Agreement and Plan of Merger Acquisition Agreement, dated as of April 28, 2015 between Spectrum Brands Holdings, Inc., Armored AutoGroup Parent Inc., Ignite Merger Sub, Inc. and Avista Capital Partners II GP, LLC, as representative for the shareholders and optionholders of Armored AutoGroup Parent Inc

Section 2.1             Merger.  Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the DGCL, Merger Sub shall be merged with and into the Company (the “Merger”) at the Effective Time.  Following the Effective Time, the separate existence of Merger Sub shall cease and the Company shall continue as the surviving corporation of the Merger (the “Surviving Corporation”) and shall succeed to and assume all the rights and obligations of Merger Sub in accordance with the DGCL.

Section 2.2              Closing of the Merger.  The closing of the Merger (the “Closing”) shall take place at 10:00 a.m., New York City time, on a date to be specified by the parties hereto, which shall be no later than the second Business Day after satisfaction (or waiver) of the conditions set forth in ARTICLE VI (not including conditions which are to be satisfied by actions taken at the Closing), at the offices of Kirkland & Ellis LLP, 601 Lexington Avenue, New York, New York 10022, unless another time, date or place is agreed to in writing by the parties hereto; provided that in no event shall the Closing Date take place prior to the expiration of the Minimum Period without the prior written consent of Parent. The “Closing Date” shall be the date on which the Closing is consummated.

Section 2.3              Effective Time.  Subject to the terms and conditions set forth in this Agreement, on the Closing Date (or on such other date as Parent and the Company may agree), the parties hereto shall cause a certificate of merger (the “Certificate of Merger”) to be executed and filed with the Secretary of State of the State of Delaware in such form as required by, and in accordance with applicable provisions of, the DGCL.  The Merger shall become effective at the time that the Certificate of Merger is accepted for filing by the Secretary of State of the State of Delaware or at such later date and time as specified in the Certificate of Merger (the time the Merger becomes effective being referred to herein as the “Effective Time”).

Section 2.4              Effects of the Merger.  The Merger shall have the effects set forth in Section 251 of the DGCL.  Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the property, rights, privileges, powers and franchises of the Company and Merger Sub shall vest in the Surviving Corporation, and all debts, Liabilities, obligations, restrictions, disabilities and duties of each of the Company and Merger Sub shall become the debts, Liabilities, obligations, restrictions, disabilities and duties of the Surviving Corporation.

Section 2.5              Certificate of Incorporation; Bylaws.

(a)            At the Effective Time, the certificate of incorporation of Merger Sub in effect immediately prior to the Effective Time shall become the certificate of incorporation of the Surviving Corporation, except that the name of the Surviving Corporation shall be “Armored AutoGroup Parent Inc.” (the “Surviving Corporation Certificate of Incorporation”) until thereafter changed or amended as provided therein or by Applicable Law.

(b)            At the Effective Time, the bylaws of Merger Sub in effect immediately prior to the Effective Time shall become the bylaws of the Surviving Corporation

 

(the “Surviving Corporation Bylaws”) until thereafter changed or amended as provided therein or by Applicable Law.

Section 2.6             Directors.  The directors of Merger Sub immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation, each to hold office in accordance with the Surviving Corporation Certificate of Incorporation and the Surviving Corporation Bylaws until such director’s successor is duly elected or appointed and qualified, or until the earlier of their death, resignation or removal.

Section 2.7              Officers.  The officers of the Company immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation, each to hold office in accordance with the Surviving Corporation Certificate of Incorporation and the Surviving Corporation Bylaws until such officer’s successor is duly elected or appointed and qualified, or until the earlier of their death, resignation or removal.

Section 2.8              Effect on Company Equity Securities.

(a)            Conversion of Merger Sub Shares.  At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company or the holder of any share of capital stock of Merger Sub, each share of capital stock of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into one share of common stock of the Surviving Corporation (as such term is defined in the Surviving Corporation Certificate of Incorporation).

(b)            Conversion of Company Preferred Shares.  At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company or any holder of Company Preferred Share, subject to compliance by such holder of Company Preferred Shares with Section 2.13, each Company Preferred Share issued and outstanding as of immediately prior to the Effective Time shall (other than Cancelled Shares), be canceled and extinguished and be converted into and shall become the right to receive the Liquidation Value (as defined in the Company Certificate of Incorporation) plus all accumulated, accrued and unpaid dividends thereon with respect to such Company Preferred Share as of immediately prior to the Effective Time as provided in Section 2.9(a)(v).  From and after the Effective Time, the holder(s) of certificates, if any, evidencing ownership of the Company Preferred Shares outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Company Preferred Shares except as otherwise provided for herein or under Applicable Law.

(c)            Conversion of Company Common Shares.  At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company or any holder of Company Common Shares, subject to compliance by such holder of Company Common Shares with Section 2.13, each Company Common Share issued and outstanding as of immediately prior to the Effective Time (other than Cancelled Shares and Dissenting Shares) shall be canceled and extinguished and be converted into and shall become the right to receive the Per Share Common Payment and a portion (if any) of the Escrow Funds, the Representative Expense Amount and the amounts received by the Representative pursuant to Section 2.9(c) as provided herein.  From and after the Effective Time, the holder(s) of certificates, if any,

 

evidencing ownership of the Company Common Shares outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Company Common Shares except as otherwise provided for herein or under Applicable Law.

(d)            Conversion of Company Options. At the Effective Time, each Vested Company Option shall be converted into the right to receive the Option Payment with respect to such Vested Company Option and a portion (if any) of the Escrow Funds, the Representative Expense Amount and the amounts received by the Surviving Corporation pursuant to Section 2.9(c) as provided herein.  As of the Effective Time, all Company Options (whether or not vested) shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and each holder of any such Company Option shall cease to have any rights with respect thereto, except as otherwise provided for herein or by Applicable Law.  The Company shall take all actions reasonably necessary to effectuate the foregoing and will provide Parent with a reasonable opportunity to review and comment upon such resolutions.

(e)            Cancelled Shares.  Company Preferred Shares and Company Common Shares held in the treasury of the Company or held by Parent or any wholly-owned Subsidiary of Parent shall be canceled for no consideration as part of the Merger (collectively, “Cancelled Shares”).

(f)            Withholding.  Notwithstanding anything to the contrary herein, each of Parent and the Surviving Corporation shall be entitled to deduct and withhold from the Purchase Price otherwise payable pursuant to this Agreement such amount as it is required to deduct and withhold with respect to such payment under the Code or any provision of applicable state, local or non-United States Tax law.  If Parent or the Surviving Corporation, or anyone acting on their behalf, as the case may be, believes that any withholding is due with respect to any payment made by it, it shall give written notice to the payee prior to the making of such payment, and it shall provide such payee a reasonable opportunity to provide any applicable certificates, forms or documentation that would reduce the withholding with respect to such payment under the Code or any other applicable Tax law.  To the extent that amounts are so deducted and withheld by Parent or the Surviving Corporation, as the case may be, such deducted and withheld amounts (a) shall be timely remitted by Parent or the Surviving Corporation, as applicable, to the applicable Governmental Entity and (b) to the extent actually so remitted, shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made by Parent or the Surviving Corporation, as the case may be.

Section 2.9              Purchase Price.

(a)            Estimated Purchase Price.  No later than five (5) Business Days prior to the Closing, the Company shall deliver to Parent (x) a good faith estimate of the Purchase Price calculated in accordance with the Accounting Principles (the “Estimated Purchase Price”) pursuant to which the Company shall (i) use the Enterprise Value and the Transaction Tax Benefit Amount and (ii) estimate (A) the amount of Closing Date Funded Indebtedness, (B) the amount of Unpaid Transaction Expenses, (C) the amount of Cash and Cash Equivalents and (D) the Net Working Capital Adjustment, (y) a good faith estimate of the Aggregate Liquidation Preference based on the expected Closing Date and (z) a good faith

 

estimate of the aggregate Per Share Common Payments and the aggregate Option Payments, together with reasonable supporting detail of the foregoing.  The Company shall consult with Parent in the Company’s preparation of the Estimated Purchase Price (it being understood that Parent shall have no approval rights with respect thereto). At the Closing, Parent shall pay, or shall cause an Affiliate to pay, or shall cause the Company, Merger Sub or the Surviving Corporation to pay, in cash by wire transfer of immediately available funds:

(i)            $10,000,000 (such amount, the “Escrow Amount”) shall be deposited into an escrow account (the “Escrow Account”), which shall be established pursuant to an escrow agreement (the “Escrow Agreement”), which Escrow Agreement shall be (x) entered into on the Closing Date among Parent, the Representative and Citibank, N.A. (the “Escrow Agent”) as security for Sellers’ obligations pursuant to Section 2.9(c)(ii), if any, and (y) substantially in the form of Exhibit B attached hereto;

(ii)            the amount set forth in the pay-off letter in respect of any Closing Date Funded Indebtedness under the Credit Facilities to the account(s) set forth therein;

(iii)            an amount equal to the Unpaid Transaction Expenses, to the accounts provided to Parent by the Representative at least two (2) Business Days prior to the Closing Date;

(iv)            $500,000 (such amount, the “Representative Expense Amount”) shall be deposited into an account established by the Representative for purposes of satisfying costs, expenses and/or Liabilities incurred in its capacity as the Representative and otherwise in accordance with this Agreement and the Representative shall provide Parent with wire instructions therefor at least two (2) Business Day prior to the Closing Date;

(v)            an amount equal to the aggregate Liquidation Value (as defined in the Company Certificate of Incorporation) for each Company Preferred Share issued and outstanding as of immediately prior to the Effective Time (other than Cancelled Shares) plus all accumulated, accrued and unpaid dividends thereon as of immediately prior to the Effective Time (the “Aggregate Liquidation Preference”) to an account designated by the Representative (for distribution to the holders of Company Preferred Shares) at least two (2) Business Days prior to the Closing Date;

(vi)            an amount equal to the aggregate Per Share Common Payment with respect to each Company Common Share issued and outstanding as of immediately prior to the Effective Time (other than Cancelled Shares and Dissenting Shares) to an account designated by the Representative (for distribution to the holders of Company Common Shares) at least two (2) Business Days prior to the Closing Date; and

(vii)            an amount equal to the aggregate Option Payments with respect to each Vested Company Option to an account or accounts designated by the Company (for distribution to holders of such Vested Company Options) at least two (2) Business Days prior to the Closing Date and the Company (or the Surviving Corporation) shall promptly pay or cause to be paid to each holder of such Vested Company Options the applicable Option Payment through the Company’s payroll or, in the case of any non-U.S. holder of Vested Company

 

Options, either through the applicable Group Company’s payroll or through such other means customary for such jurisdiction (but in any event in accordance with Applicable Law) and subject to the delivery of any tax forms (including the delivery of an applicable Tax form to the extent required by Applicable Law and to the extent that such non‑U.S. holder has not already provided an applicable Tax form to the Company).

No later than five (5) Business Days prior to the Closing, the Representative shall deliver to Parent a statement setting forth that the aggregate amount required to be paid by Parent (or its Affiliate) pursuant to each of clauses (v), (vi) and (vii) of this Section 2.9(a) (the “Seller Proceeds”) and the Option Payment payable to each holder of Vested Company Options.  Notwithstanding anything to the contrary herein, (I) Parent and the Surviving Corporation shall be entitled to rely on such statement and the information provided therein by the Representative in all respects without any further inquiry by Parent, (II) upon the payment of the Seller Proceeds by Parent (or its Affiliate) pursuant to clauses (v), (vi) and (vii) of this Section 2.9(a) in the amounts set forth on such statement, neither Parent nor the Surviving Corporation shall have any further obligation or liability with respect to (1) the payment of the Purchase Price to the Sellers or the Representative (other than in respect of any adjustment to the Purchase Price required pursuant to Section 2.9(b) or the payment by the Company of the Option Payments pursuant to Section 2.9(a)(vii) or any payments pursuant to Section 2.9(c) or Section 8.1(a)(v)), or (2) the failure of the Representative to distribute the Seller Proceeds to the holders of Company Common Shares and the holders of Company Preferred Shares, (III) in no event shall the Representative distribute any portion of the Purchase Price (including any payment pursuant to Section 2.9(c)) to any holder of Company Common Shares or holder of Company Preferred Shares who has not submitted a fully executed Letter of Transmittal and all supporting documents required to be submitted pursuant to the terms thereof (including stock certificates or affidavits of loss in lieu thereof), and (IV) in no event shall the aggregate amount of proceeds payable pursuant to this Section 2.9(a) exceed the amount of the Estimated Purchase Price.

(b)            Determination of Final Purchase Price.

(i)            As soon as practicable, but no later than 60 days after the Closing Date, Parent shall prepare and deliver to the Representative, Parent’s good faith proposed calculations (which calculations shall collectively be referred to herein as the “Proposed Closing Date Calculations”) of each of (A) the Net Working Capital, (B) the amount of Cash and Cash Equivalents, (C) the amount of Closing Date Funded Indebtedness, (D) the amount of Unpaid Transaction Expenses and (E) the Purchase Price, in each case, including reasonably detailed calculations of the components thereof and in a manner consistent with the definitions thereof.  Parent agrees to prepare the Proposed Closing Date Calculations in a manner consistent with the Accounting Principles. If Parent fails to deliver the Proposed Closing Date Calculations within such 60 day period, then, at the election of the Representative in its sole discretion, the Actual Adjustment shall be deemed to equal zero; provided, however, that the Representative reserves any and all other rights granted to it in this Agreement.

(ii)            If the Representative does not give written notice of any dispute (a “Purchase Price Dispute Notice”) to Parent within 30 days of receiving the Proposed Closing Date Calculations, the parties hereto agree that the Proposed Closing Date Calculations shall be deemed to set forth the final Net Working Capital, Cash and Cash Equivalents, Closing

 

Date Funded Indebtedness, Unpaid Transaction Expenses and the Purchase Price, in each case, for purposes of determining the Actual Adjustment.  Prior to the end of such 30‑day period, the Representative may accept the Proposed Closing Date Calculations by delivering written notice to that effect to Parent, in which case the Purchase Price will be finally determined when such notice is given.  If the Representative gives a Purchase Price Dispute Notice to Parent within such 30‑day period, Parent and the Representative shall use commercially reasonable efforts to resolve the disputes during the 30‑day period commencing on the date Parent receives the Purchase Price Dispute Notice from the Representative.  If the Representative and Parent do not agree upon a final resolution with respect to any disputed items within such 30‑day period, then the remaining items in dispute shall be submitted promptly to Deloitte, or, if such firm declines to be retained to resolve the dispute, another nationally‑recognized, independent accounting firm reasonably acceptable to Parent and the Representative (in either case, the “Accounting Firm”), Any item not specifically submitted to the Accounting Firm for evaluation shall be deemed final and binding on Parent and Representative (as set forth in the Proposed Closing Date Calculations, the Purchase Price Dispute Notice or as otherwise resolved in writing by Parent and the Representative).  The Accounting Firm shall be requested to render a determination of each disputed item within 30 days after referral of the matter to such Accounting Firm, which determination, must be in writing and must set forth, in reasonable detail, the basis therefor and must be based solely on (i) the definitions and other applicable provisions of this Agreement, (ii) a single presentation (which presentations shall be limited to the remaining items in dispute set forth in the Proposed Closing Date Calculations and Purchase Price Dispute Notice) submitted by each of Parent and the Representative to the Accounting Firm within 15 days after the engagement thereof (which the Accounting Firm shall forward to Parent or the Representative, as applicable) and (iii) one written response submitted to the Accounting Firm within 10 Business Days after receipt of each such presentation (which the Accounting Firm shall forward to Parent or the Representative, as applicable), and not on independent review, which such determination shall be conclusive and binding on each party to this Agreement absent manifest error.  The terms of appointment and engagement of the Accounting Firm shall be as reasonably agreed upon between the Representative and Parent, and any associated engagement fees shall be initially borne 50% by the Representative and 50% by Parent; provided that such fees shall ultimately be borne by Parent and the Representative in the same proportion as the aggregate amount of the disputed items that is unsuccessfully disputed by each such party (as determined by the Accounting Firm) bears to the total amount of the disputed items submitted to the Accounting Firm.  Except as provided in the preceding sentence, all other costs and expenses incurred by the parties hereto in connection with resolving any dispute hereunder before the Accounting Firm shall be borne by the party incurring such cost and expense.  The Accounting Firm will act as an expert and not as an arbitrator and will address only such items that are in dispute.  The scope of the disputes to be resolved by the Accounting Firm shall be limited to whether such calculation was done in accordance with the terms hereof, the accounting methods, standards, policies, practices, classifications, estimation methodologies, assumptions or procedures used to prepare the Proposed Closing Date Calculations, and whether there were mathematical errors in the calculation of the Proposed Closing Date Calculations, and the Accounting Firm shall not make any other determination.  The Accounting Firm shall resolve each disputed item by choosing a value not in excess of, nor less than, the greatest or lowest value, respectively, set forth in the presentations (and, if applicable, the responses) delivered to the Accounting Firm pursuant to this Section 2.9(b)(ii).  The Proposed Closing Date Calculations

 

 

shall be revised as appropriate to reflect the resolution of any objections thereto pursuant to this Section 2.9(b)(ii) and, as so revised, such Proposed Closing Date Calculations shall be deemed to set forth the final Aggregate Option Exercise Price, Net Working Capital, Cash and Cash Equivalents, Closing Date Funded Indebtedness, Unpaid Transaction Expenses and Purchase Price, in each case, for all purposes hereunder (including the determination of the Actual Adjustment).

(iii)            The Surviving Corporation shall, and shall cause each of its Subsidiaries to, promptly make its financial records and personnel available to the Representative and its accountants and other representatives at reasonable times upon reasonable advance notice during the review by the Representative of, and the resolution of any objections with respect to, the Proposed Closing Date Calculations.

(iv)            The parties hereto agree that the procedures set forth in this Section 2.9(b) for resolving disputes with respect to the Proposed Closing Date Calculations shall be the sole and exclusive method for resolving any such disputes; provided, that this provision shall not prohibit Parent or the Representative from instituting litigation to enforce any final determination of the Purchase Price by the Accounting Firm pursuant to Section 2.9(b)(ii), or to compel any party to this Agreement to submit any dispute arising in connection with this Section 2.9 to the Accounting Firm pursuant to and in accordance with the terms and conditions of this Section 2.9, in any court or other tribunal of competent jurisdiction in accordance with Section 9.17.  The substance of the Accounting Firm’s determination shall not be subject to review or appeal, absent a showing of fraud or manifest error.  It is the intent of the parties to this Agreement to have any final determination of the Purchase Price by the Accounting Firm proceed in an expeditious manner; provided, however, that any deadline or time period contained herein may be extended or modified by the written agreement of Parent and the Representative and the parties hereto agree that the failure of the Accounting Firm to strictly conform to any deadline or time period contained herein shall not be a basis for seeking to overturn any determination rendered by the Accounting Firm which otherwise conforms to the terms of this Section 2.9(b).

(c)            Adjustment to Estimated Purchase Price.

(i)            If the Actual Adjustment is a positive amount, (x) Parent or the Surviving Corporation shall pay to the Representative the portion of the Actual Adjustment due to the holders of Company Common Shares (based on their aggregate Percentage Interests) (for distribution to such holders based on their relative Percentage Interests) and the remainder of the Actual Adjustment to the Surviving Corporation and/or any other Group Company designated by the Surviving Corporation (for distribution to the holders of Vested Company Options based on their relative Percentage Interests), in each case, in cash by wire transfer of immediately available funds and within three Business Days after the date on which the Purchase Price is finally determined pursuant to this Section 2.9 and (y) simultaneously therewith, Parent and the Representative shall deliver joint written instructions to the Escrow Agent instructing the Escrow Agent to release (A) to the Representative the portion of the funds then remaining in the Escrow Account due to the holders of Company Common Shares (based on their relative Percentage Interests) for distribution to such holders based on their relative Percentage Interests and (B) the remainder of the funds then remaining in the Escrow Account to the Surviving

 

Corporation and/or any other Group Company designated by the Surviving Corporation (for distribution to the holders of Vested Company Options based on their relative Percentage Interests); provided, that in no event shall the aggregate amount paid by Parent and the Surviving Corporation pursuant to Section 2.9(c)(i)(x)  exceed $10,000,000.

(ii)            If the Actual Adjustment is a negative amount, then within three Business Days after the date on which the Purchase Price is finally determined pursuant to this Section 2.9, Parent and the Representative shall deliver joint written instructions to the Escrow Agent instructing the Escrow Agent to deliver to Parent an amount equal to the absolute value of such negative amount out of the Escrow Account; provided that if the absolute value of the Actual Adjustment is less than the Escrow Amount, then simultaneously with the delivery of such joint written instructions, Parent and the Representative shall deliver joint written instructions to the Escrow Agent instructing the Escrow Agent to release (A) to the Representative the portion of the excess funds in the Escrow Account due to the holders of Company Common Shares (based on their aggregate Percentage Interests) for distribution to such holders of Company Common Shares based on their relative Percentage Interests and (B) the remainder of the excess funds in the Escrow Account to the Surviving Corporation and/or any other Group Company designated by the Surviving Corporation (for distribution to the holders of Vested Company Options based on their relative Percentage Interests), in each case, by wire transfer of immediately available funds and within three Business Days after the date on which the Purchase Price is finally determined pursuant to this Section 2.9.

(iii)            With respect to each amount payable in respect of Company Common Shares and Vested Company Options, no later than three (3) Business Days prior to such payment from the Escrow Account to the Representative and the Surviving Corporation (or other Group Company designated by the Surviving Corporation), the Representative shall deliver to Parent a statement setting forth the portions of such payment required to be paid hereunder to the Representative (for distribution to holders of Company Common Stock based on their relative Percentage Interests) and to the Surviving Corporation or any other Group Company designated by the Surviving Corporation (for distribution to the holders of Vested Company Options based on their relative Percentage Interests).  Notwithstanding anything to the contrary herein, (I) Parent, the Surviving Corporation and each Group Company making payments in respect of Company Vested Options shall be entitled to rely on such statement and the information provided therein by the Representative in all respects without any further inquiry and (II) following the payment by Parent (or out of the Escrow Account) of the applicable amounts to the Representative or the Surviving Corporation or any other Group Company designated by the Surviving Corporation so indicated in such statement, making such payment to the Representative or the Surviving Corporation or any other Group Company designated by the Surviving Corporation in accordance with such statement, none of Parent, the Surviving Corporation or any such Group Company shall have any obligation with respect to the distribution of such amounts by the Representative.

(iv)            In the event that, upon the submission of any items in dispute to the Accounting Firm pursuant to Section 2.9(b), the undisputed items would result in a payment out of the Escrow Account to one party, the other, or both, such payment shall be made promptly following such submission, applying the provisions of this Section 2.9(c) mutatis mutandis (including by executing and delivering joint written instructions in respect of such

 

payment to the Escrow Agent), and any such payment will be credited against any payment required to be paid pursuant to this Section 2.9(c).

(v)            For the avoidance of doubt, except for Claims for Actual Fraud against the Person committing such Actual Fraud, the Escrow Amount shall serve as the sole and exclusive source of recovery for any amounts owed to Parent in connection with the final determination of the Purchase Price and Actual Adjustment pursuant to this Section 2.9.

(vi)            Promptly after receipt of the amounts to be paid to the Surviving Corporation pursuant to this Section 2.9(c), if any, the Surviving Corporation shall pay or cause to be paid to each holder of Vested Company Options the applicable portion of such amount (based on their relative Percentage Interests) through the Surviving Corporation’s payroll or, in the case of any non-U.S. holder of Vested Company Options, either through the applicable Group Company’s payroll or through such other means customary for such jurisdiction (but in any event in accordance with Applicable Law) and subject to the delivery of any tax forms (including the delivery of an applicable Tax form, to the extent required by Applicable Law and to the extent that such non‑U.S. holder has not already provided an applicable Tax form to the Company).

(vii)            Notwithstanding anything to the contrary herein, no holder of Company Common Shares or Company Preferred Shares shall be entitled to receive payments pursuant to this Section 2.9(c) until such holder has complied with Section 2.13 (including, for the avoidance of doubt, by delivering a properly completed and duly executed Letter of Transmittal and surrendering its Company Stock Certificates or an affidavit of loss in lieu thereof).

Section 2.10           Option Plans.

(a)            Prior to the Closing, the Company shall take the appropriate actions pursuant to the Option Plan (and the underlying option grant agreements) that are necessary to give effect to the provisions of Section 2.8(d) and Section 2.9(a)(vii) with respect to Vested Company Options.

(b)            The Option Plan and all Company Options shall terminate as of the Effective Time, and no holder of Company Options shall have any rights thereunder, including any rights to acquire any equity securities of the Company, the Surviving Corporation or any Subsidiaries thereof, other than as set forth herein (including pursuant to Section 2.9) or by Applicable Law.

Section 2.11           Additional Actions.  If, at any time before or after the Effective Time, the Surviving Corporation shall consider or be advised that any deeds, bills of sale, assignments, assurances or any other actions or things are reasonably necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Corporation its right, title or interest in, to or under any of the rights, properties or assets of Merger Sub or the Company or otherwise to carry out this Agreement, the officers of the Surviving Corporation shall be authorized to execute and deliver, in the name and on

 

behalf of Merger Sub or the Company, all such deeds, bills of sale, assignments and assurances and to take and do, in the name and on behalf of Merger Sub or the Company, all such other actions and things as may be reasonably necessary or desirable to vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties or assets in the Surviving Corporation or otherwise to carry out this Agreement.

Section 2.12           Closing of the Company’s Transfer Books. At the Effective Time, the stock transfer books of the Company shall be closed with respect to all Company Common Shares outstanding immediately prior to the Effective Time.  No further transfer of any such shares of Company Common Shares shall be made on such stock transfer books after the Effective Time.  If, after the Effective Time, a valid certificate previously representing any of such Company Common Shares or Company Preferred Shares (a “Company Stock Certificate”) is presented to the Surviving Corporation or Parent, such Company Stock Certificate shall be canceled and, if applicable, shall be exchanged as provided in Section 2.13.

Section 2.13           Surrender of Certificates.

(a)            The Company will mail or cause to be mailed prior to the Closing: to each holder of Company Common Shares, a letter of transmittal in the form attached hereto as Exhibit C-1 and to each holder of Company Preferred Shares, a letter of transmittal substantially in the form attached hereto as Exhibit C-2, (collectively, the “Letter of Transmittal”), which shall specify that delivery shall be effected only upon proper surrender of the Company Stock Certificates together with such Letter of Transmittal properly completed and duly executed to the Representative and the Company, and instructions for use in surrendering such Company Stock Certificates and receiving the consideration described in Section 2.9(a)(v) and Section 2.9(a)(vi), as applicable (subject to adjustment in accordance with Sections ‎Section 2.9(c) and Section 8.1(a)(iii)) in respect of the Company Common Shares and/or Company Preferred Share evidenced thereby.  Until so surrendered, each such Company Stock Certificates shall represent solely the right to receive at the Effective Time the consideration described in Section 2.9(a)(v) and Section 2.9(a)(vi), as applicable (subject to adjustment in accordance with Section 2.9(c) and Section 8.1(a)(iii)) relating to the Company Common Shares and/or Company Preferred Shares represented thereby; provided, that notwithstanding anything to the contrary in this Agreement, except as may be required pursuant to Applicable Law, no payments shall be made hereunder to any holder of the Company Common Shares or Company Preferred Shares unless and until such Person has complied with this Section 2.13 (including, for the avoidance of doubt, the delivery by such holder of a properly completed and duly executed Letter of Transmittal and the surrendering of such holder’s Company Stock Certificates or an affidavit of loss in lieu thereof).  Any Letter of Transmittal or Company Stock Certificate received prior to Closing shall be deemed effective immediately following the Effective Time.  Any amounts otherwise payable to any such Person who has not complied with this Section 2.13 (including any amounts that may become payable in accordance with ‎Section 2.9(c) and Section 8.1(a)(iii) hereof) shall instead be retained by, or distributed to, the Representative for payment to such Person following compliance with this Section 2.13.

(b)            If any Company Stock Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of, and agreeing to indemnify Parent and the Representative with respect to, that fact by the person claiming such Company Stock Certificate to be lost, stolen or

 

destroyed, the Representative shall pay in exchange for such lost, stolen or destroyed Company Stock Certificate the payment deliverable in respect thereof determined in accordance with this ARTICLE II.

Section 2.14           Treatment of Dissenting Shares.  Notwithstanding anything in this Agreement to the contrary, a holder of Company Common Shares who is entitled to demand and has validly and properly demanded appraisal of such shares in writing pursuant to, and who has complied in all respects with, the provisions of Section 262 of the DGCL (any such shares being referred to as “Dissenting Shares” until such time as such holder fails to perfect or otherwise loses such holder’s appraisal rights under the DGCL with respect to such shares) shall not have such shares converted into, or have the right to receive, the applicable Per Share Common Payment and a portion (if any) of the Escrow Funds and the Representative Expense Amount as provided herein, but instead such holder shall be entitled to such rights (and only such rights) as are granted under Section 262 of the DGCL, unless and until such holder withdraws (in accordance with Section 262(k) of the DGCL) or effectively loses the right to dissent.  If any holder of Dissenting Shares shall have effectively withdrawn (in accordance with Section 262(k) of the DGCL), lost the right to dissent or a court of competent jurisdiction shall have determined that such holder is not entitled to the relief provided by Section 262 of the DGCL, then as of the later of the Effective Time or the occurrence of such event, the Dissenting Shares held by such holder shall be automatically cancelled and converted into and represent only the right to receive the applicable Per Share Common Payment and a portion (if any) of the Escrow Funds and the Representative Expense Amount as provided herein pursuant to Section 2.8 (without, in each case, any interest thereon) and Parent shall promptly deposit any amounts then owed to such holder with the Representative for distribution to such holder.

Except as disclosed in (a) any Company SEC Reports or any IDQ Noteholder Reports (but excluding any disclosures contained under the heading “Risk Factors” or any disclosure of risk included in any “forward-looking statements” disclaimer or that are predictive or cautionary in nature) or (b) subject to Section 9.7, the Schedules, the Company hereby represents and warrants to Parent and Merger Sub, as of the date hereof and as of the Closing Date, as follows:

Section 3.1              Organization and Qualification.

(a)            The Company is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware.  Each other Group Company is a corporation, limited liability company or other business entity, as the case may be, duly organized, validly existing and in good standing (or the equivalent thereof, if applicable) under the laws of its respective jurisdiction of formation or organization (as applicable), except where the failure to be in good standing (or the equivalent thereof) would not have a Company Material Adverse Effect.  Each Group Company has the requisite corporate, limited partnership or other applicable power and authority to own, lease and operate its material assets and properties and to carry on its businesses as presently conducted.

 

(b)            Each Group Company is duly qualified or licensed to transact business and is in good standing (if applicable) in each jurisdiction in which the property and assets owned, leased or operated by it, or the nature of the business conducted by it, makes such qualification or licensing necessary, except in such jurisdictions where the failure to be so duly qualified or licensed and in good standing would not reasonably be expected to have a Company Material Adverse Effect.

Section 3.2              Capitalization of the Group Companies.

(a)            As of the date of this Agreement, the authorized capital stock of the Company consists of: (i) 400,000,000 shares of Company Common Shares, 288,384,891 of which are issued and outstanding, and (ii) 200,000,000 shares of Company Preferred Shares, 67,312 of which are issued and outstanding.  All of the issued and outstanding Company Common Shares and Company Preferred Shares are duly authorized, validly issued, fully paid and non-assessable.  Except as set forth on Schedule 3.2 or in the first sentence of this Section 3.2(a), as of the date of this Agreement, there are no outstanding or authorized (x) equity securities of the Company, (y) securities of the Company convertible into or exchangeable for equity securities of the Company, or (z) options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, convertible or exchangeable securities or other Contracts or rights (contingent or otherwise) that entitle any Person to acquire any of the foregoing from the Company. Except as set forth on Schedule 3.2, as of the date of this Agreement, the Company has no obligations to issue any equity securities or securities convertible into or exchangeable for equity securities of the Company, and no Group Company has any commitment to issue any of the foregoing or to distribute to holders of any of its capital stock or interests, any evidence of Funded Indebtedness or asset. There are no authorized or outstanding equity appreciation, phantom equity, profit participation or similar rights with respect to any Group Company.  Other than the Stockholders Agreement, no Group Company is a party to, and to the Company’s Knowledge, there are no, voting trusts, proxies, or other agreements or understandings with respect to the voting or transfer of any equity interests in any Group Company.  No Group Company has any obligation to repurchase, redeem or otherwise acquire any equity securities or interests of any Group Company.  No holder of Funded Indebtedness has the right to vote on any matters of any Group Company (or convert into, exchange for, subscribe for or acquire, any capital stock or equity securities of any Group Company or any interests having the right to vote on any matter relating to any Group Company).

(b)            Except as set forth on Schedule 3.2, no Group Company directly or indirectly owns any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for, at any time, any equity or similar interest in, any Person.  Schedule 3.2 sets forth the name, owner, jurisdiction of formation or organization (as applicable) and percentages of outstanding equity securities owned, directly or indirectly, by each Group Company, with respect to each Person of which such Group Company owns directly or indirectly, any equity or equity related securities.  Except as set forth on Schedule 3.2 or as set forth in its Governing Documents, all outstanding equity securities of each Group Company (except to the extent such concepts are not applicable under the Applicable Law of such Subsidiary’s jurisdiction of formation or other Applicable Law) have been duly authorized, validly issued, and, to the extent applicable to such Subsidiary in its jurisdiction of formation or incorporation, are fully paid and are non-assessable and free and clear of any preemptive rights, call rights, put rights, rights of

 

first refusal or similar rights (except to the extent provided by Applicable Law and other than such rights as may be held by any Group Company), restrictions on transfer (other than restrictions under applicable federal, state and other securities laws), or Liens (other than Permitted Liens) and are owned, beneficially and of record, by another Group Company.  Except as set forth on Schedule 3.2, there are no outstanding (i) equity securities of any Group Company not held by a Group Company, (ii) securities of any Group Company convertible into or exchangeable for, at any time, equity securities of any Group Company or (iii) options or other rights to acquire from any Group Company, and no obligation of any Group Company to issue, any equity securities or securities convertible into or exchangeable for equity securities of any Group Company.

Section 3.3             Authority.  The Company has the requisite corporate power and authority to execute and deliver this Agreement and each other agreement, document, instrument and/or certificate contemplated by this Agreement to be executed in connection with the Transactions (the “Ancillary Documents”) and, subject to receiving the Requisite Stockholder Approval, to consummate the Transactions.  Subject to receipt of the Requisite Stockholder Approval, the execution and delivery of this Agreement and the consummation of the Transactions have been duly authorized by all necessary corporate action on the part of the Company.  This Agreement has been (and the execution and delivery of each of the Ancillary Documents to which the Company will be a party will be) duly executed and delivered by the Company and constitute a valid, legal and binding agreement of the Company (assuming that this Agreement has been and the Ancillary Documents to which the Company is a party will be duly and validly authorized, executed and delivered by the other Persons party thereto), enforceable against the Company in accordance with their terms, except (a) to the extent that enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other Applicable Laws affecting the enforcement of creditors’ rights generally and (b) that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding thereof may be brought. The Company Board has unanimously (i) determined that it is advisable and in the best interests of the stockholders of the Company to enter into this Agreement and to consummate the Transactions upon the terms and subject to the conditions set forth herein, (ii) approved this Agreement and the Transactions, (iii) resolved to submit this Agreement to the stockholders of the Company for adoption and (iv) recommended to the stockholders of the Company that they adopt this Agreement.

Section 3.4              Financial Statements; Aggregate Liquidation Preference.

(a)            Attached hereto as Schedule 3.4 are true and complete copies of the following financial statements (such financial statements, the “Financial Statements”):

(i)            the audited consolidated balance sheet of the Company and its consolidated Subsidiaries as of December 31, 2013 and December 31, 2014 and the related audited consolidated statements of income, cash flows and stockholders’ equity of the Company and its consolidated Subsidiaries for each of the years ended December 31, 2012, December 31, 2013 and December 31, 2014;

(ii)            the audited consolidated balance sheet of Armored AutoGroup Inc. and its consolidated Subsidiaries as of December 31, 2014 and the related

 

audited consolidated statements of income, cash flows and stockholders’ equity for each fiscal year of Armored AutoGroup Inc. and its consolidated Subsidiaries then ended;

(iii)            the audited consolidated balance sheet of IDQ Holdings, Inc. and its consolidated Subsidiaries as of December 31, 2014 and the related audited consolidated statements of income, cash flows and stockholders’ equity for each fiscal year of IDQ Holdings, Inc. and its consolidated Subsidiaries then ended (the financial statements in (i), (ii) and (iii), collectively, the “Audited Financial Statements”); and

(iv)            the unaudited consolidated balance sheet and statement of profit and loss of (1) Armored AutoGroup Inc. and its consolidated Subsidiaries as of February 28, 2015 and (2) IDQ Holdings, Inc. and its consolidated Subsidiaries as of February 28, 2015 (collectively, the “Latest Financial Statements”).

(b)            Except as set forth on Schedule 3.4, (i) the Audited Financial Statements have been prepared in all material respects in accordance with GAAP applied on a consistent basis throughout the periods covered thereby, except as may be indicated in the notes thereto, (ii) the Audited Financial Statements fairly present, in all material respects, the consolidated financial position of the Group Companies as of the dates thereof and their consolidated results of operations for the periods then ended, (iii) the Latest Financial Statements fairly present, in all material respects, the consolidated financial position of the Group Companies as of the dates thereof and their consolidated results of operations for the periods then ended (subject to the absence of footnotes and normal year‑end adjustments) and (iv) the Financial Statements referred to in clause (a)(i) of this Section 3.4 are compliant in all material respects with the requirements of Rule 3-05 of Regulation S-X under the Securities Act (as applicable to financial statements of non-public entities).

Section 3.5              SEC and Other Reports.

(a)            Armored AutoGroup Inc. has filed all forms, reports, registrations, statements, certifications and other documents required to be filed by it with, or furnished by the Company to, the SEC for all periods beginning on or after January 1, 2013 (the “Company SEC Reports”).  The Company SEC Reports were prepared and comply in all material respects in accordance with the applicable requirements of the Exchange Act and the Securities Act, and did not, as of their respective dates (or, if amended, as of the date of such amendment), contain any untrue statement of a material fact or omit to state a material fact required to be stated or incorporated by reference therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. There are no outstanding or unresolved written comments from the SEC staff with respect to any of the Company SEC Reports.  To the Knowledge of the Company, none of the Company SEC Reports is the subject of ongoing SEC review, outstanding SEC comment or outstanding SEC investigation.

(b)            Each of IDQ Holdings, Inc. and IDQ Acquisition Corp. has furnished all material forms, reports, registrations, statements, certifications and other documents

 

required to be furnished by it to the trustee and the holders of the notes under each of the Indentures to which such Person is a party and has satisfied all other material reporting obligations incumbent upon it under each such Indenture, in each case since March 17, 2014 (the “IDQ Noteholder Reports”).  The IDQ Noteholder Reports were prepared in accordance with and complied in all material respects with the requirements of the applicable Indenture, and did not, as of their respective dates (or, if amended, as of the date of such amendment), contain any untrue statement of a material fact or omit to state a material fact required to be stated or incorporated by reference therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

Section 3.6              Consents and Approvals; No Violations.  Except as set forth on Schedule 3.6, assuming the truth and accuracy of the representations and warranties of Parent and Merger Sub set forth in Section 4.3, no notices to, filings with, or authorizations, consents or approvals of any Governmental Entity are necessary for the execution, delivery or performance by any Group Company of this Agreement or the Ancillary Documents to which such Group Company is a party or the consummation by the Company of the Transactions, except for (a) compliance with and filings under the HSR Act, (b) the filing of the Certificate of Merger and (c) those that may be required solely by reason of Parent’s or Merger Sub’s (as opposed to any other third party’s) participation in the Transactions.  Neither the execution, delivery or performance by the Company of this Agreement or the Ancillary Documents to which the Company is a party nor the consummation by the Company of the Transactions will (i) conflict with or result in any breach of any provision of any Group Company’s Governing Documents, (ii) except as set forth on Schedule 3.6, result in a material violation or breach of, or constitute (with or without due notice or lapse of time or both) a default or give rise to any right of termination, cancellation or acceleration under, any of the terms, conditions or provisions of any Material Contract, Real Property Lease or Material Permit, (iii) violate any order, writ, injunction, decree, Applicable Law, statute, rule or regulation of any Governmental Entity having jurisdiction over any Group Company or any of their respective properties or assets or (iv) except as contemplated by this Agreement or with respect to Permitted Liens, result in the creation of any Lien upon any of the assets of any Group Company, which in the case of clause (iii) above, would reasonably be expected to have a Company Material Adverse Effect.

Section 3.7              Material Contracts.

(a)            Except for this Agreement and for any Real Property Lease, Schedule 3.7(a) sets forth each of the following types of Contracts to which any Group Company is a party or by which any Group Company is bound as of the date hereof (each, a “Material Contract”) (provided, that for purposes of disclosure on Schedule 3.7(a), each threshold of $100,000 below shall be deemed to be $500,000):

(i)            Contract for the employment of any officer, employee or other person on a full‑time, part-time, consulting or other basis providing total annual compensation in excess of $250,000 (other than any “at will” Contract that may be terminated by any Group Company upon 30 days or less advance notice and does not impose any penalty or severance obligations upon a Group Company upon termination);

 

 

(ii)          Contract under which any Group Company has made advances or loans to any other Person (other than (A) any such Contract involving advances made to an employee of the Group Companies in the ordinary course of business and (B) any such Contract between or among one or more members of the Group Companies, on the one hand, and one or more other members of the Group Companies, on the other hand);

(iii)         Contract containing a covenant granted by any Group Company in favor of a third party not to compete or engage in any line of business or conduct business in any geographic area that would be reasonably likely to materially restrain the business of any Group Company;

(iv)        Contract limiting the freedom of any Group Company to solicit for employment or hire any individual, which limitation materially impairs the business of the Group Companies, taken as a whole, as currently conducted;

(v)          Contract required to be disclosed pursuant to Section 3.7(a)(xi) that contains any “most‑favored nations”, exclusivity or similar right or undertaking in favor of any party other than a Group Company;

(vi)        Contract or indenture (including any guarantee) relating to Funded Indebtedness except for Funded Indebtedness for an amount less than $100,000;

(vii)       Contract under which any Group Company is lessee of or holds or operates any tangible property (other than real property), owned by any other Person, except for any Contract under which the aggregate annual rental payments do not exceed $100,000;

(viii)      Contract under which any Group Company is lessor of or permits any third party to hold or operate any tangible property (other than real property), owned or controlled by the Company, except for any Contract under which the aggregate annual rental payments do not exceed $100,000;

(ix)          material Contract pursuant to which any Group Company is granted a license to use any Intellectual Property Rights, or grants any other Person a right to use any Group Company IP Rights (excluding (A) licenses for shrink-wrap, click-wrap or off-the-shelf software, or other generally commercially available software on non-discriminatory terms and (B) non‑disclosure agreements);

(x)           material partnership or strategic alliance agreements and material joint venture agreements relating to the Group Companies;

(xi)          Contract with the top 20 customers of the Group Companies based on revenue during the twelve‑month period ending December 31, 2014 (excluding any purchase or sale orders entered into in the ordinary course of business);

(xii)        Contract with the top 20 vendors of the Group Companies based on the expenditures made during the twelve‑month period ending December 31, 2014 (excluding any purchase or sale orders entered into in the ordinary course of business);

 

(xiii)       Contract with distributors and sales agents that are material to the business of the Group Companies;

(xiv)      Contract that is with any Governmental Entity for the sale of products in excess of $100,000 in revenue for the fiscal year ended December 31, 2014;

(xv)        collective bargaining agreement;

(xvi)      Contract that relates to any future disposition or acquisition of material assets or properties by any Group Company, or any merger or business combination with respect to any Group Company, other than in the ordinary course of business;

(xvii)    Contract to make capital expenditures in excess of $100,000 for which any Group Company shall have continuing Liabilities after the Closing Date;

(xviii)   Contract that requires a Group Company to purchase its total requirement of any material product or service from a third party or that contains “take or pay” provisions with a vendor of the Group Companies referenced in Section 3.7(a)(xii);

(xix)       settlement or compromise of any litigation or other material Claim to which any Group Company is or was a party (A) under which the Group Company will have any Liability after the Closing Date in excess of $250,000 or (B) which imposes material non-monetary obligations;

(xx)         Contract relating to the group provision of or purchase of services for Employee Benefit Plans; or

(xxi)       Contract that relates to any completed disposition or acquisition of material assets or properties by any Group Company, or any merger or business combination with respect to any Group Company since January 1, 2011, other than sales of inventory in the ordinary course of business.

(b)            Except as set forth on Schedule 3.7(b), each Material Contract is a valid, legal and binding agreement of the applicable Group Company and (assuming that such Material Contract was duly and validly authorized, executed and delivered by the other Persons party thereto) enforceable against the applicable Group Company and, to the Company’s Knowledge, each other party thereto, in accordance with its terms, except (i) to the extent that enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other Applicable Laws affecting the enforcement of creditors’ rights generally and (ii) that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding thereof may be brought.  Each Group Company has performed in all material respects all obligations required to be performed by it under the Material Contracts to which it is a party and is not (with or without the lapse of time or the giving of notice, or both) in material breach of or material default thereunder and, to the Knowledge of the Company, no other party to any Material Contract is in breach of or default thereunder in any respect that is or would reasonably be expected to be, individually or in the aggregate, material to the business of the Group Companies.  The Company has made available to the Parent a true and complete copy of each Material Contract.

 

Section 3.8              Customers and Suppliers.  Schedule 3.8 sets forth a true and complete list, for the twelve-month period ending December 31, 2014, of the 10 largest customers of goods and services of the Group Companies (based on revenue during such twelve-month period) and the 10 largest suppliers of goods and services to the Group Companies (based on the expenditures made during such twelve-month period).  Except as set forth on Schedule 3.8, as of the date hereof, no Person set forth on Schedule 3.8 has provided written notice to a Group Company that such Person is cancelling or otherwise terminating the relationship of such Person with the Company or any of its Subsidiaries.

Section 3.9              Absence of Changes.  Except as set forth on Schedule 3.9, during the period beginning on the date of the Latest Financial Statement and ending on the date hereof, (i) there has not been any event, change, occurrence or circumstance that has had, or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (ii) other than in connection with the Transactions, each Group Company has conducted its business in all material respects in the ordinary course consistent with past practices and (iii) no Group Company has taken any action which, if taken after the date hereof, would require the consent of Parent pursuant to Section 5.1(b)(i), (ii), (iii), (vi), (vii), (xvii), (xx) and (xxi).

Section 3.10           Litigation.  Except as set forth on Schedule 3.10, there is no Claim or series of related Claims pending or, to the Company’s Knowledge, threatened in writing or under investigation against (a) any Group Company which would reasonably be expected to result in Liability to a Group Company in excess of $250,000 or the imposition of material equitable remedies on any Group Company or (b) to the Company’s Knowledge, any director, officer or employee of a Group Company in connection with such director’s, officer’s or employee’s relationship with a Group Company.  Except as set forth on Schedule 3.10, no Group Company is subject to any outstanding order, writ, injunction or decree that has had or would reasonably be expected to have a Company Material Adverse Effect.

Section 3.11           No Undisclosed Liability.  No Group Company has any material Liability of any nature required to be disclosed or reserved against on a balance sheet in accordance with GAAP, other than (a) Liabilities set forth in the Latest Financial Statement, (b) Liabilities incurred in the ordinary course of business after the date of the Latest Financial Statement or (c) Liabilities incurred in connection with the Transactions.  No Group Company maintains any “off-balance sheet” arrangement within the meaning of Item 303 of Regulation S-K of the SEC.

Section 3.12           Compliance with Applicable Law.  The Group Companies hold all permits, licenses, approvals, certificates and other authorizations of and from all, and have made all declarations and filings with, Governmental Entities necessary for the lawful conduct of their respective businesses as presently conducted, other than any such permits, licenses, approvals, certificates and authorizations which, if not held by the Group Companies, would not reasonably be expected to have a Company Material Adverse Effect (each, a “Material Permit”).  The business of the Group Companies is, and has been since the date that is four (4) years prior to the date of this Agreement, operated in compliance

 

in all material respects with all Applicable Laws and Material Permits. Except as set forth on Schedule 3.12, since the date that is four (4) years prior to the date hereof, no Group Company has received any written notice from a Governmental Entity that alleges that the business of the Group Companies is not in compliance in any material respect with any Applicable Law or Material Permit. This Section 3.12 does not relate to employee plan matters (which is the subject of Section 3.13), environmental matters (which is the subject of Section 3.14), labor and employment matters (which is the subject of Section 3.16) or Tax matters (which is the subject of Section 3.18).

Section 3.13           Employee Plans.

(a)            Schedule 3.13(a) lists all Employee Benefit Plans.  For each Employee Benefit Plan, to the extent applicable, true, complete and correct copies of the following have been made available in all material respects to Parent: (i) each current Employee Benefit Plan document, current related insurance Contract and trust, including all amendments to each, and a written summary of any material Employee Benefit Plan not in writing; (ii) the most recent determination or opinion letter received from the Internal Revenue Service; (iii) the most recent summary plan description and all summaries of material modifications thereto; (iv) the most recent annual reports Form 5500 series, including all schedules, financial statements, and actuarial reports; and (v) for each option under the Option Plan that is currently outstanding, a list of holders, dates of grant, number of shares, exercise price per share, shares vested and dates exercisable.

(b)            Except as set forth on Schedule 3.13(b), no Group Company has any obligation to contribute to a Multiemployer Plan or a plan that is subject to Title IV of ERISA, and no Employee Benefit Plan provides post-termination health or other welfare benefits to current or former employees of any Group Company other than health continuation coverage mandated under COBRA. No Employee Benefit Plan is, and no Group Company has any obligation to contribute to: (i) a “multiple employer welfare plan” or a “multiple employer welfare arrangement” within the meaning of Section 514(b)(6) or 3(40) of ERISA, or (ii) a “welfare benefit fund” within the meaning of Section 419(e) of the Code.  Except as set forth on Schedule 3.13(b), no Group Company has incurred or expects to incur any withdrawal Liability (either as a contributing employer or as part of a controlled group which includes a contributing employer) to any Multiemployer Plan, in connection with any complete or partial withdrawal as a result of the transactions contemplated under this Agreement or otherwise.

(c)            Except as set forth on Schedule 3.13(c): (i) each Employee Benefit Plan and each Foreign Benefit Plan has been administered in all material respects in accordance with its terms and complies in all material respects with the applicable requirements of ERISA, the Code, COBRA and any other Applicable Laws and (ii) each Employee Benefit Plan intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service or is the subject of a favorable opinion letter from the Internal Revenue Service on the form of such Employee Benefit Plan and, to the Company’s Knowledge, there are no facts or circumstances that would be reasonably likely to materially adversely affect the qualified status of any such Employee Benefit Plan.  All required reports and descriptions of the Employee Benefit Plans have been timely filed and distributed in all material respects.

(d)            Except as set forth on Schedule 3.13(d), no Group Company has any material Liability under Title IV of ERISA nor, is any material Liability under Title IV of ERISA reasonably expected to be incurred by any Group Company, including on account of any ERISA Affiliate.  All material contributions required to be made by any Group Company under

 

Applicable Law or the terms of any Employee Benefit Plan, Multiemployer Plan, Foreign Benefit Plan or the plan of a Governmental Entity, or collective bargaining agreement as of the Closing Date, have been made in full or properly accrued as of such date.

(e)            No Group Company has engaged in any transaction with respect to any Employee Benefit Plan, Multiemployer Plan or Foreign Benefit Plan, that would reasonably be expected to subject any Group Company to any material Tax or penalty (civil or otherwise) imposed by ERISA, the Code or other Applicable Law.  To the Company’s Knowledge, no “fiduciary” within the meaning of Section 3(21) of ERISA has committed any breach of fiduciary responsibility imposed by ERISA or other similar Applicable Law with respect to any Employee Benefit Plan, Multiemployer Plan, Foreign Benefit Plan or otherwise that would result in material Liability to a Group Company.  Other than claims and appeals for benefits in the ordinary course, there is no pending, or to the Company’s Knowledge, threatened or anticipated action, suit, grievance, investigation, arbitration, litigation or claim with respect to any Employee Benefit Plan, Multiemployer Plan, Foreign Benefit Plan, or any assets of any thereof, and there is no pending audit or investigation of any Employee Benefit Plan, Multiemployer Plan or Foreign Benefit Plan, by any Governmental Entity, in each case, that would result in material Liability to a Group Company.

(f)            The consummation of the Transactions will not give rise to any Liability under any Employee Benefit Plan, Multiemployer Plan, Foreign Benefit Plan or otherwise, including Liability for severance pay, unemployment compensation, termination pay or withdrawal Liability, or accelerate the time of payment or vesting or increase the amount of compensation or benefits due to any employee, officer, director, stockholder or other service provider of any Group Company (whether current, former or retired) or their beneficiaries.  Except as set forth on Schedule 3.13(f), no amount received (whether in cash or property or the vesting of property), as a result of the consummation of the Transactions, by any employee, officer, director, stockholder or other service provider of any Group Company under any Employee Benefit Plan or otherwise would not be deductible by reason of Section 280G of the Code.  No Group Company has an obligation to gross-up, indemnify or otherwise reimburse any current or former employee, officer, director or other service provider of the Group Company on or after the Effective Time for any Tax incurred by such individual or entity under Section 409A or 4999 of the Code.  The parties acknowledge that this Section 3.13(f) shall not apply to any arrangements entered into at the direction of Parent or between Parent and its Affiliates, on the one hand, and a disqualified individual on the other hand (“Buyer Arrangements”) so that, for the avoidance of doubt, compliance with this Section 3.13(f) shall be determined as if such Buyer Arrangements had not been entered into.

(g)            Each Employee Benefit Plan that is a “nonqualified deferred compensation plan” (as defined in Section 409A(d)(1) of the Code) satisfies in form and operation the requirements of Sections 409A(a)(2), 409A(a)(3) and 409A(a)(4) of the Code and the guidance thereunder in all material respects.

Section 3.14           Environmental Matters.

(a)            Except as set forth on Schedule 3.14:

 

(i)            Each of the Group Companies are, and since the date that is four (4) years prior to the date hereof, have been, in compliance with all applicable Environmental Laws, except for any such noncompliance as would not reasonably be expected to have a Company Material Adverse Effect;

(ii)           Without limiting the generality of the foregoing, the Group Companies have obtained and are in compliance with all Permits, licenses and other authorizations that are required by applicable Environmental Laws for their operations as currently conducted, except for any failures to so obtain or comply as would not reasonably be expected to have a Company Material Adverse Effect;

(iii)          The Group Companies have not retained or assumed, or provided any indemnification or guarantee with respect to, either contractually or by operation of law, any Liability or Contract of any other Person relating to any environmental matter, including but not limited to, any Environmental Claim related to (i) a Group Company; (ii) the Real Property; (iii) any previously leased or owned real property; or (iv) any other real property; except, in each case, as would not reasonably be expected to have a Company Material Adverse Effect.

(iv)         No Group Company has received any unresolved written notice of an Environmental Claim, or relating to compliance with or Liability (including any investigatory, corrective or Remedial Action obligation) under, any applicable Environmental Laws; except in each of the foregoing cases for any such notice the subject matter of which would not reasonably be expected to have a Company Material Adverse Effect; and

(v)           With respect to its business, no Group Company has treated, stored, disposed of, arranged for or permitted the disposal of, transported, handled, allowed a Release of, or exposed any Person to any Hazardous Material, and none of the Real Property is contaminated by any Hazardous Material, except, in each case, as would not reasonably be expected to have a Company Material Adverse Effect.

(b)            The Group Companies have made available to Parent all material environmental audits, environmental assessments, environmental investigation reports, and environmental sampling in the possession or control of the Group Companies, in each case, materially bearing on environmental, health or safety Liabilities relating to (i) the Group Companies or (ii) the Real Property.

(c)            This Section 3.14 contains the sole and exclusive representations and warranties of the Company with respect to any environmental matters, including matters relating or subject to Environmental Laws.

Section 3.15           Intellectual Property.

(a)            Except as set forth on Schedule 3.15(a), the Group Companies own, license or otherwise have the right to use, free and clear of all Liens except for Permitted Liens, the Intellectual Property Rights which are used in, held for use in, or necessary for the conduct of the business of the Group Companies (collectively, the “Group Company IP Rights”).  Except as would not reasonably be expected to have a Company Material Adverse Effect, upon

 

the Closing, the Group Companies will continue to have the right to use all Group Company IP Rights on substantially similar terms and conditions as the Group Companies enjoyed immediately prior to the Closing.

(b)            Schedule 3.15(b) sets forth a true and complete list, as of the date hereof, of (i) all U.S. federal and non-U.S. issued patents, trademark registrations, copyright registrations, Internet domain name registrations and social media account identifiers owned by or registered to a Group Company and (ii) all U.S. federal and non-U.S. patent applications, trademark applications, and copyright applications owned by a Group Company (collectively, “Registered Group Company IP Rights”), including for each such item listed, as applicable, its (A) territory, (B) application or serial number and date, (C) issue or registration number and date, (D) title or mark, (E) owner and (F) any payments or filings required to be made within one hundred eighty (180) days after the date of this Agreement. All material Registered Group Company IP Rights are subsisting and are, to the Company’s Knowledge, valid, enforceable and in full force and effect.

(c)            Except as set forth on Schedule 3.15(c), there are no claims pending or, to the Company’s Knowledge, threatened (i) against any Group Company before any Governmental Entity alleging that any Group Company is infringing, misappropriating or otherwise violating the Intellectual Property Rights of any other Person in any material respect; (ii) before any Governmental Entity that have been brought by any Group Company against any Person alleging infringement, misappropriation or other violation of any Owned IP Rights; and (iii) that would reasonably be expected to adversely impact any Group Company’s ability to use or exploit any Owned IP Rights.

(d)            To the Company’s Knowledge (i) the conduct of the business of the Group Companies as currently conducted does not infringe, misappropriate or otherwise violate any Intellectual Property Rights of any Person, and (ii) no Person is currently infringing, misappropriating or otherwise violating any material Owned IP Rights.

(e)            The Group Companies have taken reasonable measures to maintain and protect the confidentiality of all material Proprietary Information owned or held by each Group Company, as applicable.  The Group Companies are in compliance, in all material respects, with all Applicable Laws regarding the collection, use and protection of Personal Data. To the Company’s Knowledge, no Person has gained access to or made any unauthorized use of any such Proprietary Information or Personal Data maintained by the Group Companies. To the Company’s Knowledge, the IT Systems (i) are adequate, in all material respects, for the operations of each Group Company’s business, (ii) to the extent such IT Systems are material, perform in material conformance with their documentation and (iii) to the extent such IT Systems are material, are free from any material defect.

Section 3.16           Labor Matters.

(a)             No Group Company is a party to any collective bargaining agreement.

 

(b)            (i) To the Company’s Knowledge, no union organization campaign is in progress with respect to any employees of any Group Company and (ii) there is no strike, walk out, work stoppage, lockout or other material labor dispute pending or, to the Company’s Knowledge, threatened against any Group Company.

(c)            All individuals who are performing consulting or other services for a Group Company are correctly classified in all material respects as either “independent contractors” or “employees” as the case may be.

(d)            No Group Company has implemented any location closing or employee layoffs during the four-year period prior to the date hereof in violation of the Worker Adjustment Retraining and Notification Act of 1988, or any similar state or local plant closing or mass layoff statute, rule or regulation.

Section 3.17           Insurance.  Schedule 3.17 contains a list of all material policies of fire, Liability, workers’ compensation, property, casualty and other forms of insurance owned or held by the Group Companies as of the date of this Agreement (collectively, the “Insurance Policies”).  True and complete copies of such Insurance Policies, together with all amendments and supplements thereto, have been made available to Parent.  All Insurance Policies are in full force and effect, all premiums with respect thereto covering all periods up to and including the date hereof have been paid or accrued, and no cancellation, termination, non-renewal of or material alteration of coverage under, any of such Insurance Policies has occurred or been threatened in writing.  Except as set forth on Schedule 3.17, there are no claims related to the business of the Group Companies pending under any Insurance Policies which would be reasonably expected to exceed the limits of any Insurance Policy.  None of the Group Companies is in material breach or material default with respect to any Insurance Policy, and, to the Company’s Knowledge, no event or circumstance has occurred that, with notice or lapse of time or both, would constitute a material breach or event of material default under any Insurance Policy by any of the Group Companies.

Section 3.18           Tax Matters.  Except as set forth on Schedule 3.18:

(a)            each Group Company (i) has prepared and duly filed (or has had so prepared and filed on its behalf) with the appropriate domestic federal, state, local and foreign taxing authorities all income Tax Returns and all other material Tax Returns required to be filed with respect to such Group Company and (ii) has fully and timely paid or accrued (or had paid on its behalf) all material Taxes owed by it (whether or not shown on any Tax Return), including Taxes which such Group Company is obligated to withhold and has made adequate provision in accordance with GAAP for any unpaid Taxes of the Group Companies that are not yet due and payable, for all taxable periods, or portions thereof, ending on or before the date hereof;

(b)            all Tax Returns filed with respect to each of the Group Companies are true and correct in all material respects;

(c)            each Group Company has made available to Parent correct and complete copies of all material Tax Returns, examination reports and statements of deficiencies

 

for taxable periods, or transactions consummated, for which the applicable statutory periods of limitations have not expired;

(d)            no audit or other proceeding by any taxing authority is pending or threatened in writing with respect to any Taxes due from or with respect to any Group Company and no taxing authority has given written notice of its intention to assert any deficiency or claim for additional Taxes against any Group Company;

(e)            no Group Company has consented to extend the time (or is the beneficiary of any extension of time) in which any Tax may be, or to waive the statutory period of limitations applicable for any Tax that may be, assessed or collected by any taxing authority (other than any extension which is no longer in effect or statute of limitations which has since expired) and no request by a Group Company for any such waiver or extension is currently pending;

(f)             no Group Company has received from any taxing authority any written notice of proposed adjustment, deficiency, underpayment of Taxes which has not since been satisfied by payment or been withdrawn;

(g)            within the last four (4) years, no written claim has been made by any taxing authority in a jurisdiction where any Group Company does not file Tax Returns that any such Group Company is or may be subject to taxation by that jurisdiction;

(h)            there are no Liens for Taxes upon the assets or properties of any Group Company, except for statutory Liens for Taxes not yet due;

(i)              no Group Company is a party to any Contract relating to the sharing, allocation or indemnification of Taxes (excluding Tax provisions in agreements the principal subject of which does not relate to Taxes) (collectively, “Tax Sharing Agreements”) or has any Liability for Taxes of any Person (other than members of the affiliated group, within the meaning of Section 1504(a) of the Code, filing consolidated federal income tax returns of which the Company is the common parent) under Treasury Regulations § 1.1502-6, Treasury Regulations § 1.1502-78 or any similar state, local or foreign tax law, as a transferee or successor, or otherwise;

(j)             each Group Company has withheld (or will withhold) from their respective employees, independent contractors, creditors, stockholders and third parties, and timely paid to the appropriate taxing authority, proper and accurate amounts in all material respects for all periods ending on or before the Closing Date in compliance with all Tax withholding and remitting provisions of Applicable Laws, and each Group Company has complied in all material respects with all Tax information reporting provisions of such Tax withholding and remitting provisions of Applicable Laws;

(k)            no Group Company constituted a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of shares qualifying for tax-free treatment under Section 355 of the Code in the four years prior to the date of this Agreement;

 

(l)             any adjustment of Taxes of any Group Company made by the Internal Revenue Service, which adjustment is required to be reported to the appropriate state, local or foreign taxing authorities, has been so reported;

(m)            no Group Company will be required to include in a taxable period ending after the Closing Date taxable income attributable to income that accrued in a taxable period prior to the Closing Date but was not recognized for Tax purposes in such prior taxable period as a result of the installment method of accounting, the completed contract method of accounting, the long-term contract method of accounting, the cash method of accounting or Section 481 of the Code or comparable provisions of state, local or foreign Tax law;

(n)            no Group Company has executed or entered into a closing agreement under Section 7121 of the Code or any similar provision of state, local or foreign Tax law, and no Group Company is subject to any private letter ruling of the Internal Revenue Service or comparable ruling of any other taxing authority; and

(o)            no Group Company has entered into any transaction that constitutes (i) a “listed transaction” within the meaning of Treasury Regulations § 1.6011-4(b)(2) or (ii) a “confidential corporate tax shelter” within the meaning of Treasury Regulations § 301.6111-2(a)(2).

This Section 3.18 contains the sole and exclusive representations and warranties of the Company with respect to Taxes.

Section 3.19           Brokers. No broker, finder, financial advisor or investment banker is entitled to any broker’s, finder’s, financial advisor’s, investment banker’s fee or commission or similar payment in connection with the Transactions based upon arrangements made by or on behalf of any Group Company, except to the extent such fee or commission or similar payment constitute Transaction Expenses.

Section 3.20           Real and Personal Property.

(a)            Leased Real Property.  Schedule 3.20(a) sets forth a list of all leases, licenses and other occupancy agreements and other agreements for material distribution centers that are regularly relied on in the operation of the business (each, including any and all amendments, modifications, guaranties and other agreements relating thereto, a “Real Property Lease”) of real property (such real property, the “Leased Real Property”) pursuant to which any Group Company is a tenant, licensee or occupant as of the date of this Agreement.  The Company has made available to Parent, true and complete copies of all Real Property Leases.  Except as set forth on Schedule 3.20(a), each Real Property Lease is valid and binding on the Group Company party thereto, enforceable in accordance with its terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting generally the enforcement of creditors’ rights and subject to general principles of equity).  Except as set forth on Schedule 3.20(a), each of the Group Companies, and, to the Company’s Knowledge, each of the other parties thereto, has performed in all material respects all material obligations required to be performed by it under each Real Property Lease.  Except as disclosed on Schedule 3.20(a), there are no written or oral subleases, concessions or other Contracts granting to any Person

 

other than a Group Company the right to use or occupy any Leased Real Property.  No event has occurred or circumstances exist which, with the delivery of notice, the passage of time, or both, would constitute, a material breach or material default by the applicable Group Company or permit the termination, modification, or acceleration of rent under a Real Property Lease as a result of any action or inaction by the applicable Group Company, or to the Company’s Knowledge, permit the termination, modification or acceleration of rent under a Real Property Lease.  To the Company’s Knowledge, no event has occurred or circumstances exist which with the delivery of notice, the passage of time or both, would constitute a material breach or material default by the applicable landlord or permit the termination or modification of a Real Property Lease. The applicable Group Company’s interest under each Real Property Lease is subject to no Liens other than Permitted Liens.

(b)            Owned Real Property.  Schedule 3.20(b) sets forth the address of each real property owned by any Group Company (such real property, the “Owned Real Property”).  With respect to each Owned Real Property: (i) a Group Company has good and marketable title to such Owned Real Property, free and clear of all Liens, except Permitted Liens (provided, however, that all Liens associated with the Credit Facilities shall be released as of the Closing Date); (ii) except as set forth on Schedule 3.20(b), the applicable Group Company has not leased or otherwise granted to any Person the right to use or occupy such Owned Real Property or any portion thereof; (iii) other than the rights of Parent and Merger Sub pursuant to this Agreement, there are no outstanding options, rights of first offer or rights of first refusal granted by any Group Company to purchase such Owned Real Property or any portion thereof or interest therein; and (iv) no Group Company is a party to any agreement or option to purchase any real property or interest therein relating to the business of the Group Companies.

(c)            Real Property.  The Real Property comprises all of the real property used or intended to be used in the operation of the business of the Group Companies.  To the Company’s Knowledge, the improvements to the Real Property, including all systems located on the Real Property which are material to the operation of the business of the Group Companies from such location, are in good operating order and condition (reasonable wear and tear excepted) and suitable for their current use.  The Real Property has direct access or indirect access through valid easements to and from public rights of way, and, to the Company’s Knowledge, is served by utilities, in each case as required by the normal operation of the businesses being operated from the Real Property.

(d)            Personal Property.  Except as disclosed on Schedule 3.20(c), as of the date of this Agreement, the Group Companies collectively own or hold under valid leases all material machinery, equipment and other personal property (excluding, for the avoidance of doubt, Intellectual Property Rights) necessary for the conduct of their businesses as currently conducted, subject to no Lien except for Liens identified on Schedule 3.20(c) and Permitted Liens.

Section 3.21           Products.

(a)            The Group Companies have no outstanding product warranty claim or series of related claims with respect to their products which would reasonably be expected to result in Liability to a Group Company in excess of $100,000.  The warranty expense (including

 

the cost of any replaced or reworked parts) of the Business has not exceeded $100,000 in any of the last four (4) fiscal years and, to the Company’s Knowledge, is not expected to exceed that amount in the fiscal year ending December 31, 2015.

(b)            Each of the products manufactured, produced, distributed or sold by the Group Companies, all production processes established by the Group Companies with respect thereto, and all services performed by the Group Companies are, and since the date that is four (4) years prior to the date hereof have been, in material compliance with all contractual specifications applicable to such products and services, other than as would not reasonably be expected to have a material effect on the Group Companies, taken as a whole.

Section 3.22           Transactions with Affiliates.  Schedule 3.22 sets forth all Contracts or arrangements between any Group Company, on the one hand, and Affiliates of the Group Companies (other than any Group Company or any employee of any Group Company), on the other hand, that will not be terminated effective as of the Closing Date.  Except as disclosed on Schedule 3.22, (i) none of the Group Companies or their respective Affiliates and (ii) to the Company’s Knowledge, none of their  directors, officers or members of senior management and  no individual in such Person’s immediate family or any trust, partnership or corporation in which any such Person has a material economic interest (such Persons, the “Affiliated Persons”) (a) possesses, directly or indirectly, any financial interest in, or is a director or officer of, any Person (other than any Group Company) which is a material client, supplier, customer, lessor, lessee or competitor of any Group Company, (b) is a party to any Contract or transaction with a Group Company or has any material ownership or material financial interest in any asset, property or right (tangible or intangible) used by a Group Company, or (c) has any commitment from any Group Company to make a loan or extend or guarantee credit to or for the benefit of such Affiliated Person.  Ownership of five percent or less of any class of securities of a company whose securities are registered under the Exchange Act shall not be deemed to be a financial interest for purposes of this Section 3.22.

Section 3.23           Anti-Corruption and International Trade Matters.

(a)            No Group Company, no director or officer of any Group Company and, to the Knowledge of the Company, no employee or other person acting for or on behalf of any Group Company is designated on, or is owned or controlled by any entity or individual that is designated on, any list of sanctioned parties maintained by the United States, the United Kingdom, or the European Union, including the list of Specially Designated Nationals and Blocked Persons maintained by the U.S. Treasury Department.  Since the date that is four (4) years prior to the date hereof, no Group Company has participated in any transaction involving such a designated person, or involving any country or territory subject to comprehensive U.S., UK or EU sanctions, including Iran, Cuba, Sudan, Syria, North Korea, or Crimea.

(b)            Since the date that is four (4) years prior to the date hereof, the Group Companies have complied, and currently are in compliance, in all material respects with all Applicable Laws related to anti-corruption, anti-money laundering, sanctions, exports and imports, including the Foreign Corrupt Practices Act, the export control regulations administered by the U.S.

 

Department of Commerce, the sanctions regulations administered by the U.S. Department of Treasury, and U.S. customs laws and regulations, and there are no unresolved claims against any Group Company with respect to any such Applicable Law.

(c)            Without limiting the foregoing, since the date that is four (4) years prior to the date hereof, no Group Company has received any written notice that it is subject to any governmental investigation, audit, or inquiry or conducted any internal investigation or made any voluntary or involuntary disclosure to any Governmental Entity involving or related to any alleged or actual violation of any Applicable Law relating to anti-corruption, anti-money laundering, sanctions, exportation or importation.

(d)            The Group Companies have instituted and maintain policies and procedures that are designed to provide reasonable assurance of ongoing compliance with Applicable Law relating to anti-corruption, anti-money laundering, sanctions, exportation and importation.

Section 3.24          EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES.  EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN ARTICLE III, THE GROUP COMPANIES EXPRESSLY DISCLAIM ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO THE CONDITION, VALUE OR QUALITY OF THEIR BUSINESSES OR THEIR ASSETS, AND THE GROUP COMPANIES SPECIFICALLY DISCLAIM ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO THEIR ASSETS, ANY PART THEREOF, THE WORKMANSHIP THEREOF, AND THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT.  PARENT AND MERGER SUB SHALL RELY SOLELY ON THEIR OWN EXAMINATION AND INVESTIGATION THEREOF AS WELL AS THE REPRESENTATIONS AND WARRANTIES OF THE COMPANY SET FORTH IN THIS AGREEMENT, IN ANY CERTIFICATE OR OTHER INSTRUMENT DELIVERED BY THE COMPANY OR THE REPRESENTATIVE (ON SELLER’S BEHALF) PURSUANT HERETO, OR ANY ANCILLARY DOCUMENT (INCLUDING ANY LETTER OF TRANSMITTAL OR AFFIDAVIT OF LOST CERTIFICATE).

Subject to Section 9.7, except as disclosed on the Parent Disclosure Schedules, Parent and Merger Sub hereby represent and warrant, on a joint and several basis, to the Company, as of the date hereof and as of the Closing Date, as follows:

Section 4.1              Organization.  Each of Parent and Merger Sub is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority to carry on its businesses as now being conducted, except where the failure to have such power or authority would not prevent or materially delay the consummation of the Merger.

Section 4.2              Authority.  Each of Parent and Merger Sub has all necessary power and authority to execute and deliver this Agreement and the Ancillary Documents to which

 

Parent and Merger Sub are parties and to consummate the Transactions.  The execution and delivery of this Agreement and the Ancillary Documents to which Parent and/or Merger Sub is a party and the consummation of the Transactions have been (and the Ancillary Documents to which Parent and/or Merger Sub are is a party will be) duly authorized by all necessary action on the part of Parent and/or Merger Sub and no other proceeding (including by their respective equityholders) on the part of Parent or Merger Sub is necessary to authorize this Agreement and the Ancillary Documents to which Parent and/or Merger Sub is a party to consummate the Transactions.  No vote of Parent’s equityholders is required to approve this Agreement or for Parent or Merger Sub to consummate the Transactions and Parent, acting as the sole stockholder of Merger Sub, has approved this Agreement.  This Agreement has been (and the Ancillary Documents to which Parent and/or Merger Sub is a party will be) duly and validly executed and delivered by Parent and/or Merger Sub and constitutes a valid, legal and binding agreement of each of Parent and/or Merger Sub (assuming this Agreement has been and the Ancillary Documents to which Parent and/or Merger Sub is a party will be duly authorized, executed and delivered by the other parties hereto and thereto), enforceable against each of Parent and/or Merger Sub in accordance with its terms, except (i) to the extent that enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting the enforcement of creditors’ rights generally and (ii) that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding thereof may be brought.

Section 4.3              Consents and Approvals; No Violations.  Assuming the truth and accuracy of the Company’s representations and warranties contained in Section 3.6, no material notices to, filings with, or authorizations, consents or approvals of any Governmental Entity is necessary for the execution, delivery or performance of this Agreement by Parent and Merger Sub or the Ancillary Documents to which Parent and/or Merger Sub is a party or the consummation by Parent and/or Merger Sub of the Transactions, except for (a) compliance with and filings under the HSR Act, (b) the filing of the Certificate of Merger and (c) those set forth on Schedule 4.3.  Neither the execution, delivery and performance by Parent or Merger Sub of this Agreement and the Ancillary Documents to which Parent and/or Merger Sub is a party nor the consummation by Parent or Merger Sub of the Transactions will (i) conflict with or result in any breach of any provision of Parent’s or Merger Sub’s Governing Documents, (ii) except as set forth on Schedule 4.3, result in a material violation or breach of, or constitute (with or without due notice or lapse of time or both) a default or give rise to any right of termination, cancellation or acceleration under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, Contract or other instrument or obligation to which Parent or Merger Sub is a party or by which any of them or any of their respective properties or assets may be bound, or (iii) violate any order, writ, injunction, decree, law, statute, rule or regulation of any Governmental Entity applicable to Parent or Merger Sub or any of Parent’s Subsidiaries or any of their respective properties or assets, except in the case of clauses (b) and (c) above, for violations which would not prevent or materially delay the Merger.

Section 4.4              Brokers.  No broker, finder, financial advisor or investment banker is entitled to any brokerage, finder’s, financial advisor’s or investment banker’s fee or commission or similar payment in connection with the Transactions based upon arrangements made by and on behalf of Parent or Merger Sub or any of their respective Affiliates for which Sellers or any Group Company may become liable.

 

Section 4.5              Debt Financing. As of the date of this Agreement, Parent has delivered to the Company and the Representative true, complete and correct copies of the executed debt commitment letter (the “Debt Financing Commitment Letter”) and corresponding customarily redacted fee letter (none of which redacted terms would reasonably be expected to adversely affect the amount or availability of the Debt Financing or affect the conditions thereto) from the financial institutions identified therein (the “Debt Financing Commitments,” as each may be amended or replaced from time to time to the extent permitted by Section 5.8(a)) to provide, subject to the terms and conditions therein, debt financing in the amounts set forth therein for the purpose of funding the Transactions (being collectively referred to as the “Debt Financing”). The Debt Financing Commitment Letter is a legal, valid and binding obligations of Spectrum Brands, Inc. (a wholly‑owned Subsidiary of Parent), and to the knowledge of Parent, the other parties thereto, and is enforceable in accordance with its terms, except (a) to the extent that enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other Applicable Laws affecting the enforcement of creditors’ rights generally and (b) that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding thereof may be brought.  As of the date hereof, the Debt Financing Commitment Letter is in full force and effect, and the Debt Financing Commitment Letter has not been withdrawn, rescinded or terminated or otherwise amended or modified in any respect, and no such amendment or modification is contemplated. Neither Parent nor Spectrum Brands, Inc. is in breach of any of the terms or conditions set forth in the Debt Financing Commitment Letter, and as of the date hereof, no event has occurred which, with or without notice, lapse of time or both, would reasonably be expected to constitute a breach, default or failure to satisfy any condition precedent set forth therein. As of the date hereof, Parent has no reason to believe that any of the conditions in the Debt Financing Commitment Letter will not be satisfied, or that the Debt Financing will not be made available on a timely basis in order to consummate the Transactions. As of the date hereof, no counterparty to any Debt Financing Commitment Letter has notified Parent or Spectrum Brands, Inc. of its intention to terminate the Debt Financing Commitment Letter or not to provide the Debt Financing. The net proceeds from the Debt Financing, together with other sources of liquidity as shall be available to Parent, will be sufficient to consummate the Transactions, including the payment of all fees and expenses of or payable by Parent, Spectrum Brands, Inc., Merger Sub or the Surviving Corporation, and any related repayment or refinancing of any Closing Date Funded Indebtedness, and any other amounts required to be paid in connection with the consummation of the Transactions. Parent and Spectrum Brands, Inc. have paid in full any and all commitment or other fees required by the Debt Financing Commitment Letter that are due as of the date hereof, and will pay, after the date hereof, all such fees as they become due. There are no conditions precedent or contingencies to the obligations of the parties under the Debt Financing Commitment Letter (including, to the extent applicable, pursuant to any “flex” provisions in the related fee letter or otherwise) to make the full amount of the Debt Financing available to Parent or Spectrum Brands, Inc. on the terms therein except as expressly set forth in the Debt Financing Commitment Letter. There are no side letters or other Contracts to which Parent or any of its Affiliates (including Spectrum Brands, Inc.) is a party related to the funding of the full amount of the Debt Financing that could adversely affect the availability of the Debt Financing other than as expressly set forth in the Debt Financing Commitment Letter.  No Person has any right to impose, and none of the providers under the Debt Financing Commitment Letter or Parent or Spectrum Brands, Inc. has any obligation to accept, any condition precedent to such funding other than any of the

 

conditions expressly set forth in the Debt Financing Commitment Letter nor any reduction to the aggregate amount available under the Debt Financing Commitment Letter on the Closing Date (nor any term or condition which would have the effect of reducing the aggregate amount available under the Debt Financing Commitment Letter on the Closing Date, except as expressly provided therein).  Subject to the Company’s compliance with this Agreement and the satisfaction (or waiver) of the conditions set forth in Section 6.1 and Section 6.2 (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions), Parent has no reason to believe that it will be unable to satisfy on a timely basis any conditions to the funding of the full amount of the Debt Financing, or that the Debt Financing will not be available on the Closing Date. For the avoidance of doubt, it is not a condition to Closing under this Agreement for Parent or Spectrum Brands, Inc. to obtain the Debt Financing, any Alternative Debt Financing or any other financing.

Section 4.6              Merger Sub Activities.  Merger Sub was organized solely for the purpose of entering into this Agreement and consummating the Transactions and has not engaged in any activities or business, and has incurred no Liabilities or obligations whatsoever, in each case, other than those incident to its organization and the execution of this Agreement and the consummation of the Transactions.

Section 4.7              Surviving Corporation after the Merger.  Assuming (a) satisfaction of the conditions in Section 6.1 and Section 6.3, (b) the representations and warranties of the Company contained in this Agreement are true and correct, and (c) no material adverse change with respect to the business, operations, assets, properties and financial condition of the Parent and its Subsidiaries has occurred prior to the Closing, at and immediately after the Effective Time, and after giving effect to the Merger and the other Transactions the Group Companies, Parent and its other Subsidiaries (i) will be solvent (in that both the fair value of their consolidated assets will not be less than the sum of their consolidated debts and that the present fair saleable value of their consolidated assets will not be less than the amount required to pay their probable consolidated Liabilities on their consolidated debts as they become absolute and matured), (ii) will have adequate capital with which to engage in their business, and (iii) will not have incurred debts beyond their ability to pay as they become absolute and matured.

Section 4.8               Acknowledgment and Representations by Parent and Merger Sub.

(a)            Each of Parent and Merger Sub is an informed and sophisticated Person, and has engaged expert advisors experienced in the evaluation and acquisition of companies such as the Group Companies as contemplated hereunder.  Parent, Merger Sub and their respective representatives have undertaken such investigation and have been provided with and has evaluated such documents and information as each of them have deemed necessary to enable them to make an informed and intelligent decision with respect to the execution, delivery and performance of this Agreement and the Ancillary Documents and the consummation of the Merger.  In making their determination to proceed with the Merger, Parent and Merger Sub have relied solely on the results of their and their respective representatives’ own independent investigation and the representations and warranties of the Company expressly and specifically set forth in ARTICLE III (as qualified by the Schedules), in the certificates or other instruments delivered pursuant hereto, or in any Ancillary Document (including any Letter of Transmittal or affidavit of lost certificate).

 

(b)            In connection with the investigation by Parent and Merger Sub of the Group Companies, Parent, Merger Sub and their respective representatives have received and, after the date hereof but prior to the Closing, may receive from the Group Companies or any of their representatives certain projections, budgets, forward looking statements and other forecasts.  Each of Parent and Merger Sub acknowledges that there are uncertainties inherent in attempting to make such projections, budgets, forward looking statements and other forecasts, that Parent, Merger Sub and their respective representative are familiar with such uncertainties, that Parent, Merger Sub and their respective representatives are taking full responsibility for making their own evaluation of the adequacy and accuracy of all projections, budgets, forward looking statements and other forecasts so furnished to them (including the reasonableness of the assumptions underlying such projections, budgets, forward looking statements and other forecasts), and that Parent and Merger Sub have not relied upon, are not relying upon and will not rely upon any such projections, budgets, forward looking statements or other forecasts or any other materials, documents or information (including those provided in certain “data rooms,” confidential information memoranda or similar materials, or management presentations in connection with the Merger) made available to Parent, Merger Sub and their respective representatives and Affiliates by the Group Companies or any of their representatives, and Parent and Merger Sub shall have no claim against any Person with respect thereto.

(c)            Parent and Merger Sub (on behalf of themselves and their Affiliates) acknowledge that, other than as expressly set forth in ARTICLE III, in the certificates or other instruments delivered pursuant hereto, or in any Ancillary Document (including any Letter of Transmittal or affidavit of lost certificate), none of the Group Companies or any of their respective directors, officers, employees, Affiliates, stockholders, equityholders, agents or representatives or any other Person makes or has made any representation or warranty, contractual or legal, either express or implied, as to the accuracy or completeness of any of the information provided or made available to Parent, Merger Sub or any of their respective agents, representatives, lenders or Affiliates or any other Person acting on their behalf prior to the execution of this Agreement.

Section 5.1              Conduct of Business of the Company.

(a)            From and after the date hereof until the earlier of the Effective Time or the termination of this Agreement in accordance with its terms, the Company shall and shall cause each other Group Company, except as (i) consented to in writing by Parent, (ii) required by Applicable Law, (iii) contemplated by this Agreement or (iv) listed on Schedule 5.1, to (A) use commercially reasonable efforts to conduct its business in the ordinary course, consistent with past practice, in substantially the same manner heretofore conducted, (B) use commercially reasonable efforts to preserve intact the material business relationships of the Group Companies with customers, suppliers, manufacturers and others with whom the Group Companies deal in the ordinary course of business consistent with past practice, (C) use commercially reasonable efforts to maintain the goodwill and reputation of the Group Companies in the ordinary course of business consistent with past practice and (D) continue to

 

make capital expenditures to the extent required to be made prior to the Closing Date in accordance with the Capital Expenditures Budget.

(b)            Without limiting Section 5.1(a), from and after the date hereof until the earlier of the Effective Time or the termination of this Agreement in accordance with its terms, except as (A) consented to in writing by Parent (which consent shall not be unreasonably withheld, conditioned or delayed), (B) required by Applicable Law, (C) contemplated by this Agreement or (D) listed on Schedule 5.1, the Company shall not, and shall cause each other Group Company not to:

(i)            change or amend the Company Certificate of Incorporation, Company Bylaws or other organizational documents of any of the Group Companies (whether by merger, consolidation, conversion or otherwise);

(ii)           make, declare, set aside for payment, establish a record date for, authorize or pay any dividend or distribution (whether in cash, assets, stock or otherwise), other than dividends and distributions paid by wholly-owned Subsidiaries of the Company to the Company or any of its wholly-owned Subsidiaries;

(iii)         split, combine, divide, subdivide, reverse split, consolidate, reclassify, recapitalize or effect any other similar transaction with respect to any of Group Company’s capital stock, or issue, sell, grant or authorize or propose the issuance, sale, grant or authorization of any shares of capital stock or any other securities in respect of, in lieu of or in substitution for shares of such Group Company’s capital stock, or any rights, warrants or options to acquire or with respect to any such shares of capital stock or securities, ownership interest or convertible or exchangeable or exercisable securities except for any such transaction by a wholly-owned Subsidiary of the Company which remains a wholly-owned Subsidiary of the Company after the consummation of such transaction;

(iv)         sell, assign, transfer, convey, grant, pledge, license or otherwise dispose of, grant any right to, or create or incur any Lien (other than a Permitted Lien) on, in a single transaction or a series of transactions, any material assets or material properties of the Group Companies, including (A) the capital stock or other equity interests in any Group Company and (B) any Group Company IP Rights, except, in each case, sales of inventory or disposal of assets in the ordinary course of business consistent with past practice;

(v)          do any act or knowingly omit to do any act whereby any material Owned IP Rights would become invalidated, abandoned, lost, impaired, unmaintained, unenforceable or dedicated to the public domain;

(vi)         acquire by merger or consolidation with, or merge or consolidate with, or purchase all or substantially all of the assets of, any corporation, partnership, association, joint venture or other business organization or division thereof;

(vii)       enter into any new commitments to make or authorize any capital expenditures or make any capital expenditures, other than (A) those contemplated by the Capital Expenditure Budget and (B) any unbudgeted capital expenditures that do not exceed $250,000 in the aggregate;

 

(viii)      make any material loans or advances or capital contributions to any Person, except for (A) any such loans, advances or capital contributions between or among one or more members of the Group Companies, on the one hand, and one or more other members of the Group Companies, on the other hand, (B) advances to customers or suppliers in the ordinary course of business consistent with past practice or (C) advances to employees or officers of the Group Companies in the ordinary course of business consistent with past practice;

(ix)          except as required by Applicable Law, make or change any Tax election or adopt or change any Tax accounting method, or file any amended Tax Returns, in each case, if the action would adversely affect Parent or Merger Sub with respect to any Tax Liability of the Company or any of its Subsidiaries for any taxable period;

(x)           enter into or renew any non-compete, exclusivity, non-solicitation, “most-favored nation” or similar provision or Contract that adversely restricts or limits the operations of the Group Companies prior to or after the Closing;

(xi)          incur, assume, prepay, issue, guarantee, modify, syndicate, refinance or otherwise become liable for any Funded Indebtedness (directly, contingently or otherwise), other than (A) borrowings under the Company’s existing Credit Facilities or (B) the incurrence of trade indebtedness in the ordinary course of business consistent with past practice;

(xii)        enter into, renew or agree to enter into or renew any employee welfare, pension, retirement, profit-sharing or similar plan, program, agreement, policy or arrangement excepted as required by Applicable Law or pursuant to existing, written, binding agreements in effect prior to the date of this Agreement;

(xiii)       hire any employee of the Group Company or engage any other individual to provide services to the Group Company, other than hiring of non‑executive employees in the ordinary course of business consistent with past practice; provided, that the annual compensation for any non-executive employee hired does not exceed $150,000;

(xiv)      enter into any collective bargaining agreement or other agreement with any labor organization;

(xv)        increase the compensation or benefits of any employee of any Group Company, other than in the ordinary course of business consistent with past practice;

(xvi)      grant or increase any severance, retention or change-of-control bonus or other similar payments to any current or former employee, consultant or independent contractor (other than, in each case, to the extent such payments constitute Transaction Expenses);

(xvii)     make any change in financial accounting methods, principles or practices materially affecting the reported consolidated assets, Liabilities or results of operations of any of the Group Companies, except insofar as may have been required by a change in GAAP or Applicable Law;

 

(xviii)   adopt, establish, enter into, amend or terminate or increase the benefits under any Employee Benefit Plan or other employee benefit, plan, practice, program, policy or Contract that would be an Employee Benefit Plan if in effect on the date of this Agreement, in any case other than as may be required by the terms of such Employee Benefit Plan or other plan, practice, program, policy or Contract or as may be required by Applicable Law or in order to qualify under Sections 401 and 501 of the Code or Section 409A of the Code;

(xix)       increase the compensation or benefits of any current or former director, officer employee or consultant of any Group Company except in the ordinary course of business consistent with past practice;

(xx)         commence, waive, release, settle or compromise any Claim or series of related Claims, investigation, inquiry or audit involving any Group Company for an amount in excess of $100,000, or that would (A) provide for an admission of liability by any Group Company or (B) result in non-de minimis injunctive relief in favor of the other party;

(xxi)       fail to (1) use commercially reasonable efforts to maintain in full force and effect existing Insurance Policies in the ordinary course of business consistent with past practice or (2) use commercially reasonable efforts to replace existing Insurance Policies that have expired or been terminated after the date hereof;

(xxii)      grant any material refunds, credits, rebates or other allowances to any supplier, vendor, distributor, customer or franchisee, other than in the ordinary course of business consistent with past practice;

(xxiii)    adopt a plan of agreement of complete or partial liquidation or dissolution, merger, consolidation, restructuring, recapitalization or other reorganizational document with respect to any of the Group Companies;

(xxiv)    (A) enter into, amend, modify or terminate any lease for the use or occupancy of any real property requiring rental and other payments in excess of $250,000 over the term thereof or (B) sell, assign, transfer, convey or otherwise dispose of, or purchase or acquire any Real Property;

(xxv)     other than in the ordinary course of business consistent with past practice, enter into any Material Contract or otherwise modify, amend or terminate any Material Contract (other than terminations or renewals in the ordinary course of business consistent with past practice); or

(xxvi)    enter into any Contract to do any action prohibited under this Section 5.1(b).

Section 5.2              Access to Information.  From and after the date hereof until the earlier of the Closing Date or the termination of this Agreement in accordance with its terms, upon reasonable notice, the Company shall provide to Parent and Merger Sub and their authorized representatives during normal business hours reasonable access to all books and records of the Group Companies (in a manner so as to not interfere with the normal business operations of any Group Company); provided, that the Group Companies shall not be required to

 

permit, and Parent, Merger Sub and their representatives shall not be permitted to, perform any environmental sampling at any Leased Real Property or Owned Real Property, including sampling of soil, groundwater, surface water, building materials, or air or wastewater emissions.  All of such information shall be treated as confidential information pursuant to the terms of the Confidentiality Agreement, the provisions of which are by this reference hereby incorporated herein. Notwithstanding anything to the contrary set forth in this Agreement, no Group Company or any of its respective Affiliates shall be required to disclose to Parent, Merger Sub or any of their respective representatives any information (i) if doing so would reasonably be expected to violate any Contract, fiduciary duty or Applicable Law to which any Seller, Group Company or any Affiliate is a party or is subject), (ii) which would reasonably be expected to result in the loss of the ability to successfully assert attorney-client and work product privileges, (iii) if any Group Company or any of their respective Affiliates, on the one hand, and Parent, Merger Sub or any of their respective Affiliates, on the other hand, are adverse parties in a litigation and such information is reasonably pertinent thereto or (iv) if any Group Company reasonably determines that such information should not be disclosed due to its competitively sensitive nature; provided, in each case, the Company shall, and shall cause each other Group Company to use commercially reasonable efforts to, allow otherwise required disclosure to Parent to occur without so jeopardizing any such privilege, litigation or the competitively sensitive nature of such information or contravening any such Contract, fiduciary duty or Applicable Law (except that the Company shall not be required to incur any costs or pay any fees with respect thereto).

Section 5.3              Requisite Stockholder Approval.  Promptly following its delivery of the Requisite Stockholder Approval to Parent, the Company shall deliver to the holders of Company Common Shares and Company Preferred Shares that did not execute the Requisite Stockholder Approval (i) a copy of such Requisite Stockholder Approval, and (ii) the notices required pursuant to Section 228 of the DGCL.  Any such notice will comply with the requirements of the DGCL.

Section 5.4              Efforts to Consummate.

(a)            Subject to the terms and conditions herein provided, each of Parent, Merger Sub and the Company shall use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary, proper or advisable under Applicable Laws and regulations to consummate and make effective as promptly as practicable the Transactions (including the satisfaction, but not waiver, of the closing conditions set forth in ARTICLE VI).  Notwithstanding the foregoing, each of Parent, Merger Sub and the Company shall use their reasonable best efforts to obtain consents of all Governmental Entities necessary to consummate the Transactions.  All HSR Act filing fees shall be borne by Parent.  Each party hereto shall make an appropriate filing, if necessary, pursuant to the HSR Act with respect to the Transactions promptly (and in any event, within ten (10) Business Days) after the date of this Agreement (which such filings shall request early termination of the waiting period under the HSR Act) and shall supply as promptly as practicable to the appropriate Governmental Entities any additional information and documentary material that may be requested pursuant to the HSR Act.  Without limiting the foregoing, (i) Parent, Merger Sub, and their respective Affiliates shall not extend (or take any action with the effect of extending) any waiting period or comparable period under the HSR Act or enter into any agreement with any Governmental Entity not to consummate the Transactions, except with the

 

prior written consent of the Company, and (ii) Parent and Merger Sub agree to take (and Parent’s and Merger Sub’s “reasonable best efforts” shall expressly include the taking of), and cause their Affiliates to take, all actions that may be required by any Governmental Entity to expeditiously consummate the Transactions, including (A) selling, licensing or otherwise disposing of, or holding separate and agreeing to sell, license or otherwise dispose of, or proposing or negotiating to do the same for (i) any entities, assets or facilities of any Group Company after the Closing or (ii) any entity, facility or assets of Parent or its Affiliates before or after the Closing, (B) terminating, modifying, amending or assigning existing relationships and contractual rights and obligations (other than terminations that would result in a breach of a contractual obligation to a third party), (C) amending, assigning or terminating existing licenses or other agreements (other than terminations that would result in a breach of a license or such other agreement with a third party) and entering into such new licenses or other agreements, (D) modifying any course of conduct regarding future operations of Parent or Merger Sub or any of their Affiliates or with respect to any of the businesses, assets, rights or interested to be acquired pursuant to this Agreement and (E) otherwise taking or committing to take any other action that limits or would limit Parent or Merger Sub or any of their Affiliates’ freedom of action with respect to the businesses, assets, rights or interested to be acquired pursuant to this Agreement; provided, that nothing set forth in this Section 5.4(a) shall require Parent, Merger Sub or their Affiliates to take or consent to any action that is not conditioned on the consummation of the Closing.

(b)            Prior to the Effective Time, Parent and Merger Sub shall not, and shall cause their Affiliates not to, directly or indirectly acquire or agree to acquire (by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner), any Person or portion thereof, or otherwise acquire or agree to acquire any assets, if the entering into a definitive agreement relating to, or the consummation of, such acquisition, merger or consolidation would reasonably be expected to (i) impose any delay in the obtaining of, or increase the risk of not obtaining, any permits, orders or other approvals of any Governmental Entity necessary to consummate the Merger or the expiration or termination of any applicable waiting period, (ii) increase the risk of any Governmental Entity entering an order prohibiting the consummation of the Merger, (iii) increase the risk of not being able to remove any such order on appeal or otherwise, or (iv) delay or prevent the consummation of the Merger.

(c)            In the event any claim, action, suit, investigation or other proceeding by any Governmental Entity or other Person is commenced which questions the validity or legality of the transactions contemplated hereby or seeks damages in connection therewith, the parties hereto agree to cooperate and, to the extent necessary to satisfy the conditions set forth in ARTICLE VI, use reasonable best efforts to defend against such claim, action, suit, investigation or other proceeding and, if an injunction or other order is issued in any such action, suit or other proceeding, to use reasonable best efforts to have such injunction or other order lifted, and to cooperate reasonably regarding any other impediment to the consummation of the transactions contemplated hereby.

Section 5.5              Indemnification; Directors’ and Officers’ Insurance.

(a)            Parent and Merger Sub agree that, for a period of six years following the Effective Time, all rights to indemnification or exculpation now existing in favor of the directors, officers, employees and agents of each Group Company, as provided in such

 

Group Company’s Governing Documents or otherwise in effect as of the date hereof with respect to any matters occurring prior to the Closing Date, shall survive the Merger and shall continue in full force and effect and the Group Companies on their own behalf will perform and discharge the Group Companies’ obligations to provide such indemnity and exculpation after the Merger.  To the maximum extent permitted by Applicable Law, such indemnification shall be mandatory rather than permissive, and Parent shall cause the Surviving Corporation to advance expenses in connection with such indemnification as provided in such Group Company’s Governing Documents or other applicable agreements.  The indemnification and Liability limitation or exculpation provisions of the Group Companies’ Governing Documents shall not be amended, repealed or otherwise modified after the Closing Date in any manner that would adversely affect the rights thereunder of individuals who, as of the Closing Date or at any time prior to the Closing Date, were directors, officers, employees or agents of any Group Company, unless such modification is required by Applicable Law.

(b)            The Company shall, prior to the Closing Date, purchase at Parent’s expense for the period beginning on the Closing and ending six years thereafter without any lapses in coverage, a “tail” policy providing directors’ and officers’ liability insurance coverage for the benefit of those Persons who are covered by any Group Company’s directors’ and officers’ liability insurance policies as of the date hereof or at the Closing with respect to matters occurring prior to the Closing.  Such policy shall provide coverage that is at least equal to the coverage provided under the Group Companies’ current directors’ and officers’ liability insurance policies.

(c)            Parent, Merger Sub and the Company hereby acknowledge (on behalf of themselves and their respective Subsidiaries) that the indemnified Persons under this Section 5.5 may have certain rights to indemnification, advancement of expenses and/or insurance provided by current shareholders, members, or other Affiliates of the stockholders or their respective shareholders (“Indemnitee Affiliates”) separate from the indemnification obligations of the Group Companies hereunder.  The parties hereto hereby agree (i) that the Group Companies are the indemnitors of first resort solely with respect to matters involving or relating to the Group Companies (i.e., its obligations to the indemnified Persons under this Section 5.5 are primary and any obligation of any Indemnitee Affiliate to advance expenses or to provide indemnification for the same expenses or Liabilities incurred by the indemnified Persons under this Section 5.5 with respect to matters involving or relating to the Group Companies are secondary), (ii) that rights to indemnification and advancement of expenses by the Group Companies shall be determined without regard to any rights the indeminified Persons under this Section 5.5 may have against any Indemnitee Affiliate, and (iii) that the parties hereto (on behalf of themselves and their respective Subsidiaries) irrevocably waive, relinquish and release the Indemnitee Affiliates from any and all claims against the Indemnitee Affiliates for contribution, subrogation or any other recovery of any kind arising from any rights that any Person indemnified under this Section 5.5 may have against any Indemnitee Affiliate.  The obligations of Parent and the Group Companies under this Section 5.5 shall be binding upon the successors and permitted assigns of Parent.

(d)            The directors, officers, employees and agents of each Group Company entitled to the indemnification, Liability limitation, exculpation and insurance set forth in this Section 5.5 are intended to be third party beneficiaries of this Section 5.5.  This Section

 

5.5 shall survive the consummation of the Merger and shall be binding on all successors and assigns of Parent and the Surviving Corporation.

(e)            If Parent, the Surviving Corporation or any of its Subsidiaries or any of their successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger, or (ii) transfers or conveys all or substantially all of its properties and assets to any Person, then, and in each such case, to the extent necessary, proper provision shall be made so that the successors and assigns of Parent, the Surviving Corporation or any of its Subsidiaries shall assume the obligations set forth in this Section 5.5.

Section 5.6              Exclusive Dealing.  During the period from the date of this Agreement until the earlier of the Effective Time or the termination of this Agreement in accordance with its terms, the Company will not, and will cause its directors, officers, representatives and Affiliates not to, execute or enter into, or legally commit to execute or enter into, any written agreement with respect to any Competing Transaction, enter into or participate in any negotiations or discussions with any potential third party acquirer or its representatives regarding a Competing Transaction (other than Parent and its Affiliates), knowingly encourage, knowingly facilitate, initiate or solicit any Competing Transaction or provide confidential non-public information to any potential third party acquirer or its representatives to facilitate a Competing Transaction.  Without limiting the foregoing, following the date hereof, no Group Company will file any registration statement or any amendment to any registration statement (for the avoidance of doubt, periodic and current reports required by the rules and regulations of the SEC or the Indentures are not subject to this sentence), with the SEC or cause or permit any previously filed registration statement or any amendment thereto to become effective.

Section 5.7              Retention of Documents and Information.  After the Closing Date, and subject to Parent’s document retention policies, Parent shall, and shall cause the Surviving Corporation and its Subsidiaries to, until the sixth (6^th) anniversary of the Closing Date, retain all books, records and other documents pertaining to the business of the Group Companies in existence on the Closing Date and, subject to any confidentiality restrictions that the Group Companies are subject and the preservation of any applicable legal privilege, make the same available for inspection and copying by the Representative (at Representative’s expense), during normal business hours of the Surviving Corporation or any of its Subsidiaries, as applicable, upon reasonable request and upon reasonable notice in a manner so as to not interfere with the normal business operations of any Group Company.

Section 5.8              Financing; Financing Cooperation.

(a)            Parent shall, and shall cause each of its Affiliates (including Spectrum Brands, Inc.) to, use its reasonable best efforts to obtain the Debt Financing or any other financing that is in an aggregate amount sufficient for purposes of funding in full the Transactions (the “Financing”) on a timely basis, but in no event later than two (2) Business Days prior to the Termination Date, including, if necessary using its reasonable best efforts to (i) comply with its obligations under the applicable Debt Financing Commitment Letter and any definitive agreements related thereto, (ii) negotiate and enter into definitive agreements with respect to the Debt Financing on a timely basis on terms and conditions (including the “market

 

flex” provisions) contained therein or otherwise not materially less favorable to Parent in the aggregate than those contained in the Debt Financing Commitment Letter (and the redacted fee letter), (iii) satisfy on a timely basis all conditions applicable to Parent and Spectrum Brands, Inc. contained in the Debt Financing Commitment Letter within its control, including the payment of any commitment, engagement or placement fees required as a condition to the Debt Financing, (iv) enforce its rights against the financial institutions that are a party to the Debt Financing Commitment Letter, and (v) consummate the Debt Financing at or prior to the Closing Date (it being understood that it is not a condition to Closing under this Agreement for Parent or Spectrum Brands, Inc. to obtain the Debt Financing, any Alternative Debt Financing or other Financing).  For the avoidance of doubt, in the event all or any portion of the Debt Financing structured as “high-yield” financing has not been consummated on or prior to the Closing, Parent and Merger Sub shall use their reasonable best efforts to cause the proceeds of the bridge facilities contemplated by the Debt Financing Commitment Letter to be available.  Parent shall keep the Representative and the Company informed on a reasonable basis and in reasonable detail of the status of its efforts to arrange the Debt Financing.  Parent shall give the Representative and the Company prompt notice upon having knowledge of any breach by any party of the Debt Financing Commitment Letter or any termination of the Debt Financing Commitment Letter.  Other than as expressly set forth in Section 5.8(b), Parent shall not, and shall not permit its Affiliates (including Spectrum Brands, Inc.) to, without the prior written consent of the Representative, amend, modify, supplement or waive any of the conditions or contingencies to funding contained in the Debt Financing Commitment Letter or any other provision of, or remedies under, the Debt Financing Commitment Letter, in each case, to the extent such amendment, modification, supplement or waiver would reasonably be expected to have the effect of (A) adversely affecting in any material respect the ability of Parent to timely consummate the Transactions, (B) amending, modifying, supplementing or waiving the conditions or contingencies to the Debt Financing Commitment Letter or the Debt Financing in a manner materially adverse to the Company or the Sellers or (C) materially delaying the Closing.

(b)            If all or any portion of the Debt Financing becomes unavailable, Parent shall use its reasonable best efforts to (i) arrange to promptly obtain the Debt Financing or such portion of the Debt Financing from alternative sources, which may include one or more of a senior secured debt financing, an offering and sale of notes or equity securities, or any other financing or offer and sale of other debt or equity securities, or any combination thereof, in an amount sufficient, when added to any portion of the Debt Financing or other sources of liquidity that is available, to pay in cash all amounts required to be paid by Parent in connection with the Transactions (“Alternative Debt Financing”) and (ii) obtain a new financing commitment letter (the “Alternative Debt Commitment Letter”) and a new definitive agreement with respect thereto that provides for financing (A) on terms not materially less favorable, in the aggregate, to Parent, (B) containing conditions to draw and other terms that would reasonably be expected to affect the availability thereof that (1) are not more onerous, taken as a whole, than those conditions and terms contained in the Debt Financing Commitment Letter as of the date hereof and (2) would not reasonably be expected to delay the Closing and (C) in an amount that is sufficient, when added to any portion of the Debt Financing or other sources of liquidity that is available, to pay in cash all amounts required to be paid by Parent in connection with the Transactions. In such event, the term “Debt Financing” as used in this Agreement shall be deemed to include any Alternative Debt Financing and the term “Debt Financing Commitment Letter” as used in this Agreement shall be deemed to include any Alternative Debt Commitment Letter.

 

(c)            Prior to the Closing, the Company shall, and shall cause its Subsidiaries to, provide the following reasonable cooperation with the arrangement of the Financing: (i) on or prior to May 15, 2015, the Company shall provide to Parent unaudited interim financial statements of (A) Armored AutoGroup Inc. and its consolidated Subsidiaries for the quarter ended March 31, 2015 and (B) IDQ Holdings, Inc. and its consolidated Subsidiaries for the quarter ended March 31, 2015 (such financial statements, the “Financing Information”), and the Company shall not be required to provide any other financial statements of the Group Companies; (ii) the Company shall use commercially reasonable efforts, to the extent such information is available, to provide financial and other information reasonably necessary to prepare a description of the Group Companies’ business and financial information reasonably necessary to prepare a management discussion and analysis, in each case, that is customary for the Debt Financing and, in the case of the management discussion and analysis, corresponds to the applicable Audited Financial Statements and the Financing Information;  (iii) the Company shall use commercially reasonable efforts, to the extent such information is available, to provide such other financial data as may be reasonably necessary to allow Parent its Affiliates to prepare pro forma financial statements of the type and form customarily included in the Debt Financing (which, for the avoidance of doubt, shall not include the obligation to provide financial statements of the Group Companies other than the Financing Information);  (iv) the Company shall use commercially reasonable efforts to participate in meetings, drafting sessions and rating agency presentations to the extent reasonably necessary to allow Parent or any of its Affiliates to consummate the Financing; and (v) the Company shall use commercially reasonable efforts, to the extent reasonably necessary to allow Parent or any of its Affiliates to consummate the Financing, to cause its auditors to (A) provide representation letters, certifications and consents in connection with the preparation and use of financial information in offering documents, prospectuses, rating agency presentations, investor presentations, registration statements filed pursuant to the Securities Act, Exchange Act reports, other filings required to be made by Parent or such Affiliate under the Exchange Act and other documents to be filed with the SEC, and accounting comfort letters addressed to the underwriters or initial purchasers solely in respect of any Financing Information or Financial Statements to the extent included in offering documents or prospectuses and (B) participate in drafting sessions and due diligence sessions (including accounting due diligence sessions) with respect to any such offering and provide assistance in responding to comments or questions from the SEC with respect to the financial information, in each case, as reasonably requested by Parent and to the extent such items relate  to information that the Company is otherwise required to provide under this Section 5.8(c).  The Financing Information shall have been prepared in all material respects in accordance with GAAP applied on a consistent basis throughout the periods covered thereby, except as may be indicated in the notes thereto and subject to the absence of footnotes and normal year-end adjustments and, in certain cases, normal quarterly adjustments, and shall fairly present, in all material respects, the consolidated financial position of the applicable entities as of the dates thereof and their consolidated results of operations for the periods then ended (subject to the absence of footnotes and normal year-end adjustments). Notwithstanding the immediately preceding sentence, (i) none of the Sellers, the Company or any of the Group Companies shall be required to pay any commitment or other similar fee or incur any other liability in connection with the Financing, Debt Financing or any Alternative Debt Financing, (ii) the effectiveness of any documentation executed by any Group Company with respect thereto (other than, for the avoidance of doubt, customary representation letters executed in favor of its auditors) shall be

 

 

subject to the consummation of the Closing and (iii) the Group Companies shall not be required to (x) obtain payoff letters with respect to any Funded Indebtedness (other than Closing Date Funded Indebtedness under the Credit Facilities) or (y) except as provided in Section 5.11, give any notices under the indentures governing any outstanding bonds or notes of any Group Company.  Any information provided pursuant to this Section 5.8(c) shall be subject to confidentiality obligations customary for the Financing as contemplated by the Debt Financing Commitment Letter.  Parent acknowledges and agrees that none of the Sellers nor any Group Company nor any of their respective Affiliates or any of their respective directors, officers, employees, representatives and advisors (including legal, financial and accounting advisors) shall have any responsibility for, or incur any Liability to any Person under or in connection with, the arrangement of the Financing, Debt Financing or Alternative Debt Financing that Parent may raise in connection with the Transactions, and that Parent shall indemnify and hold harmless the Representative, the Sellers, the Group Companies and their respective Affiliates and directors, officers, employees, representatives and advisors (including legal, financial and accounting advisors) from and against any and all Losses suffered or incurred by them in connection with the arrangement of the Financing, Debt Financing or Alternative Debt Financing and any information utilized in connection therewith (other than information provided by the Group Companies expressly for use in connection therewith), and each of such Persons is intended to be a third party beneficiary of this Section 5.8(c).  Parent shall, and shall cause its Affiliates to, promptly reimburse the Company for all out-of-pocket costs or expenses incurred by the Group Companies in connection with cooperation provided for in this Section 5.8(c).  Notwithstanding anything to the contrary in this Agreement, the condition set forth in Section 6.2(b), as it applies to the Group Companies’ obligations under this Section 5.8(c), shall be deemed satisfied unless a Group Company has knowingly, willfully and materially breached its obligations under this Section 5.8(c) and such breach is the proximate cause of Parent’s failure to obtain the Financing, Debt Financing or Alternative Debt Financing.

(d)            For the avoidance of doubt, all Closing Date Funded Indebtedness (other than Closing Date Funded Indebtedness under the Credit Facilities) shall remain outstanding immediately following the Effective Time and shall be liabilities of the Surviving Corporation and its Subsidiaries.

Section 5.9              Employee Benefits Plans and Retention.  Parent shall grant, or shall cause the Surviving Corporation to grant, employees of each Group Company who continue to be employed by a Group Company credit for any service with such Group Company earned prior to the Closing Date (a) for eligibility and vesting purposes and (b) for purposes of vacation accrual and severance benefit determinations under any benefit or compensation plan, program, agreement or arrangement that may be established or maintained by Parent or the Surviving Corporation or any of its Subsidiaries on or after the Closing Date (but not for purposes of any plans subject to Title IV of ERISA) (the “New Plans”).  In addition, Parent shall (i) cause to be waived all pre‑existing condition exclusions and actively‑at‑work requirements and similar limitations, eligibility waiting periods and evidence of insurability requirements under any New Plans to the extent waived or satisfied by an employee under any Employee Benefit Plan as of the Closing Date and (ii) cause any deductible, co-insurance and covered out-of-pocket expenses paid on or before the Closing Date by any employee (or covered dependent thereof) of any Group Company to be taken into account for purposes of satisfying the corresponding deductible, coinsurance and maximum out‑of‑pocket provisions after the Closing Date under any

 

applicable New Plan in the year of initial participation.  Nothing contained herein, express or implied, is intended to confer upon any employee of any Group Company any right to continued employment for any period or continued receipt of any specific employee benefit, or shall constitute an amendment to or any other modification of any New Plan or Employee Benefit Plan or Foreign Benefit Plan.  Parent agrees that Parent and the Surviving Corporation shall be solely responsible for satisfying the continuation coverage requirements of Section 4980B of the Code for all individuals who are “M&A qualified beneficiaries” as such term is defined in Treasury Regulation Section 54.4980B‑9.

Section 5.10           Tax Matters. During the period from the date of this Agreement to the Closing Date, the Group Companies shall:

(a)            prepare and duly file all federal income Tax Returns and all other material Tax Returns required to be filed by the Group Companies between the date of this Agreement and the day prior to the Closing Date (“Post-Signing Returns”) in a manner consistent with past practice, except as otherwise required by a change in, or interpretation of, Applicable Law;

(b)            deliver drafts of all Post-Signing Returns that are income Tax Returns to Parent no later than ten (10) Business Days prior to the date on which such Post-Signing Returns are required to be filed;

(c)            fully and timely pay all Taxes due and payable, if any, in respect of such Post-Signing Returns that are so filed;

(d)            promptly notify Parent of any material federal, state, local or foreign income or franchise Claim or audit pending or threatened in writing against or with respect to any Group Company in respect of any Tax matter, including Tax Liabilities and refund claims, and not settle or compromise any such, Claim or audit without Parent’s prior written consent (such consent not to be unreasonably withheld, conditioned or delayed); and

(e)            terminate all Tax Sharing Agreements to which any Group Company is a party such that there are no further Liabilities thereunder, other than any Tax Sharing Agreements solely among the Group Companies.

The Company shall be deemed to have performed and complied in all material respects with the covenants, obligations and agreements required to be performed or complied with under this Section 5.10, except to the extent noncompliance would reasonably be expected to have a Company Material Adverse Effect.

Section 5.11           Redemption Notices.  The Company shall cause Armored AutoGroup Inc. to give a notice of redemption under the AAG Indentures as Parent may reasonably request in writing; provided, that any such notice under the AAG Indentures given prior to the Closing Date shall be conditional upon the Closing and the terms and conditions specified by Parent for the redemption shall be in compliance with Applicable Law and the AAG Indentures.  For the avoidance of doubt, no Group Company shall be required to provide any notice of redemption under any IDQ Indenture prior to the Closing Date.

 

Section 5.12           280G Payments.  Prior to the Effective Time, the Company shall (i) use commercially reasonable efforts to obtain from each “disqualified individual” (as defined in Section 280G(c) of the Code) a waiver by such individual of any and all rights to payments (or other benefits) contingent on the consummation of the Transactions (within the meaning of Section 280G(b)(2)(A)(i) of the Code) to the extent necessary so that such payments and benefits would not be “excess parachute payments” under Section 280G of the Code and (ii) submit to its stockholders for a vote all such waived payments in a manner such that, if such vote is adopted by the stockholders in a manner that satisfies the stockholder approval requirements under Section 280G(b)(5)(B) of the Code and regulations promulgated thereunder, no payment received by such “disqualified individual” would be a “parachute payment” under Section 280G(b) of the Code. The Company agrees to provide to Parent written drafts of the shareholder disclosure statement, waivers, and stockholder approval forms that will be provided to disqualified individuals and stockholders in advance of delivering such documents to the disqualified individuals and stockholders, as applicable, and allow Parent a reasonable opportunity to provide comments on such documents. The parties acknowledge that this Section 5.12 shall not apply to any Buyer Arrangements unless Parent provided sufficient information regarding such Buyer Arrangements to the Company no later than ten (10) Business Days prior to the Effective Time, so that, for the avoidance of doubt, compliance with this Section 5.12 shall be determined as if such Buyer Arrangements had not been entered into.

Section 5.13           Termination of Affiliate Transactions.  On or prior to the Closing Date, the Company shall, or shall cause, all transactions and Contracts entered into by any Group Company with any Affiliated Person to be terminated without further obligation on the part of any Group Company (other than this Agreement, the Ancillary Documents, employment or similar Contract of a Group Company employee (other than the Contract set forth on Schedule 5.13) or any other Contract between a portfolio company of the Avista Sellers, KI‑IDQ 2012 Holdings, LLC or any of their respective affiliated investment funds, on the one hand, and any Group Company, on the other hand, entered into in the ordinary course of business on arm’s length terms).  From the date hereof through the Closing, the Company shall not, and shall not permit any Group Company to, enter into any transaction or Contract (other than the Ancillary Documents) with any Affiliated Person unless such transaction or Contract shall be terminated on or prior to the Closing Date in accordance with this Section 5.13.

Section 6.1              Conditions to the Obligations of the Company, Parent and Merger Sub.  The obligations of the Company, Parent and Merger Sub to consummate the Transactions are subject to the satisfaction (or, if permitted by Applicable Law, waiver in writing by the party for whose benefit such condition exists in accordance with Section 9.11) at or prior to the Effective Time of the following conditions:

(a)            any applicable waiting period under the HSR Act relating to the Merger shall have expired or been terminated;

(b)            no statute, rule, regulation, executive order, decree, temporary restraining order, preliminary or permanent injunction or other order issued by any court of

 

competent jurisdiction or other Governmental Entity or other legal restraint or prohibition preventing the consummation of the Merger shall be in effect; and

(c)            the Requisite Stockholder Approval shall have been obtained.

Section 6.2              Other Conditions to the Obligations of Parent and Merger Sub.  The obligations of Parent and Merger Sub to consummate the Merger are subject to the satisfaction or, if permitted by Applicable Law, waiver in writing by Parent and Merger Sub at or prior to the Effective Time of the following further conditions:

(a)            (i) the Company Fundamental Representations shall be true and correct in all respects both when made and as of the Closing Date, as though made on and as of such date, except (A) to the extent such Company Fundamental Representations are made on and as of a specified date, in which case the same shall continue on the Closing Date to be true and correct as of the specified date, (B) where the failure to be so true and correct as of such dates, individually or in the aggregate, have not had and would not reasonably be expected to have more than a de minimis adverse impact on the Group Companies or the Transactions, and (C) solely with respect to the representations and warranties set forth in Section 3.2 (Capitalization of the Group Companies), except for failures to be so true and correct that do not result in any increase in the Purchase Price, and (ii) all other representations and warranties of the Company set forth in ARTICLE III hereof shall be true and correct in all respects as of the Closing Date as though made on and as of the Closing Date, except (A) to the extent such representations and warranties are made on and as of a specified date, in which case the same shall continue on the Closing Date to be true and correct as of the specified date and (B) to the extent that the facts, events and circumstances that cause such representations and warranties to not be true and correct as of such dates, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect (provided that for the purposes of this clause (ii), qualifications as to materiality and Company Material Adverse Effect contained in such representations and warranties shall not be given effect other than those set forth in clause (i) of Section 3.9);

(b)            the Company shall have performed and complied in all material respects with all covenants, obligations and agreements required to be performed or complied with by the Company under this Agreement on or prior to the Closing Date;

(c)            the Company shall have delivered the following documents to Parent:

(i)            a certificate of an authorized officer of the Company, dated as of the Closing Date, to the effect that the conditions specified in Section 6.2(a), Section 6.2(b) and Section 6.2(f) are satisfied;

(ii)           written resignations of (A) each of the directors of the Company and (B) those officers and directors of the Group Companies designated by Parent at least ten Business Days prior to the Closing Date; and

(iii)         a certificate from the Company, in form and substances as prescribed by Treasury Regulations promulgated under Code Section 1445, stating that the

 

Company is not, and has not been during the relevant period specified in Section 897(c)(1)(ii) of the Code, a “United States real property holding corporation” within the meaning of Section 897(c) of the Code.

(d)            the Escrow Agreement shall have been executed by the Representative;

(e)            the Company shall have received and provided Parent with a copy of pay-off letter(s) in customary form with respect to the payoff of the Closing Date Funded Indebtedness under the Credit Facilities; and

(f)            since the date of this Agreement, no fact, event or circumstance shall have occurred which has had a Company Material Adverse Effect.

Section 6.3              Other Conditions to the Obligations of the Company.  The obligations of the Company to consummate the Merger are subject to the satisfaction or, if permitted by Applicable Law, waiver in writing by the Representative at or prior to the Effective Time of the following further conditions:

(a)            (i) the Parent Fundamental Representations shall be true and correct in all respects both when made and as of the Closing Date, as though made on and as of such date, except (A) to the extent such Parent Fundamental Representations are made on and as of a specified date, in which case the same shall continue on the Closing Date to be true and correct as of the specified date, and (B) where the failure to be so true and correct as of such dates, individually or in the aggregate, have not had and would not reasonably be expected to have more than a de minimis adverse impact on the Sellers or the Transactions, and (ii) all other representations and warranties of Parent and Merger Sub set forth in ARTICLE IV hereof shall be true and correct in all material respects as of the Closing Date as though made on and as of the Closing Date, except (A) to the extent such representations and warranties are made on and as of a specified date, in which case the same shall continue on the Closing Date to be true and correct as of the specified date and (B) to the extent that the effects, events, changes, occurrences, circumstances, states of fact or developments that cause such representations and warranties to not be true and correct as of such dates, individually or in the aggregate, have not had and would not reasonably be expected to prevent or materially delay Parent from performing its obligations under this Agreement or from consummating the Transactions (provided, that for the purposes of this clause (ii), qualifications as to materiality contained in such representations and warranties shall not be given effect);

(b)            Parent and Merger Sub shall each have performed and complied in all material respects with all covenants, obligations and agreements required to be performed or complied with by them under this Agreement on or prior to the Closing Date;

(c)            Parent shall have delivered to the Company a certificate of an authorized officer of Parent and an authorized officer of Merger Sub, dated as of the Closing Date, to the effect that the conditions specified in Section 6.3(a) and Section 6.3(b) have been satisfied; and

(d)            the Escrow Agreement shall have been executed by Parent.

 

Section 6.4              Frustration of Closing Conditions.  Except as required by Applicable Law, no party hereto may rely either as a basis for not consummating the Merger or terminating this Agreement, on the failure of any condition set forth in this ARTICLE VI to be satisfied, if such failure was caused by such party’s material breach of this Agreement.

Section 7.1              Termination.  This Agreement may be terminated and the Merger may be abandoned at any time prior to the Closing (except as limited as to time in the case of clause (e) below) by written notice setting forth the applicable clause below, only:

(a)            by mutual written consent of Parent and the Company;

(b)            by Parent, if any of the representations or warranties of the Company set forth in ARTICLE III shall not be true and correct, which failure to be true and correct, either individually or in the aggregate, would result in the condition to Closing set forth in Section 6.2(a) not being satisfied or if any of the covenants, obligations or agreements of the Company set forth in this Agreement shall have been breached, which breach, either individually or in the aggregate, would result in the condition to Closing set forth in Section 6.2(b) not being satisfied and, in each case, such failure to be true and correct or breach (or failures to be true and correct or breaches) is not cured within the earlier of (i) the Termination Date and (ii) 30 days after written notice thereof is delivered to the Company; provided, that Parent will not have the right to terminate this Agreement pursuant to this Section 7.1(b) if Parent is then in breach of any of its representations, warranties, covenants, obligations or agreements contained in this Agreement such that the conditions set forth in Section 6.3(a) or Section 6.3(b) are unable to be satisfied;

(c)            by the Company, if any of the representations or warranties of Parent or Merger Sub set forth in ARTICLE IV shall not be true and correct, which failure to be true and correct, either individually or in the aggregate, would result in the condition to Closing set forth in Section 6.3(a) not being satisfied or if any of the covenants, obligations or agreements of the Parent or Merger Sub set forth in this Agreement shall have been breached, which breach, either individually or in the aggregate, would result in the condition to Closing set forth in Section 6.3(b) not being satisfied and, in each case, such failure to be true and correct or breach (or failures to be true and correct or breaches) is not cured within the earlier of (i) the Termination Date and (ii) 30 days after written notice thereof is delivered to Parent; provided, that the Company will not have the right to terminate this Agreement pursuant to this Section 7.1(c) if the Company is then in breach of any of its representations, warranties, covenants, obligations or agreements contained in this Agreement such that the conditions set forth in Section 6.2(a) or Section 6.2(b) are unable to be satisfied;

(d)            by Parent, if the Requisite Stockholder Approval is not obtained within one (1) Business Day of the date of this Agreement;

(e)            by Parent, if the Merger shall not have been consummated on or prior to June 30, 2015 (the “Termination Date”), unless the failure to consummate the Merger is

 

primarily the result of a breach by Parent or Merger Sub of their respective representations, warranties, agreement, obligations or covenants under this Agreement;

(f)             by the Company, if the Merger shall not have been consummated on or prior to the Termination Date unless, the failure to consummate the Merger is primarily the result of a breach by the Company of its representations, warranties, agreements, obligations or covenants under this Agreement;

(g)            by the Company, if the Merger shall not have been consummated within five (5) Business Days (but in no event later than the Termination Date) of the first date upon which the Merger is required to be consummated pursuant to Section 2.2; or

(h)            by either Parent or by the Company, if any Governmental Entity shall have issued an order, decree or ruling or taken any other action permanently enjoining, restraining or otherwise prohibiting the Merger and such order, decree or ruling or other action shall have become final and nonappealable; provided, that this termination right may not be exercised by a party if its breach of any covenant or agreement herein shall have resulted in the imposition, or failure to withdraw, such order, decree ruling, judgment or injunction.

Section 7.2              Effect of Termination.  In the event of the termination of this Agreement pursuant to Section 7.1, this entire Agreement shall forthwith become null, void and of no effect (and there shall be no Liability on the part of Parent, Merger Sub or the Company or their respective Non-Party Affiliates) with the exception of (i) the provisions of this Section 7.2, ARTICLE VIII, ARTICLE IX and the penultimate sentence of Section 5.2, each of which provisions shall survive such termination and remain valid and binding obligations of the parties, and (ii)  any Liability of any party hereto for any willful or intentional breach of this Agreement (and, for the avoidance of doubt, any failure by Parent to consummate the Transactions when such Transactions are required to be consummated pursuant to Section 2.2 within the time period set forth in Section 7.1(g) shall be deemed to be a willful or intentional breach of this Agreement) prior to such termination, in which case and notwithstanding anything to the contrary in this Agreement, the Sellers and the Company shall be entitled to all remedies available at law or in equity, including equitable relief (including specific performance in accordance with Section 9.17) and damages (including damages for the benefit of the bargain lost by the Sellers and the Company, diminution in value of the Group Companies, and the reimbursement of the Sellers’ and the Group Companies’ costs and expenses (including pursuant to Section 5.8)).  The parties hereto agree that the Company shall be entitled to receive any damages that Sellers would have been entitled to claim had they been a direct party to this Agreement. Nothing herein shall limit or prevent any party hereto from exercising any rights or remedies it may have under Section 9.17.

Section 8.1              Authorization of Representative

(a)            For purposes of this Agreement, the Ancillary Documents, the Transactions and any Action relating to the foregoing, Avista Capital Partners II GP, LLC (or

 

any of its Affiliates as designated by Avista Capital Partners II GP, LLC) is hereby appointed, authorized and empowered to act as a representative (the “Representative”) for the benefit of the Sellers, as the exclusive agent and attorney-in-fact to act on behalf of each Seller, in connection therewith and to facilitate the consummation of the Transactions, including pursuant to the Ancillary Documents, which shall include the power and authority:

(i)            to execute and deliver the Escrow Agreement and any other Ancillary Documents (with such modifications or changes therein as to which the Representative, in its sole discretion, shall have consented) and to agree to such amendments or modifications thereto as the Representative, in its sole discretion, determines to be desirable and take all actions required permitted to be taken under this Agreement and the Ancillary Documents;

(ii)          to execute and deliver such waivers and consents in connection with this Agreement and the Escrow Agreement and any other Ancillary Documents and the consummation of the Transactions as the Representative, in its sole discretion, may deem necessary or desirable;

(iii)         to use the Representative Expense Amount to satisfy costs, expenses and/or Liabilities of the Representative in connection with matters related to this Agreement and/or the Ancillary Documents, with any balance of the Representative Expense Amount not used for such purposes to be disbursed by the Representative so that the applicable portions are paid to each holder of Company Common Shares based on its Percentage Interests and the remainder is paid to the Surviving Corporation and/or any other Group Company designated by the Surviving Corporation (for distribution to each holder of Vested Company Options based on its Percentage Interest, less applicable withholding taxes) at such time as the Representative determines in its sole discretion that no such costs, expenses and/or Liabilities shall become due and payable;

(iv)        to pay the Aggregate Liquidation Preference to the holders of Company Preferred Shares in accordance with Section 2.9(a);

(v)          to collect and receive all moneys and other proceeds and property payable to the Sellers as described herein, and, subject to any applicable withholding retention laws, and net of any out-of-pocket expenses incurred by the Representative (including any Transaction Expenses paid by the Representative in excess of the Representative Expense Amount), the Representative shall disburse and pay the applicable portions thereof (A) to each holder of Company Common Shares based on its Percentage Interests and (B) to the Surviving Corporation and/or any other Group Company designated by the Surviving Corporation (for distribution to each holder of Vested Company Options based on its Percentage Interests), at such time as the Representative determines in its reasonable discretion;

(vi)         as the Representative, to enforce and protect the rights and interests of Sellers (including the Representative, in its capacity as a Seller) and to enforce and protect the rights and interests of the Representative arising out of or under or in any manner relating to this Agreement and the Escrow Agreement, and each other Ancillary Document or the Transactions, and to take any and all actions which the Representative believes are necessary or

 

appropriate under this Agreement and any Ancillary Document for and on behalf of the Sellers, including asserting or pursuing any Claim against Parent, Merger Sub and/or the Surviving Corporation, defending any third party Claims or Claims by Parent, Merger Sub or their Affiliates, consenting to, compromising or settling any such Claims, conducting negotiations with Parent, the Surviving Corporation and their respective representatives regarding such Claims, and, in connection therewith, to: (A) assert or institute any Claim; (B) investigate, defend, contest or litigate any Claim initiated by Parent, the Surviving Corporation or any other Person, or by any federal, state or local Governmental Entity against the Representative and/or any Seller, the Escrow Funds, and receive process on behalf of any or all Sellers in any such Claim and compromise or settle on such terms as the Representative shall determine to be appropriate, and give receipts, releases and discharges with respect to, any such Claim; (C) file any proofs of debt, claims and petitions as the Representative may deem advisable or necessary; (D) settle, negotiate or compromise any claims asserted under the Escrow Agreement; and (E) file and prosecute appeals from any decision, judgment or award rendered in any such Claim, it being understood that the Representative shall not have any obligation to take any such actions, and shall not have any Liability for any failure to take any such actions;

(vii)       to refrain from enforcing any right of any Seller and/or the Representative arising out of or under or in any manner relating to this Agreement, the Escrow Agreement or any other Ancillary Document in connection with the foregoing; provided, however, that no such failure to act on the part of the Representative, except as otherwise provided in this Agreement, the Escrow Agreement or such other Ancillary Document, shall be deemed a waiver of any such right or interest by the Representative or by such Seller unless such waiver is in writing signed by the waiving party or by the Representative;

(viii)     engage attorneys, accountants, financial and other advisors and other Persons (including the Escrow Agent) necessary or appropriate (at the expense of the holders of Company Common Shares and Vested Company Options pro rata based on their respective Percentage Interests), in the sole discretion of the Representative in the performance of its duties hereunder; and

(ix)         to make, execute, acknowledge and deliver all such other agreements, guarantees, orders, receipts, endorsements, notices, requests, instructions, certificates, stock powers, letters and other writings, and, in general, to do any and all things and to take any and all action that the Representative, in its sole and absolute discretion, may consider necessary or proper or convenient in connection with or to carry out the Transactions.

(b)            The Representative shall not be entitled to any fee, commission or other compensation for the performance of its services hereunder, but shall be entitled to the payment of all its expenses incurred as the Representative from the holders of Company Common Shares and Vested Company Options (on a pro rata basis based on their respective Percentage Interest).  In connection with this Agreement, the Escrow Agreement and any other Ancillary Document, and in exercising or failing to exercise all or any of the powers conferred upon the Representative hereunder (i) the Representative shall incur no responsibility whatsoever to any Seller by reason of any error in judgment or other act or omission performed or omitted hereunder or in connection with the Escrow Agreement or any other Ancillary Document, excepting only responsibility for any act or failure to act which represents gross negligence or

 

willful misconduct, and (ii) the Representative shall be entitled to rely on the advice of counsel, public accountants or other independent experts experienced in the matter at issue, and any error in judgment or other act or omission of the Representative pursuant to such advice shall in no event subject the Representative to Liability to any Seller. Each holder of Company Common Shares and Vested Company Options shall indemnify, pro rata based upon such holder’s Percentage Interest, the Representative against all losses, damages, Liabilities, claims, obligations, costs and expenses, including reasonable attorneys’, accountants’ and other experts’ fees and the amount of any judgment against them, of any nature whatsoever (including, but not limited to, any and all expense whatsoever reasonably incurred in investigating, preparing or defending against any litigation, commenced or threatened or any claims whatsoever), arising out of or in connection with any Claim or in connection with any appeal thereof, relating to the acts or omissions of the Representative hereunder, or under the Escrow Agreement or any other Ancillary Document or otherwise in its capacity as the Representative.  The foregoing indemnification shall not apply in the event of any Claim which finally adjudicates the Liability of the Representative hereunder for its gross negligence or willful misconduct.  In the event of any indemnification hereunder, upon written notice from the Representative to the Sellers as to the existence of a deficiency toward the payment of any such indemnification amount, each holder of Company Common Shares and Vested Company Options shall promptly deliver to the Representative full payment of his or her ratable share of the amount of such deficiency, in accordance with such holder’s Percentage Interest.  The Representative may resign or be replaced by the Sellers together holding at least 50% of the Percentage Interest and the newly appointed Representative shall deliver written notice thereof to Parent and the Escrow Agent (together with reasonable evidence thereof).  Such substituted Representative shall be deemed to be the Representative for all purposes of this Agreement and the Ancillary Documents.  Such removal and appointment shall be effective upon the later of the date indicated in the written notice or the date such written notice is received by Parent and the Escrow Agent.  All decisions and actions by the Representative shall be binding upon all Sellers and no Sellers shall have the right to object, dissent, protest or otherwise contest the same.

(c)            All of the indemnities, immunities and powers granted to the Representative under this Agreement shall survive the Closing Date and/or any termination of this Agreement and/or any Ancillary Document.

(d)            Parent, Merger Sub and the Surviving Corporation shall have the right to rely conclusively upon all actions taken or omitted to be taken by the Representative pursuant to this Agreement, the Escrow Agreement and any other Ancillary Document, all of which actions or omissions shall be legally binding upon the Sellers.  Parent, Merger Sub and the Surviving Corporation are entitled to deal exclusively with the Representative on all matters relating to this Agreement, any Ancillary Document or the Transactions.  Any action taken or not taken or decisions, communications or writings made, given or executed by the Representative, for or on behalf of any Seller, shall be deemed an action taken or not taken or decisions, communications or writings made, given or executed by such Seller.  Any notice or communication delivered by Parent, Merger Sub or the Surviving Corporation to the Representative shall be deemed to have been delivered to all of the Sellers.  Parent, Merger Sub and the Surviving Corporation shall be entitled to disregard any decisions, communications or writings made, given or executed by any Seller in connection with this Agreement, any Ancillary Document and the Transactions, unless the same is made, given or executed by the Representative.

 

 

(e)            The grant of authority provided for herein (i) is coupled with an interest and shall be irrevocable and survive the death, incompetency, bankruptcy or liquidation of any Seller and shall be binding upon the executors, heirs, legal representatives, personal representatives, successor trustees and successors of each stockholder of the Company, (ii) shall survive the consummation of the Merger and (iii) shall be enforceable notwithstanding any rights or remedies any of the Company’s stockholders may have in connection with the Transactions.

Section 8.2              The Representative.  The parties hereto acknowledge and agree that Avista Capital Partners II GP, LLC (in its capacity as the Representative) is a party to this Agreement solely to perform certain administrative functions in connection with the consummation of the Transactions.  Accordingly, the parties hereto acknowledge and agree that the Representative, acting in such capacity, shall not be responsible for the obligations of any Seller or other Person under this Agreement or any Ancillary Document, (ii) shall have only such obligations hereunder as are expressly set forth herein or in any Ancillary Document and (iii) shall be entitled to the limitations of liability and rights to indemnification as provided by the Sellers hereunder.

Section 9.1              Entire Agreement; Assignment.  This Agreement, together with all Exhibits, Schedules and Parent Disclosure Schedules hereto and the Ancillary Documents, as the same may from time to time be amended, modified, supplemented, or restated in accordance with the terms hereof, and together with the Confidentiality Agreement, (a) constitute the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, among the parties hereto with respect to the subject matter hereof and (b) shall not be assigned by any party hereto (whether by operation of law or otherwise), without the prior written consent of Parent, Merger Sub and the Representative; provided, however, that (i) Parent may (A) assign any or all of its rights and interests hereunder to one or more of its Affiliates or (B) designate one or more of its Affiliates to perform its obligations hereunder, in each case, if Parent nonetheless remains fully responsible for the performance of its obligations hereunder and (ii) Parent may assign all or a portion of its rights and obligations to any Financing source as collateral in connection with the Financing.  Any attempted assignment of this Agreement not in accordance with the terms of this Section 9.1 shall be void.

Section 9.2              Notices.  All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by facsimile or E-mail (having obtained electronic delivery confirmation thereof), or by registered or certified mail (postage prepaid, return receipt requested) to the other parties hereto as follows:

 

or to such other address as the person to whom notice is given may have previously furnished to the others in writing in the manner set forth above.

Section 9.3              Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the law of any jurisdiction other than the State of Delaware, except to the extent the DGCL shall be held to govern the Merger.  Notwithstanding the foregoing, each of the parties hereto agrees that the Debt Commitment Letter, the rights and duties of the parties thereunder and any Claims arising under or related thereto shall be governed and construed in accordance with the laws of the jurisdiction provided under the governing law provisions thereof.

Section 9.4              Fees and Expenses.  Except as otherwise set forth in this Agreement, whether or not the Merger is consummated (including, for avoidance of doubt, the fees and expenses to be borne by Parent in accordance with Section 5.4, Section 5.8 and Section 7.2), all fees and expenses incurred in connection with the Merger, this Agreement and the Transactions, including the fees and disbursements of counsel, financial advisors and accountants, shall be paid by the party hereto incurring such fees or expenses; provided, that in the event that the Transactions are consummated, then at the Closing, Parent shall, or shall cause the Surviving Corporation to, pay all Unpaid Transaction Expenses to the extent provided in Section 2.9(a)(iii).  Notwithstanding the foregoing, Parent shall bear one-half (1/2) of all Transfer Taxes and the remaining one half (½) of such Transfer Taxes shall be deemed to be Transaction Expenses.

Section 9.5             Press Releases and Announcements.   None of the parties hereto nor any of their respective representatives shall issue any press releases or make any public announcements of non‑public information with respect to this Agreement or the Transactions (including the Merger) without the prior written consent of Parent or the Representative, as the case may be.  Notwithstanding the foregoing, any such press release or public announcement may be made if required by Applicable Law or a securities exchange rule; provided that the party required to make such press release or public announcement shall, to the extent possible, use commercially reasonable efforts to confer with the other parties concerning the timing and content of such press release or public announcement before the same is made.  Notwithstanding the foregoing, any Seller that is an investment fund (including Affiliates of such Seller) may

 

provide general information about the subject matter of this Agreement in connection with their fundraising, marketing, informational or reporting activities of the kind customarily provided with respect to investments of this nature (including disclosures with respect to investment multiples, returns on investment, rates of return and other customary financial performance metrics related to such Seller’s investment in the Group Companies).

Section 9.6              Construction; Interpretation.  The term “this Agreement” means this Agreement and Plan of Merger together with all Schedules, Parent Disclosure Schedules and Exhibits hereto, as the same may from time to time be amended, modified, supplemented or restated in accordance with the terms hereof.  The headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.  The parties hereto agree that they have been represented by counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any Applicable Law or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.  Further, no party hereto, nor its respective counsel, shall be deemed the drafter of this Agreement for purposes of construing or enforcing the provisions hereof, and all provisions of this Agreement shall be construed according to their fair meaning and not strictly for or against any party, and no presumption or burden of proof will arise favoring or disfavoring any Person by virtue of its authorship of any provision of this Agreement.  Unless otherwise expressly provided herein, any statute defined or referred to herein means such statute as from time to time amended, modified or supplemented, including by succession of comparable successor statutes.  Any reference to any Applicable Law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise.  Unless otherwise indicated to the contrary herein by the context or use thereof: (i) the words, “herein,” “hereto,” “hereof” and words of similar import refer to this Agreement as a whole, including the Schedules, Parent Disclosure Schedules and Exhibits, and not to any particular section, subsection paragraph, subparagraph or clause contained in this Agreement; (ii) masculine gender shall also include the feminine and neutral genders, and vice versa; (iii) words importing the singular shall also include the plural, and vice versa; (iv) the words “include,” “includes” or “including” shall be deemed to be followed by the words “without limitation”; (v) the words “party” or “parties” shall refer to parties to this Agreement; (vi) all references to Articles, Sections, Exhibits, Schedules or Parent Disclosure Schedules are to Articles, Sections, Exhibits, Schedules and Parent Disclosure Schedules of this Agreement; (vii) the word “or” is disjunctive but not necessarily exclusive; (viii) terms used herein that are not defined herein but are defined in GAAP have the meanings ascribed to them therein; (ix) the words “writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form; (x) other than as used with respect to any Schedule or Parent Disclosure Schedule, references to any Applicable Law, agreement or Contract are to that Applicable Law, agreement or Contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof; (xi) references to any Person include the successors and permitted assigns of that Person; (xii) references from or through any date mean, unless otherwise specified, from and including or through and including, respectively; (xiii) the words “dollar” or “$” shall mean U.S. dollars; (xiv) the word “day” means calendar day unless Business Day is expressly specified (provided, that if any action under this Agreement is required to be done or taken on a day that is not a Business Day, then such action shall be required to be done or taken not on such day but on the first succeeding Business Day thereafter); and (xv) with respect to the

 

determination of any period of time, the word “from” means “from and including” and the words “to” and “until” each means “to but including”.

Section 9.7              Exhibits and Schedules.  All Exhibits, Schedules, Parent Disclosure Schedules, or documents expressly incorporated into this Agreement, are hereby incorporated into this Agreement and are hereby made a part hereof as if set out in full in this Agreement.  Any item disclosed in any Schedule or Parent Disclosure Schedule referenced by a particular Section in this Agreement shall be deemed to have been disclosed with respect to every other Section in this Agreement if the relevance of such disclosure to such other sections is reasonably apparent.  The specification of any dollar amount in the representations or warranties contained in this Agreement or the inclusion of any specific item in any Schedule or Parent Disclosure Schedule is not intended to imply that such amounts, or higher or lower amounts or the items so included or other items, are or are not material, and no party shall use the fact of the setting of such amounts or the inclusion of any such item in any dispute or controversy as to whether any obligation, items or matter not described herein or included in a Schedule or Parent Disclosure Schedule is or is not material for purposes of this Agreement.  Any capitalized term used in any Exhibit, Schedule or Parent Disclosure Schedule but not otherwise defined therein shall have the meaning given to such term in this Agreement.

Section 9.8              Parties in Interest.  This Agreement shall be binding upon and inure solely to the benefit of each party and its successors and permitted assigns and, except as provided in Section 5.5, Section 5.8(c), Section 7.2, this Section 9.8 and Section 9.18, nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement.  Notwithstanding the foregoing, (a) from and after the Closing, the equityholders and optionholders of the Company as of immediately prior to the Closing shall be third party beneficiaries of Section 2.8, Section 2.9, Section 8.1(a)(iv) and Section 9.18, (b) the Sellers, the Representative and its Affiliates are third party beneficiaries of Section 9.19 and (c) the Financing Sources and their Affiliates are third party beneficiaries of Section 9.3, this Section 9.8, Section 9.10, Section 9.15, Section 9.16 and Section 9.18.

Section 9.9              Severability.  Whenever possible, each provision of this Agreement will be interpreted in such a manner as to be effective and valid under Applicable Law, but if any term or other provision of this Agreement is held to be invalid, illegal or unenforceable under Applicable Law, all other provisions of this Agreement shall remain in full force and effect so long as the economic or legal substance of the Transactions is not affected in any manner materially adverse to any party hereto.  Upon such determination that any term or other provision of this Agreement is invalid, illegal or unenforceable under Applicable Law, the parties hereto shall 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 in order that the Transactions are consummated as originally contemplated to the greatest extent possible.

Section 9.10           Amendment.  Prior to the Effective Time, subject to Applicable Law (including the DGCL) and Section 9.11, this Agreement may be amended or modified only by a written agreement executed and delivered by duly authorized officers of Parent, Merger Sub and the Company.  After the Effective Time, subject to Applicable Law (including the DGCL), this Agreement may be amended or modified only by written agreement executed and delivered

 

by duly authorized officers of Parent, the Surviving Corporation and the Representative.  This Agreement may not be modified or amended except as provided in the immediately preceding two sentences and any purported amendment by any party or parties hereto effected in a manner which does not comply with this Section 9.10 shall be void. Notwithstanding anything to the contrary herein, Section 9.3, Section 9.8, this Section 9.10, Section 9.15, Section 9.16 and Section 9.18 may not be amended or modified without the prior written consent of the Financing Sources.

Section 9.11           Extension; Waiver.  At any time prior to the Closing, the Company may (a) extend the time for the performance of any of the obligations or other acts of Parent or Merger Sub contained herein, (b) waive any inaccuracies in the representations and warranties of Parent or Merger Sub contained herein or in any document, certificate or writing delivered by Parent or Merger Sub pursuant hereto or (c) waive compliance by Parent or Merger Sub with any of the agreements or conditions contained herein.  At any time prior to the Closing, Parent may (i) extend the time for the performance of any of the obligations or other acts of the Company or Sellers contained herein, (ii) waive any inaccuracies in the representations and warranties of the Company contained herein or in any document, certificate or writing delivered by the Company or Sellers pursuant hereto or (iii) waive compliance by the Company with any of the agreements or conditions contained herein.  Any agreement on the part of any party hereto to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party.  Any waiver of any term or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any other term or condition of this Agreement.  The failure of any party hereto to assert any of its rights hereunder shall not constitute a waiver of such rights.

Section 9.12           Survival of Representations and Covenants.  The representations, warranties, covenants and agreements of the parties contained in this Agreement shall terminate as of and shall not survive beyond the Closing for all purposes, including any right to damages under any theory or cause of action, and there shall be no Liability in respect thereof, including but not limited to Liability for any inaccuracy, misrepresentation, breach of, default in, or failure to perform any such representations, warranties, covenants or agreements whether such Liability has accrued prior to or after the Closing, on the part of any party, its Affiliates or any of its or their respective partners, members, officers, directors, employees, agents or representatives, except for (i) those covenants and agreements to the extent that by their terms apply or are to be performed in whole or in part at or after the Closing, (ii) this ARTICLE IX, which surviving provisions shall be the sole and exclusive remedies of each party with respect to this Agreement from and after the Closing, and (iii) any claims for Actual Fraud committed by such Person.

Section 9.13           Counterparts; Facsimile Signatures.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement.  Delivery of an executed counterpart of a signature page to this Agreement by facsimile or scanned pages in.PDF format shall be effective as delivery of a manually executed counterpart to this Agreement.

Section 9.14           Obligations of Parent and Merger Sub.  The obligations of Parent and Merger Sub hereunder are jointly and severally guaranteed by each other.

 

Section 9.15           WAIVER OF JURY TRIAL.  THE PARTIES TO THIS AGREEMENT EACH HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, INCLUDING ANY DISPUTE ARISING OUT OF OR RELATING TO THE DEBT FINANCING COMMITMENT LETTER OR THE PERFORMANCE THEREOF, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY, OR OTHERWISE.  THE PARTIES TO THIS AGREEMENT EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

Section 9.16           Jurisdiction and Venue.  Each of the parties hereto (i) submits to the exclusive jurisdiction of the Chancery Court of the State of Delaware (or, if the Chancery Court of the State of Delaware declines to accept jurisdiction over a particular matter, any state or federal court sitting in Delaware) in any Claim arising out of or relating to this Agreement, (ii) agrees that all claims in respect of such Claim may be heard and determined in any such court and (iii) agrees not to bring any Claim arising out of or relating to this Agreement in any other court.  Each of the parties hereto waives any defense of inconvenient forum to the maintenance of any Claim so brought and waives any bond, surety or other security that might be required of any other party with respect thereto.  Each party hereto agrees that service of summons and complaint or any other process that might be served in any Claim may be made on such party by sending or delivering a copy of the process to the party to be served at the address of the party and in the manner provided for the giving of notices in Section 9.2.  Nothing in this Section 9.16, however, shall affect the right of any party to serve legal process in any other manner permitted by the Applicable Law.  Each party hereto agrees that a final, non-appealable judgment in any Claim so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by Applicable Law. Notwithstanding anything to the contrary herein, each party hereto hereby irrevocably agrees (i) that any Claim of any kind or description, whether in law or in equity, whether in contract or in tort or otherwise, involving the Financing Sources arising out of or relating to the Transactions, the Debt Financing and the transactions contemplated by the Debt Financing Commitment Letter, any related fee letters or the performance of services thereunder shall be brought to the exclusive jurisdiction of any state or federal court sitting in the City of New York, Borough of Manhattan, (ii) not to bring or permit any of its Affiliates to bring or support any other Person in bringing any such Claim  and (iii) to waive any right to trial by jury in respect of any such Claim.

Section 9.17           Remedies.

(a)            Any and all remedies provided herein will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of any one remedy will not preclude the exercise of any other

 

remedy. Parent and the Company agree that irreparable harm, for which monetary damages, even if available, would not be an adequate remedy, would occur in the event that the parties hereto do not perform their respective obligations under the provisions of this Agreement (including failing to comply with their obligations under Section 5.8 or take such actions as are required of them hereunder to consummate the Transactions) in accordance with their specific terms or otherwise breach such provisions. It is accordingly agreed that, prior to the valid termination of this Agreement pursuant to Section 7.1, the parties shall be entitled to an injunction or injunctions, specific performance and other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement (including Section 5.8 and Parent’s obligations to consummate the Transactions if it is required to do so hereunder), in each case, without posting a bond or undertaking and without needing to prove damages, this being in addition to any other remedy to which they are entitled at law or in equity. The foregoing right shall include the right of the Company and the Representative to cause Parent to cause the Transactions to be consummated, in each case, if, the conditions set forth in Section 6.1 and Section 6.2 have been satisfied or waived (other than conditions which by their nature cannot be satisfied until the Closing, but subject to such conditions being capable of being satisfied at such time). Each of Parent, Merger Sub and the Company agrees that it will not oppose the granting of an injunction, specific performance and other equitable relief when expressly available pursuant to the terms of this Agreement on the basis that the other parties have an adequate remedy at law or an award of specific performance is not an appropriate remedy for any reason at law or equity.

(b)            To the extent any party hereto brings a Claim or other similar process to enforce specifically the performance of the terms and provisions of this Agreement (other than an action to enforce specifically any provision that expressly survives termination of this Agreement) when expressly available to such party pursuant to the terms of this Agreement, the Termination Date shall automatically be extended to (i) the twentieth (20^th) Business Day following the resolution of such Claim or other similar process or (ii) such other time period established by the court presiding over such Claim or other similar process (and Parent shall use commercially reasonable efforts to extend the term of any Financing beyond the revised Termination Date as extended by this Section 9.17).

Section 9.18           Non-Recourse.  Except for any Claims for Actual Fraud committed by such Person, all Claims (whether in contract or in tort, in law or in equity) that may be based upon, arise out of or relate to this Agreement or the other Ancillary Documents, or the negotiation, execution or performance of this Agreement or the other Ancillary Documents (including any representation or warranty made in or in connection with this Agreement or the other Ancillary Documents or as an inducement to enter into this Agreement or the other Ancillary Documents), may be made only against the entities that are expressly identified as parties hereto and thereto.  Except for any Claims for Actual Fraud committed by such Person, no Person who is not a named party to this Agreement or the other Ancillary Documents, including any past, present or future director, officer, employee, incorporator, member, partner, stockholder, Affiliate, agent, attorney or representative of any named party to this Agreement or the other Ancillary Documents (“Non-Party Affiliates”), shall have any Liability (whether in contract or in tort, in law or in equity, or based upon any theory that seeks to impose Liability of an entity party against its owners or affiliates) for any obligations or Liabilities arising under, in connection with or related to this Agreement or such other Ancillary Agreement (as the case may be) or for any claim based on, in respect of, or by reason of this Agreement or such other

 

Ancillary Agreement (as the case may be) or the negotiation or execution hereof or thereof; and each party hereto waives and releases all such Liabilities, claims and obligations against any such Non-Party Affiliates. Non-Party Affiliates are expressly intended as third party beneficiaries of this provision of this Agreement. For the avoidance of doubt, none of the Financing Sources will have any liability to the Seller or its Affiliates relating to or arising out of this Agreement, the Debt Financing or otherwise, whether at law, or equity, in contract, in tort or otherwise, and neither the Seller nor any of its Affiliates will have any rights or claims against any of the Financing Sources hereunder or thereunder; provided that this sentence shall in no way limit the Company’s ability to seek specific performance pursuant to Section 9.17.

Section 9.19           Waiver of Conflicts and Privileged Information.

(a)            Each party to this Agreement acknowledges that (i) one or more of the Group Companies, the Representative, Sellers and/or their respective Affiliates have retained Kirkland & Ellis LLP (the “Law Firm”) to act as their counsel in connection with the Transactions (including the negotiation, preparation, execution and delivery of this Agreement and related agreements, and the consummation of the Transactions) as well as other past and ongoing matters, (ii) Law Firm has not acted as counsel for any other Person in connection with the Transactions and (iii) no Person other than the Group Companies, one or more of the Sellers, the Representative or their respective Affiliates has the status of a Law Firm client for conflict of interest or any other purpose as a result thereof.  Parent hereby (A) waives and will not assert, and will cause each of its Affiliates (including, after the Closing, the Group Companies) to waive and not assert, any conflict of interest relating to Law Firm’s representation after the Closing of any Seller, the Representative or their respective Affiliates in any matter involving the Transactions (including the negotiation, preparation, execution and delivery of this Agreement and related agreements, and the consummation of the Transactions), including in any litigation, arbitration, mediation or other proceeding, and (B) consents to, and will cause each of its Subsidiaries (including, after the Closing, the Group Companies) to consent to, any such representation, even though in each case (x) the interests of such Seller, the Representative or such Affiliates may be directly adverse to Parent, the Group Companies or their respective Affiliates, (y) Law Firm may have represented the Sellers, the Group Companies, the Representative or their respective Affiliates in a substantially related matter, or (z) Law Firm may be handling other ongoing matters for Parent, the Group Companies, or any of their respective Affiliates.

(b)            Parent agrees that, after the Closing, none of Parent, the Group Companies or any of their Affiliates will have any right to access or control any of Law Firm’s records or communications relating to or affecting the Transactions (including the negotiation, preparation, execution and delivery of this Agreement and related agreements, and the consummation of the Transactions or thereby), which will be the property of (and be controlled by) the Representative.  In addition, Parent agrees that it would be impractical to remove all Attorney-Client Communications from the records (including e-mails and other electronic files) of the Group Companies.  Accordingly, Parent will not, and will cause each of its Affiliates (including, after the Closing, the Group Companies) not to, use any Attorney-Client Communication remaining in the records of the Group Companies after the Closing in a manner that may be adverse to the Representative, any Seller or any of their respective Affiliates.

 

(c)            Parent agrees, on its own behalf and on behalf of its Affiliates (including, after the Closing, the Group Companies), that from and after the Closing (i) the attorney-client privilege, all other evidentiary privileges, and the expectation of client confidence as to all Attorney-Client Communications belong to the Sellers and will not pass to or be claimed by Parent, the Group Companies, or any of their Affiliates, and (ii) the Representative will have the exclusive right to control, assert or waive the attorney-client privilege, any other evidentiary privilege, and the expectation of client confidence with respect to such Attorney-Client Communications.  Accordingly, Parent will not, and will cause each of its Affiliates (including, after the Closing, the Group Companies) not to, (x) assert any attorney-client privilege, other evidentiary privilege, or expectation of client confidence with respect to any Attorney-Client Communication, except in the event of a post-Closing dispute with a Person that is not a Seller, the Representative or any of their respective Affiliates; or (y) waive any privilege relating to such Attorney-Client Communication to the extent the Sellers are asserting such privilege in any proceeding and have notified Parent in respect thereof.  Furthermore, Parent agrees, on its own behalf and on behalf of each of its Affiliates (including, after the Closing, the Group Companies), that in the event of a dispute between any Seller, the Representative or any of their respective Affiliates, on the one hand, and the Group Companies, on the other hand, arising out of or relating to any matter in which Law Firm jointly represented both parties, neither the attorney-client privilege, the expectation of client confidence, nor any right to any other evidentiary privilege will protect from disclosure to such Seller, the Representative or their respective Affiliates any information or documents developed or shared during the course of Law Firm’s joint representation.