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EXHIBIT (d)(1)
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
COMPASS GROUP PLC,
YORKMONT ONE, INC.,
AND
XXXXXXXX MANAGEMENT SPECIALISTS, INC.
DATED AS OF FEBRUARY 6, 2001
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TABLE OF CONTENTS
Page
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ARTICLE I THE OFFER AND THE MERGER................................................................................ 1
Section 1.01. THE OFFER.............................................................................. 1
Section 1.02. COMPANY ACTIONS........................................................................ 3
Section 1.03. THE MERGER............................................................................. 4
Section 1.04. CLOSING................................................................................ 4
Section 1.05. EFFECTIVE TIME......................................................................... 4
Section 1.06. EFFECTS OF THE MERGER.................................................................. 4
Section 1.07. ARTICLES OF INCORPORATION AND BYLAWS................................................... 4
Section 1.08. DIRECTORS.............................................................................. 5
Section 1.09. OFFICERS............................................................................... 5
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES.... 5
Section 2.01. EFFECT ON CAPITAL STOCK................................................................ 5
Section 2.02. EXCHANGE OF CERTIFICATES............................................................... 6
ARTICLE III REPRESENTATIONS AND WARRANTIES........................................................................ 7
Section 3.01. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................... 7
Section 3.02. REPRESENTATIONS AND WARRANTIES OF COMPASS AND SUB..................................... 26
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS............................................................. 28
Section 4.01. CONDUCT OF BUSINESS................................................................... 28
Section 4.02. NO SOLICITATION....................................................................... 32
ARTICLE V ADDITIONAL AGREEMENTS.................................................................................. 34
Section 5.01. PREPARATION OF THE PROXY STATEMENT; COMPANY STOCKHOLDERS MEETING...................... 34
Section 5.02. ACCESS TO INFORMATION; CONFIDENTIALITY................................................ 35
Section 5.03. COMMERCIALLY REASONABLE EFFORTS; NOTIFICATION......................................... 35
Section 5.04. INDEMNIFICATION, EXCULPATION AND INSURANCE............................................ 36
Section 5.05. FEES AND EXPENSES..................................................................... 38
Section 5.06. STOCK OPTIONS AND RESTRICTED STOCK.................................................... 39
Section 5.07. BENEFITS MATTERS...................................................................... 39
Section 5.08. PUBLIC ANNOUNCEMENTS.................................................................. 40
Section 5.09. DIRECTORS............................................................................. 40
ARTICLE VI CONDITIONS PRECEDENT.................................................................................. 41
Section 6.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER............................ 41
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER.................................................................... 42
Section 7.01. TERMINATION........................................................................... 42
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Section 7.02. EFFECT OF TERMINATION................................................................. 43
Section 7.03. AMENDMENT............................................................................. 43
Section 7.04. EXTENSION; WAIVER..................................................................... 43
ARTICLE VIII GENERAL PROVISIONS.................................................................................. 44
Section 8.01. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES......................................... 44
Section 8.02. NOTICES............................................................................... 44
Section 8.03. DEFINITIONS........................................................................... 45
Section 8.04. INTERPRETATION........................................................................ 45
Section 8.05. COUNTERPARTS.......................................................................... 46
Section 8.06. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES........................................ 46
Section 8.07. GOVERNING LAW......................................................................... 46
Section 8.08. ASSIGNMENT............................................................................ 46
Section 8.09. ENFORCEMENT........................................................................... 46
Section 8.10. SEVERABILITY.......................................................................... 46
ANNEX I CONDITIONS OF THE OFFER
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER dated as of February 6, 2001 (this
"Agreement"), by and among COMPASS GROUP PLC, a public limited company
incorporated in England and Wales ("Compass"), YORKMONT ONE, INC., a Georgia
corporation and a wholly owned indirect subsidiary of Compass ("Sub"), and
XXXXXXXX MANAGEMENT SPECIALISTS, INC., a Georgia corporation (the "Company").
WHEREAS, the respective Boards of Directors of Compass, Sub and the
Company have each determined that it is in the best interests of their
respective stockholders for Compass to acquire the Company on the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, it is proposed that Sub
will make a tender offer (as it may be amended from time to time as permitted
under this Agreement, the "Offer") to purchase all the outstanding shares of
common stock, par value $0.01 per share, of the Company including the
associated rights to purchase shares of Series A Junior Participating Preferred
Stock, $0.01 par value per share, of the Company issued pursuant to the
Company's Rights Plan (the "Company Common Stock"), at a price per share of
Company Common Stock of $40.00, net to the sellers in cash, without interest on
the terms and subject to the conditions set forth in this Agreement;
WHEREAS, the Board of Directors of the Company has approved the Offer
and resolved to recommend that holders of the Company Common Stock tender their
shares pursuant to the Offer;
WHEREAS, the respective Boards of Directors of Compass, Sub and the
Company have approved this Agreement and the merger (the "Merger") of Sub into
the Company in accordance with the Georgia Business Corporation Code (the
"GBCC"), on the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, Compass, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE OFFER AND THE MERGER
Section 1.01. THE OFFER.
(a) Subject to the conditions of this Agreement, as
promptly as practicable, but in no event later than ten business days after the
date of the public announcement of this Agreement, Sub shall, and Compass shall
cause Sub to, commence the Offer within the meaning of the applicable rules and
regulations of the Securities and Exchange Commission (the "SEC") at a price
per share of Company Common Stock of $40.00, net to the sellers in cash,
without interest. The obligations of Sub to, and of Compass to cause Sub to,
accept for payment, and pay
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for, any shares of Company Common Stock tendered pursuant to the Offer are
subject to the conditions set forth in Annex I. The initial expiration date of
the Offer shall be the 30th business day following the commencement of the
Offer. Sub expressly reserves the right to waive any condition to the Offer or
modify the terms of the Offer, except that, without the prior written consent
of the Company, Sub shall not (i) reduce the number of shares of Company Common
Stock subject to the Offer, (ii) reduce the price per share of Company Common
Stock to be paid pursuant to the Offer, (iii) waive the Minimum Tender
Condition (as defined in Annex I), add to the conditions set forth in Annex I
or modify any condition set forth in Annex I in any manner adverse to the
holders of Company Common Stock, or (iv) change the form of consideration
payable in the Offer. If all of the conditions to the Offer are not satisfied
on any scheduled expiration date of the Offer then Sub may extend the Offer for
one or more periods of time that Sub reasonably believes are necessary to cause
the conditions to the Offer to be satisfied from time to time until such
conditions are satisfied or waived, provided that, without the prior written
consent of the Company, Sub may not extend the Offer beyond April 30, 2001. Sub
may, without the consent of the Company, elect to provide a subsequent offering
period for the Offer in accordance with Rule 14d-11 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), following its acceptance for
payment of shares of Company Common Stock in the Offer. On the terms and
subject to the conditions of the Offer and this Agreement, Sub shall, and
Compass shall cause Sub to, accept for payment and pay for all shares of
Company Common Stock validly tendered and not withdrawn pursuant to the Offer
that Sub becomes obligated to purchase pursuant to the Offer as soon as
practicable after the expiration of the Offer and the receipt by Sub of a
certificate of the Company, or other evidence satisfactory to Sub and Compass,
certifying that the conditions of the Offer specified in 2(b), 2(c), 2(d),
2(e), 2(f) and 2(g) of Annex I have been satisfied, but only to the extent such
conditions relate to the Company. As used herein, the term "Specified Date"
shall refer to the date on which Sub accepts for payment the shares of Company
Common Stock pursuant to and subject to the conditions of the Offer.
(b) On the date of commencement of the Offer, Compass
and Sub shall file with the SEC a Tender Offer Statement on Schedule TO
(together with all amendments and supplements thereto, the "Schedule TO") with
respect to the Offer. The Schedule TO shall contain or shall incorporate by
reference an offer to purchase and forms of the related letter of transmittal
and any related summary advertisement (the Schedule TO, the offer to purchase
and such other documents, together with all supplements and amendments thereto,
being referred to herein collectively as the "Offer Documents"). The Company
and its counsel shall be given reasonable opportunity to review and comment
upon the Offer Documents prior to their filing with the SEC or dissemination to
the stockholders of the Company. Compass, Sub and the Company will promptly
correct any information provided by any of them for use in the Offer Documents
that shall have become false or misleading, and will take all steps necessary
to cause the Offer Documents, as so corrected, to be filed with the SEC and to
be disseminated to holders of shares of Company Common Stock, in each case as
and to the extent required by applicable federal securities laws. Compass and
Sub shall provide the Company and its counsel in writing with any written
comments (and orally, any oral comments), Compass, Sub or their counsel may
receive from the SEC or its staff with respect to the Offer Documents promptly
after the receipt of such comments and shall consult with the Company and its
counsel prior to responding to any such comments.
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(c) Compass shall provide or cause to be provided to Sub
on a timely basis the funds necessary to purchase any shares of Company Common
Stock that Sub becomes obligated to purchase pursuant to the Offer.
Section 1.02. COMPANY ACTIONS.
(a) The Company hereby approves of and consents to the
Offer and represents that its Board of Directors at a meeting duly called and
held on February 5, 2001, has by unanimous vote of the members thereof present
and voting thereat: (i) determined that this Agreement and the transactions
contemplated hereby, including the Offer and the Merger (collectively, the
"Transactions"), considered as a whole, are fair to, and in the best interest
of, the Company and the holders of Company Common Stock, (ii) approved, adopted
and declared advisable this Agreement and the Transactions (such approval and
adoption having been made in accordance with the GBCC and the Company's
Articles of Incorporation) and (iii) recommended that the holders of Company
Common Stock accept the Offer and tender their Company Common Stock pursuant to
the Offer, and approve and adopt this Agreement and the Merger.
(b) On the date of commencement of the Offer, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements thereto, the
"Schedule 14D-9") containing the recommendation of the Board of Directors of
the Company described in Section 1.02(a), and shall disseminate the Schedule
14D-9 to the extent required by Rule 14d-9 promulgated under the Exchange Act
and any other applicable federal securities laws. Compass and its counsel shall
be given reasonable opportunity to review and comment upon the Schedule 14D-9
prior to its filing with the SEC or dissemination to stockholders of the
Company. The Company, Compass and Sub will promptly correct any information
provided by any of them for use in the Schedule 14D-9 which shall have become
false or misleading, and will take all steps necessary to cause the Schedule
14D-9, as so corrected, to be filed with the SEC and disseminated to holders of
shares of Company Common Stock, in each case as and to the extent required by
applicable federal securities laws. The Company shall provide Compass and its
counsel in writing with any written comments (and orally, any oral comments)
the Company or its counsel may receive from the SEC or its staff with respect
to the Schedule 14D-9 promptly after the receipt of such comments and shall
consult with Compass and its counsel prior to responding to such comments.
(c) In connection with the Offer and the Merger, the
Company shall cause its transfer agent to furnish Sub promptly with an
appropriate number of mailing labels containing the names and addresses of the
record holders of Company Common Stock as of a recent date and of those persons
becoming record holders subsequent to such date, together with copies of all
lists of stockholders, security position listings and computer files and all
other information in the Company's possession or control regarding the
beneficial owners of Company Common Stock, and shall furnish to Sub such
information and assistance (including updated lists of stockholders, security
position listings and computer files) as Compass may reasonably request in
communicating the Offer to the Company's stockholders. Subject to the
requirements of applicable law, and except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to consummate
the Offer, the Merger and the other transactions contemplated by this
Agreement, Compass and Sub shall hold in confidence the information contained
in any such labels, listings and files, shall use such information only in
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connection with the Offer and the Merger and, if this Agreement shall be
terminated, shall, upon request, deliver to the Company all copies of such
information then in their possession.
Section 1.03. THE MERGER. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the GBCC, Sub shall be
merged with and into the Company at the Effective Time (as defined in Section
1.05). At the Effective Time, the separate corporate existence of Sub shall
cease and the Company shall continue as the surviving corporation (the
"Surviving Corporation") and shall succeed to and assume all the rights and
obligations of Sub in accordance with the GBCC.
Section 1.04. CLOSING. Upon the terms and subject to the conditions
set forth in this Agreement, the closing of the Merger (the "Closing") shall
take place at 11:00 a.m., within five business days after the satisfaction or
(to the extent permitted by applicable law) waiver of the conditions set forth
in Article VI (other than those that by their terms cannot be satisfied until
the time of the Closing but subject to the fulfillment or waiver of such
conditions), at the offices of Xxxxx Xxxxx Mulliss & Xxxxx, L.L.P., 000 Xxxxx
Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx, or at such other time, date or place
agreed to in writing by Compass and the Company; provided that if all the
conditions set forth in Article VI shall not have been satisfied or (to the
extent permitted by applicable law) waived within such period, then the Closing
shall take place on the fifth business day following the date on which all such
conditions shall have been satisfied or (to the extent permitted by applicable
law) waived. The date on which the Closing occurs is referred to in this
Agreement as the "Closing Date".
Section 1.05. EFFECTIVE TIME. Upon the terms and subject to the
conditions set forth in this Agreement, as soon as practicable on or after the
Closing Date, a certificate of merger or other appropriate documents (in any
such case, the "Certificate of Merger") shall be duly prepared, executed and
acknowledged by the parties in accordance with the relevant provisions of the
GBCC and filed with the Secretary of State of the State of Georgia. The Merger
shall become effective upon the filing of the Certificate of Merger with the
Secretary of State of the State of Georgia or at such subsequent time or date
as Compass and the Company shall agree and specify in the Certificate of
Merger. The time at which the Merger becomes effective is referred to in this
Agreement as the "Effective Time".
Section 1.06. EFFECTS OF THE MERGER. The Merger shall have the effects
set forth in Section 14-2-1106 of the GBCC.
Section 1.07. ARTICLES OF INCORPORATION AND BYLAWS.
(a) The Articles of Incorporation of the Company as in
effect immediately prior to the Effective Time shall be the Articles of
Incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable law.
(b) The Bylaws of the Sub as in effect immediately prior
to the Effective Time shall be the Bylaws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
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Section 1.08. DIRECTORS. The directors of Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation until the
earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
Section 1.09. OFFICERS. The officers of the Company immediately prior
to the Effective Time shall be the officers of the Surviving Corporation until
the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
Section 2.01. EFFECT ON CAPITAL STOCK. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of capital stock of the Company, Compass or Sub:
(a) CONVERSION OF COMPANY COMMON STOCK. Each share of
Company Common Stock issued and outstanding immediately prior to the Effective
Time (other than shares to be canceled in accordance with Section 2.01(c) and
the Appraisal Shares (as defined in Section 2.01(d)) shall be converted into
the right to receive from the Surviving Corporation in cash, without interest,
the price per share paid in the Offer (the "Merger Consideration"). At the
Effective Time all such shares shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and each holder of a
certificate that immediately prior to the Effective Time represented any such
shares (a "Certificate") shall cease to have any rights with respect thereto,
except the right to receive the Merger Consideration.
(b) CAPITAL STOCK OF SUB. Each issued and outstanding
share of common stock of Sub shall be converted into and become one fully paid
and nonassessable share of common stock of the Surviving Corporation.
(c) CANCELLATION OF TREASURY STOCK AND COMPASS-OWNED
STOCK. Each share of Company Common Stock that is owned by the Company (as
treasury stock), Compass or Sub immediately prior to the Effective Time shall
automatically be canceled and retired and shall cease to exist and no
consideration shall be delivered in exchange therefor.
(d) APPRAISAL RIGHTS. Notwithstanding anything in this
Agreement to the contrary, shares (the "Appraisal Shares") of Company Common
Stock issued and outstanding immediately prior to the Effective Time that are
held by any holder who is entitled to demand and properly demands appraisal of
such shares pursuant to, and who complies in all respects with, the provisions
of Article 13 of the GBCC and as of the Effective Time has not withdrawn or
lost such right to such appraisal shall not be converted into the right to
receive the Merger Consideration as provided in Section 2.01(a), but instead
such holder shall only be entitled to such rights as are granted by the GBCC.
At the Effective Time, all Appraisal Shares shall no longer be outstanding and
shall automatically be canceled and shall cease to exist, and each holder of
Appraisal Shares shall cease to have any rights with respect thereto, except
those granted by the GBCC. If a holder of Appraisal Shares shall effectively
withdraw or lose (through
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failure to perfect or otherwise) the right to appraisal, then, as of the
Effective Time or the occurrence of such event, whichever last occurs, those
Appraisal Shares shall be converted into and represent only the right to
receive the Merger Consideration as provided in Section 2.01(a), upon the
surrender of the certificate or certificates representing those Appraisal
Shares. The Company shall serve prompt notice to Compass of any demands for
appraisal of any shares of Company Common Stock, and Compass shall have the
right to participate in and direct all negotiations and proceedings with
respect to such demands. Prior to the Effective Time, the Company shall not,
without the prior written consent of Compass, make any payment with respect to,
or settle or offer to settle, any such demands, or agree to do any of the
foregoing.
Section 2.02. EXCHANGE OF CERTIFICATES.
(a) PAYING AGENT. Prior to the Effective Time Compass
shall designate, or shall cause to be designated, a bank or trust company
reasonably acceptable to the Company to act as agent for the payment of the
Merger Consideration upon surrender of Certificates (the "Paying Agent"), and,
from time to time after the Effective Time, Compass shall provide, or cause the
Surviving Corporation to provide, to the Paying Agent funds in amounts and at
the times necessary for the payment of the Merger Consideration upon surrender
of Certificates, it being understood that any and all interest or income earned
on funds made available to the Paying Agent pursuant to this Agreement shall be
the sole property of Compass.
(b) EXCHANGE PROCEDURE. As soon as reasonably
practicable after the Effective Time, the Paying Agent shall mail to each
Certificate holder of record (i) a form of letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates held by such person shall pass, only upon proper delivery of the
Certificates to the Paying Agent and shall be in customary form and have such
other provisions as Compass may reasonably specify) and (ii) instructions for
use in effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate to the Paying Agent for
cancellation or to such other agent or agents as may be appointed by Compass,
together with such letter of transmittal, duly completed and validly executed,
and such other documents as may reasonably be required by the Paying Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor
the amount of cash into which the shares formerly represented by such
Certificate shall have been converted pursuant to Section 2.01(a), and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Company Common Stock that is not registered in the
stock transfer books of the Company, the proper amount of cash may be paid in
exchange therefor to a person other than the person in whose name the
Certificate so surrendered is registered if such Certificate shall be properly
endorsed or otherwise be in proper form for transfer and the person requesting
such payment shall pay any transfer or other taxes required by reason of the
payment to a person other than the registered holder of such Certificate or
establish to the satisfaction of Compass that such tax has been paid or is not
applicable. No interest shall be paid or shall accrue on the cash payable upon
surrender of any Certificate.
(c) CLOSING OF TRANSFER BOOKS. At the Effective Time,
the stock transfer books of the Company shall be closed, and no transfer of
shares of Company Common Stock shall be made thereafter. If, after the
Effective Time, Certificates are presented to the
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Surviving Corporation or the Paying Agent for transfer or any other reason,
they shall be canceled and exchanged as provided in this Article II.
(d) NO LIABILITY. None of Compass, Sub, the Company or
the Paying Agent shall be liable to any person in respect of any cash delivered
to a public official pursuant to any applicable abandoned property, escheat or
similar law. If any Certificates shall not have been surrendered within two
years after the Effective Time (or immediately prior to such earlier date on
which any Merger Consideration would otherwise escheat to or became the
property of any Governmental Entity (as defined in Section 3.01(d)), any such
Merger Consideration in respect thereof shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free and
clear of all claims or interest of any person previously entitled thereto.
(e) LOST CERTIFICATES. If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond in
such reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
the Paying Agent shall pay in respect of such lost, stolen or destroyed
Certificate the Merger Consideration.
(f) WITHHOLDING. Compass, the Company, the Surviving
Corporation or the Paying Agent shall be entitled to deduct and withhold from
the consideration otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock and each holder of a Company Stock Option such
amounts as Compass, the Company, the Surviving Corporation or the Paying Agent
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"), or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld and paid over to the appropriate taxing authority by Compass, the
Company, the Surviving Corporation or the Paying Agent, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the shares of Company Common Stock and each holder of a Company Stock
Option in respect of which such deduction and withholding was made by Compass,
the Company the Surviving Corporation or the Paying Agent. Compass, the
Company, the Surviving Corporation, or the Paying Agent, as the case may be,
shall file all payroll tax reports or wage statements which are required to be
filed with the appropriate Governmental Entity.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as
set forth on the disclosure schedule (with specific reference to the Section or
Subsection of this Agreement to which the information stated in such disclosure
relates and such other Sections or Subsections of this Agreement to the extent
a matter is disclosed in such a way as to make its relevance to the information
called for by such other Section or Subsection readily apparent) delivered by
the Company to Compass prior to the execution of this Agreement (the
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"Company Disclosure Schedule"), the Company represents and warrants to Compass
and Sub as follows:
(a) ORGANIZATION, STANDING AND POWER. Each of the
Company and its subsidiaries (i) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, (ii) has
all requisite corporate, company or partnership power and authority to carry on
its business as now being conducted and (iii) 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, other than (except in the case of
clause (i) above with respect to the Company) where the failure to be so
organized, existing, qualified or licensed or in good standing, individually
and in the aggregate, would not reasonably be expected to have a Material
Adverse Effect (as defined in Section 8.03). The Company has made available to
Compass true and complete copies of its Articles of Incorporation and Bylaws,
in each case, as amended to the date of this Agreement.
(b) SUBSIDIARIES. Section 3.01(b) of the Company
Disclosure Schedule lists each subsidiary of the Company. All the outstanding
shares of capital stock or other equity or voting interests of each subsidiary
of the Company are owned by the Company free and clear of all pledges, claims,
liens, charges, encumbrances and security interests of any kind or nature
whatsoever (collectively, "Liens"), and are duly authorized, validly issued,
fully paid and nonassessable. Except for the capital stock of, or other equity
or voting interests in, its wholly owned subsidiaries, and except as disclosed
in Section 3.01(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 corporation, partnership, joint venture, association or other
entity.
(c) CAPITAL STRUCTURE. The authorized capital stock of
the Company consists of 100,000,000 shares of Company Common Stock and 250,000
shares of Preferred Stock, of which 50,000 shares are designated as Series A
Junior Participating Preferred Stock (the "Preferred Stock"). As of the close
of business on December 31, 2000, (i) 12,783,834 shares of Company Common Stock
were issued and outstanding (including shares of Company Common Stock held in a
"rabbi trust" in connection with the Company's Deferred Compensation Plan),
(ii) no shares of Company Common Stock were held by the Company in its
treasury, and (iii) no Preferred Stock was issued and outstanding or held by
the Company in its treasury. As of the date hereof, not more than 2,475,495
shares of Company Common Stock are subject to outstanding stock options to
purchase Company Common Stock (collectively, the "Company Stock Options")
granted under the Company's Stock Incentive and Deferred Compensation Plan for
Directors, the 1996 Stock Incentive Plan, and the 1996 Non-Executive Stock
Incentive Plan (such plans, collectively, the "Company Stock Plans"). There are
no outstanding stock appreciation rights or other similar rights outstanding
under the Company Stock Plans. Except as set forth above and except for stock
equivalent units held on behalf of employees in their Company stock rate of
return accounts in the Company's Deferred Compensation Plan and the rights
issued under the Rights Plan (the "Rights"), as of the close of business on
November 30, 2000, no shares of capital stock of, or other equity or voting
interests in, the Company, or options, warrants or other rights to acquire any
such stock or securities were issued, reserved for issuance or outstanding. No
shares of Company Common Stock are owned by any subsidiary of the Company. All
outstanding shares of capital stock of the Company are,
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and all shares that may be issued pursuant to the Company Stock Plans will be
when issued in accordance with the terms thereof, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights.
There are no bonds, debentures, notes or other indebtedness of the Company or
any of its subsidiaries, and no securities or other instruments or obligations
of the Company or any of its subsidiaries the value of which is in any way
based upon or derived from any capital or voting stock of the Company, having
the right to vote (or convertible into, or exchangeable for, securities having
the right to vote) on any matters on which stockholders of the Company may
vote. Except as set forth above, except as specifically permitted under Section
4.01(a), there are no Contracts (as defined in Section 3.01(d)) of any kind to
which the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound, obligating the Company or any of its
subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock of, or other equity or voting
interests in, or securities convertible into, or exchangeable or exercisable
for, shares of capital stock of, or other equity or voting interests in, the
Company or any of its subsidiaries or obligating the Company or any of its
subsidiaries to issue, grant, extend or enter into any such security, option,
warrant, call, right or Contract. There are no outstanding contractual
obligations of the Company or any of its subsidiaries to (x) repurchase, redeem
or otherwise acquire any shares of capital stock of, or other equity or voting
interests in, the Company or any of its subsidiaries or (y) vote or dispose of
any shares of the capital stock of, or other equity or voting interests in, any
of its subsidiaries. To the knowledge of the Company as of the date of this
Agreement, there are no irrevocable proxies and no voting agreements with
respect to any shares of the capital stock or other voting securities of the
Company or any of its subsidiaries.
(d) AUTHORITY; NONCONTRAVENTION. The Company has the
requisite corporate power and authority to execute and deliver this Agreement
and, subject only to, if required by law, approval of the Merger by an
affirmative vote of the holders of a majority of the outstanding shares of the
Company Common Stock (the "Company Stockholder Approval") to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company 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 only to the Company Stockholder Approval if
such approval is required by law and no other corporate proceedings on the part
of the Company are necessary to approve this Agreement or to consummate the
transactions contemplated hereby or thereby. This Agreement been duly executed
and delivered by the Company and constitutes valid and binding obligations of
the Company, enforceable against the Company in accordance with their terms,
subject to applicable bankruptcy, insolvency, moratorium, fraudulent
conveyance, or other similar laws relating to creditors' rights and general
principles of equity. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and compliance with the
provisions hereof do not conflict with, or result in any violation or breach
of, or default (with or without notice or lapse of time, or both) under, or
give rise to a right of, or result in, termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or
result in the creation of any Lien in or upon any of the properties or assets
of the Company or any of its subsidiaries under, or give rise to any increased,
additional, accelerated or guaranteed rights or entitlements under, any
provision of (i) the Articles of Incorporation or Bylaws of the Company or the
articles of incorporation or bylaws (or similar organizational documents) of
any of its subsidiaries, (ii) other than as disclosed in Section 3.01(d) of the
Company Disclosure Schedule any loan or credit agreement, bond, debenture,
note, mortgage, indenture, guarantee,
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13
lease or other contract, commitment, agreement, instrument, arrangement,
understanding, obligation, undertaking, permit, concession, franchise or
license, whether oral or written (each, including all amendments thereto, a
"Contract"), to which the Company or any of its subsidiaries is a party or any
of their respective properties or assets is subject or (iii) subject to the
governmental filings and other matters referred to in the following sentence,
any (A) statute, law, ordinance, rule or regulation or (B) judgment, order or
decree, in each case applicable to the Company or any of its subsidiaries or
their respective properties or assets, other than, in the case of clauses (ii)
and (iii), any such conflicts, violations, breaches, defaults, rights, losses,
Liens or entitlements that, individually and in the aggregate, would not
reasonably be expected to have a Material Adverse Effect or to prevent or
materially impede or delay the consummation of the Offer, the Merger or the
other transactions contemplated by this Agreement. No consent, approval, order
or authorization of, or registration, declaration or filing with, any domestic
or foreign (whether national, federal, state, provincial, local or otherwise)
government or any court, administrative agency or commission or other
governmental or regulatory authority or agency, domestic, foreign or
supranational (a "Governmental Entity"), is required by 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 or compliance with the provisions hereof, except for (U)
expiration or termination of the waiting period under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (V) the filing
with the SEC of (a) the Schedule 14D-9, (b) a proxy statement or information
statement relating to the Company Stockholder Approval if such approval is
required by law (as amended or supplemented from time to time, the "Proxy
Statement") and (c) such reports under the Exchange Act, as may be required in
connection with this Agreement, the Offer, the Merger and the other
transactions contemplated hereby or thereby, (W) the filing of the Certificate
of Merger with the Secretary of State of the State of Georgia and appropriate
documents with the relevant authorities of other states in which the Company or
any of its subsidiaries is qualified to do business, (X) any filings required
under the rules and regulations of the New York Stock Exchange (the "NYSE") and
(Y) such other consents, approvals, orders, authorizations, registrations,
declarations and filings (including those required under Environmental Laws (as
defined in Section 3.01(l)(iii)) the failure of which to be obtained or made,
individually and in the aggregate, would not reasonably be expected to have a
Material Adverse Effect or to prevent or materially impede or delay the
consummation of the Offer, the Merger or the other transactions contemplated by
this Agreement.
(e) SEC DOCUMENTS. The Company has filed with the SEC
all forms, reports, schedules, statements and other documents required to be
filed with the SEC by the Company since June 1, 1998 (together with and giving
effect to, any amendments, supplements and exhibits thereto and any information
incorporated therein by reference, the "SEC Documents"). No subsidiary of the
Company is required to file any form, report, schedule, statement or other
document with the SEC. As of their respective dates, the 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 promulgated thereunder. Except to the
extent that information contained in any SEC Document has been revised or
superseded by a later filed SEC Document, none of the SEC Documents contained
when filed any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial
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14
statements (including the related notes) included in the SEC Documents complied
as to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto as in
effect on the dates the SEC Documents were filed, 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 Form
10-Q of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated therein or in the notes thereto) and fairly present
in all material respects the consolidated financial position of the Company and
its consolidated subsidiaries as of the dates thereof and their consolidated
results of operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal and recurring year-end audit
adjustments). Since the date of the SEC Documents filed prior to the date
hereof (the "Filed SEC Documents"), the Company and its subsidiaries have
incurred no material liabilities or obligations (net of the benefits or assets
obtained by the Company in connection with the incurrence of such liabilities
or obligations) of any nature (whether accrued, absolute, contingent or
otherwise), other than (i) liabilities and obligations in connection with the
transactions contemplated by this Agreement, (ii) liabilities and obligations
incurred in the ordinary course of business consistent with past practice,
(iii) those liabilities and obligations which were not required under GAAP to
be reflected or reserved against in the financial statements (including the
related notes) included in the SEC Documents, or with respect to the period
following the date of the most recent Filed SEC Documents, those liabilities
and obligations which would not be required under GAAP to be reflected or
reserved in those financial statements of the Company prepared as of a fiscal
year end; or (iv) as set forth in Section 3.01(e) of the Company Disclosure
Schedule.
(f) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
disclosed in the Filed SEC Documents, since November 30, 2000, the Company and
its subsidiaries have conducted their respective businesses only in the
ordinary course consistent with past practice, and there has not been, except
as set forth on Section 3.01(f) of the Company Disclosure Schedule (i) any
state of facts, change, development, effect, event, condition or occurrence
that, individually or in the aggregate, constitutes, has had, or would
reasonably be expected to have, a Material Adverse Effect, (ii) any
declaration, setting aside or payment of any dividend on, or other distribution
(whether in cash, stock or property) in respect of, any of the Company's or any
of its subsidiaries' capital stock, except for dividends by a wholly owned
subsidiary of the Company to its parent and the declaration of regular
quarterly cash dividends, the most recent of which was declared January 9,
2001, payable January 31, 2001, (iii) other than in connection with the
exercise of Company Stock Options, any purchase, redemption or other
acquisition of any shares of capital stock or any other securities of the
Company or any of its subsidiaries or any options, warrants, calls or rights to
acquire such shares or other securities, (iv) any split, combination or
reclassification of any of the Company's or any of its subsidiaries' 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 capital
stock or other securities of the Company or any of its subsidiaries, (v) (A)
any granting by the Company or any of its subsidiaries to any current or former
director or executive officer of any increase, or to any current or former
officer of any material increase, in compensation or other benefits, except in
each case for increases of compensation in the ordinary course of business
consistent with past practice or required under any agreement or Benefit Plan
(as defined in Section 3.01(j)) in effect as of November 30, 2000, (B) any
granting by the Company or any of its subsidiaries to any current or former
director or officer of any right to receive any material severance or
termination pay or any material increase
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therein, or (C) any entry by the Company or any of its subsidiaries into, or
any material amendment of, any Benefit Plan with any current or former director
or officer of the Company or any of its subsidiaries, (vi) any change in
financial or tax accounting methods, principles or practices by the Company or
any of its subsidiaries, except insofar as may have been required by a change
in GAAP or applicable law, (vii) any material election with respect to taxes by
the Company or any of its subsidiaries or (viii) any settlement or compromise
of any material tax liability or refund.
(g) LITIGATION. Except as disclosed in Section 3.01(g)
of the Company Disclosure Schedule, there is no suit, claim, action,
investigation or proceeding pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its subsidiaries or any
of their respective assets that, individually, involves a claim in excess of
$200,000, nor is there any statute, law, ordinance, rule, regulation, judgment,
order, injunction or decree, of any Governmental Entity or arbitrator
outstanding against, or, to the knowledge of the Company, investigation,
proceeding, notice of violation, order of forfeiture or complaint by any
Governmental Entity involving, the Company or any of its subsidiaries that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
(h) CONTRACTS.
(i) As used herein, the term "Customer
Contract" means a contract to provide contract food and
contract catering services to customers of the Company or its
subsidiaries as to which the Company or any subsidiary was a
party;
(ii) As used herein, the term "Material
Contract" means any contract, agreement, arrangement or
understanding to which the Company or any subsidiary is a
party or by which the Company, any subsidiary, or any of
their respective assets is bound that is or contains any of
the following:
(A) the Company's 50 largest Customer
Contracts for fiscal year 2000;
(B) a contract purporting to be
binding upon the Company, any of its subsidiaries or
any of its affiliates that contains a covenant
restricting the ability of the Company or any of its
subsidiaries (or which, following the consummation
of the Offer or the Merger, would reasonably be
expected to restrict the ability of Compass or any
of its subsidiaries, including the Company and its
subsidiaries) to compete with any person or engage
in any business or activity in any geographic area
or pursuant to which any benefit is required to be
given or lost as a result of so competing or
engaging;
(C) a loan, guarantee or similar
agreement relating to the borrowing of money from,
or extension of credit to, any other person in
excess of $100,000;
(D) any lease or sublease relating to
real property involving rent in excess of $100,000
per year;
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(E) any contract not fully performed,
including without limitation contracts for the
purchase of any commodity, material, services,
equipment or fixed assets, for a price in excess of
$1,000,000 in the aggregate over the life of the
contract;
(F) any vehicle master lease or other
personal property master lease involving annual
payments in excess of $250,000 per year;
(G) any contract that obligates the
Company or its subsidiaries to obtain all or a
substantial portion of its requirements of any goods
or services from, or, except for Customer Contracts,
supply all or a substantial portion of the
requirements for any goods or services of, any other
person.
(iii) On the date of this Agreement, except as set
forth in Section 3.01(h) of the Company Disclosure Schedule:
(A) Except with respect to those
Material Contracts described in Section
3.01(h)(ii)(E) above, each Material Contract (as
defined above) together with all modifications and
amendments thereto, is the valid and binding
obligation of the Company or its subsidiaries, as
applicable, in full force and effect, and to the
Company's knowledge, enforceable against the other
parties thereto, in accordance with its terms,
subject to applicable bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium and
other laws of general application affecting
creditors' rights generally and by equitable
principles;
(B) Except with respect to those
Material Contracts described in Section
3.01(h)(ii)(E) above, neither the Company nor any of
its subsidiaries is in material breach or default
under any Material Contract; and, to the knowledge of
the Company, no other party is in material breach or
default thereunder;
(C) Except with respect to those
Material Contracts described in Section
3.01(h)(ii)(E) above, neither the Company nor any of
its subsidiaries has received any written or oral
notice of any event or condition that constitutes, or
with the passage of time would constitute, a material
default by the Company under any Material Contract;
and
(D) to the knowledge of the Company,
neither it nor any of its subsidiaries has received
written notice or other notice or advice of
termination, cancellation, nonrenewal or material
adverse price adjustment of any of the Company's 50
largest Customer Contracts for fiscal year 2000 or
any other Material Contract that would result in
material damage to the Company.
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17
(iv) On the date of this Agreement, with respect
to those Material Contracts described in Section
3.01(h)(ii)(E) above, except as set forth in Section 3.01(h)
of the Company Disclosure Schedule:
(A) To the knowledge of the Company,
each such Material Contract described in Section
3.01(h)(ii)(E) above together with all modifications
and amendments thereto, is the valid and binding
obligation of the Company or its subsidiaries, as
applicable, in full force and effect, enforceable
against the other parties thereto, in accordance with
its terms, subject to applicable bankruptcy,
insolvency, reorganization, fraudulent transfer,
moratorium and other laws of general application
affecting creditors' rights generally and by
equitable principles;
(B) To the knowledge of the Company,
neither the Company nor any of its subsidiaries is in
material breach or default under any such Material
Contract described in Section 3.01(h)(ii)(E) above,
and no other party is in material breach or default
thereunder; and
(C) To the knowledge of the Company,
neither the Company nor any of its subsidiaries has
received any written or oral notice of any event or
condition that constitutes, or with the passage of
time would constitute, a material default by the
Company under any such Material Contract described in
Section 3.01(h)(ii)(E) above.
(v) Section 3.01(h) of the Company Disclosure
Schedule contains a true and complete list of all Material
Contracts (except with respect to items described in Section
3.01(h)(ii)(E) above) and a list of the Company's top 50
Customer Contracts;
(vi) True and complete copies of each Material
Contract (except with respect to items described in Section
3.01(h)(ii)(E) above) have been made available to Compass and
to Sub.
(i) COMPLIANCE WITH LAWS. Except as disclosed in the
Company Disclosure Schedule and with respect to Environmental Laws and Taxes (as
defined in Section 3.01(n)(ix)), which are the subject of Section 3.01(l) and
Section 3.01(n), respectively, the Company and its subsidiaries are in
compliance with all statutes, laws, ordinances, rules, regulations, judgments,
orders and decrees of any Governmental Entity which are material to the
operation of the business of the Company. None of the Company or any of its
subsidiaries has received, since June 1, 1998, a written communication alleging
or relating to a possible violation of any statute, law, ordinance, rule,
regulation, judgment, order or decree of any Governmental Entity applicable to
its businesses or operations, except for violations or possible violations that,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect. The Company and its subsidiaries have in effect all
permits, licenses, variances, exemptions, authorizations, franchises, orders,
registrations and approvals of all Governmental Entities which are material to
the operation of the business of the Company (collectively, "Permits"),
necessary for them to own, lease or operate their properties and assets and to
carry on
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18
their businesses as now conducted, and there has occurred no violation of,
default (with or without notice or lapse of time or both) under, or event giving
to such Governmental Entities any right of termination, amendment or
cancellation of, with or without notice or lapse of time or both, any such
Permit which is material to the operation of the business of the Company.
(j) BENEFIT PLANS; EMPLOYMENT AND LABOR RELATIONS.
(i) Section 3.01(j)(i) of the Company Disclosure
Schedule contains an accurate and complete list of all
"employee pension benefit plans" (as defined in Section 3(2)
of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) (sometimes referred to herein as "Pension
Plans"), "employee welfare benefit plans" (as defined in
Section 3(1) of ERISA) and all other plans, agreements,
policies or arrangements relating to stock options, stock
purchases, compensation, deferred compensation, bonus,
severance, and other employee benefits, in each case
maintained or contributed to as of the date of this Agreement
by the Company or any subsidiary for the benefit of any
current or former employees, officers or directors of the
Company or any subsidiary or for which the Company or any
subsidiary is or could be liable, as a result of its status as
an ERISA Affiliate (as defined below) (collectively, the
"Benefit Plans"). Except as set forth on Section 3.01(j)(i) of
the Company Disclosure Schedule, neither the Company nor any
ERISA Affiliate currently sponsors or contributes to, nor has
ever sponsored or contributed to, any "multiemployer plan" as
described in Section 37(A) of ERISA. Each Benefit Plan has
been duly authorized by all necessary corporate action by the
Company or any participating subsidiary or ERISA Affiliate.
The Company has delivered to Compass true, complete and
correct copies of (A) the Xxxxxxxx Health Care, Inc. Salary
Deferral Plan; (B) the Xxxxxxxx Health Care, Inc. Salary
Deferral Plan Trust Agreement; (C) the Xxxxxxxx Health Care,
Inc. 401(k) Plan for Union Employees; (D) the Trust Agreement
between Xxxxxxx Xxxxx Trust Company, FSB, as the Trustee and
Xxxxxxxx Health Care, Inc., as the Employer; (E) the Xxxxxxxx
Restaurants, Inc. Retirement Plan; (F) the Xxxxxxxx
Incorporated Retirement Plan Trust Agreement; (G) the Xxxxxxxx
Management Specialists, Inc. Grantor Trust Agreement; (H) the
Xxxxxxxx Health Care, Inc. Executive Life Insurance Plan; (I)
the Xxxxxxxx Health Care, Inc. Cafeteria Plan, (J) the
Xxxxxxxx Health Care, Inc. Employee Welfare Benefit Plans
Master Trust Agreement, (K) the Administrative Services
Agreement between Metropolitan Life Insurance Company and
Xxxxxxxx Health Care, Inc. dated March 1, 1999, and (L) the
Employee Management Services Agreement between the Company and
Professional Employment Managers, Inc. dated June, 1999.
"ERISA Affiliate" means, with respect to any entity, trade or
business, any other entity, trade or business that is a member
of a group described in Section 414(b), (c), (m) or (o) of the
Code or Section 4001(b)(1) of ERISA that includes the first
entity, trade or business, or that is a member of the same
"controlled group" as the first entity, trade or business
pursuant to Section 4001(a)(14) of ERISA, at any time. "DOL"
means the United States Department of Labor. "IRS" means the
Internal Revenue Service. "PBGC" means the Pension Benefit
Guaranty Corporation.
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(ii) Except as set forth on Section 3.01(j)(ii)
of the Company Disclosure Schedule, the Benefit Plans are on
the date hereof in compliance with the applicable provisions
of ERISA and the Code, the rules and regulations promulgated
thereunder, all other applicable laws and the terms of all
applicable collective bargaining agreements. There are no
investigations by any federal or state entity, or other claims
(except routine claims for benefits payable under the Benefit
Plans), suits or proceedings against or with respect to which
any Benefit Plan is a party or asserting any rights to or
claims for benefits under any Benefit Plan that would give
rise to any liability that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect
on the Company. There are no involuntary termination
proceedings which have been instituted against any Pension
Plan.
(iii) Each of the Company and its subsidiaries has
performed all of its material obligations under all Benefit
Plans and has made appropriate entries in its financial
records and statements prepared in accordance with generally
accepted accounting practices for all obligations and
liabilities under such Benefit Plans that have accrued but are
not yet due. Other than any Pension Plan amendment with
respect to which the remedial amendment period described under
Section 401(b) of the Code has not expired, each Pension Plan
that is intended to be a tax-qualified plan is the subject of
a favorable determination letter from the IRS (a
"Determination Letter Request"), and was filed with
the IRS within the remedial amendment period described under
Section 401(b) of the Code, each such favorable determination
letter stating to the effect that such Pension Plan is
qualified under Section 401(a) of the Code, subject to the
reservation as to the Pension Plan's operational compliance
with Code requirements. No such determination letter on any
Pension Plan has been revoked, and the IRS has not issued
written notice of its intent to revoke the qualified status of
any such Pension Plan. No event has occurred and no
circumstance exists that would reasonably be expected to
result in the disqualification of such Pension Plan or, with
respect to each Determination Letter Request, would reasonably
be expected to cause the IRS not to issue a favorable
determination letter. The Company has delivered or made
available to Compass a copy of the most recent determination
letter received with respect to each Pension Plan for which a
letter has been issued, as well as any Determination Letter
Request still pending.
(iv) No statement, either written or oral, has been
made by the Company or any subsidiary to any individual with
regard to any Benefit Plan that was not in accordance with the
respective Benefit Plan and that could have material adverse
economic consequences to the Surviving Corporation or Compass.
(v) Except as set forth on Section 3.01(j)(v) of
the Company Disclosure Schedule, each Benefit Plan is and has
been administered, and the Company and its subsidiaries, with
respect to all Benefit Plans are, in compliance in all
material respects with ERISA, the Code and other applicable
laws and with
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20
applicable collective bargaining agreements. This statement
specifically means, but is not limited to, the following
matters:
(A) No material transaction prohibited
by Section 406 of ERISA and no material "prohibited
transaction" under Section 4975 of the Code have
occurred with respect to any Benefit Plan for which
an exemption does not apply.
(B) The Company and its subsidiaries
have had no liability to the PBGC with respect to any
plan or have any liability under Sections 502 or
4071(c) of ERISA. All filings required by ERISA and
the Code as to each Benefit Plan have been timely
filed, and all notices and disclosures to
participants under such Benefit Plans required by
either ERISA or the Code have been timely provided.
(vi) Except as set forth on Section 3.01(j)(vi)
of the Company Disclosure Schedule, each of the following
statements is true and correct regarding each Benefit Plan:
(A) No event or circumstance specific
to the Company or its subsidiaries (as opposed to
general economic or industry events that impact the
Company or its subsidiaries as members of an affected
group or class of business enterprises), except for
ordinary course matters such as workers compensation
adjustments, has occurred since the close of the
Benefit Plan year immediately preceding the date of
this Agreement that could result in a material
increase in premium costs of any Benefit Plan that
are insured, or material increase in benefit costs of
such Benefit Plans that are self-insured.
(B) Except to the extent required under
Section 601 et seq. of ERISA and Section 4980B of the
Code, neither the Company nor any of its subsidiaries
provides health or welfare benefits for any retired
or former employee or is obligated to provide health
or welfare benefits to any active employee or
beneficiary following such employee's retirement or
other termination of service.
(C) The Company and its subsidiaries
has the right to modify and terminate benefits to
retirees (other than benefits provided under Pension
Plans) with respect to both retired and active
employees. Each Benefit Plan has complied in all
material respects with the provisions of Section 601
et seq. of ERISA and Section 4980B of the Code.
(vii) Except as set forth on Section 3.01(j)(vii)
of the Company Disclosure Schedule, neither the Company nor
any of its subsidiaries now sponsors, maintains, contributes
to or has an obligation to contribute to, and has not at any
time since January 1, 1994, sponsored, maintained, contributed
to, or been obligated to contribute to, any Pension Plan
subject to the provisions of
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21
Section 302 or Title IV of ERISA or Sections 412 or 4971 of
the Code. Except where such liabilities would not reasonably
be expected to have a Material Adverse Effect, no liability
currently exists, and under no circumstances could the Company
or any of its ERISA Affiliates incur a liability (other than
liabilities arising in accordance with the terms of the
Benefit Plans) pursuant to the provisions of Title I, II or IV
of ERISA or Section 412, 4971 or 4980B of the Code that could
become a liability of the Surviving Corporation or Compass
after the Transactions. Without limiting the generality of the
foregoing, neither the Company nor any of its ERISA Affiliates
has engaged in any transaction described in Section 4069 or
Section 4204 of ERISA for the purpose of evading liability
under subtitle D of Title IV of ERISA.
(viii) Neither the Company nor any of its
subsidiaries has incurred any material liability, nor has any
event occurred that could reasonably result in any material
liability, under Title I or Title IV of ERISA (other than to a
Pension Plan for contributions not yet due or to the PBGC for
payment of premiums not yet due) or under Section 412 or
Chapter 43 of the Code that has not been fully paid as of the
date hereof.
(ix) Except as set forth in Section 3.01(j)(ix)
of the Company Disclosure Schedule, neither the Company nor
any of its subsidiaries is a party to, or bound by, any
contract with any labor union or association, including,
without limitation, any collective bargaining, labor or
similar agreement. Neither the execution and delivery of this
Agreement nor the consummation of the transactions
contemplated hereby will (A) constitute a breach or default
under any such agreement, (B) give rise to any right to
terminate, amend or modify any such agreement or (C) create
any withdrawal liability. Except as set forth in Section
3.01(g) of the Company Disclosure Schedule, there is not
currently, pending or existing and there is not and has not
been threatened (i) any strike, slow-down, picketing, work
stoppage or formal employee grievance or arbitration process;
(ii) any proceeding against the Company or any subsidiary
relating to the alleged violation of any legal requirement
pertaining to labor relations or employment matters, including
any charge, claim or action or complaint filed by an employee
or union with the National Labor Relations Board, the Equal
Employment Opportunity Commission, the DOL or any other
federal or state governmental body, any organizational
activity or other labor or unemployment dispute against the
Company, any subsidiary, or the Surviving Corporation; (iii)
any application for certification of a collective bargaining
agent; or (iv) any formal or other organizational activity by
the Company's or any subsidiary's employees, except with
respect to clauses (i) and (ii) immediately above, such
occurrences as would not be reasonably expected to have a
Material Adverse Effect. To the knowledge of the Company and
its subsidiaries, no event has occurred or circumstance exists
that could provide the basis for any work stoppage or other
labor dispute. There is no lockout of any employees by the
Company or any subsidiary, and no such action is contemplated
by the Company or any subsidiary. The Company and its
subsidiaries are in compliance with all applicable laws
relating to employment and employment practices, terms and
conditions of employment, wages and
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hours, nondiscrimination, employee leave, hours, benefits, the
payment of social security taxes, and occupational health, and
is not engaged in any unfair labor practice except where the
failure to so comply or the result of such unfair labor
practice, as the case may be, would not have a Material
Adverse Effect on the Company.
(x) Except as disclosed in the Filed SEC
Documents, since the date of the most recent audited financial
statements included in the Filed SEC Documents, there has not
been any adoption of or amendment in any collective bargaining
agreement.
(xi) Except as set forth in Section 3.01(j)(xi)
of the Company Disclosure Schedule, since the meeting of the
Company's Board of Directors on September 27, 2000, there has
not been any adoption of or amendment to any Benefit Plan,
other than any amendment required by law or consistent with
past practice.
(k) ABSENCE OF CERTAIN BUSINESS PRACTICES. Since June 1,
1998, neither the Company nor any of its subsidiaries, nor, to the knowledge of
the Company and its subsidiaries (other than solely as a result of the knowledge
of any individual who engages in such conduct), any officer, employee or agent
thereof, or any other person acting on either of their behalf, has, directly or
indirectly, given or agreed to give any payment, gift or similar benefit to any
customer, supplier, governmental employee or other person who is or may be in a
position to help or hinder the business or operations of the Company or any
subsidiary (or assist the Company or any subsidiary in connection with any
actual or proposed transaction relating to its business and operations) (i)
which subjected or might have subjected the Company or any subsidiary to any
damage or penalty in any criminal or governmental litigation or proceeding, or
(ii) which, in case of a payment made directly or indirectly to an official or
employee of any government or of an agency or instrumentality of any government,
constitutes an illegal bribe or kickback (or, if made to an official or employee
of a foreign government, is unlawful under the Foreign Corrupt Practices Act of
1977) or, in the case of a payment made directly or indirectly to a person other
than an official or employee of a government or of an agency or instrumentality
of a government, constitutes an illegal bribe, illegal kickback or other illegal
payment under any law of the United States or under the law of any state which
subjects the payor to a criminal penalty or the loss of a license or privilege
to engage in a trade or business or the termination of a Customer Contract.
(l) ENVIRONMENTAL MATTERS.
(i) Except as set forth in Section 3.01(l) of
the Company Disclosure Schedule, (A) the Company and its
subsidiaries are in material compliance with all Environmental
Laws (as defined below) and are subject to no continuing
agreements, orders or judgments with respect to compliance
with Environmental Laws (as defined below); (B) neither the
Company nor any of its subsidiaries has received any written
notices of material unremedied violations from any
Governmental Entity, and there are no governmental
investigations or audits, whether pending, or to the knowledge
of the Company, threatened, with respect
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thereto, the violation of which could result in the imposition
of a material fine, penalty, liability, cost or expense; and
(C) the Company and its subsidiaries have obtained or made
application and paid for all material permits, licenses,
orders and approvals of governmental or administrative
authorities which either are required by applicable
Environmental Laws (as defined below) to permit it to carry on
its business and operations in substantially the same manner
as currently conducted and the Company and its subsidiaries
are in material compliance with the requirements set out in
such permits, licenses, orders and approvals.
(ii) Neither the Company nor any of its
subsidiaries has used, stored, disposed or released any
Hazardous Material (as defined below), except such substances
as are normally used in the conduct of its business and
operations, and then in such quantities as are in compliance
in all material respects with Environmental Laws (as defined
below).
(iii) Definitions.
"Environmental Laws" means all applicable
laws, rules, regulations, orders, decrees, common law,
judgments or binding agreements issued, promulgated or entered
into by or with any Governmental Entity relating to pollution
or protection of the environment (including ambient air,
surface water, groundwater, soils or subsurface strata) or
protection of human health as it relates to Hazardous
Materials, including laws and regulations relating to Releases
or threatened Releases of Hazardous Materials or otherwise
relating to the generation, manufacture, processing,
distribution, use, treatment, storage, transport, handling of
or exposure to Hazardous Materials.
"Hazardous Materials" means all hazardous,
toxic, explosive or radioactive substances, wastes or other
pollutants, including petroleum or petroleum distillates,
asbestos or asbestos-containing material, polychlorinated
biphenyls ("PCBs") or PCB-containing materials or equipment,
radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Release" means, with respect to any
Hazardous Material, any release, spill, emission, leaking,
dumping, injection, pouring, deposit, disposal, discharge,
dispersal, leaching or migration of such Hazardous Materials
into or through the environment (including ambient air,
surface water, groundwater, land surface or subsurface strata)
or within any building, structure, facility or fixture.
(m) INSURANCE. Section 3.01(m) of the Company Disclosure
Schedule contains a list of all policies of insurance held by, or maintained on
behalf of, the Company or any subsidiary, indicating for each policy the
carrier, the insured, the type of insurance, the amounts of coverage and the
expiration date. Except as set forth on Section 3.01(m) of the Company
Disclosure Schedule, nether the Company nor any of its subsidiaries has received
any written notice of cancellation, material amendment or material dispute as to
coverage with respect to any such policies.
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(n) TAXES. (i) (A) Each of the Company and its subsidiaries
has timely filed or caused to be filed with appropriate taxing
authorities all domestic and foreign (whether national,
federal, state, provincial, local or otherwise) tax returns
and reports required to be filed by or with respect to it; (B)
each of the Company and its subsidiaries has timely paid in
full all Taxes shown as due on such returns and reports; and
(C) the most recent financial statements contained in the
Filed SEC Documents reflect an adequate reserve for all
current Taxes payable by the Company and each of its
subsidiaries (in addition to any reserve for deferred taxes
established to reflect timing differences between book and tax
items) for all taxable periods and portions thereof through
the date of such financial statements.
(ii) Except as set forth in Section 3.01(n)(ii)
of the Company Disclosure Schedule, no material domestic or
foreign (whether national, federal, state, provincial, local
or otherwise) income or franchise tax return or report or any
other tax return or report of the Company or any of its
subsidiaries is under audit or examination by any taxing
authority, and no written or, to the knowledge of the Company,
unwritten notice of such an audit or examination has been
received by the Company or any of its subsidiaries. The
Company has received no notice of deficiency, refund
litigation, proposed adjustment or matter in controversy with
respect to any amount of Taxes due and owing by the Company or
any of its subsidiaries. Each deficiency resulting from any
completed audit or examination relating to any amount of Taxes
by any taxing authority or any concluded litigation has been
timely paid in full.
(iii) Except as disclosed on Section 3.01(n)(iii)
of the Company Disclosure Schedule, with respect to each of
the Company and its subsidiaries, there is no currently
effective agreement or other document extending, or having the
effect of extending, the period of assessment or collection of
any Taxes and no power of attorney with respect to any Taxes
has been executed or filed with any taxing authority.
(iv) No Liens for Taxes exist upon any assets or
properties of the Company or any of its subsidiaries, except
for statutory Liens for Taxes not yet due and Liens for Taxes
that the Company or any of its subsidiaries is contesting in
good faith for which adequate reserves have been established.
(v) Except as disclosed on Section 3.01(n)(v) of
the Company Disclosure Schedule, none of the Company or any of
its subsidiaries is a party to or bound by any tax sharing or
allocation agreement, tax indemnity obligation or any similar
agreement, arrangement or practice with respect to Taxes
(including any advance pricing agreement, closing agreement,
gain recognition agreement or other agreement relating to
Taxes with any taxing authority).
(vi) None of the Company or any of its
subsidiaries was, at any time during a period specified in
Section 897(c)(1)(A)(ii) of the Code, a United States real
property holding corporation within the meaning of Section
897(c)(2) of the Code.
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(vii) Except as disclosed on Section 3.01(n)(vii)
of the Company Disclosure Schedule, none of the Company or any
of its subsidiaries has at any time since January 1, 1990 been
a member of a Company Affiliated Group (as defined in Section
3.01(n)(xiii)), and, to the best knowledge of the Company,
none of the Company or any of its subsidiaries has any
liability for Taxes of any other person which is not a
subsidiary of the Company under Treasury Regulation Section
1.1502-6 (or comparable provisions of foreign, state or local
law), as a transferee or successor, by contract or otherwise.
(viii) Except as otherwise disclosed in the Filed
SEC Documents, none of the Company or any of its subsidiaries
has constituted either a "distributing corporation" or a
"controlled corporation" in a distribution of stock qualifying
or intended to qualify for tax-free treatment under Section
355 of the Code in the two years prior to the date of this
Agreement.
(ix) All Taxes which the Company or any of its
subsidiaries is (or was) required by law to withhold or
collect have been duly withheld or collected, and have been
timely paid over to the proper authorities to the extent due
and payable.
(x) There are not currently pending any material
claims made by a taxing authority in a jurisdiction where the
Company or any of its subsidiaries does not file tax returns
and reports, that the Company or any of its subsidiaries is or
may be subject to taxation by that jurisdiction.
(xi) Except as disclosed in Section 3.01(n)(xi)
of the Company Disclosure Schedule, neither the Company nor
any of its subsidiaries has applied for, been granted, or
agreed to any accounting method change for which it will be
required to take into account any adjustment under Section 481
of the Code or any similar provision of the Code or the
corresponding tax laws of any nation, state or locality.
(xii) Except as set forth in Section 3.01(n)(xii)
of the Company Disclosure Schedule, neither the Company nor
any of its subsidiaries is a party to any agreement that would
require the Company or any of its subsidiaries or any
affiliate thereof to make any payment the would constitute an
"excess parachute payment" for purposes of Section 280G and
4999 of the Code.
(xiii) As used in this Agreement, (A) "Taxes" shall
include all (x) domestic and foreign (whether national,
federal, state, provincial, local or otherwise) income,
franchise, property, sales, excise, employment, payroll,
social security, value-added, ad valorem, transfer,
withholding, license, severance, stamp, premium,
environmental, customs, duties, capital stock, unemployment,
disability, registration, estimated, alternative, add-on
minimum and other taxes, including taxes based on or measured
by gross receipts, profits, sales, use or occupation, tariffs,
levies, impositions, assessments or governmental charges of
any nature whatsoever, including any interest penalties or
additions with respect thereto, (y) liability for the payment
of any amounts of the type described in
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clause (x) as a result of being a member of an affiliated,
consolidated, combined or unitary group, and (z) liability for
the payment of any amounts as a result of being party to any
tax sharing agreement or as a result of any express or implied
obligation to indemnify any other person with respect to the
payment of any amounts of the types described in clause (x) or
(y) and (B) "Company Affiliated Group" shall mean each group
of which the Company or any of its subsidiaries is or has been
a member during a period for which such group filed a tax
return or report on an affiliated, combined, consolidated or
unitary basis.
(xiv) The Company has not breached, and is not in
default under, the Amended and Restated Tax Allocation and
Indemnification Agreement dated March 2, 1996 among Xxxxxxxx
Restaurants Inc., Custom Management Corporation of
Pennsylvania, Custom Management Corporation, Xxxx X. Xxxx &
Associates, Inc., Xxxxxxxx International, Inc., Xxxxxxxx
Custom Management Corporation of Pennsylvania, Xxxxxxxx Fresh
Cooking, Inc., Ruby Tuesday, Inc., Ruby Tuesday (Georgia),
Inc., Galaxy Management, Inc., Xxxxxx Food Services, Inc.,
Xxxxxxxx of New Jersey, Inc., Tias, Inc. and the Company (the
"Reorganization Tax Agreement").
(o) INTELLECTUAL PROPERTY.
(i) The Company and its subsidiaries own, free
and clear of all Liens, or are validly licensed or otherwise
have the right to use all the trademarks, service marks, trade
names, brands, copyrights and patents, all applications for
registration and registrations for such trademarks, copyrights
and patents and all mask works, trade secrets, confidential
and proprietary information, compositions of matter, formulas,
designs, proprietary rights, know-how and processes owned by
or licensed to or used by the Company or any of its
subsidiaries (all of the foregoing collectively hereinafter
referred to as the "Intellectual Property Rights") that are
material to the conduct of the business of the Company and its
subsidiaries, with such exceptions as, individually or in the
aggregate, would not reasonably be expected to have a Material
Adverse Effect. To the Company's knowledge, all the
Intellectual Property Rights that are material to the conduct
of the business of the Company and its subsidiaries are valid,
enforceable and in full force and effect.
(ii) To the Company's knowledge, none of the
Company or any of its subsidiaries has interfered with,
infringed upon or misappropriated any valid Intellectual
Property Rights or other proprietary information of any other
person, except any such infringement or misappropriation that,
individually and in the aggregate would not reasonably be
expected to have a Material Adverse Effect. Since June 1,
1998, with respect to such material infringement or
misappropriation, none of the Company or any of its
subsidiaries has received any written charge, complaint,
claim, demand or notice alleging any such interference,
infringement, misappropriation or other conflict (including
any claim that the Company or any of its subsidiaries must
license or refrain from using any Intellectual Property Rights
or other proprietary information of any other person)
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that has not been settled or otherwise fully resolved. To the
Company's knowledge, no other person has interfered with,
infringed upon or misappropriated any Intellectual Property
Rights of the Company or any of its subsidiaries, except any
such infringement or misappropriation that, individually and
in the aggregate would not reasonably be expected to have a
Material Adverse Effect.
(p) PROPERTY. Section 3.01(p) of the Company Disclosure
Schedule contains a true and complete list of all real property owned by the
Company or any of its subsidiaries. The Company and each of its subsidiaries has
valid title or valid leasehold interests to all its real and personal property,
free and clear of all mortgages, liens, pledges, charges or encumbrances of any
nature whatsoever, except (i) liens for current taxes, payments of which are not
yet delinquent, (ii) such imperfections in title and easements and encumbrances,
if any, as are not substantial in character, amount or extent and do not
materially detract from the value, or materially interfere with the present use
of the property subject thereto or affected thereby, or otherwise materially
impair the Company's business operations, or (iii) such restrictions and
encumbrances as are listed on the title insurance policies of the Company with
respect to such owned real property, copies of which have been made available to
Compass. There are no pending or, to the knowledge of the Company, threatened
condemnation proceedings against or affecting any real property owned by the
Company or its subsidiaries.
(q) REORGANIZATION AGREEMENTS. Neither the Company nor
any of its subsidiaries, and to the knowledge of the Company, no third party, is
in default with respect to any material obligation or liability under (i) that
certain Distribution Agreement dated as of March 2, 1996 by and among Xxxxxxxx
Restaurants Inc., Xxxxxxxx Fresh Cooking, Inc. and the Company, (ii) the
Reorganization Tax Agreement (as defined above), and (iii) that certain
Agreement Respecting Employee Benefit Matters dated as of March 2, 1996 among
Xxxxxxxx Restaurants Inc., Xxxxxxxx Fresh Cooking, Inc. and the Company.
(r) RIGHTS AGREEMENT. The Company has taken all action
necessary so that the execution and delivery of this Agreement, and the
consummation of the Transactions or the other transactions contemplated hereby
or thereby, will not result in the occurrence of a "Distribution Date" or "Stock
Acquisition Date" or "Triggering Event" under that certain Rights Agreement
dated as of March 2, 1996 between the Company and AmSouth Bank of Alabama (as
amended, modified, supplemented or replaced, the "Rights Agreement") and will
not result in any person becoming an "Acquiring Person" (as such terms are
defined in the Rights Agreement). All outstanding Rights will be retired or
expire at the Effective Time.
(s) TAKEOVER PROVISIONS AND STATUTES. The Board of
Directors of the Company has taken all actions necessary to exempt this
Agreement, the Transactions or the other transactions contemplated hereby from
all applicable takeover and super-majority provisions of the Company's Articles
of Incorporation and Bylaws and from Georgia law, including Sections 14-2-1111
and 14-2-1132 of the GBCC. No other provision in any organizational document or
agreement of the Company or any subsidiary nor, to the knowledge of the Company,
any other state takeover or similar statute or regulation is applicable to this
Agreement and the Transactions or the other transactions contemplated hereby.
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(t) VOTE REQUIRED. The affirmative vote of the holders of
a majority of the outstanding Company Common Stock entitled to vote thereon is
the only vote of the holders of any class or series of Company capital stock
necessary to approve this Agreement, the Transactions and the other transactions
contemplated hereby.
(u) BROKERS; SCHEDULE OF FEES AND EXPENSES. No broker,
investment banker, financial advisor, finder or other similar person, other than
Bear, Xxxxxxx & Co. Inc., the fees and expenses of which will be paid by the
Company, is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Company. The
Company has delivered to Compass true and complete copies of all agreements
under which any such fees or expenses are payable and all indemnification and
other agreements related to the engagement of the persons to whom such fees are
payable.
(v) OPINION OF FINANCIAL ADVISOR. The Board of Directors
of the Company has received the written opinion of Bear, Xxxxxxx & Co. Inc.,
substantially to the effect that, as of the date hereof, the consideration to be
received in the Offer and the Merger by the Company's stockholders is fair to
the Company's stockholders from a financial point of view, a copy of which
opinion has been delivered to Compass.
(w) COMPANY BUSINESS. The Company owns no assets and
conducts no business outside of the continental United States.
(x) INFORMATION SUPPLIED.
(i) The Schedule 14D-9 (and any amendment or
supplement thereto) will not, on the date of its filing with
the SEC and the date it is first published, sent or given to
shareholders, 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, except that no representation is made by the
Company with respect to information supplied in writing by or
on behalf of Compass or Sub expressly for inclusion therein.
The Schedule 14D-9 will comply as to form in all material
respects with the requirements of the Exchange Act and the
rules and regulations thereunder.
(ii) The information supplied or to be supplied
in writing by or on behalf of the Company for inclusion in the
Offer Documents will not, on the date the Offer Documents are
filed with the SEC or on the date the Offer Documents are
first published, sent or given to shareholders, 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.
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Section 3.02. REPRESENTATIONS AND WARRANTIES OF COMPASS AND SUB.
Compass and Sub represent and warrant to the Company as follows:
(a) ORGANIZATION. Each of Compass and Sub is a
corporation duly incorporated or organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated or
organized and has all requisite corporate power and authority to carry on its
business as now being conducted.
(b) AUTHORITY; NONCONTRAVENTION. Compass and Sub have the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by Compass and Sub, the consummation by Compass and
Sub of the transactions contemplated hereby and the financing arrangements
referred to in Section 3.02(d), have been duly authorized by all necessary
corporate action on the part of Compass and Sub and no other corporate
proceedings on the part of Compass or Sub are necessary to approve this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly executed and delivered by Compass and Sub and constitutes a valid
and binding obligation of Compass and Sub enforceable against Compass and Sub in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium, fraudulent conveyance, or other similar laws relating to creditors'
rights and general principles of equity. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and
compliance with the provisions hereof do not and will not conflict with, or
result in any violation or breach of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right of, or result in,
termination, cancellation or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any Lien upon any of the
properties or assets of Compass under, or give rise to any increased,
additional, accelerated or guaranteed rights or entitlements under, any
provision of (i) the articles of organization or bylaws or similar
organizational documents of Compass or Sub, (ii) any Contract to which Compass
or Sub is a party or any of their respective properties or assets is subject or
(iii) subject to the governmental filings and other matters referred to in the
following sentence, any (A) statute, law, ordinance, rule or regulation or (B)
judgment, order or decree, in each case applicable to Compass or Sub or their
respective properties or assets, other than, in the case of clauses (ii) and
(iii), any such conflicts, violations, breaches, defaults, rights, losses, Liens
or entitlements that, individually and in the aggregate, would not reasonably be
expected to prevent or materially impede or delay the consummation of the Offer,
the Merger or the other transactions contemplated hereby. No consent, approval,
order or authorization of, or registration, declaration or filing with, any
Governmental Entity is required by Compass or Sub in connection with the
execution and delivery of this Agreement by Compass and Sub and the consummation
by Compass and Sub of the transactions contemplated hereby and thereby or the
compliance with the provisions hereof or thereof, except for (1) expiration or
termination of the waiting period under the HSR Act, (2) the filing of the
Certificate of Merger with the Secretary of State of the State of Georgia and
appropriate documents with the relevant authorities of other states in which the
Company is qualified to do business, (3) the filing of the Offer Documents with
the SEC and (4) such other consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to be obtained or
made, individually and in the aggregate, would not impair in any material
respect the ability of Compass or Sub to perform its obligations under this
Agreement or
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prevent or materially delay the consummation of any of the transactions
contemplated by this Agreement.
(c) INTERIM OPERATIONS OF SUB. Sub was formed solely for
the purpose of engaging in the transactions contemplated hereby and has engaged
in no business other than in connection with the transactions contemplated by
this Agreement.
(d) CAPITAL RESOURCES. Compass has on hand or pursuant to
written commitments sufficient funds to purchase, or permit Sub to purchase, all
shares of the Company Common Stock validly tendered into and not withdrawn from
the Offer and to permit Compass and Sub to consummate the Transactions and to
pay the Merger Consideration and all associated costs and expenses.
(e) DIRECTOR RECOMMENDATIONS. The Board of Directors of
Compass (or a duly authorized committee) has duly and unanimously adopted
resolutions which are still in full force and effect as of the date hereof
approving and declaring advisable the Offer, the Merger, this Agreement and the
Transactions. The Board of Directors and sole shareholder of Sub have adopted
resolutions approving the Offer, the Merger, this Agreement and the
Transactions.
(f) BROKERS; SCHEDULE OF FEES AND EXPENSES. No broker,
investment banker, financial advisor, finder or other similar person, other than
Credit Suisse First Boston Corporation, the fees and expenses of which will be
paid by Compass or Sub, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Compass or Sub.
(g) NO UNTRUE REPRESENTATION; INFORMATION SUPPLIED.
(i) The Offer Documents will not, on the date
filed with the SEC and first published, sent or given to
shareholders of the Company, 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, except that no representation is made by
Compass or Sub with respect to information supplied in writing
by or on behalf of the Company expressly for inclusion therein
and information derived from documents filed by the Company
with the Commission. The Offer Documents will comply as to
form in all material respects with the requirements of the
Exchange Act and the regulations thereunder.
(ii) The information supplied or to be supplied
in writing by or on behalf of Compass or Sub for inclusion in
the Schedule 14D-9 (and any amendments or supplements thereto)
will not, on the date the Schedule 14D-9 is filed with the SEC
and is first published, sent or given to shareholders of the
Company, 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
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statements therein, in light of the circumstances under which
they are made, not misleading.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.01. CONDUCT OF BUSINESS.
(a) CONDUCT OF BUSINESS BY THE COMPANY. During the period
from the date of this Agreement to the Effective Time, except (i) as consented
to in writing by Compass, (ii) as specifically contemplated by this Agreement,
or (iii) as disclosed in Section 4.01 of the Company Disclosure Schedule (with
specific reference to the Subsection of this Section 4.01 to which the
information stated in such disclosure relates and such other Subsections of this
Section 4.01 to the extent a matter is disclosed in such a way as to make its
relevance to the information called for by such other Subsection readily
apparent), the Company shall, and shall cause its subsidiaries to, carry on
their respective businesses in the ordinary course consistent with past practice
and use their commercially reasonable efforts to comply with all applicable
laws, rules and regulations and, to the extent consistent therewith, use their
commercially reasonable efforts to preserve their assets and technology and
preserve their relationships with customers, suppliers, licensors, licensees,
distributors and others having business dealings with them in all material
respects. Without limiting the generality of the foregoing, the Company shall
not, and shall not permit any of its subsidiaries to:
(i) (w) declare, set aside or pay any dividends
on, or make any other distributions (whether in cash, stock or
property) in respect of, any of its capital stock, other than
quarterly cash dividends consistent with past practice, (x)
purchase, redeem or otherwise acquire any shares of capital
stock or any other securities of the Company or its
subsidiaries or any options, warrants, calls or rights to
acquire any such shares or other securities, except with
respect to redemption requirements pursuant to the Company
Stock Plans, (y) split, combine or reclassify any 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 its capital stock or any of its other securities or
(z) liquidate or merge with any subsidiaries of the Company;
(ii) issue, deliver, sell, pledge or otherwise
transfer or encumber any shares of its capital stock, any
other equity or voting interests or any securities convertible
into, or exchangeable for, or any options, warrants, calls or
rights to acquire, any such shares, voting securities or
convertible securities or any stock appreciation rights or
other rights that are linked to the price of Company Common
Stock (other than the issuance of shares of Company Common
Stock upon the exercise of Company Stock Options pursuant to
the Benefit Plans that are in existence on the date of this
Agreement);
(iii) amend its articles of incorporation or
bylaws (or similar organizational documents);
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(iv) directly or indirectly acquire or agree to
acquire (A) by merging or consolidating with, or by purchasing
all or a substantial portion of the assets of, or by any other
manner, any assets constituting a business or any corporation,
partnership, joint venture or association or other entity or
division thereof, or any direct or indirect interest in any of
the foregoing, or (B) any assets other than purchases of
assets in the ordinary course of business consistent with past
practice;
(v) directly or indirectly sell, lease, license,
sell and leaseback, mortgage or otherwise encumber or subject
to any Lien (except for purchase money security interests and
other Liens arising in the ordinary course of business) or
otherwise dispose of any of its properties or assets or any
interest therein, except sales of (i) inventory and obsolete
assets in the ordinary course of business consistent with past
practice and (ii) immaterial assets in the ordinary course of
business consistent with past practice (but specifically
excluding joint venture investments);
(vi) (x) repurchase, accelerate, prepay or incur
any indebtedness or guarantee any indebtedness of another
person or issue or sell any debt securities or options,
warrants, calls or other rights to acquire any debt securities
of the Company or any of its subsidiaries, guarantee any debt
securities of another person, enter into any "keep well" or
other agreement to maintain any financial statement condition
of another person or enter into any arrangement having the
economic effect of any of the foregoing, other than in the
ordinary course of business consistent with past practice,
provided that the aggregate amount of indebtedness of the
Company shall not exceed $70,000,000 as of the Specified Date,
(y) make any loans, advances or capital contributions to, or
investments in, any other person, other than any direct or
indirect wholly owned subsidiary of the Company, or (z) enter
into any hedging agreement or other financial agreement or
arrangement designed to protect the company against
fluctuations in commodities prices or current exchange rates,
except agreements or arrangements in respect of contractual
commitments of the Company entered into in the ordinary course
of business consistent with past practice;
(vii) incur or commit to incur any capital
expenditures, whether by acquisition or internal investment,
or any obligations or liabilities in connection therewith,
other than capital expenditures which are reflected on the
Company's fiscal 2001 budget;
(viii) pay, discharge, settle or satisfy any claims
(including claims of stockholders), liabilities or obligations
(whether absolute, accrued, asserted or unasserted, contingent
or otherwise), in excess of $500,000 in the aggregate other
than the payment, discharge or satisfaction in the ordinary
course of business consistent with past practice or as
required by their terms as in effect on the date of this
Agreement of trade payables and other similar liabilities and
of claims, liabilities or obligations reflected, reserved
against or otherwise disclosed in the most recent audited
financial statements (or the notes thereto) of the Company
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included in the Filed SEC Documents (for amounts not in excess
of such reserves or as otherwise disclosed) or incurred since
the date of such financial statements in the ordinary course
of business consistent with past practice, or waive, release,
grant or transfer any right of material value, other than in
the ordinary course of business consistent with past practice,
or waive any material benefits of, or agree to modify in any
adverse respect, or fail to enforce, or consent to any matter
with respect to which its consent is required under, any
confidentiality, standstill or similar agreement to which the
Company or any of its subsidiaries is a party;
(ix) (A) grant to any employee, officer,
director, consultant or independent contractor of the Company
or any of its subsidiaries any increase in compensation or pay
any bonus, other than in the ordinary course of business
consistent with past practice, (B) establish any program for
or grant to any employee, officer, director, consultant or
independent contractor of the Company or any of its
subsidiaries any increase in severance or termination pay, (C)
establish, adopt, enter into or amend any Pension Plan, (D)
establish, adopt, enter into or amend in any material respect
any collective bargaining agreement or Benefit Plan, (E) take
any action to accelerate any rights or benefits, take any
action to fund or in any other way secure the payment of
compensation or benefits under any Pension Plan or Benefit
Plan, or make any material determinations not in the ordinary
course of business consistent with past practice, under any
collective bargaining agreement or Benefit Plan or Pension
Plan, other than pursuant to the provisions of Section 5.07
hereof, including any payment of cash pursuant thereto or (F)
amend or modify or grant any Company Stock Option, in each
case above other than (i) changes that are required by
applicable law or (ii) to satisfy obligations existing as of
the date hereof;
(x) fail to maintain existing insurance at
levels substantially comparable to current levels or otherwise
in a manner inconsistent with past practice;
(xi) transfer or license to any person or entity
or otherwise extend, amend or modify any rights to the
Intellectual Property Rights of the Company and its
subsidiaries other than in the ordinary course of business
consistent with past practices; provided that in no event
shall the Company license on an exclusive basis or sell any
Intellectual Property Rights of the Company or its
subsidiaries;
(xii) enter into or amend any agreements pursuant
to which any person is granted exclusive marketing,
manufacturing or other rights with respect to any material
Company product, process or technology;
(xiii) enter into or amend any contract or other
agreement, whether written or oral, that contains any
guarantees as to the Company's or any subsidiary's future
revenues;
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(xiv) except with respect to the acquisition (and
related construction) of that certain real property and
facility located at 0000 Xxxxxxxx Xxxx, Xxxxxxx, Xxxxxxx
00000, obtain any real property, whether through acquisition,
lease, sublease or otherwise, other than in the ordinary
course of business consistent with past practice in connection
with contracts with customers;
(xv) hire in excess of that number of additional
employees required in the good faith judgment of the Company;
(xvi) except insofar as may be required by a
change in GAAP or generally accepted accounting principles of
the applicable jurisdiction or changes in applicable law, make
any changes in accounting methods, principles or practices;
(xvii) take any action that would reasonably be
expected to result in (A) any representation and warranty of
the Company set forth in this Agreement that is qualified as
to materiality becoming untrue, (B) any such representation
and warranty that is not so qualified becoming untrue in any
material respect or (C) any condition to the Offer or the
Merger not being satisfied; or
(xviii) authorize any of, or commit, resolve or
agree to take any of, the foregoing actions.
(b) 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 all tax returns ("Post-Signing Returns")
required to be filed by or with respect to each such entity; (ii) timely pay all
taxes due and payable in respect of such Post-Signing Returns that are so filed;
(iii) accrue a reserve in the books and records and financial statements of any
such entity in accordance with past practice for all taxes payable by such
entity for which no Post-Signing Return is due prior to the Effective Time; (iv)
promptly notify Compass of any suit, claim, action, investigation, proceeding or
audit (collectively, "Actions") pending against or with respect to the Company
or any of its subsidiaries in respect of any Tax, the nonpayment of which would
have a Material Adverse Effect, and not settle or compromise any such Action in
excess of $500,000 without Compass's consent; and (v) not make any material tax
election without Compass's consent.
(c) ADVICE OF CHANGES; FILINGS. The Company shall,
subject to Section 4.01(d), (i) confer with Compass on a regular and frequent
basis to report on operational matters and other matters requested by Compass
and (ii) use commercially reasonable efforts to promptly advise Compass orally
and in writing of any change or event that would reasonably be expected to have
a Material Adverse Effect. The Company and Compass shall each promptly provide
the other copies of all filings made by such party with any Governmental Entity
in connection with this Agreement and the transactions contemplated hereby,
other than the portions of such filings that include competitively sensitive or
other confidential information. The Company will furnish Compass with copies of
all filings and correspondence with or from the SEC.
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(d) NO DISCLOSURE. Notwithstanding Section 4.01(c), with
respect to any business in which Compass and the Company (or any of their
respective subsidiaries) compete with each other, the Company shall not provide
to Compass or Sub information (in documentary or other form) that outside
counsel to the Company (after consultation with outside counsel to Compass)
determines should not be exchanged because of the competitive sensitivity of the
information.
Section 4.02. NO SOLICITATION.
(a) The Company shall not, nor shall it permit any of its
subsidiaries to, nor shall it authorize or permit any director, officer or
employee of the Company or any of its subsidiaries or any investment banker,
attorney, accountant or other advisor or representative of the Company or any of
its subsidiaries to, directly or indirectly, (i) solicit, initiate or encourage
any Takeover Proposal (as defined below) or (ii) enter into, continue or
otherwise participate in any discussions or negotiations regarding, or furnish
to any person any information with respect to, or otherwise cooperate in any way
with, or assist or participate in any effort or attempt by any person with
respect to, any Takeover Proposal; provided that at any time prior to the
Specified Date, the Board of Directors of the Company may, in response to a
Superior Proposal (as defined below) or a bona fide Takeover Proposal that such
Board of Directors determines in good faith is reasonably likely to lead to a
Superior Proposal (a "Likely Superior Proposal"), in each case that was
unsolicited, and subject to compliance with Section 4.02(c), (x) furnish
information with respect to the Company and its subsidiaries to the person
making such Superior Proposal or Likely Superior Proposal (and its
representatives) pursuant to a customary confidentiality agreement (which
confidentiality agreement contains terms that are no less favorable to the
Company than the terms of the Confidentiality Agreement dated December 4, 2000,
between Compass and the Company (as it may be amended from time to time, the
"Confidentiality Agreement")) provided that all such information is provided on
a prior or substantially current basis to Compass; and (y) participate in
discussions or negotiations with the person making such Superior Proposal or
Likely Superior Proposal (and its representatives) regarding such Superior
Proposal or Likely Superior Proposal.
For purposes of this Agreement, "Superior Proposal" means any offer not
solicited by the Company made by a third party to consummate a tender offer,
exchange offer, merger, consolidation or similar transaction which would result
in such third party (or its shareholders) owning, directly or indirectly, more
than 50% of the shares of Company Common Stock then outstanding (or of the
surviving entity in a merger) or all or substantially all of the assets of the
Company and its subsidiaries and otherwise on terms which the Board of Directors
of the Company determines in good faith (following receipt of the advice of a
financial advisor of nationally recognized reputation) to provide consideration
to the holders of Company Common Stock with a greater value than the
consideration payable in the Merger.
For purposes of this Agreement, "Takeover Proposal" means any inquiry,
proposal or offer from any person relating to any direct or indirect acquisition
or purchase of 20% or more of the assets of the Company and its subsidiaries,
taken as a whole, or 20% or more of any class or series of equity securities of
the Company or any of its subsidiaries, any tender offer or exchange offer that
if consummated would result in any person beneficially owning 20% or more of any
class or series of equity securities of the Company or any of its subsidiaries,
or any merger,
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consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company or any of its subsidiaries, other
than the transactions contemplated by this Agreement.
(b) Except as set forth below, neither the Board of
Directors of the Company nor any committee thereof shall (i) withdraw (or modify
in a manner adverse to Compass or Sub) or propose to withdraw (or modify in a
manner adverse to Compass or Sub) the approval or recommendation by such Board
of Directors or any such committee of this Agreement, the Offer or the Merger,
(ii) adopt, approve or recommend, or propose to adopt, approve or recommend, any
Takeover Proposal, (iii) cause or permit the Company to enter into any letter of
intent, memorandum of understanding, agreement in principle, acquisition
agreement, merger agreement or other similar agreement (each, an "Acquisition
Agreement") constituting any Takeover Proposal (other than a confidentiality
agreement referred to in Section 4.02(a) entered into under the circumstances
referred to in such Section 4.02(a)) or (iv) agree or resolve to take any of the
actions set forth in clauses (i), (ii) or (iii) of this sentence.
Notwithstanding the foregoing, at any time prior to the Specified Date, the
Board of Directors of the Company may, in response to a Superior Proposal that
was unsolicited, withdraw or modify the recommendation by such Board of
Directors of this Agreement, the Offer or the Merger or terminate this
Agreement, if such Board of Directors determines in good faith (after taking
into account any changes to the terms of this Agreement proposed in writing by
Compass in response to such Superior Proposal and after consultation with a
financial advisor of nationally recognized reputation) that such Superior
Proposal, as modified as a result of any negotiations, provides consideration to
the holders of the Company Common Stock with a greater value than the
consideration payable pursuant to this Agreement (and concurrently with or after
such termination, if it so chooses, cause the Company to enter into any
Acquisition Agreement with respect to such Superior Proposal), but only at a
time that is prior to the Specified Date and is after the third business day
following Compass's receipt of written notice advising Compass that the Board of
Directors of the Company is prepared to accept a Superior Proposal, specifying
the material terms and conditions of such Superior Proposal and identifying the
person making such Superior Proposal.
(c) In addition to the obligations of the Company set
forth in paragraphs (a) and (b) of this Section 4.02, the Company shall promptly
(and in no event later than 24 hours) advise Compass orally and in writing of
any request for information that the Company reasonably believes could lead to
or contemplates a Takeover Proposal or of any Takeover Proposal, or any inquiry
the Company reasonably believes could lead to any Takeover Proposal, the terms
and conditions of such request, Takeover Proposal or inquiry (including any
subsequent amendment or other modification to such terms and conditions) and the
identity of the person making any such request, Takeover Proposal or inquiry.
The Company shall promptly keep Compass informed in all material respects of the
status and details (including amendments or proposed amendments) of any such
request, Takeover Proposal or inquiry.
(d) Nothing contained in this Section 4.02 or elsewhere
in this Agreement shall prohibit the Company from (i) taking and disclosing to
its stockholders a position contemplated by Rule 14e-2(a) promulgated under the
Exchange Act or (ii) making any disclosure to the Company's stockholders if, in
the good faith judgment of the Board of Directors of the Company, after
consultation with outside counsel, failure so to disclose would be
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inconsistent with applicable law; provided, however, that, except as set forth
in Section 4.02(b), in no event shall the Board of Directors of the Company or
any committee thereof withdraw or modify, or propose to withdraw or modify, its
position with respect to this Agreement, the Offer or the Merger or adopt,
approve or recommend, or propose to adopt, approve or recommend, any Takeover
Proposal.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.01. PREPARATION OF THE PROXY STATEMENT; COMPANY STOCKHOLDERS
MEETING.
(a) If the adoption of this Agreement by the Company's
stockholders is required by law or the Company's Articles of Incorporation or
Bylaws, the Company and Compass shall, as promptly as practicable following the
expiration of the Offer, prepare and file with the SEC the Proxy Statement and
the Company shall use its commercially reasonable efforts to respond as promptly
as practicable to any comments of the SEC with respect thereto and to cause the
Proxy Statement to be mailed to the Company's stockholders as promptly as
practicable following the expiration of the Offer. The Company shall promptly
notify Compass upon the receipt of any comments from the SEC or its staff or any
request from the SEC or its staff for amendments or supplements to the Proxy
Statement and shall provide Compass with copies of all correspondence between
the Company and its representatives, on the one hand, and the SEC and its staff,
on the other hand. Notwithstanding the foregoing, prior to filing or mailing the
Proxy Statement (or any amendment or supplement thereto) or responding to any
comments of the SEC with respect thereto, the Company (i) shall provide Compass
an opportunity to review and comment on such document or response, (ii) shall
include in such document or response all comments reasonably proposed by Compass
and (iii) shall not file or mail such document or respond to the SEC prior to
receiving Compass's approval, which approval shall not be unreasonably withheld
or delayed.
(b) If the adoption of this Agreement by the Company's
Stockholders is required by law or the Company's Articles of Incorporation or
Bylaws, the Company shall, as promptly as practicable following the expiration
of the Offer, establish a record date (which will be as promptly as reasonably
practicable following the expiration of the Offer) for, duly call, give notice
of, convene and hold a meeting of its stockholders (the "Company Stockholders
Meeting") for the purpose of obtaining the Company Stockholder Approval. Subject
to Section 4.02(b), the Company shall, through its Board of Directors, recommend
to its stockholders that they adopt this Agreement, and shall include such
recommendation in the Proxy Statement. Without limiting the generality of the
foregoing, the Company agrees that its obligations pursuant to the first
sentence of this Section 5.01(b) shall not be affected by (i) the commencement,
public proposal, public disclosure or communication to the Company or any other
person of any Takeover Proposal or (ii) the withdrawal or modification by the
Board of Directors of the Company or any committee thereof of such Board's or
committee's approval or recommendation of the Offer, the Merger or this
Agreement. Notwithstanding the foregoing, if Sub or any other subsidiary of
Compass shall acquire at least ninety percent (90%) of the outstanding shares of
Company Common Stock, the parties shall take all necessary and appropriate
action to cause the Merger to become effective as soon as practicable after the
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expiration of the Offer without the Company Stockholders Meeting in accordance
with Section 14-2-1104 of the GBCC.
(c) Compass agrees to cause all shares of Company Common
Stock purchased pursuant to the Offer and all other shares of Company Common
Stock owned by Compass or any subsidiary of Compass to be voted in favor of the
Company Stockholder Approval.
Section 5.02. ACCESS TO INFORMATION; CONFIDENTIALITY. Except as
required by applicable law and as otherwise provided in Section 4.01(d), the
Company shall, and shall cause each of its subsidiaries to, upon reasonable
advance notice by Compass to the Company, afford to Compass, and to Compass's
officers, employees, investment bankers, attorneys, accountants and other
advisors and representatives, reasonable and reasonably prompt access during
normal business hours during the period prior to the Effective Time or the
termination of this Agreement to all their respective properties, assets, books,
contracts, commitments, directors, officers, employees, attorneys, accountants,
auditors, other advisors and representatives and records and, during such
period, the Company shall, and shall cause each of its subsidiaries to, make
available to Compass on a prompt basis (a) a copy of each report, schedule,
form, statement and other document filed or received by it during such period
pursuant to the requirements of domestic or foreign (whether national, federal,
state, provincial, local or otherwise) laws and (b) all other information
concerning its business, properties and personnel as Compass may reasonably
request (including access to, but not copies of, the work papers of Ernst &
Young LLP), except such information which counsel to the Company designates as
privileged under the attorney-client or similar privilege. Except as required by
law, Compass will hold, and will direct its officers, employees, investment
bankers, attorneys, accountants and other advisors and representatives to hold,
any and all information received from the Company, directly or indirectly, in
confidence in accordance with the Confidentiality Agreement.
Section 5.03. COMMERCIALLY REASONABLE EFFORTS; NOTIFICATION.
(a) Upon the terms and subject to the conditions set
forth in this Agreement, each of the parties agrees to use all commercially
reasonable efforts to take, or cause to be taken, all actions, that are
necessary to consummate and make effective the Offer, the Merger and the other
transactions contemplated by this Agreement, including using all commercially
reasonable efforts to accomplish the following: (i) the taking of all
commercially reasonable acts necessary to cause the conditions to the Offer and
the Merger to be satisfied, (ii) the obtaining of all necessary actions or
nonactions, waivers, consents, approvals, orders and authorizations from
Governmental Entities and the making of all necessary registrations,
declarations and filings, including the making of all filings under the HSR Act
and the Exon-Xxxxxx Amendment as promptly as reasonably practicable, and in any
event, within 15 business days after the date hereof, and (iii) the obtaining of
all necessary consents, approvals or waivers from third parties. In connection
with and without limiting the foregoing, the Company and its Board of Directors
shall, if any provision of the Company's Articles of Incorporation, Bylaws or
any state takeover statute or similar statute or regulation is or becomes
applicable to this Agreement, the Transactions or the other transactions
contemplated hereby or thereby, use its commercially reasonable efforts to
ensure that this Agreement, the Transactions or the other transactions
contemplated hereby or thereby may be consummated as promptly as practicable on
the terms contemplated by this Agreement and otherwise to minimize the effect of
such provision, statute
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or regulation on this Agreement, the Transactions or the other transactions
contemplated hereby or thereby. The Company and Compass shall keep the other
apprised of the status of matters relating to the completion of the transactions
contemplated hereby and work cooperatively in connection with obtaining any such
waivers, consents, approvals, orders and authorizations, including, without
limitation: (i) promptly notifying the other of, and if in writing, furnishing
the other with copies of (or, in the case of material oral communications,
advise the other orally of) any communications from or with any Governmental
Entity with respect to the Offer, the Merger or any of the other transactions
contemplated by this Agreement (except such communications which counsel to the
Company advises the Company is privileged under the attorney-client privilege or
similar privilege), (ii) permitting the other party to review and discuss in
advance, and considering in good faith the views of one another in connection
with, any proposed written (or material proposed oral) communication with any
Governmental Entity, (iii) not participating in any meeting with any
Governmental Entity unless it consults with the other party in advance and to
the extent permitted by such Governmental Entity gives the other party the
opportunity to attend and participate thereat, (iv) furnishing the other party
with copies of all correspondence, filings and communications (and memoranda
setting forth the substance thereof) between it and any Governmental Entity with
respect to this Agreement, the Offer and the Merger, and (v) furnishing the
other party with such necessary information and reasonable assistance as such
other party may reasonably request in connection with its preparation of
necessary filings or submissions of information to any Governmental Entity, and
which is not of a privileged nature or which contains competitively sensitive
information.
(b) The Company shall give prompt notice to Compass, and
Compass shall give prompt notice to the Company, 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 or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition agreement to be complied
with or satisfied by it under this Agreement; provided that no such notification
shall affect the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under this
Agreement.
Section 5.04. 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 (the "Indemnified Parties") as provided in their
respective articles of incorporation or bylaws (or similar organizational
documents) shall be assumed and continued by the Surviving Corporation in the
Merger, without further action, at the Effective Time and shall survive the
Merger and shall continue in full force and effect in accordance with their
terms. Notwithstanding any other provisions in any such articles of
incorporation or bylaws to the contrary, any Indemnified Party who is an officer
or director of the Company as of the date hereof will provide notice to the
Surviving Corporation and Compass of any third party claim which may give rise
to an indemnity obligation, and the Surviving Corporation and Compass shall have
the ability to participate in the defense of any such claim.
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(b) In the event that the Surviving Corporation or any of
its successors or assigns (i) consolidates with or merges into any other person
and is not the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all
its properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of the Surviving
Corporation assume the obligations set forth in this Section 5.04. In the event
that the Surviving Corporation is financially incapable of satisfying its
obligations under this Section 5.04, Compass shall satisfy such obligations.
(c) For six years after the Effective Time, the Surviving
Corporation shall maintain in effect the Company's current directors' and
officers' liability insurance covering each person currently covered by the
Company's directors' and officers' liability insurance policy for acts or
omissions occurring prior to the Effective Time on terms with respect to such
coverage and in amounts no less favorable in any material respect to such
directors and officers than those of such policy as in effect on the date of
this Agreement; provided that (i) Compass may substitute therefor policies of a
reputable insurance company the material terms of which, including coverage and
amount, are no less favorable in any material respect to such directors and
officers than the insurance coverage otherwise required under this Section
5.04(c) and (ii) in no event shall Compass be required to pay aggregate premiums
for insurance under this Section 5.04(c) in excess of 200% of the amount of the
aggregate premiums paid by the Company for 2000 for such purpose which 2000
premiums are identified in Section 5.04(c) of the Company Disclosure Schedule;
provided further that Compass shall nevertheless be obligated to provide such
coverage as may be obtained for such 200% amount.
(d) The Company shall, to the fullest extent permitted
under applicable law and regardless of whether the Merger becomes effective,
indemnify and hold harmless, and, after the Effective Time, the Surviving
Corporation shall, to the fullest extent permitted under applicable law,
indemnify and hold harmless, each Indemnified Party against all costs and
expenses (including reasonable attorneys' fees), judgments, fines, losses,
claims, damages, liabilities and settlement amounts paid in connection with any
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), whether civil, criminal, administrative or
investigative, arising out of or pertaining to any action or omission in their
capacity as a director or officer occurring before the Effective Time. In the
event of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), (i) the Company or the Surviving
Corporation, as the case may be, shall pay the reasonable fees and expenses of
counsel selected by the Indemnified Parties, which counsel shall be reasonably
satisfactory to the Company or the Surviving Corporation, promptly after
statements therefor are received and (ii) the Company or the Surviving
Corporation, as the case may be, shall cooperate in the defense of any such
matter; provided, however, that neither the Company nor the Surviving
Corporation shall be liable for any settlement effected without its written
consent (which consent shall not be unreasonably withheld); and provided further
that neither the Company nor the Surviving Corporation shall be obligated
pursuant to this Section 5.04(d) to pay the fees and expenses of more than one
counsel (and one local counsel) for all Indemnified Parties in any single action
except to the extent that two or more of such Indemnified Parties shall have
conflicting interests in the outcome of such action.
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Section 5.05. FEES AND EXPENSES.
(a) Except as set forth in Section 5.05(c), all fees and
expenses incurred in connection with this Agreement, the Offer, the Merger and
the other transactions contemplated by this Agreement shall be paid by the party
incurring such fees or expenses, whether or not the Merger is consummated.
(b) In the event that:
(i) (A) first, a Takeover Proposal shall have
been publicly proposed or publicly announced or any person has
publicly announced an intention (whether or not conditional
and whether or not withdrawn) to make a Takeover Proposal,
thereafter (B) this Agreement is terminated by either Compass
or the Company pursuant to Section 7.01(b)(i) and (C) within
12 months after such termination, the Company or any of its
subsidiaries enters into any Acquisition Agreement with
respect to, or consummates, any Takeover Proposal; or
(ii) this Agreement is terminated by Compass
pursuant to Section 7.01(c) or by the Company pursuant to
Section 7.01(f),
then the Company shall pay Compass a fee equal to $18,000,000 (the "Termination
Fee") by wire transfer of same day funds to an account designated by Compass in
the case of a payment as a result of any event referred to in Section 5.05(b)(i)
or Section 5.05(b)(ii), promptly, but in no event later than the date of such
termination. For purposes of Section 5.05(b), a "Takeover Proposal" shall have
the meaning assigned to such term in Section 4.02(b), except that references to
"20%" in such definition shall be deemed to be references to "50%". The parties
acknowledge that the agreements contained in this Section 5.05(b) and in Section
5.05(c) are an integral part of the transactions contemplated by this Agreement,
and that, without these agreements, the parties would not enter into this
Agreement; accordingly, if the Company fails to promptly pay the amounts due
pursuant to this Section 5.05(b) or Section 5.05(c) and, in order to obtain such
payment, Compass commences a suit that results in a judgment against the Company
for the amounts set forth in this Section 5.05(b) or Section 5.05(c), the
Company shall pay to Compass interest on the amounts set forth in this Section
5.05(b) or Section 5.05(c), at the prime rate of Bank of America, N.A. in effect
on the date such payment was required to be made.
(c) In addition, the Company shall reimburse Compass and
Sub for all their actual and documented out-of-pocket expenses incurred in
connection with this Agreement, the Offer, the Merger and the other transactions
contemplated by this Agreement (i) in the event this Agreement is terminated in
the circumstances described in Section 5.05(b)(i), or (ii) in the event this
Agreement is terminated in the circumstances described in Section 5.05(b)(ii),
promptly, but in no event later than the date of such termination; provided,
that the aggregate amount of such reimbursement together with the Termination
Fee shall not exceed $21,000,000. All payments made pursuant to this Section
5.05(c) shall be made by wire transfer of same day funds to an account
designated by Compass.
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Section 5.06. STOCK OPTIONS AND RESTRICTED STOCK.
(a) Upon payment by Sub for shares of Common Stock
pursuant to the Offer, each holder of a Company Stock Option, whether or not
then exercisable, which is then outstanding shall be entitled to receive, in
cancellation and full settlement of the Company Stock Option, an amount equal to
the product of (x) the number of shares of Company Common Stock provided in the
Company Stock Option and (y) the excess, if any, of the price per share of
Company Common Stock paid pursuant to the Offer over the exercise price per
share of Company Common Stock provided for in the Company Stock Option (the
"Option Consideration"). As soon as practicable following payment by Sub for
shares of Common Stock pursuant to the Offer, but no later than the Effective
Time, the Company shall pay (or cause to be paid, as the case may be) the Option
Consideration in cash to each holder of a Company Stock Option to whom Option
Consideration is payable. The Company shall take such other actions available
under the Company Stock Plans to effect the cancellation of all Company Stock
Options. The Company agrees to use commercially reasonable efforts to obtain
consents from the holders of such Company Stock Options to their cancellation to
the extent Compass determines such consents to be advisable.
(b) Notwithstanding any provision in any granting
agreement or other document to the contrary, all restrictions on shares of
restricted Company Common Stock granted under any of the Company Incentive Plans
shall lapse at the Specified Date, and the holder of such restricted Company
Common Stock shall be entitled to tender such shares in the Offer or receive for
each share of restricted Company Common Stock, in cancellation and full
settlement of such share, the Merger Consideration.
Section 5.07. BENEFITS MATTERS.
(a) The Company will take all actions necessary and
appropriate to terminate (i) its Salary Deferral Plan, (ii) its 1996 Stock
Incentive Plan (including all management and executive stock programs under such
plan), and (iii) its 1996 Non-Executive Stock Incentive Plan (including all
management and executive stock programs under such plan), at the Specified Date.
Except for the Company's Salary Deferral Plan and except as otherwise provided
herein, from and after the Specified Date, the Surviving Corporation shall
continue to honor in accordance with their respective terms the Benefit Plans,
Pension Plans and all of the Company's other employee benefit, compensation,
employment, severance and termination agreements, plans and policies, including
any rights or benefits arising as a result of the transactions contemplated by
this Agreement (either alone or in combination with any other event); it being
agreed and acknowledged by Compass that the transactions contemplated by this
Agreement constitute a "change of control" for all purposes under all such
agreements, plans and policies.
(b) After the Effective Time, employees of the Company or
any of its subsidiaries immediately prior to the Effective Time (the "Company
Employees") shall be provided benefits which are substantially similar to those
provided by the Company before the Effective Time, other than any equity-based
benefits provided before the Effective Time which shall be replaced by
permitting Company Employees to participate in the Compass Group Stock Bonus
Program in effect in 2001, or another plan substantially similar thereto.
Further, for a period of ten (10) days after the date of this Agreement, Compass
and the Company shall cause
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those offers of employment to each of Xxxxx X. Xxxxxxxxx, X. Xxxxx Xxxxxxx, Xxxx
X. Xxxxxxxx, Xxxxx X. Xxxxxxxxx, Xxxx X. Xxxxx, Xxxxxxx X. Xxxxxxxx, Xxxxx
Xxxxxx, Xxxxxx Xxxxxx, and Xxxxxx X. Xxxxxx (which offers of employment were
made to such persons prior to the date of this Agreement, and which employment
is subject to an employment agreement between the Company and such persons) to
remain open for acceptance by such persons. The foregoing obligation of Compass
and the Company shall in no way constitute an ongoing obligation of Compass or
the Company following the expiration of such ten (10) day period, except to the
extent provided in such employment agreements, as executed by the parties
thereto.
(c) Nothing contained in this Section 5.07 or elsewhere
in this Agreement shall be construed to prevent the termination of employment of
any individual Company Employee or, subject to the limitations of Section
5.07(a), (b), (c) and (d), any change in the employee benefits available to any
individual Company Employee or the amendment or termination of any particular
Benefit Plan, Pension Plan or other employee benefit plan, program, policy or
arrangement to the extent permitted by its terms as in effect immediately prior
to the Specified Date.
(d) During the period from the date of this Agreement to
the Effective Time, the Company will permit no further discounted purchases of
Company Common Stock with director fees or deferred compensation for Company
Directors through the Company Incentive Plans or any deferred compensation plan
for Company Directors.
(e) All change of control agreements between the Company
and any officer or director of the Company shall be terminated at or prior to
the Specified Date.
(f) With respect solely to section 13 and section 14 of
those indemnification agreements by and between the Company and its officers and
directors (which sections 13 and 14 relate to the establishment of a trust and
the obtaining of the opinions of independent counsel), such provisions in the
above-referenced sections of such indemnification agreements shall be terminated
at or prior to the Effective Time. Notwithstanding the foregoing, all other
provisions of such indemnification agreements shall remain in full force and
effect.
Section 5.08. PUBLIC ANNOUNCEMENTS. Subject to applicable securities
and other laws, Compass and Sub, on the one hand, and the Company, on the other
hand, shall, to the extent reasonably practicable, consult with each other
before issuing, and give each other a reasonable opportunity to review and
comment upon, any press release or other public statements with respect to this
Agreement, the Offer, the Merger and the other transactions contemplated by this
Agreement. Subject to applicable securities and other laws, the parties agree
that the initial press release to be issued with respect to the transactions
contemplated by this Agreement shall be in the form and at the time agreed to by
the parties.
Section 5.09. DIRECTORS.
(a) Promptly upon the acceptance for payment of, and
payment by Sub for, any shares of Company Common Stock pursuant to the Offer,
Sub shall be entitled to designate such number of directors on the Board of
Directors of the Company as will give Sub, subject to compliance with Section
14(f) of the Exchange Act, representation on the Board of Directors of
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44
the Company equal to that number of directors, rounded up to the next whole
number, which is the product of (a) the total number of directors on the Board
of Directors of the Company (giving effect to the directors elected pursuant to
this sentence) multiplied by (b) the percentage that (i) such number of shares
of Company Common Stock so accepted for payment and paid for by Sub bears to
(ii) the number of such shares outstanding, and the Company shall, at such time,
cause Sub's designees to be so elected; provided, however, that in the event
that Sub's designees are appointed or elected to the Board of Directors of the
Company, until the Effective Time, the Board of Directors of the Company shall
have at least a sufficient number of directors (as required by the rules of the
New York Stock Exchange, Inc. (the "NYSE")) who are Directors on the date of
this Agreement and who are not officers of the Company or representatives of any
affiliates of the Company (the "Independent Directors"); and provided further
that, in such event, if the number of Independent Directors shall be reduced
below the number required by the rules of the NYSE for any reason whatsoever,
any remaining Independent Directors (or Independent Director, if there shall be
only one remaining) shall be entitled to designate persons to fill such
vacancies who shall be deemed to be Independent Directors for purposes of this
Agreement or, if no Independent Directors then remain, the other directors shall
designate a sufficient number of persons to fill such vacancies who are not
officers, stockholders or affiliates of the Company, Compass or Sub, and such
persons shall be deemed to be Independent Directors for purposes of this
Agreement. Subject to applicable law, the Company shall take all action
requested by Compass necessary to effect any such election, including mailing to
its stockholders the Information Statement containing the information required
by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and
the Company shall make such mailing with the mailing of the Schedule 14D-9
(provided that Sub shall have provided to the Company on a timely basis all
information required to be included in the Information Statement with respect to
Sub's designees). In connection with the foregoing, the Company shall promptly,
at the option of Sub, either increase the size of the Board of Directors of the
Company or obtain the resignation of such number of its current directors as is
necessary to enable Sub's designees to be elected or appointed to the Board of
Directors of the Company as provided above.
(b) Prior to the Effective Time, the Company shall cause
each member of its Board of Directors, other than Sub's designees, to execute
and deliver a letter effectuating his or her resignation as a director of such
Board of Directors effective immediately prior to the Effective Time.
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) STOCKHOLDER APPROVAL. The Company Stockholder
Approval, if required by applicable law, shall have been obtained.
(b) NO INJUNCTIONS OR LEGAL RESTRAINTS. No temporary
restraining order, preliminary or permanent injunction or other order or decree
issued by any court of competent jurisdiction or other legal restraint or
prohibition (collectively, "Legal
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Restraints") that has the effect of preventing the consummation of the Merger
shall be in effect; provided, however, that each of the parties shall have used
commercially reasonable efforts to prevent the entry of any such injunction or
other order and to appeal as promptly as practicable any injunction or other
order that may be entered.
(c) PURCHASE OF SHARES IN THE OFFER. Sub shall have
previously accepted for payment and paid for the shares of Company Common Stock
pursuant to the Offer.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.01. TERMINATION. This Agreement may be terminated, and the
Offer and the Merger contemplated hereby may be abandoned, at any time prior to
the Effective Time, whether before or after the Company Stockholder Approval has
been obtained:
(a) by mutual written consent of Compass, Sub and the
Company;
(b) by either Compass or the Company:
(i) if Sub shall not have accepted for payment
any shares of Company Common Stock pursuant to the Offer prior
to April 30, 2001; provided that the right to terminate this
Agreement pursuant to this Section 7.01(b)(i) shall not be
available to any party whose breach of this Agreement has been
a principal reason the Offer has not been consummated by such
date; or
(ii) if any Governmental Entity shall have issued
an order, injunction or other decree or ruling or taken any
other action permanently enjoining, restraining or otherwise
prohibiting the acceptance for payment of, or payment for the
Company Common Stock pursuant to the Offer or the Merger and
such order, injunction, decree or ruling or other action shall
have become final and nonappealable.
(c) by Compass if the Board of Directors of the Company
or any committee thereof shall have (i) withdrawn or modified the recommendation
of such Board of Directors of this Agreement, the Offer or the Merger or (ii)
failed to confirm its recommendation to the Company's stockholders that they
accept the Offer and give the Company Stockholder Approval within ten business
days after a written request by Compass that it do so if such request is made
following the making of a Takeover Proposal, provided that Compass may not make
more than one such request in respect of a Takeover Proposal unless such
proposal has been materially modified;
(d) prior to the Specified Date by Compass (i) if the
Company shall have breached any of its representations, warranties or covenants
contained in this Agreement, which breach would give rise to the failure of a
condition set forth in paragraph (d) or (e) of Annex I which breach has not been
or is incapable of being cured by the Company within 10 business days after its
receipt of written notice thereof from Compass, or (ii) if any suit, action or
proceeding set forth in paragraph (a) of Annex I shall have prevailed and become
final and nonappealable;
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(e) prior to the Specified Date by the Company if any of
Compass's representations and warranties contained in this Agreement shall not
be true and correct, except for such failures to be true and correct that
(without giving effect to any limitation as to "materiality" set forth therein),
individually or in the aggregate, would not reasonably be expected to have a
Compass Material Adverse Effect, which failure has not been or is incapable of
being cured by Compass within 10 business days after its receipt of written
notice thereof from the Company; or
(f) prior to the Specified Date by the Company in
accordance with Section 4.02(b) subject to compliance by the Company with the
notice provisions herein and payment of the Termination Fee and expense
reimbursement provisions of Section 5.05.
Section 7.02. EFFECT OF TERMINATION. In the event of termination of
this Agreement by either the Company or Compass as provided in Section 7.01,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Compass, Sub or the Company, other than
the provisions of Section 3.01(u), the last sentence of Section 5.02, Section
5.05, this Section 7.02 and Article VIII; provided that no such termination
shall relieve any party hereto from any liability or damages resulting from a
willful breach by a party of any of its representations, warranties or covenants
set forth in this Agreement.
Section 7.03. AMENDMENT. This Agreement may be amended by the parties
hereto at any time, whether before or after the Company Stockholder Approval has
been obtained; provided that, after the Specified Date, no amendment shall be
made which decreases the Merger Consideration and, after the Company Stockholder
Approval has been obtained, there shall be made no amendment that by law
requires further approval by stockholders or shareholders of the parties without
the further approval of such stockholders or shareholders. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties hereto. Following the election or appointment of Sub's designees
pursuant to Section 5.09 and prior to the Effective Time, the affirmative vote
of a majority of the Independent Directors then in office shall be required by
the Company to (i) amend or terminate this Agreement by the Company, (ii)
exercise or waive any of the Company's rights or remedies under this Agreement
or (iii) extend the time for performance of Compass and Sub's respective
obligations under this Agreement.
Section 7.04. EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained herein or in any document delivered
pursuant hereto or (c) waive compliance with any of the agreements or conditions
contained herein; provided that after the Company Stockholder Approval has been
obtained, there shall be made no waiver that by law requires further approval by
stockholders or shareholders of the parties without the further approval of such
stockholders or shareholders. 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 behalf of such party. The failure or delay by any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights nor shall any single or partial exercise
by any party to this Agreement of any of its rights under this Agreement
preclude any other or further exercise of such rights or any other rights under
this Agreement.
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ARTICLE VIII
GENERAL PROVISIONS
Section 8.01. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. 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 8.01 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
Section 8.02. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally 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):
if to Compass or Sub, to:
Compass Group PLC
c/o Compass Group USA, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: General Counsel
with a copy to:
Xxxxx Xxxxx Mulliss & Xxxxx, L.L.P.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx, Xx.
if to the Company, to:
Xxxxxxxx Management Specialists, Inc.
0000 Xxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
with a copy to:
Powell, Goldstein, Xxxxxx & Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx XX, 00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. XxXxxxx and
Xxxxxxx Xxxxxxxxxx
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Section 8.03. 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;
(b) "Knowledge" means, with respect to the Company, the
actual knowledge of Xxxxx X. Xxxxxxxxx, K. Xxxxx Xxxxxxx, and Xxxx X. Xxxxxxxx.
(c) "Material Adverse Effect" means any state of facts,
change, development, effect, event, condition or occurrence that is materially
adverse to the business, assets, financial condition or results of operations of
the Company and its subsidiaries, taken as a whole, other than adverse changes
resulting from (i) general national, international or regional economic,
financial or market conditions, (ii) conditions, circumstances or changes
affecting the foodservice industry in general and not the Company specifically,
or (iii) the announcement or pendency of this Agreement or the Transactions
(including if resulting therefrom, employee attrition or modification of terms
of contracts with clients or suppliers, or delay in securing or loss of
potential contracts or other business);
(d) "Person" means an individual, corporation,
partnership, joint venture, association, trust, limited liability company,
Governmental Entity, unincorporated organization or other entity;
(e) "Compass Material Adverse Effect" means any state of
facts, change, development, effect, event, condition or occurrence that is
materially adverse to the business, assets, financial condition or results of
operations of Compass and its subsidiaries, taken as a whole, other than (i)
general national, international or regional economic, financial or market
conditions, (ii) adverse changes resulting from conditions, circumstances or
changes affecting the foodservice industry in general and not Compass
specifically, or (iii) with respect to Section 3.02(d), that prevents or
materially impedes or delays the consummation of the Offer, the Merger or the
other transactions contemplated by this Agreement.
Section 8.04. INTERPRETATION. When a reference is made in this
Agreement to a Section, Subsection or Schedule, such reference shall be to a
Section or Subsection of, or a Schedule 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. The
term "or" is not exclusive. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms. Any
agreement or instrument defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement or instrument as from
time to time amended, modified or supplemented. References to a person are also
to its permitted successors and assigns.
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Section 8.05. 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.
Section 8.06. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement (a) constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter of this Agreement, other than the Confidentiality
Agreement and (b) except for the provisions of Section 5.04 and Section 5.06, is
not intended to confer upon any person other than the parties hereto (and their
respective successors and assigns) any rights or remedies.
Section 8.07. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Georgia, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
Section 8.08. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned, in whole or in part,
except by operation of law, by any of the parties hereto without the prior
written consent of the other parties hereto, except that Sub may assign, in its
sole discretion, any of or all its rights, interests and obligations under this
Agreement to Compass or to any direct or indirect wholly owned subsidiary of
Compass, but no such assignment shall relieve Sub of any of its obligations
hereunder. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by, the parties hereto and
their respective successors and assigns.
Section 8.09. 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 may be entitled to an injunction or
injunctions to prevent breaches of this Agreement.
Section 8.10. 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.
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IN WITNESS WHEREOF, Compass, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
COMPASS GROUP PLC
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
----------------------------------------
Title: Authorized Agent
---------------------------------------
YORKMONT ONE, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
----------------------------------------
Title: Chief Financial Officer
---------------------------------------
XXXXXXXX MANAGEMENT SPECIALISTS,
INC.
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxxxx
----------------------------------------
Title: Chief Executive Officer
---------------------------------------
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ANNEX I
CONDITIONS OF THE OFFER
1. Notwithstanding any other term of the Offer or the Agreement
and Plan of Merger (the "Agreement") of which this Annex I is an integral part,
Sub shall not be required to accept for payment or, subject to any applicable
rules and regulations of the SEC, including Rule 14e-l(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered shares of Company
Common Stock promptly after the termination or withdrawal of the Offer), to pay
for any shares of Company Common Stock tendered pursuant to the Offer unless:
(a) there shall have been validly tendered and not
withdrawn prior to the expiration of the Offer that number of shares of
Company Common Stock which, together with any shares of Company Common
Stock determined on a fully diluted basis for all beneficially owned by
Compass, Sub, or any of their affiliates, would represent a majority of
the issued and outstanding Company Common Stock determined on a fully
diluted basis on the date of purchase (the "Minimum Tender Condition");
(b) any requisite waiting period under the HSR Act (and
any extensions thereof) applicable to the purchase of shares of Company
Common Stock pursuant to the Offer and to the Merger shall have been
terminated or shall have expired without the imposition of any
conditions or restrictions which in the judgment of either party would
adversely impact the economic or business benefits of the transactions
contemplated by the Agreement.
2. Furthermore, notwithstanding any other term of the Offer or
the Agreement, Sub shall not be required to accept for payment or, subject as
aforesaid, to pay for any shares of Company Common Stock not theretofore
accepted for payment or paid for, and, subject to the Agreement, may terminate
or amend the Offer, if, immediately prior to the applicable expiration of the
Offer, any of the following conditions exists:
(a) there shall be pending or formally threatened any
suit, action or proceeding by any Governmental Entity, (i) challenging
the acquisition by Compass or Sub of any shares of Company Common
Stock, seeking to restrain or prohibit consummation of the Offer or the
Merger, or seeking to place limitations on the ownership of shares of
Company Common Stock (or shares of common stock of the Surviving
Corporation) by Compass or Sub, (ii) seeking to prohibit or limit the
ownership or operation by the Company or Compass and their respective
subsidiaries of the business or assets of the Company or Compass and
their respective subsidiaries, or to compel the Company or Compass and
their respective subsidiaries to dispose of or hold separate any
material portion of the United States based business or assets of the
Company or Compass and their respective subsidiaries, as a result of
the Offer, the Merger, the Transactions or any of the other
transactions contemplated by the Agreement, (iii) seeking to prohibit
Compass or any of its subsidiaries from effectively controlling in any
material respect the business or operations of the Company, or (iv)
which otherwise is reasonably expected to have a Material Adverse
Effect; in each of (i) through (iv) above, subject to the obligations
set forth in Section 5.03 of the Agreement;
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(b) any Legal Restraint which may result in the filing of
any injunction or other order that has the effect of preventing the
purchase of shares of Company Common Stock pursuant to the Offer or the
Merger shall be in effect; provided, however, that each of the parties
shall have used commercially reasonable efforts to prevent the entry of
any such injunction or other order and to appeal as promptly as
practicable any injunction or other order that may be entered;
(c) except as set forth in the Company Disclosure
Schedule or in the Filed SEC Documents, since the date of the
Agreement, there shall have been any state of facts, change,
development, effect, event, condition or occurrence that, individually
or in the aggregate, constitutes or would reasonably be expected to
have, a Material Adverse Effect;
(d) (i) the representation and warranty of the Company
contained in the first five sentences of Section 3.01(c) of the
Agreement shall not be true and correct in all material respects, (ii)
the representations and warranties of the Company contained in the
Agreement that are qualified by reference to Material Adverse Effect
shall not be true and correct, or (iii) the other representations and
warranties of the Company contained in this Agreement shall not be true
and correct, except for such failures to be true and correct that,
individually and in the aggregate, would not reasonably be expected to
have a Material Adverse Effect;
(e) the Company shall have failed to perform in any
material respect any material obligation required to be performed by it
under the Agreement at or prior to the Specified Date;
(f) the sum of the Company's indebtedness for money
borrowed (including obligations under capital leases) exceeds
$70,000,000;
(g) the Agreement shall have been terminated in
accordance with its terms;
which, in the reasonable judgment of Sub or Compass, in any such case, and
regardless of the circumstances giving rise to any such condition (including any
action or inaction by Compass, Sub, or any of their affiliates other than any
action or inaction constituting a breach of the Agreement), makes it inadvisable
to proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Sub and Compass
and may be asserted by Sub or Compass regardless of the circumstances giving
rise to such condition or may be waived by Sub and Compass in whole or in part
at any time and from time to time in their reasonable discretion. The failure by
Compass, Sub or any other affiliate of Compass at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right; the waiver
of any such right with respect to particular facts and circumstances shall not
be deemed a waiver with respect to any other facts and circumstances and each
such right shall be deemed an ongoing right that may be asserted at any time and
from time to time. The terms in this Annex I that are defined in the Agreement
have the meanings set forth therein.
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FIRST AMENDMENT
TO
AGREEMENT AND PLAN OF MERGER
This FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER (this
"Amendment") dated as of February 14, 2001 (this "Amendment"), by and among
COMPASS GROUP PLC, a public limited company incorporated in England and Wales
("Compass"), YORKMONT ONE, INC., a Georgia corporation and a wholly owned
indirect subsidiary of Compass ("Sub"), and XXXXXXXX MANAGEMENT SPECIALISTS,
INC., a Georgia corporation (the "Company") (Compass, Sub, and the Company are
collectively referred to herein as the "Parties").
RECITALS
WHEREAS, the Parties entered into that certain Agreement and Plan of
Merger dated February 6, 2001 (the "Agreement"), pursuant to which it is
proposed that Sub will make a tender offer to purchase all the outstanding
shares of common stock of the Company, including the associated rights to
purchase shares of Series A Junior Participating Preferred Stock of the Company
issued pursuant to the Company's Rights Plan, at a price per share of Company
Common Stock of $40.00, net to the sellers in cash, without interest, on the
terms and subject to the conditions set forth in the Agreement, and following
such tender offer, it is further proposed that Sub will merge with and into the
Company, whereby the Company will be the surviving corporation of such merger;
WHEREAS, the Parties have discovered editing errors in each of Section
5.05(b) and Section 5.05(c) of the Agreement, which resulted in such Sections
not correctly reflecting the intention of the Parties;
WHEREAS, pursuant to the provisions of Section 7.03 of the Agreement,
the Parties desire, by entering into this Amendment, to amend the Agreement so
to correct such editing errors and accurately state the intention of the
Parties when the Parties entered into the Agreement; and
WHEREAS, capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, the Parties hereto
agree as follows:
1. Section 5.05(b) of the Agreement is hereby deleted in its
entirety, and inserted in lieu thereof is a new Section 5.05(b), as follows:
"(b) In the event that:
(i) (A) first, a Takeover Proposal shall have been
publicly proposed or publicly announced or any
person has publicly announced an intention
54
(whether or not conditional and whether or not
withdrawn) to make a Takeover Proposal, thereafter
(B) this Agreement is terminated by either Compass
or the Company pursuant to Section 7.01(b)(i) and
(C) within 12 months after such termination, the
Company or any of its subsidiaries enters into any
Acquisition Agreement with respect to, or
consummates, any Takeover Proposal; or
(ii) this Agreement is terminated by Compass pursuant to
Section 7.01(c) or by the Company pursuant to
Section 7.01(f),
then the Company shall pay Compass a fee equal to $18,000,000
(the "Termination Fee") by wire transfer of same day funds to
an account designated by Compass in the case of a payment as
a result of any event referred to in Section 5.05(b)(i)(C),
upon the first to occur of such events, and in the case of
payment as a result of any event referred to in Section
5.05(b)(ii), promptly, but in no event later than the date of
such termination. For purposes of Section 5.05(b), a
"Takeover Proposal" shall have the meaning assigned to such
term in Section 4.02(b), except that references to "20%" in
such definition shall be deemed to be references to "50%".
The parties acknowledge that the agreements contained in this
Section 5.05(b) and in Section 5.05(c) are an integral part
of the transactions contemplated by this Agreement, and that,
without these agreements, the parties would not enter into
this Agreement; accordingly, if the Company fails to promptly
pay the amounts due pursuant to this Section 5.05(b) or
Section 5.05(c) and, in order to obtain such payment, Compass
commences a suit that results in a judgment against the
Company for the amounts set forth in this Section 5.05(b) or
Section 5.05(c), the Company shall pay to Compass interest on
the amounts set forth in this Section 5.05(b) or Section
5.05(c), at the prime rate of Bank of America, N.A. in effect
on the date such payment was required to be made."
2. Section 5.05(c) of the Agreement is hereby deleted in its
entirety, and inserted in lieu thereof is a new Section 5.05(c), as follows:
"(c) In addition, the Company shall reimburse Compass and Sub for
all their actual and documented out-of-pocket expenses incurred in
connection with this Agreement, the Offer, the Merger and the other
transactions contemplated by this Agreement (i) in the event this
Agreement is terminated in the circumstances described in Section
5.05(b)(i)(C) upon the first to occur of such events, or (ii) in the
event this Agreement is terminated in the circumstances described in
Section 5.05(b)(ii), promptly, but in no event later than the date of
such termination; provided, that the aggregate amount of such
reimbursement together with the Termination Fee shall not exceed
$21,000,000. All payments made pursuant to this Section 5.05(c) shall
be made by wire transfer of same day funds to an account designated by
Compass."
3. All remaining provisions of the Agreement shall remain
unchanged and effective and are incorporated herein by reference.
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4. This Amendment 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.
5. This Amendment shall be governed by, and construed in
accordance with, the laws of the State of Georgia, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws
thereof.
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IN WITNESS WHEREOF, Compass, Sub and the Company have caused this
First Amendment to Agreement and Plan of Merger to be signed by their
respective officers thereunto duly authorized, all as of the date first written
above.
COMPASS GROUP PLC
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxxx
------------------------------------------
Title: Authorized Agent
-----------------------------------------
YORKMONT ONE, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxxx
------------------------------------------
Title: Chief Financial Officer
-----------------------------------------
XXXXXXXX MANAGEMENT SPECIALISTS, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------------------------
Name: Xxxxx X. Xxxxxxxxx
------------------------------------------
Title: Chief Executive Officer
-----------------------------------------
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