UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report:
January 3, 2005
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(Date of earliest event reported)
RAYOVAC CORPORATION
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(Exact Name of Registrant as Specified in Charter)
Wisconsin 001-13615 22-2423556
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(State or other Jurisdiction (Commission File No.) (IRS Employer
of Incorporation) Identification No.)
Six Concourse Parkway, Suite 3300, Atlanta, Georgia 30328
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(Address of principal executive offices, including zip code)
(770) 829-6200
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(Registrant's telephone number, including area code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the Registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On January 3, 2005, Rayovac Corporation, a Wisconsin corporation (the
"Company") entered into an Agreement and Plan of Merger (the "Merger
Agreement") by and among the Company, Lindbergh Corporation, a Delaware
corporation and a wholly owned subsidiary of the Company ("Sub") and United
Industries Corporation, a Delaware corporation ("United"), pursuant to which
the Company will acquire all of the outstanding equity interests of United. In
accordance with the Merger Agreement, Sub will merge with and into United, with
United continuing as the surviving corporation. The total merger consideration
will consist of 13.75 million shares of Company common stock and $70 million in
cash.
The transaction has been approved by the Company's and United's
boards of directors and holders of a majority of United's voting capital stock
and is subject to regulatory approvals and other customary closing conditions.
The Company expects the transaction to close in February.
In connection with the Merger Agreement, the Company has also entered
into a shareholder's agreement, and pursuant to the Merger Agreement, the
Company will enter into a registration rights agreement and a standstill
agreement at the closing of the transaction.
Pursuant to the terms of the shareholder's agreement by and between
the Company and UIC Holdings, L.L.C. ("Holdings") dated as of January 3, 2005
(the "Shareholder's Agreement"), the Company will increase the size of its
board of directors from eight to ten and cause each of the new director
positions (Class II directors on the Company's classified board) to be filled
by persons designated by Holdings. The Company will allow Holdings to include
on any slate of directors presented to the Company's stockholders for election
at the appropriate meeting of stockholders, to be approved by the Company's
nominating committee, up to two directors on the Company's board of directors
for so long as Holdings and certain of its affiliates own at least 15% of the
Company's issued and outstanding common stock on a fully-diluted basis, and one
director for so long as Holdings and certain of its affiliates own at least 10%
of the Company's issued and outstanding common stock on a fully-diluted basis.
The Shareholder's Agreement prohibits Holdings from selling or transferring
shares of the Company's common stock it received in the Company's acquisition
of United for 12 months following the consummation of the acquisition or from
selling or transferring more than 50% of such shares during the 18 month period
following the consummation of that acquisition.
Pursuant to the terms of the registration rights agreement by and
among the Company and holders of shares of United's common stock immediately
prior to the acquisition, which will be entered into at the closing of the
acquisition (the "Registration Rights Agreement"), the Company will agree to
prepare and file with the U.S. Securities and Exchange Commission, not later
than nine months following the consummation of the acquisition of United, a
registration statement to permit the public offering and resale under the
Securities Act of 1933 on a continuous basis shares of the Company's common
stock held by the beneficiaries of the agreement. The Company will also grant
to the former stockholders of United certain rights to require the Company, on
not more than three occasions, to prepare and file a registration statement
relating to the shares received by them in the merger as well as certain
rights to include such shares in any registration statement proposed to be
filed by the Company.
Pursuant to the terms of the standstill agreement by and among
Holdings, Thomas H. Lee Equity Fund IV, L.P., THL Equity Advisors, L.P., Thomas
H, Lee Partners, L.P. and Thomas H. Lee Advisors, L.L.C. (together, the
"Restricted Parties") and the Company, which will be entered into at the
closing of the acquisition (the "Standstill Agreement"), the Restricted Parties
and certain of their affiliates will be prohibited, until the fifth anniversary
of consummation of the acquisition of United, from acquiring ownership in
excess of 28% of the Company's outstanding capital stock on a fully-diluted
basis, soliciting proxies or consents with respect to the Company's capital
stock, soliciting or encouraging third parties to acquire or seek to acquire
the Company, a significant portion of its assets or more than 5% of its
outstanding capital stock, or joining or participating in a pooling agreement,
syndicate, voting trust or other similar arrangement with respect to the
Company's capital stock for the purpose of acquiring, holding, voting or
disposing of the Company's capital stock.
On January 4, 2005, the Company announced that it had entered into the
Merger Agreement by press release, a copy of which is attached hereto as
Exhibit 99.1 and incorporated herein by reference.
David A. Jones, Chairman of the Board and Chief Executive Officer of
the Company, and trusts for his family members, own 200,000 shares of United
common stock, and Mr. Jones holds vested options to acquire 400,000 shares of
United common stock at a weighted average exercise price of $2.00 per share.
Mr. Jones was a member of the board of directors of United from January 20,
1999 to December 31, 2003 and provided consulting services to United under an
agreement that was terminated on September 28, 2004. Thomas R. Shepherd, a
member of the Company's Board of Directors, is an investor in Thomas H. Lee
Equity Fund IV, L.P. The Company's Board of Directors established an
independent committee of the Board, which did not include Mr. Jones or Mr.
Shepherd, to evaluate, negotiate and approve the terms of the transaction.
The foregoing descriptions of the Merger Agreement, the Shareholder's
Agreement, the Registration Rights Agreement and the Standstill Agreement do
not purport to be complete statements of the parties' rights thereunder and are
qualified in their entirety by reference to the Merger Agreement, the
Shareholder's Agreement, the form of Registration Rights Agreement and the form
of Standstill Agreement, copies of which are attached hereto as Exhibits 2.1,
4.1, 4.2 and 4.3, respectively, and incorporated herein by reference.
Item 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
Exhibit Description of Exhibit
Number
2.1 Agreement and Plan of Merger by and among
Rayovac Corporation, Lindbergh Corporation and
United Industries Corporation dated as of
January 3, 2005.
4.1 Shareholder's Agreement by and between Rayovac
Corporation and UIC Holdings, L.L.C.
dated as of January 3, 2005.
4.2 Form of Registration Rights Agreement by and
among Rayovac Corporation and certain
shareholders (Exhibit E to Agreement and Plan
of Merger).
4.3 Form of Standstill Agreement by and among
Rayovac Corporation, UIC Holdings, L.L.C.,
Thomas H. Lee Equity Fund IV, L.P., THL Equity
Advisors, L.P., Thomas H, Lee Partners, L.P.
and Thomas H. Lee Advisors, L.L.C. (Exhibit I
to Agreement and Plan of Merger).
99.1 Press Release dated January 4, 2005 issued by
Rayovac Corporation.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: January 4, 2005 RAYOVAC CORPORATION
By: /s/ Randall J. Steward
---------------------------
Name: Randall J. Steward
Title: Executive Vice President and
Chief Financial Officer
EXHIBIT INDEX
Exhibit Description of Exhibit
Number
2.1 Agreement and Plan of Merger by and among
Rayovac Corporation, Lindbergh Corporation and
United Industries Corporation dated as of
January 3, 2005.
4.1 Shareholder's Agreement by and between Rayovac
Corporation and UIC Holdings, L.L.C.
dated as of January 3, 2005.
4.2 Form of Registration Rights Agreement by and
among Rayovac Corporation and certain
shareholders (Exhibit E to Agreement and Plan
of Merger).
4.3 Form of Standstill Agreement by and among
Rayovac Corporation, UIC Holdings, L.L.C.,
Thomas H. Lee Equity Fund IV, L.P., THL Equity
Advisors, L.P., Thomas H, Lee Partners, L.P.
and Thomas H. Lee Advisors, L.L.C. (Exhibit I
to Agreement and Plan of Merger).
99.1 Press Release dated January 4, 2005 issued by
Rayovac Corporation.
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
RAYOVAC CORPORATION,
LINDBERGH CORPORATION
AND
UNITED INDUSTRIES CORPORATION
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Dated January 3, 2005
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TABLE OF CONTENTS
Page
ARTICLE I. THE MERGER.............................................................................................1
Section 1.1 The Merger.............................................................................1
Section 1.2 Effective Time; Closing................................................................1
Section 1.3 Effect of the Merger...................................................................2
Section 1.4 Articles of Incorporation and Bylaws...................................................2
Section 1.5 Directors and Officers.................................................................2
Section 1.6 Tax Consequences.......................................................................2
Section 1.7 Further Action.........................................................................2
ARTICLE II. CONSIDERATION; EXCHANGE PROCEDURES....................................................................2
Section 2.1 Merger Consideration...................................................................2
Section 2.2 Certain Definitions....................................................................4
Section 2.3 Treatment of Shares....................................................................5
Section 2.4 Rights as Stockholders; Stock Transfers................................................5
Section 2.5 Fractional Shares and Cash and Rounding................................................6
Section 2.6 Exchange Procedures; Deposit of Merger Consideration...................................6
Section 2.7 Anti-Dilution Provisions..............................................................12
Section 2.8 Legending of Securities...............................................................12
ARTICLE III. REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COMPANY..........................................13
Section 3.1 Organization and Qualification........................................................13
Section 3.2 Capitalization and Ownership..........................................................14
Section 3.3 Authority.............................................................................15
Section 3.4 No Consents Required..................................................................15
Section 3.5 Absence of Violations or Conflicts....................................................16
Section 3.6 Financial Statements..................................................................16
Section 3.7 Absence of Certain Changes or Events..................................................17
Section 3.8 No Claims Against the Company.........................................................17
Section 3.9 Absence of Undisclosed Liabilities; Indenture.........................................17
Section 3.10 Legal Proceedings.....................................................................18
Section 3.11 Environmental Matters.................................................................18
Section 3.12 Governmental Authorization and Compliance with Laws...................................20
Section 3.13 Intellectual Property.................................................................20
Section 3.14 Employee Plans........................................................................22
Section 3.15 Tax Matters...........................................................................25
Section 3.16 Title to Properties; Adequacy.........................................................27
Section 3.17 Contracts.............................................................................28
Section 3.18 Inventory.............................................................................29
Section 3.19 Accounts Receivable...................................................................29
Section 3.20 Defective Products; Product Liability; Product Recalls................................29
Section 3.21 Major Customers.......................................................................30
Section 3.22 Major Suppliers.......................................................................31
Section 3.23 Labor Relations.......................................................................31
Section 3.24 Insider Interests.....................................................................32
Section 3.25 Insurance.............................................................................32
Section 3.26 Corporate Records.....................................................................32
Section 3.27 SEC Reports...........................................................................33
Section 3.28 Bank Accounts.........................................................................33
Section 3.29 Stockholders..........................................................................33
Section 3.30 Derivatives...........................................................................34
Section 3.31 Accounting Controls...................................................................34
Section 3.32 Board Recommendation..................................................................34
Section 3.33 Combinations Involving the Company....................................................34
Section 3.34 Qualification as a Reorganization.....................................................35
Section 3.35 Brokers, Finders and Investment Bankers...............................................35
Section 3.36 No Other Representations or Warranties; Disclosure Letter.............................35
Section 3.37 Acknowledgement of the Company........................................................35
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF ACQUIROR...........................................................36
Section 4.1 Organization and Qualification........................................................36
Section 4.2 Authority.............................................................................36
Section 4.3 No Consents Required..................................................................37
Section 4.4 Absence of Violations or Conflicts....................................................37
Section 4.5 Absence of Certain Changes or Events..................................................37
Section 4.6 SEC Reports...........................................................................37
Section 4.7 Rayovac Shares........................................................................38
Section 4.8 Financing.............................................................................38
Section 4.9 Investment............................................................................39
Section 4.10 Litigation............................................................................39
Section 4.11 Qualification as a Reorganization.....................................................39
Section 4.12 Brokers, Finders and Investment Bankers...............................................39
Section 4.13 No Other Representations or Warranties; Disclosure Letter.............................39
Section 4.14 Acknowledgement of Acquiror...........................................................40
ARTICLE V. ADDITIONAL COVENANTS AND AGREEMENTS...................................................................40
Section 5.1 Information Statement.................................................................40
Section 5.2 Conduct of Business Pending the Closing...............................................41
Section 5.3 Reasonable Best Efforts; Further Assurances; Cooperation..............................44
Section 5.4 Expenses..............................................................................44
Section 5.5 No Solicitation of Transactions.......................................................44
Section 5.6 Public Announcements..................................................................45
Section 5.7 Additional Financial Statements.......................................................45
Section 5.8 Release of Company....................................................................45
Section 5.9 Access to Books and Records...........................................................45
Section 5.10 Filing under the HSR Act and the Canadian Competition Act.............................45
Section 5.11 Restrictions on Transfers of the Acquiror Stock.......................................47
Section 5.12 Employee Matters......................................................................47
Section 5.13 Registration Rights with Respect to Acquiror Stock....................................47
Section 5.14 Director and Officer Liabilities and Indemnification..................................48
Section 5.15 Conduct of Business of Newco..........................................................49
Section 5.16 Supplemental Indenture................................................................49
Section 5.17 Cooperation in Syndication of New Debt................................................49
Section 5.18 Affiliate Letters.....................................................................50
Section 5.19 Stock Exchange Listing................................................................50
Section 5.20 Confidentiality.......................................................................50
Section 5.21 Reorganization Treatment..............................................................51
Section 5.22 Notice of Consent.....................................................................51
Section 5.23 Options and Warrants Exercised Between the Date Hereof and the Effective Time.........51
ARTICLE VI. CONDITIONS PRECEDENT TO THE CLOSING..................................................................51
Section 6.1 Conditions of the Parties' Obligations to Effect the Closing..........................51
Section 6.2 Conditions to Obligations of Acquiror and Newco.......................................52
Section 6.3 Conditions to Obligations of the Company..............................................53
ARTICLE VII. ITEMS TO BE DELIVERED AT THE CLOSING................................................................53
Section 7.1 To be Delivered by the Company........................................................53
Section 7.2 To be Delivered by Acquiror and Newco.................................................54
ARTICLE VIII. TERMINATION AND ABANDONMENT........................................................................55
Section 8.1 Termination and Abandonment...........................................................55
Section 8.2 Specific Performance; Remedies Cumulative.............................................56
Section 8.3 Rights and Obligations upon Termination...............................................56
Section 8.4 Effect of Termination.................................................................56
ARTICLE IX. GENERAL PROVISIONS...................................................................................56
Section 9.1 Non-Survival of Representations, Warranties, Covenants and Agreements.................56
Section 9.2 Notices...............................................................................57
Section 9.3 Table of Contents; Headings; Rules of Construction....................................58
Section 9.4 Amendment.............................................................................58
Section 9.5 Severability..........................................................................58
Section 9.6 Waiver................................................................................58
Section 9.7 No Third Party Beneficiaries; Assignment..............................................59
Section 9.8 Time of the Essence; Computation of Time..............................................59
Section 9.9 Disclosure............................................................................59
Section 9.10 Counterparts..........................................................................59
Section 9.11 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial..........................59
Section 9.12 No Strict Construction................................................................60
Section 9.13 Entire Agreement......................................................................60
DEFINED TERMS
$................................................................................................................58
Acquiror..........................................................................................................1
Acquiror Material Adverse Effect.................................................................................36
Acquiror SEC Filings.............................................................................................38
Acquiror Stock....................................................................................................5
Acquisition Proposal.............................................................................................44
Affiliate........................................................................................................45
Agreement.........................................................................................................1
Antitrust Division...............................................................................................45
Authorizations...................................................................................................16
Authorized Officer...............................................................................................49
Business Day.....................................................................................................58
C$...............................................................................................................58
Canadian Competition Act Compliance..............................................................................46
Canadian Employee Plan...........................................................................................22
Canadian Subsidiaries............................................................................................31
Canadian Tax Act.................................................................................................27
Cash Election Shares..............................................................................................7
Certificate of Merger.............................................................................................2
Claim............................................................................................................18
Clean-Up.........................................................................................................18
Closing...........................................................................................................2
Closing Date......................................................................................................2
COBRA............................................................................................................24
Code..............................................................................................................1
Commitment Letters...............................................................................................38
Company...........................................................................................................1
Company Common Share..............................................................................................4
Company Contracts................................................................................................28
Company Delivered Agreements.....................................................................................15
Company Financial Statements.....................................................................................16
Company Intellectual Property Rights.............................................................................21
Company Licenses.................................................................................................20
Company SEC Filings..............................................................................................33
Company Third Party Intellectual Property Rights.................................................................21
Competition Act..................................................................................................46
Consent...........................................................................................................1
Delaware Law......................................................................................................1
Disclosure Letter................................................................................................13
Dissenting Shares.................................................................................................5
DOL..............................................................................................................23
Effective Time....................................................................................................2
Election Deadline.................................................................................................8
Election Form.....................................................................................................7
Employee Plans...................................................................................................23
Environmental Claim..............................................................................................18
Environmental Law................................................................................................18
Environmental Permit.............................................................................................19
ERISA............................................................................................................22
ERISA Affiliate..................................................................................................23
Exchange Act.....................................................................................................33
Exchange Agent....................................................................................................6
Exchange Fund.....................................................................................................7
Exercisable Shares................................................................................................4
FTC..............................................................................................................45
GAAP.............................................................................................................17
Governmental Entity..............................................................................................16
Governmental Order...............................................................................................16
Hazardous Material...............................................................................................19
herein...........................................................................................................58
hereof...........................................................................................................58
hereto...........................................................................................................58
HIPAA............................................................................................................24
Holder Representation Form........................................................................................7
Holdings..........................................................................................................1
HSR Act..........................................................................................................45
In the Money Options..............................................................................................3
In the Money Options Aggregate Option Spread......................................................................4
Include..........................................................................................................58
including........................................................................................................58
Indemnified Party................................................................................................48
Indenture........................................................................................................17
Information Statement............................................................................................40
IRS..............................................................................................................23
Knowledge........................................................................................................15
Laws.............................................................................................................20
Leases...........................................................................................................27
Lee..............................................................................................................54
Liabilities......................................................................................................17
Liens............................................................................................................15
Loan Guarantor...................................................................................................17
Losses...........................................................................................................48
Material Adverse Effect..........................................................................................14
Memoranda........................................................................................................49
Merger............................................................................................................1
Merger Consideration..............................................................................................3
Multi-Employer Plan..............................................................................................22
New Certificates..................................................................................................6
Newco.............................................................................................................1
No-Election Shares................................................................................................8
Non-Accredited Investors..........................................................................................8
Non-Accredited Shares.............................................................................................8
Non-Determinable Shares...........................................................................................8
Old Certificates..................................................................................................6
Option............................................................................................................4
Options...........................................................................................................4
Owned Real Property..............................................................................................27
Participants.....................................................................................................23
Parties...........................................................................................................1
Party.............................................................................................................1
PBGC.............................................................................................................23
Pension/Profit-Sharing Plan......................................................................................22
Person...........................................................................................................18
Prior Transactions...............................................................................................35
Projections......................................................................................................50
Properties.......................................................................................................27
Purchaser Delivered Agreements...................................................................................36
Purchaser Disclosure Letter......................................................................................36
Rayovac Shares...................................................................................................38
Reallocated Cash Shares...........................................................................................9
Reallocated Stock Shares.........................................................................................10
Receiving Party..................................................................................................50
Registration Rights Agreement....................................................................................48
Regulation D......................................................................................................7
Regulatory Filings...............................................................................................47
Release..........................................................................................................19
Remedial Action..................................................................................................19
Returns..........................................................................................................25
Rule 145 Affiliate...............................................................................................12
Rule 145 Affiliate Agreement.....................................................................................12
SEC..............................................................................................................44
Securities Act...................................................................................................12
Shareholders Agreement...........................................................................................54
Shares...........................................................................................................14
State Acts.......................................................................................................12
Stock Election Shares.............................................................................................7
Stock Exchange Ratio..............................................................................................3
Subsidiary.......................................................................................................13
Supplemental Indenture...........................................................................................49
Surviving Corporation.............................................................................................1
Tax..............................................................................................................25
Taxes............................................................................................................25
Total Cash Consideration..........................................................................................4
Total Cash to be Allocated........................................................................................5
Total Stock Consideration.........................................................................................5
Transfer.........................................................................................................47
United Stockholders Agreement....................................................................................14
Warrant...........................................................................................................5
Warrants..........................................................................................................5
EXHIBITS
A. Company Stockholder's Written Consent
B. Election Form
C. Holder Representation Form
D. Rule 145 Affiliate Agreement
E. Registration Rights Agreement
F. Supplemental Indenture
G. Form of Company Legal Opinion
H. Form of Holdings Legal Opinion
I. Standstill Agreement
J. Shareholders Agreement
K. Form of Acquiror/Newco Legal Opinion
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made January
3, 2005, by and among RAYOVAC CORPORATION, a Wisconsin corporation
("Acquiror"), LINDBERGH CORPORATION, a Delaware corporation and a wholly owned
subsidiary of Acquiror ("Newco") and UNITED INDUSTRIES CORPORATION, a Delaware
corporation (the "Company"). The foregoing parties to this Agreement are each a
"Party" and collectively the "Parties."
BACKGROUND STATEMENT
The respective Boards of Directors of the Parties have approved this
Agreement and the transactions contemplated hereby, including the Merger, and
deemed it advisable and in the best interests of their respective corporations
and stockholders that the Parties consummate the Merger and the other
transactions provided for herein. As a condition and inducement to Acquiror's
willingness to enter into this Agreement, at or immediately following the
execution of this Agreement, UIC Holdings, L.L.C., a Delaware limited liability
company ("Holdings"), as the owner of over eighty percent (80%) of the
outstanding voting and non-voting stock of the Company, will execute a written
consent of the stockholders of the Company (dated as of the date hereof) in the
form of Exhibit A (the "Consent") approving this Agreement and the transactions
contemplated thereby, including the Merger. For United States federal income
tax purposes, the Parties intend that the Merger qualify as a reorganization
under the provisions of section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and the Parties intend by executing this Agreement to
adopt a plan of reorganization within the meaning of Treasury Regulation
Section 1.368-2(g).
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the Parties agree as
follows:
ARTICLE I.
THE MERGER
Section 1.1 The Merger. At the Effective Time and subject to and upon
the terms and conditions of this Agreement and the applicable provisions of the
law of the State of Delaware ("Delaware Law"), Newco shall be merged with and
into the Company (the "Merger"), the separate corporate existence of Newco
shall cease and the Company shall continue as the surviving corporation. The
Company, as the surviving corporation after the Merger, is hereinafter
sometimes referred to as the "Surviving Corporation."
Section 1.2 Effective Time; Closing. Subject to the provisions of this
Agreement, the Parties shall cause the Merger to be consummated by filing a
Certificate of Merger with the Secretary of State of the State of Delaware (the
"Certificate of Merger") (the time of such filing being the "Effective Time")
as soon as practicable on or after the Closing Date. The closing of the Merger
(the "Closing") shall take place (a) at the offices of Sutherland Asbill &
Brennan LLP, 1114 Avenue of the Americas, 40th Floor, New York, New York 10036,
10:00 a.m., local time on February 4, 2005 or, if later, the third (3rd)
Business Day after the conditions set forth in Article VI are satisfied or
waived by the Party or Parties entitled to waive them, or (b) at such other
place and time as the Parties may agree (the "Closing Date").
Section 1.3 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement and the applicable provisions
of Delaware Law.
Section 1.4 Articles of Incorporation and Bylaws. At the Effective
Time, the Certificate of Incorporation of the Company shall be amended and
restated in its entirety to be identical to the Certificate of Incorporation of
Newco as in effect immediately prior to the Effective Time, until thereafter
amended in accordance with and as provided in such Certificate of
Incorporation; provided, however, that Article I of the Certificate of
Incorporation of the Surviving Corporation shall read as follows: "The name of
the corporation is United Industries Corporation." At the Effective Time, the
Bylaws of the Company shall be amended and restated in their entirety to be
identical to the Bylaws of Newco as in effect immediately prior to the
Effective Time, until thereafter amended in accordance with Delaware Law and as
provided in such Bylaws.
Section 1.5 Directors and Officers. The initial directors of the
Surviving Corporation shall be the directors of Newco immediately prior to the
Effective Time, until their respective successors are duly elected or appointed
and qualified. The initial officers of the Surviving Corporation shall be the
officers of Newco immediately prior to the Effective Time, until their
respective successors are duly appointed.
Section 1.6 Tax Consequences. It is intended by the Parties that the
Merger shall constitute a reorganization within the meaning of Section 368(a)
of the Code. The Parties adopt this Agreement as a plan of reorganization
within the meaning of Treasury Regulation Section 1.368-2(g).
Section 1.7 Further Action. At and after the Effective Time, the
officers and directors of Acquiror and the Surviving Corporation will be
authorized to execute and deliver, in the name and on behalf of the Company and
Newco, any deeds, bills of sale, assignments or assurances and to take and do,
in the name and on behalf of the Company and Newco, any other actions and
things to vest, perfect or confirm of record or otherwise in the Surviving
Corporation any and all right, title and interest in, to and under any of the
rights, properties or assets acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger.
ARTICLE II.
CONSIDERATION; EXCHANGE PROCEDURES
Section 2.1 Merger Consideration. The total consideration to be paid
by Acquiror to all of the holders of Company Common Shares, Warrants and
Options (subject to adjustment for rounding pursuant to Section 2.5(a) and for
the payment of cash in lieu of fractional shares pursuant to Section 2.5(b))
under this Agreement shall be a combination of 13,750,000 shares of Acquiror
Stock and $70,000,000.00 in cash (collectively, the "Merger Consideration").
For purposes of making the allocations of the Merger Consideration described in
this Agreement, the shares of Acquiror Stock are assigned a value of $29.40 per
share (determined on the basis of the average of the closing prices of Acquiror
Stock for the ten (10) trading day period leading up to and including December
31, 2004). Subject to the provisions of this Agreement, including the election
and allocation provisions set forth in this Article II, at the Effective Time,
automatically by virtue of the Merger and without any action on the part of any
Person:
(a) Company Options.
(i) In the Money Options. Each Option with an exercise price
per Company Common Share less than $5.997 that remains unexercised, vested
and outstanding immediately prior to the Effective Time (the "In the Money
Options") shall be converted into the right to receive an amount in cash
equal to the amount obtained by multiplying (x) the number of Exercisable
Shares subject to such holder's In the Money Options by (y) the result
obtained by subtracting the exercise price per share for such In the Money
Options from $5.997.
(ii) Out of the Money Options. Each Option with an exercise
price per Company Common Share equal to or greater than $5.997 shall not
be entitled to receive any Merger Consideration.
(iii) Termination of all Options. Each Option that is
outstanding and unexercised as of the Effective Time, whether or not then
vested and exercisable, shall be terminated as of the Effective Time.
(b) Company Common Shares. Each Company Common Share (excluding
treasury stock (which for this purpose shall not include any shares held by a
trustee under any of the Company's or the Subsidiaries' deferred compensation
plans) and Dissenting Shares) issued and outstanding immediately prior to the
Effective Time shall, at the election of the holder thereof, be converted into
the right to receive:
(i) 0.20398 shares of Acquiror Stock (the "Stock Exchange
Ratio"); or
(ii) cash in the amount of $5.997 (the "Cash Exchange Ratio").
(c) Warrants. Each Warrant that remains unexercised and outstanding
immediately prior to the Effective Time shall, at the election of the holder
thereof, either:
(i) Exchanged Warrants. Be converted into the right to receive:
(A) the number of shares of Acquiror Stock equal to the
result obtained by (1) multiplying (Y) the number of
Company Common Shares for which such Warrants are
exercisable by (Z) the result obtained by subtracting the
exercise price per share for such Warrant from $5.997 and
then (2) dividing the result obtained in (1) by $29.40;
and/or
(B) cash in the amount obtained by multiplying (x) the
number of Company Common Shares for which such Warrant is
exercisable by (y) the result obtained by subtracting the
exercise price per share for such Warrant from $5.997; or
(ii) Retained Warrants. Continue to remain outstanding in
accordance with its terms and after the Effective Time be exercisable for
the following consideration contained in the Exchange Fund, rather than
Company Common Shares, in a consideration mix determined pursuant to
Section 2.6:
(A) the number of shares of Acquiror Stock obtained by
multiplying the number of Company Common Shares for which
such Warrant is exercisable by the Stock Exchange Ratio;
(B) cash in an amount obtained by multiplying the number of
Company Common Shares for which such Warrant is exercisable
by $5.997; or
(C) a combination of such Acquiror Stock and cash
determined in accordance with clauses (A) and (B).
Section 2.2 Certain Definitions. For purposes of this Article II,
the following terms shall have the meanings set forth below:
(a) "Company Common Shares" means the Company's $0.01 par value
Class A Common Stock and $0.01 par value, Class B Common Stock.
(b) "Exercisable Shares" means, with respect to each In the Money
Option that remains outstanding immediately prior to the Effective Time, the
number of Company Common Shares for which such In the Money Option is
exercisable immediately prior to the Effective Time.
(c) "In the Money Options Aggregate Option Spread" means
$12,916,532.24 less the aggregate amount obtained by multiplying the number of
Exercisable Shares with respect to each In the Money Options as of the date of
this Agreement exercised prior to the Effective Time by the result obtained by
subtracting the exercise price for each such In the Money Options from $5.997.
(d) "Options" means the currently outstanding options to purchase
7,925,000 Company Common Shares (each, an "Option").
(e) "Total Cash Consideration" means $70,000,000.00.
(f) "Total Cash to be Allocated" means the sum of the Total Cash
Consideration plus the aggregate proceeds delivered by the Company to the
Exchange Agent pursuant to Section 5.23.
(g) "Total Stock Consideration" means 13,750,000 shares of
Acquiror's $0.01 par value Common Stock ("Acquiror Stock").
(h) "Warrants" means the currently outstanding warrants to purchase
9,500,000 Company Common Shares (each, a "Warrant").
Section 2.3 Treatment of Shares. Subject to the provisions of this
Agreement, at the Effective Time, automatically by virtue of the Merger and
without any action on the part of any Person:
(a) Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, Company Common Shares which are outstanding immediately prior
to the Effective Time and with respect to which dissenters' rights shall have
been properly demanded in accordance with Delaware Law ("Dissenting Shares")
shall not be converted into the right to receive, or be exchangeable for,
Merger Consideration or cash in lieu of fractional shares but, instead, the
holders thereof shall be entitled to payment of the appraised value of such
Dissenting Shares in accordance with the provisions of Delaware Law; provided,
however, that (i) if any holder of Dissenting Shares shall subsequently deliver
a written withdrawal of his demand for appraisal of such shares, or (ii) if any
holder fails to establish his entitlement to dissenters' rights, such holder or
holders shall forfeit the right to appraisal of such shares of Company Common
Stock and each of such shares shall thereupon be deemed to be Cash Election
Shares and converted into the right to receive the cash consideration, without
any interest thereon, in accordance with Sections 2.1(b)(ii) and 2.6.
(b) Treasury Shares. Each Company Common Share held as treasury
stock immediately prior to the Effective Time shall be canceled and retired at
the Effective Time and no consideration shall be issued in exchange therefor.
Notwithstanding the foregoing, any Company Common Shares held by any trustee
under any of the Company's or any of the Subsidiaries' deferred compensation
plans shall be treated as outstanding for purposes of this Agreement.
(c) Outstanding Newco Stock. Each share of the capital stock of
Newco issued and outstanding immediately prior to the Effective Time shall, by
virtue of the Merger, be converted into one share of the capital stock of the
Surviving Corporation.
Section 2.4 Rights as Stockholders; Stock Transfers. At the Effective
Time, the Company Common Shares shall no longer be outstanding and shall
automatically be canceled and cease to exist and holders of Company Common
Shares shall cease to be, and shall have no rights as, stockholders of the
Company, other than to receive any dividend or other distribution with respect
to such Company Common Shares with a record date occurring prior to the
Effective Time, the consideration provided under this Article II and the
appraisal rights in the case of Dissenting Shares. After the Effective Time,
there shall be no transfers on the stock transfer books of the Company or the
Surviving Corporation of any Company Common Shares.
Section 2.5 Fractional Shares and Cash and Rounding.
(a) Fractional Cents and Rounding. Following the making of all
allocations of cash and Acquiror Stock in accordance with Section 2.6, if the
amount of cash to be paid to any holder of Company Common Shares, Options or
Warrants would entitle such holder to receive a fraction of a cent in cash, any
such dollar amounts shall be rounded to two decimal points, with any dollar
amount equal to 0.0050 or higher being rounded up to the next highest whole
cent. The foregoing determination will be determined on the basis of such
holder's aggregate holdings of Company Common Shares, In the Money Options and
Warrants, and the consideration payable hereunder in respect thereto.
(b) Fractional Shares and Rounding. Notwithstanding any other
provision hereof, no fractional shares of Acquiror Stock and no certificates or
scrip therefor, or other evidence of ownership thereof, will be issued in the
Merger and no Acquiror dividend or other distribution or stock split or
combination will relate to any fractional share of Acquiror Stock, and such
fractional share of Acquiror Stock will not entitle the owner thereof to vote
or to any rights of a security holder of Acquiror; instead, if, after the
allocation of the Merger Consideration in accordance with Section 2.6, any
holder of Company Common Shares or Warrants would otherwise be entitled to a
fractional share of Acquiror Stock, Acquiror shall pay to such holder of
Company Common Shares or Warrants (after taking into account all Old
Certificates delivered by such holder) an amount in cash (without interest)
determined by multiplying such fractional share of Acquiror Stock to which the
holder would be entitled by $29.40. The determination of whether any holder of
Company Common Shares or Warrants would be entitled to a fractional share of
Acquiror Stock will be determined on the basis of such holder's aggregate
holdings of Company Common Shares and Warrants, and the consideration payable
hereunder in respect thereto. Following the making of all allocations of cash
and Acquiror Stock in accordance with Section 2.6, if the amount of Acquiror
Stock to be paid to any holder of Company Common Shares, Options or Warrants
would entitle such holder to receive a fractional share of Acquiror Stock, any
such fractional share amount shall be rounded to six decimal points, with any
amount equal to 0.0000005 or higher being rounded up to the next highest
one-hundred thousandth (.000001) of a share. Any such fractional share of
Acquiror Stock with respect to which Acquiror has instead paid cash in lieu of
such fractional share in accordance with this Section 2.5 (b) shall be removed
from the Exchange Fund and returned to Acquiror.
Section 2.6 Exchange Procedures; Deposit of Merger Consideration.
(a) Exchange Fund. Within ten (10) Business Days after the date of
this Agreement, Acquiror shall appoint a financial institution or other
appropriate entity selected by Acquiror to act as exchange agent for the Merger
(in such capacity, the "Exchange Agent"). At or prior to the Effective Time,
Acquiror shall deposit, or shall cause to be deposited, with such Exchange
Agent for the benefit of the holders of certificates representing Company
Common Shares ("Old Certificates") and the holders of In the Money Options and
Warrants that remain outstanding immediately prior to the Effective Time, for
exchange and payment in accordance with this Article II, certificates
representing the Total Stock Consideration ("New Certificates") and the Total
Cash Consideration (such cash and New Certificates, together with any dividends
or distributions with respect thereto with a record date occurring on or after
the Effective Time, and any amounts delivered by the Company to the Exchange
Agent pursuant to Section 5.23 being hereinafter collectively referred to as
the "Exchange Fund") to be paid pursuant to this Article II in exchange for
outstanding Company Common Shares, to the holders of In the Money Options that
remain unexercised, vested and outstanding immediately prior to the Effective
Time and to the holders of Warrants that remain outstanding immediately prior
to the Effective Time. The Exchange Agent shall have no liability for any
actions taken, or failures to act, with respect to this Agreement in the
absence of gross negligence or intentional misconduct on the part of the
Exchange Agent. The Exchange Fund represents the total consideration to be paid
to all holders of Company Common Shares, Options and Warrants pursuant to this
Agreement and neither the Company, Acquiror nor the Exchange Agent shall be
required to pay any additional amounts to such holders of Company Common
Shares, Options or Warrants pursuant to this Agreement (other than any
additional amounts required due to rounding pursuant to Section 2.5(a), cash
paid in lieu of fractional shares pursuant to Section 2.5(b) and any amounts
required to be paid to holders of Dissenting Shares in excess of the amounts
allocated pursuant to Section 2.6).
(b) No Interest. No interest will be paid or accrued on any Merger
Consideration, including any cash to be paid in lieu of fractional shares of
Acquiror Stock or in respect of dividends or distributions, that any holder of
Company Common Shares, any holder of an Option that remains outstanding
immediately prior to the Effective Time or any holder of a Warrant that remains
outstanding immediately prior to the Effective Time shall be entitled to
receive pursuant to this Article II.
(c) Election and Exchange Procedures. As soon as practicable after
the date of this Agreement, the Company shall, or Acquiror shall cause the
Exchange Agent to, mail or make available to each holder of record of a
certificate or certificates representing issued and outstanding Company Common
Shares and each holder of Options or Warrants (i) the Information Statement,
(ii) a notice and letter of transmittal (which shall specify that delivery
shall be effected and risk of loss and title to the certificates theretofore
representing Company Common Shares or Warrants shall pass only upon proper
delivery of such certificates or Warrants to the Exchange Agent) advising such
holder of the Merger and the procedure for surrendering to the Exchange Agent
such certificates or Warrants, if applicable, in exchange for the consideration
set forth in Sections 2.1(b) and (c) hereof; (iii) an election form in the form
attached hereto as Exhibit B ("Election Form") and (iv) a holder representation
form in the form attached hereto as Exhibit C ("Holder Representation Form")
whereby each such holder will represent and agree, among other things, as to
such holder's ownership of the Company Common Shares, In the Money Options or
Warrants free of Liens, will indicate, in the case of Company Common Shares or
Warrants, whether such holder is an "accredited investor" within the meaning of
Rule 501 of Regulation D under the Securities Act ("Regulation D"), and will
acknowledge, in the case of Company Common Shares or Warrants, the restrictions
imposed upon the transfer of any Acquiror Stock received by such holder
pursuant to this Article II, as described in Sections 2.8(a) and 5.11. Each
Election Form shall permit the holder (or in the case of nominee record
holders, the beneficial owner through proper instructions and documentation) of
Company Common Shares or Warrants (A) to elect the number of such holder's
Company Common Shares or Warrants (or portion thereof) with respect to which
such Holder wishes to receive Acquiror Stock (the "Stock Election Shares"), (B)
to elect the number of such holder's Company Common Shares or Warrants (or
portion thereof) with respect to which such Holder wishes to receive cash (the
"Cash Election Shares"), or (C) to indicate that such holder makes no such
elections with respect to such holder's Company Common Shares or Warrants (or
portion thereof) (the "No-Election Shares"). Nominee record holders who hold
Company Common Shares or Warrants on behalf of multiple beneficial owners shall
indicate how many of the shares or Warrants (or portion thereof) held by them
are Stock Election Shares, Cash Election Shares and No-Election Shares. Any
Company Common Shares or Warrants with respect to which the holder thereof
shall not, as of 5:00 p.m., Eastern Time, on the tenth (10th) Business Day
following but not including the date of mailing of the Election Form or such
other date as Acquiror and the Company shall mutually agree upon (the "Election
Deadline"), have made such an election by submission to the Exchange Agent of
an effective, properly completed Election Form shall be deemed to be
No-Election Shares. Notwithstanding anything in this Agreement to the contrary:
(X) if Acquiror does not reasonably believe, with respect to any holder of
Company Common Shares or Warrants that has not submitted an effective, properly
completed Election Form and Holder Representation Form, that such holder is an
"accredited investor" within the meaning of Regulation D, all Company Common
Shares, including Company Common Shares underlying Warrants (determined on a
net exercise basis), actually or beneficially owned by such holder shall be
deemed to be Cash Election Shares ("Non-Determinable Shares"); (Y) to the
extent that, upon making the allocations made pursuant to Section 2.6(d), the
number of holders of Company Common Shares or Warrants who (i) are to receive
Acquiror Stock pursuant to such allocations and (ii) either indicate on Holder
Representation Forms that such holders are not "accredited investors" within
the meaning of Regulation D, or do not indicate whether they are "accredited
investors" and who Acquiror does not reasonably believe are "accredited
investors" within the meaning of Regulation D (collectively, the
"Non-Accredited Investors") would exceed thirty-five (35), then any Company
Common Shares, including Company Common Shares underlying Warrants (determined
on a net exercise basis), actually or beneficially owned by any such
Non-Accredited Investors (collectively, the "Non-Accredited Shares") shall be
deemed Cash Election Shares and (Z) any Dissenting Shares, for purposes of
making the allocations described in Section 2.6(d), shall be deemed Cash
Election Shares. In the absence of an effective, properly completed Election
Form and Holder Representation Form from any holder of Company Common Shares or
Warrants, the Company will use its reasonable best efforts to obtain
information reasonably sufficient to permit Acquiror to determine whether it
reasonably believes that such holder is an "accredited investor" within the
meaning of Regulation D. Any election to receive Acquiror Stock or cash shall
have been properly made only if the Exchange Agent shall have actually received
a properly completed Election Form by the Election Deadline. An Election Form
will be properly completed only if accompanied by certificates representing all
shares of Company Common Shares, if applicable, covered thereby and Warrants,
if applicable, covered thereby, subject in each case to the provisions of
Section 2.6(g), and a completed Holder Representation Form. Any Election Form
may be revoked or changed by the person submitting such Election Form to the
Exchange Agent by written notice to the Exchange Agent only if such notice is
actually received by the Exchange Agent prior to the Election Deadline. The
Exchange Agent shall have reasonable discretion, after consultation with the
Company and Acquiror, to determine when any election, modification or
revocation is received and whether any such election, modification or
revocation has been properly made and to interpret the provisions of this
Article II. If this Agreement is terminated and abandoned prior to the Closing
Date, the Exchange Agent shall return promptly to each of the Company's
stockholders the certificates representing Company Common Shares and the
Warrants it has received from such stockholder and shall return promptly to the
Company the funds received pursuant to Section 5.23. Any Holder of Company
Common Shares or Warrants who returns a properly completed Election Form,
Holder Representation Form, Old Certificates with respect to such Company
Common Shares, if applicable, and Warrants, if applicable, prior to the
Election Deadline as well as each holder of In the Money Options will be paid
the Merger Consideration with respect to such Company Common Shares, In the
Money Options or Warrants as soon as practicable at or immediately after the
Effective Time.
(d) Allocation of Merger Consideration.
(i) If the number of Cash Election Shares times the Cash
Exchange Ratio is less than the Total Cash to be Allocated minus the In
the Money Option Aggregate Option Spread, then:
(1) all Cash Election Shares shall be
converted into the right to receive cash in
accordance with Sections 2.1(b)(ii) and 2.1(c)(i)(B);
(2) No-Election Shares shall then be treated
as Cash Election Shares to the extent necessary to
have the total number of Cash Election Shares times
the Cash Exchange Ratio equal the Total Cash to be
Allocated minus the In the Money Option Aggregate
Option Spread. If less than all of the No-Election
Shares need to be treated as Cash Election Shares,
then the Exchange Agent shall allocate on a pro rata
basis as described in Section 2.6(d)(iv) which
No-Election Shares shall be treated as Cash Election
Shares in such manner as the Exchange Agent shall
determine, and all remaining No-Election Shares shall
thereafter be treated as Stock Election Shares;
(3) if all of the No-Election Shares are
treated as Cash Election Shares under the preceding
subsection and the total number of Cash Election
Shares times the Cash Exchange Ratio is less than the
Total Cash to be Allocated minus the In the Money
Option Aggregate Option Spread, then the Exchange
Agent shall convert on a pro rata basis as described
in Section 2.6(d)(iv) a sufficient number of Stock
Election Shares into Cash Election Shares
("Reallocated Cash Shares") such that the sum of the
number of Cash Election Shares plus the number of
Reallocated Cash Shares times the Cash Exchange Ratio
equals the Total Cash to be Allocated minus the In
the Money Option Aggregate Option Spread, and all
Reallocated Cash Shares will be converted into the
right to receive cash in accordance with Sections
2.1(b)(ii) and 2.1(c)(i)(B); and
(4) all the Stock Election Shares that are
not Reallocated Cash Shares shall be converted into
the right to receive Acquiror Stock in accordance
with Sections 2.1(b)(i) and 2.1(c)(i)(A).
(ii) If the number of Cash Election Shares times the Cash
Exchange Ratio is greater than the Total Cash to be Allocated minus the In
the Money Option Aggregate Option Spread, then:
(1) all Stock Election Shares and all
No-Election Shares shall be converted into the right
to receive Acquiror Stock (upon exercise in the case
of unexchanged Warrants) in accordance with Sections
2.1(b)(i), 2.1(c)(i)(A) and 2.1(c)(ii)(A);
(2) the Exchange Agent shall convert on a
pro rata basis as described in Section 2.6(d)(iv) a
sufficient number of Cash Election Shares
("Reallocated Stock Shares") such that the number of
remaining Cash Election Shares times the Cash
Exchange Ratio equals the Total Cash to be Allocated
minus the In the Money Option Aggregate Option
Spread, and all Reallocated Stock Shares shall be
converted into the right to receive Acquiror Stock in
accordance with Sections 2.1(b)(i) and 2.1(c)(i)(A);
and
(3) all the Cash Election Shares that are
not Reallocated Stock Shares shall be converted into
the right to receive cash in accordance with Sections
2.1(b)(ii) and 2.1(c)(i)(B).
(iii) If the number of Cash Election Shares times the Cash
Exchange Ratio is equal to the Total Cash to be Allocated minus the In the
Money Option Aggregate Option Spread, then subparagraphs (d)(i) and (ii)
above shall not apply and all No-Election Shares and all Stock Election
Shares will be converted into the right to receive Acquiror Stock.
(iv) In the event that the Exchange Agent is required pursuant
to Section 2.6(d)(i)(2) to allocate which No-Election Shares are to be
treated as Cash Election Shares and which No-Election Shares are to be
treated as Stock Election Shares, each holder of No-Election Shares shall
be allocated a pro rata portion of the total No-Election Shares that need
to be treated as Cash Election Shares based on the total number of Company
Common Shares, including Company Common Shares underlying Warrants
(determined on a net exercise basis), designated as No-Election Shares and
the number of Cash Election Shares required to be allocated pursuant to
Section 2.6(d)(i)(2). In the event that the Exchange Agent is required
pursuant to Section 2.6(d)(i)(3) to convert some Stock Election Shares
into Reallocated Cash Shares, each holder of Stock Election Shares shall
be allocated a pro rata portion of the total Reallocated Cash Shares based
on the total number of Company Common Shares, including Company Common
Shares underlying Warrants (determined on a net exercise basis), held by
such holder of Stock Election Shares and the total number of Company
Common Shares, including Company Common Shares underlying Warrants
(determined on a net exercise basis), held by all such holders of Stock
Election Shares. In the event the Exchange Agent is required pursuant to
Section 2.6(d)(ii)(2) to convert some Cash Election Shares into
Reallocated Stock Shares, each holder of Cash Election Shares shall be
allocated a pro rata portion of the total Reallocated Stock Shares based
on the total number of Company Common Shares, including Company Common
Shares underlying Warrants (determined on a net exercise basis), held by
such holder of Cash Election Shares and the total number of Company Common
Shares, including Company Common Shares underlying Warrants (determined on
a net exercise basis), held by all such holders of Cash Election Shares;
provided, however, that in no event shall any Non-Determinable Shares, any
Non-Accredited Shares, if Section 2.6(c)(Y) applies, or any Dissenting
Shares be included in such calculations or converted into Reallocated
Stock Shares.
(e) Unclaimed Merger Consideration. Promptly following the date
that is six (6) months after the Effective Time, the Exchange Agent shall
deliver to the Surviving Corporation all cash, certificates and other documents
in its possession relating to the transactions described in this Agreement; and
any holders of Company Common Shares, Options or Warrants who have not
theretofore complied with this Article II may look thereafter only to the
Surviving Corporation for the Merger Consideration to which they are entitled
pursuant to this Article II, in each case, without any interest thereon. Any
such portion of the Exchange Fund remaining unclaimed by holders of Company
Common Shares, Options or Warrants immediately prior to the time that such
amounts would otherwise escheat to or become property of any Governmental
Entity shall, to the extent permitted by Law, become the property of the
Surviving Corporation free and clear of any claims or interest of any Person
previously entitled thereto. Notwithstanding the foregoing, neither the
Exchange Agent nor any Party hereto shall be liable to any former holder of
Company Common Shares, Options or Warrants for any Acquiror Stock, any
dividends or distributions thereon or any cash to be paid as part of the Merger
Consideration or in lieu of fractional shares of Acquiror Stock, in each case,
which has been delivered to a public official pursuant to applicable abandoned
property, escheat or similar Laws.
(f) No Dividends with Respect to Unsurrendered Old Certificates. No
dividends or other distributions with respect to Acquiror Stock with a record
date occurring on or after the Effective Date shall be paid to the holder of
any unsurrendered Old Certificate representing Company Common Shares converted
in the Merger into the right to receive such Acquiror Stock until the holder
thereof shall be entitled to receive New Certificates in exchange therefor in
accordance with the procedures set forth in this Section 2.6. After becoming so
entitled in accordance with this Section 2.6, the record holder thereof shall
be entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect to the
shares of Acquiror Stock such holder had the right to receive upon surrender of
the Old Certificates.
(g) Lost Certificates or Warrants. If any Old Certificate or
Warrant has been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the Person claiming such Old Certificate or Warrant to be lost,
stolen or destroyed and, if required by Acquiror, the posting by such Person of
a bond in such reasonable amount as Acquiror may direct as indemnity against
any claim that may be made against it with respect to such Old Certificate or
Warrant, the Exchange Agent shall deliver in exchange for such lost, stolen or
destroyed Old Certificate or Warrant (i) the number of shares of Acquiror Stock
to which such Person is entitled pursuant to Sections 2.1(b)(i), 2.1(c)(i) or
2.1(d), and (ii) a check in an amount equal to the sum of the cash to be paid
to such Person as part of the Merger Consideration, if any, and the cash to be
paid in lieu of any fractional shares of Acquiror Stock to which such Person is
entitled pursuant to Section 2.5, if any.
(h) Withholding. Acquiror and the Exchange Agent, after
consultation with the Company, are entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
Company Common Shares, Warrants or In the Money Options such amounts as
Acquiror is required to deduct and withhold with respect to the making of such
payment under the Code and the rules and regulations promulgated thereunder, or
any applicable Law. To the extent that amounts are so withheld by Acquiror or
the Exchange Agent, such withheld amounts may be treated for all purposes of
this Agreement as having been paid to the holders of Company Common Shares,
Warrants or In the Money Options in respect of which such deduction and
withholding were made by Acquiror or the Exchange Agent.
(i) Affiliates. Notwithstanding the other provisions of this
Article II, Old Certificates surrendered for exchange by any Person who may be
deemed to be an "affiliate" of the Company for purposes of Rule 145(c) under
the Securities Act, including all of the directors and executive officers of
the Company (each, a "Rule 145 Affiliate"), shall not be exchanged until
Acquiror has received a written agreement from that Rule 145 Affiliate in the
form attached as Exhibit D (a "Rule 145 Affiliate Agreement").
Section 2.7 Anti-Dilution Provisions. In the event Acquiror changes
(or establishes a record date for changing) the number of shares of Acquiror
Stock issued and outstanding between the date hereof and the Effective Time as
a result of a stock split, stock dividend, recapitalization, reclassification,
split up, combination, exchange of shares, readjustment or similar transaction
with respect to the outstanding shares of Acquiror Stock and the record date
therefor shall be prior to the Effective Time, the Stock Exchange Ratio shall
be proportionately adjusted.
Section 2.8 Legending of Securities.
(a) The shares of Acquiror Stock to be delivered in connection with
this Agreement will be issued in a transaction exempt from registration under
the Securities Act of 1933, as amended (the "Securities Act") by reason of
Section 4(2) thereof, Regulation D, or other private offering exemptions, and
similar exemptions under applicable state securities laws (the "State Acts"),
and Acquiror is relying on the representations of the stockholders of the
Company with respect to such exemptions. Each stockholder will acknowledge in
its Holder Representation Form that it understands and agrees, that stop
transfer instructions with respect to the shares of Acquiror Stock received by
such stockholder pursuant to this Agreement will be given to Acquiror's
transfer agent and that there will be placed on the certificates for such
shares legends stating in substance as follows:
(i) The securities represented hereby have not been
registered under the Securities Act of 1933, as amended, or any
state or other securities laws and may not be offered, sold,
transferred or otherwise disposed of unless registered with the
United States Securities and Exchange Commission and the
securities regulatory authorities of applicable states or foreign
countries or unless an exemption from such registration is
available.
(ii) The offer, sale, transfer or disposal of the securities
represented hereby is restricted pursuant to a Holder
Representation Form and Section 5.11 of the Agreement and Plan of
Merger among Rayovac Corporation, United Industries Corporation,
and the other parties thereto. Rayovac Corporation shall furnish
to the Holder hereof a copy of such Form and Agreement and Plan of
Merger upon request and without charge.
(b) The foregoing legends will also be placed on any certificate
representing securities issued subsequent to the original issuance of the
Acquiror Stock pursuant to this Agreement as a result of any transfer of such
shares or any stock dividend, stock split or other recapitalization as long as
the Acquiror Stock issued to the holders of Company Common Shares pursuant to
this Agreement has not been transferred in such manner to justify the removal
of the legends therefrom.
(c) (i) Upon request from any holder of Acquiror Stock issued
pursuant to this Agreement received more than twelve (12) months but less than
eighteen (18) months after the Closing Date, Acquiror will cause the transfer
agent for its stock to issue new certificates to such requesting holder
reflecting the legend set forth in (a)(ii) above only on fifty percent (50%) of
such shares of Acquiror Stock, (ii) upon request from any holder of Acquiror
Stock issued pursuant to this Agreement received more than eighteen (18) months
after the Closing Date, Acquiror will cause the transfer agent for its stock to
issue new certificates to such requesting holder reflecting the removal of the
legend set forth in (a)(ii) above on all such shares of Acquiror Stock and
(iii) the legend set forth in (a)(i) above shall be removed by Acquiror from
any certificate evidencing Acquiror Stock upon delivery to Acquiror of an
opinion by counsel, reasonably satisfactory to Acquiror, that a registration
statement under the Securities Act is at that time in effect with respect to
the legended security or that such security can be freely transferred in a
public sale without such a registration statement being in effect and that such
transfer will not jeopardize the exemption or exemptions from registration
pursuant to which the Acquiror Stock was issued hereunder.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COMPANY
The Company represents and warrants to Acquiror and Newco as follows,
except as set forth in the letter delivered by the Company to Acquiror on the
date hereof, which contains certain exceptions to the representations and
warranties of the Company in this Agreement (the "Disclosure Letter"):
Section 3.1 Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the corporate power and authority to own
all of its properties and assets and to carry on its business as it is now
being conducted. The copies of the Company's bylaws, as amended to date, which
have been delivered or made available to Acquiror, are complete and correct,
and such bylaws, as so amended, are in full force and effect. As used in this
Agreement, the term "Subsidiary" means, with respect to the Company, any
corporation or other organization, whether incorporated or unincorporated, of
which at least fifty percent (50%) of the securities or interests having by the
terms thereof voting power to elect at least fifty percent (50%) of the board
of directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by the Company. The Subsidiaries are listed in Section 3.1 of the Disclosure
Letter. Each of the Subsidiaries is a corporation or other organization duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of organization and has the corporate or other
organizational power and authority to own all of its properties and assets and
to carry on its business as it is now being conducted. The Company and each of
the Subsidiaries is duly qualified and is in good standing to do business in
all jurisdictions in which it is required to be qualified, except where the
lack of such qualification would not have a Material Adverse Effect. "Material
Adverse Effect" means a material adverse effect on the business, properties,
assets, liabilities, results of operations or financial condition of the
Company and the Subsidiaries, taken as a whole, but excluding any effect
resulting from or relating to (i) general economic conditions or general
effects on the industry in which the Company and the Subsidiaries are primarily
engaged (including as a result of (a) an outbreak or escalation of hostilities
involving the United States or the declaration by the United States of a
national emergency or war or (b) the occurrence of any other calamity or crisis
or any change in financial, political or economic conditions in the United
States), (ii) resulting from the public announcement of the transactions
contemplated by this Agreement or (iii) relating to or resulting from action
taken by Acquiror or any of its Affiliates or representatives.
Section 3.2 Capitalization and Ownership.
(a) The Company. The authorized capital stock of the Company is
51,457,500 shares of $0.01 par value Class A common stock and 51,457,500 shares
of $0.01 par value Class B common stock (collectively, the "Shares") and 40,000
shares of $0.01 par value Class A Preferred Stock. There are 35,954,496 shares
of Class A common stock, 35,954,496 shares of Class B common stock and zero
shares of Class A Preferred Stock issued and outstanding and 3,081,569 shares
of Class A common stock, 3,081,569 shares of Class B common stock and zero
shares of Class A Preferred Stock held as treasury stock. All of the issued and
outstanding Shares are duly authorized, validly issued, fully paid and
nonassessable, and were not issued in violation of any preemptive rights. The
Shares represent all of the issued and outstanding capital stock of the
Company. Except as set forth in Section 3.2(a) of the Disclosure Letter, there
are no subscriptions, options, convertible securities, calls, rights, warrants
or other agreements, claims or commitments of any nature whatsoever obligating
the Company to issue, transfer, register with any securities commission or
other authority, deliver or sell or cause to be issued, transferred, so
registered, delivered or sold, additional shares of the Company or other
securities of the Company or obligating the Company to grant, extend or enter
into any such agreement or commitment. Except as set forth in Section 3.2(a) of
the Disclosure Letter, there are no stockholders' agreements, voting trusts,
proxies or other similar agreements with respect to the Shares to which the
Company is a party. Each stockholder of the Company has signed the United
Industries Corporation Stockholders Agreement dated January 20, 1999, as
amended (the "United Stockholders Agreement"), which is included in Section
3.2(a) of the Disclosure Letter. The United Stockholders Agreement, including
the waiver of appraisal rights contained therein, is a valid and binding
obligation of the parties thereto enforceable against each in accordance with
its terms. The stockholders of the Company as of the date of this Agreement and
the numbers and classes of shares held by each are set forth in Section 3.2(a)
of the Disclosure Letter.
(b) Subsidiaries. All of the issued and outstanding shares of each
Subsidiary are duly authorized, validly issued, fully paid and nonassessable,
and were not issued in violation of any preemptive rights. There are no
subscriptions, options, convertible securities, calls, rights, warrants or
other agreements, claims or commitments of any nature whatsoever obligating any
Subsidiary to issue, transfer, register with any securities commission or other
authority, deliver or sell or cause to be issued, transferred, so registered,
delivered or sold, additional shares of any Subsidiary or other securities of
any Subsidiary or obligating any Subsidiary to grant, extend or enter into any
such agreement or commitment. Except as disclosed in Section 3.2(b) of the
Disclosure Letter, the Company owns all right, title and interest in and to all
of the outstanding shares of each of the Subsidiaries, free and clear of all
liens, mortgages, security interests, pledges, charges, other rights of third
parties or other encumbrances (collectively, "Liens"). There are no
stockholders' agreements to which the Company or any of the Subsidiaries is a
party or, to the Knowledge of the Company, any other stockholders' agreements,
with respect to the shares of any of the Subsidiaries. Except as disclosed in
Section 3.2(b) of the Disclosure Letter, the Company has the right to elect all
of the directors of each Subsidiary and the power to control the business and
affairs of each Subsidiary.
(c) "Knowledge" means, with (i) respect to the Company, the actual
knowledge of Robert L. Caulk, Gregory Flanagan, John A. Heil, John Hill, Daniel
J. Johnston, Thomas Kasvin, Louis Laderman, William H. Metzger, Robert Rubin,
Steven D. Schultz, Rick K. Spurlock and Stephen L. Tooker, and (ii) with
respect to Acquiror and Newco, the actual knowledge of any executive officer of
Acquiror.
Section 3.3 Authority. With respect to this Agreement and any other
agreements, instruments and documents executed and delivered by the Company
pursuant to this Agreement (this Agreement and such other agreements,
instruments and documents delivered by the Company are collectively referred to
as the "Company Delivered Agreements") (i) the Company has the corporate power
and authority to enter into the Company Delivered Agreements executed and
delivered by it and to consummate the transactions contemplated by, and
otherwise to comply with and perform its obligations under, them; (ii) the
execution and delivery by the Company of the Company Delivered Agreements and
the consummation by the Company of the transactions contemplated on its part
thereby have been duly authorized by the Board of Directors; (iii) other than
the approval of the stockholders of the Company, no other action on the part of
the Company is necessary to authorize the execution and delivery of the Company
Delivered Agreements by the Company or the consummation by the Company of the
transactions contemplated thereby; and (iv) the Company Delivered Agreements
will, when executed and delivered (assuming the due execution and delivery by
the other parties thereto), constitute valid and binding obligations of the
Company enforceable against the Company in accordance with their terms except
to the extent that such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other Laws and court decisions
relating to or affecting the enforcement of creditors' rights generally
(including statutory or other Laws regarding fraudulent transfers), and is
subject to general principles of equity.
Section 3.4 No Consents Required. Except as set forth in Section
3.4 of the Disclosure Letter and except (i) for the pre-merger notification
requirements of the HSR Act and the rules and regulations thereunder and any
filings required under the Canadian Competition Act, if any; (ii) the filing of
the Certificate of Merger; and (iii) where failure to obtain such consent,
authorization, clearance, order or approval, or filing or registration would
not prevent the Company from performing its obligations under this Agreement in
any material respect, no consent, authorization, clearance, order or approval,
or filing or registration (collectively, "Authorizations") of or with any
executive, judicial or other public authority, agency, department, bureau,
division, unit or court or other public Person (collectively, a "Governmental
Entity") or any other Authorization of or with any other Person, is required in
connection with the execution and delivery of the Company Delivered Agreements
by the Company and the consummation by the Company of the transactions
contemplated by, or other compliance with or performance under, the Company
Delivered Agreements.
Section 3.5 Absence of Violations or Conflicts. Except as set forth
in Section 3.5 of the Disclosure Letter, the execution and delivery of the
Company Delivered Agreements and the consummation by the Company of the
transactions contemplated by, or other compliance with or performance under,
them do not and will not with the passing of time or giving of notice or both
(a) constitute a violation of, be in conflict with, constitute a default or
require any payment under, permit a termination of, or result in the creation
or imposition of any Lien upon any assets of the Company or the Subsidiaries
under (i) any material contract, agreement, commitment, undertaking or
understanding (including rights of refusal or similar rights or other transfer
restrictions), (ii) any material order, writ, judgment, injunction, decree,
stipulation, determination, agreement, arrangement or award entered by or with
any Governmental Entity (a "Governmental Order") to which the Company or the
Subsidiaries are subject, (iii) any Laws to which the Company or the
Subsidiaries are subject or (iv) the certificate of incorporation or bylaws or
other governing documents of the Company or any of the Subsidiaries, except in
the case of (i), (ii) and (iii), where such violation, conflict, default,
termination or imposition could not reasonably be expected to have a Material
Adverse Effect; or (b) create, or cause the acceleration of the maturity of,
any debt, obligation or liability of the Company or the Subsidiaries. The
Company has taken all action necessary in order to exempt this Agreement, the
Merger and the other transactions contemplated hereby from (x) the requirements
of any "moratorium", "control share", "fair price" or other antitakeover laws
and regulations of the State of Delaware, including Section 203 of the Delaware
General Corporation Law, and of any other state and (y) any other applicable
provisions of the Company's certificate of incorporation and bylaws.
Section 3.6 Financial Statements. The Company has previously
provided to Acquiror true and complete copies of (i) the audited consolidated
balance sheets of the Company and the Subsidiaries (but only such Subsidiaries
that existed as Subsidiaries as of the respective dates) as of December 31,
2002 and December 31, 2003 and the related consolidated statements of
operations, stockholders' equity and cash flows for the years then ended,
including the notes thereto, together with the unqualified audit report thereon
of the Company's independent certified public accountants, and a true and
complete copy of the unaudited consolidated balance sheet and related
consolidated statement of operations of the Company and the Subsidiaries for
the period ending September 30, 2004 and (ii) the corresponding audited
financial statements for each of the Subsidiaries acquired by the Company after
December 31, 2001 (together with any other financial statements required to be
delivered pursuant to Section 5.7, collectively, the "Company Financial
Statements"). The Company Financial Statements have been prepared from, and are
in accordance with, the books and records of the Company and the Subsidiaries
and present fairly, in all material respects, the financial position and
results of operations of the Company and the Subsidiaries as of the dates and
for the periods indicated in conformity with United States generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods covered by such statements, except as otherwise stated in the Company
Financial Statements.
Section 3.7 Absence of Certain Changes or Events. Except as set
forth in Section 3.7 of the Disclosure Letter, since September 30, 2004, there
has not been: (i) any change, development, event or condition that has resulted
in, or could be reasonably expected to result in, a Material Adverse Effect;
(ii) any material damage, destruction, loss or casualty to property or assets
of the Company or the Subsidiaries, taken as a whole, whether or not covered by
insurance; (iii) any strike, work stoppage or slowdown or other labor trouble
involving the Company or any of the Subsidiaries; (iv) any declaration, setting
aside or payment of any dividend or distribution (whether in cash, capital
shares or property) with respect to the capital stock of the Company; (v) any
redemption or other acquisition by the Company or any of the Subsidiaries of
any of the shares of the capital stock of the Company or any of the
Subsidiaries; (vi) any split, combination, reclassification or other similar
change in the outstanding shares of the capital stock of the Company or any of
the Subsidiaries; (vii) any material transaction entered into by the Company or
any of the Subsidiaries other than in the ordinary course of business; or
(viii) any agreement by the Company or any of the Subsidiaries to do any of the
foregoing.
Section 3.8 No Claims Against the Company. No stockholder or former
stockholder of the Company or any of the Subsidiaries has any claim against the
Company or any of the Subsidiaries, except as disclosed in Section 3.8 of the
Disclosure Letter and except as otherwise specifically provided in this
Agreement.
Section 3.9 Absence of Undisclosed Liabilities; Indenture.
(a) Undisclosed Liabilities. For purposes of this Agreement, the
term "Liabilities" shall include any of the Company's or any of the
Subsidiaries' debts, liabilities or obligations of any kind whatsoever, whether
accrued, absolute, contingent, changing, known, unknown, determinable,
indeterminable, liquidated, unliquidated or otherwise and whether due or to
become due in the future. Except as set forth in the Company Financial
Statements or disclosed in Section 3.9(a) of the Disclosure Letter, each of the
Company and the Subsidiaries (a) did not have, as of September 30, 2004, any
Liabilities required by GAAP to be disclosed in the Company's consolidated
balance sheet, and (b) has not incurred since September 30, 2004, any
Liabilities other than liabilities or obligations incurred in the ordinary and
usual course of business after September 30, 2004, which would not be required
by GAAP to be disclosed in the Company's consolidated balance sheet. Section
3.9(a) of the Disclosure Letter lists, and the Company has delivered to
Acquiror copies of the documentation creating or governing, all securitization
transactions and "off-balance sheet arrangements" (as defined in Item 303(c) of
Regulation S-K of the SEC) effected by the Company or the Subsidiaries.
(b) Indenture. Section 3.9(b) of the Disclosure Letter lists the
name of each Guarantor, as that term is defined in Section 1.01 of the
Indenture dated as of March 27, 2003, between the Company, the Guarantors and
U.S. Bank National Association (the "Indenture"), each such Guarantor being
hereafter referred to as a "Loan Guarantor."
Section 3.10 Legal Proceedings. Except as disclosed in Section 3.10
of the Disclosure Letter, (i) there is no claim, action, suit or proceeding
(each, a "Claim") pending or, to the Knowledge of the Company, threatened
against the Company or any of the Subsidiaries or any of its properties or
assets (or any of its officers or directors in connection with the business of
the Company or the Subsidiaries) before any arbitrator or Governmental Entity
that, if determined adversely, could be reasonably expected to have a Material
Adverse Effect, nor has the Company or any of the Subsidiaries received notice
of any investigation by any Governmental Entity or other individual, sole
proprietorship, partnership, joint venture, corporation, estate, trust,
unincorporated organization, association, limited liability company,
institution or other entity (collectively, a "Person") against the Company or
any of the Subsidiaries (or any of its officers or directors in connection with
the business of the Company or the Subsidiaries) which would have such effect;
and (ii) neither the Company nor any of the Subsidiaries (or any of its
officers or directors in connection with the business of the Company or the
Subsidiaries) is a party to or bound by any Governmental Order of any
Governmental Entity, arbitrator or any other Person against the Company or any
of the Subsidiaries that could reasonably expected to have a Material Adverse
Effect.
Section 3.11 Environmental Matters.
(a) When used in this Section 3.11:
(i) "Clean-Up" means all actions required under applicable
Environmental Law to: (A) contain, clean-up, remove, treat or
remediate Hazardous Materials so that they do not migrate or
endanger human health or the environment; (B) perform
post-remedial monitoring and care; or (C) respond to any request
by any Governmental Entity for information or documents in any way
relating to containment, clean-up, removal, treatment or
remediation or potential containment, clean-up, removal, treatment
or remediation of Hazardous Material.
(ii) "Environmental Claim" means any claim, action, cause of
action, investigation or written notice by any Person against the
Company or the Subsidiaries alleging potential liability
(including potential liability for investigatory costs, Clean-Up
costs, Remedial Action, governmental response costs, natural
resources damages, property damages, personal injuries or
penalties) under any Environmental Law arising out of, based on or
resulting from (A) the presence, or Release, of any Hazardous
Material on the real property owned or leased by the Company or
the Subsidiaries, or (B) circumstances forming the basis of any
violation, or alleged violation, by the Company or the
Subsidiaries under any Environmental Law or Environmental Permit.
(iii) "Environmental Law" means all applicable Laws relating
to pollution or protection of the environment. Without limiting
the generality of the foregoing, Environmental Law includes Laws
relating to Releases or threatened Releases of Hazardous Material
or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, Release, disposal,
transport or handling of Hazardous Material and all Laws with
regard to record keeping, notification, disclosure and reporting
requirements respecting Hazardous Material.
(iv) "Environmental Permit" means each permit, approval,
registration identification number, license, certificate and other
authorization which is or may be required under any applicable
Environmental Law.
(v) "Hazardous Material" means any substance, chemical,
compound, product, solid, gas, liquid, waste, byproduct,
pollutant, contaminant or material which is classified or
regulated as "hazardous" or "toxic" pursuant to Environmental Law,
and includes friable asbestos-containing material, polychlorinated
biphenyls and petroleum products.
(vi) "Release" means any release, spill, emission,
discharge, leaking, pumping, injection, deposit, disposal,
dispersal, leaching or migration into the environment (including
ambient air, surface water, groundwater and surface or subsurface
strata), or into or out of any property, including the movement of
Hazardous Material through or in the air, soil, surface water,
groundwater or property.
(vii) "Remedial Action" means any action or proceeding to
(A) cause the removal of any Hazardous Material, (B) correct or
prevent an environmental problem resulting from the prior
treatment, storage, Release or disposal of Hazardous Material or
to recover the cost of either by a Governmental Entity or other
Person, or (C) cause the removal of any fill or implement any
remediation, restoration or mitigation that may be required in
connection with any dredging, filling or disturbance activities in
any wetland or wetlands.
(b) Except as set forth in Section 3.11(b) of the Disclosure
Letter: (i) the Company and the Subsidiaries are, and for the past five (5)
years have been, in compliance in all material respects with all applicable
Environmental Laws (which compliance includes the possession of all material
Environmental Permits, and material compliance with the terms and conditions
thereof) and (ii) neither the Company nor any of the Subsidiaries has received
any written communication from any Governmental Entity or other Person alleging
that the Company or the Subsidiaries is not in such material compliance.
(c) Except as set forth in Section 3.11(c) of the Disclosure Letter
or in compliance in all material respects with Environmental Laws, the Company
and the Subsidiaries have not (i) except for immaterial events, used, treated,
stored, disposed of, or caused a Release of any Hazardous Material on, under,
at, from or in any way affecting any real property owned or leased by the
Company or the Subsidiaries, or (ii) shipped any Hazardous Material generated
on any real property owned or leased by the Company or the Subsidiaries to any
other place for use, treatment, storage, treatment or disposal.
(d) Except as set forth in Section 3.11(d) of the Disclosure
Letter, there is no Environmental Claim pending or, to the Knowledge of the
Company, threatened against the Company or the Subsidiaries or any of their
assets or business, which, if adversely determined, could be reasonably
expected to have a Material Adverse Effect.
(e) Except as set forth in Section 3.11(e) of the Disclosure
Letter, to the Knowledge of the Company, no other Person has placed, stored,
deposited, discharged, buried, dumped or disposed or caused the Release of
Hazardous Material or any other wastes produced by, or resulting from, any
business, commercial or industrial activities, operations or processes, on or
beneath any real property owned or leased by the Company or the Subsidiaries,
the presence of which would give rise to a Material Environmental Claim or
constitute a material violation of an Environmental Law.
(f) Neither the Company nor any of the Subsidiaries owns or
operates, nor to Knowledge of the Company have any of them formerly owned or
operated, any site that, nor has the Company or any of the Subsidiaries sent
wastes to, a site that, pursuant to any Environmental Law, has been placed on
the "National Priorities List", the "CERCLIS" list, or any similar list of
sites with suspected or confirmed environmental problems.
(g) The Company has made available to Acquiror copies of all
material environmental or health and safety related assessments, studies,
reports, analyses, regulatory inspection reports, correspondence with
Governmental Entities and results of investigations involving the Company or
any of the Subsidiaries that are in the possession, custody or control of the
Company or any of the Subsidiaries.
Section 3.12 Governmental Authorization and Compliance with Laws.
Each of the Company and the Subsidiaries is, and since January 1, 2000 has
been, in material compliance with all laws, ordinances, regulations, policies,
orders and rules (collectively "Laws") of all Governmental Entities applicable
to the Company and the Subsidiaries or their business, properties or assets.
Each of the Company and the Subsidiaries holds and has held all material
licenses, permits, certificates, franchises, registrations, consents,
Authorizations or other rights filed with, granted, issued by, or entered by
any Governmental Entity that are required for the conduct of its business as
now and then being conducted (collectively, "Company Licenses"). All of the
material Company Licenses required for the conduct of the business of the
Company and each of the Subsidiaries are valid and in full force and effect,
and the terms of the Company Licenses are not subject to any restrictions or
conditions that limit or would limit the operations of the business of the
Company or the Subsidiaries as presently conducted, other than restrictions or
conditions generally applicable to licenses of that type. There are no
proceedings pending or, to the Knowledge of the Company, complaints or
petitions by others, or threatened proceedings, before any Governmental Entity
relating to the Company Licenses.
Section 3.13 Intellectual Property.
(a) Each of the Company and the Subsidiaries owns, or is validly
licensed or otherwise possesses legally enforceable and, except for limitations
arising under licenses or similar contracts governing the Company's and the
Subsidiaries' rights therein, unencumbered rights to use, all domestic and
foreign patents, domestic and foreign trademarks, trade names, service marks,
domain names and copyrights, any applications for and registrations of such
patents, industrial designs, trademarks, trade names, service marks, domain
names and copyrights, and all database rights, net lists, processes, formulae,
methods, schematics, technology, invention, trade secrets, know-how, computer
software programs or applications and tangible or intangible proprietary
information or material that are necessary or used to conduct its business, or
necessary or used with respect to the production, marketing, use, sale of
products or export for sale currently under development by the Company or any
of the Subsidiaries (the "Company Intellectual Property Rights"). Except as set
forth in Section 3.13(a) of the Disclosure Letter, the Company and each
Subsidiary has the unrestricted right to produce, use, market, license, sell
and export for sale all of the products and services produced, used, marketed
and licensed by it now and for the foreseeable future and the consummation of
the transactions contemplated by this Agreement will not alter or impair any
such rights. Section 3.13(a) of the Disclosure Letter lists all of the material
Company Intellectual Property Rights, denoting all material licenses or other
agreements (other than licenses of generally available computer programs)
pursuant to which the Company or any Subsidiary has any right to use or enjoy
any intellectual property that is owned by others or pursuant to which the
Company or any Subsidiary is under a duty of confidentiality with respect to
any intellectual property owned by others. Each of the Company and the
Subsidiaries has taken all action reasonably necessary to protect the Company
Intellectual Property Rights, including use of reasonable secrecy measures to
protect any trade secrets included in the Company Intellectual Property Rights,
payment of maintenance or renewal fees where applicable for the Company
Intellectual Property Rights, and filing of maintenance or renewal declarations
or affidavits and accompanying materials where applicable for the Company
Intellectual Property Rights. Section 3.13(a) of the Disclosure Letter sets
forth a list of all material Company Intellectual Property Rights that will
transfer to another party upon the happening of one or more specified events.
(b) Except as set forth in Section 3.13(b) of the Disclosure
Letter, the execution and delivery of this Agreement and consummation of the
transactions contemplated hereby will not result in the breach of, or create on
behalf of any Person the right to terminate or modify, any license, sublicense
or other contract or agreement relating to the Company Intellectual Property
Rights, or any licenses, sublicenses or other contracts or agreements as to
which the Company or any of the Subsidiaries is a party and pursuant to which
the Company or any of the Subsidiaries is authorized to use any Person's
patents, trademarks, trade names, service marks, trade dress, domain names,
copyrights or trade secrets ("Company Third Party Intellectual Property
Rights").
(c) All material patents, trademarks, service marks, domain names
and copyrights which are held by the Company or any of the Subsidiaries are
valid and subsisting. Except as set forth in Section 3.13(c) of the Disclosure
Letter, neither the Company nor any of the Subsidiaries has, since January 1,
2002, been involved in any material Claim, or received in writing any claim or
notice, which involves a claim of infringement, dilution or misappropriation of
any material patents, trademarks, trade names, service marks, trade dress,
domain names, copyrights or violation of any trade secret or other proprietary
right of any Person (nor is there any Claim that arose prior to such date that
remains outstanding and unresolved). To the Knowledge of the Company, the
manufacturing, use, marketing, sale or export for sale of the products of the
Company and the Subsidiaries do not infringe upon, dilute, misappropriate or
otherwise come into conflict with any patent, trademark, trade name, service
mark, trade dress, copyright, trade secret or other proprietary right of any
Person. To the Knowledge of the Company, no other Person has previously
interfered with, misappropriated, infringed upon or diluted, or is currently
interfering with, misappropriating, infringing upon or diluting, any Company
Intellectual Property Rights or other proprietary, personality or privacy
information of the Company or any Subsidiary. Except as set forth in Section
3.13(c) of the Disclosure Letter, there are no agreements, judgments or
Governmental Orders which involve indemnification by the Company or any of the
Subsidiaries with respect to infringement or misappropriation of intellectual
property.
(d) It is the policy of the Company and the Subsidiaries that each
employee, agent, consultant or contractor of the Company and the Subsidiaries
that may be reasonably anticipated to contribute to or participate in the
creation or development of any copyrightable, patentable or trade secret
material execute agreements providing that the Company or one of the
Subsidiaries is deemed to be the original owner/author of all property rights
therein and including an assignment or an agreement to assign in favor of the
Company or one of the Subsidiaries all right, title and interest in such
material. Except as disclosed in Section 3.13(d) of the Disclosure Letter, to
the Knowledge of the Company, no employee, agent, consultant or contractor of
the Company or any of the Subsidiaries who has materially contributed to or
participated in the creation or development of any copyrightable, patentable or
trade secret material on behalf of the Company or any of the Subsidiaries has
failed to execute such an agreement.
Section 3.14 Employee Plans.
(a) Schedule of Plans. Section 3.14(a) of the Disclosure Letter
lists each of the following that the Company, any of the Subsidiaries or any
ERISA Affiliate maintains, is required to contribute to or otherwise
participates in or as to which the Company, any of the Subsidiaries or any
ERISA Affiliate has any liability or obligation, whether accrued, contingent or
otherwise:
(i) any "employee pension benefit plan" (as defined in the
Employee Retirement Income Security Act of 1974, as amended
("ERISA")) ("Pension/Profit-Sharing Plan"), including any pension,
profit-sharing, retirement, thrift or stock bonus plan;
(ii) any "multi-employer plan" ("Multi-Employer Plan"),
"multiple employer plan" or "multiple employer welfare
arrangement" (all as defined in ERISA and/or the Code);
(iii) any "employee welfare benefit plan" (as defined in
ERISA);
(iv) any of the Canadian Employee Plans that the Company or
a Subsidiary maintains or contributes to for the benefit of any of
the Company's or Subsidiary's employees, former employees or their
respective dependent or beneficiaries, but excluding the Canada
Pension Plan, the Quebec Pension Plan, any health or drug plan
established and administered by a Province and workers'
compensation insurance provided by federal or provincial law or a
comparable program established and administered outside Canada.
"Canadian Employee Plan" means all bonus, deferred compensation,
incentive compensation, share purchase, share option, share
appreciation, phantom share, savings, profit sharing, severance or
termination pay, health, dental or other medical, life, disability
or other insurance (whether insured or self-insured), mortgage
insurance, employee loan, employee assistance, supplementary
unemployment benefit, pension, retirement, supplementary
retirement, plan, program and every other benefit plan, program,
agreement, arrangement or practice (whether written or unwritten);
and
(v) any other compensation, stock option, restricted stock,
fringe benefit or retirement plan, program, policy, understanding
or arrangement of any kind whatsoever, whether formal or informal,
not included in the foregoing and providing for benefits for, or
the welfare of, any or all of the current or former employees,
officers, directors, independent contractors, leased employees,
consultants or agents of the Company, any of the Subsidiaries or
any ERISA Affiliate or their beneficiaries or dependents
("Participants"), including any health, life insurance, retiree
medical, bonus, employment, consulting, incentive, retention or
severance arrangement, and all outstanding stock options,
restricted shares, phantom stock awards, stock appreciation
rights, performance share unit awards or cash or other similar
incentive awards thereunder;
(all of the foregoing in items (i), (ii), (iii), (iv) and (v) being referred to
as "Employee Plans"). "ERISA Affiliate" means each trade or business (whether
or not incorporated) that together with the Company or any of the Subsidiaries
is treated as a single employer pursuant to Code Section 414(b), (c), (m) or
(o) or under the comparable provisions of ERISA.
(b) Absence of Certain Types of Plans. Except as set forth in
Section 3.14(b) of the Disclosure Letter, neither the Company, any of the
Subsidiaries nor any ERISA Affiliate has at any time incurred any unsatisfied
liability under any Employee Plan described in paragraph 3.14(a)(ii), including
any liability, joint or otherwise, under ERISA Title IV for a complete or
partial withdrawal from any Multi-Employer Plan. Neither the Company nor any of
the Subsidiaries has any obligation in respect of any Canadian Employee Plans
that are multi-employer pension plans or multi-employer benefit plans except
contribution obligations as set forth in the materials provided to Acquiror.
(c) Employee Plans Documentation. The Company has delivered to
Acquiror (and Section 3.14(c) of the Disclosure Letter lists each item
delivered) copies of the following: (i) each written Employee Plan, as amended;
(ii) all Internal Revenue Service ("IRS") determination and opinion letters, or
the Canadian equivalent, issued with respect to each Pension/Profit-Sharing
Plan; (iii) the three (3) most recent actuarial valuations (if any) for each
Pension/Profit-Sharing Plan; (iv) the three (3) most recent annual reports on
the Form 5500 series, or the Canadian equivalent, including all schedules
thereto; (v) each trust or custodial agreement, insurance contract or other
document setting forth any other funding arrangement, if any, with respect to
each Employee Plan; (vi) each administrative or other similar agreement with
respect to the Employee Plans; (vii) the most recent ERISA summary plan
description (including any summaries of material modifications), or the
Canadian equivalent, or other summary of plan provisions distributed to
participants or beneficiaries for each Employee Plan; (viii) each opinion or
ruling from the IRS, the U.S. Department of Labor ("DOL") or the Pension
Benefit Guaranty Corporation ("PBGC"), or the Canadian equivalent, concerning
any Employee Plan; (ix) each Registration Statement, amendment thereto and
prospectus relating thereto filed with the SEC, or Canadian equivalent, or
furnished to participants in connection with any Employee Plan; (x) written
descriptions of all non-written agreements relating to the Employee Plans; and
(xi) a current sample of each notice or agreement required to be provided to
any party pursuant to Code Section 4980B or ERISA Section 601 et seq. ("COBRA")
and Code Section 9801 or ERISA Section 701 et seq. ("HIPAA").
(d) Legal Compliance. The Employee Plans have been maintained and
administered, in all material respects, in accordance with their terms and with
all provisions of the Code, ERISA (including applicable regulations thereunder)
and other applicable Laws. Each of the Company, the Subsidiaries and all ERISA
Affiliates have fully complied in a manner that will not result in any Material
Adverse Affect with all of their obligations under each of the Employee Plans
and with all provisions of the Code, ERISA and any and all other applicable
Laws. Except as set forth in Section 3.14(d) of the Disclosure Letter, each
Pension/Profit-Sharing Plan: (i) has received a favorable determination letter
from the IRS to the effect that it is qualified under Code Sections 401(a) and
501, both as to the original plan and all restatements or material amendments
and (ii) has never been subject to any assertion by any Governmental Entity
that it is not so qualified. No Employee Plan is subject to an audit by the
IRS, DOL or any other Governmental Entity nor is it the subject of any
voluntary compliance program, amnesty program, closing agreement or other
similar programs, and no completed audit, compliance filing, closing agreement
or similar action or agreement has resulted in the imposition of any Tax or
penalty that has not been satisfied.
(e) Accruals; Funding.
(i) Pension/Profit-Sharing Plans. None of the Employee Plans is
a Pension/Profit-Sharing Plan subject to ERISA Title IV (including those
for retired, terminated or other Participants). None of the Company, any
of the Subsidiaries or any ERISA Affiliate has terminated any
Pension/Profit-Sharing Plan subject to Title IV as to which there is any
remaining liability, or incurred any outstanding liability under ERISA
Section 4062 to the PBGC or to a trustee appointed under ERISA Section
4042.
(ii) Contributions. Except as set forth in Section 3.14(e) of
the Disclosure Letter: (1) the Company, each of the Subsidiaries and each
ERISA Affiliate have made full and timely payment of all amounts required
to be contributed under the terms of each Employee Plan and applicable
Law, or required to be paid as expenses under such Employee Plan,
including administrative and related expenses, PBGC premiums and amounts
required to be contributed under Code Section 412; (2) all contributions
have been made in accordance with the actuarial recommendations; and (3)
no excise taxes may be assessed as a result of any nondeductible or other
contributions made or not made to an Employee Plan.
(f) Reporting and Disclosure. Summary plan descriptions and all
other returns, reports, registration statements, prospectuses, documents,
statements and communications that are required to have been filed, published
or disseminated under the Code, ERISA or other Law and the rules and
regulations promulgated by the Treasury Department, the DOL or by the SEC or
any other Governmental Entity with respect to the Employee Plans have been so
filed, published or disseminated.
(g) Claims for Benefits. Other than claims for benefits arising in
the ordinary course of the administration and operation of the Employee Plans,
no claims, investigations or arbitrations are pending or threatened against any
Employee Plan the Company, any of the Subsidiaries any ERISA Affiliate, any
trust or arrangement created under or as part of any Employee Plan, any
trustee, fiduciary, custodian, administrator or other Person holding or
controlling assets of any Employee Plan, and no basis to anticipate any such
claim or claims exists.
(h) Prohibited Transactions; Terminations; Other Reportable Events.
Except as set forth in Section 3.14(h) of the Disclosure Letter, neither the
Company, any of the Subsidiaries, any ERISA Affiliate, any Employee Plan, any
trust or arrangement created under any of them, nor any trustee, fiduciary,
custodian, administrator or any other person or entity holding or controlling
assets of any of the Employee Plans has engaged in any "prohibited transaction"
(as such term is defined in ERISA or the Code) that could subject any of the
Company, any of the Subsidiaries, any ERISA Affiliate or any Employee Plan to
any Tax, penalty or other cost or liability of any kind.
(i) Creation of Obligations By Reason of the Merger. Except as set
forth in Section 3.14(i) of the Disclosure Letter, the execution and delivery
of the Company Delivered Agreements and the consummation of the transactions
contemplated by the Company Delivered Agreements will not constitute an event
under any Employee Plan that will or may result in any payment (whether
severance pay or otherwise), acceleration, forgiveness of indebtedness,
vesting, distribution, increase in benefits or obligation to fund benefits with
respect to any Participant, including any obligation to make a payment that
would be nondeductible under Code section 280G or any other Code provision.
(j) Employee Recharacterization. Neither the Company, any
Subsidiary nor any ERISA Affiliate has or could have any liability arising from
the recharacterization of any Person engaged by the Company, any Subsidiary or
any ERISA Affiliate as an independent contractor, lease employee, consultant or
similar service provider as an Employee of the Company, any Subsidiary or any
ERISA Affiliate, where such liability could reasonably be expected to have a
Material Adverse Effect.
Section 3.15 Tax Matters. Except as disclosed in Section 3.15 of
the Disclosure Letter:
(a) Each of the Company and the Subsidiaries has duly and timely
filed all income Tax and other material Tax returns, declarations, reports,
information returns and statements ("Returns") required to be filed by it in
respect of any United States federal, state or local, or foreign Taxes and has
duly and timely paid all income Taxes and other material Taxes due and payable
by it, other than Taxes which are being contested in good faith (and disclosed
by the Company to Acquiror in writing). As used herein, "Tax" or "Taxes" means
and includes any and all taxes, fees, levies, assessments, duties, tariffs,
imposts, and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect
thereto) imposed by any Governmental Entity, including, without limitation:
foreign, domestic, central, local, state or other jurisdictional taxes or other
charges on or with respect to income, estimated income, franchises, business,
occupation, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth; taxes or other charges in the nature
of excise, withholding, ad valorem, stamp, transfer, value added, or gains
taxes; license, registration and documentation fees; and customs duties,
tariffs, and similar charges. The unaudited consolidated balance sheet of the
Company and the Subsidiaries for the period ending September 30, 2004,
establishes reserves for the payment of all income Taxes and other material
Taxes not yet due and payable as of such date in conformity with GAAP applied
on a consistent basis, except as otherwise stated in the Company Financial
Statements. Each of the Company and the Subsidiaries have complied in all
material respects with all applicable Laws relating to the payment and
withholding of Taxes from employees and other Persons.
(b) None of the income Tax and other material Tax Returns of the
Company or any of the Subsidiaries have been examined by the IRS or any other
United States federal, state or local or any foreign Governmental Entity within
the past six (6) years, other than reviews and assessments undertaken by the
Canada Revenue Agency in the ordinary course for all Canadian Returns. There
are no audits or other Governmental Entity proceedings presently pending nor,
to the Knowledge of the Company, any other disputes pending with respect to, or
claims asserted for, Taxes upon the Company or any of the Subsidiaries, nor has
the Company or any of the Subsidiaries given any currently outstanding waivers
or comparable consents regarding the application of any statute of limitations
with respect to any Taxes or Returns. There are no Liens for Taxes upon the
assets of the Company or any of the Subsidiaries, except Liens for Taxes not
yet due.
(c) Neither the Company nor any of the Subsidiaries (i) has
requested any extension of time within which to file any Return which has not
since been filed or (ii) is required to include in income any adjustment by
reason of a voluntary change in accounting method initiated by the Company or
any of the Subsidiaries (nor to the Knowledge of the Company, has any
Governmental Entity proposed any such adjustment or change of accounting
method).
(d) There is no 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 Acquiror and its affiliated group
(including the Surviving Corporation) by reason of Section 280G of the Code or
give rise to any Tax under Section 4999 of the Code.
(e) None of the Company or the Subsidiaries 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 (i) in the two (2) years prior
to the date hereof or (ii) in a distribution which 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.
(f) Neither the Company nor any of the Subsidiaries has been a
member of an affiliated, consolidated, combined or unitary group (other than a
group of which Holdings, the Company or a Subsidiary is the common parent), or
has any liability for Taxes of any Person (other than Holdings, the Company and
the Subsidiaries) under Treasury Regulation Section 1.1502-6 or any analogous
or similar provision of Law.
(g) Neither the Company nor any of the Subsidiaries 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 circumstances exist or have existed which have resulted in
or may result in the application of any of sections 79 to 80.04 (relating
generally to debt forgiveness) of the Income Tax Act (Canada), as amended (the
"Canadian Tax Act") (or similar laws of a province) to the Company or any of
the Subsidiaries. No Subsidiary has received a requirement pursuant to section
224 of the Canadian Tax Act which remains unsatisfied in any respect. For
taxation years commencing after 1998 and ending on or before the Closing Date
each Subsidiary has made and obtained records or documents, where required,
that meet the requirements of paragraphs 247(4)(a) to (c) of the Canadian Tax
Act with respect to all transactions and arrangements with non-resident Persons
not dealing at arm's length with the relevant company within the meaning of the
Canadian Tax Act. No Subsidiary has claimed any reserve for tax purposes, if as
a result of such claim any amount could be included in income for a taxation
year ending after the Closing Date and no Subsidiary has made a payment, nor is
or may be obligated to make any payment, that may not be deductible by virtue
of section 67 or 78 of the Canadian Tax Act (or similar laws of a province).
There are no circumstances which have or could result in the application,
either before, on or after Closing Date, of section 17 or paragraph 214(3)(a)
of the Canadian Tax Act to any Subsidiary.
Section 3.16 Title to Properties; Adequacy.
(a) Section 3.16(a) of the Disclosure Letter lists (i) all of the
real property owned by the Company or any of the Subsidiaries (the "Owned Real
Property") and (ii) all of the leases (the "Leases") for real property to which
the Company or any of the Subsidiaries is a party. Each Lease is in full force
and effect, except to the extent that its enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other Laws and court
decisions relating to or affecting the enforcement of creditors' rights
generally (including statutory or other Laws regarding fraudulent transfers),
and is subject to general principles of equity.
(b) The Company or one of the Subsidiaries has good and marketable
title to or valid leasehold interests, in all properties and assets that are
material to the conduct of the business of the Company, including those
reflected in the Company Financial Statements (or acquired after the date of
the Company Financial Statements by the Company or the Subsidiaries), or not
reflected on the Company Financial Statements but used by the Company or the
Subsidiaries, except for assets and properties sold, consumed or otherwise
disposed of in the ordinary course of business since September 30, 2004 (which,
to the extent material, are disclosed in Section 3.16(b) of the Disclosure
Letter), including the Owned Real Property (collectively, the "Properties"),
free and clear of any title defects or Liens, except (i) Liens securing debt
reflected as liabilities on the latest balance sheet included in the Company
Financial Statements, (ii) Liens for current Taxes and assessments not in
default, (iii) mechanics', carriers', workers', repair persons', statutory or
common law Liens either not delinquent or being contested in good faith and
(iv) Liens, covenants, rights-of-way, building or use restrictions, easements,
exceptions, variances, reservations and other matters or limitations of any
kind, if any, which could not reasonably be expected to have a materially
adverse effect on the Company's or the Subsidiaries' use of such Properties
affected for the purposes currently used or materially diminish the value of
such Properties.
(c) No Person other than the Company or the Subsidiaries is
currently entitled to possession of any of the Properties, whether owned or
leased by the Company or the Subsidiaries. The buildings, structures and
improvements owned or leased by the Company or the Subsidiaries conform in all
material respects to all applicable Laws, including zoning regulations, none of
which would upon consummation of the transactions contemplated hereby
materially adversely interfere with the use of such Properties, buildings,
structures or improvements for the purposes for which they are now utilized.
Except as set forth in Section 3.16(c) of the Disclosure Letter, (i) each of
the Properties is adequate in all material respects for the operations for
which it is being used by the Company or the Subsidiaries, (ii) each of the
Properties is in reasonably good repair and operating condition, normal wear
and tear excepted, and (iii) the Properties constitute all of the properties
that the Company and the Subsidiaries use in connection with the operation of
their business as currently conducted. The Company and the Subsidiaries do not
have any commitment or plan to make any capital expenditure with respect to any
of the Properties in excess of $100,000 that has not been set forth in Section
3.16(c) of the Disclosure Letter.
Section 3.17 Contracts. Section 3.17 of the Disclosure Letter sets
forth an accurate and complete list of each written and, to the Knowledge of
the Company, each oral agreement, contract, obligation, promise, or undertaking
(including any and all amendments thereto) to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the Subsidiaries is
bound which (a) relates to the borrowing of money or the guaranty of any
obligation to borrow money; (b) involves revenues or expenditures in excess of
$100,000 (excluding sale orders entered into in the ordinary course of business
consistent with past practice); (c) is a collective bargaining agreement; (d)
obligates the Company or any of the Subsidiaries not to compete with any
business or in any territory or which otherwise restrains or prevents the
Company or any of the Subsidiaries from carrying on any lawful business; (e)
relates to employment, compensation, severance, consulting or indemnification
between the Company or any of the Subsidiaries and any of their present or
former officers, directors, employees or consultants who are entitled to
compensation thereunder (other than indemnification of officers and directors
under corporate charter or bylaw provisions); (f) relates to a material Company
Third Party Intellectual Property Right; (g) involves the grant by or to the
Company or any of the Subsidiaries of exclusive rights; or (h) is otherwise
material to the assets, business, operations or financial condition of the
Company and the Subsidiaries taken as a whole (collectively, the "Company
Contracts"). To the Knowledge of the Company, all of the Company Contracts and
Leases are enforceable by the Company or the Subsidiary which is a party
thereto in accordance with their terms except to the extent that such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other Laws and court decisions relating to or affecting the
enforcement of creditors' rights generally, and is subject to general
principles of equity. Neither the Company nor any of the Subsidiaries has
received or given any notice of termination with respect to any of the Company
Contracts. Except as set forth in Section 3.17 of the Disclosure Letter,
neither the Company nor any of the Subsidiaries is in material breach or
default under (and no event has occurred which with notice or the passage of
time or both would constitute a material breach or default under) any Company
Contract or Lease nor, to the Knowledge of the Company, is any other party to
any of the Company Contracts or Leases in default thereunder (and to the
Knowledge of the Company, no event has occurred which with notice or the
passage of time or both would constitute a material breach or default
thereunder). The Company has provided or made available to Acquiror true and
complete copies of all of the Company Contracts and Leases.
Section 3.18 Inventory. Except as set forth in Section 3.18 of the
Disclosure Letter, the inventories as reflected in the Company Financial
Statements and in the books and records of the Company and the Subsidiaries:
(a) are determined and valued in accordance with GAAP applied on a consistent
basis; and (b) consist of items that are salable in the ordinary course of
business (subject to the inventory reserves shown in the Company Financial
Statements), are currently being sold (or reasonably expected to be sold during
the twelve (12) months following the Closing) and are not excessive in the
business' current circumstances. Except as set forth in the Company Financial
Statements or Section 3.18 of the Disclosure Letter, no material amount of
inventory previously sold by the Company or a Subsidiary is subject to returns
or recalls.
Section 3.19 Accounts Receivable. The Company's and the Subsidiaries'
accounts receivable: (a) are valid and existing and collectable in the ordinary
course of business (subject to the bad debt reserves shown in the Company
Financial Statements); (b) represent monies due for goods sold and delivered or
services rendered in the ordinary course of business; and (c) are subject to no
refunds or other adjustments (except discounts for prompt payment given in the
ordinary course of business that are described in Section 3.19 of the
Disclosure Letter) or to any defenses, rights of set-off, assignments,
restrictions, security interests, encumbrances or conditions enforceable by
third parties on or affecting any of them. The bad debt reserves in the Company
Financial Statements are adequate, determined in accordance with GAAP and
calculated consistent with past practice. None of the accounts or the notes
receivable of the Company and the Subsidiaries is subject to any setoffs or
counterclaims or represents obligations for goods sold on consignment, on
approval or on a sale-or-return basis or subject to any other repurchase or
return arrangement.
Section 3.20 Defective Products; Product Liability; Product Recalls.
(a) Except as set forth in Section 3.20(a) of the Disclosure
Letter: (i) the Company and the Subsidiaries have maintained accurate sales
records, order backlog and other information with respect to all products and
services; and (ii) each of the Company and the Subsidiaries' products and
services comply in all material respects with applicable Law and each warranty,
guaranty or claim made by the Company or the Subsidiaries or implied by
applicable Law. Section 3.20(a) of the Disclosure Letter lists each material
warranty, guaranty or claim made by the Company and the Subsidiaries as to its
products or services (other than those implied by applicable Law).
(b) Since January 1, 2000, no product manufactured, sold, leased,
licensed or delivered by the Company or any Subsidiary has been subject to any
product warranty beyond the applicable standard product warranties which are
set forth in Section 3.20(b) of the Disclosure Letter. Section 3.20(b) of the
Disclosure Letter sets forth the aggregate expenses incurred by the Company and
the Subsidiaries in fulfilling their product warranty obligations during each
year since January 1, 2000. The Company and each of the Subsidiaries has no
reason to believe that warranty expense as a percentage of sales will increase
materially in the future.
(c) The Company and the Subsidiaries have complied in all material
respects with all applicable Laws with respect to its products and services,
including those of the United States Food and Drug Administration, the Consumer
Product Safety Commission and the United States Environmental Protection Agency
and the corresponding Canadian Governmental Entities. Section 3.20(c) of the
Disclosure Letter sets forth all correspondence with any such agencies alleging
any non-compliance with applicable Law with respect to the products and
services of the Company and the Subsidiaries.
(d) To the Knowledge of the Company all of the Company's and the
Subsidiaries' products have been merchantable, free from defects in material
and workmanship, and suitable for the purpose for which they were sold. The
Company's and the Subsidiaries' products have not been subject to any product
recall (including any safety related recall) or service bulletin and, to the
Knowledge of the Company there is no fact or facts existing which may
reasonably be expected to result in any such recall or service bulletin. Except
as disclosed in Section 3.20(d) of the Disclosure Letter, there is no legal
action, Claim, arbitration, or other legal or administrative proceeding or
investigation before any Governmental Entity pending or, to the Knowledge of
the Company, threatened, involving any product liability, product recall or
otherwise involving any product of the Company or the Subsidiaries.
(e) The Company and the Subsidiaries have insurance against loss or
damage arising out of product liability, true and complete copies of which have
been delivered to Acquiror. Such insurance covers all incidents of loss which
have occurred prior to the date hereof or which may occur resulting from the
Company's or any of the Subsidiaries' products sold prior to the Closing. All
incidents of damage claims paid by the Company, any of the Subsidiaries, or any
of their insurance carriers in excess of $50,000.00 in the two (2) year period
preceding the date of this Agreement are described in Section 3.20(e) of the
Disclosure Letter. The Company Financial Statements include an adequate reserve
(or shall otherwise reflect an appropriate accrual), determined in accordance
with GAAP, for all liability or potential liability resulting or arising from
any product recall that has been initiated or breach of warranty claims that
have been asserted, or that are reasonably likely to be initiated or asserted,
in connection with products manufactured and sold by the Company or any of the
Subsidiaries, including the matters set forth in Section 3.20(e) of the
Disclosure Letter, in each case, as of the date of the Company Financial
Statements.
Section 3.21 Major Customers. Section 3.21 of the Disclosure Letter
sets forth for each of the Company's (together with the Subsidiaries') U.S.
Home and Garden, Canadian Home and Garden and Pet segments, (a) the name of
each customer of the Company and the Subsidiaries which was among the ten (10)
customers which generated the greatest amount of revenue during the year ended
December 31, 2003, (b) the name of each customer which was among the ten (10)
customers which generated the greatest amount of revenue during the nine (9)
months ended September 30, 2004, and (c) the name of each customer listed
pursuant to (a) or (b) above as to which the Company or one of the Subsidiaries
has received a termination notice or as to which the Company or any of the
Subsidiaries has a reasonable basis to believe that such customer will
terminate its relationship with the Company and the Subsidiaries or materially
reduce its future purchases from the Company and the Subsidiaries on or before
December 31, 2005.
Section 3.22 Major Suppliers. Section 3.22 of the Disclosure Letter
sets forth for each of the Company's (together with the Subsidiaries') U.S.
Home and Garden, Canadian Home and Garden and Pet segments, (a) the name of
each supplier of the Company and the Subsidiaries which was among the ten (10)
suppliers which generated the greatest amount of expense during the year ended
December 31, 2003 and of any other supplier which during the year ended
December 31, 2003 generated expense of $500,000 or more, (b) the name of each
supplier which was among the ten (10) suppliers which generated the greatest
amount of expense during the nine (9) months ended September 30, 2004 and of
any other supplier which during the nine (9) months ended September 30, 2004
generated expense of $375,000 or more, and (c) the name of each supplier listed
pursuant to (a) and (b) above and as to which the Company or one of the
Subsidiaries has received a termination notice or as to which the Company or
any of the Subsidiaries has a reasonable basis to believe that such supplier
will terminate its relationship with the Company and the Subsidiaries or
materially reduce its future sales to the Company and the Subsidiaries on or
before December 31, 2005.
Section 3.23 Labor Relations.
(a) Except as set forth in Section 3.23(a) of the Disclosure
Letter, the Company and each of the Subsidiaries, is and since January 1, 2000
has been, in compliance in all material respects with all applicable Laws
respecting employment and employment practices, terms and conditions of
employment, wages and hours, and is not engaged in any unfair labor or unlawful
employment practice. There is no unlawful employment practice or discrimination
charge pending involving the Company or any of the Subsidiaries before any
Governmental Entity, nor is there any pending or, to the Knowledge of the
Company, threatened unfair labor practice charge or complaint against the
Company or any of the Subsidiaries before any Governmental Entity.
(b) Except as set forth in Section 3.23(b) of the Disclosure
Letter, neither the Company nor any of the Subsidiaries, with the exception of
any Subsidiaries with operations in Canada with respect to their Canadian
employees (the "Canadian Subsidiaries"), is party to or is bound by any
agreement, arrangement understanding with any employee or consultant that
cannot be terminated on notice of (90) or fewer days or that entitles any
employee or consultant to receive any salary continuation or severance payment
or retain any specified position with the Company or any of the Subsidiaries.
(c) Except as set forth in Section 3.23(c) of the Disclosure
Letter, none of the Canadian Subsidiaries is party to or is bound by any
agreement, arrangement or understanding with any consultant that cannot be
terminated on notice of (90) or fewer days or that entitles any consultant to
receive any salary continuation or severance payment or retain any specified
position with any of the Canadian Subsidiaries.
(d) There is no labor strike, dispute, slowdown or stoppage
actually pending or, to the Knowledge of the Company, threatened against or
involving or affecting the Company or any of the Subsidiaries. No grievance or
arbitration proceeding is pending and no written claim therefor exists
involving the Company or any of the Subsidiaries. Except as disclosed in
Section 3.23(d) of the Disclosure Letter, there is no collective bargaining
agreement that is binding on the Company or any of the Subsidiaries.
(e) Except for existing collective bargaining obligations of the
Company disclosed in Section 3.23(d) of the Disclosure Letter, no trade union,
council of trade unions, employee bargaining agency or affiliated bargaining
agent: (i) holds bargaining rights with respect to the employees of the Company
or any of the Subsidiaries by way of certification, interim certification,
voluntary recognition, designation or successor rights; (ii) has applied to be
certified as the bargaining agent of the employees of the Company or any of the
Subsidiaries; or (iii) has applied to have the Company or any of the
Subsidiaries declared a related employer pursuant to any applicable statute or
regulation.
Section 3.24 Insider Interests. Except as set forth in Section 3.24
of the Disclosure Letter, no Affiliate, officer, director, stockholder, member
or manager of the Company or any of the Subsidiaries (a) has any agreement with
the Company or any of the Subsidiaries or any interest in any property, real or
personal, tangible or intangible, except for the normal rights as an officer,
director, stockholder, member or manager or (b) has any pending or, to the
Knowledge of the Company, threatened claim or cause of action against the
Company or any of the Subsidiaries, except for accrued compensation and
benefits, expenses and similar obligations incurred in the ordinary course of
business with respect to employees of the Company or any of the Subsidiaries.
Neither the Company nor any of the Subsidiaries has, since July 30, 2002,
extended or modified credit, arranged for the extension of credit, or renewed
an extension of credit, in the form of a personal loan to or for any director
or executive officer (or equivalent thereof) of the Company or any of the
Subsidiaries. Section 3.24 of the Disclosure Letter identifies any loan or
extension of credit maintained by the Company or any of the Subsidiaries to
which the second sentence of Section 13(k)(1) of the Exchange Act applies.
Section 3.25 Insurance. The Company and each of the Subsidiaries
maintains the amount and scope of all insurance policies or contract providing
coverage as summarized and set forth in Section 3.25 of the Disclosure Letter.
All such policies or contracts of insurance are of a scope and, in the opinion
of the management, in an amount usual and customary for businesses of similar
size and scope engaged in the Company's and the Subsidiaries' businesses in
similar geographic areas, are sufficient for compliance in all material
respects with all Laws and of all agreements to which the Company or any of the
Subsidiaries is a party, and have been issued by insurers, which, to the
Knowledge of the Company, are responsible and financially sound. All insurance
policies pursuant to which any such insurance is provided are in full force and
effect and no effective written notice of cancellation or termination of any
such insurance policies has been given to the Company or any of the
Subsidiaries by the carrier of any such policy. All premiums required to be
paid in connection therewith have been paid in full.
Section 3.26 Corporate Records. Except as disclosed in Section 3.26
of the Disclosure Letter, the corporate record books (including the share
transfer records) of the Company and each of the Subsidiaries are complete,
accurate and up to date in all material respects with all necessary signatures
and set forth all meetings and actions taken by the stockholders and directors
(or members and managers, as applicable) of the Company and each of the
Subsidiaries and all transactions involving shares or other equity units of the
Company and each of the Subsidiaries (and contain all canceled certificates).
Section 3.27 SEC Reports. The Company has furnished Acquiror with
copies of its Annual Report on Form 10-K for the fiscal year ended December 31,
2003, Quarterly Reports on Form 10-Q for the quarters ended March 31, 2004,
June 30, 2004 and September 30, 2004 and all other reports or registration
statements filed by the Company with the SEC under applicable laws, rules and
regulations since December 31, 2003 (all such reports and registration
statements being herein collectively called the "Company SEC Filings"), each as
filed with the SEC. Each such Company SEC Filing when it became effective or
was filed with the SEC, as the case may be, complied in all material respects
with the requirements of the Securities Act and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as applicable, and the rules and
regulations of the SEC thereunder and each Company SEC Filing did not on the
date of effectiveness or filing, as the case may be, contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of circumstances under which they were
made, not misleading. The Company has filed, in a timely manner, all forms,
reports and documents required to be made under the Exchange Act for the twelve
(12) months prior to the date of this Agreement. The financial statements of
the Company included in the Company SEC Filings complied as to form in all
material respects with the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with GAAP applied on a consistent
basis during the periods involved (expect as may be indicated in the notes
thereto or, in the case of the unaudited statements, as permitted by Rule 10-01
of Regulation S-X of the SEC) and fairly present in all material respects in
accordance with applicable requirements of GAAP (subject, in the case of the
unaudited statements, to normal, recurring adjustments, none of which will be
material) the consolidated financial position of the Company and its
consolidated Subsidiaries as of their respective dates and the consolidated
results of operations and the consolidated cash flows of the Company and its
consolidated Subsidiaries for the periods presented therein. The Chief
Executive Officer and the Chief Financial Officer of the Company have signed,
and the Company has filed with the SEC, all certifications required by Section
906 of the Sarbanes-Oxley Act of 2002 and such certifications contain no
qualifications or exceptions to the matters certified therein and have not been
modified or withdrawn, and neither the Company nor any of its officers has
received notice from any Governmental Entity questioning or challenging the
accuracy, completeness, form or manner of filing of such certifications. As
used in this Section 3.27, the term "file" shall be broadly construed to
include any manner in which a document or information is furnished, supplied
otherwise made available to the SEC.
Section 3.28 Bank Accounts. Section 3.28 of the Disclosure Letter
lists all bank, money market, savings and similar accounts and safe deposit
boxes of the Company and the Subsidiaries, specifying the account numbers, the
authorized signatories or persons having access to them, and the Company will
separately furnish to Acquiror the passwords used to access such accounts,
including through voice response and internet services.
Section 3.29 Stockholders. To the Knowledge of the Company, there
are not more than thirty-five (35) stockholders of the Company who do not
qualify as "accredited investors" (as such term is defined in Rule 501(a) of
Regulation D).
Section 3.30 Derivatives. All exchange-traded or over-the-counter
swap, forward, future, option, cap, floor or collar financial contracts and any
other similar arrangements whether entered into for the Company's account or
for the account of one or more of the Subsidiaries or their customers, were
entered into (i) in accordance with prudent business practices and all
applicable Laws, and (ii) with counterparties believed to be financially
responsible at the time; and each of them constitutes the valid and legally
binding obligation of the Company or the Subsidiaries, enforceable in
accordance with its terms (except as enforceability may be limited by (i)
bankruptcy, reorganization, insolvency or other laws and court decisions
relating to or affecting this enforcement of creditors' rights generally
(including statutory or other laws regarding fraudulent transfers) and (ii) the
availability of specific performance or other equitable remedies, and are in
full force and effect. Neither the Company nor any of the Subsidiaries, nor to
the Knowledge of the Company, any other party thereto, is in breach of any of
its material obligations under any such agreement or arrangement. The Company
SEC Filings disclose the value of such agreements and arrangements on a
mark-to-market basis in accordance with GAAP, as modified to give effect to
Statement of Financial Accounting Standards No. 133, and, since September 30,
2004, there has not been a material change in such value.
Section 3.31 Accounting Controls. The Company and each of the
Subsidiaries has devised and maintained systems of internal accounting controls
sufficient to provide reasonable assurances, in the judgment of the Board of
Directors of the Company, that: (i) all material transactions are executed in
accordance with management's general or specific authorization; (ii) all
material transactions are recorded as necessary to permit the preparation of
financial statements in conformity with GAAP consistently applied or any other
criteria applicable to such statements; (iii) all material information
concerning the Company and the Subsidiaries is made known on a timely basis to
the individuals responsible for the preparation of the Company's filings with
the SEC and other public disclosure documents; (iv) access to the material
property and assets of the Company and the Subsidiaries is permitted only in
accordance with management's general or specific authorization; and (v) the
recorded accountability for items is compared with the actual levels at
reasonable intervals and appropriate action is taken with respect to any
differences. Section 3.31 of the Disclosure Letter lists, and the Company has
delivered to Acquiror copies of, all written descriptions of, and all policies,
manuals and other documents promulgating, such disclosure controls and
procedures to the extent such materials are of general applicability with
respect to the disclosure controls and procedures of the Company or any of the
Subsidiaries.
Section 3.32 Board Recommendation. The Board of Directors of the
Company, at a meeting duly called and held, has by the vote of those directors
present (i) determined that this Agreement and the transactions contemplated
hereby, including the Merger, the execution and delivery of the Company
Delivered Agreements and other agreements and arrangements, including those
related to restrictions on the transfer of the Acquiror Stock received as
Merger Consideration, and the transactions contemplated thereby, taken
together, are advisable and fair to and in the best interests of the
stockholders of the Company and has approved the same, and (ii) resolved to
recommend that the stockholders of the Company approve this Agreement and the
transactions contemplated herein, including the Merger.
Section 3.33 Combinations Involving the Company. To the Knowledge
of the Company, all mergers, consolidations or other business combinations
involving the Company or any of the Subsidiaries and all liquidations,
purchases or other transactions by which the Company or any of the Subsidiaries
acquired or disposed of a material portion of any of their businesses or
properties (collectively, the ("Prior Transactions") were conducted in
compliance with applicable charter documents, bylaws, any other applicable
agreements, instruments and documents and applicable Laws. To the Knowledge of
the Company, and except as disclosed in Section 3.33 of the Disclosure Letter,
none of the parties to any of the Prior Transactions have made any claims
against any other party or parties thereto for any breach of the definitive
documents for such transaction. Section 3.33 of the Disclosure Letter describes
any written amendments to the Company's or any of the Subsidiaries'
post-closing obligations with respect to the Prior Transactions since the dates
of the Prior Transactions.
Section 3.34 Qualification as a Reorganization. The Company knows
of no facts or circumstances that could reasonably be expected to prevent the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Code.
Section 3.35 Brokers, Finders and Investment Bankers. Except as
disclosed in Section 3.35 of the Disclosure Letter, neither the Company, any of
the Subsidiaries nor any of their officers, directors or employees has employed
any broker, finder or investment banker or incurred any liability for any
investment banking fees, financial advisory fees, brokerage fees or finders' or
similar fees in connection with the transactions contemplated by this
Agreement.
Section 3.36 No Other Representations or Warranties; Disclosure
Letter. Except for the representations and warranties contained in this Article
III (as modified by the Disclosure Letter), neither the Company nor any other
Person makes any other express or implied representation or warranty with
respect to the Company, the Subsidiaries or the transactions contemplated by
this Agreement, and the Company disclaims any other representations or
warranties, whether made by the Company or any of its Affiliates, officers,
directors, employees, agents or representatives. Except for the representations
and warranties contained in Article III hereof (as modified by the Disclosure
Letter), the Company hereby disclaims all liability and responsibility for any
representation, warranty, projection, forecast, statement, or information made,
communicated, or furnished (orally or in writing) to Acquiror or its Affiliates
or representatives (including any opinion, information, projection, or advice
that may have been or may be provided to Acquiror by any director, officer,
employee, agent, consultant, or representative of the Company or any of its
Affiliates). The disclosure of any matter or item in the Disclosure Letter
shall not be deemed to constitute an acknowledgment that any such matter is
required to be disclosed.
Section 3.37 Acknowledgement of the Company. The Company
acknowledges and agrees that it has conducted its own independent review and
analysis of the business, assets, condition and operations of Acquiror and
Newco. In entering into this Agreement, the Company has relied solely upon its
own investigation and analysis and the representations and warranties,
covenants and agreements of Acquiror and Newco contained in this Agreement and
the Company (a) acknowledges that, other than as set forth in this Agreement,
Acquiror or Newco, nor any of their respective directors, officers, employees,
affiliates, agents or representatives makes or has made any representation or
warranty, either express or implied, as to the accuracy or completeness of any
of the information provided or made available to the Company or its agents or
representatives prior to the execution of this Agreement, (b) agrees, to the
fullest extent permitted by Law (except with respect to claims of fraud), that
neither Acquiror or Newco, nor any of their, nor any of their respective
directors, officers, employees, affiliates, agents or representatives shall
have any liability or responsibility whatsoever to the Company on any basis
(including in contract, tort or otherwise) based upon any information provided
or made available, or statements made, to the Company prior to the execution of
this Agreement and (c) acknowledges that it is not aware of any representation
or warranty of Acquiror and Newco set forth in Article IV of this Agreement
being untrue or inaccurate. Notwithstanding anything herein, the review and
analyses conducted by the Company shall in no way vitiate or otherwise modify
the representations and warranties made by Acquiror and Newco in Article IV of
this Agreement.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror and Newco, jointly and severally, represent and warrant to
the Company as follows, except as set forth in the letter delivered by Acquiror
to the Company on the date hereof, which contains certain exceptions to the
representations and warranties of Acquiror and Newco in this Agreement (the
"Purchaser Disclosure Letter"):
Section 4.1 Organization and Qualification. Acquiror is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Wisconsin and has the corporate power and authority to own
all of its properties and assets and to carry on its business as it is now
being conducted. Newco is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the corporate
power and authority to own all of its properties and assets and to carry on its
business as it is now being conducted. Each of Acquiror and Newco is duly
qualified to do business and is in good standing in all jurisdictions in which
it is required to be qualified and in which the failure to be so qualified
would not have an Acquiror Material Adverse Effect. "Acquiror Material Adverse
Effect" means a material adverse effect on the business, properties, assets,
liabilities, results of operations or financial condition of Acquiror and
Newco, taken as a whole, but excluding any effect resulting from or relating to
(a) general economic conditions or general effects on the industry in which
Acquiror and Newco are primarily engaged (including as a result of (i) an
outbreak or escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war or (ii) the
occurrence of any other calamity or crisis or any change in financial,
political or economic conditions in the United States), (b) resulting from the
public announcement of the transactions contemplated by this Agreement or (c)
relating to or resulting from action taken by the Company or any of its
Affiliates or representatives.
Section 4.2 Authority. Each of Acquiror and Newco has the corporate
power and authority to execute and deliver this Agreement and any other
agreements, instruments and documents executed and delivered by Acquiror and
Newco pursuant to this Agreement (this Agreement and such other agreements,
instruments and documents are collectively referred to as the "Purchaser
Delivered Agreements") and to consummate the transactions contemplated by, and
otherwise to comply with and perform its obligations under, them. The execution
and delivery by Acquiror and Newco of the Purchaser Delivered Agreements and
the consummation by Acquiror and Newco of the transactions contemplated on its
part thereby have been duly authorized by each of their Boards of Directors. No
other corporate action on the part of Acquiror and Newco is necessary to
authorize the execution and delivery of the Purchaser Delivered Agreements by
Acquiror and Newco or the consummation by Acquiror and Newco, of the
transactions contemplated thereby. The Purchaser Delivered Agreements will,
when executed and delivered by Acquiror and Newco, constitute valid and binding
obligations of Acquiror and Newco enforceable against Acquiror and Newco, in
accordance with their terms, except to the extent that such enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or other Laws
and court decisions relating to or affecting the enforcement of creditors'
rights generally (including statutory or other Laws regarding fraudulent
transfers), and is subject to general principles of equity.
Section 4.3 No Consents Required. Except as disclosed in Section 4.3
of the Purchaser Disclosure Letter and except (i) for the pre-merger
notification requirements of the HSR Act and the rules and regulations
thereunder and any filings required under the Canadian Competition Act, if any;
(ii) the filing of the Certificate of Merger; and (iii) where failure to obtain
such Authorization would not prevent Acquiror and Newco from performing their
obligations under this Agreement in any material respect, no Authorization of
or with any Governmental Entity is required in connection with the execution
and delivery of the Purchaser Delivered Agreements by Acquiror or the
consummation by Acquiror and Newco of the transactions contemplated by, or
other compliance with or performance under, the Purchaser Delivered Agreements.
Section 4.4 Absence of Violations or Conflicts. Except as disclosed in
Section 4.4 of the Purchaser Disclosure Letter, the execution and delivery of
the Purchaser Delivered Agreements by Acquiror and Newco do not and the
consummation by either Acquiror and Newco of the transactions contemplated by,
or other compliance with or performance under, them do not and will not with
the passage of time or the giving of notice or both (a) constitute a violation
of, be in conflict with any provision of the articles or certificate of
incorporation or bylaws of either Acquiror or Newco, (b) violate or conflict
with, or result (with the giving of notice or the lapse of time or both) in a
violation of or constitute a default under, any material Governmental Order to
which either Acquiror or Newco is a party or by which either Acquiror or Newco
or either of their assets or properties is bound or any applicable Laws or (c)
constitute a breach or violation of or a default under any material agreement
or contract to which Acquiror is a party, by which it is bound or to which any
of its assets are subject, except, in the case of (b) and (c), where such
violation, conflict, default, termination or imposition could not reasonably be
expected to have an Acquiror Material Adverse Effect.
Section 4.5 Absence of Certain Changes or Events. Except as set forth
in Section 4.5 of the Purchaser Disclosure Letter, since September 30, 2004
there has not been any change, development, event or condition that has
resulted in, or could be reasonably expected to result in, an Acquiror Material
Adverse Effect and Acquiror has not incurred any debts, liabilities or
obligations of any kind whatsoever, whether accrued, absolute, contingent,
changing, known, unknown, determinable, indeterminable, liquidated,
unliquidated or otherwise and whether due or to become due in the future which
would be required by GAAP to be disclosed in Acquiror's consolidated balance
sheet.
Section 4.6 SEC Reports. Acquiror has furnished the Company with
copies of its Annual Report on Form 10-K for the fiscal year ended September
30, 2004, Quarterly Reports on Form 10-Q for the quarters ended December 28,
2003, March 28, 2004 and June 27, 2004 and all other reports or registration
statements filed by Acquiror with the SEC under applicable Laws since September
30, 2003 (all such reports and registration statements being herein
collectively called the "Acquiror SEC Filings"), each as filed with the SEC.
Except the fact that Part III, Item 12 of the Form 10-K was incomplete and
needed to be amended, each such Acquiror SEC Filing when it became effective or
was filed with the SEC, as the case may be, complied in all material respects
with the requirements of the Securities Act and the Exchange Act, as
applicable, and the rules and regulations of the SEC thereunder and each
Acquiror SEC Filing did not on the date of effectiveness or filing, as the case
may be, contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of
circumstances under which they were made, not misleading. Acquiror has made all
filings required to be made under the Exchange Act for the twelve (12) months
prior to the date of this Agreement. The financial statements of Acquiror
included in the Acquiror SEC Filings complied as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with GAAP applied on a consistent basis
during the periods involved (expect as may be indicated in the notes thereto
or, in the case of the unaudited statements, as permitted by Rule 10-01 of
Regulation S-X of the SEC) and fairly present in all material respects in
accordance with applicable requirements of GAAP (subject, in the case of the
unaudited statements, to normal, recurring adjustments, none of which will be
material) the consolidated financial position of Acquiror and its consolidated
subsidiaries as of their respective dates and the consolidated results of
operations and the consolidated cash flows of Acquiror and its consolidated
subsidiaries for the periods presented therein. The Chief Executive Officer and
the Chief Financial Officer of Acquiror have signed, and Acquiror has filed
with the SEC, all certifications required by Section 906 of the Sarbanes-Oxley
Act of 2002 and such certifications contain no qualifications or exceptions to
the matters certified therein and have not been modified or withdrawn, and
neither Acquiror nor any of its officers has received notice from any
Governmental Entity questioning or challenging the accuracy, completeness, form
or manner of filing of such certifications. As used in this Section 4.5, the
term "file" shall be broadly construed to include any manner in which a
document or information is furnished, supplied otherwise made available to the
SEC.
Section 4.7 Rayovac Shares. Immediately prior to execution of this
Agreement, the authorized capital stock of Acquiror is 150,000,000 shares of
Acquiror Stock and 5,000,000 shares of $0.01 par value preferred stock
(collectively, the "Rayovac Shares"), of which 34,438,122 shares of the Rayovac
Shares and no shares or preferred stock are issued and outstanding and
29,575,071 shares of the Rayovac Shares are held as treasury stock. All of the
issued and outstanding Rayovac Shares are duly authorized, validly issued,
fully paid and nonassessable, and were not issued in violation of any
preemptive rights. The shares of Acquiror Stock to be delivered in connection
with the Merger will be duly authorized, validly issued, fully paid and
nonassessable. A sufficient number of shares have been reserved by Acquiror's
Board of Directors to provide for such issuance.
Section 4.8 Financing. Acquiror has received executed commitments from
one or more financial institutions to provide, subject to the conditions
specified therein, funds sufficient in amount to consummate the Merger and the
transactions contemplated thereby, including the refinancing of the existing
indebtedness of the Company, copies of which are attached as Section 4.8 of the
Purchaser Disclosure Letter (the "Commitment Letters"). Acquiror has paid all
commitment fees required to be paid and taken all other actions required to
cause such Commitment Letters to be effective and to constitute the valid
commitment of the issuer(s) of such Commitment Letters. There is no breach of
any representation, warranty or covenant under the Commitment Letters and the
Commitment Letters are valid and binding commitments of Acquiror and, to
Acquiror's Knowledge, of the issuer(s) thereof to the extent set forth on the
face thereof. There is no fact, occurrence or condition that makes any of the
assumptions or statements therein inaccurate in any material respect or that
would cause the commitments provided in the Commitment Letters to be terminated
or ineffective or any of the conditions contained therein not to be met.
Section 4.9 Investment. Acquiror is acquiring the Company Common
Shares received by it as a result of the Merger for its own account, for
investment only, and not with a view to any resale or public distribution
thereof. Acquiror shall not offer to sell or otherwise dispose of such Company
Common Shares (or the Surviving Corporation) in violation of any Law applicable
to any such offer, sale or other disposition. Acquiror acknowledges that the
Company Common Shares have not been registered under the Securities Act or any
state securities laws and cannot be resold unless they are so registered or
unless an exception from registration is available, and it must bear the
economic risk of its investment in the Securities for an indefinite period of
time. Acquiror is an "accredited investor" within the meaning of Regulation D.
Section 4.10 Litigation. There are no actions, suits or proceedings
pending or, to the Knowledge of Acquiror, threatened against or affecting
Acquiror at law or in equity, or before or by any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which would adversely affect Acquiror's
performance of its obligations under this Agreement or the consummation of the
transactions contemplated hereby or otherwise could be reasonably expected to
have an Acquiror Material Adverse Effect.
Section 4.11 Qualification as a Reorganization. Acquiror knows of no
facts or circumstances that could reasonably be expected to prevent the Merger
from qualifying as a reorganization within the meaning of Section 368(a) of the
Code.
Section 4.12 Brokers, Finders and Investment Bankers. Except for
Citigroup Global Markets Inc. and Merrill, Lynch & Co., Inc., neither Acquiror,
Newco nor any of their officers, directors or employees has employed any
broker, finder or investment banker or incurred any liability for any
investment banking fees, financial advisory fees, brokerage fees or finders' or
similar fees in connection with the transactions contemplated by this
Agreement.
Section 4.13 No Other Representations or Warranties; Disclosure
Letter. Except for the representations and warranties contained in this Article
IV (as modified by the Purchaser Disclosure Letter), none of Acquiror, Newco
nor any other Person makes any other express or implied representation or
warranty with respect to Acquiror, Newco or the transactions contemplated by
this Agreement, and Acquiror and Newco disclaim any other representations or
warranties, whether made by Acquiror and Newco or any of their Affiliates,
officers, directors, employees, agents or representatives. Except for the
representations and warranties contained in Article IV hereof (as modified by
the Purchaser Disclosure Letter), Acquiror and Newco hereby disclaim all
liability and responsibility for any representation, warranty, projection,
forecast, statement, or information made, communicated, or furnished (orally or
in writing) to the Company or its Affiliates or representatives (including any
opinion, information, projection, or advice that may have been or may be
provided to the Company by any director, officer, employee, agent, consultant,
or representative of the Company or any of its Affiliates). The disclosure of
any matter or item in the Purchaser Disclosure Letter shall not be deemed to
constitute an acknowledgment that any such matter is required to be disclosed.
Section 4.14 Acknowledgement of Acquiror. Acquiror acknowledges and
agrees that it has conducted its own independent review and analysis of the
business, assets, condition and operations of the Company and the Subsidiaries.
In entering into this Agreement, Acquiror has relied solely upon its own
investigation and analysis and the representations and warranties, covenants
and agreements of the Company contained in this Agreement and Acquiror (a)
acknowledges that, other than as set forth in this Agreement, none of the
Company, nor any of its respective directors, officers, employees, affiliates,
agents or representatives makes or has made any representation or warranty,
either express or implied, as to the accuracy or completeness of any of the
information provided or made available to Acquiror or its agents or
representatives prior to the execution of this Agreement, (b) agrees, to the
fullest extent permitted by law (except with respect to claims of fraud), that
none of the Company, nor any of its respective directors, officers, employees,
affiliates, agents or representatives shall have any liability or
responsibility whatsoever to Acquiror on any basis (including in contract, tort
or otherwise) based upon any information provided or made available, or
statements made, to Acquiror prior to the execution of this Agreement and (c)
acknowledges that it is not aware of any representation or warranty of the
Company set forth in Article III of this Agreement being untrue or inaccurate.
Notwithstanding anything herein, the review and analyses conducted by Acquiror
shall in no way vitiate or otherwise modify the representations and warranties
made by the Company in Article III of this Agreement.
ARTICLE V.
ADDITIONAL COVENANTS AND AGREEMENTS
Section 5.1 Information Statement.
(a) Preparation and Distribution. The Company and Acquiror will
prepare an information statement, (the "Information Statement") in connection
with the Merger in accordance with Regulation D promulgated under the Exchange
Act and Delaware Law, and the Company shall provide the Information Statement
to its stockholders and holders of Warrants as soon as practicable after the
date of this Agreement in accordance with Section 2.6(c). The Company and
Acquiror will furnish all information concerning the Company and Acquiror,
respectively, as may be reasonably necessary or requested in connection with
the foregoing. None of the information supplied or to be supplied by the
Company or Acquiror for inclusion or incorporation by reference in the
Information Statement will, at the time the Information Statement is first
published, sent or given to holders of Company Common Shares, and at any time
it is amended or supplemented, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
are made, not misleading. If any of the Parties becomes aware prior to the
Effective Time of any information furnished by it that would cause any of the
statements in the Information Statement to be false or misleading with respect
to any material fact, or to omit to state any material fact necessary to make
the statements therein not false or misleading, it will promptly inform the
other Parties thereof and to take the necessary steps to correct the
Information Statement.
(b) Non-Accredited Stockholders. The Company shall assist Acquiror
in obtaining such information as Acquiror reasonably requires to allow Acquiror
to determine the number and nature of the Company stockholders and holders of
Warrants in their capacity as purchasers (as such term is used under Rule 506
of Regulation D). In connection with the distribution of the Information
Statement to the Company stockholders, the Company shall use its reasonable
best efforts to cause each Company stockholder to complete and return an
accredited investor questionnaire in accordance with Section 2.6(c). The
Company shall cause all Non-Accredited Investors to use a "purchaser
representative" (as defined in Rule 501(h) of Regulation D) to assist the
Non-Accredited Investors in evaluating the Information Statement and the
investment decisions represented by this Agreement, the Merger and the
transactions contemplated hereby.
Section 5.2 Conduct of Business Pending the Closing. Except as may
be contemplated by this Agreement or required by applicable Law or any Company
Contracts disclosed in Section 3.17 of the Disclosure Letter, or as Acquiror
may otherwise consent to (which consent shall not be unreasonably withheld or
delayed), during the period from the date hereof to the Closing Date:
(a) Operation of the Company in the Ordinary Course of Business.
Other than as set forth in Section 5.2 of the Disclosure Letter, the Company
shall, and shall cause each of the Subsidiaries to, operate its business in the
ordinary and usual course in substantially the same manner as heretofore
conducted. The Company shall, and shall cause the Subsidiaries to, (i) prepare
and file all income Tax and other material Tax Returns and amendments thereto
required to be filed by it during the period from the date of this Agreement
until the Closing, and shall allow Acquiror, at its request, to review all such
Tax Returns prior to the filing thereof, which review shall not interfere with
the timely filing thereof; (ii) timely pay all Taxes due and payable with
respect to such Tax Returns; and (iii) comply in all material respects with all
applicable Laws relating to the withholding of Taxes.
(b) Forbearances by the Company. Without limiting the generality of
Section 5.2(a), except as set forth in Section 5.2 of the Disclosure Letter,
without the prior written consent of Acquiror, which consent shall not be
unreasonably withheld or delayed, the Company shall not, nor shall it permit
any of the Subsidiaries to:
(i) incur any Liability other than current Liabilities
incurred in the ordinary and usual course of business, or fail to
pay any Liability when due or take or fail to take any action, the
taking of which, or the failure to take of which, would permit any
Liability to be accelerated;
(ii) assume, guarantee, endorse or otherwise become
responsible for the obligations of any other Person other than
endorsements of negotiable instruments in the ordinary course of
business, or make any loans or advances to any Person;
(iii) declare, set aside or pay any dividend in cash or
property with respect to its capital shares or declare or make any
distribution in cash or property on, redeem, or purchase or
otherwise acquire any Shares, or split, combine or otherwise
similarly change the outstanding Shares, or authorize the creation
or issuance of or issue or sell any capital shares or any
securities or obligations convertible into or exchangeable for, or
giving any Person any right to acquire from it, any of its capital
shares, or agree to take any such action;
(iv) mortgage, pledge or otherwise encumber any property or
asset, except in the ordinary and usual course of business;
(v) sell, lease, transfer or dispose of any of its
properties or assets, waive or release any rights or cancel,
compromise, release or assign any indebtedness owed to it or any
claims held by it, except for sales of products in the ordinary
and usual course of business and except as contemplated by this
Agreement;
(vi) make any investments of a capital nature either by
purchase of shares or securities, contributions to capital,
property transfers or otherwise, or by the purchase of any
property or assets of any other Person except in the ordinary and
usual course of business;
(vii) fail to perform its material obligations under Company
Contracts (except those being contested in good faith) or enter
into, assume or amend in any material respect any material
contract or commitment other than contracts to purchase or sell
goods or provide services entered into in the ordinary and usual
course of business;
(viii) except for regularly scheduled increases in
accordance with, and the determination of and payment of annual
bonuses consistent with, normal prior practice (both as to timing
and amount), increase in any manner the compensation or fringe
benefits of any of its officers or employees or pay or agree to
pay any pension or retirement allowance not required by any
existing plan or agreement to any such officers or employees, or
commit itself to or enter into any employment agreement or any
incentive compensation, deferred compensation, profit sharing,
stock option, share purchase, savings, consulting, retirement,
pension or other "fringe benefit" plan, award or arrangement with
or for the benefit of any officer, employee or other Person except
in accordance with normal prior practice;
(ix) permit any insurance policy naming it as a beneficiary
or a loss payable payee to be canceled or terminated or any of the
coverage thereunder to lapse, unless it makes its reasonable best
efforts to obtain simultaneously with such termination or
cancellation replacement policies providing substantially the same
coverage on commercially reasonable terms and, if so available,
such policies are in full force and effect;
(x) amend its Bylaws or other governing documents;
(xi) enter into any union, collective bargaining or similar
agreement;
(xii) fail to pay any trade accounts payable or other amount
due to suppliers and trade creditors of the Company and the
Subsidiaries as they become due in accordance with their terms
(except those being contested in good faith);
(xiii) sell any inventory other than in the ordinary course
of business;
(xiv) borrow any money against accounts receivable or
otherwise factor any accounts receivable;
(xv) acquire any other corporation, entity or business
(whether by purchase of stock, acquisition of assets, merger or
otherwise); or
(xvi) enter into an agreement to take any of the actions
described in clauses (i) through (xv).
In connection with the continued operation of the business of the Company and
the Subsidiaries between the date of this Agreement and the Closing Date, at
the reasonable request of Acquiror, representatives of the Company shall confer
in good faith with one or more representatives of Acquiror on operational
matters of materiality and the general status of ongoing operations. The
Company acknowledges that Acquiror does not thereby waive any rights it may
have under this Agreement as a result of this covenant to engage in
consultations. Acquiror acknowledges that, notwithstanding the foregoing,
Acquiror shall have no right to control in any manner the business of the
Company and the Subsidiaries between the date of this Agreement and the Closing
Date.
(c) Investigation. After the date of this Agreement, the Company
shall permit Acquiror to make or cause to be made such investigation of the
business and properties of the Company and the Subsidiaries and their financial
and legal condition as Acquiror deems necessary or advisable to familiarize
itself therewith, provided that such investigations shall not unreasonably
interfere with normal operations of the Company or the Subsidiaries. The
Company shall permit Acquiror and its authorized representatives to have full
access to the premises, books and records of the Company and the Subsidiaries
with reasonable prior notice and at reasonable hours, and shall furnish
Acquiror with such financial and operating data and other information with
respect to the Company and the Subsidiaries as Acquiror may from time to time
reasonably request. Any disclosure whatsoever during such investigation by
Acquiror shall not constitute any endorsement or additional representations or
warranties of the Company or any Subsidiary beyond those specifically set forth
in this Agreement.
Section 5.3 Reasonable Best Efforts; Further Assurances; Cooperation.
Subject to the other provisions of this Agreement, each of the Parties hereto
shall in good faith perform their obligations under this Agreement and shall
use their reasonable best efforts to do, or cause to be done, all things
necessary, proper or advisable under applicable Law to obtain all
Authorizations and satisfy all conditions to the obligations of the Parties
under this Agreement (including seeking early termination of the waiting period
under the HSR Act and Canadian Competition Act Compliance) and to cause the
transactions contemplated by this Agreement to be carried out promptly in
accordance with the terms hereof and shall cooperate fully with each other and
their respective officers, directors, employees, agents, counsel, accountants
and other designees in connection with any steps required to be taken as part
of their respective obligations under this Agreement, including cooperation
with respect to the satisfaction of any of the conditions to the Closing set
forth in Article VI. Upon the execution of this Agreement and thereafter, each
Party shall take such actions and execute and deliver such documents as may be
reasonably requested by the other Parties hereto in order to consummate the
transactions contemplated by this Agreement. Without limiting the foregoing,
the Company and the Subsidiaries and their accountants shall cooperate with
Acquiror in the preparation of and filing, in accordance with applicable Law,
with the United States Securities and Exchange Commission (the "SEC") and
filing with other Governmental Entities of required reports of Acquiror with
respect to such financial statements and historical pro forma financial
information of the Company and the Subsidiaries as may be required pursuant to
the requirements of the SEC for filing under Form 8-K.
Section 5.4 Expenses. Except as otherwise provided in this Agreement,
whether or not the transactions contemplated hereby are consummated, all costs
and expenses (including any brokerage commissions or any finder's or investment
banker's fees and including attorneys' and accountants' fees) incurred in
connection with this Agreement and the transactions contemplated hereby shall
be paid by the Party incurring such expenses. Notwithstanding the foregoing,
all reasonable attorneys' and accounting fees and other reasonable fees and
expenses incurred by Holdings in connection with the transactions contemplated
by this Agreement will be paid by the Company at the Closing.
Section 5.5 No Solicitation of Transactions. Prior to the termination
and abandonment of this Agreement, neither the Company nor any of the
Subsidiaries shall cause their Affiliates that they control, officers,
directors, or representatives to: (a) solicit, initiate or encourage submission
of proposals or offers from any Person other than Acquiror relating to any
acquisition or purchase of all or a material part of the stock or assets of, or
any merger, consolidation, share exchange or business combination with, or any
recapitalization, restructuring or issuance or offering of debt or equity
securities of, the Company or any of the Subsidiaries (an "Acquisition
Proposal"); or (b) participate in any discussions or negotiations regarding, or
furnish to any Person other than Acquiror and its representatives, any
information with respect to, or otherwise cooperate in any way or assist,
facilitate or encourage, any Acquisition Proposal by any Person other than
Acquiror. The Company will immediately cease and cause to be terminated any
existing activity, discussions or negotiations with any Person other than
Acquiror and its representatives conducted prior to the execution and delivery
of this Agreement with respect to any Acquisition Proposal. If, notwithstanding
the foregoing, the Company should receive any Acquisition Proposal or any
inquiry regarding any such proposal from any Person, then the Company shall
promptly inform Acquiror. For purposes of this Agreement, the term "Affiliate"
means, with respect to any Person, any other Person who directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, such Person, and the term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlled" and
"controlling" have meanings correlative thereto.
Section 5.6 Public Announcements. The timing and content of all press
releases or other public announcements regarding any aspect of this Agreement
to the financial community, Governmental Entities, employees or the general
public by Acquiror, the Company or the Subsidiaries shall be subject to the
other Parties' prior approval, except as may be required by applicable Law or
rule or regulation of a self-regulated organization to which such disclosing
Party may be subject. Notwithstanding the foregoing, Acquiror, the Company and
the Subsidiaries shall cooperate reasonably to prepare a joint press release to
be issued with respect to the transactions contemplated hereby.
Section 5.7 Additional Financial Statements. As soon as reasonably
practicable after the end of every month and prior to the Closing Date (but in
no event later than the twentieth (20th) day of the following month) beginning
with the month in which this Agreement is signed, the Company shall deliver to
Acquiror an unaudited consolidated balance sheet of the Company and the
Subsidiaries as of the applicable scheduled end of such month, and a related
consolidated statement of operations for such month.
Section 5.8 Release of Company. Effective as of the Closing Date, each
of the Company and the Subsidiaries does hereby unconditionally and irrevocably
forever release and discharge each holder of Company Common Shares, Options or
Warrants from all obligations and liabilities to each of the Company and the
Subsidiaries, all agreements and understandings involving the Company and the
Subsidiaries other than this Agreement and the instruments and documents
delivered by Acquiror or such holders pursuant to this Agreement, and all
claims and causes of action (whether at law or in equity) of the Company or the
Subsidiaries against any stockholders prior to the Closing Date.
Section 5.9 Access to Books and Records. After the Closing Date, and
until the seventh (7th) anniversary of the Closing Date, each Party will permit
the others to have reasonable access to the books and records relating to the
Company's and the Subsidiaries' businesses in its possession and to make copies
of them upon the following conditions: (a) the requesting Party providing
notice to the other which sets forth a valid business reason for the request
for access and (b) the access being at such times and on such other reasonable
conditions appropriate to avoid any material interference with the other
Party's business operations.
Section 5.10 Filing under the HSR Act and the Canadian Competition Act.
(a) General. The Parties acknowledge that the transactions
contemplated by this Agreement require filings with the Federal Trade
Commission (the "FTC") and the Antitrust Division of the United States
Department of Justice (the "Antitrust Division") under the Hart-Scott-Rodino
Antitrust Improvement Act of 1976, as amended (the "HSR Act").
(b) Filings. The Parties will each promptly, but in no event later
than five (5) Business Days after the date of this Agreement, file or cause to
be filed with the FTC and the Antitrust Division the notifications and reports
required to be filed pursuant to the HSR Act in connection with the
transactions contemplated by this Agreement and will undertake in good faith to
file promptly any supplemental information which may be requested, which
notifications and reports and filing of supplemental information will comply in
all material respects with the requirements of such act. The Parties will each
furnish to the other such information as either may reasonably request to make
such filings. Acquiror shall be responsible for any filing fees with respect to
such filings.
(c) Canadian Filings. If required, Acquiror will promptly file, but
in no event later than ten (10) Business Days after the date of this Agreement,
an application for an advance ruling certificate pursuant to Section 102 of the
Competition Act (Canada) (the "Competition Act") in respect of the transactions
contemplated by this Agreement. If requested by Acquiror or the Canadian
Commissioner of Competition, the Parties will promptly file a short-form or
long-form pre-merger notification pursuant to the Competition Act. Acquiror
shall be responsible for any filing fees with respect to such filing.
(d) Communications. The Parties will each promptly inform the other
of any material communication made to, or received by it from, the FTC, the
Antitrust Division or the Canadian Commissioner of Competition.
(e) Appeal. If the Antitrust Division brings a Claim seeking to
prevent or restrain the transactions contemplated by this Agreement, if the FTC
issues a complaint or petitions a court to enjoin the transactions contemplated
by this Agreement, or if the Canadian Commissioner of Competition brings a
Claim seeking to prevent or restrain the transactions contemplated by this
Agreement, then the Parties shall use their reasonable best efforts to defend
and/or appeal such Claim, petition or complaint.
(f) Canadian Competition Act Compliance. For purposes of this
Agreement "Canadian Competition Act Compliance" means:
(i) the issuance of an advance ruling certificate pursuant to
section 102 of the Competition Act in respect of the transactions
contemplated by this Agreement;
(ii) Acquiror and the Company have given the notice required
under section 114 of the Competition Act with respect to the transactions
contemplated by this Agreement and the applicable waiting period under
section 123 of the Competition Act has expired or been waived in
accordance with the Competition Act; or
(iii) the obligation to give the requisite notice has been
waived pursuant to subsection 113(c) of the Competition Act;
and, in the case of (ii) or (iii), Acquiror has been advised in writing by the
Commissioner of Competition or a person authorized by the Commissioner of
Competition that such person is of the view, at that time, that, in effect,
grounds do not exist to initiate proceedings before the Competition Tribunal
under the merger provisions of the Competition Act with respect to the
transactions contemplated by this Agreement, and the form of and any terms and
conditions attached to any such advice are acceptable to Acquiror.
(g) Certain Representations and Warranties. None of the information
supplied or to be supplied by a Party for inclusion in any regulatory filings
prepared in connection with the transactions contemplated by this Agreement
(collectively, the "Regulatory Filings") by it, will, at the respective time
the Regulatory Filings or any amendments or supplements to them are filed with
the appropriate Governmental Entities, contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. If at any time prior to the consummation of the
transactions contemplated by this Agreement any act or event should be
discovered by a Party which the applicable Law requires to be set forth in an
amendment of, or a supplement to, the Regulatory Filings, then such Party will
promptly so inform the others and will furnish all necessary information in
writing to the others relating to such event.
Section 5.11 Restrictions on Transfers of the Acquiror Stock.
Pursuant to this Agreement and the Holder Representation Form, each holder of
the Company Common Shares or a Warrant will agree as a condition to the
issuance of Acquiror Stock as Merger Consideration, that with respect to any
shares of Acquiror Stock received by such holder as a result of the
transactions contemplated by this Agreement, in no event shall any such holder
sell, assign, convey, exchange, pledge, hypothecate, gift, dispose of or
otherwise part with any indicia or aspect of title, ownership or possession of,
to or in (collectively, a "Transfer") (i) any such shares during the period
ending twelve (12) months after the Effective Time or (ii) in the aggregate
more than fifty percent (50%) of such shares during the period ending eighteen
(18) months after the Effective Time. The preceding restriction shall not apply
to any Transfer to an Affiliate of such holder or other Transfer permitted by
the Registration Rights Agreement.
Section 5.12 Employee Matters. From and after the Effective Time,
Acquiror shall cause the Company and the Subsidiaries to honor all (a) existing
agreements with their employees and (b) requirements of applicable Laws
relating to their employees. In addition, from and after the Effective Time,
Acquiror shall cause the Company and the Subsidiaries to (i) continue in effect
for at least through 2005, following the Effective Time the Employee Plans as
in effect on the date hereof for current and former employees or provide plans,
programs, policies, arrangements or agreements for current and former employees
that will provide such employees and former employees with benefits as are in
the aggregate comparable to the benefits provided to such employees and former
employees under the Employee Plans as in effect on the date hereof, and (ii)
honor and recognize years of service and waive any waiting periods for current
employees with respect to participation in Acquiror's and/or the Surviving
Corporation's employee benefit plans, programs, policies, arrangements or
agreements (other than for purposes of benefit accrual under a defined benefit
pension plan) with the Company or any of the Subsidiaries as of the Effective
Time to the extent permitted by the governing documents for such Plan.
Section 5.13 Registration Rights with Respect to Acquiror Stock.
Acquiror shall grant to the holders of Company Common Shares or Warrants who
receive Acquiror Stock as a result of the Merger registration rights with
respect to those shares of Acquiror Stock in accordance with the terms of a
registration rights agreement to be entered into by Acquiror and the holders of
Company Common Shares or Warrants as of the Closing Date substantially in the
form of Exhibit E attached hereto (the "Registration Rights Agreement").
Section 5.14 Director and Officer Liabilities and Indemnification.
(a) The Company and each of the Subsidiaries hereby exculpate (to
the fullest extent permitted by applicable Law), contingent upon but
automatically effective upon the Closing, and the Company and each of the
Subsidiaries shall jointly and severally indemnify, defend and hold harmless,
the present and former officers, employees and directors of the Company or any
of the Subsidiaries (each an "Indemnified Party")" against all costs, expenses,
losses and liabilities ("Losses") arising out of actions or omissions in their
capacities as such occurring at or prior to the Closing to the fullest extent
permitted under applicable Law, the Company's or the Subsidiary's certificate
of incorporation or bylaws (or substantially equivalent documents), and any
agreement between an Indemnified Party and the Company or any of the
Subsidiaries in effect at the date of this Agreement, including, without
limitation, advancing expenses incurred in the defense of any action or Claim,
provided, however, that (i) the Company shall pay for only one counsel for all
Indemnified Parties unless the use of one counsel for such Indemnified Parties
would present such counsel with a conflict of interest and (ii) such
advancement of expenses shall be subject to such Indemnified Party's agreement
to return any advanced funds if a court of competent jurisdiction, after all
time for appeals having been exhausted, shall have determined that the
Indemnified Party is not entitled to indemnity against such expenses under
applicable law or the Company's certificate of incorporation or bylaws.
(b) If for any reason the indemnity provided for in Section 5.14(a)
is unavailable to any Indemnified Party or is insufficient to hold each such
Indemnified Party harmless from all such Losses, then the Company and the
Subsidiaries and their respective successors shall each contribute to the
amount paid or payable by such Indemnified Party in such proportion as is
appropriate to reflect not only the relative benefits received by the Company
and the Subsidiaries on the one hand and such Indemnified Party, as the case
may be, on the other but also the relative fault of such Person as well as any
relevant equitable considerations (it being expressly agreed that the
Indemnified Parties to whom this Section 5.14 applies are hereby made express
and intended third party beneficiaries of this Section 5.14).
(c) The obligations of the Company and the Subsidiaries under this
Section 5.14 shall not be terminated or modified in such a manner as to
adversely affect any Indemnified Party to whom this Section 5.14 applies (it
being expressly agreed that the Indemnified Parties to whom this Section 5.14
applies are hereby made express and intended Person beneficiaries of this
Section 5.14).
(d) Neither the Company nor any of the Subsidiaries or Acquiror
will take any action to amend or terminate the provisions of the Company's or
the Subsidiaries' certificates of incorporation or bylaws (or other governing
documents) or any agreements between an Indemnified Party and the Company or
any of the Subsidiaries so as to reduce, limit, alter or otherwise terminate
the Company's or the Subsidiaries' obligations to indemnify any former officer,
employee or director.
(e) If the Company or the Subsidiaries fail, for any reason, to
satisfy or discharge, in whole or in part, their obligations pursuant to this
Section 5.14 with respect to a claim for indemnification or contribution,
Acquiror shall be liable for satisfying or discharging such indemnification or
contribution obligation to the extent not satisfied or discharged by the
Company and the Subsidiaries.
Section 5.15 Conduct of Business of Newco. During the period of
time from the date of this Agreement to the Effective Time, Newco shall not
engage in any activities of any nature except as provided in or contemplated by
this Agreement.
Section 5.16 Supplemental Indenture. Prior to the Closing Date, the
Company's Board of Directors and the Board of Directors of each Loan Guarantor
shall duly adopt resolutions, in a form reasonably satisfactory to Acquiror,
authorizing the execution and delivery of a First Supplemental Indenture
substantially in the form attached hereto as Exhibit F (the "Supplemental
Indenture"), with such changes as approved by an officer of the Company
authorized by the resolutions to execute the Supplemental Indenture (an
"Authorized Officer"), whose signature on the Supplemental Indenture shall be
conclusive evidence of such approval. Upon request of Acquiror, accompanied by
appropriate evidence that the consent required by Section 8.02 of the Indenture
has been obtained, an Authorized Officer of the Company and each Loan Guarantor
shall promptly execute and deliver the Supplemental Indenture to U.S. Bank
National Association together with any other certificates or documents required
to be delivered by the Company and each Loan Guarantor to make the Supplemental
Indenture effective under the terms of the Indenture.
Section 5.17 Cooperation in Syndication of New Debt. Acquiror
covenants and agrees to use it reasonable best efforts and to do all other
things to obtain for itself and/or the Company the financing necessary for
consummation of the transactions contemplated by this Agreement (whether from
the issuer of the Commitment Letters or from other sources) in accordance with
the Commitment Letters. Acquiror represents that there are no conditions to the
closing of the financing as contemplated by the Commitment Letters other than
those set forth in the Commitment Letters and the payment of fees related
thereto. Acquiror further covenants and agrees that (a) it will not terminate,
modify, amend or in any manner alter the obligations of the issuer(s) of the
Commitment Letters in any manner that is adverse to Acquiror's ability to
obtain financing for the transactions contemplated by this Agreement at any
time prior to the termination of this Agreement and (b) it will enforce its
rights to obtain the financing contemplated by the Commitment Letters to the
fullest extent permitted by law. In connection with the preparation of an
information memorandum associated with the syndication of new long-term debt of
Acquiror and an offering memorandum relating to the issue of senior
subordinated notes (collectively, the "Memoranda") and the syndication efforts
relating to the placement of said debt, the Company and the Subsidiaries shall)
provide to Acquiror all reasonably requested information, make available from
time to time upon reasonable notice appropriate officers of the Company and the
Subsidiaries for presentations regarding the business and prospects of the
Company and the Subsidiaries and assist Acquiror in preparing pro forma
financial statements and financial forecasts. The Company and the Subsidiaries
each represents and warrants that (i) all information, other than Projections,
provided or to be provided by it used in the preparation of the Memoranda was
or will be complete and correct when furnished in all material respects and
does not and will not contain any untrue statement of material fact or omit to
state a material fact necessary to make the statements contained therein not
misleading in any material respect and (ii) all financial projections and other
forward-looking information concerning the Company and the Subsidiaries which
have been or will be provided to Acquiror ("Projections") have been or will be
prepared in good faith based upon assumptions believed to be reasonable at the
time of preparation. The Company and the Subsidiaries will furnish such
information and Projections as Acquiror may reasonably request and will
supplement the information and Projections from time to time until the Closing
Date so that the information and Projections relating to the Company and the
Subsidiaries in the Memoranda is complete and correct in all material respects
and does not contain any untrue statement of material fact or omit to state a
material fact necessary to make the statements therein not misleading in any
material respect.
Section 5.18 Affiliate Letters. As soon as practicable after the date
of this Agreement, (a) the Company shall deliver a letter identifying all
Persons who may be deemed to be Rule 145 Affiliates and (b) the Company shall
advise the Rule 145 Affiliates of the resale restrictions imposed by applicable
securities Laws and shall use its reasonable best efforts to obtain a Rule 145
Affiliate Agreement from each such Person.
Section 5.19 Stock Exchange Listing. Acquiror shall use its reasonable
best efforts to cause the shares of Acquiror Stock to be issued in the Merger
to be approved for listing on the New York Stock Exchange, subject to official
notice of issuance, prior to the Closing.
Section 5.20 Confidentiality. Until the third (3rd) anniversary of the
date hereof, each of Acquiror, Newco and the Surviving Corporation, on the one
hand, and the Company and the Subsidiaries, on the other, shall, and shall
cause its Affiliates and its and their representatives and advisors to, keep
secret and confidential and to not use or disclose (except for the specific
purpose of evaluating the transactions contemplated by this Agreement) all
non-public information regarding the Company and the other Parties that is
acquired by or disclosed to it or its Affiliates in connection with the
evaluation or negotiation of the transactions contemplated by this Agreement.
These restrictions shall not apply to any information that (a) was, is now, or
becomes available to the public (but not as a result of a breach of any duty of
confidentiality by which the Party receiving such information (the "Receiving
Party") and its representatives and advisors are bound); (b) is disclosed to
the Receiving Party by a Person not subject to any duty of confidentiality with
respect to such information; (c) the Receiving Party demonstrates was developed
independently by it without the use of the any such non-public information; or
(d) is required by applicable Law to be disclosed, but then only (i) to the
extent disclosure is required and (ii) after giving the Party disclosing such
information notice of such obligation so that it may seek a protective order or
other similar or appropriate relief. If this Agreement is terminated prior to
the Closing, each Receiving Party, their Affiliates and their representatives
and advisors will promptly return to the other Parties or destroy all such
data, information and other written material (including all copies thereof)
obtained by such Receiving Party, and such Receiving Party will make no further
use whatsoever of any of such or the information and knowledge contained
therein or derived therefrom. The provisions of this Section 5.20 shall
supersede any confidentiality agreement or similar contract that may exist
between or among the Parties prior to the date hereof.
Section 5.21 Reorganization Treatment. From and after the date of this
Agreement, neither the Company, Acquiror nor any of their respective Affiliates
shall take any action, or fail to take any necessary action, that could
reasonably be expected to prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code. Unless
otherwise required by Law, the Company, Acquiror and their respective
Affiliates shall treat the Merger as having qualified as a reorganization
within the meaning of Section 368(a) of the Code on all Tax Returns filed by
them, and shall not take any position contrary thereto for any Tax purposes.
Section 5.22 Notice of Consent. As soon as practicable after the date
of this Agreement, the Company shall give its stockholders notice of the
approval of this Agreement and the transactions contemplated hereby, including
the Merger, and notice of appraisal rights complying with Delaware Law. Such
notices may accompany the Information Statement.
Section 5.23 Options and Warrants Exercised Between the Date Hereof
and the Effective Time. The Company shall deliver to the Exchange Agent for
payment pursuant to Article II all amounts paid to the Company by holders of
Options and Warrants who exercise such Options and Warrants after the date
hereof.
ARTICLE VI.
CONDITIONS PRECEDENT TO THE CLOSING
Section 6.1 Conditions of the Parties' Obligations to Effect the
Closing. The respective obligations of the Parties to consummate the Merger and
the other transactions contemplated hereby shall be subject to the satisfaction
or waiver (if permitted by applicable Law or Governmental Order) by each Party
prior to the Closing of the following conditions:
(a) No Injunctions. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any Governmental Order or Law that is
in effect and that has the effect of making the Closing illegal or otherwise
prohibiting consummation of the transactions contemplated by this Agreement,
including the Merger; provided, however, that each of the Parties shall have
used its reasonable best efforts to prevent the entry of such Governmental
Order and to appeal as promptly as possible any such Governmental Order that is
entered.
(b) Authorizations. All Authorizations of Governmental Entities
required to consummate the transactions contemplated by this Agreement,
including the Merger, shall have been obtained, all such Authorizations shall
remain in full force and effect, no appeal shall have been filed challenging
any such Authorizations, all statutory waiting periods in respect thereof,
including under the HSR Act shall have expired or been terminated or waived
and, in the case of Acquiror and Newco, no such Authorizations or expiration of
a statutory waiting period shall contain a materially adverse condition.
Canadian Competition Act Compliance shall have been satisfied.
(c) Listing. The shares of Acquiror Stock to be issued in the
Merger shall have been approved for listing on the New York Stock Exchange,
subject to official notice of issuance.
Section 6.2 Conditions to Obligations of Acquiror and Newco. The
obligation of Acquiror and Newco to consummate the Merger and the other
transactions contemplated hereby shall be subject to the fulfillment, prior to
or at the Closing, of each of the following conditions (any or all of which may
be waived by Acquiror):
(a) Injunction, etc. No Claim with substantial merit, as determined
by Acquiror's Board of Directors in good faith, shall have been instituted by
any Person, or, to the Knowledge of Acquiror, shall have been threatened in
writing by any Governmental Entity, which has not been withdrawn, dismissed or
otherwise eliminated, and which seeks (i) to prohibit, restrict or delay
consummation of the transactions contemplated hereby or to limit in any
material respect the right of Acquiror to control the business of the Company
and the Subsidiaries after the Closing Date, or (ii) to subject Acquiror, Newco
or their directors or officers to material liability on the ground that it or
they have violated any Law in relation to the transactions contemplated by this
Agreement.
(b) Representations and Warranties; Covenants and Agreements. The
representations and warranties of the Company contained in this Agreement (i)
shall have been true and correct at the date hereof and (ii), except for
changes contemplated in this Agreement and where the failure of which could not
be reasonably expected to have a Material Adverse Effect, it shall also be true
and correct in all material respects at and as of the Closing Date, with the
same force and effect as if made at and as of the Closing Date, provided,
however, that representations and warranties that are confined to a specified
date shall speak only as of such date and all "material," "in all material
respects," "material adverse effect," "immaterial," "materially" and similar
materiality qualifiers in Article III, shall be ignored for purposes of Section
6.2(b)(ii). The Company shall have performed or complied (or cured any
noncompliance) in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it at or prior
to the Closing Date.
(c) Certificate. The Company shall have delivered to Acquiror a
certificate, dated as of the Closing Date, executed on its behalf by an
authorized officer, to the effect that the conditions specified in Section
6.2(b) have been satisfied.
(d) No Material Adverse Effect. After the date of this Agreement
there shall not have been any Material Adverse Effect.
(e) Appraisal Rights. Holders of no more than three percent (3%) of
the outstanding Company Common Shares shall have properly made a demand in
writing to the Company for an appraisal with respect to such holder's Company
Common Shares in accordance with Delaware Law.
(f) Financing. Acquiror shall have obtained the financing under the
Commitment Letters.
(g) Company Common Shares and Warrants Held by Holdings. The
Exchange Agent shall have received an Election Form, Holder Representation Form
and all Old Certificates and Warrants (or duly completed loss affidavits and,
if required, indemnity bonds), where applicable, with respect to the Company
Common Shares and Warrants owned by Holdings as of the date hereof, duly
executed by Holdings or the holders of a majority of such Company Common Shares
and Warrants.
Section 6.3 Conditions to Obligations of the Company. The
obligation of the Company to consummate the Merger and the other transactions
contemplated hereby shall be subject to the fulfillment, prior to or at the
Closing, of each of the following conditions (any or all of which may be waived
by the Company):
(a) Injunction, etc. No Claim with substantial merit, as determined
by the Company's Board of Directors in good faith, shall have been instituted
by any Person, or, to the Knowledge of the Company, shall have been threatened
in writing by any Governmental Entity, which has not been withdrawn, dismissed
or otherwise eliminated, and which seeks (i) to prohibit, restrict or delay
consummation of the transactions contemplated hereby or (ii) to subject the
Company or the Subsidiaries or their officers and directors to material
liability on the ground that it or they have violated any Law in relation to
the transactions contemplated by this Agreement.
(b) Representations and Warranties; Covenants and Agreements. The
representations and warranties of Acquiror and Newco contained in this
Agreement (i) shall have been true and correct at the date hereof and (ii),
except for changes contemplated in this Agreement and where the failure of
which could not be reasonably expected to have an Acquiror Material Adverse
Effect, shall also be true and correct in all material respects at and as of
the Closing Date, with the same force and effect as if made at and as of the
Closing Date, provided, however, that representations and warranties that are
confined to a specified date shall speak only as of such date and all
"material," "in all material respects," "material adverse effect,"
"immaterial," "materially" and similar materiality qualifiers in Article IV,
shall be ignored for purposes of Section 6.3(b)(ii). Acquiror and Newco shall
have performed or complied (or cured any noncompliance) in all material
respects with all agreements and covenants required by this Agreement to be
performed or complied with by them at or prior to the Closing Date.
(c) Certificate. Each of Acquiror and Newco shall have delivered to
the Company a certificate, dated as of the Closing Date, executed on its behalf
by an authorized officer, to the effect that the conditions specified in
Sections 6.1(c) and 6.3(b) have been satisfied.
(d) No Acquiror Material Adverse Effect. After the date of this
Agreement there shall not have been any Acquiror Material Adverse Effect.
ARTICLE VII.
ITEMS TO BE DELIVERED AT THE CLOSING
Section 7.1 To be Delivered by the Company. At the Closing, the
Company shall deliver, or cause to be delivered, to Acquiror the following:
(a) The certificate referred to in Section 6.2(c).
(b) The Certificate of Merger duly executed by the Company in the
form required by applicable Law.
(c) The Company's and the Subsidiaries' corporate minute books,
corporate seal and stock records.
(d) Letters of resignation and release in forms reasonably
satisfactory to Acquiror, effective as of the Closing Date, from each of the
officers and directors of the Company and the Subsidiaries listed in Section
7.1(d) of the Disclosure Letter except those officers that Acquiror notifies
the Company prior to the Closing Date it wishes to retain.
(e) An opinion from Weil, Gotshal & Manges LLP, special counsel to
the Company, substantially in the form attached hereto as Exhibit G, and an
opinion from Weil, Gotshal & Manges LLP, special counsel to Holdings,
substantially in the form attached hereto as Exhibit H, each dated as of the
Closing Date.
(f) Copies of the resolutions of the Boards of Directors of the
Company and its stockholders, authorizing the execution, delivery and
performance of the Company Delivered Agreements, certified by the Secretary of
the Company or other officer responsible for the books and records of the
Company as being true and correct copies of the originals which have not been
modified or amended and which are in effect at the Closing.
(g) A certificate of the Secretary of the Company or other officer
responsible for the books and records of the Company certifying as of the
Closing as to the incumbency of the officers of the Company and as to the
signatures of such officers who have executed documents delivered at the
Closing on behalf of the Company.
(h) Certificates, dated within five (5) days of the Closing, of the
applicable Governmental Entity establishing that the Company is in existence
and otherwise is in good standing to transact business.
(i) A Standstill Agreement in the form of Exhibit I attached
hereto, with respect to the acquisition by Thomas H. Lee Advisors, L.L.C. and
its Affiliates ("Lee") of additional shares of Acquiror Stock, executed by Lee
and certain Affiliates of Lee.
(j) An agreement between Holdings and Acquiror in the form of
Exhibit J attached hereto (the "Shareholders Agreement"), with respect to
Holdings' participation on the Board of Directors of Acquiror and other
matters, duly executed by Holdings.
(k) A certificate meeting the requirements of Treasury Regulation
ss. 1.1445-2(c)(3).
(l) Such other documents as Acquiror may reasonably request.
Section 7.2 To be Delivered by Acquiror and Newco. At the Closing,
Acquiror and Newco shall deliver to the Company or the Exchange Agent, as
applicable, the following:
(a) The Merger Consideration.
(b) The certificate referred to in Section 6.3(c).
(c) Opinions from Sutherland Asbill & Brennan LLP, with respect to
Newco, and Acquiror's Wisconsin counsel, with respect to Acquiror,
substantially in the form attached hereto as Exhibit K and dated as of the
Closing Date.
(d) Copies of the resolutions of the Boards of Directors of
Acquiror and Newco, authorizing the execution, delivery and performance of the
Purchaser Delivered Documents, certified by the Secretary or Assistant
Secretary of Acquiror and Newco, respectively, as being true and correct copies
of the originals which have not been modified or amended and which are in
effect at the Closing.
(e) A certificate of the Secretary or Assistant Secretary of
Acquiror and Newco certifying as of the Closing as to the incumbency of the
officers of Acquiror and Newco and as to the signatures of such officers who
have executed documents delivered at the Closing on behalf of Acquiror and
Newco.
(f) Certificates, dated within five (5) days of the Closing, of the
applicable Governmental Entity establishing that each of Acquiror and Newco is
in existence and otherwise is in good standing to transact business.
(g) The Registration Rights Agreement, duly executed by Acquiror.
(h) The Shareholders Agreement, duly executed by Acquiror.
(i) Such other documents as the Company may reasonably request.
ARTICLE VIII.
TERMINATION AND ABANDONMENT
Section 8.1 Termination and Abandonment. This Agreement may be
terminated and abandoned at any time prior to the Closing Date:
(a) By mutual written consent of the Parties;
(b) By Acquiror if any event shall have occurred as a result of
which any condition set forth in Section 6.1 or 6.2 is no longer capable of
being satisfied; provided, however, that the right to terminate this Agreement
pursuant to this Section 8.1(b) shall not be available to Acquiror if the
condition to its obligation to perform became incapable of fulfillment due to
its failure, or the failure of any of its Affiliates, to fulfill any obligation
under this Agreement;
(c) By the Company, if any event shall have occurred as a result of
which any condition set forth in Section 6.1 or 6.3 is no longer capable of
being satisfied; provided, however, that the right to terminate this Agreement
pursuant to this Section 8.1(c) shall not be available to the Company if the
condition to its obligation to perform became incapable of fulfillment due to
its failure, or the failure of any of its Affiliates, to fulfill any obligation
under this Agreement; or
(d) By Acquiror or the Company, if the Closing shall not have
occurred on or before March 31, 2005, provided, however that a Party whose
breach of this Agreement has resulted in the Closing not having occurred on or
before said date shall not have the right to terminate this Agreement pursuant
to this Section 8.1(d).
Section 8.2 Specific Performance; Remedies Cumulative. The Parties
acknowledge that the rights of each Party to consummate the transactions
contemplated hereby are special, unique, and of extraordinary character, and
that, in the event that any Party violates or fails and refuses to perform any
covenant made by it herein, the other Party or Parties will be without adequate
remedy at Law. In the event that any party violates, fails or refuses to
perform any covenant made by it herein, the other Party or Parties may, in
addition to any remedies at Law, institute and prosecute an action in a court
of competent jurisdiction to enforce specific performance of such covenant or
seek any other equitable relief. No exercise of a remedy available to a Party
shall be deemed an election excluding any other remedy available to such Party
(any such claim by any other Party being hereby waived).
Section 8.3 Rights and Obligations upon Termination. If this
Agreement is not consummated for any reason, each Party will redeliver all
documents, work papers, and other materials of any Party relating to the
transactions contemplated hereby, whether obtained before or after the
execution hereof, to the Party furnishing the same, except to the extent
previously delivered to third parties in connection with the transactions
contemplated hereby, and all information received by any Party hereto with
respect to the business of any other Party shall not at any time be used for
the advantage of, or disclosed to third parties by, such Party to the detriment
of the Party furnishing such information; provided, however, that this Section
8.3 shall not apply to any documents, work papers, material or information
which is a matter of public knowledge or which heretofore has been or hereafter
is published in any publication for public distribution or filed as public
information with any Governmental Entity.
Section 8.4 Effect of Termination. Except for the provisions of
Sections 5.4, 5.6, 5.20, 8.3 and 8.4 and Article IX, which shall survive any
termination of this Agreement, in the event of the termination and abandonment
of this Agreement pursuant to Article IX, this Agreement shall forthwith become
void and have no further effect, without any liability on the part of any Party
hereto or its respective officers, directors or stockholders; provided,
however, that nothing in this Section 8.4 shall relieve any Party from
liability for the willful and intentional breach of its representations,
warranties, covenants or agreements set forth in this Agreement occurring prior
to such termination.
ARTICLE IX.
GENERAL PROVISIONS
Section 9.1 Non-Survival of Representations, Warranties, Covenants and
Agreements. Except for Article I, Article II, Sections 5.4, 5.6, 5.8, 5.9,
5.11, 5.12, 5.13, 5.14 and 5.21, and Article IX, none of the representations,
warranties, covenants and agreements contained in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Closing.
Section 9.2 Notices. All notices and other communications under this
Agreement shall be in writing and may be given by any of the following methods:
(a) personal delivery; (b) facsimile transmission; (c) registered or certified
mail (airmail if to an address in a country other than the country in which the
sender is located), postage prepaid, return receipt requested; or (d) delivery
service requiring acknowledgment of receipt. Any such notice or communication
shall be sent to the appropriate Party at its address or facsimile number given
below (or at such other address or facsimile number for such Party as shall be
specified by notice given hereunder):
If to Acquiror or Newco, to:
Rayovac Corporation
Six Concourse Parkway
Suite 3300
Atlanta, Georgia 30328
Fax: (770) 829-6200
Attn: Kent J. Hussey, President
with a copy to:
Sutherland Asbill & Brennan LLP
999 Peachtree Street, N.E.
Atlanta, Georgia 30309-3996
Fax: (404) 853-8806
Attn: Mark D. Kaufman
If to the Company:
United Industries Corporation
2150 Schuetz Road
St. Louis, Missouri 63146
Fax: (314) 253-5924
Attn: Robert L. Caulk, President
with a copy to:
Weil, Gotshal & Manges LLP
100 Federal Street, Floor 34
Boston, Massachusetts 02110
Fax: (617) 772-8333
Attn: James R. Westra
All such notices and communications shall be deemed received upon (a) actual
receipt thereof by the addressee, (b) actual delivery thereof to the
appropriate address as evidenced by an acknowledged receipt, or (c) in the case
of a facsimile transmission, upon transmission thereof by the sender and
confirmation of receipt. In the case of notices or communications sent by
facsimile transmission, the sender shall contemporaneously mail a copy of the
notice or communication to the addressee at the address provided for above.
However, such mailing shall in no way alter the time at which the facsimile
notice or communication is deemed received.
Section 9.3 Table of Contents; Headings; Rules of Construction.
(a) The Table of Contents and headings contained herein are for
convenience of reference only, do not constitute a part of this Agreement, and
shall not be deemed to limit or affect any of the provisions hereof.
(b) "Include" and "including" and similar expressions are not
expressions of limitation and shall be construed as if followed by the words
"without limitation."
(c) "Business Day" means any day other than Saturday, Sunday, any
day which is a legal holiday under the Laws of the State of New York and any
day on which banking institutions in the State or City of New York are
authorized or required by Law to close.
(d) The words "herein," "hereto," "hereof" and words of similar
import refer to this Agreement as a whole and not to any particular Section or
paragraph hereof.
(e) Words importing the singular will also include the plural, and
vice versa.
(f) The symbol "$" means United States Dollars, and the symbol "C$"
means Canadian dollars.
Section 9.4 Amendment. No amendment, modification or discharge of
this Agreement shall be valid or binding unless set forth in writing and
executed by each of the Parties hereto and the holders of a majority of the
capital stock of the Company outstanding as of the date immediately prior to
the date hereof.
Section 9.5 Severability. If any provision of this Agreement is
invalid, illegal or incapable of being enforced by any Law or public policy,
all other provisions of this Agreement will nevertheless remain in full force
and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any Party hereto.
Upon any such determination that any provision is invalid, illegal or incapable
of being enforced, the Parties hereto will negotiate in good faith to modify
this Agreement so as to effect the original intent of the Parties as closely as
possible in an acceptable manner to the end that the transactions contemplated
by this Agreement are consummated to the extent possible.
Section 9.6 Waiver. The failure of any Party hereto at any time or
times to require performance of any provision hereof shall in no manner affect
the right to enforce the same. No waiver by any Party of any condition, or the
breach of any provision contained in the Company or Purchaser Delivered
Agreements, or whether by conduct or otherwise, in any one or more instances
shall be deemed or construed as a further or continuing waiver of any such
condition or breach or a waiver of any other condition or of the breach of any
other provision herein or therein.
Section 9.7 No Third Party Beneficiaries; Assignment. This Agreement
shall be binding on the Parties and their respective successors and assigns and
shall inure to the benefit of the Parties and their respective successors and
permitted assigns. Except as provided in Article II and Sections 5.8, 5.13 and
5.14, nothing in this Agreement shall create or be deemed to create any third
party beneficiary rights in any Person. Except for (a) any assignment to a
wholly-owned subsidiary of Newco or Acquiror, in which event Newco and Acquiror
shall remain liable for the performance of this Agreement, and (b) any transfer
or assignment after the Closing by the Surviving Corporation or Acquiror in
connection with the sale or transfer of all or substantially all the business
or assets of the Surviving Corporation or Acquiror, whether by sale of stock,
sale of assets, merger or otherwise, no transfer or assignment of this
Agreement or of any rights or obligations under this Agreement may be made by
any Party without the prior written consent of the other Parties (which consent
shall not be withheld unreasonably) and any attempted transfer or assignment
without that required consent shall be void.
Section 9.8 Time of the Essence; Computation of Time. Time is of the
essence of each and every provision of this Agreement. Whenever the last day
for the exercise of any right or the discharge of any duty under this Agreement
shall fall upon Saturday, Sunday or a public or legal holiday, the Party having
such right or duty shall have until 6:00 p.m. New York time on the next
succeeding regular Business Day to exercise such right or to discharge such
duty.
Section 9.9 Disclosure. Certain information set forth in the
Disclosure Letter and the Purchaser Disclosure Letter is included solely for
informational purposes and may not be required to be disclosed pursuant to this
Agreement. The disclosure of any information shall not be deemed to constitute
an acknowledgment that such information is required to be disclosed in
connection with the representations and warranties made by the Company or
Acquiror and Newco, respectively, in this Agreement or that such information is
material, nor shall such information be deemed to establish a standard of
materiality, nor shall it be deemed an admission of any liability of, or
concession as to any defense available to the Company or Acquiror and Newco,
respectively.
Section 9.10 Counterparts. This Agreement may be executed by each
Party upon a separate copy, and in such case one counterpart of this Agreement
shall consist of enough of such copies to reflect the signatures of all of the
Parties. This Agreement may be executed in two (2) or more counterparts, each
of which shall be an original, and each of which shall constitute one and the
same agreement. Any Party may deliver an executed copy of this Agreement and of
any documents contemplated hereby by facsimile transmission to another Party
and such delivery shall have the same force and effect as any other delivery of
a manually signed copy of this Agreement or of such other documents.
Section 9.11 Governing Law; Consent to Jurisdiction; Waiver of Jury
Trial. This Agreement shall be governed by and construed in accordance with the
Laws of the State of New York (except as it relates to corporate law involving
Acquiror, in which case it shall be governed by the Laws of the State of
Wisconsin, and except as it relates to the procedures for the Merger, in which
case it shall be governed by Delaware Law), without giving effect to any Laws
of such State that would make such choice of Laws ineffective. Each Party
hereto hereby submits to the non-exclusive jurisdiction of the United States
District Court for the Southern District of New York and of any New York State
Court sitting in Manhattan for purposes of all legal proceedings arising out of
or relating to this Agreement or the transactions contemplated hereby. Each
Party hereto irrevocably waives, to the fullest extent permitted by Law, any
objection which it may now or hereafter have to the laying of the venue of any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum. Each Party
hereto hereby irrevocably waives any and all right to trial by jury in any
legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
Section 9.12 No Strict Construction. The Parties have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises under any provision of
this Agreement, this Agreement shall be construed as if drafted jointly by the
Parties, and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement.
Section 9.13 Entire Agreement. This Agreement (with its Exhibits, the
Disclosure Letter and the Purchaser Disclosure Letter) contains, and is
intended as, a complete statement of all the terms of the arrangements among
the Parties with respect to the matters provided for herein and therein, and
supersedes any previous agreements and understandings among the Parties with
respect to those matters.
[signatures on next page]
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be duly executed as of the date first above written.
ACQUIROR:
RAYOVAC CORPORATION
By: /s/ Kent J. Hussey
-----------------------
Name: Kent J. Hussey
Title: President and Chief Operating Officer
NEWCO:
LINDBERGH CORPORATION
By: /s/ Kent J. Hussey
-----------------------
Name: Kent J. Hussey
Title: President
COMPANY:
UNITED INDUSTRIES CORPORATION
By: /s/ Robert L. Caulk
-----------------------
Name: Robert L. Caulk
Title: Chairman and Chief Executive Officer
EXHIBIT A
Company Stockholder's Written Consent
[Omitted. A supplemental copy of this exhibit will be
furnished to the SEC upon request.]
EXHIBIT B
Election Form
[Omitted. A supplemental copy of this exhibit will be
furnished to the SEC upon request.]
EXHIBIT C
Holder Representation Form
[Omitted. A supplemental copy of this exhibit will be
furnished to the SEC upon request.]
EXHIBIT D
Rule 145 Affiliate Agreement
[Omitted. A supplemental copy of this exhibit will be
furnished to the SEC upon request.]
EXHIBIT E
RAYOVAC CORPORATION
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into
by and among RAYOVAC CORPORATION, a Wisconsin corporation (the "Company"), and
the Persons listed on Schedule 1 attached hereto, who were, immediately prior
to the Effective Time, stockholders of United Industries Corporation ("United")
(collectively, the "Shareholders"). Capitalized terms not defined herein shall
have the meanings assigned to such term in the Merger Agreement (as defined
below).
BACKGROUND STATEMENT
Pursuant to that certain Agreement and Plan of Merger dated January 3,
2005 (the "Merger Agreement") by and among the Company, Lindbergh Corporation
and United, the Shareholders may receive shares (the "Shares") of the Company's
$0.01 par value common stock (the "Common Stock"). The Company has agreed to
provide certain registration rights with respect to the Shares in accordance
with this Agreement.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties agree as
follows:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission, or any
other federal agency at the time administering the Securities Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Registration Expenses" shall mean the expenses so described in
Section 6.
"Registration Statement" shall mean the Shelf Registration Statement
or Demand Registration Statement (each defined in Section 2) and any additional
registration statements contemplated by Sections 2 or 3, including (in each
case) the prospectus, amendments and supplements to such registration statement
or prospectus, all exhibits attached thereto, and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
"Restricted Stock" shall mean the Shares, excluding Shares which have
been (a) registered under the Securities Act pursuant to an effective
Registration Statement filed thereunder and disposed of in accordance with the
Registration Statement covering them or (b) publicly sold pursuant to Rule 144
under the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean the expenses so described in Section 6.
"State Acts" shall mean the applicable securities or "blue sky" laws
of the States of the United States, as amended, and the rules and regulations
thereunder, all as the same shall be in effect at the time.
2. Required Registrations.
(a) The Company will, (i) within nine (9) months following the
Effective Time, prepare and file with the Commission a Registration Statement
on Form S-1 or, if applicable, Form S-3, or any equivalent form for
registration by issuers in accordance with the Securities Act, to permit the
resale from time to time of the Restricted Stock under the Securities Act on a
delayed or continuous basis pursuant to Rule 415 (the "Shelf Registration
Statement"), (ii) use reasonable best efforts to cause the Shelf Registration
Statement to be declared effective (the "Registration Effective Date") within
twelve (12) months following the Effective Time and (iii) use reasonable best
efforts to cause the Shelf Registration Statement to remain effective until the
earlier of (x) the two (2) year anniversary of the Registration Effective Date
and (y) the date on which all of the Restricted Stock covered by the Shelf
Registration Statement has been sold to the public pursuant to such
registration statement in accordance with the intended methods of distribution
thereof (the "Shelf Expiration Date"). The plan of distribution contemplated by
the Shelf Registration Statement shall permit resales of Restricted Stock in
the manner or manners designated by the Shareholders, including offers and
sales through underwriters or agents, offers and sales directly to investors,
block trades and such other methods of offer and sale as the Shareholders shall
request. The Company shall not permit any securities other than Restricted
Stock to be included in the Shelf Registration Statement.
(b) Subject to Section 2(d), if, following the Registration Effective
Date, one or more Shareholders desires to sell Restricted Stock in an
underwritten offering pursuant to the Shelf Registration Statement, such
Shareholder or Shareholders may request in writing that the Company file an
amendment to the Shelf Registration Statement, stating the number of shares of
Restricted Stock proposed to be sold and describing the plan of distribution,
and the Company shall file such an amendment to the Shelf Registration
Statement as soon as reasonably practicable and use reasonable best efforts to
cause such amended Shelf Registration Statement to become effective.
(c) Subject to Section 2(d), if at any time after the Shelf Expiration
Date, one or more Shareholders desires to sell Restricted Stock in an
underwritten public offering, such Shareholder or Shareholders may request in
writing that the Company (i) prepare and file with the Commission a
Registration Statement on Form S-1 or, if applicable, Form S-3, or any
equivalent form for registration by issuers in accordance with the Securities
Act, to register the sale of Restricted Stock under the Securities Act (the
"Demand Registration Statement"), (ii) use its reasonable best efforts to cause
the Demand Registration Statement to be declared effective ("Demand Effective
Date") and (iii) use its reasonable best efforts to cause the Demand
Registration Statement to remain effective until the earlier of (x) one hundred
eighty (180) days of the Demand Effective Date and (y) the date on which all of
the Restricted Stock covered by the Demand Registration Statement has been sold
to the public pursuant to such registration statement in accordance with the
intended method of distribution thereof. Other than shares offered for its own
account pursuant to Section 2(d)(iii), the Company shall not permit any
securities other than Restricted Stock to be included in the Demand
Registration Statement.
(d) Notwithstanding anything in this Section 2 to the contrary:
(i) in no event will the Shareholders be entitled to request the
Company to amend the Shelf Registration Statement to permit an underwritten
offering of Restricted Stock pursuant to the Shelf Registration Statement or
request the Company file a Demand Registration Statement unless no less than
ten percent (10%) of the aggregate number of shares of Restricted Stock
originally held by the Shareholders are proposed to be sold pursuant to such
underwritten offering;
(ii) in no event will the Shareholders be entitled to request the
Company to amend the Shelf Registration Statement to permit or to file a Demand
Registration Statement for more than an aggregate of three (3) underwritten
offerings;
(iii) subject to Section 2(g), the Company shall have the right to
offer shares for its own account in the third such underwritten offering, if
any, pursuant to this Section 2 following the first two (2) such underwritten
offerings; and
(iv) the Company's obligation to register for resale the Restricted
Stock held by any Shareholder in any Registration Statement pursuant to this
Section 2 shall be contingent on such Shareholder furnishing to the Company the
information required by Section 4(c).
(e) the Company's obligation to amend the Shelf Registration Statement
to permit or to file a Demand Registration Statement for an underwritten
offering pursuant to this Section 2 shall not be deemed to have been satisfied
unless the Shelf Registration Statement or Demand Registration Statement, as
applicable, has become effective and remained effective in compliance with the
provisions of the Securities Act until such time as all of the Restricted Stock
offered in such underwritten offering shall have been disposed of in accordance
with the intended methods of disposition thereof set forth in such Shelf
Registration Statement or Demand Registration Statement, as applicable.
(f) In any underwritten offering pursuant to this Section 2, the
participating Shareholders holding a majority of the Restricted Stock proposed
to be sold in such offering shall have the right to select one managing
underwriter, and such managing underwriter shall be the sole managing
underwriter for any such offering; provided that if the Company offers shares
for its own account in any such underwritten offering pursuant to this Section
2 the Company shall also be entitled to select one managing underwriter, and
such underwriter, together with the underwriter selected by the participating
Shareholders, shall be the sole managing underwriters for any such offering.
The Company (together with the participating Shareholders) shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting, as well as all other documents customary in
similar offerings, including, without limitation, questionnaires, custody
agreements, powers of attorney, lockup agreements and indemnification
agreements, as applicable.
(g) With respect to the third underwritten offering, if any, pursuant
to this Section 2 following the first two (2) such underwritten offerings, if
the Company exercises its right to offer shares for its own account in such
offering and the managing underwriter(s) for such underwritten offering advises
the Company and the participating Shareholders in writing that, in such
underwriter(s) opinion, the aggregate number of securities requested to be
included in such offering by the Company, if any, and the Shareholders exceeds
the largest number or amount of securities which can be sold without reasonably
expecting to have an adverse effect on such offering, including the price at
which such securities can be sold, the number of such securities to be included
in such registration shall be reduced and the Company and the participating
Shareholders shall include in such offering the number of securities that in
the opinion of the managing underwriter(s) can be sold without adverse effect
on the offering, allocated pro rata among the Company and the participating
Shareholders of the Restricted Stock on the basis of the number of shares
proposed to be sold by the Company and such participating Shareholders in such
underwritten offering. If any Shareholder advises the managing underwriter(s)
of any underwritten offering that the shares of Restricted Stock covered by the
registration statement cannot be sold in such offering within a price range
acceptable to such Shareholder, then such Shareholder shall have the right to
exclude its Restricted Stock from such offering.
3. Incidental Registration.
(a) If the Company at any time (other than pursuant to Section 2)
proposes to register any of its Common Stock under the Securities Act for sale
to the public, whether for its own account or for the account of other security
holders or both (except with respect to Registration Statements on Forms S-4,
S-8 or another form not available for registering the Restricted Stock for sale
to the public or any successor thereto), each such time it will give prompt
written notice to all holders of outstanding shares of Restricted Stock of its
intention to do so and of such holders' rights under this Section 3, at least
ten (10) business days prior to the anticipated filing date of the registration
statement relating to such registration. Upon the written request of any such
holder, received by the Company within five (5) business days after receipt of
the Company's notice by the holder, to register any of its Restricted Stock,
the Company will use reasonable best efforts to cause the Restricted Stock as
to which registration shall have been so requested to be included in the
securities to be covered by the Registration Statement proposed to be filed by
the Company. Any such Shareholder may elect, in writing no less than five (5)
business days prior to the anticipated effective date of the registration
statement filed in connection with such registration, not to register such
securities in connection with such registration.
(b) In the event that any registration pursuant to this Section 3
shall be, in whole or in part, an underwritten public offering of Common Stock,
the number of shares of Restricted Stock to be included in such an underwriting
may be reduced (pro rata among the requesting holders based upon the number of
shares of Restricted Stock owned by such holders) if and to the extent that the
managing underwriter notifies the Company in writing that, in its opinion, such
inclusion would exceed the largest number or amount of securities which can be
sold without reasonably expecting to have an adverse effect on such offering,
including the price at which such securities can be sold by the Company
therein. The reduction referred to in the immediately preceding sentence shall
be applied as follows: (i) if the Company effects such registration for its
account, the reduction shall be applied first, to the securities of security
holders of the Company (including the holders of the Restricted Stock) that are
entitled to, and are requested to be included in, such registration, pro rata
among all such security holders, based on the number of securities held by such
security holders, and second, to the securities included in such registration
by the Company, provided, however, that if the time period set forth in Section
2(a) has expired without a Registration Statement pursuant to Section 2 having
been filed, the above described order shall be reversed and (ii) if the Company
effects such registration for the account of other security holders, the
reduction shall be applied first, to the securities included in such
registration by the Company, second, to the securities of security holders of
the Company (including the holders of the Restricted Stock) which are entitled
to, and are requested to be included in, such registration pursuant to this
Section 3 and similar piggy-back registration rights, pro rata among all such
security holders, based on the number of securities held by such security
holders, and third, to the securities included in such registration by the
security holders of the Company initiating such registration. Notwithstanding
the foregoing provisions, the Company may withdraw any Registration Statement
referred to in this Section 3 without thereby incurring any liability to the
holders of Restricted Stock.
(c) In any underwritten offering pursuant to this Section 3 in which
no less than ten percent (10%) of the aggregate number of shares of Restricted
Stock originally held by the Shareholders are proposed to be sold, the
participating Shareholders and the Company shall each have the right to select
one managing underwriter and such managing underwriters shall be the sole
managing underwriters for any such offering. The Company (together with the
participating Shareholders) shall enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting, as well as all other documents customary in similar offerings,
including, without limitation, questionnaires, custody agreements, powers of
attorney, lockup agreements and indemnification agreements, as applicable. The
participating Shareholders shall have no right to select a managing underwriter
if less than ten percent (10%) of the aggregate number of shares of Restricted
Stock originally held by the Shareholders are proposed to be sold in such
underwritten public offering.
4. Registration Procedures.
(a) If and whenever the Company is required by the provisions of
Sections 2 or 3 to use reasonable best efforts to effect the registration of
any shares of Restricted Stock under the Securities Act, the Company will, as
expeditiously as reasonably practicable:
(i) prepare and file with the Commission a Registration Statement
with respect to such securities and use commercially reasonable best efforts to
cause such Registration Statement to become and remain effective for the period
of the distribution contemplated by Section 4(b);
(ii) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such Registration Statement
effective for the period specified by Section 4(b) and comply with the
provisions of the Securities Act with respect to the disposition of all
Restricted Stock covered by such Registration Statement in accordance with the
sellers' intended method of disposition set forth in such Registration
Statement for such period;
(iii) furnish to each seller of Restricted Stock and to each
underwriter such number of copies of the Registration Statement and the
prospectus included therein (including each preliminary prospectus), copies of
any correspondence with the Commission or its staff relating to such
Registration Statement and such other documents as such persons reasonably may
request in order to facilitate the public sale or other disposition of the
Restricted Stock covered by such Registration Statement;
(iv) use reasonable best efforts to register or qualify the
Restricted Stock covered by such Registration Statement under the State Acts of
such jurisdictions as the sellers of Restricted Stock or, in the case of an
underwritten public offering, the managing underwriter reasonably shall
request; provided, however, that the Company shall not for any such purpose be
required to qualify generally to transact business as a foreign corporation in
any jurisdiction where it is not so qualified or to consent to general service
of process in any such jurisdiction;
(v) use reasonable best efforts to list the Restricted Stock
covered by such Registration Statement with a national securities exchange (if
such shares are not already listed) and with each additional securities
exchange on which the similar securities of the Company are then listed;
(vi) immediately notify each seller of Restricted Stock and each
underwriter under such Registration Statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event of which the Company has knowledge as a result of which
the prospectus contained in such Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing and, with the
assistance of such seller, the Company will prepare a supplement or amendment
to such prospectus so that, as thereafter delivered to the purchasers of such
Restricted Stock, such prospectus will not contain an untrue statement of a
material fact or omit to state any fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading;
(vii) if the offering is underwritten and at the request of any
seller of Restricted Stock, use reasonable best efforts to furnish on the date
that Restricted Stock is delivered to the underwriters for sale pursuant to
such registration: (A) an opinion dated such date of counsel representing the
Company for the purposes of such registration, addressed to the underwriters,
stating that such Registration Statement has become effective under the
Securities Act and that (1) to the knowledge of such counsel, no stop order
suspending the effectiveness thereof has been issued and no proceedings for
that purpose have been instituted or are pending or contemplated under the
Securities Act, (2) the Registration Statement, the related prospectus and each
amendment or supplement thereof comply as to form in all material respects with
the requirements of the Securities Act (except that such counsel need not
express any opinion as to financial statements contained therein), and (3) to
such other matters as reasonably may be requested by counsel for the
underwriters and (B) a letter dated such date from the independent public
accountants retained by the Company, addressed to the underwriters, stating
that they are independent public accountants within the meaning of the
Securities Act and that, in the opinion of such accountants, the financial
statements of the Company included in the Registration Statement or the
prospectus, or any amendment or supplement thereof, comply as to form in all
material respects with the applicable accounting requirements of the Securities
Act, and such letter shall additionally cover such other financial matters
(including information as to the period ending no more than five business days
prior to the date of such letter) with respect to such registration as such
underwriters reasonably may request;
(viii) make available for inspection by each seller of Restricted
Stock, any underwriter participating in any distribution pursuant to such
Registration Statement, and any attorney, accountant or other agent retained by
such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors and employees to supply all information reasonably
requested by any such seller, underwriter, attorney, accountant or agent in
connection with such Registration Statement;
(ix) after the filing of the Registration Statement and any
amendment or supplement thereto, the Company will promptly notify each selling
holder of Restricted Stock covered by such Registration Statement and any
amendment or supplement thereto of any order suspending the effectiveness of
such Registration Statement issued or threatened by the Commission and, as
promptly as practicable, use its commercially reasonable best efforts to
prevent the entry of such stop order or to remove it if entered;
(x) cooperate with the Shareholders and the managing underwriters,
if any, to facilitate the timely preparation and delivery of certificates
representing Restricted Stock to be sold and not bearing any restrictive
legends; and enable such Restricted Stock to be in such denominations and
registered in such names as the managing underwriters may request prior to any
sale of the Restricted Stock to the underwriters;
(xi) with respect to an underwritten offering pursuant to this
Agreement, make appropriate members of senior management of the Company
available (subject to consulting with them in advance as to schedule) for
customary participation in telephonic, in-person conferences or "road show"
presentations to potential investors;
(xii) promptly notify the Shareholders, counsel to the Shareholders
and the managing underwriter or agent, (i) when the registration statement, or
any post-effective amendment to the registration statement, shall have become
effective, or any supplement to the prospectus or any amendment to the
prospectus shall have been filed, (ii) of the receipt of any comments from the
Commission, and (iii) of any request of the Commission to amend the
registration statement or amend or supplement the prospectus or for additional
information; and
(xiii) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, within the required time periods, an earnings statement
covering a period of at least twelve (12) months, beginning with the first
fiscal quarter of the Company after the effective date of the registration
statement (as the term "effective date" is defined in Rule 158(c) under the
Securities Act), which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder or any successor
provisions thereto.
(b) For purposes of Sections 4(a)(i) and (ii) and Section 2, the
period of distribution of Restricted Stock in a firm commitment underwritten
public offering shall be deemed to extend until each underwriter has completed
the distribution of all securities purchased by it or a period of one hundred
eighty (180) days, which ever first occurs, and the period of distribution of
Restricted Stock in any other registration shall be deemed to extend until the
earlier of the sale of all Restricted Stock covered thereby or of one hundred
eighty (180) days after the effective date thereof.
(c) In connection with each registration hereunder, the sellers of
Restricted Stock will furnish to the Company in writing such information with
respect to themselves, their beneficial ownership of Common Stock, and the
proposed distribution by them as reasonably shall be necessary in order to
assure compliance with federal securities laws, Commission rules and applicable
State Acts. The Company's obligation to register the Restricted Stock held by
any Shareholder in any Registration Statement shall be contingent on such
Shareholder furnishing to the Company the information required by this Section
4(c). Moreover, no person may participate in any underwritten offering
hereunder unless such person (i) provides the information required by this
Section 4(c); (ii) agrees to sell such person's securities on the basis
provided in any underwriting arrangements approved by the Company or the
participating Shareholders, as applicable; and (iii) completes and executes all
questionnaires, custody agreements, powers of attorney, lockup agreements,
indemnification agreements, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements.
(d) In connection with each registration pursuant to Sections 2 or 3
covering an underwritten public offering, the Company and each selling
Shareholder shall (i) enter into a written agreement with the managing
underwriter(s) selected in the manner herein provided in such form and
containing such provisions as are customary in the securities business for such
an arrangement between such underwriter and companies of the Company's size and
investment stature, (ii) regardless of whether the agreement referred to in the
foregoing clause (i) is entered into, make such representations and warranties
to the selling Shareholders and each of the underwriters in form, substance and
scope as are customarily made in connection with an offering pursuant to any
appropriate agreement or such Registration Statement, (iii) deliver such
documents and certificates, including officers' certificates, as may be
customary in the circumstances and reasonably requested by the selling
Shareholders or the underwriters, (iv) undertake such obligations relating to
expense reimbursement, indemnification and contribution as are provided in
Sections 6 and 7 and (v) take such other actions as are reasonably required in
order to expedite or facilitate the disposition of such Restricted Stock.
5. Suspension or Delay. Notwithstanding anything to the contrary in
this Agreement, the Company may delay filing a Registration Statement or an
amendment thereto, and may withhold efforts to cause a Registration Statement
or amendment thereto to become effective if: (i) the board of directors of the
Company determines in good faith after consultation with counsel that such
action is required by applicable law; (ii) the Company determines in good faith
after consultation with counsel that the filing or use of the Registration
Statement or amendment thereto would require the Company to disclose material
information, including without limitation the fact that the Company is engaged
in confidential negotiations regarding, or is in the process of completing, any
significant business transaction, the disclosure of which would not be required
in the absence of such registration statement, and the board of directors of
the Company determines in good faith that such disclosure would be materially
detrimental to the Company and its stockholders; or (iii) the Company is
engaged in, or prior to receiving such request had determined and taken
substantial steps to effect, an underwritten public offering of Common Stock
for its own account (other than an offering pursuant to Form S-8, S-4 or any
successor or similar form) and the managing underwriter has advised the Company
that such offers and sales by the Shareholders will adversely affect such
public offering. Each period referred to above during which the use of a
Registration Statement or amendment thereto is delayed in accordance with this
Section 5 shall be referred to herein as a "Deferral Period". Notwithstanding
the foregoing, in no event shall the Company be entitled to declare more than
three (3) Deferral Periods in any 365-day period nor shall the aggregate number
of days included in all Deferral Periods exceed one hundred fifty (150) days in
any 365-day period without the consent of the Shareholders holding a majority
of the Restricted Stock at such time. The Company shall terminate a Deferral
Period as soon as practicable after the circumstances giving rise to the
Company's right to declare such Deferral Period cease to exist. The Company
shall promptly give the Shareholders written notice of a determination to
commence a Deferral Period, which notice shall contain a general statement of
the reasons for such Deferral Period and the anticipated length of such
Deferral Period, and shall notify the Shareholders upon the termination of each
Deferral Period. If, after a Registration Statement becomes effective, the
Company advises the holders of registered shares that the Company has
determined in good faith that the registration statement is required to be
amended to comply with applicable law or regulation, the holders of such
registered shares shall suspend any further sales of their registered shares
until the Company advises them that the registration statement has been
amended.
6. Expenses. All expenses incurred by the Company and the selling
holders of Restricted Stock in complying with Sections 2 and 3, including,
without limitation, all registration and filing and review fees, printing
expenses, fees and disbursements of counsel (including one counsel to the
holders of Restricted Stock) and independent public accountants for the
Company, fees and expenses (including counsel fees) incurred in connection with
complying with State Acts, fees of the National Association of Securities
Dealers, Inc. (the "NASD"), fees of any securities exchange, transfer taxes,
fees of transfer agents and registrars, costs of insurance, messenger,
telephone and delivery expenses and reasonable fees and disbursements of one
counsel for the sellers of Restricted Stock, but excluding any Selling
Expenses, are called "Registration Expenses." Registration Expenses shall not
include underwriting discounts, selling commissions, fees and expenses of more
than one counsel to the selling holders of Restricted Stock and all such fees
and expenses are referred to as "Selling Expenses." The Company will pay all
Registration Expenses in connection with the Shelf Registration Statement, the
Demand Registration Statement and each Registration Statement under Sections 2
or 3 of this Agreement. All Selling Expenses in connection with each
Registration Statement under Sections 2 and 3 shall be borne by the
participating Shareholders in proportion to the number of shares of Restricted
Stock sold by each, or by such participating Shareholders other than the
Company (except to the extent the Company shall be a seller) as they may agree.
7. Indemnification and Contribution.
(a) In the event of a registration of any of the Restricted Stock
under the Securities Act pursuant to Sections 2 or 3, the Company will
indemnify and hold harmless each seller of such Restricted Stock thereunder,
each underwriter of such Restricted Stock thereunder and each other person, if
any, who controls such seller or underwriter within the meaning of the
Securities Act, against any losses, claims, damages or liabilities (including,
without limitation, any legal or other expenses reasonably incurred by such
Shareholder or any such controlling person in connection with defending or
investigating any such action or claim), joint or several, to which such
seller, underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement under which such Restricted Stock was registered
under the Securities Act pursuant to Sections 2 or 3, any preliminary
prospectus or final prospectus contained therein, or any amendment or
supplement thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse
each such seller, each such underwriter and each such controlling person for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action,
provided, however, that the Company will not be liable in any such case if and
to the extent that any such loss, claim, damage or liability arises out of or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished by any such
seller, any such underwriter or any such controlling person in writing
specifically for use in such Registration Statement or prospectus. It is agreed
that the indemnity agreement contained in this Section 7 shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld or delayed).
(b) As a condition precedent to the right of any holder of Restricted
Stock to sell Restricted Stock in a registration pursuant to this Agreement,
such holder will agree that in the event of a registration of any of the
Restricted Stock under the Securities Act pursuant to Sections 2 or 3, each
seller of such Restricted Stock thereunder, severally and not jointly, will
indemnify and hold harmless the Company, each person, if any, who controls the
Company within the meaning of the Securities Act, each officer of the Company
who signs the Registration Statement, each director of the Company, each
underwriter and each person who controls any underwriter within the meaning of
the Securities Act, against all losses, claims, damages or liabilities, joint
or several, to which the Company or such officer, director, underwriter or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement under
which such Restricted Stock was registered under the Securities Act pursuant to
Sections 2 or 3, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company and each such officer, director,
underwriter and controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action, provided, however, that such seller will be
liable hereunder in any such case if and only to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in reliance
upon and in conformity with information pertaining to such seller, as such,
furnished in writing to the Company by such seller specifically for use in such
Registration Statement or prospectus, and provided, further, however, that the
liability of each seller hereunder shall not in any event to exceed the net
proceeds received by such seller from the sale of Restricted Stock covered by
such Registration Statement. It is agreed that the indemnity agreement
contained in this Section 7(b) shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability or action if such settlement is
effected without the consent of such seller hereunder (which consent shall not
be unreasonably withheld or delayed).
(c) Promptly after receipt by an indemnified party hereunder of notice
of the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
such indemnified party other than under this Section 7 and shall only relieve
it from any liability which it may have to such indemnified party under this
Section 7 if and to the extent the indemnifying party is prejudiced by such
omission. In case any such action shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in and, to the extent
it shall wish, to assume and undertake the defense thereof with counsel
reasonably satisfactory to such indemnified party, and, after notice from the
indemnifying party to such indemnified party of its election so to assume and
undertake the defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Section 7 for any legal expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation and of liaison with counsel so selected,
provided, however, that, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be reasonable defenses available to it
which are different from or additional to those available to the indemnifying
party or if the interests of the indemnified party reasonably may be deemed to
conflict with the interests of the indemnifying party, the indemnified party
shall have the right to select a separate counsel and to assume such legal
defenses and otherwise to participate in the defense of such action, with the
expenses and fees of such separate counsel and other expenses related to such
participation to be reimbursed by the indemnifying party as incurred.
(d) In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (i) any holder
of Restricted Stock exercising rights under this Agreement, or any controlling
person of any such holder, makes a claim for indemnification pursuant to this
Section 7 but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to
appeal or the denial of the last right of appeal) that such indemnification
may not be enforced in such case notwithstanding the fact that this Section 7
provides for indemnification in such case, or (ii) contribution under the
Securities Act may be required on the part of any such selling holder or any
such controlling person in circumstances for which indemnification is provided
under this Section 7; then, and in each such case, the Company and such holder
will contribute to the aggregate losses, claims, damages or liabilities to
which they may be subject (after contribution from others) in such proportion
so as to reflect the relative fault of each indemnifying party; provided,
however, that, in any such case, (A) no such holder will be required to
contribute any amount in excess of the public offering price of all such
Restricted Stock (net of Selling Expenses) offered by it pursuant to such
Registration Statement; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity who was not guilty
of such fraudulent misrepresentation. The relative fault of the Company, on
the one hand, and of each selling shareholder, on the other, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by such party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and each Shareholder agree that it
would not be just or equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to above. The
amount paid or payable as a result of the losses, claims, damages and
liabilities referred to above shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any
such action or claim.
(e) The indemnity and contribution provisions contained in this
Section 7 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Shareholder or any person controlling any Shareholder, or by or on
behalf of the Company, its officers or directors or any person controlling the
Company, and (iii) any sale of Restricted Stock pursuant to any Registration
Statement.
(f) The obligations of the parties under this Section 7 shall be in
addition to any liability which any party may otherwise have to any other
party.
(g) The indemnification and contribution required by Sections 7(a),
7(b) and 7(d) shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
8. Changes in Common Stock. If there is any change in the Shares by
way of a stock split, stock dividend, combination or reclassification, or
through a merger, consolidation, reorganization or recapitalization, or by any
other means, appropriate adjustment shall be made in the provisions hereof so
that the rights and privileges granted hereby shall continue with respect to
the Shares as so changed.
9. Rule 144 Reporting and Termination of Company Obligations.
(a) The Company shall not be obligated to register or include in any
Registration Statement any Restricted Stock held by a Shareholder if all
Restricted Stock held by such Shareholder may be publicly offered, sold and
distributed without registration pursuant to Rule 144(k) under the Securities
Act.
(b) With a view to making available the benefits of certain rules and
regulations of the Commission which may at any time permit the sale of the
Restricted Stock to the public without registration, the Company shall:
(i) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(ii) use reasonable best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(iii) furnish to each holder of Restricted Stock forthwith upon
request a written statement by the Company as to its compliance with the
reporting requirements of such Rule 144 and of the Securities Act and the
Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed by the Company as such
holder may reasonably request in availing itself of any rule or regulation of
the Commission allowing such holder to sell any Restricted Stock without
registration.
(c) The Company shall take such further action and shall offer all
reasonable and necessary assistance including, without limitation, the delivery
of a legal opinion letter and instructions to the Company's stock transfer
agent to enable the sale by any Shareholder of Restricted Stock pursuant to
Rule 144 or any similar rule or regulation.
10. Lockup Agreements.
(a) In consideration of the Company's obligations under this
Agreement, each of the Shareholders hereby agrees that in no event shall such
Shareholder sell, assign, convey, exchange, pledge, hypothecate, gift, dispose
of or otherwise part with any indicia or aspect of title, ownership or
possession of, to or in (collectively, a "Transfer") (i) any such Shares during
the period ending twelve (12) months after the Effective Time (as defined in
the Merger Agreement) or (ii) in the aggregate more than fifty percent (50%) of
such Shares held by such Shareholder during the period ending eighteen (18)
months after the Effective Time.
(b) Notwithstanding the restrictions in Section 10(a), unless
prohibited by applicable securities laws, a Shareholder shall be permitted to
effect a Transfer of Shares to an Affiliate of such Shareholder or, if the
Shareholder is a limited liability company, limited partnership, corporation or
trust, to its members, partners, shareholders or beneficiaries, as applicable.
Any such purported Transfer shall be void and of no force unless the
Shareholder shall provide written notice of the proposed Transfer to the
Company no less than ten (10) days prior to the completion thereof and shall
provide the Company with all certificates, affidavits, representations or other
documents reasonably necessary to effectuate such proposed transfer under
federal, state or other applicable securities laws. For purposes of this
Agreement, the term "Affiliate" means, with respect to any Shareholder, any
person who directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such Shareholder,
and the term "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
person, whether through the ownership of voting securities, by contract or
otherwise, and the terms "controlled" and "controlling" have meanings
correlative thereto.
11. Representations and Warranties of the Company. The Company
represents and warrants as follows:
(a) the execution, delivery and performance of this Agreement by the
Company has been duly authorized by all requisite corporate action and will not
violate any order of any court or other agency of government, the Articles of
Incorporation or bylaws of the Company or any provision of any indenture,
agreement or other instrument to which it or any or its properties or assets is
bound, conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any such indenture, agreement or other
instrument or result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of the properties or assets of
the Company; and
(b) this Agreement has been duly executed and delivered by the Company
and constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms.
12. Miscellaneous.
(a) Successors and Assigns. All covenants and agreements contained in
this Agreement by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and assigns of the parties
and intended third party beneficiaries (as described in Section 12(d)) hereto
(including without limitation, any transferees of any Restricted Stock),
whether so expressed or not.
(b) No Inconsistent Agreements. The Company hereby represents and
warrants that the rights granted to the Shareholders hereunder do not conflict
in any way with rights granted to other holders of the Company's securities. In
addition, the Company covenants and agrees that it shall not at any time during
the term of this Agreement grant any holder of Company securities any rights
that conflict in any way with rights granted to the Shareholders hereunder.
(c) Third Party Beneficiaries. Any transferee of Restricted Stock is
an intended third party beneficiary of this Agreement.
(d) Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be delivered in person or by recognized
overnight courier, mailed by certified or registered mail, return receipt
requested, or sent by telecopier, addressed as follows:
(i) if to the Company at the address of such party set forth in the
Merger Agreement;
(ii) if to any Shareholder at the address set forth on Schedule 1
or such other address as may be furnished to the Company by such Shareholder;
and
(iii) if to any subsequent holder of Restricted Stock, to it at
such address as may have been furnished to the Company in writing by such
holder;
or, in any case, at such other address or addresses as shall have been
furnished in writing to the Company (in the case of a holder of Restricted
Stock) or to the holders of Restricted Stock (in the case of the Company) in
accordance with the provisions of this paragraph.
(e) Governing Law, Consent to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the Laws of the State of New York,
without giving effect to any Laws of such State that would make such choice of
Laws ineffective. Each Party hereto hereby submits to the non-exclusive
jurisdiction of the United States District Court for the Southern District of
New York and of any New York State Court sitting in Manhattan for purposes of
all legal proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. Each Party hereto irrevocably waives, to the
fullest extent permitted by Law, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum.
(f) MUTUAL WAIVER OF JURY TRIAL. THE PARTIES HERETO WAIVE ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND
ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT.
(g) Amendment and Waiver. This Agreement may not be amended or
modified, and no provision hereof may be waived, without the written consent of
the Company and the holders of at least a majority of the outstanding shares of
Restricted Stock at the time of such amendment, modification or waiver.
(h) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(i) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. Upon any such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto will negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the obligations and restrictions contemplated
by this Agreement are consummated to the extent possible.
(j) Consummation of Merger. This Agreement shall be null and void and
given no effect if the Merger Agreement is terminated and the transactions
contemplated thereby are not consummated.
(k) Headings. The headings and captions contained herein are for
convenience of reference only and shall not control or affect the meaning or
construction of any provision hereof.
(SIGNATURES COMMENCE ON THE FOLLOWING PAGE)
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year indicated.
COMPANY:
RAYOVAC CORPORATION
By:
---------------------------
Title:
------------------------
Date:
-------------------------
SHAREHOLDER:
If the undersigned is an entity:
--------------------------------
(Type or print name of entity)
By:
--------------------------------
(Signature of officer signing on
behalf of entity)
Print Name:
--------------------------------
Title:
-------------------------------------
Date: ______________ ___, 2005
If the undersigned is an individual:
-------------------------------------------
Signature
-------------------------------------------
Print Name
-------------------------------------------
Signature of Spouse or Co-Owner if Joint
Tenants, Tenants in Common or Community
Property
-------------------------------------------
Print Name of Spouse or Co-Owner if Joint
Tenants, Tenants in Common or Community
Property
Date:______________ ___, 2005
(Signature Page to Registration Rights Agreement)
SCHEDULE 1
SHAREHOLDERS
[TO BE COMPLETED AT CLOSING]
EXHIBIT F
Supplemental Indenture
[Omitted. A supplemental copy of this exhibit will
be furnished to the SEC upon request.]
EXHIBIT G
Form of Company Legal Opinion
[Omitted. A supplemental copy of this exhibit will
be furnished to the SEC upon request.]
EXHIBIT H
Form of Holdings Legal Opinion
[Omitted. A supplemental copy of this exhibit will
be furnished to the SEC upon request.]
EXHIBIT I
STANDSTILL AGREEMENT
THIS STANDSTILL AGREEMENT (this "Agreement") is entered into as of
February ___, 2005 (the "Effective Date") by and between UIC HOLDINGS, L.L.C.,
a Delaware limited liability company ("Holdings"), Thomas H. Lee EQUITY fUND
iV, L.P., a Delaware limited partnership ("Equity Fund"), THL EQUITY ADVISORS
IV, LLC, a Delaware limited liability company ("Equity Advisors"), THOMAS H.
LEE PARTNERS, L.P., a Delaware limited partnership ("Partners"), Thomas H. Lee
ADVISORS, L.L.C., a Delaware limited liability company ("Lee"; together with
Holdings, Equity Fund, Equity Advisors and Partners, the "Restricted Parties"),
and RAYOVAC CORPORATION, a Wisconsin corporation (the "Company"). The foregoing
parties to this Agreement are each a "Party" and collectively the "Parties".
Capitalized terms not defined herein shall have the meanings ascribed to such
terms in the Merger Agreement (as defined below).
BACKGROUND STATEMENT
Pursuant to that certain Agreement and Plan of Merger (the "Merger
Agreement") dated January 3, 2005 by and among the Company, Lindbergh
Corporation and United Industries Corporation, some or all of the Restricted
Parties will receive shares of the Company's $0.01 par value common stock (the
"Common Stock"). The Company has required, as a material inducement to its
consummation of the transactions contemplated by the Merger Agreement, that the
Restricted Parties enter into this Agreement, whereby the Restricted Parties
agree to limit their future acquisitions of the capital stock of the Company.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the Parties agree as
follows:
ARTICLE X.
DEFINED TERMS
-------------
1.1 Defined Terms. As used in this Agreement the following terms shall
have the following meanings:
"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. Notwithstanding
anything herein to the contrary, the term "Affiliate" shall not be deemed to
include any portfolio company of any Restricted Party or Putnam Investments,
Inc.
"Company Voting Securities" means, collectively, the Common Stock, any
other class of capital stock of the Company issued and outstanding, and any
other securities, warrants or options or rights of any nature (whether or not
issued by the Company) that are convertible into, exchangeable for, or
exercisable for the purchase of, or otherwise give the holder thereof any
rights in respect of any class or series of Company securities that is entitled
to vote generally for the election of directors.
"Control" means, with respect to any Person, the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Permitted Ownership Percentage" means twenty-eight percent (28%) of
the Company Voting Securities on a fully-diluted basis, including no more than
twenty-eight percent (28%) of the shares of any class of such Company Voting
Securities on a fully-diluted basis.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Transfer" means, as a noun, any transfer, sale, assignment, exchange,
charge, pledge, gift, hypothecation, conveyance, encumbrance or other
disposition whether direct or indirect, voluntary or involuntary, by operation
of Law or otherwise and, as a verb, directly or indirectly, voluntarily or
involuntarily, by operation of Law or otherwise, to transfer, sell, assign,
exchange, charge, pledge, give, hypothecate, convey, encumber or otherwise
dispose of.
ARTICLE XI.
REPRESENTATIONS AND WARRANTIES
------------------------------
Each of the Parties hereby represents and warrants with respect to
itself only that:
(a) it has the corporate or other organizational power and
authority to enter into this Agreement and to perform its obligations
hereunder;
(b) this Agreement constitutes its valid and legally binding
obligation, enforceable in accordance with the terms hereof except to
the extent that such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other Laws and court
decisions relating to or affecting the enforceability of creditor's
rights generally (including statutory or other Laws regarding
fraudulent transfers), and is subject to general principles of equity;
(c) neither the execution and the delivery of this Agreement,
nor the consummation of the transactions contemplated hereby by it,
will (i) violate any Law, Governmental Order or other restriction of
any Governmental Entity, to which it is subject or any provision of
its articles of incorporation or formation, bylaws or other
organizational documents or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in
any party thereto the right to accelerate, terminate, modify, or
cancel, or require any notice under any material agreement, contract,
lease, license, instrument or other material arrangement to which it
is a party or by which it is bound or to which any of its material
assets is subject (or result in the imposition of any lien, security
interest or other encumbrance upon any of its assets);
(d) it need not give any notice to, make any filing with, or
obtain any Authorization of any Person not already been obtained in
order to consummate the transactions contemplated by this Agreement;
and
(e) in the case of each of the Restricted Parties, except for
agreements expressly contemplated in, or entered into for the purpose
of consummating the transactions contemplated in, the Merger
Agreement, neither such Restricted Party nor any of its Affiliates has
any agreement, arrangement or understanding with any other Person or
group who is not an Affiliate of such Restricted Party with respect to
acquiring, holding, voting or disposing of Company Voting Securities.
ARTICLE XII.
STANDSTILL
----------
3.1 Standstill Period. During the period commencing on the date hereof
and ending on the fifth (5th) anniversary of the Effective Date (the
"Standstill Period"), except as specifically approved in writing in advance by
the Board of Directors of the Company, the Restricted Parties shall not, and
shall cause any Affiliates to not, in any manner, directly or indirectly,
either individually or together with any Person or Persons acting in concert of
beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act):
(a) acquire, or offer or agree to acquire, or become the
beneficial owner of or obtain any rights in respect of any Company
Voting Securities such that, following the consummation of such
transaction, the Restricted Parties and their Affiliates taken
together would beneficially own, in the aggregate, Company Voting
Securities in excess of the Permitted Ownership Percentage; provided,
however that the foregoing limitation on acquisition shall not
prohibit the acquisition of Company Voting Securities issued as
dividends or as a result of stock splits and similar reclassifications
or received in a consolidation, merger or other business combination
in respect of, in exchange for or upon conversion of Company Voting
Securities validly acquired under this Section 3 and held by the
Restricted Parties or any of their Affiliates at the time of such
dividend, split or reclassification, consolidation or merger or
business combination;
(b) solicit proxies or consents or become a "participant" in
a "solicitation" (as such terms are defined or used in Regulation 14A
under the Exchange Act) of proxies or consents with respect to any
Company Voting Securities or initiate or become a participant in any
shareholder proposal or "election contest" (as such term is defined or
used in Rule 14a-11 under the Exchange Act) with respect to the
Company or any of its successors or induce others to initiate the
same, or otherwise seek to advise or influence any Person with respect
to the voting of any voting securities of the Company or any of its
successors;
(c) publicly or privately propose, encourage, solicit or
participate in the solicitation of any Person to acquire, offer to
acquire or agree to acquire, by merger, tender offer, purchase or
otherwise, the Company or a substantial portion of its assets or more
than 5% of the outstanding capital stock (except in connection with
the registration of securities pursuant to the Registration Rights
Agreement); or
(d) directly or indirectly join in or in any way participate
in a pooling agreement, syndicate, voting trust or other similar
arrangement with respect to the Company's voting securities or
otherwise act in concert with any other Person (other than Affiliates
of such Restricted Parties), for the purpose of acquiring, holding,
voting or disposing of the Company Voting Securities.
3.2 LIMITATION. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE
RESTRICTED PARTIES WILL NOT BE DEEMED TO BE IN VIOLATION OF THIS AGREEMENT IF
THE RESTRICTED PARTIES AND THEIR AFFILIATES TAKEN TOGETHER OWN COMPANY VOTING
SECURITIES IN EXCESS OF THE PERMITTED OWNERSHIP PERCENTAGE AS A RESULT OR
ARISING OUT OF ANY ACTION TAKEN BY THE COMPANY TO REDUCE THE NUMBER OF ISSUED
AND OUTSTANDING SHARES OF COMPANY VOTING SECURITIES.
ARTICLE XIII.
MISCELLANEOUS
-------------
4.1 Remedies. Each of the Parties acknowledges and agrees that (a) the
provisions of this Agreement are reasonable and necessary to protect the proper
and legitimate interests of the Parties and (b) the Parties would be
irreparably damaged in the event any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that each of the Parties shall be entitled
to preliminary and permanent injunctive relief to prevent breaches of the
provisions of this Agreement by any other Party without the necessity of
proving actual damages or of posting any bond, and to enforce specifically the
terms and provisions hereof and thereof in any court of the United States or
any state thereof having jurisdiction, which rights shall be cumulative and in
addition to any other remedy to which the Parties may be entitled hereunder or
at law or equity.
4.2 No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties, their respective
successors and permitted transferees and assigns.
4.3 Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the Parties with respect to
the subject matter hereof and supersedes any prior understandings, agreements,
or representations by or among the Parties, written or oral, to the extent they
relate in any way to the subject matter hereof.
4.4 Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties and their respective successors and
permitted transferees and assigns. No Party may assign either this Agreement or
any of its rights, interests or obligations hereunder without the prior written
approval of the other Parties; provided, however that the Company may assign
its rights and obligations under this Agreement to any successor or acquiring
entity in connection with any business combination transaction, reorganization
or sale of substantially all the assets of the Company.
4.5 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
4.6 Governing Law. This agreement shall be governed by and construed
in accordance with the Laws of the State of New York, without giving effect to
any Laws of such State that would make such choice of Laws ineffective.
4.7 Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by each
of the Parties. No waiver by any Party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent such occurrence.
4.8 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. Upon any such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
Parties hereto will negotiate in good faith to modify this Agreement so as to
effect the original intent of the Parties as closely as possible in an
acceptable manner to the end that the obligations and restrictions contemplated
by this Agreement are consummated to the extent possible.
4.9 Termination. This Agreement shall automatically terminate as of
the fifth (5th) anniversary of the Effective Date.
[signatures on next pages]
IN WITNESS WHEREOF, each of the Parties has executed this Agreement as
of the date first written above.
RAYOVAC CORPORATION
By:
--------------------------------
Name:
Title:
THOMAS H. LEE EQUITY FUND IV, L.P.
By: THL Equity Advisors IV, LLC,
its General Partner
By: Thomas H. Lee Partners, L.P.,
its Managing Member
By: Thomas H. Lee Advisors, LLC,
its General Partner
By:
----------------------------
Name:
Title: Managing Director
THL EQUITY ADVISORS IV, LLC
By: Thomas H. Lee Partners, L.P.,
its Managing Member
By: Thomas H. Lee Advisors, LLC,
its General Partner
By:
----------------------------
Name:
Title: Managing Director
THOMAS H. LEE PARTNERS, L.P.
By: Thomas H. Lee Advisors, LLC,
its General Partner
By:
----------------------------
Name:
Title: Managing Director
THOMAS H. LEE ADVISORS, L.L.C.
By:
----------------------------
Name:
Title: Managing Director
UIC HOLDINGS, L.L.C.
By: Thomas H. Lee Equity Fund IV, L.P.,
its Managing Member
By: THL Equity Advisors IV, LLC,
its General Partner
By:
----------------------------
Name:
Title: Managing Director
EXHIBIT J
Shareholders Agreement
[Omitted. A supplemental copy of this exhibit will
be furnished to the SEC upon request.]
EXHIBIT K
Form of Acquiror/Newco Legal Opinion
[Omitted. A supplemental copy of this exhibit will
be furnished to the SEC upon request.]
EXHIBIT 4.1
SHAREHOLDER'S AGREEMENT
THIS SHAREHOLDER'S AGREEMENT ("Agreement") is made and entered into as
of January 3, 2005, by and between RAYOVAC Corporation, a Wisconsin corporation
(the "Company"), and UIC HOLDINGS, L.L.C., a Delaware limited liability company
(the "Holdings"). The foregoing parties to this Agreement are each a "Party"
and collectively the "Parties". Capitalized terms not defined herein shall have
the meanings ascribed to those terms in the Merger Agreement, as defined below.
BACKGROUND STATEMENT
Pursuant to that certain Agreement and Plan of Merger (the "Merger
Agreement") dated January 3, 2005 by and among the Company, Lindbergh
Corporation and United Industries Corporation ("United"), Holdings may receive
shares of the Company $0.01 par value common stock (the "Company Stock").
Simultaneous with the execution of the Merger Agreement, the Parties are
entering into this Agreement to set forth certain understandings and agreements
of the Parties with respect to the actions of the Parties prior to and after
the Closing, including the governance of the Company after the Effective Time.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties agree as
follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF HOLDINGS
As a material inducement to the Company to enter into this Agreement
and the Merger Agreement, Holdings hereby represents and warrants to the
Company as follows:
1.1 Organization, Power and Authorization. Holdings is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware and has the power and authority to own all of
its properties and assets and to carry on its business as it is now being
conducted. Holdings has the requisite limited liability company power and
authority necessary to enter into, deliver and carry out its obligations
pursuant to this Agreement. The members of Holdings are set forth on Schedule
1.1 hereto.
1.2 Ownership of Shares. As of the date of this Agreement, Holdings
holds of record and owns beneficially Thirty Million Three Hundred Thirty-One
Thousand Nine Hundred Sixty-Five (30,331,965) shares of Class A Voting Common
Stock of United and Thirty Million Three Hundred Thirty-One Thousand Nine
Hundred Sixty-Five (30,331,965) shares of Class B Nonvoting Common Stock of
United (together, the "United Common Shares"), free and clear of all Liens,
other than restrictions on transfer arising under the Securities Act and state
securities laws. Holdings also holds warrants to acquire Four Million Six
Hundred Eighty Six Thousand Five Hundred Eight One and Eighty Three
One-Hundredths (4,686,581.83) shares of Class A Voting Common Stock of United
and Four Million Six Hundred Eighty Six Thousand Five Hundred Eight One and
Eighty Three One-Hundredths (4,686,581.83) shares of Class B Nonvoting Common
Stock of United ("Warrants" and together with the United Common Shares, the
"United Securities"). Except for the United Industries Corporation Stockholders
Agreement dated January 20, 1999, as amended, Holdings is not a party to any
voting trust, proxy, or other agreement or understanding with respect to the
voting or transfer of any United Common Shares.
1.3 Organization; Assets. Holdings was formed for the sole purpose to
acquire and hold the United Securities and has not had any other operations or
activities. Holdings does not own any other assets other than the United
Securities and has no debts, liabilities or obligations of any kind, other than
liabilities that arise out of or are related to (i) Holdings being deemed to
influence or control United, (ii) Laws imposing liability solely by reason of
Holdings' percentage ownership of United, or (iii) any actions taken at the
request or on behalf of United or any of its subsidiaries or Affiliates,
including without limitation the filing of any tax returns or filings with
governmental or regulatory agencies.
1.4 Binding Effect. This Agreement constitutes a valid and binding
obligation of Holdings which is enforceable against Holdings in accordance with
its terms, except to the extent such enforceability may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or other Laws and court
decisions relating to or affecting the enforcement of creditors' rights
generally (including statutory or other Laws regarding fraudulent transfers),
and is subject to general principles of equity.
1.5 No Consents Required. No Authorizations of or with any
Governmental Entity or any other Authorization of or with any other Person is
required in connection with the execution and delivery of this Agreement by
Holdings and its compliance with or performance hereunder.
1.6 Absence of Violations or Conflicts. The execution and delivery of
this Agreement by Holdings and its compliance with or performance hereto do not
and will not with the passing of time or giving of notice or both constitute a
violation of, conflict with, constitute a default or require any payment under,
permit a termination of, or result in the creation or imposition of any Lien
upon the United Common Shares, under (i) any contract, agreement, commitment,
undertaking or understanding (including rights of refusal or similar rights or
other transfer restrictions) to which Holdings is a party, (ii) any
Governmental Order, (iii) any applicable Laws or (iv) the operating agreement
or other governing documents of Holdings.
1.7 No Litigation. There is no lawsuit, claim, action, proceeding or
investigation pending or, to the knowledge of Holdings, threatened against
Holdings, its properties or businesses, which could reasonably be expected to
have an adverse effect on or restrict the ability of Holdings to comply with
the terms hereof or otherwise perform hereunder.
1.8 Investment. Holdings is acquiring any Company Stock received by it
as Merger Consideration for its own account, for investment only, and not with
a view to any resale or public distribution thereof. Holdings shall not offer
to sell or otherwise dispose of such Company Stock in violation of any Law
applicable to any such offer, sale or other disposition. Holdings acknowledges
that such Company Stock has not been registered under the Securities Act or any
state securities laws and cannot be resold unless it is so registered or unless
an exception from registration is available, and it must bear the economic risk
of its investment in such Company Stock for an indefinite period of time.
Holdings is an "accredited investor" within the meaning of Regulation D.
1.9 Broker, Finders and Investment Bankers. Holdings has not employed
any broker, finder or investment banker or incurred any liability for any
investment banking fees, financial advisory fees, brokerage fees or finders' or
similar fees in connection with the transactions contemplated by the Merger
Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2.1 Organization, Power and Authorization. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Wisconsin and has the power and authority to own all of
its properties and assets and to carry on its business as it is now being
conducted. The Company has the requisite corporate power and authority
necessary to enter into, deliver and carry out its obligations pursuant to this
Agreement.
2.2 Binding Effect. This Agreement constitutes a valid and binding
obligation of the Company which is enforceable against the Company in
accordance with its terms, except to the extent such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other Laws and
court decisions relating to or affecting the enforcement of creditors' rights
generally (including statutory or other Laws regarding fraudulent transfers),
and is subject to general principles of equity.
2.3 No Consents Required. No Authorizations of or with any
Governmental Entity or any other Authorization of or with any other Person is
required in connection with the execution and delivery of this Agreement by the
Company and its compliance with or performance hereunder.
2.4 Absence of Violations or Conflicts. The execution and delivery of
this Agreement by the Company and its compliance with or performance hereto do
not and will not with the passing of time or giving of notice or both
constitute a violation of, conflict with, constitute a default or require any
payment under, permit a termination of, or result in the creation or imposition
of any Lien upon the Company Stock, under (i) any contract, agreement,
commitment, undertaking or understanding (including rights of refusal or
similar rights or other transfer restrictions) to which the Company is a party,
(ii) any Governmental Order, (iii) any applicable Laws or (iv) the articles of
incorporation or bylaws of the Company.
ARTICLE III
GOVERNANCE
3.1 Board Representation.
(a) Creation of Additional Board of Directors Positions.
Immediately following the Effective Time, the Board of Directors of the Company
(the "Board") shall cause the number of members ("Directors") of the Board to
be increased by two (2) Directors, to a total of ten (10) Directors. The
Directors created pursuant to this Section 3.1(a) shall be Class II Directors.
(b) Designation by Holdings. Immediately following the Effective
Time, the Board shall cause each of the Director positions created pursuant to
Section 3.1(a) to be filled by persons designated by Holdings. Thereafter, for
so long as Holdings' aggregate ownership of Company Stock (together with the
ownership of Company Stock by any of its members or Affiliates) as a percentage
of the total issued and outstanding Company Stock, in each case on a fully
diluted basis (the "Holdings Ownership Percentage"):
(i) is equal to or greater than fifteen percent (15%), Holdings
shall be entitled to designate two (2) nominees for inclusion on any slate of
Directors presented to the shareholders of the Company for election at the
appropriate meeting of the shareholders; and
(ii) is less than fifteen percent (15%) but equal to or greater
than ten percent (10%), Holdings shall be entitled to designate one (1) nominee
for inclusion on any slate of Directors presented to the shareholders of the
Company for election at the appropriate meeting of the shareholders;
provided, however, that in the event that Holdings Ownership
Percentage at any time is less than ten percent (10%), Holdings shall no longer
have any right pursuant to this Agreement to designate any nominees for
inclusion on any slate of Directors presented to the shareholders of the
Company for election at the appropriate meeting of the shareholders. At the
Company's request, any Director designated by Holdings shall resign in the
event that the Holdings Ownership Percentage would no longer entitle Holdings
to designate a nominee for such Director position pursuant to this Section
3.1(b).
3.2 Qualification. Each person designated by Holdings as a nominee for
Director pursuant to Section 3.1(b) shall be nominated for such position by the
nominating committee of the Board (currently its Nominating and Corporate
Governance Committee) (the "Nominating Committee") unless the Nominating
Committee, in the execution of its fiduciary and corporate governance duties,
shall reasonably determine in good faith that such nomination would be
inconsistent with the Nominating Committee's duties under applicable Law or
with applicable regulation or the rules of the New York Stock Exchange. If the
Nominating Committee shall reasonably determine that such designee is not so
qualified, Holdings shall have the opportunity to specify one or more
additional designees who shall become nominees subject to the qualification set
forth in the immediately preceding sentence.
3.3 Observer Rights. In the event Holdings' designees are not elected
to the Board of Directors or Holdings is otherwise not entitled to designate a
nominee pursuant to Section 3.1(b), Holdings may designate an observer, without
voting rights, who will be entitled to attend all meetings of the Company's
Board of Directors (including executive and other committees). Any observer
designated by Holdings shall be entitled to notice of all meetings of the
Company's Board of Directors (including executive and other committee meetings)
and to information provided to any Directors generally.
3.4 Insurance; Indemnification. The Company shall at all times during
the term of this Agreement (a) maintain Directors and Officers liability
insurance in such amount as is usual and customary for companies comparable to
the Company, but in no event less than $20 million and (b) provide in its
charter and bylaws for indemnification of directors and officers to the fullest
extent provided by applicable laws. In addition, the Company shall enter into
separate indemnification agreements reasonably satisfactory to Holdings with
each of the directors designated by Holdings.
ARTICLE IV
NO TRANSFER; RELEASE; RESTRICTIVE COVENANTS
4.1 Transfer of Shares. After the date of this Agreement, other than
a transfer to its members in connection with the merger of Holdings with and
into United or in connection with the Merger, Holdings shall not sell, pledge,
encumber or otherwise transfer any or all of the United Securities.
4.2 Restrictions on Transfer of Company Stock.
(a) Restrictions and Legends. Holdings hereby acknowledges and
agrees that with respect to any shares of Company Stock received by it as
a result of the transactions contemplated by the Merger Agreement, in no
event shall it sell, assign, convey, exchange, pledge, hypothecate, gift,
dispose of or otherwise part with any indicia or aspect of title,
ownership or possession of, to or in (collectively, a "Transfer") (i) any
such shares during the period ending twelve (12) months after the
Effective Time or (ii) in the aggregate more than fifty percent (50%) of
such shares during the period ending eighteen (18) months after the
Effective Time. The preceding restriction shall not apply to any Transfer
to an Affiliate of any of Holdings or in connection with the merger of
Holdings with and into United. Holdings acknowledges that stop transfer
instructions with respect to the Company Stock received by the Holder
will be given to the Company's transfer agent and that there will be
placed on the certificates for such shares a legend stating in substance
as follows:
(i) The securities represented hereby have not been registered
under the Securities Act of 1933, as amended, or any state or other
securities laws and may not be offered, sold, transferred or otherwise
disposed of unless registered with the United States Securities and
Exchange Commission and the securities regulatory authorities of
applicable states or foreign countries or unless an exemption from such
registration is available.
(ii) The offer, sale, transfer or disposal of the securities
represented hereby is restricted pursuant to a Holder Representation Form
and Section 5.11 of the Agreement and Plan of Merger among Rayovac
Corporation, United Industries Corporation, and the other parties
thereto. Rayovac Corporation shall furnish to the Holder hereof a copy of
such Form and Agreement and Plan of Merger upon request and without
charge.
(b) Legends on Subsequent Certificates. The foregoing legends
will also be placed on any certificate representing securities issued
subsequent to the original issuance of the Company Stock to Holdings
pursuant to the Merger Agreement as a result of any transfer of such
shares or any stock dividend, stock split or other recapitalization as
long as the Company Stock issued to Holdings pursuant to the Merger
Agreement has not been transferred in such manner to justify the removal
of the legends therefrom.
(c) Removal of Legends. (i) Upon request from any holder of
the Company Stock issued to Holdings pursuant to the Merger Agreement
received more than twelve (12) months but less than eighteen (18) months
after the Closing Date, the Company will cause the transfer agent for its
stock to issue new certificates to such requesting holder reflecting the
legend set forth in (a)(ii) above only on fifty percent (50%) of such
shares of the Company Stock held by such holder, (ii) upon request from
any holder of the Company Stock issued to Holdings pursuant to the Merger
Agreement received more than eighteen (18) months after the Closing Date,
the Company will cause the transfer agent for its stock to issue new
certificates to such requesting holder reflecting the removal of the
legend set forth in (a)(ii) above on all such shares of the Company Stock
held by such holder and (iii) the legend set forth in (a)(i) above shall
be removed by the Company from any certificate evidencing the Company
Stock upon delivery to the Company of an opinion by counsel, reasonably
satisfactory to the Company, that a registration statement under the
Securities Act is at that time in effect with respect to the legended
security or that such security can be freely transferred in a public sale
without such a registration statement being in effect and that such
transfer will not jeopardize the exemption or exemptions from
registration pursuant to which the Company Stock was issued hereunder.
4.3 Release of United. Effective as of the Closing Date, Holdings
does hereby unconditionally and irrevocably forever release and discharge
United and the Subsidiaries from all obligations and liabilities to Holdings,
all agreements and understandings involving Holdings other than the Warrants,
and all claims and causes of action (whether at law or in equity) of Holdings
against United and the Subsidiaries arising prior to the Closing Date.
4.4 No Interference; Nondisclosure.
(a) No Interference with Customers. During the period commencing on
the Closing Date and continuing for a period of two (2) years thereafter (the
"Non-Interference Period"), Holdings agrees that neither it nor any of its
Affiliates shall solicit, encourage or induce a Customer to withdraw, curtail
or cancel such Customer's business with United or the Subsidiaries. As used in
this Agreement, the term "Customer" means any actual customer of United or the
Subsidiaries served or actually solicited by United or the Subsidiaries within
the twelve (12) month period prior to the Closing Date. As used in this
Agreement, the term "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.
Notwithstanding anything herein to the contrary, with respect to Holdings, the
term "Affiliates" shall not be deemed to include Putnam Investments, Inc. or
any portfolio company of THL (defined below); provided, however, that neither
Holdings nor any of its Affiliates shall provide information concerning
Customers to Putnam Investments, Inc. or such portfolio companies to assist
them in a manner that would violate this Section 4.4 in the absence of the
prior provision of this sentence. As used in this Agreement "Control" means,
with respect to any Person, the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise.
(b) No Interference with Employees. Holdings agrees that, during
the Non-Interference Period, neither it nor any of its Affiliates will
directly or indirectly request or induce any employee to terminate his or her
employment with United or the Subsidiaries and accept employment with another
business entity engaged in the consumer lawn and gardening, insect control or
pet supplies business in the United States or Canada, or hire during the
Non-Interference Period any employee within twelve (12) months after
termination of such employee's employment with United or the Subsidiaries.
This Section 4.4 shall not be construed to prohibit Holdings or its Affiliates
from placing general advertisements for employees in newspapers, periodicals
or other media of general circulation or hiring any such employees as a result
thereof or from using recruiting or headhunting firms, so long as such firms
are not specifically directed to target employees of United or the
Subsidiaries.
(c) Trade Secrets; Confidential Information. Holdings recognizes
and acknowledges that it has had access to certain highly sensitive, special,
unique information of United and the Subsidiaries that is confidential or
proprietary. Holdings hereby covenants and agrees that it and its Affiliates
will not (i) as to Trade Secrets for so long as they remain Trade Secrets
under applicable Law and (ii) as to Confidential Information, during the
Non-Interference Period, use or disclose any Trade Secrets or Confidential
Information, except for disclosures to authorized representatives of the
Company; provided, however, that the foregoing restrictions shall not apply to
any information that (W) was, is now, or becomes available to the public (but
not as a result of a breach of any duty of confidentiality by which Holdings,
its Affiliates and its representatives and advisors are bound); (X) is
disclosed to Holdings or its Affiliates by a Person not subject to any duty of
confidentiality with respect to such information; (Y) Holdings or its
Affiliates demonstrates was developed independently by it without the use of
any such non-public information; or (Z) is required by applicable Law or rule
or regulation of a self-regulatory organization to which it may be subject to
be disclosed, but then only (1) to the extent disclosure is required and (2)
after giving the party disclosing such information notice of such obligation
so that it may seek a protective order or other similar or appropriate relief.
For purposes of this Agreement, (i) "Trade Secret" means any information,
including, but not limited to, technical or non-technical data, a formula, a
pattern, a compilation, a program, a device, a method, a technique, a set of
guidelines, a procedure, a drawing, a process, financial data, financial
plans, product plans, or a list of actual or potential customers or suppliers
of United or the Subsidiaries, that derives economic value, actual or
potential, from not being generally known to and not being readily
ascertainable by proper means by other persons who can obtain economic value
from its disclosure or use and is the subject of efforts that are reasonable
under the circumstances to maintain its secrecy or otherwise constitutes a
trade secret under applicable Law; and (ii) "Confidential Information" means
any data or information of United or the Subsidiaries other than Trade
Secrets, which is competitively sensitive and not known to the public.
4.5 No Solicitation of Transactions. Prior to the termination and
abandonment of this Agreement, Holdings shall not and shall cause its
Affiliates, officers, directors, or representatives not to: (a) solicit,
initiate or encourage submission of proposals or offers from any Person other
than the Company relating to any acquisition or purchase of all or a material
part of the stock or assets of, or any merger, consolidation, share exchange
or business combination with, or any recapitalization, restructuring or
issuance or offering of debt or equity securities of, United or any of the
Subsidiaries (an "Acquisition Proposal"); or (b) participate in any
discussions or negotiations regarding, or furnish to any Person other than the
Company and its representatives, any information with respect to, or otherwise
cooperate in any way or assist, facilitate or encourage, any Acquisition
Proposal by any Person other than the Company. Holdings will immediately cease
and cause to be terminated any existing activity, discussions or negotiations
with any Person other than the Company and its representatives conducted prior
to the execution and delivery of this Agreement with respect to any
Acquisition Proposal. If, notwithstanding the foregoing, Holdings should
receive any Acquisition Proposal or any inquiry regarding any such proposal
from any Person, then it shall promptly inform the Company.
ARTICLE V
MISCELLANEOUS
5.1 Release. Holdings hereby releases the Company, its Affiliates and
their officers and directors from any liability for, and agrees not to bring
any suit, action or proceeding against them with respect to, any untrue
statement or alleged untrue statement of any material fact relating to United
or Holdings provided by United or Holdings contained in the Information
Statement, or any amendment or supplement thereof, and for any omission or
alleged omission to state for inclusion in the Information Statement a
material fact required to be stated therein or necessary to make the
statements relating to United or Holdings provided by United or Holdings, and
included therein, not misleading.
5.2 Delivery of Stockholder Materials. As soon as practicable,
Holdings will deliver or cause to be delivered to the Exchange Agent an
Election Form, Holder Representation Form and all Old Certificates and
Warrants with respect to the United Common Shares and Warrants owned by
Holdings, duly executed by Holdings.
5.3 Information. Holdings will furnish all information concerning
Holdings or its members as may be reasonably requested by United or the
Company in connection with the preparation of the Information Statement, the
Supplemental Indenture, any filings with Governmental Entities or as otherwise
reasonably requested in connection with the transactions contemplated by the
Merger Agreement.
5.4 Public Announcements. The timing and content of all press
releases or other public announcements regarding any aspect of this Agreement
to the financial community, Governmental Entities, employees or the general
public by the Company or Holdings shall be subject to the other Parties' prior
approval, except as may be required by applicable Law or rule or regulation of
a self-regulated organization to which such disclosing Party may be subject.
5.5 Termination. This Agreement shall remain in effect until
terminated (i) by a written agreement of the Company and Holdings, (ii) by
cessation of the Company's business and winding up of its affairs, (iii)
automatically upon termination of the Merger Agreement.
5.6 Entire Agreement. This Agreement constitutes the entire agreement
among the Parties in relation to the subject matter hereof, and no other
representations, warranties, covenants, understandings or agreements, or
otherwise, in relation thereto exist among the Parties.
5.7 Amendment. This Agreement may not be amended in any manner except
by an instrument in writing which refers to this Agreement and is executed by
the Company and Holdings.
5.8 Waiver. Any waiver by any Party or any breach of, or failure to
comply with, or failure to enforce at any time, any of the provisions of this
Agreement shall not be construed as or constitute a continuing waiver of such
provision, or a waiver or any other breach of, or failure to comply with, any
other provision of this Agreement, nor shall it in any way affect the validity
of this Agreement or any part thereof or the right of any Party thereafter to
enforce each and every provision of this Agreement.
5.9 Notices. All notices, requests, consents, demands, and other
communications to be given or delivered under or by reason of the provisions
of this Agreement shall be in writing, shall be personally delivered or sent
by certified mail and shall be deemed to have been duly given when received by
the Party to whom addressed at the address of such party as it appears in the
records of the Company from time to time, or at such other place as any of the
Parties may from time to time furnish to the other Parties in writing.
5.10 Governing Law, Consent to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the Laws of the State of New
York, without giving effect to any Laws of such State that would make such
choice of Laws ineffective. Each Party hereby submits to the non-exclusive
jurisdiction of the United States District Court for the Southern District of
New York and of any New York State Court sitting in Manhattan for purposes of
all legal proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. Each Party irrevocably waives, to the
fullest extent permitted by Law, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum.
5.11 Successors and Assigns. This Agreement may not be assigned by
Holdings without the prior written consent of the Company. This Agreement
shall be binding upon and inure to the benefit of the Parties and the heirs,
personal representatives, successors and permitted assigns of the Parties.
Notwithstanding anything herein to the contrary, in connection with any merger
of Holdings with and into United, Holdings may assign its rights and
obligations hereunder to Thomas H. Lee Equity Fund IV, L.P., Thomas H. Lee
Foreign Fund IV, L.P. and Thomas H. Lee Foreign Fund IV-B, L.P. or any of its
Affiliates (collectively, "THL"), provided that THL shall agree in writing to
be bound to the terms and conditions of this Agreement. In connection with any
assignment of this Agreement by Holdings to THL, upon and after such
assignment all references herein "Holdings" shall be deemed to refer to "THL".
5.12 Execution in Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original but all of
which together will constitute one and the same instrument.
[SIGNATURES ON THE FOLLOWING PAGE]
IN WITNESS WHEREOF, the parties hereto have executed, or have caused
their duly authorized officers or representatives to execute, this Agreement as
of the day and year first above written.
RAYOVAC CORPORATION
By: /s/ Kent J. Hussey
------------------------------------
Name: Kent J. Hussey
Title: President and Chief Operating Officer
UIC HOLDINGS, L.L.C.
By: Thomas H. Lee Equity Fund IV, L.P.,
its Managing Member
By: THL Equity Advisors IV, LLC,
its General Partner
By: /s/ Scott A. Schoen
-----------------------
Name: Scott A. Schoen
Title: Managing Director
Schedule 1.1
Members of Holdings
-------------------
Thomas H. Lee Equity Fund IV, L.P.:
Thomas H. Lee Foreign Fund IV, L.P.
Thomas H. Lee Foreign Fund IV-B, L.P.
1997 Thomas H. Lee Nominee Trust
David V. Harkins
The 1995 Harkins Gift Trust
Scott A. Schoen
C. Hunter Boll
Scott M. Sperling
Anthony J. DiNovi
Thomas M. Hagerty
Warren C. Smith, Jr.
Smith Family Limited Partnership
Seth W. Lawry
Kent R. Weldon
Terrence M. Mullen
Todd M. Abbrecht
Charles A. Brizius
Scott Jaeckel
Soren Oberg
Thomas R. Shepherd
Wendy L. Masler
Andrew D. Flaster
RSL Trust
Stephen Zachary Lee
Charles W. Robins as Custodian for Jesse Lee
Charles W. Robins
James Westra
Thomas H. Lee Charitable Investment L.P.
Thomas H. Lee Investors
EXHIBIT 99.1
RAYOVAC TO ACQUIRE UNITED INDUSTRIES
Transaction Diversifies Company into Large High-Growth Markets: Lawn & Garden,
Specialty Pet Supplies and Household Insect Control
ATLANTA, Jan. 4, 2005 - Rayovac Corp. (NYSE:ROV), a global consumer products
company with a diverse portfolio of world-class brands, announced today that it
has reached an agreement to acquire United Industries Corporation. The
transaction calls for Rayovac to issue 13.75 million shares of its common
stock, along with additional consideration of $70 million in cash, to United
Industries' current shareholders, for a total value of approximately $1.2
billion including the assumption of approximately $880 million of United
Industries debt and a cash tax benefit of $140 million. This acquisition
extends Rayovac's household products offerings into the large and growing lawn
and garden and specialty pet supply categories, while leveraging the company's
operational expertise and existing relationships with global retailers.
Privately held United Industries, based in St. Louis, is a leading manufacturer
and marketer of consumer products for lawn and garden care and household insect
control, operating as Spectrum Brands in the United States and NuGro in Canada.
United also holds a leading position in the fragmented but fast-growing U.S.
pet supply market, manufacturing and marketing premium branded specialty pet
supplies through its United Pet Group. Among United's brands are
Spectracide(R), Vigoro(R), Sta-Green(R), Schultz(TM) and C.I.L(R) in the lawn
and garden market; Hot Shot(R), Cutter(R) and Repel(R) in the household insect
control market; and Marineland(R), Perfecto(R) and Eight in One(R) among pet
supply products. United estimates total 2004 pro forma sales of $950 million
(assumes acquisitions made during 2004 were part of United's results for the
entire twelve months) to customers including The Home Depot, Lowe's, Wal-Mart,
PETCO and PETsMART.
"Rayovac's publicly stated goal has been to grow through acquisitions that
diversify and increase our revenue base while leveraging our global
merchandising and distribution capabilities. United Industries is just such an
acquisition," said David A. Jones, Rayovac's chairman and chief executive
officer. "Upon closing, we will have a significant presence in several new
consumer products markets -- large growth categories where we can capitalize on
our strengths with major retailers to leverage the full potential of the
powerful combined enterprise."
The company noted that the United transaction will significantly diversify
Rayovac's revenue base. It is expected that after closing, worldwide battery
sales will represent approximately 40 percent of total combined pro forma
revenue versus the current level of approximately 67 percent.
Added Jones: "This is a truly transforming transaction for Rayovac,
representing a major step forward toward our goal of achieving annual revenues
of $3 billion."
"We are extremely pleased to join a company that clearly believes in our
brands, our markets and our merchandising strategy," said United Industries
Chief Executive Officer Robert L. Caulk, who is expected to join Rayovac's
senior management team. "We share Rayovac's belief that our products will
flourish as part of a larger company with an integrated global manufacturing,
distribution and information services platform and a more significant
relationship with our customers."
"The combination of Rayovac and United Industries offers a compelling value
proposition," said Thomas H. Lee Partners Co-President Scott Schoen. "United's
strong brands and history of operational excellence will be further
strengthened in combination with Rayovac's global manufacturing, distribution,
supply chain and IT infrastructure. The Rayovac management team has established
a track record of successfully integrating acquired businesses while
maintaining marketplace momentum. Our ongoing ownership stake is a tangible
demonstration of our confidence in the future success of the combined
enterprise."
Rayovac's current expectations are that the transaction will be slightly
accretive to earnings before synergies in year one. The company's initial
expectations anticipate gross synergies approximating $70 to $75 million
(before one-time costs) to be realized over a three year period. Anticipated
cost savings include efficiencies to be gained through rationalization of
manufacturing, global purchasing, distribution and information technology. In
addition to these cost savings, Rayovac has identified a number of
opportunities to drive revenue growth through cross-selling and coordination of
sales and marketing efforts.
Transaction Details
The transaction is subject to approval under the Hart-Scott-Rodino Anti-trust
Improvements Act and other customary closing conditions. Rayovac plans to enter
into a new senior secured credit facility and issue senior subordinated notes
in connection with the acquisition. Existing United Industries debt of
approximately $900 million will be redeemed or replaced by the new credit
facility. The transaction has been approved by United's shareholders. The
transaction is expected to close in February.
United is 83 percent owned (on a fully diluted basis) by the Thomas H. Lee
Equity Fund IV, a private equity fund managed by Thomas H. Lee Partners and
affiliates (THL). It is anticipated that following the transaction THL will
hold an ownership position in Rayovac of approximately 25 percent. The shares
of Rayovac common stock received by United shareholders in the transaction will
be issued pursuant to an exemption from registration under the federal
securities laws. Rayovac has agreed to file a shelf registration within nine
months following closing to allow for the sale of such shares. As part of the
transaction, the shares issued to United shareholders will be subject to a
lockup agreement expiring one year after the closing date relative to 50
percent of the shares and 18 months after the closing date for the remaining 50
percent. In addition, two new Class II seats will be added to Rayovac's current
eight-person board of directors, to be filled by candidates selected by the THL
shareholders.
Rayovac and THL were previously partners when THL invested in Rayovac
Corporation in 1996. THL maintained a significant interest in Rayovac until
September 2002. David Jones, Rayovac chairman and chief executive officer, was
a board member of United Industries from 1999 to 2003. Rayovac noted that an
independent committee of its board was established to evaluate, negotiate and
approve the terms of the transaction. Citigroup Global Markets Inc. served as
advisors to the independent committee of the Rayovac board of directors.
Merrill Lynch & Co. served as financial advisor to Rayovac Corporation, and
Goldman Sachs & Co. advised United Industries.
Webcast Information
Rayovac will host a conference call on Tuesday, January 4 at 8:30 a.m. EST to
discuss the United Industries acquisition. Interested investors and others can
participate on the call at 800-592-7713 (international callers at
706-679-4191). A replay of the call will be available at 800-642-1687
(international callers at 706-645-9291) under the passcode 3156577.
A simultaneous webcast of the call and an accompanying slide presentation will
be available at www.rayovac.com.
About United Industries
United Industries Corporation, headquartered in St. Louis, is a leading
manufacturer and marketer of products for the consumer lawn-and-garden care and
household insect control markets in North America and a leading supplier of
quality products to the pet supply industry in the United States. United
Industries has 2,800 employees throughout North America.
United Industries' Home and Garden Division, which operates as Spectrum Brands,
includes the Spectracide(R), Spectracide Triazicide(R), Spectracide
Terminate(R), Garden Safe(R) and Real-Kill(R) brands in the controls category,
Sta-Green(R), Vigoro(R), Schultz(TM), Peters(R), Bandini(R) and Best(R) brands
in the lawn and garden fertilizer and organic growing media categories and Hot
Shot(R), Cutter(R) and Repel(R) brands in the consumer household insecticide
and insect repellent categories.
United Industries' Canada Division, which operates as Nu-Gro includes the
CIL(R), Wilson(R), Vigoro(R), Pickseed(R), So-Green(R), Plant-Prod(R),
Greenleaf(R) and Green Earth(R) brands in the consumer home and garden
categories in Canada. Nu-Gro also produces and distributes controlled release
nitrogen and other fertilizer technologies to the consumer, professional and
golf industries worldwide under the names IB Nitrogen(R), Nitroform(R),
Nutralene(R), Organiform(R) and S.C.U.(R)
United Industries' Pet Division, which operates as United Pet Group, or UPG,
manufactures and markets premium pet supplies products for dogs, cats, fish,
birds, and small animals. UPG markets the broadest line in the industry,
including integrated aquarium kits, stand-alone tanks, filters and filter
media, sea salt, and other aquarium supplies and accessories, as well as a
variety of pet treats and supplies. UPG's aquatics brands, which include
Marineland(R), Perfecto(R), and Instant Ocean(R), are leading brands in their
market segments. UPG's pet supply brands include Eight in One(R), Nature's
Miracle(R), Dingo(R), Lazy Pet(R), St. Aubrey(R), Wild Harvest(R) and One
Earth(TM).
About Thomas H. Lee Partners, L.P.
Thomas H. Lee Partners, L.P., is a Boston-based private equity firm focused on
identifying and acquiring substantial ownership positions in growth companies.
Founded in 1974, Thomas H. Lee Partners currently manages approximately $12
billion of committed capital, including its most recent fund, the $6.1 billion
Thomas H. Lee Equity Fund V. In addition to United Industries, notable
transactions sponsored by the firm include: Eye Care Centers of America,
Simmons Company, Michael Foods, ProSiebenSat.1, American Media, AXIS Capital
Holdings Limited, Houghton Mifflin, TransWestern Publishing, National
Waterworks, Endurance Specialty Insurance, Vertis, Cott Corporation,Rayovac,
Fisher Scientific International, Experian, GNC and Snapple Beverage.
About Rayovac
Rayovac is a global consumer products company and one of the largest battery,
shaving and grooming, and lighting companies in the world. Through a diverse
and growing portfolio of world-class brands -- including Rayovac, Varta and
Remington -- Rayovac holds leading market positions in a number of major
product categories. The company's products are sold by 19 of the world's top 20
retailers, and are available in over one million stores in 120 countries around
the world. Headquartered in Atlanta, Georgia, Rayovac generates approximately
$1.5 billion in annual revenues and has 6,500 employees worldwide. The
company's stock trades on the New York Stock Exchange under the symbol ROV.
Certain matters discussed in this news release, with the exception of
historical matters, may be forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements are subject
to a number of risks, uncertainties and other factors that could cause results
to differ materially from those anticipated as of the date of this release.
Actual results may differ materially from these statements as a result of (1)
our ability to close and finance the contemplated United acquisition as
anticipated, (2) our ability to achieve anticipated synergies and efficiencies
as a result of this transaction, (3) changes in external competitive market
factors, such as introduction of new product features or technological
developments, development of new competitors or competitive brands or
competitive promotional activity or spending, (4) changes in consumer demand
for the various types of products Rayovac and United offer, (5) changes in the
general economic conditions where Rayovac and United do business, such as stock
market prices, interest rates, currency exchange rates, inflation and raw
material costs, (6) our ability to successfully implement manufacturing,
distribution and other cost efficiencies and (7) various other factors,
including those discussed herein and those set forth in Rayovac's and United's
securities filings, including their most recently filed Forms 10Q and Annual
Reports on Form 10-K.
Investor Contact:
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Nancy O'Donnell
VP Investor Relations
770-829-6208
cell 404-992-9001
Media Contact:
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David Doolittle
Ketchum for Rayovac
404-879-9266
cell 404-840-1321