Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
XXXXX XXXXX INTERNATIONAL, INC.,
CONNOR ACQUISITION CORP.
AND
XXXXXX CORPORATION
DATED FEBRUARY 3, 2003
TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER ...................................................................... 1
SECTION 1.1 The Merger .................................................................. 1
SECTION 1.2 Closing ..................................................................... 2
SECTION 1.3 Effective Time .............................................................. 2
SECTION 1.4 Effects of the Merger ....................................................... 2
SECTION 1.5 Certificate of Incorporation and By-laws of the Surviving Corporation ....... 2
SECTION 1.6 Directors and Officers ...................................................... 2
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES ........................................ 3
SECTION 2.1 Effect on Capital Stock ..................................................... 3
SECTION 2.2 Fractional Shares ........................................................... 4
SECTION 2.3 Exchange of Certificates .................................................... 4
SECTION 2.4 Certain Adjustments ......................................................... 7
SECTION 2.5 Shares of Dissenting Stockholders ........................................... 7
SECTION 2.6 Stock Options ............................................................... 8
ARTICLE III REPRESENTATIONS AND WARRANTIES ................................................ 9
SECTION 3.1 Representations and Warranties of the Company ............................... 9
SECTION 3.2 Representations and Warranties of Parent .................................... 38
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS ...................................... 47
SECTION 4.1 Conduct of Business by the Company .......................................... 47
SECTION 4.2 Advice of Changes ........................................................... 51
SECTION 4.3 No Solicitation by the Company .............................................. 52
SECTION 4.4 Certain Tax Matters ......................................................... 55
SECTION 4.5 Transition .................................................................. 55
SECTION 4.6 No Fundamental Changes in the Conduct of Business by Parent ................. 55
ARTICLE V ADDITIONAL AGREEMENTS ........................................................... 56
SECTION 5.1 Preparation of the Form S-4, Joint Proxy Statement; Stockholders Meetings ... 56
SECTION 5.2 Letters of the Company's Accountants ........................................ 58
SECTION 5.3 Letters of Parent's Accountants ............................................. 58
SECTION 5.4 Access to Information; Confidentiality ...................................... 58
SECTION 5.5 Commercially Reasonable Efforts ............................................. 59
SECTION 5.6 [Intentionally Omitted] ..................................................... 59
SECTION 5.7 Indemnification, Exculpation and Insurance .................................. 59
SECTION 5.8 Fees and Expenses ........................................................... 60
SECTION 5.9 Public Announcements ........................................................ 62
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SECTION 5.10 Affiliates .................................................................. 62
SECTION 5.11 Stock Exchange Listing ...................................................... 62
SECTION 5.12 Stockholder Litigation ...................................................... 63
SECTION 5.13 Standstill Agreements; Confidentiality Agreements ........................... 63
SECTION 5.14 Conveyance Taxes ............................................................ 63
SECTION 5.15 Employee Benefits ........................................................... 63
SECTION 5.16 Rights Agreement Matters .................................................... 64
SECTION 5.17 Termination of Registration of Company Common Stock ......................... 64
SECTION 5.18 Voting Agreement ............................................................ 64
SECTION 5.19 Company Officer Certificates ................................................ 65
SECTION 5.20 Non-Solicitation Agreements ................................................. 65
SECTION 5.21 Letter Agreements ........................................................... 65
ARTICLE VI CONDITIONS PRECEDENT ........................................................... 65
SECTION 6.1 Conditions to Each Party's Obligation to Effect the Merger .................. 65
SECTION 6.2 Conditions to Obligations of Parent and Merger Sub .......................... 66
SECTION 6.3 Conditions to Obligations of the Company .................................... 67
SECTION 6.4 Frustration of Closing Conditions ........................................... 67
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER ............................................. 68
SECTION 7.1 Termination ................................................................. 68
SECTION 7.2 Effect of Termination ....................................................... 69
SECTION 7.3 Amendment ................................................................... 69
SECTION 7.4 Extension; Waiver ........................................................... 69
ARTICLE VIII GENERAL PROVISIONS ........................................................... 70
SECTION 8.1 Nonsurvival of Representations, Warranties and Agreements ................... 70
SECTION 8.2 Notices ..................................................................... 70
SECTION 8.3 Definitions ................................................................. 71
SECTION 8.4 Interpretation .............................................................. 72
SECTION 8.5 Counterparts ................................................................ 72
SECTION 8.6 Entire Agreement; No Third-Party Beneficiaries .............................. 73
SECTION 8.7 Governing Law ............................................................... 73
SECTION 8.8 Assignment .................................................................. 73
SECTION 8.9 Consent to Jurisdiction ..................................................... 73
SECTION 8.10 Headings .................................................................... 73
SECTION 8.11 Severability ................................................................ 73
SECTION 8.12 Enforcement ................................................................. 74
Exhibit A: Form of Affiliate Letter
Exhbit B: Form of Voting Agreement
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INDEX OF DEFINED TERMS
DEFINED TERMS SECTION DEFINED
------------- ---------------
Adjustment Event Section 2.4
affiliate Section 8.3(a)
Agreement Preamble
Audited Year-End Financial Statement Section 3.1(e)(iii)
Bankruptcy Order Section 3.1(h)(ii)
Cash Consideration Section 2.1(c)(ii)
Certificate of Merger Section 1.3
Change in the Company Recommendation Section 4.3(b)
Closing Section 1.2
Closing Date Section 1.2
Code Section 2.3(g)
Company Preamble
Company Acquisition Agreement Section 4.3(b)
Company Common Stock Recitals
Company Disclosure Schedule Section 3.1
Company Financial Advisor Section 3.1(s)
Company Junior Preferred Stock Section 3.1(c)
Company Material Contracts Section 3.1(f)
Company Preferred Stock Section 3.1(c)
Company Properties Section 3.1(w)(i)
Company Property Section 3.1(w)(i)
Company Recommendation Section 5.1(d)
Company Regulatory Agreement Section 3.1(h)(iii)
Company SEC Documents Section 3.1(e)(i)
Company Stock Certificates Section 2.3(b)
Company Stockholder Approval Section 3.1(r)
Company Stockholders Meeting Recitals
Company Stock Option Section 2.6(a)
Company Stock Options Section 2.6(a)
Company Stock Plans Section 3.1(c)
Company Superior Proposal Section 4.3(a)
Company Takeover Proposal Section 4.3(a)
Confidentiality Agreements Section 5.4
Continuation Period Section 5.15(b)
Continuing Employees Section 5.15(a)
DGCL Recitals
Dissenting Shares Section 2.5
EBITDA Section 3.1(e)(iii)
Effective Time Section 1.3
Employee Section 3.1(f)
Employee Plans Section 3.1(k)(i)
iii
Environmental Laws Section 3.1(m)(xi)
Environmental Permits Section 3.1(m)(i)
ERISA Section 3.1(k)(i)
ERISA Affiliate Section 3.1(k)(i)
Exchange Act Section 3.1(c)
Exchange Agent Section 2.3(a)
Exchange Fund Section 2.3(a)
Exchange Ratio Section 2.1(c)
Facility Section 3.1(m)(x)
FBCA Recitals
Fiduciary Section 3.1(k)(v)
Form S-4 Section 3.1(d)
GAAP Section 3.1(e)(ii)
Governmental Entity Section 3.1(d)
Hazardous Substances Section 3.1(m)(xi)
HSR Act Section 3.1(d)
Indemnified Parties Section 5.7(b)
Instruments of Indebtedness Section 3.1(f)
Intellectual Property Section 3.1(n)(i)
IRS Section 3.1(j)(xviii)
Joint Proxy Statement Section 3.1(d)
knowledge Section 8.3(e)
Leased Properties Section 3.1(w)(i)
Leased Property Section 3.1(w)(i)
Letter of Transmittal Section 2.3(b)
Liens Section 3.1(b)
Major Shareholder Section 3.1(c)
material adverse change Section 8.3(b)
material adverse effect Section 8.3(b)
Material Contract Section 3.1(f)
Merger Recitals
Merger Consideration Section 2.1(c)
Merger Sub Preamble
Multi-Employer Plans Section 3.1(k)(iv)
Nasdaq Section 2.1(c)
Option Consideration Section 2.6(a)
Other Company Documents Section 3.1(h)(iv)
Other Parent Documents Section 3.2(g)(iii)
Owned Properties Section 3.1(w)(i)
Owned Property Section 3.1(w)(i)
Parent Preamble
Parent Authorized Preferred Stock Section 3.2(b)
Parent Average Stock Price Section 2.1(c)
Parent Common Stock Section 3.2(b)
Parent Disclosure Schedule Section 3.2
Parent Employee Stock Options Section 3.2(b)
iv
Parent Regulatory Agreement Section 3.2(g)(ii)
Parent SEC Documents Section 3.2(d)
Parent Stockholder Approval Section 3.2(k)
Parent Stockholders Meeting Recitals
Parent Stock Consideration Section 2.1(c)(i)
Parent Stock Plans Section 3.2(b)
PBGC Section 3.1(k)(iii)
Permits Section 3.1(h)(i)
Permitted Liens Section 3.1(w)(ii)
person Section 8.3(c)
Post Signing Returns Section 4.4
Pre-Termination Company Takeover Proposal Event Section 5.8(b)(iv)
Real Property Lease Section 3.1(w)(iii)
Real Property Leases Section 3.1(w)(iii)
Release Section 3.1(m)(xi)
Requisite Regulatory Approvals Section 6.1(b)
Resale Prospectus Section 5.1(a)
Restraints Section 6.1(c)
Right Section 2.1(c)
Rights Section 2.1(c)
Rights Agreement Section 2.1(c)
Rights Agreement Amendments Section 3.1(v)
SEC Section 3.1
Secretary Section 1.3
Securities Act Section 3.1(e)(i)
Software Section 3.1(n)(i)
SOXA Section 3.1(e)(i)
Space Lease Section 3.1(w)(i)
Space Leases Section 3.1(w)(i)
State Takeover Laws Section 3.1(u)
subsidiary Section 8.3(d)
Surviving Corporation Section 1.1
Tangible Personal Property Section 3.1(x)
Tax Section 3.1(j)(xviii)
Taxes Section 3.1(j)(xviii)
Tax Return Section 3.1(j)(xviii)
Unaudited Company Balance Sheet Section 3.1(cc)
Unaudited Year-End Company Financial Statements Section 3.1(e)(iii)
Voting Agreement Section 5.18
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AGREEMENT AND PLAN OF MERGER (this "Agreement") made and entered into
on this 3/rd/ day of February 2003, by and among XXXXX XXXXX INTERNATIONAL,
INC., a Florida corporation ("Parent"), CONNOR ACQUISITION CORP., a Delaware
corporation and wholly owned subsidiary of Parent ("Merger Sub"), and XXXXXX
CORPORATION, a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, each of Parent, Merger Sub and the Company desire Parent to
consummate a business combination with the Company in a transaction whereby,
upon the terms and subject to the conditions set forth in this Agreement, Merger
Sub will merge with and into the Company (the "Merger"), each outstanding share
of common stock, $1.00 par value, of the Company ("Company Common Stock") (other
than shares cancelled and retired pursuant to Section 2.1(b) and Dissenting
Shares), will be converted into the right to receive the Merger Consideration,
and the Company will be the surviving corporation in the Merger;
WHEREAS, the Board of Directors of the Company unanimously has
determined and resolved that the Merger and all of the transactions contemplated
by this Agreement are in the best interest of the holders of Company Common
Stock and that the Merger is fair and advisable, and has approved this Agreement
in accordance with the Delaware General Corporation Law, as amended (the
"DGCL"), and has further resolved unanimously to recommend to all holders of
Company Common Stock that they vote affirmatively to adopt this Agreement at a
meeting of such holders to be duly called and convened for such purpose (the
"Company Stockholders Meeting"); and
WHEREAS, the Board of Directors of Parent unanimously has determined
and resolved that the Merger and all of the transactions contemplated by this
Agreement are in the best interest of Parent and the holders of Parent Common
Stock and has adopted this Agreement in accordance with the Florida Business
Corporation Act, as amended (the "FBCA"), and has further resolved unanimously
to recommend to all holders of Parent Common Stock that they vote affirmatively
to approve the issuance of shares of Parent Common Stock pursuant to the Merger
and the transactions contemplated by this Agreement at a meeting of such holders
to be duly called and convened for such purpose (the "Parent Stockholders
Meeting"), and Parent, as sole stockholder of Merger Sub, has adopted this
Agreement in accordance with the DGCL.
NOW, THEREFORE, in consideration of the mutual premises recited above
and the representations, warranties, covenants and agreements contained in this
Agreement, the parties hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement and in accordance with the DGCL, at the Effective
Time Merger Sub shall be merged with and into the Company and the Company shall
be the surviving corporation in the Merger (the "Surviving Corporation") and, as
such, the Company shall continue its corporate
existence as a direct, wholly owned subsidiary of Parent under the laws of the
State of Delaware, and the separate corporate existence of Merger Sub thereupon
shall cease.
SECTION 1.2 Closing. Subject to the satisfaction or, to the extent
permitted by applicable law, waiver of the conditions to consummation of the
Merger contained in Article VI hereof, the closing of the Merger (the "Closing")
shall take place at 10:00 a.m., New York time, on a date to be specified by the
parties (the "Closing Date"), which date shall not be later than the third
business day next following the satisfaction or, to the extent permitted by
applicable law, waiver of the conditions set forth in Article VI (other than
those conditions that by their nature are to be satisfied at the Closing, but
subject to the fulfillment or, to the extent permitted by applicable law, waiver
of those conditions), unless another time or date is agreed to by the parties
hereto. The Closing will be held at the offices of Xxxxxxxxx Traurig, LLP, The
MetLife Building, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or at such other
location as is agreed to by the parties hereto.
SECTION 1.3 Effective Time. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing the parties shall cause
the Merger to be consummated by filing with the Secretary of State of the State
of Delaware (the "Secretary") a certificate of merger (the "Certificate of
Merger") duly executed and so filed in accordance with the DGCL and shall make
all other filings and recordings required under the DGCL to effectuate the
Merger and the transactions contemplated by this Agreement. The Merger shall
become effective at such time as the Certificate of Merger is duly filed with
the Secretary, or at such subsequent date or time as Parent and the Company
mutually shall agree and specify in the Certificate of Merger (the time the
Merger becomes so effective being hereinafter referred to as the "Effective
Time").
SECTION 1.4 Effects of the Merger. The Merger shall have the effects
set forth in Section 259 of the DGCL.
SECTION 1.5 Certificate of Incorporation and By-laws of the Surviving
Corporation. The certificate of incorporation of the Company in effect
immediately prior to the Effective Time shall be the certificate of
incorporation of the Surviving Corporation until thereafter amended or restated
as provided therein or by applicable law. The by-laws of Merger Sub in effect
immediately prior to the Effective Time shall be the by-laws of the Surviving
Corporation until thereafter amended or restated as provided therein or by
applicable law.
SECTION 1.6 Directors and Officers. The directors of Merger Sub at the
Effective Time shall, from and after the Effective Time, be and become the
directors of the Surviving Corporation until their successors shall have been
duly elected and qualified or until their earlier death, resignation or removal
in accordance with the certificate of incorporation and by-laws of the Surviving
Corporation and the DGCL. The officers of the Company at the Effective Time
shall, from and after the Effective Time, be and become the officers of the
Surviving Corporation until their successors shall have been duly appointed and
qualified or until their earlier death, resignation or removal in accordance
with the certificate of incorporation and the by-laws of the Surviving
Corporation.
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ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
SECTION 2.1 Effect on Capital Stock. At the Effective Time, by virtue
of the Merger and automatically without any action on the part of any holder of
capital stock of Parent, Merger Sub or the Company, respectively:
(a) Capital Stock of Merger Sub. Each then outstanding share
of common stock, $.00l par value, of Merger Sub shall be converted into and
become one duly authorized, validly issued, fully paid and nonassessable share
of common stock, $.001 par value, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent Owned Stock.
Each share of Company Common Stock then issued and held in the Company's
treasury or by any of the Company's subsidiaries, and each share of Company
Common Stock then owned by Parent, Merger Sub or any other wholly owned
subsidiary of Parent, shall be canceled and retired and shall cease to exist,
and no consideration shall be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Subject to the
provisions of the last paragraph of this Section 2.1 (c), each then outstanding
share of Company Common Stock (including each associated right to purchase
Company Junior Preferred Stock distributed as a dividend on May 28, 2002 (each,
a "Right", and collectively the "Rights") pursuant to that certain Rights
Agreement dated as of May 17, 2002, as amended, between the Company and Mellon
Investor Services, LLC, as Rights Agent (the "Rights Agreement")) (other than
shares cancelled and retired pursuant to Section 2.1(b) and Dissenting Shares),
shall be converted into and become the right to receive:
(i) subject to Section 2.2, such fraction of a duly
authorized, validly issued, fully paid and nonassessable share of
Parent Common Stock equal to the Exchange Ratio (the "Parent Stock
Consideration"); and
(ii) $5.3538 in cash (the "Cash Consideration");
provided, however, if the Parent Average Stock Price is less than
$12.00, the Cash Consideration shall be increased by an amount
equal to the quotient obtained by dividing (x) the difference
between (1) $39,000,000 and (2) the product of 3,250,000 and the
Parent Average Stock Price by (y) 9,712,809.
For purposes of this Agreement, the "Exchange Ratio" means the quotient
obtained by dividing $4.0153 by the Parent Average Stock Price; provided,
however, if the Parent Average Stock Price is less than $12.00, the "Exchange
Ratio" shall mean and be fixed at 0.3346. For purposes of this Agreement, the
"Parent Average Stock Price" means the arithmetic average of the closing sale
prices of a share of Parent Common Stock as reported on the Nasdaq Stock Market
("Nasdaq") for the 20-consecutive full trading days ending on the third full
trading day next preceding the Closing Date. The Exchange Ratio shall be
calculated to the nearest ten
3
thousandth of a share of Parent Common Stock and the Parent Average Stock Price
shall be calculated to the nearest ten thousandth of one cent. The Cash
Consideration and Parent Stock Consideration are sometimes hereinafter referred
to collectively as the "Merger Consideration."
For purposes of clarity and without limiting the generality of the
foregoing, notwithstanding any other provision of this Agreement, in no event
shall (i) the amount of Parent Stock Consideration to be issued in the Merger to
the holders of Company Common Stock (plus the amount of Parent Common Stock to
be issued to the holders of Company Stock Options pursuant to Section 2.6)
exceed, in the aggregate, 3,250,000 shares of Parent Common Stock, and (ii) the
value of the Merger Consideration to be paid and delivered in the aggregate to
holders of Company Common Stock in the Merger (plus the aggregate amount of cash
to be paid in the Merger in lieu of fractional shares of Parent Common Stock
pursuant to Section 2.2 and the value of the aggregate amount of cash and Parent
Common Stock to be paid and delivered to the holders of Company Stock Options
pursuant to Section 2.6) exceed $91,000,000.
SECTION 2.2 Fractional Shares. No certificates representing fractional
shares of Parent Common Stock shall be issued upon the surrender for exchange of
Company Stock Certificates, no dividend or distribution by Parent shall relate
to such fractional share interests, and such fractional share interests shall
not entitle the owner thereof to vote or to any rights as a shareholder of
Parent. In lieu of any such fractional shares, each holder of a Company Stock
Certificate who otherwise would have been entitled to receive in the Merger a
fractional share interest in exchange for such Company Stock Certificate shall
receive in lieu and stead thereof from the Exchange Agent an amount in cash
equal to the product obtained by multiplying (x) the fractional share interest
to which such holder (after taking into account all shares of Company Common
Stock held by such holder at the Effective Time) otherwise would be entitled by
(y) the Parent Average Stock Price.
SECTION 2.3 Exchange of Certificates.
(a) As soon as reasonably practicable following the Effective
Time, Parent shall deposit with Continental Stock Transfer & Trust Company, or
such other bank or trust company designated by Parent and reasonably acceptable
to the Company (the "Exchange Agent"), for the benefit of the holders of shares
of Company Common Stock for exchange in accordance with this Section 2.3, (i)
certificates representing the aggregate Parent Stock Consideration issuable
pursuant to Section 2.1(c) and (ii) cash representing the aggregate Cash
Consideration issuable pursuant to Section 2.1(c) (such shares of Parent Common
Stock together with all dividends and distributions applicable thereto as
specified in Section 2.3(c) and the Cash Consideration being hereinafter
referred to collectively as the "Exchange Fund").
(b) As soon as reasonably practicable after the Effective
Time, the Exchange Agent shall mail to each holder of record of a certificate
(or certificates) which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock (the "Company Stock Certificates")
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Company Stock Certificate(s) shall
pass, only upon delivery of the Company Stock Certificate(s) (or affidavits of
loss in lieu of such certificates) (the "Letter of Transmittal") to the Exchange
Agent and shall be in such form and have such other provisions as Parent or the
Exchange Agent reasonably may specify, together with a
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substitute Form W-9) and (ii) instructions for use thereof in surrendering
Company Stock Certificate(s) in exchange for the Merger Consideration (and any
cash in lieu of fractional shares of Parent Common Stock to be issued or paid in
consideration therefor upon surrender of such certificate in accordance with
Section 2.2 and any dividends or distributions to which such holder is entitled
pursuant to Section 2.3(c)). Upon surrender to the Exchange Agent of a Company
Stock Certificate in proper form for cancellation, together with a duly executed
letter of transmittal, the holder of such Company Stock Certificate shall be
entitled to receive in exchange therefor (i) a certificate (or certificates)
representing such whole number of shares of Parent Common Stock such Company
stockholder is entitled to receive pursuant to Section 2.1(c) in such
denominations and registered in such names as such holder may request and a
check representing the Cash Consideration that such Company stockholder is
entitled to receive pursuant to Section 2.1(c) and (ii) a check representing the
amount of cash in lieu of fractional shares, if any, and unpaid dividends and
distributions, if any, which such Company stockholder is entitled to receive
pursuant to the provisions of this Article II, in all cases after giving effect
to the payment of all required withholding Taxes. The shares represented by the
Company Stock Certificate so surrendered shall forthwith be cancelled. Without
limiting the generality of the foregoing (and notwithstanding any other
provisions of this Agreement), no interest shall be paid or accrued in respect
of any of the Merger Consideration, the cash in lieu of fractional shares, if
any, and the unpaid dividends and distributions, if any, payable to holders of
Company Common Stock in accordance with this Article II. In the event of a
transfer of ownership of shares of Company Common Stock that is not registered
on the stock transfer books and records of the Company, a certificate
representing the proper number of shares of Parent Common Stock, and a check
representing the Cash Consideration that such holder of Company Common Stock is
entitled to receive pursuant to Section 2.1(c), plus a check representing the
cash to be paid in lieu of fractional shares, if any, and the unpaid dividends
and distributions, if any, to which such holder is entitled to receive in
accordance with this Article II, will be issued to such transferee only if a
Company Stock Certificate held by such transferee is properly presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and to evidence that all applicable stock transfer Taxes
theretofore have been paid. Until surrendered in accordance with this Section
2.3 and as specified in the Letter of Transmittal, each Company Stock
Certificate shall be deemed at all times from and after the Effective Time to
represent only the right to receive upon such surrender the Merger Consideration
plus the cash in lieu of fractional shares, if any, and unpaid dividends and
distributions, if any, as provided in this Article II. If any Company Stock
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Company Stock Certificate to
be lost, stolen or destroyed and, if required by Parent, the posting by such
person of a bond in such reasonable amount as Parent may direct as indemnity
against any claim that may be made against it or the Surviving Corporation with
respect to such Company Stock Certificate, the Exchange Agent shall deliver in
exchange for such lost, stolen or destroyed Company Stock Certificate, a
certificate representing the proper number of shares of Parent Common Stock and
a check for the Cash Consideration that such holder of Company Common Stock is
entitled to receive pursuant to Section 2.1(c), plus the cash to be paid in lieu
of fractional shares, if any, with respect to the shares of Company Common Stock
formerly represented thereby, and the unpaid dividends and distributions on
shares of Parent Common Stock, if any, as provided in this Article II.
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(c) Notwithstanding any other provisions of this Agreement, no
dividends or other distributions declared or made after the Effective Time in
respect of shares of Parent Common Stock having a record date after the
Effective Time shall be paid to the holder of any unsurrendered Company Stock
Certificate, and no cash payment in lieu of fractional shares shall be paid to
any such holder, until the holder shall surrender such Company Stock Certificate
as provided in this Section 2.3. Subject to applicable law, following surrender
of any such Company Stock Certificate, there shall be paid to the holder of the
certificates representing whole shares of Parent Common Stock issued in exchange
therefor, in each case without any interest thereon, (i) at the time of such
surrender, the amount of dividends or other distributions having a record date
after the Effective Time theretofore payable with respect to such whole shares
of Parent Common Stock and not paid, less the amount of all required withholding
Taxes in respect thereof, and (ii) at the appropriate payment date subsequent to
surrender, the amount of dividends or other distributions having a record date
after the Effective Time but prior to the date of such surrender and having a
payment date subsequent to the date of such surrender and payable with respect
to such whole shares of Parent Common Stock, less the amount of all required
withholding Taxes in respect thereof.
(d) All shares of Parent Common Stock issued and Cash
Consideration paid upon surrender of Company Stock Certificates in accordance
with this Article II and as specified in the Letter of Transmittal (including
any cash paid in lieu of fractional shares) shall be deemed to have been issued
and paid in full satisfaction of all rights pertaining to such shares of Company
Common Stock represented thereby and, as of the Effective Time, the stock
transfer books and records of the Company shall be closed and there shall be no
further registration of transfers on the stock transfer books and records of the
Company of shares of Company Common Stock outstanding immediately prior to the
Effective Time. If, after the Effective Time, Company Stock Certificates are
properly presented to the Surviving Corporation for any reason (but otherwise in
accordance with this Article II and as specified in the Letter of Transmittal),
they shall be cancelled and exchanged as provided in this Section 2.3.
(e) At any time following the six-month anniversary of the
Effective Time, Parent shall be entitled to require the Exchange Agent to
deliver to it any remaining portion of the Exchange Fund not theretofore
distributed to former holders of shares of Company Common Stock (including any
interest received with respect thereto and other income resulting from
investments thereof by the Exchange Agent, as directed by Parent), and such
former holders shall be entitled to look only to the Parent (subject to
abandoned property, escheat and other similar laws) with respect to the Merger
Consideration, cash in lieu of fractional shares of Parent Common Stock, if any,
and dividends or other distributions with respect to Parent Common Stock, if
any, payable upon due surrender of their Company Stock Certificates, in all
cases without any interest thereon and less all required withholding Taxes.
Notwithstanding the foregoing, neither the Parent nor the Exchange Agent shall
be liable to any holder of a Company Stock Certificate for Merger Consideration
(or dividends or distributions in respect thereof) or cash from the Exchange
Fund in each case delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(f) The Exchange Agent shall invest any cash included in the
Exchange Fund, as directed by Parent. Any interest, proceeds and other income
resulting from such investments shall be paid to Parent upon termination of the
Exchange Fund in accordance with Section 2.3(e).
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If the cash in the Exchange Fund shall be insufficient to satisfy fully all of
the payment obligations to be made by the Exchange Agent hereunder, then Parent
promptly shall, from time to time, deposit cash into the Exchange Fund in an
amount which is equal to the deficiency in the amount of cash required to
satisfy fully such payment obligations.
(g) Each of the Surviving Corporation, Merger Sub and Parent shall be
entitled to deduct and withhold from the Merger Consideration otherwise payable
pursuant to this Agreement to any holder of shares of Company Common Stock or
Company Stock Options such Taxes and other amounts as it is required to deduct
and withhold with respect to the making of such payment under the Internal
Revenue Code of 1986, as amended (the "Code"), and the rules and regulations
promulgated thereunder, and pursuant to the applicable provisions of state,
local and foreign Tax laws. To the extent that amounts are so deducted, withheld
and paid to the applicable taxing authority by the Surviving Corporation, Merger
Sub or Parent, as the case may be, such deducted, withheld and paid amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the shares of Company Common Stock or Company Stock Options, as the
case may be, in respect of which such deduction, withholding and payment was
made by the Surviving Corporation, Merger Sub or Parent.
SECTION 2.4 Certain Adjustments. If after the date hereof and prior to the
Effective Time and to the extent permitted by this Agreement, the outstanding
shares of Parent Common Stock or Company Common Stock shall be changed into a
different number, class or series of shares by reason of any reclassification,
recapitalization or combination, forward stock split, reverse stock split, stock
dividend or rights issued in respect of such stock, or any similar event shall
occur (any such action, an "Adjustment Event"), the Merger Consideration shall
be adjusted correspondingly to provide to the holders of Company Common Stock
the right to receive the same economic effect as contemplated by this Agreement
immediately prior to such Adjustment Event and Parent's payment obligations
likewise shall be correspondingly adjusted such that it shall be required to pay
and deliver not more than the aggregate Merger Consideration contemplated by
this Agreement.
SECTION 2.5 Shares of Dissenting Stockholders. Subject to Section 6.2(e),
notwithstanding anything in this Agreement to the contrary, any shares of
Company Common Stock that are outstanding as of the Effective Time and that are
held by a stockholder who has properly exercised his appraisal rights under
Section 262 of the DGCL (the "Dissenting Shares") shall not be converted into
the right to receive the Merger Consideration; provided, however, if any such
holder shall have failed to perfect or shall have effectively withdrawn or lost
his right to dissent from the Merger under the DGCL and to receive such
consideration as may be determined to be due with respect to such Dissenting
Shares pursuant to and subject to the requirements of the DGCL, each share of
such holder's Company Common Stock thereupon shall be deemed to have been
converted into and to have become, as of the Effective Time, the right to
receive, without any interest thereon, the Merger Consideration in accordance
with Section 2.1(c). The Company shall give Parent (i) prompt written notice of
all demands for appraisal or payment for shares of Company Common Stock received
by the Company prior to the Effective Time in accordance with the DGCL and (ii)
the opportunity to participate in and direct all negotiations and proceedings
with respect to such demands and notices. The Company shall not, without the
prior written consent of Parent, make any payment with respect to, or settle,
offer to settle or otherwise compromise or negotiate, any such demands.
7
SECTION 2.6 Stock Options.
(a) The Company shall use its reasonable best efforts to obtain, not
later than 45 days after the date hereof, from each holder of outstanding
options (whether or not then exercisable or vested) to acquire Company Common
Stock granted under the Company Stock Plans (each, a "Company Stock Option" and
collectively, the "Company Stock Options"), an executed agreement substantially
in the form of Section 2.6 of the Company Disclosure Schedule, in each case
providing that automatically at the Effective Time (i) each Company Stock Option
held by such holder shall become fully vested and immediately exercisable, (ii)
each then outstanding Company Stock Option shall be cancelled and void, (iii) in
consideration of such vesting and cancellation, each Company Stock Option shall
thereupon represent for all purposes under the relevant Company Stock Plan and
all grant and award instruments and agreements governing and evidencing such
holder's Company Stock Option(s) only the right to receive (subject to Section
2.3(g) and the last paragraph of Section 2.1(c)) such amount of Parent Common
Stock and cash ratably in the same proportion in which the Parent Stock
Consideration and Cash Consideration shall be delivered and paid in accordance
with Section 2.1(c)) equal to, for each Company Stock Option, the product of (x)
the number of shares of Company Common Stock subject to the then outstanding
Company Stock Options held by such holder and (y) the excess (to the extent a
positive number) of $9.3691 over the then applicable per share exercise price of
each such Company Stock Option (such amount of Parent Common Stock and cash
being so paid in full settlement of and in consideration for cancellation of
each such Company Stock Option being hereinafter referred to as the "Option
Consideration"), payable as provided in Section 2.6(b), and (iv) from and after
the Effective Time, except as provided in this Section 2.6, such holder shall
not have any rights or benefits under any Company Stock Plan or Company Stock
Option (or any grant or award letter or agreement issued in respect thereof) to
acquire any securities of the Company, Parent, the Surviving Corporation or any
subsidiary of Parent and shall, by virtue of having effected such surrender,
cancellation and receipt of Option Consideration, have unconditionally and
irrevocably discharged and released Parent, the Company, the Surviving
Corporation and each of their respective subsidiaries, officers, directors and
affiliates from and against, and thereupon shall have permanently waived, all
rights and claims (fixed, contingent or otherwise) such holder may now or
hereafter have thereunder with respect to all Company Stock Plans and Company
Stock Options (and all grant and award instruments and agreements governing and
evidencing the same).
(b) As promptly as practicable after the Effective Time, Parent
shall, or shall cause the Surviving Corporation to, pay to each holder of a
Company Stock Option the Option Consideration (net of any applicable withholding
tax as provided in Section 2.3(g)) in respect thereof. Until settled in
accordance with the provisions of this Section 2.6(b), each Company Stock Option
shall be deemed at any time after the Effective Time to represent for all
purposes only the right to receive the Option Consideration.
(c) The Company promptly shall use its best efforts (including
causing the Board of Directors of the Company or any compensation, stock option,
corporate governance, special or other duly constituted committee thereof to
take all such actions as are permitted by the Company Stock Plans) to implement
the provisions of this Section 2.6 (including, without limitation, the delivery
to all holders of Company Stock Options such letters, notices and disclosures
informing such holders of the Merger and the transactions contemplated by this
8
Agreement and delivery of the form of agreement contemplated by Section 2.6(a)
above) and to ensure that (i) from and after the Effective Time, no holder of a
Company Stock Option nor any party to or participant in any of the Company Stock
Plans shall have any right thereunder to acquire any equity securities of the
Company, Parent, the Surviving Corporation or any subsidiary thereof and (ii)
the Company Stock Plans and all Company Stock Options (and all grant and award
letters and agreements issued in respect thereof) shall terminate and become
void as of the Effective Time. The Company shall permit each holder of Company
Stock Options to satisfy any withholding Tax and other payments in respect of
such holder under the Code and the rules and regulations promulgated thereunder,
and pursuant to the applicable provisions of state, local and foreign Tax laws,
by withholding such number of shares of Parent Common Stock otherwise issuable
to such holder pursuant to this Agreement as shall be equal in value to the
amount of any such withholding Tax and other payments in respect of such holder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of the Company. Except as set
forth on the Disclosure Schedule delivered by the Company to Parent prior to the
execution of this Agreement which hereby is incorporated by reference in and
constitutes an integral part of this Agreement (the "Company Disclosure
Schedule") and making specific reference to the particular subsection(s) of this
Agreement to which exception is being taken or as set forth in the Company's
Annual Report on Form 10-K for its fiscal year ended December 29, 2001 and any
other periodic Exchange Act reports filed by the Company with the Securities and
Exchange Commission (the "SEC") since March 29, 2002 (in which case specific
reference thereto shall be made in the Company Disclosure Schedule), the Company
hereby represents and warrants to Parent and Merger Sub as follows:
(a) Organization, Standing and Corporate Power.
(i) Each of the Company and its subsidiaries is a corporation or
other legal entity duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is organized
and has the requisite corporate or other power, as the case may be,
and requisite authority to carry on its business as presently being
conducted. Each of the Company and its subsidiaries is duly qualified
or licensed to conduct business and is in good standing in each
jurisdiction in which the nature of its business or the ownership,
leasing or operation of its properties or other jurisdictional
presence makes such qualification or licensing necessary, except for
those jurisdictions where the failure to be so qualified or licensed
or to be in good standing individually or in the aggregate would not
reasonably be expected to have a material adverse effect on the
Company or the applicable subsidiary.
(ii) The Company has delivered or made available to Parent prior
to the execution of this Agreement complete and correct copies of the
certificate of incorporation and by-laws or other organizational
documents, as amended to date, of the Company and its subsidiaries.
9
(iii) The minute books of the Company contain complete and
correct records of all meetings and accurately reflect all consents,
resolutions and other material actions taken by the stockholders, the
Board of Directors and all committees of the Board of Directors of the
Company since May 11, 1999.
(b) Subsidiaries. Section 3.1(b) of the Company Disclosure Schedule
lists the names and jurisdiction of incorporation or organization of all the
subsidiaries of the Company, whether consolidated or unconsolidated. The
outstanding securities of the subsidiaries of the Company consists of: (i)
shares of capital stock or other equity interests that are owned, directly or
indirectly, by the Company; and (ii) such securities as are set forth in Section
3.1(b) of the Company Disclosure Schedule. All outstanding shares of capital
stock of, or other equity interests in, each such subsidiary: (i) have been duly
authorized, validly issued and are fully paid and nonassessable; (ii) are owned
directly or indirectly by the Company, free and clear of all pledges, claims,
liens, charges, encumbrances, adverse claims, mortgages and security interests
of any kind or nature whatsoever (collectively, "Liens"); and (iii) are free of
all other restrictions (including restrictions on the right to vote, sell or
otherwise dispose of such capital stock or other ownership interests) that would
prevent the operation by the Surviving Corporation of such subsidiary's business
as presently conducted. Except as set forth above or in Section 3.1(b) of the
Company Disclosure Schedule, the Company does not own, directly or indirectly,
any capital stock of or other equity or voting interests in any person.
(c) Capital Structure. The authorized capital stock of the Company
consists of 45,000,000 shares of Company Common Stock and 5,000,000 shares of
preferred stock, $2.00 par value, of the Company ("Company Preferred Stock"), of
which Company Preferred Stock 45,000 shares have been designated as Series A
Junior Participating Preferred Stock, $2.00 par value (the "Company Junior
Preferred Stock"). As of January 30, 2003: (i) 8,782,198 shares of Company
Common Stock were issued and outstanding; (ii) 1,217,802 shares of Company
Common Stock were held by the Company in its treasury and no shares of Company
Common Stock were held by subsidiaries of the Company; (iii) 1,111,111 shares of
Company Common Stock were reserved for issuance pursuant to the Company's 1999
Stock Award Incentive Plan and all other plans, agreements and arrangements
providing for equity-based compensation to any director, Employee, consultant or
independent contractor of the Company or any of its subsidiaries (collectively,
the "Company Stock Plans"), of which 930,611 shares are subject to outstanding
Company Stock Options; and (iv) no shares of Company Junior Preferred Stock were
issued and outstanding. All outstanding shares of capital stock of the Company
are, and all shares thereof which may be issued prior to the Closing Date will
be, when issued, duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive or any similar rights.
The Company has delivered to Parent a true and complete list, as of
the close of business on January 30, 2003, of all outstanding Company Stock
Options, the number of shares subject to each such Company Stock Option, the
grant date, exercise price, term and vesting schedule of each such Company Stock
Option and the names of the holders thereof. There are no outstanding Company
Stock Options with an exercise price equal to or greater than $9.3691. Except as
set forth in this Section 3.1(c), the Rights and changes since January 30, 2003
resulting from the issuance of shares of Company Common Stock pursuant to and in
accordance with Company Stock Options outstanding prior to January 30, 2003, (i)
there are not issued, reserved
10
for issuance or outstanding (A) any shares of capital stock or voting securities
or other ownership interests of the Company, (B) any securities of the Company
or any Company subsidiary convertible into or exchangeable or exercisable for
shares of capital stock or voting securities or other ownership interests of the
Company, or (C) any warrants, calls, options or other rights to acquire from the
Company or any Company subsidiary, or any obligation of the Company or any of
its subsidiaries to issue, any capital stock, voting securities or other
ownership interests in, or securities convertible into or exchangeable or
exercisable for, capital stock or voting securities or other ownership interests
of the Company, and (ii) there are no outstanding obligations of the Company or
any of its subsidiaries to repurchase, redeem or otherwise acquire any such
securities or to issue, deliver or sell, or cause to be issued, delivered or
sold, any such securities, other than pursuant to any "cashless exercise"
provision of any Company Stock Options.
Other than the Rights, there are no outstanding (x) securities of the
Company or any of its subsidiaries convertible into or exchangeable or
exercisable for shares of capital stock or voting securities or other ownership
interests in any subsidiary of the Company, (y) warrants, calls, options or
other rights to acquire from the Company or any of its subsidiaries, or any
obligation of the Company or any of its subsidiaries to issue, any capital
stock, voting securities or other ownership interests in, or any securities
convertible into or exchangeable or exercisable for, any capital stock, voting
securities or other ownership interests in, any subsidiary of the Company or (z)
obligations of the Company or any of its subsidiaries to repurchase, redeem or
otherwise acquire any such outstanding securities of subsidiaries of the Company
or to issue, deliver or sell, or cause to be issued, delivered or sold, any such
securities. Neither the Company nor any of its subsidiaries is a party and, to
the knowledge of the Company, no other person having "beneficial ownership"
(within the meaning of Rule l3d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) of more than 5% of the outstanding Company Common
Stock (a "Major Shareholder") is a party to any agreement restricting the
transfer of, relating to the voting of, requiring registration of, or granting
any preemptive, antidilutive or other similar rights with respect to any of the
securities of the Company or any of its subsidiaries. There are no voting trusts
or other agreements or understandings to which the Company or any of its
subsidiaries is a party or, to the knowledge of the Company, any Major
Shareholder is a party, with respect to the voting of the capital stock of the
Company or any of the subsidiaries.
(d) Authority; Noncontravention. The Company has all requisite
corporate power and authority to enter into this Agreement and, subject, in the
case of the Merger, to the Company Stockholder Approval, to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the consummation by the Company of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of the Company, subject, in the case of the Merger, to the Company Stockholder
Approval. This Agreement has been duly executed and delivered by the Company
and, assuming the due authorization, execution and delivery by Parent and Merger
Sub, constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except that (i)
such enforceability may be subject to applicable bankruptcy, insolvency,
fraudulent conveyance or other similar laws now or hereafter in effect affecting
creditors' rights and remedies generally and (ii) the availability of the remedy
of specific performance or injunction or other forms of equitable relief may be
subject to equitable defenses and could be subject to the discretion of the
court before which any proceeding therefor may be brought.
11
The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby and compliance with the
provisions of this Agreement will not, conflict with, or result in any
violation, forfeiture or termination of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right of forfeiture,
termination, cancellation or acceleration (with or without notice or lapse of
time, or both) of any obligation or loss of a benefit or, in the case of clause
(iii) below, any material obligation or loss of a material benefit, under, or
result in the creation or imposition of any Lien upon any of the properties or
assets of the Company or any of its subsidiaries under, (i) the certificate of
incorporation or by-laws of the Company, (ii) the certificate of incorporation
or by-laws or the comparable organizational documents of any of its
subsidiaries, (iii) any loan or credit agreement, note, bond, mortgage, Permit,
indenture, lease, Intellectual Property, vendor agreement, capital lease,
software agreement or other agreement or instrument applicable to the Company or
any of its subsidiaries or their respective properties or assets that is
material to the operations of the Company and its subsidiaries taken as a whole
or (iv) subject to the governmental filings and other matters referred to in the
following sentence, any judgment, order, decree, writ, statute, law, ordinance,
rule or regulation applicable to the Company or any of its subsidiaries or their
respective properties or assets, other than, in the case of clause (iv), any
such conflicts, violations, defaults, rights, losses or Liens that individually
or in the aggregate would not (x) reasonably be expected to have a material
adverse effect on the Company or (y) reasonably be expected to impair or
materially delay the ability of the Company to perform its obligations under
this Agreement.
No consent, approval, order or authorization of, action by or in
respect of, or registration, declaration or filing with, any (i) Federal, state,
local, municipal or foreign government, (ii) governmental, quasi-governmental
authority (including any governmental agency, commission, public authority,
branch, department or official, and any court or other tribunal) or body
exercising, or entitled to exercise, any governmentally-derived administrative,
executive, judicial, legislative, police, regulatory or taxing authority, or
(iii) any self-regulatory organization, administrative or regulatory agency,
commission, tribunal or authority (each, a "Governmental Entity") is required by
or with respect to the Company or any of its subsidiaries in connection with the
execution and delivery of this Agreement by the Company or the consummation by
the Company of the transactions contemplated hereby, except for (1) the filing
of a pre-merger notification and report form by the Company under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"); (2) the filings with the SEC of (A) a joint proxy statement pursuant to
Regulation 14A under the Exchange Act relating to the Company Stockholders
Meeting and the Parent Stockholders Meeting (such joint proxy statement, as
amended or supplemented from time to time, the "Joint Proxy Statement") and a
Registration Statement of the Parent on Form S-4 to be prepared and filed in
connection with the issuance of Parent Common Stock in the Merger (the "Form
S-4"), and (B) such reports under the Exchange Act, as may be required in
connection with the Merger, this Agreement and the transactions contemplated by
this Agreement; and (3) the filing of the Certificate of Merger with the
Secretary and such filings with Governmental Entities to satisfy the applicable
requirements of the laws of states in which the Company and its subsidiaries are
qualified or licensed to do business or state securities or "blue sky" laws.
(e) Company Documents; Undisclosed Liabilities. (i) Since May 11,
1999, the Company has timely filed (giving effect for this purpose to
permissible extensions pursuant
12
to Rule 12b-25 under the Exchange Act, to the extent the filing deadline as so
extended was satisfied) all reports, schedules, forms, information statements
and other documents (including all exhibits) required to be filed by the Company
with the SEC (together with all certifications required pursuant to the
Xxxxxxxx-Xxxxx Act of 2002 ("SOXA") and as amended as of the date hereof, the
"Company SEC Documents"). As of their respective filing dates, (A) the Company
SEC Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act,
as the case may be, and the rules and regulations of the SEC thereunder
applicable to such Company SEC Documents, and (B) no Company SEC Documents, as
of their respective dates, except as amended or supplemented by a subsequent
Company Filed SEC Document, contained, and no Company SEC Documents filed
subsequent to the date hereof will contain as of their respective dates, any
untrue statement of a material fact or omitted, and no Company SEC Documents
filed subsequent to the date hereof will omit as of their respective dates, to
state a material fact required to be stated therein or necessary to make the
statements therein (in the case of registration statements of the Company under
the Securities Act, in light of the circumstances under which they were made)
not misleading.
(ii) The financial statements of the Company and its subsidiaries
included in Company SEC Documents (including the related notes) complied as to
form, as of their respective dates of filing with the SEC, in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto (including, without limitation,
Regulation S-X), have been prepared in accordance with generally accepted
accounting principles in the United States ("GAAP") (except, in the case of
unaudited statements, as permitted by Quarterly Report Form 10-Q of the SEC)
applied on a consistent basis during the periods and at the dates involved
(except as may be indicated in the notes thereto) and fairly present the
consolidated financial condition of the Company and its subsidiaries at the
dates thereof and the consolidated results of operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to notes and
normal year-end audit adjustments that were not, or with respect to any such
financial statements contained in any Company SEC Documents to be filed
subsequent to the date hereof are not reasonably expected to be, material in
amount or effect). Except (A) as reflected in the Company's unaudited balance
sheet at September 28, 2002 or liabilities described in any notes thereto (or
liabilities for which neither accrual nor footnote disclosure is required
pursuant to GAAP) or (B) for liabilities incurred in the ordinary course of
business since September 28, 2002 consistent with past practice or in connection
with this Agreement or the transactions contemplated hereby, neither the Company
nor any of its subsidiaries has any material liabilities or obligations of any
nature. Deloitte & Touche LLP, who have expressed their opinion with respect to
the financial statements of the Company and its subsidiaries included in Company
SEC Documents (including the related notes), are independent public or certified
public accountants as required by the Securities Act and the Exchange Act.
(iii) The unaudited consolidated balance sheet of the Company and its
subsidiaries at December 28, 2002, and the related unaudited consolidated
statements of operations and cash flows for the Company's fiscal year ended
December 28, 2002 (including the related notes and schedules thereto), a true
and complete copy of which heretofore has been delivered by the Company to
Parent (the "Unaudited Year-End Financial Statements"), comply as to form in all
material respects with applicable accounting requirements and the published
rules and
13
regulations of the SEC with respect thereto (including, without limitation,
Regulation S-X), have been prepared in accordance with GAAP applied on a
consistent basis during the fiscal year ended and at December 28, 2002 (except
as may be indicated in the notes thereto), and fairly present the consolidated
financial condition of the Company and its subsidiaries at December 28, 2002 and
the consolidated results of operations and cash flows of the Company and its
subsidiaries for the Company's fiscal year ended December 28, 2002 (subject to
notes and normal year-end audit adjustments); provided, however, that such
Unaudited Year-End Financial Statements shall not be deemed to be a fair
presentation of the consolidated income from continuing operations before
interest, income taxes, discontinued operations, extraordinary gain and
depreciation and amortization ("EBITDA") of the Company and its subsidiaries or
the consolidated net sales of the Company and its subsidiaries for purposes of
this Section 3.1(e)(iii) if either the consolidated EBITDA or the consolidated
net sales of the Company and its subsidiaries as reflected in the audited
consolidated statements of operations of the Company and its subsidiaries for
the Company's fiscal year ended December 28, 2002 (the "Audited Year-End
Financial Statements") are less than $19.250 million or $210.2 million,
respectively. Non-capitalized and non-recurring out-of-pocket, cash transaction
expenses incurred by the Company in connection with the transactions
contemplated by this Agreement to the extent not included in the consolidated
EBITDA and consolidated net sales amounts heretofore disclosed by the Company to
Parent shall not be counted toward the determination of such consolidated EBITDA
or consolidated net sales of the Company and its subsidiaries for purposes of
the foregoing proviso.
(iv) Each of the Company, its directors and its senior financial
officers has consulted with the Company's independent auditors and with the
Company's outside counsel with respect to, and (to the extent applicable to the
Company) is familiar in all material respects with all of the requirements of,
SOXA. The Company is in compliance with the provisions of SOXA applicable to it
as of the date hereof and has implemented such programs and has taken reasonable
steps, upon the advice of the Company's independent auditors and outside
counsel, respectively, to ensure the Company's future compliance (not later than
the relevant statutory and regulatory deadlines therefor) with all provisions of
SOXA which shall become applicable to the Company after the date hereof. All
financial projections and forecasts heretofore furnished to Parent, with respect
to fiscal periods commencing after December 28, 2002, were prepared by the
Company's management in good faith on the basis of reasonable assumptions (based
on the best information and estimates currently available to management when
made).
(f) Certain Contracts. Neither the Company nor any of its subsidiaries
is a party to or bound by or otherwise subject to (a) any agreement,
arrangement, commitment or understanding relating to the incurring of
indebtedness by the Company or any of its subsidiaries (including sale and
leaseback transaction in excess of $250,000 and including capitalized lease
transactions and other similar financing transactions) including, without
limitation, any such agreement, arrangement, commitment or understanding which
contains provisions which in any non-de minimis manner restrict, or may
restrict, the conduct of business as presently conducted by the issuer thereof
or borrower, guarantor or obligor thereunder (collectively, "Instruments of
Indebtedness"), (b) any "material contract" (as such term is defined in Item 601
(b) (10) of Regulation S-K of the SEC), (c) any non-competition agreement or any
other agreement or obligation which purports to restrict or limit in any respect
(i) the ability of the Company or its subsidiaries to solicit customers or (ii)
the manner in which, or the localities in which, all or any
14
material portion of the business of the Company and its subsidiaries, taken as a
whole or, following consummation of the transactions contemplated by this
Agreement, Parent and its subsidiaries, is or would be conducted, (d) any
agreement providing for the indemnification or surety by the Company or a
subsidiary of the Company of any person, other than customary agreements
relating to the indemnification of directors or officers of the Company or its
subsidiaries, (e) any strategic alliance, revenue sharing joint venture or
partnership agreement, (f) any agreement that grants any right of first or last
refusal or right of first or last offer or similar right or that limits or
purports to limit the ability of the Company or any of its subsidiaries to own,
operate, sell, transfer, pledge or otherwise dispose of any material amount of
assets or business, (g) any contract or agreement providing for any material
future payments that are conditioned, in whole or in part, on a change of
control of the Company or any of its subsidiaries, (h) any collective bargaining
agreement, (i) any employment agreement or any agreement or arrangement that
contains any material severance pay or post-employment liabilities or
obligations to any current or former employee of the Company or its subsidiaries
(any such person, hereinafter, an "Employee"), other than as required under law,
(j) any material agreement pertaining to the use of or granting of any right to
use or practice any rights under any Intellectual Property, whether the Company
is the licensee or licensor thereunder, (k) any agreements pursuant to which the
Company or any of its subsidiaries leases or uses any real property, and (l) any
contract or other agreement not made in the ordinary course of business which is
material to the Company and its subsidiaries taken as a whole or which
reasonably would be expected to delay the consummation of the Merger or any of
the transactions contemplated by this Agreement (the agreements, contracts and
obligations of the type described in clauses (a) through (l) being referred to
herein as "Company Material Contracts"). Each Company Material Contract is valid
and binding on and enforceable against the Company (or, to the extent a
subsidiary of the Company is a party, such subsidiary) and, to the knowledge of
the Company, each other party thereto and is in full force and effect. Neither
the Company nor any of its subsidiaries is in breach or default under any
Company Material Contract. Neither the Company nor any subsidiary of the Company
knows of, or has received notice of, any violation or default under (nor, to the
knowledge of the Company, does there exist any condition which with the passage
of time or the giving of notice or both would result in such a violation or
default under) any Company Material Contract by any other party thereto. Prior
to the date hereof, the Company has made available to Parent true and complete
copies of all Company Material Contracts. There are no provisions in any
Instrument of Indebtedness that provide any restrictions on, or that require
that any financial payment (other than payment of outstanding principal and
accrued interest) be made in the event of, the repayment of the outstanding
indebtedness thereunder prior to its term.
(g) Absence of Certain Changes or Events. Except for liabilities
incurred in connection with this Agreement or the transactions contemplated
hereby, since December 29, 2001, the Company and its subsidiaries have conducted
their respective businesses only in the ordinary course, and since such date
there has not been:
(i) any material adverse change in the Company or any event which
either individually or when aggregated with any other event(s) has or
reasonably would be expected to have a material adverse effect on the
Company,
15
(ii) any issuance of Company Stock Options or restricted shares
of Company Common Stock (in any event identifying in Section 3.1(g) of
the Company Disclosure Schedule the issue date, exercise price and
vesting schedule, as applicable, for issuances since December 29,
2001),
(iii) any declaration, setting aside or payment of any dividend
or other distribution (whether in cash, stock or property) with
respect to any of the Company's capital stock,
(iv) any split, combination or reclassification of any of the
Company's capital stock or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of or in
substitution for shares of the Company's capital stock, except for
issuances of Company Common Stock upon the exercise of Company Stock
Options awarded and outstanding prior to the date hereof in accordance
with their present terms,
(v) prior to the date hereof (A) any granting by the Company
or any of its subsidiaries to any current or former director,
executive officer or other Employee of any increase in compensation,
bonus, perquisites, incentive payments or other benefits except in the
ordinary course of business, (B) any granting by the Company or any of
its subsidiaries to any such current or former director, executive
officer or Employee of any increase in severance or termination pay,
or (C) any entry by the Company or any of its subsidiaries into, or
any amendment of, any employment, deferred compensation, consulting,
severance, termination or indemnification agreement with any such
current or former director, executive officer or any Employee,
(vi) except insofar as may have been required by a change in
GAAP or regulatory accounting principles, any change in its accounting
methods (or underlying assumptions), principles or practices affecting
its assets, liabilities, businesses, inventories, cash flows, revenue
or expense recognition policies, estimates, accruals, reserves,
guarantees, amortization, discounts, returns, allowances,
depreciation, goodwill impairment, consolidation principles,
contingencies, intercompany loans, credit collections, including
without limitation, any reserving, renewal, reversal, deferral,
valuation or residual method, practice or policy, in each case, in
effect on the date hereof, or change in any material respect any of
its methods of reporting income and deductions for Federal income tax
purposes from those employed in the preparation of the Federal income
tax returns of the Company for the taxable year ending December 29,
2001,
(vii) any Tax election or change in any Tax election, amendment
to any Tax Return, closing agreement with respect to Taxes, or
settlement or compromise of any income Tax liability by the Company or
its subsidiaries, except as would not be required to be disclosed in
the Company SEC Documents,
(viii) any material change in investment policies, or
16
(ix) any agreement or commitment (contingent or otherwise) to do
any of the foregoing.
(h) Permits; Compliance with Applicable Laws.
(i) The Company and its subsidiaries own and/or possess all
material permits, licenses, variances, authorizations, exemptions,
orders, registrations and approvals of all Governmental Entities which
are required for the operation of the respective businesses of the
Company and its subsidiaries (the "Permits") as presently conducted.
Each of the Company and its subsidiaries is, and since May 11, 1999
has been, in compliance in all material respects with the terms of the
Permits and all the Permits are in full force and effect and no
suspension, modification or revocation of any of them is pending or,
to the knowledge of the Company, threatened nor, to the knowledge of
the Company, do grounds exist for any such action.
(ii) Each of the Company and its subsidiaries is, and since May
11, 1999 has been, in compliance in all material respects with all
applicable statutes, laws, regulations, ordinances, Permits, rules,
writs, judgments, orders, decrees and arbitration awards of each
Governmental Entity applicable to the Company or its subsidiaries,
including, without limitation the Order of the United States
Bankruptcy Court pursuant to Section 1129 of the Bankruptcy Code
confirming the First Amended Chapter 11 Plan of Reorganization of the
Company, dated April 16, 1999 (the "Bankruptcy Order").
(iii) Neither the Company nor any of its subsidiaries is subject
to any outstanding Restraint or is a party to any written agreement,
consent agreement or memorandum of understanding with, or is a party
to any commitment letter or similar undertaking to, or, except as
would not have a material adverse effect on the Company, is subject to
any order or directive by, or is a recipient of any supervisory letter
from or has adopted any resolutions at the request of any Governmental
Entity that restricts in any respect the conduct of its business or,
except as would not have a material adverse effect on the Company,
that in any manner relates to its policies, affairs, its management or
its business (each, a "Company Regulatory Agreement"), nor has the
Company or any of its subsidiaries or affiliates (A) to the Company's
knowledge, been advised since May 11, 1999 by any Governmental Entity
that it is considering issuing or requesting any such Company
Regulatory Agreement or (B) have any knowledge of any pending or
threatened regulatory investigation.
(iv) Except for filings with the SEC and filings with respect to
Taxes, which are the subject of Sections 3.1(e) and 3.1(j),
respectively, and not covered by this Section 3.1(h)(iv), the Company
and each of its subsidiaries have timely filed all regulatory reports,
schedules, forms, registrations and other documents, together with any
amendments required to be made with respect thereto, that they were
required to file since May 11, 1999 with each Governmental Entity (the
"Other Company Documents"), and have timely paid all fees and
assessments due
17
and payable in connection therewith, except where the failure to make
such payments and filings individually or in the aggregate would not
have a material adverse effect on the Company. There is no material
unresolved violation or exception by any of such Governmental Entities
with respect to any report or statement relating to any examinations
of the Company or any of its subsidiaries. No Other Company Documents,
as of their respective dates, except as amended or supplemented by an
Other Company Document filed prior to the date hereof, contained, and
no Other Company Documents filed subsequent to the date hereof will
contain as of their respective dates, any untrue statement of a
material fact or omitted, and no Other Company Documents filed
subsequent to the date hereof will omit as of their respective dates,
to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading. The Company has delivered or made
available to Parent a true and complete copy of each material Other
Company Document.
(v) Neither the Company nor any of its subsidiaries nor any of
their respective directors, executive officers or Employees has been
the subject of any disciplinary proceedings or orders of any
Governmental Entity arising under applicable laws or regulations which
would be required to be disclosed in any Other Company Document except
as disclosed therein, and no such disciplinary proceeding or order is
pending, nor to the knowledge of the Company, threatened.
(i) Absence of Litigation. Section 3.1(i) of the Company Disclosure
Schedule contains a true and current summary description of each pending and, to
the Company's knowledge, threatened litigation, action, suit, case, proceeding,
investigation or arbitration, the forum, the parties thereto, the subject matter
thereof and the amount of damages claimed or other remedies requested. No
action, inquiry, demand, charge, requirement or investigation by any
Governmental Entity and no litigation, action, suit, case, proceeding,
investigation or arbitration by any person or Governmental Entity, in each case
with respect to the Company or any of its subsidiaries or any of their
respective properties or Permits, is pending or, to the knowledge of the
Company, threatened. Each of (i) the Settlement Agreement, dated as of July 2,
2002, by and among Hartford Fire Insurance Company, Twin City Fire Insurance
Company, Ace American Insurance Company, CIGNA Insurance Company and the
Company; (ii) the Full and Final Release and Indemnity Agreement, dated August
30, 1999, as amended, by and among the Releasors named therein, the Company and
the other Released Parties named therein; and (iii) the Final Judgment of the
United States District Court of Maverick County, Texas, dated September 1, 1999,
in the matter of Xxxxx Xxxxxxx Xxxxxxxxx-Xxxxxx, et al. x. Xxxxxx Corporation,
et al. (No. 97-07-14605-CV), is valid and binding on and enforceable against the
Company and, to the knowledge of the Company, each other party thereto and is in
full force and effect, and the Company has no further obligation or liability of
any kind or nature whatsoever (fixed, contingent or otherwise) with respect to
the litigations, actions, suits, cases or proceedings that are the subject of
the agreements described in clauses (i) and (ii) above and the judgment
described in clause (iii) above. The claims, allegations and causes of action
which are the subject of that certain pending litigation Xxxxxx x. Xxxxxxxx'x
Inc. x. Xxxx Companies, a Division of Xxxxxx Corporation, and Aris-Isotoner,
Inc. (Index No. 15111/95) are covered by one or more insurance policies
underwritten by The Hartford, Twin City Fire Insurance Company
18
(Hartford), Federal Insurance Company (Chubb) or National Surety Corp.
(Fireman's Fund) that are in full force and effect as of the date hereof,
coverage under which is reasonably likely to be sufficient to insure the Company
against any and all obligations, charges, losses, costs, debts, judgments, dues,
expenses, sums of money and claims arising from or relating to such action, and
neither the Company nor any of its subsidiaries has received any notice of
denial of such coverage or has any reason to believe that such coverage does not
exist.
(j) Taxes. For purposes of this Section 3.1(j) any reference to the
Company or the Company's subsidiaries shall be deemed to include a reference to
the Company's predecessors or the Company's subsidiaries' predecessors,
respectively, except where inconsistent with the language of this Section
3.1(j).
(i) Each of the Company and each of its subsidiaries has (A)
timely filed (or there have been timely filed on its behalf) with the
appropriate Governmental Entities all United States federal income and
other material Tax Returns required to be filed by it (giving effect to
all extensions) and such Tax Returns are true, correct and complete in
all material respects; (B) timely paid in full (or there has been
timely paid in full on its behalf) all United States federal income and
other material Taxes required to have been paid by it; and (C) made
adequate provision (or adequate provision has been made on its behalf)
for all accrued Taxes not yet due. The accruals and provisions for
Taxes reflected in the Company's audited consolidated financial
statements as of December 29, 2001 (and the notes thereto) and the most
recent quarterly financial statements (and the notes thereto) are
adequate in accordance with GAAP for all Taxes accrued or accruable
through the date of such statements.
(ii) There are no material Liens for Taxes upon any property or
assets of the Company or any subsidiary of the Company, except for
Liens for Taxes not yet due or for Taxes which are being contested in
good faith by appropriate proceedings (and for which adequate
provisions have been made in the Company's audited consolidated
financial statements in accordance with GAAP).
(iii) Each of the Company and its subsidiaries has complied in all
material respects with all applicable laws, rules and regulations
relating to the payment and withholding of Taxes and has, within the
time and in the manner prescribed by law, withheld and paid over to the
proper Governmental Entities all material amounts required to be so
withheld and paid over under such applicable laws.
(iv) As of the date of this Agreement, no Federal, state, local
or foreign audits or other administrative proceedings or court
proceedings are presently pending with regard to any Taxes or Tax
Returns of the Company or any of its subsidiaries, and neither the
Company nor any subsidiary of the Company has received a written
notice of any material pending or proposed claims, audits or
proceedings with respect to Taxes.
19
(v) Neither the Company nor any of its subsidiaries has granted
in writing any power of attorney which is currently in force with
respect to any Taxes or Tax Returns.
(vi) Other than in the ordinary course of business, neither the
Company nor any of its subsidiaries has requested an extension of time
within which to file any Tax Return which has not since been filed and
no currently effective waivers, extensions, or comparable consents
regarding the application of the statute of limitations with respect to
Taxes or Tax Returns has been given by or on behalf of the Company or
any of its subsidiaries.
(vii) Neither the Company nor any of its subsidiaries is a party
to any agreement providing for the allocation, sharing or
indemnification of Taxes.
(viii) No deficiency or proposed adjustment which has not been
settled or otherwise resolved for any amount of Tax has been proposed,
asserted, or assessed in writing by any Governmental Entity against, or
with respect to, the Company or any of its subsidiaries. There is no
action, suit or audit now in progress, pending or, to the knowledge of
the Company, threatened against or with respect to the Company or any
of its subsidiaries with respect to any material Tax.
(ix) Neither the Company nor any of its subsidiaries has been
included in any "consolidated," "unitary" or "combined" Tax Return
(other than Tax Returns which include only the Company and any of its
subsidiaries) provided for under the laws of the United States, any
foreign jurisdiction or any state or locality with respect to Taxes for
any taxable year.
(x) No election under Section 341(f) of the Code has been made
by the Company or any of its subsidiaries.
(xi) Neither the Company nor any of its subsidiaries has
constituted either a "distributing corporation" or a "controlled
corporation" (within the meaning of Section 355(a) (1) (A) of the Code)
in a distribution of stock to which Section 355 of the Code (or so much
of Section 356 of the Code as relates to Section 355 of the Code)
applies and which occurred within two years of the date of this
Agreement.
(xii) Neither the Company nor any of its subsidiaries have
agreed, or is required, to make any material adjustment under Section
481 of the Code affecting any taxable year ending after December 31,
1996.
(xiii) Except as disclosed in Section 3.1(j) (xiii) of the Company
Disclosure Schedule, there have not been, within two years of the date
of this Agreement, any (i) redemptions by the Company or any of its
subsidiaries, (ii) transfers or dispositions of property by the Company
or any of its subsidiaries for which the Company or its subsidiary did
not receive adequate consideration, or
20
(iii) distributions to the holders of Company Common Stock with respect
to their stock other than distributions of cash in the ordinary course
of business.
(xiv) No claim has been made in writing by any Governmental
Entities in a jurisdiction where the Company or any of its subsidiaries
does not file Tax Returns that any such entity is, or may be, subject
to taxation by that jurisdiction.
(xv) Each of the Company and each of its subsidiaries has made
available to Parent correct and complete copies of (i) all of their
material Tax Returns filed within the past three years, (ii) all audit
reports, letter rulings, technical advice memoranda and similar
documents issued by a Governmental Entity within the past three years
relating to the Federal, state, local or foreign Taxes due from or with
respect to the Company or any of its subsidiaries, and (iii) any
closing letters or agreements entered into by the Company or any of its
subsidiaries with any Governmental Entities within the past three years
with respect to Taxes.
(xvi) Neither the Company nor any of its subsidiaries has
received any notice of deficiency or assessment from any Governmental
Entity for any amount of Tax that has not been fully settled or
satisfied, and to the knowledge of the Company and its subsidiaries no
such deficiency or assessment is proposed.
(xvii) The Company and its subsidiaries have net operating loss
carryforwards available for Federal, state and local tax purposes
substantially in the amounts and which expire substantially in
accordance with Section 3.1(j) of the Company Disclosure Schedule.
(xviii) For purposes of this Agreement (A) "Tax" or "Taxes" shall
mean (I) any and all taxes, customs, duties, tariffs, imposts, charges,
deficiencies, assessments, levies or other like governmental charges,
including, without limitation, income, gross receipts, excise, real or
personal property, ad valorem, value added, estimated, alternative
minimum, stamp, sales, withholding, social security, occupation, use,
service, service use, license, net worth, payroll, franchise, transfer
and recording taxes and charges, imposed by the Internal Revenue
Service (the "IRS") or any other taxing authority (whether domestic or
foreign including, without limitation, any state, county, local or
foreign government or any subdivision or taxing agency thereof
(including a United States possession)), whether computed on a
separate, consolidated, unitary, combined or any other basis; and such
term shall include any interest, fines, penalties or additional amounts
attributable to, or imposed upon, or with respect to, any such amounts,
(II) any liability for the payment of any amounts described in (I)
above as a result of being a member of an affiliated, consolidated,
combined, unitary, or similar group or as a result of transferor or
successor liability, including, without limitation, Treasury Regulation
1.1502-6 or comparable provision of applicable law, and (III) any
liability for the payment of any amounts as a result of being a party
to any tax sharing agreement or as a result of any obligation to
indemnify any other person with respect to the payment
21
of any amounts of the type described in (I) or (II), and (B) "Tax
Return" shall mean any report, return, document, declaration,
election or other information or filing required to be supplied
to any taxing authority or jurisdiction (foreign or domestic)
with respect to Taxes, including, without limitation, information
returns and any documents with respect to or accompanying
payments of estimated Taxes or requests for the extension of time
in which to file any such report, return, document, declaration
or other information.
(k) Employee Benefit Plans.
(i) Section 3.1(k) of the Company Disclosure Schedule
contains a true and complete list of all pension, stock option,
stock purchase, benefit, welfare, profit-sharing, retirement,
disability, vacation, severance, hospitalization, insurance,
incentive, deferred compensation and other similar fringe or
employee benefit plans, funds, programs or arrangements, whether
written or oral, in each of the foregoing cases which (i) covers,
is maintained for the benefit of, or relates to any or all
current or former employees of the Company and any other entity
("ERISA Affiliate") related to the Company under Section 414(b),
(c), (m) and (o) of the Code and (ii) is not a "multiemployer
plan" as defined in Section 3(37) or Section 4001(a)(3) of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA") or Section 414 of the Code (the "Employee Plans").
Section 3.1(k) of the Company Disclosure Schedule identifies and
includes but is not limited to, each of the Employee Plans that
is subject to Section 302 or Title IV of ERISA or Section 412 of
the Code. Neither the Company nor any ERISA Affiliate of the
Company has any commitment or formal plan, whether or not legally
binding, to create any additional employee benefit plan or modify
or change any existing Employee Plan other than as may be
required by the express terms of such Employee Plan or applicable
law.
(ii) With respect to each Employee Plan that has been
qualified or is intended to be qualified under the Code or that
is an "Employee Benefit Plan" within the meaning of Section 3.3
of ERISA, such Employee Plan has been duly approved and adopted
by all necessary and appropriate action of the Board of Directors
of the Company (or a duly constituted committee thereof), and,
with respect to each Employee Plan, the Company heretofore has
delivered or made available to Parent, including the last three
years for which such documents were prepared and/or filed, as
appropriate and to the extent applicable, complete and correct
copies of each of the following documents:
(A) the Employee Plan and any amendments thereto (or if
the Employee Plan is not a written Employee Plan, a description
thereof);
(B) the most recent annual report, (including all
Schedules attached thereto), independent accountant's report,
actuarial report, if required under ERISA, and the most recent
report prepared with respect thereto in accordance with Statement
of Financial Accounting Standards No. 87;
22
(C) the Summary Plan Description and summaries of
material modifications and all modifications thereto communicated
to employees with respect thereto;
(D) if the Employee Plan is funded through a trust or
any third party funding vehicle, the trust or other funding
agreement and the financial statements thereof;
(E) the most recent determination letter received from
the Internal Revenue Service with respect to each Employee Plan
intended to qualify under Sections 401 and/or 501(c)(9) of the
Code; and
(F) any pending favorable determination letter
applications filed with the Internal Revenue Service, together
with all attachments thereto and all subsequent correspondence
and communications with regard to such application.
(iii) With respect to the Employee Plans, all required
contributions for all periods ending before the Closing Date have
been or will be paid in full by the Closing Date. Subject only to
normal retrospective adjustments in the ordinary course, all
required insurance premiums, including, but not limited to,
premiums to the Pension Benefit Guaranty Corporation (the
"PBGC"), have been or will be paid in full with regard to such
Employee Plans for policy years or other applicable policy
periods ending on or before the Closing Date by the Closing Date.
As of the date hereof, none of the Employee Plans has unfunded
benefit liabilities, as defined in Section 4001(a)(16) of ERISA.
(iv) Section 3.1(k) of the Company Disclosure Schedule
contains a true and complete list of all "multi-employer plans,"
as defined in Section 3(37) or Section 4001(a)(3) of ERISA or
Section 414, that the Company and/or any ERISA Affiliate
contributes to, or is or was obligated to contribute to, during
the five-year period prior to the date hereof (the
"Multi-Employer Plans"). Neither the Company nor any ERISA
Affiliate has incurred or expects to incur any withdrawal
liability to any Multi-Employer Plan in connection with any
complete or partial withdrawal from such plan occurring on or
before the Closing Date. No condition exists and no event has
occurred with respect to any Multi-Employer Plan that presents a
material risk of a complete or partial withdrawal under Title IV
of ERISA. The Company and each ERISA Affiliate have made all
required contributions to all Multi-Employer Plans. To the
knowledge of the Company, neither the Company nor any ERISA
Affiliate has incurred any reduction in contribution base units
which, if continued, would result in a partial withdrawal from a
multi-employer plan.
(v) With respect to each Employee Plan (i) no prohibited
transactions as defined in Section 406 of ERISA or Section 4975
of the Code have occurred or are expected to occur as a result of
the Merger or the transactions contemplated by this Agreement,
(ii) no action, suit, grievance, arbitration or other type of
23
litigation, or claim with respect to the assets of any Employee
Plan (other than routine claims for benefits made in the ordinary
course of plan administration for which plan administrative
review procedures have not been exhausted) is pending or, to the
knowledge of the Company, threatened or imminent against the
Company, any ERISA Affiliate or any fiduciary, as such term is
defined in Section 3(21) of ERISA ("Fiduciary"), including, but
not limited to, any action, suit, grievance, arbitration or other
type of litigation, or claim regarding conduct that allegedly
interferes with the attainment of rights under any Employee Plan
and (iii) the Company has no knowledge of any facts which would
give rise to or could give rise to any such actions, suits,
grievances, arbitration or other type of litigation, or claims
with respect to any Employee Plan. To the knowledge of the
Company, neither the Company, nor its directors, officers,
Employees or any Fiduciary has any liability for failure to
comply with ERISA or the Code for any action or failure to act in
connection with the administration or investment of such plan.
None of the Employee Plans is subject to any pending
investigations or to the knowledge of the Company threatened
investigations from any Governmental Agencies who enforce
applicable laws under ERISA and the Code.
(vi) Each of the Employee Plans is, and has been, operated
in accordance with its terms and each of the Employee Plans, and
administration thereof, is, and has been, in all material
respects in compliance with the requirements of any and all
applicable statutes, orders or governmental rules or regulations
currently in effect, including, but not limited to, ERISA and the
Code. All required reports and descriptions of the Employee Plans
(including but not limited to Form 5500 Annual Reports, Form 1024
Application for Recognition of Exemption Under Section 501(a),
Summary Annual Reports and Summary Plan Descriptions) have been
timely filed and distributed as required by ERISA and the Code.
Any notices required by ERISA or the Code or any other state or
federal law or any ruling or regulation of any state or federal
administrative agency with respect to the Employee Plans,
including but not limited to any notices required by Section
204(h), Section 606 or Section 4043 of ERISA or Section 4980B of
the Code, have been appropriately given.
(vii) The IRS has issued a favorable determination letter
with respect to each Employee Plan intended to be "qualified"
within the meaning of Section 401(a) of the Code that has not
been revoked and, to the knowledge of the Company, no
circumstances exist that could adversely affect the qualified
status of any such plan and the exemption under Section 501(a) of
the Code of the trust maintained thereunder. Each Employee Plan
intended to satisfy the requirements of Section 125, 501(c)(9) or
501(c)(17) of the Code has satisfied such requirements in all
material respects.
(viii) With respect to each Employee Plan to which the
Company or any ERISA Affiliate made, or was required to make,
contributions on behalf of any Employee during the five-year
period ending on the last day of the most recent plan year end
prior to the Closing Date, (a) no liability under Title IV or
Section 302 of ERISA has been incurred by the Company or any
ERISA Affiliate that has
24
not been satisfied in full, and (b) to the knowledge of the
Company, no condition exists that presents a material risk to the
Company or any ERISA Affiliate of incurring any such liability,
other than liability for premiums due to the PBGC and (c) the
present value of accrued benefits under such plan, based upon the
actuarial assumptions used for funding purposes in the most
recent actuarial report prepared by such plan's actuary with
respect to such plan did not exceed, as of its latest valuation
date, the then current value of the assets of such plan allocable
to such accrued benefits. No Employee Plan or any trust
established thereunder has incurred any "accumulated funding
deficiency" (as defined in Section 302 of ERISA and Section 412
of the Code), whether or not waived, as of the last day of the
most recently ended fiscal year.
(ix) No Employee Plan provides medical, surgical,
hospitalization, death or similar benefits (whether or not
insured) for Employees for periods extending beyond their
retirement or other termination of service, other than (i)
coverage mandated by Section 4980B of the Code, Section 601 of
ERISA or other applicable law, (ii) death benefits under any
"pension plan," (iii) benefits the full cost of which is borne by
the Employee (or his beneficiary) or (iv) Employee Plans that can
be amended or terminated by the Company without consent. The
Company does not have any current or projected liability with
respect to post-employment or post-retirement welfare benefits
for retired, former, or current Employees of the Company.
(x) No material amounts payable under the Employee Plans
will fail to be deductible for Federal income tax purposes by
virtue of Section 162(m) of the Code.
(xi) To the extent that the Company or any of its
subsidiaries is deemed to be a fiduciary with respect to any Plan
that is subject to ERISA, the Company or such subsidiary (1)
during the past five years has complied with the requirements of
ERISA and the Code in the performance of its duties and
responsibilities with respect to such employee benefit plan and
(2) has not knowingly caused any of the trusts for which it
serves as an investment manager, as defined in Section 3(38) of
ERISA, to enter into any transaction that would constitute a
"prohibited transaction" under Section 406 of ERISA or Section
4975 of the Code, with respect to any such trusts, except for
transactions that are the subject of a statutory or
administrative exemption.
(xii) No person will be entitled to a "gross up" or other
similar payment in respect of excise taxes under Section 4999 of
the Code with respect to the transactions contemplated by this
Agreement.
(xiii) None of the Employee Plans have been completely or
partially terminated and none has been the subject of a
"reportable event" as that term is defined in Section 4043 of
ERISA (other than events for which the 30-day notice to the PBGC
has been waived). No proceeding by the PBGC to terminate any
Employee Plan pursuant to Title IV of ERISA has been instituted
or, to the
25
knowledge of the Company, threatened. No amendment has been
adopted which would require the Company or any ERISA Affiliate to
provide security pursuant to Section 307 of ERISA or Section
401(a)(29) of the Code.
(xiv) USI Consulting Group, Inc. is a licensed actuarial
consultant.
(l) Labor Matters.
(i) With respect to Employees of the Company and its
subsidiaries: (i) to the knowledge of the Company, no senior
executive or key Employee has any plans to terminate employment
with the Company or any of its subsidiaries; (ii) there is no
unfair labor practice charge or complaint against the Company or
any of its subsidiaries pending or, to the knowledge of the
Company or any of its subsidiaries, threatened before the
National Labor Relations Board or any other comparable
Governmental Entity; (iii) there is no demand for recognition
made by any labor organization or petition for election filed
with the National Labor Relations Board or any other comparable
Governmental Entity; (iv) no grievance or any arbitration
proceeding arising out of or under collective bargaining
agreements is pending and, to the knowledge of Company or any of
its subsidiaries, no claims therefor have been threatened other
than grievances or arbitrations incurred in the ordinary course
of business; (v) the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby and
thereby will not give rise to termination of any existing
collective bargaining agreement or permit any labor organization
to commence or initiate any negotiations in respect of wages,
hours, benefits, severance or working conditions under any such
existing collective bargaining agreements; and (vi) there is no
litigation, arbitration proceeding, governmental investigation,
administrative charge, citation or action of any kind pending or,
to the knowledge of the Company, proposed or threatened against
the Company relating to employment, employment practices, terms
and conditions of employment or wages, benefits, severance and
hours.
(ii) There is no labor dispute, strike, work stoppage or
lockout, or, to the knowledge of the Company or any of its
subsidiaries, threat thereof, by or with respect to any employee
of the Company or any of its subsidiaries.
(iii) None of the Company or any of its subsidiaries has any
collective bargaining relationship or duty to bargain with any
"Labor Organization" (as such term is defined in Section 2(5) of
the National Labor Relations Act, as amended), and none of the
Company nor any of its subsidiaries has recognized any labor
organization as the collective bargaining representative of any
of its employees.
(iv) Section 3.1(l)(iv) of the Company Disclosure Schedule
lists the name, accrued vacation, the place of employment, the
current annual salary rates, bonuses, deferred or contingent
compensation, "golden parachute" and other like benefits paid or
payable (in cash or otherwise) in each of the fiscal years ended
December 29, 2001 and December 28, 2002, the date of employment,
title and job
26
function of each current salaried Employee whose total annual
compensation exceeds $100,000, officer and director of the
Company and of each current consultant or agent of the Company
whose total annual compensation for services provided exceeds
$100,000 who is employed or otherwise engaged by the Company. The
execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby and thereby will not (i)
result in any payment (including severance, unemployment
compensation, tax gross-up, bonus or otherwise) becoming due to
any current or former director, employee or independent
contractor of the Company or any of its subsidiaries, from the
Company or any of its subsidiaries under any Plan, (ii)
materially increase any benefits otherwise payable under any
Plan, or (iii) result in the acceleration of the time of payment,
exercise or vesting of any such benefits.
(v) Section 3.1(l)(v) of the Company Disclosure Schedule
sets forth all contracts, agreements, plans or arrangements
covering any Employee of the Company or its subsidiaries
containing "change of control," "stay-put," transition,
retention, severance or similar provisions, and sets forth the
names and titles of all such Employees, the amounts payable under
such provisions, whether such provisions would become payable as
a result of the Merger and the transactions contemplated by this
Agreement, and when such amounts would be payable to such
Employees, all of which are in writing, have heretofore been duly
approved by the Company's Board of Directors or the compensation
committee thereof, and true and complete copies of all of which
have heretofore been delivered to Parent. Other than as set forth
in Section 3.1(l)(v) of the Company Disclosure Schedule, there
are no contracts, agreements, plans or arrangements (oral or
written) covering any Employee of the Company or its subsidiaries
with "change of control," "stay-put," severance or similar
provisions. There is no contract, agreement, plan or arrangement
(oral or written) covering any Employee of the Company that
individually or collectively could give rise to the payment of
any amount that would not be deductible pursuant to the terms of
Section 280G of the Code. Neither the Company nor any ERISA
Affiliate has incurred any liability under the Worker Adjustment
and Retraining Act or any similar state law relating to
employment termination in connection with a mass layoff, plant
closing or similar event.
(m) Environmental Matters. Except for such matters which would
not, individually or in the aggregate, reasonably be expected to result in a
material adverse effect on the Company and are listed in Section 3.1(m) of the
Company Disclosure Schedule:
(i) the Company has obtained all permits, approvals and
authorizations required under Environmental Laws (hereinafter
"Environmental Permits"), and is and has been in compliance with
all requirements under such Environmental Permits and
Environmental Laws;
(ii) there are no present or past Releases (1) at any
properties currently owned or operated by the Company, (2) at any
properties formerly owned or operated by the Company that are
attributable to the operations of the Company,
27
(3) at any facility that received Hazardous Substances generated
by the Company or (4) exposure of any persons from a Release
attributable to the operations of the Company that has or would
reasonably be expected to form the basis of any assertion of any
claim under Environmental Laws, against the Company;
(iii) no Lien has been placed or threatened to be placed
upon any of the current or, to the Company's knowledge, past
Company Properties under any Environmental Law that is
attributable to the operations of the Company;
(iv) there has been no environmental investigation, study,
audit, test, review or other analysis conducted in relation to
any of the current operations or Company Properties or any other
operations or properties or facilities of the Company or its
subsidiaries, now or to the Company's knowledge, previously owned
or leased by the Company, which is in the possession or control
of the Company and has not been delivered to the Parent at least
ten (10) days prior to the date hereof;
(v) no Environmental Law imposes any obligation upon the
Company arising out of or as a condition to any transaction
contemplated by this Agreement, including any requirement to
modify or transfer any Environmental Permits, any requirement to
file any notice or other submission with a Governmental Entity,
the placement of any notice, restriction, acknowledgment or
covenant in any land records, or the modification of or provision
of notice under any agreement, consent order or consent decree;
(vi) the Company has not entered into or agreed to, nor
does any of them contemplate entering into, any consent decree or
order in respect of the business of the Company or its
subsidiaries, or any of the Company Properties, and none of them
is subject to any court order relating to compliance with, or
addressing the presence of Hazardous Substances on or under, any
Environmental Laws in respect of the business of the Company, or
any of the Company Properties;
(vii) no underground storage tanks, Hazardous Substances,
asbestos-containing materials or polychlorinated biphenyls are
present on the Company Properties in a condition which materially
violates applicable Environmental Laws;
(viii) with respect to the Company Properties and any other
property formerly owned, used or operated by the Company, the
Company has neither received nor has knowledge of any basis for
(i) any written notice, citation, summons, complaint or order
from any Governmental Entity alleging a material violation of any
Environmental Law attributable to the operations of the Company,
(ii) any notice, citation, summons, complaint or order from any
Governmental Entity alleging failure of the business of the
Company to obtain any Environmental Permits; and
28
(ix) in addition, the Company has no knowledge of:
(A) any violation of or liability under any
Environmental Laws or Environmental Permits attributable to the
operations of the Company;
(B) as of the date hereof, the institution, pendency
or threat of any suit, action, claim or proceeding in connection
with any violation or liability under any Environmental Laws or
Environmental Permits attributable to the operations of the
Company; or
(C) any request, claim, suit or requirement seeking
payment for, response to, or remediation of Hazardous Substances
at or arising from any of the Company Properties, or other
properties formerly owned or operated by the Company attributable
to the operations of the Company, or at properties used for the
storage, transportation or disposal of Hazardous Substances
generated by the Company.
(x) In addition, the Company makes the following special
respresentations:
(A) The Company no longer owns or has any interest in
the facility known as 000 Xxxxx Xxxxxx or 000 Xxxxx Xxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxx 00000 and which is fully described in legal
terms in Exhibit A to the agreement for the sale and purchase of
project dated June 14, 1993 between the Company and Xxxxxx,
Peabody & Co., Inc. (the "Facility");
(B) The Company has no knowledge, has received no
notice and otherwise is not aware of any action, fact, event or
circumstance regarding, or that reasonably could be likely to
form the basis of, any litigation, proceeding or claim (or any
threat thereof) regarding or referencing material violations of
Environmental Laws or any liability relating to Releases of
Hazardous Substances at the Facility; and
(C) To the Company's knowledge, during the time the
Company owned the Facility, the Facility's environmental
condition complied in all material respects with Environmental
Laws, and the Company has not received any notice and is not
aware of any action, fact, event or circumstance to the contrary.
(xi) As used in this Agreement:
(A) "Environmental Laws" shall mean any and all
binding and applicable local, municipal, state, federal or
international law, statute, treaty, directive, decision,
judgment, award, regulation, decree, rule, code of practice,
guidance, order, direction, consent, authorization, permit or
similar requirement, approval or standard concerning (1)
occupational, consumer and/or public health and safety, and/or
(2) environmental matters (including clean-up standards and
practices), with respect to buildings, equipment, soil,
sub-surface strata, air,
29
surface water, or ground water, whether set forth in applicable
law or applied in practice, whether to facilities such as those
of the Company Properties in the jurisdictions in which the
Company Properties are located or to facilities such as those
used for the transportation, storage or disposal of Hazardous
Substances generated by the Company and/or its subsidiaries or
otherwise.
(B) "Hazardous Substances" shall mean any and all
dangerous substances, hazardous substances, toxic substances,
radioactive substances, hazardous wastes, special wastes,
controlled wastes, oils, petroleum and petroleum products,
hazardous chemicals and any other materials which are regulated
by the Environmental Laws or otherwise found or determined to be
potentially harmful to human health or the environment.
(C) "Release" shall mean any spilling, leaking,
pumping, emitting, emptying, discharging, injecting, escaping,
leaching, migrating, dumping or disposing of Hazardous Substances
(including the abandonment or discarding of barrels, containers
or other closed receptacles containing Hazardous Substances) into
the environment.
As used in this Section 3.1(m) only (and for no other
purpose of this Agreement), the term "Company" shall be deemed to
mean the Company and each of its subsidiaries, together with all
predecessors-in-interest thereto, whether by operation of law,
assignment, sale, purchase, transfer or otherwise.
(n) Intellectual Property.
(i) Section 3.1(n) (i) of the Company Disclosure Schedule
sets forth, for the Intellectual Property (as defined below)
owned by the Company or any of its subsidiaries, a complete and
accurate list of all U.S. and foreign (A) patents and patent
applications, (B) trademark or service xxxx registrations and
applications, (C) copyright registrations and applications, and
(D) Internet domain names. The Company or one of its subsidiaries
owns or has the valid right to use all patents and patent
applications, trademarks, service marks, trademark or service
xxxx registrations and applications, trade names, logos, designs,
Internet domain names, slogans and general intangibles of like
nature, together with all goodwill related to the foregoing,
copyrights, copyright registrations, renewals and applications,
Software (as defined below), technology, trade secrets and other
confidential information, know-how, proprietary processes,
formulae, algorithms, models and methodologies, licenses,
agreements and all other proprietary rights (collectively, the
"Intellectual Property"), used in the business of the Company as
it currently is conducted. "Software" means any and all (A)
computer programs, including any and all software implementations
of algorithms, models and methodologies, whether in source code
or object code, (B) databases and compilations, including any and
all data and collections of data, whether machine readable or
otherwise, (C) descriptions, flow-charts and other work product
used to design, plan, organize and develop any of the foregoing,
(D) the technology supporting and content contained on any owned
or operated Internet site(s), and
30
(E) all documentation, including user manuals and training
materials, relating to any of the foregoing.
(ii) All of the Intellectual Property owned by the Company
or one of its subsidiaries is free and clear of all Liens. The
Company or one of its subsidiaries is listed in the records of
the appropriate United States, state or foreign agency as, the
sole owner of record for each application and registration listed
in Section 3.1(n) (i) of the Company Disclosure Schedule.
(iii) All of the registrations listed in Section 3.1(n) (i)
of the Company Disclosure Schedule are valid, subsisting,
enforceable, in full force and effect, and have not been
cancelled, expired, abandoned or otherwise terminated and all
renewal fees in respect thereof have been duly paid and are
currently in compliance with all formal legal requirements
(including the timely post-registration filing of affidavits of
use and incontestability and renewal applications). There is no
pending or, to the Company's knowledge, threatened opposition,
interference, invalidation or cancellation proceeding before any
court or registration authority in any jurisdiction against the
registrations and applications listed in Section 3.1(n) (i) of
the Company Disclosure Schedule or, to the Company's knowledge,
against any other Intellectual Property used by the Company or
its subsidiaries.
(iv) The conduct of the Company's and its subsidiaries'
business as currently conducted or planned by the Company to be
conducted does not, in any material respect, infringe upon
(either directly or indirectly such as through contributory
infringement or inducement to infringe), dilute, misappropriate
or otherwise violate any Intellectual Property owned or
controlled by any third party.
(v) To the Company's knowledge, no third party is
misappropriating, infringing, diluting, or violating any
Intellectual Property owned by or licensed to or by the Company
or its subsidiaries and no such claims have been made against a
third party by the Company or its subsidiaries.
(vi) Each material item of Software, which is used by the
Company or its subsidiaries in connection with the operation of
their businesses as currently conducted, is either (A) owned by
the Company or its subsidiaries, (B) currently in the public
domain or otherwise available to the Company without the need of
a license, lease or consent of any third party, or (C) used under
rights granted to the Company or its subsidiaries pursuant to a
written agreement, license or lease from a third party.
(o) Insurance Matters. The Company and its subsidiaries have all
material primary, excess, reinsurance and umbrella policies of general
liability, casualty, property, fire, workers' compensation, products liability,
completed operations, employers, liability, health, bonds, earthquake, flood and
other forms of insurance providing insurance coverage that is customary in
amount and scope for other companies in the industry in which the Company and
its subsidiaries operate, are in full force and effect on the date hereof and
shall be kept in full
31
force and effect by the Company through the Effective Time. All such policies,
considered collectively with other such policies providing the same type of
coverage, are sufficient for compliance with all requirements of law and are
sufficient for compliance in all material respects with all requirements under
agreements, plans, commitments and leases to which the Company and its
subsidiaries is a party. With respect to all such policies that are individually
or in the aggregate material to the Company or its subsidiaries, all premiums
currently payable or previously due and payable with respect to all periods up
to and including the Effective Time have been paid to the extent such premiums
are due and payable on or prior to the date hereof and, with respect to premiums
not due or payable at or prior to the date hereof, subject to Section 4.1 of
this Agreement, all premiums due and payable prior to the Effective Time, will
have been paid prior to the Effective Time and no notice of cancellation or
termination has been received with respect to any such policy.
(p) Information Supplied. Neither this Agreement, the Company
Disclosure Schedule nor any other document, schedule, exhibit, certificate or
instrument provided by the Company or any of the Company's subsidiaries or any
of their respective employees or agents to Parent in connection with the
transactions contemplated hereby contains an untrue statement of a material fact
or omits to state a material fact necessary to make the statements contained
therein, not misleading. None of the information supplied or to be supplied by
the Company in writing specifically for inclusion or incorporation by reference
in (i) the Form S-4 will, at the time the Form S-4 becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, not misleading or (ii) the Joint Proxy Statement will, at
the date it is first mailed to the Company's and Parent's respective
stockholders and at the time of the Company Stockholders Meeting and Parent
Stockholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading, except that no representation or warranty is made by the Company
with respect to statements made based on information supplied by Parent
specifically for inclusion or incorporation by reference in the Form S-4 or
Joint Proxy Statement. The Joint Proxy Statement, as it relates to the Company
Stockholders Meeting, will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder.
(q) Transactions with Affiliates. There are no outstanding
amounts payable to or receivable from, or advances by the Company or any of its
subsidiaries to, and neither the Company nor any of its subsidiaries is
otherwise a creditor of or debtor to, any stockholder, director, Employee or
affiliate of the Company or any of its subsidiaries, other than as part of the
normal and customary terms of such persons' employment or service as a director
with the Company or any of its subsidiaries. Neither the Company nor any
subsidiary of the Company is a party to any transaction or agreement with any
affiliate, stockholder, director or executive officer of the Company or any of
its subsidiaries or any material transaction or agreement with any Employee
other than executive officers.
(r) Voting Requirements. The affirmative vote (in person or by
duly authorized and valid proxy at the Company Stockholders Meeting) of the
holders of a majority of the outstanding shares of Company Common Stock in favor
of the adoption of this Agreement (the "Company Stockholder Approval") is the
only vote of the holders of any class or series of
32
the Company's capital stock required by applicable law (including, without
limitation, the DGCL) and the Company's organizational instruments to duly
effect such adoption.
(s) Opinion of Financial Advisor. The Board of Directors of the
Company has received the opinion of Stone Ridge Partners LLC (the "Company
Financial Advisor"), to the effect that, as of the date hereof, the Merger
Consideration is fair to holders of Company Common Stock, from a financial point
of view, and such opinion has not been withdrawn, revoked or modified. A true
and complete copy of such opinion shall be delivered to Parent promptly after
the date hereof.
(t) Brokers. Except for the Company Financial Advisor, whose
fees in connection with the Merger and the transactions contemplated by this
Agreement shall not exceed the amount set forth on Section 3.1(t) of the Company
Disclosure Schedule, no broker, investment banker, financial advisor, finder,
consultant or other person is entitled to any broker's, finder's, financial
advisor's or other similar fee, compensation or commission, however and whenever
payable, in connection with the Merger and the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company. The
Company has delivered to Parent complete and correct copies of such arrangements
and agreements which are set forth as part of the Company Disclosure Schedule.
(u) Takeover Laws. The Company has taken (or caused to have been
taken) and has done (or caused to have been done) all actions and things
necessary to make this Agreement, the Merger and all of the transactions
contemplated hereby and thereby, exempt from or otherwise not subject to the
provisions of any "change-in-control," "fair price," "interested stockholder,"
"business combination," "control share acquisition," "moratorium," "vote
sterilization" and "pre-merger notification" (other than pursuant to the HSR Act
which is not covered by this Section 3.1(u)) and all other anti-takeover laws
(including, without limitation, Section 203 of the DGCL) (collectively, "State
Takeover Laws").
(v) Rights Agreement. The Company and Mellon Investor Services
LLC, in its capacity as Rights Agent, have duly amended the Rights Agreement
with respect to the Rights to purchase Junior Preferred Stock, which Rights have
been issued and presently are associated with and represented by certificates
evidencing the Company Common Stock, to render the Rights Agreement inapplicable
to this Agreement, the Merger and the transactions contemplated hereby and
thereby (including, without limitation, in connection with this Agreement, the
Merger and the transactions contemplated hereby and thereby) to ensure that (i)
none of the Parent, Merger Sub or any of their respective affiliates or
subsidiaries shall become or be deemed to be an "Acquiring Person" or an
"Interested Stockholder" (as such terms are defined in the Rights Agreement),
and (ii) no "Distribution Date," "Shares Acquisition Date" or "Triggering Event"
(as such terms are defined in the Rights Agreement) shall occur, and that the
Rights shall not detach or separate from the associated underlying shares of
Company Common Stock or provide the holders thereof the right to acquire any
securities of any person, or any interest therein or right thereto, in each case
as a result of (x) the execution, delivery or performance of this Agreement or
the consummation of the Merger and the transactions contemplated hereby or
thereby, or (y) the public announcement thereof (the amendments referred to
above being hereinafter collectively referred to as, the "Rights Agreement
Amendments"). Other than as set forth in this Section 3.1(v), the Rights
Agreement, as so amended, has not been further amended or modified,
33
and shall not be further amended or modified, except as may be requested by the
Parent or the Merger Sub to effectuate the provisions of this Section 3.1(v).
Complete and correct copies of the Rights Agreement and all amendments thereto
(including the Rights Agreement Amendments), have been provided to the Parent
and Merger Sub.
(w) Real Property.
(i) (A) Section 3.1(w)(i)(A) of the Company Disclosure
Schedule sets forth a complete list of all real property owned by
the Company or its subsidiaries as of the date hereof
(individually, an "Owned Property" and collectively, the "Owned
Properties") as well as all contracts, agreements or options to
acquire other real property, or to sell or lease Owned Property,
in each case binding on the Company or any of its subsidiaries,
and (B) Section 3.1(w)(i)(B) of the Company Disclosure Schedule
sets forth a complete list of all real property leased,
subleased, or otherwise occupied or used by the Company and its
Subsidiaries as lessee (individually, a "Leased Property" and
collectively, the "Leased Properties") . The Leased Properties,
together with the Owned Properties are referred to herein
individually as a "Company Property" and collectively as the
"Company Properties". Section 3.1(w)(i)(C) of the Company
Disclosure Schedule sets forth a complete list of all leases and
subleases granting to any person (other than the Company or its
subsidiaries) any right to occupy or use the Company Properties
or any portion thereof (individually, a "Space Lease" and
collectively, the "Space Leases").
(ii) Owned Properties. The Company and its subsidiaries
have good, marketable and insurable fee simple title to all Owned
Properties and all buildings, structures and other improvements
located thereon, free and clear of all Liens, other than the
following permitted Liens ("Permitted Liens")
(A) Any Lien reflected (A) on the Company's and its
subsidiaries' title reports and (B) in Section 3.1(w)(ii) of the
Company Disclosure Schedule;
(B) Liens for Taxes not yet due or delinquent or as
to which there is a good faith dispute and for which there are
adequate provisions on the books and records of the Company in
accordance with GAAP;
(C) with respect to real property, any Lien,
encumbrance or other title defect which is not in a liquidated
amount (whether material or immaterial) and which does not,
individually or in the aggregate, interfere materially with the
current use or materially detract from the value or marketability
of such property (assuming its continued use in the manner in
which it is currently used);
(D) rights of tenants arising under the Space Leases;
and
(E) inchoate materialmen's, mechanics', carriers',
workmen's and repairmen's liens arising in the ordinary course
and not past due and payable
34
or the payment of which is being contested in good faith by
appropriate proceedings.
(iii) Real Property Leases.
(A) Either the Company or its subsidiaries have
valid, binding and enforceable leasehold interests in and to the
Leased Properties and all improvements demised pursuant to the
leases, licenses and occupancy agreements listed in Section
3.1(w)(iii) of the Company Disclosure Schedule (each, a "Real
Property Lease" and collectively, the "Real Property Leases").
(B) Each of the Real Property Leases is in full force
and effect; the Company or a subsidiary thereof holds a valid
leasehold interest in, and actual and exclusive possession of,
the Leased Properties subject thereto, free and clear of all
Liens of any nature whatsoever, except Permitted Liens.
(C) Neither the Company nor any of its subsidiaries
has received any notification that it is in default with respect
to any Real Property Leases which default remains uncured.
(D) The Company and its subsidiaries are not in
material breach or default in respect of any Real Property Lease,
and to their knowledge no event has occurred which, with due
notice or lapse of time or both, could constitute such a material
breach or default, except for such obligations, the
non-performance of which, and such breaches or defaults, the
existence of which, in each case, would not result in a
termination or cancellation of any Real Property Lease.
(E) The base monthly rents, percentage rents, real
estate taxes contributions and common area maintenance
contributions, due and payable under each Real Property Lease for
the month of February 2003, as same may be subject to adjustment
pursuant to the terms of each Real Property Lease, are set forth
in Section 3.1(w)(iii) of the Company Disclosure Schedule.
(iv) Space Leases.
(A) The Company has heretofore delivered to Parent
true, correct and complete copies of all Space Leases.
(B) Each Space Lease is valid, binding and in full
force and effect.
(v) All of the buildings, fixtures and improvements
included on or in the Company Properties and owned or leased by
the Company and its Subsidiaries are in satisfactory condition
and repair for the continued use of the Company Properties in the
ordinary course of business consistent with past practices.
35
(vi) To the Company's knowledge and without inquiry (i)
all certificates of occupancy necessary for the current use and
operation of each Company Property have been issued and are in
full force and effect, and (ii) the use of the Company Properties
is in conformity with such certificates of occupancy in all
material respects.
(vii) There does not exist any actual or, to the knowledge
of the Company, threatened or contemplated condemnation or
eminent domain proceedings that affect any Company Property or
any material part thereof.
(viii) Neither the Company nor any of its subsidiaries holds
a contractual right to purchase or acquire any material real
estate interest and no person or entity has any option, right of
first refusal or other contractual right to acquire title to the
Company Properties or any portion thereof or interest therein.
(ix) To the Company's knowledge, the current use and
occupancy of the Company Properties and the improvements located
thereon are not in violation of any material recorded covenants,
conditions, restrictions, reservations, easements or agreements
affecting the Company Properties.
(x) To the Company's knowledge, each improvement located
on the Company Properties which is material to its operation has
sufficient access to public roads directly or by means of a valid
private easement.
(xi) All water, gas and other utilities are sufficient to
enable the Company Properties to continue to be used and operated
in the ordinary course of business consistent with past
practices. With respect to the Owned Properties, said utilities
either enter the premises through adjoining public streets or, if
they pass through adjoining private land, do so in accordance
with legal, valid and enforceable permanent public or private
easements which will inure to the benefit of the Parent, its
successors and assigns.
(x) Tangible Personal Property. Except as would not materially
impair the Company and its operations or the operations of its subsidiaries, the
machinery, equipment, furniture, fixtures and other tangible personal property
(the "Tangible Personal Property") owned, leased or used by the Company or any
of its subsidiaries is in the aggregate sufficient and adequate to carry on
their respective businesses in all material respects as presently conducted and
is, in the aggregate and in all material respects, in good operating condition
and repair, normal wear and tear excepted. The Company and its subsidiaries are
in possession of and have good title to, or valid leasehold interests in or
valid rights under contract to use, the Tangible Personal Property material to
the Company and its subsidiaries, taken as a whole, free and clear of all Liens,
other than Permitted Liens.
(y) Investment Company. Neither the Company nor any of its
subsidiaries is an investment company required to be registered as an investment
company pursuant to the Investment Company Act.
36
(z) Board Approval. Pursuant to meetings duly noticed and
convened in accordance with all applicable laws and at each of which a quorum
was present, the Board of Directors of the Company, after full and deliberate
consideration, unanimously has (i) duly approved this Agreement and resolved
that the Merger and the transactions contemplated hereby are fair to, advisable
and in the best interests of the Company's stockholders, and (ii) resolved to
unanimously make the Company Recommendation, and directed that the Merger be
submitted for consideration by the holders of Company Common Stock at the
Company Stockholders' Meeting for such purpose.
(aa) Foreign Corrupt Practices and International Trade Sanctions;
Internal Controls.
(i) Neither the Company, nor any of its subsidiaries, nor
any of their respective directors, officers, agents, employees or
any other persons acting on their behalf has, in connection with
the operation of their respective businesses, (A) used any
corporate or other funds for unlawful contributions, payments,
gifts or entertainment, or made any unlawful expenditures
relating to political activity to government officials,
candidates or members of political parties or organizations, or
established or maintained any unlawful or unrecorded funds in
violation of Section 104 of the Foreign Corrupt Practices Act or
any other similar applicable foreign, federal or state law, (B)
paid, accepted or received any unlawful contributions, payments,
expenditures or gifts, or (C) violated or operated in
noncompliance with any export restrictions, anti-boycott
regulations, embargo regulations or other applicable domestic or
foreign laws and regulations, except in each case those
violations or lack of compliance which would not have a material
adverse effect on the Company.
(ii) Each of the Company and the subsidiaries maintains
accurate books and records reflecting its assets and liabilities
and maintains proper and adequate internal accounting controls
which provide assurance that (i) transactions are executed with
management's authorization; (ii) transactions are recorded as
necessary to permit preparation of the consolidated financial
statements of the Company and to maintain accountability for the
Company's consolidated assets; (iii) access to the Company's
assets is permitted only in accordance with management's
authorization; (iv) the reporting of the Company's assets is
compared with existing assets at regular intervals; and (v)
accounts, notes and other receivables and inventory are recorded
accurately, and proper and adequate procedures are implemented to
effect the collection thereof on a current and timely basis. The
Company heretofore has provided to Parent complete and correct
copies of all certifications filed with the SEC pursuant to
Sections 302 and 906 of SOXA and hereby reaffirms, represents and
warrants directly to Parent and Merger Sub the matters and
statements made in such certificates.
(bb) Suppliers and Customers.
(i) Neither the Company nor any subsidiary has received any
notice or has any reason to believe that any significant supplier
will not sell raw materials,
37
supplies, merchandise and other goods to the Company or any
subsidiary at any time after the Effective Time on terms and
conditions substantially similar to those used in its current
sales to the Company and the subsidiaries, subject only to
general and customary price increases, unless comparable raw
materials, supplies, merchandise or other goods are readily
available from other sources on comparable terms and
conditions.
(ii) Neither the Company nor any of its subsidiaries
is engaged in any dispute with any significant customer and,
to the knowledge of the Company and its subsidiaries, no
significant customer has expressed any intention to suspend,
terminate, materially limit, reduce, change or otherwise
modify its business relations with the Company or any of its
subsidiaries (including, without limitation, giving notice of
any intention to suspend, terminate, materially limit, reduce
or otherwise modify the volume of any purchases or orders from
the Company).
(cc) Accounts Receivable; Inventory. Subject to GAAP reserves
set forth in the unaudited consolidated balance sheet of the Company and its
subsidiaries at December 28, 2002 (the "Unaudited Company Balance Sheet"), all
inventories, accounts and notes receivable of the Company and its subsidiaries
reflected in the Unaudited Company Balance Sheet have arisen in the ordinary
course of business and were not subject to any material discount, vendor margin
agreements, "high/low" holdbacks, contingency, "make whole," chargebacks,
writeoffs, writedowns, "make good", guaranty, return, allowance, claim of offset
or recoupment, counterclaim or Liens (other than Permitted Liens). All accounts
and notes receivable of the Company and its subsidiaries arising subsequent to
the date of the Unaudited Company Balance Sheet through the date of this
Agreement arose in the ordinary course of business and are not subject to any
material discount, vendor margin agreements, "high/low" holdbacks, contingency,
"make whole", chargebacks, writeoffs, writedowns, "make good", guaranty,
discount, return, allowance, claim of offset or recoupment, counterclaim or
Liens (other than Permitted Liens), except for normal GAAP reserves consistent
with past custom and practice. The reserves for doubtful accounts and allowances
set forth on the Unaudited Company Balance Sheet and notes are evaluated by the
Company quarterly and have been established in accordance with past custom and
practice and are substantially adequate to provide for all losses which may be
sustained on realization of the accounts receivable shown on the Unaudited
Company Balance Sheet. The inventories shown on the Unaudited Company Balance
Sheet consisted in all material respects of items of a quantity and quality
usable or saleable in the ordinary course of business. All of such inventories
were acquired in the ordinary course of business and have been replenished in
all material respects in the ordinary course of business consistent with past
custom and practice.
SECTION 3.2 Representations and Warranties of Parent. Except as set
forth on the Disclosure Schedule delivered by Parent to the Company prior to the
execution of this Agreement which is incorporated by reference in and
constitutes an integral part of this Agreement (the "Parent Disclosure
Schedule") and making specific reference to the particular subsection(s) of this
Agreement to which exception is being taken or as set forth in the Parent's
Annual Report on Form 10-K for its fiscal year ended January 31, 2002 and any
other periodic Exchange Act reports filed by Parent with the SEC since April 25,
2002 (in which case specific
38
reference thereto shall be made in the Parent Disclosure Schedule), Parent
hereby represents and warrants to the Company as follows:
(a) Organization, Standing and Corporate Power.
(i) Each of Parent, its subsidiaries and Merger Sub
is a corporation or other legal entity duly organized, validly
existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite
corporate or other power, as the case may be, and requisite
authority to carry on its business as presently being
conducted. Each of Parent and its subsidiaries is duly
qualified or licensed to do business and is in good standing
in each jurisdiction in which the nature of its business or
the ownership, leasing or operation of its properties makes
such qualification or licensing necessary, except for those
jurisdictions where the failure to be so qualified or licensed
or to be in good standing individually or in the aggregate
would not reasonably be expected to have a material adverse
effect on Parent or the applicable subsidiary.
(ii) Merger Sub is a newly formed corporation with no
material assets or liabilities, except for liabilities arising
under this Agreement. Merger Sub will not conduct any business
or activities other than the issuance of its capital stock to
Parent prior to the Merger.
(b) Capital Structure. The authorized capital stock of Parent
consists of 30,000,000 shares of common stock, $.01 par value (the "Parent
Common Stock"), and 1,000,000 shares of preferred stock, par value $0.01 per
share, of Parent ("Parent Authorized Preferred Stock"). As of January 30, 2003:
(i) 6,425,641 shares of Parent Common Stock were issued and outstanding; (ii) no
shares of Parent Common Stock were held by Parent in its treasury; (iii) no
shares of Parent Common Stock were held by subsidiaries of Parent; (iv)
approximately 2,500,000 shares of Parent Common Stock were reserved for issuance
pursuant to the stock-based plans identified in Section 3.2(b) of the Parent
Disclosure Schedule (such plans, collectively, the "Parent Stock Plans"), of
which approximately 1,488,634 shares are subject to outstanding employee stock
options or other rights to purchase or receive Parent Common Stock granted under
the Parent Stock Plans (collectively, "Parent Employee Stock Options"); and (v)
no shares of Parent Common Stock are reserved for issuance pursuant to
convertible securities. All outstanding shares of capital stock of Parent are,
and all shares thereof which may be issued pursuant to this Agreement or
otherwise will be, when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive or any similar rights. Except as set
forth in this Section 3.2(b) and except for changes since January 30, 2003
resulting from the issuance of shares of Parent Common Stock pursuant to the
Parent Stock Plans or Parent Employee Stock Options and other rights referred to
in this Section 3.2(b), as of the date hereof, (x) there are not issued,
reserved for issuance or outstanding (A) any shares of capital stock or voting
securities or other ownership interests of Parent, (B) any securities of Parent
or any Parent subsidiary convertible into or exchangeable or exercisable for
shares of capital stock or voting securities or other ownership interests of
Parent, (C) any warrants, calls, options or other rights to acquire from Parent
or any Parent subsidiary, and any obligation of Parent or any Parent subsidiary
to issue, any capital stock, voting securities or securities convertible into or
exchangeable or exercisable for capital stock or voting securities or other
ownership interests of
39
Parent, and (y) there are no outstanding obligations of Parent or any Parent
subsidiary to repurchase, redeem or otherwise acquire any such securities or to
issue, deliver or sell, or cause to be issued, delivered or sold, any such
securities. There are no outstanding (A) securities of Parent or any Parent
subsidiary convertible into or exchangeable or exercisable for shares of capital
stock or other voting securities or other ownership interests in any Parent
subsidiary, (B) warrants, calls, options or other rights to acquire from Parent
or any Parent subsidiary, and any obligation of Parent or any Parent subsidiary
to issue, any capital stock, voting securities or other ownership interests in,
or any securities convertible into or exchangeable or exercisable for any
capital stock, voting securities or ownership interests in, any Parent
subsidiary or (C) obligations of Parent or any Parent subsidiary to repurchase,
redeem or otherwise acquire any such outstanding securities of Parent
subsidiaries or to issue, deliver or sell, or cause to be issued, delivered or
sold, any such securities. Except for the Voting Agreement, there are no voting
trusts or other agreements or understandings to which the Parent or any of its
subsidiaries is a party or, to the knowledge of Parent, any Major Shareholder is
a party, with respect to the voting of the capital stock of Parent or any of the
subsidiaries.
(c) Authority; Noncontravention. Each of Parent and Merger Sub
has all requisite corporate power and authority to enter into this Agreement
and, subject, in the case of the issuance of the Parent Common Stock in the
Merger, to the Parent Stockholder Approval, to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement by
Parent and Merger Sub and the consummation by Parent and Merger Sub of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of Parent and Merger Sub, respectively,
subject, in the case of the issuance of the Parent Common Stock in the Merger,
to the Parent Stockholder Approval. This Agreement has been duly executed and
delivered by each of Parent and Merger Sub, and, assuming the due authorization,
execution and delivery hereof by the Company, constitutes the legal, valid and
binding obligations of Parent and Merger Sub, respectively, enforceable against
Parent and Merger Sub, respectively, in accordance with their terms, except that
(i) such enforceability may be subject to applicable bankruptcy, insolvency,
fraudulent conveyance or other similar laws now or hereafter in effect affecting
creditors' rights and remedies generally and (ii) the availability of the remedy
of specific performance or injunction or other forms of equitable relief may be
subject to equitable defenses and could be subject to the discretion of the
courts for which any proceeding therefor may be brought.
The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby and compliance with the
provisions of this Agreement will not, conflict with, or result in any
violation, forfeiture or termination of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right of forfeiture,
termination, cancellation or acceleration (with or without notice or lapse of
time, or both) of any obligation or loss of a benefit or, in the case of clause
(iii) below, any material obligation or loss of a material benefit, under, or
result in the creation or imposition of any Lien upon any of the properties or
assets of Parent or any of its subsidiaries under, (i) the certificate of
incorporation or by-laws of Parent, (ii) the certificate of incorporation or
by-laws of the comparable organizational documents of any of its significant
subsidiaries or Merger Sub, (iii) any loan or credit agreement, note, bond,
mortgage, indenture, lease, vendor agreement, capital lease, software agreement,
permit, concession, franchise, license or other agreement or instrument or
similar authorization applicable to Parent or any of its subsidiaries or their
respective properties or assets or (iv)
40
subject to the governmental filings and other matters referred to in the
following sentence, any judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to Parent or any of its subsidiaries or their
respective properties or assets, other than, in the case of clause (iv), any
such conflicts, violations, defaults, rights, losses or Liens that individually
or in the aggregate would not (x) reasonably be expected to have a material
adverse effect on Parent or (y) reasonably be expected to materially impair or
materially delay the ability of Parent or Merger Sub to perform its obligations
under this Agreement.
No consent, approval, order or authorization of, action by, or in
respect of, or registration, declaration or filing with, any Governmental Entity
is required by or with respect to Parent or any of its subsidiaries in
connection with the execution and delivery of this Agreement by Parent and
Merger Sub or the consummation by Parent and Merger Sub of the transactions
contemplated by this Agreement, except for (1) the filing of a pre-merger
notification and report form by Parent under the HSR Act; (2) the filings with
the SEC of (A) the Form S-4 and the Joint Proxy Statement and (B) such reports
under the Exchange Act as may be required in connection with the Merger, this
Agreement and the transactions contemplated by this Agreement; (3) the filing of
the Certificate of Merger with the Secretary and such filings with Governmental
Entities to satisfy the applicable requirements of the laws of states in which
Parent and its subsidiaries are qualified or licensed to do business or state
securities or "blue sky" laws; and (4) such filings with and approvals of Nasdaq
to permit the shares of Parent Common Stock to be issued in the Merger to be
qualified for listing on Nasdaq, subject to official notice of issuance.
(d) Parent Documents. Since January 31, 2000, Parent has timely
filed (giving effect for this purpose to permissible extensions pursuant to Rule
12b-25 under the Exchange Act, to the extent the filing deadline as so extended
was satisfied) all reports, schedules, forms, information statements and other
documents (including exhibits) required to be filed by Parent with the SEC
(together with all certifications required pursuant to SOXA, the "Parent SEC
Documents"). As of their respective filing dates, (i) the Parent SEC Documents
complied in all material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Parent SEC Documents, and (ii) no Parent SEC
Documents, as of their respective dates, except as amended or supplemented by a
subsequently filed Parent SEC Document, contained, and no Parent SEC Document
filed subsequent to the date hereof will contain as of their respective dates,
any untrue statement of a material fact or omitted, and no Parent SEC Document
filed subsequent to the date hereof will omit as of their respective dates, to
state a material fact required to be stated therein or necessary to make the
statements therein (in the case of registration statements of the Parent under
the Securities Act, in light of the circumstances under which they were made)
not misleading.
The financial statements of Parent included in the Parent SEC
Documents (including the related notes) complied as to form, as of their
respective dates of filing with the SEC, in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with GAAP
(except, in the case of unaudited statements, as permitted by Quarterly Report
Form l0-Q of the SEC) applied on a consistent basis during the periods and at
the dates involved (except as may be indicated in the notes thereto) and fairly
present the consolidated financial condition of Parent
41
and its subsidiaries at the dates thereof and the consolidated results of
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to notes and normal year-end audit adjustments that were
not, or with respect to any such financial statements contained in any Parent
SEC Documents to be filed subsequently to the date hereof are not reasonably
expected to be, material in amount or effect). Except (A) as reflected in
Parent's unaudited balance sheet as of October 31, 2002 or liabilities described
in any notes thereto (or liabilities for which neither accrual nor footnote
disclosure is required pursuant to GAAP) or (B) for liabilities incurred in the
ordinary course of business since October 31, 2002 consistent with past practice
or in connection with this Agreement or the transactions contemplated hereby,
neither Parent nor any of its subsidiaries has any material liabilities or
obligations of any nature. Deloitte & Touche LLP, who have expressed their
opinion with respect to the financial statements of the Parent and its
subsidiaries included in Parent SEC Documents (including the related notes), are
independent public or certified public accountants as required by the Securities
Act and the Exchange Act.
Each of the Parent, its directors and its senior financial
officers has consulted with the Parent's independent auditors and with the
Parent's outside counsel with respect to, and (to the extent applicable to the
Parent) is familiar in all material respects with all of the requirements of,
SOXA. The Parent is in compliance with the provisions of SOXA applicable to it
as of the date hereof and has implemented such programs and has taken reasonable
steps, upon the advice of the Parent's independent auditors and outside counsel,
respectively, to ensure Parent's future compliance (not later than the relevant
statutory and regulatory deadlines therefor) with all provisions of SOXA which
shall become applicable to the Parent after the date hereof. All financial
projections and forecasts heretofore furnished to the Company were prepared by
the Parent's management in good faith on the basis of reasonable assumptions
(based on the best information and estimates currently available to management
when made).
(e) Information Supplied. Neither this Agreement, the Parent
Disclosure Schedule nor any other document, schedule, exhibit, certificate or
instrument provided by the Parent, any of the Parent's subsidiaries, Merger Sub
or any of their respective employees or agents to the Company in connection with
the transactions contemplated hereby contains an untrue statement of a material
fact or omits to state a material fact necessary to make the statements
contained therein, not misleading. None of the information supplied or to be
supplied by Parent specifically for inclusion or incorporation by reference in
(i) the Form S-4 will, at the time the Form S-4 becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading or (ii) the Joint Proxy Statement will, at the
date it is first mailed to the Company's and Parent's respective stockholders
and at the time of the Company Stockholders Meeting and Parent Stockholders
Meeting, 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 therein, in light of the circumstances under which they are made, not
misleading, in either case, no representation or warranty is made by Parent with
respect to statements made or incorporated by reference therein based on
information supplied by the Company specifically for inclusion or incorporation
by reference in the Form S-4 or Joint Proxy Statement. The Form S-4 will comply
as to form in all material respects with the requirements of the Securities Act
and the rules and regulations thereunder, and the Joint Proxy Statement, as it
42
relates to the Parent Stockholders Meeting, will comply as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder.
(f) Brokers. Except for Xxxxxx Xxxxxxx & Co., LLC, no broker,
investment banker, financial advisor, finder, consultant or other person is
entitled to any broker's, finder's, financial advisor's or other similar fee,
compensation or commission, however and whenever payable, in connection with the
Merger and the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent or Merger Sub.
(g) Compliance with Applicable Laws.
(i) Each of Parent and its subsidiaries is, and since
January 31, 2000 has been, in compliance in all material respects
with all applicable statutes, laws, regulations, ordinances,
permits, rules, writs, judgments, orders, decrees or arbitration
awards of any Governmental Entity applicable to Parent.
(ii) Neither Parent nor any of its subsidiaries is subject
to any outstanding Restraint or is a party to any commitment
letter or similar undertaking to, or, except as would not have a
material adverse effect on Parent, is subject to any order or
directive by, or is a recipient of any supervisory letter from or
has adopted any resolutions at the request of any Governmental
Entity that restricts in any respect the conduct of its business
or, except as would not have a material adverse effect on Parent,
that in any manner currently relates to its policies, its
management or its business currently (each, a "Parent Regulatory
Agreement"), nor has Parent or any of its subsidiaries or
affiliates (A) to Parent's knowledge, been advised since January
31, 2002 by any Governmental Entity that it is considering
issuing or requesting any Parent Regulatory Agreement or (B) have
knowledge of any pending or threatened regulatory investigation.
(iii) Except for filings with the SEC and filings with
respect to Taxes, which are the subject of Sections 3.2(d) and
3.2(p), respectively, and not covered by this Section
3.2(g)(iii), the Parent and each of its subsidiaries have timely
filed all regulatory reports, schedules, forms, registrations and
other documents, together with any amendments required to be made
with respect thereto, that they were required to file since
January 31, 2000 with each Governmental Entity (the "Other Parent
Documents"), and have timely paid all fees and assessments due
and payable in connection therewith, except where the failure to
make such payments and filings individually or in the aggregate
would not have a material adverse effect on the Parent. There is
no material unresolved violation or exception by any of such
Governmental Entities with respect to any report or statement
relating to any examinations of the Parent or any of its
subsidiaries. No Other Parent Documents, as of their respective
dates, except as amended or supplemented by an Other Parent
Document filed prior to the date hereof, contained, and no Other
Parent Documents filed subsequent to the date hereof will contain
as of their respective dates, any untrue statement of a material
fact or omitted, and no Other Parent Documents filed subsequent
to the date hereof will omit as of their respective dates, to
state a material fact required to be stated
43
therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. The
Parent has delivered or made available to Parent a true and
complete copy of each material Other Parent Document.
(h) Absence of Litigation. There are no pending or, to Parent's
knowledge, threatened litigations, actions, suits, proceedings, investigations
or arbitrations with respect to Parent or any of its subsidiaries or any of
their respective properties that would result in a material adverse effect on
Parent.
(i) Absence of Certain Changes. Except for liabilities incurred
in connection with this Agreement or the transactions contemplated hereby, and
except as disclosed in the Parent SEC Documents filed and publicly available
prior to the date hereof, since January 31, 2002, (A) there has not been any
material adverse change in Parent or any event which either individually or when
aggregated with other event(s) has or reasonably would be expected to have a
material adverse effect on Parent and its subsidiaries taken as a whole or (B)
there are not, to Parent's knowledge, any facts, circumstances or events that
make it reasonably likely that Parent will not be able to fulfill its
obligations under this Agreement in all material respects.
(j) Board Approval. Pursuant to meetings duly noticed and
convened in accordance with all applicable laws and at each of which a quorum
was present, the Board of Directors of Parent, after full and deliberate
consideration, unanimously has (i) duly adopted this Agreement and resolved that
the Merger and the transactions contemplated hereby are in the best interests of
Parent's stockholders, and (ii) resolved unanimously to recommend to all of
Parent's stockholders that they affirmatively vote to approve the issuance of
Parent Common Stock in the Merger at the Parent Stockholders Meeting. The Board
of Directors of Merger Sub unanimously has duly approved this Agreement and has
determined that the Merger is advisable.
(k) Voting Requirements. The affirmative vote (in person or by
duly authorized and valid proxy) at the Parent Stockholders Meeting of the
holders of a majority of the total votes cast on the proposal to approve the
issuance of Parent Common Stock pursuant to the Merger and the transactions
contemplated by this Agreement (the "Parent Stockholder Approval") is the only
vote of the holders of any class or series of the Parent's capital stock
required by applicable law (including the rules and regulations and listing
requirements of Nasdaq) and the Parent's organizational instruments to effect
such approval.
(l) Foreign Corrupt Practices and International Trade Sanctions;
Internal Controls. (i) Neither the Parent, nor any of its subsidiaries, nor any
of their respective directors, officers, agents, employees or any other persons
acting on their behalf has, in connection with the operation of their respective
businesses, (A) used any corporate or other funds for unlawful contributions,
payments, gifts or entertainment, or made any unlawful expenditures relating to
political activity to government officials, candidates or members of political
parties or organizations, or established or maintained any unlawful or
unrecorded funds in violation of Section 104 of the Foreign Corrupt Practices
Act or any other similar applicable foreign, federal or state law, (B) paid,
accepted or received any unlawful contributions, payments, expenditures or
gifts, or (C) violated or operated in noncompliance with any export
restrictions, anti-boycott regulations, embargo regulations or other applicable
domestic or foreign
44
laws and regulations, except in each case those violations or lack of compliance
which would not have a material adverse effect on the Parent.
(ii) Each of the Parent and its subsidiaries maintains
accurate books and records reflecting its assets and liabilities
and maintains proper and adequate internal accounting controls
which provide assurance that (i) transactions are executed with
management's authorization; (ii) transactions are recorded as
necessary to permit preparation of the consolidated financial
statements of the Parent and to maintain accountability for the
Parent's consolidated assets; (iii) access to the Parent's assets
is permitted only in accordance with management's authorization;
(iv) the reporting of the Parent's assets is compared with
existing assets at regular intervals; and (v) accounts, notes and
other receivables and inventory are recorded accurately, and
proper and adequate procedures are implemented to effect the
collection thereof on a current and timely basis. The Parent
heretofore has provided to the Company complete and correct
copies of all certifications filed with the SEC pursuant to
Sections 302 and 906 of SOXA and hereby reaffirms, represents and
warrants to the Company the matters and statements made in such
certificates.
(m) Certain Contracts. Neither the Parent nor any of its
subsidiaries is a party to or bound by or otherwise subject to (a) any "material
contract" (as such term is defined in Item 601(b)(10) of Regulation S-K of the
SEC) or (b) any other agreements the performance or non-performance of which
would have a material adverse effect on the Parent. All material contracts which
Parent or any of its subsidiaries is a party to, bound by or otherwise subject
to are in full force and effect.
(n) Transactions with Affiliates. There are no outstanding
amounts payable to or receivable from, or advances by the Parent or any of its
subsidiaries to, and neither the Parent nor any of its subsidiaries is otherwise
a creditor of or debtor to, any stockholder, director, Employee or affiliate of
the Parent or any of its subsidiaries, other than as part of the normal and
customary terms of such persons' employment or service as a director with the
Parent or any of its subsidiaries. Neither the Parent nor any subsidiary of the
Parent is a party to any transaction or agreement with any affiliate,
stockholder, director or executive officer of the Parent or any of its
subsidiaries or any material transaction or agreement with any Employee other
than executive officers.
(o) Adequate Funds and Authorized Stock. Parent has adequate
cash reserves, borrowing availability under its existing credit facilities
and/or standard and customary senior lender commitments sufficient in the
aggregate to pay the aggregate Cash Consideration (and the aggregate cash
portion of the aggregate Option Consideration) contemplated by Article II of
this Agreement, and Parent has a sufficient number of duly authorized but
unissued shares of Parent Common Stock to issue the maximum number of such
shares contemplated by Article II of this Agreement.
(p) Tax Matters. For purposes of this Section 3.2(p) any
reference to the Parent or the Parent's subsidiaries shall be deemed to include
a reference to the Parent's
45
predecessors or the Parent's subsidiaries' predecessors, respectively, except
where inconsistent with the language of this Section 3.2(p).
(i) Each of the Parent and each of its subsidiaries has
(A) timely filed (or there have been timely filed on its behalf)
with the appropriate Governmental Entities all United States
federal income and other material Tax Returns required to be
filed by it (giving effect to all extensions) and such Tax
Returns are true, correct and complete in all material respects;
(B) timely paid in full (or there has been timely paid in full on
its behalf) all income and other material Taxes required to have
been paid by it; and (C) made adequate provision (or adequate
provision has been made on its behalf) for all accrued Taxes not
yet due. The accruals and provisions for Taxes reflected in the
Parent's audited consolidated balance sheet as of January 31,
2002 (and the notes thereto) and the most recent quarterly
financial statements (and the notes thereto) are adequate in
accordance with GAAP for all Taxes accrued or accruable through
the date thereof.
(ii) There are no material Liens for Taxes upon any
property or assets of the Parent or any subsidiary of the Parent,
except for Liens for Taxes not yet due or for Taxes which are
being contested in good faith by appropriate proceedings (and for
which adequate provisions have been made in the Parent's audited
consolidated financial statements in accordance with GAAP).
(iii) Each of the Parent and its subsidiaries has complied
in all material respects with all applicable laws, rules and
regulations relating to the payment and withholding of Taxes and
has, within the time and in the manner prescribed by law,
withheld and paid over to the proper Governmental Entities all
material amounts required to be so withheld and paid over under
such applicable laws.
(iv) As of the date of this Agreement, no Federal, state,
local or foreign audits or other administrative proceedings or
court proceedings are presently pending with regard to any Taxes
or Tax Returns of the Parent or any of its subsidiaries, and
neither the Parent nor any subsidiary of the Parent has received
a written notice of any material pending or proposed claims,
audits or proceedings with respect to Taxes.
(v) No deficiency or proposed adjustment which has not
been settled or otherwise resolved for any amount of Tax has been
proposed, asserted, or assessed by any Governmental Entity
against, or with respect to, the Parent or any of its
subsidiaries. There is no action, suit or audit now in progress,
pending or, to the knowledge of Parent, threatened against or
with respect to the Parent or any of its subsidiaries with
respect to any Tax.
(vi) Neither the Parent nor any of its subsidiaries has
been included in any "consolidated," "unitary" or "combined" Tax
Return (other than Tax Returns which include only the Parent and
any of its subsidiaries) provided for under the laws of the
United States, any foreign jurisdiction or any state or locality
with respect to Taxes for any taxable year.
46
(vii) No claim has been made in writing by any
Governmental Entities in a jurisdiction where the Parent or any
of its subsidiaries does not file Tax Returns that any such
entity is, or may be, subject to taxation by that jurisdiction.
(viii) Each of the Parent and each of its subsidiaries has
made available to the Company correct and complete copies of (i)
all of their material Tax Returns filed within the past six
years, (ii) all audit reports, letter rulings, technical advice
memoranda and similar documents issued by a Governmental Entity
within the past five years relating to the Federal, state, local
or foreign Taxes due from or with respect to the Parent or any of
its subsidiaries, and (iii) any closing letters or agreements
entered into by the Parent or any of its subsidiaries with any
Governmental Entities within the past five years with respect to
Taxes.
(ix) Neither the Parent nor any of its subsidiaries has
received any notice of deficiency or assessment from any
Governmental Entity for any amount of Tax that has not been fully
settled or satisfied, and to the knowledge of the Parent and its
subsidiaries no such deficiency or assessment is proposed.
(q) Intellectual Property. The Parent or one of its
subsidiaries owns or has the valid right to use all Intellectual Property used
in the business of the Parent as it currently is conducted. The Parent or one of
its subsidiaries is listed in the records of the appropriate United States,
state or foreign agency as the sole owner of record for each Intellectual
Property application and registration material to its business. All of the
material registrations of the Parent are valid, subsisting, enforceable, in full
force and effect, and have not been cancelled, expired, abandoned or otherwise
terminated and all renewal fees in respect thereof have been duly paid and are
currently in compliance with all formal legal requirements (including the timely
post-registration filing of affidavits of use and incontestability and renewal
applications). There is no pending or, to the Parent's knowledge, threatened
opposition, interference, invalidation or cancellation proceeding before any
court or registration authority in any jurisdiction against any material
Intellectual Property used by the Parent or its subsidiaries.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.1 Conduct of Business by the Company. Except as set forth in
Section 4.1 of the Company Disclosure Schedule, as required by applicable law or
regulation and except as otherwise expressly contemplated by this Agreement,
until the earlier of the termination of this Agreement and the Effective Time,
the Company shall, and shall cause its subsidiaries to, carry on their
respective businesses in the usual, regular and ordinary course consistent with
past practice and in compliance with all applicable laws and regulations, pay
their respective debts and Taxes when due, pay or perform their other respective
obligations when due, and, use commercially reasonable efforts consistent with
the terms of this Agreement to preserve intact their current business
organizations and their current business relationships with their respective
suppliers and customers, use all commercially reasonable efforts consistent with
the other terms of this Agreement to keep available the services of their
current officers and employees,
47
including, without limitation, their respective sales and design personnel, and
preserve intact their relationships with those persons having business dealings
with them, all with the goal of preserving unimpaired their goodwill and ongoing
businesses at the Effective Time. Without limiting the generality of the
foregoing, senior officers of Parent and the Company shall meet on a regular
basis to review the financial and operational affairs of the Company and its
subsidiaries, to the extent permitted by applicable law, and the Company shall
give due consideration to Parent's input on such matters, consistent with
Section 4.5 hereof, with the understanding that Parent shall in no event be
permitted to exercise control of the Company prior to the Effective Time. Except
as set forth in Section 4.1 of the Company Disclosure Schedule, as required by
applicable law or regulation and except as otherwise expressly contemplated by
this Agreement or except as previously consented to by Parent in writing, after
the date hereof the Company shall not, and shall not permit any of its
subsidiaries to:
(i) other than dividends and distributions by a direct or
indirect wholly owned subsidiary of the Company to its parent,
(x) declare, set aside or pay any dividends on, make any other
distributions in respect of, or enter into any agreement with
respect to the voting of, any shares of any class or series of
its capital stock, (y) split, combine or reclassify any shares of
any class or series of its capital stock or issue or authorize
the issuance of any other securities in respect of, in lieu of,
or in substitution for, shares of any class or series of its
capital stock, except upon the exercise of Company Stock Options
that are outstanding as of the date hereof in accordance with
their present terms, or (z) purchase, redeem or otherwise acquire
any shares of any class or series of capital stock of the Company
or any of its subsidiaries, other securities thereof or any
rights, warrants or options to acquire any such shares or other
securities (other than the issuance of Company Common Stock upon
the exercise of Company Stock Options that are outstanding on the
date hereof in accordance with their present terms);
(ii) issue, deliver, sell, pledge or otherwise encumber or
subject to any Lien any shares of any class or series of its
capital stock, any other voting securities, including, without
limitation, any restricted shares of Company Common Stock, or any
securities convertible into, or any rights, warrants or options
to acquire, any such shares, voting securities or convertible
securities, including, without limitation, any Company Stock
Options (other than the issuance of Company Common Stock upon the
exercise of Company Stock Options that are outstanding on the
date hereof in accordance with their present terms);
(iii) amend its certificate of incorporation, by-laws or
other organizational instruments and agreements;
(iv) acquire or agree to acquire by merging or
consolidating with, or by purchasing any assets or any equity
securities or indebtedness of, or by any other manner, any
business or any person, or otherwise acquire or agree to acquire
any assets for consideration in excess of $500,000 in any one
transaction or series of related transactions or $1,500,000 in
the aggregate;
48
(v) sell, lease, license, mortgage, exchange, transfer
or otherwise encumber or subject to any Lien or otherwise dispose
of any of its properties or assets other than pursuant to
transactions in the ordinary course of business and consistent
with past practices, or create any security interest in such
assets or properties, except for Permitted Liens;
(vi) incur any indebtedness for borrowed money or issue
any debt securities or assume, guarantee, indemnify or endorse,
or otherwise become directly or indirectly responsible or liable
for the obligations of any person or, other than in the ordinary
course of business, make any loans, advances or capital
contributions to, or investments in, any person other than its
wholly owned subsidiaries and as a result of ordinary advances
and reimbursements to employees and endorsements of banking
instruments;
(vii) change in any material respect its accounting
methods (or underlying assumptions), principles or practices
affecting its assets, liabilities, businesses, inventories, cash
flows, revenue or expense recognition policies, estimates,
accruals, reserves, guarantees, amortization, discounts, returns,
allowances, depreciation, goodwill impairment, consolidation
principles, contingencies, intercompany loans, credit
collections, including, without limitation, any reserving,
renewal, reversal, deferral, valuation or residual method,
practice or policy, in each case, in effect on the date hereof,
except as required by changes in GAAP or regulatory accounting
principles, or change in any material respect any of its methods
of reporting income and deductions for Federal income tax
purposes from those employed in the preparation of the Federal
income tax returns of the Company for the taxable year ending
December 29, 2001, except as required by changes in law or
regulation;
(viii) change in any material respects its investment or
risk management or other similar policies of the Company or any
of its subsidiaries;
(ix) make or change any material Tax election, file any
amended Tax Return, enter into any closing agreement, settle or
compromise any material liability with respect to Taxes, agree to
any material adjustment of any Tax attribute, file any claim for
a refund of Taxes, or consent to any extension or waiver of the
limitation period applicable to any Tax claim or assessment,
provided, that for purposes of this subparagraph (ix), "material"
shall mean affecting or relating to $1,500,000 of taxable income;
(x) create, renew or amend, or take any other action
that may result in the creation, renewal, or amendment, of any
agreement or contract or other binding obligation of the Company
or its subsidiaries containing (A) any non-de minimis restriction
on the ability of the Company and its subsidiaries, taken as a
whole, to conduct its business as it is presently being conducted
or (B) any non-de minimis restriction on the Company or its
subsidiaries engaging in any type or activity or business;
49
(xi) (A) incur any capital expenditures in an annual aggregate
amount in excess of $500,000 or (B) enter into any agreement
obligating the Company to spend more than $500,000 annually, or
$1,000,000 in the aggregate, or undertake any material commitment or
material transaction of the type described in Section 3.1(f) of this
Agreement, other than in the ordinary course of business consistent
with past practice;
(xii) amend or otherwise modify, except in the ordinary course
of business, in any material respect, or violate the terms of any of
the Company Material Contracts or other binding obligations of the
Company or its subsidiaries;
(xiii) alter in any material respect, or enter into any
commitment to alter in any material respect, its interest in any
corporation, association, joint venture, partnership or business
entity in which the Company directly or indirectly holds any equity or
ownership interest on the date hereof (other than in the ordinary
course of business consistent with past practice);
(xiv) (A) grant to any current or former director, executive
officer or other Employee of the Company or its subsidiaries any
increase in compensation, perquisites, bonus or other benefits, except
for salary, wage, bonus or benefit increases to current Employees who
are not executive officers and which are in the ordinary course of
business, consistent with past practice, (B) grant to any such current
or former director, executive officer or other Employee of the Company
any increase in severance or termination pay, (C) enter into, or
amend, or take any action to clarify any provision of, any Employee
Plan or any employment, deferred compensation, thrift, stock option,
pension, welfare, retirement, consulting, severance, medical, trust,
termination or indemnification agreement with any such current or
former director, executive officer or other Employee, or (D) modify
any Company Stock Option;
(xv) except pursuant to agreements or arrangements in effect on
the date hereof and disclosed in writing and provided or made
available to Parent and except for compensation for service as an
officer, Employee or director consistent with past practice, and in
all cases solely to the extent permissible under SOXA, pay, loan or
advance any amount to, or sell, transfer or lease any properties or
assets (real, personal or mixed, tangible or intangible) to, or enter
into any agreement or arrangement with, any of its officers or
directors or any affiliate or the immediate family members or
associates of any of its officers or directors other than compensation
in the ordinary course of business consistent with past practice;
(xvi) agree or consent to any material amendment or modification
of existing agreements with any Governmental Entity in respect of the
operations of its business, except (i) as required by law or (ii) to
effect the consummation of the transactions contemplated hereby;
50
(xvii) pay, discharge, settle, compromise or satisfy any
material claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), including taking any
action to settle or compromise any litigation, action, suit, case,
investigation or proceeding (including, without limitation, those of a
judicial, arbitral or governmental mandate, other than any such
payment, discharge, settlement, compromise or satisfaction in the
ordinary course of business, consistent with past practice or in
accordance with their terms, of liabilities reflected or reserved
against in, or contemplated by, the most recent consolidated financial
statements (or the notes thereto) of the Company included in the
Company Filed SEC Documents, or incurred since September 28, 2002 in
the ordinary course of business consistent with past practice;
(xviii) authorize, or commit or agree to take, any of the
foregoing actions or any other action that would be reasonably likely
to prevent the Company from performing or would be reasonably likely
to cause the Company not to perform its covenants in this Agreement;
(xix) issue any broadly distributed communication of a general
nature to Employees, customers or suppliers (including general
communications relating to benefits and compensation) without the
prior written approval of Parent (which will not be unreasonably
delayed or withheld), except for communications in the ordinary course
of business that do not relate to the Merger or the transactions
contemplated by this agreement;
(xx) create, renew, amend or permit to expire, lapse or
terminate or take any action reasonably likely to result in the
creation, renewal, amendment, expiration, lapse or termination of any
insurance policies referred to in Section 3.1(o); or
(xxi) take any action or fail to take any action which would
result in any of the conditions of Article VI not being satisfied.
SECTION 4.2 Advice of Changes. Each of the Company, as one party, and
Parent and Merger Sub, together as the second party, shall promptly advise the
other party orally and in writing to the extent it has knowledge of (i) any
representation or warranty made by it contained in this Agreement that is
qualified as to materiality becoming untrue or inaccurate in any respect or any
such representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect, (ii) the failure by it to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it under this Agreement; (iii) any suspension, termination, limitation,
modification, change or other alteration of any agreement, arrangement, business
or other relationship with any of the Company's or its subsidiaries' respective
customers, suppliers or sales or design personnel; and (iv) any change or event
having, or which, insofar as reasonably can be foreseen, could have a material
adverse effect on such party or on the accuracy and completeness of its
representations and warranties or the ability of such party to satisfy the
conditions set forth in Article VI; provided, however, that no such notification
shall affect the representations, warranties, covenants or agreements of the
parties (or remedies with respect thereto) or the conditions to the obligations
of the parties under this Agreement; and
51
provided further that a failure to comply with this Section 4.2 shall not
constitute a failure to be satisfied of any condition set forth in Article VI
unless the underlying untruth, inaccuracy, failure to comply or satisfy, or
change or event would independently result in a failure of a condition set forth
in Article VI to be satisfied.
SECTION 4.3 No Solicitation by the Company. (a) Until the earlier
of the Effective Time and the date of termination of this Agreement,
neither the Company, any of its subsidiaries nor any of the officers
or directors of the Company or any of its subsidiaries shall, and the
Company shall instruct and use its best efforts to cause its and its
subsidiaries' agents, employees, representatives and affiliates
(including any investment banker, attorney or accountant retained by
it or any of its subsidiaries) not to, directly or indirectly, (i)
solicit, initiate or encourage (including by way of furnishing
information), or take any other action designed to facilitate any
inquiries or expressions of interest regarding, or the making of any
offer or proposal which reasonably could be expected to lead to, the
receipt or submission of a Company Takeover Proposal, (ii) participate
in any discussions or provide any confidential or material non-public
information, data or assistance to any person relating to any Company
Takeover Proposal, (iii) enter into any agreement regarding any
Company Takeover Proposal, (iv) make or authorize any statement,
recommendation or solicitation in support of or expressing neutrality
in respect of any Company Takeover Proposal or (v) grant any waiver or
release under any "standstill" or similar agreement; provided,
however, that prior to the Effective Time, the Company shall be
permitted to (A) engage in discussions with any person who seeks
(without any solicitation by or discussion with the Company or its
directors, officers, Employees, advisors, agents or representatives in
violation of this Section 4.3) to initiate discussions relating to a
Company Takeover Proposal, or (B) subject to receipt by the Company of
an executed confidentiality agreement from such person containing
customary terms for and conditions relative to transactions of such
nature (and otherwise having terms no more favorable to such person
than those set forth in the Confidentiality Agreements), furnish such
person information concerning the Company and its subsidiaries, if and
only to the extent that prior to furnishing any such information to,
or entering into discussions with, any such person, (1) the Board of
Directors of the Company determines in its good faith, after
consultation with outside legal counsel, that the failure to engage in
such discussions or provide such information would violate the
fiduciary duties of the Company's Board of Directors to the Company's
stockholders under applicable law, (2) the Company's Board of
Directors concludes in its good faith, after consultation with its
outside legal counsel and the Company Financial Advisor (or an
independent financial advisor of nationally recognized reputation),
that there is a substantial likelihood that such actions would lead
reasonably promptly to the receipt or submission of a Company Superior
Proposal and (3) the Company provides prior written notice to Parent
of its intention to take such action. Upon the execution of this
Agreement, the Company, its subsidiaries and their representatives
immediately shall cease and cause to be terminated all existing
activities, discussions, inquiries, investigations or negotiations
with all parties (other than Parent, Merger Sub and their respective
directors, officers, agents, representatives and advisors) with
respect to any Company Takeover Proposal or proposed transaction which
could lead to a Company Takeover Proposal. The Company hereby confirms
that it has consulted with and fully informed its and its
subsidiaries' officers, directors, agents, representatives and
affiliates as to the meaning and provisions of this Section 4.3, and
that such persons have confirmed their understanding of and have
agreed to comply with the provisions hereof.
52
For purposes of this Agreement, "Company Takeover Proposal" means any
inquiry, expression of interest, term sheet, letter of intent, proposal or offer
from any person relating to any (i) acquisition, purchase, lease, exchange,
sale, joint venture, or mortgage (in a single transaction or series of related
transactions) of 10% or more of the consolidated assets of the Company and its
subsidiaries, (ii) offer, sale, issuance or purchase (in a single transaction or
series of related transactions) of any Equity Securities (as defined in Section
3(a)(11) of the Exchange Act) or voting debt securities of the Company or any of
its subsidiaries, (iii) tender or exchange offer which, if consummated, would
result in any person acquiring beneficial ownership of any Equity Securities or
voting debt securities of the Company, (iv) merger, consolidation, share
exchange, business combination, reorganization, recapitalization, liquidation,
dissolution, reincorporation or similar transaction involving the Company or any
of its subsidiaries, (v) the declaration or payment by the Company of an
extraordinary dividend or distribution in respect of any of its Equity
Securities or the effectuation by the Company of a transaction that would
involve either a change in or reconstitution of the Company's outstanding
capital stock or a distribution of assets of any kind to the holders thereof,
(vi) repurchase by the Company or any of its subsidiaries of shares of the
Company's capital stock or voting debt securities, or (vii) public announcement
by the Company or any other person of a proposal, plan or intention to pursue,
enter into or consummate any of the foregoing (other than the Merger).
For purposes of this Agreement, a "Company Superior Proposal" means any
unsolicited bona-fide, written proposal or offer (setting forth all relevant
material terms and conditions, including, without limitation, price and
structure, and to the extent then known, intended Tax and accounting treatment,
conditions to consummation, a description of all requisite third party and
regulatory approvals, and the intentions of the person making the proposal or
offer with respect to the provisions of this Section 4.3 and Section 5.8(b))
made by any person (other than Parent, Merger Sub or an affiliate thereof) to
acquire, directly or indirectly, including pursuant to a tender or exchange
offer, merger, consolidation, share exchange, business combination,
recapitalization, reincorporation, or other similar transaction (including any
change-in-control of the type contemplated by Rule 14f-1 under the Exchange
Act), 100% of the combined voting power of the Company's capital stock then
outstanding or all or substantially all of the consolidated assets of the
Company and which the Board of Directors of the Company determines in good
faith, after consultation with and upon the advice of outside legal counsel and
the Company Financial Advisor (or an independent financial advisor of nationally
recognized reputation), would be more favorable to the holders of Company Common
Stock than the Merger and otherwise fair to and in the best interests of the
holders of Company Common Stock and advisable (after due consideration of the
transaction value and price and form of consideration, the likelihood and
anticipated timing of consummation, all regulatory approval requirements and
consequences, and all other legal, financial and regulatory aspects of the
proposal) and, in respect of which, cash (sufficient in amount to pay the
aggregate consideration to be received by the holders of Company Common Stock to
the extent such consideration is to be paid in cash, all transaction fees and
expenses and the fee payable under Section 5.8(b) hereof) is either then
available and segregated or fully committed and not subject to any contingency
(except for customary commercial senior lender "market outs").
(b) Except as expressly permitted by the third paragraph of this
Section 4.3(b), neither the Board of Directors of the Company nor any committee
thereof shall (i) withdraw, modify or qualify, or propose publicly to withdraw,
modify or qualify, in any manner
53
adverse to Parent, the approval or adoption of the Agreement, the Merger or the
Company Recommendation or take any action or make any statement in connection
with the Company Stockholders Meeting inconsistent with such approval, adoption
or Company Recommendation (collectively, a "Change in the Company
Recommendation"), (ii) approve or recommend, or propose publicly to approve or
recommend, any Company Takeover Proposal, or (iii) cause the Company or any of
its subsidiaries to enter into any letter of intent, agreement-in-principle,
memorandum of understanding, heads of agreement, term sheet, agreement,
contract, commitment, plan or arrangement (each, a "Company Acquisition
Agreement") related to any Company Takeover Proposal.
For purposes of this Agreement, a Change in the Company Recommendation
shall include any approval or recommendation (or publicly announced proposal to
approve or recommend), by the Company's Board of Directors or any committee
thereof of a Company Takeover Proposal, or any failure by the Company's Board of
Directors to recommend against a Company Takeover Proposal.
Notwithstanding the foregoing, if in response to a Company Acquisition
Proposal from any person which is unsolicited and not otherwise made, submitted
or received in violation of this Section 4.3, the Board of Directors of the
Company determines in its good faith, after consultation with its outside legal
counsel and the Company Financial Advisor (or an independent financial advisor
of nationally recognized reputation), that such Company Acquisition Proposal
constitutes a Company Superior Proposal, subject to payment of the fee required
to be paid by the Company to Parent pursuant to Section 5.8(b), the Board of
Directors of the Company may, (A) at any time prior to the Company Stockholders
Meeting, effect a Change in the Company Recommendation or, (B) at any time after
the Company Stockholders Meeting, terminate this Agreement and enter into a
Company Acquisition Agreement with respect to such Company Superior Proposal;
provided, however, that at least seven business days prior to taking any of the
actions set forth in clause (A) or (B) above, the Company's Board of Directors
theretofore shall have provided Parent written notice advising Parent that the
Company's Board of Directors is prepared to conclude that such Company Takeover
Proposal constitutes a Company Superior Proposal and during such seven-business
day period the Company and its agents, representatives and advisors shall have
negotiated diligently and in good faith with Parent to make adjustments to
and/or amendments in the terms and conditions of this Agreement such that such
Company Takeover Proposal would no longer constitute a Company Superior Proposal
and after fully considering any such adjustment or amendment the Company's Board
of Directors concludes in its good faith, after consultation with its outside
legal counsel and its independent financial advisor, that such Company Takeover
Proposal constitutes a Company Superior Proposal; it being hereby intended and
agreed that the Company shall not enter into any Company Acquisition Agreement
with respect to such Company Superior Proposal (or propose publicly to do so)
prior to the expiration of such seven-business day period.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 4.3, the Company shall advise Parent
orally and within 24 hours in writing of any request for information relating to
a Company Takeover Proposal, or of any Company Takeover Proposal, the material
terms and conditions of such request or Company Takeover Proposal and the
identity of the person making such request or Company Takeover Proposal, and
shall promptly provide a copy of any written request or Company Takeover
Proposal to Parent,
54
and any information and/or documents provided by the Company or any of its
subsidiaries to the person making such request or Company Takeover Proposal to
the extent not previously furnished to Parent. The Company will keep Parent
promptly informed, on a current basis and in reasonable detail, of the status
and details (including amendments or proposed amendments) of any such request or
Company Takeover Proposal.
(d) Nothing contained in this Section 4.3 shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by Rule
l4e-2(a) promulgated under the Exchange Act or from making any disclosure if the
Board of Directors of the Company, after consultation with outside legal
counsel, determines in good faith that the failure to make such disclosure would
violate its obligations under applicable law; provided, however, any such
disclosure relating to a Company Takeover Proposal shall be deemed to be a
Change in the Company Recommendation unless the Board of Directors of the
Company publicly reaffirms the Company Recommendation in such disclosure.
SECTION 4.4 Certain Tax Matters. During the period from the date of this
Agreement to the Effective Time, the Company shall, and shall cause each of its
subsidiaries to: (i) timely file (taking into account any extensions of time
within which to file) all Tax Returns ("Post-Signing Returns") required to be
filed by it and such Post-Signing Returns shall be prepared in a manner
reasonably consistent with past practice; (ii) timely pay all Taxes shown as due
and payable on such Post-Signing Returns that are so filed; (iii) make provision
in its books and records and financial statements in accordance with past
practice for all Taxes payable by it for which no Post-Signing Return is due
prior to the Effective Time; and (iv) promptly notify Parent of any material
suit, claim, action, investigation, proceeding or audit pending against or with
respect to the Company or any of its subsidiaries in respect of any Tax matter,
including (without limitation) Tax liabilities and refund claims.
SECTION 4.5 Transition. To the extent permitted by applicable law, Parent
and the Company shall, and shall cause their respective subsidiaries,
affiliates, officers and employees to, use their commercially reasonable efforts
to facilitate the integration of the Company and its subsidiaries with the
businesses of Parent and its subsidiaries to be effective as of the Closing
Date. Without limiting the generality of the foregoing, from the date hereof
through the Closing Date and consistent with the performance of their day-to-day
operations and the continuous operation of the Company and its subsidiaries in
the ordinary course of business, the Company shall cause the current employees
and officers of the Company and its subsidiaries to use their commercially
reasonable efforts to be available and provide support to Parent, including
support from its outside contractors, and to assist Parent in performing all
tasks, including, without limitation, employee, customer and supplier interviews
and equipment installations, reasonably required to result in a successful
integration at and after the Closing.
SECTION 4.6 No Fundamental Changes in the Conduct of Business by Parent.
(a) Until the earlier of the termination of this Agreement and the
Effective Time, the Parent shall, and shall cause its subsidiaries to, carry on
their respective businesses in the usual, regular and ordinary course consistent
with past practice and in compliance with all applicable laws and regulations,
pay their respective debts and Taxes when due, pay or perform their other
respective obligations when due.
55
(b) Except as set forth in Section 4.6 of the Parent Disclosure
Schedule or as otherwise expressly contemplated by this Agreement, until the
Effective Time, Parent shall not, and shall not permit any of it subsidiaries
to:
(i) except as contemplated hereby, amend its certificate of
incorporation or by-laws in a manner that would adversely affect the
economic benefits of the Merger to the holders of Company Common
Stock; provided that the authorization or issuance of any class or
series of preferred stock shall not be deemed to violate this clause
(i);
(ii) enter into any agreement to acquire all or substantially
all of the capital stock or assets of any other person or business
unless such transaction would not materially delay or impede the
consummation of the Merger;
(iii) take any action or fail to take any action which would
result in any of the conditions of Article VI not being satisfied; or
(iv) authorize, or commit or agree to take, any of the foregoing
actions or any other action that would be reasonably likely to prevent
Parent from performing or would be reasonably likely to cause Parent
not to perform its covenants hereunder in all material respects.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 Preparation of the Form S-4, Joint Proxy Statement;
Stockholders Meetings.
(a) As promptly as practicable following the date of this Agreement,
Parent shall prepare and file with the SEC (and the Company shall cooperate and
participate in the preparation of) the Form S-4, in which the Joint Proxy
Statement shall be included as a prospectus and in which a resale prospectus
(the "Resale Prospectus") shall be included for the purpose of permitting the
Parent Common Stock issued to those affiliates of the Company identified in
Section 5.10 of the Company Disclosure Schedule to be resold by such affiliates
as provided in the last sentence of this Section 5.1(a). Each of Parent and the
Company shall use their reasonable best efforts to have the Form S-4 and the
Resale Prospectus declared effective under the Securities Act and the Joint
Proxy Statement "cleared" by the SEC's staff for mailing in connection with the
Company Stockholder Meeting and the Parent Stockholder Meeting as promptly as
practicable after such filing. As promptly as practicable after the Form S-4 is
declared effective, each of Parent and the Company shall cause the Joint Proxy
Statement to be mailed to their respective stockholders. Parent shall use its
reasonable best efforts to maintain the Resale Prospectus in effect for purposes
of the Securities Act until the earlier of (i) such time as those affiliates
identified on Schedule 5.10 have resold their Parent Common Stock covered by
such Resale Prospectus or (ii) 365 days after the effective date of the Resale
Prospectus.
(b) If at any time prior to the Effective Time there shall occur (i)
any event with respect to the Company or any of its subsidiaries, or with
respect to other information
56
supplied by Company for inclusion in the Form S-4 or the Joint Proxy Statement
or (ii) any event with respect to Parent, or with respect to information
supplied by Parent for inclusion in the Form S-4 or the Joint Proxy Statement,
in either case, which event is required to be described in an amendment of, or a
supplement to, the Form S-4 or the Joint Proxy Statement, such event promptly
shall be so described, and such amendment or supplement shall be promptly filed
with the SEC and, as required by law, disseminated to the stockholders of
Company and Parent.
(c) Each of the Company and Parent shall promptly notify the other of
the receipt of any comments from the SEC or its staff or any other appropriate
government official and of any requests by the SEC or its staff or any other
appropriate government official for amendments or supplements to any of the
filings with the SEC in connection with the Merger and other transactions
contemplated hereby or for additional information, and shall supply the other
with copies of all correspondence between the Company or any of its
representatives, or Parent or any of its representatives, as the case may be, on
the one hand, and the SEC or its staff or any other appropriate government
official, on the other hand, with respect thereto. The Company and Parent shall
use their respective reasonable best efforts to respond to any comments of the
SEC with respect to the Form S-4 and the Joint Proxy Statement as promptly as
practicable after the receipt thereof. The Company and Parent shall cooperate
with each other and provide to each other all information necessary to prepare
the Form S-4 and the Joint Proxy Statement, and shall provide promptly to the
other party all information such party may obtain that could necessitate
amending any such document.
(d) The Company shall, as promptly as practicable after the Form S-4
is declared effective under the Securities Act, duly call, give notice of,
convene and hold the Company Stockholders Meeting in accordance with the DGCL,
its certificate of incorporation and by-laws, as applicable, for the purpose of
obtaining the Company Stockholder Approval and subject to Section 4.3(b), the
Board of Directors of the Company shall recommend to the Company's stockholders
that they affirmatively vote for the adoption of this Agreement (the "Company
Recommendation"). The Company shall solicit from the holders of Company Common
Stock proxies in favor of adoption of this Agreement and shall take all other
lawful action necessary and desirable to obtain the Company Stockholder
Approval. Once the Company Stockholders Meeting has been duly called and
noticed, the Company shall not postpone or adjourn (other than for the absence
of a quorum, and then only to the nearest possible future date) the Company
Stockholders Meeting without Parent's written consent. Without limiting the
generality of the foregoing, the Company agrees that its obligations pursuant to
the first sentence of this Section 5.1(d) shall not be affected by the making,
commencement, public announcement, public disclosure, submission, receipt or
communication to the Company or its stockholders or professional advisors or
representatives of any Company Takeover Proposal. Notwithstanding any Change in
the Company Recommendation or anything in this Agreement to the contrary, this
Agreement shall be submitted to the stockholders of the Company at the Company
Stockholders Meeting for the purpose of obtaining the Company Stockholder
Approval, and nothing contained herein shall be deemed to relieve the Company of
such obligation. The Company shall coordinate and cooperate with Parent with
respect to the timing of the Company Stockholders Meeting and the Parent
Stockholder Meeting, and shall take all steps necessary to ensure that they are
convened and held on the same date or as nearly proximate to one another as
reasonably practicable.
57
(e) Parent shall, as promptly as practicable after the Form S-4 is
declared effective under the Securities Act, duly call, give notice of, convene
and hold the Parent Stockholders Meeting in accordance with the FBCA and its
articles of incorporation and by-laws, as applicable, for the purpose of
obtaining the Parent Stockholder Approval, and the Board of Directors of Parent
shall recommend to its shareholders that they affirmatively vote to approve the
issuance of Parent Common Stock pursuant to the Merger and the transactions
contemplated by this Agreement.
SECTION 5.2 Letters of the Company's Accountants. The Company shall cause
to be delivered to Parent two letters from the Company's independent
accountants, one dated a date not later than the second business day next
preceding the date on which the Form S-4 shall become effective and one dated a
date not later than the second business day next preceding the Closing Date,
each addressed to Parent, in form and substance reasonably satisfactory to
Parent and customary in scope and substance for comfort letters delivered by
independent public accountants in connection with registration statements
similar to the Form S-4.
SECTION 5.3 Letters of Parent's Accountants. Parent shall cause to be
delivered to the Company two letters from Parent's independent accountants, one
dated a date not later than the second business day next preceding the date on
which the Form S-4 shall become effective and one dated a date not later than
the second business day next preceding the Closing Date, each addressed to the
Company, in form and substance reasonably satisfactory to the Company and
customary in scope and substance for comfort letters delivered by independent
public accountants in connection with registration statements similar to the
Form S-4.
SECTION 5.4 Access to Information; Confidentiality. Subject to the
confidentiality agreements, dated June 25, 2002 and December 16, 2002,
respectively (the "Confidentiality Agreements"), by and between Parent and the
Company, and subject to applicable laws and regulations, each party shall, and
shall cause its subsidiaries to, afford to the other party and to the officers,
current employees, accountants, counsel, financial advisors, agents, lenders and
other representatives of such party and its subsidiaries, reasonable access
during normal business hours during the period prior to the Effective Time to
all its respective properties, books, contracts, commitments, personnel and
records and, during such period, each party shall, and shall cause each of its
subsidiaries to, furnish promptly to the other party (a) a copy of each material
report, schedule, registration statement and other document filed by it with any
Governmental Entity and (b) all other information concerning its business,
properties and personnel as such other party may reasonably request. In
addition, each party will deliver or cause to be delivered to the other party
all internal reports prepared by it and/or its subsidiaries in the ordinary
course that are reasonably required by such party promptly after such reports
are made available to its personnel. No review of information, documentation or
materials by Parent pursuant to this Section 5.4 shall affect any representation
or warranty made by the Company to Parent, and no review of information,
documentation or materials by the Company pursuant to this Section 5.4 shall
affect any representation or warranty made by Parent to the Company. The Company
and Parent will hold, and will cause each of its respective officers, current
employees, accountants, counsel, financial advisors, agents, lenders and other
representatives and affiliates to hold, any nonpublic information in accordance
with the terms of the Confidentiality Agreements.
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SECTION 5.5 Commercially Reasonable Efforts. (a) Except where otherwise
provided in this Agreement, each of the parties hereto shall use its
commercially reasonable efforts to take promptly or cause to be taken all
actions, and to do promptly or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper and advisable
under applicable law and otherwise to consummate and make effective the Merger
and the other transactions contemplated by this Agreement, including (i) the
obtaining of all necessary actions or nonactions, waivers, consents,
authorizations, permissions and approvals from Governmental Entities and the
making of all necessary registrations and filings and the taking of all steps as
may be necessary to obtain a waiver, consent, authorization, permission or
approval from, or to avoid an action or proceeding by, any Governmental Entity,
(ii) the obtaining of all necessary waivers, consents, authorizations,
permissions and approvals from third parties, (iii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging the Merger, this Agreement or the consummation of the transactions
contemplated by this Agreement, and (iv) the execution and delivery of all
additional instruments necessary to consummate the transactions contemplated by,
and to fully carry out the purposes of, this Agreement, including, without
limitation, (A) the preparation of any Employee Plan documents required under
ERISA and/or the Code, (B) the amendment or filing of any document required by
any Governmental Entity and/or any disclosure document to participants under
ERISA and/or the Code, (C) the conducting of any operational review from and
after the date hereof and (D) the taking of any action of management or the
Board of Directors of the Company in respect of any of the foregoing.
(b) In connection with and without limiting the generality of the
foregoing, the Company and Parent shall (i) use their best efforts to ensure
that no State Takeover Laws is or becomes applicable to Parent or Merger Sub or
to the Merger or to this Agreement or any of the transactions contemplated
hereby, and (ii) if any State Takeover Laws becomes applicable to the Merger or
to this Agreement or the transactions contemplated hereby, take all action
necessary to ensure that the Merger and the transactions contemplated by this
Agreement may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise to minimize the effect of such State Takeover
Law on the Merger, this Agreement and the transactions contemplated hereby.
SECTION 5.6 [Intentionally Omitted]
SECTION 5.7 Indemnification, Exculpation and Insurance. (a) All rights to
indemnification and exculpation from liabilities for acts or omissions occurring
at or prior to the Effective Time now existing in favor of the current or former
directors or officers of the Company and its subsidiaries as provided in their
respective certificates of incorporation or by-laws (or comparable
organizational instruments and agreements) and any existing indemnification
agreements or arrangements of the Company and its subsidiaries shall survive the
Merger and shall continue in full force and effect in accordance with their
terms, and shall not be amended, repealed or otherwise modified for a period of
five years after the Effective Time in any manner that would adversely affect
the rights thereunder of such individuals for acts or omissions occurring at or
prior to the Effective Time.
(b) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative,
including, without limitation, any such
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claim, action, suit, proceeding or investigation in which any individual who is
now or has been at any time prior to the date of this Agreement, or who becomes
prior to the Effective Time, a director or officer of the Company or any of its
subsidiaries (the "Indemnified Parties"), is, or is threatened to be, made a
party, or arising out of or pertaining to (i) the fact that he is or was a
director, officer or current employee of the Company or any of its subsidiaries
or their respective predecessors or (ii) this Agreement or any of the
transactions contemplated hereby, whether in any case asserted or arising before
or after the Effective Time, the parties hereto agree to cooperate and use their
reasonable best efforts to defend against and respond thereto.
(c) For a period of three years after the Effective Time, the
Surviving Corporation shall maintain in effect the Company's current directors'
and officers' liability insurance covering acts or omissions occurring prior to
the Effective Time with respect to those persons who are currently covered by
the Company's directors' and officers' liability insurance policy on terms with
respect to such scope of coverage and amount no less favorable to the Company's
directors and officers currently covered by such insurance than those of such
policy in effect on the date hereof; provided, however, that the Surviving
Corporation may substitute therefor policies of Parent or its subsidiaries
(including self-insurance) containing terms with respect to scope of coverage
and amount no less favorable to such directors or officers; and provided,
further, that in no event shall the Surviving Corporation be required to pay
aggregate premiums for insurance under this Section 5.7(c) in excess of 275% of
the aggregate premiums paid by the Company during its fiscal year ended December
28, 2002 on an annualized basis for such purpose and, if the annual premiums of
such insurance coverage exceed such amount, the Surviving Corporation shall
obtain a policy with the greatest scope of coverage and amount that is then
available for a cost not exceeding 275% of such premium amount.
(d) Parent shall cause the Surviving Corporation or any successor
thereto, whether by consolidation, merger or transfer of substantially all of
its properties or assets, to comply with its obligations under this Section 5.7.
The provisions of this Section 5.7 shall survive the Effective Time and are
intended to be for the benefit of, and shall be enforceable by, each Indemnified
Party and other person named herein and his or her heirs and representatives.
SECTION 5.8 Fees and Expenses. (a) Except as provided in this Section 5.8
or in Section 5.14, all fees and expenses incurred in connection with the
Merger, this Agreement (including all instruments and agreements prepared and
delivered in connection herewith), and the transactions contemplated by this
Agreement shall be paid by the party incurring such fees or expenses, whether or
not the Merger is consummated.
(b) (i) If this Agreement is terminated by Parent pursuant to
Section 7.1(c)(ii), then upon such termination the Company shall pay
(or cause to be paid) to Parent by wire transfer of same day funds to
an account designated in writing by Parent to the Company, a fee of
$3,680,000.
(ii) (A) If (x) a Pre-Termination Company Takeover Proposal
Event shall occur and thereafter this Agreement is terminated either
by Parent or the Company pursuant to Section 7.1(b)(ii) and (y) prior
to the first anniversary of the date of such termination the Company
consummates a Company Takeover Proposal or enters into or publicly
announces a Company Acquisition Agreement,
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then on the earliest to occur of the date such Company Takeover
Proposal is consummated or such Company Acquisition Agreement is
entered into or publicly announced, the Company shall pay (or cause to
be paid) to Parent by wire transfer of same day funds to an account
designated in writing by Parent to the Company, a fee of $3,680,000
(less the amount, if any, theretofore paid to Parent under Section
5.8(b)(ii)(B)).
(B) If this Agreement is terminated by either Parent or
the Company pursuant to Section 7.1(b)(ii) without there having
occurred a Pre-Termination Company Takeover Proposal Event, then the
Company shall pay (or cause to be paid) to Parent by wire transfer of
same day funds to an account designated in writing by Parent to the
Company, a fee of $1,840,000, not later than the second business day
next following such termination.
(iii) If this Agreement is terminated by the Company pursuant to
Section 7.1(d), then upon such termination the Company shall pay (or
cause to be paid) to Parent, by wire transfer of same day funds to an
account designated in writing by Parent to the Company, a fee of
$3,680,000.
(iv) For purposes of this Section 5.8(b), a "Pre-Termination
Company Takeover Proposal Event" shall be deemed to occur if, prior to
the event giving rise to the right to terminate this Agreement and, in
all cases, subject to the requirements and obligations of the Company
set forth in Sections 4.3 and 5.1, a Company Takeover Proposal shall
have been made known to the Company or any of its subsidiaries or made
directly to the Company's stockholders generally or any person shall
have publicly announced an intention (whether or not conditional) to
make a Company Takeover Proposal, and such Company Takeover Proposal
or public announcement shall not have been irrevocably withdrawn at
least seven business days prior to the Company Stockholders Meeting.
(v) The Company acknowledges that the agreements contained in
this Section 5.8(b) are an integral part of the transactions
contemplated by this Agreement and that without these agreements
Parent would not have been induced to enter into this Agreement.
Accordingly, if the Company fails to pay the amounts due pursuant to
this Section 5.8(b), and, to obtain such payment, Parent commences a
suit which results in a judgment against the Company for the fee set
forth in this Section 5.8(b), the Company shall pay to Parent all of
its costs and expenses (including attorneys' fees and expenses) in
connection with such suit, together with interest on the amount of the
fee at the rate on six-month U.S. Treasury obligations plus 300 basis
points in effect on the date such payment was required to be made.
(vi) It is expressly agreed that the amounts to be paid pursuant
to this Section 5.8(b) constitute liquidated damages negotiated at
arm's-length and do not constitute, and are not intended by the
parties to operate as, a penalty, and any such amounts paid shall
constitute the sole and exclusive remedy of the party
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receiving such payment under the events and circumstances
giving rise thereto as specified in this Agreement, except
that nothing herein shall relieve any party from any liability
(in contract, tort or otherwise, and whether pursuant to an
action at law or in equity) for any knowing or willful breach
by a party of any of its representations, warranties,
covenants or agreements set forth in this Agreement or in
respect of fraud by any party.
SECTION 5.9 Public Announcements. Parent and the Company shall consult
with each other before issuing, and shall provide each other the opportunity to
review, comment upon and concur with and use reasonable efforts to agree on, any
press release or other public statements or announcements (including pursuant to
Rule 165 under the Securities Act and Rule 14a-12 under the Exchange Act) and
any broadly distributed internal communications with respect to the Merger, this
Agreement and the transactions contemplated by this Agreement, and shall not
issue any such press release or make any such public statement or announcement
prior to such consultation, except as either party may determine is required by
applicable law, court process or by obligations pursuant to any listing
agreement with any national securities exchange or inter-dealer quotation system
of a registered national securities association (provided prior notice is given
to the other party with a copy of any such disclosure) and except for any
discussions with rating agencies. The parties agree that the initial press
releases (or joint press release if the parties so determine) to be issued with
respect to the Merger, this Agreement and the transactions contemplated by this
Agreement shall be in the form heretofore agreed to by the parties.
SECTION 5.10 Affiliates. The Company shall use its reasonable best
efforts to obtain and deliver to Parent not later than 30 days after the date
hereof a written agreement substantially in the form attached hereto as Exhibit
A of all persons who are (or may deemed to be) "affiliates" of the Company for
purposes of Rule 145 under the Securities Act (and who are identified in Section
5.10(a) of the Company Disclosure Schedule). Any such affiliate that shall not
so execute and deliver to the Company such written agreement as provided in this
Section 5.10 shall not be entitled to have the Parent Stock Consideration issued
in the Merger to such affiliate covered by (and shall not be entitled to be
included as a "selling stockholder" in) the Resale Prospectus. Promptly after
the expiration of such 30-day period, the Company shall cause to be delivered to
each affiliate that shall not so execute such written agreement as provided in
this Section 5.10 a statement disclosing that the shares of Parent Common Stock
to be issued in the Merger to such affiliate are subject to transfer
restrictions under each of Rule 145 and Rule 144 under the Securities Act and,
therefore, may not be sold, transferred or otherwise disposed of except pursuant
to an effective registration statement under, or in accordance with an available
exemption from the registration and prospectus delivery requirements of, the
Securities Act, and that the certificates evidencing such shares of Parent
Common Stock shall bear appropriate restrictive legends and stop transfer orders
shall be maintained by the Parent's transfer agent in respect of such shares.
SECTION 5.11 Stock Exchange Listing. Parent shall use its reasonable
best efforts to cause the Parent Common Stock issuable under Article II to be
qualified for listing on Nasdaq, subject to official notice of issuance, as
promptly as practicable after the date hereof, and in any event prior to the
Closing Date.
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SECTION 5.12 Stockholder Litigation. Each of the Company and Parent
shall give the other the reasonable opportunity to participate in the defense of
any stockholder litigation against the Company or Parent, as applicable, and its
directors relating to the transactions contemplated by this Agreement.
SECTION 5.13 Standstill Agreements; Confidentiality Agreements. During
the period from the date of this Agreement through the Effective Time, the
Company shall not terminate, amend, modify or waive any provision of any
confidentiality or standstill agreement to which it or any of its respective
subsidiaries is a party and which relates to the confidentiality or information
regarding the Company or its subsidiaries or which relate to securities of the
Company. During such period, the Company shall use its reasonable best efforts
to enforce, to the fullest extent permitted under applicable law, the provisions
of any such agreement, including by using its reasonable best efforts to obtain
injunctions to prevent any breaches of such agreements and to enforce
specifically the terms and provisions thereof in any court of competent
jurisdiction.
SECTION 5.14 Conveyance Taxes. The Company has no interest in real
estate, including, without limitation, any leasehold interest, except as set
forth in Section 3.1(w)(i)(A) and Section 3.1(w)(i)(B) of the Company Disclosure
Schedule, and the Company and Parent agree that if Parent determines, in its
sole discretion, that a calculation of the fair market value of such real estate
interest is necessary for the preparation and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer, real property transfer gains or similar Taxes, the Company shall
obtain an appraisal of the fair market value of such real estate interest as
promptly as practicable. Parent and the Company shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer, real property transfer
gains, sales, use, transfer, value added, stock transfer and stamp Taxes, any
transfer, recording, registration and other fees or any similar Taxes which
become payable in connection with the transactions contemplated by this
Agreement that are required or permitted to be filed on or before the Effective
Time, and each party further agrees to take such reporting positions and other
action as reasonably required to effectuate the intention and purposes of this
Section 5.14. The Company shall pay on behalf of its stockholders any such Taxes
or fees imposed by any Governmental Entity which become payable in connection
with the transactions contemplated by this Agreement for which such stockholders
are primarily liable and in no event shall Parent pay such amounts.
SECTION 5.15 Employee Benefits. (a) Parent shall, or shall cause the
Surviving Corporation and its subsidiaries to, (i) give those Employees who are,
as of the Effective Time, employed by the Company and its subsidiaries (the
"Continuing Employees") full credit for purposes of eligibility, vesting and
benefit accruals (other than for purposes of benefit accruals under any defined
benefit pension plan) under any employee benefit plans or arrangements
maintained by Parent, the Surviving Corporation or any subsidiary of Parent or
the Surviving Corporation for such Continuing Employees' service with the
Company or any subsidiary of the Company (or any predecessor entity) to the same
extent recognized by the Company and its subsidiaries, and (ii) waive all
limitations as to preexisting conditions, exclusions and waiting periods with
respect to participation and coverage requirements applicable to the Continuing
Employees under any welfare plan that such employees may be eligible to
participate in after the Effective Time, other than limitations or waiting
periods that are already in effect with respect to
63
such employees and that have not been satisfied as of the Effective Time under
any welfare plan maintained for the Continuing Employees immediately prior to
the Effective Time, and provide credit under any such welfare plan for any
copayments, deductibles and out-of-pocket expenditures for the remainder of the
coverage period during which any transfer of coverage occurs.
(b) From and after the Effective Time and through December 31
of the calendar year in which the Effective Time occurs (the "Continuation
Period"), Parent shall provide, or shall cause to be provided, to the Continuing
Employees compensation and employee benefit plans, programs and arrangements
that are, in the aggregate, comparable to those generally provided to such
employees as of the date hereof. From and after the expiration of the
Continuation Period, Parent shall provide, or shall cause to be provided, to the
Continuing Employees compensation and employee benefit plans, programs and
arrangements that are no less favorable than those generally provided to
similarly situated employees of Parent. Notwithstanding anything contained
herein to the contrary, each Continuing Employee whose employment is terminated
during the twelve-month period (or such longer period as may be required by the
terms of the applicable severance plan or other agreement of the Company as
listed on Section 5.15(b) of the Company Disclosure Schedule) following the
Effective Time shall be entitled to receive severance pay and benefits equal to
the severance pay and benefits under the applicable severance plan or other
agreement of the Company listed on Section 5.15(b) of the Company Disclosure
Schedule.
(c) Subject to Section 5.15(a) and (b) above, from and after
the Effective Time, Parent shall, or shall cause the Surviving Corporation to,
assume and honor all Employee Plans, as in effect on the date hereof; provided,
however, nothing herein shall restrict Parent's or the Surviving Corporation's
ability to amend or terminate such Employee Plans in accordance with their
terms.
SECTION 5.16 Rights Agreement Matters. Except as expressly required by
this Agreement (including, without limitation, in connection with the Rights
Agreement Amendments), without the prior written consent of Parent, the Company
shall not amend or modify or make any determination under or take any action
with respect to, the Rights Agreement, including, without limitation, any
redemption of the Rights or any action with respect to the Rights Agreement to
facilitate any Company Takeover Proposal; provided, however, that the Company
may amend or take appropriate action under the Rights Agreement to delay the
occurrence of a "Distribution Date" (as defined in the Rights Agreement) in
response to the public announcement of a Company Takeover Proposal.
SECTION 5.17 Termination of Registration of Company Common Stock. As
promptly as practicable after the Effective Time, Parent, on the Company's
behalf, shall file with the SEC a Notice of Termination of Registration on Form
15 pursuant to Rule 12g-4 under the Exchange Act.
SECTION 5.18 Voting Agreement. Concurrently with the execution of this
Agreement, Xxxxxx Xxxxxxxxxxx, Xxxxx Xxxxxxxxxxx, GFX, Inc., a Florida
corporation, and The Xxxxx Xxxxxxxxxxx Family Partnership, Ltd., a Florida
limited partnership, who collectively beneficially own approximately 48.6% of
the outstanding shares of Parent Common Stock, shall
64
enter into a written agreement substantially in the form attached hereto as
Exhibit B (the "Voting Agreement").
SECTION 5.19 Company Officer Certificates. The Company shall use its
reasonable best efforts to obtain, not later than the date it files with the SEC
its Annual Report on Form 10-K for its fiscal year ended December 28, 2002, from
each of the Employees of the Company set forth on Schedule 5.19(a) of the
Company Disclosure Schedule, an executed certificate substantially in the forms
of Section 5.19(b) of the Company Disclosure Schedule.
SECTION 5.20 Non-Solicitation Agreements. Concurrently with the
execution of this Agreement, each of Xxxxxxx X. Xxxxxx and Xxxxxxxx X. Xxxxx
shall enter into a written agreement in the forms of Section 5.20(a) and
5.20(b), respectively, of the Company Disclosure Schedule.
SECTION 5.21 Letter Agreements. The Company shall obtain, not later
than 10 business days after the date hereof, from those individuals listed on
Section 5.21(a) of the Company Disclosure Schedule, an executed agreement in the
form of Section 5.21(b) of the Company Disclosure Schedule.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligation of each party to effect the Merger is subject to the
satisfaction or, to the extent permitted by applicable law, waiver by each of
Parent and the Company on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approvals. Each of the Company Stockholder
Approval and the Parent Stockholder Approval shall have been obtained.
(b) Governmental and Regulatory Approvals. Other than the
filing of the Certificate of Merger provided for under Section 1.3 and the
expiration or early termination of the applicable pre-merger notification
waiting period pursuant to the HSR Act (as provided in Section 6.1(f)), all
consents, approvals and actions of, filings with and notices to any Governmental
Entity required by the Company, Parent or any of their subsidiaries under
applicable law or regulation to consummate the Merger and the transactions
contemplated by this Agreement, the failure of which to be obtained or made
would result in a material adverse effect on Parent's ability to conduct the
business of the Company in substantially the same manner as presently conducted,
shall have been obtained or made (all such approvals and the expiration of all
such waiting periods, the "Requisite Regulatory Approvals")
(c) No Injunctions or Restraints. No judgment, order,
restraining order and/or injunction (temporary or otherwise), decree, statute,
law, ordinance, rule or regulation, entered, enacted, promulgated, enforced or
issued by any court or other Governmental Entity or other legal restraint or
prohibition (collectively, "Restraints") shall be in effect preventing or
materially delaying the consummation of the Merger; provided, however, that each
of the parties shall have used its best efforts to have such Restraint lifted,
vacated or rescinded; and provided,
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further that if such Restraint is not lifted, vacated or rescinded (and all
litigation, if any, in respect thereof terminated or withdrawn) by the 10/th/
business day next preceding the Company Stockholders Meeting the condition in
this Section 6.1(c) shall be deemed not to be satisfied.
(d) Form S-4. The Form S-4 shall have become effective under
the Securities Act prior to the mailing by the Company and Parent of the Joint
Proxy Statement to their respective stockholders, and no stop order or
proceedings seeking a stop order shall have been entered or be pending by the
SEC.
(e) Stock Exchange Listing. The shares of Parent Common Stock
issuable to the Company's stockholders as contemplated by Article II shall have
been approved for listing on the Nasdaq, subject to official notice of issuance.
(f) HSR Act. The pre-merger notification waiting period (and
any extension thereof) applicable to the Merger under the HSR Act shall have
expired or been terminated.
SECTION 6.2 Conditions to Obligations of Parent and Merger Sub. The
obligation of Parent and Merger Sub to effect the Merger is further subject to
satisfaction or waiver of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth herein and in the Company Disclosure
Schedule shall be true and correct at and as of the Closing Date, as if made at
and as of such time (except to the extent expressly made as of an earlier date,
in which case such representations and warranties shall be true and correct as
of such date); provided that no representation or warranty of the Company shall
be deemed untrue or incorrect for purposes of this Section 6.2(a) as a
consequence of the existence of any fact, event or circumstance inconsistent
with such representation or warranty, unless such fact, event or circumstance,
individually or when aggregated with all other facts, events or circumstances
inconsistent with any representation or warranty of the Company, has had or
would be expected to result in a material adverse effect on the Company,
disregarding for these purposes any qualification or exception for, or reference
to, materiality in any such representation or warranty. Parent shall have
received a certificate of the Company's Chief Executive Officer and Chief
Financial Officer to the foregoing effect.
(b) Performance of Obligations of the Company. The Company
shall have performed all obligations required to be performed by it at or prior
to the Closing Date under this Agreement; provided that no covenant of the
Company shall be deemed not performed for purposes of this Section 6.2(b) unless
such non-performance, individually or when aggregated with all other
non-performances, if any, of the Company, has had or reasonably could be
expected to result in a material adverse effect on the Company, disregarding for
these purposes any qualification or exception for, or reference to, materiality
in any such covenant.
(c) Regulatory Condition. No condition or requirement shall
have been imposed by one or more Governmental Entities in connection with any
required approval by them of the Merger that requires the Company or any of its
subsidiaries to be operated in a manner that would have a material adverse
effect on the Company.
66
(d) Accountants' Letter. Parent shall have received "comfort"
letters of the Company's Accountants dated the date on which the Form S-4 shall
become effective and dated the Effective Time, respectively, and addressed to
Parent. Such "comfort" letters shall be in such form and substance as is
reasonably customary for letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4.
(e) Shares of Dissenting Stockholders. The aggregate amount of
Dissenting Shares shall not have exceeded 5% of the total number of shares of
Company Common Stock outstanding immediately prior to the Effective Time.
(f) No Company Material Adverse Effect. There shall not be or
exist any change, effect, event, circumstance, occurrence or state of facts that
has had, has or which reasonably could be expected to have, a material adverse
effect on the Company.
SECTION 6.3 Conditions to Obligations of the Company. The obligation of
the Company to effect the Merger is further subject to satisfaction or waiver of
the following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent set forth herein and in the Parent Disclosure Schedule
shall be true and correct at and as of the Closing Date, as if made at and as of
such time (except to the extent expressly made as of an earlier date, in which
case such representations and warranties shall be true and correct as of such
date); provided that no representation or warranty of Parent shall be deemed
untrue or incorrect for purposes of this Section 6.3(a) as a consequence of the
existence of any fact, event or circumstance inconsistent with such
representation or warranty, unless such fact, event or circumstance,
individually or when aggregated with all other facts, events or circumstances
inconsistent with any representation or warranty of Parent, has had or would be
expected to result in a material adverse effect on Parent, disregarding for
these purposes any qualification or exception for, or reference to, materiality
in any such representation or warranty. The Company shall have received a
certificate of Parent's Chief Executive Officer and Chief Financial Officer to
the foregoing effect.
(b) Performance of Obligations of Parent. Parent shall have
performed all obligations required to be performed by it at or prior to the
Closing Date under this Agreement; provided that no covenant of Parent shall be
deemed not performed for purposes of this Section 6.3(b) unless such
non-performance, individually or when aggregated with all other
non-performances, if any, of Parent, has had or reasonably could be expected to
result in a material adverse effect on Parent, disregarding for these purposes
any qualification or exception for, or reference to, materiality in any such
covenant.
(c) No Parent Material Adverse Effect. There shall not be or
exist any change, effect, event, circumstance, occurrence or state of facts that
has had, has or which reasonably could be expected to have, a material adverse
effect on Parent.
SECTION 6.4 Frustration of Closing Conditions. Neither Parent nor the
Company may rely on the failure of any condition set forth in Section 6.1, 6.2
or 6.3, as the case may be, to be satisfied if such failure was caused by such
party's failure to use its own
67
reasonable best efforts to consummate the Merger and the other transactions
contemplated by this Agreement, as required by and subject to Section 5.5.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1 Termination. This Agreement may be terminated at any time prior
to the Effective Time, whether or not the Company Stockholder Approval has been
obtained:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated at or prior
to 5:00 p.m., New York time, on July 31, 2003, provided, however, that
the right to terminate this Agreement pursuant to this Section 7.1(b)
shall not be available to any party whose failure to perform any of
its obligations under this Agreement results in the failure of the
Merger to be consummated by such time and date;
(ii) if the Company Stockholder Approval shall not have been
obtained;
(iii) if the Parent Stockholder Approval shall not have been
obtained at the Parent Stockholders Meeting duly noticed and convened
for such purpose or at any adjournment or postponement thereof;
(iv) if any Restraint having any of the effects set forth in
Section 6.1(c) shall be in effect and shall have become final and
nonappealable; provided, however, that the party seeking to terminate
this Agreement pursuant to this Section 7.1(b) (iv) shall have used
its reasonable best efforts to prevent the entry of such Restraint and
to have such Restraint vacated or removed; or
(v) if any Governmental Entity that must grant a Requisite
Regulatory Approval shall have denied the applicable Requisite
Regulatory Approval and such denial shall have become final and
nonappealable;
(c) by Parent, if (i) the Company shall have failed to make the
Company Recommendation in the Joint Proxy Statement, (ii) the Company shall have
effected a Change in the Company Recommendation in accordance with the
provisions of Section 4.3(b), (iii) the Company shall have effected a Change in
the Company Recommendation in violation of the terms of this Agreement, or (iv)
the Company shall have breached its obligations under this Agreement by reason
of a failure to duly notice, call or convene the Company Stockholders Meeting in
accordance with Section 5.1(d);
(d) by the Company in accordance with clause (B) of the third
paragraph of Section 4.3(b); provided, however, that for the termination of this
Agreement pursuant to this
68
paragraph (d) to be deemed effective, the Company first shall have complied with
the provisions of Section 4.3, including, without limitation, the notice
provisions thereof, and with all other applicable requirements under this
Agreement, including the payment to Parent of the fee required by paragraph (b)
(iii) of Section 5.8;
(e) by Parent, if the Company shall have breached any of its
representations, warranties, covenants or other agreements contained in this
Agreement, which breach (i) would give rise to the failure of a condition set
forth in Section 6.2(a) or (b), and (ii) is either incapable of being cured by
the Company or, if curable, is not cured within 15 days of receipt from Parent
of written notice thereof; or
(f) by the Company, if Parent shall have breached any of its
representations, warranties, covenants or other agreements contained in this
Agreement, which breach (i) would give rise to the failure of a condition set
forth in Section 6.3(a) or (b), and (ii) is either incapable of being cured by
Parent or, if curable, is not cured within 15 days of receipt from the Company
written notice thereof.
The party desiring to terminate this Agreement pursuant to clause (b),
(c), (d), (e) or (f) of this Section 7.1 shall provide written notice of such
termination to the other party in accordance with Section 8.2, specifying in
reasonable detail the provision hereof pursuant to which such termination is
effected.
SECTION 7.2 Effect of Termination. If this Agreement is terminated by
either the Company or Parent as provided in Section 7.1, this Agreement
forthwith shall become void and have no effect, without any liability or
obligation on the part of Parent or the Company, other than that the provisions
of Section 5.8, this Section 7.2 and Article VIII shall survive such
termination, provided, however, that nothing herein (including the payment of
any amounts pursuant to Section 5.8 hereof) shall relieve any party from any
liability (in contract, tort or otherwise, and whether pursuant to an action at
law or in equity) for any knowing or willful breach by a party of any of its
representations, warranties, covenants or agreements set forth in this Agreement
or in respect of fraud by any party.
SECTION 7.3 Amendment. This Agreement may be amended by the parties at any
time before or after the receipt of the Company Stockholder Approval; provided,
however, that after such approval, there shall not be made any amendment that by
law requires any further approval by the stockholders of the Company without the
further approval of such stockholders. This Agreement may not be amended except
by an instrument in writing signed on behalf of all of the parties to be bound
thereby.
SECTION 7.4 Extension; Waiver. At any time prior to the Effective Time, a
party may (a) extend the time for the performance of any of the obligations or
other acts of the other party, (b) waive any inaccuracies in the representations
and warranties of the other party contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) subject to the proviso of Section
7.3, waive compliance by the other party with any of the agreements or
conditions contained in this Agreement. Any agreement on the part of a party to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on
69
behalf of such party. The failure of any party to this Agreement to assert any
of its rights under this Agreement or otherwise shall not constitute a waiver of
such rights.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1 Nonsurvival of Representations, Warranties and Agreements. None
of the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 8.1 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 8.2 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally, telecopied (which is confirmed) or sent by
overnight courier (providing proof of delivery) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Parent or Merger Sub, to:
Xxxxx Xxxxx International, Inc.
0000 XX 000/xx/ Xxxxxx
Xxxxx, Xxxxxxx 00000
Fax No.: (000) 000-0000
Attention: Corporate General Counsel
with a copy (which shall not constitute notice pursuant to
this Section 8.2) to:
Xxxxxxxxx Traurig, LLP
The MetLife Building
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No. : (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxx, Esq.
xxxxxxxx@xxxxx.xxx
70
if to the Company, to:
Xxxxxx Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.: (000) 000-0000
Attention: Chief Executive Officer
with a copy (which shall not constitute
notice pursuant to this Section 8.2) to:
Xxxxx Xxxxxxx Xxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.: (000) 000-0000
Attention: Xxxxx Xxxxxxx, Esq.
xxxxxxxx@xxxxxxxxxxxx.xxx
SECTION 8.3 Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first person, where "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a person, whether through the ownership
of voting securities, by contract, as trustee or executor, or otherwise.
(b) "material adverse change" or "material adverse effect" means,
when used in reference to the Company or Parent, any change, effect, event,
circumstance, occurrence or state of facts that is, or which reasonably could be
expected to be, materially adverse to the business, assets, liabilities,
condition (financial or otherwise), cash flows or results of operations of such
party and its subsidiaries, considered as an entirety; provided, however, that
the following shall not be taken into account or given effect, either
individually or in the aggregate, in determining whether there has occurred or
there reasonably could be expected to occur, or whether there exists a change,
effect, event, circumstance, occurrence or state of facts that is or which
reasonably could be expected to be, a material adverse change or a material
adverse effect: (i) any change, effect, event, circumstance, occurrence or state
of facts relating to the United States economy or financial or securities
markets in general (but only to the extent not constituting or arising from a
banking moratorium or general suspension of trading for more than five
consecutive trading days on any national securities exchange or U.S.
inter-dealer quotation system of a registered national securities association or
not otherwise involving a decline in the Dow Xxxxx Industrial Average of more
than 25% measured over any five Nasdaq-trading day period), (ii) any adverse
change, effect, event, circumstance, occurrence or state of facts relating to
the wholesale men's apparel industry to the extent not affecting the referent
person to a disproportionately greater extent than other persons in industries
in which the referent person competes are or could reasonably be expected to be
affected, or (iii) any change, effect, event, circumstance, occurrence or state
of facts directly relating to and arising out of the public announcement or
performance of this Agreement and the transactions contemplated hereby.
71
(c) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
(d) a "subsidiary" of any person means another person, an amount of
the voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect not less than a majority of its Board of Directors
or other governing body (or, if there are no such voting interests, 50% or more
of the equity interests of which) is owned directly or indirectly by such first
person.
(e) "knowledge" means, (i) with respect to the Company, the
knowledge (after reasonable inquiry and investigation) of the individuals listed
on Section 8.3(e) of the Company Disclosure Schedule and (ii) with respect to
Parent, the knowledge (after reasonable inquiry and investigation) of Parent's
current Chief Financial Officer, Vice President of Finance and Senior Vice
President and Controller.
SECTION 8.4 Interpretation. When a reference is made in this Agreement to
an Article, Section or Exhibit, such reference shall be to an Article or Section
of, or an Exhibit to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. All terms defined in this
Agreement shall have the defined meanings when used in any certificate or other
document made or delivered pursuant hereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. Any agreement, instrument or statute
defined or referred to herein or in any agreement or instrument that is referred
to herein means, in the case of any agreement or instrument, such agreement or
instrument as from time to time amended, modified or supplemented, including by
waiver or consent and, in the case of statutes, such statutes as in effect on
the date of this Agreement. References to a person are also to its permitted
successors and assigns. The parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any Federal, state, local or
foreign statute or law shall be deemed to also refer to any amendments thereto
and all rules and regulations promulgated thereunder, unless the context
requires otherwise.
SECTION 8.5 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties. A facsimile copy of a signature
page shall be deemed to be an original signature page.
72
SECTION 8.6 Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) and the
Confidentiality Agreements (a) constitute the entire agreement, and supersede
all prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter of this Agreement and (b) except for
the provisions of Section 5.7 which shall inure to the benefit of and be
enforceable by the persons referred to therein, are not intended to confer upon
any person other than the parties any rights or remedies.
SECTION 8.7 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal substantive and procedural laws of
the State of Delaware, regardless of the laws that might otherwise govern under
applicable principles of conflicts of law of such state.
SECTION 8.8 Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties hereto without the
prior written consent of the other parties, provided, however, that Parent may
assign Merger Sub's rights and obligations, in whole or in part, under this
Agreement to Parent or any other, wholly-owned, direct subsidiary of Parent. Any
assignment in violation of the preceding sentence shall be void. Subject to the
preceding two sentences, this Agreement will be binding upon, inure to the
benefit of, and be enforceable by, the parties and their respective successors
and assigns.
SECTION 8.9 Consent to Jurisdiction. Each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any Federal court
located in the State of Delaware or any Delaware state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated by
this Agreement, (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
and (c) agrees that it will not bring any action relating to this Agreement or
any of the transactions contemplated by this Agreement in any court other than a
Federal court sitting in the State of Delaware or a Delaware state court. The
parties irrevocably and unconditionally waive any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement or any of
the transactions contemplated by this Agreement in any Federal court located in
the State of Delaware or any Delaware state court, and hereby further
irrevocably and unconditionally waive and agree not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
SECTION 8.10 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 8.11 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
73
SECTION 8.12 Enforcement. The parties 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. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any other
remedy to which they are entitled at law or in equity.
[The remainder of this page is intentionally left blank.]
74
IN WITNESS WHEREOF, Parent, the Company and Merger Sub have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
XXXXX XXXXX INTERNATIONAL, INC.
By /s/ Xxxxxxx X. Page
--------------------------------
Name: Xxxxxxx X. Page
Title: Chief Financial Officer
CONNOR ACQUISITION CORP.
By /s/ Xxxxxxx X. Page
--------------------------------
Name: Xxxxxxx X. Page
Title: President
XXXXXX CORPORATION
By /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chairman of the Board
and Chief Executive Officer
75
EXHIBIT A
Form of Affiliate Letter
February __, 2003
Xxxxx Xxxxx International, Inc.
0000 XX 000xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Corporate General Counsel
Ladies and Gentlemen:
The undersigned has been advised that it may be deemed to be an
"affiliate" of Xxxxxx Corporation, a Delaware corporation (the "Company") (as
that term is defined in Rule 145 under the Securities Act of 1933, as amended
(the "Securities Act")). The undersigned understands that upon the terms and
subject to the conditions of the Agreement and Plan of Merger dated February 3,
2003 (the "Merger Agreement"), by and among Xxxxx Xxxxx International, Inc., a
Florida corporation ("Parent"), Connor Acquisition Corp., a Delaware corporation
and a subsidiary of Parent ("Merger Sub"), and the Company, Merger Sub shall be
merged with and into the Company (the "Merger") and the Company shall be the
surviving corporation in the Merger and, as such, continue its corporate
existence as a direct, wholly owned subsidiary of Parent under the laws of the
State of Delaware. Capitalized terms used but not otherwise defined herein shall
have the respective meanings ascribed to such terms in the Merger Agreement.
The undersigned further understands that in the Merger, in exchange for
shares of its common stock, $1.00 par value, of the Company ("Company Common
Stock") pursuant to Section 2.1(c) of the Merger Agreement, and/or in exchange
for its Company Stock Options pursuant to Section 2.6 of the Merger Agreement,
as applicable, it may receive shares of common stock, $0.01 par value, of Parent
("Parent Common Stock"), and that it may be deemed to have been an "affiliate"
(as such term is defined in Rule 144 under the Securities Act) of the Company at
the time the Merger was submitted to the holders of Company Common Stock at the
Company Stockholders Meeting to obtain the Company Stockholder Approval and that
the sale, transfer or other disposition by the undersigned of the Parent Common
Stock shall not be registered under the Securities Act, except to the extent
contemplated by Section 5.1(a) of the Merger Agreement (but subject to Section
5.10 of the Merger Agreement).
The undersigned has read this letter carefully and discussed the
requirements hereof to the extent necessary with its counsel or with counsel for
the Company. The undersigned represents, warrants and covenants with and to
Parent that if it receives any Parent Common Stock as a result of the Merger
pursuant to Section 2.1(c) of the Merger Agreement and/or in exchange for
Company Stock Options pursuant to Section 2.6 of the Merger Agreement:
1. It shall not effect any sale, transfer, or other
disposition of such Parent Common Stock (or any rights thereto or interests
therein) (except to Parent) unless and until: (i) such sale, transfer or other
disposition has been registered pursuant to a registration statement which has
been declared effective by order of the SEC under the Securities Act (which
condition shall be satisfied as contemplated by Section 5.1(a) of the Merger
Agreement but subject to Section 5.10 of the Merger Agreement), (ii) such sale,
transfer or other disposition is made in compliance with Rules 144 and 145 under
the Securities Act (as such rules may be amended from time to time), (iii) in
the opinion of
A-1
counsel in form and substance reasonably satisfactory to Parent, or under a
"no-action" letter or interpretive letter from the staff of the SEC addressed to
the undersigned, such sale, transfer or other disposition will not violate or
otherwise is exempt from registration under the Securities Act, or (iv) it has
the right to have the legend set forth in Sections 3 and 4 below removed solely
as provided in Section 4 below.
2. It understands that only to the extent provided in Section
5.1(a) of the Merger Agreement (but subject to Section 5.10 thereof), Parent is
under no obligation to register the sale, transfer or other disposition of
Parent Common Stock by the undersigned or on its behalf under the Securities Act
or, other than as set forth below, to take any other action necessary to make
compliance with an exemption from such registration available.
3. It understands that stop transfer instructions have been or
will be given to Parent's transfer agent with respect to the Parent Common Stock
issued to the undersigned in the Merger pursuant to Section 2.1(c) and/or
Section 2.6 of the Merger Agreement and that there will be placed on the
certificates, if any, for such shares (or any substitutions therefor) a legend
stating in substance:
"The shares represented by this certificate were issued in a
transaction to which Rules 145 and 144, respectively, under
the Securities Act of 1933, as amended, apply. The shares
represented by this certificate may be sold, transferred or
otherwise disposed of only in accordance with the terms of a
certain letter agreement between the registered holder hereof
and Xxxxx Xxxxx International, Inc., a copy of which agreement
is on file at the principal offices of Xxxxx Xxxxx
International, Inc"
4. It understands that unless (i) the sale, transfer or other
disposition by the undersigned of the Parent Common Stock issued to it pursuant
to Section 2.1(c) and/or Section 2.6 of the Merger Agreement has been registered
in a registration statement which is declared effective by order of the SEC
under the Securities Act (which is contemplated by Section 5.1(a) of the Merger
Agreement but subject to Section 5.10 of the Merger Agreement) and such shares
have been sold, transferred or otherwise disposed of in accordance with the plan
of distribution contemplated by and described in the final prospectus
constituting part of such effective registration statement, or (ii) such sale,
transfer or other disposition is made in compliance with the provisions of Rule
145(d) under the Securities Act, Parent reserves the right, in its sole and
absolute discretion, to place the following legend on the certificates, if any,
issued to the undersigned's transferee:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), and were acquired from a person who
received such shares in a transaction to which Rules 145 and
144 under the Securities Act apply. Accordingly, neither the
shares represented by this certificate nor any right thereto
or interests therein may be sold, transferred or otherwise
disposed of except (i) pursuant to an appropriate registration
statement which is declared effective by order of the
Securities and Exchange Commission under the Securities Act
and pursuant to applicable state securities laws, (ii) in
compliance with the Rules 144 and 145, respectively, under the
Securities Act (as such rules may be amended from time to
time), or (iii)
A-2
if, in the opinion of counsel in form and substance reasonably
satisfactory to Parent, or under a "no-action" letter or
interpretive letter from the staff of the SEC addressed to the
holder/owner of the shares represented by this certificate,
registration under the Securities Act of any sale, transfer or
disposition of the shares represented by this certificate is
not required by reason of the availability of and compliance
with an applicable exemption from such registration."
It is hereby understood and agreed that the legends set forth in
paragraphs (3) and (4) above shall be removed by delivery of substitute
certificates without such legend and/or any stop transfer instructions will be
lifted only if the undersigned shall have delivered to Parent (i) a copy of a
"no-action" letter or interpretative letter from the staff of the SEC addressed
to the undersigned, or an opinion of counsel in form and substance reasonably
satisfactory to Parent, to the effect that such legend is not required for
purposes of the Securities Act or (ii) a written statement from the undersigned
representing that that the Parent Common Stock represented by such certificates
have been sold in conformity with the provisions of Rule 145(d) and Rule 144, as
applicable (together with a copy of an opinion of counsel addressed to the
Parent's transfer agent) or pursuant to an effective registration statement
under the Securities Act, which shall be as contemplated by Sections 5.1(a) and
5.10 of the Merger Agreement. Notwithstanding the above, if the shares of Parent
Common Stock are disposed of in accordance with the Resale Prospectus
contemplated by Sections 5.1(a) and 5.10 of the Merger Agreement, the conditions
of clause (i) of the immediately preceding paragraph (as well as clause (i) of
Section 1 hereof and clause (i) of Section 4 hereof) shall be deemed satisfied.
[The remainder of this page is intentionally left blank.]
A-3
Execution of this letter should not be considered an admission on my
part of "affiliate" status as described in the first paragraph of this letter
agreement, or as a waiver of any rights I may have to object to any claim that I
am such an affiliate on or after the date of this letter.
Very truly yours,
By: _________________________________
Name:
Accepted this ______ day of
___________________________, 2003.
XXXXX XXXXX INTERNATIONAL, INC.
By: _____________________________________
Name:
Title:
A-4
EXHIBIT B
FORM OF
VOTING AGREEMENT
VOTING AGREEMENT (this "Agreement") entered into on this 3rd day of
February 2003, among XXXXXX CORPORATION, a Delaware corporation ("Target"), and
each of the stockholders of XXXXX XXXXX INTERNATIONAL, INC., a Florida
corporation ("Parent"), signatory hereto (each, a "Stockholder" and,
collectively, the "Stockholders"). Capitalized terms used and not specifically
defined herein have the respective meanings ascribed to such terms in the Merger
Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, Parent and Target, concurrently with the execution and
delivery of this Agreement, are entering into that certain Agreement and Plan of
Merger of even date herewith (the "Merger Agreement"), pursuant to which, upon
the terms and subject to the conditions set forth therein, a wholly owned
subsidiary of Parent will be merged with and into Target (the "Merger"), and
Target will be the surviving corporation in the Merger; and
WHEREAS, each Stockholder is the record and/or beneficial owner of the
number of outstanding shares of Parent Common Stock set forth opposite each such
Stockholder's name on Schedule A hereto (with respect to each Stockholder, such
Stockholder's "Existing Shares" and, together with all shares of Parent Common
Stock which are acquired by such Stockholders after the date hereof, whether
upon the exercise of warrants, options, conversion of convertible securities or
otherwise, such Stockholder's "Shares").
NOW, THEREFORE, in consideration of the execution of the Merger
Agreement by the parties thereto and the respective representations, warranties,
covenants and agreements set forth in this Agreement, and intending to be
legally bound hereby and thereby, the parties hereto agree as follows:
ARTICLE I VOTING
1.1 Agreement to Vote. Each Stockholder hereby agrees, severally and not
jointly, that it shall, and shall cause the holder of record on any applicable
record date to, at the Parent Stockholders Meeting or at any adjournment or
postponement thereof, (a) appear at such meeting or otherwise cause its Shares
to be counted as present thereat for purposes of establishing a quorum, and (b)
vote or consent (or cause to be voted or consented), in person or by proxy, all
of its Shares in favor of (i) the proposal to approve the issuance of Parent
Common Stock pursuant to and upon the terms and subject to the conditions set
forth in the Merger Agreement and (ii) any other matter submitted to a vote of
the holders of Parent Common Stock at the Parent Stockholder Meeting necessary
to consummate the Merger.
B-1
1.2 No Ownership Interest. Nothing contained in this Agreement shall be
deemed to vest in Target any direct or indirect ownership (or incidence of
ownership), whether beneficial or otherwise, of or with respect to any Shares
(or any interest therein).
1.3 No Inconsistent Agreements. Each Stockholder hereby covenants and
agrees that, except as contemplated by this Agreement and the Merger Agreement,
the Stockholder (a) has not entered, and shall not enter at any time while this
Agreement remains in effect, into any voting agreement or voting trust with
respect to the Shares and (b) has not granted, and shall not grant at any time
while this Agreement remains in effect, a proxy or power of attorney with
respect to the Shares, in either case, which is inconsistent with such
Stockholder' s obligations pursuant to this Agreement.
1.4 Limitations on Transfers. To the extent that any Stockholder shall
directly or indirectly offer for sale, sell, transfer, tender, pledge, encumber,
assign or otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to or consent to the offer for sale,
sale, transfer, tender, pledge, encumbrance, assignment or other disposition of,
any or all of the Shares or any interest therein, it shall be a condition
thereof that prior to any such offer, sale, transfer, tender, pledge,
encumbrance, assignment or other disposition (i) such Stockholder shall have
given notice thereof to Target (whose consent shall not be required) and (ii)
the proposed transferee shall execute and deliver to Target an appropriate
instrument reasonably satisfactory to Target whereby such transferee agrees to
observe and comply with this Agreement and with all obligations and restrictions
imposed on Stockholders hereby.
ARTICLE II REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER
Each Stockholder hereby, severally and not jointly, represents and warrants
to Target as follows:
2.1 Authorization; Validity of Agreement; Necessary Action. Such
Stockholder has full power and authority to execute and deliver this Agreement
and to perform such Stockholder's obligations hereunder. The execution, delivery
and performance by such Stockholder of this Agreement and the consummation by it
of the transactions contemplated hereby have been duly and validly authorized by
such Stockholder and no other actions or proceedings on the part of such
Stockholder are necessary to authorize the execution and delivery by it of this
Agreement and the consummation by it of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by such Stockholder, and,
assuming this Agreement constitutes a valid and binding obligation of Target,
constitutes a valid and binding obligation of such Stockholder, enforceable
against it in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, moratorium and similar laws relating to or
affecting creditors generally or by general equity principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
If such Stockholder is married and any of such Stockholder's Shares constitute
community property under applicable laws, this Agreement has been duly
authorized, executed and
B-2
delivered by, and constitutes the valid and binding agreement of, such
Stockholder's spouse. If this Agreement is being executed in a representative or
fiduciary capacity, the individual or entity signing this Agreement has the full
power and authority to enter into and perform this Agreement
2.2 Non-Contravention. The execution, delivery and performance by such
Stockholder of this Agreement do not and will not result in any breach or
violation of or be in conflict with or constitute a default under any term of
any agreement, judgment, injunction, order, decree, law, regulation or
arrangement to which such Stockholder is a party or by which such Stockholder
(or any of its assets) is bound, except for any such breach, violation, conflict
or default which, individually or in the aggregate, would not impair or affect
such Stockholder's ability to perform such Stockholder's obligations hereunder.
2.3 Shares. Such Stockholder's Existing Shares are, and all of its Shares
from the date hereof through and on the date of the Parent Stockholders Meeting
will be, owned beneficially by such Stockholder. As of the date hereof, such
Stockholder's Existing Shares constitute all of the shares of Parent Common
Stock owned of record or beneficially by such Stockholder. Such Stockholder has
or will have the voting power, power of disposition, power to issue instructions
with respect to the matter set forth in Section 1.1 hereof, and power to agree
to all of the matters set forth in this Agreement, in each case with respect to
all of such Stockholder's Existing Shares and with respect to all of such
Stockholder's Shares on the date of the Parent Stockholder Meeting, with no
limitations, qualifications or restrictions on such rights, subject to
applicable federal securities laws and the terms of this Agreement.
ARTICLE III REPRESENTATIONS AND WARRANTIES OF TARGET
Target represents and warrants to each Stockholder as follows:
3.1 Corporate Authorization. The execution, delivery and performance by
Target of the transactions contemplated hereby are within the corporate powers
of Target and have been duly authorized by all necessary corporate action.
3.2 Binding Obligation. This Agreement has been duly executed and delivered
by Target, and, assuming this Agreement constitutes a valid and binding
obligation of each Stockholder, constitutes a valid and binding obligation of
Target, enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium and similar
laws relating to or affecting creditors generally or by general equity
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
3.3 Non-Contravention. The execution, delivery and performance by Target of
this Agreement do not and will not result in any breach or violation of or be in
conflict
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with or constitute a default under any term of any agreement, judgment,
injunction, order, decree, law, regulation or arrangement to which Target
is a party or by which Target (or any of its assets) is bound, except for
any such breach, violation, conflict or default which, individually or in
the aggregate, would not impair or affect Target's ability to perform its
obligations hereunder.
ARTICLE IV GENERAL PROVISIONS
4.1 Termination. This Agreement shall terminate and no party shall have
any rights or duties hereunder upon the earlier to occur of (a) the Effective
Time or (b) termination of the Merger Agreement pursuant to Section 7.1 thereof.
Nothing in this Section 4.1 shall relieve or otherwise limit any party of
liability for breach of this Agreement.
4.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed duly given (a) on the date of delivery if delivered
personally, or by telecopy or facsimile, upon confirmation of receipt, or (b) on
the first Business Day following the date of dispatch if delivered by a
recognized next-day courier service. All notices hereunder shall be delivered as
set forth below, or pursuant to such other instructions as may be designated in
writing by the party to receive such notice:
if to TARGET to:
Xxxxxx Corporation
00000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Chief Executive Officer
with a copy (which shall not constitute notice hereunder) to:
Xxxxx Xxxxxxx Xxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
email: xxxxxxxx@xxxxxxxxxxxx.xxx
Attention: Xxxxx Xxxxxxx, Esq.
If to the Stockholders party hereto:
to the address set forth next to the name of such
Stockholders on the signature pages hereof
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with a copy (which shall not constitute notice hereunder) to:
Xxxxxxxxx Xxxxxxx, LLP
The MetLife Building
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
e-mail: xxxxxxxx@xxxxx.xxx
Attention: Xxxxxxxx X. Xxxxxxx, Esq.
4.3 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that both
parties need not sign the same counterpart. Signatures transmitted by facsimile
or other comparable means shall be deemed an original.
4.4 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Florida (without giving effect to
choice of law principles thereof).
4.5 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.
4.6 Assignment. Except as expressly provided in Section 1.4 hereof,
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the parties hereto, in whole or in part (whether by
operation of law or otherwise), without the prior written consent of all of the
parties hereto. Any assignment in violation of the preceding sentence shall be
void. Subject to the preceding two sentences, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns (including, in the case of an individual, any
executors, administrators, estates or legal representatives of such individual).
4.7 Consent to Jurisdiction. Each of the parties hereto (a) consents to
submit itself to the personal jurisdiction of any Federal court located in the
State of Florida or any Florida state court in the event any dispute arises out
of this Agreement, (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other
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request for leave from any such court, and (c) agrees that it will not bring any
action relating to this Agreement or any of the transactions contemplated by
this Agreement in any court other than a Federal court sitting in the State of
Florida or a Florida state court. The parties irrevocably and unconditionally
waive any objection to the laying of venue of any action, suit or proceeding
arising out of this Agreement or any of the transactions contemplated by this
Agreement in any Federal court located in the State of Florida or any Florida
state court, and hereby further irrevocably and unconditionally waive and agree
not to plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
4.8 Expenses. All costs and expenses incurred in connection with this
Agreement shall be paid by the party incurring such cost or expense.
4.9 Amendments. This Agreement may not be modified or amended, except upon
the execution and delivery of a written agreement executed by the parties
hereto.
4.10 Certain Definitions. For purposes of this Agreement, (i) the term
"beneficial ownership" (or any similar term) shall have the meaning set forth in
Rule 13d-3 under the Securities Exchange Act of 1934, and (ii) the term "Merger
Agreement" shall include the Merger Agreement as amended from time to time.
4.11 Action in Stockholder Capacity Only. Each representation, warranty,
covenant and agreement made by a Stockholder hereunder is made in such
Stockholder's capacity as a stockholder only, not as an officer or director of
Parent. Nothing herein shall limit or affect any Stockholder's ability to take
any action in his or her capacity as an officer or director of Parent.
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IN WITNESS WHEREOF, each of the parties hereto has signed this Agreement or
caused this Agreement to be signed by its respective officers thereunto duly
authorized, all as of the date first written above.
Target:
XXXXXX CORPORATION
By: _______________________________
Name:
Title:
Stockholders:
___________________________________
XXXXXX XXXXXXXXXXX
___________________________________
XXXXX XXXXXXXXXXX
GFX, INC., a Florida corporation
By: _______________________________
XXXXXX XXXXXXXXXXX, President
THE XXXXX XXXXXXXXXXX FAMILY
PARTNERSHIP LTD., a Florida
limited partnership
By: XXXXX XXXXXXXXXXX
INVESTMENT CORP., a Florida
corporation, General Partner
By:________________________________
XXXXX XXXXXXXXXXX, President
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Schedule A
--------------------------------------------------------------------------------
Address Stockholder
--------------------------------------------------------------------------------
XXXXXX XXXXXXXXXXX
Number of shares of
Parent Common Stock: 1,176,325
--------------------------------------------------------------------------------
XXXXX XXXXXXXXXXX
Number of shares of
Parent Common Stock: 1,123,288
--------------------------------------------------------------------------------
GFX, INC.
Number of shares of
Parent Common Stock: 361,525
--------------------------------------------------------------------------------
THE XXXXX XXXXXXXXXXX FAMILY
PARTNERSHIP LTD.
Number of shares of
Parent Common Stock: 83,690
--------------------------------------------------------------------------------
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