AGREEMENT AND PLAN OF MERGER
BY AND AMONG
DI PARENT, LP,
DI SUPER HOLDINGS, INC.,
DIAMETER MERGER CO.,
ADVENT INTERNATIONAL GPE VII, LLC,
as Shareholder Representative
Dated as of September 7, 2021
This AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of September 7, 2021, by and among: (i) TopBuild Corp., a Delaware corporation (“Buyer”); (ii) Diameter Merger Co., a Delaware corporation (“Merger Sub”); (iii) DI Super Holdings, Inc., a Delaware corporation (the “Company”); (iv) DI Parent, LP, a Delaware limited partnership (the “Seller”); and (v) Advent International GPE VII, LLC, a Delaware limited liability company (the “Shareholder Representative”), solely in its capacity as the Shareholder Representative.
W I T N E S S E T H:
WHEREAS, the Company, Buyer and Merger Sub intend to effect a merger of Merger Sub with and into the Company in accordance with this Agreement and the Delaware General Corporation Law (the “Act”), pursuant to which, among other things, Merger Sub will cease to exist and the Company will become a subsidiary of Buyer;
WHEREAS, the board of directors of Merger Sub, and the board of directors of the Company have approved, adopted and declared advisable this Agreement and the transactions contemplated hereby, including the Merger, in accordance with the Act and upon the terms and subject to the conditions set forth in this Agreement; and
WHEREAS, the respective boards of directors of the Company and Merger Sub have recommended to their respective sole shareholder the adoption and approval of this Agreement and the Merger in accordance with the Act;
“Acquired Companies” means, collectively, the Company and each of the Company Subsidiaries as of the relevant time; provided that, for purposes of the representations and warranties made in Article IV, “Acquired Companies” means, collectively the Company and each of the Company Subsidiaries as of the date hereof, but excluding the Maiden Entities and their Subsidiaries.
“Acquisitions Pipeline Schedule” means the acquisition target (the “Acquisition Target”) set forth on Schedule 1.1(a) of the Company Disclosure Schedules, as may be amended by the Company after the date hereof with the consent of Buyer.
“Adjustment Escrow Account” means the escrow account established pursuant to the Escrow Agreement in respect of the Adjustment Escrow Amount.
“Adjustment Escrow Amount” means an amount equal to $19,605,000.
“Adjustment Escrow Release Amount” means (a) the Adjustment Escrow Amount minus (b) the Net Negative Purchase Price Adjustment Amount (if any); provided that if this adjustment amount is a negative number, the Adjustment Escrow Release Amount will be $0.
“Adjustment Escrow Release Amount Per Share” means (a) the Adjustment Escrow Release Amount divided by (b) the number of Shares (other than Shares to be canceled in accordance with Section 2.8(b), and Shares held by Company Subsidiaries, if any).
“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person, and the term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.
“Agreed Principles” means (a) the policies set out on Schedule 1(b)(i) of the Company Disclosure Schedules; (b) to the extent not inconsistent with clause (a), the accounting principles, methods, policies, procedures, classifications, asset recognition bases, categorizations, assumptions, techniques, and methodologies (including as they relate to the nature of accounts, calculation of reserves or levels of accruals and in respect of the exercise of management judgment) as interpreted and applied in the preparation of the Interim Financial Statements; and (c) to the extent not addressed in clauses (a) and (b), GAAP consistently applied.
“Anti-Spam Laws” means an Act to promote the efficiency and adaptability of the Canadian economy by regulating certain activities that discourage reliance on electronic means of carrying out commercial activities, and to amend the Canadian Radio-Television and Telecommunications Commissions Act, the Competition Act, the Personal Information Protection and Electronic Documents Act and the Telecommunications Act (Canada) and other Laws that regulate the same or similar subject matter.
“Antitrust Laws” means the HSR Act, the Sherman Act, the Clayton Act, the Federal Trade Commission Act, and any other United States or foreign Laws that are designed to prohibit, restrict or regulate actions having the purpose or effect of monopolization, lessening of competition or restraint of trade.
“Business Day” means any day of the year other than (a) a Saturday, Sunday or federal holiday in the United States or (b) a day on which national banking institutions in New York, New York are required or authorized to close.
“CARES Act” means the Coronavirus Aid, Relief, and Economic Security Act (as amended).
“Cash” means the aggregate amount of cash, cash equivalents, and marketable securities (however derived, including from capital contributions, operations, financings, sales or condemnations, insurance proceeds, the exercise of options or extraordinary events) of the Acquired Companies calculated on a consolidated basis. For the avoidance of doubt, Cash shall
exclude all checks written by the Acquired Companies, but not cleared and include (a) the amount of any cash and checks previously received by the Acquired Companies or their respective banks, whether or not cleared, and deposits in transits; (b) any security, escrow or similar deposits; and (c) any deposits or cash held (i) as a guarantee in respect of performance of Contracts; or (ii) as collateral in respect of outstanding insurance policies, leases or letters of credit or credit card receivables.
“Certificate of Incorporation” means the Certificate of Incorporation of the Company, as amended from time to time in accordance with its terms and conditions, as in effect on the date hereof.
“Clayton Act” means the Clayton Act of 1914, as amended, and the rules and regulations promulgated thereunder.
“Closing Cash” means Cash as of the Measurement Time.
“Closing Debt” means Debt as of the Measurement Time.
“Closing Per Share Price” means an amount equal to the quotient of (x) the remainder of (i) the Merger Consideration, minus (ii) the Adjustment Escrow Amount, minus (iii) the Regular Indemnity Escrow Amount, minus (iv) the Special Indemnity Escrow Amount, minus (v) the Expense Reserve Holdback Amount, divided by (vi) the number of Shares (other than Shares to be canceled in accordance with Section 2.8(b), and Shares held by Company Subsidiaries, if any).
“Closing Transaction Expenses” means Company Transaction Expenses that are unpaid as of the Measurement Time.
“Closing Working Capital” means Net Working Capital as of the Measurement Time.
“Code” means the Internal Revenue Code of 1986, as amended.
“Company Benefit Plan” means each “employee benefit plan” (within the meaning of Section 3(3) of ERISA, including multiemployer plans within the meaning of Section 3(37) of ERISA (a “Multiemployer Plan”)), and all equity or equity-based compensation, severance, retention, change-in-control, fringe benefit, bonus, incentive, deferred compensation, employee loan, medical, life insurance, disability, accident, salary continuation, accrued leave, vacation, sick pay, sick leave, supplemental retirement, unemployment benefit and all other employee benefit plans, agreements, programs, policies, commitments and/or practices or other arrangements, whether or not subject to ERISA (including any funding mechanism therefor), whether formal or informal, oral or written, under which (a) any current or former employee of any Acquired Company has any present or future right to benefits or which are contributed to, sponsored by or maintained by any Acquired Company or (b) any Acquired Company has any actual or contingent liability; provided, that “Company Benefit Plan” shall exclude (x) plans, programs and arrangements maintained by a Governmental Body to which an Acquired Company is or was required to contribute pursuant to statute, (y) individual employment or independent contract
agreements, but shall not exclude any benefits (e.g., bonus payments, severance, etc.) provided under such agreements, and (z) collective agreements.
“Company Subsidiary” means any Subsidiary of the Company as of the relevant time; provided that, for purposes of the representations and warranties made in Article IV, “Company Subsidiary” means any Subsidiary of the Company as of the date hereof, but excluding the Maiden Entities and their Subsidiaries.
“Company Transaction Expenses” means (a) the out-of-pocket costs, fees and expenses incurred by or on behalf of any Acquired Company in connection with the Transactions for investment bankers, third party consultants, advisors and legal counsel, and whether billed or payable prior to, on or after the Closing; (b) all transaction-related bonuses (but, for the avoidance of doubt, not regular or contractually required bonuses payable in the Ordinary Course of Business) payable to any director, officer, employee, independent contractor or consultant of any Acquired Company as a result of the consummation of the contemplated Transactions (but excluding any post-Closing liabilities or obligations arising as a result of both (i) the consummation of the contemplated Transactions; and (ii) the occurrence of one or more additional post-Closing events including continued service or under so-called “double-trigger” severance provisions contained in any employment-related Contracts); (c) one-half (1/2) of any fees and expenses associated with acquiring any “run-off” or “tail” policy purchased by the Company pursuant to Section 7.6(d); provided, however, that if such fees and expenses are in excess of $200,000, then any such amount over $200,000 shall be deemed a “Company Transaction Expense”; (d) one-half (1/2) of the premiums, underwriting fees, brokers’ commissions and other costs and expenses related to the R&W Insurance Policy; and (e) any liabilities related to the Supplemental Retirement Benefits defined in Section 7.8(f) to the extent that any such agreement is not terminated at Closing and paid in full by Seller.
“Copyrights” means all copyrights, whether in published or unpublished works, databases, data collections and rights therein, mask work rights, Software, web site content, rights to compilations, collective works and derivative works of any of the foregoing and moral rights in any of the foregoing; registrations and applications for registration for any of the foregoing and any renewals or extensions thereof; and moral rights in any of the foregoing.
“COVID-19” means SARS-CoV-2 or COVID-19, and any variants, evolutions or mutations thereof or related or associated epidemics or pandemics.
“Data Breach” means any incident involving any unauthorized or unlawful access, acquisition or use of (a) Personal Information, (b) encryption keys or (c) Information Systems.
“Debt” means, without duplication, the principal amount, plus any related accrued and unpaid interest, fees and prepayment premiums or penalties, “breakage costs”, redemption fees or other termination fees of the Acquired Companies, in each case, to the extent they arise as a consequence of the Closing, for (a) indebtedness for borrowed money; (b) indebtedness evidenced by notes, bonds, debentures, mortgages or similar instruments, but
excluding letters of credit to the extent not drawn upon; (c) any obligations associated with leases classified as capital leases in the Financial Statements or in accordance with GAAP (in each case, excluding the effect of ASC 842; (d) the deferred purchase price of property or assets, including any seller notes, earn-out payments (but excluding the earn-out payment that may become payable pursuant to the terms of the Maiden Acquisition Agreements following the Closing), or any post-closing purchase price adjustments pursuant to the terms of the Maiden Acquisition Agreements; (e) the Tax Liability Amount; (f) any performance bond, letter of credit or surety bond, in each case, solely to the extent drawn upon or payable and not continuing; (g) net obligations of the Acquired Companies under interest rate, commodity or currency swap arrangements, to the extent payable if terminated; or (h) any guarantee or assumption of any such indebtedness described in clauses (a) through (g) above or any debt securities of another Person. Notwithstanding the foregoing, “Debt” shall not include (i) trade payables; (ii) any liability or obligation to the extent taken into account in the calculation of Net Working Capital; (iii) any liabilities or obligations solely between any of the Acquired Companies, or (iv) any obligations associated with leases classified as operating leases in the Financial Statements.
“Debt Financing” means Buyer’s debt financing for the purpose of funding the Transactions.
“Domain Names” means Internet electronic addresses, uniform resource locators and alphanumeric designations associated therewith registered with or assigned by any domain name registrar, domain name registry or other domain name registration authority as part of an electronic address on the Internet and all applications for any of the foregoing.
“Enterprise Value” means $1,001,000,000.
“Environment” means soil, surface waters, groundwater, drinking water, land, stream sediments, soil gas, natural resources, surface or subsurface strata, ambient air or indoor air.
“Environmental Law” means any Law, or legally binding policy or guideline, relating to: public or workplace health and safety (to the extent relating to exposure to Hazardous Materials); protection of the Environment; Releases or threats of Releases of Hazardous Materials; the presence, storage, use, treatment, transportation, management, handling, generation, production, manufacture, importation, exportation, sale, distribution, labeling, recycling, processing, testing, control or cleanup of Hazardous Materials (or products containing Hazardous Materials); or injury or harm to persons relating to exposure to Hazardous Materials.
“ERISA” means any the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” means any entity, business or other Person, whether or not incorporated, that together with any Acquired Company is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414(m) or (o) of the Code.
“Escrow Agent” means Bank of America, N.A., as escrow agent under the Escrow Agreement, or any successor Person appointed in accordance with the terms of the Escrow Agreement.
“Escrow Agreement” means an escrow agreement to be executed as of the Closing Date, by and among Buyer, the Shareholder Representative and the Escrow Agent, substantially in the form attached hereto as Exhibit A, providing for the holding and disbursement of the Adjustment Escrow Amount held in escrow in accordance with the terms hereof and thereof.
“Escrow Amounts” means, together, the Adjustment Escrow Amount, the Regular Indemnity Escrow Amount and the Special Indemnity Escrow Amount.
“Estimated Working Capital Adjustment” means (a) if the Estimated Working Capital exceeds the Net Working Capital Peg, the amount, if any, by which the Estimated Working Capital exceeds the Net Working Capital Peg, which amount shall be expressed as a positive number; (b) if the Estimated Working Capital is less than the Net Working Capital Peg, the amount, if any, by which the Net Working Capital Peg exceeds the Estimated Working Capital, which amount shall be expressed as a negative number; or (c) if the Estimated Working Capital is equal to the Net Working Capital Peg, zero.
“Existing Credit Agreements” means (a) that certain ABL Credit Agreement, dated as of December 15, 2014 (as amended by the First Amendment to ABL Credit Agreement, dated as of May 29, 2015, the Second Amendment to ABL Credit Agreement, dated as of October 14, 2015, the Third Amendment to ABL Credit Agreement, dated as of March 23, 2016, the Fourth Amendment to ABL Credit Agreement, dated as of May 19, 2017, the Fifth Amendment to ABL Credit Agreement, dated as of June 7, 2019, and as may be further amended, restated, amended and restated, supplemented or otherwise modified from time to time), by and among, inter alios, DI Intermediate, Inc. (“Holdings”), U.S. Borrower, Crossroads C&I Distributors Inc., the lenders from time to time party thereto and Bank of America, N.A., as administrative agent and collateral agent, (b) that certain First Lien Term Loan Credit Agreement, dated as of December 15, 2014 (as amended by the First Amendment to First Lien Term Loan Credit Agreement, dated as of May 29, 2015, the Second Amendment to First Lien Term Loan Credit Agreement, dated as of June 7, 2019, and as may be further amended, restated, amended and restated, supplemented or otherwise modified from time to time), by and among, inter alios, Holdings, U.S. Borrower, the lenders from time to time party thereto and Royal Bank of Canada, as administrative agent and collateral agent and (c) that certain Second Lien Term Loan Credit Agreement, dated as of December 15, 2014 (as amended by the First Amendment to Second Lien Term Loan Credit Agreement, dated as of May 29, 2015, the Second Amendment to Second Lien Term Loan Credit Agreement, dated as of June 7, 2019, and as may be further amended, restated, amended and restated, supplemented or otherwise modified from time to time), by and among, inter alios, Holdings, U.S. Borrower, the lenders from time to time party thereto and Wilmington Trust, National Association, as administrative agent and collateral agent.
“Expense Reserve Holdback Release Amount Per Share” means an amount equal to (a) the aggregate amount of funds remaining in the Expense Reserve Holdback Account divided by (b) the number of Shares (other than Shares to be canceled in accordance with Section 2.8(b), and Shares held by Company Subsidiaries, if any).
“Federal Trade Commission Act” means the Federal Trade Commission Act of 1914, as amended, and the rules and regulations promulgated thereunder.
“Final Cash Adjustment” means the amount, which may be positive or negative, equal to the Final Cash minus the Estimated Cash.
“Final Debt Adjustment” means the amount, which may be positive or negative, equal to the Final Debt minus the Estimated Debt.
“Final Transaction Expenses Adjustment” means the amount, which may be positive or negative, equal to the Final Transaction Expenses minus the Estimated Transaction Expenses.
“Final Working Capital Adjustment” means the amount, which may be positive or negative, equal to (a) if the Final Working Capital exceeds the Estimated Working Capital, the amount, if any, by which the Final Working Capital exceeds the Estimated Working Capital, which amount shall be expressed as a positive number, or (b) if the Final Working Capital is less than the Estimated Working Capital, the amount, if any, by which the Estimated Working Capital exceeds the Final Working Capital, which amount shall be expressed as a negative number.
“Financing Sources” means the Persons providing or arranging, underwriting or placing the Debt Financing.
“Fraud” means a claim for Delaware common law fraud brought by a party hereto against a party hereto based on the making of a representation of such party contained in this Agreement or the certificates to be provided pursuant to Section 2.4(a)(i) and Section 2.4(b)(ii). For the avoidance of doubt, “Fraud” does not include any claim for equitable fraud, promissory fraud, unfair dealings fraud, or any torts (including a claim for fraud) based on negligence or recklessness.
“Fundamental Representations” means the representations and warranties contained in Section 4.1 (Organization and Good Standing), Section 4.2 (Authorization of Agreement), Section 4.4 (Capitalization), Section 4.26 (Brokers’ Fee), Section 5.1 (Organization and Good Standing), Section 5.2 (Authorization of Agreement), Section 5.4 (Title to Shares), and Section 5.6 (Brokers’ Fee).
“GAAP” means generally accepted accounting principles in the United States as of the date hereof (or, as used in Section 4.6, with respect to any Financial Statements, as in effect as of the date such Financial Statements were prepared).
“Governmental Body” means any domestic or foreign national, state, multi-state, municipal or other local government, any subdivision, agency, commission or authority thereof, or any quasi-governmental or private body exercising any regulatory or Taxing Authority (to the
extent that the rules, regulations or orders of such organization or authority have the force of Law), or any court, tribunal or arbitrator of competent jurisdiction.
“Hazardous Material” means any (a) asbestos or asbestos-containing materials; (b) petroleum or petroleum-containing or petroleum-derived materials; (c) radiation or radioactive materials; (d) mold present at levels or in conditions that can causes adverse health effects; (e) polychlorinated biphenyls; (f) per-and polyfluoroalkyl substances; (g) urea formaldehyde; and (h) any other material, substance or waste which is defined, regulated or classified under any Environmental Law as a “hazardous waste,” “hazardous material,” “regulated substance,” “hazardous substance,” “extremely hazardous waste,” “restricted hazardous waste,” “contaminant,” “pollutant,” “toxic waste,” “toxic substance” or similar term or which is otherwise regulated under Environmental Law due to its dangerous, deleterious or harmful properties.
“Holding Acquired Companies” means, collectively, the Company, DI Intermediate, Inc., a Delaware corporation, DI Purchaser, Inc., a Delaware corporation, Distribution International Holding LLC, a Delaware limited liability company, and Distribution International Holding Corp., a Delaware corporation.
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
“Indemnified Taxes” means, without duplication, any Taxes of any (i) Acquired Company for any Pre-Closing Tax Period; (ii) member of any affiliated, consolidated, combined, unitary or other similar group for Tax purposes of which any Acquired Company is or was a member on or prior to the Closing Date, including pursuant to Treasury Regulation Section 1.1502-6 or any analogous or similar U.S. state or local, or non-U.S. Law; and (iii) Person (other than any Acquired Company) imposed on any Acquired Company as a transferee or successor, by Contract (other than a customary commercial Contract not primarily related to Taxes) or pursuant to any Law, which Taxes relate to an event or transaction occurring before the Closing; provided, however, that any such Taxes shall not constitute Indemnified Taxes to the extent such Taxes (i) were expressly taken into account in the calculation of Closing Working Capital, Closing Debt or Closing Transaction Expenses; or (ii) result from actions of any Acquired Company on the Closing Date after the Closing that are (A) outside of the Ordinary Course of Business; and (B) not expressly permitted by this Agreement.
“Information Systems” means all computer hardware, databases and data storage systems, computer, data, database and communications networks (other than the Internet), and other apparatus used to create, store, transmit, exchange or receive information in any form, including those hosted by or outsourced to third parties such as cloud service providers used by any of the Acquired Companies.
“Intellectual Property” means all Copyrights, Domain Names, Patents, Software, Trademarks and Trade Secrets.
“International Benefit Plan” means each Company Benefit Plan that has been adopted or maintained by any of the Acquired Companies (or under which any Acquired Company has any actual or contingent liability) (a) primarily for the benefit of any current or former
employees, directors or other service providers who perform services outside the United States or (b) which is not subject to United States Law.
“Inventory” means (a) all stock in trade, merchandise, goods, supplies and other products owned by the Acquired Companies for resale or lease in the Ordinary Course of Business; and (b) all of the raw materials, work-in-process, and finished products of the Company.
“IRS” means the United States Internal Revenue Service and, to the extent relevant, the United States Department of Treasury.
“Knowledge of Buyer” means the actual knowledge (and not imputed or constructive knowledge), after reasonable inquiry or investigation of direct reports, of Luis Machado.
“Knowledge of the Company” means the actual knowledge (and not imputed or constructive knowledge), after reasonable inquiry or investigation of direct reports, of any of Steve Margolius, Brian Crutchfield, Sharla Frenzel, Lance Devin, Darla Lentz, Ibis Reynolds and David Jacobs.
“Law” means any applicable foreign, federal, state, provincial, municipal, local law, statute, code, ordinance, rule, regulation, Order or other legal requirement of any Governmental Body.
“Leased Real Property” means all real property leased, subleased or otherwise occupied by Acquired Company or any of its Subsidiaries pursuant to a lease or other Contract.
“Legal Proceeding” means any judicial, administrative or arbitral actions, suits, claims or counterclaims, litigation, audit, criminal prosecution or proceedings (including any civil, criminal, administrative or appellate proceeding) by or before a Governmental Body.
“Lien” means any lien, encumbrance, pledge, mortgage, deed of trust, security interest, lease, license, charge, hypothec, option, right of first refusal or first offer, easement, servitude, or other transfer restriction or encumbrance.
“Maiden Acquisition” means the transactions contemplated by (a) that certain Share Purchase Agreement, dated as of August 31, 2021, by and among Crossroads C&I Distributors Inc., 1548199 Alberta Ltd., Bertram Family Trust, Robert Bertram and Tammy Bertram and (b) that certain Asset Purchase Agreement, dated as of August 31, 2021, by and among Ideal Products of America Holdings, LLC, Ideal Products of America, L.P., Ideal Products of America Property, Inc., Ideal Products of America, Inc., Ideal Products of Canada Ltd. and the Owners of Ideal Products of Canada Ltd. Named therein (such agreements, together, the “Maiden Acquisition Agreements”).
“Maiden Entities” means Ideal Products of Canada Ltd. and Ideal Products of America Holdings, LLC.
“Material Adverse Effect” means any effect, change, event, occurrence, development or circumstance (any such item, an “Effect”) that, individually or in the aggregate,
(x) has or would reasonably be expected to have a material adverse effect on the condition (financial or otherwise), business or results of operations of the Acquired Companies, taken as a whole; or (y) have a material adverse effect on the ability of Seller or the Company to perform its obligations under this Agreement or would otherwise prevent the consummation of the Transactions; provided, however, that no Effect caused by or resulting from any of the following, either alone or in combination, shall constitute or be taken into account in determining whether there has been or will be a Material Adverse Effect with respect to clause (x) of this definition: (a) any Effect affecting the economy of the United States generally, including changes in the credit, debt, capital or financial markets (including changes in interest or exchange rates) or the economy of the United States or Canada; (b) any Effect affecting the industries in which any Acquired Company conducts business; (c) any Effect arising in connection with acts of god, disasters, emergencies, calamities, epidemics, pandemics or disease outbreaks (including COVID-19), or global, national or regional political or social actions or conditions, including hostilities, military actions, political instability, acts of terrorism or war or any escalation or material worsening of any such hostilities, military actions, political instability, acts of terrorism or war whether commenced before or after the date hereof; (d) any failure, in and of itself, by any Acquired Company to meet any internal or published projections, forecasts or revenue or earnings predictions for any period (it being understood that the underlying causes of the facts or occurrences giving rise to such failure may be taken into account in determining whether a Material Adverse Effect has occurred); (e) any matter to the extent that it is disclosed on the Company Disclosure Schedules; (f) any Effect that results from any action taken at the express request of Buyer; (g) the announcement of the execution of this Agreement, including the effects of such announcement on relationships with customers, suppliers, Governmental Bodies, employees or other third-party relationships (provided that this clause (g) shall not apply to any representation or warranty (or condition to the consummation of the Transactions relating to such representation or warranty) solely to the extent the purpose of such representation and warranty is to address the consequences resulting from the execution or announcement of this Agreement or the consummation of the Transactions); (h) any change in Law or GAAP or interpretation thereof; or (i) any material breach by Buyer or Merger Sub of their obligations under this Agreement, unless, in the cases of clauses (a), (b), (c) or (h) above, to the extent that such changes would reasonably be expected to have a materially disproportionate impact on the condition (financial or otherwise), business or results of operations of the Acquired Companies, taken as a whole, relative to other affected participants in the industries in which any Acquired Company conducts business (in which case, only the incremental disproportionate impact shall be taken into account in determining whether there has been a Material Adverse Effect).
“Merger Consideration” means the Enterprise Value, plus Estimated Cash, plus the Estimated Working Capital Adjustment, minus the Estimated Debt, minus Estimated Transaction Expenses.
“Net Positive Purchase Price Adjustment Amount Per Share” means (a) the Net Positive Purchase Price Adjustment Amount divided by (b) the number of Shares (other than Shares to be canceled in accordance with Section 2.8(b), and Shares held by Company Subsidiaries, if any).
“Net Working Capital” means the consolidated current assets of the Acquired Companies minus the consolidated current liabilities of the Acquired Companies solely to the extent such current assets and current liabilities are specifically listed in the Net Working Capital Schedule as line items that comprise Net Working Capital (and including or excluding any asset or liability accounts explicitly identified as included or excluded from the calculation on the Net Working Capital Schedule), and, in each case, as determined in accordance with the Agreed Principles. For the avoidance of doubt, “Net Working Capital” shall not include (a) any amounts reflected in Closing Cash, Closing Debt and Closing Transaction Expenses, (b) any intercompany receivables, payables or loans of any kind or nature solely between or among any of the Acquired Companies, (c) any amounts due to Seller or its Affiliates, (d) any income Tax assets or liabilities or (e) any deferred Tax assets or liabilities.
“Net Working Capital Schedule” means the example statement of Net Working Capital set forth in Schedule 1.1(b) of the Company Disclosure Schedules.
“Order” means any order, injunction, judgment, decree, ruling, writ, assessment or arbitration award of a Governmental Body.
“Ordinary Course of Business” means the ordinary and usual course of day-to-day operations of the Acquired Companies consistent with past practice, taken as a whole (including, for the avoidance of doubt, recent past custom and practice of any COVID-19 Response, but excluding any violation of applicable Law or Permit or any material violation of any Material Contract.
“Organizational Documents” means the constitution, charter, memorandum, articles of incorporation, certificate of incorporation, articles of association, constitution, bylaws, limited liability company agreement or other similar document of a Person, as may be amended, restated or otherwise modified from time to time.
“Owned Intellectual Property” means Intellectual Property owned, or purported to be owned, in whole, or in part, by an Acquired Company.
“Patents” means all patents, industrial and utility models, industrial designs, and any other indicia of invention ownership issued or granted by any Governmental Body, including all provisional applications, priority and other applications, divisionals, continuations (in whole or in part), extensions, reissues, re-examinations or equivalents or counterparts of any of the foregoing.
“Permit” means any approvals, authorizations, consents, licenses, permits, registrations or certificates or other similar authorization of a Governmental Body.
“Permitted Liens” means (a) all defects, exceptions, restrictions, easements, rights of way and encumbrances disclosed in policies of title insurance made available to Buyer; (b) Liens securing liabilities of the Acquired Companies which are reflected or reserved against in the consolidated balance sheet of the Company prepared in accordance with GAAP to the extent so reflected or reserved; (c) statutory Liens for Taxes, assessments or other governmental charges not
yet delinquent or the amount or validity of which is being contested in good faith by appropriate proceedings and for which adequate reserves have been established therefor in accordance with GAAP; (d) landlords’, mechanics’, carriers’, workers’, repairers’ and similar Liens arising or incurred in the Ordinary Course of Business; (e) zoning, building code, entitlement and other land use and Environmental Laws, which are not violated in any material respect by the current or contemplated use of the real property; (f) title of a lessor under a capital or operating lease, and leases, subleases, and similar transactions in the Ordinary Course of Business; and (g) licenses in Intellectual Property granted in the Ordinary Course of Business.
“Person” means any individual, corporation, partnership, limited liability company, firm, joint venture, association, joint-stock company, trust, unincorporated organization, Governmental Body or other entity.
“Personal Information” means, in addition to any definition for any similar term (e.g., “personally identifiable information” or “PII”) provided by applicable Law, all information that identifies, is reasonably capable of being associated with or could reasonably be linked to an individual.
“Pre-Closing Tax Period” means any taxable period ending on or before the Closing Date, and, in the case of any Straddle Period, the portion of such period ending on and including the Closing Date.
“Regular Indemnity Escrow Account” means the escrow account established pursuant to the Escrow Agreement in respect of the Regular Indemnity Escrow Amount.
“Regular Indemnity Escrow Amount” means an amount equal to $3,656,250.
“Related Claim” means any claims, causes of action or Legal Proceedings (whether at law or in equity, based upon contract, tort, statute or otherwise) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution, performance, breach, interpretation, construction, validity or enforcement of this Agreement (including any claim, cause of action or Legal Proceeding based upon, arising out of or related to any representation or warranty made or alleged to be made in or in connection with, or as an inducement to enter into, this Agreement).
“Related Party” means: (a) any Person that currently serves as a director, controlling shareholder or executive officer of Seller or any Acquired Company; (b) any Person controlled by a Person described in (a) above (other than the Company or any of its Subsidiaries); (c) any trust of which a Person described in (a) above is grantor; and (d) any member of the Immediate Family of any Person described in (a) above. For purposes of this definition, the “Immediate Family” of an individual means (x) the individual’s spouse and (y) the individual’s parents, brothers, sisters and children; and “control” of a specified Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of such Person, whether through ownership of voting securities, by Contract, agency or otherwise.
“Release” means any releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, migrating, disposing, depositing or dumping
of a Hazardous Material on or into the Environment (including the abandonment or discarding of barrels, containers and other closed receptacles containing any Hazardous Material).
“Representatives” means, with respect to any Person, such Person’s equityholders, partners, members, officers, directors employees, consultants, agents, attorneys, accountants, advisors and other representatives.
“Retention Amount” means an amount equal to the retention in place under the R&W Insurance Policy.
“SEC” means the U.S. Securities and Exchange Commission.
“Securities Act” means the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Sherman Act” means the Sherman Antitrust Act of 1890, as amended, and the rules and regulations promulgated thereunder.
“Software” means all computer software and code, including assemblers, applets, compilers, source code, object code, development tools, design tools, user interfaces and data, in any form or format.
“Special Indemnity Escrow Amount” means an amount equal to $8,500,000.
“Specified Claim – A” means as described on Schedule 1.1(e)(i)(A) of the Company Disclosure Schedules.
“Specified Claim – B” means as described on Schedule 1.1(e)(i)(B) of the Company Disclosure Schedules.
“Specified Claims” means, collectively, the Specified Claim – A and the Specified Claim – B.
“Specified Claim – A Survival Period” means as described on Schedule 1.1(e)(ii)(A) of the Company Disclosure Schedules.
“Specified Claim – B Survival Period” means as described on Schedule 1.1(e)(ii)(B) of the Company Disclosure Schedules.
“Specified Debt” means the Debt set forth on Schedule 1.1(f) of the Company Disclosure Schedules.
“Straddle Period” means any taxable period that begins on or before the Closing Date and ends after the Closing Date.
“Subsidiary” means, with respect to any Person, any other Person of which such specified Person will, at the time, directly or indirectly through one or more Subsidiaries, (a) own
at least 50% of the outstanding voting securities or other voting equity interests or (b) hold at least 50% of the partnership, limited liability company or similar interests.
“Tax” or “Taxes” means: (a) all federal, state, local or foreign taxes, charges, fees, imposts, levies or other assessments, including all net income, gross receipts, capital, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security (or similar), unemployment, disability, excise, severance, stamp, occupation, premium, customs, duties, property, estimated taxes and any other taxes of any kind whatsoever; and (b) all interest, penalties, fines and additions to tax imposed on any item described in clause (a) of this definition.
“Tax Liability Amount” means an amount equal to the sum of (a) unpaid amount of income Taxes of the Acquired Companies (which shall not be less than zero) attributable to any Pre-Closing Tax Period for which Tax Returns are not yet due and have not been filed, calculated consistently with the Acquired Companies’ past practice (except as otherwise required by applicable Law) and, with respect to a Straddle Period, in accordance with Section 7.11(c) (provided, that such amount shall (i) exclude any deferred income Tax liabilities and deferred Tax assets established to reflect timing differences between book and Tax income; (ii) exclude any income Taxes resulting from actions of Buyer, any Acquired Company or any of their respective Affiliates on the Closing Date after the Closing that are (x) outside of the Ordinary Course of Business and (y) not expressly permitted by this Agreement; (iii) assume that the taxable year of any partnership (including any entity treated as a partnership for U.S. federal income Tax purposes) or any “controlled foreign corporation” (within the meaning of Code Section 957) in which any Acquired Company owns an equity interest shall end for U.S. federal income Tax purposes as of the end of the day on the Closing Date; (iv) if an election under Code Section 965(h) was made by or with respect to any Acquired Company, take into account any unpaid installments of the “net tax liability” (within the meaning of Code Section 965(h)); (v) to the extent deductible on any such Tax Return on at least a “more likely than not” level of comfort, take into account any Transaction Tax Deductions, (vi) be reduced by any refunds or overpayments of estimated Taxes for such taxable periods), and (vii) shall exclude any Taxes arising out of or in connection with the Maiden Acquisition; and (b) an amount equal to any Taxes the payment or deposit of which have been deferred pursuant to the CARES Act (or any similar U.S. state and local and non-U.S. Law).
“Taxing Authority” means the IRS and any other Governmental Body exercising any authority to impose, assess, collect or otherwise administer any Tax or any other authority exercising Tax regulatory authority.
“Tax Return” means any return, report or statement filed with any Taxing Authority with respect to any Tax (including any attachments thereto, and any amendment thereof), including any information return, claim for refund, amended return or declaration of estimated Tax, and including, where permitted or required, combined, consolidated or unitary returns for any group of entities consisting of the Acquired Companies.
“Trademarks” means trademarks, service marks, fictional business names, trade names, commercial names and other proprietary rights to any words, names, slogans, symbols, logos, devices or combinations thereof used to identify, distinguish and indicate the source or origin of goods or services; registrations, renewals, applications for registration, equivalents and
counterparts of the foregoing; and the goodwill of the business associated with each of the foregoing.
“Trade Secrets” means anything that would constitute a “trade secret” under applicable Law, and all other inventions (whether patentable or not), industrial designs, discoveries, improvements, ideas, designs, models, formulae, patterns, compilations, data collections, drawings, blueprints, mask works, devices, methods, techniques, processes, know-how, confidential information, proprietary information, customer lists, Software and technical information.
“Transaction Documents” means this Agreement and all other agreements, certificates and instruments to be executed by Buyer, Merger Sub, the Company, and/or the Shareholder Representative at or prior to the Closing pursuant to this Agreement.
“Transaction Tax Deductions” means, without duplication, (a) the deductible portion of all Company Transaction Expenses (provided, however, that for this purpose the Company shall be deemed to have elected to treat seventy percent (70%) of the amount of any success-based fee as an amount that does not facilitate the transaction pursuant to the safe harbor in Revenue Procedure 2011-29), (b) all deductions resulting from the repayment of any Debt at the Closing, including all fees, expenses and interest (including amounts treated as interest for income Tax purposes), original issue discount, breakage fees, tender premiums, consent fees, redemption, retirement or make-whole payments, defeasance in excess of par or similar payments and any deductions for the capitalized and unamortized portion of any financing fees or expenses of the Acquired Companies, and (c) any other deductible payments attributable to the Transactions contemplated by this Agreement and economically borne by Seller.
“Transactions” means the transactions contemplated by the Transaction Documents.
“Transfer Taxes” means any real property transfer, sales, use, value added, stamp, documentary, recording, registration, conveyance, stock transfer, intangible property transfer, personal property transfer, gross receipts, registration, duty, securities transactions or similar fees or non-income Taxes or governmental charges (together with any interest or penalty, addition to Tax or additional amount imposed) as levied by any Taxing Authority or other Governmental Body in connection with the Transactions, including any payments made in lieu of any such Taxes or governmental charges that become payable in connection with the Transactions. For the avoidance of doubt, Transfer Taxes shall not include any income Tax or other Tax based on net income, profits or capital gains, including any Chinese Tax, if any, incurred in connection with the Maiden Acquisition or this Transaction.
“Transferred Information” means the Personal Information to be disclosed or conveyed to one party or any of its representatives or agents by or on behalf of another party as a result of or in conjunction with the transactions contemplated herein, and includes all such personal information disclosed to Buyer prior to the execution of this Agreement.
“Treasury Regulations” means the Treasury Regulations promulgated under the Code.
“United States or U.S.” means the United States of America.
“U.S. Borrower” means DI Purchaser, Inc., a Delaware corporation.
“Willful 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 representation, warranty, covenant or agreement set forth in this Agreement, which breach was the conscious object of the act or failure to act.
Acquired Company Tax Proceeding
1.1(a) (in definition of Acquisitions Pipeline Schedule)
Audited Financial Statements
Balance Sheet Date
Buyer Indemnified Parties
Certificate of Merger
Company Disclosure Schedules
Company’s 401(k) Plan
Covered Acquired Company Tax Proceeding
1.1(a) (in definition of Material Adverse Effect)
1.1(a) (in definition of Acquisitions Pipeline Schedule)
Estimated Transaction Expenses
Estimated Working Capital
Final Transaction Expenses
Final Working Capital
Incentive Plan Participant
Interim Financial Statements
1.1(a) (in definition of Company Benefit Plan)
Net Negative Purchase Price Adjustment Amount
Net Positive Purchase Price Adjustment Amount
Pending A Indemnity Claims
Pending B Indemnity Claims
Pending Regular Indemnity Claims
Pending Tax Indemnity Claims
Pre-Closing Tax Refund
Purchase Price Adjustment
R&W Insurance Policy
Related Party Contract
Related Party Transaction
Supplemental Retirement Benefits
Tax Indemnity Expiration Date
Waived 280G Benefits
Except as set forth on the disclosure schedule delivered to Buyer contemporaneously to the execution of this Agreement (the “Company Disclosure Schedules”), the Company hereby represents and warrants to Buyer and Merger Sub that:
Notwithstanding any provision of this Agreement (other than clause (k) of this Section 4.9), the Company makes no representation or warranty with respect to Taxes of any Acquired Company imposed, or any Tax positions, with respect to any period (or portion thereof)
beginning after the Closing Date, and no representation or warranty is made in this Agreement with respect to the usability of any net operating loss, amortizable Tax basis or other Tax asset or attribute in any taxable period (or portion thereof) beginning after the Closing Date or with respect to any limitations thereon arising in connection with the transaction or after the Closing.
Except as set forth on the Company Disclosure Schedules, Seller hereby represents and warrants to Buyer and Merger Sub, as of the date hereof and as of the Closing that:
Each of Buyer and Merger Sub hereby represents and warrants to the Company as of the date hereof and as of the Closing that:
(e)Any information provided pursuant to this Section 7.13 shall be subject to the Confidentiality Agreements.
Notwithstanding anything to the contrary contained herein, if all of the conditions set forth in Sections 8.1 and 8.2 have been satisfied as of the Termination Date (other than those conditions that by their nature are to be satisfied by actions taken at the Closing or the failure of which to be satisfied is due primarily to a breach by Buyer or Merger Sub of any of their respective representations, warranties, covenants, or agreements contained in this Agreement), then Buyer shall not be permitted to terminate this Agreement pursuant to this Section 9.1.
Notwithstanding anything in this Section 10.3 to the contrary, the limitations set forth in herein shall not apply in instances of Fraud.
If to the Company (prior to the Closing) to:
DI Super Holdings, Inc.
c/o Advent International Corporation
800 Boylston Street
Boston, Massachusetts 02199
Attention: James Westra
c/o Distribution International, Inc.
601 Jefferson St. Suite 600
Houston, TX 77002
Attention: Brian Crutchfield and Sharla Frenzel
E-mail: firstname.lastname@example.org; email@example.com
With a copy (which shall not constitute notice) to each of:
Weil, Gotshal & Manges LLP
100 Federal Street, 34th Floor
Boston, Massachusetts 02110
Attention: Ramona Y. Nee
If to the Seller or the Shareholder Representative, to:
c/o Advent International Corporation
800 Boylston Street
Boston, Massachusetts 02199
Attention: James Westra
With a copy (which shall not constitute notice) to:
Weil, Gotshal & Manges LLP
100 Federal Street, 34th Floor
Boston, Massachusetts 02110
Attention: Ramona Y. Nee
If to Buyer, Merger Sub, or the Company (after Closing), to:
475 North Williamson Boulevard
Daytona Beach, Florida 32114
Attention: General Counsel
With a copy (which shall not constitute notice) to:
Attention: Benjamin L. Stulberg
** REMAINDER OF PAGE INTENTIONALLY LEFT BLANK **
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective authorized officers, as of the date first written above.
/s/ John S. Peterson
Name:John S. Peterson
Title:Vice President and Chief Financial Officer
DIAMETER MERGER CO.
/s/ Luis F. Machado
Name:Luis F. Machado
Title:President, Secretary and Treasurer
[Signature Page to Agreement and Plan of Merger]
DI SUPER HOLDINGS, INC.
/s/ Steven Margolius
Title: President, Chief Executive Officer, Assistant Treasurer and Assistant Secretary
DI PARENT, LP
DI Parent GP, Inc.,
its general partner
/s/ James Westra
Title:President and Secretary
[Signature Page to Agreement and Plan of Merger]
ADVENT INTERNATIONAL GPE VII, LLC
Advent International Corporation
/s/ James Westra
Title:Chief Legal Officer, General Counsel, and Managing Partner
[Signature Page to Agreement and Plan of Merger]