AGREEMENT AND PLAN OF MERGER
BY
AND
AMONG
WHITEHALL JEWELLERS, INC.,
PRENTICE CAPITAL MANAGEMENT, LP,
XXXXXXXX OPPORTUNITY FUND, L.P.
WJ HOLDING CORP.
AND
WJ ACQUISITION CORP.
DATED AS OF FEBRUARY 1, 2006
TABLE OF CONTENTS
Page
ARTICLE I TERMS OF THE MERGER..............................................3
1.1. The Offer......................................................3
1.2. Company Actions................................................4
1.3. Directors of the Company.......................................5
1.4. The Merger.....................................................7
1.5. The Closing; Effective Time....................................7
1.6. Conversion of Securities.......................................7
1.7. Tender of and Payment for Certificates.........................8
1.8. Options.......................................................10
1.9. Dissenting Shares.............................................11
1.10. Certificate of Incorporation and Bylaws.......................11
1.11. Directors and Officers........................................11
1.12. Other Effects of Merger.......................................12
1.13. Additional Actions............................................12
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................12
2.1. Due Incorporation and Good Standing...........................12
2.2. Capitalization................................................13
2.3. Subsidiaries..................................................14
2.4. Authorization; Binding Agreement..............................14
2.5. Governmental Approvals........................................15
2.6. No Violations; No Restrictions................................15
2.7. Application of Takeover Protections...........................16
2.8. SEC Filings; Company Financial Statements.....................16
2.9. Absence of Certain Changes....................................17
2.10. Absence of Undisclosed Liabilities............................18
2.11. Compliance with Laws..........................................18
2.12. Permits.......................................................19
2.13. Litigation....................................................19
2.14. Indebtedness and Other Contracts..............................19
2.15. Intellectual Property.........................................20
2.16. Employee Matters..............................................21
2.17. Taxes and Returns.............................................22
2.18. Finders and Investment Bankers................................22
2.19. Fairness Opinion..............................................23
2.20. Insurance.....................................................23
2.21. Vote Required.................................................23
2.22. Title to Properties...........................................23
2.23. Environmental Matters.........................................23
2.24. Schedule 14D-9; Offer Documents; and Proxy Statement..........24
2.25. Transactions with Affiliates..................................24
2.26. Disclosure....................................................25
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT, HOLDCO AND
PURCHASER.....................................................25
3.1. Due Incorporation and Good Standing...........................25
3.2. Authorization; Binding Agreement..............................25
3.3. Governmental Approvals........................................26
3.4. No Violations.................................................26
3.5. Finders and Investment Bankers................................27
3.6. Disclosures...................................................27
3.7. Financing Commitments.........................................28
3.8. No Prior Activities...........................................28
3.9. Ownership of Shares...........................................28
3.10. Disclosure....................................................28
ARTICLE IV ADDITIONAL COVENANTS OF THE COMPANY............................28
4.1. Conduct of Business of the Company............................28
4.2. Notification of Certain Matters...............................31
4.3. Access and Information........................................31
4.4. Special Meeting; Proxy Statement..............................32
4.5. Commercially Reasonable Efforts...............................34
4.6. Public Announcements..........................................34
4.7. Compliance....................................................35
4.8. Exclusivity...................................................35
4.9. SEC and Stockholder Filings...................................37
4.10. State Takeover Laws...........................................38
ARTICLE V ADDITIONAL COVENANTS OF PARENT, HOLDCO AND PURCHASER............38
5.1. Notification of Certain Matters...............................38
5.2. Best Efforts..................................................39
5.3. Compliance....................................................39
5.4. Indemnification...............................................39
5.5. Benefit Plans and Employee Matters............................41
5.6. Public Announcements..........................................42
5.7. Availability of Funds.........................................42
5.8. No Disposition of Shares; Obligation to Vote..................42
ARTICLE VI CONDITIONS.....................................................42
6.1. Conditions to Each Party's Obligations........................42
6.2. [Reserved]....................................................43
6.3. Conditions to Obligations of the Company......................43
6.4. Frustration of Conditions.....................................43
ARTICLE VII TERMINATION AND ABANDONMENT...................................43
7.1. Termination...................................................43
7.2. Effect of Termination.........................................45
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7.3. Fees and Expenses.............................................45
ARTICLE VIII MISCELLANEOUS................................................46
8.1. Amendment and Modification....................................46
8.2. Waiver of Compliance; Consents................................46
8.3. Survival......................................................47
8.4. Notices.......................................................47
8.5. Binding Effect; Assignment....................................49
8.6. Governing Law.................................................49
8.7. Counterparts..................................................50
8.8. Interpretation................................................50
8.9. Entire Agreement..............................................50
8.10. Severability..................................................51
8.11. Specific Performance..........................................51
8.12. Attorneys' Fees...............................................51
8.13. Third Party Beneficiaries.....................................51
8.14. Obligation of Holdco and Parent...............................51
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "AGREEMENT") is made and
entered into as of February 1, 2006 (the "EFFECTIVE DATE"), by and among
Whitehall Jewellers, Inc., a Delaware corporation (the "COMPANY"), Prentice
Capital Management, LP, a Delaware limited partnership ("PARENT"), Xxxxxxxx
Opportunity Fund, L.P. ("XXXXXXXX") WJ Holding Corp., a Delaware corporation and
affiliate of Parent and Xxxxxxxx ("HOLDCO"), and WJ Acquisition Corp., a
Delaware corporation and wholly-owned subsidiary of Holdco ("PURCHASER").
WITNESSETH:
A. The respective Boards of Directors of Holdco, Purchaser and the
Company deem it advisable and in the best interests of their respective
stockholders that Holdco acquire the Company upon the terms and subject to the
conditions provided for in this Agreement and the other documents and agreements
entered into in connection with this Agreement, including: the execution of the
Amended and Restated Bridge Term Loan Credit Agreement dated as of the date
hereof (the "BRIDGE LOAN AGREEMENT" and together with Amendment No. 2 (as
defined in recital D below) and this Agreement, the "TRANSACTION DOCUMENTS")
pursuant to which PWJ Lending LLC ("PWJ LENDING"), an affiliate of Parent, as
Collateral and Administrative agent and the lenders thereto, has agreed, among
other things, to extend the maturity of certain loan obligations outstanding
under a Bridge Term Loan Credit Agreement (the "ORIGINAL BRIDGE LOAN AGREEMENT")
dated October 3, 2005 among, the Company, PWJ Lending as Collateral Agent and
Administrative Agent and the other lenders thereto and to make an additional $20
million loan to the Company for working capital and general corporate purposes.
B. In furtherance thereof, it is proposed that the acquisition be
accomplished by Purchaser commencing a cash tender offer (as it may be amended
from time to time as permitted by this Agreement, the "Offer") to purchase and
acquire all shares of the issued and outstanding common stock, par value $0.001
per share (the "COMMON STOCK"), of the Company for $1.60 per share of Common
Stock (such amount or any greater amount per share of Common Stock paid pursuant
to the Offer being hereinafter referred to as the "OFFER PRICE," and the shares
of Common Stock being hereinafter referred to as the "SHARES"), subject to any
applicable withholding for Taxes (as such term is defined in Section 2.16(g)),
net to the seller in cash, upon the terms and subject to the conditions set
forth in this Agreement.
C. The Board of Directors of the Company (the "BOARD") has
unanimously approved the Agreement, the Offer and the Merger (as defined below),
and the Board has determined that such approval is sufficient to render
inapplicable to this Agreement, the Offer, the Merger and the other transactions
contemplated by this Agreement the restriction against the parties hereto
engaging in any business combination as set forth in Section 203 of the Delaware
General Corporation Law ("DGCL") and has determined that this Agreement, the
Offer and the Merger and the transactions contemplated hereby and thereby are
fair to and in the best interests of the Company and its stockholders, and has
resolved to recommend that holders of Shares accept the Offer, tender their
Shares to Purchaser pursuant to the Offer and adopt this Agreement.
D. The Company and its rights agent have, as of the Effective Date,
executed Amendment No. 2 ("AMENDMENT NO. 2") to that certain Amended and
Restated Stockholders Rights Agreement (the "RIGHTS AGREEMENT"), dated as of
April 28, 1999, between the Company and BankBoston, N.A., and such amendment has
not been amended or otherwise modified since the date thereof.
F. The general partners of each of Parent and Xxxxxxxx (on their
own behalf and as the sole stockholders of Holdco), and the Board of Directors
of each of Holdco (on its own behalf and as the sole stockholder of Purchaser),
Purchaser and the Company have each approved this Agreement, the other
Transaction Documents and the merger of Purchaser with and into the Company (the
"MERGER"), with the Company continuing as the surviving corporation in the
Merger in accordance with the DGCL and, in each such case, upon the terms and
conditions set forth in this Agreement.
G. By virtue of the provisions of this Agreement, that certain
Securities Purchase Agreement (the "PURCHASE AGREEMENT"), dated as of October 3,
2005, between the Company, PWJ Funding LLC, an affiliate of Parent, PWJ Lending,
and Xxxxxxxx is terminated effective upon execution of this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement and intending to be legally
bound hereby, the parties hereto agree as follows:
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ARTICLE I
TERMS OF THE MERGER
1.1. THE OFFER.
(a) Purchaser, Parent and Xxxxxxxx shall commence (within the meaning of
Rule 14d-2 under the Securities Exchange Act of 1934, as amended (together with
the rules and regulations promulgated thereunder, the "EXCHANGE ACT")) the Offer
as promptly as reasonably practicable after the Effective Date, but in no event
later than five (5) business days (as defined in Rule 14d-1(g)(3) of the
Exchange Act) from the date of this Agreement and the Offer shall remain open at
least twenty (20) business days from commencement of the Offer (the "INITIAL
EXPIRATION DATE"). The obligation of Purchaser, and the obligation of Parent and
Xxxxxxxx to cause Purchaser, to accept for payment and to pay for any Shares
validly tendered and not withdrawn prior to the expiration of the Offer shall be
subject only to the satisfaction or waiver by Parent or Purchaser of the
following conditions: (i) there being validly tendered and not withdrawn prior
to the expiration of the Offer that number of shares of Common Stock which,
together with any shares of Common Stock then owned by Holdco, Purchaser, and/or
Parent and Xxxxxxxx and their respective affiliates, represents at least a
majority of the aggregate voting power of the Shares and the shares of Class B
Common Stock, par value $1.00 per share, of the Company ("CLASS B SHARES"),
voting together as a single class, outstanding on the date such Shares are
purchased (the "MINIMUM CONDITION"); and (ii) the other conditions set forth in
ANNEX A hereto. Purchaser shall, on the terms and subject to the prior
satisfaction or waiver by Parent or Purchaser of the Minimum Condition and the
other conditions of the Offer set forth in ANNEX A hereto, accept for payment
and pay for all Shares tendered and not withdrawn as soon as it is legally
permitted to do so under applicable Law. The Offer shall be made by means of an
offer to purchase (the "OFFER TO PURCHASE") that contains the terms set forth in
this Agreement, the Minimum Condition and the other conditions set forth in
ANNEX A hereto. Purchaser expressly reserves the right to waive any of such
conditions, to increase the Offer Price and to make any other changes in the
terms of the Offer; PROVIDED, however, that Purchaser shall not, and Parent and
Xxxxxxxx shall cause Purchaser not to, decrease the Offer Price, change the form
of consideration payable in the Offer, decrease the number of Shares sought in
the offer, impose additional conditions to the Offer, extend the Offer beyond
the Initial Expiration Date, waive the Minimum Condition or amend any other term
or condition of the Offer in any manner adverse to the holders of the Shares, in
each case without the prior written consent of the Company (such consent to be
authorized by the Board or a duly authorized committee thereof). Notwithstanding
the foregoing, Purchaser may, without the consent of the Company, prior to the
termination of this Agreement, extend the Offer for any period required by any
rule, regulation or interpretation of the United States Securities and Exchange
Commission ("SEC"), or the staff thereof, applicable to the Offer. If, at any
scheduled expiration of the Offer, any condition to the Offer is not satisfied,
including, without limitation, the satisfaction of the Minimum Condition, Holdco
shall, and Parent shall cause Holdco to, extend the Offer for one or more
periods of not more than five (5) business days each. Purchaser may also,
without the consent of the Company, or if requested by the Company shall, extend
the Offer in accordance with Rule 14d-11 under the Exchange Act; PROVIDED,
HOWEVER, Parent shall not extend the Offer in accordance with Rule 14d-11 if the
Shares validly tendered and not withdrawn prior to the scheduled expiration of
the Offer (taken together with Shares and Class B Shares then owned by Parent,
Xxxxxxxx, Holdco,
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Purchaser and any of their subsidiaries and affiliates) constitute in the
aggregate 90% or greater of the aggregate voting power of the Shares and the
Class B Shares. Parent and Xxxxxxxx shall provide or cause to be provided to the
Purchaser on a timely basis the funds necessary to purchase any shares of Common
Stock that the Purchaser becomes obligated to purchase pursuant to the Offer.
(b) As promptly as practicable (but in no event later than five (5)
business days after the date hereof), Parent, Xxxxxxxx and Purchaser shall file
with the SEC a Tender Offer Statement on Schedule TO (together with all
amendments and supplements thereto, the "SCHEDULE TO") with respect to the
Offer. The Schedule TO shall contain or incorporate by reference an offer to
purchase and forms of the related letter of transmittal and all other ancillary
Offer documents (collectively, together with all amendments and supplements
thereto, the "OFFER DOCUMENTS"). The Schedule TO shall reflect the existence of
this Agreement. Parent, Xxxxxxxx and Purchaser shall take all steps necessary to
cause the Offer Documents to be disseminated to the holders of the Shares as and
to the extent required by applicable federal securities laws. Parent, Xxxxxxxx
and Purchaser, on the one hand, and the Company, on the other hand, will
promptly correct any information provided by it for use in the Offer Documents
if and to the extent that it shall have become false or misleading in any
material respect, and each of Parent, Xxxxxxxx and Purchaser will take all
necessary steps to cause the Offer Documents as so corrected to be filed with
the SEC and to be disseminated to holders of the Shares, in each case as and to
the extent required by applicable federal securities laws. The Company and its
counsel shall be given a reasonable opportunity to review the Schedule TO before
it is filed with the SEC. In addition, Parent, Xxxxxxxx and Purchaser agree to
provide the Company and its counsel in writing any comments or other
communications, whether written or oral, that Parent, Xxxxxxxx or Purchaser or
their counsel may receive from time to time from the SEC or its staff with
respect to the Offer Documents promptly after the receipt of such comments or
other communications and to notify the Company and its counsel a reasonable time
prior to responding to any such comments.
1.2. COMPANY ACTIONS.
(a) The Company hereby approves of and consents to the Offer and
represents and warrants that the Board, at a meeting duly called and held, has
(i) determined that the terms of the Offer and the Merger are fair to and in the
best interests of the stockholders of the Company, (ii) approved this Agreement
and the transactions contemplated hereby, including the Offer and the Merger,
and (iii) subject to Section 4.8, resolved to recommend that the stockholders of
the Company accept the Offer, tender their Shares to Purchaser thereunder and
adopt this Agreement. The Company hereby consents to the inclusion in the Offer
Documents of the recommendation of the Board described in the immediately
preceding sentence, and the Company shall not permit the recommendation of the
Company's Board to be modified in any manner adverse to Parent or Purchaser or
to be withdrawn by the Company's Board, except as provided in Section 4.8
hereof.
(b) As promptly as practicable from the date of commencement of the Offer,
the Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements thereto, the
"SCHEDULE 14D-9") which shall contain the recommendation referred to in clause
(iii) of Section 1.2(a) hereof, subject to Section
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4.8. The Company further agrees to take all steps necessary to cause the
Schedule 14D-9 to be disseminated to holders of the Shares as and to the extent
required by applicable federal securities laws. The Company, on the one hand,
and each of Parent, Xxxxxxxx and Purchaser, on the other hand, will promptly
correct any information provided by it for use in the Schedule 14D-9 if and to
the extent that it shall have become false or misleading in any material
respect, and the Company will take all steps necessary to cause the Schedule
14D-9 as so corrected to be filed with the SEC and to be disseminated to holders
of the Shares, in each case as and to the extent required by applicable federal
securities laws. Parent, Xxxxxxxx, Purchaser and their counsel shall be given a
reasonable opportunity to review and comment upon the Schedule 14D-9 before it
is filed with the SEC. In addition, the Company agrees to provide Parent,
Purchaser, Xxxxxxxx and their counsel in writing any comments or other
communications, whether written or oral, that the Company or its counsel may
receive from time to time from the SEC or its staff with respect to the Schedule
14D-9 promptly after the receipt of such comments or other communications and,
subject to the fiduciary obligation of the Board, to consult with Parent,
Purchaser, Xxxxxxxx and their counsel a reasonable time prior to responding to
any such comments.
(c) In connection with the Offer, the Company shall promptly furnish
Purchaser with mailing labels containing the names and addresses of all record
holders of Shares and with security position listings of Shares held in stock
depositories, each as of a recent date, together with all other available
listings and computer files containing names, addresses and security position
listings of record holders and non-objecting beneficial owners of Shares. The
Company shall furnish Purchaser with such additional information in the
Company's possession or control, including, without limitation, updated listings
and computer files of holders of Shares, mailing labels and security position
listings, and such other assistance as Parent, Purchaser, Xxxxxxxx or their
agents may reasonably require in communicating the Offer to the record and
beneficial holders of Shares. Except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to consummate
the transactions contemplated hereby, Parent, Holdco, Xxxxxxxx and Purchaser
shall hold in confidence the information contained in any such labels, listings
and files, shall use such information only in connection with the Offer and the
Merger and, if this Agreement shall be terminated, shall, upon request, deliver
to the Company all copies of such information then in their possession or the
possession of its agents or representatives.
1.3. DIRECTORS OF THE COMPANY.
(a) Immediately upon the purchase of and payment for Shares by Parent,
Purchaser, Xxxxxxxx or any of their affiliates pursuant to the Offer following
satisfaction of the Minimum Condition, Purchaser shall be entitled to designate
such total number of directors, rounded up to the next whole number, on the
Board as is equal to the product obtained by multiplying the total number of
directors on such Board by the percentage that the number of Shares so purchased
and paid for bears to the total number of Shares then outstanding, but in no
event less than a majority of the number of directors. In furtherance thereof,
the Company and its Board of Directors shall, after the purchase of and payment
for Shares by Purchaser or any of its affiliates pursuant to the Offer, upon
request of Purchaser, immediately increase the size of its Board of Directors,
or at the Company's election secure the resignations of such number of directors
or remove such number of directors or any combination of the foregoing, as is
necessary to enable Purchaser's designees to be so elected to the Company's
Board and shall cause Purchaser's designees to be
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so elected and shall comply with Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder in connection therewith. Immediately upon the first
purchase of and payment for Shares by Purchaser or any of its affiliates
pursuant to the Offer, the Company shall, if requested by Purchaser, also cause
directors designated by Purchaser to constitute at least the same percentage
(rounded up to the next whole number) of each committee of the Board as is on
the Board. Notwithstanding the foregoing, if Shares are purchased pursuant to
the Offer, the Company shall use its best efforts to assure that there shall be
until the Effective Time (as hereinafter defined) at least two of the members of
the Board who are directors on the date hereof and are not employees of the
Company (each a "CONTINUING DIRECTOR"). In addition to any indemnification
rights pursuant to this Agreement or the Company's Certificate of Incorporation,
as amended (the "CERTIFICATE OF INCORPORATION") and Bylaws, the Continuing
Directors as a group shall be entitled to retain independent legal counsel at
Company expense if and to the extent that issues are presented to them that
involve a conflict of interest for Company counsel. The Company and its Board of
Directors shall promptly take all actions as may be necessary to comply with
their obligations under this Section 1.3(a). If at any time prior to the
Effective Time there shall be in office only one Continuing Director for any
reason, the Board shall be entitled to appoint a person who is not an officer or
employee of the Company or any subsidiary designated by the remaining Continuing
Director to fill such vacancy (and such person shall be deemed to be a
Continuing Director for all purposes of this Agreement), and if at any time
prior to the Effective Time no Continuing Directors then remain, the other
directors of the Company then in office shall use their best efforts to
designate two persons to fill such vacancies who are not officers or employees
or affiliates of the Company, its subsidiaries, or Parent, Xxxxxxxx, Holdco or
Purchaser or any of their respective affiliates (and such persons shall be
deemed to be Continuing Directors for all purposes of this Agreement). The
Company's obligations under this Section 1.3 shall be subject to (i) Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, (ii) Purchaser
providing to the Company on a timely basis all information required to be
included in the information statement thereunder with respect to Purchaser's
designees and (iii) compliance with any director independence or other
qualifications required by applicable law or the non-prosecution agreement dated
September 28, 2004 between the United States Attorney's Office for the Eastern
District of New York and the Company.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill its obligations under Section 1.3(a), including mailing to
stockholders together with the Schedule 14D-9 the information required by such
Section 14(f) and Rule 14f-1 as is necessary to enable Purchaser's designees to
be elected to the Board. Parent, Holdco, Xxxxxxxx and Purchaser will supply the
Company and be solely responsible for any information with respect to them and
their nominees, officers, directors and affiliates required by such Section
14(f) and Rule 14f-1.
(c) Following the election of Purchaser's designees to the Board pursuant
to this Section 1.3 and prior to the Effective Time, (i) any amendment or
termination of this Agreement by the Company, (ii) any extension or waiver by
the Company of the time for the performance of any of the obligations or other
acts of Parent, Holdco, Xxxxxxxx or Purchaser under this Agreement, or (iii) any
waiver of any conditions in Section 6.1 or 6.3 by the Company or any of the
Company's rights hereunder or any other action that could adversely affect in
any material respect the rights of the Company's stockholders hereunder shall,
in any such case, require the concurrence of a majority of the directors of the
Company then in office who neither were
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designated by Parent, Holdco, Purchaser, Xxxxxxxx or any of their affiliates nor
are employees of the Company (the "INDEPENDENT DIRECTOR APPROVAL").
1.4. THE MERGER.
Upon the terms and subject to the conditions of this Agreement, the Merger
shall be consummated in accordance with the DGCL. At the Effective Time, upon
the terms and subject to the conditions of this Agreement, Purchaser shall be
merged with and into the Company in accordance with the DGCL and the separate
existence of Purchaser shall thereupon cease and the Company, as the surviving
corporation in the Merger (the "SURVIVING CORPORATION"), shall continue its
corporate existence under the laws of the State of Delaware as a wholly-owned
subsidiary of Holdco. It is intended that the Merger shall constitute a taxable
purchase of the Shares and Class B Shares by Holdco for federal, state and local
tax purposes.
1.5. THE CLOSING; EFFECTIVE TIME.
(a) The closing of the Merger (the "CLOSING") shall take place at the
offices of Xxxxxxx Xxxx & Xxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
at 10:00 a.m. local time on a date to be specified by the parties which shall be
no later than the third business day after the date that all of the closing
conditions set forth in Section 6.1 have been satisfied or waived (if waivable),
or, if on such date the closing condition set forth in Sections 6.2 and 6.3
shall not have been satisfied or waived (if waivable), as soon as practicable
after all the conditions in Article VI have been satisfied or waived (if
waivable), unless another time, date or place is agreed upon in writing by the
parties hereto.
(b) Subject to the provisions of this Agreement, on the Closing Date the
parties shall file with the Secretary of State of the State of Delaware a
certificate of merger in accordance with Section 252 of the DGCL (the
"CERTIFICATE OF MERGER") executed in accordance with the relevant provisions of
the DGCL and shall make all other filings or recordings required under the DGCL
in order to effect the Merger. The Merger shall become effective upon the filing
of the Certificate of Merger or at such other time as is agreed by the parties
hereto and specified in the Certificate of Merger. The time when the Merger
shall become effective is herein referred to as the "EFFECTIVE TIME" and the
date on which the Effective Time occurs is herein referred to as the "CLOSING
Date."
1.6. CONVERSION OF SECURITIES.
At the Effective Time, by virtue of the Merger and without any action on
the part of Parent, Holdco, Purchaser, the Company, Xxxxxxxx or the holders of
any securities of Purchaser or the Company:
(a) Each Share or Class B Share that is owned by Parent, Holdco, Xxxxxxxx
or Purchaser or any wholly owned subsidiary of Parent or Xxxxxxxx, or that is
owned by the Company as treasury stock, shall automatically be cancelled and
retired and shall cease to exist, and no consideration shall be delivered in
exchange therefor.
(b) Each issued and outstanding (i) Share (other than Shares to be
cancelled in accordance with Section 1.6(a) hereof and Dissenting Shares (as
defined in Section 1.9 below))
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shall automatically be converted into the right to receive the Offer Price in
cash (the "MERGER CONSIDERATION"), and (ii) Class B Share (other than Class B
Shares to be cancelled in accordance with Section 1.6(a) hereof and Dissenting
Shares (as defined in Section 1.9 below)) shall automatically be converted into
the right to receive the product of (x) 00.00000000 and (y) the Offer Price
(such product, the "CLASS B MERGER CONSIDERATION"), in each case in cash
payable, without interest, to the holder of such Share or such Class B Share, as
applicable, upon surrender, in the manner provided in Section 1.7 hereof, of the
certificate that formerly evidenced such Share or Class B Share. All such Shares
and Class B Shares, when so converted, shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder
of a certificate representing any such Shares or Class B Shares shall cease to
have any rights with respect thereto, except the right to receive the Merger
Consideration or the Class B Merger Consideration, as applicable, therefor upon
the surrender of such certificate in accordance with Section 1.7 hereof.
(c) Each issued and outstanding share of common stock of Purchaser shall
be converted into one validly issued, fully paid and nonassessable share of
common stock of the Surviving Corporation.
1.7. TENDER OF AND PAYMENT FOR CERTIFICATES.
(a) PAYING AGENT. Prior to the Effective Time, Purchaser shall designate a
bank or trust company reasonably acceptable to the Company to act as agent for
the holders of the Shares and the Class B Shares (other than Shares held by
Parent, Holdco, Purchaser, the Company, Xxxxxxxx and any of their respective
subsidiaries and Dissenting Shares) in connection with the Merger (the "PAYING
AGENT") to receive in trust, the aggregate Merger Consideration to which holders
of Shares and Class B Shares shall become entitled pursuant to Section 1.6(b)
hereof. Purchaser shall, and Parent and Xxxxxxxx shall cause Purchaser to,
transfer and deposit such aggregate Merger Consideration with or for the account
of the Paying Agent, for the benefit of the holders of shares of Company Common
Stock (other than shares to be cancelled pursuant to Section 1.6(a)) immediately
prior to the Effective Time. Such aggregate Merger Consideration shall be
invested by the Paying Agent as directed by Holdco.
(b) EXCHANGE PROCEDURES. Promptly after the Effective Time, Parent,
Xxxxxxxx and the Surviving Corporation shall cause to be mailed to each holder
of record, as of the Effective Time, of a certificate or certificates, which
immediately prior to the Effective Time represented outstanding Shares or Class
B Shares (the "CERTIFICATES"), whose Shares or Class B Shares were converted
pursuant to Section 1.6(b) hereof into the right to receive the Merger
Consideration, a letter of transmittal (which shall specify that delivery shall
be effected, and risk of loss and title to the Certificates shall pass, only
upon proper delivery of the Certificates to the Paying Agent and shall be in
such form and have such other provisions as Parent may reasonably specify) and
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Consideration. Upon surrender of a Certificate for cancellation
to the Paying Agent or to such other agent or agents as may be appointed by
Parent, together with such letter of transmittal, properly completed and duly
executed in accordance with the instructions thereto, the holder of such
Certificate shall be entitled to receive in exchange therefor the Merger
Consideration for each Share, or the Class B Merger Consideration for each Class
B Share, formerly represented by such Certificate, and the Certificate so
surrendered shall forthwith be cancelled. No interest
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will be paid or accrued on the cash payable upon the surrender of the
Certificates. If payment of the Merger Consideration is to be made to a person
other than the person in whose name the surrendered Certificate is registered,
it shall be a condition of payment that the Certificate so surrendered shall be
properly endorsed or shall be otherwise in proper form for transfer and that the
person requesting such payment shall have paid all transfer and other Taxes
required by reason of the issuance to a person other than the registered holder
of the Certificate surrendered or shall have established to the satisfaction of
the Surviving Corporation that such Tax either has been paid or is not
applicable. Until surrendered as contemplated by this Section 1.7, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive the Merger Consideration for each Share, or the Class
B Merger Consideration for each Class B Share, in cash as contemplated by
Section 1.6(b) hereof.
(c) TRANSFER BOOKS; NO FURTHER OWNERSHIP RIGHTS IN THE SHARES. At the
Effective Time, the stock transfer books of the Company shall be closed, and
thereafter there shall be no further registration of transfers of the Shares or
Class B Shares on the records of the Company. From and after the Effective Time,
the holders of Certificates evidencing ownership of the Shares or Class B Shares
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such Shares or Class B Shares, except as otherwise
provided for herein or by applicable law. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be cancelled and exchanged as provided in this Article I.
(d) TERMINATION OF FUND; NO LIABILITY. At any time following the six-month
anniversary of the Effective Time, the Surviving Corporation shall be entitled
to require the Paying Agent to deliver to it any funds (including any interest
received with respect thereto) which had been made available to the Paying
Agent, and holders shall be entitled to look to the Surviving Corporation
(subject to abandoned property, escheat or other similar laws) only as general
creditors thereof with respect to the Merger Consideration payable upon due
surrender of their Certificates without any interest thereon. Notwithstanding
the foregoing, neither the Surviving Corporation nor the Paying Agent nor any
party hereto shall be liable to any holder of a Certificate for Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(e) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificate(s) shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate(s) to be lost,
stolen or destroyed and, if required by Parent, the posting by such person of a
bond in such sum as Parent may reasonably direct as indemnity against any claim
that may be made against any party hereto or the Surviving Corporation with
respect to such Certificate(s), the Paying Agent will disburse the Merger
Consideration pursuant to Section 1.6(b) payable in respect of the Shares or
Class B Shares represented by such lost, stolen or destroyed Certificate(s).
(f) WITHHOLDING TAXES. Parent, Holdco, Xxxxxxxx and Purchaser shall be
entitled to deduct and withhold, or cause the Paying Agent to deduct and
withhold, from the Offer Price or the Merger Consideration payable to a holder
of Shares pursuant to the Offer or the Merger, or from the Class B Merger
Consideration payable to a holder of Class B Shares pursuant to the Merger, any
such amounts as are required under the Internal Revenue Code of 1986, as amended
(the "CODE"), or any applicable provision of state, local or foreign Tax law. To
the extent that
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amounts are so withheld by Parent, Holdco, Xxxxxxxx or Purchaser, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the Shares or Class B Shares, as applicable, in respect of
which such deduction and withholding was made by Parent, Holdco or Purchaser.
1.8. OPTIONS.
(a) With respect to all outstanding options to purchase Shares ("COMPANY
OPTIONS") granted under the Company's 1996 Long-Term Incentive Plan and the
Company's 1997 Long-Term Incentive Plan (collectively, the "COMPANY LTIP
PLANS"), all Restricted Stock Awards (as defined in any Company LTIP Plan)
issued under the Company LTIP Plans and all outstanding Company Options granted
under the Employment Agreement dated October 31, 2005 between the Company and
Xxxxxx X. Xxxxxxxxxxx (the "EMPLOYMENT AGREEMENT"), the Company shall comply
with its payment obligations, if any, under each Company LTIP Plan and the
Employment Agreement with respect to any "Change in Control" (as defined in such
Company LTIP Plan or the Employment Agreement, as applicable) occurring as a
result of the Offer, the Company Stockholder Approval or any of the other
transactions contemplated hereby or by the other Transaction Documents.
(b) With respect to all Company Options granted under the Company's 1998
Non-Employee Directors Stock Option Plan, as amended (the "NON-EMPLOYEE
DIRECTORS PLAN" and, together with the Company's 1996 Long-Term Incentive Plan
and the Company's 1997 Long-Term Incentive Plan, the "COMPANY OPTION PLANS"), at
the Effective Time, subject to the terms and conditions set forth below in this
Section 1.8(b), each holder of a Company Option granted under the Non-Employee
Directors Plan (the "NON-EMPLOYEE DIRECTOR OPTIONS") will be entitled to receive
from the Company, and shall receive, promptly following the Effective Time, in
settlement of each Non-Employee Director Option a Cash Amount. The "CASH AMOUNT"
shall be equal to the net amount of (A) the product of (i) the excess, if any,
of the Merger Consideration over the exercise price per share of such
Non-Employee Director Option at the Effective Time, multiplied by (ii) the
number of shares subject to such Non-Employee Director Option, less (B) any
applicable withholdings for Taxes. If the exercise price per share of any
Non-Employee Director Option equals or exceeds the Merger Consideration, the
Cash Amount therefor shall be zero. Notwithstanding the foregoing, with respect
to any person subject to Section 16(a) of the Exchange Act, any Cash Amount to
be paid to such person in accordance with this Section 1.8(b) shall be paid as
soon as practicable after the payment can be made without liability to such
person under Section 16(b) of the Exchange Act.
(c) The Company shall use commercially reasonable efforts to ensure that,
as of and after the Effective Time, except as provided in this Section 1.8, (i)
all rights under any Company Option and any provision of the Company Option
Plans and any other plan, program or arrangement providing for the issuance or
grant of any other interest in respect of the capital stock of the Company shall
be cancelled and (ii) no person shall have any right under the Company Option
Plans or any other plan, program or arrangement with respect to securities of
the Company, the Surviving Corporation or any subsidiary thereof.
(d) At or before the Effective Time, the Company shall use commercially
reasonable efforts to cause to be effected any necessary amendments to the
Company Option Plans and any
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other resolutions, consents or notices, in such form reasonably acceptable to
Purchaser, required under the Company Option Plans or any Company Options to
give effect to the foregoing provisions of this Section 1.8.
1.9. DISSENTING SHARES.
Notwithstanding any provision of this Agreement to the contrary, each
outstanding Share or Class B Share, the holder of which has demanded and
perfected such holder's right to dissent from the Merger and to be paid the fair
value of such Shares or Class B Shares in accordance with the DGCL and, as of
the Effective Time, has not effectively withdrawn or lost such dissenters'
rights ("DISSENTING SHARES"), shall not be converted into or represent a right
to receive the Merger Consideration into which Shares are converted, or the
Class B Merger Consideration into which Class B Shares are converted, pursuant
to Section 1.6(b) hereof, but the holder thereof shall be entitled only to such
rights as are granted by the DGCL. Notwithstanding the immediately preceding
sentence, if any holder of Shares or Class B Shares who demands dissenters'
rights with respect to its Shares or Class B Shares under the DGCL effectively
withdraws or loses (through failure to perfect or otherwise) its dissenters'
rights, then as of the Effective Time or the occurrence of such event, whichever
later occurs, such holder's Shares or Class B Shares will automatically be
converted into and represent only the right to receive the Merger Consideration
as provided in Section 1.6(b) hereof, without interest thereon, upon surrender
of the certificate or certificates formerly representing such Shares or Class B
Shares. After the Effective Time, Purchaser shall cause the Company to make all
payments to holders of Shares or Class B Shares with respect to such demands in
accordance with the DGCL. The Company shall give Purchaser (i) prompt written
notice of any notice of intent to demand fair value for any Shares or Class B
Shares, withdrawals of such notices, and any other instruments served pursuant
to the DGCL and received by the Company, and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for fair value for Shares
or Class B Shares under the DGCL. The Company shall not, except with the prior
written consent of Purchaser, voluntarily make any payment with respect to any
demands for fair value for Shares or Class B Shares or offer to settle or settle
any such demands.
1.10. CERTIFICATE OF INCORPORATION AND BYLAWS.
Subject to Section 5.4 hereof, at and after the Effective Time until the
same have been duly amended, (i) the Certificate of Incorporation of the
Surviving Corporation shall be identical to the Certificate of Incorporation of
Purchaser in effect at the Effective Time and (ii) the Bylaws of the Surviving
Corporation shall be identical to the Bylaws of Purchaser in effect at the
Effective Time.
1.11. DIRECTORS AND OFFICERS.
At and after the Effective Time, the directors of Purchaser immediately
prior to the Effective Time shall be the directors of the Surviving Corporation,
and the officers of Purchaser immediately prior to the Effective Time shall be
the officers of the Surviving Corporation, except as the Purchaser shall
otherwise provide in writing, in each case until their successors are elected or
appointed and qualified. If, at the Effective Time, a vacancy shall exist on the
Board of
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Directors or in any office of the Surviving Corporation, such vacancy may
thereafter be filled in the manner provided by law.
1.12. OTHER EFFECTS OF MERGER.
The Merger shall have all further effects as specified in the applicable
provisions of the DGCL.
1.13. ADDITIONAL ACTIONS.
If, at any time after the Effective Time, the Surviving Corporation shall
consider or be advised that any deeds, bills of sale, assignments, assurances or
any other actions or things are necessary or desirable to vest, perfect or
confirm of record or otherwise in the Surviving Corporation its right, title or
interest in, to or under any of the rights, properties or assets of Purchaser or
the Company or otherwise carry out this Agreement, the officers and directors of
the Surviving Corporation shall be authorized to execute and deliver, in the
name and on behalf of Purchaser or the Company, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of
Purchaser or the Company, all such other actions and things as may be necessary
or desirable to vest, perfect or confirm any and all right, title and interest
in, to and under such rights, properties or assets in the Surviving Corporation
or otherwise to carry out this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The following representations and warranties by the Company to Parent,
Purchaser, Xxxxxxxx and Holdco are qualified by the Company Disclosure Schedule
which sets forth certain disclosures concerning the Company, its subsidiaries
and its business (the "COMPANY DISCLOSURE SCHEDULE"). The Company hereby
represents and warrants to Parent, Holdco, Xxxxxxxx and Purchaser as follows:
2.1. DUE INCORPORATION AND GOOD STANDING.
Each of the Company and each of its subsidiaries is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it was formed and has all requisite power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted. The Company and each of its subsidiaries is duly qualified or
licensed and in good standing to do business in each jurisdiction in which the
character of the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing necessary, except
where the failure to be so duly qualified or licensed and in good standing would
not have a Company Material Adverse Effect. For purposes of this Agreement, the
term "COMPANY MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on
the business, properties, assets, operations, results of operations or condition
(financial or otherwise) of the Company and its subsidiaries, taken as a whole,
or the ability for the Company to timely perform its obligations under this
Agreement and the other Transaction Documents and to consummate the Merger and
the other transactions contemplated hereby and thereby, except in each case for
any such effects resulting from, arising out of, or relating to the taking of
any
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action or incurring of any expense in connection with this Agreement or the
other Transaction Documents or the transactions contemplated hereby or thereby.
2.2. CAPITALIZATION.
(a) The authorized capital stock of the Company consists of (i)
60,000,000 shares of Common Stock, (ii) 26,026 shares of Class B Common Stock,
par value $1.00 per share (the "CLASS B STOCK"), and (iii) 2,000,000 shares of
preferred stock, par value $.001 per share (the "PREFERRED STOCK" and together
with the Common Stock and the Class B Stock, the "COMPANY CAPITAL STOCK"). As of
the close of business on February 1, 2006, (A) 16,763,215 shares of Common Stock
were issued and outstanding, (B) 142 shares of Class B Stock were issued and
outstanding, (C) no shares of Preferred Stock were issued and outstanding (other
than shares of Series A Junior Participating Preferred Stock that are reserved
in accordance with the Rights Agreement) and (D) 3,098,106 shares of Common
Stock were reserved for issuance pursuant to the Company's Option Plans. All of
the outstanding shares of Company Capital Stock are, and all shares of Company
Capital Stock which may be issued pursuant to the exercise of outstanding
Company Options will be, when issued in accordance with the respective terms
thereof, duly authorized, validly issued, fully paid and non-assessable. None of
the outstanding securities of the Company has been issued in violation of any
federal or state securities laws.
(b) Except as set forth above, as of the date hereof, (i) the Company
directly or indirectly owns all of the capital stock of its subsidiaries, (ii)
there are no existing options, warrants, puts, calls, preemptive or similar
rights, bonds, debentures, notes or other indebtedness having general voting
rights or debt convertible into securities having such rights ("VOTING DEBT") or
subscriptions or other rights, agreements, arrangements or commitments of any
character, relating to the issued or unissued capital stock of the Company or
its subsidiaries obligating the Company or its subsidiaries to issue, transfer
or sell or cause to be issued, transferred, sold or repurchased any options or
shares of capital stock or Voting Debt of, or other equity interest in, the
Company or its subsidiaries or securities convertible into or exchangeable for
such shares or equity interests, or obligating the Company or its subsidiaries
to grant, extend or enter into any such option, warrant, call, subscription or
other right, agreement, arrangement or commitment and (iii) there are no
outstanding contractual obligations of the Company or its subsidiaries to
repurchase, redeem or otherwise acquire any Company Capital Stock, or other
capital stock of the Company or its subsidiaries to provide funds to make any
investment (in the form of a loan, capital contribution or otherwise) in any
other entity.
(c) There are no voting trusts or other agreements or understandings to
which the Company is a party with respect to the voting of the Company Capital
Stock.
(d) Following the Effective Time, no holder of Company Options will have
any right to receive shares of common stock of the Surviving Corporation upon
exercise of Company Options.
(e) SECTION 2.2(E) of the Company Disclosure Schedule lists all Company
Options outstanding as of the date hereof, the name of the holder of each
Company Option , the date of grant and the exercise price of such Company
Option, the number of shares of Common Stock as to which such Company Option has
vested, the vesting schedule for such Company Option, a
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summary of any acceleration provisions or milestones, and whether the
exercisability of such Company Option will be accelerated in any way by the
transactions contemplated under this Agreement or the other Transaction
Documents, and indicates the extent of acceleration, if any.
(f) Prior to the execution and delivery of this Agreement, each holder
of a Non-Employee Director Option has executed and delivered to the Company a
written acknowledgement that no payment other than the Cash Amount in accordance
with Section 1.8(b) will be due to such holder on account of any Non-Employee
Director Option following the Effective Time, and all of such holder's rights
under such Non-Employee Director Options shall terminate upon receipt of the
Cash Amount in accordance with Section 1.8(b) following the Effective Time. No
other consent or approval from the holder of any Company Option is required to
effectuate the terms of this Agreement or the other Transaction Documents.
(g) The Company has furnished to Purchaser accurate and complete copies
of the Certificate of Incorporation and Bylaws, as currently in effect, of the
Company and each of its subsidiaries, and the terms of all securities
convertible into, or exercisable or exchangeable for, shares of Common Stock and
the material rights of the holders thereof in respect thereto.
2.3. SUBSIDIARIES
SECTION 2.3 of the Company Disclosure Schedule contains a list of all
subsidiaries. Each subsidiary is wholly owned by the Company. All of the capital
stock and other interests of the subsidiaries so held are owned by the Company
free and clear of any claim, lien, encumbrance, security interest or agreement
with respect thereto, other than under the Security Documents. "SECURITY
DOCUMENTS" means (1) the Original Bridge Loan Agreement and (2) the Company's
Second Amended and Restated Revolving Credit and Gold Consignment Agreement,
dated as of July 29, 2003 among the Company, LaSalle Bank National Association,
as administrative agent for the banks from time to time party thereto, LaSalle
Bank National Association, as Collateral Agent for the lenders party thereto and
the other agents and parties from time to time party thereto as the same may be
amended from time to time (the "SENIOR CREDIT AGREEMENT"), in each case as
amended and together with all security and ancillary documents related thereto.
All of the outstanding shares of capital stock in each of the subsidiaries held
by the Company are duly authorized, validly issued, fully paid and nonassessable
and were issued free of preemptive rights and in compliance with applicable
Laws. No equity securities or other interests of any of the subsidiaries are or
may become required to be issued or purchased by reason of any options,
warrants, rights to subscribe to, puts, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, shares of any capital stock of any subsidiary, and there are no contracts,
commitments, understandings or arrangements by which any subsidiary is bound to
issue additional shares of its capital stock, or options, warrants or rights to
purchase or acquire any additional shares of its capital stock or securities
convertible into or exchangeable for such shares.
2.4. AUTHORIZATION; BINDING AGREEMENT.
The Company has all requisite corporate power and authority to execute
and deliver this Agreement and the other Transaction Documents to which it is a
party and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and
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the other Transaction Documents to which it is a party by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby,
including, but not limited to, the Offer and the Merger, have been duly and
validly authorized and approved by the Board, and no other corporate proceedings
on the part of the Company are necessary to authorize the execution and delivery
of this Agreement and the other Transaction Documents to which it is a party or
to consummate the transactions contemplated hereby and thereby (other than the
requisite approval of the Merger by the stockholders of the Company in
accordance with the DGCL). The Company has delivered to Purchaser a copy of duly
adopted resolutions of the Board approving the execution, delivery and
performance of this Agreement and the other agreements contemplated hereby and,
in each case, the transactions contemplated thereby, certified by the Secretary
of the Company. This Agreement and the other Transaction Documents to which the
Company is a party have been duly and validly executed and delivered by the
Company and constitute the legal, valid and binding agreements of the Company,
enforceable against the Company in accordance with their terms, except to the
extent that enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or other similar laws
relating to, or affecting generally, the enforcement of applicable creditors'
rights and remedies and by principles of equity regarding the availability of
remedies ("ENFORCEABILITY EXCEPTIONS"). The Board has approved this Agreement,
the Offer and the Merger.
2.5. GOVERNMENTAL APPROVALS.
No consent, approval, waiver or authorization of, notice to or
declaration or filing with ("CONSENT"), any nation or government, any state or
other political subdivision thereof, any entity, authority or body exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including, without limitation, any governmental or
regulatory authority, agency, department, board, commission, administration or
instrumentality, any court, tribunal or arbitrator or any self regulatory
organization ("GOVERNMENTAL AUTHORITY") on the part of the Company or its
subsidiaries is required in connection with the execution or delivery by the
Company of this Agreement, the other Transaction Documents, the Offer, the
Merger or the consummation by the Company of the other transactions contemplated
hereby and thereby other than (i) the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware in accordance with the DGCL,
(ii) filings with the SEC and state securities laws administrators, (iii) such
filings as may be required in any jurisdiction where the Company is qualified or
authorized to do business as a foreign corporation in order to maintain such
qualification or authorization, and (iv) those Consents that, if they were not
obtained or made, would not have a Company Material Adverse Effect.
2.6. NO VIOLATIONS; NO RESTRICTIONS.
(a) The execution and delivery of this Agreement, the other Transaction
Documents, the Merger, the consummation of the other transactions contemplated
hereby and thereby and compliance by the Company with any of the provisions
hereof and thereof will not (i) conflict with or result in any breach of any
provision of the Certificate of Incorporation or Bylaws or other governing
instruments of the Company or any of its subsidiaries, (ii) require any Consent
under or result in a material violation or material breach of, or constitute
(with or without due notice or lapse of time or both) a material default (or
give rise to any right of termination,
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cancellation, acceleration, suspension or revocation) under any of the terms,
conditions or provisions of any agreement or other instrument to which the
Company is a party or by which the Company or its properties or assets may be
bound, (iii) result in the creation or imposition of any liens, charges,
security interests, options, claims, mortgages, pledges, assessments, charges,
adverse claims, rights of others or restrictions (whether on voting, sale,
transfer, disposition or otherwise) or other encumbrances or restrictions of any
nature whatsoever, whether imposed by agreement, understanding, law or equity,
or any conditional sale contract, title retention contract or other contract to
give or refrain from giving any of the foregoing ("ENCUMBRANCES") of any kind
upon any of the assets of the Company or (iv) subject to obtaining the Consents
from Governmental Authorities referred to in Section 2.5 hereof, contravene any
applicable provision of any statute, law, rule or regulation or any legally
binding order, decision, injunction, judgment, award or decree ("LAW" or "LAWS")
to which the Company or any of its assets or properties is subject; except in
the case of (ii), (iii) and (iv) to the extent that such violation, breach,
default or right would not have a Company Material Adverse Effect or prevent or
materially delay the consummation of the transactions contemplated by this
Agreement or any of the other Transaction Documents.
(b) There is no judgment, injunction, order or decree binding upon the
Company or its subsidiaries which has or could reasonably be expected to have
the effect of prohibiting or impairing any current business practice of the
Company or its subsidiaries, or the conduct of business by the Company or its
subsidiaries as currently conducted.
2.7. APPLICATION OF TAKEOVER PROTECTIONS.
The Company and its rights agent have, as of the date of this Agreement,
executed an amendment to the Rights Agreement in the form attached hereto as
Schedule 2.7(a) and such amendment has not been amended or otherwise modified
since the date thereof. Other than the Rights Agreement, the Company has not
adopted a stockholder rights plan or similar arrangement that is in effect
relating to accumulations of beneficial ownership of Common Stock or a change in
control of the Company. The Company and its Board have taken all necessary
action to render inapplicable Section 203 of the DGCL and any other control
share acquisition, business combination, or other similar anti-takeover
provision under the Certificate of Incorporation or the laws of Delaware which
is or could become applicable to the Company, Parent, Purchaser, Xxxxxxxx or
Holdco as a result of the transactions contemplated by this Agreement.
2.8. SEC FILINGS; COMPANY FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports, schedules, statements and
other documents required to be filed by the Company with the SEC since February
1, 2004 under the Exchange Act or the Securities Act of 1933, as amended (the
"SECURITIES ACT") and has made available to Holdco such forms, reports and
documents not available on the XXXXX system in the form filed with the SEC. All
such required forms, reports and documents (including those that the Company may
file subsequent to the date hereof) are referred to herein as the "COMPANY SEC
REPORTS." As of their respective dates, the Company SEC Reports (i) complied in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, the Xxxxxxxx-Xxxxx Act of 2002 ("SOX"), and
the rules and regulations of the SEC
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thereunder applicable to such Company SEC Reports and (ii) did not at the time
they were filed (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such later filing) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, except
for Exhibit 17.1 to the Company's Form 8-K dated December 6, 2005 and all
quotations or repetitions of the allegations set forth in such exhibit in any
other Company SEC Reports.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Company SEC Reports as amended
to date (the "COMPANY FINANCIALS"), including each Company SEC Report filed
after the date hereof until the Closing, (i) complied in all material respects
with the published rules and regulations of the SEC with respect thereto, (ii)
was prepared in accordance with GAAP applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited interim financial statements, as may be permitted by the SEC
on Form 10-Q under the Exchange Act) and (iii) fairly presented in all material
respects the consolidated financial position of the Company as at the respective
dates thereof and the consolidated results of the Company's operations and cash
flows for the periods indicated, except that the unaudited interim financial
statements may not contain footnotes and were or are subject to normal year-end
audit adjustments. The balance sheet of the Company as of October 31, 2005
contained in the Company SEC Reports (the "BALANCE SHEET DATE") as filed with
the SEC before the date hereof is hereinafter referred to as the "COMPANY
BALANCE SHEET."
(c) The Company is in compliance with any and all applicable requirements
of SOX that are effective as of the date hereof, and any and all applicable
rules and regulations promulgated by the SEC thereunder that are effective as of
the date hereof, except where such noncompliance would not have, individually or
in the aggregate, a Company Material Adverse Effect.
2.9. ABSENCE OF CERTAIN CHANGES.
From the Balance Sheet Date to the date hereof, the Company and its
subsidiaries have not:
(a) suffered any Extremely Detrimental Effect;
(b) permitted or allowed any of their properties or assets (real,
personal or mixed, tangible or intangible) to be subjected to any Encumbrances,
except for liens for current Taxes not yet due or Encumbrances the incurrence of
which would not have an Extremely Detrimental Effect;
(c) cancelled any debts or waived any claims or rights of value in
excess of $250,000 owed to them;
(d) sold, transferred, or otherwise disposed of any of their assets,
individually or in the aggregate, in excess of $100,000, except in the ordinary
course of business, consistent with past practice;
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(e) other than capital expenditures in accordance with the Company's
capital expenditure budget for the 2005 fiscal year, a copy of which is attached
as SECTION 2.9(C) of the Company Disclosure Schedule (the "CAPEX Budget"), made
any capital expenditure or acquired any property, plant and equipment for a cost
in excess of $100,000, or $1,000,000 in the aggregate;
(f) made any material change in severance policy or practices which
have not been publicly disclosed in the Company SEC Reports;
(g) declared, paid or set aside for payment any dividend or other
distribution (whether in cash, stock or property) in respect of their respective
capital stock or redeemed, purchased or otherwise acquired, directly or
indirectly, any shares of capital stock or other securities of the Company,
other than dividends and distributions to the Company or one if its wholly-owned
subsidiaries;
(h) granted, issued, accelerated, paid, accrued or agreed to pay or make
any accrual or arrangement for payments or benefits pursuant to any Company
employee plans, except in accordance with the terms of the respective Company
employee plans, or adopted any Company employee plan, or amended any Company
employee plan in any material respect, in each case except in the ordinary
course of business consistent with past practice or as required by applicable
law or the terms of any agreement in effect as of the date of this Agreement; or
(i) authorized or agreed, whether in writing or otherwise, to take any
action described in this Section 2.9.
For purposes of this Agreement, an "EXTREMELY DETRIMENTAL EFFECT" shall
mean any event, circumstance or fact which, individually or in the aggregate, is
or could reasonably be expected to be significantly more adverse on the
business, properties, assets, operations, results of operations or condition
(financial or otherwise) of the Company and its Subsidiaries, taken as a whole,
than any event, circumstance or fact constituting a Company Material Adverse
Effect.
2.10. ABSENCE OF UNDISCLOSED LIABILITIES
As of the date hereof, except (a) as disclosed in the Company Balance
Sheet, (b) as disclosed in SECTION 2.10 of the Company Disclosure Schedule, or
(c) for liabilities and obligations incurred in the ordinary course of business
consistent with past practice since the Balance Sheet Date, neither the Company
nor its subsidiaries have incurred any material liabilities or obligations of
any nature, required by GAAP to be recognized or disclosed on a consolidated
balance sheet of the Company or in the notes thereto that would create a Company
Material Adverse Effect.
2.11. COMPLIANCE WITH LAWS.
(a) Neither the Company nor its subsidiaries is in violation of any term
of or in default under its Certificate of Incorporation or Bylaws or their
organizational charter or certificate of incorporation or bylaws, respectively.
Neither the Company nor any of its subsidiaries is in violation of any judgment,
decree or order or any statute, ordinance, rule or regulation applicable to the
Company or its subsidiaries, and neither the Company nor any of its
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subsidiaries will conduct its business in violation of any of the foregoing,
except for possible violations which would not, individually or in the
aggregate, have a Company Material Adverse Effect. From October 28, 2005 through
the date hereof, (i) the Common Stock has been traded on the pink sheets, (ii)
trading in the Common Stock has not been suspended by the SEC and (iii) the
Company has received no communication, written or oral, from the SEC regarding
the suspension or delisting of the Common Stock from the pink sheets.
(b) Neither the Company nor any of its subsidiaries, nor, to the
knowledge of the Company, any director, officer, agent, employee or other person
acting on behalf of the Company or any of its subsidiaries, in the course of its
actions for, or on behalf of, the Company, has (i) used any corporate funds for
any unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity; (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment to
any foreign or domestic government official or employee.
2.12. PERMITS.
The Company and its subsidiaries possess all certificates, authorizations
and permits issued by the appropriate regulatory authorities necessary to
conduct their respective businesses, as presently operated (collectively,
"COMPANY PERMITS"), except where the failure to possess such certificates,
authorizations or permits would not have, individually or in the aggregate, a
Company Material Adverse Effect. Since February 1, 2003, neither the Company nor
any such subsidiary has received any notice of proceedings relating to the
revocation or modification of any such material certificate, authorization or
permit.
2.13. LITIGATION.
There is no action, suit, proceeding, inquiry or investigation
("LITIGATION") before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the
Company, threatened against or affecting the Company, the Common Stock or any of
the Company's subsidiaries or any of the Company's or its subsidiaries' officers
or directors that, in either case, reasonably can be expected to result in
damages to the Company or any of its subsidiaries in excess of $100,000 and are
not covered by the Company's existing insurance policies or otherwise seeking
declarative or injunctive relief. SECTION 2.13 of the Company Disclosure
Schedule sets forth summary descriptions of any such litigation. As of the date
hereof, there is no judgment, decree or order against the Company or its
subsidiaries or, to the knowledge of the Company, any of its directors or
officers (in their capacities as such), that would enjoin or materially delay
any of the transactions contemplated by this Agreement or the other Transaction
Documents.
2.14. INDEBTEDNESS AND OTHER CONTRACTS.
(a) Neither the Company nor any of its subsidiaries on the date hereof
(i) has any outstanding Indebtedness (as defined below), in excess of $250,000
individually or in the aggregate, (ii) is a party to any contract, agreement or
instrument, the violation of which, or
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default under which, by the other party(ies) to such contract, agreement or
instrument would result in a Company Material Adverse Effect, (iii) is in
violation of any term of or in default under any contract, agreement or
instrument relating to any Indebtedness, except where such violations and
defaults would not result, individually or in the aggregate, in a Company
Material Adverse Effect, or (iv) is a party to any contract, agreement or
instrument relating to any Indebtedness, the performance of which, in the
judgment of the Company's officers, has or is expected to have a Company
Material Adverse Effect. SECTION 2.14 of the Company Disclosure Schedule
provides a detailed description of the material terms of any such outstanding
Indebtedness.
(b) For purposes of this Agreement: (i) "INDEBTEDNESS" of any person
means, without duplication (A) all indebtedness for borrowed money, (B) all
obligations issued, undertaken or assumed as the deferred purchase price of
property or services including, without limitation, "capital leases" in
accordance with GAAP (other than trade payables entered into in the ordinary
course of business), (C) all reimbursement or payment obligations with respect
to letters of credit, surety bonds and other similar instruments, (D) all
obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the acquisition
of property, assets or businesses, (E) all indebtedness created or arising under
any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to any property or assets acquired with
the proceeds of such indebtedness (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such property), (F) all monetary obligations under any
leasing or similar arrangement which, in connection with GAAP, consistently
applied for the periods covered thereby, is classified as a capital lease, (G)
all indebtedness referred to in clauses (A) through (F) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, lien, pledge, charge, security
interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by any person, even though the person which
owns such assets or property has not assumed or become liable for the payment of
such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (A) through (G)
above; and (ii) "CONTINGENT OBLIGATION" means, as to any person, any direct or
indirect liability, contingent or otherwise, of that person with respect to any
indebtedness, lease, dividend or other obligation of another person if the
primary purpose or intent of the person incurring such liability, or the primary
effect thereof, is to provide assurance to the obligee of such liability that
such liability will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect thereto. For the
avoidance of doubt, the term "Indebtedness" under this Agreement shall not be
deemed to include any amounts owed not relating to Indebtedness for borrowed
money, under the Company's merchandising consignment agreements entered into in
the ordinary course of business.
2.15. INTELLECTUAL PROPERTY.
(a) The Company and its subsidiaries own or possess adequate rights or
licenses to use (i) patents (and any renewals and extensions thereof), patent
rights (and any applications therefor), rights of priority and other rights in
inventions; (ii) trademarks, service marks, trade names and trade dress, and all
registrations and applications therefor and all legal and common-
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law equivalents of any of the foregoing; (iii) copyrights and rights in mask
works (and any applications or registrations for the foregoing, and all renewals
and extensions thereof), common-law copyrights and rights of authorship
including all rights to exploit any of the foregoing in any media and by any
manner and means now known or hereafter devised; (iv) industrial design rights,
and all registrations and applications therefor; (v) rights in data, collections
of data and databases, and all legal or common-law equivalents thereof; (vi)
rights in domain names and domain name reservations; (vii) rights in trade
secrets, proprietary information and know-how (collectively, "INTELLECTUAL
PROPERTY RIGHTS"), collectively with all licenses and other agreements providing
the Company or its subsidiaries the Intellectual Property Rights material to the
operation of their businesses as now conducted and as described in the Company
SEC Reports.
(b) None of the Company or any of its subsidiaries has knowledge that
any of them has infringed in any material respect on any of the Intellectual
Property Rights of any person and none of the Company or any of its subsidiaries
is infringing on any of the Intellectual Property Rights of any person in any
material respect. There is no action, suit, hearing, claim, notice of violation,
arbitration or other proceeding, hearing or investigation that is pending, or to
the Company's knowledge, is threatened against, the Company regarding the
infringement of any of the Intellectual Property Rights in any material respect.
The Company is not, to its knowledge, making unauthorized use of any
confidential information or trade secrets of any third party, and the Company
has not received any notice of any asserted infringement (nor is the Company
aware of any reasonable basis for any third party asserting an infringement) by
the Company in any material respect of, any rights of a third party with respect
to any Intellectual Property Rights. The Company and its subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value
of all of their Intellectual Property Rights.
(c) This Section 2.15 relates only to Intellectual Property Rights in
the United States of America and not in any foreign jurisdiction.
2.16. EMPLOYEE MATTERS.
(a) Neither the Company nor any of its Subsidiaries is a party to any
collective bargaining agreement or employs any member of a union.
(b) As of the date hereof, no executive officer of the Company (as
defined in Rule 501(f) of the Exchange Act) has given notice to the Company that
such person intends to leave the Company or otherwise terminate such person's
employment for any reason prior to the Effective Time.
(c) The Company and its Subsidiaries are in compliance with all
applicable Laws respecting labor, employment and employment practices and
benefits, terms and conditions of employment and wages and hours, except where
failure to be in compliance would not, either individually or in the aggregate,
reasonably be expected to result in a Company Material Adverse Effect.
(e) No executive officer of the Company, to the knowledge of the
Company, is, or is now expected to be, in violation of any material term of any
employment contract,
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confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each such executive officer does not
subject the Company or any of its subsidiaries to any liability with respect to
any of the foregoing matters.
2.17. TAXES AND RETURNS.
(a) The Company and each of its subsidiaries (i) has made or filed all
foreign, federal and state income and all other Tax Returns required by any
jurisdiction to which it is subject, (ii) has paid all Taxes that are material
in amount, shown or determined to be due on such Tax Returns, except those being
contested in good faith, and (iii) has set aside on its books provision
reasonably adequate for the payment of all Taxes for periods subsequent to the
periods to which such Tax Returns apply. There are no unpaid Taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Company know of no basis for any such claim. No liens
have been filed by or against the Company or any of its subsidiaries with
respect to any Taxes (other than liens for Taxes not yet due and payable).
Neither the Company nor it subsidiaries has received notice of assessment or
proposed assessment of any material Taxes claimed to be owed by it or any other
person on its behalf. Neither the Company nor its subsidiaries is a party to any
tax sharing or tax indemnity agreement or any other agreement of a similar
nature that remains in effect, other than such tax sharing agreements between
the Company and its subsidiaries. Each of the Company and its subsidiaries has
complied in all material respects with all applicable legal requirements
relating to the payment and withholding of Taxes and, within the time and in the
manner prescribed by law, has withheld from wages, fees and other payments and
paid over to the proper governmental or regulatory authorities all amounts
required. The Company is not a United States Real Property Holding Corporation
within the meaning of Section 897 (c)(2) of the Code.
(b) For purposes of this Agreement, the term "TAX" or "TAXES" shall mean
any tax, custom, duty, governmental fee or other like assessment or charge of
any kind whatsoever, imposed by any Governmental Authority (including, but not
limited to, any federal, state, local, foreign or provincial income, gross
receipts, property, sales, use, license, excise, franchise, employment, payroll,
alternative or added minimum, ad valorem, transfer or excise tax) together with
any interest, addition or penalty imposed thereon. The term "TAX RETURN" shall
mean a report, return or other information statement (including any attached
schedules or any amendments to such report, return or other information
statement) required to be supplied to or filed with a Governmental Authority
with respect to any Tax, including an information return, claim for refund,
amended return or declaration of estimated Tax.
2.18. FINDERS AND INVESTMENT BANKERS.
Neither the Company nor any of its officers or directors has employed any
broker or finder or otherwise incurred any liability for any brokerage fees,
commissions or finders' fees in connection with the transactions contemplated
hereby. SECTION 2.18 of the Company Disclosure Schedule sets forth the estimated
amount of any brokerage fees, commissions or finders' fees payable in connection
with the transactions contemplated hereby.
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2.19. FAIRNESS OPINION.
The Company has received from Duff & Xxxxxx, LLC, its financial advisor,
a written opinion addressed to it for inclusion in the Schedule 14D-9 and the
Proxy Statement to the effect that the consideration to be received in the Offer
and the Merger by the Company's stockholders is fair to the Company's
stockholders (other than Parent, Holdco, Purchaser, Xxxxxxxx or their respective
affiliates) from a financial point of view.
2.20. INSURANCE.
The Company and its subsidiaries maintain insurance policies in such
amounts as management of the Company believes to be prudent and customary for
the businesses in which the Company and its subsidiaries are engaged. Neither
the Company nor any such subsidiary has been refused any insurance coverage
sought or applied for and neither the Company nor any such subsidiary has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a Company Material Adverse Effect.
2.21. VOTE REQUIRED.
(a) The affirmative vote of the holders (including Purchaser following
its acceptance of Shares for payment under the Offer) of a majority of the
outstanding voting power of the outstanding Shares and Class B Shares, voting
together as a single class (the "COMPANY STOCKHOLDER APPROVAL"), if necessary to
approve the Merger, is the only vote of the holders of any class or series of
the Company's capital stock necessary to approve the Merger.
(b) Other than any actions described in Section 2.21(a), the Company has
taken all actions necessary under the DGCL to approve the Offer, the Merger and
the other transactions contemplated by this Agreement and the other Transaction
Documents.
2.22. TITLE TO PROPERTIES.
The Company and its subsidiaries have good and marketable title to all
real property and good and marketable title to all personal property owned by
them which is material to the business of the Company and its subsidiaries, in
each case free and clear of all Encumbrances and defects, except such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and any of its
subsidiaries. Any real property and facilities held under lease by the Company
and any of its subsidiaries are held by them under valid, subsisting and
enforceable leases, with such exceptions as are not material and do not
materially interfere with the use made and proposed to be made of such property
and buildings by the Company and its subsidiaries.
2.23. ENVIRONMENTAL MATTERS.
The Company and its subsidiaries (i) are in compliance with any and all
Environmental Laws (as hereinafter defined), (ii) have received all permits,
licenses or other approvals required of them under applicable Environmental Laws
to conduct their respective businesses and (iii) are
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in compliance with all terms and conditions of any such permit, license or
approval where, in each of the foregoing clauses (i), (ii) and (iii), the
failure to so comply could be reasonably expected to have, individually or in
the aggregate, a Company Material Adverse Effect. The term "ENVIRONMENTAL LAWS"
means all federal, state, local or foreign laws relating to pollution or
protection of human health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata),
including, without limitation, laws relating to emissions, discharges, releases
or threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, "HAZARDOUS MATERIALS") into the
environment, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits,
plans or regulations issued, entered, promulgated or approved thereunder.
2.24. SCHEDULE 14D-9; OFFER DOCUMENTS; AND PROXY STATEMENT.
Neither the Schedule 14D-9 nor any information supplied by the Company
for inclusion in the Offer Documents will, at the respective times the Schedule
14D-9, the Offer Documents or any amendments or supplements thereto are filed
with the SEC and first published, sent or given to stockholders of the Company,
as the case may be, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements made therein, in the light of the circumstances under which
they are made, not misleading. The Proxy Statement, if filed, will not, on the
date the Proxy Statement (or any amendment or supplement thereto) is first
mailed to stockholders of the Company and on the date of the Special Meeting, if
there is one, be false or misleading with respect to any material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under which
they are made, not misleading or will omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading or
necessary to correct any statement in any earlier communication with respect to
the Special Meeting or the solicitation of proxies for the meeting which shall
have become false or misleading in any material respect. The Schedule 14D-9 and
the Proxy Statement will, when filed by the Company with the SEC, comply as to
form in all material respects with the applicable provisions of the Exchange Act
and the rules and regulations thereunder. Notwithstanding the foregoing, the
Company makes no representation or warranty with respect to information supplied
by or on behalf of Parent, Holdco, Xxxxxxxx or Purchaser which is contained in
any of the foregoing documents.
2.25. TRANSACTIONS WITH AFFILIATES.
None of the officers or directors of the Company is presently a party to
any transaction with the Company or any of its subsidiaries (other than for
ordinary course services as employees, officers or directors or pursuant to
existing employment agreements or benefit plans or arrangements executed or in
effect as of the date hereof), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any such officer or director or, to the knowledge of the Company, any
corporation, partnership, trust or other entity
-24-
in which any such officer or director has a substantial interest or is an
officer, director, trustee or partner.
2.26. DISCLOSURE.
All disclosure included in this Agreement and the Company Disclosure
Schedule provided to Parent, Holdco, Xxxxxxxx and Purchaser regarding the
Company, its business and the transactions contemplated hereby, taken as a
whole, furnished by or on behalf of the Company is true and correct in all
material respects and does not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT, XXXXXXXX, HOLDCO AND PURCHASER
Parent, Holdco, Xxxxxxxx and Purchaser hereby jointly and severally
(except in the case of representations and warranties which are specifically
made as to Parent or Xxxxxxxx, which are made severally and not jointly by
Parent or Xxxxxxxx, as applicable; provided that Parent agrees to be jointly and
severally responsible for any breach of any such representations and warranties
on the part of Xxxxxxxx in accordance with Section 8.5(b) hereof) represent and
warrant to the Company as follows:
3.1. DUE INCORPORATION AND GOOD STANDING.
Each of Holdco and Purchaser is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and assets and to carry on its business as now being
conducted. Holdco and Purchaser have heretofore made available to the Company
accurate and complete copies of the Certificates of Incorporation and Bylaws, as
currently in effect, of Holdco and Purchaser.
Each of Parent and Xxxxxxxx is a limited partnership duly formed, validly
existing and in good standing under the laws of the jurisdiction of its
formation and has all requisite limited partnership power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted.
3.2. AUTHORIZATION; BINDING AGREEMENT.
Holdco and Purchaser have all requisite corporate power and authority to
execute and deliver this Agreement and the other Transaction Documents to which
they are parties and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the other Transaction
Documents to which they are parties and the consummation of the transactions
contemplated hereby and thereby, including, but not limited to, the Offer and
the Merger, have been duly and validly authorized by the respective Boards of
Directors of Holdco and Purchaser, as appropriate, and no other corporate
proceedings on the part of Holdco or Purchaser are necessary to authorize the
execution and delivery of this Agreement and the other Transaction Documents to
which they are parties or to consummate the
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transactions contemplated hereby and thereby. Holdco, as the sole stockholder of
Purchaser, has approved this Agreement and the Merger. Holdco and Purchaser have
duly and validly executed and delivered this Agreement and the other Transaction
Documents to which they are parties. This Agreement and the other Transaction
Documents to which Holdco and Purchaser are parties have been duly and validly
executed and delivered by each of Holdco and Purchaser and constitute the legal,
valid and binding agreements of Holdco and Purchaser, enforceable against each
of Holdco and Purchaser in accordance with their terms, subject to the
Enforceability Exceptions.
Each of Parent and Xxxxxxxx has all requisite limited partnership power
and authority to execute and deliver this Agreement and the other Transaction
Documents and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the other Transaction Documents
and the consummation of the transactions contemplated hereby and thereby,
including, but not limited to, the Offer and the Merger, have been duly and
validly authorized by the general partner of each of Parent and Xxxxxxxx, and no
other limited partnership or other proceedings on the part of Parent or
Xxxxxxxx, as applicable, are necessary to authorize the execution and delivery
of this Agreement and the other Transaction Documents or to consummate the
transactions contemplated hereby and thereby. This Agreement and the other
Transaction Documents have been duly and validly executed and delivered by each
of Parent and Xxxxxxxx and constitute the legal, valid and binding agreements of
Parent and Xxxxxxxx, enforceable against Parent and Xxxxxxxx in accordance with
their terms, subject to the Enforceability Exceptions.
3.3. GOVERNMENTAL APPROVALS.
No Consent from or with any Governmental Authority on the part of Parent,
Holdco, Xxxxxxxx or Purchaser is required in connection with the execution or
delivery by Parent, Holdco, Xxxxxxxx or Purchaser of this Agreement or the other
Transaction Documents or the consummation by Parent, Holdco, Xxxxxxxx or
Purchaser of the transactions contemplated hereby or thereby other than (i) the
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware in accordance with the DGCL, (ii) filings with the SEC, state
securities laws administrators and the National Association of Securities
Dealers, Inc. (the "NASD"), and (iii) those Consents that, if they were not
obtained or made, would not reasonably be expected to have a material adverse
effect on the business, assets, condition (financial or otherwise), liabilities
or the results of operations of Parent, Holdco, Xxxxxxxx and Purchaser and their
respective subsidiaries taken as a whole, a material adverse effect on or the
ability of any of Parent, Holdco, Xxxxxxxx or Purchaser to timely perform its
obligations under this Agreement and the other Transaction Documents and to
consummate the Offer, the Merger and the other transactions contemplated hereby
and thereby ("PURCHASER MATERIAL ADVERSE EFFECT").
3.4. NO VIOLATIONS.
The execution and delivery of this Agreement, the other Transaction
Documents, the Offer, the Merger, the consummation of the other transactions
contemplated hereby and thereby and compliance by Parent, Holdco, Xxxxxxxx and
Purchaser with any of the provisions hereof and thereof, will not (i) conflict
with or result in any breach of any provision of the Certificate of
Incorporation, Bylaws, partnership agreement or other governing instruments of
Parent, Holdco,
-26-
Xxxxxxxx or Purchaser, (ii) require any Consent under or result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, cancellation,
acceleration, suspension or revocation) under any of the terms, conditions or
provisions of any agreement or other instrument to which Parent, Holdco,
Xxxxxxxx or Purchaser is a party or by which any of them or their properties or
assets may be bound (the "PARENT CONTRACTS") or (iii) subject to obtaining the
Consents from Governmental Authorities referred to in Section 3.3 hereof,
contravene any Law to which Parent, Holdco, Xxxxxxxx or Purchaser or any of
their respective assets or properties are subject (taking into account the
actions of all such parties prior to the execution of this Agreement), except,
in the case of clauses (ii) and (iii) above, for any deviations from the
foregoing which would not reasonably be expected to have a Purchaser Material
Adverse Effect or prevent or materially delay the consummation of the
transactions contemplated by this Agreement or any of the other Transaction
Documents. As of the date hereof, there is no judgment, decree or order against
Parent, Xxxxxxxx, Holdco, Purchaser or any of their subsidiaries or, to the
knowledge of Parent, Holdco, Xxxxxxxx and Purchaser, any of their directors or
officers (in their capacities as such), that would enjoin or materially delay
any of the transactions contemplated by this Agreement or the other Transaction
Documents.
3.5. FINDERS AND INVESTMENT BANKERS.
None of Parent, Holdco, Xxxxxxxx or Purchaser nor any of their respective
officers or directors has employed any broker or finder or otherwise incurred
any liability for any brokerage fees, commissions or finders, fees in connection
with the transactions contemplated hereby.
3.6. DISCLOSURES.
Neither the Schedule TO nor any information supplied by Parent, Holdco,
Xxxxxxxx or Purchaser for inclusion in the Schedule 14D-9 will, at the
respective times the Schedule TO, the Schedule 14D-9, or any amendments or
supplements thereto, are filed with the SEC and first published, sent or given
to stockholders of the Company, as the case may be, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in the light
of the circumstances under which they are made, not misleading. If a Proxy
Statement is filed or mailed to stockholders of the Company, the information
supplied by Parent, Holdco, Xxxxxxxx or Purchaser for inclusion in the Proxy
Statement will not, on the date the Proxy Statement (or any amendment or
supplement thereto) is first mailed to stockholders of the Company and on the
date of the Special Meeting, if there is one, be false or misleading with
respect to any material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading or will
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading or necessary to correct any statement in any
earlier communication with respect to the Special Meeting or the solicitation of
proxies for the meeting which shall have become false or misleading in any
material respect. The Schedule TO will, when filed by Purchaser with the SEC,
comply as to form in all material respects with the requirements of the Exchange
Act and the rules and regulations thereunder. Notwithstanding the foregoing,
Parent, Holdco, Xxxxxxxx and Purchaser make no representation or warranty with
respect to any information supplied by or
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on behalf of the Company which is contained in any of the Offer Documents, the
Proxy Statement or any amendment or supplement thereto.
3.7. FINANCING COMMITMENTS.
Parent has sufficient cash on hand to satisfy the obligations of
Purchaser, Parent, Xxxxxxxx and Holdco hereunder, and shall (on its own or
together with Xxxxxxxx) make such funds available (i) to Holdco and Purchaser,
at or prior to the First Acceptance Time, to pay for all shares that Purchaser
becomes obligated to purchase pursuant to the Offer, (ii) to Holdco and
Purchaser at the Effective Time, to pay the aggregate Merger Consideration and
Class B Merger Consideration pursuant to the Merger and (iii) as and when
needed, to pay all obligations, fees and expenses related to the transactions
contemplated by this Agreement and the other Transaction Documents.
3.8. NO PRIOR ACTIVITIES.
Except for obligations or liabilities incurred in connection with its
incorporation or organization or the negotiation and consummation of this
Agreement, the other Transaction Documents, the Offer, the Merger and the other
transactions contemplated hereby and thereby, neither Holdco nor Purchaser has
incurred any obligations or liabilities, or has engaged in any business or
activities of any type or kind whatsoever or entered into any agreements or
arrangements with any person or entity. The authorized capital stock of Holdco
consists of 1,000 shares of common stock, par value $0.01 per share. As of the
date of this Agreement, 100 shares of Holdco common stock are outstanding, all
of which were validly issued, are fully paid and nonassessable and 75% of which
are owned by Parent and 25% of which are owned by Xxxxxxxx. As of the date of
this Agreement, 10 shares of Purchaser common stock are outstanding, all of
which were validly issued, are fully paid and nonassessable and are owned by
Holdco.
3.9. Ownership of Shares.
As of the date hereof, Parent, Holdco, Purchaser, Xxxxxxxx and their
respective affiliates own and have the power to vote the number of Shares set
forth on SCHEDULE 3.9.
3.10. Disclosure.
All disclosure included in this Agreement and the Disclosure Schedule of
Parent, Holdco, Xxxxxxxx and Purchaser provided to the Company regarding Parent,
Holdco, Xxxxxxxx and Purchaser, their businesses and the transactions
contemplated hereby, taken as a whole, furnished by or on behalf of Parent,
Holdco, Xxxxxxxx and Purchaser is true and correct in all material respects and
does not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.
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ARTICLE IV
ADDITIONAL COVENANTS OF THE COMPANY
4.1. CONDUCT OF BUSINESS OF THE COMPANY.
(a) Unless Purchaser shall otherwise agree in writing and except as
expressly contemplated by this Agreement or the other Transaction Documents or
as set forth in SECTION 4.1 of the Company Disclosure Schedule (the inclusion of
any item having been consented to by Purchaser), during the period from the date
of this Agreement to the Effective Time, (i) the Company and its subsidiaries
shall conduct their business in the ordinary course and consistent with past
practice, after taking into account the Company's financial position as of the
date hereof, and (ii) the Company shall use its commercially reasonable efforts
to preserve intact its business organization, to keep available the services of
its and its subsidiaries' officers and employees, and to maintain satisfactory
relationships with all persons with whom it and its subsidiaries do business;
PROVIDED, HOWEVER, that Parent, Holdco, Xxxxxxxx and Purchaser acknowledge that
the continued availability of such employees and relationships with venders may
be adversely affected by (A) the risk factors identified in the Company SEC
Reports and (B) the announcement and pendency of this Agreement, the other
Transaction Documents and the transactions contemplated hereby and thereby.
(b) Without limiting the generality of the foregoing clause (a) and
except as expressly contemplated by this Agreement or the other Transaction
Documents or as set forth in SECTION 4.1 of the Company Disclosure Schedule,
neither the Company nor any of its subsidiaries will, without the prior written
consent of Purchaser:
(A) amend or propose to amend its Certificate of Incorporation or
Bylaws (or comparable governing instruments) in any material respect;
(B) except pursuant to rights under the Company Options, authorize
for issuance, issue, grant, sell, pledge, dispose of or propose to issue, grant,
sell, pledge or dispose of any shares of, or any options, warrants, commitments,
subscriptions or rights of any kind to acquire or sell any shares of, its
capital stock or other securities or any Voting Debt including, but not limited
to, any securities convertible into or exchangeable for shares of stock of any
class, except for the issuance of Shares pursuant to the exercise of stock
options outstanding on the date of this Agreement in accordance with their
present terms;
(C) split, combine or reclassify any shares of its capital stock or
declare, pay or set aside any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock,
or directly or indirectly redeem, purchase or otherwise acquire or offer to
acquire any shares of its capital stock or other securities and other than
dividends and distributions to the Company or one of its wholly-owned
subsidiaries;
(D) (a) create, incur, assume, forgive or make any changes to the
terms or collateral of any debt, receivables or employee or officer loans or
advances, except in the ordinary course of business or incurrences that
constitute refinancing of existing obligations on terms that are no less
favorable to the Company or its subsidiaries than the existing terms or ordinary
course borrowings under the Senior Credit Agreement; (b) except in the ordinary
course
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of business, assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, indirectly, contingently or otherwise) for the
obligations of any person; (c) except in the ordinary course of business, make
any capital expenditures or make any loans, advances or capital contributions
to, or investments in, any other person (other than to a subsidiary or in
connection with customary travel, relocation or business advances to employees),
except for capital expenditures that do not exceed $1,000,000 in the aggregate
more than the aggregate amount provided in the 2005 Capex Budget; (d) acquire
the stock or assets of, or merge or consolidate with, any other person; (e)
voluntarily incur any material liability or obligation (absolute, accrued,
contingent or otherwise) other than in the ordinary course of business
consistent with past practice; or (f) other than in the ordinary course of
business consistent with past practice, sell, transfer, mortgage, pledge, or
otherwise dispose of, or encumber, or agree to sell, transfer, mortgage, pledge
or otherwise dispose of or encumber, any assets or properties (real, personal or
mixed) material to the Company and its subsidiaries other than to secure debt
permitted under subclause (a) of this clause (D);
(E) hire any executive officer of the Company or increase in any
manner the wages, salaries, bonus, compensation or other benefits of any of its
officers (i.e., elected officers, senior vice presidents and regional vice
presidents) or enter into, establish, amend or terminate any employment,
consulting, retention, change in control, collective bargaining, bonus or other
incentive compensation, profit sharing, health or other welfare, stock option or
other equity, pension, retirement, vacation, severance, termination, deferred
compensation or other compensation or benefit plan, policy, agreement, trust,
fund or other arrangement with, for or in respect of, any stockholder, officer
(i.e., elected officers, senior vice presidents and regional vice presidents),
director, agent, consultant or affiliate other than as required pursuant to the
terms of agreements in effect on the date of this Agreement or in the ordinary
course of business consistent with past practice with employees (other than
officers) of the Company or any of its subsidiaries or enter into or engage in
any agreement, arrangement or transaction with any of its directors, officers,
employees or affiliates except current compensation and benefits in the ordinary
course of business, consistent with past practice;
(F) settle or compromise any litigation, proceeding, action or
claim that could reasonably be expected to result in payments (to the extent not
covered by insurance) that exceed $250,000 in the aggregate;
(G) enter into or commit to enter into any material transaction or
material monetary commitment or enter into, amend, modify or terminate any
material agreement (including real estate leases that are material in the
aggregate);
(H) adopt or amend any resolution or agreement concerning
indemnification of its directors, officers, employees or agents;
(I) establish any subsidiary or enter into any new line of
business;
(J) enter into any lease, contract or agreement pursuant to which
the Company or any of its subsidiaries is obligated to pay or incur obligations
of more than $250,000 per year, other than the purchase of inventory, and
entering into leases, in the ordinary course of business consistent with past
practice; or
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(K) authorize any of, or agree to commit to do any of, the
foregoing actions.
(c) The Company shall use its commercially reasonable efforts to (i)
comply in all material respects with all Laws applicable to it or any of its
properties, assets or business, (ii) maintain in full force and effect all the
Company Permits necessary for, or otherwise material to, such business and (iii)
make in a timely manner any material filings with the SEC required under the
Securities Act or the Exchange Act or the rules and regulations promulgated
thereunder.
4.2. NOTIFICATION OF CERTAIN MATTERS.
The Company shall give prompt notice to Purchaser if any of the following
occur after the date of this Agreement: (i) there has been a material failure of
the Company or any of its representatives to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it or them
hereunder; (ii) receipt of any notice or other communication in writing from any
third party alleging that the Consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement or the other
Transaction Documents, provided that such Consent would have been required to
have been disclosed in this Agreement; (iii) receipt of any material notice or
other communication from any Governmental Authority (including, but not limited
to, the NASD or any securities exchange) in connection with the transactions
contemplated by this Agreement or the other Transaction Documents; (iv) the
occurrence of an event which would reasonably be expected to have a Company
Material Adverse Effect or that would otherwise reasonably be expected to cause
a condition in Article VI or ANNEX A not to be satisfied; or (v) the
commencement or threat of any Litigation involving or affecting the Company or
any of its subsidiaries, or any of their respective properties or assets, or, to
its knowledge, any employee, agent, director or officer, in his or her capacity
as such, of the Company or any of its subsidiaries which, if pending on the date
hereof, would have been required to have been disclosed in this Agreement or
which relates to the consummation of the Offer or the Merger. No such notice to
Purchaser shall have any effect on the determination of whether or not any of
the conditions to Closing or to the consummation of the Offer have been
satisfied or in determining whether or not any of the representations,
warranties or covenants contained in this Agreement have been breached.
4.3. ACCESS AND INFORMATION.
(a) Between the date of this Agreement and the Effective Time, the
Company will give, and shall direct its accountants and legal counsel to give,
Purchaser and its respective authorized representatives (including, without
limitation, its financial advisors, accountants and legal counsel), at all
reasonable times, access as reasonably requested to all offices and other
facilities and to all contracts, agreements, commitments, books and records of
or pertaining to the Company and its subsidiaries, will permit the foregoing to
make such reasonable inspections as they may require and will cause its officers
promptly to furnish Purchaser with (i) such financial and operating data and
other information with respect to the business and properties of the Company and
its subsidiaries as Purchaser may from time to time reasonably request, and (ii)
a copy of each material report, schedule and other document filed or received by
the Company pursuant to the requirements of applicable securities laws or the
NASD; PROVIDED, HOWEVER, that the Company, its legal counsel and other
authorized representatives shall not be required to
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disclose any information protected under attorney-client or attorney
work-product privilege; and PROVIDED FURTHER that, between the date hereof and
the time of first acceptance of Shares for payment under the Offer, Purchaser
may, upon the prior written approval (which shall not be unreasonably withheld
or delayed) of the Company's Chief Executive Officer, Chief Financial Officer or
General Counsel, (i) contact any employee of the Company directly, provided that
such contact is for informational purposes only and does not unreasonably
interfere with such employee's ongoing responsibilities to the Company, and (ii)
have access to the Company's offices and facilities; and, following the time of
first acceptance of Shares for payment under the Offer, Purchaser shall not be
restricted in any manner in contacting employees of the Company or in accessing
the Company's offices and facilities. No such access, inspections or furnishing
of information shall have any adverse effect on Purchaser's ability to assert
that conditions to Closing or to the consummation of the Offer have not been
satisfied. Notwithstanding the foregoing, the treatment of such information and
documentation shall remain subject to the confidentiality agreement between
Parent and the Company, dated September 9, 2005, as may be amended, modified or
supplemented from time to time (the "CONFIDENTIALITY AGREEMENT"), and Purchaser
and its authorized representatives shall not conduct any environmental sampling.
(b) The Chief Financial Officer of the Company shall deliver to
Purchaser immediately before the close of business on the day which is six (6)
business days prior to the then-scheduled expiration date of the Offer and
immediately before the close of business on the then-scheduled expiration date
of the Offer, a certificate executed by such officer which sets forth the
anticipated number of issued and outstanding Shares as of the date of the
expiration of the Offer.
(c) Without limiting any other provision of this Agreement, from time to
time during the Offer upon the request of Purchaser, immediately before the
close of business on the day which is six (6) business days prior to the then
scheduled expiration date of the Offer and immediately before the close of
business on the expiration date of the Offer, the Company shall inform Purchaser
orally and in writing as to the then-current status of satisfaction of the
conditions to the Offer described in paragraphs (i), (ii), (iii) and (iv) on
ANNEX A hereto. The chief executive officer of the Company shall deliver to
Purchaser promptly following the close of business on the then-scheduled
expiration date of the Offer a certificate executed by such officer to the
effect that the conditions to the Offer specified in the immediately preceding
sentence have been satisfied.
(d) The Company, Purchaser, Parent (on its own behalf and on behalf of
PWJ Lending and PWJ Funding as their managing member), Xxxxxxxx and Holdco agree
that the Purchase Agreement will terminate effective upon the execution and
delivery of this Agreement by the parties hereto, except for such provisions of
the Purchase Agreement that survive any termination by their terms.
4.4. SPECIAL MEETING; PROXY STATEMENT.
(a) If required by applicable law in order to consummate the Merger, the
Company, acting through its Board of Directors, shall, in accordance with
applicable Law:
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(i) (A) as promptly as practicable after the date hereof, duly call,
give notice of, convene and hold a special meeting of its stockholders (the
"SPECIAL MEETING"), for the purposes of considering and taking action upon the
approval and adoption of the Merger and this Agreement;
(B) subject to Section 4.8, declare advisable and recommend to
its stockholders that they approve the Merger and adopt this Agreement, and
shall include disclosure regarding the approvals of the Board;
(C) without limiting the generality of the foregoing, the
Company agrees that its obligations under clause (A) of this Section 4.4(a)(i)
shall not be affected by the commencement, public proposal, public disclosure or
communication to the Company or any other person of any Competing Transaction
(as such term is defined in Section 4.8(a)) or the withdrawal or modification by
the Board or any committee thereof of such Board's or committee's approval or
recommendation of the Offer, the Merger or this Agreement; and
(b) As promptly as practicable after the date hereof, the Company shall
prepare and file with the SEC a preliminary proxy or information statement
relating to the Merger and this Agreement and use all best efforts to file such
preliminary proxy or information statement with the SEC within ten (10) business
days after the consummation of the Offer, and obtain and furnish the information
required to be included by the SEC in the Proxy Statement and, after
consultation with Purchaser, respond promptly to any comments made by the SEC
with respect to the preliminary proxy or information statement and cause a
definitive proxy or information statement, including any amendments or
supplements thereto (the "PROXY STATEMENT") to be mailed to its stockholders at
the earliest practicable date, provided that no amendments or supplements to the
Proxy Statement will be made by the Company without prior consultation with
Purchaser and its counsel.
(c) If at any time prior to the Effective Time any information relating
to the Company or Purchaser, or any of their respective affiliates, officers or
directors, should be discovered by the Company or Purchaser which should be set
forth in an amendment or supplement to the Proxy Statement, so that the Proxy
Statement would not include any misstatement of a material fact or omit to state
any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other parties hereto and an
appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by Law, disseminated to
the shareholders of the Company.
(d) Subject to the fiduciary obligations of the Board determined after
consultation with outside legal counsel, the Company shall (i) include in the
Proxy Statement the recommendation of the Board that shareholders of the Company
vote in favor of the approval of the Merger and the approval and adoption of
this Agreement, and (ii) use its reasonable best efforts to procure the approval
of the shareholders of the Company for the Merger required under applicable Law.
(e) No filing of, or amendment or supplement to, the Proxy Statement
will be made by the Company without providing Purchaser the opportunity to
review and comment thereon.
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Purchaser shall immediately review and comment upon any such filing, amendment
or supplement. The Company will advise Purchaser, promptly after it receives
notice thereof, of any request by the SEC for amendment of the Proxy Statement
or comments thereon and responses thereto or requests by the SEC for additional
information.
(f) Notwithstanding the provisions of paragraphs (a) through (f) above,
in the event that Parent, Holdco, Purchaser, Xxxxxxxx and any of their
subsidiaries and affiliates shall have acquired Shares and Class B Shares (taken
together with Shares and Class B Shares then owned by Parent, Holdco, Purchaser,
Xxxxxxxx and any of their subsidiaries and affiliates) constitute in the
aggregate at least 90% of the voting power of the outstanding Shares and Class B
Shares, pursuant to the Offer or otherwise, the parties hereto shall take all
necessary and appropriate action to cause the Merger to become effective as soon
as practicable after such acquisition, without a meeting of stockholders of the
Company, in accordance with Section 253 of the DGCL.
(g) Immediately following execution by the Company of this Agreement,
the Company shall cancel the special stockholder meeting scheduled for February
9, 2006 and shall take such actions as are necessary under applicable law to
remove from consideration at such special meeting or otherwise the approval by
the Company's stockholders of the Transaction Resolutions (as defined in the
Purchase Agreement). The Company hereby represents that it has, through a duly
authorized resolution of the Board, resolved to take such actions, including
without limitation, cancellation of such special meeting and the removal from
consideration at any meeting of stockholders any matter related to the
Transaction Resolutions.
4.5. COMMERCIALLY REASONABLE EFFORTS.
Subject to the terms and conditions herein provided, including Section
4.8 of this Agreement, the Company agrees to use its commercially reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make effective
as promptly as practicable the Offer and the Merger and the other transactions
contemplated by this Agreement and the other Transaction Documents, including,
but not limited to, (i) obtaining all Consents from Governmental Authorities and
other third parties required for the consummation of the Offer and the Merger
and the other transactions contemplated hereby (provided that the Company shall
not make any payment or amend the terms of any agreement in connection with
obtaining any such Consent without the prior written approval of Holdco) and
(ii) consulting and cooperating with and providing assistance to Holdco and
Purchaser in the preparation and filing with the SEC of the Offer Documents and
all necessary amendments and supplements thereto. Upon the terms and subject to
the conditions hereof, the Company agrees to use commercially reasonable efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary to satisfy the conditions to the consummation of the Offer and
the Closing set forth herein.
4.6. PUBLIC ANNOUNCEMENTS.
Subject to the fiduciary obligations of the Board, so long as this
Agreement is in effect, the Company shall, and shall cause its affiliates to,
consult with Purchaser before issuing, and provide Purchaser the opportunity to
review and comment upon, any press release or any other
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public announcement with respect to this Agreement, the other Transaction
Documents and the transactions contemplated hereby and thereby, including the
Offer or the Merger, and shall not issue any such press release or public
announcement prior to such consultation, except as required by applicable Law or
regulatory authority. As promptly as practicable, but in no event later than one
business day following the date hereof, the Company and Parent shall issue a
joint press release announcing execution of this Agreement, in form and
substance reasonably satisfactory to both such parties.
4.7. COMPLIANCE.
In consummating the Offer, the Merger and the other transactions
contemplated by this Agreement and the other Transaction Documents, the Company
shall comply in all material respects with the provisions of the Exchange Act
and the Securities Act and shall comply in all material respects with all other
applicable Laws.
4.8. EXCLUSIVITY.
(a) The Company agrees that, during the period from the date hereof
until the Closing Date, it shall not, and shall cause its directors, officers,
agents, representatives, and any other person acting on its behalf
(collectively, the "REPRESENTATIVES") not to, directly or indirectly, (i)
solicit offers, inquiries or proposals for, or entertain any offer, inquiry or
proposal to enter into: (A) a merger, consolidation, share exchange or other
business combination or similar transaction involving the Company, (B) an
acquisition of 10% or more of the then-outstanding equity securities of the
Company, (C) an acquisition of equity securities, or of debt securities or other
securities convertible into or exchangeable for equity securities of the
Company, which would, after giving effect to such conversion or exchange,
constitute more than 10% of the outstanding equity securities of the Company,
(D) a sale, transfer, conveyance, lease or disposal of all or any significant
portion of the assets of the Company in one transaction or a series of related
transactions (other than sales of inventory or assets no longer useful in the
business, in each case, in the ordinary course of business), (E) a liquidation
or dissolution of the Company or the adoption of a plan of liquidation or
dissolution by the Company, (F) an agreement, understanding or other arrangement
providing for the occurrence of individuals who at the beginning of such period
constituted the Board or other governing body of the Company (together with any
new directors whose election to such Board or whose nomination for election by
the stockholders of the Company was approved by a vote of a majority of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved), ceasing for any reason to constitute a majority of such Board then in
office or (G) any other transaction in lieu of, or which would intend to impede
or prevent, the transactions contemplated by this Agreement and the other
Transaction Documents, the Offer or the Merger (any of the foregoing, a
"COMPETING TRANSACTION"), (ii) participate or engage in any discussions (except
to notify of the existence of these provisions) or negotiations with, or
disclose or provide any non-public information or data relating to the Company
or any subsidiary of the Company or afford access to the properties, books or
records or employees of the Company or any subsidiary of the Company to, any
third party relating to a Competing Transaction, or knowingly facilitate any
effort or attempt to make or implement a Competing Transaction or accept a
Competing Transaction; or (iii) enter into any contract (including any agreement
in principle, letter of intent or understanding) with respect to or
contemplating any
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Competing Transaction or enter into any agreement, arrangement or understanding
requiring the Company to abandon, terminate or fail to consummate the
transactions contemplated by this Agreement and the other Transaction Documents.
(b) Notwithstanding anything to the contrary contained in this Section
4.8, in the event that, prior to the time of the first acceptance of Shares for
payment pursuant to the Offer, the Company receives an unsolicited bona fide
written Competing Transaction (under circumstances in which the Company has
complied with its obligations under Section 4.8(a)(i)) with respect to itself
from a third party that its Board has in good faith concluded (following the
receipt of the advice of its reputable outside legal counsel and its financial
advisor of recognized reputation) (i) that such Competing Transaction is, or is
reasonably likely to result in, a Superior Proposal and (ii) that the failure to
provide nonpublic information or data concerning the Company or participate in
negotiations or discussions concerning such Competing Transaction would result
in a breach by the Board of its fiduciary duties to the Company's stockholders
or creditors under applicable law, it may then take the following actions: (1)
furnish nonpublic information to the third party making such Competing
Transaction, provided that (A) concurrently with furnishing any such nonpublic
information to such party, it gives Purchaser written notice of its intention to
furnish such nonpublic information, (B) it receives from the third party an
executed confidentiality agreement containing customary limitations on the use
and disclosure of all nonpublic information furnished to such third party on its
behalf, the terms of which are at least as restrictive on the third party as the
terms contained in the Confidentiality Agreement (and containing additional
provisions that expressly permit the Company to comply with the provisions of
this Section 4.8) and (C) contemporaneously with furnishing any nonpublic
information to such third party, it furnishes such nonpublic information to
Purchaser (to the extent such nonpublic information has not been previously so
furnished); and (2) engage in negotiations with the third party with respect to
the Competing Transaction, provided that concurrently with entering into
negotiations with such third party, it gives Purchaser written notice of its
intention to enter into negotiations with such third party.
(c) Subject to Sections 4.8(d) and (e), neither the Board nor any
committee thereof shall (i) withdraw, qualify, modify or amend (or publicly
propose to withdraw, qualify, modify or amend) in any manner adverse to
Purchaser, its recommendation of this Agreement (the "RECOMMENDATION") or take
any action or make any statement, filing or release, in connection with the
meeting of the stockholders of the Company, inconsistent with its recommendation
of this Agreement, the Offer or the Merger (it being understood that taking a
neutral position or no position with respect to a Competing Transaction shall
each be considered an adverse modification of its Recommendation) or (ii)
approve or recommend (or propose publicly to approve or recommend) any Competing
Transaction (each of the foregoing is referred to herein as a "COMPANY CHANGE IN
RECOMMENDATION").
(d) Notwithstanding anything in this Agreement to the contrary, the
Board shall be permitted, at any time prior to the time of the first acceptance
of Shares for payment pursuant to the Offer, in response to an unsolicited bona
fide written Competing Transaction (a copy of which shall be provided to
Purchaser within 24 hours of receipt thereof, including any amendments or
modifications thereto), to approve or recommend, or propose to approve or
recommend, any Competing Transaction and, subject to the Company first
exercising its right to terminate this Agreement under Section 7.1(g), enter
into a bona fide agreement contemplating a
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Competing Transaction, and in connection therewith, to withdraw, modify or
change the approval or recommendation by the Board of this Agreement, the Offer
or the Merger but only if (i) the Board concludes in good faith after
consultation with the Company's financial advisor of recognized reputation and
reputable outside legal counsel that such Competing Transaction constitutes a
Superior Proposal, (ii) the Company shall promptly (but in no event later than
24 hours after the Board reaches such conclusion) have given written notice to
Purchaser advising Purchaser that the Company has received a Superior Proposal
from a third party, specifying the material terms and conditions of such
Superior Proposal and (iii) either (A) Purchaser shall not have revised its
proposal with respect to the transactions contemplated hereby within (x) 10
business days after the date on which such notice is deemed to have been given
to Purchaser or (y) in the event of any counter-proposal with respect to such
Competing Transaction from a third party that has previously submitted a
Superior Proposal, three business days after the date on which notice of such
counter-proposal is deemed to have been given to Purchaser or (B) if Purchaser
within such period shall have revised its proposal with respect to the
transactions contemplated hereby, the Board, after consultation with the
Company's financial advisor of recognized reputation and reputable outside legal
counsel, shall have determined in good faith that the third party's Competing
Transaction is a Superior Proposal relative to Purchaser's revised proposal.
(e) Nothing contained in this Agreement shall prohibit the Company or
its Board from taking and disclosing to its stockholders a position with respect
to a tender or exchange offer by a third party pursuant to Rules 14d-9 and
14e-2(a) promulgated under the Exchange Act to the extent required by applicable
law; PROVIDED, however, that any such disclosure relating to a Competing
Transaction shall be deemed a Company Change in Recommendation unless the Board
reaffirms its Recommendation in such disclosure. Nothing contained in this
Agreement shall prohibit the Board or any committee thereof from making a
Company Change in Recommendation if the Board or such committee concludes in
good faith after consultation with reputable legal counsel that the failure to
do would result in a breach by the Board or such committee of its fiduciary
duties to the Company's stockholders or creditors.
(f) The Company shall immediately cease and cause to be terminated any
existing solicitation, initiation, encouragement, activity, discussion or
negotiation with any parties conducted heretofore by the Company or any of its
Representatives with respect to any Competing Transactions existing on the date
of this Agreement. The Company will promptly notify Purchaser if the Company (or
any of its Representatives) receives any such Competing Transactions and the
details thereof, and keep Purchaser informed with respect to each such Competing
Proposal.
(g) For purposes of this Agreement, "SUPERIOR PROPOSAL" shall mean a
Competing Transaction that the Board has in good faith concluded (following the
receipt of advice of its reputable outside legal counsel and its financial
advisor of recognized reputation), taking into account, among other things, all
legal, financial, regulatory and other aspects of the proposal and the person or
group making the proposal, to be more favorable, from a financial point of view,
to the Company, its stockholders and creditors, taken as a whole, than the terms
of this Agreement and is reasonably capable of being consummated.
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(h) The Company acknowledges that Holdco and Purchaser will be entitled
to obtain a court order in any court of competent jurisdiction against acts of
non-compliance with this Section 4.8, without the posting of bond or other
security, in addition to, and not in lieu of, other remedies they may have.
4.9. SEC AND STOCKHOLDER FILINGS.
The Company shall send to Purchaser a copy of all public reports and
materials as and when it sends the same to its stockholders, the SEC or any
state or foreign securities commission.
4.10. STATE TAKEOVER LAWS; RIGHTS AMENDMENT.
Notwithstanding any other provision in this Agreement, if any state
takeover statute may become, or may purport to be, applicable to the
transactions contemplated in this Agreement or the Transaction Documents, the
Company and the members of its Board will use all reasonable efforts to grant
such approvals and take such actions as are necessary so that the transactions
contemplated by this Agreement and the Transaction Documents may be consummated
as promptly as practicable on the terms and conditions contemplated hereby and
thereby and otherwise act to eliminate the effect of any takeover statute on any
of the transactions contemplated by this Agreement or the Transaction Documents.
The Company shall not amend the Rights Agreement or Amendment No. 2 without
Parent's prior written consent during the term of this Agreement; provided;
however that any such amendment, if at all, will not retroactively cause Parent,
Xxxxxxxx, Holdco, Purchaser or any of their respective Affiliates or Associates
(as such terms is defined in the Rights Agreement) to be deemed Acquiring
Persons (as such terms is defined in the Rights Agreement) solely by reason of
their Beneficial Ownership (as such terms is defined in the Rights Agreement) of
Shares as of the date hereof.
ARTICLE V
ADDITIONAL COVENANTS OF PARENT, HOLDCO AND PURCHASER
5.1. NOTIFICATION OF CERTAIN MATTERS.
Parent, Holdco, Xxxxxxxx and Purchaser shall give prompt notice to the
Company if any of the following occur after the date of this Agreement: (i) any
representation or warranty made by Parent, Holdco, Xxxxxxxx or Purchaser in this
Agreement is untrue or inaccurate in any material respect at any time from the
date hereof to the Effective Time; (ii) there has been a material failure of
Parent, Holdco, Xxxxxxxx or Purchaser or any of their respective representatives
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it or them hereunder; (iii) receipt of any notice or other
communication in writing from any third party alleging that the Consent of such
third party is or may be required in connection with the transactions
contemplated by this Agreement or the Transaction Documents, provided that such
Consent would have been required to have been disclosed in this Agreement; (iv)
receipt of any material notice or other communication from any Governmental
Authority (including, but not limited to, the NASD) in connection with the
transactions contemplated by this Agreement or the Transaction Documents; (v)
the occurrence of an event which would reasonably be expected to have a
Purchaser Material Adverse Effect; or (vi) the commencement or threat of any
Litigation involving or affecting Parent, Xxxxxxxx or any of their respective
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subsidiaries, or any of their respective properties or assets, or, to its
knowledge, any employee, agent, director or officer, in his or her capacity as
such, of Parent, Xxxxxxxx or any of their respective subsidiaries which, if
pending on the date hereof, would have been required to have been disclosed in
this Agreement or which relates to the consummation of the Offer or the Merger.
No such notice to the Company shall have any effect on the determination of
whether or not any of the conditions to Closing or to the consummation of the
Offer have been satisfied or in determining whether or not any of the
representations, warranties or covenants contained in this Agreement have been
breached.
5.2. BEST EFFORTS.
Subject to the terms and conditions herein provided, each of Parent,
Holdco, Xxxxxxxx and Purchaser agrees to use its best efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective as promptly as practicable
the Offer and the Merger and the other transactions contemplated by this
Agreement and the other Transaction Documents, including, but not limited to:
(i) obtaining all Consents from Governmental Authorities and other third parties
required for the consummation of the offer and the Merger and the other
transactions contemplated hereby and by the other Transaction Documents and (ii)
consulting and cooperating with and providing assistance to the Company in the
preparation and filing with the SEC of the Schedule 14D-9 and the Proxy
Statement, if applicable, and all necessary amendments and supplements thereto.
Upon the terms and subject to the conditions hereof, each of Parent, Holdco,
Xxxxxxxx and Purchaser agrees to use best efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary to satisfy the
conditions to the consummation of the Offer and the Closing set forth herein,
and to consummate the transactions contemplated hereby and by the other
Transaction Documents.
5.3. COMPLIANCE.
In consummating the Offer, the Merger and the other transactions
contemplated hereby and by the other Transaction Documents, Parent, Holdco,
Xxxxxxxx and Purchaser shall comply, and cause their respective subsidiaries to
comply or to be in compliance, in all material respects with the provisions of
the Exchange Act, the Securities Act and all other applicable Laws.
5.4. INDEMNIFICATION.
(a) Each of Parent and Xxxxxxxx agrees that all rights to exculpation
and indemnification for acts or omissions occurring prior to the Effective Time
now existing in favor of the current or former directors or officers or
employees or agents (the "COMPANY INDEMNIFIED PARTIES") of the Company or any of
its subsidiaries or other entities, at the request of the Company or any of its
subsidiaries, as provided in its charter or by-laws or in any agreement shall
survive the Offer and the Merger and shall continue in full force and effect in
accordance with their terms. For six years from the Effective Time (or, in the
case of matters occurring at or prior to the Effective Time that have not been
resolved prior to the sixth anniversary of the Effective Time, until such
matters are finally resolved), Parent and Xxxxxxxx shall indemnify the Company
Indemnified Parties to the same extent as such Company Indemnified Parties are
entitled to indemnification pursuant to the preceding sentence. As of the
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Effective Time, the indemnification and exculpation provisions contained in the
Bylaws and the Certificate of Incorporation of the Surviving Corporation shall
be at least as favorable to individuals who immediately prior to the Closing
Date were directors, officers, agents or employees of the Company or otherwise
entitled to indemnification under the Company's Bylaws or Certificate of
Incorporation (an "INDEMNIFIED PARTY") as those contained in the Bylaws and the
Certificate of Incorporation of the Company, respectively, and shall not be
amended, repealed or otherwise modified for a period of six (6) years after the
Closing Date in any manner that would adversely affect the rights thereunder of
any Indemnified Party; PROVIDED, HOWEVER, that nothing contained herein shall
limit Purchaser's ability to merge the Company or the Surviving Corporation into
Purchaser or any of its subsidiaries or any other person or otherwise eliminate
the Company's or the Surviving Corporation's corporate existence in each case
provided that the surviving entity shall assume the obligations of the Company
or the Surviving Corporation in accordance with SECTION 5.4(C). The Company
hereby covenants that it shall, to the fullest extent permitted under Delaware
law and regardless of whether the Merger becomes effective, indemnify, defend
and hold harmless, and after the Effective Time, the Surviving Corporation
shall, to the fullest extent permitted under Delaware law, indemnify, defend and
hold harmless, each Indemnified Party against any costs or expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation, including, without limitation, liabilities
arising out of this Agreement or the Transaction Documents or under the Exchange
Act, occurring through the Closing Date, and in the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), (i) the Company or the Surviving Corporation shall pay the
reasonable fees and expenses of counsel selected by the Indemnified Parties,
which counsel shall be reasonably satisfactory to the Company or the Surviving
Corporation, promptly as statements therefor are received, and (ii) the Company
and the Surviving Corporation will cooperate in the defense of any such matter;
PROVIDED, HOWEVER, that neither the Company nor the Surviving Corporation shall
be liable for any settlement effected without its written consent (which consent
shall not be unreasonably withheld); and PROVIDED, FURTHER, that neither the
Company nor the Surviving Corporation shall be obliged pursuant to this Section
5.4 to pay the fees and disbursements of more than one counsel for all
Indemnified Parties in any single action, except to the extent that, in the
reasonable opinion of counsel for the Indemnified Parties, two or more of such
Indemnified Parties have conflicting interests in the outcome of such action.
Notwithstanding anything to the contrary in this Section 5.4 or in the Bylaws or
Certificate of Incorporation of the Surviving Corporation, the foregoing
indemnification shall not be available to an Indemnified Party to the extent
that a claim arises in connection with facts or circumstances which, if known by
Purchaser prior to the Effective Time, would have constituted a breach of the
Company's representations, warranties, covenants or agreements made in this
Agreement. In the event that any Indemnified Party becomes involved in any
actual or threatened action, suit, claim, proceeding or investigation after the
Closing Date, the Surviving Corporation shall advance to such Indemnified Party
his or her legal and other expenses (including the cost of any investigation and
preparation incurred in connection therewith), subject to the providing by such
Indemnified Party of an undertaking to reimburse all amounts so advanced in the
event of a determination of a court of competent jurisdiction that such
Indemnified Party is not entitled thereto.
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(b) The Surviving Corporation shall either (i) cause to be obtained at
the Effective Time "tail" insurance policies with a claims period of at least
six (6) years from the Effective Time with respect to directors' and officers'
liability insurance in amount and scope at least as favorable as the Company's
existing policies for claims arising from facts or events that occurred on or
prior to the Effective Time; or (ii) maintain in effect for six (6) years from
the Effective Time, if available, the current directors' and officers' liability
insurance policies maintained by the Company (provided that the Surviving
Corporation may substitute therefor policies of at least the same coverage,
amounts and retentions with substantially comparable insurers containing terms
and conditions that are no less favorable to the insured) with respect to
matters occurring prior to the Effective Time; PROVIDED, HOWEVER, that in no
event shall the Surviving Corporation be required to make annual premium
payments for such insurance in excess of two times the annual premiums paid by
the Company for such insurance as of the date hereof ("COMPANY'S CURRENT
PREMIUM"), and if such premiums for such insurance would at any time exceed two
times the Company's Current Premium, then the Surviving Corporation shall cause
to be maintained policies of insurance which, in the Surviving Corporation's
good faith determination, provide the maximum coverage available at an annual
premium equal to two times the Company's Current Premium. The Company represents
that the amount of Company's Current Premium is set forth in SECTION 5.4(B) of
the Company Disclosure Schedule.
(c) If the Surviving Corporation or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers or conveys all or substantially all of its properties and assets
to any person, then, and in each such case, to the extent necessary, proper
provision shall be made so that the successors and assigns of the Surviving
Corporation assume the obligations set forth in this Section 5.4.
(d) The provisions of this Section 5.4 (i) are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and representatives and (ii) are in addition to, and not in substitution
for, any other rights to indemnification or contribution that any such person
may have by contract or otherwise.
5.5. BENEFIT PLANS AND EMPLOYEE MATTERS.
(a) Purchaser shall, to the extent practicable, either maintain and
provide to the Company's employees who continue employment with Purchaser, the
Surviving Corporation or any subsidiary thereof, the employee benefits and
programs of the Company as substantially in effect as of the date hereof or
cause the Surviving Corporation to provide employee benefits and programs to
such employees that, in the aggregate, are substantially comparable to those of
the Company. The Company shall provide Purchaser with such information as
Purchaser may reasonably request regarding the Company's employee benefits and
programs in order to assist Purchaser in complying with its obligations under
this Section 5.5(a). Nothing in this Section 5.5(a) shall be construed to
prohibit or restrict Purchaser or the Surviving Corporation from amending,
suspending or terminating any of its employee benefit plans or programs at any
time. Nothing in this Section 5.5 or elsewhere in this Agreement shall be
construed to create a right in any employee to employment with Purchaser, the
Surviving Corporation or any of their subsidiaries and the employment of each
such employee shall be "at will" employment, except to the extent otherwise
provided in a written employment agreement.
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(b) From and after the Effective Time, the Surviving Corporation shall
honor, in accordance with their terms, all employment and severance agreements
listed in SECTION 5.5(B) of the Company Disclosure Schedule in effect
immediately prior to the Closing Date that are applicable to any current or
former employees or directors of the Company. To the knowledge of the Company as
of the date of the Agreement, there are no other material written employment or
severance agreements to which the Company is a party.
5.6. PUBLIC ANNOUNCEMENTS.
So long as this Agreement is in effect, Parent, Holdco, Xxxxxxxx and
Purchaser shall, and shall cause their affiliates to, consult with the Company
before issuing, and provide the Company the opportunity to review and comment
upon, any press release or any other public announcement with respect to this
Agreement, the other Transaction Documents and the transactions contemplated
hereby and thereby, including the Offer or the Merger, and shall not issue any
such press release or public announcement prior to such consultation, except as
required by applicable Law or regulatory authority.
5.7. [INTENTIONALLY OMITTED].
5.8. NO DISPOSITION OF SHARES; OBLIGATION TO VOTE.
During the time this Agreement is in effect, Parent, Holdco, Xxxxxxxx and
Purchaser shall not, and shall not permit any of their respective subsidiaries
or affiliates to, sell, pledge, assign, encumber, grant any proxy or enter into
any voting or similar agreement with respect to, transfer or otherwise dispose
of (collectively, "TRANSFER"), or agree to Transfer, any Shares or Class B
Shares owned by them as of the date hereof or subsequently acquired by them, or
take any other action that would restrict, limit or interfere with their
obligations under this Agreement or any of the Transaction Documents. Parent,
Holdco, Xxxxxxxx and Purchaser shall, and shall cause their respective
subsidiaries and affiliates to, vote, or cause to be voted, all of the Shares
acquired in the Offer and all Shares and Class B Shares otherwise owned by any
of them or their subsidiaries and affiliates in favor of the approval and
adoption of the Merger and this Agreement.
ARTICLE VI
CONDITIONS
6.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS.
The respective obligations of each party to effect the Merger shall be
subject to the fulfillment or waiver at or prior to the Effective Time of the
following conditions:
(a) STOCKHOLDER APPROVAL. If required under the DGCL, the Company
Stockholder Approval shall have been obtained.
(b) NO INJUNCTION OR ACTION. No order, statute, rule, regulation,
executive order, stay, decree, judgment or injunction shall have been enacted,
entered, promulgated or enforced by any court or other Governmental Authority
since the date of this Agreement, which prohibits or prevents the consummation
of the Merger and which has not been vacated, dismissed or
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withdrawn prior to the Effective Time. The Company, Parent, Holdco, Xxxxxxxx and
Purchaser shall use their best efforts to have any of the foregoing vacated,
dismissed or withdrawn by the Effective Time.
(c) PURCHASE OF SHARES. Parent, Holdco, Xxxxxxxx and Purchaser or any
affiliate of either of them shall have purchased Shares pursuant to the Offer
that together with shares otherwise owned by Purchaser and its affiliates
represent at least the Minimum Condition (unless such Minimum Condition has been
waived by Purchaser and the Company, in each of their sole discretion).
(d) EXPIRATION OF OFFERING. Any "subsequent offering period" shall have
expired.
6.2. [RESERVED].
6.3. CONDITIONS TO OBLIGATIONS OF THE COMPANY.
The obligations of the Company to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following additional
condition, which may be waived by the Company:
(a) PERFORMANCE BY PARENT, HOLDCO, XXXXXXXX AND PURCHASER. Parent,
Holdco, Xxxxxxxx and Purchaser shall have performed and complied with all the
covenants and agreements in all material respects and satisfied in all material
respects all the conditions required by this Agreement to be performed or
complied with or satisfied by Parent, Holdco, Xxxxxxxx and Purchaser at or prior
to the Effective Time.
6.4. FRUSTRATION OF CONDITIONS.
Neither Purchaser nor the Company may rely on the failure of any
condition set forth in this Article VI to be satisfied if such failure was
caused by such party's failure to comply with or perform any of its covenants or
obligations set forth in this Agreement.
ARTICLE VII
TERMINATION AND ABANDONMENT
7.1. TERMINATION.
This Agreement may be terminated and the Merger and the other
transactions may be abandoned at any time prior to the time of the first
acceptance of Shares for payment pursuant to the Offer ("FIRST ACCEPTANCE TIME")
by action taken or authorized by the Board of Directors or general partner, as
the case may be, of the terminating party or parties, as follows (the date of
any such termination, the "TERMINATION DATE"):
(a) by mutual written consent of Purchaser and the Company;
(b) by either Purchaser or the Company, if the First Acceptance Time
shall not have occurred on or before May 31, 2006; PROVIDED, HOWEVER, that the
right to terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose failure to fulfill
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any obligation under this Agreement has been the cause of, or resulted in, the
failure of the First Acceptance Time to occur on or before such date;
(c) by either Purchaser or the Company, if any Governmental Authority
shall have enacted, issued, promulgated, enforced or entered any legally binding
injunction, order, decree or ruling (whether temporary, preliminary or
permanent) or taken any other action (including the failure to have taken an
action) which has become final and non-appealable and has the effect of making
consummation of the Merger illegal or otherwise preventing or prohibiting
consummation of the Merger; PROVIDED that the party seeking to terminate this
Agreement shall have used its reasonable best efforts to remove or lift such
injunction, order, decree or ruling;
(d) by Purchaser, following twenty (20) days prior notice of the
occurrence of an Extremely Detrimental Effect, to the extent such Extremely
Detrimental Effect has not been cured during such twenty (20) day period;
PROVIDED, HOWEVER, that for purposes of this clause (d), any adverse effect on
the continued availability of employees or relationships with vendors arising
out of the announcement or pendency of this Agreement, the other Transaction
Documents and the transactions contemplated hereby and thereby shall not be
taken into account in determining whether an Extremely Detrimental Effect has
occurred.
(e) by Purchaser, if none of Parent, Purchaser, Xxxxxxxx or Holdco is in
material breach of its obligations under this Agreement, and if (i) any of the
representations and warranties of the Company herein is untrue or inaccurate in
any material respect (except that where any statement in a representation or
warranty expressly includes a "material adverse effect", "material" or other
materiality qualifier, such representation or warranty shall be untrue and
inaccurate in all respects) on the date of this Agreement or is untrue or
inaccurate and would reasonably be expected to have an Extremely Detrimental
Effect on and as of the First Acceptance Time (except to the extent a
representation or warranty expressly speaks of an earlier date, in which case as
of such earlier date), or (ii) there has been a breach on the part of the
Company of any of its covenants or agreements under this Agreement, and such
breach of a covenant or agreement (if curable) has not been cured within twenty
(20) days after notice to the Company and (if not cured) would result in a
material adverse affect on the parties' ability to consummate the transactions
contemplated by this Agreement;
(f) by the Company, if the Company is not in material breach of its
obligations under this Agreement, and if (i) any of the representations and
warranties of Parent, Purchaser, Xxxxxxxx or Holdco herein is untrue or
inaccurate in any material respect (except that where any statement in a
representation or warranty expressly includes a "material adverse effect",
"material" or other materiality qualifier, such representation or warranty shall
be untrue and inaccurate in all respects) on the date of this Agreement or is
untrue or inaccurate and would reasonably be expected to have a Purchaser
Material Adverse Effect on as of the First Acceptance Time (except to the extent
a representation or warranty expressly speaks of an earlier date, in which case
as of such earlier date), or (ii) there has been a breach on the part of any of
Parent, Purchaser, Xxxxxxxx or Holdco of any of their covenants or agreements
under this Agreement, and such breach of a covenant or agreement (if curable)
has not been cured within twenty (20) days after notice to Parent, Purchaser,
Xxxxxxxx or Holdco, as the case may be, and (if not cured) would result in a
material adverse affect on the parties' ability to consummate the transactions
contemplated by this Agreement;
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(g) by Purchaser, if the Board shall have (i) made a Company Change in
Recommendation or (ii) entered into an agreement other than a confidentiality
agreement with respect to a Competing Transaction; PROVIDED, HOWEVER, that any
such purported termination pursuant to this Section 7.1(g) shall be void and of
no force or effect unless the Company concurrently with such termination pays to
Purchaser (or its written designee(s)) the Expenses in accordance with Section
7.3; or
(h) by the Company, if the Board shall have made a Company Change in
Recommendation, but only (i) after providing written notice to Purchaser (a
"NOTICE OF SUPERIOR OFFER") advising Purchaser that the Board has received a
Superior Proposal, specifying the material terms and conditions of such Superior
Proposal and identifying the person making such Superior Proposal, and (ii) if
Purchaser does not, within three (3) business days of Purchaser's receipt of the
Notice of Superior Offer, make an offer such that the Board determines, in its
good faith judgment (after consultation with its advisors), such Superior
Proposal is no longer a Superior Proposal; PROVIDED that during such three
business day period, the Company shall negotiate in good faith with Purchaser
(to the extent Purchaser wishes to negotiate) to enable Purchaser to make such
an offer; PROVIDED, HOWEVER, that any such purported termination pursuant to
this Section 7.1(h) shall be void and of no force or effect unless the Company
concurrently with such termination pays to Purchaser (or its written
designee(s)) the Expenses in accordance with Section 7.3; and PROVIDED FURTHER
that Parent, Holdco, Xxxxxxxx and Purchaser acknowledge and agree that
concurrently with such termination the Company may enter into a definitive
agreement providing for implementation of such Superior Proposal.
7.2. EFFECT OF TERMINATION.
In the event of the termination of this Agreement pursuant to Section
7.1, this Agreement shall forthwith become void (except that the provisions of
this Section 7.2 and Section 7.3 (Fees and Expenses) shall survive any such
termination), and there shall be no other liability under this Agreement on the
part of any party hereto; PROVIDED, if this Agreement is terminated pursuant to
Section 7.1 (other than Section 7.1(f)), the Company shall remain obligated to
reimburse Parent and Xxxxxxxx (or its written designee(s)) for the Expenses
described in 7.3 below; PROVIDED, HOWEVER, that nothing herein shall relieve any
party from liability for any willful and material breach of any of its
representations, warranties, covenants or agreements set forth in this Agreement
prior to such termination.
7.3. FEES AND EXPENSES.
(a) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, the Company shall pay or cause to
be paid all costs and expenses incident to the performance of its obligations
hereunder, including without limitation, all of its fees, costs and expenses
incident to the preparation, issuance, execution, authentication and delivery of
this Agreement and the other Transaction Documents and the transactions
contemplated hereby and thereby. The Company shall pay, and hold Parent, Holdco,
Xxxxxxxx and Purchaser harmless against, any liability, loss or expense
(including, without limitation, reasonable attorney's fees and out of pocket
expenses) arising in connection with any claim relating to any such payment.
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(b) Whether or not the transactions contemplated in the Transaction
Documents are consummated or this Agreement is terminated, the Company shall pay
or cause to be paid all out-of-pocket costs, fees and expenses (including,
without limitation, all fees and other client charges and expenses of Xxxxxxx
Xxxx & Xxxxx, LLP, counsel for Parent, Holdco and Purchaser) incurred by, or on
behalf of, Parent, Holdco, Xxxxxxxx and Purchaser in connection with the
transactions contemplated by the Transaction Documents, including, but not
limited to, in connection with (i) any accounting, business, environmental,
legal, or regulatory due diligence review of the Company and its business, (ii)
the revision, negotiation, execution and delivery of the Transaction Documents
and any related documents and (iii) any other expenses related or incident to
the Purchase Agreement and the transactions contemplated thereby (which have not
been previously reimbursed by the Company), including those incurred by Parent
and Xxxxxxxx through the date hereof up to a maximum reimbursement of $750,000
with respect to this Section 7.3(b) ("EXPENSES"). Except as required by Section
7.1(h), the Company shall within ten (10) business days of any written request
by Parent, Holdco, Xxxxxxxx or Purchaser, as the case may be, pay or reimburse
Parent, Holdco, Xxxxxxxx or Purchaser(or their respective written designee(s)),
as the case may be, for the Expenses set forth in such written request.
ARTICLE VIII
MISCELLANEOUS
8.1. AMENDMENT AND MODIFICATION.
At any time before or after adoption of this Agreement by the
shareholders of the Company and prior to the Effective Time, this Agreement may
be amended or supplemented in writing by the Company and Purchaser with respect
to any of the terms contained in this Agreement; PROVIDED, HOWEVER, that
following approval by the shareholders of the Company there shall be no
amendment or change to the provisions hereof with respect to the Merger
Consideration or the Class B Merger Consideration as provided herein nor any
amendment or change not permitted under applicable Law, without further approval
by the shareholders of the Company.
8.2. WAIVER OF COMPLIANCE; CONSENTS.
At any time prior to the Effective Time, any party may:
(a) extend the time for the performance of any of the obligations or
acts of the other party;
(b) waive any inaccuracies in the representations and warranties of the
other party contained herein or in any document delivered pursuant hereto; or
(c) subject to the proviso of Section 8.1 waive compliance with any of
the agreements or conditions of the other party contained herein.
Notwithstanding the foregoing, no failure or delay by any party in
exercising any right hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right hereunder. Any
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agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
8.3. SURVIVAL.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time. The covenants contained in this Agreement shall terminate at the Effective
Time, except for those covenants contained in Sections 1.6(b), 1.7, 1.8, 1.9,
1.11, 1.12, 1.13, 5.4, 5.5 and 7.3 hereof, which shall survive beyond the
Effective Time in accordance with their terms.
8.4. NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given when delivered in person, by facsimile,
receipt confirmed, or on the next business day when sent by overnight courier or
on the second succeeding business day when sent by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(i) if to the Company, to:
Whitehall Jewellers, Inc.
000 X. Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. XxxxXxxxx, Xx. Vice President & General
Counsel
Facsimile: 000-000-0000
with a copy to (but which shall not constitute notice to the Company):
Sidley Austin LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxx Xxxxxxx, Esq.
Facsimile: 212-839-5599
and
Sidley Austin LLP
Xxx Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxx, Esq.
Facsimile: 312-853-7036
(ii) if to Parent, Holdco or Purchaser, to:
WJ Acquisition Corp.
c/o Prentice Capital Management, LP
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000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx Xxxxxx
Facsimile: 000-000-0000
with a copy to (but which shall not constitute notice to Parent, Holdco,
Xxxxxxxx or Purchaser)
Xxxxxxx Xxxx & Xxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxx, Esq.
Facsimile: (000) 000-0000
(ii) if to Xxxxxxxx, to:
x/x Xxxxxxxx Xxxxxxxxx
000 X. Xxxxxx Barre Blvd. 4th Floor
Xxxxxx Barre, PA 18702
Attention: Xxxxxxx Xxxxxxxx
Facsimile: (000) 000-0000
with a copy to (but which shall not constitute notice to Xxxxxxxx)
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxx, Esq.
Facsimile: (000) 000-0000
8.5. BINDING EFFECT; ASSIGNMENTS.
(a) Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto prior to
the Effective Time, without the prior written consent of the other parties
hereto. Subject to the preceding sentence, this Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Each of Holdco,
Purchaser and Xxxxxxxx (collectively with Parent, the "Buyers") hereby appoints
the Parent to act as the attorney-in-fact and agent for and on behalf of the
Buyers with respect to the taking of any and all actions and the making of any
decisions required or permitted to be taken by any of Parent, Holdco, Purchaser
or Xxxxxxxx under this Agreement and the other Transaction Documents, including,
without limitation, the power to (i) arbitrate, resolve, settle or compromise
any dispute regarding indemnification claims or matters arising out of this
Agreement and (ii) take all actions necessary in the judgment of Parent for the
accomplishment of the foregoing. Notices to or from Parent shall constitute
notice to or from each Buyer. A decision, act, consent or instruction of Parent
in connection with any of the foregoing matters shall constitute a decision of
all of the Buyers and shall be final, binding and conclusive upon each of the
Buyers, and the Company may rely upon any such written decision, consent or
instruction of Parent as being the decision, consent or instruction of each and
every Buyer. In performing the functions specified in this Agreement,
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Parent will not be liable to any Buyer in the absence of fraud or willful
misconduct on the part of Parent, and, as between Parent and the Buyers, any act
done or omitted pursuant to the advice of counsel shall be conclusive evidence
of Parent good faith. Each of Parent and Xxxxxxxx confirms that it has had the
opportunity to independently participate in the negotiation of the transaction
contemplated hereby with the advice of its own counsel and advisors. Xxxxxxxx
acknowledges that (i) Xxxxxxx Xxxx & Xxxxx LLP solely represented Parent in
connection with the transaction contemplated hereby and (ii) Parent did not
provide any advice in connection herewith and Xxxxxxxx'x determination to
participate herein was based solely on its own evaluation of the risks and
merits of the investment contemplated hereby.
(b) Parent agrees to be jointly and severally responsible for any
failure on the part of Xxxxxxxx, Holdco or Purchaser to perform any of its
obligations under this Agreement and the other Transaction Documents and for any
breach of any representation, warranty or covenant on the part of any of
Xxxxxxxx, Holdco or Purchaser.
8.6. GOVERNING LAW.
This Agreement shall be deemed to be made in, and in all respects shall
be interpreted, construed and governed by and in accordance with the internal
laws of, the State of Delaware, without regard to the conflicts of law
principles thereof.
8.7. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which
together shall be deemed an original, but all of which together shall constitute
one and the same instrument.
8.8. INTERPRETATION.
The article and section headings contained in this Agreement are solely
for the purpose of reference, are not part of the agreement of the parties and
shall not in any way affect the meaning or interpretation of this Agreement. As
used in this Agreement, (i) the term "PERSON" shall mean and include an
individual, a partnership, a joint venture, a corporation, a limited liability
company, a trust, an association, an unincorporated organization, a Governmental
Authority and any other entity, (ii) unless otherwise specified herein, the term
"AFFILIATE," with respect to any person, shall mean and include any person
controlling, controlled by or under common control with such person; as used in
this definition, "control" (including, with its correlative meanings,
"controlled by" and "under common control with") shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of
management or policies of a person, whether through the ownership of securities
or partnership of other ownership interests, by contract or otherwise, (iii) the
term "SUBSIDIARY" of any specified person shall mean any corporation a majority
of the outstanding voting power of which, or any partnership, joint venture,
limited liability company or other entity a majority of the total equity
interest of which, is directly or indirectly owned by such specified person,
(iv) the term "KNOWLEDGE," when used with respect to the Company, shall mean the
knowledge of the directors and officers of the Company identified on SCHEDULE
8.8 (without a duty to investigate) and, when used with respect to Purchaser,
shall mean the knowledge of the directors and officers of Purchaser, and (v) the
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term "INCLUDING" shall mean "including, without limitation." The parties have
participated jointly in the negotiation and drafting of this Agreement.
Consequently, in the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties
hereto, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provision of this
Agreement.
8.9. ENTIRE AGREEMENT.
This Agreement and the documents or instruments referred to herein,
including, but not limited to, the Exhibit(s) attached hereto and the Disclosure
Schedules referred to herein, which Exhibit(s) and Disclosure Schedules are
incorporated herein by reference, any other written agreement entered into
contemporaneously herewith, and the Confidentiality Agreement and the other
Transaction Documents embody the entire agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, representations, warranties, covenants, or undertakings,
other than those expressly set forth or referred to herein. This Agreement and
such other agreements supersede all prior agreements and the understandings
between the parties with respect to such subject matter.
8.10. SEVERABILITY.
In case any provision in this Agreement shall be held invalid, illegal or
unenforceable in a jurisdiction, such provision shall be modified or deleted, as
to the jurisdiction involved, only to the extent necessary to render the same
valid, legal and enforceable, and the validity, legality and enforceability of
the remaining provisions hereof shall not in any way be affected or impaired
thereby nor shall the validity, legality or enforceability of such provision be
affected thereby in any other jurisdiction. If any provision of this Agreement
is so broad as to be unenforceable, such provision shall be interpreted to be
only so broad as is enforceable.
8.11. SPECIFIC PERFORMANCE.
The parties hereto agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. The parties hereto agree
that money damages or other remedy at Law would not be sufficient or adequate
remedy for any breach or violation of, or a default under, this Agreement by
them. Accordingly, the parties further agree that each party shall be entitled
to an injunction or restraining order to prevent breaches of this Agreement and
to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other right or remedy to which such party may be entitled under this Agreement,
at law or in equity, without bond or other security being required.
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8.12. ATTORNEY'S FEES.
If any legal action or any arbitration is brought for the enforcement of
this Agreement or because of an alleged dispute, controversy, breach, or default
in connection with this Agreement, the prevailing party shall be entitled to
recover reasonable attorneys' fees and all other reasonable costs and expenses
incurred in that action or proceeding, in addition to any other relief to which
it may be entitled.
8.13. THIRD PARTY BENEFICIARIES.
Nothing contained in this Agreement or in any instrument or document
executed by any party in connection with the transactions contemplated hereby
shall create any rights in, or be deemed to have been executed for the benefit
of, any person or entity that is not a party hereto or thereto or a successor or
permitted assign of such a party, except as provided by and in accordance with
the provisions of Section 5.4 and except for the provisions of 5.5(b) hereof.
8.14. OBLIGATION OF HOLDCO, PARENT AND XXXXXXXX.
Parent and Xxxxxxxx shall cause Holdco, Purchaser and Surviving
Corporation to comply with all their respective obligations under this Agreement
and the other Transaction Documents.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each of the parties hereto have caused this Agreement
and Plan of Merger to be signed and delivered by their respective duly
authorized officers as of the date first above written.
WHITEHALL JEWELLERS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxxxxxxx
Title: Chief Executive Officer
PRENTICE CAPITAL MANAGEMENT, LP
By: /s/ Xxxxxxx Xxxxx
----------------------------------------
Name: Xxxxxxx Xxxxx
Title: Chief Financial Officer
XXXXXXXX OPPORTUNITY FUND, L.P.
By: Xxxxxxxx Financial Advisors, LLC, its General
Partner
By: SH Independence, LLC, its Managing Member
By: /s/ Xxxxxxx Xxxxxxxx
----------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Sole Member
WJ HOLDING CORP.
By: /s/ Xxxxxxx Xxxxx
----------------------------------------
Name: Xxxxxxx Xxxxx
Title: Vice President
WJ ACQUISITION CORP.
By: /s/ Xxxxxxx Xxxxx
----------------------------------------
Name: Xxxxxxx Xxxxx
Title: Vice President
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]
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ANNEX A
CONDITIONS TO THE OFFER
The capitalized terms used but not defined in this ANNEX A and which are
defined in the attached Agreement and Plan of Merger (the "Agreement") shall
have the meanings ascribed to such terms in the Agreement. Notwithstanding any
other provision of the Offer, Purchaser is not required to accept for payment
or, subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) under the Exchange Act (relating to Purchaser's obligation to pay for
or return tendered Shares promptly after termination or expiration of the
Offer), pay for, and may delay the acceptance for payment of or, subject to the
restriction referred to above, the payment for, any Shares, and may terminate or
amend the Offer (but only subject to and in accordance with the Agreement, if
(1) the Minimum Tender Condition has not been satisfied or (2) if at any time on
or after the date of the Agreement and prior to the expiration of the Offer, any
of the following conditions exist and continue to exist at the expiration of the
Offer:
(i) any order, statute, rule, regulation, executive order, stay, decree,
judgment or injunction shall have been enacted, entered, promulgated or enforced
by any court or other Governmental Authority since the date of this Agreement,
which prohibits or prevents the consummation of the Offer or the Merger or
imposes material limitations on Parent's, Xxxxxxxx'x or Purchaser's ability to
effectively exercise full rights of ownership of the Shares; provided that
Parent, Xxxxxxxx and Purchaser shall have used their best efforts to have any of
the foregoing vacated, dismissed or withdrawn; or
(ii) any event, circumstances or fact shall have occurred which has
resulted in, would result in or could reasonably be expected to result in,
individually or in the aggregate, an Extremely Detrimental Effect on the
business, properties, assets, operations, results of operations or condition
(financial or otherwise) of the Company and its subsidiaries, taken as a whole;
PROVIDED, HOWEVER, that for purposes of this clause (ii), any adverse effect on
the continued availability of employees or relationships with vendors arising
out of the announcement or pendency of this Agreement, the other Transaction
Documents and the transactions contemplated hereby and thereby shall not be
taken into account in determining whether an Extremely Detrimental Effect has
occurred or could reasonably be expected to occur; or
(iii) the Company or any of its subsidiaries has (a) issued or sold, or
authorized or proposed the issuance or sale of, any additional Shares, shares of
any other class or series of capital stock, other voting securities or any
securities convertible into, or options, rights or warrants, conditional or
otherwise, to acquire, any of the foregoing (other than the issuance of Shares
pursuant to and in accordance with the terms in effect on the date of the
Agreement, of warrants and Company Stock Options outstanding prior to such
date), or any other securities or rights in respect of, in lieu of, or in
substitution or exchange for any shares of its capital stock, (b) declared or
paid (or the Board proposes to declare or pay) any dividend or other
distribution on any shares of capital stock of the Company (other than a
distribution of the Rights certificates or a redemption of the Rights in
accordance with the Rights Agreement as publicly disclosed to be in effect prior
to the date of the Agreement), (c) altered or entered into an agreement to alter
any material term of any outstanding security, issued or sold, or authorized or
entered into
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an agreement to issue or sell, any debt securities or otherwise incurred or
authorized or entered into an agreement to incur any debt other than in the
ordinary course of business (other than to amend the Rights Agreement to make
the Rights inapplicable to the Offer and the Merger or in accordance with
agreements contemplated by the Transaction Documents), (d) entered into or
amended any employment, severance or similar agreement, arrangement or plan with
any of its officers other than in the ordinary course of business or entered
into or amended any such agreements, arrangements or plans so as to provide for
increased benefits to employees as a result of or in connection with the making
of the Offer, the acceptance for payment of or payment for some of or all the
Shares by Purchaser or the consummation of the Merger, or (e) amended its
certificate of incorporation or bylaws other than to amend the Rights Agreement
to make the Rights inapplicable to the Offer and the Merger; or
(iv) the Company or any of its subsidiaries shall have (a) granted after
the date of the Agreement to any person proposing a Competing Transaction any
material option, warrant or similar right (including, without limitation, a
right to acquire or receive any Shares or other securities, assets or business
of the Company or any of its subsidiaries) or (b) paid or agreed to pay any
material cash or other consideration to any party that has proposed a Competing
Transaction in connection with or in any way related to any such Competing
Transaction which, in Purchaser's reasonable judgment, in any such case, and
regardless of the circumstances (including any action or omission by Parent,
Xxxxxxxx or Purchaser) giving rise to any such condition, makes it inadvisable
to proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Parent, Purchaser,
Xxxxxxxx and their affiliates and may be asserted by Parent, Xxxxxxxx or
Purchaser in their reasonable discretion regardless of the circumstances
(excluding any affirmative action or omission by Parent, Xxxxxxxx or Purchaser)
giving rise to any such conditions or may be waived by Parent, Xxxxxxxx or
Purchaser in their reasonable discretion in whole or in part at any time or from
time to time before the Expiration Date (but only subject to and in accordance
with the Agreement). Purchaser, Xxxxxxxx and Parent expressly reserve the right
to waive any of the conditions to the Offer and to make any change in the terms
of or conditions to the Offer (but only subject to and in accordance with the
Agreement). The failure by Parent, Xxxxxxxx or Purchaser at any time to exercise
their rights under any of the foregoing conditions shall not be deemed a waiver
of any such right. The waiver of any such right with respect to particular facts
and circumstances shall not be deemed a waiver with respect to any other facts
and circumstances. Each such right shall be deemed an ongoing right which may be
asserted at any time or from time to time.
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