Exhibit 10.1
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) IS OF THE TYPE THAT THE COMPANY TREATS AS PRIVATE OR CONFIDENTIAL. OMISSIONS ARE DESIGNATED WITH [**].
STOCK PURCHASE AGREEMENT BY AND AMONG
CHASE CORPORATION,
NUCERA SOLUTIONS HOLDCO LP, AND
NUCERA HOLDINGS INC.
Dated as of July 15, 2022
TABLE OF CONTENTS
Page
ARTICLE IV REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE
ARTICLE V REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE
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Annex I – Net Working Capital Methodology Exhibit A – R&W Insurance Policy
Exhibit B – Escrow Agreement
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT is dated as of July 15, 2022 (this “Agreement”), by and among Chase Corporation, a Massachusetts corporation (“Buyer”), NuCera Holdings Inc., a Delaware corporation (the “Company”), and NuCera Solutions Holdco LP, a Delaware limited partnership (the “Seller”).
WHEREAS, the Seller owns all of the issued and outstanding shares of common stock of the Company, par value $0.001 per share (the “Common Stock”); and
WHEREAS, Buyer desires to purchase from the Seller, and the Seller desires to sell to Buyer, all of the shares of Common Stock (the “Purchased Shares”) on the terms and conditions specified herein (the “Sale Transaction”).
NOW, THEREFORE, in consideration of the premises and the mutual promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I
Section 1.1 Definitions. For the purposes of this Agreement, each of the following terms shall have the following respective meanings:
“Action” means any legal action, lawsuit, litigation, examination, complaint, demand, claim, administrative or arbitral action, hearing, inquiry, investigation or other proceeding (public or private) or other legal proceeding (whether sounding in contract, tort or otherwise, whether civil or criminal and whether brought at law or in equity).
“Affiliate” means, with respect to any specified Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with such specified Person.
“Affiliated Group” means an affiliated group as defined in Section 1504 of the Code (or any analogous combined, consolidated or unitary group defined under state, local or non-U.S. Applicable Law relating to income Tax) of which any of the Target Companies is or has been a member.
“Ancillary Agreements” means the Escrow Agreement and any other documents and certificates delivered pursuant to this Agreement.
“Antitrust Law” means any Applicable Law or Governmental Order that is designed to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade, including the HSR Act, the Sherman Act, as amended, the Clayton Act, as amended, the Federal Trade Commission Act, as amended, the Council Regulation (EC) No. 139/2004 of 20 January 2004 on the control of concentrations between undertakings and in any case that are applicable to the transactions contemplated by this Agreement.
“Applicable Law” means, with respect to any Person’s status, action or inaction, any US federal, state or local or any foreign law, statute, standard, ordinance, code, rule or regulation, in each case which has jurisdiction over such Person’s status, action or inaction.
“Assets” means all properties, assets and rights of every kind, nature and description whatsoever whether tangible or intangible, real, personal or mixed, wherever located.
“Baker Hughes” means Baker Hughes Holdings, LLC and any Subsidiaries or Affiliates.
“BH Purchase Agreement” means that certain Stock and Asset Purchase Agreement by and between Baker Hughes and NuCera Solutions LLC dated July 21, 2020.
“Business” means the businesses conducted by the Target Companies as of the date hereof and the Closing Date.
“Business Day” means any day other than a Saturday, Sunday or other day on which banks in New York, New York are required to be closed.
“Buyer Material Adverse Effect” means, with respect to Buyer, a material adverse effect on the ability of Buyer to consummate the Contemplated Transactions in a timely manner or to perform its obligations under any of the Transaction Documents.
“Cash” means, without duplication, the aggregate amount of all cash and cash equivalents required or permitted to be reflected as cash and cash equivalents on a consolidated balance sheet of such Person and its Subsidiaries as of such date prepared in accordance with GAAP, (i) including all outstanding security deposits, and cash and checks received by such Person or their banks prior to such date whether or not cleared and (ii) excluding any checks written by such Person prior to such date but not yet cleared and any Restricted Cash.
“Closing Cash” means the Cash of the Target Companies at the Reference Time.
“Closing Indebtedness” means the Indebtedness of the Target Companies at the Reference Time.
“Code” means the Internal Revenue Code of 1986, as amended.
“Company Intellectual Property Rights” means all Intellectual Property Rights owned or purported to be owned by the Target Companies, including all Intellectual Property Rights in and to Company Technology.
“Company’s Knowledge” and similar formulations means (a) the actual knowledge of Steve McKeown, Kevin Chesnut and/or Shawn Ham, and (b) the knowledge that any such Person could reasonably be expected to discover or become aware of after making a reasonable inquiry concerning the existence of such fact or other matter at issue.
“Company Technology” means any and all Technology owned or purported to be owned by the Target Companies in connection with the conduct and operation of the Business.
“Compensation” means, with respect to any employee of the Target Companies, all salaries, compensation, remuneration, bonuses or benefits (including issuances or grants of Equity Interests), made by the Target Companies to or for the benefit of such employee.
“Consent” means any approval, consent, ratification, waiver, clearance or other authorization of, notice to or registration, qualification, designation, declaration or filing with any Person.
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“Contemplated Transactions” means the transactions contemplated by (a) this Agreement (including the Sale Transaction), (b) the delivery and performance of the Ancillary Agreements and (c) the payment of fees and expenses relating to such transactions.
“Contractual Obligation” means, with respect to any Person, any contract, agreement, lease, sublease, license, or sublicense, whether written or oral, to which or by which such Person is a party that is in effect.
“COVID-19” means SARS-CoV-2 or COVID-19, and any variants or evolutions thereof or related or associated epidemics, pandemic or disease outbreaks.
“Disclosure Schedule” means the Disclosure Schedules to this Agreement.
“Employee Plan” means any “employee benefit plan” within the meaning of Section 3(3) of ERISA (whether or not subject to ERISA) and any fringe benefit, stock option, equity-based compensation, phantom equity, bonus or incentive plan or arrangement, severance pay policy or agreement, employment, retirement, post-employment, pension, profit sharing or deferred compensation plan or agreement, tuition reimbursement, education assistance, relocation assistance, fringe benefit or any other benefit or compensation plan, policy, program, arrangement or agreement, including any statutory plan to which contributions are mandated to a Governmental Authority.
“Encumbrance” means any lien, pledge, hypothecation, charge, mortgage, security interest, encumbrance, equitable interest, claim, right of possession, encroachment, covenant, option, right of first refusal, preemptive right, community property interest, defect, exception, adverse rights or restriction on use, transfer, voting or exercise of any other attribute of ownership of any kind, or restriction of any kind.
“Enforceable” means, with respect to any Contractual Obligation stated to be Enforceable by or against any Person, that such Contractual Obligation is a legal, valid and binding obligation enforceable by or against such Person in accordance with its terms, except to the extent that enforcement of the rights and remedies created thereby is subject to bankruptcy, insolvency, reorganization, moratorium and other similar law of general application affecting the rights and remedies of creditors and to general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law).
“Environmental Law” means any Applicable Law relating to protection of the environment, (including ambient air, soil, surface water or groundwater, or subsurface strata), to human health and safety, to endangered or threatened species, to pollution (or cleanup thereof) or the protection of natural resources, or to any emission, discharge, generation, processing, storage, holding, abatement, existence, Release, threatened Release or transportation of any Hazardous Materials, including without limitation (i) CERCLA, the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et seq.; the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C. §§ 7401 et seq.; the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. §§ 651 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. § 5101 et seq.; the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. § 136 et seq.; the Safe Drinking Water Act, 41 U.S.C. §§ 300f et seq.; any state, county, municipal or local statutes, laws or ordinances similar or analogous to the federal statutes listed above; any amendments to the statutes, laws or ordinances listed above, in existence on the date hereof; any rules, regulations, guidelines, directives, orders or the like adopted pursuant to or implementing the statutes, laws,
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ordinances and amendments above; and any other law, statute, ordinance, amendment, rule, regulation, guideline, directive, order or the like currently in effect relating to environmental, health or safety matters, and (ii) all other requirements relating to the manufacture, processing, distribution, sale, use, handling, transportation, treatment, receipt, storage, disposal, release or threat of release or discharge of Hazardous Materials, or pertaining to reporting, licensing, permitting, investigating and remediating emissions, discharges, Releases of Hazardous Materials into the air, surface water, sediments, groundwater or land or human or worker health and safety (as they may be affected by the release of or exposure to Hazardous Materials).
“Environmental Permit” means any Permit that is required by a Governmental Authority under or issued, granted given, authorized by or made pursuant to any Environmental Law.
“Equity Interest” means, with respect to any Person, (a) any capital stock, partnership or membership interest, unit of participation or other similar interest (however designated) in such Person and
(b) any option, warrant, purchase right, conversion right, exchange right or other Contractual Obligation which would entitle any other Person to acquire any such interest in such Person.
“ERISA” means the US Employee Retirement Income Security Act of 1974, as amended.
“Escrow Agent” means Wilmington Trust, National Association, or its successor, in its capacity as such pursuant to the terms of the Escrow Agreement.
“Escrow Agreement” means the Escrow Agreement, in the form of Exhibit B attached hereto, to be entered into by Buyer, the Seller and the Escrow Agent.
“Excluded Liabilities” means the Liabilities that the Target Companies did not assume pursuant to the BH Purchase Agreement.
“Existing Contamination” means all contamination arising from or relating to [**], as such terms are defined in the [**] and the Disclosure Letter attached thereto.
“FMLA” means the Family and Medical Leave Act of 1993, as amended.
“Fraud” means common law fraud under the Laws of the State of Delaware (excluding constructive fraud, recklessness or negligent fraud) brought against a party hereto based on the making of a representation or warranty of such party contained in this Agreement, which misrepresentation is made for the purpose of inducing any other party to act and upon which such other party justifiably relies on.
“Fundamental Representations” means, collectively, the representations and warranties set forth in Section 4.1 (Organization), Section 4.2 (Power and Authorization), Section 4.5 (Capitalization) and Section 4.26 (No Brokers).
“GAAP” means generally accepted accounting principles in the US as in effect from time to time.
“Government Official” means any officer or employee of a Governmental Authority or any department, agency, or instrumentality thereof, or of a public international organization, or any person acting in an official capacity for or on behalf of any such Governmental Authority, department, agency,
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instrumentality or public international organization, excluding any such Persons related to the government of the United States.
“Governmental Authority” means a federal, state, provincial, local, county or municipal government, governmental, or political subdivision thereof, or any regulatory body, arbitrator, mediator, arbitral body (public or private), agency, commission or authority, state owned or controlled enterprise, any court or judicial authority, whether international or national, or any multi-lateral development body.
“Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, ruling, decision, verdict, determination or award made, issued or entered by or with any Governmental Authority.
“Hazardous Materials” means any substance, chemical, material or waste that: (i) is currently defined, listed, identified, or regulated as “hazardous,” “acutely hazardous,” “toxic,” “dangerous,” a “pollutant,” a “contaminant” or words of similar import or regulatory effect under Environmental Law, (ii) requires investigation, removal or remediation under any Environmental Law; (iii) is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous and is regulated by any Governmental Authority or Environmental Law; and (iv) is or contains asbestos or asbestos containing materials, urea formaldehyde foam insulation, polychlorinated biphenyls, poly- and perfluoroalkyl substances, petroleum or petroleum-derived products or compounds (including natural gas, gasoline, diesel fuel, oil, and other fuels and petroleum products or fractions thereof), gas or related materials, mold, radioactive materials, or polychlorinated biphenyls (PCBs).
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
“Indebtedness” means, with respect to any Person, and without duplication: (a) any Liability of such Person: (i) for borrowed money (including the current portion thereof); (ii) under any reimbursement obligation relating to a letter of credit, bankers’ acceptance or note purchase facility; (iii) evidenced by a bond, note, debenture (including a purchase money obligation) or similar Contractual Obligations; (iv) created or arising under any conditional sale or other title retention arrangement or vendor financing; (v) secured by a purchase money mortgage or other Encumbrance to secure all or part of the purchase price of the property subject to such Encumbrance; (vi) for the deferred purchase price of business, equipment or property, including the maximum gross amount of all seller notes and “earn-out,” milestone, purchase price adjustment or other similar payments that are outside of the Ordinary Course of Business; (vii) net actual liability for Contractual Obligations relating to interest rate, currency rate or commodity price protection, swap agreements, collar agreements and other hedging agreements if terminated at Closing; (viii) in respect of any severance payable to former employees owed prior to or at the Closing (including the employer portion of any payroll, employment or similar Taxes related thereto) that are accrued (or are required to be accrued by GAAP) at or prior to the Closing and not included in the calculation of Net Working Capital; (ix) any unfunded or underfunded pension or qualified deferred compensation liabilities, measured as of Closing (including the employer portion of any payroll, employment or similar Taxes related thereto), but excluding any such amounts under the mandatory pension plan contributed to by NuCera Solutions France, SARL; (x) for capitalized liabilities under GAAP of such Person as lessee under leases that have been classified as capital or finance leases in the Financial Statements or that would be required to be classified as capital or finance leases in accordance with GAAP, recorded as capital (or finance) leases (and for the avoidance of doubt, excluding all operating leases); (xi) any declared but unpaid dividends and distributions or amounts owed to Seller or its Affiliates; or (xii) the items listed on Section 1.1 of the Disclosure Schedule under the heading “Debt-Like Items”, and (b) any Liability of others described in the preceding clause (a) that such Person has guaranteed, that is recourse to such Person or any of its assets or that is otherwise its legal Liability. For purposes of this Agreement, “Indebtedness” (i) includes any and all accrued or unpaid interest, (ii) includes prepayment penalties, breakage costs, premiums (including make whole premiums)
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or penalties and fees or expenses actually incurred with respect to the prepayment or repayment of any Indebtedness at Closing, and (iii) excludes any amounts included in Net Working Capital or Seller Transaction Expenses.
“Intellectual Property Rights” means any and all of the following, as they exist in any jurisdiction throughout the world: (a) patents, patent applications of any kind and patent rights; (b) registered and unregistered trademarks, service marks, trade names, trade dress, corporate names, logos, packaging design, slogans and internet domain names, and other indicia of source, origin or quality, together with all goodwill associated with any of the foregoing, and registrations and applications for registration of any of the foregoing; (c) copyrights in both published and unpublished works and registrations and applications for registration of any of the foregoing, including, without limitation, copyrightable works, works of authorships, compilations, database and all derivatives, translations, adaptations and combinations of the above; (d) rights under trade secret law in trade secrets and other confidential or proprietary information (including customer and supplier lists, customer and supplier records, pricing and cost information, and Technology); (e) any and all other intellectual property rights and/or proprietary rights recognized by law;
(f) any goodwill associated with each of the foregoing and (g) all rights to sue or recover and retain damages and costs (including attorneys’ fees) for the past, present and future infringement, misappropriation or other violation of any of the foregoing.
“Liability” means, with respect to any Person, any and all debts, claims, liabilities, commitments and obligations, whether accrued or fixed, known or unknown, absolute or contingent, matured or unmatured, or disputed or undisputed, liquidated or unliquidated or determined or determinable, including any liability or obligation of such Person required under GAAP to be accrued on the financial statements of such Person.
“Material Adverse Effect” means any fact, change, effect, event, occurrence, or development (each a “Change”, and collectively, “Changes”) that, individually or in the aggregate, has had or would reasonably be expected to have a materially adverse effect on (a) the Business, Assets or condition (financial or otherwise) of the Target Companies, taken as a whole, or (b) the ability of the Seller or any of the Target Companies to consummate the Contemplated Transactions; provided, however, that none of the following shall be deemed in themselves, either alone or in combination, to constitute, and none of the following shall be taken into account in determining whether there has been or could be, a Material Adverse Effect (unless, with respect to clauses (i), (ii), (iii), (iv), (ix) and (xi) below, such Change has a material and disproportionate effect on the Target Companies, taken as a whole, as compared to the effect of such Change on a business similarly situated to the Business): (i) operating, business, regulatory or other conditions in the industry in which any Target Company operates; (ii) general economic conditions, including changes in the credit, debt or financial, or capital markets (including changes in interest or exchange rates), in each case, in the US or anywhere else in the world; (iii) conditions in the securities markets, capital markets, credit markets, currency markets or other financial markets in the US or any other country or region in the world, including (A) changes in interest rates in the US or any other country or region in the world and changes in exchange rates for the currencies of any countries and (B) any suspension of trading in securities (whether equity, debt, derivative or hybrid securities) generally on any securities exchange or over-the- counter market operating in the US or any other country or region in the world; (iv) any stoppage or shutdown of any Governmental Authority (including any default by a Governmental Authority or delays in payments or delays or failures to act by any Governmental Authority); (v) the announcement or pendency or consummation of the Contemplated Transactions (including the identity or business plans of Buyer or its Affiliates) or compliance with the terms of, or taking any action permitted or required by, this Agreement, including any impact thereof on relationships, contractual or otherwise, with customers, suppliers, distributors, licensors, licensees, joint venture partners or employees; (vi) changes in GAAP or
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other accounting requirements or principles or any changes in Applicable Laws or the interpretation thereof; (vii) actions required to be taken under Applicable Laws; (viii) the failure of the Target Companies to meet or achieve the results set forth in any internal budget, plan, projection or forecast for any period; (ix) global, national or regional political, social, financial, economic or business conditions, including hostilities, acts of war, sabotage or terrorism or military actions or any escalation, worsening or diminution of any such hostilities, acts of war, sabotage or terrorism or military actions existing or underway; (x) hurricanes, earthquakes, floods, tsunamis, tornadoes, mudslides, wild fires or other natural disasters and other force majeure events in the US or any other country or region in the world; (xi) any epidemic, pandemic or disease outbreak or any curfews or other restrictions that relate to, or arise out of, any epidemic, pandemic or disease outbreak or material worsening of such conditions threatened or existing as of the date of this Agreement; and (xii) any action taken by the Target Companies or any omission to act by the Target Companies, in each case, that is in compliance with the terms of this Agreement or was otherwise taken (or not taken) with the written consent of or at the written request of Buyer or any of its Affiliates.
“Net Working Capital” means (i) all current assets (excluding Closing Cash and any Tax assets) of the Target Companies as of the Reference Time (but before taking into account the consummation of the Contemplated Transactions), minus (ii) all current liabilities (excluding any items constituting Closing Indebtedness, Unpaid Pre-Closing Taxes or Seller Transaction Expenses) of the Target Companies as of the Reference Time (but before taking into account the consummation of the Contemplated Transactions). For the avoidance of doubt, the determination of Net Working Capital for purposes of calculating Estimated Aggregate Consideration Amount and Final Aggregate Consideration Amount and the preparation of the Closing Statement will take into account only those components (i.e., line items and specified accounts) used in the illustrative calculation of Net Working Capital in accordance with the Net Working Capital Methodology.
“Net Working Capital Ceiling” means an amount equal to $19,500,000.
“Net Working Capital Floor” means an amount equal to $18,500,000.
“Net Working Capital Methodology” means the agreed methodologies, practices, classifications, judgments, estimation techniques, line items, specified accounts, assumptions and principles utilized for the purposes of calculating Net Working Capital set forth on Annex I of this Agreement and as reflected in the illustrative calculation of Net Working Capital set forth on Annex I of this Agreement.
“Ordinary Course of Business” means, with respect to any Person, an action taken by such Person in the ordinary course of such Person’s business and consistent with the past practices of such Person’s business.
“Organizational Documents” means, with respect to any Person (other than an individual), (a) the certificate or articles of incorporation, association or organization (together with any memorandum of association) and any limited liability company, operating or partnership agreement adopted or filed in connection with the creation, formation or organization of such Person and (b) all by-laws and equity holders agreements to which such Person is a party relating to the organization or governance of such Person, in each case, as amended or supplemented.
“Parties” means Buyer, the Company and the Seller.
“Permit” means any license, permit, approval, registration, certificate, variance or other similar right or authorization obtained, or required to be obtained, from any Governmental Authority.
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“Permitted Encumbrances” means (a) statutory liens for current Taxes, assessments or other governmental charges or levies not yet due and payable or liens for Taxes, assessments or other governmental charges or levies the amount or validity of which is being contested in good faith in appropriate proceedings and for which appropriate reserves have been established; (b) mechanics’, materialmen’s, carriers’, workers’, repairers’ and similar statutory liens and other similar matters of record affecting title incurred in the Ordinary Course of Business and which are not delinquent; (c) liens to secure landlords, lessors or renters under leases or rental agreements (to the extent the applicable Target Company is not in default under such lease or rental agreement); (e) requirements and restrictions of zoning, building and other laws and which are not material to the Business; (f) encumbrances set forth in any title policy or title report or survey with respect to leases and other encumbrances of record and which are not material to the Business; (g) purchase money liens securing rental payments under capital lease arrangements; and (h) other imperfections on title, if any, that have not had, and would not reasonably be expected to have, a Material Adverse Effect.
“Person” means any individual or any corporation, association, partnership, limited liability company, joint venture, joint stock or other company, business trust, trust, organization, Governmental Authority or other entity of any kind.
“Personal Data” means all data that identifies a natural person and is subject to regulation by Privacy and Information Security Requirements applicable to any Target Company.
“Post-Closing Tax Period” means any taxable period that begins after the Closing Date and the portion of any Straddle Period that begins after the Closing Date.
“Pre-Closing Tax Period” means any taxable period ending on or before the Closing Date and the portion of any Straddle Period up to and including the Closing Date.
“Privacy and Information Security Requirements” means (i) all Applicable Laws regulating the privacy and/or security of Personal Data (ii) the Payment Card Industry Data Security Standards, to the extent that they are applicable and binding on any Target Company; and (iii) each Target Company’s published privacy policy.
“Purchase Price Adjustment Escrow Amount” means One Million Nine Hundred Thousand Dollars ($1,900,000).
“R&W Insurance Policy” means that certain representations and warranties insurance policy attached hereto as Exhibit A.
“Reference Time” means 12:01 a.m., New York time, on the Closing Date.
“Release” means any actual or threatened release, spill, emission, seep, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching in or allowing to escape or migrate, into or through the environment (including ambient air (indoor or outdoor), surface water, groundwater, land surface or subsurface strata or within any building, structure, facility or fixture).
“Representative” means, with respect to any Person, any director, officer, employee, agent, manager, consultant, advisor, or other representative of such Person, including legal counsel, accountants, and financial advisors.
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“Restricted Cash” means any cash or cash equivalents that are subject to restrictions, limitations, or Taxes on use or distribution or otherwise not available for general corporate use by Applicable Law or Contract (excluding security deposits).
“Securities Act” means the Securities Act of 1933, as amended.
“Seller Material Adverse Effect” means, with respect to the Seller, a material adverse effect on the ability of the Seller to consummate the Contemplated Transactions in a timely manner or to perform its obligations under any of the Transaction Documents or to perform its obligations under any of the Transaction Documents.
“Seller Transaction Expenses” means, to the extent not paid at or prior to the Closing and not included in Indebtedness or Net Working Capital, (i) all costs, fees and expenses of the Seller and the Target Companies incurred at or prior to the Closing in connection with or in anticipation of the negotiation, execution and delivery of this Agreement and the Ancillary Agreements or the consummation of the Contemplated Transactions or any similar transaction, including legal, accounting, investment banking, advisory and other costs fees and expenses, (ii) obligations due or arising prior to or at the Closing of the Seller and/or the Target Companies in respect of change of control payments to any current employee, director or consultant of the Target Companies and transaction or similar bonuses arising solely as a result of the Contemplated Transactions, (iii) any employer-side payroll, employment, unemployment, social security and other similar Taxes with respect to the amounts set forth in the foregoing clause (ii), (iv) any management or similar fees due to SKCP Catalyst Management I, LP pursuant to any management, advisory or other similar Contractual Obligation, (v) fifty-percent (50%) of any fees payable to the Escrow Agent under the Escrow Agreement and (vi) fifty-percent (50%) of the cost of the D&O Insurance.
“Solvent” means, with respect to any Person, that (a) the property of such Person, at a present fair saleable valuation, exceeds the sum of its debts (including contingent and unliquidated debts); (b) the present fair saleable value of the property of such Person exceeds the amount that will be required to pay such Person’s probable liability on its existing debts as they become absolute and matured; and (c) such Person has adequate capital to carry on its business. For the purpose of this definition, in computing the amount of contingent or unliquidated debts at any time, such debts will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become actual or matured debts.
“Straddle Period” means any taxable period beginning on or prior to and ending after the Closing
Date.
“Subsidiary” means, with respect to any specified Person, any other Person of which such specified Person, directly or indirectly through one or more Subsidiaries, (a) owns at least 50% of the outstanding Equity Interests entitled to vote generally in the election of the board of directors or similar governing body of such other Person, or (b) has the power to generally direct the business and policies of that other Person as a general partner, managing member, manager or in similar capacity.
“Target Company” means the Company or any of its Subsidiaries, and “Target Companies” means, collectively, the Company and each of its Subsidiaries.
“Tax” or “Taxes” means any and all: (i) taxes and similar charges, fees, duties, levies or other assessments, including federal, state, local and foreign income, profits, franchise, gross receipts, capital stock, goods and services, net proceeds, ad valorem, value added, alternative or add-on minimum, estimated, payroll, employment, unemployment, social security (or similar), disability, severance,
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occupation, customs, import and export, premium, stamp, occupancy, user, transfer, registration, license, recording, excess profits, windfall profits, environmental, sales, use, property, escheat, abandoned or unclaimed property, withholding, excise and any other tax of any nature whatsoever; (ii) interest, penalties, fines, additions to tax or additional amounts imposed by any taxing authority in connection with (x) any item described in clause (i) or (y) the failure to comply with any requirement imposed with respect to any Tax Returns; and (iii) liability in respect of any items described in clause (i) and/or (ii) payable by reason of Contractual Obligation, assumption, transferee or successor liability, Treasury Regulation Section 1.1502-6 (or any predecessor or successor thereof or any analogous or similar provision of applicable federal, state, local or foreign Law), operation of law or otherwise, in each case, whether disputed or not.
“Tax Return” means any return, declaration, report, claim for refund, information return or statement relating to Taxes filed or required to be filed with a Tax authority (domestic or foreign), including any schedule or attachment thereto, and including any amendment thereof.
“Technology” means all inventions, works, discoveries, innovations, know-how, information (including ideas, research and development, formulas, algorithms, compositions, processes and techniques, data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, business and marketing plans and proposals, graphics, illustrations, artwork, documentation, and manuals), databases, computer software, firmware, computer hardware, electronic, electrical, and mechanical equipment, and all other forms of technology, including improvements, modifications, works in process, derivatives, or changes, whether tangible or intangible, embodied in any form, whether or not protectable or protected by patent, copyright, trade secret law, or otherwise, and all documents and other materials recording any of the foregoing.
“Transaction Documents” means this Agreement and the Ancillary Agreements.
“Transaction Tax Deductions” means, without duplication, amounts that are deductible for relevant Tax purposes for (A) all fees, expenses and interest (including amounts treated as interest for income Tax purposes) and any breakage fees or accelerated deferred financing fees incurred by the Target Companies with respect to the payment of Closing Indebtedness in connection with the Closing, (B) all fees, costs and expenses incurred by the Target Companies in connection with or incident to this Agreement and the transactions contemplated hereby, including Seller Transaction Expenses and any other legal, accounting and investment banking fees, costs and expenses, and (C) all amounts treated as deductible for income Tax purposes as a result of the vesting of an Equity Interest in the Target Companies in connection with or relating to the Closing.
“Treasury Regulations” means the regulations promulgated under the Code.
“Unpaid Pre-Closing Taxes” means any accrued and unpaid income Taxes of the Target Companies for any Pre-Closing Tax Period for which Tax Returns are first due (with extension) after the Closing Date (calculated by taking into account the Transaction Tax Deductions and any applicable prepayments or estimated payments of the particular type of Tax), as of the end of the day on the Closing Date and calculated in accordance with Section 8.2(f), in each case calculated in a manner consistent with the past practices of the Target Companies and without any change in or introduction of any new reserves. For the avoidance of doubt, Unpaid Pre-Closing Taxes cannot be a negative number and will be determined without regard to any deferred Tax assets and/or deferred Tax Liabilities.
“US” means the United States of America.
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Section 1.2 Additional Defined Terms.
Each of the following terms is defined in the Section set forth opposite such term:
280G Vote | Section 7.8 |
Accounting Firm | Section 3.3(b) |
Affected Employees | Section 8.1(b) |
Aggregate Consideration Amount | Section 3.1(a) |
Agreement | Preamble |
Audited Financials | Section 4.6(a)(i) |
BIS | Section 4.19 |
Buyer | Preamble |
Buyer Adjustment Amount | Section 3.3(d) |
Buyer Released Claims | Section 8.7(a) |
Buyer Released Parties | Section 8.7(b) |
Buyer Releasing Parties | Section 8.7(a) |
Closing | Section 2.2 |
Closing Date | Section 2.2 |
Closing Statement | Section 3.3(a) |
Commitment Period | Section 8.1(a) |
Common Stock | Recitals |
Company | Preamble |
Company Plan | Section 4.13(a) |
Company Registrations | Section 4.10(a) |
Confidentiality Agreement | Section 8.4 |
Contracting Parties | Section 12.4 |
D&O Indemnified Person | Section 8.3(a) |
D&O Insurance | Section 8.3(c) |
Debt Payoff Letters | Section 7.6 |
Disclosed Contractual Obligations | Section 4.14 |
Disputed Items | Section 3.3(b) |
DOJ | Section 7.4(a) |
Embargoed Persons | Section 4.19 |
Estimated Aggregate Consideration Amount | Section 3.1(b) |
Excess Amount | Section 3.3(c) |
Final Aggregate Consideration Amount | Section 3.3(c) |
Financials | Section 4.6(a)(ii) |
FTC | Section 7.4(a) |
Goodwin | Section 8.6(a) |
Interim Financials | Section 4.6(a)(ii) |
Key Employees Schedule | Section 7.7 |
Material Customer | Section 4.25(b) |
Material Supplier | Section 4.25(a) |
Most Recent Balance Sheet | Section 4.6(a)(ii) |
Most Recent Balance Sheet Date | Section 4.6(a)(ii) |
Nonparty Affiliate | Section 12.4 |
Objections Statement | Section 3.3(b) |
OFAC | Section 4.19 |
Outbound IP Contractual Obligations | Section 4.10(c) |
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Parachute Payment Waiver | Section 7.8 |
Pull and Refile | Section 7.4(a) |
Purchase Price Adjustment Escrow Account | Section 3.2(d) |
Purchased Shares | Recitals |
Real Property | Section 4.9 |
Released Claims | Section 8.7 |
Released Party | Section 8.7 |
Releasing Party | Section 8.7 |
Restricted Period | Section 8.5(a) |
Review Period | Section 7.8 |
Sale | Recitals |
Second Request | Section 7.4(a) |
Section 280G Approval | Section 7.8 |
Section 280G Soliciting Materials | Section 7.8 |
Seller | Preamble |
Seller Released Claims | Section 8.7(b) |
Seller Released Parties | Section 8.7(a) |
Seller Releasing Parties | Section 8.7(b) |
Termination Date | Section 10.1(b) |
WARN | Section 4.21(d) |
Warranty | Section 4.25(b) |
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ARTICLE II
SALE AND PURCHASE OF PURCHASED SHARES; CLOSING
Section 2.1 Sale and Purchase of Purchased Shares. Upon the terms and subject to the conditions contained herein, on the Closing Date, Buyer shall purchase the Purchased Shares from the Seller, and the Seller shall sell to Buyer the Purchased Shares for a cash amount (subject to adjustment as provided in Article III) equal to the Aggregate Consideration Amount plus any additional amounts payable to Seller pursuant to the terms of this Agreement, free and clear of any and all Encumbrances (other than any (a) restrictions on transfer imposed by any securities laws, and (b) Encumbrances created by or resulting from actions of Buyer or any of its Affiliates or Representatives).
Section 2.2 Closing. The closing of the Sale Transaction (the “Closing”) shall occur no later than the second (2nd) Business Day after the fulfillment or waiver of all conditions set forth in Article IX (other than those to be satisfied at the Closing itself, but subject to the satisfaction or waiver of such conditions) (the “Closing Date”), and shall take place remotely via the exchange of signature pages.
ARTICLE III
CLOSING PAYMENTS AND PURCHASE PRICE ADJUSTMENT
Section 3.1 Calculation of Closing and Final Consideration.
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Section 3.2 Payments at Closing; Transaction Expenses and Closing Indebtedness.
Section 3.3 Post-Closing Adjustment.
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Buyer or any other transaction entered into by Buyer in connection with the consummation of the Contemplated Transactions, (ii) any of the plans, transactions, or changes which Buyer intends to initiate or make or cause to be initiated or made after the Closing with respect to the Target Companies or the Business or Assets, or any facts or circumstances that are unique or particular to Buyer or any of its Assets or Liabilities, and (iii) with respect to the calculation of Net Working Capital for purposes of the Closing Statement, the introduction or inclusion by Buyer or Seller of any line items or accounts not expressly included in the Net Working Capital Methodology.
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in the proportion that the aggregate dollar amount of Disputed Items submitted thereto for resolution that are unsuccessfully disputed by the Seller (as finally determined by the Accounting Firm) bears to the aggregate dollar amount of such submitted Disputed Item and (ii) will be borne by Buyer in the proportion that the aggregate dollar amount of Disputed Items submitted thereto for resolution that are successfully disputed by the Seller (as finally determined by the Accounting Firm) bears to the aggregate dollar amount of such submitted Disputed Items.
(5) days after the determination of the Final Aggregate Consideration Amount, (i) Buyer will pay (or will cause to be paid) to the Seller, by wire transfer of immediately available funds, an amount equal to the Excess Amount and (ii) Buyer and Seller will jointly instruct the Escrow Agent to pay to the Seller by wire transfer of immediately available funds the Purchase Price Adjustment Escrow Amount and any remaining amount in the Purchase Price Adjustment Escrow Account.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE TARGET COMPANIES
In order to induce Buyer to enter into and perform this Agreement and to consummate the Contemplated Transactions, the Seller and the Company hereby represent and warrant to Buyer as of the date hereof as follows, in each case, except as set forth on the Disclosure Schedule (with disclosures on one section of the Disclosure Schedule qualifying representations in non-corresponding sections of this Article IV to the extent their applicability is reasonably apparent without any independent knowledge of the matters so disclosed):
Section 4.1 Organization. Each Target Company is duly organized, validly existing and in good standing under the Applicable Law of its jurisdiction of organization. Each Target Company is duly qualified to do business and in good standing in each jurisdiction in which it owns or leases Real Property or conducts business and is required to so qualify except where the failure to so qualify has not had, and would not reasonably be expected to have, a Material Adverse Effect. Each Target Company has all requisite power and authority necessary to own, lease, operate and use its Assets and carry on the Business and each Target Company does not engage in any business other than the Business. The name and business address of each Target Company is set forth in Section 4.1 of the Disclosure Schedule. True, correct and complete copies of the Organizational Documents of each Target Company have been delivered or otherwise made available to Buyer.
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Section 4.2 Power and Authorization. Each Target Company has all requisite power and authority necessary for the execution, delivery and performance by it of this Agreement and each Ancillary Agreement to which it is (or with respect to Ancillary Agreements to be entered into at the Closing, will be) a party. Each Target Company has duly authorized by all necessary action the execution, delivery and performance of this Agreement and each such Ancillary Agreement to which it is (or with respect to Ancillary Agreements to be entered into at the Closing, will be) a party. This Agreement and each Ancillary Agreement to which any Target Company is a party (i) has been (or, in the case of Ancillary Agreements to be entered into at Closing, will be when executed and delivered) duly executed and delivered by such Target Company and (ii) is (or in the case of Ancillary Agreements to be entered into at the Closing, will be when executed and delivered) a legal, valid and binding obligation of the Target Companies, Enforceable against such Target Company in accordance with their respective terms.
Section 4.3 Authorization of Governmental Authorities. Except (a) for compliance with the HSR Act or any similar Antitrust Law, (b) as otherwise set forth on Section 4.3 of the Disclosure Schedule or (c) for such actions or filings that the failure to take or make, as the case may be, would not, individually or in the aggregate, reasonably be expected to be material to the Target Companies, taken as a whole, no action by (including any Consent of), or in respect of, or filing with, any Person is required by or on behalf of any Target Company or in respect of any Target Company, the Business or any Assets of the Target Companies for, or in connection with, (i) the valid and lawful authorization, execution, delivery and performance by a Target Company of this Agreement or any Ancillary Agreement to which it is (or with respect to Ancillary Agreements to be entered into at the Closing, will be) a party or (ii) the consummation of the Contemplated Transactions.
Section 4.4 Noncontravention. Except as set forth on Section 4.4 of the Disclosure Schedule, none of the authorization, execution, delivery or performance by any Target Company of this Agreement or any Ancillary Agreement to which it is (or with respect to Ancillary Agreements to be entered into at the Closing, will be) a party, nor the consummation of the Contemplated Transactions, will (with or without notice or lapse of time or both) (a) result in any material breach or violation of, or constitute a material default under, any Applicable Law with respect to any Target Company; or (b) result in any breach or violation of, or constitute a default under, or result in termination of, or accelerate the performance required by, or require any action by (including any authorization, consent or approval) or notice to any Person under, any of the terms, conditions or provisions of (i) any Disclosed Contractual Obligation or (ii) the Organizational Documents of the Target Companies.
Section 4.5 Capitalization. Section 4.5 of the Disclosure Schedule sets forth the authorized, issued and outstanding Equity Interests of each Target Company. The outstanding capital stock of the Company consists solely of the shares of Common Stock, all of which are issued and outstanding and are owned by the Seller, free and clear of all Encumbrances other than under applicable securities laws or as restricted under the Organizational Documents of the Company. The Purchased Shares have been duly authorized and were validly issued to the Seller, and are fully-paid and nonassessable. All of the issued and outstanding shares of capital stock or other Equity Interests of each of the other Target Companies have been validly issued, are fully paid and non-assessable (where applicable) and are owned beneficially and of record by the holders thereof as set forth on Section 4.5 of the Disclosure Schedule, free and clear of all Encumbrances other than under applicable securities laws or as restricted under the Organizational Documents of such Target Companies. No Target Company has (a) any outstanding securities convertible into or exercisable or exchangeable for, any shares of capital stock of any class or other Equity Interests of such Target Company, (b) agreements to which such Target Company is a party with respect to the voting of any shares of capital stock or other Equity Interests of such Target Company or which restrict the transfer of any such shares or (c) outstanding Contractual Obligations to repurchase,
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redeem or otherwise acquire any shares of its capital stock, other Equity Interests or any other securities of the Target Companies. No Target Company owns any shares, equity or debt securities or other ownership interest, directly or indirectly, in any other Person, nor is any Target Company party to any Contract to acquire any such shares, securities or other ownership interest, or subject to any obligation to make any further debt or equity investment in any Person.
Section 4.6 Financial Matters.
| (a) | Financial Statements. Buyer has been furnished with each of the following: |
Section 4.7 Absence of Certain Developments. Since the Most Recent Balance Sheet Date (a) there has not been any change, development, condition or event that constitutes a Material Adverse Effect, and (b) the Business has been conducted only in the Ordinary Course of Business (aside from actions taken in contemplation of the Contemplated Transactions).
Section 4.8 No Undisclosed Liabilities. There are no Liabilities of the Target Companies other than those that (i) are adequately reflected or reserved against in the Most Recent Balance Sheet, (ii) were incurred in the Ordinary Course of Business after the Most Recent Balance Sheet Date, (iii) were incurred in connection with the transactions contemplated hereby, (iv) which are not, individually or in the aggregate, material in amount, or (v) have not had and would not reasonably be expected to have a Material Adverse Effect.
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Encumbrances other than Permitted Encumbrances, (ii) valid title to the leasehold estate (as lessee or sublessee) in the leased real property set forth on Section 4.9(a)(ii) of the Disclosure Schedule (the “Leased Real Property”) and (iii) valid title to the easement (as grantee) in the easement property set forth on Section 4.9(a)(iii) of the Disclosure Schedule (the “Easement Property” and together with the Owned Real Property and the Leased Real Property, the “Real Property”), in each case free and clear of all Encumbrances, except for Permitted Encumbrances. The Owned Real Property, Leased Real Property and Easement Property, as applicable, constitute all of the real property owned or leased by, or granted to, the relevant Target Company.
(ii) other than the right of Buyer pursuant to this Agreement, there are no outstanding options, rights of first offer or rights of first refusal or other contracts or agreements to purchase the Owned Real Property or the applicable Target Company’s interest in the Leased Real Property or Easement Property or any portion thereof or interest therein; (iii) none of the Target Companies (as the case may be) is a party to any agreement or option to purchase any real property or interest therein; and
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use provided for in the applicable lease, Applicable Law, and all licenses, permits, consents, authorizations, certificates and registrations.
Section 4.10 Intellectual Property; Privacy and Information Security.
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any Person. To the Company’s Knowledge, no Person is infringing upon any Company Intellectual Property Rights in any manner that would be reasonably expected to give rise to a Material Adverse Effect.
| (c) | Section 4.10(c) of the Disclosure Schedule identifies each Contractual Obligation |
(i) under which the Target Companies use or license an item of Technology or any Intellectual Property Rights that any Person besides the Target Companies own other than commercial off-the shelf software and (ii) under which the Target Companies have granted to any Person any right or interest in any Company Intellectual Property Rights including any right to use any item of Company Technology (the “Outbound IP Contractual Obligations”), other than non-exclusive licenses of Company Intellectual Property Rights or Company Technology granted in the Ordinary Course of Business with an annual value of less than one hundred thousand dollars ($100,000.00).
Section 4.11 Permits. Section 4.11 of the Disclosure Schedule sets forth a list of all material Permits, true, correct and complete copies of which have been delivered or otherwise made available to Buyer. Except as set forth in Section 4.11 of the Disclosure Schedule, each Target Company has been since July 1, 2019 and is, in all material respects, in compliance with all material Permits and of all certification organizations required, and all exemptions from requirements to obtain or apply for any of the foregoing, necessary for the conduct of the Business as presently conducted and the ownership and use of the Assets. No loss, non-renewal, suspension, modification or expiration of, nor any noncompliance with, any material Permit is pending or, to the Knowledge of the Company, threatened (including, without limitation, as a result of the transactions contemplated by this Agreement), other than the expiration and renewal of such material Permits in accordance with their terms. To the Company’s Knowledge, no event
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has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse or limitation of any material Permits.
Section 4.12 Tax Matters. Except as set forth on Section 4.12 of the Disclosure Schedule:
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on or before the Closing Date; or (viii) any installment sale or other open transaction disposition made on or prior to the Closing Date.
Section 4.13 Employee Benefit Plans.
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a violation of the health care requirements of Part 6 or 7 of Title I of ERISA or Section 4980B or 4980D of the Code. Each Target Company has maintained records that are sufficient to satisfy the reporting requirements under Section 6055 and 6056 of the Code, to the extent required, for all periods of time up to and through the Closing Date. No Target Company has modified the employment or service terms of any employee or service provider for the purpose of excluding such employee or service provider from full time status for purposes of the PPACA.
Section 4.14 Contractual Obligations. Section 4.14 of the Disclosure Schedule lists each of the following Contractual Obligations to which the Target Companies are bound:
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by any party more than one year from the date hereof, that, in each case, are not terminable by the applicable Target Company without penalty on notice of sixty (60) days or less;
The Target Companies have made available to Buyer accurate and complete copies of each written Contractual Obligation listed on Section 4.14 of the Disclosure Schedule, to the extent copies exist, in each case, as amended or otherwise modified and in effect. The Target Companies have made available to Buyer a written summary setting forth all of the material terms and conditions of each oral Contractual Obligation listed on Section 4.14 of the Disclosure Schedule. To the Company’s Knowledge, each Contractual Obligation required to be disclosed on Section 4.14 of the Disclosure Schedule (the “Disclosed Contractual Obligations”) is Enforceable against each party to such Contractual Obligation and, subject to obtaining
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any necessary consents disclosed on Section 4.3 and Section 4.4 of the Disclosure Schedule, will continue to be so Enforceable following the consummation of the Contemplated Transactions. No Target Company is nor, to the Company’s Knowledge, is any other party to any Disclosed Contractual Obligation in material breach or violation of, or default under, or has repudiated any material provision of, any Disclosed Contractual Obligation.
Section 4.15 Related Party Transactions. Except as set forth on Section 4.15 of the Disclosure Schedule, no Affiliate of any Target Company: (a) has any interest in any material Asset owned or leased by any Target Company or used in connection with the Business, (b) provides or has provided or received any material loans, assets, services or facilities to or from any Target Company or (c) is engaged in any material transaction, arrangement or understanding with any Target Company (other than payments and other Compensation in the Ordinary Course of Business).
Section 4.16 Labor Matters. Except for claims or proceedings that have not had and would not reasonably be expected to have a Material Adverse Effect: (i) there are no claims or proceedings pending, or to the Company’s Knowledge, threatened, against any Target Company asserting that such Target Company has committed an Unfair Labor Practice within the meaning of the National Labor Relations Act; and (ii) there are currently no strikes, slowdowns, work stoppages or lockouts, by or with respect to any current employees of any Target Company. Except as set forth on Section 4.16 of the Disclosure Schedule, no Target Company is a party to any collective bargaining agreement.
Section 4.17 Litigation; Governmental Orders. Except as set forth on Section 4.17 of the Disclosure Schedule, there is no Action to which a Target Company is a party (either as plaintiff or defendant) that is pending, or to the Company’s Knowledge, threatened involving any Person. No Target Company is bound by any Governmental Order.
Section 4.18 Compliance with Law. Since July 1, 2019, (a) no Target Company has violated any, and each Target Company is in compliance with, in each case in all material respects, all Applicable Laws and Governmental Orders relating to such Target Company, the Business, or the Assets of such Target Company, (b) no Target Company has received any written notice, or, to the Company’s Knowledge, any oral notice to the effect, or otherwise been advised, that it is not in material compliance with any such Applicable Law or material Governmental Order, and (c) each Target Company has filed all registrations, reports, statements, notices and other filings required to be filed with any Governmental Authority by the Target Company relating to the conduct of the Business or ownership of the Assets, including all amendments or supplements to any of the above. All such registrations, reports, statements, notices and other filings complied with the requirements of Applicable Law in all material respects.
Section 4.19 OFAC Sanctions and Export Trade Controls. Since July 1, 2019, to the Company’s Knowledge, no Target Company (a) has violated or is in violation of, in any material respect, any applicable anti-money laundering, import, export control or sanctions laws, including the USA Patriot Act of 2001, the USA Patriot Improvement and Reauthorization Act of 2006, the Arms Export Control Act, the International Traffic in Arms Regulations, the Export Control Reform Act, the Export Administration Regulations, the International Emergency Economic Powers Act, 50 U.S.C. §1701 et seq., the Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated thereunder, each as amended, or any other similar Applicable Law or regulation; or (b) is named on any list of prohibited persons, entities or jurisdictions maintained and administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”), the U.S. State Department’s Directorate of Defense Trade Controls or the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”). None of the Target Companies is currently selling, supplying, brokering, exporting or re-exporting, directly or indirectly, any products or services to any person or entity located in (a) any
27
country or region that itself is subject to comprehensive sanctions administered by OFAC (including, as of the date of this Agreement, Cuba, Iran, North Korea, Syria, the Crimea region of Ukraine and the so-called Donetsk and Luhansk People’s Republic regions of Ukraine), or (b) the Russian Federation, in violation of Applicable Law. To the Company’s Knowledge, (x) each Target Company and each Person owning an interest in any of the Target Companies is (A) not currently identified on the Specially Designated Nationals and Blocked Persons List or on any other similar list maintained by OFAC or BIS, and (B) not otherwise a Person with whom a citizen of the United States is prohibited to engage in transactions by any trade embargo, economic sanction, or other prohibition of United States law, regulation, agency order or determination, or Executive Order of the President of the United States (collectively, “Embargoed Persons”), (y) none of the funds or other assets of the Target Companies constitute property of, or are beneficially owned, directly or indirectly, by any Embargoed Person, and (z) no Embargoed Person has any interest of any nature whatsoever in the Target Companies (whether directly or indirectly).
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Section 4.22 Environmental Matters. Except as set forth on Section 4.22 of the Disclosure Schedule:
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Section 4.23 Insurance. Section 4.23 of the Disclosure Schedule sets forth a list of the material insurance policies that cover the Target Companies. The list includes for each such policy, the type of policy, form of coverage, the policy number and the name of the insurer. Each such policy is in full force and effect (or has been renewed in the Ordinary Course of Business) and no Target Company is in material default with respect to its obligations under any of such policies. True and complete copies of the material insurance policies have been made available to Buyer prior to the date hereof. Excluding insurance policies that have expired and been replaced in the Ordinary Course of Business, to the Knowledge of the Company, no threat has been made to cancel or not renew any current insurance policy of any of the Target Companies. None of the insurers under any current insurance policy of any Target Company has provided written notice to such Target Company that such insurer will reject the defense or
30
coverage of any claim purported to be covered by such insurer or reserved the right to reject the defense or coverage of any claim purported to be covered by such insurer. Except as set forth on Section 4.23 of the Disclosure Schedule, none of the Target Companies have any liability for retrospective premium adjustments under any insurance policies.
Section 4.24 Inventory; Product Warranty; Product Liability.
(f) There exists no material Liability arising out of any injury to individuals or property as a result of the ownership, possession or use of any product or service sold by the Target Companies with respect to the Business prior to the date hereof. Since July 1, 2019, there have not been any mandatory or voluntary product recalls or withdrawals with respect to any products of the Business.
Section 4.25 Customers and Suppliers.
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given written notice of its intent to cancel, not renew or otherwise, terminate or materially and adversely modify; or (ii) threatened in writing to cancel, fail to renew or terminate or materially and adversely modify, its relationship with any of the Target Companies, other than pursuant to any contract that terminates pursuant to its terms.
Section 4.26 No Brokers. Other than to Lincoln International LLC (whose fees and expenses shall be fully satisfied by Seller), no Target Company has any Liability of any kind to, or is subject to any claim of, any broker, finder or agent in connection with the Contemplated Transactions and no other Person is entitled to any fee or commission or like payment from any Target Company in respect thereof.
Section 4.27 Disclaimer of Other Representations and Warranties. THE REPRESENTATIONS AND WARRANTIES MADE BY THE TARGET COMPANIES IN THIS AGREEMENT AND THE ANCILLARY DOCUMENTS (OR ANY CERTIFICATE OR INSTRUMENT DELIVERED BY THE SELLER AND TARGET COMPANIES HEREUNDER OR THEREUNDER) ARE THE EXCLUSIVE REPRESENTATIONS AND WARRANTIES MADE BY THE SELLER AND TARGET COMPANIES WITH RESPECT TO THE SELLER AND THE TARGET COMPANIES. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS ARTICLE IV, EACH OF THE SELLER, THE TARGET COMPANIES, THEIR AFFILIATES, AND THEIR DIRECTORS, MANAGERS, PARTNERS, OFFICERS, DIRECT OR INDIRECT EQUITYHOLDERS AND EACH OF THEIR RESPECTIVE REPRESENTATIVES EXPRESSLY DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO THE SELLER, THE TARGET COMPANIES, THE BUSINESS, OR EACH OF THE SELLER’S AND THE TARGET COMPANY’S ASSETS, AND BUYER SHALL RELY SOLELY ON ITS OWN EXAMINATION AND INVESTIGATION THEREOF. BUYER ACKNOWLEDGES AND AGREES THAT THE REPRESENTATIONS AND WARRANTIES OF THE SELLER AND TARGET COMPANIES SET FORTH IN THIS ARTICLE IV SUPERSEDE, REPLACE AND NULLIFY ANY OTHER
32
STATEMENT (WHETHER WRITTEN OR ORAL) MADE BY THE SELLER OR ANY OF THE TARGET COMPANIES, THEIR AFFILIATES, ANY OF THEIR REPRESENTATIVES OR ANY OTHER PARTY PRIOR TO THE DATE HEREOF WITH RESPECT TO THE SELLER AND THE TARGET COMPANIES AND TO THE DISCLAIMERS CONTAINED IN THIS Section 4.27.
ARTICLE V
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE SELLER
Seller hereby represents and warrants to Buyer, as of the date hereof, as follows:
Section 5.1 Organization. The Seller is a limited partnership duly organized, validly existing and in good standing under the Applicable Laws of the jurisdiction of its organization. The Seller has all requisite power and authority to own, lease and operate its properties and to carry on its business as currently conducted.
Section 5.2 Authority. The Seller has all requisite power and authority to enter into the Transaction Documents to which it is a party and to consummate the Contemplated Transactions. The execution, delivery and performance of the Transaction Documents to which the Seller is a party and the consummation of the Contemplated Transactions have been duly authorized by all necessary action on the part of the Seller. This Agreement has been, and each of the other Transaction Documents to which the Seller is a party will be at the Closing, duly executed and delivered by the Seller and, assuming the due authorization, execution and delivery by the other parties hereto and thereto, this Agreement and the Transaction Documents entered into on the date hereof by the Seller constitute, and in the case of the Transaction Documents entered into following the date hereof they will at Closing constitute, valid and binding obligations of the Seller, Enforceable against the Seller in accordance with their respective terms.
Section 5.3 No Conflict. The execution and delivery by the Seller of the Transaction Documents to which it is a party, and the consummation of the Contemplated Transactions, do not and will not (a) conflict with or result in any violation of or default under (with or without notice or lapse of time, or both) or (b) give rise to a right of termination, cancellation, modification or acceleration of any Liability or loss of any benefit under (i) any provision of the Seller’s Organizational Documents, or (ii) any Applicable Law, except, in the case of clause (ii), for such conflicts, violations or defaults as have not had, and would not reasonably be expected to have, a Seller Material Adverse Effect.
Section 5.4 Consents. No Consent or Governmental Order is required by or with respect to the Seller in connection with the execution and delivery of the Transaction Documents by the Seller or the consummation by the Seller of the Contemplated Transactions except for (a) filings and notices required under applicable securities laws and (b) compliance with the HSR Act or any similar Antitrust Law.
Section 5.5 Ownership of Purchased Shares. The Seller holds, beneficially and of record, the Purchased Shares, and has valid title to such shares, free and clear of all Encumbrances. The Seller has the power and authority to sell, transfer, assign and deliver the Purchased Shares as provided in this Agreement, and such delivery will vest in Buyer good and valid title to the Purchased Shares, free and clear of any and all Encumbrances. The Seller acquired the Purchased Shares in one or more transactions exempt from registration under the Securities Act, any applicable state “blue sky” or securities law, and any other Applicable Law, and without violation of any preemptive, preferential or similar right of any Person. The Seller does not own any equity, debt or other interest, directly or indirectly, in any Person that: (i) directly competes with the Target Companies; (ii) provides goods or services, directly or indirectly, to the Target Companies; or (iii) purchases good or services, directly or indirectly, to the Target Companies.
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Section 5.6 Litigation. There is no Action of any nature pending or, to the knowledge of the Seller, threatened against the Seller that could individually or in the aggregate reasonably be expected to have a Seller Material Adverse Effect. The Seller is not subject to any outstanding Governmental Order that could individually or in the aggregate reasonably be expected to have a Seller Material Adverse Effect.
Section 5.7 No Brokers. Other than to Lincoln International LLC (whose fees and expenses shall be fully satisfied by Seller), Seller has not incurred, and will not incur, directly or indirectly, any Liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with the Transaction Documents or the Contemplated Transactions and no other Person is entitled to any fee or commission or like payment from the Seller in respect thereof.
Section 5.8 Disclaimer of Other Representations and Warranties. THE REPRESENTATIONS AND WARRANTIES MADE BY THE SELLER IN THIS AGREEMENT AND THE ANCILLARY DOCUMENTS (OR ANY CERTIFICATE OR INSTRUMENT DELIVERED BY THE SELLER HEREUNDER OR THEREUNDER) ARE THE EXCLUSIVE REPRESENTATIONS AND WARRANTIES MADE BY THE SELLER. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN Article IV OR THIS ARTICLE V, EACH OF THE SELLER, ITS AFFILIATES, AND THEIR DIRECTORS, MANAGERS, PARTNERS, OFFICERS, DIRECT OR INDIRECT EQUITYHOLDERS AND EACH OF THEIR RESPECTIVE REPRESENTATIVES EXPRESSLY DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO THE SELLER, THE TARGET COMPANIES, THE BUSINESS, OR THE TARGET COMPANIES’ ASSETS, AND BUYER SHALL RELY SOLELY ON ITS OWN EXAMINATION AND INVESTIGATION THEREOF. BUYER ACKNOWLEDGES AND AGREES THAT THE REPRESENTATIONS AND WARRANTIES OF THE SELLER SET FORTH IN ARTICLE IV AND THIS Article V SUPERSEDE, REPLACE AND NULLIFY ANY OTHER STATEMENT (WHETHER WRITTEN OR ORAL) MADE BY ANY OF THE SELLER, ITS AFFILIATES, ANY OF THEIR REPRESENTATIVES OR ANY OTHER PARTY WITH RESPECT TO THE SELLER AND THE TARGET COMPANIES PRIOR TO THE DATE HEREOF AND TO THE DISCLAIMERS CONTAINED IN THIS SECTION 5.8.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to each of the Company and the Seller, as of the date hereof, as follows:
Section 6.1 Organization. Buyer is a corporation duly organized, validly existing and in good standing under the Applicable Law of the jurisdiction of its organization. Buyer has all requisite power and authority to own, lease and operate its properties and to carry on its business and is duly qualified or licensed to do business and is in good standing as a foreign corporation or partnership in each jurisdiction in which the conduct of its business or the ownership, leasing, holding or use of its properties makes such qualification necessary except where failure to qualify has not had, and would not reasonably be expected to have, a Buyer Material Adverse Effect.
Section 6.2 Authority. Buyer has all requisite power and authority to enter into the Transaction Documents to which it is a party and to consummate the Contemplated Transactions. The execution, delivery and performance of the Transaction Documents to which Buyer is a party and the consummation of the Contemplated Transactions have been duly authorized by all necessary action on the part of Buyer. This Agreement has been, and each of the other Transaction Documents to which Buyer is a party will be at the Closing, duly executed and delivered by Buyer and, assuming the due authorization,
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execution and delivery by the other parties hereto and thereto, this Agreement and the Transaction Documents entered into on the date hereof by Buyer constitute, and in the case of the Transaction Documents entered into following the date hereof they will at Closing constitute, valid and binding obligations of Buyer, Enforceable against Buyer in accordance with their respective terms.
Section 6.3 No Conflict. The execution and delivery by Buyer of the Transaction Documents to which it is a party, and the consummation of the Contemplated Transactions, do not and will not (a) conflict with or result in any violation of or default under (with or without notice or lapse of time, or both) or (b) give rise to a right of termination, cancellation, modification or acceleration of any Liability or loss of any benefit under (i) any provision of Buyer’s Organizational Documents, or (ii) any Applicable Law, except, in the case of clause (ii), for such conflicts, violations or defaults as have not had, and would not reasonably be expected to have, a Buyer Material Adverse Effect.
Section 6.4 Consents. Except for compliance with the HSR Act or any similar Antitrust Law, no Consent or Governmental Order is required by or with respect to Buyer in connection with the execution and delivery of the Transaction Documents by Buyer or the consummation by Buyer of the Contemplated Transactions.
Section 6.5 Litigation. There is no Action of any nature pending or, to the knowledge of Buyer, threatened against Buyer that could individually or in the aggregate reasonably be expected to have a Buyer Material Adverse Effect. Buyer is not subject to any outstanding Governmental Order that could individually or in the aggregate reasonably be expected to have a Buyer Material Adverse Effect.
Section 6.6 Sufficiency of Funds. Buyer has sufficient cash on hand or other sources of immediately available funds to enable it to make payment of the Aggregate Consideration Amount (including the components thereof), all other amounts to be paid or repaid by Buyer under this Agreement (whether payable on or after the Closing), and all of Buyer’s and its Affiliates’ fees and expenses associated with the Contemplated Transactions. In no event shall the receipt by, or the availability of any funds or financing to Buyer or any of its Affiliates or any other financing be a condition to Buyer’s obligation to consummate the Contemplated Transactions.
Section 6.7 Brokers’ and Finders’ Fees. Other than to Moelis & Company (whose fees and expenses shall be fully satisfied by Buyer), Buyer has not incurred, and will not incur, directly or indirectly, any Liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with the Transaction Documents or the Contemplated Transactions and no other Person is entitled to any fee or commission or like payment from Buyer in respect thereof.
Section 6.8 Restricted Securities. Buyer is acquiring the Purchased Shares for its own account, with the intention of holding the Purchased Shares for investment and not with a view to the resale or distribution of any part of the Purchased Shares, and Buyer does not have any present intention of selling, granting any participation in or otherwise distributing the Purchased Shares. Buyer understands that the Purchased Shares have not been registered under the Securities Act of 1933, as amended, by reason of specific exemptions from the registration provisions, which depend upon, among other things, the bona fide nature of the investment intent and the accuracy of Buyer’s representations as expressed in this Agreement. Buyer understands that the Purchased Shares are “restricted securities” under applicable US federal and state securities laws and that, pursuant to these laws, Buyer must hold the Purchased Shares indefinitely unless they are registered with the Securities and Exchange Commission and qualified by state authorities or an exemption from such registration and qualification requirements is available.
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Section 6.9 Solvency. Buyer is not entering the Contemplated Transactions with actual intent to hinder, delay or defraud either present or future creditors. Immediately after giving effect to the Contemplated Transactions, Buyer and its Subsidiaries (including the Target Companies) will be Solvent. Immediately after giving effect to the Contemplated Transactions, Buyer and its Subsidiaries will have adequate capital to carry on their businesses.
Section 6.10 Due Diligence Review.
Section 6.11 Disclaimer of Other Representations and Warranties. THE REPRESENTATIONS AND WARRANTIES MADE BY THE BUYER IN THIS AGREEMENT AND THE ANCILLARY DOCUMENTS (OR ANY CERTIFICATE OR INSTRUMENT DELIVERED BY THE BUYER HEREUNDER OR THEREUNDER) ARE THE EXCLUSIVE REPRESENTATIONS AND WARRANTIES MADE BY THE BUYER. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS ARTICLE VI, EACH OF THE BUYER, ITS AFFILIATES, AND THEIR DIRECTORS, MANAGERS, PARTNERS, OFFICERS, DIRECT OR INDIRECT EQUITYHOLDERS AND EACH OF THEIR RESPECTIVE REPRESENTATIVES EXPRESSLY DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO THE BUYER. THE COMPANY AND THE SELLER ACKNOWLEDGE AND AGREE THAT THE REPRESENTATIONS AND WARRANTIES OF THE BUYER SET FORTH IN THIS Article VI SUPERSEDE, REPLACE AND NULLIFY ANY OTHER STATEMENT (WHETHER WRITTEN OR ORAL) MADE BY ANY OF THE BUYER, ITS AFFILIATES, ANY OF THEIR REPRESENTATIVES
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OR ANY OTHER PARTY WITH RESPECT TO THE BUYER PRIOR TO THE DATE HEREOF AND TO THE DISCLAIMERS CONTAINED IN THIS SECTION 6.11.
ARTICLE VII
Section 7.1 Operation of the Business.
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or (C) make any loan, advance or capital contribution to, or acquire any Equity Interests in, any Person (other than loans and advances to employees in the Ordinary Course of Business);
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Section 7.2 Access to Premises and Information. From the date of this Agreement until the Closing, or the earlier termination of this Agreement in accordance with Article X, to the extent permitted by Applicable Law, the Target Companies shall permit Buyer to have reasonable access (at reasonable times and upon reasonable notice and subject to any restrictions contained in confidentiality agreements to which any Target Company is subject) to employees of the Target Companies and to premises, properties, books, records (including Tax records) and Contractual Obligations of the Target Companies, except, in each case, for (a) privileged attorney-client communications or attorney work product, (b) information or materials required to be kept confidential by Applicable Law or fiduciary duty, any information that is reasonably pertinent to any litigation in which the Target Companies and Buyer are adverse parties and (d) information or materials that relate to the proposed sale of the Business of the Target Companies or the negotiation, execution and delivery of this Agreement or the Ancillary Agreements; provided, however, that notwithstanding anything to the contrary contained herein, (i) none of the Target Companies, the Seller or any of their Affiliates shall be required to disclose to the Buyer or any Representative of the Buyer any consolidated, combined, affiliated, or unitary Tax Return which includes the Seller or any of its Affiliates other than the Target Companies or any work papers relating thereto; and (ii) Buyer shall not conduct any invasive environmental testing, sampling or other invasive assessments of the premises of the Target Companies. All information and materials provided to Buyer and/or its Representatives pursuant to this Section 7.2 shall be used solely for the purpose of the Contemplated Transactions, and such information shall be subject to the terms of the Confidentiality Agreement.
Section 7.3 Reasonable Best Efforts. Prior to the Closing, except with respect to the matters described in Section 7.4, which shall be governed by the provisions thereof, each party to this Agreement shall use reasonable best efforts to cause the conditions set forth in Article IX to be satisfied and to consummate the Contemplated Transactions.
Section 7.4 Regulatory Compliance. Each of Buyer and the Company shall use its respective commercially reasonable best efforts, and shall cause their respective Subsidiaries and Affiliates to use their respective commercially reasonable best efforts to seek termination of any waiting periods relating to the HSR Act or other Antitrust Law prior to the Termination Date.
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Any such Notification and Report Form and supplemental information shall be in substantial compliance with the requirements of the HSR Act and other Applicable Law. If either Buyer or the Company determines that a withdrawal and re-filing of Buyer’s Notification and Report Form (a “Pull and Refile”) will enable the parties to expedite Closing, then upon notice to the other party, Buyer shall conduct a Pull and Refile in compliance with FTC Rule 16 C.F.R. 803.12 and any other Applicable Law as promptly as practicable.
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any substantive meeting or discussion, either in person or by telephone, with any Governmental Authority in connection with the transactions contemplated by this Agreement unless it consults with the other party in advance and, to the extent not prohibited by such Governmental Authority, gives the other party the opportunity to attend and participate.
Section 7.5 No Solicitation. The Company and the Seller agree that from the date of this Agreement until the Closing, or the earlier termination of this Agreement in accordance with Article X, the Seller and the Company shall not, and the Seller and the Company shall cause each Target Company and each of their respective Representatives not to, solicit, initiate, facilitate or knowingly encourage proposals, offers or inquiries from any third party with respect to, or enter into negotiations or any agreement regarding the terms of, any sale of all or substantially all of the stock of any Target Company or assets of the Business (including any sale structured as a merger, consolidation or similar business combination) with any Person, in any case other than Buyer, its Affiliates and their respective Representatives or authorize or permit any of the officers, directors or employees of the Company, or any investment banker, financial advisor, attorney, accountant or other representative retained by the Seller, the Company or any Subsidiary to take any such action.
Section 7.6 Payoff Letters and Lien Releases. The Company shall obtain and deliver to Buyer customary payoff letters in connection with the repayment of the Closing Indebtedness (the “Debt Payoff Letters”) and make arrangements for the delivery of, subject to the receipt of the applicable payoff amounts, customary lien releases related to the Closing Indebtedness at the Closing (the “Lien Releases”).
Section 7.7 Contacts. Until the Closing Date, Buyer shall not, and shall cause its Representatives not to, contact or communicate with the employees (other than the employees identified on the “Key Employees Schedule” attached as Section 7.7 to the Disclosure Schedule), customers, potential customers, suppliers, distributors or licensors of the Company, or any other Persons having a business relationship with the Company, concerning the transactions contemplated hereby without the prior written consent of the Seller, such consent not to be unreasonably withheld, conditioned or delayed.
Section 7.8 280G. If any Person who is a “disqualified individual” (within the meaning of Section 280G of the Code and the Department of Treasury regulations promulgated
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thereunder) with respect to any Target Company may receive any payment(s) or benefit(s) that could constitute parachute payments under Section 280G of the Code in connection with the Contemplated Transactions, then: (a) the Target Companies shall seek and use commercially reasonable efforts to obtain a waiver from each such “disqualified individual” (a “Parachute Payment Waiver”); and (b) the Target Companies shall prepare and distribute to its equityholders a disclosure statement describing all potential parachute payments and benefits that may be received by such disqualified individual(s) that execute a Parachute Payment Waiver and shall submit such payments to its equityholders for approval, in each case, in accordance with the requirements of Section 280G(b)(5)(B) of the Code and the Department of Treasury regulations promulgated thereunder, such that, if approved by the requisite majority of the equityholders, such payments and benefits shall not be deemed to be “parachute payments” under Section 280G of the Code (the foregoing actions, a “280G Vote”). Prior to the Closing, if a 280G Vote is required, the Target Companies shall deliver to Buyer evidence reasonably satisfactory to Buyer, (i) that a 280G Vote was solicited in conformance with Section 280G of the Code, and the requisite equityholder approval was obtained with respect to any payments and/or benefits that were subject to the Target Companies equityholder vote (the “Section 280G Approval”) or (ii) that the Section 280G Approval was not obtained and as a consequence, pursuant to the Parachute Payment Waiver, such “parachute payments” shall not be made or provided. The form of the Parachute Payment Waiver, the disclosure statement, any other materials to be submitted to the Target Companies; equityholders in connection with the Section 280G Approval and the calculations related to the foregoing (the “Section 280G Soliciting Materials”) shall be subject to a minimum of three business days (the “Review Period”) by Buyer, which approval shall not be unreasonably withheld. To the extent Buyer (or its Affiliates) enters into any arrangements that would otherwise qualify as parachute payments, such arrangements shall be disregarded for purposes herein unless the Target Companies are provided with a written description (including all material terms and valuations) by Buyer prior to the end of the Review Period.
ARTICLE VIII
Section 8.1 Employee Benefits.
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Affected Employee prior to the Closing Date shall be credited for eligibility, participation and vesting purposes under such plan, program or policy and for purposes of calculating benefits under any severance, sick leave, paid time off or vacation plans to the extent permitted by such plans, and (b) with respect to any health and/or welfare benefit plans to which any such Affected Employee may become eligible, Buyer shall cause such plans to the extent permitted by such plans to provide credit for any co-payments or deductibles and maximum out-of-pocket payments by such Affected Employee and their eligible dependents during the year in which the Closing occurs and waive all pre-existing condition exclusions and waiting periods, other than limitations or waiting periods that had not been satisfied prior to the Closing Date. Buyer shall recognize vacation days and paid time off previously accrued and reserved for by the Target Companies immediately prior to the Closing Date to the extent included as a Liability in the calculation of Net Working Capital.
Section 8.2 Certain Tax Matters.
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begin) after the Closing Date to a Pre-Closing Tax Period or shifts deductions or losses from a Pre- Closing Tax Period to a period beginning (or deemed to begin) after the Closing Date, (v) extend or waive, or cause to be extended or waived, or permit the Target Companies to extend or waive, any statute of limitations or other period for assessment of any Tax or deficiency related to a Pre- Closing Tax Period, or (vi) cause the Target Companies to take any action after the Closing on the Closing Date outside of the Ordinary Course of Business unless otherwise provided by this Agreement.
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constitute part of a transaction that is the same as, or substantially similar to, the “Intermediary Transaction Tax Shelter” described in Internal Revenue Service Notices 2001-16 and 2008-111.
Section 8.3 Indemnification of Directors and Officers.
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Agreement or the Contemplated Transactions). The cost of D&O Insurance will be split fifty- percent (50%) by Buyer and fifty-percent (50%) by Seller.
Section 8.4 Publicity; Confidentiality. No public announcement or disclosure may be made by any Party with respect to the subject matter of this Agreement or the Contemplated Transactions without the prior written consent of (i) in the case of any such public announcement or disclosure by Buyer, the Seller or (ii) in the case of any such public announcement or disclosure by the Target Companies or the Seller, Buyer; provided, that the provisions of this Section 8.4 shall not prohibit (a) any disclosure required by any Applicable Law (in which case the disclosing party will provide the other Parties with the opportunity to review and comment in advance of such disclosure), (b) any disclosure to any member of the Seller who is bound by the same obligations regarding disclosure, (c) any disclosure to any Representative of any member of the Seller who needs to know such information for the purpose of evaluating the Contemplated Transactions, (d) any disclosure made in connection with the enforcement of any right or remedy relating to the Transaction Documents or the Contemplated Transactions, or (e) any disclosure by a member of the Seller who is bound by the same obligations regarding disclosure as part of such member’s ordinary course reporting or review procedure or in connection with such member’s ordinary course fundraising, marketing, information or reporting activities. Buyer hereby acknowledges and agrees that Buyer shall be bound by all of the terms and provisions of that certain Letter Agreement between Buyer and SK Capital Partners, LP, on behalf of itself and Seller, dated as of April 12, 2022, as if Buyer were the original counterparty thereto (as amended, modified, supplemented or restated, the “Confidentiality Agreement”). Seller hereby agrees that, from and after the Closing Date, it will not, and will not permit its Affiliates or any of their respective Representatives, either directly or indirectly, in any capacity whatsoever, from and after the Closing Date to divulge, disclose or communicate with any Person, any Confidential Information (as defined below) not rightfully in the public domain. “Confidential Information” includes all confidential information related to the Business, including: (i) any financial, business, planning, operations, services, potential services, products, potential products, technical information and/or know-how, formulas, production, purchasing, marketing, sales, personnel, customer, broker, supplier, or other confidential or proprietary information relating to the Business or Buyer, its business or any of its proprietary or confidential information; (ii) any papers, data, records, processes, methods, techniques, systems, models, samples, devices, equipment, compilations, invoices, customer lists, or documents relating to the Business or Buyer, its business or any of its proprietary or confidential information; and (iii) any confidential information or trade secrets of any third party provided to Seller, its Affiliates or Buyer in confidence or subject to other use or disclosure restrictions or limitations and relating to the Business or Buyer, its business or any of its proprietary or confidential information. Notwithstanding anything to the contrary herein contained, the covenants of Seller contained in this Section 8.4 shall not restrain any disclosures: (i) required by legal process or Applicable Law; or (ii) pertaining to any information that Seller can demonstrate already had become or later becomes publicly available through
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no fault of Seller, its Affiliates or any of their respective Representatives; (iii) to any of Seller’s Representatives who are bound to, or are otherwise subject to a professional or fiduciary obligation to, maintain the confidentiality of such Confidential Information (and who are instructed by Seller as to its confidential nature); or (iv) pertaining to any information independently developed by Seller or any of its Affiliates without use of or reference to Confidential Information.
Section 8.5 Restrictive Covenants.
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will not be impaired and the provision in question shall be enforceable to the fullest extent of applicable law.
Section 8.6 Acknowledgement; Waiver of Conflicts; Retention of Privilege.
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Section 8.8 R&W Insurance Policy. Buyer and its Affiliates shall not amend, waive or otherwise modify the R&W Insurance Policy, in any manner that would allow the insurer thereunder or any other Person to subrogate or otherwise make or bring any claim or suit against the Seller or any Nonparty Affiliate based upon, arising out of, or related to this Agreement, or the negotiation, execution or performance of this Agreement, absent Fraud. Buyer acknowledges and agrees that the binding of the R&W Insurance Policy is not in any way a condition to Closing the transactions contemplated pursuant to this Agreement.
ARTICLE IX
Section 9.1 Conditions to Buyer’s Obligations. The obligations of Buyer to consummate the Contemplated Transactions are subject to the satisfaction (or waiver by Buyer in its sole discretion) of the following conditions as of the Closing Date:
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as if made on the Closing Date (except to the extent such representations or warranties relate to another date, in which case as of such other date as if made on such other date).
| (g) | W-9. Seller shall have delivered to Buyer a duly executed copy of IRS Form W-9. |
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Section 9.2 Conditions to the Seller’s and the Company’s Obligations. The obligations of the Seller and the Company to consummate the Contemplated Transactions are subject to the satisfaction (or waiver by the Seller in its sole discretion) of the following conditions as of the Closing Date:
ARTICLE X
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Section 10.1 Termination. This Agreement may be terminated and the Contemplated Transactions may be abandoned at any time prior to the Closing:
| (a) | by mutual written consent of Buyer and the Seller; |
Section 10.2 Effect of Termination. In the event of a termination of this Agreement pursuant to Section 10.1, all obligations of the Parties hereto to each other with respect to this Agreement and the Contemplated Transaction shall terminate, except for the provisions of Article I, Section 8.4, this Article X, and Article XII (Miscellaneous), and the Confidentiality Agreement, each of which shall survive such termination of this Agreement, provided, however, that any termination of this Agreement pursuant to Section 10.1(c), Section 10.1(d) or Section 10.1(e) shall not prejudice the ability of the non- breaching Party from seeking damages from any other Party for any willful and material breach of this
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Agreement, including attorneys’ fees and the right to pursue any remedy available at law or in equity, including specific performance. For purposes of this Agreement, “willful and material breach” means a deliberate act or a deliberate failure to act, which act or failure to act constitutes in and of itself a material breach of any covenant or obligation contained in this Agreement, regardless of whether breaching such covenant or obligation was the conscious object of the act or failure to act.
ARTICLE XI
ARTICLE XII
Section 12.1 Notices. Any notice, request, demand, claim or other communication required or permitted to be delivered, given or otherwise provided under this Agreement must be in writing and must be delivered personally, delivered by nationally recognized overnight courier service, sent by certified or registered mail, postage prepaid, or (if an email address is provided below) sent by email
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(subject to electronic confirmation of receipt). Any such notice, request, demand, claim or other communication shall be deemed to have been delivered and given (a) when delivered, if delivered personally, (b) the Business Day after it is deposited with such nationally recognized overnight courier service, if sent for overnight delivery by a nationally recognized overnight courier service, (c) the day of sending, if sent by email prior to 5:00 p.m. (Eastern time) on any Business Day or the next succeeding Business Day if sent by email after 5:00 p.m. (Eastern time) on any Business Day or on any day other than a Business Day or (d) five Business Days after the date of mailing, if mailed by certified or registered mail, postage prepaid, in each case, to the following address or, if applicable, email address, or to such other address or addresses or email address as such Party may subsequently designate to the other Parties by notice given hereunder:
If to the Seller, to:
NuCera Solutions Holdco LP c/o SK Capital Partners
430 Park Avenue
Telephone: (646) 442-2422
Attention: [**]
E-mail: [**]
with a copy (which shall not constitute notice) to: Goodwin Procter LLP
1900 N Street, NW Washington, DC 20036
Telephone: (202) 346-4262
Attention: [**]
E-mail: [**]
If to a Buyer (or to the Company after the Closing), to: Chase Corporation
375 University Avenue
Westwood, MA 02090
Telephone: (781) 332 - 0700 Email: [**]
Attention: [**] with a copy (which shall not constitute notice) to:
Nelson Mullins Riley & Scarborough LLP One Financial Center, Suite 3500
Boston, Massachusetts 02111
Telephone: (617) 217 - 4769
Email: [**]
Attention: [**]
Each of the Parties may specify a different address or addresses or email address by giving notice in accordance with this Section 12.1 to each of the other Parties.
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Section 12.2 Succession and Assignment; No Third-Party Beneficiaries.
Section 12.3 Amendments and Waivers. No amendment or waiver of any provision of this Agreement will be valid and binding unless it is in writing and signed, in the case of an amendment, by Buyer and the Seller, or in the case of a waiver, by the party against whom the waiver is to be effective. No waiver by any Party of any breach or violation of, default under or inaccuracy in any representation, warranty or covenant hereunder, whether intentional or not, will be deemed to extend to any prior or subsequent breach or violation of, default under, or inaccuracy in, any such representation, warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. No delay or omission on the part of any Party in exercising any right, power or remedy under this Agreement will operate as a waiver thereof.
Section 12.4 Non-Recourse. Except to the extent otherwise set forth in the Confidentiality Agreement, all claims, obligations, Liabilities, or causes of action (whether in contract or in tort, in law or in equity, or granted by statute) that may be based upon, in respect of, arise under, out or by reason of, be connected with, or relate in any manner to this Agreement, or the negotiation, execution, or performance of this Agreement (including any representation or warranty made in, in connection with, or as an inducement to, this Agreement), may be made only against (and such representations and warranties are those solely of) (i) the Persons that are expressly identified as parties in the preamble to this Agreement and (ii) with respect to any representation or warranty made in, in connection with, or as an inducement to, this Agreement, the Persons expressly making such representation or warranty (subject, in all cases to Section 4.27, Section 5.8 and Section 6.11) that is expressly identified as a Party in the preamble to this Agreement (the “Contracting Parties”). No Person who is not a Contracting Party, including any past, present or future director, officer, employee, incorporator, member, partner, manager, stockholder, Affiliate, agent, attorney, Representative or assignee of, and any financial advisor or lender to, any Contracting Party, or any past, present or future director, officer, employee, incorporator, member, partner, manager, stockholder, Affiliate, agent, attorney, Representative or assignee of, and any financial advisor or lender to, any of the foregoing (collectively, the “Nonparty Affiliates”), shall have any Liability (whether in contract or in tort, in law, common law, or in equity, or granted by statute) for any claims, causes of action, obligations, or Liabilities arising under, out of, in connection with, or related in any
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manner to this Agreement or based on, in respect of, or by reason of this Agreement or its negotiation, execution, performance, or breach (including any theories pertaining to “piercing the corporate veil”, “alter-ego”, unjust enrichment, or any other similar theories) (other than as set forth in the Confidentiality Agreement).
Section 12.5 Entire Agreement; Disclosure Schedules.
Section 12.6 Counterparts; Facsimile Signature. This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute but one and the same instrument. This Agreement will become effective when duly executed and delivered by each Party. Counterpart signature pages to this Agreement may be delivered by facsimile
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or electronic delivery (i.e., by email of a PDF signature page) and each such counterpart signature page will constitute an original for all purposes.
Section 12.7 Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction will not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. In the event that any provision hereof would, under Applicable Law, be invalid or unenforceable in any respect, each Party intends that such provision will be construed by modifying or limiting it so as to be valid and enforceable to the maximum extent compatible with, and possible under, Applicable Law.
Section 12.8 Governing Law. This Agreement, the rights of the Parties hereunder, all Actions arising in whole or in part under or in connection herewith, and all issues and questions concerning the construction, validity, interpretation and enforceability of this Agreement and the exhibits and schedules hereto, in each case will be governed by and construed and enforced in accordance with the domestic substantive laws of the State of Delaware, including its statutes of limitations, without giving effect to any choice or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction.
Section 12.9 Jurisdiction; Venue; Service of Process.
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Section 12.10 Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, THE PARTIES HEREBY WAIVE, AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN WHOLE OR IN PART UNDER OR IN CONNECTION WITH THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE PARTIES AGREE THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION WHATSOEVER BETWEEN OR AMONG THEM RELATING TO THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS AND THAT SUCH ACTIONS WILL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
Section 12.11 Specific Performance.
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Section 12.12 Retention of Books and Records. Buyer shall cause the Target Companies to retain all books, ledgers, files, reports, plans, operating records and any other material documents pertaining to such Person in existence at the Closing that are required to be retained under current retention policies or applicable law for a period of seven (7) years from the Closing Date, and to make the same available after the Closing for inspection and copying by the Seller or its Representatives during regular business hours and upon reasonable request and upon reasonable advance notice.
Section 12.13 Expenses. Except as otherwise expressly provided herein, each of Buyer, the Company and the Seller shall pay all of their own fees and expenses incurred in connection with this Agreement and the Contemplated Transactions, including the fees and disbursements of counsel, financial advisors and accountants.
[Signature pages follow.]
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be duly executed and delivered as of the day and year first above written.
BUYER:
CHASE CORPORATION
By: | /s/ Adam P. Chase |
NUCERA HOLDINGS INC.
By: | /s/ Steven McKeown |
NUCERA SOLUTIONS HOLDCO LP
By: NuCera Solutions GP LLC, its general partner
By: | /s/ Jonathan Borell |
Signature Page to Stock Purchase Agreement
