EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
AMONG
RC2 CORPORATION
RBVD ACQUISITION CORP.
AND
THE FIRST YEARS INC.
DATED AS OF JUNE 4, 2004
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TABLE OF CONTENTS
Page
ARTICLE I THE MERGER.......................................................2
1.1 The Merger.......................................................2
1.2 Articles of Organization and By-Laws.............................2
1.3 Effective Time...................................................2
1.4 Closing..........................................................2
1.5 Directors and Officers...........................................3
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS.......................................3
2.1 Effect on Capital Stock..........................................3
2.2 Company Stock Options and Related Matters........................3
ARTICLE III PAYMENT FOR SHARES...............................................4
3.1 Payment for Shares of Company Common Stock.......................4
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGERCO............6
4.1 Organization.....................................................6
4.2 Authorization; Validity of Agreement; Necessary Action...........6
4.3 Consents and Approvals; No Violations............................7
4.4 Required Financing...............................................7
4.5 Takeover Laws....................................................7
4.6 Formation and Ownership of MergerCo; No Prior Activities.........8
4.7 Financial Condition of Parent....................................8
4.8 Brokers..........................................................8
4.9 Litigation.......................................................8
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................9
5.1 Existence; Good Standing; Authority; Compliance with Law.........9
5.2 Authorization, Validity and Effect of Agreements................10
5.3 Capitalization..................................................10
5.4 Subsidiaries....................................................11
5.5 Other Interests.................................................12
5.6 Consents and Approvals; No Violations...........................12
5.7 SEC Reports.....................................................12
5.8 Litigation......................................................13
5.9 Absence of Certain Changes......................................13
5.10 Taxes...........................................................14
5.11 Properties......................................................14
5.12 Intellectual Property...........................................16
5.13 Environmental Matters...........................................16
5.14 Employee Benefit Plans..........................................17
5.15 Labor Matters...................................................18
5.16 No Brokers......................................................18
(i)
5.17 Opinion of Financial Advisor....................................18
5.18 Vote Required...................................................18
5.19 Material Contracts..............................................18
5.20 Insurance.......................................................19
5.21 No Other Representations or Warranties..........................19
5.22 Definition of the Company's Knowledge...........................19
ARTICLE VI CONDUCT OF BUSINESS PENDING THE MERGER..........................19
6.1 Conduct of Business by the Company..............................19
ARTICLE VII ADDITIONAL AGREEMENTS...........................................21
7.1 Stockholders Meeting............................................21
7.2 Other Filings...................................................23
7.3 Additional Agreements...........................................23
7.4 Fees and Expenses...............................................24
7.5 No Solicitations................................................24
7.6 Officers' and Directors' Indemnification........................25
7.7 Access to Information; Confidentiality..........................27
7.8 Public Announcements............................................27
7.9 Employee Benefit Arrangements...................................28
7.10 Required Financing..............................................29
ARTICLE VIII CONDITIONS TO THE MERGER........................................29
8.1 Conditions to the Obligations of Each Party to Effect
the Merger....................................................29
8.2 Additional Conditions to Obligations of Parent and MergerCo.....30
8.3 Additional Conditions to Obligations of the Company.............31
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER...............................31
9.1 Termination.....................................................31
9.2 Effect of Termination...........................................33
9.3 Amendment.......................................................34
9.4 Extension; Waiver...............................................34
ARTICLE X GENERAL PROVISIONS..............................................34
10.1 Notices.........................................................34
10.2 Certain Definitions.............................................35
10.3 Terms Defined Elsewhere.........................................38
10.4 Interpretation..................................................41
10.5 Non-Survival of Representations, Warranties, Covenants
and Agreements................................................41
10.6 Miscellaneous...................................................41
10.7 Assignment......................................................41
10.8 Severability....................................................41
10.9 Choice of Law/Consent to Jurisdiction...........................41
10.10 Gender Neutral..................................................42
10.11 No Agreement Until Executed.....................................42
(ii)
EXHIBIT AND SCHEDULES
Exhibit
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Exhibit A Form of Voting Agreement
Parent Disclosure Schedule
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Section Title
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4.2 Necessary Action
4.3 Consents
Company Disclosure Schedule
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Section Title
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2.2(a) Company Stock Option Plans
5.1(a) Organization and Good Standing
5.1(c) Compliance with Law
5.3(c) Stock Options
5.3(d) Restricted Stock Awards
5.3(e) Voting Rights/Restrictions on Transfer
5.4 Subsidiaries
5.5 Other Interests
5.6 Consents
5.7(b) Undisclosed Liabilities
5.8 Litigation
5.9 Absence of Changes
5.10 Taxes
5.11(a) Properties
5.11(b) Property Restrictions
5.11(c) Encumbrances
5.12 Intellectual Property
5.13 Environmental Matters
5.14(a) Employee Benefit Plans
5.14(d) Section 280G
5.19 Material Contracts
5.22 Definition of the Company's Knowledge
6.1 Conduct of Business Pending the Merger
7.3 Additional Agreements
7.6(b) Indemnification Agreements
7.9 Employee Benefit Arrangements
8.2(c) Consents of Third Parties
10.2 Company Actions
Other Schedule
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Section Title
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8.1(c) Other Filings
(iii)
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of June 4,
2004, is made by and among RC2 Corporation, a Delaware corporation ("Parent"),
RBVD Acquisition Corp., a Massachusetts corporation and a wholly owned
subsidiary of Parent ("MergerCo"), and The First Years Inc., a Massachusetts
corporation (the "Company").
RECITALS
WHEREAS, the parties wish to effect a business combination through a
merger of MergerCo with and into the Company (the "Merger") on the terms and
conditions set forth in this Agreement and in accordance with the Business
Corporation Law of the Commonwealth of Massachusetts (the "MBCL"), and after
July 1, 2004, the Massachusetts Business Corporation Act (the "MBCA");
WHEREAS, the Board of Directors of the Company (the "Company Board") has
unanimously adopted and approved this Agreement, the Merger and the other
transactions contemplated by this Agreement and determined that this Agreement,
the Merger and the other transactions contemplated by this Agreement are
advisable and in the best interest of the Company's stockholders;
WHEREAS, the respective Boards of Directors of Parent and MergerCo have
determined that this Agreement, the Merger and the other transactions
contemplated by this Agreement are in the best interest of their respective
stockholders, and Parent has approved this Agreement as the sole stockholder of
MergerCo;
WHEREAS, as a condition to the willingness of Parent and MergerCo to enter
into this Agreement, certain stockholders of the Company (the "Voting Agreement
Stockholders") are simultaneously herewith entering into voting agreements with
Parent in the form attached hereto as Exhibit A (collectively, the "Voting
Agreements"), pursuant to which each Voting Agreement Stockholder has agreed,
among other things, to vote his shares of common stock, par value $0.10 per
share, of the Company ("Company Common Stock," which term, as the context
requires, shall be deemed to include the rights (the "Rights") issued under the
terms of the Company Rights Agreement), in favor of this Agreement, upon the
terms and subject to the conditions set forth in the Voting Agreement; and
WHEREAS, Parent, MergerCo and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger, and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements set forth herein, and intending to be legally bound,
Parent, MergerCo and the Company hereby agree as follows:
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ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this Agreement, at
the Effective Time, the Company and MergerCo shall consummate the Merger
pursuant to which (a) MergerCo shall be merged with and into the Company and the
separate corporate existence of MergerCo shall thereupon cease, (b) the Company
shall be the successor or surviving corporation in the Merger (the "Surviving
Corporation") and shall continue to be governed by the laws of the Commonwealth
of Massachusetts, and (c) the separate corporate existence of the Company with
all its rights, privileges, immunities, powers and franchises shall continue
unaffected by the Merger. The Merger shall have the effects specified in the
MBCL, and after July 1, 2004, the MBCA. The purpose of the Surviving Corporation
shall be to manufacture, buy, sell and generally deal in, at wholesale, infants'
and children's toys, novelties and accessories, including any and all articles
used or capable of being used in connection with said business or any part
thereof, and in general, to carry on any business or other activity which may be
lawfully carried on by a corporation organized under Chapter 156B, and Chapter
156D after July 1, 2004, of the Massachusetts General Laws (the "MGL").
1.2 Articles of Organization and By-Laws. The Company shall take such
steps as are permitted under the MGL to (a) amend the Restated Articles of
Organization of the Company (the "Articles of Organization") so that the
Articles of Organization of MergerCo, as in effect immediately prior to the
Effective Time, shall be the Articles of Organization of the Surviving
Corporation until thereafter amended as provided by law and such Articles of
Organization, and (b) amend the By-laws of the Company (the "By-laws") so that
the By-laws of MergerCo, as in effect immediately prior to the Effective Time,
shall be the By-laws of the Surviving Corporation until thereafter amended as
provided by law, by the Articles of Organization of the Surviving Corporation
and by such By-laws. Notwithstanding the foregoing, the name of the Surviving
Corporation shall be "The First Years Inc." and the Articles of Organization and
By-laws of the Surviving Corporation shall so provide.
1.3 Effective Time. On the Closing Date, MergerCo and the Company shall
duly execute and file articles of merger (the "Articles of Merger") with the
Secretary of State of the Commonwealth of Massachusetts in accordance with the
MGL. The Merger shall become effective at such time as the Articles of Merger,
accompanied by payment of the filing fee (as provided in the MGL), have been
examined by and received the endorsed approval of the Secretary of State of the
Commonwealth of Massachusetts (the "Effective Time").
1.4 Closing. The closing of the Merger (the "Closing") shall occur as
promptly as practicable (but in no event later than the third Business Day)
after all of the conditions set forth in Article VIII (other than conditions
which by their terms are required to be satisfied or waived at the Closing)
shall have been satisfied or, if permissible, waived by the party entitled to
the benefit of the same, and, subject to the foregoing, shall take place at such
time and on a date to be specified by the parties (the "Closing Date"). The
Closing shall take place at the offices of Xxxxxxx Procter LLP, 00 Xxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, or at such other place as agreed to by the parties
hereto.
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1.5 Directors and Officers. The directors of MergerCo immediately prior to
the Effective Time shall be the initial directors of the Surviving Corporation
and the officers of MergerCo immediately prior to the Effective Time shall be
the initial officers of the Surviving Corporation, each to hold office in
accordance with the Articles of Organization and By-laws of the Surviving
Corporation.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS
2.1 Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of Company
Common Stock or any shares of capital stock of MergerCo:
(a) Each share of common stock, par value $0.01 per share, of
MergerCo issued and outstanding immediately prior to the Effective Time
shall be converted into one fully paid and nonassessable share of common
stock, par value $0.01 per share, of the Surviving Corporation following
the Merger.
(b) Each share of Company Common Stock that is owned by the Company,
by any wholly owned Subsidiary of the Company or by Parent, MergerCo or
any other wholly owned Subsidiary of Parent shall automatically be
canceled and retired and shall cease to exist, and no cash or other
consideration shall be delivered or deliverable in exchange therefor.
(c) 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 2.1(b)) shall be converted into the right to
receive $18.60 per share, net to the seller in cash, payable to the holder
thereof, without any interest thereon (the "Merger Consideration"), upon
surrender and exchange of the Certificate representing such share of
Company Common Stock in accordance with the provisions of Section 3.1.
(d) All shares of Company Common Stock, when converted as provided
in Section 2.1(c), shall no longer be outstanding and shall automatically
be canceled and retired and shall cease to exist, and each Certificate
previously evidencing such shares shall thereafter represent only the
right to receive the Merger Consideration. The holders of Certificates
previously evidencing shares of Company Common Stock outstanding
immediately prior to the Effective Time shall cease to have any rights
with respect to the Company Common Stock except as otherwise provided
herein or by law and, upon the surrender of Certificates in accordance
with the provisions of Section 3.1, shall only represent the right to
receive for their shares of Company Common Stock, the Merger
Consideration.
2.2 Company Stock Options and Related Matters.
(a) Each option (collectively, the "Options") granted under the 2002
Amended and Restated Stock Option Plan for Directors (the "Director Plan")
or the 2002 Amended and Restated Equity Incentive Plan (the "Equity Plan,"
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and together with the Director Plan, the "Company Stock Option Plans"),
which is outstanding (whether or not then exercisable) as of immediately
prior to the Effective Time, shall become fully vested as of the Effective
Time or earlier in accordance with the relevant Company Stock Option Plan.
At the Effective Time, upon the surrender and cancellation of the option
agreement representing such Option, the Company shall pay to the holder
thereof cash in an amount equal to the product of (i) the number of shares
of Company Common Stock provided for in such Option and (ii) the excess,
if any, of the Merger Consideration over the exercise price per share
provided for in such Option, which cash payment shall be treated as
compensation and shall be net of any applicable federal or state
withholding tax. The Company shall cause all Options issued pursuant to
the Director Plan to terminate and cease to be outstanding or of any force
or effect immediately following the Effective Time subject only to the
right of each holder of an Option to receive the cash payment to which
such holder is entitled pursuant to this Section 2.2(a). The Company shall
use its reasonable best efforts to take all actions, including such
actions as set forth in Section 2.2(a) of the Company Disclosure Schedule,
necessary to ensure that all Options issued pursuant to the Equity Plan,
to the extent not exercised prior to the Effective Time, shall terminate
and be cancelled immediately following the Effective Time and thereafter
be of no further force or effect.
(b) Parent and MergerCo acknowledge that all restricted stock awards
granted under the Company Stock Option Plans shall immediately vest and
the restrictions associated therewith shall automatically be deemed waived
as provided by the Company Stock Option Plans but in no event later than
the date on which the Company's stockholders approve this Agreement.
ARTICLE III
PAYMENT FOR SHARES
3.1 Payment for Shares of Company Common Stock.
(a) At the Effective Time, Parent shall deposit, or shall cause to
be deposited, with a bank or trust company as shall be mutually acceptable
to Parent and the Company (the "Exchange Agent"), for the benefit of the
holders of shares of Company Common Stock for exchange through the
Exchange Agent, the aggregate Merger Consideration as provided pursuant to
Section 2.1(c) (the "Exchange Fund").
(b) Promptly after the Effective Time, Parent shall cause the
Exchange Agent to mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock (the "Certificates") whose
shares were converted into the right to receive the Merger Consideration
pursuant to Section 2.1 (i) a form of letter of transmittal reasonably
acceptable to the Company which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only
upon proper delivery of the Certificates to the Exchange Agent and (ii)
instructions for use in surrendering the Certificates in exchange for the
Merger Consideration.
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(c) Upon surrender of a Certificate for cancellation to the Exchange
Agent together with such letter of transmittal, properly completed and
duly executed, and such other documents as may be required pursuant to
such instructions, the holder of such Certificate shall be entitled to
receive in exchange therefor the Merger Consideration which such holder
has the right to receive in respect of the shares of Company Common Stock
formerly represented by such Certificate, and the Certificate so
surrendered shall forthwith be canceled. No interest will be paid or
accrued on any Merger Consideration payable to holders of Certificates.
(d) Until surrendered in accordance with this Section 3.1, each such
Certificate (other than Certificates representing shares of Company Common
Stock held by Parent, MergerCo or any other wholly owned Subsidiary of
Parent, in the treasury of the Company or by any wholly owned Subsidiary
of the Company) shall represent solely the right to receive the Merger
Consideration relating thereto. If the Merger Consideration (or any
portion thereof) is to be delivered to any person other than the person in
whose name the Certificate formerly representing shares of Company Common
Stock surrendered therefor is registered, it shall be a condition to such
right to receive such Merger Consideration that the Certificate so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the person surrendering such shares of Company Common
Stock shall pay to the Exchange Agent any transfer or other taxes required
by reason of the payment of the Merger Consideration to a person other
than the registered holder of the Certificate surrendered, or shall
establish to the satisfaction of the Exchange Agent that such tax has been
paid or is not applicable.
(e) Promptly following the date which is 180 days after the
Effective Time, the Exchange Agent shall deliver to the Surviving
Corporation all cash, Certificates and other documents in its possession
relating to the Merger, and the Exchange Agent's duties shall terminate.
Thereafter, each holder of a Certificate formerly representing shares of
Company Common Stock may surrender such Certificate to the Surviving
Corporation and (subject to applicable abandoned property, escheat and
similar laws) receive in consideration therefor the Merger Consideration
relating thereto.
(f) At the Effective Time, the stock transfer books of the Company
shall be closed and thereafter, there shall be no further registration of
transfers of shares of Company Common Stock on the stock transfer books of
the Surviving Corporation of any shares of Company Common Stock which were
outstanding immediately prior to the Effective Time. On or after the
Effective Time, any Certificates formerly representing shares of Company
Common Stock presented to the Surviving Corporation or the Exchange Agent
shall be surrendered and canceled in return for the payment of the Merger
Consideration relating thereto, as provided in this Article III.
(g) None of Parent, the Surviving Corporation or the Exchange Agent
or any of their respective Subsidiaries or affiliates shall be liable to
any person in respect of any cash from the Exchange Fund delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
(h) 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 reasonably required by
Parent, the posting by such person of a bond, in such reasonable amount as
5
Parent may direct, as indemnity against any claim that may be made against
it with respect to such Certificate, the Exchange Agent will issue the
Merger Consideration in exchange for such lost, stolen or destroyed
Certificate.
(i) The Exchange Agent, Parent and the Surviving Corporation shall
be entitled to deduct and withhold from the Merger Consideration or other
amounts payable pursuant to this Agreement to any holder of shares of
Company Common Stock such amounts as the Exchange Agent, Parent or the
Surviving Corporation is required to deduct and withhold with respect to
the making of such payment under the Code, or any provision of United
States federal, state or local tax laws. To the extent that amounts are so
withheld by the Exchange Agent, Parent or the Surviving Corporation, such
amounts withheld shall be treated for all purposes of this Agreement as
having been paid to the holder of the shares of Company Common Stock in
respect of which such deduction and withholding was made by the Exchange
Agent, Parent or the Surviving Corporation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGERCO
Except as set forth in the disclosure schedules delivered at or prior to
the execution hereof to the Company (the "Parent Disclosure Schedule"), Parent
and MergerCo jointly and severally hereby represent and warrant to the Company
as follows:
4.1 Organization. Parent is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and MergerCo is a
corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Massachusetts, and each has all requisite power and
authority and all necessary governmental approvals to own, lease and operate
their properties and to carry on their businesses as now being conducted, except
where the failure to be so organized, existing and in good standing or to have
such power, authority, and governmental approvals would not, individually or in
the aggregate, have a Parent Material Adverse Effect. Parent is duly qualified
or licensed to do business and in good standing in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except where
the failure to be so duly qualified or licensed and in good standing would not,
individually or in the aggregate, have a Parent Material Adverse Effect.
4.2 Authorization; Validity of Agreement; Necessary Action. Each of Parent
and MergerCo has all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby
and perform its obligations hereunder. The execution, delivery and performance
by Parent and MergerCo of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
action on behalf of the Board of Directors of Parent and the Board of Directors
of MergerCo and by the sole stockholder of MergerCo, and, except as set forth in
Section 4.2 of the Parent Disclosure Schedule, no other action on the part of
Parent and MergerCo is necessary to authorize the execution and delivery by
Parent and MergerCo of this Agreement and the consummation of the transactions
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contemplated hereby. This Agreement has been duly executed and delivered by
Parent and MergerCo and, assuming due and valid authorization, execution and
delivery hereof by the Company, is a valid and binding obligation of each of
Parent and MergerCo, as the case may be, enforceable against each of them in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights and general
principles of equity.
4.3 Consents and Approvals; No Violations. Except (1) for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act, the Securities Act, the HSR
Act, and state securities or state "Blue Sky" laws, (2) for filing of the
Articles of Merger and (3) as otherwise set forth in Section 4.3 of the Parent
Disclosure Schedule, none of the execution, delivery or performance of this
Agreement by Parent or MergerCo, the consummation by Parent or MergerCo of the
transactions contemplated hereby or compliance by Parent or MergerCo with any of
the provisions hereof will (a) conflict with or result in any breach of any
provision of the organizational documents of Parent or the articles of
organization or bylaws of MergerCo, (b) require any filing with, notice by, or
permit, authorization, consent or approval of, any state, federal, county,
municipal, foreign or other government or governmental authority or by any court
of competent jurisdiction (a "Governmental Entity"), (c) result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which Parent or MergerCo is a party or by which
either of them or any of their respective properties or assets may be bound, or
(d) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Parent or MergerCo or any of their properties or assets, excluding
from the foregoing clauses (b), (c) and (d) such filings, notices, permits,
authorizations, consents, approvals, violations, breaches or defaults which
would not, individually or in the aggregate, (i) prevent or materially delay
consummation of the Merger, (ii) otherwise prevent or materially delay
performance by Parent or MergerCo of any of their obligations under this
Agreement or (iii) have a Parent Material Adverse Effect.
4.4 Required Financing. Parent and MergerCo have financing commitments in
place which, if funded in accordance with their terms, either alone or with cash
presently on hand, will provide sufficient funds to consummate the Merger,
including, without limitation, to (a) pay the Merger Consideration pursuant to
Section 2.1(c), (b) to the extent necessary, refinance the outstanding
indebtedness of the Company, (c) pay any fees and expenses in connection with
the Merger or the financing thereof and (d) provide for the working capital
needs of the Surviving Corporation following the Merger. Neither Parent nor
MergerCo has any reason to believe that any condition to such financing
commitments cannot or will not be waived or satisfied prior to the Effective
Time. Parent has provided to the Company true, complete and correct copies of
all financing commitment letters executed by its lenders (collectively, the
"Lenders"), including any exhibits, schedules or amendments thereto (the
"Financing Letters").
4.5 Takeover Laws. Neither Parent nor MergerCo was, immediately prior to
the execution of this Agreement, an "interested stockholder" within the meaning
of Chapter 110F of the MGL.
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4.6 Formation and Ownership of MergerCo; No Prior Activities.
(a) MergerCo was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement. All of the issued and
outstanding capital stock of MergerCo is validly issued, fully paid and
non-assessable and is owned, beneficially and of record, by Parent free
and clear of all security interests, liens, claims, pledges, options,
rights of first refusal, stockholder agreements, limitations on Parent's
voting rights, charges and other encumbrances of any nature whatsoever.
(b) As of the date hereof and as of the Effective Time, except for
(i) obligations or liabilities incurred in connection with its
incorporation or organization and (ii) this Agreement and any other
agreements or arrangements contemplated by this Agreement or in
furtherance of the transactions contemplated hereby, MergerCo has not
incurred, directly or indirectly, through any Subsidiary or affiliate, any
obligations or liabilities or engaged in any business activities of any
type or kind whatsoever or entered into any agreements or arrangements
with any person.
4.7 Financial Condition of Parent. Parent has provided to the Company
true, complete and correct copies of the audited financial statements of Parent
for the fiscal year ended December 31, 2003 and the unaudited financial
statements of Parent for the interim period ended March 31, 2004 (collectively,
the "Parent Financial Statements"). The balance sheets included in the Parent
Financial Statements fairly present in all material respects the financial
position of Parent as of the respective dates thereof, and each of the
statements of income, retained earnings and cash flow included therein fairly
present in all material respects the results of operations retained earnings or
cash flow, as the case may be, of Parent for the respective fiscal periods set
forth therein, in each case in accordance with GAAP consistently applied during
the periods involved (except as may be indicated in the notes thereto and
subject, in the unaudited statements, to normal year-end audit adjustments which
would not be material in amount or effect).
4.8 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission from the Company in connection
with the Merger based upon arrangements made by or on behalf of Parent, MergerCo
or any of Parent's other Subsidiaries.
4.9 Litigation. There is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of Parent, threatened against Parent
or MergerCo and neither Parent nor MergerCo is subject to any outstanding order,
writ, judgment, injunction or decree of any Governmental Entity which, in either
case, would, individually or in the aggregate, (a) prevent or materially delay
the consummation of the Merger or (b) otherwise prevent or materially delay
performance by Parent or MergerCo of any of their material obligations under
this Agreement.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedules delivered at or prior to
the execution hereof to Parent and MergerCo (the "Company Disclosure Schedule"),
the Company represents and warrants to Parent and MergerCo as follows:
5.1 Existence; Good Standing; Authority; Compliance with Law.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the Commonwealth of Massachusetts.
Except as set forth in Section 5.1(a) of the Company Disclosure Schedule,
the Company is duly qualified or licensed to do business as a foreign
corporation and is in good standing under the laws of any other
jurisdiction in which the character of the properties owned, leased or
operated by it therein or in which the transaction of its business makes
such qualification or licensing necessary, except where the failure to be
so qualified or licensed would not, individually or in the aggregate, have
a Company Material Adverse Effect. The Company has all requisite corporate
power and authority to own, operate, lease and encumber its properties and
carry on its business as now conducted.
(b) Each of the Company Subsidiaries listed in Section 5.4 of the
Company Disclosure Schedule (the "Company Subsidiaries") is a corporation,
partnership or limited liability company duly incorporated or organized,
validly existing and in good standing under the laws of its jurisdiction
of incorporation or organization, has the requisite corporate power or
other power and authority to own its properties and to carry on its
business as it is now being conducted, and is duly qualified to do
business and is in good standing in each jurisdiction in which the
ownership of its property or the conduct of its business requires such
qualification, except for jurisdictions in which such failure to be so
qualified or to be in good standing would not, individually or in the
aggregate, have a Company Material Adverse Effect. The Company has no
other Subsidiaries other than the Company Subsidiaries.
(c) Except as set forth in Section 5.1(c) of the Company Disclosure
Schedule, neither the Company nor any of the Company Subsidiaries is in
violation of any order of any court, governmental authority or arbitration
board or tribunal, or any law, ordinance, governmental rule or regulation
to which the Company or any Company Subsidiary or any of their respective
properties or assets is subject (including, but not limited to, the
Xxxxxxxx-Xxxxx Act of 2002 ("SOX"), other Securities Laws, and the Listing
Standards of the Nasdaq Stock Market, Inc.), where such violation, alone
or together with all other violations, would have a Company Material
Adverse Effect. The Company and the Company Subsidiaries have obtained all
licenses, permits and other authorizations and have taken all actions
required by applicable law or governmental regulations in connection with
their businesses as now conducted, except where the failure to obtain any
such license, permit or authorization or to take any such action, alone or
together with all other such failures, would not have a Company Material
Adverse Effect.
9
(d) The Company has previously provided or made available to Parent
true and complete copies of the Articles of Organization and By-laws and
the other charter documents, bylaws, organizational documents and
partnership, limited liability company and joint venture agreements (and
in each such case, all amendments thereto) of the Company and each of the
Company Subsidiaries as in effect on the date of this Agreement.
5.2 Authorization, Validity and Effect of Agreements.
(a) The Company has all requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby and perform its obligations hereunder. Subject only to
the approval of this Agreement by the holders of the Company Common Stock,
the execution, delivery and performance by the Company of this Agreement
and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on behalf of the
Company. In connection with the foregoing, the Company Board has
unanimously adopted and approved this Agreement and approved the
transactions contemplated by this Agreement, unanimously recommended that
the Company's stockholders adopt and approve this Agreement, and taken
such actions and votes as are necessary on its part to render the
provisions of Chapter 110F of the MGL and all other applicable takeover
statutes inapplicable to this Agreement, the Voting Agreements and the
Merger. In accordance with the applicable provisions of the MGL, the
stockholders of the Company are not entitled to appraisal or dissenters
rights in connection with transactions contemplated hereby. This
Agreement, assuming due and valid authorization, execution and delivery
hereof by Parent and MergerCo, constitutes a valid and legally binding
obligation of the Company, enforceable against the Company in accordance
with its terms, subject to applicable bankruptcy, insolvency, moratorium
or other similar laws relating to creditors' rights and general principles
of equity.
(b) The Company Board has amended the Common Stock Rights Agreement,
dated as of November 19, 2001, between the Company and EquiServe Trust
Company, N.A., as Rights Agent thereunder (the "Company Rights
Agreement"), prior to the execution of this Agreement so as to provide
that (i) (A) neither Parent nor MergerCo will become an "Acquiring Person"
and (B) no "Stock Acquisition Date" or "Distribution Date" (as such terms
are defined in the Company Rights Agreement) will occur, in each case, as
a result of the approval, execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and (ii) the Company
Rights Agreement will terminate immediately prior to the Effective Time.
The Company Board has taken all other action necessary so that the
execution of this Agreement and the consummation of the transactions
contemplated hereby does not and will not (x) cause any of the Rights to
become exercisable or redeemable or (y) enable or require the Company to
separate any Rights from the shares of Company Common Stock to which they
are attached.
5.3 Capitalization.
(a) The authorized capital stock of the Company consists of
50,000,000 shares of Company Common Stock and no shares of preferred stock
of the Company. As of June 2, 2004, (i) 8,346,981 shares of Company Common
Stock were issued and outstanding, (ii) 2,980,000 shares of Company Common
Stock have been authorized and reserved for issuance pursuant to the
Company Stock Option Plans, subject to adjustment on the terms set forth
in the Company Stock Option Plans, (iii) 1,325,286 Options were
outstanding under the Company Stock Option Plans, and (iv) 2,614,364
10
shares of Company Common Stock were held in the treasury of the Company.
As of the date of this Agreement, the Company had no shares of Company
Common Stock reserved for issuance other than as described above. All such
issued and outstanding shares of capital stock of the Company are duly
authorized, validly issued, fully paid, nonassessable and free of
preemptive rights.
(b) The Company has no outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote)
with the stockholders of the Company on any matter.
(c) Except for the Options (all of which have been issued under the
Company Stock Option Plans) and the Company Rights Agreement, there are
not any existing options, warrants, calls, subscriptions, convertible
securities, or other rights, agreements or commitments which obligate the
Company to issue, transfer or sell any shares of capital stock of the
Company. Section 5.3(c) of the Company Disclosure Schedule sets forth a
full list of the Options, including the name of the person to whom such
Options have been granted, the number of shares subject to each Option,
the per share exercise price for each Option, and the vesting schedule for
each Option. True and complete copies of all instruments (or the forms of
such instruments) referred to in this Section 5.3(c) have been furnished
or made available to Parent.
(d) Section 5.3(d) of the Company Disclosure Schedule sets forth a
complete list of the restricted stock awards granted under the Company
Stock Option Plans. True and complete copies of all instruments (or the
forms of such instruments) referred to in this Section 5.3(d) have been
furnished or made available to Parent.
(e) Except as set forth in Section 5.3(e) of the Company Disclosure
Schedule, there are no agreements or understandings to which the Company
or any Company Subsidiary is a party with respect to the voting of any
shares of capital stock of the Company or which restrict the transfer of
any such shares, nor does the Company have knowledge of any third party
agreements or understandings with respect to the voting of any such shares
or which restrict the transfer of any such shares.
(f) There are no outstanding contractual obligations of the Company
or any Company Subsidiary to repurchase, redeem or otherwise acquire any
shares of capital stock, partnership interests or any other securities of
the Company or any Company Subsidiary.
(g) Neither the Company nor any Company Subsidiary is under any
obligation, contingent or otherwise, by reason of any agreement to
register the offer and sale or resale of any of their securities under the
Securities Act.
5.4 Subsidiaries. Section 5.4 of the Company Disclosure Schedule sets
forth the name and jurisdiction of incorporation or organization of each Company
Subsidiary. All issued and outstanding shares or other equity interests of each
Company Subsidiary are duly authorized, validly issued, fully paid and
nonassessable. There are not any existing options, warrants, calls,
subscriptions, convertible securities, or other rights, agreements or
commitments which obligate any Company Subsidiary to issue, transfer or sell any
shares of its capital stock. All issued and outstanding shares or other equity
11
interests of each Company Subsidiary are owned directly or indirectly by the
Company free and clear of all liens, pledges, security interests, claims or
other encumbrances.
5.5 Other Interests. Except as set forth in Section 5.5 of the Company
Disclosure Schedule, neither the Company nor any Company Subsidiary owns
directly or indirectly any interest or investment (whether equity or debt) in
any person (other than investments in short-term investment securities).
5.6 Consents and Approvals; No Violations. Assuming the adoption and
approval of this Agreement by the stockholders of the Company and except (1) for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act, the Securities
Act, the HSR Act, and state securities or state "Blue Sky" laws, (2) for filing
of the Articles of Merger and (3) as otherwise set forth in Section 5.6 of the
Company Disclosure Schedule, none of the execution, delivery or performance of
this Agreement by the Company, the consummation by the Company of the
transactions contemplated hereby or compliance by the Company with any of the
provisions hereof will (a) conflict with or result in any breach of any
provision of the organizational documents of the Company, (b) require any filing
with, notice by, or permit, authorization, consent or approval of, any
Governmental Entity, (c) result in a violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which the Company is a
party or by which it or any of its properties or assets may be bound, or (d)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company or any of its properties or assets, excluding from the
foregoing clauses (b), (c) and (d) such filings, notices, permits,
authorizations, consents, approvals, violations, breaches or defaults which
would not, individually or in the aggregate, (i) prevent or materially delay
consummation of the Merger, (ii) otherwise prevent or materially delay
performance by the Company of its material obligations under this Agreement or
(iii) have a Company Material Adverse Effect.
5.7 SEC Reports.
(a) The Company has filed all required forms, reports and
registration statements with the SEC since December 31, 2000
(collectively, the "Company SEC Reports"), all of which were prepared in
all material respects in accordance with the applicable requirements of
the Exchange Act, the Securities Act and the rules and regulations
promulgated thereunder (the "Securities Laws"). As of their respective
dates, the Company SEC Reports (i) complied as to form in all material
respects with the applicable requirements of the Securities Laws and (ii)
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which
they were made, not misleading. Each of the consolidated balance sheets of
the Company included in or incorporated by reference into the Company SEC
Reports (including the related notes and schedules) fairly presents in all
material respects the consolidated financial position of the Company and
the Company Subsidiaries as of its date and each of the consolidated
statements of income, retained earnings and cash flows of the Company
included in or incorporated by reference into the Company SEC Reports
(including any related notes and schedules) fairly presents in all
material respects the results of operations, retained earnings or cash
12
flows, as the case may be, of the Company and the Company Subsidiaries for
the periods set forth therein, in each case in accordance with GAAP
consistently applied during the periods involved, except as may be noted
therein and except, in the case of the unaudited statements, as permitted
by Form 10-Q pursuant to Sections 13 or 15(d) of the Exchange Act and
normal year-end audit adjustments which would not be material in amount or
effect. No Company Subsidiary is required to file any form or report with
the SEC or any state securities authority. The certificates of the Chief
Executive Officer and Chief Financial Officer of the Company required by
Rules 13a-14 and 15d-14 of the Exchange Act or 18 U.S.C. ss.1350 (Section
906 of SOX) with respect to the Company SEC Reports, as applicable, are
true and correct as of the date of this Agreement as they relate to a
particular Company SEC Report, as though made as of the date of this
Agreement. The Company has established and maintains disclosure controls
and procedures, has conducted the procedures in accordance with their
terms and has otherwise operated in compliance with the requirements under
Rules 13a-15 and 15d-15 of the Exchange Act.
(b) Except as and to the extent set forth on the consolidated
balance sheet of the Company and the Company Subsidiaries as of December
31, 2003, including all notes thereto (the "Company Balance Sheet"), and
except as set forth in Section 5.7(b) of the Company Disclosure Schedule,
neither the Company nor any Company Subsidiary has any liabilities or
obligations of any nature (whether accrued, absolute, contingent, or
otherwise) that would be required to be reflected on a balance sheet, or
in the notes thereto, prepared in accordance with GAAP, except (i) the
obligation to pay any transfer fee necessary to transfer and assign the
Company licenses listed on Section 7.3 of the Company Disclosure Schedule,
(ii) the obligations to pay fees and expenses to the Company's attorneys,
accountants and the Company's financial advisor relating to the
transactions contemplated by this Agreement and other expenses incurred in
connection with the Company's exploration of strategic alternatives, (iii)
for liabilities or obligations incurred in the ordinary course of business
since December 31, 2003, that, individually or in the aggregate, would not
have a Company Material Adverse Effect, or (iv) as otherwise reflected in
the Company SEC Reports filed prior to the date of this Agreement.
5.8 Litigation. Except as set forth in the Company SEC Reports filed prior
to the date of this Agreement or in Section 5.8 of the Company Disclosure
Schedule, (a) there is no suit, claim, action, proceeding or investigation
pending or, to the knowledge of the Company, threatened against the Company or
any of the Company Subsidiaries and (b) neither the Company nor any Company
Subsidiary is subject to any outstanding order, writ, judgment, injunction or
decree of any Governmental Entity which, in the case of (a) or (b), would,
individually or in the aggregate, (i) prevent or materially delay the
consummation of the Merger, (ii) otherwise prevent or materially delay
performance by the Company of any of its material obligations under this
Agreement or (iii) have a Company Material Adverse Effect.
5.9 Absence of Certain Changes. Except as disclosed in the Company SEC
Reports filed prior to the date of this Agreement or set forth in Section 5.9 of
the Company Disclosure Schedule, since December 31, 2003 through the date
hereof, the Company and the Company Subsidiaries have conducted their businesses
only in the ordinary course of business and there has not been: (a) any
declaration, setting aside or payment of any dividend or other distribution with
respect to any shares of capital stock of the Company or any redemption,
purchase or other acquisition of any securities of the Company by the Company or
13
any Company Subsidiary; (b) any material commitment, contractual obligation
(including, without limitation, any management or franchise agreement, any lease
(capital or otherwise) or any letter of intent), borrowing, liability, guaranty,
capital expenditure or transaction (each, a "Commitment") entered into by the
Company or any of the Company Subsidiaries outside the ordinary course of
business except for Commitments for expenses of attorneys, accountants and
investment bankers incurred in connection with the Merger; (c) any material
change in the Company's accounting principles, practices or methods; (d) any
change in the financial condition, results of operations, or business of the
Company or any of the Company Subsidiaries that, individually or in the
aggregate, has had or would have a Company Material Adverse Effect; (e) any
increase to, or establishment of, any severance plan or agreement with any
officer of the Company or any Company Subsidiary; or (f) except for normal
increases in the ordinary course of business consistent with past practice not
exceeding $500,000 in the aggregate, any increase in any manner of the
compensation or fringe benefits of any non-executive officer or employee or any
payment of any benefit not required by any Employee Program or arrangement.
5.10 Taxes. Except as set forth in Section 5.10 of the Company Disclosure
Schedule, each of the Company and the Company Subsidiaries (a) has timely filed
(or had filed on their behalf) all Tax Returns required to be filed by any of
them (after giving effect to any filing extension granted by a Governmental
Entity) and (b) has paid (or had paid on their behalf) all Taxes as required to
be paid by it, except, in each case, where the failure to file such Tax Returns
or pay such Taxes would not, individually or in the aggregate, have a Company
Material Adverse Effect. Except as set forth in Section 5.10 of the Company
Disclosure Schedule, the most recent audited financial statements contained in
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2003 reflect, to the knowledge of the Company, an adequate reserve for all Taxes
payable by the Company and the Company Subsidiaries for all taxable periods and
portions thereof through the date of such financial statements in accordance
with GAAP, whether or not shown as being due on any Tax Returns. To the
knowledge of the Company, and except as set forth in Section 5.10 of the Company
Disclosure Schedule, no deficiencies for any Taxes have been proposed, asserted
or assessed against the Company or any of the Company Subsidiaries as of the
date of this Agreement, and no requests for waivers of the time to assess any
such Taxes are pending.
5.11 Properties.
(a) Section 5.11(a) of the Company Disclosure Schedule lists all
real property (1) owned by the Company or any of the Company Subsidiaries
or (2) leased or subleased to or by the Company or any of the Company
Subsidiaries as tenant or sub-tenant, as the case may be. The Company has
delivered, or made available, to Parent complete and accurate copies of
the leases and subleases (each as amended to date) of the properties
listed in Section 5.11(a) of the Company Disclosure Schedule. With respect
to each lease and sublease of the properties listed in Section 5.11(a) of
the Company Disclosure Schedule except as would not, individually or in
the aggregate, have a Company Material Adverse Effect:
(i) the lease or sublease is a legal, valid, binding, and
enforceable obligation of the Company or Company Subsidiary, subject
to applicable bankruptcy, insolvency, moratorium or other similar
laws relating to creditors' rights and general principles of equity;
14
(ii) neither the Company nor any Company Subsidiary, or to the
knowledge of the Company any other party, is in breach or violation
of, or default under, any such lease or sublease, and, to the
knowledge of the Company, no event has occurred, is pending or is
threatened, which, after the giving of notice or the lapse of time or
both, would constitute a breach or default by the Company or a
Company Subsidiary, or to the knowledge of the Company, any other
party under such lease or sublease; and
(iii) neither the Company nor any Company Subsidiary has
assigned, transferred, conveyed, mortgaged, deeded in trust or
encumbered any interest in the leasehold or subleasehold.
(b) Except as set forth in Section 5.11(b) of the Company Disclosure
Schedule, the Company and each Company Subsidiary owns fee simple title to
or has a valid leasehold interest in each of the real properties at which
the Company or any Company Subsidiary conducts operations (the "Company
Properties"), free and clear of all Encumbrances, and the Company
Properties are not subject to any easements, rights of way, covenants,
conditions, restrictions or other written agreements, laws affecting
building use or occupancy, or reservations of an interest in title
(collectively, "Property Restrictions"), except for (i) the matters set
forth in Section 5.11(b) of the Company Disclosure Schedule, (ii) Property
Restrictions imposed or promulgated by law or any Governmental Entity or
authority with respect to real property, including zoning regulations,
that do not materially and adversely affect the current use of the
property, (iii) real estate taxes, Encumbrances, and Property Restrictions
disclosed on existing title policies or reports or surveys that have been
provided to Parent prior to the date of the Agreement, (iv) mechanics',
carriers', suppliers', workmen's or repairmen's liens and other Property
Restrictions, if any, which, individually or in the aggregate, are not
material in amount, do not materially detract from the value of, or
materially interfere with, the present use of any of the Company
Properties subject thereto or affected thereby, and do not otherwise
materially impair business operations conducted by the Company and the
Company Subsidiaries and which have arisen or been incurred only in the
ordinary course of business or are set forth in the Company's financial
statements included in the Company SEC Reports filed prior to the date of
this Agreement, and (v) with respect to leaseholds any Encumbrances on the
landlord's fee interest. Except as set forth in Section 5.11(b) of the
Company Disclosure Schedule or as would not, individually or in the
aggregate, have a Company Material Adverse Effect, no written notice of
any violation of any law affecting any portion of any of the Company
Properties has been received by the Company or any Company Subsidiary from
any Governmental Entity.
(c) To the knowledge of the Company and except as set forth in
Section 5.11(c) of the Company Disclosure Schedule, the Company and the
Company Subsidiaries own good title, free and clear of all Encumbrances,
to all personal property and other non-real estate assets used in
connection with the business of the Company as presently conducted, except
for (i) Encumbrances reflected in the Company Balance Sheet, (ii)
Encumbrances or imperfections of title which are not, individually or in
the aggregate, material in character, amount or extent and which do not
materially detract from the value or materially interfere with the present
use of the assets subject thereto or affected thereby, and (iii)
Encumbrances for current Taxes not yet due and payable. All of the
15
machinery, equipment and other tangible personal property and assets owned
or used by the Company and the Company Subsidiaries are, to the Company's
knowledge, in good condition and repair, except for ordinary wear and
tear, to the extent necessary to permit the Company and the Company
Subsidiaries to conduct their businesses as they are presently being
conducted.
5.12 Intellectual Property. To the knowledge of the Company, the Company
or the Company Subsidiaries own or are licensed to use, or otherwise have the
right to use, all items of intangible property which are material to the
business of the Company and the Company Subsidiaries as currently conducted,
taken as a whole, including, without limitation, trade names, unregistered
trademarks and service marks, brand names, software, patents and copyrights.
Except as disclosed in the Company SEC Reports filed prior to the date of this
Agreement or Section 5.12 of the Company Disclosure Schedule, there are no
claims pending or, to the Company's knowledge, threatened, that the Company or
any Company Subsidiary is in violation of any such intellectual property right
of any third party which, individually or in the aggregate, would have a Company
Material Adverse Effect, and, to the Company's knowledge, no third party is in
violation of any intellectual property rights of the Company or any Company
Subsidiary which, individually or in the aggregate, would have a Company
Material Adverse Effect. Except as would not, individually or in the aggregate,
have a Company Material Adverse Effect, the use by the Company or any Company
Subsidiary of its intellectual property does not infringe and has not infringed
(a) the intellectual property rights of any other person (other than patent
rights as described in clause (b)), and (b) to the knowledge of the Company, the
patent rights of any other person, nor has it, through such use, misappropriated
or improperly used or disclosed any intellectual property of any other person.
5.13 Environmental Matters. Except as disclosed in Section 5.13 of the
Company Disclosure Schedule, the Company, the Company Subsidiaries and the
Company Properties are in compliance with all Environmental Laws, except for any
noncompliance that, either individually or in the aggregate, would not have a
Company Material Adverse Effect. There is no administrative or judicial
enforcement proceeding pending, or to the knowledge of the Company threatened,
against the Company, any Company Subsidiary or any of the Company Properties
under any Environmental Law. Except as disclosed in Section 5.13 of the Company
Disclosure Schedule, neither the Company nor any Company Subsidiary or, to the
knowledge of the Company, any legal predecessor of the Company or any Company
Subsidiary, has received any written notice that it is potentially responsible
under any Environmental Law for costs of response or for damages to natural
resources, as those terms are defined under the Environmental Laws, at any
location and neither the Company nor any Company Subsidiary has transported or
disposed of, or allowed or arranged for any third party to transport or dispose
of, any waste containing Hazardous Materials at any location included on the
National Priorities List, as defined under the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, or any location
proposed for inclusion on that list or at any location on any analogous state
list. Except as disclosed in Section 5.13 of the Company Disclosure Schedule,
the Company has no knowledge of the presence of or any release on any of the
Company Properties of Hazardous Materials, except in compliance with all
Environmental Laws, and, except as disclosed in Section 5.13 of the Company
Disclosure Schedule and to the Company's knowledge, there is no Hazardous
Materials treatment, storage or disposal facility, underground storage tank,
landfill, surface impoundment, underground injection well, asbestos, mold or
PCB's, as those terms are defined under the Environmental Laws, located at any
of the Company Properties or any real property owned or leased by any
predecessor entity or facilities utilized by the Company or the Company
Subsidiaries.
16
5.14 Employee Benefit Plans.
(a) Section 5.14(a) of the Company Disclosure Schedule sets forth a
list of every employee benefit plan, within the meaning of ERISA Section
3(3) and any other bonus, incentive compensation, profit-sharing, equity,
stock bonus, stock option, stock appreciation rights, restricted stock,
other stock-based incentive, executive compensation agreement, employment
agreement, deferred compensation, pension, stock purchase, employee stock
ownership, savings, pension, retirement, supplemental retirement,
employment related change-in-control, severance, salary continuation,
layoff, welfare (including, without limitation, health, medical,
prescription, dental, disability, salary continuation, life, accidental
death, travel accident, and other insurance), vacation, holiday, sick
leave, fringe benefit, or other benefit plan, program, or policy, and
whether qualified or nonqualified and any trust, escrow, or other
agreement related thereto, covering any present or former employees,
directors, or their respective dependents ("Employee Programs"), currently
maintained by, sponsored by or contributed to by the Company or any ERISA
Affiliate. Each Employee Program maintained by the Company or any ERISA
Affiliate and which is intended to qualify under Section 401(a) of the
Code has received a favorable determination letter from the IRS regarding
its qualification thereunder.
(b) With respect to each Employee Program, the Company has provided,
or made available, to Parent (if applicable to such Employee Program): (i)
all documents embodying or governing such Employee Program, and any
funding medium for the Employee Program (including, without limitation,
trust agreements); (ii) the most recent IRS determination letter with
respect to such Employee Program under Code Section 401(a); (iii) the most
recently filed IRS Forms 5500; (iv) the summary plan description for such
Employee Program (or other descriptions of such Employee Program provided
to employees) and all modifications thereto; and (v) any insurance policy
related to such Employee Program.
(c) Each Employee Program has been administered in accordance with
the applicable plan documents and the requirements of applicable law,
including, without limitation, ERISA and the Code, except as would not,
individually or in the aggregate, have a Company Material Adverse Effect.
No Employee Program is subject to Title IV of ERISA or is a multiemployer
plan within the meaning of Section 3(37) of ERISA. The Company or an ERISA
Affiliate, as applicable, has made all contributions required to be made
by the terms of any Employee Program or applicable law, except as would
not, individually or in the aggregate, have a Company Material Adverse
Effect.
(d) Except as set forth in Section 5.14(d) of the Company Disclosure
Schedule, the consummation of the transactions contemplated by this
Agreement will not entitle any present or former director, officer, or
employee of the Company or any ERISA Affiliate to any excess parachute
payments (within the meaning of Section 280G of the Code).
17
(e) For purposes of this Section 5.14:
(i) An entity is an "ERISA Affiliate" of the Company for
purposes of this Section 5.14 if it would have ever been considered
a single employer with the Company under ERISA Section 4001(b) or
part of the same "controlled group" as the Company for purposes of
ERISA Section 302(d)(8)(C); and
(ii) "Multiemployer Plan" means an employee pension or welfare
benefit plan to which more than one unaffiliated employer
contributes and which is maintained pursuant to one or more
collective bargaining agreements.
5.15 Labor Matters. Neither the Company nor any Company Subsidiary is a
party to, or bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor union organization. There
is no unfair labor practice or labor arbitration proceeding pending or, to the
knowledge of the Company, threatened against the Company or any of the Company
Subsidiaries relating to their business, except for any such proceeding which
would not, individually or in the aggregate, have a Company Material Adverse
Effect. To the Company's knowledge, there are no organizational efforts with
respect to the formation of a collective bargaining unit presently being made or
threatened involving employees of the Company or any of the Company
Subsidiaries.
5.16 No Brokers Neither the Company nor any of the Company Subsidiaries
has entered into any contract, arrangement or understanding with any person or
firm which may result in the obligation of such entity or Parent or MergerCo to
pay any finder's fees, brokerage or agent's commissions or other like payments
in connection with the negotiations leading to this Agreement or consummation of
the Merger, except that the Company has retained Xxxxxxx, Xxxxx & Co., as its
financial advisor, in connection with the Merger.
5.17 Opinion of Financial Advisor. The Company has received the opinion of
Xxxxxxx, Sachs & Co. to the effect that, as of the date hereof, the Merger
Consideration is fair to the holders of Company Common Stock from a financial
point of view.
5.18 Vote Required. The affirmative vote of the holders of two-thirds of
the shares of outstanding Company Common Stock is the only vote of the holders
of any class or series of capital stock of the Company necessary to adopt and
approve this Agreement and consummate the transactions contemplated by this
Agreement.
5.19 Material Contracts. Except as set forth in Section 5.19 of the
Company Disclosure Schedule, the Company SEC Reports list all Material Contracts
of the Company, and except as set forth in Section 5.19 of the Company
Disclosure Schedule or in the Company SEC Reports, to the knowledge of the
Company, each Material Contract is valid, binding and enforceable and in full
force and effect, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights and general principles of
equity, and there are no defaults thereunder, except those defaults that would
not, individually or in the aggregate, have a Company Material Adverse Effect.
18
5.20 Insurance. The Company maintains insurance coverage with reputable
insurers, or maintains self-insurance practices, in such amounts and covering
such risks as are in accordance with normal industry practice for companies
engaged in businesses similar to that of the Company (taking into account the
cost and availability of such insurance). There is no claim by the Company or
any Company Subsidiary pending under any such policies which (a) has been denied
or disputed by the insurer or (b) would have, individually or in the aggregate,
a Company Material Adverse Effect. All such insurance policies are in full force
and effect, all premiums due and payable thereon have been paid, and no written
notice of cancellation or termination has been received by the Company with
respect to any such policy which has not been replaced on substantially similar
terms prior to the date of such cancellation.
5.21 No Other Representations or Warranties. Except for the
representations and warranties made by the Company in this Article V, the
Company makes no representations or warranties, and the Company hereby disclaims
any other representations or warranties, with respect to the Company, the
Company Subsidiaries, or its or their businesses, operations, assets,
liabilities, condition (financial or otherwise) or prospects or the negotiation,
execution, delivery or performance of this Agreement by the Company,
notwithstanding the delivery or disclosure to Parent or its affiliates or
representatives of any documentation or other information with respect to any
one or more of the foregoing.
5.22 Definition of the Company's Knowledge. As used in this Agreement, the
phrase "to the knowledge of the Company" or any similar phrase means the actual
(and not the constructive or imputed) knowledge of those individuals identified
in Section 5.22 of the Company Disclosure Schedule.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
6.1 Conduct of Business by the Company. During the period from the date of
this Agreement to the Effective Time, except as otherwise contemplated by this
Agreement, the Company shall use its commercially reasonable efforts to, and
shall cause each of the Company Subsidiaries to use its commercially reasonable
efforts to, carry on their respective businesses in the usual, regular and
ordinary course, consistent with past practice, and use their commercially
reasonable efforts to preserve intact their present business organizations, keep
available the services of their present advisors, managers, officers and
employees and preserve their relationships with customers, suppliers, licensors
and others having business dealings with them and continue and perform under
existing contracts as in effect on the date hereof (for the term provided in
such contracts). Without limiting the generality of the foregoing, neither the
Company nor any of the Company Subsidiaries will (except as expressly permitted
by this Agreement or as contemplated by the transactions contemplated hereby, as
set forth in Section 6.1 of the Company Disclosure Schedule, or to the extent
that Parent shall otherwise consent in writing):
(a) split, combine or reclassify any shares of capital stock of the
Company or declare, set aside or pay any dividend or other distribution
(whether in cash, stock, or property or any combination thereof) in
respect of any shares of capital stock of the Company, except for
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dividends or distributions, declared, set aside or paid by any Company
Subsidiary to the Company or any Company Subsidiary that is, directly or
indirectly, wholly owned by the Company;
(b) authorize for issuance, issue or sell or agree or commit to
issue or sell (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any
stock of any class or any other securities or equity equivalents
(including, without limitation, stock appreciation rights) (other than the
issuance of shares of Company Common Stock upon the exercise of Options
outstanding on the date of this Agreement in accordance with their present
terms), or redeem, purchase, or otherwise acquire any shares of its
capital stock or any securities or obligations convertible into or
exchangeable for any shares of its capital stock, or any options,
warrants, conversion, or other rights to acquire any shares of its capital
stock or any such securities or obligations (other than the delivery of
previously owned shares in connection with the exercise of Options
outstanding on the date of this Agreement or the forfeiture of shares of
restricted stock in accordance with the terms of the applicable
agreement);
(c) acquire, sell, lease, encumber, transfer or dispose of any
assets outside the ordinary course of business consistent with past
practice (whether by asset acquisition, stock acquisition or otherwise);
(d) incur any amount of indebtedness for borrowed money, guarantee
any indebtedness, issue or sell debt securities, make any loans, advances
or capital contributions, mortgage, pledge or otherwise encumber any
material assets, or create or suffer any material lien thereupon, except,
in each case, in the ordinary course of business consistent with past
practice pursuant to credit facilities in existence on the date hereof;
(e) except pursuant to any mandatory payments under any credit
facilities in existence on the date hereof, pay, discharge or satisfy any
claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than any payment, discharge or
satisfaction in the ordinary course of business consistent with past
practice;
(f) change any of the accounting principles or practices used by it
(except as required by GAAP, in which case written notice shall be
provided to Parent and MergerCo prior to any such change);
(g) except as required by law, (i) enter into, adopt, amend or
terminate any Employee Program, (ii) enter into, adopt, amend or terminate
any agreement, arrangement, plan or policy between the Company or any of
the Company Subsidiaries and one or more of their directors or executive
officers, or (iii) except for normal increases in the ordinary course of
business consistent with past practice not to exceed $500,000 in the
aggregate, increase in any manner the compensation or fringe benefits of
any non-executive officer or employee or pay any benefit not required by
any Employee Program or arrangement as in effect as of the date hereof;
(h) adopt any amendments to the Articles of Organization, the
By-laws or the Company Rights Agreement, except as expressly provided by
the terms of this Agreement;
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(i) adopt a plan of complete or partial liquidation or resolutions
providing for or authorizing such a liquidation or a dissolution, merger,
consolidation, restructuring, recapitalization or reorganization (other
than the Merger or plans of complete or partial liquidation or dissolution
of inactive Company Subsidiaries);
(j) settle or compromise any litigation or other disputes (whether
or not commenced prior to the date of this Agreement) other than
settlements or compromises for litigation or other disputes where the
amount paid (after giving effect to insurance proceeds actually received)
in settlement or compromise does not exceed $500,000, individually or
$1,000,000 in the aggregate, for all such litigation or other disputes;
(k) amend any term of any outstanding security of the Company or any
Company Subsidiary;
(l) modify or amend any Material Contract to which the Company or
any Company Subsidiary is a party or waive, release or assign any material
rights or claims under any such Material Contract;
(m) authorize, commit to or make any equipment purchases or capital
expenditures other than in the ordinary course of business and consistent
with past practice not to exceed $3,500,000 in the aggregate; or
(n) enter into an agreement to take any of the foregoing actions.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Stockholders Meeting.
(a) The Company, acting through the Company Board, shall, in
accordance with applicable law:
(i) duly call, give notice of, convene and hold a special
meeting of its stockholders (the "Special Meeting") for the purpose
of considering and taking action upon this Agreement, and the Company
shall use its reasonable best efforts to hold the Special Meeting as
soon as practicable after the date on which the Proxy Statement is
cleared by the SEC;
(ii) as promptly as practicable, prepare and file with the SEC
a preliminary proxy statement relating to this Agreement and the
Merger;
(iii) use its reasonable best efforts to (A) obtain and
furnish the information required to be included by the SEC in a
definitive proxy statement (the "Proxy Statement") and, after
consultation with Parent, to respond promptly to any comments made
by the SEC with respect to the preliminary proxy statement and cause
the Proxy Statement to be mailed to its stockholders as promptly as
practicable following clearance from the SEC, and (B) obtain the
necessary approval of this Agreement by its stockholders; and
21
(iv) subject to the fiduciary duties of the Company Board as
provided in Section 7.5, include in the Proxy Statement the
unanimous recommendation of the Company Board that stockholders of
the Company vote in favor of the adoption and approval of this
Agreement.
(b) Parent and MergerCo shall provide to the Company any information
for inclusion in the Proxy Statement which may be required under
applicable law and which is reasonably requested by the Company. Each of
the Company, on the one hand, and Parent and MergerCo, on the other hand,
agree promptly to correct any information provided by either of them for
use in the Proxy Statement if, and to the extent that, such information
shall have become false or misleading in any material respect, and the
Company further agrees to take all necessary steps to cause the Proxy
Statement as so corrected to be filed with the SEC and to be disseminated
to the stockholders of the Company, in each case, as and to the extent
required by applicable federal securities laws.
(c) The Company hereby represents and warrants that the information
supplied or to be supplied by the Company for inclusion or incorporation
by reference in (i) the Proxy Statement or (ii) the Other Filings, will,
at the respective times filed with the SEC or other Governmental Entity
and, in addition, in the case of the Proxy Statement, as of the date it or
any amendment or supplement thereto is mailed to stockholders and at the
time of the Special Meeting, not 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. The Proxy
Statement, insofar as it relates to the Company or other information
supplied by the Company for inclusion therein, will comply as to form in
all material respects with the requirements of the Exchange Act and the
rules and regulations promulgated thereunder. Notwithstanding the
foregoing, the Company makes no representation, warranty or covenant with
respect to information concerning Parent or MergerCo included in the Proxy
Statement or information supplied by Parent or MergerCo for inclusion in
the Proxy Statement.
(d) Parent and MergerCo jointly and severally hereby represent and
warrant that the information supplied or to be supplied by Parent or
MergerCo for inclusion or incorporation by reference in (i) the Proxy
Statement or (ii) the Other Filings, will, at the respective times filed
with the SEC or other Governmental Entity and, in addition, in the case of
the Proxy Statement, as of the date it or any amendment or supplement
thereto is mailed to stockholders and at the time of the Special Meeting,
not 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. The Proxy Statement, insofar as it relates to Parent
or MergerCo or other information supplied by Parent or MergerCo for
inclusion therein, will comply as to form in all material respects with
the requirements of the Exchange Act and the rules and regulations
promulgated thereunder. Notwithstanding the foregoing, Parent and MergerCo
make no representation, warranty or covenant with respect to information
concerning the Company included in the Proxy Statement or information
supplied by the Company for inclusion in the Proxy Statement.
22
7.2 Other Filings. As soon as practicable following the date of this
Agreement, the Company, Parent and MergerCo each shall properly prepare and file
any other filings required under the Exchange Act or any other federal, state or
foreign law relating to the Merger (including filings, if any, required under
the HSR Act) (collectively, the "Other Filings"). Each of the Company, Parent
and MergerCo shall promptly notify the other of the receipt of any comments on,
or any request for amendments or supplements to, any of the Other Filings by the
SEC or any other Governmental Entity or official, and each of the Company,
Parent and MergerCo shall supply the other with copies of all correspondence
between it and each of its Subsidiaries and representatives, on the one hand,
and the SEC or the members of its staff or any other appropriate governmental
official, on the other hand, with respect to any of the Other Filings. The
Company, Parent and MergerCo each shall promptly obtain and furnish the other
(a) the information which may be reasonably required in order to make such Other
Filings and (b) any additional information which may be requested by a
Governmental Entity and which the parties reasonably deem appropriate. In
furtherance and not in limitation of the foregoing, each party hereto agrees to
make an appropriate filing of a Notification and Report Form pursuant to the HSR
Act with respect to the Merger as promptly as practicable and in any event
within ten (10) business days of the date hereof and to supply as promptly as
practicable any additional information and documentary material that may be
requested pursuant to the HSR Act and use its reasonable best efforts to take,
or cause to be taken, all other actions consistent with this Section 7.2
necessary to cause the expiration or termination of the applicable waiting
periods under the HSR Act as soon as practicable. In addition, Parent and
MergerCo hereby covenant and agree to use their respective reasonable best
efforts to secure termination of any waiting periods any other applicable law
and to obtain the approval of the Federal Trade Commission (the "FTC"), the
Antitrust Division of the United States Department of Justice (the "DOJ") or any
other Governmental Entity, as applicable, for the Merger and the other
transactions contemplated hereby, including, without limitation, promptly
entering into a consent decree or other arrangement with the FTC, DOJ or other
Governmental Entity as may be necessary to secure termination of such waiting
periods or obtain such approval. Parent and MergerCo shall take all such
actions, including (y) proposing, negotiating, committing to and effecting, by
consent decree, hold separate order, or otherwise, the sale, divestiture or
disposition of such assets or businesses of Parent (or any of its Subsidiaries)
and (z) otherwise taking or committing to take actions that limit Parent or its
Subsidiaries' freedom of action with respect to, or its ability to retain, one
or more of its or its Subsidiaries' businesses, product lines or assets, in each
case, as may be required in order to avoid the entry of, or to effect the
dissolution of, any injunction, temporary restraining order, or other order in
any suit or proceeding, which would otherwise have the effect of preventing or
materially delaying the consummation of the Merger. The Company shall take such
of the foregoing actions as Parent may request; provided that any such action is
conditioned upon the consummation of the Merger.
7.3 Additional Agreements.
(a) Subject to the terms and conditions herein provided, each of the
parties hereto agrees to use its reasonable best efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective as
promptly as practicable the Merger and to cooperate with each other in
connection with the foregoing, including the taking of such actions as are
necessary to obtain any necessary consents, approvals, orders, exemptions
and authorizations by or from any public or private third party,
23
including, without limitation, any that are required to be obtained under
any federal, state or local law or regulation or any contract, agreement
or instrument to which the Company or any Company Subsidiary is a party or
by which any of their respective properties or assets are bound, to defend
all lawsuits or other legal proceedings challenging this Agreement or the
consummation of the Merger, to effect all necessary registrations and
Other Filings, including, but not limited to, filings under the HSR Act,
if any, and submissions of information requested by a Governmental Entity,
and to use its best efforts to cause to be lifted or rescinded any
injunction or restraining order or other order adversely affecting the
ability of the parties to consummate the Merger. In connection with the
foregoing, the Company agrees to use its reasonable best efforts to enter
into the contracts listed in Section 7.3(i) of the Company Disclosure
Schedule on terms reasonably satisfactory to Parent. The parties hereto
acknowledge and agree that the Company shall pay any transfer fee
necessary to transfer and assign the Company's licenses listed on Section
7.3(ii) of the Company Disclosure Schedule.
(b) Promptly following the date of this Agreement, Parent shall
engage a national accounting firm or other reputable consultant to assist
Parent with the review, documentation and testing of the internal control
over financial reporting of the Company and the Company Subsidiaries for
the purpose of preparing the compliance by the Company after the Effective
Time with the reporting and attestation requirements of Item 308 of SEC
Regulation S-K. In connection with the foregoing, the Company shall
cooperate and work in good faith with Parent and its consultant and use
its reasonable best efforts to complete all documentation and testing of
internal control over financial reporting of the Company and the Company
Subsidiaries reasonably requested by Parent prior to the Effective Time.
7.4 Fees and Expenses. Except as set forth in Section 9.2 hereof, whether
or not the Merger is consummated, all fees, costs and expenses incurred in
connection with the preparation, execution and performance of this Agreement and
the transactions contemplated hereby, including, without limitation, all fees,
costs and expenses of agents, representatives, counsel and accountants shall be
paid by the party incurring such fees, costs or expenses.
7.5 No Solicitations.
(a) Immediately after the execution of this Agreement, the Company
will terminate and cease any discussions or negotiations with any parties
relating to an Acquisition Proposal. Neither the Company, nor any of its
officers, directors or employees or any investment banker, financial
advisor, attorney, accountant or other representative retained by it,
shall, directly or indirectly, (i) solicit, initiate or knowingly
encourage (including by way of furnishing non-public information), or take
any other action to facilitate, any inquiries or the making of any
proposal that constitutes an Acquisition Proposal, or (ii) participate in
any discussions or negotiations regarding an Acquisition Proposal;
provided, however, that, at any time prior to the approval of this
Agreement by the stockholders of the Company, if the Company receives a
bona fide written Acquisition Proposal that was unsolicited and that did
not otherwise result from a breach of this Section 7.5(a), the Company may
furnish non-public information with respect to the Company and the Company
Subsidiaries to the person who made such Acquisition Proposal (a "Third
Party") and may participate in discussions regarding such Acquisition
Proposal if (A) the Company Board determines in good faith, after
consultation with outside counsel, that failure to do so would be
inconsistent with its fiduciary duties to the Company's stockholders under
applicable law, and (B) the Company Board determines that such Acquisition
24
Proposal is reasonably likely to lead to a Superior Proposal. The Company
shall promptly notify (but in any event within one (1) business day)
Parent of the Company's first receipt of a written Acquisition Proposal by
such Third Party and of the material terms and conditions thereof.
Notwithstanding anything to the contrary in this Agreement, the Company
shall not be required to disclose to Parent or MergerCo the identity of
the Third Party making any Acquisition Proposal and, except as provided in
Sections 7.5(b) and 9.1(c)(i), shall have no duty to notify or update
Parent or MergerCo on the status of discussions or negotiations (including
the status of such Acquisition Proposal or any amendments or proposed
amendments thereto) between the Company and such Third Party.
(b) Subject to Section 9.1(d)(ii) and prior to the approval of this
Agreement by the stockholders of the Company, the Company Board may not
(i) withdraw or modify in a manner material and adverse to Parent or
MergerCo its approval or recommendation of this Agreement, (ii) approve or
recommend an Acquisition Proposal to its stockholders or (iii) cause the
Company to enter into any definitive agreement with respect to an
Acquisition Proposal, unless, in each such case, in the event a Superior
Proposal is made, the Company Board determines in good faith, after
consultation with outside counsel, that failure to take such action would
be inconsistent with its fiduciary duties to the Company's stockholders
under applicable law. In the event that the Company Board makes such
determination, the Company may enter into an agreement with respect to a
Superior Proposal, but only forty-eight (48) hours after Parent's receipt
of written notice (A) advising Parent that the Company Board has received
a Superior Proposal and that the Company has elected to terminate this
Agreement pursuant to Section 9.1(c)(i) of this Agreement and (B) setting
forth such other information required to be included therein as provided
in Section 9.1(c)(i).
(c) Nothing contained in this Section 7.5 shall prohibit the Company
from at any time taking and disclosing to its stockholders a position
contemplated by Rule 14d-9 or Rule 14e-2(a) promulgated under the Exchange
Act or making any disclosure required by Rule 14a-9 promulgated under the
Exchange Act.
7.6 Officers' and Directors' Indemnification.
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative,
including, without limitation, any such claim, action, suit, proceeding or
investigation in which any person who is now, or has been at any time
prior to the date hereof, or who becomes prior to the Effective Time, a
director, officer, employee, fiduciary or agent of the Company or any of
the Company Subsidiaries (the "Indemnified Parties") is, or is threatened
to be, made a party based in whole or in part on, or arising in whole or
in part out of, or pertaining to (i) the fact that he or she is or was a
director, officer, employee, fiduciary or agent of the Company or any of
the Company Subsidiaries, or is or was serving at the request of the
Company or any of the Company Subsidiaries as a director, officer,
employee, fiduciary or agent of another corporation, partnership, joint
venture, trust or other enterprise, or (ii) the negotiation, execution or
performance of this Agreement or any of the transactions contemplated
hereby, whether in any case asserted or arising before or after the
Effective Time, the parties hereto agree to cooperate and use their
reasonable best efforts to defend against and respond thereto. It is
understood and agreed that the Company shall indemnify and hold harmless,
and after the Effective Time the Surviving Corporation and Parent shall
indemnify and hold harmless, as and to the full extent permitted by
25
applicable law, each Indemnified Party against any losses, claims,
damages, liabilities, costs, expenses (including reasonable attorneys'
fees and expenses), judgments, fines and amounts paid in settlement in
connection with any such threatened or actual claim, action, suit, demand,
proceeding or investigation, and in the event of any such threatened or
actual claim, action, suit, proceeding or investigation (whether asserted
or arising before or after the Effective Time), (A) the Company, and the
Surviving Corporation and Parent after the Effective Time, shall promptly
pay expenses in advance of the final disposition of any claim, suit,
proceeding or investigation to each Indemnified Party to the full extent
permitted by law, (B) the Indemnified Parties may retain counsel
satisfactory to them, and the Company, Parent and the Surviving
Corporation, shall pay all fees and expenses of such counsel for the
Indemnified Parties within thirty (30) days after statements therefor are
received, and (C) the Company, Parent and the Surviving Corporation will
use their respective reasonable best efforts to assist in the vigorous
defense of any such matter; provided, however, that none of the Company,
the Surviving Corporation or Parent shall be liable for any settlement
effected without its prior written consent (which consent shall not be
unreasonably withheld); and provided further that the Company, the
Surviving Corporation and Parent shall have no obligation hereunder to any
Indemnified Party when and if a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final and
non-appealable, that indemnification of such Indemnified Party in the
manner contemplated hereby is prohibited by applicable law. Any
Indemnified Party wishing to claim indemnification under this Section 7.6,
upon learning of any such claim, action, suit, proceeding or
investigation, shall notify the Company and, after the Effective Time, the
Surviving Corporation and Parent thereof; provided that the failure to so
notify shall not affect the obligations of the Company, the Surviving
Corporation and Parent except to the extent such failure to notify
materially prejudices such party.
(b) Parent and MergerCo agree that all rights to indemnification or
exculpation existing in favor of, and all limitations on the personal
liability of, each present and former director, officer, employee,
fiduciary and agent of the Company and the Company Subsidiaries provided
for in the respective charters or by-laws or otherwise in effect as of the
date hereof shall continue in full force and effect for a period of six
(6) years from the Effective Time; provided, however, that all rights to
indemnification in respect of any claims (each a "Claim") asserted or made
within such period shall continue until the disposition of such Claim.
From and after the Effective Time, Parent and the Surviving Corporation
also agree to indemnify and hold harmless the present and former officers
and directors of the Company and the Company Subsidiaries in respect of
acts or omissions occurring prior to the Effective Time to the extent
provided in any written indemnification agreements between the Company
and/or one or more Company Subsidiaries and such officers and directors as
listed in Section 7.6(b) of the Company Disclosure Schedule.
(c) Prior to the Effective Time, the Company shall purchase an
extended reporting period endorsement under the Company's existing
directors' and officers' liability insurance coverage for the Company's
directors and officers in a form acceptable to the Company which shall
provide such directors and officers with coverage for six (6) years
following the Effective Time of not less than the existing coverage under,
and have other terms not materially less favorable to, the insured persons
than the directors' and officers' liability insurance coverage presently
maintained by the Company, so long as the aggregate cost is less than
26
$750,000 (the "Premium Limit"). In the event that the Premium Limit is
insufficient for such coverage, the Company may enter into an agreement to
spend up to that amount to purchase such lesser coverage as may be
obtained with such amount. Parent shall, and shall cause the Surviving
Corporation to, maintain such policy in full force and effect, and
continue to honor the obligations thereunder.
(d) The obligations under this Section 7.6 shall not be terminated
or modified in such a manner as to adversely affect any indemnitee to whom
this Section 7.6 applies without the consent of such affected indemnitee
(it being expressly agreed that the indemnitees to whom this Section 7.6
applies shall be third party beneficiaries of this Section 7.6 and shall
be entitled to enforce the covenants contained herein).
(e) In the event Parent or the Surviving Corporation or any of their
respective successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving corporation or
entity of such consolidation or merger, or (ii) transfers or conveys all
or substantially all of its properties and assets to any person, then, and
in each such case, to the extent necessary proper provision shall be made
so that the successors and assigns of Parent or the Surviving Corporation,
as the case may be, assume the obligations set forth in this Section 7.6.
7.7 Access to Information; Confidentiality. From the date hereof until the
Effective Time, the Company shall, and shall cause each of the Company
Subsidiaries and each of the Company's and Company Subsidiaries' officers,
employees and agents to, afford to Parent and to the officers, employees and
agents of Parent access upon reasonable notice and at reasonable times without
undue interruption to (a) their properties, books, records and contracts;
provided, however, that Parent shall obtain the Company's consent, which consent
shall not be unreasonably withheld, prior to any visit to any Company property,
and (b) the officers and key employees of the Company and the Company
Subsidiaries; provided, however, that Parent shall obtain the Company's consent,
which consent shall not be unreasonably withheld, prior to accessing any
non-executive officer or key employee. The Company shall furnish Parent such
financial, operating and other data and information as Parent may reasonably
request to the extent such data or information is reasonably available,
including, but not limited to, information regarding the Company's internal
control over financial reporting and disclosure controls and procedures. Prior
to the Effective Time, Parent and MergerCo shall hold in confidence all such
information on the terms and subject to the conditions contained in that certain
confidentiality agreement between Parent and the Company dated January 27, 2004
(the "Confidentiality Agreement").
7.8 Public Announcements. The Company and Parent shall consult with each
other before issuing any press release or otherwise making any public statements
with respect to this Agreement or the Merger and shall not issue any such press
release or make any such public statement without the prior consent of the other
party, which consent shall not be unreasonably withheld; provided, however, that
a party may, without the prior consent of the other party, issue such press
release or make such public statement as may be required by law or the
applicable rules of any stock exchange or quotation system if the party issuing
such press release or making such public statement has used its reasonable best
efforts to consult with the other party and to obtain such party's consent but
has been unable to do so in a timely manner. In this regard, the parties shall
make a joint public announcement of the Merger contemplated hereby no later than
27
(a) the close of trading on the Nasdaq National Market on the date this
Agreement is signed, if such signing occurs during a Business Day or (b) the
opening of trading on the Nasdaq National Market on the Business Day following
the date on which this Agreement is signed, if such signing does not occur
during a Business Day.
7.9 Employee Benefit Arrangements.
(a) On and after the Closing, Parent shall, and shall cause the
Surviving Corporation to, honor in accordance with their terms all
severance obligations of the Company or any Company Subsidiary listed in
Section 7.9 of the Company Disclosure Schedule, except as may otherwise be
agreed to by the parties thereto, and the Company or Parent shall pay on
the Closing Date to the applicable officers and employees listed in said
Section of the Company Disclosure Schedule, any amounts with respect to
such severance obligations that are payable by their terms upon
consummation of the Merger, at the Effective Time or on the Closing Date.
Parent also agrees to fully vest all benefits of participants in The First
Years Inc. and its Affiliates Pension Plan whose employment is terminated
by Parent or the Surviving Corporation without "cause" or by such
participant for "good reason" within twenty-four (24) months following the
Closing Date, without regard to any vesting schedules set forth in such
plan (as such terms are defined in Section 7.9 of the Company Disclosure
Schedule).
(b) Until December 31, 2004 or such later time as Parent shall
determine (the "Transition Period"), Parent shall cause, and cause the
Surviving Corporation to, continue the participation of employees of the
Surviving Corporation and the Company Subsidiaries who remain employed
after the Effective Time (the "Company Employees") in the Employee
Programs (other than deferred compensation plans or stock option plans) on
the same terms as those currently in effect. As of the end of the
Transition Period, the Company Employees shall be permitted to participate
in the employee benefit plans of Parent and its Subsidiaries on the same
terms as similarly situated employees of Parent and its Subsidiaries, and
Parent may terminate any of the Company employee benefit plans or merge
any of the Company employee benefit plans with Parent's employee benefit
plans as Parent deems appropriate. Parent shall cause the applicable
benefit plans to treat the service of Company Employees with the Company
or the Company Subsidiaries attributable to any period before the
Effective Time as service rendered to Parent or the Surviving Corporation
for purposes of eligibility to participate, vesting and for other
appropriate benefits, including, but not limited to, applicability of
minimum waiting periods for participation. Without limiting the foregoing,
Parent shall not, and shall cause the Surviving Corporation to not, treat
any Company Employee as a "new" employee for purposes of any exclusions
under any health or similar plan of Parent or the Surviving Corporation
for a pre-existing medical condition, and any deductibles and co-pays paid
under any of the Company's or any of the Company Subsidiaries' health
plans shall be credited towards deductibles and co-pays under the health
plans of Parent or the Surviving Corporation. Parent shall, and shall
cause the Surviving Corporation, to make appropriate arrangements with its
insurance carrier(s) to ensure such results.
(c) After the Closing, Parent shall cause the Surviving Corporation
to honor all obligations which accrued prior to the Effective Time under
the Company's deferred compensation plans, supplemental retirement plans,
management incentive plans and long-range incentive plans. Except as is
otherwise required by the existing terms of the written employment and
severance agreements to which the Company is presently a party and listed
28
in Section 7.9 of the Company Disclosure Schedule, future accruals may be
(but are not required to be) provided for under any such plan(s) or under
any similar plan(s) of the Surviving Corporation or Parent.
7.10 Required Financing. Each of Parent and MergerCo hereby agrees to use
its reasonable best efforts to arrange the financing in respect of the Merger
and to satisfy the conditions set forth in the Financing Letters. Parent will
provide the Company any amendments to the Financing Letters as promptly as
possible (but in any event within twenty-four (24) hours). Parent and MergerCo
shall keep the Company informed of the status of their financing arrangements
for the Merger, including providing written notification to the Company as
promptly as possible (but in any event within forty-eight (48) hours) with
respect to (a) any indication that any of the Lenders may be unable to provide
the financing as contemplated by the Financing Letters, (b) the ability of
Parent or MergerCo to satisfy any of the conditions set forth in the Financing
Letters, and (c) any adverse developments relating to the financing contemplated
by the Financing Letters. Parent shall provide written notice to the Company
within twenty-four (24) hours if any Lender has indicated to Parent or MergerCo
that such Lender will be unable to provide the financing contemplated by the
applicable Financing Letter or if any other event occurs which is reasonably
likely to prevent or materially delay Parent or MergerCo from obtaining the
proposed financing with respect to the Merger (a "Parent Financing Notice"). In
the event Parent and MergerCo are unable to arrange any portion of such
financing in the manner or from the sources contemplated by the Financing
Letters, Parent and MergerCo shall use its reasonable best efforts to arrange
any such portion from alternative sources on substantially the same terms and
with substantially the same conditions as the portion of the financing that
Parent and MergerCo were unable to arrange.
ARTICLE VIII
CONDITIONS TO THE MERGER
8.1 Conditions to the Obligations of Each Party to Effect the Merger. The
respective obligations of each party to effect the Merger are subject to the
fulfillment or waiver by consent of the other party, where permissible, at or
prior to the Effective Time, of each of the following conditions:
(a) Stockholder Approval. This Agreement shall have been adopted and
approved by the affirmative vote of the stockholders of the Company as
required by the MGL, the Articles of Organization and the By-Laws.
(b) Xxxx-Xxxxx-Xxxxxx Act. The waiting period (and any extension
thereof) applicable to the consummation of the Merger under the HSR Act
shall have expired or been terminated.
(c) Other Regulatory Approvals. All material approvals,
authorizations and consents of any Governmental Entity required to
consummate the Merger set forth on Schedule 8.1(c) of this Agreement shall
have been obtained and remain in full force and effect, and all waiting
periods relating to such approvals, authorizations and consents shall have
expired or been terminated.
29
(d) No Injunctions, Orders or Restraints; Illegality. No preliminary
or permanent injunction or other order, decree or ruling issued by a court
or other Governmental Entity of competent jurisdiction nor any statute,
rule, regulation or executive order promulgated or enacted by any
Governmental Entity of competent jurisdiction shall be in effect which
would have the effect of (i) making the consummation of the Merger
illegal, or (ii) otherwise prohibiting the consummation of the Merger.
8.2 Additional Conditions to Obligations of Parent and MergerCo. The
obligations of Parent and MergerCo to effect the Merger are further subject to
the satisfaction of the following conditions, any one or more of which may be
waived by Parent at or prior to the Effective Time:
(a) Representations and Warranties. Those representations and
warranties of the Company set forth in this Agreement which are qualified
by materiality or a Company Material Adverse Effect or words of similar
effect shall be true and correct as of the Effective Time as though made
at the Effective Time (except to the extent such representations and
warranties expressly relate to a specific date or as of the date hereof,
in which case such representations and warranties shall be true and
correct as of such date), and those representations and warranties of the
Company set forth in this Agreement which are not so qualified shall be
true and correct as of the Effective Time as though made at the Effective
Time (except to the extent such representations and warranties expressly
relate to a specific date or as of the date hereof, in which case such
representations and warranties shall be true and correct as of such date),
except for such inaccuracies as, individually or in the aggregate, would
not have a Company Material Adverse Effect. Parent shall have received a
certificate signed on behalf of the Company by the Chief Executive Officer
or Chief Financial Officer of the Company, dated the Closing Date, to the
foregoing effect.
(b) Performance and Obligations of the Company. The Company shall
have performed or complied in all material respects with all agreements
and covenants required by this Agreement to be performed or complied with
by it on or prior to the Effective Time, and Parent shall have received a
certificate signed on behalf of the Company by the Chief Executive Officer
or Chief Financial Officer of the Company to the foregoing effect.
(c) Consents, Etc. Any consent, authorization, order or approval of
(or filing or registration with) any third party identified in Section
8.2(c) of the Company Disclosure Schedule shall have been obtained, and
(i) no Distribution Date (as defined therein) shall have occurred under
the Company Rights Agreement and (ii) in the event a Stock Acquisition
Date (as defined therein) shall have occurred under the Company Rights
Agreement, the Company Rights Agreement shall have been amended to
terminate the right of any holder of the Rights to acquire shares of
Parent's common stock after the Effective Time.
(d) No Company Material Adverse Effect. Since the date of the
Agreement, there shall not have been, individually or in the aggregate,
any Company Material Adverse Effect, and no effect, event or change shall
have occurred that, individually or in the aggregate, may reasonably be
expected to have any Company Material Adverse Effect.
(e) Clerk's Certificate. The Company shall have delivered a
certificate of the Clerk of the Company, dated as of the Closing Date,
certifying as to (i) the incumbency of the officers of the Company
executing documents executed and delivered in connection herewith,
30
(ii) the copies of the Articles of Organization and By-Laws, each as in
effect from the date of this Agreement until the Closing Date, and (iii) a
copy of the votes of the Company Board authorizing and approving the
applicable matters contemplated hereunder.
(f) No Financing Material Adverse Change. Since the date of the
Agreement, there shall not have been any Financing Material Adverse
Change.
8.3 Additional Conditions to Obligations of the Company. The obligation of
the Company to effect the Merger is further subject to the satisfaction of the
following conditions, any one or more of which may be waived by the Company at
or prior to the Effective Time:
(a) Representations and Warranties. Those representations and
warranties of Parent and MergerCo set forth in this Agreement which are
qualified by materiality or a Parent Material Adverse Effect or words of
similar effect shall be true and correct as of the Effective Time as
though made at the Effective Time (except to the extent such
representations and warranties expressly relate to a specific date or as
of the date hereof, in which case such representations and warranties
shall be true and correct as of such date), and those representations and
warranties of Parent and MergerCo set forth in this Agreement which are
not so qualified shall be true and correct as of the Effective Time as
though made at the Effective Time (except to the extent such
representations and warranties expressly relate to a specific date or as
of the date hereof, in which case such representations and warranties
shall be true and correct as of such date), except for such inaccuracies
as, individually or in the aggregate, would not have a Parent Material
Adverse Effect. The Company shall have received a certificate signed on
behalf of Parent and MergerCo by the Chief Executive Officer or Chief
Financial Officer of the Parent, dated the Closing Date, to the foregoing
effect.
(b) Performance of Obligations of Parent and MergerCo. Each of
Parent and MergerCo shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement to
be performed or complied with by it on or prior to the Effective Time, and
the Company shall have received a certificate signed on behalf of Parent
and MergerCo by the Chief Executive Officer or Chief Financial Officer of
Parent, dated as of the Closing Date, to the foregoing effect.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after stockholder approval thereof:
(a) by the mutual written consent of Parent, MergerCo and the
Company;
(b) by either of the Company, on the one hand, or Parent or
MergerCo, on the other hand, by written notice to the other:
31
(i) if the approval of the stockholders of the Company
required for the consummation of the Merger shall not have been
obtained by reason of the failure to obtain the required approval at
the Special Meeting;
(ii) if any Governmental Entity of competent jurisdiction
shall have issued an injunction or taken any other action (which
injunction or other action the parties hereto shall use their best
efforts to lift), which permanently restrains, enjoins or otherwise
prohibits the consummation of the Merger, and such injunction shall
have become final and non-appealable; or
(iii) if the consummation of the Merger shall not have
occurred on or before March 3, 2005; provided, however, that the
right to terminate this Agreement under this Section 9.1(b)(iii)
shall not be available to any party whose failure to comply with any
provision of this Agreement has been the cause of, or resulted in,
the failure of the Merger to occur on or before such date.
(c) by the Company:
(i) in connection with entering into a definitive agreement to
effect a Superior Proposal in accordance with Section 7.5; provided,
however, that prior to terminating this Agreement pursuant to this
Section 9.1(c)(i), the Company shall have provided Parent with
forty-eight (48) hours prior written notice of the Company's
decision to so terminate. Such notice shall indicate in reasonable
detail the material terms and conditions of such Superior Proposal,
including, without limitation, the amount and form of the proposed
consideration and whether such Superior Proposal is subject to any
material conditions; or
(ii) if Parent or MergerCo shall have breached in any material
respect any of their respective representations, warranties,
covenants or other agreements contained in this Agreement, which
breach, either individually or in the aggregate, would result in the
failure of the conditions set forth in Sections 8.3(a) or 8.3(b) and
which breach cannot be or has not been cured within thirty (30) days
after the giving of written notice to Parent or MergerCo; or
(iii) following receipt by the Company of a Parent Financing
Notice.
(d) by Parent or MergerCo:
(i) if the Company shall have breached in any respect any of
its representations, warranties, covenants or other agreements
contained in this Agreement, which breach, either individually or in
the aggregate, would result in the failure of the conditions set
forth in Sections 8.2(a) or 8.2(b) and which breach cannot be or has
not been cured within thirty (30) days after the giving of written
notice to the Company; or
(ii) if the Company Board shall (A) fail to include a
recommendation in the Proxy Statement of this Agreement, (B)
withdraw, modify or change, or propose or announce any intention to
withdraw, modify or change, in a manner material and adverse to
32
Parent or MergerCo, the approval or recommendation by the Company
Board of this Agreement, (C) approve or recommend, or propose or
announce any intention to approve or recommend, any Acquisition
Proposal (including making no recommendation or stating an inability
to make a recommendation), other than a recommendation to reject
such Acquisition Proposal; or (D) takes any action prohibited by
Section 7.5.
9.2 Effect of Termination.
(a) Subject to Section 9.2(b), in the event of the termination
of this Agreement pursuant to Section 9.1, this Agreement shall
forthwith become null and void and have no effect, without any
liability on the part of Parent, MergerCo or the Company and their
respective directors, officers, employees, partners, managers,
members or stockholders and all rights and obligations of any party
hereto shall cease, except for the agreements contained in Sections
7.4, 7.7, 7.8, this Section 9.2 and Article X; provided, however,
that nothing contained in this Section 9.2(a) shall relieve any
party from liabilities or damages arising out of any fraud or
willful breach by such party of any of its representations,
warranties, covenants or other agreements contained in this
Agreement. If termination of this Agreement shall have been caused
by the willful breach of this Agreement by any party hereto, then,
in addition to other remedies at law or equity for such breach of
this Agreement, the party so found to have willfully breached this
Agreement shall indemnify and reimburse the other party for all of
its reasonable out-of-pocket expenses incurred in connection with
this Agreement and the transactions contemplated by this Agreement.
(b) If this Agreement is terminated (i) by the Company
pursuant to Section 9.1(c)(i), (ii) by Parent or MergerCo pursuant
to Section 9.1(d)(ii)(C), (iii) by Parent or MergerCo pursuant to
Section 9.1(d)(ii)(A), (B) or (D) and the Company enters into a
definitive agreement with respect to an Acquisition Proposal or an
Acquisition Proposal is consummated within six (6) months after the
termination of this Agreement, or (iv) pursuant to Section 9.1(b)(i)
after the public announcement of an Acquisition Proposal and the
Company enters into a definitive agreement with respect to an
Acquisition Proposal or an Acquisition Proposal is consummated
within six (6) months after the termination of this Agreement, then
the Company shall pay to Parent an amount in cash equal to
$6,450,000 (the "Liquidated Amount"). Payment of the Liquidated
Amount required by this Section 9.2(b) shall be payable by the
Company to Parent by wire transfer of immediately available funds
(A) concurrently with a termination of this Agreement by the Company
under Section 9.1(c)(i), (B) within three (3) Business Days after
the date of termination of this Agreement by Parent or MergerCo
under Section 9.1(d)(ii)(C) or (C) within three (3) Business Days
after the Company enters into a definitive agreement with respect to
an Acquisition Proposal in the case of clauses (iii) or (iv) above.
(c) Notwithstanding anything to the contrary in this
Agreement, Parent and MergerCo hereto expressly acknowledge and
agree that, with respect to any termination of this Agreement
pursuant to Section 9.1(c)(i) or Section 9.1(d)(ii) in circumstances
where the Liquidated Amount is payable in accordance with Section
9.2(b), the payment of the Liquidated Amount shall constitute
liquidated damages with respect to any claim for damages or any
other claim which Parent or MergerCo would otherwise be entitled to
assert against the Company or any of the Company Subsidiaries or any
of their respective assets, or against any of their respective
33
directors, officers, employees, partners, managers, members or
stockholders, with respect to this Agreement and the transactions
contemplated hereby and shall constitute the sole and exclusive
remedy available to Parent and MergerCo. The parties hereto
expressly acknowledge and agree that, in light of the difficulty of
accurately determining actual damages with respect to the foregoing
upon any termination of this Agreement pursuant to Section 9.1(c)(i)
or Section 9.1(d)(ii) in circumstances where the Liquidated Amount
is payable in accordance with Section 9.2(b), the rights to payment
under Section 9.2(b): (i) constitute a reasonable estimate of the
damages that will be suffered by reason of any such proposed or
actual termination of this Agreement pursuant to Section 9.1(c)(i)
or Section 9.1(d)(ii) and (ii) shall be in full and complete
satisfaction of any and all damages arising as a result of the
foregoing. Except for nonpayment of the amounts set forth in Section
9.2(b), Parent and MergerCo hereby agree that, upon any termination
of this Agreement pursuant to Section 9.1(c)(i) or Section
9.1(d)(ii) in circumstances where the Liquidated Amount is payable
in accordance with Section 9.2(b), in no event shall Parent or
MergerCo (A) seek to obtain any recovery or judgment against the
Company or any of the Company Subsidiaries or any of their
respective assets, or against any of their respective directors,
officers, employees, partners, managers, members or stockholders,
and (B) be entitled to seek or obtain any other damages of any kind,
including, without limitation, consequential, indirect or punitive
damages.
9.3 Amendment. This Agreement may be amended by the parties
hereto by an instrument in writing signed on behalf of each of the
parties hereto at any time before or after any approval hereof by
the stockholders of the Company and MergerCo; provided, however,
that after any such stockholder approval, no amendment shall be made
which by law requires further approval by stockholders without
obtaining such approval.
9.4 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto may, to the extent legally allowed, (a)
extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies
in the representations and warranties of the other party contained
herein or in any document delivered pursuant hereto and (c) waive
compliance by the other party with any of the agreements or
conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set
forth in a written instrument signed on behalf of the party against
which such waiver or extension is to be enforced. The failure of a
party to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of those rights.
ARTICLE X
GENERAL PROVISIONS
10.1 Notices. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given or made
as of the date delivered or sent if delivered personally or sent by facsimile or
sent by prepaid overnight carrier to the parties at the following addresses (or
at such other addresses as shall be specified by the parties by like notice):
34
(a) if to Parent or MergerCo:
RC2 Corporation
0000 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxx Xxxxxxx Van Deuren S.C.
0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
(b) if to the Company:
The First Years Inc.
One Kiddie Drive
Avon, Massachusetts 02322-1171
Attn: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx Procter LLP
Exchange Place
Boston, Massachusetts 02109
Attn: Xxxxxx X. Cable, P.C.
Xxxxxx X. Xxxxxxx III
Facsimile: (000) 000-0000
10.2 Certain Definitions. For purposes of this Agreement, the term:
"Acquisition Proposal" shall mean any (a) merger, consolidation or similar
transaction involving the Company, (b) sale, lease or other disposition,
directly or indirectly, by merger, consolidation, share exchange or otherwise,
of any assets of the Company or the Company Subsidiaries representing 15% or
more of the consolidated assets of the Company and the Company Subsidiaries in a
single transaction or series of transactions, (c) issue, sale or other
disposition of (including by way of merger, consolidation, share exchange or any
similar transaction) securities (or options, rights or warrants to purchase, or
securities convertible into, such securities) representing 15% or more of the
votes associated with the outstanding securities of the Company, (d) tender
offer or exchange offer in which any person or "group" (as such term is defined
under the Exchange Act) shall acquire beneficial ownership (as such term is
defined in Rule 13d-3 under the Exchange Act), or the right to acquire
beneficial ownership, of 15% or more of the outstanding shares of Company Common
Stock, (e) recapitalization, restructuring, liquidation, dissolution, or other
similar type of transaction with respect to the Company, (f) any person shall
35
have acquired beneficial ownership or the right to acquire beneficial ownership
of, or any "group" (as such term is defined under Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder) shall have been formed
which beneficially owns or has the right to acquire beneficial ownership of, 15%
or more of the then outstanding shares of capital stock of the Company, (g)
transaction which is similar in form, substance or purpose to any of the
foregoing transactions, or (h) any proposal or plan by any person to do any of
the foregoing; provided, however, that the term "Acquisition Proposal" shall not
include the Merger or the other transactions contemplated by this Agreement.
"affiliate" means a person that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control
with, the first-mentioned person.
"Business Day" shall mean any day other than a day on which the SEC shall
be closed.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Material Adverse Effect" means, with respect to the Company, an
effect, event or change which has a material adverse effect on the business,
assets, results of operations or condition (financial or otherwise) of the
Company and the Company Subsidiaries taken as a whole, other than effects,
events or changes arising out of or resulting from (a) changes in general legal,
regulatory, political, economic or business conditions or changes in generally
accepted accounting principles that, in each case, generally affect industries
in which the Company and the Company Subsidiaries conduct business; provided
that such changes do not affect the Company and the Company Subsidiaries in a
materially disproportionate manner, (b) the negotiation, execution, announcement
or performance of this Agreement or the consummation of the transactions
contemplated by this Agreement, including the impact thereof on relationships,
contractual or otherwise, with customers, suppliers, licensors, distributors,
partners or employees, and the taking of any actions set forth in Section 10.2
of the Company Disclosure Schedule, or (c) acts of war, sabotage or terrorism,
or any escalation or worsening of any such acts of war, sabotage or terrorism
threatened or underway as of the date of this Agreement.
"Encumbrance" means any claim, lien (statutory or otherwise),
hypothecation, pledge, security interest, mortgage, deed of trust or other
encumbrance.
"Environmental Laws" means any federal, state or local statute, law,
ordinance, regulation, rule, code, or binding order and any enforceable and
binding judicial or administrative interpretation thereof, including any
judicial or administrative order, consent decree, judgment, stipulation,
injunction, permit, authorization, or agency requirement, in each case having
the force and effect of law, relating to the pollution, protection,
investigation or restoration of the indoor or outdoor environment, health and
safety as affected by the environment or natural resources, including, without
limitation, those relating to the use, handling, presence, transportation,
treatment, storage, disposal, release, threatened release or discharge of
Hazardous Materials or contamination.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
36
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Financing Material Adverse Change" shall mean any material disruption in
the banking and capital markets which has caused either Lender to withdraw its
commitment to provide financing as contemplated by the Financing Letters, and
resulted in Parent being unable to obtain alternative financing to the extent
contemplated by Section 7.10 hereof to pay the Merger Consideration.
"GAAP" means generally accepted accounting principles as applied in the
United States.
"Hazardous Materials" means any "hazardous waste" as defined in any
Environmental Laws, any "hazardous substances" or "pollutant" or "contaminant"
as defined in any Environmental Laws and, to the extent not included in the
foregoing, any medical waste, asbestos, asbestos-containing materials, mold,
fungi, petroleum, oil or fractions thereof.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, and the rules and regulations thereunder.
"IRS" means the United States Internal Revenue Service.
"Material Contracts" shall mean: (a) all contracts, agreements or
understandings with customers of the Company and Company Subsidiaries in the
last fiscal year where each customers' contracts, agreements or understandings
in the aggregate account for more than 10% of the Company's annual revenues; (b)
all acquisition, merger, asset purchase or sale agreements entered into by the
Company or Company Subsidiary in the last two fiscal years with a transaction
value in excess of 10% of the Company's consolidated annual revenues; (c) all
contracts, agreements or understandings to which the Company or any Company
Subsidiary is a party or is bound relating to any indebtedness for borrowed
money, guarantees of any indebtedness, debt securities, loans, advances or
capital contributions, or mortgages, in each case in an amount greater than
$100,000, or (d) any other agreements within the meaning set forth in Item
601(b)(10) of Regulation S-K of Title 17, Part 229 of the Code of Federal
Regulations.
"Nasdaq National Market" means the National Market System of the National
Association of Securities Dealers Automated Quotation System.
"Parent Material Adverse Effect" means, with respect to Parent, an effect,
event or change which has a material adverse effect on the ability of Parent to
obtain the financing necessary to satisfy any of Parent's or MergerCo's
obligations arising under or arising out of this Agreement.
"person" means an individual, corporation, limited liability company,
partnership, association, trust, unincorporated organization, other entity or
group (as defined in Section 13(d) of the Exchange Act).
"SEC" means the Securities and Exchange Commission.
37
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Subsidiary" means any corporation more than 50% of whose outstanding
voting securities, or any partnership, joint venture or other entity more than
50% of whose total equity interest, is directly or indirectly owned by Parent or
the Company, as the case may be.
"Superior Proposal" means an Acquisition Proposal that is more favorable
to the stockholders of the Company than the Merger from a financial point of
view than the transactions contemplated by this Agreement (taking into account
all of the terms and conditions of such Acquisition Proposal, including any
conditions to consummation and the likelihood of such Acquisition Proposal being
consummated).
"Tax Returns" means all reports, returns, declarations, statements or
other information required to be supplied to a taxing authority, domestic or
foreign, in connection with Taxes.
"Taxes" means any and all taxes, fees, levies, duties, tariffs, imposts
and other charges of any kind (together with any and all interest, penalties,
additions to tax and additional amounts imposed with respect thereto) imposed by
any government or taxing authority, including, without limitation: taxes or
other charges on or with respect to income, franchises, windfall or other
profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, worker's compensation, unemployment compensation or
net worth taxes or other charges in the nature of excise, withholding, ad
valorem, stamp, transfer, value added or gains taxes; license, registration and
documentation fees; and duties, tariffs and similar charges.
10.3 Terms Defined Elsewhere. The following terms are defined elsewhere in
this Agreement, as indicated below:
"Agreement" Preamble
"Articles of Merger" Section 1.3
"Articles of Organization" Section 1.2
"By-laws" Section 1.2
"Certificates" Section 3.1(b)
"Claim" Section 7.6(b)
"Closing" Section 1.4
"Closing Date" Section 1.4
"Commitment" Section 5.9
"Company" Preamble
38
"Company Balance Sheet" Section 5.7(b)
"Company Board" Recitals
"Company Common Stock" Recitals
"Company Disclosure Schedule" Article V
"Company Employees" Section 7.9(b)
"Company Properties" Section 5.11(b)
"Company Rights Agreement" Section 5.2(b)
"Company SEC Reports" Section 5.7
"Company Stock Option Plans" Section 2.2(a)
"Company Subsidiaries" Section 5.1(b)
"Confidentiality Agreement" Section 7.7
"Director Plan" Section 2.2(a)
"DOJ" Section 7.2
"Effective Time" Section 1.3
"Employee Programs" Section 5.14(a)
"Encumbrances" Section 5.11(c)
"Equity Plan" Section 2.2(a)
"Exchange Agent" Section 3.1(a)
"Exchange Fund" Section 3.1(a)
"FTC" Section 7.2
"Financing Letters" Section 4.4
"Governmental Entity" Section 4.3
"Indemnified Parties" Section 7.6(a)
"Lenders" Section 4.4
"Liquidated Amount" Section 9.2(b)
39
"MBCA" Recitals
"MBCL" Recitals
"MGL" Section 1.1
"Massachusetts Courts" Section 10.9
"Merger" Recitals
"Merger Consideration" Section 2.1(c)
"MergerCo" Preamble
"Options" Section 2.2(a)
"Other Filings" Section 7.2
"Parent" Preamble
"Parent Disclosure Schedule" Article IV
"Parent Financial Statements" Section 4.7
"Parent Financing Notice" Section 7.10
"Premium Limit" Section 7.6(c)
"Property Restrictions" Section 5.11(b)
"Proxy Statement" Section 7.1(a)
"Rights" Recitals
"SOX" Section 5.1(c)
"Securities Laws" Section 5.7
"Special Meeting" Section 7.1(a)
"Surviving Corporation" Section 1.1
"Third Party" Section 7.5(a)
"Transition Period" Section 7.9(b)
"Voting Agreements" Recitals
"Voting Agreement Stockholders" Recitals
40
10.4 Interpretation. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.5 Non-Survival of Representations, Warranties, Covenants and
Agreements. Except for Sections 7.6 and 7.9 and any covenant or agreement of the
parties which by its terms contemplates performance after the Effective Time,
none of the representations, warranties, covenants and agreements contained in
this Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, and thereafter there shall be no liability on the
part of either Parent, MergerCo or the Company or any of their respective
officers, directors or stockholders in respect thereof. Except as expressly set
forth in this Agreement, there are no representations or warranties of any party
hereto, express or implied.
10.6 Miscellaneous. This Agreement (a) constitutes, together with the
Confidentiality Agreement, the Voting Agreements, the Company Disclosure
Schedule and the Parent Disclosure Schedule, the entire agreement and supersedes
all of the prior agreements and understandings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof, (b) shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns and is not intended to confer upon any other person
(except as set forth below) any rights or remedies hereunder and (c) may be
executed in two or more counterparts which together shall constitute a single
agreement. Sections 7.6 and 7.9 are intended to be for the benefit of those
persons described therein and the covenants contained therein may be enforced by
such persons. The parties hereto agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in the Massachusetts Courts, this being in
addition to any other remedy to which they are entitled at law or in equity.
10.7 Assignment. Except as expressly permitted by the terms hereof,
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the parties hereto without the prior written consent
of the other parties.
10.8 Severability. If any provision of this Agreement, or the application
thereof to any person or circumstance is held invalid or unenforceable, the
remainder of this Agreement, and the application of such provision to other
persons or circumstances, shall not be affected thereby, and to such end, the
provisions of this Agreement are agreed to be severable.
10.9 Choice of Law/Consent to Jurisdiction. All disputes, claims or
controversies arising out of or relating to this Agreement, or the negotiation,
validity or performance of this Agreement, or the transactions contemplated
hereby shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts without regard to its rules of conflict of laws.
Each of the Company, Parent and MergerCo hereby irrevocably and unconditionally
consents to submit to the sole and exclusive jurisdiction of the courts of the
Commonwealth of Massachusetts and of the United States District Court for the
District of Massachusetts (the "Massachusetts Courts") for any litigation
arising out of or relating to this Agreement, or the negotiation, validity or
performance of this Agreement, or the transactions contemplated hereby (and
41
agrees not to commence any litigation relating thereto except in such courts),
waives any objection to the laying of venue of any such litigation in the
Massachusetts Courts and agrees not to plead or claim in any Massachusetts Court
that such litigation brought therein has been brought in any inconvenient forum.
Each of the parties hereto agrees, (a) to the extent such party is not otherwise
subject to service of process in the Commonwealth of Massachusetts, to appoint
and maintain an agent in the Commonwealth of Massachusetts as such party's agent
for acceptance of legal process, and (b) that service of process may also be
made on such party by prepaid certified mail with a proof of mailing receipt
validated by the United States Postal Service constituting evidence of valid
service. Service made pursuant to (a) or (b) above shall have the same legal
force and effect as if served upon such party personally within the Commonwealth
of Massachusetts. For purposes of implementing the parties' agreement to appoint
and maintain an agent for service of process in the Commonwealth of
Massachusetts, each of Parent and MergerCo does hereby appoint CT Corporation, 0
Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, as such agent.
10.10 Gender Neutral. Wherever used herein, a pronoun in the masculine
gender shall be considered as including the feminine gender unless the context
clearly indicates otherwise.
10.11 No Agreement Until Executed. Irrespective of negotiations among the
parties or the exchanging of drafts of this Agreement, this Agreement shall not
constitute or be deemed to evidence a contract, agreement, arrangement or
understanding among the parties hereto unless and until (a) the Company Board
has approved, for purposes of Chapter 110F of the MGL and any applicable
provision of the Articles of Organization, the terms of this Agreement, and (b)
this Agreement is executed by the parties hereto.
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IN WITNESS WHEREOF, Parent, MergerCo and the Company have caused this
Agreement to be executed under seal as of the date first written above by their
respective officers thereunto duly authorized.
RC2 CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Chief Executive Officer
RBVD ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Treasurer
THE FIRST YEARS INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
By: /s/ Xxxx X. Xxxxx
------------------------------
Name: Xxxx X. Xxxxx
Title: Treasurer
