Exhibit 2.1
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ASSET PURCHASE AGREEMENT
by
and among
DARLING INTERNATIONAL INC.,
DARLING NATIONAL LLC,
and
NATIONAL BY-PRODUCTS, LLC
Dated as of December 19, 2005
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TABLE OF CONTENTS
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PAGE
Article I
DEFINITIONS...........................................................................1
1.1 Certain
Definitions...................................................................1
1.2 Terms
Defined Elsewhere in this
Agreement.............................................9
1.3 Other
Definitional and Interpretive
Matters..........................................11
Article II
PURCHASE AND SALE OF ASSETS; ASSUMPTION OF
LIABILITIES...............................12
2.1 Purchase
and Sale of
Assets..........................................................12
2.2 Excluded
Assets......................................................................14
2.3 Assumption
of
Liabilities............................................................14
2.4 Excluded
Liabilities.................................................................15
2.5 Further
Conveyances and Assumptions; Consent of Third
Parties........................16
2.6 Bulk-Sales
Laws......................................................................16
2.7 Purchase
Price
Allocation............................................................17
2.8 Right to
Control
Payment.............................................................17
2.9 Proration of Certain
Expenses........................................................17
2.10
Accounts
Receivable..................................................................17
Article III
CONSIDERATION........................................................................18
3.1
Consideration........................................................................18
3.2 Payment of
Purchase
Price............................................................18
3.3 Indemnity
Escrow.....................................................................18
3.4 Closing
Statement....................................................................19
3.5 Purchase
Price
Adjustment............................................................20
3.6 Additional
Contingent
Consideration..................................................22
Article IV
CLOSING AND
TERMINATION..............................................................23
4.1 Closing
Date.........................................................................23
4.2
Termination of
Agreement.............................................................23
4.3 Procedure
upon
Termination...........................................................26
4.4 Effect of
Termination................................................................26
4.5
Termination
Fee......................................................................26
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TABLE OF CONTENTS
(CONTINUED)
PAGE
Article V
REPRESENTATIONS AND WARRANTIES OF
SELLER.............................................27
5.1
Organization and Good Standing; No
Subsidiaries......................................27
5.2
Authorization of
Agreement...........................................................28
5.3 Conflicts;
Consents of Third
Parties.................................................29
5.4 Financial
Statements.................................................................29
5.5 No
Undisclosed
Liabilities...........................................................30
5.6 Title to
Purchased Assets;
Sufficiency...............................................31
5.7 Absence of
Certain
Developments......................................................31
5.8
Taxes................................................................................32
5.9 Real
Property........................................................................35
5.10
Tangible Personal
Property...........................................................37
5.11
Intellectual
Property................................................................37
5.12
Material
Contracts...................................................................39
5.13
Employee
Benefits....................................................................41
5.14
Labor................................................................................45
5.15
Litigation...........................................................................45
5.16
Compliance with Laws;
Permits........................................................46
5.17
Environmental
Matters................................................................46
5.18
Insurance............................................................................48
5.19
Inventories..........................................................................48
5.20
Accounts and Notes Receivable and
Payable............................................48
5.21
Related Party
Transactions...........................................................49
5.22
Customers and
Suppliers..............................................................49
5.23
Product Warranty; Product
Liability..................................................49
5.24
Banks................................................................................50
5.25
Full
Disclosure......................................................................50
5.26
Financial
Advisors...................................................................50
5.27
Certain
Payments.....................................................................50
5.28
Information
Supplied.................................................................51
5.29
Seller's Financial
Condition.........................................................51
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TABLE OF CONTENTS
(CONTINUED)
PAGE
5.30
Limitation of Representations and
Warranties.........................................51
Article VI
REPRESENTATIONS AND WARRANTIES OF PARENT AND
PURCHASER...............................52
6.1
Organization and Good
Standing.......................................................52
6.2
Capital
Structure....................................................................52
6.3
Authorization of
Agreement...........................................................53
6.4 Conflicts;
Consents of Third
Parties.................................................53
6.5
Litigation...........................................................................54
6.6 Financial
Advisors...................................................................54
6.7 Voting
Requirements..................................................................54
6.8 Parent SEC
Documents.................................................................54
6.9
Information
Supplied.................................................................55
6.10
Environmental
Matters................................................................55
6.11
Financing............................................................................56
6.12
Full
Disclosure......................................................................57
Article VII
COVENANTS............................................................................57
7.1 Access to
Information................................................................57
7.2 Conduct of
the Business Pending the
Closing..........................................58
7.3
Consents.............................................................................60
7.4 Regulatory
Approvals.................................................................61
7.5 Further
Assurances...................................................................62
7.6 No
Solicitation by Seller;
Etc.......................................................62
7.7
Non-Competition; Non-Solicitation;
Confidentiality...................................65
7.8
Preservation of
Records..............................................................66
7.9
Publicity............................................................................66
7.10
Use of
Name..........................................................................67
7.11
Environmental
Matters................................................................67
7.12
Cooperation with
Financing...........................................................67
7.13
Monthly Financial
Statements.........................................................68
7.14
Notification of Certain
Matters......................................................68
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TABLE OF CONTENTS
(CONTINUED)
PAGE
7.15
Parent Board of
Directors............................................................68
7.16
Preparation of the Form S-4 and the Joint Proxy Statement;
Stockholder Meetings......68
7.17
Dividends............................................................................70
7.18
Amendment of Rights
Plan.............................................................70
7.19
No Dissolution of
Seller.............................................................70
7.20
Transfer of
Certificates of
Title....................................................70
7.21
Agreements of Rule 145
Affiliates....................................................70
7.22
Updating of
Schedules................................................................71
7.23
Engagement of
Actuary................................................................71
Article VIII EMPLOYEES
AND EMPLOYEE
BENEFITS......................................................71
8.1
Employment...........................................................................71
8.2 Standard
Procedure...................................................................72
8.3 Employee
Benefits....................................................................72
8.4 Withdrawal
Liability.................................................................72
Article IX
CONDITIONS TO
CLOSING................................................................73
9.1 Conditions
Precedent to Obligations of Parent and
Purchaser..........................73
9.2 Conditions
Precedent to Obligations of
Seller........................................77
Article X
INDEMNIFICATION......................................................................78
10.1
Survival of Representations and
Warranties...........................................78
10.2
Indemnification......................................................................79
10.3
Indemnification
Procedures...........................................................80
10.4
Limitations on Indemnification for Breaches of Representations and
Warranties........81
10.5
Tax Treatment of Indemnity
Payments..................................................82
Article XI
TAXES................................................................................82
11.1
Transfer
Taxes.......................................................................82
11.2
Prorations...........................................................................82
11.3
Cooperation on Tax
Matters...........................................................83
Article XII RISK
OF
LOSS.........................................................................83
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TABLE OF CONTENTS
(CONTINUED)
PAGE
Article XIII
MISCELLANEOUS........................................................................84
13.1
Expenses.............................................................................84
13.2
Specific
Performance.................................................................84
13.3
Submission to Jurisdiction; Consent to Service of Process;
Arbitration...............84
13.4
Entire Agreement; Amendments and
Waivers.............................................85
13.5
Governing
Law........................................................................86
13.6
Notices..............................................................................86
13.7
Severability.........................................................................87
13.8
Binding Effect;
Assignment...........................................................87
13.9
Non-Recourse.........................................................................87
13.10
Counterparts.........................................................................88
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Exhibits
--------
Exhibit A
Form of Escrow Agreement
Exhibit B
Form of Rule 145 Affiliate Agreement
Exhibit C
Form of Noncompetition and Nonsolicitation Agreement
Exhibit D
Form of Bill of Sale
Exhibit E
Form of Assignment and Assumption Agreement
Exhibit F
Form of Power of Attorney
Exhibit G
Form of Opinion of Seller's Counsel
Exhibit H
Form of Opinion of Parent's Counsel
vi
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is dated as of
December 19, 2005, by and among DARLING
INTERNATIONAL INC., a Delaware
corporation ("Parent"), DARLING NATIONAL
LLC, a Delaware limited liability
company and a wholly-owned subsidiary of
Parent ("Purchaser"), and NATIONAL
BY-PRODUCTS, LLC, an Iowa limited liability
company ("Seller").
W I T N E S S E T H:
WHEREAS, Seller presently conducts the Business;
WHEREAS, Seller desires to sell, transfer and assign to
Purchaser,
and Purchaser desires to acquire and assume
from Seller, all of the Purchased
Assets and Assumed Liabilities, all as more
specifically provided herein (the
"Transaction");
WHEREAS, the Board of Managers of Seller and the Board of
Directors
of Parent on behalf of Parent and Purchaser
have approved this Agreement and the
Transaction;
WHEREAS, certain terms used in this Agreement are defined in
Section
1.1;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter
contained, the parties hereby agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Certain Definitions.
For purposes of this Agreement, the following terms shall have
the
meanings specified in this Section 1.1:
"Affiliate" means, with respect to any Person, any other Person
that,
directly or indirectly through one or more
intermediaries, controls, or is
controlled by, or is under common control
with, such Person, and the term
"control" (including the terms "controlled
by" and "under common control with")
means the possession, directly or
indirectly, of the power to direct or cause
the direction of the management and
policies of such Person, whether through
ownership of voting securities, by contract
or otherwise.
"Business" means the business of Seller, including (i) the
collection
and conversion of animal and poultry
by-products from the meat processing and
restaurant industries into fats and protein
meal products, (ii) the collection,
processing and marketing of animal hides,
and (iii) the sale of the processed
products to livestock and pet food
manufacturers, among other customers,
throughout the United States and
internationally.
1
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"Business
Day" means any day of the year on which national banking
institutions in Dallas, Texas are open to
the public for conducting business and
are not required or authorized to
close.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act
of
1985, as amended.
"Code" means the Internal Revenue Code of 1986 and the
regulations
promulgated thereunder, as amended from
time to time.
"commercially reasonable efforts" means the efforts, time and costs
a
prudent person desirous of achieving a
result would use, expend or incur in
similar circumstances to achieve such
results as expeditiously as possible;
provided that such person is not required
to expend funds or assume liabilities
beyond those that are (i) commercially
reasonable in nature and amount in the
context of the transaction or (ii)
otherwise required to be expended or assumed
pursuant to the terms of this
Agreement.
"Contract" means any written or oral contract, agreement,
indenture,
note, bond, debenture, mortgage, loan,
instrument, lease, license, commitment or
other obligation.
"Documents" means all files, documents, instruments, papers,
books,
reports, records, tapes, microfilms,
photographs, letters, budgets, forecasts,
ledgers, journals, title policies, lists of
past, present and/or prospective
customers, supplier lists, regulatory
filings, operating data and plans,
technical documentation (design
specifications, functional requirements,
operating instructions, logic manuals, flow
charts, etc), user documentation
(installation guides, user manuals,
training materials, release notes, working
papers, etc.), marketing documentation
(sales brochures, flyers, pamphlets, web
pages, etc.), and other similar materials
related to the Business and the
Purchased Assets, in each case whether or
not in electronic form.
"Employee" means all individuals (including common law
employees,
independent contractors and individual
consultants), as of the date hereof, who
are employed or engaged by Seller in
connection with the Business, together with
individuals who are hired in respect of the
Business after the date hereof.
"Environmental Costs and Liabilities" means, with respect to
any
Person, all Liabilities and Remedial
Actions incurred as a result of any claim
or demand by any other Person or in
response to any violation of Environmental
Law or to the extent based upon, related
to, or arising under or pursuant to any
Environmental Law, Environmental Permit,
order or agreement with any
Governmental Body or other Person, or which
relates to any environmental, health
or safety condition, violation of
Environmental Law or a Release or threatened
Release of Hazardous Materials, whether
known or unknown, accrued or contingent,
whether based in contract, tort, implied or
express warranty, strict liability,
criminal or civil statute.
2
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"Environmental Law" means any foreign, federal, state or local
law
(including common law), statute, code,
ordinance, rule, regulation or other
legal requirement or obligation in any way
relating to pollution, odors, noise,
or the protection of human health and
safety, the environment or natural
resources, including the Comprehensive
Environmental Response, Compensation and
Liability Act (42 U.S.C. ss. 9601 et seq.),
the Hazardous Materials
Transportation Act (49 U.S.C. App. ss. 1801
et seq.), the Resource Conservation
and Recovery Act (42 U.S.C. ss. 6901 et
seq.), the Clean Water Act (33 U.S.C.
ss. 1251 et seq.), the Clean Air Act (42
U.S.C. ss. 7401 et seq.), the Toxic
Substances Control Act (15 U.S.C. ss. 2601
et seq.), the Federal Insecticide,
Fungicide, and Rodenticide Act (7 U.S.C.
ss. 136 et seq.), and the Occupational
Safety and Health Act (29 U.S.C. ss. 651 et
seq.), as each has been amended and
the regulations promulgated pursuant
thereto.
"Environmental Permit" means any Permit required by
Environmental
Laws for the operation of the Business.
"ERISA" means the Employment Retirement Income Security Act of
1974,
as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended,
and the rules and regulations promulgated
thereunder.
"Excluded Contracts" means the following Contracts and any
amendments
thereto: (i) the Letter Agreement, by and
between First Union Securities, Inc.
and Seller, dated as of August 1, 2001;
(ii) the Matching Service Agreement, by
and between DM Kelly & Company and
Seller, dated as of August 9, 2002; (iii) the
Unit Appreciation Agreement; (iv) the
Seller's Rights Agreement, dated as of
January 1, 1999; and (v) any Contract that
cannot be assigned by law or its
terms.
"Former Employee" means all individuals (including common law
employees, independent contractors and
individual consultants) who were employed
or engaged by Seller in connection with the
Business but who are no longer so
employed or engaged on the date hereof.
"Fully Diluted Basis" means accounting for all outstanding
securities
generally entitled to vote in the election
of directors of Parent on a fully
diluted basis, after giving effect to the
exercise or conversion of all options,
warrants, rights and other securities
exercisable or convertible into such
voting securities, which shall include any
shares of Parent Common Stock to be
issued to Seller on the Closing Date, but
not include any stock options for
which the exercise price exceeds the
Closing Share Price.
"Furniture and Equipment" means all furniture, furnishings,
equipment, vehicles, leasehold improvements
not deemed real estate by applicable
Laws, and other tangible personal property,
including all artwork, desks,
chairs, tables, Hardware, copiers,
telephone lines and numbers, telecopy
machines and other telecommunication
equipment, cubicles and miscellaneous
office furnishings and supplies, including
but not limited to those assets
listed on Company Disclosure Schedule
1.1.
3
<PAGE>
"GAAP" means generally accepted accounting principles in the
United
States as of the date hereof.
"Governmental Body" means any government or governmental or
regulatory body thereof, or political
subdivision thereof, whether foreign,
federal, state, or local, or any agency,
instrumentality or authority thereof,
or any court or arbitrator (public or
private).
"Hardware" means any and all computer and computer-related
hardware,
including, but not limited to, computers,
file servers, facsimile servers,
scanners, color printers, laser printers
and networks.
"Hazardous Material" means any substance, material or waste that
is
regulated, classified, or otherwise
characterized under or pursuant to any
Environmental Law as "hazardous," "toxic,"
"pollutant," "contaminant,"
"radioactive," or words of similar meaning
or effect, including petroleum and
its by-products, asbestos, polychlorinated
biphenyls, radon, mold or other fungi
and urea formaldehyde insulation.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act
of
1976, as amended, and the rules and
regulations promulgated thereunder.
"Indebtedness" of any Person means, without duplication, (i)
the
principal, accreted value, accrued and
unpaid interest, prepayment and
redemption premiums or penalties (if any),
unpaid fees or expenses and other
monetary obligations in respect of (A)
indebtedness of such Person for money
borrowed and (B) indebtedness evidenced by
notes, debentures, bonds or other
similar instruments for the payment of
which such Person is responsible or
liable; (ii) all obligations of such Person
issued or assumed as the deferred
purchase price of property, all conditional
sale obligations of such Person and
all obligations of such Person under any
title retention agreement (but
excluding trade accounts payable and other
accrued current liabilities arising
in the Ordinary Course of Business); (iii)
all obligations of such Person under
leases required to be capitalized in
accordance with GAAP; (iv) all obligations
of such Person for the reimbursement of any
obligor on any letter of credit,
banker's acceptance or similar credit
transaction that has been drawn upon,
including any fees related to such
obligations whether or not drawn upon; (v)
all obligations of such Person under
interest rate or currency swap transactions
(valued at the termination value thereof);
(vi) the liquidation value, accrued
and unpaid dividends and prepayment or
redemption premiums and penalties (if
any), unpaid fees or expense and other
monetary obligations in respect of any
and all redeemable preferred stock of such
Person; (vii) all checks issued by
Seller prior to the Closing Date that
remain outstanding as of the Closing Date;
(viii) all obligations of the type referred
to in clauses (i) through (vii) of
any Persons for the payment of which such
Person is responsible or liable,
directly or indirectly, as obligor,
guarantor, surety or otherwise, including
guarantees of such obligations; and (ix)
all obligations of the type referred to
in clauses (i) through (viii) of other
Persons secured by (or for which the
holder of such obligations has an existing
right, contingent or otherwise, to be
secured by) any Lien on any property or
asset of such Person (whether or not
such obligation is assumed by such
Person).
4
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"Intellectual Property" means all right, title and interest in
or
relating to intellectual property, whether
protected, created or arising under
the laws of the United States or any other
jurisdiction, including: (i) all
patents and applications therefor,
including all continuations, divisionals and
continuations-in-part and patents issuing
thereon, along with all reissues,
reexaminations, substitutions and
extensions thereof (collectively, "Patents");
(ii) all trademarks, service marks, trade
names, trade dress, logos, corporate
names and other source or business
identifiers, together with the goodwill
associated with any of the foregoing, along
with all applications,
registrations, renewals and extensions
thereof (collectively, "Marks"); (iii)
all Internet domain names; (iv) all
copyrights, works of authorship and moral
rights, and all registrations,
applications, renewals, extensions and reversions
of any of the foregoing (collectively,
"Copyrights"); (v) trade secrets ("Trade
Secrets"); and (vi) all other intellectual
property rights arising from or
relating to Technology.
"Intellectual Property Licenses" means (i) any grant by Seller
to
another Person of any right, permission,
consent or non-assertion relating to or
under any of the Purchased Intellectual
Property and (ii) any grant by another
Person to Seller of any right, permission,
consent or non-assertion relating to
or under any third Person's Intellectual
Property.
"IRS" means the United States Internal Revenue Service and, to
the
extent relevant, the United States
Department of Treasury.
"Knowledge of Parent" means the knowledge that Bill McMurtry has
or
could reasonably be expected to have
acquired in the course of performance of
his duties for Parent.
"Knowledge of Seller" means the knowledge that Mark Myers,
David
Pace, Todd Ferrell and Larry Angotti have
or could reasonably be expected to
have acquired in the course of performance
of their respective duties for
Seller.
"Law" means any foreign, federal, state or local law (including
common law), statute, code, ordinance,
rule, regulation or other legal
requirement or obligation.
"Legal Proceeding" means any judicial, administrative or
arbitral
actions, suits, mediations, investigations,
inquiries, proceedings or claims
(including counterclaims) by or before a
Governmental Body.
"Liability" means any debt, loss, damage, adverse claim, fines,
penalties, liability or obligation (whether
direct or indirect, known or
unknown, asserted or unasserted, absolute
or contingent, accrued or unaccrued,
matured or unmatured, determined or
determinable, disputed or undisputed,
liquidated or unliquidated, or due or to
become due, and whether in contract,
tort, strict liability or otherwise), and
including all costs and expenses
relating thereto (including all fees,
disbursements and expenses of legal
counsel, experts, engineers and consultants
and costs of investigation).
5
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"Lien" means any lien, encumbrance, pledge, mortgage, deed of
trust,
security interest, claim, lease, charge,
option, right of first refusal,
easement, servitude, proxy, voting trust or
agreement, transfer restriction
under any shareholder or similar agreement,
encumbrance or any other restriction
or limitation whatsoever.
"Material Adverse Effect" means a material adverse effect on (i)
the
business, assets, properties, prospects,
results of operations or financial
condition of Seller or of the Business;
(ii) the value of the Purchased Assets
or a material increase in the amount of
Assumed Liabilities; or (iii) the
ability of Seller to consummate the
transactions contemplated by this Agreement
or perform its obligations under this
Agreement or the Seller Documents, except
Material Adverse Effect shall not include
matters affecting the rendering
business generally or general economic
conditions.
"Order" means any
order, injunction, judgment, doctrine, decree,
ruling, writ, assessment or arbitration
award of a Governmental Body.
"Ordinary Course of Business" means the ordinary and usual course
of
normal day-to-day operations of the
Business, as conducted by Seller, through
the date of determination consistent with
past practice.
"Parent Common Stock" means the common stock, par value $0.01
per
share, of Parent.
"Parent Material Adverse Effect" means a material adverse effect
on
(i) the business, assets, properties,
prospects, results of operations or
financial condition of Parent or of the
business of Parent; or (ii) the ability
of Parent or Purchaser to consummate the
transactions contemplated by this
Agreement or perform its obligations under
this Agreement or the Purchaser
Documents, except Parent Material Adverse
Effect shall not include matters
affecting the rendering business generally
or general economic conditions.
"Permits" means any approvals, authorizations, consents,
licenses,
permits or certificates of a Governmental
Body.
"Permitted Exceptions" means (i) statutory liens for current
Taxes,
assessments or other governmental charges
not yet delinquent or the amount or
validity of which is being contested in
good faith by appropriate proceedings,
provided an appropriate reserve has been
established therefor in the Financial
Statements in accordance with GAAP; (ii)
mechanics', carriers', workers' and
repairers' Liens that do not, individually
or in the aggregate, have a Material
Adverse Effect and which if filed are being
contested in a timely manner
pursuant to applicable Law and are properly
reserved against in Seller's books
and records in accordance with GAAP; (iii)
zoning, entitlement and other land
use and environmental regulations by any
Governmental Body, provided that if
such regulations have been violated, such
violations, individually or in the
aggregate, do not have a Material Adverse
Effect; and (iv) easements, covenants,
restrictions and encumbrances which do not,
individually or in the aggregate,
have a Material Adverse Effect.
6
<PAGE>
"Person" means any individual, corporation, limited liability
company, partnership, firm, joint venture,
association, joint-stock company,
trust, unincorporated organization,
Governmental Body or other entity.
"Purchased Contracts" means all Contracts of Seller related to
the
Business other than the Excluded
Contracts.
"Purchased
Intellectual Property" means all Intellectual Property (i)
owned by Seller and related to the Business
or (ii) used by Seller in connection
with the Business.
"Purchased Technology" means all Technology (i) owned by Seller
and
related to the Business or (ii) used by
Seller in connection with the Business,
including, without limitation, all Software
and other Technology developed by
Seller and relating to employees and
payroll.
"Release" means any release, spill, emission, leaking, pumping,
pouring, injection, deposit, dumping,
emptying, disposal, discharge, dispersal,
leaching or migration into the indoor or
outdoor environment, or into or out of
any property.
"Remedial Action" means all actions including any capital
expenditures undertaken to (i) clean up,
remove, treat or in any other way
address any Hazardous Material; (ii)
prevent the Release or threat of Release,
or minimize the further Release of any
Hazardous Material so it does not
endanger or threaten to endanger public
health or welfare or the indoor or
outdoor environment; (iii) perform
pre-remedial studies and investigations or
post-remedial monitoring and care; or (iv)
correct a condition of noncompliance
with Environmental Laws.
"SEC" means the United States Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and
the rules and regulations promulgated
thereunder.
"Software" means any and all (i) computer programs, including any
and
all software implementations of algorithms,
models and methodologies, whether in
source code or object code; (ii) databases
and compilations, including any and
all data and collections of data, whether
machine readable or otherwise; (iii)
descriptions, flow-charts and other work
product used to design, plan, organize
and develop any of the foregoing, screens,
user interfaces, report formats,
firmware, development tools, templates,
menus, buttons and icons; and (iv) all
documentation, including user manuals and
other training documentation, related
to any of the foregoing.
"Subsidiary" means, with respect to any Person, any other Person
of
which (i) a majority of the outstanding
share capital, voting securities or
other equity interests are owned, directly
or indirectly, by such Person or (ii)
such Person is entitled, directly or
indirectly, to appoint a majority of the
board of directors or managers or
comparable supervisory body of the other
Person.
7
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"Tax" or "Taxes" means (i) any and all federal, state, local or
foreign taxes, charges, fees, imposts,
levies or other assessments, including,
without limitation, all net income, gross
receipts, capital, sales, use, ad
valorem, value added, transfer, franchise,
profits, inventory, capital stock,
license, withholding, payroll, employment,
social security, unemployment,
excise, severance, stamp, occupation,
property and estimated taxes, customs
duties, fees, assessments and charges of
any kind whatsoever; (ii) all interest,
penalties, fines, additions to tax or
additional amounts of any kind imposed by
any Taxing Authority in connection with any
item described in clause (i); and
(iii) any liability in respect of any items
described in clauses (i) and/or (ii)
payable by reason of Contract, assumption,
transferee liability, operation of
law, Treasury Regulation Section
1.1502-6(a) (or any predecessor or successor
thereof or any analogous or similar
provision under law) or otherwise.
"Taxing Authority" means the IRS and any other Governmental
Body
responsible for the administration of any
Tax.
"Tax Return" means any return, report or statement filed or
required
to be filed with respect to any Tax
(including any elections, declarations,
schedules or attachments thereto, and any
amendment thereof), including any
information return, claim for refund,
amended return or declaration of estimated
Tax, and including, where permitted or
required, combined, consolidated or
unitary returns for any group of entities
that includes Seller or any of its
Affiliates.
"Technology" means, collectively, all Software, information,
designs,
formulae, algorithms, procedures, methods,
techniques, ideas, know-how, research
and development, technical data, programs,
subroutines, tools, materials,
specifications, processes, inventions
(whether patentable or unpatentable and
whether or not reduced to practice),
apparatus, creations, improvements, works
of authorship and other similar materials,
and all recordings, graphs, drawings,
reports, analyses, and other writings, and
other tangible embodiments of the
foregoing, in any form whether or not
specifically listed herein, and all
related technology, that are used in,
incorporated in, embodied in, displayed by
or related to, or are used in connection
with the foregoing.
"Unit Appreciation Agreement" means that certain letter
agreement,
dated as of December 12, 2001, from Seller
to certain employees of Seller,
whereby Seller agreed to, among other
things, pay a lump sum payment to each
such employee upon the termination of his
or her employment with Seller for any
reason in the amount of (i) the difference
between the market value of one
membership unit of Seller at the time of
such termination and $23, multiplied by
(ii) the number of shares of Seller's
capital stock such employee was required
to sell as a result of Seller's conversion
from a corporation to a limited
liability company on January 11, 2002, as
such agreement may have been amended
or supplemented.
8
<PAGE>
"WARN" means the Worker Adjustment and Retraining Notification Act
of
1988, as amended, and the rules and
regulations promulgated thereunder.
1.2 Terms Defined Elsewhere in this Agreement. For purposes of
this
Agreement, the following terms have
meanings set forth in the sections
indicated:
<TABLE>
<C>
<C>
Term
Section
----
-------
AAA
13.3(a)
Adjusted
Closing Cash Payment
3.4
Agreed
Principles
3.4
Agreement
Introductory Paragraph
Antitrust
Division
7.4(a)
Antitrust
Laws
7.4(b)
Asset
Acquisition Statement
2.7
Assumed
Liabilities
2.3
Balance
Sheet
5.4(a)
Balance
Sheet Date
5.4(a)
Basket
10.4(a)
Cash
Escrow Amount
3.3
Closing
4.1
Closing
Balance Sheet
3.5(a)
Closing
Cash Payment
3.1(a)
Closing Date
4.1
Closing
Issued Shares
3.1(a)
Closing
Share Price
3.1(b)
Closing
Statement
3.5(a)
Closing
Working Capital
3.5(a)
Company
Disclosure Schedule
Article V Introductory Paragraph
Confidential Information
7.7(c)
Confidentiality Agreement
7.1
Copyrights
1.1 (in Intellectual Property definition)
Employee
Benefit Plans
5.13(a)
ERISA
Affiliate
5.13(a)
ERISA
Affiliate Plans
5.13(a)
Escrow
Agent
3.3
Escrow
Agreement
3.3
Escrowed
Shares
3.3
Estimate
Statement
3.4
Estimate Statement
Delivery Date
3.4
Estimated
Closing Balance Sheet
3.4
Excluded
Assets
2.2
Excluded
Liabilities
2.4
Excluded
Properties
5.9(a)
Expenses
4.5(a)
Final
Closing Balance Sheet
3.5(e)
Final
Working Capital
3.5(e)
9
<PAGE>
Term
Section
----
-------
Financial
Statements
5.4(a)
Financing
9.1(q)
FIRPTA
Affidavit
9.1(n)
Form S-4
5.28
FTC
7.4(a)
Indemnity
Escrow Amount
3.3
Independent Accountant
3.5(c)
Initial
Closing Working Capital
3.4
Joint
Proxy Statement
5.28
Labor
Contracts
5.14(a)
Loss and
Losses
10.2(a)
Marks
1.1 (in Intellectual Property definition)
Material
Contracts
5.12(a)
Monthly
Financial Statements
7.13
Multiemployer Plans
5.13(a)
Multiple
Employer Plans
5.13(a)
Negative
Adjustment
3.4
Net
Working Capital
3.4
Nonassignable Assets
2.5(b)
Owned
Property and Owned Properties
5.9(a)
Parent
Introductory Paragraph
Parent
Disclosure Schedule
Article VI Introductory Paragraph
Parent's
Environmental Assessment
7.11(a)
Parent
Indemnified Parties
10.2(a)
Parent
Preferred Stock
6.2
Parent SEC
Documents
6.8
Parent
Stock Plan
6.2
Parent
Stockholder Approval
6.7
Parent
Stockholders Meeting
7.16(c)
Patents
1.1 (in Intellectual Property definition)
PBGC
5.13(e)
Payoff
Indebtedness Amount
3.1(a)
Personal
Property Leases
5.10(b)
Plan
8.4(a)
Positive
Adjustment
3.4
Purchase
Price
3.1(a)
Purchased
Assets
2.1
Purchaser
Introductory Paragraph
Purchaser Documents
6.3
Purchaser
Plans
8.3
Qualified
Plans
5.13(c)
Real
Property Lease and Real Property Leases
5.9(a)
Related
Persons
5.21
Remaining
Issued Shares
3.6(b)(ii)
Representatives
7.6(a)
10
<PAGE>
Term
Section
----
-------
Restricted
Business
7.7(a)
Rule 145
Affiliate
7.21
Seller
Introductory Paragraph
Seller's
Environmental Assessment
7.11(b)
Seller
Adverse Recommendation Change
7.6(c)
Seller
Adverse Recommendation Notice
7.6(c)
Seller
Board Recommendation
7.16(b)
Seller
Documents
5.2(a)
Seller
Indemnified Parties
10.2(b)
Seller
Marks
7.10
Seller
Permits
5.16(b)
Seller
Property and Seller Properties
5.9(a)
Seller
Unitholder Approval
5.2(b)
Seller
Unitholders Meeting
7.16(b)
Superior
Proposal
7.6(d)
Survival
Period
10.1
Takeover
Proposal
7.6(d)
Target
Share Price
3.6(b)(i)
Target
Working Capital
3.4
Term Sheet
6.11
Termination Date
4.2(a)
Termination Fee
4.5(a)
Third
Party Claim
10.3(b)
Total
Consideration
3.1(a)
Trade
Secrets
1.1 (in Intellectual Property definition)
Transaction
Recitals
Transfer
Taxes
11.1
Transferred Employees
8.1
True-Up
Date
3.6(a)
True-Up
Market Price
3.6(a)
True-Up
Shares
3.6(b)(iii)
Unitholders
3.2(b)
Unresolved
Claims
3.3
Value Gap
3.6(b)(ii)
</TABLE>
1.3 Other Definitional and Interpretive Matters.
(a) Unless otherwise expressly provided, for purposes of this
Agreement, the following rules of
interpretation shall apply:
Calculation of Time Period. When calculating the period of time
before which, within which or following
which, any act is to be done or step
taken pursuant to this Agreement, the date
that is the reference date in
calculating such period shall be excluded.
If the last day of such period is a
non-Business Day, the period in question
shall end on the next succeeding
Business Day.
11
<PAGE>
Dollars. Any reference in this Agreement to $ shall mean U.S.
dollars.
Gender and Number. Any reference in this Agreement to gender
shall
include all genders, and words imparting
the singular number only shall include
the plural and vice versa.
Headings. The provision of a Table of Contents, the division of
this
Agreement into Articles, Sections and other
subdivisions and the insertion of
headings are for convenience of reference
only and shall not affect or be
utilized in construing or interpreting this
Agreement. All references in this
Agreement to any "Section" are to the
corresponding Section of this Agreement
unless otherwise specified.
Herein. The words such as "herein," "hereinafter," "hereof,"
and
"hereunder" refer to this Agreement as a
whole and not merely to a subdivision
in which such words appear unless the
context otherwise requires.
Including. The word "including" or any variation thereof means
(unless the context of its usage requires
otherwise) "including, but not limited
to," and shall not be construed to limit
any general statement that it follows
to the specific or similar items or matters
immediately following it.
(b) The parties hereto have participated jointly in the
negotiation
and drafting of this Agreement and, in the
event an ambiguity or question of
intent or interpretation arises, this
Agreement shall be construed as jointly
drafted by the parties hereto and no
presumption or burden of proof shall arise
favoring or disfavoring any party by virtue
of the authorship of any provision
of this Agreement.
ARTICLE II
PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES
2.1 Purchase and Sale of Assets. On the terms and subject to
the
conditions set forth in this Agreement, at
the Closing Purchaser shall purchase,
acquire and accept from Seller, and Seller
shall sell, transfer, assign, convey
and deliver to Purchaser all of Seller's
right, title and interest in, to and
under the Purchased Assets, free and clear
of all Liens except for Permitted
Exceptions. "Purchased Assets" shall mean
all of the business, assets,
properties, contractual rights, goodwill,
going concern value, rights and claims
of Seller related to the Business on the
Closing Date, wherever situated and of
whatever kind and nature, real or personal,
tangible or intangible, whether or
not reflected on the books and records of
Seller (other than the Excluded
Assets), including each of the following
assets.
(a) all cash and accounts receivable of Seller;
(b) all inventory used or useful in the Business;
(c) all tangible personal property used or useful in the
Business,
including Furniture and Equipment;
12
<PAGE>
(d) all deposits (including customer deposits and security for
rent,
electricity, telephone, hedging contracts
or otherwise) and prepaid charges and
expenses, including any prepaid rent, of
Seller;
(e) all rights of Seller under all Owned Property and each Real
Property Lease, together with all
improvements, fixtures and other appurtenances
thereto and rights in respect thereof;
(f) the Purchased Intellectual Property and the Purchased
Technology;
(g) all rights of Seller under the Purchased Contracts including
all
claims or causes of action with respect to
the Purchased Contracts;
(h) all Documents that are related to the Business, including
Documents relating to products, services,
marketing, advertising, promotional
materials, Purchased Intellectual Property,
Purchased Technology, personnel
files for Employees and all files, customer
files and documents (including
credit information), supplier lists,
records, literature and correspondence,
whether or not physically located on any of
the premises referred to in clause
(e) above, but excluding those documents
referenced in Section 2.2(b) below;
(i) all assets of any trust attributable to Employees and
Former
Employees in connection with any Employee
Benefit Plan;
(j) all Permits, including Environmental Permits, used by Seller
in
the Business (which includes all Permits
necessary to conduct the Business as
currently conducted) and all rights, and
incidents of interest therein;
(k) all raw materials and supplies owned by Seller and used in
connection with the Business;
(l) all rights of Seller under non-disclosure or
confidentiality,
non-compete, or non-solicitation agreements
with Former Employees, Employees and
agents of Seller or with third parties to
the extent relating to the Business or
the Purchased Assets (or any portion
thereof);
(m) all rights of Seller under or pursuant to all warranties,
representations and guarantees made by
suppliers, manufacturers and contractors
to the extent relating to products sold or
services provided to Seller or to the
extent affecting any Purchased Assets;
(n) all work-in-process;
(o) all assets of the type reflected on the Balance Sheet;
(p) all claims, choses-in-action and rights in litigation and
settlements in respect thereof;
13
<PAGE>
(q) Seller's rights to the name "National By-Products";
(r) all third-party property and casualty insurance proceeds, and
all
rights to third-party property and casualty
insurance proceeds, in each case to
the extent received or receivable in
respect of the Business; and
(s) all goodwill and other intangible assets associated with
the
Business, including the goodwill associated
with the Purchased Intellectual
Property.
2.2 Excluded Assets. Nothing herein contained shall be deemed
to
sell, transfer, assign or convey the
Excluded Assets to Purchaser, and Seller
shall retain all right, title and interest
to, in and under the Excluded Assets.
"Excluded Assets" shall mean each of the
following assets:
(a) the Excluded Contracts;
(b) all minute books, organizational documents, stock registers
and
such other books and records of Seller as
pertain to ownership, organization or
existence of Seller and duplicate copies of
such records as are necessary to
enable Seller to file tax returns and
reports;
(c) except as set forth on Company Disclosure Schedule 2.2(c),
all
shares of capital stock or other equity
securities of Seller or held by Seller
with respect to any other Person;
(d) the real estate in Denver, Colorado referred to by Seller as
the
"closed Pepcol plant," which is described
more fully on Company Disclosure
Schedule 2.2(d);
(e) a limited partnership interest in the Marriott Hotel located
at
7th and Grand, Des Moines, Iowa, which is
described more fully on Company
Disclosure Schedule 2.2(e); and
(f) all ownership interests in International By Products, S. de
R.L.
de C.V.
2.3 Assumption of Liabilities. On the terms and subject to the
conditions set forth in this Agreement, at
the Closing Purchaser shall assume,
effective as of the Closing, the following
liabilities of Seller (collectively,
the "Assumed Liabilities"):
(a) all liabilities of Seller under the Purchased Contracts;
(b) all accounts payable incurred in the Ordinary Course of
Business;
(c)
all Liabilities arising out of, under or in connection with any
Indebtedness of Seller and accounted for in
the calculation of Final Working
Capital hereunder; and
14
<PAGE>
(d) all Liabilities reflected, including reserves therefor, on
the
Final Closing Balance Sheet, excluding all
Liabilities referred to in Section
2.4.
2.4 Excluded Liabilities. Purchaser will not assume or be liable
for
any Excluded Liabilities. Seller shall
timely perform, satisfy and discharge in
accordance with their respective terms all
Excluded Liabilities. "Excluded
Liabilities" shall mean all Liabilities of
Seller arising out of, relating to or
otherwise in respect of the Business on or
before the Closing Date and all other
Liabilities of Seller other than the
Assumed Liabilities. Excluded Liabilities
shall include the following Liabilities and
in no event shall Purchaser assume
any liability for the matters set out in
this Section 2.4 except those
Liabilities reflected, including reserves
therefor, on the Final Closing Balance
Sheet:
(a) all Liabilities in respect of any products sold and/or
services
performed by Seller on or before the
Closing Date;
(b) except to the extent specifically provided in Article VIII,
all
Liabilities arising out of, relating to or
with respect to (i) the employment or
performance of services, or termination of
employment or services by Seller or
any of its Affiliates of any individual on
or before the Closing Date, (ii)
workers' compensation claims against Seller
that relate to the period on or
before the Closing Date, irrespective of
whether such claims are made prior to
or after the Closing, (iii) any Employee
Benefit Plan, (iv) Seller's Long-Term
Incentive Plan;
(c) all Liabilities arising out of, under or in connection with
Excluded Contracts and, with respect to
Purchased Contracts, Liabilities in
respect of a breach by or default of Seller
accruing under such Contracts with
respect to any period prior to Closing;
(d) all Liabilities for (i) Seller's portion of Transfer Taxes,
(ii)
Taxes of Seller or any Subsidiary (or any
predecessor thereof), (iii) Taxes that
relate to the Purchased Assets or the
Assumed Liabilities for taxable periods
(or portions thereof) ending on or before
the Closing Date, including, without
limitation, Taxes allocable to Seller
pursuant to Section 11.2, and (iv)
payments under any Tax allocation, sharing
or similar agreement (whether oral or
written);
(e)
all Liabilities in respect of any pending or threatened Legal
Proceeding, or any claim arising out of,
relating to or otherwise in respect of
(i) the operation of the Business to the
extent such Legal Proceeding or claim
relates to such operation on or prior to
the Closing Date, or (ii) any Excluded
Asset;
(f) all Liabilities relating to any dispute with any client or
customer of the Business existing as of the
Closing Date or based upon, relating
to or arising out of events, actions, or
failures to act prior to the Closing
Date; and
(g) all Liabilities or obligations of Seller relating to the
business, operations, assets or Liabilities
of any Subsidiary or former
Subsidiary of Seller based upon, relating
to or arising out of events, actions
or failures to act prior to the Closing
Date.
15
<PAGE>
2.5 Further Conveyances and Assumptions; Consent of Third
Parties.
(a) From time to time following the Closing, Seller and
Purchaser
shall, and shall cause their respective
Affiliates to, execute, acknowledge and
deliver all such further conveyances,
notices, assumptions, releases and
aquittances and such other instruments, and
shall take such further actions, as
may be reasonably necessary or appropriate
to assure fully to Purchaser and its
successors or assigns, all of the
properties, rights, titles, interests,
estates, remedies, powers and privileges
intended to be conveyed to Purchaser
under this Agreement and the Seller
Documents and to assure fully to Seller and
its successors and assigns, the assumption
of the liabilities and obligations
intended to be assumed by Purchaser under
this Agreement and the Purchaser
Documents, and to otherwise make effective
the transactions contemplated hereby
and thereby.
(b) Nothing in this Agreement nor the consummation of the
transactions contemplated hereby shall be
construed as an attempt or agreement
to assign any Purchased Asset, including
any Contract, Permit, certificate,
approval, authorization or other right,
which by its terms or by Law is
nonassignable without the consent of a
third party or a Governmental Body or is
cancelable by a third party in the event of
an assignment ("Nonassignable
Assets") unless and until such consent
shall have been obtained. Seller shall
use its commercially reasonable efforts to
obtain such consents promptly. To the
extent permitted by applicable Law, in the
event consents to the assignment
thereof cannot be obtained, such
Nonassignable Assets shall be held, as of and
from the Closing Date, by Seller in trust
for Purchaser and the covenants and
obligations thereunder shall be performed
by Purchaser in Seller's name and all
benefits and obligations existing
thereunder shall be for Purchaser's account.
Seller shall take or cause to be taken at
Seller's expense such actions in its
name or otherwise as Purchaser may
reasonably request so as to provide Purchaser
with the benefits of the Nonassignable
Assets and to effect collection of money
or other consideration that becomes due and
payable under the Nonassignable
Assets, and Seller shall promptly pay over
to Purchaser all money or other
consideration received by it in respect of
all Nonassignable Assets. As of and
from the Closing Date, Seller authorizes
Purchaser, to the extent permitted by
applicable Law and the terms of the
Nonassignable Assets, at Purchaser's
expense, to perform all the obligations and
receive all the benefits of Seller
under the Nonassignable Assets and appoints
Purchaser its attorney-in-fact to
act in its name on its behalf with respect
thereto.
2.6 Bulk-Sales Laws. Purchaser hereby waives compliance by
Seller
with the requirements and provisions of any
"bulk-transfer" Laws of any
jurisdiction that may otherwise be
applicable with respect to the sale of any or
all of the Purchased Assets to Purchaser;
provided, however, that, except with
respect to the Assumed Liabilities, Seller
agrees (a) to pay and discharge when
due or to contest or litigate all claims of
creditors which are asserted against
Purchaser or the Purchased Assets by reason
of such noncompliance, (b) to
indemnify, defend and hold harmless
Purchaser from and against any and all such
claims in the manner provided in Article X
and (c) to take promptly all
necessary action to remove any Lien which
is placed on the Purchased Assets by
reason of such noncompliance. Any
"bulk-transfer" Law that addresses Taxes shall
be governed by Article XI and not by this
Section 2.6.
16
<PAGE>
2.7 Purchase Price Allocation. Not later than ninety days after
the
Closing Date, Purchaser and Seller will
work together in good faith to prepare
and deliver a copy of Form 8594 and any
required exhibits thereto (the "Asset
Acquisition Statement") allocating the
Total Consideration among the Purchased
Assets. If Seller and Purchaser cannot
agree to an Asset Acquisition Statement,
each shall prepare its own proposed Asset
Acquisition Statement, and such
disagreement shall be resolved in
accordance with the same procedures set forth
in Sections 3.5(b) and 3.5(c). The Total
Consideration paid by Purchaser for the
Purchased Assets shall be allocated in
accordance with the Asset Acquisition
Statement as finalized pursuant to this
Section 2.7, and all income Tax Returns
and reports filed by Purchaser and Seller
relating to the Business or the
Purchased Assets shall be prepared
consistently with such allocation. For
purposes of this Section 2.7, the Purchased
Assets include the covenant not to
compete as set forth in Section 7.7.
2.8 Right to Control Payment. Purchaser shall have the right, but
not
the obligation, to make any payment due
from Seller with respect to any Excluded
Liabilities which are not paid by Seller
within five Business Days following
written request for payment from Purchaser;
provided, however, that if Seller
advises Purchaser in writing during such
five Business Day period that a good
faith payment dispute exists or Seller has
valid defenses to non-payment with
respect to such Excluded Liability, then
Purchaser shall not have the right to
pay such Excluded Liability. Seller agrees
to reimburse Purchaser promptly and
in any event within five Business Days
following written notice of such payment
by Purchaser for the amount of any payment
made by Purchaser pursuant to this
Section 2.8. Payment under this Section 2.8
shall be made promptly and in full,
without regard to Article X.
2.9 Proration of Certain Expenses. Subject to Section 2.4(d)
and
Section 11.2 with respect to Taxes, all
expenses and other payments in respect
of the Owned Property and all rents and
other payments (including any prepaid
amounts) due under the Real Property Leases
and any other leases constituting
part of the Purchased Assets shall be
prorated between Seller, on the one hand,
and Purchaser, on the other hand, as of the
Closing Date. Seller shall be
responsible for all rents (including any
percentage rent, additional rent and
any accrued tax and operating expense
reimbursements and escalations), charges
and other payments of any kind accruing
during any period under the Real
Property Leases or any such other leases up
to and including the Closing Date.
Purchaser shall be responsible for all such
rents, charges and other payments
accruing during any period under the Real
Property Leases or any such other
leases after the Closing Date. Purchaser
shall pay the full amount of any
invoices received by it and shall submit a
request for reimbursement to Seller
for Seller's share of such expenses and
Seller shall pay the full amount of any
invoices received by it and Purchaser shall
reimburse Seller for Purchaser's
share of such expenses.
2.10 Accounts Receivable. Seller shall provide reasonable
assistance
to Purchaser in the collection of accounts
receivable. If Seller shall receive
payment in respect of accounts receivable
that are included in the Purchased
Assets, then Seller shall promptly forward
such payment to Purchaser.
17
<PAGE>
ARTICLE III
CONSIDERATION
3.1 Consideration.
(a) The aggregate consideration for the Purchased Assets shall be
(i)
(A) an amount in cash (the "Closing Cash
Payment") equal to (x) $70.5 million,
less (y) the amount of Indebtedness related
to Seller's credit facilities
outstanding immediately prior to the
Closing Date (the "Payoff Indebtedness
Amount"), plus (B) that number of shares of
Parent Common Stock (the "Closing
Issued Shares") equal to 20% of the
outstanding shares of Parent Common Stock as
of 8 a.m. Central Time on the Closing Date,
calculated on a Fully Diluted Basis
(the "Purchase Price"), and (ii) the
assumption of the Assumed Liabilities
(together with the Purchase Price, the
"Total Consideration"). The Purchase
Price will be subject to adjustment
pursuant to Sections 3.4, 3.5 and 3.6.
(b) For purposes of this Agreement, the "Closing Share Price"
shall
be an amount equal to the per share closing
price of Parent Common Stock on the
American Stock Exchange (as reported by The
Wall Street Journal, Eastern
Edition, or if not reported thereby, any
other authoritative source) for the
trading day immediately preceding the
Closing Date.
3.2 Payment of Purchase Price.
(a) On the Closing Date, Parent shall pay the Adjusted Closing
Cash
Payment (as defined below), less the Cash
Escrow Amount, to Seller, which amount
shall be paid by wire transfer of
immediately available funds into an account
designated by Seller in writing not fewer
than three Business Days prior to the
Closing Date.
(b) As soon as reasonably practicable after the Closing Date,
Parent
shall deliver to Seller certificates
representing the Closing Issued Shares,
less the Escrowed Shares (as defined
below), registered in the names of the
holders of record of the outstanding
membership units of Seller set forth on
Company Disclosure Schedule 3.2(b) (the
"Unitholders"), pro rata in accordance
with their ownership interests, and Seller
shall promptly distribute such
certificates to the Unitholders.
(c) On the Closing Date, Parent shall pay the Payoff
Indebtedness
Amount on behalf of Seller by wire transfer
of immediately available funds as
directed by the holders of such
Indebtedness.
(d) Promptly after Closing, Seller shall pay all amounts owed
under
the Unit Appreciation Agreement to the
beneficiaries of the Unit Appreciation
Agreement and all amounts owed under
Seller's Long-Term Incentive Plan, in each
case less applicable withholding and
employment taxes.
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3.3 Indemnity Escrow. On the Closing Date, Parent shall, on behalf
of
Seller, deliver to U.S. Bank, National
Association, as agent to Parent and
Seller (the "Escrow Agent"), to an account
designated by the Escrow Agent, an
amount in immediately available funds equal
to $3.5 million (the "Cash Escrow
Amount") and that number of shares of
Parent Common Stock equal to the quotient
of $6.5 million divided by the Closing
Share Price (the "Escrowed Shares" and
together with the Cash Escrow Amount, the
"Indemnity Escrow Amount"), in
accordance with the terms of this Agreement
and the Escrow Agreement in
substantially the form attached hereto as
Exhibit A, which will be executed at
the Closing, by and among Parent, Seller
and the Escrow Agent (the "Escrow
Agreement"). Any payment Seller is
obligated to make to any Parent Indemnified
Parties pursuant to Article X shall be
paid, to the extent there are sufficient
funds in the Indemnity Escrow Account, by
release of funds to the Parent
Indemnified Parties from the Indemnity
Escrow Account by the Escrow Agent in
accordance with the terms set forth in the
Escrow Agreement. The Escrow Agent
shall release the Indemnity Escrow Amount
(to the extent not utilized to pay
Purchaser for any indemnification claim) to
Seller in accordance with the terms
set forth in the Escrow Agreement. The
Indemnity Escrow Amount retained by the
Escrow Agent for any claims for
indemnification under Article X asserted but not
settled before the applicable release date
under the Escrow Agreement
("Unresolved Claims") shall be released by
the Escrow Agent (to the extent not
utilized to pay Purchaser for any such
claims resolved in favor of Purchaser)
upon their resolution in accordance with
Article X and the Escrow Agreement.
3.4 Closing Statement. At least two (2) Business Days before
Closing
(the "Estimate Statement Delivery Date"),
Seller shall cause to be prepared and
delivered to Parent an estimated balance
sheet of Seller as of the end of
business on the Closing Date and prior to
the consummation of the transactions
contemplated hereby (the "Estimated Closing
Balance Sheet") and a statement (the
"Estimate Statement") setting forth
Seller's good faith estimate of Net Working
Capital (as defined below) derived from the
Estimated Closing Balance Sheet
("Initial Closing Working Capital") and the
corresponding Adjusted Closing Cash
Payment to be paid at Closing, if any.
Seller shall provide Parent with copies
of or reasonable access to such books and
records as are reasonably necessary
for purposes of verifying the amounts set
forth in the Estimated Closing Balance
Sheet and the Estimate Statement. "Net
Working Capital" means, at the time of
determination, the current assets of the
Business (less Excluded Assets included
in such current assets), reduced by the
current liabilities of the Business
(which shall include all Indebtedness,
whether current or long-term, and any
Liabilities related to employees such as
projected workers' compensation claims
and, to the extent not paid before Closing,
all amounts owed by Seller under
the Unit Appreciation Agreement to the
beneficiaries of the Unit Appreciation
Agreement and all amounts owed under
Seller's Long-Term Incentive Plan,
but shall exclude the Payoff Indebtedness
Amount and Excluded Liabilities
included in such current liabilities), in
each case as determined in accordance
with GAAP, and the accounting principles
set forth on Company Disclosure
Schedule 3.4 (the "Agreed Principles"). An
example, for illustrative purposes
only, of the calculation of Net Working
Capital as of October 1, 2005 is set
forth on Company Disclosure Schedule 3.4.
Seller shall use the latest available
information as of the Estimate Statement
Delivery Date to prepare the Estimated
Closing Balance Sheet and to calculate the
Initial Closing Working Capital and
the Adjusted Closing Cash Payment. The
preparation of the Estimate Statement
shall be for the purpose of determining the
difference between Initial Closing
Working Capital and Target Working Capital.
If Initial Closing Working Capital
exceeds $250,000 ("Target Working
Capital"), the Closing Cash Payment shall be
increased by the amount of such excess
(such increase, a "Positive Adjustment")
and, if Target Working Capital exceeds
Initial Closing Working Capital, the
Closing Cash Payment shall be reduced by
the amount of such excess (such
reduction, a "Negative Adjustment").
"Adjusted Closing Cash Payment" means the
Closing Cash Payment plus any Positive
Adjustment or the Closing Cash Payment
minus any Negative Adjustment, as
applicable.
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3.5 Purchase Price Adjustment.
(a) As promptly as practicable, but no later than sixty days
after
the Closing Date, Parent shall cause to be
prepared and delivered to Seller an
unaudited balance sheet of Seller (the
"Closing Balance Sheet") and a closing
statement (the "Closing Statement") and a
certificate based on such Closing
Statement setting forth Parent's
calculation of Net Working Capital derived from
the Closing Balance Sheet ("Closing Working
Capital"). The preparation of the
Closing Statement shall be for the purpose
of determining the difference between
Initial Closing Working Capital and Closing
Working Capital.
(b) If Seller disagrees with the amounts reflected on the
Closing
Balance Sheet or Parent's calculation of
Closing Working Capital delivered
pursuant to Section 3.5(a), Seller may,
within thirty (30) days after delivery
of the Closing Statement, deliver a notice
to Parent disputing such amounts
reflected on the Closing Balance Sheet
and/or disagreeing with such calculation
of Closing Working Capital and setting
forth Seller's calculation of such
amounts. Any such notice of dispute or
disagreement shall specify those items or
amounts as to which Seller disagrees, and
Seller shall be deemed to have agreed
with all other items and amounts contained
in the Closing Balance Sheet, the
Closing Statement and the calculation of
Closing Working Capital delivered
pursuant to Section 3.5(a).
(c) If a notice of disagreement shall be duly delivered pursuant
to
Section 3.5(b), Parent and Seller shall,
during the fifteen (15) days following
such delivery, use their commercially
reasonable efforts to reach agreement on
the disputed items or amounts in order to
determine, as may be required, the
proper amounts set forth on the Closing
Balance Sheet and the amount of Closing
Working Capital, which amount shall not be
less than the amount thereof shown in
Parent's calculation delivered pursuant to
Section 3.5(a) nor more than the
amount thereof shown in Seller's
calculation delivered pursuant to Section
3.5(b). If the parties so resolve all
disputes, the Closing Balance Sheet and
the computation of Closing Working Capital,
as amended to the extent necessary
to reflect the resolution of the dispute,
shall be conclusive and binding on the
parties. If during such period, Parent and
Seller are unable to reach an
agreement, they shall promptly thereafter
cause Ernst & Young LLP (or if Ernst &
Young LLP is unable or unwilling to accept
its mandate, an independent
nationally recognized accounting firm to be
mutually agreed upon by Parent and
Seller, in either such case, the
"Independent Accountant") to review this
Agreement and the disputed items or amounts
for the purpose of determining the
proper amounts on the Closing Balance Sheet
and calculating Closing Working
Capital (it being understood that in making
such determination and calculation,
the Independent Accountant shall be
functioning as an expert and not as an
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arbitrator). In making such determination
and calculation, the Independent
Accountant shall consider only those items
or amounts in the Closing Balance
Sheet, the Closing Statement and Parent's
calculation of Closing Working Capital
as to which Seller has disagreed. The
Independent Accountant shall deliver to
Parent and Seller, as promptly as
practicable (but in any case no later than
thirty days from the date of engagement of
the Independent Accountant), a report
setting forth such determination and
calculation, which amount shall not be less
than the amount thereof shown in Parent's
calculation delivered pursuant to
Section 3.5(a) nor more than the amount
thereof shown in Seller's calculation
delivered pursuant to Section 3.5(b). Such
report shall be final and binding
upon Parent and Seller. The fees, costs and
expenses of the Independent
Accountant's review and report shall be
borne equally by Parent and Seller.
(d) Parent and Seller shall, and shall cause their respective
representatives to, cooperate and assist in
the preparation of the Closing
Balance Sheet, the Closing Statement and
the calculation of Closing Working
Capital and in the conduct of the review
referred to in this Section 3.5,
including the making available to the
extent necessary of books, records, work
papers and personnel.
(e) If Initial Closing Working Capital exceeds Final Working
Capital,
Seller shall pay to Parent, in the manner
and with interest as provided in
Section 3.5(f), the amount of such excess
as an adjustment to the Purchase
Price, to the extent there are sufficient
funds in the Indemnity Escrow Account,
by release of funds to Parent from the
Indemnity Escrow Account by the Escrow
Agent in accordance with the Escrow
Agreement. If Final Working Capital exceeds
Initial Closing Working Capital, Parent
shall pay to Seller, in the manner and
with interest as provided in Section
3.5(f), the amount of such excess as an
adjustment to the Purchase Price. "Final
Closing Balance Sheet" and "Final
Working Capital" mean, respectively, the
Closing Balance Sheet and Closing
Working Capital (i) as shown in Parent's
calculation delivered pursuant to
Section 3.5(a) if no notice of disagreement
with respect thereto is duly
delivered pursuant to Section 3.5(b); or
(ii) if such a notice of disagreement
is delivered, (A) as agreed by Parent and
Seller pursuant to Section 3.5(c) or
(B) in the absence of such agreement, as
shown in the Independent Accountant's
calculation delivered pursuant to Section
3.5(c); provided, however, that in no
event shall Final Working Capital be more
than Seller's calculation of Closing
Working Capital delivered pursuant to
Section 3.5(b) or less than Parent's
calculation of Closing Working Capital
delivered pursuant to Section 3.5(a).
(f) Any payment pursuant to Section 3.5(e) shall be made within
three
Business Days after Final Working Capital
has been determined by wire transfer
by Parent or Seller, as the case may be, of
immediately available funds to the
account of such other party as may be
designated in writing by such other party
prior to such transfer. The amount of any
payment to be made pursuant to this
Section 3.5 shall bear interest from and
including the Closing Date to but
excluding the date of payment at a rate per
annum equal to the rate of interest
published from time to time by The Wall
Street Journal, Eastern Edition (under
the heading "Money Rates"), as the "prime
rate" during the period from the
Closing Date to the date of payment. Such
interest shall be payable at the same
time as the payment to which it relates and
shall be calculated daily on the
basis of a year of 365 days and the actual
number of days elapsed.
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<PAGE>
3.6 Additional Contingent Consideration.
(a) In addition to the Purchase Price paid to Seller on the
Closing
Date (as it may be adjusted), depending
upon the market price of the Parent
Common Stock on the True-Up Date (as
hereinafter defined), Parent shall, if
required hereunder, deliver to Seller
additional consideration in the form of
certificates representing shares of Parent
Common Stock registered in the names
of the Unitholders who hold, directly or as
Escrowed Shares, Remaining Issued
Shares (as hereinafter defined), pro rata
in accordance with their respective
percentage of Remaining Issued Shares held
by them, directly or as Escrowed
Shares, immediately prior to the True-Up
Date, and Seller shall promptly
distribute such certificates to such
Unitholders. For purposes of determining
whether any such additional consideration
shall be paid by Parent hereunder, on
the last day of the 13th full consecutive
month following the Closing Date (the
"True-Up Date"), Parent shall deliver to
Seller a schedule setting forth the
True-Up Market Price of the Parent Common
Stock. For purposes hereof, "True-Up
Market Price" shall mean, with respect to
the Parent Common Stock, on a per
share basis (as adjusted for any stock
split, stock dividend, combination or
recapitalization), an amount equal to the
average of the per share closing price
of Parent Common Stock on the American
Stock Exchange (as reported by The Wall
Street Journal, Eastern Edition, or if not
reported thereby, any other
authoritative source), for each of the
trading days included in the ninety (90)
prior consecutive calendar days, ending
with the calendar day immediately
preceding the True-Up Date.
(b) In the event that the product of (i) the True-Up Market Price
and
(ii) the aggregate number of Closing Issued
Shares (as adjusted for any stock
split, stock dividend, combination or
recapitalization) is less than $70.5
million, Parent will issue to Seller
certificates representing an additional
number of shares of Parent Common Stock
registered in the names of the
Unitholders who hold, directly or as
Escrowed Shares, Remaining Issued Shares,
which number of shares shall be calculated
by Parent as follows:
(i) First, the "Target Share Price" shall be determined by
dividing (A) $70.5 million by (B) the aggregate number of
Closing
Issued Shares (as adjusted for any stock split, stock dividend,
combination or recapitalization);
(ii) Second, the "Value Gap" shall be determined by multiplying
(A) the aggregate number of Closing Issued Shares (including
without
duplication the Escrowed Shares, but excluding any Escrowed
Shares
released to Parent in accordance with the terms of the Escrow
Agreement, and as adjusted for any stock split, stock dividend,
combination or recapitalization), less the number of any such
Closing
Issued Shares (as so adjusted) transferred by the Unitholders
(except
transfers by gift or into trust) on or after the Closing Date
(the
"Remaining Issued Shares") by (B) the difference between (x)
the
Target Share Price and (y) the higher of the True-Up Market Price
or
$3.60 (as adjusted for any stock split, stock dividend, combination
or
recapitalization); provided that the difference in subclause (B) is
a
positive number, if not, then the "Value Gap" shall be zero;
and
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(iii) Third, the number of additional shares of Parent Common
Stock to be issued in accordance with this Section 3.6 (the
"True-Up
Shares") shall be determined by dividing (A) the Value Gap by (B)
the
higher of (x) the True-Up Market Price and (y) $3.60 (as adjusted
for
any stock split, stock dividend, combination or
recapitalization),
rounded to the nearest whole number.
(c) Certificates representing the True-Up Shares registered in
the
names of the Unitholders who hold, directly
or as Escrowed Shares, Remaining
Issued Shares shall be delivered by Parent
to Seller no later than the 20th
Business Day following the True-Up Date and
allocated among all of the
Unitholders who hold, directly or as
Escrowed Shares, Remaining Issued Shares in
accordance with their respective percentage
of Remaining Issued Shares held by
them immediately prior to the True-Up Date;
provided, however, that no
fractional shares of Parent Common Stock
will be issued hereunder; and, provided
further, however, that the total number of
True-Up Shares to be registered in
the name of each Unitholder who holds,
directly or as Escrowed Shares, Remaining
Issued Shares shall be rounded to the
nearest whole number. Seller shall
promptly distribute the certificates
representing such True-Up Shares to the
appropriate Unitholders.
ARTICLE IV
CLOSING AND TERMINATION
4.1 Closing Date. The consummation of the purchase and sale of
the
Purchased Assets and the assumption of the
Assumed Liabilities provided for in
Article II hereof (the "Closing") shall
take place at the offices of Weil,
Gotshal & Manges LLP located at 200
Crescent Court, Suite 300, Dallas, Texas
75201 (or at such other place as the
parties may designate in writing) at 10:00
a.m. (Dallas time) on a date to be
specified by the parties (the "Closing
Date"), which date shall be no later than
the third Business Day after
satisfaction or waiver of the conditions
set forth in Article IX (other than
conditions that by their nature are to be
satisfied at Closing, but subject to
the satisfaction or waiver of those
conditions at such time), unless another
time, date or place is agreed to in writing
by the parties hereto.
4.2 Termination of Agreement. This Agreement may be terminated
prior
to the Closing as follows:
(a) At the election of Seller or Parent on or after May 15,
2006
(such date, as it may be extended under
this Section 4.2(a), the "Termination
Date") if the Closing shall not have
occurred by the close of business on such
date; provided, that the terminating party
is not in material default of any of
its obligations hereunder; and provided
further, that (A) either Parent or
Seller shall have the option to extend,
from time to time, the Termination Date
for additional periods of time, not to
exceed 60 days in the aggregate (or such
longer period as Parent and Seller may
mutually agree) if all other conditions
to the Closing are satisfied or capable of
then being satisfied and the sole
reason that the Closing has not been
consummated is that the condition set forth
in Section 7.4 has not been satisfied due
to the failure to obtain the necessary
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consents and approvals under applicable
Laws or an Order of a Governmental Body
of competent jurisdiction shall be in
effect and Parent, Purchaser or Seller are
still attempting to obtain such necessary
consents and approvals under
applicable Laws, or are contesting (x) the
refusal of the relevant Governmental
Body to give such consents or approvals, or
(y) the entry of any such Order, in
court or through other applicable
proceedings; and (B) the right to terminate
this Agreement pursuant to this Section
4.2(a) shall not be available to any
party whose breach of any provision of this
Agreement has been the cause of, or
resulted, directly or indirectly, in, the
failure of the Closing to be
consummated by the Termination Date;
(b) by mutual written consent of Seller and Parent;
(c) by written notice (i) from Parent to Seller that there has
been
an event, change, occurrence or
circumstance that, individually or in the
aggregate, with any other events, changes,
occurrences or circumstances, has had
or could reasonably be expected to have a
Material Adverse Effect or (ii) from
Seller to Parent that there has been an
event, change, occurrence or
circumstance that, individually or in the
aggregate, with any other events,
changes, occurrences or circumstances, has
had or could reasonably be expected
to have a Parent Material Adverse
Effect;
(d) by Seller or Parent if there shall be in effect a final
nonappealable Order of a Governmental Body
of competent jurisdiction
restraining, enjoining or otherwise
prohibiting the consummation of the
transactions contemplated hereby; provided,
however, that the right to terminate
this Agreement under this Section 4.2(d)
shall not be available to a party if
such Order was primarily due to the failure
of such party to perform any of its
obligations under this Agreement;
(e) by Parent, if Seller shall have breached or failed to perform
any
of its representations, warranties,
covenants or agreements set forth in this
Agreement, or if any representation or
warranty of Seller shall have become
untrue, in either case such that the
conditions set forth in Section 9.1(a) or
9.1(b) would not be satisfied and such
breach is incapable of being cured or, if
capable of being cured, shall not have been
cured within fifteen days following
receipt by Seller of notice of such breach
from Parent;
(f) by Seller, if Parent shall have breached or failed to perform
any
of its representations, warranties,
covenants or agreements set forth in this
Agreement, or if any representation or
warranty of Parent shall have become
untrue, in either case such that the
conditions set forth in Section 9.2(a) or
9.2(b) would not be satisfied and such
breach is incapable of being cured or, if
capable of being cured, shall not have been
cured within fifteen days following
receipt by Parent of notice of such breach
from Seller;
(g) by Parent if (i) a Seller Adverse Recommendation Change
shall
have occurred or (ii) the Board of Managers
of Seller or any committee thereof
(x) shall not have rejected any Takeover
Proposal within fifteen (15) Business
Days of the making thereof (including, for
these purposes, by taking no position
with respect to the acceptance by Seller's
unitholders of a tender offer or
exchange offer, which shall constitute a
failure to reject such Takeover
Proposal) or (y) shall have failed to
publicly reconfirm the Seller Board
Recommendation within fifteen (15) Business
Days after receipt of a written
request from Parent that it do so if such
request is made following the making
by any Person of a Takeover Proposal;
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(h) by Seller or Parent if the Seller Unitholder Approval shall
not
have been obtained at the Seller
Unitholders Meeting duly convened therefor or
at any adjournment or postponement thereof;
provided, however, that the right of
Seller to terminate this Agreement under
this Section 4.2(h) shall not be
available to it if it has failed to comply
in all material respects with its
obligations under Section 7.6 or
7.16(b);
(i) by Seller or Parent if the Parent Stockholder Approval shall
not
have been obtained at the Parent
Stockholders Meeting duly convened therefor or
at any adjournment or postponement thereof;
provided, however, that the right of
Parent to terminate this Agreement under
this Section 4.2(i) shall not be
available to it if it has failed to comply
in all material respects with its
obligations under Section 7.16(c);
(j) by Parent on or before February 28, 2006, if (i) Parent's
Environmental Assessment (as defined in
Section 7.11(a) below) at Seller's
properties shall have revealed any
circumstances that could reasonably be
expected to result in (A) the criminal
prosecution of Seller or any director,
officer or employee of Seller under
Environmental Laws, (B) any suspension or
closure of operations at Seller's
properties or facilities or the revocation or
termination of any material Environmental
Permits or (C) any Environmental Costs
and Liabilities that, individually or in
the aggregate, will or could reasonably
be expected to result in expenditures to
cure in excess of the amounts reserved
therefor on the Balance Sheet by at least
$2.75 million, or (ii) Parent's
operational due diligence review of Seller
shall have revealed any deficiencies
in the Purchased Assets that indicate that
Parent would not be able to continue
to operate the combined businesses of
Parent and Seller for the year following
Closing at a capital expenditure cost equal
to or less than 150% of the current
annual capital expenditure budgets of
Parent and Seller, on a combined basis; or
(k) by Seller on or before February 28, 2006, if (i) Seller's
Environmental Assessment (as defined in
Section 7.11(b) below) at Parent's
properties shall have revealed any
circumstances that could reasonably be
expected to result in (A) the criminal
prosecution of Parent or any director,
officer or employee of Parent under
Environmental Laws, (B) any suspension or
closure of operations at Parent's
properties or facilities or the revocation or
termination of any material Environmental
Permits or (C) any Environmental Costs
and Liabilities that, individually or in
the aggregate, will or could reasonably
be expected to result in expenditures to
cure in excess of the amounts reserved
therefor on Parent's balance sheet as at
October 1, 2005 by at least $2.75
million, or (ii) Seller's operational due
diligence review of Parent shall have
revealed any deficiencies in Parent's
assets that indicate that Parent would not
be able to continue to operate the combined
businesses of Parent and Seller for
the year following Closing at a capital
expenditure cost equal to or less than
150% of the current annual capital
expenditure budgets of Parent and Seller, on
a combined basis.
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4.3 Procedure upon Termination. In the event of termination and
abandonment by Parent or Seller, or both,
pursuant to Section 4.2 hereof,
written notice thereof shall forthwith be
given to the other party or parties,
and this Agreement shall terminate, and the
purchase of the Purchased Assets
hereunder shall be abandoned, without
further action by Parent, Purchaser or
Seller.
4.4 Effect of Termination. In the event that this Agreement is
validly terminated as provided herein, then
each of the parties shall be
relieved of their duties and obligations
arising under this Agreement after the
date of such termination and such
termination shall be without liability to
Parent, Purchaser or Seller; provided,
however, that (a) if this Agreement is
terminated by Parent pursuant to Section
4.2(e), Seller, in addition to any
other Liabilities accruing hereunder shall
be liable for and shall pay within
five Business Days of such termination the
cost of (i) all filing or other fees
paid by Parent or Purchaser to any
Governmental Body in respect of the
transactions contemplated by this Agreement
and (ii) all out-of-pocket expenses
incurred by Parent or Purchaser in
connection with the transactions contemplated
hereby; (b) if this Agreement is terminated
by Parent pursuant to Section
4.2(g), Seller, in addition to any other
Liabilities accruing hereunder or
otherwise, shall be liable as set forth in
Section 4.5 hereof; (c) if this
Agreement is terminated by either Parent or
Seller pursuant to Section 4.2(a)
and all other conditions to the Closing
have been satisfied or are capable of
then being satisfied and the sole reason
that the Closing has not been
consummated is that the condition set forth
in Section 9.1(q) has not been
satisfied due to the failure of Purchaser
to obtain the necessary Financing or
if this Agreement is terminated by Seller
pursuant to Section 4.2(f), Parent, in
addition to any other Liabilities accruing
hereunder shall be liable for and
shall pay within five (5) Business Days of
such termination the cost of (i) all
filing or other fees paid by Seller to any
Governmental Body in respect of the
transactions contemplated by this Agreement
and (ii) all out-of-pocket expenses
incurred by Seller in connection with the
transactions contemplated hereby; (d)
the obligations of the parties set forth in
this Section 4.4, Section 4.5 and
Articles XIII hereof shall survive any such
termination and shall be enforceable
hereunder; and (d) nothing in this Section
4.4 shall relieve Parent or Seller of
any Liability for a willful breach of this
Agreement prior to the effective date
of such termination.
4.5 Termination Fee.
(a) In the event that this Agreement is terminated by Parent
pursuant
to Section 4.2(g), then Seller shall pay to
Parent a termination fee of $4.23
million in cash (the "Termination Fee"). In
addition, Seller shall pay to Parent
all of the expenses of Parent, including
all out-of-pocket fees and expenses
(including all reasonable fees and expenses
of counsel, accountants, financial
advisors and investment bankers to a party
hereto and its Affiliates), up to
$1.0 million in the aggregate, incurred by
Parent in connection with or related
to the legal, financial and regulatory
diligence of Seller and the
authorization, preparation, negotiation,
execution and performance of this
Agreement, the preparation, printing,
filing and mailing of the Joint Proxy
Statement and the Form S-4 and the
prospectus contained therein, the filing of
any required notices under applicable
Antitrust Laws or other regulations and
all other matters related to the
transactions contemplated by this Agreement
(the "Expenses"). Such Expenses shall
include, without limitation, fees and
related charges of accountants and
consultants.
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(b) Any payment required to be made pursuant to Section 4.5(a)
shall
be made to Parent promptly following
termination of this Agreement by Parent
pursuant to Section 4.2(g) (and in any
event not later than two Business Days
after delivery to Seller of notice of
demand for payment); and, with regard to
Expenses payable pursuant to Section 4.5(a)
above, such payment shall be made to
Parent not later than two Business Days
after delivery to Seller of an
itemization setting forth in reasonable
detail all such Expenses of Parent
(which itemization may be supplemented and
updated from time to time by such
party until the 60th day after such party
delivers such notice of demand for
payment). All such payments shall be made
by wire transfer of immediately
available funds to an account to be
designated by Parent.
(c) In the event that Seller shall fail to pay the Termination
Fee
and/or Expenses required pursuant to this
Section 4.5 when due, such fee and/or
Expenses, as the case may be, shall accrue
interest for the period commencing on
the date such Termination Fee and/or
Expenses, as the case may be, became due,
at a rate equal to the rate of interest
publicly announced by Citibank, in the
City of New York, from time to time during
such period, as such bank's Prime
Lending Rate, plus 2%. In addition, if
Seller shall fail to pay such fee and/or
Expenses, as the case may be, when due,
Seller shall also pay to Parent all of
Parent's costs and expenses (including
attorneys' fees and related charges) in
connection with efforts to collect such
Termination Fee and/or Expenses, as the
case may be. Seller acknowledges that the
Termination Fee, Expense and the other
provisions of this Section 4.5 are an
integral part of this Agreement and that,
without these agreements, Parent would not
enter into this Agreement.
(d) Seller acknowledges and agrees that in the event of a breach
of
this Agreement, the payment of the
Termination Fee and/or Expenses shall not
constitute the exclusive remedies available
to Parent, and that Parent shall be
entitled to the remedies set forth in
Section 13.2, including injunction and
specific performance, and all additional
and other remedies available at law or
in equity to which Parent may be
entitled.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Parent and Purchaser
that,
except as set forth in the disclosure
schedule (with specific reference to the
Section or subsection of this Agreement to
which the information stated in such
disclosure schedule relates) delivered by
Seller to Parent and Purchaser
simultaneously with the execution of this
Agreement (the "Company Disclosure
Schedule"):
5.1 Organization and Good Standing; No Subsidiaries.
(a) Seller is a limited liability company duly organized,
validly
existing and in good standing under the
laws of the State of Iowa and has all
requisite limited liability company power
and authority to own, lease and
operate its properties and to carry on its
business as now conducted and as
currently proposed to be conducted. Seller
is duly qualified or authorized to do
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business and is in good standing under the
laws of each jurisdiction in which it
owns or leases real property and each other
jurisdiction in which the conduct of
its business or the ownership of its
properties requires such qualification or
authorization, except where the failure to
be so qualified or authorized could
not have or reasonably be expected to have
a Material Adverse Effect. Seller has
delivered to Parent true, complete and
correct copies of its operating agreement
and By-laws as in effect on the date
hereof.
(b) Except as set forth on Company Disclosure Schedule 5.1(b),
Seller
does not, directly or indirectly, own any
stock or other equity interest in any
other Person. No former Subsidiary of
Seller had any operations, business,
Liabilities or other activities that would
create a Liability on the part of
Seller.
5.2 Authorization of Agreement.
(a) Seller has all requisite power, authority and legal capacity
to
execute and deliver this Agreement and
Seller has all requisite power, authority
and legal capacity to execute and deliver
each other agreement, document, or
instrument or certificate contemplated by
this Agreement or to be executed by
Seller in connection with the transactions
contemplated by this Agreement (the
"Seller Documents"), and, subject to
obtaining the Seller Unitholder Approval,
to perform its obligations hereunder and
thereunder and to consummate the
transactions contemplated hereby and
thereby. The execution, delivery and
performance of this Agreement and each of
the Seller Documents and the
consummation of the transactions
contemplated hereby and thereby have been duly
authorized and approved by Seller's Board
of Managers, and except for obtaining
the Seller Unitholder Approval, no other
action on the part of Seller as an Iowa
limited liability company is necessary to
authorize the execution, delivery and
performance of this Agreement and the
transactions contemplated hereby. This
Agreement has been, and each of the Seller
Documents will be, at or prior to the
Closing, duly and validly executed and
delivered by Seller and (assuming the due
authorization, execution and delivery by
Parent and Purchaser) this Agreement
constitutes, and each of the Seller
Documents when so executed and delivered
will constitute, legal, valid and binding
obligations of Seller, enforceable
against Seller in accordance with their
terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and
similar laws affecting creditors'
rights and remedies generally, and subject,
as to enforceability, to general
principles of equity, including principles
of commercial reasonableness, good
faith and fair dealing (regardless of
whether enforcement is sought in a
proceeding at law or in equity).
(b) The affirmative vote (in person or by proxy) of the holders of
a
majority of the outstanding membership
units of Seller at the Seller Unitholders
Meeting or any adjournment or postponement
thereof in favor of the adoption of
this Agreement (the "Seller Unitholder
Approval") is the only vote or approval
of the holders of any class or series of
equity of Seller which is necessary to
adopt this Agreement and approve the
transactions contemplated hereby.
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<PAGE>
5.3 Conflicts; Consents of Third Parties.
(a) Except as set forth on Company Disclosure Schedule 5.3(a),
and
assuming the Seller Unitholder Approval is
obtained and the filings referred to
in Sections 5.3(b)(ii)(A) & (B) are
made, none of the execution and delivery by
Seller of this Agreement or by Seller of
the Seller Documents, the consummation
of the transactions contemplated hereby or
thereby, or compliance by Seller with
any of the provisions hereof or thereof
will conflict with, or result in any
violation or breach of, or conflict with or
cause a default (with or without
notice or lapse of time, or both) under, or
give rise to a right of termination,
cancellation or acceleration of any
obligation or the loss of a material benefit
under, or give rise to any obligation of
Seller to make any payment under, or to
the increased, additional, accelerated or
guaranteed rights or entitlements of
any Person under, or result in the creation
of any Liens upon any of the
properties or assets of Seller under, any
provision of (i) the operating
agreement and by-laws of Seller; (ii) any
Contract or Permit to which Seller is
a party or by which any of the properties
or assets of Seller are bound, except
as could not reasonably be expected to
have, individually or in the aggregate, a
Material Adverse Effect; (iii) any Order
applicable to Seller or by which any of
the properties or assets of Seller are
bound; or (iv) any applicable Law, except
as could not reasonably be expected to
have, individually or in the aggregate, a
Material Adverse Effect.
(b) No consent, waiver, approval, Permit or authorization of or
filing with, or notification to, any Person
or Governmental Body is required on
the part of Seller in connection with (i)
the execution and delivery of this
Agreement or the Seller Documents, the
compliance by Seller with any of the
provisions hereof and thereof, the
consummation of the transactions contemplated
hereby and thereby or the taking by Seller
of any other action contemplated
hereby or thereby, or (ii) the continuing
validity and effectiveness immediately
following the Closing of any Contract or
Permit of Seller, except (A) for the
filing with the SEC of the Form S-4 and
other filings required under, and
compliance with other applicable
requirements of, the Securities Act and the
Exchange Act, (B) for filings required
under and compliance with the applicable
requirements of the HSR Act, (C) as set
forth on Company Disclosure Schedule
5.3(b) and (D) as could not reasonably be
expected to have, individually or in
the aggregate, a Material Adverse
Effect.
5.4 Financial Statements.
(a) Seller has delivered to Parent copies of (i) the audited
balance
sheets of Seller as at January 1, 2005,
January 3, 2004 and December 28, 2002
and the related audited statements of
income and of cash flows of Seller for the
years then ended and (ii) the unaudited
balance sheet of Seller as at October 1,
2005 and the related statement of income
and cash flows of Seller for the nine
month period then ended (such audited and
unaudited statements, including the
related notes and schedules thereto, are
referred to herein as the "Financial
Statements"). Each of the Financial
Statements is complete and correct in all
material respects, has been prepared in
accordance with GAAP consistently
applied (except with respect to the
unaudited financial statements for normal
recurring year-end adjustments that,
individually or in the aggregate, would not
29
<PAGE>
be material) without modification of the
accounting principles used in the
preparation thereof throughout the periods
presented and presents fairly in all
material respects the consolidated
financial position, results of operations and
cash flows of Seller as at the dates and
for the periods indicated.
For the purposes hereof, the unaudited balance sheet of Seller as
at
October 1, 2005 is referred to as the
"Balance Sheet" and October 1, 2005 is
referred to as the "Balance Sheet
Date."
(b) Seller makes and keeps books, records and accounts which,
in
reasonable detail, accurately and fairly
reflect the transactions and
dispositions of its assets. Seller
maintains systems of internal accounting
controls sufficient to provide reasonable
assurances that: (i) transactions are
executed in accordance with management's
general or specific authorization; (ii)
transactions are recorded as necessary to
permit the preparation of financial
statements in conformity with GAAP and to
maintain accountability for assets;
(iii) access to assets is permitted only in
accordance with management's general
or specific authorization; and (iv) the
recorded accountability for assets is
compared with the actual levels at
reasonable intervals and appropriate action
is taken with respect to any
differences.
(c) Seller's principal executive officer and its principal
financial
officer have disclosed, based on their most
recent evaluation, to Seller's
auditors and the audit committee of the
Board of Managers of Seller (i) all
significant deficiencies in the design or
operation of internal controls which
could adversely affect Seller's ability to
record, process, summarize and report
financial data and have identified for
Seller's auditors any material weaknesses
in internal controls and (ii) any fraud,
whether or not material, that involves
management or other employees who have a
significant role in Seller's internal
controls.
(d) Seller has established and maintains disclosure controls
and
procedures designed to ensure that material
information relating to Seller is
made known to Seller's principal executive
officer and its principal financial
officer by others within those entities;
and, to the Knowledge of Seller, such
disclosure controls and procedures are
effective in timely alerting Seller's
principal executive officer and its
principal financial officer to material
information.
(e) Seller's records, systems, controls, data and information
are
recorded, stored, maintained and operated
under the exclusive ownership and
direct control of it and Seller's
accountants. Seller maintains a system of
internal accounting controls sufficient to
provide reasonable assurances
regarding the reliability of financial
reporting and the preparation of
financial statements in accordance with
GAAP.
5.5 No Undisclosed Liabilities. Except as set forth on Company
Disclosure Schedule 5.5, Seller has no
Indebtedness or Liabilities (whether or
not required under GAAP to be reflected on
a balance sheet or the notes thereto)
other than those (i) specifically reflected
in, fully reserved against or
otherwise described in the Balance Sheet or
the notes thereto, (ii) incurred in
the Ordinary Course of Business since the
Balance Sheet Date, or (iii) that are
immaterial, individually or in the
aggregate, to Seller.
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<PAGE>
5.6 Title to Purchased Assets; Sufficiency. Seller owns and has
good
title to each of the Purchased Assets
(except as could not reasonably be
expected to have, individually or in the
aggregate, a Material Adverse Effect)
free and clear of all Liens other than
Permitted Exceptions. The Purchased
Assets constitute all of the Properties
used in or held for use in the Business
and are sufficient for Purchaser to conduct
the Business from and after the
Closing Date without interruption and in
the Ordinary Course of Business, as it
has been conducted by Seller.
5.7 Absence of Certain Developments. Except as expressly
contemplated
by this Agreement or as set forth on
Company Disclosure Schedule 5.7, since the
Balance Sheet Date, (a) Seller has
conducted the Business only in the Ordinary
Course of Business and (b) there has not
been any event, change, occurrence or
circumstance that, individually or in the
aggregate, with any other events,
changes, occurrences or circumstances, has
had or could reasonably be expected
to have a Material Adverse Effect. Without
limiting the generality of the
foregoing, since the Balance Sheet Date or
as set forth on Company Disclosure
Schedule 5.7:
(i) there has not been any damage, destruction or loss, whether
or not covered by insurance, with respect to the Purchased
Assets
having a replacement cost of more than $500,000 for any single loss
or
$1.0 million for all such losses;
(ii) other than in the Ordinary Course of Business, Seller has
not awarded or paid any bonuses to Former Employees or Employees
of
Seller, except to the extent accrued on the Balance Sheet, or
entered
into any employment, deferred compensation, long-term
incentive,
severance, stay bonus, bonus, or similar agreement (nor amended
any
such agreement) or agreed to increase the compensation payable or
to
become payable by it to any of Seller's directors, officers,
employees, agents or representatives or agreed to increase the
coverage or benefits available under any severance pay,
termination
pay, vacation pay, company awards, salary continuation for
disability,
sick leave, deferred compensation, bonus or other incentive
compensation, insurance, pension or other employee benefit
plan,
payment or arrangement made to, for or with such directors,
officers,
employees, agents or representatives;
(iii) there has not been any change by Seller in accounting or
Tax reporting principles, methods or policies;
(iv) Seller has not failed to promptly pay and discharge
current
Liabilities except for Liabilities not material in amount that
are
disputed in good faith by appropriate proceedings and for which
proper
reserve has been made on the Balance Sheet;
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(v) Seller has not made any capital investment in, any loan to,
or any acquisition of the securities or assets of, any other
Person,
other than advances to Employees in the Ordinary Course of
Business;
(vi) Seller has not mortgaged, pledged or subjected to any Lien
any of its assets, or acquired any assets or sold, assigned,
transferred, conveyed, leased or otherwise disposed of any assets
of
Seller, except for assets acquired or sold, assigned,
transferred,
conveyed, subjected to any Lien or otherwise disposed of in the
Ordinary Course of Business;
(vii) Seller has not discharged or satisfied any Lien, or paid
any Liability, except in the Ordinary Course of Business;
(viii) Seller has not canceled or compromised any debt or claim
or amended, modified, canceled, terminated, relinquished, waived
or
released any Contract or right except in the Ordinary Course of
Business and which, in the aggregate, would not be material to
Seller;
(ix) Seller has not issued, created, incurred, assumed or
guaranteed any Indebtedness, except in the Ordinary Course of
Business;
(x) Seller has not made or committed to make any capital
expenditures (a) in excess of planned capital expenditures
budgeted
for the current fiscal year and as reasonably deemed to be
necessary
by Seller for next fiscal year consistent with prior practice or
(b)
which require any payment that may or will extend beyond the
Closing
Date;
(xi) Seller has not instituted or settled any material Legal
Proceeding resulting in a loss of revenue in excess of $50,000
individually or in amounts exceeding $100,000 in the aggregate;
(xii) Seller has not granted any license or sublicense of any
rights under or with respect to any Purchased Intellectual Property
or
Purchased Technology;
(xiii) Seller has not made any loan to, or entered into any
other
transaction with, any of its Unitholders, Affiliates, officers,
directors, partners or employees, except for any advances made
to
Employees in the Ordinary Course of Business; and
(xiv) Seller has not agreed, committed, arranged or entered
into
any understanding to do anything set forth in this Section 5.7.
5.8 Taxes.
(a) (i) All income, franchise and all other material Tax
Returns
required to be filed by or on behalf of
Seller, any Subsidiary or any
affiliated, consolidated, combined or
unitary group of which Seller or any
Subsidiary is or was a member have been
duly and timely filed with the
appropriate Taxing Authority in all
jurisdictions in which such Tax Returns are
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required to be filed (after giving effect
to any valid extensions of time in
which to make such filings), and all such
Tax Returns are true, complete and
correct in all material respects; and (ii)
all income, franchise and other
material Taxes payable by or on behalf of
Seller, any Subsidiary or any
affiliated, consolidated, combined or
unitary group of which Seller or any
Subsidiary is or was a member have been
fully and timely paid. With respect to
any period for which Taxes are not yet due
or owing, Seller has made due and
sufficient accruals for such Taxes in the
Financial Statements and its books and
records. All required estimated Tax
payments sufficient to avoid any material
underpayment penalties or interest have
been made by or on behalf of Seller.
(b) Purchaser has received complete copies of (i) all income,
franchise and all other material Tax
Returns of or including Seller and any
Subsidiary relating to the taxable periods
ending on or after December 31, 2001
and (ii) any audit report issued after
December 31, 2001 relating to any Taxes
due from or with respect to Seller or any
Subsidiary.
(c) Company Disclosure Schedule 5.8 lists (i) all material types
of
Taxes paid, and all types of Tax Returns
filed by or on behalf of Seller or any
Subsidiary, and (ii) all of the
jurisdictions that impose such Taxes or with
respect to which Seller or any Subsidiary
has a duty to file such Tax Returns.
No claim has been made by a Taxing
Authority in a jurisdiction where Seller or
any Subsidiary does not file Tax Returns
such that it is or may be subject to
taxation by that jurisdiction.
(d) All deficiencies asserted or assessments made as a result of
any
examinations by any Taxing Authority of the
Tax Returns of, or including, Seller
or any Subsidiary have been fully paid, and
there are no audits or
investigations of Seller or any Subsidiary
by any Taxing Authority in progress,
nor has Seller or any Subsidiary received
any written notice from any Taxing
Authority that it intends to conduct such
an audit or investigation. No issue
has been raised by a Taxing Authority in
any prior examination of Seller or any
Subsidiary that, by application of the same
or similar principles, could
reasonably be expected to result in a
material proposed deficiency for any
subsequent taxable period.
(e) Seller has complied in all material respects with all
applicable
Laws relating to the payment and
withholding of Taxes and has duly and timely
withheld and paid over to the appropriate
Taxing Authority all amounts required
to be so withheld and paid under all
applicable Laws.
(f) Neither Seller nor any Subsidiary nor any other Person on
its
behalf has (i) executed or entered into a
closing agreement pursuant to Section
7121 of the Code or any similar provision
of Law with respect to Seller or any
Subsidiary that would be binding on the
Purchaser after the Closing Date, (ii)
requested any extension of time within
which to file any income, franchise or
other material Tax Return, which Tax Return
has since not been filed, (iii)
granted any extension for the assessment or
collection of any income, franchise
or other material Taxes, which Taxes have
not since been paid, or (iv) granted
to any Person any power of attorney that is
currently in force with respect to
any Tax matter that would be binding on the
Purchaser after the Closing Date.
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(g) Neither Seller nor any Subsidiary is a party to any tax
sharing,
allocation, indemnity or similar agreement
or arrangement (whether or not
written) pursuant to which it will have any
obligation to make any payments
after the Closing.
(h) No Contract is a contract, agreement, plan or arrangement
covering any person that, individually or
collectively, could give rise to the
payment of any amount that would not be
deductible by Purchaser, Seller or any
of their respective Affiliates by reason of
Section 280G of the Code or be
subject to Section 4999 of the Code.
(i) There are no Liens for Taxes upon the Purchased Assets,
except
for Permitted Exceptions.
(j) National By-Products, Inc., a C corporation, ceased to exist
when
it merged with and into Seller on January
11, 2002. Since January 11, 2002,
Seller has (i) been properly treated as a
partnership for Federal, state and
local income Tax purposes, and has not made
an election, by IRS Form 8832 or
otherwise, to be treated as a corporation
and (ii) has not been a "publicly
traded partnership" within the meaning of
Section 7704 of the Code.
(k) Seller is not a
"foreign person" within the meaning of Section
1445 of the Code.
(l) Neither Seller nor any Subsidiary is subject to any private
letter ruling of the IRS or any comparable
ruling of any Taxing Authority that
would be binding on Purchaser after the
Closing Date.
(m) None of the Purchased Assets is (i) property required to be
treated as being owned by another Person
pursuant to the provisions of Section
168(f)(8) of the Internal Revenue Code of
1954, as amended and in effect
immediately prior to the enactment of the
Tax Reform Act of 1986, (ii)
"tax-exempt use property" within the
meaning of Section 168(h)(1) of the Code,
(iii) "tax-exempt bond financed property"
within the meaning of Section 168(g)
of the Code, (iv) "limited use property"
within the meaning of Rev. Proc.
2001-28, (v) subject to Section
168(g)(1)(A) of the Code, or (vi) subject to any
provision of state, local or foreign Law
comparable to any of the provisions
listed above.
(n) Neither Seller nor any Subsidiary has ever been a member of
any
consolidated, combined, affiliated or
unitary group of corporations for any Tax
purposes other than a group in which Seller
is the common parent.
(o) Neither Seller nor any Subsidiary has constituted either a
"distributing corporation" or a "controlled
corporation" (within the meaning of
Section 355(a)(1)(A) of the Code) in a
distribution of stock qualifying for
tax-free treatment under Section 355 of the
Code (A) in the two years prior to
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the date of this Agreement or (B) in a
distribution that could otherwise
constitute part of a "plan" or "series of
related transactions" (within the
meaning of Section 355(e) of the Code) in
conjunction with the transactions
contemplated by this Agreement.
(p) Seller and each Subsidiary has disclosed on its federal
income
Tax Returns all positions taken therein
that could give rise to substantial
understatement of federal income tax within
the meaning of Section 6662 of the
Code.
(q) Neither Seller nor any Subsidiary has or has ever had a
permanent
establishment in any jurisdiction other
than the United States, or has engaged
in a trade or business in any jurisdiction
other than the United States that
subjected it to tax in such country.
(r) Seller has not participated in any "reportable transaction"
as
defined in Treasury regulation Section
1.6011-4(b).
Notwithstanding the foregoing, for purposes of this Section 5.8,
any
reference to Seller or any Subsidiary shall
be deemed to include any Person that
merged with or was liquidated into Seller
or any Subsidiary.
5.9 Real Property.
(a) Company Disclosure Schedule 5.9(a)(i)(A) sets forth a
complete
list of (i) all real property and interests
in real property, including
improvements thereon and easements
appurtenant thereto, owned in fee by Seller
(individually, an "Owned Property" and
collectively, the "Owned Properties"),
and (ii) all real property and interests in
real property leased, licensed or
subleased by Seller (individually, a "Real
Property Lease" and collectively, the
"Real Property Leases" and, together with
the Owned Properties, being referred
to herein individually as a "Seller
Property" and collectively as the "Seller
Properties") as lessee or lessor, licensee
or licensor, including a description
of each such Real Property Lease (including
the name of the third party lessor
or lessee, the date of the lease or
sublease and all amendments thereto and the
manner in which such interest is held) and
the property encumbered thereby. The
properties listed on Company Disclosure
Schedule 5.9(a)(i)(B) are referred to
herein as the "Excluded Properties." Seller
has good and marketable fee title to
all Owned Property (other than the owned
Excluded Properties), free and clear of
all Liens of any nature whatsoever, except
(A) those Liens set forth on Company
Disclosure Schedule 5.9(a)(i)(A) and (B)
Permitted Exceptions. The Seller
Properties and the Excluded Properties
constitute all interests in real property
currently used, occupied or currently held
for use in connection with the
Business of Seller and which are necessary
for the continued operation of the
Business of Seller as the Business is
currently conducted. All of the Seller
Properties and the Excluded Properties and
buildings, fixtures and improvements
thereon owned or leased by Seller taken as
a whole (i) are in reasonably good
operating condition (ordinary wear and tear
excepted), and all mechanical and
other systems located thereon, taken as a
whole, are in reasonably good
operating condition, in each case in all
material respects, except for repairs,
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maintenance and replacements necessary in
the Ordinary Course of Business, and
(ii) were constructed and have been
operated in compliance with applicable Law,
except as could not reasonably be expected
to have, individually or in the
aggregate, a Material Adverse Effect.
Except as set forth on Company Disclosure
Schedule 5.9(a)(ii) and except as could not
reasonably be expected to have,
individually or in the aggregate, a
Material Adverse Effect, none of the
improvements located on the Seller
Properties constitute a legal non-conforming
use or otherwise require any special
dispensation, variance or special permit
under any Laws. Seller has delivered to
Parent true, correct and complete copies
of (i) all deeds, title reports and surveys
for the Owned Properties and (ii)
the Real Property Leases, together with all
amendments, modifications or
supplements, if any, thereto. Seller
Properties are not subject to any leases,
rights of first refusal, options to
purchase or rights of occupancy, except the
Real Property Leases and those set forth on
Company Disclosure Schedule
5.9(a)(iii).
(b) Except as set forth on Company Disclosure Schedule 5.9(b),
(i)
Seller has a valid, binding and enforceable
leasehold interest or license under
each of the Real Property Leases (other
than the leased Excluded Properties)
under which it is a lessee or licensee,
free and clear of all Liens other than
Permitted Exceptions, (ii) each of the Real
Property Leases is in full force and
effect, (iii) Seller is not in default
under any Lease, and no event has
occurred and no circumstance exists which,
if not remedied, and whether with or
without notice or the passage of time or
both, would result in such a default,
and (iv) Seller has not received or given
any notice of any default or event
that with notice or lapse of time, or both,
would constitute a default by Seller
under any of the Real Property Leases and,
to the Knowledge of Seller, no other
party is in default thereof, and no party
to any Real Property Lease has
exercised any termination rights with
respect thereto.
(c) Seller has all material certificates of occupancy and Permits
of
any Governmental Body necessary or useful
for the current use and operation of
each Seller Property, and Seller has fully
complied with all material conditions
of the Permits applicable to them. No
material default or violation, or event
that with the lapse of time or giving of
notice or both would become a material
default or violation, has occurred in the
due observance of any Permit. Seller
has not received any notice that any
certificate of occupancy or Permit will not
be renewed at the end of its current term,
and Seller is not aware of any facts
that would cause a denial of any renewal
application.
(d) There does not exist any actual or, to the Knowledge of
Seller,
threatened or contemplated condemnation or
eminent domain proceedings that
affect any Seller Property or any part
thereof, and Seller has not received any
notice, oral or written, of the intention
of any Governmental Body or other
Person to take or use all or any part
thereof.
(e) Seller has not received any notice from any insurance
company
that has issued a policy with respect to
any Seller Property requiring
performance of any structural or other
repairs or alterations to such Seller
Property.
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(f) Except as to the Excluded Assets, Seller does not own, hold,
and
is not obligated under and is not a party
to, any option, right of first refusal
or other contractual right to purchase,
acquire, sell, assign or dispose of any
real estate or any portion thereof or
interest therein. None of the Seller
Properties is subject to any option, right
of first refusal or other contractual
right to purchase, acquire, sell or dispose
of same.
5.10 Tangible Personal Property.
(a) Seller has good and marketable title to all of the items of
tangible personal property used in the
Business by Seller (except as sold or
disposed of subsequent to the date hereof
in the Ordinary Course of Business and
not in violation of this Agreement), free
and clear of any and all Liens, other
than Permitted Exceptions. All such items
of tangible personal property taken as
a whole are in reasonably good operating
condition (ordinary wear and tear
excepted) and are suitable for the purposes
used, in each case in all materials
respects, except for repairs, maintenance
and replacements necessary in the
Ordinary Course of Business.
(b) Company Disclosure Schedule 5.10 sets forth all leases of
personal property ("Personal Property
Leases") involving annual payments in
excess of $25,000 relating to personal
property used by Seller in the Business
or to which Seller is a party or by which
the properties or assets of Seller is
bound. All of the items of personal
property under the Personal Property Leases
taken as a whole are in reasonably good
operating condition and repair (ordinary
wear and tear excepted) and are suitable
for the purposes used, and such
property is in all material respects in the
condition required of such property
by the terms of the lease applicable
thereto during the term of the lease, in
each case, except for repairs, maintenance
and replacements necessary in the
Ordinary Course of Business. Seller has
delivered to the Parent true, correct
and complete copies of the Personal
Property Leases, together with all
amendments, modifications or supplements
thereto.
(c) Except as could not reasonably be expected to have,
individually
or in the aggregate, a Material Adverse
Effect, (i) Seller has a valid, binding
and enforceable leasehold interest under
each of the Personal Property Leases
under which it is a lessee and (ii) each of
the Personal Property Leases is in
full force and effect and Seller has not
received or given any notice of any
default or event that with notice or lapse
of time, or both, would constitute a
default by Seller under any of the Personal
Property Leases. To the Knowledge of
Seller, no other party is in default under
any of the Personal Property Leases,
and no party to any of the Personal
Property Leases has exercised any
termination rights with respect
thereto.
5.11 Intellectual Property.
(a) Company Disclosure Schedule 5.11(a) sets forth an accurate
and
complete list of all Patents, registered
Marks, pending applications for
registration of Marks, unregistered Marks,
registered Copyrights, pending
applications for registration of Copyrights
and Internet domain names owned or
filed by Seller and included in the
Purchased Intellectual Property. Company
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Disclosure Schedule 5.11(a) lists (i) the
record owner of each such item of
Purchased Intellectual Property, (ii) the
jurisdictions in which each such item
of Purchased Intellectual Property has been
issued or registered or in which any
such application for issuance or
registration has been filed and (iii) the
registration or application date, as
applicable.
(b) Except as disclosed in Company Disclosure Schedule 5.11(b),
Seller is the sole and exclusive owner of
all right, title and interest in and
to, or has the valid and continuing right
to use, all of the Purchased
Intellectual Property listed or that should
be listed in Company Disclosure
Schedule 5.11(a). To the Knowledge of
Seller, Seller is the sole and exclusive
owner of, or has valid and continuing
rights to use, sell, license and otherwise
commercially exploit, as the case may be,
all other Purchased Intellectual
Property and all Purchased Technology as
the same are used, sold, licensed and
otherwise commercially exploited in the
Business as presently conducted, free
and clear of all Liens or obligations to
others (except for those specified
Intellectual Property Licenses included in
Company Disclosure Schedule 5.12(a)).
(c) The Purchased Intellectual Property, the Purchased
Technology,
the manufacturing, licensing, marketing,
importation, offer for sale, sale or
use of any products and services in
connection with the Business as presently
and as currently proposed to be conducted,
and the present and currently
proposed business practices, methods and
operations of Seller do not infringe,
constitute an unauthorized use or
misappropriation of, dilute or violate any
Intellectual Property or other right of any
Person. The Purchased Intellectual
Property, the Purchased Technology and the
Intellectual Property Licenses
include all of the Intellectual Property
and Technology necessary and sufficient
to enable Seller to conduct the Business in
the manner in which such Business is
currently being conducted.
(d) To the Knowledge of Seller, no Person is infringing,
violating,
misusing, diluting or misappropriating any
Purchased Intellectual Property or
Purchased Technology, and no such claims
have been made against any Person by
Seller.
(e) No Trade Secret material to the Business as presently
conducted
has been authorized to be disclosed or has
been actually disclosed by Seller to
any of its Former Employees, Employees or
any third Person other than pursuant
to a non-disclosure agreement restricting
the disclosure and use of the
Purchased Intellectual Property and
Purchased Technology. Seller has taken
adequate security measures to protect the
confidentiality and value of all the
material Trade Secrets included in the
Purchased Intellectual Property and any
other non-public, proprietary information
included in the Purchased Technology,
which measures are reasonable in the
industry in which the Business operates.
(f) As of the date hereof, Seller is not the subject of any
pending
or, to the Knowledge of Seller, threatened
Legal Proceedings which involve a
claim of infringement, unauthorized use,
misappropriation, dilution or violation
by any Person against Seller or challenging
the ownership, use, validity or
enforceability of any Purchased
Intellectual Property or Purchased Technology.
Seller has not received written (including
by electronic mail) notice of any
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such threatened claim and, to the Knowledge
of Seller, there are no facts or
circumstances that would form the basis for
any such claim or challenge. The
Purchased Intellectual Property and the
Purchased Technology, and all of
Seller's rights in and to the Purchased
Intellectual Property and Purchased
Technology, are valid and enforceable.
(g) The consummation of the transactions contemplated hereby will
not
result in the loss or impairment of
Purchaser's right to own or use any of the
Purchased Intellectual Property or
Purchased Technology.
(h) Neither this Agreement nor any transaction contemplated by
this
Agreement will result in the grant of any
license with respect to any Purchased
Intellectual Property or Purchased
Technology to any third Person pursuant to
any Contract to which Seller is a party or
by which any assets or properties of
Seller is bound.
(i) Company Disclosure Schedule 5.11(i) sets forth a complete
and
accurate list of (i) all Software included
in the Purchased Technology developed
by or for Seller, (ii) all Software
exclusively owned by Seller that is not
included in the Purchased Technology but is
incorporated, embedded or bundled
with any Software listed in subclause (i)
above and (iii) all Software not
exclusively owned by Seller and
incorporated, embedded or bundled with any
Software listed in subclause (i) above
(excluding such Software licensed to
Seller under a shrink-wrap or click-through
agreement on reasonable terms
through commercial distributors or in
consumer retail stores for a license fee
of no more than $10,000). Seller has not
incorporated any "open source,"
"freeware," "shareware" or other Software
having similar licensing or
distribution models in any Software
developed, licensed, distributed or
otherwise exploited by or for Seller and
included in the Purchased Technology.
(j) Seller has not licensed or provided to any third Person, or
otherwise permitted any third Person to
access or use, any source code or
related materials for any Software
developed by or for Seller and included in
the Purchased Technology. Seller is not
currently a party to any source code
escrow agreement or any other agreement (or
a party to any agreement obligating
Seller to enter into a source code escrow
agreement or other agreement)
requiring the deposit of source code or
related materials for any such Software.
5.12 Material Contracts.
(a) Company Disclosure Schedule 5.12(a) sets forth, by reference
to
the applicable subsection of this Section
5.12(a), all of the following
Contracts to which Seller is a party or by
which it or its assets or properties
are bound (collectively, the "Material
Contracts"):
(i) Contracts with any current or former officer, director,
member or Affiliate of Seller;
(ii) Contracts with any labor union or association representing
any Employee of Seller;
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(iii) Contracts for the sale of any of the assets of Seller
other
than in the Ordinary Course of Business or for the grant to any
Person
of any preferential rights to purchase any of its assets;
(iv) Contracts for joint ventures, strategic alliances,
partnerships, or sharing of profits or proprietary information;
(v) Contracts containing covenants of Seller not to compete in
any line of business or with any Person in any geographical area
or
not to solicit or hire any Person with respect to employment or
covenants of any other Person not to compete with Seller in any
line
of business or in any geographical area or not to solicit or hire
any
Person with respect to employment;
(vi) Contracts relating to the acquisition (by merger, purchase
of stock or assets or otherwise) by Seller of any operating
business
or material assets or the capital stock of any other Person;
(vii) Contracts relating to the incurrence, assumption or
guarantee of any Indebtedness or imposing a Lien on any of the
assets
of Seller, including indentures, guarantees, loan or credit
agreements, sale and leaseback agreements, purchase money
obligations
incurred in connection with the acquisition of property,
mortgages,
pledge agreements, security agreements, or conditional sale or
title
retention agreements;
(viii) each purchase Contract giving rise to Liabilities of
Seller in excess of $100,000;
(ix) each Contract providing for payments by or to Seller in
excess of $100,000 in any fiscal year or $250,000 in the
aggregate
during the term thereof;
(x) all Contracts obligating Seller to provide or obtain
products
or services for a period of one year or more or requiring Seller
to
purchase or sell a stated portion of its requirements or
outputs;
(xi) Contracts under which Seller has made advances or loans to
any other Person, except advances to Employees of Seller in the
Ordinary Course of Business;
(xii) Contracts providing for severance, retention, change in
control or other similar payments;
(xiii) Contracts for the employment of any individual on a
full-time, part-time or consulting or other basis providing
annual
compensation in excess of $100,000;
(xiv) management Contracts and Contracts with independent
contractors or consultants (or similar arrangements) in excess
of
$100,000 that are not cancelable without penalty or further
payment
and without more than 30 days' notice;
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(xv) outstanding Contracts of guaranty, surety or
indemnification, direct or indirect, by Seller;
(xvi) Contracts (or group of related contracts) which involve
the
expenditure of more than $100,000 annually or $250,000 in the
aggregate or require performance by any party more than one year
from
the date hereof;
(xvii) All Intellectual Property Licenses, royalty Contracts
and
other Contracts relating to any Intellectual Property (except
licenses
pertaining to "off-the-shelf" commercially available Software
used
pursuant to shrink-wrap or click-through license grants on
reasonable
terms for a license fee of no more than $10,000); and
(xviii) Contracts that are otherwise material to Seller.
(b) Each of the Material Contracts is in full force and effect and
is
the legal, valid and binding obligation of
Seller, and of the other parties
thereto, enforceable against each of them
in accordance with its terms and, upon
consummation of the transactions
contemplated by this Agreement, shall, except
as otherwise stated in Company Disclosure
Schedule 5.12(b), continue in full
force and effect without penalty or other
adverse consequence. Seller is not in
material default under any Material
Contract, nor, to the Knowledge of Seller,
is any other party to any Material Contract
in breach of or default thereunder,
and no event has occurred that with the
lapse of time or the giving of notice or
both would constitute a material breach or
default by Seller or any other party
thereunder. No party to any of the Material
Contracts has exercised any
termination rights with respect thereto,
and no such party has given notice of
any significant dispute with respect to any
Material Contract. Seller has, and
will transfer to Purchaser at the Closing,
good and valid title to the Material
Contracts, free and clear of all Liens
other than Permitted Exceptions. Seller
has delivered to Parent true, correct and
complete copies of all of the Material
Contracts, together with all amendments,
modifications or supplements thereto.
(c) Company Disclosure Schedule 5.12(c) sets forth a complete
and
accurate list of all consents, waivers,
approvals or authorizations of any
Person required to transfer the Material
Contracts.
5.13 Employee Benefits.
(a) Company Disclosure Schedule 5.13(a) sets forth a complete
and
correct list of: (i) all "employee benefit
plans", as defined in Section 3(3) of
ERISA, and all other employee benefit
arrangements or payroll practices,
including bonus plans, consulting or other
compensation agreements, incentive,
equity or equity-based compensation, or
deferred compensation arrangements,
stock purchase, severance pay, sick leave,
vacation pay, salary continuation,
disability, hospitalization, medical
insurance, life insurance, scholarship
programs maintained by Seller or to which
Seller contributed or is obligated to
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contribute thereunder for current or former
employees of Seller or that cover
Employees of Seller (the "Employee Benefit
Plans"), and (ii) all "employee
pension plans", as defined in Section 3(2)
of ERISA, subject to Title IV of
ERISA or Section 412 of the Code,
maintained by Seller and any trade or business
(whether or not incorporated) which are or
have ever been under common control,
or which are or have ever been treated as a
single employer, with Seller under
Sections 414(b), (c), (m) or (o) of the
Code ("ERISA Affiliate") or to which
Seller and any ERISA Affiliate contributed
or has ever been obligated to
contribute thereunder (the "ERISA Affiliate
Plans"). Company Disclosure Schedule
5.13(a) separately sets forth each Seller
or ERISA Affiliate Plan which is a
multiemployer plan as defined in Section
3(37) of ERISA ("Multiemployer Plans"),
or has been subject to Sections 4063 or
4064 of ERISA ("Multiple Employer
Plans").
(b) True, correct and complete copies of the following
documents,
with respect to each of the Employee
Benefit Plans and ERISA Affiliate Plans (as
applicable), have been delivered to Parent
(A) any plans and related trust
documents, and all amendments thereto, (B)
the most recent Forms 5500 for the
past three (3) years and schedules thereto,
(C) the most recent financial
statements and actuarial valuations for the
past three (3) years, (D) the most
recent IRS determination letter, (E) the
most recent summary plan descriptions
(including letters or other documents
updating such descriptions) and (F)
written descriptions of all non-written
agreements relating to the Employee
Benefit Plans and ERISA Affiliate
Plans.
(c) Each of the Employee Benefit Plans and ERISA Affiliate
Plans
intended to qualify under Section 401 of
the Code ("Qualified Plans") so qualify
and the trusts maintained thereto are
exempt from federal income taxation under
Section 501 of the Code, and, except as
disclosed on Company Disclosure Schedule
5.13(c), nothing has occurred with respect
to the operation of any such plan
which could cause the loss of such
qualification or exemption or the imposition
of any liability, penalty or tax under
ERISA or the Code.
(d) Except as reserved against or accrued on the Balance Sheet
and
the Estimated Closing Balance Sheet, all
contributions and premiums required by
Law or by the terms of any Employee Benefit
Plan or ERISA Affiliate Plan or any
agreement relating thereto have been timely
made (without regard to any waivers
granted with respect thereto) to any funds
or trusts established thereunder or
in connection therewith, and no accumulated
funding deficiencies exist in any of
such plans subject to Section 412 of the
Code, which are single employer plans,
and all contributions for any period ending
on or before the Closing Date which
are not yet due will have been paid or
accrued on the Estimated Closing Balance
Sheet.
(e) The benefit liabilities, as defined in Section 4001(a)(16)
of
ERISA, of each of the Employee Benefit
Plans and ERISA Affiliate Plans subject
to Title IV of ERISA using the actuarial
assumptions that would be used by the
Pension Benefit Guaranty Corporation (the
"PBGC") in the event it terminated
each such plan, do not exceed the
combination of the fair market value of the
assets of each such plan plus the
liabilities accrued on the Balance Sheet and
the Estimated Closing Balance Sheet. The
liabilities of each Employee Benefit
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Plan that has been terminated or otherwise
wound up have been fully discharged
in full compliance with applicable Law. To
the Knowledge of Seller, the amount
of withdrawal liability that Seller and its
ERISA Affiliates would incur, in the
aggregate, as a result of a complete
withdrawal from each of the Multiemployer
Plans set forth on Company Disclosure
Schedule 5.13(a) would not exceed
$3,000,000 for all such plans.
(f) There has been no "reportable event" as that term is defined
in
Section 4043 of ERISA and the regulations
thereunder with respect to any of the
Employee Benefit Plans or ERISA Affiliate
Plans subject to Title IV of ERISA
which would require the giving of notice,
or any event requiring notice to be
provided under Section 4041(c)(3)(C) or
4063(a) of ERISA.
(g) Neither Seller nor any ERISA Affiliate or any organization
to
which Seller or any ERISA Affiliate is a
successor or parent corporation, within
the meaning of Section 4069(b) of ERISA,
has engaged in any transaction, within
the meaning of Section 4069 of ERISA.
(h) None of the Employee Benefit Plans which are "welfare
benefit
plans" within the meaning of Section 3(1)
of ERISA provide for continuing
benefits or coverage for any participant or
any beneficiary of a participant
post-termination of employment except as
may be required under COBRA and at the
expense of the participant or the
participant's beneficiary. Each of Seller and
any ERISA Affiliate which maintains a
"group health plan" within the meaning of
Section 5000(b)(1) of the Code has complied
with the notice and continuation
requirements of Section 4980B of the Code,
COBRA, Part 6 of Subtitle B of Title
I of ERISA and the regulations
thereunder.
(i) There has been no violation of ERISA or the Code with respect
to
the filing of applicable returns, reports,
documents and notices regarding any
of the Employee Benefit Plans or ERISA
Affiliate Plans with the Secretary of
Labor or the Secretary of the Treasury or
the furnishing of such notices or
documents to the participants or
beneficiaries of the Employee Benefit Plans or
ERISA Affiliate Plans.
(j) There are no pending Legal Proceedings which have been
asserted
or instituted against any of the Employee
Benefit Plans or ERISA Affiliate
Plans, the assets of any such plans or
Seller, or the plan administrator or any
fiduciary of the Employee Benefit Plans or
ERISA Affiliate Plans with respect to
the operation of such plans (other than
routine, uncontested benefit claims),
and, to the Knowledge of Seller, there are
no facts or circumstances which could
form the basis for any such Legal
Proceeding.
(k) Each of the Employee Benefit Plans and ERISA Affiliate Plans
has
been maintained, in all material respects,
in accordance with its terms and all
provisions of applicable Law. All
amendments and actions required to bring each
of the Employee Benefit Plans and ERISA
Affiliate Plans into conformity in all
material respects with all of the
applicable provisions of ERISA and other
applicable Laws have been made or taken
except to the extent that such
amendments or actions are not required by
law to be made or taken until a date
after the Closing Date and are disclosed on
Company Disclosure Schedule 5.13(j).
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(l) Seller and any ERISA Affiliate which maintains a "benefits
plan"
within the meaning of Section 5000(b)(1) of
ERISA, have complied with the notice
and continuation requirements of Section
4980B of the Code or Part 6 of Title I
of ERISA and the applicable regulations
thereunder.
(m) Neither Seller nor any ERISA Affiliate or any organization
to
which any is a successor or parent
corporation, has divested any business or
entity maintaining or sponsoring a defined
benefit pension plan having unfunded
benefit liabilities (within the meaning of
Section 4001(a)(18) of ERISA) or
transferred any such plan to any person
other than Seller or any ERISA Affiliate
during the five-year period ending on the
Closing Date.
(n) Neither Seller nor any "party in interest" or "disqualified
person" with respect to the Employee
Benefit Plans or ERISA Affiliate Plans has
engaged in a non-exempt "prohibited
transaction" within the meaning of Section
4975 of the Code or Section 406 of
ERISA.
(o) Neither Seller nor any ERISA Affiliate has terminated any
Employee Benefit Plan or ERISA Affiliate
Plan subject to Title IV of ERISA, or
incurred any outstanding liability under
Section 4062 of ERISA to the Pension
Benefit Guaranty Corporation or to a
trustee appointed under Section 4042 of
ERISA.
(p) Except as set forth on Company Disclosure Schedule 5.13(p),
neither the execution and delivery of this
Agreement nor the consummation of the
transactions contemplated hereby will (i)
result in any payment becoming due to
any Employee of Seller; (ii) increase any
benefits otherwise payable under any
Employee Benefit Plan or ERISA Affiliate
Plan; or (iii) result in the
acceleration of the time of payment or
vesting of any such benefits.
(q) Seller is not a party to any contract, plan or commitment,
whether legally binding or not, to create
any additional Employee Benefit Plan
or ERISA Affiliate Plan, or to modify any
existing Employee Benefit Plan or
Pension Plan.
(r) No stock or other security issued by Seller forms or has formed
a
material part of the assets of any Employee
Benefit Plan or ERISA Affiliate
Plan.
(s) Any individual who performs services for Seller (other than
through a contract with an organization
other than such individual) and who is
not treated as an employee for federal
income tax purposes by Seller is not an
employee for such purposes.
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5.14 Labor.
(a) Except as set forth on Company Disclosure Schedule 5.14(a)
(the
"Labor Contracts"), Seller is not a party
to any labor or collective bargaining
agreement and there are no labor or
collective bargaining agreements which
pertain to Employees of Seller. Seller has
delivered or otherwise made available
to Parent true, correct and complete copies
of the labor or collective
bargaining agreements listed on Company
Disclosure Schedule 5.14(a), together
with all amendments, modifications or
supplements thereto.
(b) Except as set forth on Company Disclosure Schedule 5.14(b),
no
Employees are represented by any labor
organization. No labor organization or
group of Employees of Seller has made a
pending demand for recognition, and
there are no representation proceedings or
petitions seeking a representation
proceeding presently pending or, to the
Knowledge of Seller, threatened to be
brought or filed, with the National Labor
Relations Board or other labor
relations tribunal. There is no organizing
activity involving Seller pending or,
to the Knowledge of Seller, threatened by
any labor organization or group of
Employees.
(c) There are no (i) strikes, work stoppages, slowdowns, lockouts
or
arbitrations or (ii) material grievances or
other labor disputes pending or, to
the Knowledge of Seller, threatened against
or involving Seller involving any
Employee. There are no unfair labor
practice charges, grievances or complaints
pending or, to the Knowledge of Seller,
threatened by or on behalf of any
Employee or Former Employee.
(d) There are no complaints, charges or claims against Seller
pending
or, to Knowledge of Seller, threatened that
could be brought or filed with any
Governmental Body or based on, arising out
of, in connection with or otherwise
relating to, the employment or termination
of employment or failure to employ
any individual by Seller. Seller is in
compliance with all Laws relating to the
employment of labor, including all such
Laws relating to wages, hours, WARN and
any similar state or local "mass layoff" or
"plant closing" Law, collective
bargaining, discrimination, civil rights,
safety and health, workers'
compensation and the collection and payment
of withholding and/or social
security taxes and any similar tax except
as could not reasonably be expected to
have, individually or in the aggregate, a
Material Adverse Effect. There has
been no "mass layoff" or "plant closing"
(as defined by WARN) with respect to
Seller within the six months prior to
Closing.
5.15 Litigation. Except as set forth in Company Disclosure
Schedule
5.15, there is no Legal Proceeding pending
or, to the Knowledge of Seller,
threatened against Seller (or to the
Knowledge of Seller, pending or threatened
against any of the officers, directors or
key Employees of Seller with respect
to their business activities on behalf of
Seller), or to which Seller is
otherwise a party, before any Governmental
Body; nor to the Knowledge of Seller
is there any reasonable basis for any such
Legal Proceeding. Except as set forth
on Company Disclosure Schedule 5.15, Seller
is not subject to any Order,
settlement agreement or stipulation and
Seller is not in breach or violation of
any Order, settlement agreement or
stipulation. Except as set forth on Company
Disclosure Schedule 5.15, Seller is not
engaged in any legal action to recover
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monies due it or for damages sustained by
it. There are no Legal Proceedings
pending or, to the Knowledge of Seller,
threatened against Seller or to which
Seller is otherwise a party relating to
this Agreement or any Seller Document or
the transactions contemplated hereby or
thereby.
5.16 Compliance with Laws; Permits.
(a) To the Knowledge of Seller, Seller is in compliance with all
Laws
applicable to its operations or assets or
the Business. Seller has not received
any written or other notice of or been
charged with the violation of any Laws.
To the Knowledge of Seller, Seller is not
under investigation with respect to
the violation of any Laws and there are no
facts or circumstances which could
form the basis for any such violation.
(b) Company Disclosure Schedule 5.16(b) contains a list of all
material Permits which are required for the
operation of the Business as
presently conducted and as presently
intended to be conducted ("Seller
Permits"). Seller currently has all
material Permits which are required for the
operation of the Business as presently
conducted and as presently intended to be
conducted. Seller is not in default or
violation, and no event has occurred
which, with notice or the lapse of time or
both, would constitute a default or
violation, in any material respect of any
term, condition or provision of any
Seller Permit and, to the Knowledge of
Seller, there are no facts or
circumstances which could form the basis
for any su
