EX-2.1 AGREEMENT AND PLAN OF MERGERAgreement and Plan of Merger |
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MEDVEST HOLDINGS CORP | SMITHS MEDICAL HOLDCO LIMITED | FOREST ACQUISITION CORP | MEDVEST HOLDINGS CORPORATION | OEP MEDVEST LLC. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here. |
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Exhibit 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this “ Agreement ”) is made and entered into as of December 5, 2004 by and among Smiths Medical Holdco Limited, a company formed under the laws of England and Wales (“ Parent ”), Forest Acquisition Corp., an Ohio corporation and a wholly-owned subsidiary of Parent (“ Merger Sub ”), MedVest Holdings Corporation, an Ohio corporation (the “ Company ”), each of the individual Company Stockholders (as hereafter defined) signatories to this Agreement (collectively, the “ Principal Company Stockholders ”) and OEP MedVest LLC, a Delaware limited liability company (the “ Representative ”), on behalf of the Company Stockholders.
RECITALS
WHEREAS, the Board of Directors of each of Parent, Merger Sub and the Company has approved and declared advisable the merger of Merger Sub with and into the Company (the “ Merger ”), pursuant to which the Company shall continue as the surviving corporation and as a wholly-owned subsidiary of Parent, upon the terms and subject to the conditions of this Agreement and in accordance with Title 17 of the Ohio Revised Code (the “ ORC ”);
WHEREAS, the Board of Directors of each of Parent and the Company has determined that the Merger is in furtherance of and consistent with their respective business strategies and is in the best interest of their respective stockholders, and Parent has approved this Agreement and the Merger as the sole stockholder of Merger Sub;
WHEREAS, pursuant to the Merger, among other things, all of the issued and outstanding shares of capital stock of the Company (assuming cancellation of all outstanding Options (as hereafter defined) to purchase Company Shares (as hereafter defined) in connection with the Merger) shall be converted into the right to receive the Sellers’ Merger Consideration (as hereafter defined) as provided herein;
WHEREAS, as a condition to, and in connection with the execution of this Agreement, the Principal Company Stockholders have entered into a Consent, Release and Stockholder Representative Agreement (the “ Representative Agreement ”) with the Representative in the form attached hereto as Exhibit A ; and
WHEREAS, the parties to this Agreement desire to make certain representations and warranties, covenants and other agreements in connection with the Merger.
NOW, THEREFORE, in consideration of the foregoing and the respective representations and warranties, covenants and agreements set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE
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“ Accounting Arbitrator ” has the meaning set forth in Section 3.04(b) below.
“ Acquisition Proposal ” means any proposal, offer or indication of interest with respect to (i) a merger, consolidation, liquidation, dissolution, sale of substantial assets, tender offer, recapitalization, share exchange or other business combination involving the Company or any of its Subsidiaries the assets of which, individually or in the aggregate, constitute more than 20% of the consolidated assets of the Company and its Subsidiaries, (ii) the issuance by the Company of over 20% of its equity securities or (iii) the acquisition in any manner, directly or indirectly, of over 20% of the consolidated assets of the Company and its Subsidiaries or 20% of any class of equity or voting securities of the Company or any of its Subsidiaries, the assets of which, individually or in the aggregate, constitute more than 20% of the consolidated assets of the Company and its Subsidiaries.
“ Affiliate ” has the meaning set forth in Rule 12b-2 promulgated under the Exchange Act.
“ Agreement ” has the meaning set forth in the introductory paragraph above.
“ AIP ” has the meaning set forth in Section 4.24(e) below.
“ Assets ” means all of the Company’s or its Subsidiaries’ assets, properties, goodwill and rights of every kind and description, real and personal, tangible and intangible, wherever situated and whether or not reflected on the Most Recent Financial Statements.
“ Audited Financial Statements ” has the meaning set forth in Section 4.07(a) below.
“ Balance Sheet Date ” has the meaning set forth in Section 4.07(a) below.
“ Buyer Indemnified Parties ” has the meaning set forth in Section 10.01 below.
“ Cash ” shall mean all cash (including cash on hand and cash in bank accounts) and cash equivalents (including marketable securities) of the Company and its Subsidiaries as of the close of business on the Closing Date determined in accordance with GAAP consistent with the consolidated presentation of “cash” set forth in the Audited Financial Statements.
“ CERCLA ” has the meaning set forth in Section 4.16(g) below.
“ Certificate of Merger ” has the meaning set forth in Section 2.02 below.
“ Certificates ” has the meaning set forth in Section 3.02(d) below.
“ Charter Documents ” has the meaning set forth in Section 4.04 below.
“ Claims ” has the meaning set forth in Section 10.01(a) below.
“ Closing ” has the meaning set forth in Section 2.02 below.
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“ Closing Cash ” has the meaning set forth in Section 3.01(c) below.
“ Closing Cash Adjustment ” has the meaning set forth in Section 3.01(c) below.
“ Closing Date ” has the meaning set forth in Section 2.02 below.
“ Closing Net Working Capital ” shall mean, as of the close of business on the Closing Date (but without giving effect to any purchase accounting adjustments that arise solely as a result of the Merger), the sum of those consolidated current assets of the Company and its Subsidiaries minus the sum of those consolidated current liabilities of the Company and its Subsidiaries, in each case as set forth in Section 3.04 (a) of the Disclosure Schedule, as determined in accordance with GAAP applied on a basis consistent with the methodologies and principles used in the preparation of the consolidated balance sheet of the Company and its Subsidiaries as of December 31, 2003, which constitutes a part of the Audited Financial Statements, and subject to the methodologies, principles and exceptions set forth in Section 3.04(a) of the Disclosure Schedule.
“ Code ” means the Internal Revenue Code of 1986, as amended.
“ Common Per Share Merger Consideration ” shall be equal to the quotient of (x) the Sellers’ Merger Consideration, minus the Preferred Per Share Merger Consideration multiplied by the Fully-Diluted Preferred Shares, divided by (y) the Fully-Diluted Common Shares.
“ Common Share ” has the meaning set forth in Section 3.02(a) below.
“ Company ” has the meaning set forth in the introductory paragraph above.
“ Company Articles ” means the Articles of Incorporation of the Company, as amended.
“ Company Indemnified Officers and Directors ” has the meaning set forth in Section 7.03(a) below.
“ Company Indemnified Parties ” has the meaning set forth in Section 10.02 below.
“ Company Shares ” means, collectively, the Common Shares and the Preferred Shares.
“ Company Senior Debt ” shall mean all indebtedness owed by the Company and its Subsidiaries pursuant to that certain Credit Agreement, dated as of May 21, 2003, among Medex, the Company, the domestic subsidiaries of Medex, the lenders parties thereto, Wachovia Bank, National Association, Lehman Commercial Paper Inc., Banc One Mezzanine Corporation, The Huntington National Bank, LaSalle Bank National Association, Wachovia Securities, Inc. and Lehman Brothers Inc., as amended or supplemented from time to time.
“ Company Senior Subordinated Notes ” means those certain 8-7/8% Senior Subordinated Notes issued by Medex and guaranteed by the Company having a face value of $200.0 million and due May 15, 2013.
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“ Company Stockholder Transaction Expenses ” has the meaning set forth in Section 11.01 below.
“ Company Stockholders ” means the holders of all issued and outstanding Company Shares and Options at or prior to the Effective Time.
“ Confidentiality Agreement ” has the meaning set forth in Section 6.05 below.
“ Contract ” means, with respect to a Person, any written or oral contract, agreement, lease, instrument, commitment or undertaking that is binding on such Person or its property under applicable Law.
“ Copyrights ” mean all copyrights in both published and unpublished form and all registrations and applications for registration for copyrights in any jurisdiction, and any renewals, modifications and extensions thereof.
“ Court Order ” means, with respect to a Person, any judgment, decree, injunction, order or ruling of any federal, state, local or foreign court or Governmental Body that is binding on such Person or its property under applicable Law.
“ Customer Contracts ” means all Contracts that provide for the shipment of Products to, the billing of and the collection of payment from customers by the Company or any of its Subsidiaries. To the extent that such Products are ordered by a customer through a distributor, group purchasing organization or other agency/sponsoring organization set forth in Section 4.13(a) of the Disclosure Schedule, any Contract with such end-user customer shall not be separately identified in Section 4.13(a) of the Disclosure Schedule.
“ Default ” means (i) a breach, default or violation, (ii) the occurrence of an event that with or without the passage of time or the giving of notice, or both, would constitute a breach, default or violation or (iii) with respect to any Contract, the occurrence of an event that with or without the passage of time or the giving of notice, or both, would give rise to a right of termination, renegotiation or acceleration.
“ Disclosure Schedule ” means the disclosure schedule delivered by the Company to Parent on the date of this Agreement, as amended after the date hereof, if at all, in accordance with Section 6.06 below.
“ Dissenting Shares ” has the meaning set forth in Section 3.09 below.
“ Dissenting Stockholders ” has the meaning set forth in Section 3.09 below.
“ Dombrowski Patent Agreement ” has the meaning set forth in Section 6.03(k) .
“ Dublin Land ” means the Company’s former excess vacant Owned Real Property consisting of approximately 5.89 acres located adjacent to the Company’s facility in Dublin, Ohio.
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“ EES Accounts Receivable ” means the net amount receivable from Ethicon Endo-Surgery, Inc., a subsidiary of Johnson & Johnson, or any of its Affiliates relating to matters as set forth in Section 1 of the Disclosure Schedule.
“ Effective Time ” has the meaning set forth in Section 2.02 below.
“ Employee Benefit Plan ” means any “employee benefit plan” (as such term is defined in ERISA §3(3)) and any other employee benefit plan, program, incentive arrangement or arrangement that provides benefits or compensation to any employee or former employee of the Company or any of its ERISA Affiliates and that is maintained, sponsored or contributed to by the Company or any of its ERISA Affiliates, or to which the Company or any ERISA Affiliate has or has had an obligation to contribute.
“ Employee Pension Benefit Plan ” has the meaning set forth in ERISA §3(2), and also for the avoidance of doubt includes any employer sponsored scheme for the provision of funding retirement benefits for any past or present officer or employee, or for any dependant of any such person, with which the Company or its ERISA Affiliates has or may have any liability (actual or contingent, present or future) including any obligation or liability to contribute to any personal pension scheme in respect of any of its officers or employees.
“ Employee Welfare Benefit Plan ” has the meaning set forth in ERISA §3(1).
“ Environmental Claims ” means any and all administrative or judicial actions, suits, orders, claims, liens, notices, investigations, violations or proceedings related to any applicable Environmental Law or any Environmental Permit brought, issued or asserted by a Governmental Body or third party for compliance, damages, penalties, removal, response, remedial or other action pursuant to any applicable Environmental Law or for personal injury or property damage resulting from the release of a Hazardous Material at, to or from any facility or property owned or operated by the Company or any of its Subsidiaries or at, to or from any facility or property at which the Company or any of its Subsidiaries disposed or arranged for the disposal or treatment (with a transporter or otherwise) of Hazardous Materials, including claims by the Company’s employees or any employees of any of its Subsidiaries seeking damages for exposure to Hazardous Materials.
“ Environmental Laws ” means any and all applicable: (a) international, European Union, national, state, federal, regional or local laws (including common law, statute law, civil, criminal and administrative law); (b) subordinate legislation and codes of practice, including, without limitation, guidance notes, circulars, decisions, regulations and judgments; and (c) judicial or administrative interpretation of each of the foregoing, in each case having the force and effect of law, which relate to the protection of the environment, natural resources, safety or health (as it relates to exposure to Hazardous Materials) or the handling, use, recycling, generation, treatment, storage, management, transportation or disposal of Hazardous Materials.
“ Environmental Permit ” means all permits, licenses, approvals, authorizations or consents required by any Governmental Body under any applicable Environmental Law and includes any and all orders, consent orders or binding agreements issued or entered into by a Governmental Body under any applicable Environmental Law.
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“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.
“ ERISA Affiliate ” means each entity that is treated as a single employer with the Company for purposes of Code §414.
“ Escrow Agent ” has the meaning set forth in Section 3.01(d)(ii) below.
“ Escrow Agreement ” has the meaning set forth in Section 3.01(d)(ii) below.
“ Escrow Amount ” means $30 million.
“ Escrow Funds ” is defined in Section 3.01(d)(ii) below.
“ Estimated Closing Cash ” has the meaning set forth in Section 3.01(c) below.
“ Estimated Closing Net Working Capital ” has the meaning set forth in Section 3.01(b) .
“ Exchange Act ” has the meaning set forth in Section 4.20 below.
“ FDA ” has the meaning set forth in Section 4.24(a) below.
“ Financial Statements ” has the meaning set forth in Section 4.07(a) below.
“ Fully-Diluted Common Shares ” is equal to, at the Effective Time and without duplication with respect to clauses (i) and (ii) immediately below, the sum of: (i) the total number of Common Shares outstanding and (ii) the total number of Common Shares that would be issued assuming the exercise of all outstanding Options.
“ French Subsidiary ” means Medex Medical France, S.A.R.L.
“ Fully-Diluted Preferred Shares ” is equal to, at the Effective Time and without duplication with respect to clauses (i) and (ii) immediately below, the sum of: (i) the total number of Preferred Shares outstanding and (ii) the total number of Preferred Shares that would be issued assuming the exercise of all outstanding Options.
“ GAAP ” means United States generally accepted accounting principles as in effect from time to time.
“ General Threshold ” has the meaning set forth in Section 10.01(b) below.
“ German Subsidiary ” means Medex GmbH.
“ Governmental Body ” means, in relation to anywhere in the world, any supra-national, national, state, municipal or local government (including any subdivision, court, administrative agency, competent authority, notified body or commission or other authority thereof) or any quasi-governmental body exercising any regulatory, taxing, importing or other governmental or quasi-governmental authority, including the European Union.
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“ Hazardous Material ” means any hazardous, toxic or radioactive substance, material or waste with respect to which, as of the Closing Date, any state or local Governmental Body requires environmental investigation, monitoring, reporting or remediation, including any material or substance that is: (A) defined as a “ hazardous substance ,” “ regulated substance ” or “ hazardous waste ” under applicable state law, (B) petroleum, petroleum products or petroleum wastes, (C) asbestos, (D) designated as a “ hazardous substance ” pursuant to section 311 of the Federal Water Pollution Control Act, as amended, 33 U.S.C. §1251 et seq. (33 U.S.C. § 1321), (E) defined as a “ hazardous waste ” pursuant to section 1004 of the Resource Conservation and Recovery Act, as amended, 42 U.S.C. §6901 et seq. (42 U.S.C. §6903), (F) defined as a “ hazardous substance ” pursuant to section 101 of the CERCLA or (G) otherwise regulated as hazardous or toxic under the Toxic Substances Control Act, as amended, 15 U.S.C. §2601 et seq., the Clean Air Act, as amended, 42 U.S.C. §7401 et seq., the Hazardous Materials Transportation Act, as amended, 49 U.S.C. §1801 et seq., or the Federal Insecticide, Fungicide and Rodenticide Act, as amended, 7 U.S.C. §136 et seq., the Emergency Planning and Community Right-to-Know Act, as amended, 42 U.S.C. §11001 et seq., the Safe Drinking Water Act, as amended, 42 U.S.C. §300(f) et seq., and the Occupational Safety and Health Act, as amended, 29 U.S.C. §651 et seq.
“ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder.
“ Indemnified Party ” has the meaning set forth in Section 10.04 below.
“ Indemnifying Party ” has the meaning set forth in Section 10.04 below.
“ Insurance Costs ” has the meaning set forth in Section 10.06 below.
“ Intellectual Property ” means patents, trade marks, service marks, logos, trade names, internet domain names, rights in designs, Copyrights (including rights in computer software) and database rights, utility models, rights in know-how and other intellectual property rights, in each case whether registered or unregistered and including applications for registration, and all rights or forms of protection having equivalent or similar effect anywhere in the world.
“ IPI ” means Inhalation Plastics, Inc.
“ IPI Agreement ” means the Asset Purchase Agreement by and between Medex Cardio-Pulmonary, Inc. and IPI, dated as of May 10, 2002, and all other agreements related thereto.
“ IRB ” has the meaning set forth in Section 4.24(d) below.
“ Jelco Agreements ” means the Purchase Agreement by and between Ethicon Endo-Surgery, Inc. and Medex, dated as of April 2, 2003, the Foreign Purchase Agreements (as defined therein), and all other agreements related thereto.
“ Knowledge ” means, with respect to the Company, the actual knowledge without independent investigation of the following individuals: Dominick A. Arena, Michael I. Dobrovic, Ralph E. Dickman, Jr., Charles J. Jamison, Georg W. Landsberg, Catherine Chenetski, Vinc Ellerbrock and Scott Seidenverg.
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“ Law ” means any statute, law, ordinance, regulation, guidance, order or rule of any Governmental Body, including those covering employment, employee benefits, tax, medical devices and pharmaceuticals, energy, safety, health, information technology, transportation, bribery, recordkeeping, zoning, antidiscrimination, antitrust, wage and hour, and price and wage control matters, excluding Environmental Laws.
“ Leased Real Property ” means all leasehold or subleasehold estates and other rights to use or occupy any land, buildings, structures, improvements, fixtures or other interests in real property that is used in the business of the Company and its Subsidiaries.
“ Leases ” means all leases, subleases, licenses, concessions and other agreements (written or oral), including all amendments, extensions, renewals, guaranties and other agreements with respect thereto, pursuant to which the Company or any of its Subsidiaries holds any Leased Real Property.
“ Liability ” means any direct or indirect liability, indebtedness, obligation, expense, claim, loss, damage, deficiency, guaranty or endorsement of or by any Person, absolute or contingent, accrued or unaccrued, due or to become due, liquidated or unliquidated.
“ Licenses ” means any permits, licenses, clearances, franchises, registrations, certificates, variances, exemptions, consents, approvals and other authorizations granted by any Governmental Body, excluding Environmental Permits.
“ Lien ” means any mortgage, pledge, charge, lien, assignment, hypothecation, encumbrance, charge or other security interest (including any right to acquire, option or right of preemption or conversion) or any agreement to create any of the above, other than (a) liens for Taxes not yet due and payable or for Taxes that the taxpayer is contesting in good faith through appropriate proceedings, (b) purchase money liens and liens securing rental payments under capital lease arrangements and (c) other liens arising in the Ordinary Course of Business and not incurred in connection with the borrowing of money.
“ Management Buyout Agreement ” means the Amended and Restated Stock Purchase Agreement, dated as of February 9, 2001, by and among the Company, Medex and Saint-Gobain Performance Plastics Corporation and all other agreements related thereto.
“ Material Adverse Effect ” or “ Material Adverse Change ” means any effect or change that would be materially adverse to the business, operations, assets, financial condition and results of operations of the Company and its Subsidiaries, taken as a whole; provided that none of the following shall be deemed to constitute, and none of the following shall be taken into account in determining whether there has been, a Material Adverse Effect or Material Adverse Change: any adverse change, event, development or effect arising from or relating to (1) general business or economic conditions, including such conditions related to the business of the Company and its Subsidiaries, (2) national or international political or social conditions, including the engagement by the United States in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the United States or any of its territories, possessions or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States, (3) financial, banking or securities
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markets (including any disruption thereof and any decline in the price of any security or any market index), (4) changes in GAAP, (5) changes in Law or (6) the announcement or performance of this Agreement or the transactions contemplated by this Agreement or the other Transaction Documents, including any disclosure of Parent’s post-Closing plans or intentions with respect to the operations of the Company or any of its Subsidiaries; and (b) any adverse change in or effect on the business of the Company and its Subsidiaries that is cured by the Company or its Subsidiaries before the earlier of (1) the Closing Date and (2) the date on which this Agreement is terminated pursuant to Section 9.01 hereof.
“ Material Customer Contracts ” has the meaning set forth in Section 4.13(a) below.
“ Medex ” means Medex, Inc., an Ohio corporation, a wholly-owned subsidiary of the Company.
“ Merger ” has the meaning set forth in the Recitals above.
“ Merger Consideration ” has the meaning set forth in Section 3.01(a) below.
“ Merger Sub ” has the meaning set forth in the introductory paragraph above.
“ Mexico Land ” means the Company’s excess vacant Owned Real Property consisting of approximately 10.0 acres located adjacent to the Company’s facility in Apodaca, Nuevo Leon, Mexico for which a sale contract has been entered into for an aggregate purchase price of approximately US $1.56 million.
“ Money Purchase Benefits ” in relation to a member of a personal or occupational pension scheme or the widow or widower of a member of such a scheme, means benefits the rate or amount of which is calculated by reference to a payment or payments made by the member or by any other person in respect of the member and which are not average salary benefits.
“ Most Recent Financial Statements ” has the meaning set forth in Section 4.07(a) below.
“ Multiemployer Plan ” has the meaning set forth in ERISA §3(37).
“ Option ” has the meaning set forth in Section 3.03 below.
“ Option Holder ” has the meaning set forth in Section 3.03 below.
“ Option Payments ” has the meaning set forth in Section 3.03 below.
“ Option Plans ” has the meaning set forth in Section 3.03 below.
“ ORC ” has the meaning set forth in the Recitals above.
“ Ordinary Course of Business ” means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency).
“ Owned Real Property ” means all land, together with all buildings, structures, improvements and fixtures located thereon, and all easements and other rights and interests
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appurtenant thereto, owned by the Company or any of its Subsidiaries and used in the business of the Company and its Subsidiaries.
“ Parent ” has the meaning set forth in the introductory paragraph above.
“ Payment Fund ” has the meaning set forth in Section 3.01(d) below.
“ Permitted Encumbrances ” means with respect to each parcel of Owned Real Property: (a) Taxes, assessments and other governmental levies, fees or charges imposed with respect to such Owned Real Property that are (i) not due and payable as of the Closing Date or (ii) being contested by appropriate proceedings; (b) mechanics liens and similar liens for labor, materials or supplies provided with respect to such Owned Real Property incurred in the Ordinary Course of Business for amounts that are (i) not delinquent and would not, in the aggregate, have a Material Adverse Effect or (ii) being contested by appropriate proceedings; (c) zoning, building codes and other land use laws regulating the use or occupancy of such Owned Real Property or the activities conducted thereon that are imposed by any governmental authority having jurisdiction over such Owned Real Property; and (d) easements, covenants, conditions, restrictions and other similar matters affecting title to such Owned Real Property and other title defects, all of which do not materially impair the use or occupancy of such Owned Real Property in the operation of the business of the Company or its Subsidiaries.
“ Person ” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, any other business entity or a governmental entity (or any department, agency or political subdivision thereof).
“ Preamendment Devices ” has the meaning set forth in Section 4.24(c) below.
“ Preferred Per Share Merger Consideration ” shall be equal to the quotient of (i) the sum of (a) the Preferred Share Face Amount, plus (b) the Preferred Share Preference Amount, plus (c) the Preferred Share Participation Amount, divided by (ii) the Fully-Diluted Preferred Shares, which amount shall be allocated to the holders of Preferred Shares in accordance with the provisions of Section 3.01(g) .
“ Preferred Share ” has the meaning set forth in Section 3.02(b) below.
“ Preferred Share Face Amount ” shall be an amount equal to $5.643 times the number of Fully-Diluted Preferred Shares.
“ Preferred Share Face Amount Threshold ” has the meaning set forth in Section 3.01(g)(i) .
“ Preferred Share Participation Amount ” shall be an amount equal to ten percent (10%) of the aggregate Sellers’ Merger Consideration remaining after the Preferred Share Face Amount Threshold and Preferred Share Preference Amount Threshold have been met and the Preferred Share Face Amount and Preferred Share Preference Amount have been allocated to the holders of Preferred Shares in accordance with the provisions of Section 3.01(g) .
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“ Preferred Share Preference Amount ” shall be an amount equal to $2.8215 times the number of Fully-Diluted Preferred Shares.
“ Preferred Share Preference Amount Threshold ” has the meaning set forth in Section 3.01(g)(ii) .
“ Prime Rate ” has the meaning set forth in Section 3.04(c) below.
“ Principal Company Stockholders ” has the meaning set forth in the introductory paragraph above.
“ Products ” means all products manufactured, tested, packaged, labeled, marketed, sold or distributed by the Company or any of its Subsidiaries.
“ Relevant Group ” means any affiliated, combined, consolidated, unitary or similar group of which any of the Company or its Subsidiaries is or was a member during the period beginning on February 10, 2001 and ending on the Closing Date.
“ Representative ” has the meaning set forth in the introductory paragraph above.
“ Representative Agreement ” has the meaning set forth in the Recitals above.
“ Requisite Stockholder Approval ” has the meaning set forth in Section 4.18 below.
“ Restricted Company Stockholders ” means Dominick A. Arena, Michael I. Dobrovic, Ralph E. Dickman, Jr., Charles J. Jamison and Georg W. Landsberg.
“ SEC ” has the meaning set forth in Section 4.20 below.
“ SEC Reports ” has the meaning set forth in Section 4.20 below.
“ Sellers’ Merger Consideration ” means an amount equal to the Merger Consideration plus the aggregate exercise price that would be payable to the Company upon the exercise of all Options outstanding immediately prior to the cancellation and settlement thereof pursuant to Section 3.03 .
“ Senior Debt Payoff Amount ” has the meaning set forth in Section 3.01(e) below.
“ Senior Subordinated Notes Amount ” means an amount equal to the aggregate principal of, and accrued but unpaid interest on, the Company Senior Subordinated Notes.
“ Statement of Closing Cash ” has the meaning set forth in Section 3.04(a) below.
“ Statement of Closing Net Working Capital ” has the meaning set forth in Section 3.04(a) below.
“ Statement of Estimated Closing Cash ” has the meaning set forth in Section 3.01(c) below.
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“ Statement of Estimated Closing Net Working Capital ” has the meaning set forth in Section 3.01(b) below.
“ Subsidiary ” means, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof or (ii) if a limited liability company, partnership, association or other business entity (other than a corporation), a majority of membership, partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof and for this purpose a Person or Persons owns a majority ownership interest in such a business entity (other than a corporation) if such Person or Persons shall be allocated a majority of such business entity’s gains or losses or shall be or control any managing director or general partner of such business entity (other than a corporation). The term “Subsidiary” shall include all Subsidiaries of such Subsidiary.
“ Surviving Corporation ” has the meaning set forth in Section 2.01 below.
“ Target Closing Net Working Capital ” has the meaning set forth in Section 3.01(b) below.
“ Tax ” or “ Taxes ” means any charge on income, profits or gains, and all other federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code §59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar, including any national insurance contributions), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated or other tax, assessment, fee levy or other governmental charge of any kind whatsoever (other than fees or similar amounts paid with respect to the renewal of patents or other Intellectual Property), including any interest, penalty, addition to tax or addition thereto.
“ Tax Benefits ” means any Tax benefits that the Company or any of its Subsidiaries derive from any items incurred by the Company or its Subsidiaries in connection with the transactions contemplated by this Agreement.
“ Tax Return ” means any return, declaration, report, claim for refund or information return or statement relating to Taxes.
“ Tax Threshold ” has the meaning set forth in Section 10.01(b) below.
“ Territory ” has the meaning set forth in Section 7.04(a) below.
“ Transaction Documents ” means this Agreement and any other certificate, instrument, agreement or document required to be delivered pursuant to the terms hereof.
“ WARN Act ” has the meaning set forth in Section 4.15(j) below.
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“ Withholdings ” means all amounts to be withheld from the Merger Consideration as required by Law (arising from withholding obligations of the Company as a result of the cancellation and settlement of Options pursuant to Section 3.03 ), which amount(s) shall be remitted to the appropriate Governmental Body by the Surviving Corporation at and upon the Closing.
ARTICLE
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SECTION 2.01 . The Merger . Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the ORC, at the Effective Time, Merger Sub shall be merged with and into the Company. As a result of the Merger, the separate corporate existence of Merger Sub shall cease, and the Company shall continue as the surviving corporation and as a wholly-owned subsidiary of Parent following the Merger (the “ Surviving Corporation ”). Subject to the provisions of this Agreement, nothing contained in this Agreement shall give Parent, directly or indirectly, the right to control or direct the Company’s operations prior to the Effective Time. Prior to the Effective Time, each of the Company and the Parent shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its respective operations.SECTION 2.02 . Effective Time . Unless this Agreement is earlier terminated pursuant to Section 9.01 , the closing of the Merger (the “ Closing ”) will take place no later than seven (7) business days after the satisfaction or, if permissible, waiver of the conditions set forth in Article VIII , at the offices of Winston & Strawn LLP, 35 West Wacker Drive, Chicago, Illinois 60601, at 10:00 a.m. (Chicago time), provided that such place, date and time may be changed to another place, date and/or time as agreed to in writing by Parent and the Company. The date upon which the Closing actually occurs is herein referred to as the “ Closing Date .” On the Closing Date, the parties hereto shall cause the Merger to be consummated by filing a certificate of merger (the “ Certificate of Merger ”) with the Secretary of State of the State of Ohio, in such form as required by, and executed in accordance with, the relevant provisions of the ORC (the date and time of acceptance by the Secretary of State of Ohio of such filing, or, if another date and time is specified in such filing, such specified date and time, being the “ Effective Time ”).SECTION 2.03 . Effect of the Merger . At the Effective Time, the effect of the Merger shall be as provided in the applicable provisions of the ORC. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, except as otherwise provided herein, all the property, assets, rights, privileges, powers and franchises of the Company and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities, duties and obligations of the Company and Merger Sub shall become the debts, liabilities, duties and obligations of the Surviving Corporation.SECTION 2.04 . Articles of Incorporation; Code of Regulations . At the Effective Time, the Articles of Incorporation and the Code of Regulations of the Surviving Corporation shall be amended in their entirety to contain the provisions set forth in the Articles of
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Incorporation and Code of Regulations of Merger Sub, as in effect immediately prior to the Effective Time.SECTION 2.05 . Directors and Officers . The directors of Merger Sub immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation, each to serve in accordance with the Articles of Incorporation and the Code of Regulations of the Surviving Corporation. The officers of Merger Sub immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation, each to hold office in accordance with the Articles of Incorporation and the Code of Regulations of the Surviving Corporation.ARTICLE
III
SECTION 3.01 . Calculation and Payment of the Merger Consideration .(a) Calculation of Merger Consideration . The aggregate amount to be paid by Parent with respect to the Company Shares (on a fully-diluted basis) shall equal the sum of the following:(i) Nine Hundred Twenty Five Million Dollars ($925,000,000), plus(ii) the Estimated Closing Cash, plus or minus(iii) the excess or deficiency of the Target Closing Net Working Capital determined by the calculations set forth in the Statement of Estimated Closing Net Working Capital under Section 3.01(b) , minus(iv) the Senior Debt Payoff Amount to be paid by Parent under Section 3.01(e) , minus(v) the Senior Subordinated Notes Amount, plus(vi) the costs and expenses (including legal fees and expenses) paid prior to the Closing by the Company and its Subsidiaries in connection with the tender offer to redeem the Company Senior Subordinated Notes, minus(vii) the Company Stockholder Transaction Expenses not paid prior to the Closing by the Company and its Subsidiaries.The aggregate amount of items (i) through (vii) immediately above is referred to herein as the “ Merger Consideration .” Remittance and delivery of the Merger Consideration shall be made by Parent or Merger Sub in accordance with the provisions of Sections 3.01(d) , 3.01(e) and 3.01(f) below. After the Effective Time, the Merger Consideration, the Preferred Per Share Merger Consideration and the Common Per Share Merger Consideration shall be subject to the adjustments set forth in Sections 3.01(b) , 3.01(c) and 3.04 .
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(b) Estimated Closing Net Working Capital Adjustment . Not less than four (4) business days prior to the Closing Date, the Company shall deliver to Parent and Merger Sub a statement of the Estimated Closing Net Working Capital (the “ Statement of Estimated Closing Net Working Capital ”) determined on a basis consistent with the methodology to be employed in the calculation of the Closing Net Working Capital pursuant to Section 3.04 below (such estimate, the “ Estimated Closing Net Working Capital ”). To the extent that the Estimated Closing Net Working Capital is greater than Seventy-Six Million Dollars ($76,000,000) (the “ Target Closing Net Working Capital ”), the Merger Consideration (and the payment required to be made into the Payment Fund under this Section 3.01 at the Closing) will be increased by such excess. To the extent that the Estimated Closing Net Working Capital is less than the Target Closing Net Working Capital, the Merger Consideration (and the payment required to be made into the Payment Fund under this Section 3.01 at the Closing) will be decreased by such shortfall. Subsequent to Closing, the provisions of Section 3.04 will apply.(c) Estimated Closing Cash Adjustment . Not less than four (4) business days prior to the Closing Date, the Company shall deliver to Parent and Merger Sub a statement of the Estimated Closing Cash (the “ Statement of Estimated Closing Cash ”), which shall reflect the estimated amount of Cash of the Company and each of its Subsidiaries as of the close of business on the Closing Date (the “ Estimated Closing Cash ”). Subsequent to the Closing, the Estimated Closing Cash shall be reconciled to the actual amount of Cash of the Company and each of its Subsidiaries as of the close of business on the Closing Date (the “ Closing Cash ”) in accordance with Section 3.04 below (the “ Closing Cash Adjustment ”).(d) Payment of Merger Consideration . At and upon the Effective Time, Parent or Merger Sub shall remit the Merger Consideration by wire transfer of immediately available funds as follows:(i) the Withholdings shall be remitted to the Company’s payroll withholding bank account for transmittal to the Internal Revenue Service or the applicable recipient thereof;(ii) a portion of the Merger Consideration in the amount of the Escrow Amount shall be deposited by Parent with the escrow agent (the “ Escrow Agent ”) designated in the escrow agreement (the “ Escrow Agreement ”), substantially in the form of Exhibit B hereto, to be entered into at the Closing by Parent, the Representative and the Escrow Agent. Such cash delivered to the Escrow Agent, together with any investment proceeds thereon are referred to collectively herein as the “ Escrow Funds .” The Escrow Agreement sets forth the terms upon which disbursements shall be made by the Escrow Agent; and(iii) the remaining amount of the Merger Consideration, after subtraction of the amounts remitted in accordance with Sections 3.01(d)(i) and 3.01(d)(ii) and subtraction of the portion thereof otherwise allocable in accordance with Section 3.01(g) below to Dissenting Shares, shall be remitted to the Representative or its designee by Parent.15The aggregate of the payments set forth in this Section 3.01(d) , together with any subsequent remittances to the Representative or its designee as a consequence of the Closing Net Working Capital Adjustment and/or the Closing Cash Adjustment (as respectively described in Section 3.04 ), is referred to herein as the “ Payment Fund .” The Representative shall allocate and distribute, or cause its designee to distribute, the Payment Fund in accordance with the provisions of Sections 3.01(g), 3.02 and 3.03 below.(e) Payment of Company Senior Debt . At and upon the Effective Time, Parent shall pay, or cause to be paid, on behalf of the Company by wire transfer of immediately available funds, to the lenders such amounts as directed in writing by the lenders necessary to repay the Company Senior Debt (including all interest accrued thereunder and all fees and expenses required to satisfy such obligations) up to and including the Closing Date (the “ Senior Debt Payoff Amount ”).(f) Payment of Company Stockholder Transaction Expenses . At and upon the Effective Time, Parent shall pay, or cause to be paid, by wire transfer of immediately available funds such amounts necessary to pay the Company Stockholder Transaction Expenses, not paid prior to the Closing by the Company and its Subsidiaries, which shall be set forth on a schedule that the Representative shall deliver to Parent not less than three (3) business days prior to the Closing Date.(g) Allocation of Merger Consideration . Upon and after the Closing, the Representative, having been duly empowered to act on behalf of the Company Stockholders pursuant to the terms of the Representative Agreement, shall make determinations as to the allocation of the Sellers’ Merger Consideration among the Preferred Shares, the Common Shares and the Options. In furtherance of the foregoing, the Representative shall follow the directives and procedures set forth in this Section 3.01(g) and in Sections 3.02 and 3.03 to determine the payments and deliveries to be made from the Payment Fund with respect to such ownership interests in the Company.(i) Until the Preferred Share Face Amount Threshold has been met, one hundred percent (100%) of the Sellers’ Merger Consideration shall be paid to the holders of Preferred Shares (other than with respect to Dissenting Shares) pro rata among such holders on the basis of the number of Fully-Diluted Preferred Shares held by such holders immediately prior to the Effective Time. The “ Preferred Share Face Amount Threshold ” shall mean the point at which the (x) sum of the Sellers’ Merger Consideration paid to the holders of Preferred Shares divided by (y) the number of Fully-Diluted Preferred Shares equals $5.643.(ii) From and after the point the Preferred Share Face Amount Threshold has been met until the Preferred Share Preference Amount Threshold has been met, (1) ninety percent (90%) of the Sellers’ Merger Consideration shall be paid to the holders of Preferred Shares (other than with respect to Dissenting Shares) pro rata among such holders on the basis of the number of Fully-Diluted Preferred Shares held by such holders immediately prior to the Effective Time and (2) ten percent (10%) of the Sellers’ Merger Consideration shall be paid to the holders of Common Shares (other than with respect to Dissenting Shares) pro rata among such holders on the basis of the number of16Fully-Diluted Common Shares held by such holders immediately prior to the Effective Time. The “ Preferred Share Preference Amount Threshold ” shall mean the point at which the (x) sum of the Merger Consideration paid to the holders of Preferred Shares divided by (y) the number of Fully-Diluted Preferred Shares equals $8.4645.(iii) From and after the point the Preferred Share Preference Amount Threshold has been met, (1) ten percent (10%) of the Sellers’ Merger Consideration shall be paid to the holders of Preferred Shares (other than with respect to Dissenting Shares) pro rata among such holders on the basis of the number of Fully-Diluted Preferred Shares held by such holders immediately prior to the Effective Time and (2) ninety percent (90%) of the Sellers’ Merger Consideration shall be paid to the holders of Common Shares (other than with respect to Dissenting Shares) pro rata among such holders on the basis of the number of Fully-Diluted Common Shares held by such holders immediately prior to the Effective Time.(iv) In determining the allocation of the Sellers’ Merger Consideration, the Company Stockholders shall be deemed to have received the Escrow Amount as a portion of such Sellers’ Merger Consideration.SECTION 3.02 . Effect of Merger on the Capital Stock of the Company .(a) Conversion of Common Stock . At the Effective Time, each share of common stock, without par value, of the Company (each, a “ Common Share ”) that is issued and outstanding immediately prior to the Effective Time, including, without limitation, all shares of common stock issued upon exercise of any Options shall, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company or the Company Stockholders, be canceled and extinguished, and each such Common Share shall be converted into the right to receive the Common Per Share Merger Consideration (subject to adjustment to reflect changes in the Closing Net Working Capital and/or the Closing Cash as provided in Sections 3.01(b) , 3.01(c) and 3.04 hereof) in cash, payable in accordance with and subject to the conditions on payment as provided in this Article III , other than with respect to Dissenting Shares and without duplication with respect to Options cancelled pursuant to Section 3.03 . Notwithstanding any contrary provision set forth in this Agreement, the Representative shall not pay to any Company Stockholder holding Common Shares (i) that portion of the Merger Consideration represented by such Company Stockholder’s pro rata share of the Escrow Funds until such time as such amount, if any, is distributable pursuant to the terms and conditions of the Escrow Agreement or (ii) such Company Stockholder’s pro rata share of Holdback Amount or the Expense Amount (in each case as such terms are defined in the Representative Agreement), until such time as such amounts, if any, are distributable pursuant to the terms and conditions of the Representative Agreement. The adoption of this Agreement and the approval of the Merger by the Company Stockholders shall constitute approval of the Escrow Agreement and of all of the arrangements relating thereto, including, without limitation, the placement of the Escrow Funds in escrow.(b) Conversion of Preferred Stock . At the Effective Time, each share of Class A Preferred Stock, without par value, of the Company (each, a “ Preferred Share ”) that is issued and outstanding immediately prior to the Effective Time, including, without limitation, all shares of Preferred Stock issued upon exercise of any Options shall, by virtue of the Merger and17without any action on the part of Parent, Merger Sub, the Company or the Company Stockholders, be canceled and extinguished, and each such Preferred Share shall be converted into the right to receive the Preferred Per Share Merger Consideration (subject to adjustment to reflect changes in the Closing Net Working Capital and/or the Closing Cash as provided in Sections 3.01(b) , 3.01(c) and 3.04 hereof) in cash, payable in accordance with and subject to the conditions on payment as provided in this Article III , other than with respect to Dissenting Shares and without duplication with respect to Options cancelled pursuant to Section 3.03 . Notwithstanding any contrary provision set forth in this Agreement, the Representative shall not pay to any Company Stockholder holding Preferred Shares (i) that portion of the Sellers’ Merger Consideration represented by such Company Stockholder’s pro rata share of the Escrow Funds until such time as such amount, if any, is distributable pursuant to the terms and conditions of the Escrow Agreement or (ii) such Company Stockholder’s pro rata share of Holdback Amount or the Expense Amount (in each case as such terms are defined in the Representative Agreement), until such time as such amounts, if any, are distributable pursuant to the terms and conditions of the Representative Agreement.(c) Treasury Stock . Each Company Share held in the treasury of the Company immediately prior to the Effective Time shall be canceled and extinguished without any conversion thereof, and no payment shall be made with respect thereto.(d) Surrender of Certificates . The Representative or its designee shall deliver the Merger Consideration pursuant to this Section 3.02 (adjusted as contemplated in Sections 3.01(b) , 3.01(c) and 3.04 ) out of the Payment Fund for each Company Share that is surrendered in accordance with this Section 3.02(d) . As soon as practicable, but in no event later than five (5) business days after the Effective Time, the Representative or its designee shall mail to each holder of record of a certificate representing outstanding Company Shares (the “ Certificates ”) (1) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery by such Company Stockholder of his, her or its Certificates to the Representative or its designee, and shall be in customary form) and (2) instructions for use in effecting the surrender of the Certificates in exchange for the Sellers’ Merger Consideration contemplated to be paid to the Company Stockholders pursuant to this Section 3.02 . Upon surrender of a Certificate to the Representative or its designee for cancellation, the holder of such Certificate shall be entitled to receive in exchange therefor the Sellers’ Merger Consideration (adjusted as contemplated in Sections 3.01(b), 3.01(c) and 3.04 hereof) represented by such Certificate as set forth above, which Sellers’ Merger Consideration shall be payable upon such proper surrender by the Representative or its designee by delivery of a certified or bank cashier’s check or by wire transfer, and the Certificate so surrendered shall forthwith be canceled upon delivery thereof to the Representative or its designee. No interest will be paid or accrued on any cash payable to holders of Certificates. In the event of a transfer of ownership of Company Shares that is not registered in the transfer records of the Company, payment may be made to a transferee if the Certificate representing such Company Shares is presented to Parent, accompanied by all documents required to evidence and effect such transfer and by evidence that any applicable stock transfer taxes have been paid.(e) Cancellation of Company Shares . From and after the Effective Time, all Company Shares shall no longer be outstanding and shall automatically be canceled and retired18and shall cease to exist, and each holder of a Certificate representing any such Company Shares shall cease to have any rights with respect thereto, except the right to receive the Sellers’ Merger Consideration represented by such Certificate (other than with respect to Dissenting Shares).SECTION 3.03 . Options . In connection with the Merger, effective at the Effective Time, all outstanding stock options or similar rights to purchase Common Shares or Preferred Shares (each, an “ Option ”) heretofore granted under the Company’s 2001 Stock Option Plan, 2002 Stock Option Plan or 2004 Stock Option Plan (together, the “ Option Plans ”), without any payment therefor except as otherwise provided in this Section 3.03 , shall be automatically cancelled in accordance with their terms, and, prior to the Effective Time, the Board of Directors of the Company (or, if appropriate, any committee thereof) shall adopt appropriate resolutions and take all other actions necessary to terminate the Option Plans and all individual option agreements outside of the Option Plans as of the Effective Time. Each Option, to the extent unexercised as of the Effective Time, shall thereafter no longer be exercisable but shall entitle each holder thereof (each, an “ Option Holder ”), in cancellation and settlement therefor, to a payment in cash, at the Effective Time, equal to (A) if an Option exercisable for Common Shares, the product of (i) the excess, if any, of (x) the Common Per Share Merger Consideration (subject to adjustment to reflect changes in the Closing Net Working Capital and/or the Closing Cash as provided in Sections 3.01(b) , 3.01(c) and 3.04 hereof) over (y) the exercise price per Common Share subject to such Option, multiplied by (ii) the total number of Common Shares subject to such Option immediately prior to its cancellation (such payment to be net of Withholding, if any, and without interest), at the same time, in the same manner and subject to the same conditions under which other Company Stockholders receive Common Per Share Merger Consideration, or (B) if an Option exercisable for Preferred Shares, the product of (i) the excess, if any, of (x) the Preferred Per Share Merger Consideration (subject to adjustment to reflect changes in the Closing Net Working Capital and/or the Closing Cash as provided in Sections 3.01(b) , 3.01(c) and 3.04 hereof) over (y) the exercise price per Preferred Share subject to such Option, multiplied by (ii) the total number of Preferred Shares subject to such Option immediately prior to its cancellation (such payment to be net of Withholding, if any, and without interest), at the same time, in the same manner and subject to the same conditions under which other Company Stockholders receive the Preferred Per Share Merger Consideration (collectively, such amounts payable hereunder being referred to as the “ Option Payments ”). As soon as practicable, but in no event later than five (5) business days after the Effective Time, the Representative or its designee shall mail to each Option Holder (1) a letter of transmittal and (2) instructions for use in effecting the cancellation and termination of the Option in exchange for the Option Payments contemplated to be paid to the Option Holders pursuant to this Section 3.03 . Upon receipt of a duly completed letter of transmittal, the Representative or its designee shall pay to such Option Holder, on behalf of the Company out of amounts paid to the Representative in accordance with this Agreement and subject to any applicable Withholdings, the Option Payments due under this Section 3.03 with respect to such Option. Notwithstanding any contrary provision set forth in this Agreement, the Representative shall not pay to any Option Holder at the Effective Time (i) that portion of the Option Payments represented by such Option Holder’s pro rata share of the Escrow Funds until such time as such amount, if any, is distributable pursuant to the terms and conditions of the Escrow Agreement or (ii) such Option Holder’s pro rata share of Holdback Amount or the Expense Amount (in each case as such terms are defined in the Representative Agreement), until such time as such amounts, if any, are distributable pursuant to the terms and conditions of the Representative Agreement.19
SECTION 3.04 . Closing Net Working Capital Adjustment; Closing Cash Adjustment .(a) Within ninety (90) days after the Closing Date, Parent shall prepare and deliver to the Representative (i) a statement of the Closing Net Working Capital (the “ Statement of Closing Net Working Capital ”) and (ii) a statement of the Closing Cash (the “ Statement of Closing Cash ”). The Statement of Closing Net Working Capital shall be based upon the books and records of the Company and its Subsidiaries and shall be prepared in accordance with GAAP and the definition of Closing Net Working Capital set forth in Article I above and in accordance with the procedures set forth in Section 3.04(a) of the Disclosure Schedule. The Statement of Closing Cash shall be based upon the books and records of the Company and its Subsidiaries and shall be prepared in accordance with GAAP and the definition of Cash set forth in Article I above.(b) The Statement of Closing Net Working Capital and the Statement of Closing Cash shall respectively be final and binding on the parties unless the Representative shall, within thirty (30) days following the delivery of (i) the Statement of Closing Net Working Capital or (ii) the Statement of Closing Cash, as applicable, deliver to Parent written notice of disagreement with any of such statements, which notice(s) shall describe the nature of any such disagreement in reasonable detail, identify the specific items involved and the dollar amount of each such disagreement. The Representative shall provide reasonable supporting documentation for each such disagreement concurrently with the delivery of the respective notice(s). After the end of such thirty (30) day period, the Representative may not introduce additional disagreements with respect to any item in the Statement of Closing Net Working Capital or the Statement of Closing Cash. If the Representative shall raise any objections within the aforesaid thirty (30) day period, then the disputed matters shall be resolved by the Representative, on behalf of the Company Stockholders, and Parent. If the Representative and Parent are unable to resolve all disagreements within thirty (30) days of receipt by Parent of a written notice of disagreement, or such longer period as may be agreed by Parent and the Representative, then, within thirty (30) days thereafter, the Representative and Parent jointly shall select KPMG LLP or any other arbiter from a nationally recognized independent public accounting firm that is not the independent auditor of any of Parent, the Company, the Representative or the Surviving Corporation; if Parent and the Representative are unable to select an arbiter within such time period, the American Arbitration Association shall make such selection (the Person so selected shall be referred to herein as the “ Accounting Arbitrator ”). The Accounting Arbitrator so selected will consider only those items and amounts set forth in the Statement of Closing Net Working Capital and/or the Statement of Closing Cash as to which Parent and the Representative have disagreed within the time periods and on the terms specified above and must resolve the matter in accordance with the terms and provisions of this Agreement. In submitting a dispute to the Accounting Arbitrator, each of the parties shall concurrently furnish, at its own expense, to the Accounting Arbitrator and the other party such documents and information as the Accounting Arbitrator may request. Each party may also furnish to the Accounting Arbitrator such other information and documents as it deems relevant, with copies of such submission and all such documents and information being concurrently given to the other party. The Accounting Arbitrator shall issue a detailed written report that sets forth the resolution of all items in dispute and that contains, as applicable, (i) a final Statement of Closing Net Working Capital and/or (ii) a final Statement of Closing Cash, according to the dispute(s) noticed. Each such report shall be20final and binding upon Parent and the Representative (on behalf of the Stockholders). The fees and expenses of the Accounting Arbitrator incurred in connection with the determination of the disputed items by the Accounting Arbitrator shall be borne by (i) Parent if the Accounting Arbitrator’s determination of the disputed items shall vary from Parent’s determination of the disputed items by more than the difference between the Representative’s determination of the disputed items and the Accounting Arbitrator’s determination of the disputed items or (ii) the Representative if the Accounting Arbitrator’s determination of the disputed items shall vary from the Representative’s determination of the disputed items by more than the difference between Parent’s determination of the disputed items and the Accounting Arbitrator’s determination of the disputed items. Parent and the Representative shall, and Parent shall cause the Surviving Corporation to, cooperate fully with the Accounting Arbitrator and respond on a timely basis to all requests for information or access to documents or personnel made by the Accounting Arbitrator or by other parties hereto, all with the intent to fairly and in good faith resolve all disputes relating to the Statement of Closing Net Working Capital and/or the Statement of Closing Cash as promptly as reasonably practicable.(c) If the amount representing:(i) the Closing Net Working Capital as reflected in the Statement of Closing Net Working Capital as finally determined in accordance with this Section 3.04 is less than the Estimated Closing Net Working Capital, the Merger Consideration shall be decreased on a dollar-for-dollar basis by the amount of such shortfall. If the amount representing Closing Net Working Capital as reflected in the Statement of Closing Net Working Capital as finally determined is greater than the Estimated Closing Net Working Capital, the Merger Consideration shall be increased on a dollar-for-dollar basis by the amount of such excess.(ii) the Closing Cash as reflected in the Statement of Closing Cash as finally determined in accordance with this Section 3.04 is less than the Estimated Closing Cash, the Merger Consideration shall be decreased on a dollar-for-dollar basis by the amount of such shortfall. If the amount representing Closing Cash as reflected in the Statement of Closing Cash as finally determined is greater than the Estimated Closing Cash, the Merger Consideration shall be increased on a dollar-for-dollar basis by the amount of such excess.If any adjustment under this Section 3.04 results in an aggregate reduction in the Merger Consideration, Parent shall be entitled to the amount of such reduction plus interest from and after the Closing Date to and through the date of payment at the prime rate charged on the Closing Date by LaSalle Bank, National Association, Chicago, Illinois (the “ Prime Rate ”), which such amount shall be paid to Parent within five (5) business days after the final determination of the Closing Net Working Capital and/or the Closing Cash, respectively. Any reduction in Merger Consideration to be paid pursuant to this Section 3.04 shall be the joint and several obligation of all Company Stockholders and paid by the Representative to Parent. Conversely, if any adjustment results in an aggregate increase in the Merger Consideration, Parent shall deposit or shall cause to be deposited into the Payment Fund the amount of such increase plus interest from and after the Closing Date to and through the date of payment at the Prime Rate within five (5)21business days after the final determination of the Closing Net Working Capital and/or the Closing Cash, respectively.SECTION 3.05 . Return of Merger Consideration . If, after nine (9) months after the Effective Time, there remain any holders of Company Shares who have not surrendered their Certificates for payment of the Merger Consideration, the Representative shall mail notices to such holders at the address set forth in the stock records of the Company notifying them of their right to receive the Merger Consideration. To the extent that any holders of Company Shares have not tendered their Certificates within ninety (90) days after the mailing of such notice, the Representative or its designee shall return, to the extent permitted by Law, to Parent any funds held by it or its designee for the benefit of holders of Company Shares and deliver to Parent any Certificates or other documents received by it or its designee from any holder of Company Shares after such time. Upon receipt, Parent shall hold the remaining funds for the benefit of such holders and shall deliver to any holder of Company Shares who has properly surrendered Certificates for Company Shares the Merger Consideration to which such holder is entitled pursuant to this Agreement with respect to the Company Shares surrendered by such holder.SECTION 3.06 . No Liability . None of Parent, Merger Sub or the Surviving Corporation shall be liable to any Company Stockholder in respect of any Merger Consideration delivered to a public official as required by and pursuant to any applicable abandoned property, escheat or similar Law. Subject to Section 3.07 , if any Certificate shall not have been surrendered prior to the date on which any Merger Consideration would otherwise escheat to or become the property of any public official, any such Merger Consideration shall, to the extent permitted by applicable Law, become the property of the Surviving Corporation, free and clear of all claims or interests of any Person previously entitled thereto.SECTION 3.07 . Lost, Stolen and Destroyed Certificates . If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed, and the agreement by the Person to indemnify the Surviving Corporation in respect of any losses it incurs with respect to such lost, stolen or destroyed Certificate, the Surviving Corporation will issue in exchange for such lost, stolen or destroyed Certificate, the Merger Consideration deliverable in respect thereof pursuant to this Agreement.SECTION 3.08 . Effect of Merger on Capital Stock of Surviving Corporation . At the Effective Time, each share of Merger Sub’s common stock, par value $0.01 per share, that is issued and outstanding immediately prior to the Effective Time, shall, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company or the Company Stockholders, be converted automatically into and exchanged for one share of common stock of the Surviving Corporation.SECTION 3.09 . Appraisal Rights . Notwithstanding anything in this Agreement to the contrary, Company Shares (the “ Dissenting Shares ”) that are issued and outstanding immediately prior to the Effective Time and are held by Company Stockholders who have not voted in favor of the Merger, consented thereto in writing or otherwise contractually waived their rights to appraisal and who have complied with all of the relevant provisions of the ORC (the “ Dissenting Stockholders ”) shall not be converted into or be exchangeable for the right to receive22
the Sellers’ Merger Consideration, unless and until such Company Stockholders shall have failed to perfect or shall have effectively withdrawn or lost their rights to appraisal under the ORC. The Company shall give Parent (i) prompt notice of any written demands for appraisal of any Company Shares, attempted withdrawals of such demands and any other instruments served pursuant to the ORC and received by the Company relating to stockholders’ rights of appraisal, and (ii) the opportunity to direct all negotiations and proceedings with respect to demands for appraisal under the ORC. Neither the Company nor the Surviving Corporation shall, except with the prior written consent of Parent, voluntarily make any payment with respect to, or settle or offer to settle, any such demand for payment. If any Dissenting Stockholder shall fail to perfect or shall have effectively withdrawn or lost the right to dissent, then (i) as of the occurrence of such event, such holder’s Dissenting Shares shall cease to be Dissenting Shares and shall be converted into and represent the right to receive the Sellers’ Merger Consideration (adjusted as contemplated in Sections 3.01(b) , 3.01(c) and 3.04 hereof) issuable pursuant to Section 3.02 , and (ii) promptly following the occurrence of such event, Parent shall deposit into the Payment Fund the Merger Consideration (adjusted as contemplated in Sections 3.01(b) , 3.01(c) and 3.04 hereof) to which such holder is entitled pursuant to Section 3.02 .SECTION 3.10 . Deliveries . At the Closing and as a condition to Closing:(a) The Company or the Representative on behalf of the Company Stockholders, as the case may be, shall deliver to Parent:(i) All of the third party consents identified on Section 3.10(a)(i) of the Disclosure Schedule in form and substance reasonably satisfactory to Parent;(ii) The written resignations of each director and officer of the Company and its Subsidiaries as Parent shall direct in writing to the Company prior to the Closing;(iii) A certificate to the effect that each of the conditions specified below in Sections 8.02(a) and (b) is satisfied in all respects;(iv) The Escrow Agreement executed by the Representative;(v) The Termination Agreement substantially in the form of Exhibit C hereto duly executed by the Company and One Equity Partners LLC;(vi) The Termination Agreement substantially in the form of Exhibit D hereto duly executed by the Company and Garrett Capital Advisors;(vii) Evidence in form and substance reasonably satisfactory to Parent that the consulting agreement between the Company and Prottiviti, Inc. has been terminated without liability to the Company beyond the Closing Date;(viii) An opinion of counsel to the Company in form and substance reasonably satisfactory to Parent; and
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(ix) A duly completed and executed certification that an interest in the Company is not a “United States real property interest” pursuant to Section 1.1445-2(c)(3) of the Treasury Regulations.(b) Parent shall deliver to the Company or the Representative, as the case may be:(i) The cash comprising the Merger Consideration (to be paid in the manner set forth in Section 3.01 );(ii) A certificate to the effect that each of the conditions specified below in Sections 8.03(a) and (b) is satisfied in all respects; and(iii) The Escrow Agreement executed by Parent.(c) Parent, the Principal Company Stockholders and the Escrow Agent shall enter into the Escrow Agreement and Parent will deposit with the Escrow Agent the Escrow Amount by wire transfer of immediately available funds to the account designated by the Escrow Agent.(d) The Company and the Merger Sub shall file with the Ohio Secretary of State a duly executed and verified Certificate of Merger, as required by the ORC, and the parties shall take all such other and further actions as may be required by Law to make the Merger effective upon the terms and subject to the conditions hereof.ARTICLE
IV
The Company, and with respect to Section 4.25 only, each of the Principal Company Stockholders, represent and warrant to Parent and Merger Sub that the statements contained in this Article IV are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Article IV ), except for representations and warranties that speak as of a specific date other than the date of this Agreement or the Closing Date, which are correct and complete as of such other date.
SECTION 4.01 . Organization, Qualification, Corporate Power and Authority . The Company and each of its Subsidiaries is a corporation (or other business entity) duly organized or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation. The Company and each of its Subsidiaries is duly authorized to conduct business and is in good standing under the laws of each jurisdiction where such qualification is required, except where the lack of such qualification would not have a Material Adverse Effect, all of which jurisdictions are set forth in Section 4.01 of the Disclosure Schedule. The Company and each of its Subsidiaries has full corporate (or other entity) power and authority to carry on the businesses in which it currently is engaged and to own and use the properties owned and used by it. Section 4.01 of the Disclosure Schedule lists the Company’s Subsidiaries and the directors and officers of the Company’s and each of its Subsidiaries.24
SECTION 4.02 . Authority Relative to this Agreement . The Company has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement by the Company and the consummation by the Company of the Merger and the other transactions contemplated hereby have been duly authorized by all necessary corporate action, and no other corporate proceedings on the part of the Company and no stockholder votes are necessary to authorize this Agreement or to consummate the Merger and the other transactions contemplated hereby, other than the Requisite Stockholder Approval and the filing and recordation of the Certificate of Merger. This Agreement constitutes the valid and legally binding obligation of the Company, enforceable in accordance with its terms and conditions, subject to laws of general application relating to public policy, bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief and other equitable remedies.SECTION 4.03 . Capitalization .(a) The entire authorized capital stock of the Company consists of (i) 25,000,000 Common Shares, of which 1,974,870 Common Shares are issued and outstanding as of the date hereof and (ii) 25,000,000 Preferred Shares, of which 17,773,826 Preferred Shares are issued and outstanding as of the date hereof. Pursuant to the Option Plans, the Company has reserved for issuance 2,475,000 Preferred Shares and 525,000 Common Shares. As of the date hereof, the Company has granted, pursuant to the Option Plans, options to purchase an aggregate of 1,719,203 Preferred Shares and 211,183 Common Shares. All of the issued and outstanding Company Shares have been duly authorized and are validly issued, fully paid and non-assessable, were not issued in violation of any Contract binding upon the Company and were issued in compliance with all applicable Charter Documents of the Company and all applicable federal and state securities or “blue sky” laws and regulations. The Company Shares are owned of record, and to the Knowledge of the Company, beneficially, by the Company Stockholders set forth in Section 4.03(a) to the Disclosure Schedule in the respective amounts set forth therein. Except for the Options, there are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights or other contracts or commitments that could require the Company to issue, sell or otherwise cause to become outstanding any of its capital stock. There are no outstanding or authorized stock appreciation, phantom stock, profit participation or similar rights with respect to the Company. There are no other securities of the Company that are convertible into or exchangeable for capital stock or other securities of the Company.(b) Except as set forth in Section 4.03(b) of the Disclosure Schedule, the Company holds, directly or indirectly, the legal and beneficial title in all of the shares of capital stock (or equivalent equity interests) of each of its Subsidiaries free from all Liens and any other rights exercisable by third parties (except for Liens securing Company Senior Debt, which Liens will be released, effective as of the Closing Date, and restrictions imposed by applicable federal or state securities Law). All of the shares of capital stock (or equivalent equity interests) of the Subsidiaries of the Company are fully paid or properly credited under the applicable Law of the jurisdiction of incorporation or formation of the relevant Subsidiary of the Company. There is no liability to pay any additional contributions on any of the shares of capital stock (or equivalent equity interests) of the Subsidairies of the Company. Other than the Company, no Person has the
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right (exercisable now or in the future and whether contingent or not) to call for the issue of any share or loan capital in any Subsidiary of the Company.SECTION 4.04 . Noncontravention . Assuming that all consents, approvals, authorizations and permits described in Section 4.04 of the Disclosure Schedule have been obtained and all filings and notifications described in this Section 4.04 have been made, neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i) violate any Law or Court Order to which the Company or any of its Subsidiaries is subject, (ii) assuming the Requisite Stockholder Approval is obtained, violate any provision of the charter, bylaws or other governing documents of the Company or any of its Subsidiaries (the “ Charter Documents ”), or (iii) conflict with, result in or constitute a Default under, or require any notice under any Contract to which the Company or any of its Subsidiaries is a party or by which it is bound or to which any of its Assets is subject (or result in the imposition of any Lien upon any of its Assets), except in the case of (i) and (iii) where the violation, conflict, Default, failure to give notice or Lien would not have a Material Adverse Effect. Except as set forth in Section 4.04 of the Disclosure Schedule and except for the filing of the Certificate of Merger under the ORC, the pre-merger notification requirements of the HSR Act and foreign antitrust and competition | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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