EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
MSH SUPERMARKETS HOLDING CORP.,
MS OPERATIONS, INC.
AND
XXXXX SUPERMARKETS, INC.
DATED AS OF MAY 2, 2006
TABLE OF CONTENTS
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ARTICLE I THE MERGER..................................................... 1
Section 1.1 The Merger............................................... 1
Section 1.2 Closing.................................................. 1
Section 1.3 Effective Time........................................... 2
Section 1.4 Effects of the Merger.................................... 2
Section 1.5 Articles of Incorporation; By-laws....................... 2
Section 1.6 Directors and Officers................................... 2
ARTICLE II CONVERSION OF SHARES AND ASSOCIATED COMPANY RIGHTS;
SHAREHOLDERS MEETING.................................................. 2
Section 2.1 Conversion of Securities................................. 2
Section 2.2 Treatment of Company Stock Options....................... 3
Section 2.3 Surrender of Shares and Associated Company Rights; Stock
Transfer Books........................................... 3
Section 2.4 Withholding Taxes........................................ 5
Section 2.5 Further Action........................................... 5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY................ 6
Section 3.1 Organization; Subsidiaries; Charter Documents............ 6
Section 3.2 Capitalization of the Company............................ 7
Section 3.3 Corporate Authorization; Board Approval.................. 9
Section 3.4 Governmental Approvals................................... 10
Section 3.5 Non-Contravention........................................ 10
Section 3.6 Company SEC Documents.................................... 11
Section 3.7 Financial Statements; No Undisclosed Liabilities;
Internal and Disclosure Controls......................... 11
Section 3.8 Information in Disclosure Documents...................... 12
Section 3.9 Absence of Certain Changes............................... 12
Section 3.10 Insurance................................................ 13
Section 3.11 Real Property; Title to Assets........................... 13
Section 3.12 Company Intellectual Property............................ 15
Section 3.13 Litigation............................................... 16
Section 3.14 Taxes.................................................... 16
Section 3.15 Employee Benefit Plans................................... 18
Section 3.16 Compliance with Laws; Permits............................ 23
Section 3.17 Environmental Matters.................................... 23
Section 3.18 Company Material Contracts............................... 25
Section 3.19 Finders' Fees............................................ 26
Section 3.20 Opinions of Financial Advisors........................... 26
Section 3.21 Takeover Statutes; Rights Plan........................... 27
Section 3.22 Transactions with Affiliates............................. 27
Section 3.23 Labor Matters............................................ 27
TABLE OF CONTENTS
(continued)
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Section 3.24 10b-5.................................................... 28
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB.............. 28
Section 4.1 Organization and Power................................... 28
Section 4.2 Corporate Authorization.................................. 28
Section 4.3 Governmental Authorization............................... 29
Section 4.4 Non-Contravention........................................ 29
Section 4.5 Information Supplied..................................... 29
Section 4.6 Litigation............................................... 30
Section 4.7 Finders' Fees............................................ 30
Section 4.8 Sub...................................................... 30
Section 4.9 Share Ownership.......................................... 30
ARTICLE V COVENANTS...................................................... 30
Section 5.1 Interim Operations of the Company........................ 30
Section 5.2 Access to Information.................................... 33
Section 5.3 Reasonable Best Efforts.................................. 33
Section 5.4 Employee Matters......................................... 34
Section 5.5 No Solicitation.......................................... 35
Section 5.6 Shareholders Meeting..................................... 38
Section 5.7 Additional Agreements.................................... 39
Section 5.8 Publicity................................................ 39
Section 5.9 Notification of Certain Matters.......................... 39
Section 5.10 Directors' and Officers' Insurance and Indemnification... 40
Section 5.11 Proxy Statement.......................................... 41
Section 5.12 Cooperation.............................................. 42
Section 5.13 Rights Plan.............................................. 43
Section 5.14 Solvency Letter.......................................... 43
Section 5.15 Pre-Closing Reorganization............................... 43
ARTICLE VI CONDITIONS.................................................... 44
Section 6.1 Conditions to the Obligations of Each Party.............. 44
Section 6.2 Conditions to the Obligations of Parent and Sub.......... 44
Section 6.3 Conditions to the Obligations of the Company............. 46
Section 6.4 Frustration of Closing Conditions........................ 46
ARTICLE VII TERMINATION.................................................. 46
Section 7.1 Termination.............................................. 46
Section 7.2 Notice of Termination; Effect of Termination............. 48
Section 7.3 Expenses; Termination Fees............................... 48
ARTICLE VIII MISCELLANEOUS............................................... 50
Section 8.1 Definitions.............................................. 50
Section 8.2 Amendment and Modification............................... 52
TABLE OF CONTENTS
(continued)
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Section 8.3 Nonsurvival of Representations and Warranties............ 52
Section 8.4 Notices.................................................. 52
Section 8.5 Interpretation........................................... 53
Section 8.6 Counterparts............................................. 53
Section 8.7 Entire Agreement; No Third Party Beneficiaries........... 53
Section 8.8 Severability............................................. 54
Section 8.9 Specific Performance..................................... 54
Section 8.10 Governing Law............................................ 54
Section 8.11 Assignment............................................... 54
Section 8.12 Consent to Jurisdiction; Waiver of Jury Trial............ 54
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of May 2,
2006, by and among MSH SUPERMARKETS HOLDING CORP., a Delaware corporation
("Parent"), MS OPERATIONS, INC., an Indiana corporation and a wholly owned
subsidiary of Parent ("Sub"), and XXXXX SUPERMARKETS, INC., an Indiana
corporation (the "Company").
WHEREAS, a special committee (the "Special Committee") of the Board of
Directors of the Company and the Board of Directors of the Company, based on the
recommendation of the Special Committee, have unanimously (i) determined that
the Merger, including the consideration to be paid for each outstanding share
(collectively, the "Shares") of (A) Class A Common Stock, without par value, of
the Company (the "Class A Company Common Stock") and (B) Class B Common Stock,
without par value, of the Company (the "Class B Company Common Stock", and
together with the Class A Common Stock, the "Company Common Stock") in the
Merger is advisable, fair to, and in the best interests of, the Company and its
shareholders, (ii) approved and adopted this Agreement and the Merger and (iii)
resolved to recommend approval of this Agreement and the Merger by such
shareholders;
WHEREAS, Parent has delivered to the Company a copy of the equity
commitment letter (the "Equity Commitment Letter") dated as of the date hereof,
among Sun Capital Partners IV, LP, Parent and Sub;
WHEREAS, the Boards of Directors of Parent and Sub have approved, and
deem it advisable to enter into, this Agreement; and
WHEREAS, the Board of Directors of the Company has approved in advance
the transactions contemplated by this Agreement for purposes of the provisions
of Section 23-1-43 of the Indiana Business Corporation Law (the "IBCL").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions
of this Agreement, and in accordance with the IBCL, at the Effective Time, Sub
shall be merged with and into the Company (the "Merger"). As a result of the
Merger, the separate corporate existence of Sub shall cease and the Company
shall continue as the surviving corporation of the Merger (the "Surviving
Corporation").
Section 1.2 Closing. Upon the terms and subject to the conditions set
forth in this Agreement, the closing of the Merger (the "Closing") shall take
place at 10:00 a.m. on a date (the "Closing Date") which shall be the second
business day after satisfaction or waiver of the conditions set forth in Article
VI, other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the fulfillment or waiver of those
conditions, at the offices of Xxxxxx, Xxxxx & Xxxxxxx LLP, 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 or at such other time, date or place as agreed to in
writing by the parties hereto.
Section 1.3 Effective Time. Upon the Closing, the parties hereto shall
cause the Merger to be consummated by filing articles of merger (the "Articles
of Merger") with the Secretary of State of the State of Indiana, in such form as
required by, and executed in accordance with the relevant provisions of, the
IBCL. The date and time of the filing of the Articles of Merger with the
Secretary of State of the State of Indiana (or such later time as shall be
agreed to by the parties hereto and is specified in the Articles of Merger) will
be the "Effective Time".
Section 1.4 Effects of the Merger. The Merger shall have the effects
set forth in the applicable provisions of the IBCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all the
property, rights, privileges, immunities, powers and franchises of the Company
and Sub shall vest in the Surviving Corporation, and all debts, liabilities and
duties of the Company and Sub shall become the debts, liabilities and duties of
the Surviving Corporation.
Section 1.5 Articles of Incorporation; By-laws.
(a) Articles of Incorporation. At the Effective Time and without any
further action on the part of the Company or Sub, the restated articles of
incorporation of the Company as in effect immediately prior to the Effective
Time shall be the articles of incorporation of the Surviving Corporation until
thereafter amended as provided therein and under the IBCL.
(b) By-Laws. At the Effective Time and without any further action on
the part of the Company or Sub, the by-laws of the Company, as in effect
immediately prior to the Effective Time shall be the by-laws of the Surviving
Corporation and thereafter may be amended or repealed in accordance with their
terms or the articles of incorporation of the Surviving Corporation and as
provided by Law.
Section 1.6 Directors and Officers. The directors of Sub immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the articles of
incorporation and by-laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed (as the case may be) and qualified.
ARTICLE II
CONVERSION OF SHARES AND ASSOCIATED COMPANY RIGHTS;
SHAREHOLDERS MEETING
Section 2.1 Conversion of Securities. At the Effective Time, by virtue
of the Merger and without any action on the part of Sub, the Company or the
holders of any of the following securities:
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(a) Company Common Stock. Each Share, together with the associated
Company Right, issued and outstanding immediately prior to the Effective Time
(other than any Shares (and the associated Company Rights) to be cancelled
pursuant to Section 2.1(b)) shall be cancelled, extinguished and converted
automatically into the right to receive an amount equal to $11.125 in cash (the
"Merger Consideration") payable to the holder thereof, without interest, upon
surrender of the certificate that prior to the Merger represented such Share
(and the associated Company Right) in the manner provided in Section 2.3, less
any required withholding taxes.
(b) Treasury Shares. Each Share held in the treasury of the Company
and each Share (and associated Company Right) owned by Parent, Sub or any other
wholly-owned Subsidiary of Parent or of the Company immediately prior to the
Effective Time shall be cancelled and retired without any conversion thereof and
no payment or distribution shall be made with respect thereto.
(c) Stock of Sub. Each share of common stock of Sub issued and
outstanding immediately prior to the Effective Time shall be converted into and
become one validly issued, fully paid and nonassessable share of Class A Common
Stock of the Surviving Corporation.
Section 2.2 Treatment of Company Stock Options.
(a) Company Stock Options. At the Effective Time, each then
outstanding option to purchase Shares (collectively, a "Company Stock Option"),
granted pursuant to the Company's 1998 Stock Incentive Plan, the Company's 1999
Outside Directors Stock Option Plan, the Company's 1991 Employee Stock Plan and
the Company's 1992 Stock Option Plan for Outside Directors (collectively,
"Company Stock Plans") whether or not then vested or exercisable, shall be
cancelled by the Company, and each holder of a cancelled Company Stock Option
shall be entitled to receive at the Effective Time or as soon as practicable
thereafter from the Surviving Corporation (and, if necessary, Parent shall
provide funds to the Surviving Corporation sufficient for such payments) in
consideration for the cancellation of such Company Stock Option an amount in
cash equal to the product of (i) the number of shares of Company Common Stock
previously subject to such Company Stock Option and (ii) the excess, if any, of
the Merger Consideration over the exercise price per share of Company Common
Stock previously subject to such Company Stock Option.
(b) Equity Plans. Except as provided herein or as otherwise agreed to
by the parties, all stock incentive plans and any other plan, program or
arrangement providing for the issuance or grant of any interest in respect of
the Shares shall terminate as of the Effective Time, and the Company shall,
prior to the Effective Time, take all actions necessary to ensure that following
the Effective Time no holder of any Company Stock Option or any other
equity-based right shall have any right to acquire equity securities of the
Company or the Surviving Corporation.
Section 2.3 Surrender of Shares and Associated Company Rights; Stock
Transfer Books. (a) Prior to the Effective Time, Sub shall designate a bank or
trust company (which shall be reasonably satisfactory to the Company) to act as
agent for the holders of Shares (and associated Company Rights) in connection
with the Merger (the "Paying Agent") to receive
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the Merger Consideration to which holders of Shares (and associated Company
Rights) shall become entitled pursuant to Section 2.1(a). At or prior to the
Effective Time, Parent or Sub will cause to be deposited in trust with the
Paying Agent cash in an amount equal to the aggregate Merger Consideration to
which shareholders of the Company are entitled to receive pursuant to this
Article II. Such funds shall be invested by the Paying Agent as directed by Sub
or, after the Effective Time, the Surviving Corporation, provided that such
investments shall be in obligations of or guaranteed by the United States of
America, in commercial paper obligations rated A-1 or P-1 or better by Xxxxx'x
Investors Service, Inc. or Standard & Poor's Rating Services, respectively, or
in deposit accounts, certificates of deposit, bank repurchase or reverse
repurchase agreements or banker's acceptances of, or Eurodollar time deposits
purchased from, commercial banks with capital exceeding $250 million (based on
the most recent financial statements of such bank which are then publicly
available at the United States Securities and Exchange Commission ("SEC") or
otherwise). Any net profit resulting from, or interest or income produced by,
such investments will be payable to the Surviving Corporation or Parent, as
Parent directs.
(b) Surrender of Certificates. As soon as practicable after the
Effective Time (but in no event more than five business days after the Effective
Time), the Surviving Corporation shall cause to be mailed to each record holder,
as of the Effective Time, of an outstanding certificate or certificates which
immediately prior to the Effective Time represented Shares (and the associated
Company Rights) (the "Certificates"), a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Paying Agent, and shall be in such form and have such other provisions not
inconsistent with this Agreement as Parent and the Surviving Corporation shall
reasonably specify) and instructions for use in effecting the surrender of the
Certificates for payment of the Merger Consideration therefor. Upon surrender to
the Paying Agent of a Certificate, together with such letter of transmittal,
duly completed and validly executed in accordance with the instructions thereto,
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 for each Share (and the associated Company Right) formerly
represented by such Certificate, and such Certificate shall then be cancelled.
Until so surrendered, each Certificate will represent, from and after the
Effective Time, only the right to receive the Merger Consideration in cash as
contemplated by this Article II. No interest shall be paid or accrued for the
benefit of holders of the Certificates on the Merger Consideration payable upon
the surrender of the Certificates. If payment of the Merger Consideration is to
be made to a Person other than the Person in whose name the surrendered
Certificate is registered, it shall be a condition of payment that the
Certificate so surrendered shall be properly endorsed or shall be otherwise in
proper form for transfer and that the Person requesting such payment shall have
paid any transfer and 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 have established to the satisfaction of the
Surviving Corporation that such tax either has been paid or is not applicable.
As used in this Agreement, "Person" means an individual, corporation, limited
liability company, partnership, association, trust, unincorporated organization,
other entity or group (as defined in the Exchange Act).
(c) Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, the Paying Agent shall
deliver in exchange for such lost,
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stolen or destroyed Certificates, upon the making of an affidavit of that fact
by the holder thereof, the Merger Consideration to which the holder thereof is
entitled pursuant to this Article II; provided, however, that Parent or the
Surviving Corporation may, as a condition precedent to such delivery, require
the owner of such lost, stolen or destroyed Certificates to deliver a bond in
such sum as they may reasonably direct as indemnity against any claim that may
be made against Parent, the Surviving Corporation, the Company or the Paying
Agent with respect to the Certificates alleged to have been lost, stolen or
destroyed.
(d) Remaining Funds. At any time following six months after the
Effective Time, the Surviving Corporation shall be entitled to require the
Paying Agent to deliver to it any funds (including any interest and other income
received with respect thereto) which had been made available to the Paying Agent
and which have not been disbursed to holders of Certificates, and thereafter
such holders shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar Laws) only as general creditors
thereof with respect to the Merger Consideration payable, without interest, to
which such holders may be entitled pursuant to this Article II. Notwithstanding
the foregoing, none of the Surviving Corporation, the Paying Agent or any party
hereto shall be liable to any Person in respect of any Merger Consideration
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar Law.
(e) No Further Rights. At the close of business on the day of 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 (and the associated Company Rights) on the records of the
Company. From and after the Effective Time, the holders of Certificates
evidencing ownership of Shares (and the associated Company Rights) outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such Shares (and the associated Company Rights) except as otherwise
provided for herein or by applicable Law.
Section 2.4 Withholding Taxes. Each of the Paying Agent, the Company,
Parent and the Surviving Corporation shall be entitled to deduct and withhold
from the Merger Consideration or the consideration otherwise payable to a holder
of Company Common Stock (and the associated Company Rights) or Company Stock
Options, as the case may be, pursuant to the Merger such amounts as the Paying
Agent, the Company, Parent or the Surviving Corporation is required to deduct
and withhold with respect to the making of such payment under the Internal
Revenue Code of 1986, as amended (the "Code"), or under any applicable provision
of state, local or foreign Law. To the extent that amounts are so withheld, such
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the Company Common Stock (and the associated Company Rights) or
Company Stock Options, as the case may be, in respect of which such deduction
and withholding was made by the Paying Agent, the Company, Parent or the
Surviving Corporation, respectively.
Section 2.5 Further Action. At and after the Effective Time, the
officers and directors of Parent and the Surviving Corporation will be
authorized to execute and deliver, in the name and on behalf of the Company and
Sub, any deeds, bills of sale, assignments or assurances and to take and do, in
the name and on behalf of the Company and Sub, any other actions and things to
vest, perfect or confirm of record or otherwise in the Surviving Corporation
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any and all right, title and interest in, to and under any of the rights,
properties or assets acquired or to be acquired by the Surviving Corporation as
a result of, or in connection with, the Merger.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Sub as
follows:
Section 3.1 Organization; Subsidiaries; Charter Documents.
(a) Organization. Each of the Company and its Subsidiaries is a
corporation, partnership or other entity duly organized, validly existing and in
good standing (where applicable) under the Laws of the jurisdiction of its
incorporation or organization, and has the requisite corporate or other power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Each of the Company and its Subsidiaries is
duly qualified or licensed to do business and is in good standing (where
applicable) 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 has not had and would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
As used in this Agreement, the term "Company Material Adverse Effect"
means, when used with reference to one or more events, changes, circumstances or
effects, a material adverse effect on the business, operations, assets,
revenues, expenses, liabilities or financial condition of the Company and its
Subsidiaries taken as a whole, other than events, changes, circumstances or
effects that arise out of or result from (i) economic factors generally
affecting the economy or financial markets as a whole or the industries in which
the Company or any of its Subsidiaries operates which do not disproportionately
impact the Company or any of its Subsidiaries, (ii) any change in Laws, unless
such change adversely affects the Company or any of its Subsidiaries
disproportionately in comparison to their respective competitors, (iii) the
public announcement of this Agreement and the transactions contemplated hereby,
and (iv) the performance by the Company of its obligations pursuant to this
Agreement.
(b) Subsidiaries. Section 3.1(b) of the Disclosure Schedule delivered
by the Company to Parent on the date hereof (the "Company Disclosure Schedule")
sets forth a complete list of the Company's Subsidiaries and all other entities
in which the Company owns, directly or indirectly, any shares of capital stock,
equity or membership interests and such list sets forth the jurisdiction of
organization, the authorized and outstanding capital stock and the beneficial
ownership of each Subsidiary.
As used in this Agreement, the term "Subsidiary" means, when used with
reference to any entity, any corporation or other organization, whether
incorporated or unincorporated, (i) of which such party or any other Subsidiary
of such party is a general or managing partner or (ii) the outstanding voting
securities or interests of which, having by their terms ordinary voting power to
elect a majority of the Board of Directors or others performing
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similar functions with respect to such corporation or other organization, is
directly or indirectly owned or controlled by such entity or by any one or more
of its Subsidiaries.
(c) Charter Documents. The Company has delivered or made available to
Parent: (i) a true and correct copy of each of the restated articles of
incorporation and by-laws of the Company, as amended to date (collectively, the
"Company Charter Documents") and (ii) true and correct copies of the articles of
incorporation or organization and by-laws or operating agreements, or like
organizational documents, each as amended to date (collectively, "Subsidiary
Charter Documents") of each of its Subsidiaries, and each such instrument is in
full force and effect. The Company is not in violation of any of the provisions
of the Company Charter Documents and each Subsidiary of the Company is not in
violation of its respective Subsidiary Charter Documents.
Section 3.2 Capitalization of the Company.
(a) Company Capitalization. The authorized capital stock of the
Company consists of 15,000,000 shares of Class A Company Common Stock,
15,000,000 shares of Class B Company Common Stock and 5,000,000 shares of
cumulative preferred stock, par value $100 per share, of the Company (the
"Preferred Stock") of which 100,000 shares are designated as Series A Junior
Participating Cumulative Preferred Stock and have been reserved for issuance
upon the exercise of the rights (the "Company Rights") distributed to holders of
the Company Common Stock pursuant to the Amended and Restated Rights Agreement,
dated as of December 24, 1998 (the "Rights Plan"), between the Company and
National City Bank, as Rights Agent. As of the close of business on May 1, 2006,
(i) 3,734,927 shares of Class A Company Common Stock were issued and outstanding
and 980,326 shares were held by the Company as treasury shares, (ii) 4,177,372
shares of Class B Company Common Stock were issued and outstanding and 1,087,786
shares were held by the Company as treasury shares, (iii) 1,682,625 shares of
Company Common Stock were reserved for issuance under the Company Stock Plans
(including shares referred to in (iv) and (v) below), (iv) 1,198,835 shares of
Class A Company Common Stock were reserved for issuance upon the exercise of
outstanding Company Stock Options granted under the plans and agreements
applicable to such Company Stock Options, (v) 435,850 shares of Class B Company
Common Stock were reserved for issuance upon the exercise of outstanding Company
Stock Options granted under the plans and agreements applicable to such Company
Stock Options, (vi) no shares of Preferred Stock were issued and outstanding and
(vii) no bonds, debentures, notes or other instruments or evidence of
indebtedness having the right to vote (or convertible into, or exercisable or
exchangeable for, securities having the right to vote) on any matters of which
shareholders of the Company may vote were issued or outstanding. All outstanding
shares of Company Common Stock are, and all shares which may be issued pursuant
to the plans and agreements applicable to the Company Stock Options will be,
when issued in accordance with the respective terms thereof, duly authorized,
validly issued, fully paid and non-assessable and not issued in violation of, or
are subject to, preemptive rights or similar rights. Except as set forth above
and as contemplated by this Agreement, there are no outstanding (A) shares of
capital stock or other voting securities of the Company, (B) securities of the
Company convertible into or exchangeable or exercisable for shares of capital
stock or voting securities of the Company, (C) options, warrants, restricted
stock, restricted stock units, or other rights to acquire from the Company, and
no preemptive or similar rights, subscriptions or other rights, convertible
securities, agreements, arrangements or
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commitments of any character, relating to the capital stock or voting securities
of the Company obligating the Company to issue, register, transfer or sell, any
capital stock, voting securities or securities convertible into or exchangeable
or exercisable for capital stock or voting securities of the Company or
obligating the Company to grant, extend or enter into any such option, warrant,
restricted stock units, subscription or other right, convertible security,
agreement, arrangement or commitment or (D) no equity equivalents, interests in
the ownership or earnings of the Company or other similar rights (the items in
clauses (A), (B), (C) and (D) being referred to collectively as the "Company
Securities"). None of the Company or its Subsidiaries has any obligation,
commitments or arrangements to redeem, repurchase or otherwise acquire any of
the Company Securities or any of the Company Subsidiary Securities (as
hereinafter defined), including as a result of the transactions contemplated by
this Agreement or to provide funds to or make any investment (in the form of a
loan, capital contribution or otherwise) in any Subsidiary or other Person.
Except as set forth in Section 3.2(a) of the Company Disclosure Schedule, there
are no voting trusts or registration rights or other agreements or
understandings to which the Company or any of its Subsidiaries is a party, or of
which the Company has knowledge, with respect to the voting or disposition of
the capital stock of the Company or any of its Subsidiaries.
For purposes of this Agreement, "knowledge of the Company", "Company's
knowledge" or similar "knowledge" qualifiers mean the actual knowledge after due
inquiry of the individuals set forth in Section 3.2(a) of the Company Disclosure
Schedule.
(b) Subsidiary Capitalization. All outstanding shares of capital stock
or other interests of each Subsidiary of the Company have been duly authorized
and validly issued, are fully paid and nonassessable and were not issued in
violation of preemptive rights or similar rights. Except as set forth in Section
3.2(b) of the Company Disclosure Schedule, all of the outstanding shares of
capital stock of, or other ownership interests in, each Subsidiary of the
Company, is owned by the Company, directly or indirectly, free and clear of any
liens, charges, security interests, options, claims, pledges, licenses,
limitations in voting rights or other encumbrances of any nature whatsoever
(collectively, "Liens"). There are no outstanding (i) securities of the Company
or any of its Subsidiaries convertible into or exchangeable or exercisable for
shares of capital stock or other voting securities or ownership interests in any
Subsidiary of the Company, or (ii) options, warrants, restricted stock,
restricted stock units or other rights to acquire from the Company or any of its
Subsidiaries, and no other obligation of the Company or any of its Subsidiaries
to issue, any capital stock, voting securities or other ownership interests in,
or any securities convertible into or exchangeable or exercisable for, any
capital stock, voting securities or ownership interests in, any Subsidiary of
the Company or any equity equivalents, interests in the ownership or earnings of
any Subsidiary or other similar rights (the items in clauses (i) and (ii) being
referred to collectively as the "Company Subsidiary Securities").
(c) Indebtedness. (i) Section 3.2(c)(i) of the Company Disclosure
Schedule sets forth a complete and correct list of each Contract pursuant to
which any Indebtedness of the Company or its Subsidiaries is outstanding or may
be incurred. No Contract pursuant to which any Indebtedness of the Company or
its Subsidiaries is outstanding or may be incurred provides for the right to
vote (or is convertible into, or exchangeable or exercisable for, securities
having the right to vote) on any matters on which the shareholders of the
Company or its Subsidiaries may vote.
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(ii) Section 3.2(c)(ii) of the Company Disclosure Schedule sets forth
a complete and correct list, of all standby letters of credit, performance or
payment bonds, guarantee arrangements and surety bonds of any nature relating to
the Company or any of its Subsidiaries.
As used in this Agreement, the term "Contract" means any agreement,
contract, subcontract, lease, indenture, note, option, warranty, purchase order,
license, sublicense, or legally binding commitment or undertaking of any nature,
as in effect as of the date hereof or as may hereinafter be in effect.
As used in this Agreement, the term "Indebtedness" means (i)
indebtedness for borrowed money, whether secured or unsecured, (ii) obligations
under conditional or installment sale or other title retention Contracts
relating to purchased property, (iii) capitalized lease obligations and (iv)
guarantees of any of the foregoing of another Person.
Section 3.3 Corporate Authorization; Board Approval.
(a) Corporate Authorization. The Company has all necessary corporate
power and authority to enter into this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution,
delivery and performance by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby, have been duly and
validly authorized by all necessary corporate action, except, with respect to
the Merger, for the approval of this Agreement and the Merger by a majority of
all of the votes entitled to be cast on this Agreement and the Merger by the
holders of outstanding Company Class A Common Stock and Company Class B Common
Stock, voting separately as classes (the "Company Requisite Vote"). The Company
Requisite Vote is the only vote of holders of any class or series of securities
necessary to approve this Agreement and the Merger. This Agreement has been duly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery by Parent and Sub, constitutes a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other similar Laws affecting creditors rights generally
from time to time in effect, and to general principles of equity good faith and
fair dealing, regardless whether in a proceeding at equity or at Law).
(b) Special Committee Approval. The Special Committee has, at a
meeting thereof duly called and held on or prior to the date hereof, unanimously
(i) determined that this Agreement and the Merger are fair to, advisable and in
the best interests of the Company and its shareholders, (ii) determined and
recommended that this Agreement and the Merger be approved and adopted by the
Company's Board of Directors, and (iii) recommended that the Company's Board of
Directors make the Company Recommendation.
(c) Board Approval. The Board of Directors of the Company has, at a
meeting duly called and held on or prior to the date hereof and, based on the
recommendation of the Special Committee, unanimously (i) determined and declared
that this Agreement and the Merger are fair to, advisable and in the best
interests of the Company and its shareholders, (ii) adopted and approved this
Agreement and the Merger, (iii) resolved to make the Company
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Recommendation, and (iv) directed that this Agreement and the Merger be
submitted to the Company's shareholders for approval.
Section 3.4 Governmental Approvals. The execution, delivery and
performance by the Company of this Agreement, and the consummation by the
Company of the transactions contemplated hereby, require no action, permit,
license, authorization, certification, consent, approval, concession or
franchise by or in respect of, or filing with, any federal, state, or local U.S.
or foreign government, court, administrative agency, commission, arbitrator or
other governmental or regulatory agency or authority (a "Governmental
Authority") other than: (a) the filing of the Articles of Merger with respect to
the Merger with the Secretary of State of the State of Indiana and appropriate
documents with the relevant authorities of other states in which the Company is
qualified to do business; (b) compliance with any applicable requirements of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"); (c) such other consents, approvals, Orders, authorizations,
registrations, declarations, filings, notices and permits set forth on Section
3.4 of the Company Disclosure Schedule; (d) the filing with the SEC of (i) a
Proxy Statement and other solicitation materials relating to the Shareholders
Meeting and (ii) such reports under Section 13(a), 13(d), 15(d) or 16(a) of the
Exchange Act as may be required in connection with this Agreement and the
transactions contemplated by this Agreement; and (e) such other consents,
approvals, Orders, authorizations, registrations, declarations and filings the
failure of which to be obtained or made individually or in the aggregate would
not reasonably be expected to have a Company Material Adverse Effect.
Section 3.5 Non-Contravention. Except as set forth in Section 3.5 of
the Company Disclosure Schedule, the execution, delivery and performance by the
Company of this Agreement do not, and the consummation of the transactions
contemplated hereby will not: (a) contravene, conflict with or violate the
Company Charter Documents or the Subsidiary Charter Documents; (b) subject to
obtaining the approval of this Agreement and the Merger by the Company's
shareholders as contemplated in Section 5.6 and obtaining all the consents,
approvals and authorizations specified in clauses (a) through (e) of Section
3.4, contravene or conflict with or constitute a violation of any provision of
any law, statute, ordinance, rule, code, or regulation of any Governmental
Authority ("Law"), or any outstanding order, writ, judgment, injunction, ruling,
determination, award or decree by or with any Governmental Authority ("Order")
binding upon or applicable to the Company or its Subsidiaries or by which any of
their respective properties are bound or affected; (c) subject to obtaining all
the consents, approvals and authorizations specified in clauses (a) through (e)
of Section 3.4 and Section 3.5 of the Company Disclosure Schedule, constitute a
default (or an event which with notice, the lapse of time or both would become a
default) under or give rise to a right of termination, cancellation,
modification or acceleration of any right or obligation of the Company or any of
its Subsidiaries, or cause increased liability or fees or to the loss of a
material benefit or imposition of a penalty under (i) any Contract or (ii) any
Company Permit; or (d) result in the creation or imposition of any Liens on any
asset of the Company or any of its Subsidiaries; other than, in the case of
clauses (b), (c) or (d), any such contraventions, conflicts, violations,
defaults, rights of termination, cancellation, modification, acceleration or
other occurrences or Liens that individually or in the aggregate have not had
and would not reasonably be expected to have a Company Material Adverse Effect.
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Section 3.6 Company SEC Documents. The Company has filed all
registration statements, prospectuses, reports, schedules, forms, statements and
other documents (including exhibits and all other information incorporated by
reference) required to be filed by it with the SEC since January 1, 2002
(collectively, the "Company SEC Documents"). The Company SEC Documents (a) were
prepared in accordance and complied in all material respects with the
requirements of the Securities Act of 1933, as amended (together with the rules
and regulations promulgated thereunder, the "Securities Act"), or the Exchange
Act, as the case may be, applicable to the Company SEC Documents each as in
effect on the date so filed, and (b) did not at the time they were filed contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except to the extent corrected by a subsequently filed Company SEC
Document filed and publicly available prior to the date of this Agreement
(including any financial statements or other documentation incorporated by
reference therein). As of the date of this Agreement, there are no outstanding
or unresolved comments in comment letters received from the SEC staff with
respect to any of the Company SEC Documents. No Subsidiary of the Company is
required to file any form, report or other document with the SEC.
Section 3.7 Financial Statements; No Undisclosed Liabilities; Internal
and Disclosure Controls.
(a) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Company SEC Documents as of
their respective dates (the "Company Financials"): (i) complied in all material
respects with all applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto, (ii) were prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited interim financial statements, as may be permitted by the SEC on Forms
10-Q, 8-K or any successor forms under the Exchange Act), and (iii) fairly
presented in all material respects the consolidated financial condition of the
Company and its consolidated Subsidiaries as at the respective dates thereof and
the consolidated results of the Company's operations and cash flows for the
periods indicated. Except as set forth in Section 3.7(a) of the Company
Disclosure Schedule, all of the Subsidiaries of the Company are consolidated for
accounting purposes. The consolidated balance sheet of the Company contained in
the Company SEC Documents as of January 7, 2006 is hereinafter referred to
herein as the "Company Balance Sheet," and January 7, 2006 is hereinafter
referred to herein as the "Company Balance Sheet Date".
(b) Except as set forth in Section 3.7(b) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
except (i) liabilities or obligations disclosed or provided for in the Company
Balance Sheet or the notes thereto or in the Company SEC Documents filed prior
to the date hereof and publicly available after the filing of the Company SEC
Document containing the Company Balance Sheet and (ii) liabilities or
obligations incurred since the Company Balance Sheet Date in the ordinary course
of business that individually or in the aggregate have not had and would not
reasonably be expected to have a Company Material Adverse Effect. Except as set
forth in Section 3.7(b) of the Company Disclosure Schedule, neither the Company
nor any of its Subsidiaries has engaged in any securitization transactions or
-11-
"off-balance sheet arrangements" (as defined in Item 303(a)(4)(ii) of Regulation
S-K of the SEC).
(c) The Company has made available to Parent a complete and correct
copy of any amendments or modifications which have not yet been filed with the
SEC to Contracts which previously had been filed by the Company with the SEC
pursuant to the Securities Act or the Exchange Act.
(d) The management of the Company has (i) implemented and maintains
disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange
Act) designed to ensure that material information relating to the Company,
including its consolidated Subsidiaries, is made known to the management of the
Company by others within those entities, and (ii) disclosed, based on its most
recent evaluation, to the Company's outside auditors and the audit committee of
the Board of Directors of the Company (A) all significant deficiencies and
material weaknesses in the design or operation of internal control over
financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) which are
reasonably likely to adversely affect the Company's ability to record, process,
summarize and report financial data and (B) any fraud, whether or not material,
that involves management or other employees who have a significant role in the
Company's internal control over financial reporting.
(e) Since the enactment of the Xxxxxxxx-Xxxxx Act of 2002, the Company
has been and is in compliance in all material respects with (i) the applicable
provisions of the Xxxxxxxx-Xxxxx Act of 2002 and (ii) the applicable listing and
corporate governance rules and regulations of the Nasdaq Stock Market.
(f) As of the date hereof, the Company has not identified any material
weaknesses in the design or operation of internal control over financial
reporting other than as disclosed in the Company SEC Documents or Section 3.7(f)
of the Company Disclosure Schedule.
Section 3.8 Information in Disclosure Documents. Neither the Proxy
Statement to be filed with the SEC in connection with the Merger nor any
amendment or supplement to the Proxy Statement, will contain at the date the
Proxy Statement or any such amendment or supplement is first mailed to
shareholders of the Company and at the time of the Shareholders Meeting, 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 were made, not misleading, except
that no representation or warranty is made by the Company with respect to
statements made or incorporated by reference therein based on information
supplied by Parent or Sub expressly for inclusion or incorporation by reference
in the Proxy Statement. The Proxy Statement will, when filed with the SEC,
comply in all material respects with the requirements of the Exchange Act and
the rules and regulations promulgated thereunder.
Section 3.9 Absence of Certain Changes. Except as disclosed in Section
3.9 of the Company Disclosure Schedule or in the Company SEC Documents filed and
publicly available prior to the date hereof, since the Company Balance Sheet
Date, the businesses of the Company and its Subsidiaries have been conducted in
all material respects in the ordinary course
-12-
of business consistent with past practice, and there has not been any change,
development, event, condition, occurrence or effect that (a) would be prohibited
by the terms of Section 5.1 had such occurred subsequent to the date hereof, or
(b) individually or in the aggregate has had or would reasonably be expected to
have (i) a Company Material Adverse Effect or (ii) a material adverse impact on
the ability of the Company to consummate the Merger.
Section 3.10 Insurance. Copies of all material insurance policies
applicable to the Company and its Subsidiaries have been made available to
Parent. Except as set forth in Section 3.10 of the Company Disclosure Schedule:
(a) all such policies are in full force and effect and were in full force and
effect during the periods of time such insurance policies are purported to be in
effect; (b) neither the Company nor any Subsidiary is in breach or default
(including any such breach or default with respect to the payment of premiums or
the giving of notice), and no event has occurred which, with notice or the lapse
of time or both, would constitute such a breach or default, or permit
termination or modification, under any policy; (c) all premiums due thereon have
been paid and the Company has not received any notice of cancellation,
termination or non-renewal of any such policy; (d) all such insurance polices
are customary in scope and amount of coverage for the business of the Company
and its Subsidiaries; (e) all appropriate insurers under such insurance policies
have been notified as required by such insurance policies of all potentially
insurable losses and pending litigation, and no such insurer has informed the
Company or any of its Subsidiaries of any denial of coverage or reservation of
rights thereto; and (f) the Company and its Subsidiaries have not received any
written notice of cancellation of any material insurance policy maintained in
favor of the Company or any of its Subsidiaries or has been denied insurance
coverage, in either case, in the past five years.
Section 3.11 Real Property; Title to Assets.
(a) Owned Real Property. (i) Section 3.11(a) of the Company Disclosure
Schedule contains a true and complete list of all the real property (including
street address and store number) owned in fee by the Company or its Subsidiaries
(the "Owned Real Property"). Each of the Company and its Subsidiaries has good,
valid, fee simple and marketable and insurable title to each parcel of Owned
Real Property, including, without limitation, all buildings, structures,
fixtures and improvements located thereon, in each case, free and clear of all
Liens, except (A) Liens disclosed on Section 3.11(a) of the Company Disclosure
Schedule, (B) Liens for Taxes and general and special assessments not yet due
and payable or which are being contested in good faith by appropriate
proceedings and for which sufficient amounts have been reserved, and (C) other
Liens which, individually or in the aggregate, would not reasonably be expected
to materially interfere with the Company's or any of its Subsidiaries' use and
enjoyment of such Owned Real Property or with the conduct of the business of the
Company and its Subsidiaries, nor materially impair the value thereof or the
ability of the Company of any of its Subsidiaries to obtain financing by using
such Owned Real Property as collateral. Except as set forth in Section 3.11(a)
of the Company Disclosure Schedule, there are no outstanding Contracts for the
sale of any of the Owned Real Property. Except as set forth in Section 3.11(b)
of the Company Disclosure Schedule, there are no leases, subleases, licenses,
concessions, easements other than those easements which would not reasonably be
expected to materially interfere with the Company's or any of its Subsidiaries'
use and enjoyment of such Owned Real Property or with the conduct of the
business of the Company and its Subsidiaries or any other contracts,
-13-
options or rights of first offer or rights of first refusal or agreements
granting to any Person or entity other than the Company and its Subsidiaries any
right to the possession, use, occupancy or enjoyment of any of the Owned Real
Property or any portion thereof.
(ii) Except as set forth in Section 3.11(a) of the Company
Disclosure Schedule, the Company has not received notice of material
violation of any zoning, building, health, safety, fire or other similar
law, ordinance, order or regulations with respect to the Real Property.
(iii) Except as set forth in Section 3.11(a) of the Company's
Disclosure Schedule, all utilities currently serving the Real Property are
sufficient to permit the Company and its Subsidiaries to conduct their
businesses as presently conducted.
(iv) All structural, mechanical and other systems and material
items at the Real Property are free from material defect and in good
operating condition, normal wear and tear excluded.
(b) Real Property Leases. Section 3.11(b) of the Company Disclosure
Schedule contains a true and complete list of all leases, subleases,
sub-subleases, licenses and other agreements (including the date, store number
and name of the parties to such lease documents) under which the Company or any
of its Subsidiaries, leases, subleases, licenses, uses or occupies, or has the
right to use or occupy (in each case whether as landlord, tenant, subtenant or
other occupancy arrangement), now or in the future, any real property (the
"Leased Real Property," and together with the Owned Real Property, the "Real
Property"). The leases, subleases, sub-subleases, licenses and other agreements
governing such Leased Real Property are referred to herein as the "Real Property
Leases." The Company has previously furnished or otherwise made available to
Parent true, correct and complete copies of all Real Property Leases, and
written summaries of material terms of such Real Property Leases (the "Lease
Reports") as posted to the Company's on-line data room on April 27, 2006. The
information set forth in the Lease Reports is true and correct in all material
respects. Except as set forth in Section 3.11(b) of the Company Disclosure
Schedule, each Real Property Lease constitutes the valid and legally binding
obligation of the Company or its Subsidiaries, enforceable against the Company
or its Subsidiaries, as applicable, in accordance with its terms. With respect
to each Real Property Lease (i) there is no material default or event which,
with notice or lapse of time or both, would constitute a material default on the
part of the Company or its Subsidiaries, or, to the knowledge of the Company any
other party thereto and (ii) except as set forth in Section 3.11(b) of the
Company Disclosure Schedule, (A) neither the Company nor any of its
Subsidiaries, as applicable, has assigned, sublet or transferred its leasehold
interest; (B) as to the Company and its Subsidiaries, such Real Property Lease
is in full force and effect; (C) the Merger does not require the consent of or
notice to any other party to such Real Property Lease, will not result in a
breach of or default under such Real Property Lease, will not give rise to any
recapture or similar rights, and will not otherwise cause such Real Property
Lease to cease to be legal, valid, binding, enforceable and in full force and
effect on identical terms following the Closing; (D) the Company's and its
Subsidiaries' possession and quiet enjoyment of the Leased Real Property has not
been disturbed and there are no material disputes with respect to such Real
Property Lease; (E) to the knowledge of the Company, no security deposit or
portion thereof deposited with respect to such Real Property Lease has been
applied in respect of a breach or default under such
-14-
Real Property Lease which has not been redeposited in full; (F) the other party
to such Real Property Lease is not an Affiliate of the Company or any of its
Subsidiaries; (G) neither the Company nor any of its Subsidiaries has subleased,
licensed or otherwise granted any Person the contractual right to use or occupy
such Leased Real Property or any portion thereof other than easements which
would not reasonably be expected to materially interfere with the Company's or
any of its Subsidiaries' use and enjoyment of such Leased Real Property or with
the conduct of the business of the Company and its Subsidiaries, are not
material to the operation of the Leased Real Property; and (H) neither the
Company nor any of its Subsidiaries has collaterally assigned or granted any
other security interest in such Real Property Lease or any interest therein.
Except as set forth in Section 3.11(b) of the Company Disclosure Schedule, none
of the Real Property Leases contain any unsatisfied capital expenditure
requirements or remodeling obligations of the Company or any of its Subsidiaries
other than ordinary maintenance and repair obligations. Each of the Company and
its Subsidiaries has a good and valid leasehold interest in each Real Property
Lease free and clear of all Liens, except (i) as disclosed on Section 3.11(b) of
the Company Disclosure Schedule, (ii) Liens for Taxes and general and special
assessments not yet due and payable or which are being contested in good faith
by appropriate proceedings and for which sufficient amounts have been reserved,
and (iii) other Liens which would not reasonably be expected to materially
interfere with the Company's or any of its Subsidiaries' use and enjoyment of
such Real Property Lease or with the conduct of the business of the Company and
its Subsidiaries, nor materially impair the value thereof or the ability of the
Company or any of its Subsidiaries to obtain financing by using such Leased Real
Property as collateral.
(c) Personal Property. Except as set forth in Section 3.11(c) of the
Company Disclosure Schedule, the Company and its Subsidiaries have good and
valid title to or lease all furniture, fixtures, equipment, operating supplies
and other personal property (the "Personal Property") necessary to carry on
their businesses as now being conducted, subject to no Liens that individually
or in the aggregate have had or would reasonably be expected to have a Company
Material Adverse Effect.
Section 3.12 Company Intellectual Property. Section 3.12(a) of the
Company Disclosure Schedule lists all registrations or applications for
registration of any Company Intellectual Property and Section 3.12(b) of the
Company Disclosure Schedule lists all material Company Intellectual Property
(whether or not registered). Except as set forth in Section 3.12(c) of the
Company Disclosure Schedule, all material Company Intellectual Property is
valid, subsisting and enforceable in all respects, is sufficient to operate the
business of the Company as currently conducted, and the Company or its
Subsidiaries own or have the right to use all material Company Intellectual
Property free and clear of all Liens. Except as individually or in the aggregate
have not had or would not reasonably be expected to have a Company Material
Adverse Effect, and except as set forth in Section 3.12(d) of the Company
Disclosure Schedule, (i) no Action is pending or, to the Company's knowledge,
threatened against or affecting the Company or any of its Subsidiaries or any of
their respective properties, which challenge the validity or use of, or the
ownership by, the Company and/or its Subsidiaries of the Company Intellectual
Property; (ii) the Company has no knowledge of any infringement or infringing
use of any of the Company Intellectual Property or licenses by any Person; (iii)
the Company or the Subsidiaries has taken all reasonable actions to maintain and
protect the Company Intellectual Property, including confidential Company
Intellectual Property; and (iv) to the Company's knowledge, no infringement,
misappropriation or violation of any intellectual property right or
-15-
other proprietary right of any third party has occurred or will result from the
conduct of the business of the Company and its Subsidiaries or from the signing
and execution of this Agreement or the consummation of the transactions
contemplated hereby, and no claim has been made by any third party based upon an
allegation of any such infringement.
As used in this Agreement, the term "Company Intellectual Property"
means (i) all domestic and foreign patents, trademarks, service marks,
copyrights, trade names, domain names and all material licenses running to or
from the Company or any of its Subsidiaries relating to the Company's or any of
its Subsidiaries' businesses or owned by the Company or any of its Subsidiaries;
(ii) all material common law trademarks, service marks, copyrights and
copyrightable works (including databases, software and Internet site content),
trade names, brand names and logos; and (iii) all trade secrets, inventions,
formulae, data, improvements, know-how, confidential information, material
computer programs (including any source code and object code) documentation,
engineering and technical drawings, processes, methodologies, trade dress, and
all other proprietary technology utilized in or incidental to the businesses of
the Company and its Subsidiaries, and all common law rights relating to the
foregoing.
Section 3.13 Litigation. Except as set forth in Section 3.13 of the
Company Disclosure Schedule, there is no action, suit, investigation, claim,
charge or proceeding ("Actions") pending against, or to the knowledge of the
Company, threatened against or affecting, the Company or any of its Subsidiaries
or their respective properties or rights (a) by, before or with any Governmental
Authority or (b) by or with any other Person, except for any such matters that
individually or in the aggregate have not had, and would not reasonably be
expected to have, a Company Material Adverse Effect. As of the date of this
Agreement, no officer or director of the Company is a defendant in any Action
commenced by shareholders of the Company with respect to the performance of his
or her duties as an officer and/or director of the Company. Except as set forth
in Section 3.13 of the Company Disclosure Schedule, there exist no Contracts
with any of the directors and officers of the Company or its Subsidiaries that
provide for indemnification by the Company or its Subsidiaries. Except as
specifically disclosed in the Company SEC Documents filed and publicly available
prior to the date of this Agreement, neither the Company nor any of its
Subsidiaries nor any of their respective properties or assets is or are subject
to any Order that individually or in the aggregate has had, or would reasonably
be expected to have, a Company Material Adverse Effect.
Section 3.14 Taxes. Except as set forth on Section 3.14 of the Company
Disclosure Schedule:
(a) The Company and each of its Subsidiaries, and each affiliated
group (within the meaning of Section 1504 of the Code) of which the Company or
any of its Subsidiaries is, or was at any time during the last seven fiscal
years, a member, has timely filed (or has had timely filed on its behalf, taking
into account all applicable extensions) all material Tax Returns required by
applicable Law to be filed by it. All such Tax Returns are correct and complete
in all material respects and correctly and accurately set forth the amount of
any Taxes relating to the applicable period. The Company and each of its
Subsidiaries has timely paid (or has had timely paid on its behalf) all material
Taxes due and owing (whether or not shown on any Tax Return) and has established
an adequate reserve for the payment of all material Taxes not yet due and owing
in the Company Financials in accordance with GAAP.
-16-
(b) The Company and each of its Subsidiaries has withheld and paid all
material Taxes required to have been withheld and paid in connection with any
amounts paid or owing to any employee, independent contractor, creditor,
shareholder, or other third party.
(c) As of the date of this Agreement, none of the material Tax Returns
of the Company or its Subsidiaries filed during any of the most recent six years
have been examined by any Taxing Authority and no audit, action, proceeding or
assessment is pending or threatened by any such Taxing Authority against the
Company or its Subsidiaries.
(d) As of the Closing Date, neither the Company nor its Subsidiaries
will be a party to, be bound by or have any obligation under any tax allocation,
tax sharing, tax indemnity or similar agreement with respect to Taxes.
(e) There are no material Liens for Taxes (other than Taxes not yet
due and payable or that are being contested in good faith) upon any of the
assets of the Company or any of its Subsidiaries.
(f) Neither the Company nor any of its Subsidiaries (i) has within the
past seven years been a member of an "affiliated group" (as defined in Section
1504(a) of the Code or a consolidated, affiliated, unitary or similar group
under state, local or foreign tax law) (other than a group the common parent of
which is the Company) or (ii) has any liability for Taxes of any Person (other
than the Company or any of its Subsidiaries) arising from the application of
Treasury Regulations Section 1.1502-6 or any analogous provision of state, local
or foreign Law, or as a transferee or successor, by contract, or otherwise.
(g) Neither the Company nor any of its Subsidiaries has granted any
unexpired waiver of any federal, state, local or foreign statute of limitations
with respect to, or any extension of a period for the assessment of, any Tax.
(h) Neither the Company nor any of its Subsidiaries will be required
to include any material item of income in, or exclude any deduction from,
taxable income for any taxable period (or portion thereof) ending after the
Closing Date as a result of any: (i) change in method of accounting for a
taxable period ending or prior to the Closing Date; (ii) "closing agreement" as
described in Section 7121 of the Code (or any corresponding or similar provision
of state, local or foreign Tax Law) executed on or prior to the Closing Date;
(iii) intercompany transactions or any excess loss account described in Treasury
Regulations under Section 1502 of the Code (or any corresponding or similar
provision of state, local or foreign Tax Law); (iv) installment sale or open
transaction disposition made on or prior to the Closing Date; or (v) prepaid
amount received by the Company or any of its Subsidiaries on or prior to the
Closing Date.
(i) Neither the Company nor any of its Subsidiaries has within the
past five years distributed stock of another entity, or had its stock
distributed by another entity, in a transaction that was purported or intended
to be governed in whole or in part by Section 355 or 361 of the Code.
(j) Neither the Company nor any of its Subsidiaries has engaged in any
transaction that could give rise to (i) a disclosure obligation with respect to
any Person under
-17-
Section 6111 of the Code or the regulations promulgated thereunder, (ii) a list
maintenance obligation with respect to any Person under Section 6112 of the Code
or the regulations promulgated thereunder, or (iii) a disclosure obligation as a
"reportable transaction" under Section 6011 of the Code and the promulgated
regulations thereunder.
(k) With respect to requests for changes in method of accounting and
ruling request: (i) neither the Company nor any of its Subsidiaries has agreed
to make any adjustment pursuant to Section 481(a) of the Code (or any
predecessor provision) by reason of any change in any accounting method; (ii)
neither the Company nor any of its Subsidiaries has pending any application with
any Taxing Authority requesting permission for any change in any accounting
method; and (iii) there are no outstanding rulings or requests for rulings with
any Taxing Authority addressed, directly or indirectly, to the Company or any of
its Subsidiaries.
(l) Each asset with respect to which the Company or any of its
Subsidiaries, claims any material depreciation, amortization or similar expense
for Tax purposes is owned for Tax purposes by the Company or one of its
Subsidiaries under applicable Tax law.
(m) Neither the Company nor any of its Subsidiaries is a party to any
safe harbor lease within the meaning of Section 168(f)(8) of the Code, as in
effect prior to amendment by the Tax Equity and Fiscal Responsibility Act of
1982.
(n) Neither the Company nor any of its Subsidiaries has participated
in an international boycott as defined in section 999 of the Code.
As used in this Agreement, the term "Taxes" means any and all taxes,
charges, fees, levies or other assessments, including income, gross receipts,
excise, real or Personal Property, sales, withholding, social security,
retirement, unemployment, occupation, use, goods and services, service use,
license, value added, capital, net worth, payroll, profits, employment,
severance, stamp, occupation, premium, environmental, custom duties, disability,
registration, alternative or add-on minimum, estimated, franchise, transfer and
recording taxes, fees and charges, and any other taxes, assessment or similar
charges imposed by any Taxing Authority and any interest or penalties or
additional amounts, if any, attributable to, or imposed upon, or with respect
to, any such taxes, charges, fees, levies or other assessments whether or not
disputed.
As used in this Agreement, the term "Taxing Authority" means the
Internal Revenue Service or any other taxing authority, whether domestic or
foreign, including any state, county, local or foreign government or any
subdivision or taxing agency thereof.
As used in this Agreement, the term "Tax Return" means any report,
return, document, claim for refund, declaration or other filing required to be
supplied to any taxing authority or jurisdiction (foreign or domestic) with
respect to Taxes.
Section 3.15 Employee Benefit Plans.
(a) For purposes of this Section 3.15, the following terms have the
definitions given below:
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"Controlled Group Liability" means any and all liabilities (i) under
Title IV of ERISA, (ii) under section 302 of ERISA, (iii) under sections 412 and
4971 of the Code, (iv) resulting from a violation of the continuation coverage
requirements of section 601 et seq. of ERISA and section 4980B of the Code or
the group health plan requirements of sections 701 et seq. of the Code and
section 701 et seq. of ERISA, and (v) under corresponding or similar provisions
of foreign laws or regulations, in each case other than pursuant to the Plans.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, together with the rules and regulations thereunder.
"ERISA Affiliate" means, with respect to any entity, trade or
business, any other entity, trade or business that is a member of a group
described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1)
of ERISA that includes the first entity, trade or business, or that is a member
of the same "controlled group" as the first entity, trade or business pursuant
to Section 4001(a)(14) of ERISA.
"Pension Plan" means any Plan that is a "defined benefit plan" as
defined in Section 3(35) of ERISA.
"Plans" means all employee benefit plans, programs, practices,
agreements, understandings, commitments and other arrangements providing
benefits to any employee or former employee in respect of services provided to
the Company or any of its Subsidiaries or ERISA Affiliates or to any beneficiary
or dependent thereof, and whether covering one person or more than one person,
sponsored, administered or maintained by the Company, a Subsidiary or any of
their respective ERISA Affiliates or to which the Company, a Subsidiary or any
of their respective ERISA Affiliates contributes or is obligated to contribute.
Without limiting the generality of the foregoing, the term "Plans" includes any
defined benefit or defined contribution pension plan, profit sharing plan, stock
ownership plan, deferred compensation agreement or arrangement, vacation pay,
sickness, disability or death benefit plan (whether provided through insurance,
on a funded or unfunded basis or otherwise), employee stock option or stock
purchase plan, cash or stock-based bonus or incentive plans or programs,
severance pay plan policy, practice or agreement, employment agreement, fringe
benefit, retention, change in control, retiree medical benefits plan and each
other employee benefit plan, program or arrangement, including, without
limitation, each "employee benefit plan" within the meaning of Section 3(3) of
ERISA.
(b) Section 3.15(b) of the Company Disclosure Schedule lists all
Plans. With respect to each Plan, the Company has made available to Parent a
true, correct and complete copy of the following (where applicable): (i) each
writing constituting a part of such Plan, including without limitation all plan
documents (including amendments and proposed amendments), benefit schedules,
trust agreements, and insurance contracts and other funding vehicles; (ii) the
three most recent Annual Reports (Form 5500 Series) and accompanying schedules,
if any; (iii) the current summary plan description, if any, and any other
current summaries or descriptions of benefits furnished to employees, officers
and directors; (iv) the most recent annual and periodic accounting of Plan
assets, if any; (v) the most recent actuarial
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report, if any; (vi) the most recent determination letter from the Internal
Revenue Service, if any; (vii) forms of any notices provided to employees during
the last three (3) years in connection with Section 4980B of the Code and the
Health Insurance Portability and Accountability Act of 1995; and (viii) copies
of any correspondence during the last three (3) years relating to a Plan
received from, or provided to the Internal Revenue Service, the Department of
Labor or any other governmental agency. Except as specifically provided in the
foregoing documents made available to Parent or as set forth in Section 3.15(b)
of the Company Disclosure Schedule, there are no amendments to any Plan that
have been adopted or approved, nor has the Company or any of its Subsidiaries or
any of their respective ERISA Affiliates adopted or announced any formal plan or
commitment, whether or not legally binding, to create any additional Plan or to
modify or change any existing Plan.
(c) With respect to each Plan that is intended to be a "qualified
plan" within the meaning of Section 401(a) of the Code (a "Qualified Plan"), the
Plan has received, or an application is pending or not yet untimely for, a
determination letter from the Internal Revenue Service that the Plan is
qualified and its trust is exempt from taxation under Section 501(a) of the
Code, and has been so qualified during the period from its adoption date.
(d) All contributions required to be made by the Company or any of its
Subsidiaries or any of their respective ERISA Affiliates to any Plan by
Applicable Laws or by any plan document or other contractual undertaking, and
all premiums due or payable with respect to insurance policies funding any Plan,
for any period through the date hereof have been timely made or paid in full and
through the Closing Date will be timely made or paid in full.
(e) Except as set forth in Section 3.15(e) of the Company Disclosure
Schedule, each Plan and related trust agreement has been established, operated
and administered in all material respects in accordance with its terms and with
all applicable provisions of ERISA, the Code, and all other applicable laws and
regulations and with any applicable collective bargaining agreement. There is
not now, and there are no existing circumstances that would reasonably be
expected to give rise to, any requirement for the posting of security with
respect to a Plan pursuant to Section 401(a) of the Code or the imposition of
any lien on the assets of the Company or any of its Subsidiaries or any of their
respective ERISA Affiliates under ERISA or the Code.
(f) Except as set forth in Section 3.15(f) of the Company Disclosure
Schedule, no Plan is a "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA (a "Multiemployer Plan") or a plan that has two or more
contributing sponsors at least two of whom are not under common control, within
the meaning of Section 4063 of ERISA (a "Multiple Employer Plan"), nor has the
Company or any of its Subsidiaries or any of their respective ERISA Affiliates
contributed to or been obligated to contribute to or withdrawn from any
Multiemployer Plan or Multiple Employer Plan. Except as set forth in Section
3.15(f) of the Company Disclosure Schedule, for any Multiemployer Plan in which
the Company participates, the Company is in compliance with all of its
contribution obligations, is not obligated to pay withdrawal liability, and is
not aware of existing circumstances or events (including the transactions
contemplated by this Agreement) that would reasonably be expected to trigger
withdrawal liability.
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(g) (i) The funding method used in connection with each Pension Plan,
which is subject to the minimum funding requirements of ERISA, is
acceptable within the meaning of Section 3(31) of ERISA and the actuarial
assumptions used in connection with funding each such plan are reasonable
as defined in Section 412(c)(3) of the Code and Section 302(c)(3) of ERISA.
As of the last day of the last plan year of each Pension Plan, the
"underfunded" status of the plan(s), as calculated in accordance with GAAP
and using a discount rate of 6% and all other actuarial assumptions and
factors consistently used by the Company to calculate and report its
pension liabilities for purposes of its filings with the SEC, did not
exceed $22 million. No "accumulated funding deficiency" (for which an
excise tax is due or would be due in the absence of a waiver) as defined in
Section 412 of the Code or as defined in Section 302(a)(2) of ERISA,
whichever may apply, has been incurred with respect to any Pension Plan
with respect to any plan year, whether or not waived. Neither the Company
nor any of its Subsidiaries has failed to pay when due any "required
installment", within the meaning of Section 412(m) of the Code and Section
302(e) of ERISA, whichever may apply, with respect to any Pension Plan.
(ii) The Company has paid all premiums (and interest charges and
penalties for late payment, if applicable) due the Pension Benefit Guaranty
Corporation ("PBGC") with respect to each Pension Plan for each plan year
thereof for which such premiums are required. Neither the Company nor any
ERISA Affiliate has engaged in, or is a successor or parent corporation to
an entity that has engaged in, a transaction which is described in Section
4069 of ERISA. There has been no unreported "reportable event" (as defined
in Section 4043(b) of ERISA and the PBGC regulations under such Section)
with respect to any Pension Plan. No filing has been made by the Company or
any ERISA Affiliate with the PBGC, and no proceeding has been commenced by
the PBGC, to terminate any Pension Plan. No condition exists and no event
has occurred that could constitute grounds for the termination of any
Pension Plan by the PBGC. Neither the Company nor any ERISA Affiliate has,
at any time, (a) ceased operations at a facility so as to become subject to
the provisions of Section 4062(e) of ERISA, (b) withdrawn as a substantial
employer so as to become subject to the provisions of Section 4063 of
ERISA, or (c) ceased making contributions on or before the Closing Date to
any Pension Plan subject to Section 4064(a) of ERISA to which the Company
or any ERISA Affiliate made contributions during the six years prior to the
Closing Date.
(h) Except for health continuation coverage as required by Section
4980B of the Code or Part 6 of Title I of ERISA and except as set forth in
Section 3.15(h) of the Company Disclosure Schedule, none of the Company, any of
its Subsidiaries nor any of their respective ERISA Affiliates has any material
liability for life, health, medical or other welfare benefits to former
employees or beneficiaries or dependents thereof. Except as set forth in Section
3.15(h) of the Company Disclosure Schedule, there has been no communication to
employees of the Company, its Subsidiaries or their respective ERISA Affiliates
that would reasonably be expected or interpreted to promise or guarantee such
employees retiree health or life insurance benefits or other retiree death
benefits on a permanent basis. An estimate of the liabilities for providing
retiree medical and life benefits coverage to active and retired employees of
the Company and its Subsidiaries is reflected on the appropriate balance sheet
and books and records of the Company according to Statement of Financial
Accounting Standards No. 106.
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(i) Except as disclosed in Section 3.15(i) of the Company Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will result in, cause the
accelerated vesting or delivery of, or increase the amount or value of, any
payment or benefit to any employee, officer, director or consultant of the
Company, any Subsidiary or any of their respective ERISA Affiliates. Without
limiting the generality of the foregoing, except as set forth in Section 3.15(i)
to the Company Disclosure Schedule, no amount paid or payable by the Company,
any of its Subsidiaries or any of their respective ERISA Affiliates in
connection with the transactions contemplated hereby, either solely as a result
thereof or as a result of such transactions in conjunction with any other
events, will be an "excess parachute payment" within the meaning of Section 280G
of the Code.
(j) Except as disclosed in Section 3.15(j) of the Company Disclosure
Schedule, there are no pending or, to the knowledge of the Company, threatened
claims (other than claims for benefits in the ordinary course), lawsuits or
arbitrations that have been asserted or instituted against the Plans, any
fiduciaries thereof with respect to their duties to the Plans or the assets of
any of the trusts under any of the Plans that would reasonably be expected to
result in any material liability of the Company, any of its Subsidiaries or any
of their respective ERISA Affiliates to the Pension Benefit Guaranty
Corporation, the Department of Treasury, the Department of Labor, any
Multiemployer Plan, or any Plan participant or beneficiary. Except as set forth
in Section 3.15(j) of the Company Disclosure Schedule, no Plan is, or within the
last three (3) years has been, the subject of examination or audit by a
governmental authority or a participant in a government sponsored amnesty,
voluntary compliance or similar program.
(k) No Plan is subject to the laws of any jurisdiction outside of the
United States. Neither the Company nor any of its Subsidiaries has any employees
who are based outside of the United States.
(l) Neither the Company nor any Plan fiduciary has engaged in any
transaction in violation of Sections 404 or 406 of ERISA or any "prohibited
transaction," as defined in Section 4975(c)(1) of the Code, for which no
exemption exists under Section 408 of ERISA or Section 4975(c)(2) or (d) of the
Code. Neither the Company nor any ERISA Affiliate has knowingly participated in
a violation of Part 4 of Title I, Subtitle B of ERISA by any plan fiduciary of
any Plan and has no unpaid civil penalty under Section 502(l) of ERISA.
(m) The Company may terminate, suspend, or amend each Plan at any time
(except to the extent otherwise restricted by Section 4980B of the Code) without
the consent of the participants or employees covered by such Plan. Neither the
Company nor any ERISA Affiliate has announced any intention, made any amendment
or binding commitment, or given any written or oral notice providing that the
Company or an ERISA Affiliate (i) will create additional Plans covering
employees of the Company or any Subsidiary, (ii) will increase benefits promised
or provided pursuant to any Plan, or (iii) will not exercise after the Closing
Date any right or power it may have to terminate, suspend or amend any Plan,
except as may be required by law.
(n) The Company and each Plan has properly classified individuals
providing services to the Company or its Subsidiaries as independent contractors
or as employees, as the case may be.
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Section 3.16 Compliance with Laws; Permits.
(a) Compliance with Laws. Except as disclosed in Section 3.16(a) of
the Company Disclosure Schedule or in the Company SEC Documents filed and
publicly available prior to the date hereof and except for such violations and
failures to comply that individually or in the aggregate have not had, and would
not reasonably be expected to have, a Company Material Adverse Effect or a
material adverse impact on the ability of the Company to consummate the
transactions contemplated by this Agreement: (i) the Company and each of its
Subsidiaries has conducted its business and is in compliance with all Orders and
Laws applicable thereto and (ii) no notice, Action or assertion has been
received by the Company or any of its Subsidiaries or, to the knowledge of the
Company, has been filed, commenced or threatened against the Company or any of
its Subsidiaries alleging any violation of any Law applicable to them or by
which their respective properties are bound or affected.
(b) Company Permits. The Company and each of its Subsidiaries hold all
licenses, franchises, permits, certificates, approvals and authorizations from
Governmental Authorities necessary for the lawful conduct of their respective
businesses and the lawful ownership, occupancy and operation of the Real
Property (collectively, the "Company Permits"), except where the failure to hold
the same individually or in the aggregate has not had and would not reasonably
be expected to have a Company Material Adverse Effect. Section 3.16(b) of the
Company Disclosure Schedule sets forth a true and complete list of the Company
Permits. Except as, individually or in the aggregate, would not reasonably be
expected to have a Company Material Adverse Effect, the Company and its
Subsidiaries are in compliance with the terms of all Company Permits and neither
the Company nor any of its Subsidiaries has received written notice from any
Governmental Authority that the Company or any of its Subsidiaries is or may
become a party to or subject to any proceeding seeking to revoke, suspend or
otherwise limit any such Company Permit.
(c) Non-Exclusion. None of the Company, its Subsidiaries that
participate in a Federal health care program (as that term is defined under 42
U.S.C. Section 1320a-7b(f)) or state health care program, or officers,
directors, managing employees, or direct or indirect owners of 5% or more of the
Company or Subsidiaries that participate in a Federal health care program or
state health care program have been or are currently excluded pursuant to 42
U.S.C. Section 1320a-7 or similar state exclusion authority, debarred, or
otherwise ineligible to participate in any Federal health care program or state
health care programs, have been convicted of any criminal offense that may lead
to exclusion under 42 U.S.C. Section 1320a-7 or other similar state exclusion
authority, have been charged by indictment or information with any criminal
offense as described above, or are or have been under investigation for or
engaged in any activity which may result in exclusion from participation in any
Federal health care program or state health care program.
Section 3.17 Environmental Matters. Except as disclosed in Section
3.17 of the Company Disclosure Schedule and except individually or in the
aggregate as have not had, or would not reasonably be expected to have, a
Company Material Adverse Effect, (a) each of the Company and its Subsidiaries
is, and at all times prior was, in compliance with all applicable Environmental
Laws and Environmental Permits except for instances of non-compliance that have
been resolved prior to the date of this Agreement, (b) no notice, notification,
demand, request for information, citation, summons or Order has been received
by, no complaint has been
-23-
filed against or received, no penalty has been assessed against, and
no Action is pending or, to the Company's knowledge, threatened by any Person
against, the Company or any of its Subsidiaries with respect to any matters
relating to or arising out of any Environmental Law that has not been resolved
prior to the date of this Agreement, (c) no Hazardous Substance has been
discharged, disposed of, arranged to be disposed of, dumped, injected, pumped,
deposited, spilled, leaked, emitted, released or threatened to be released at,
on, under, to or from any property or facility now or previously owned, leased
or operated by the Company or any of its Subsidiaries and no person has been
exposed to any Hazardous Substance at any such location that, to the knowledge
of the Company, has resulted or is reasonably expected to result in a claim
against the Company or any of its Subsidiaries, (d) there are no Environmental
Liabilities, (e) each of the Company and its Subsidiaries has obtained and holds
all required Environmental Permits, and each such Environmental Permit will
remain valid and effective after the Closing without any notice to or consent of
any Governmental Authority, (f) neither the Company nor its Subsidiaries has
transported or arranged for the treatment, storage, handling, disposal, or
transportation of any Hazardous Substance to any off site location which could
result in an Environmental Liability, (g) no property or facility now or
previously owned, leased or operated by the Company or any of its Subsidiaries
is a current or proposed Environmental Clean-up Site, (h) there are no (i)
underground storage tanks, active or abandoned, (ii) polychlorinated biphenyl
containing equipment, or (iii) asbestos containing materials which are not in
compliance with all applicable Environmental Laws at any property or facility
now or previously owned, leased or operated by the Company or any of its
Subsidiaries, (i) neither the Company nor its Subsidiaries has, either expressly
or by operation of law, assumed responsibility for or agreed to indemnify or
hold harmless any Person for any liability or obligation, arising under or
relating to Environmental Laws, including but not limited to, any obligation for
investigation, corrective or remedial action and (j) during the last ten (10)
years there have been no environmental investigations, studies, audits, tests,
reviews or other analyses conducted by or on behalf of, and which are in the
possession of the Company or its Subsidiaries (or any representatives or
advisors thereof) with respect to any property or facility now or previously
owned, leased or operated by the Company or any of its Subsidiaries which have
not been made available to the Parent prior to execution of this Agreement. The
transactions contemplated by this Agreement do not require the preparation,
delivery or filing pursuant to the Indiana Responsible Property Transfer Law,
Ind. Code Section 13-25-3-1, et seq. (the "RPTL") of any "disclosure documents"
as defined under the RPTL. For purposes of this Section, the terms "Company" and
its "Subsidiaries" shall include any entity which is, in whole or in part, a
predecessor of the Company or any of its Subsidiaries.
As used in this Agreement, the term "Environmental Laws" means any and
all federal, state and local Law (including common law), Order or any agreement
with any Governmental Authority or other third party, relating to human health
and safety (including worker health and safety), the environment, natural
resources or to Hazardous Substances (including the exposure of any Person to
Hazardous Substances), pollutants, contaminants, wastes or chemicals or toxic,
radioactive, ignitable, corrosive, reactive or otherwise hazardous substances,
wastes or materials.
As used in this Agreement, the term "Environmental Liabilities" means
any and all liabilities or obligations of or relating to the Company or any of
its Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise,
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which (i) arise under or relate to matters covered by Environmental Laws and
(ii) arise from or relate to actions occurring or conditions existing on or
prior to the Closing Date.
As used in this Agreement, the term "Hazardous Substances" means any
pollutant, contaminant, waste or chemical or any toxic, radioactive, corrosive,
reactive or otherwise hazardous substance, waste or material, or any substance
having any constituent elements displaying any of the foregoing characteristics,
including petroleum, its derivatives, by-products and other hydrocarbons,
asbestos or asbestos containing materials, polychlorinated biphenyls, mold, lead
containing materials, radioactive material, or any substance, waste or material
regulated under any Environmental Laws.
As used in this Agreement, "Environmental Clean-up Site" means any
location which is listed or proposed for listing on the National Priorities
List, the Comprehensive Environmental Response, Compensation and Liability
Information System, or on any similar state list of sites requiring
investigation or cleanup, or which is the subject of any pending or threatened
action, suit, proceeding, or investigation related to or arising under any
Environmental Law.
As used in this Agreement, "Environmental Permit" means any federal,
state or local permits, licenses, approvals, consents or authorizations required
or issued by any Governmental Authority under or in connection with any
Environmental Law, including without limitation, any and all Orders, consent
orders or binding agreements issued by or entered into with a Governmental
Authority under any applicable Environmental Law.
Section 3.18 Company Material Contracts. All Company Material
Contracts are legal, valid and binding and in full force and effect, except to
the extent they have previously expired in accordance with their terms, and are
enforceable by the Company and its Subsidiaries in accordance with their
respective terms. Except as set forth in Section 3.18 of the Company Disclosure
Schedule, the Company and its Subsidiaries have performed in all material
respects all respective obligations required to be performed by them to date
under the Company Material Contracts and are not (with or without the lapse of
time or the giving of notice, or both) in breach or default in any material
respect thereunder and, to the knowledge of the Company, no other party to any
of the Company Material Contracts is (with or without the lapse of time or the
giving of notice, or both) in breach or default in any material respect
thereunder. Except as set forth in Section 3.18 of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries has received any
written communication from any party to a Company Material Contract or on behalf
of any such party that either the Company or any of its Subsidiaries is in
default under a Company Material Contract or such party intends to cancel,
terminate or fail or renew such Company Material Contract. Section 3.18(a) of
the Company Disclosure Schedule contains a complete and correct a list of all
the Company Material Contracts. True and correct copies of the Company Material
Contracts have been made available to Parent.
(a) As used in this Agreement, the term "Company Material Contract"
means:
(i) any "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC) with respect to the Company and
its Subsidiaries;
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(ii) any Contract (other than a Contract described in one of the
other provisions of this definition without regard to any percentage or
numerical limitation contained therein) that involved annual expenditures
during the Company's fiscal year ended April 1, 2006 by the Company or any
of its Subsidiaries in excess of $1,500,000 and that is not otherwise
cancelable by the Company or such Subsidiary without any financial or other
penalty on 180-days' or less notice;
(iii) any Contract that contains any restriction on the ability
of the Company or any of its Subsidiaries to compete or to provide any
products or services generally (other than restrictions on the provision of
products and services under supply agreements that only allow the Company
to sell one brand of product) versus another or in any market segment or
any geographic area or that would obligate the Company or any of its
Subsidiaries or affiliates to provide its services or products to a
counterparty on terms at least as favorable to such counterparty as, or
otherwise by comparison to, those which are offered to any other
counterparty;
(iv) any Contract or arrangement (other than between or among the
Company or any direct or indirect wholly owned Subsidiaries of the Company)
under which the Company or any of its Subsidiaries has (A) incurred any
indebtedness for borrowed money that is currently outstanding or (B) given
any guarantee in respect of indebtedness for borrowed money;
(v) any Contract or license pursuant to which the Company obtains
any Company Intellectual Property that are necessary for the marketing,
distribution or sale of any of its products or pursuant to which the
Company has granted exclusive rights to any Company Intellectual Property;
(vi) any material partnership or joint venture agreement (without
regard to legal form) to which the Company or any of its Subsidiaries is a
party; and
(vii) any Contract which is reasonably likely to prohibit or
materially delay the consummation of the transactions contemplated by this
Agreement.
(b) Section 3.18(b) of the Company Disclosure Schedule identifies each
executive officer and each other officer of the Company or its Subsidiaries, who
has entered into a non-compete agreement in favor of the Company or the
respective Subsidiary, as applicable.
Section 3.19 Finders' Fees. Except as set forth in Section 3.19 of the
Company Disclosure Schedule, no investment banker, broker, finder, other
intermediary or other Person is entitled to any fee or commission from the
Company or any of its Subsidiaries in connection with the consummation of the
transactions contemplated by this Agreement, other xxxx Xxxxxxx Xxxxx & Co. and
Xxxxx X. Xxxxxxx Company, a copy of whose engagement agreements have been
provided to Parent. The Company has not agreed to pay any discretionary fees or
commissions to Xxxxxxx Xxxxx & Co. or Xxxxx X. Xxxxxxx Company pursuant to such
engagement letters.
Section 3.20 Opinions of Financial Advisors. The Company has received
the written opinions of Xxxxxxx Xxxxx & Co. and Xxxxx X. Xxxxxxx Company, each
dated as of the date hereof
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to the effect that, as of the date of such opinions, the Merger Consideration to
be received by the holders of shares of Company Common Stock in connection with
the Merger is fair from a financial point of view to such holders.
Section 3.21 Takeover Statutes; Rights Plan. (a) No "fair price,"
"moratorium," "control share acquisition" or other similar Indiana anti-takeover
statute or regulation or any anti-takeover provision in the Company's articles
of incorporation or by-laws is applicable to the Merger or the other
transactions contemplated by this Agreement. The Board of Directors of the
Company has taken all action so that Parent and Sub will not be prohibited from
entering into a "business combination" (as such term is used in Section 23-1-43
of the IBCL) with the Company as a result of the execution of this Agreement or
the consummation of the transactions contemplated hereby.
(b) The Company has taken all actions necessary to render the Rights
Plan inapplicable to this Agreement, the Merger and the other transactions
contemplated by this Agreement.
Section 3.22 Transactions with Affiliates. Except as set forth in
Section 3.22 of the Company Disclosure Schedule or in the Company SEC Documents,
there are no Contracts or transactions between the Company or any of its
Subsidiaries, on the one hand, and any (a) executive officer or director of the
Company or any of its Subsidiaries, (b) record or beneficial owner of ten
percent (10%) or more of the voting securities of the Company or (c) affiliate
of any such executive officer, director or record or beneficial owner, on the
other hand, in each case which are required to be disclosed under Item 404 of
Regulation S-K promulgated under the Exchange Act, except those of a type
available to employees of the Company generally.
Section 3.23 Labor Matters. (a) Except as set forth in Section 3.23(a)
of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries is a party to or otherwise bound by any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
other labor organization. Neither is the Company or any of its Subsidiaries the
subject of any material proceeding asserting that the Company or any of its
Subsidiaries has committed an unfair labor practice or seeking to compel any of
them to bargain with any labor union or other labor organization nor has there
been since January 1, 2000 or is there pending or, to the knowledge of the
Company, threatened any labor strike, dispute, walk-out, work stoppage,
slow-down or lockout involving the Company or any of its Subsidiaries.
(b) Since January 1, 2000, none of the Company nor any of its
Subsidiaries has taken any action that would constitute a "mass layoff," "mass
termination" or "plant closing" within the meaning of the United States Worker
Adjustment and Retraining Notification Act or would otherwise trigger notice
requirements or liability under any federal, local, state or foreign plant
closing notice or collective dismissal Law.
(c) The Company and its Subsidiaries are in compliance, in all
material respects, with all applicable laws relating to employment and
employment practices, terms and conditions of employment, wages and hours,
occupational safety and health, and immigration.
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(d) Except as set forth in Section 3.23(d) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries is subject to any
pending or unremedied grievances or pending or unremedied unfair labor practices
that, individually or in the aggregate, would reasonably be expected to result
in any material liability of the Company. In addition, except as set forth in
Section 3.23(d) of the Company Disclosure Schedule, neither the Company nor any
of its Subsidiaries has received notice of any charge or complaint, or
threatened charge or complaint, against it before the Equal Employment
Opportunity Commission or the Department of Labor or any state or local agency
of similar jurisdiction that, individually or in the aggregate, would reasonably
be expected to result in any material liability of the Company.
Section 3.24 10b-5. No representation or warranty contained in this
Article III or in the Company Disclosure Schedule contains any untrue statement
of a material fact or omits to state a material fact necessary in order to make
the statements made herein or therein, in light of the circumstances in which
they were made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub jointly and severally represent and warrant to the
Company as set forth below.
Section 4.1 Organization and Power. Parent is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware, and has the requisite corporate or other power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted. Sub is duly organized and validly existing under the Laws of the
State of Indiana. Parent is duly qualified or licensed to do business and is 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 individually or in the aggregate has
not had and would not reasonably be expected to have a Parent Material Adverse
Effect.
As used in this Agreement, the term "Parent Material Adverse Effect"
means, when used with reference to one or more events, changes, circumstances or
effects, a material adverse effect on the business, operations, assets,
liabilities or financial condition of Parent and its Subsidiaries taken as a
whole.
Section 4.2 Corporate Authorization. Each of Parent and Sub has all
necessary power and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution, delivery and performance by Parent and Sub of this Agreement and
the consummation by Parent and Sub of the transactions contemplated hereby have
been duly authorized by all necessary corporate action, including by resolution
of the Board of Directors of Parent and Sub, and have been adopted by Parent as
the sole shareholder of Sub. No vote of any class or series of Parent's capital
stock and no further vote of any capital stock of Sub is necessary in connection
with the execution of this Agreement
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and the consummation of the transactions contemplated hereby. This Agreement has
been duly executed and delivered by each of Parent and Sub and, assuming the due
authorization, execution and delivery by the Company, constitutes a valid and
binding agreement of each of Parent and Sub, enforceable against Parent and Sub,
as applicable, in accordance with its terms (subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and other similar
Laws affecting creditors' rights generally from time to time in effect and to
general principles of equity, good faith and fair dealing, regardless of whether
in a proceeding at equity or at Law).
Section 4.3 Governmental Authorization. The execution, delivery and
performance by Parent and Sub of this Agreement, and the consummation by Parent
and Sub of the transactions contemplated hereby, require no action by or in
respect of, or filing with, any Governmental Authority other than: (a) the
filing of the Articles of Merger with respect to the Merger with the Secretary
of State of the State of Indiana and appropriate documents with the relevant
authorities of other states in which Sub is qualified to do business; (b)
compliance with any applicable requirements of the HSR Act; (c) such consents,
approvals, Orders, authorizations, registrations, declarations, filings and
notices as may be required under the Securities Act and the Exchange Act in
connection with this Agreement and the transactions contemplated by this
Agreement; (d) filings and notices not required to be made or given until after
the Effective Time; and (e) such other consents, approvals, Orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made individually or in the aggregate would not reasonably be
expected to impair the ability of Parent or Sub to perform their obligations
hereunder, or prevent, impede, interfere with or hinder or delay the
consummation of the transactions contemplated hereby.
Section 4.4 Non-Contravention. The execution, delivery and performance
by Parent and Sub of this Agreement do not, and the consummation by Parent and
Sub of the transactions contemplated hereby will not: (a) contravene or conflict
with any provision of each of Parent's and Sub's certificate or articles of
incorporation and by-laws; (b) assuming compliance with the matters referred to
in Section 4.3, contravene or conflict with or constitute a violation of any
provision of any Law or Order binding upon or applicable to Parent or Sub; (c)
constitute a default (or an event which with notice, the lapse of time or both
would become a default) under or give rise to a right of termination,
cancellation or acceleration of any right or obligation of Parent or Sub under
(i) any provision of any material Contract binding upon Parent or Sub or (ii)
any material license, franchise, or permit held by Parent or Sub; or (d) result
in the creation or imposition of any Lien on any asset of Parent or Sub; other
than, in the case of clauses (b), (c) or (d), any such contraventions,
conflicts, violations, defaults, rights of termination, cancellation or
acceleration or Liens that individually or in the aggregate would not reasonably
be expected to impair the ability of Parent or Sub to perform their obligations
hereunder, or prevent, impede, interfere with or hinder or delay the
consummation of the transactions contemplated hereby.
Section 4.5 Information Supplied. None of the information supplied or
to be supplied by Parent or Sub expressly for inclusion or incorporation by
reference in the Proxy Statement or any amendment or supplement thereto will
contain, at the date the Proxy Statement or any amendment or supplement thereto
is first mailed to shareholders of the Company and at the time of the
Shareholders Meeting, any untrue statement of a material fact or omit to state
any
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material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
Section 4.6 Litigation. As of the date of this Agreement, there is no
action, suit, investigation or proceeding pending against, or to the knowledge
of Parent, threatened against or affecting, Parent or any of its Subsidiaries or
any of their respective properties which, individually or in the aggregate,
would reasonably be expected to impair the ability of Parent or Sub to perform
their obligations hereunder, or prevent, impede, interfere with or hinder or
delay the consummation of the transactions contemplated hereby. For purposes of
this Agreement, "knowledge of Parent" means the actual knowledge of the
executive officers of Parent.
Section 4.7 Finders' Fees. The Company will not be responsible for any
fee or commission to any investment banker, broker, finder, other intermediary
or other Person upon consummation of the transactions contemplated by this
Agreement based on arrangements made by or on behalf of Parent or Sub.
Section 4.8 Sub. Sub is a newly-formed and indirect wholly-owned
Subsidiary of Parent. Each of Parent and Sub was formed solely for the purpose
of engaging in the transactions contemplated by this Agreement, and has not,
other than in connection with the transactions contemplated hereby or thereby
and other than those incidental to its organization and maintenance of corporate
existence, (i) engaged in any business activities, (ii) conducted any
operations, (iii) incurred any liabilities or (iv) owned any assets or property.
Section 4.9 Share Ownership. Neither Parent nor Sub nor any of their
respective affiliates own, beneficially or of record, directly or indirectly,
any outstanding shares of Company Common Stock.
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company. The Company covenants
and agrees that, except (i) as expressly provided in this Agreement, (ii) with
the prior written consent of Parent or (iii) as set forth on Section 5.1 of the
Company Disclosure Schedule, after the date hereof and prior to the Effective
Time:
(a) the business of the Company and its Subsidiaries shall be
conducted in the ordinary course of business consistent with past practice and
each of the Company and its Subsidiaries shall use commercially reasonable
efforts to preserve its business organization intact and maintain its existing
relations with material customers, suppliers, employees, creditors and business
partners;
(b) the Company shall not, directly or indirectly, split, combine or
reclassify the outstanding Company Common Stock, or any outstanding capital
stock of any of the Subsidiaries of the Company;
(c) neither the Company nor any of its Subsidiaries shall: (i) amend
or propose to amend its articles of incorporation or organization or by-laws or
operating agreements
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or similar organizational documents or the Rights Plan; (ii) declare, set aside
or pay any dividend or other distribution payable in cash, stock or property
with respect to its capital stock other than dividends paid by the Company's
wholly owned Subsidiaries to the Company or its wholly owned Subsidiaries; (iii)
issue, sell, transfer, pledge, dispose of or encumber any additional shares of,
or securities convertible into or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of capital stock of any
class of the Company or its Subsidiaries, other than issuances pursuant to
exercises of Company Stock Options or as may be required under the Rights Plan;
(iv) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber
any assets other than the disposal of assets in the ordinary course consistent
with past practice; or (v) redeem, purchase or otherwise acquire directly or
indirectly any of its capital stock;
(d) neither the Company nor any of its Subsidiaries shall: (i) grant
any increase in the compensation (whether annual base salary or wages or bonus
opportunities or amounts) payable or to become payable by the Company or any of
its Subsidiaries to any Company employee (excluding executive officers who shall
be given no increases) other than scheduled annual merit increases in annual
base salary or wages in the ordinary course of business consistent with past
practice; (ii) except to the extent currently required under applicable Law or
the terms of the applicable Plan disclosed in Section 3.15(b) of the Company
Disclosure Schedule, adopt or enter into any new, or amend or otherwise increase
or terminate, or accelerate the payment or vesting of the amounts payable or to
become payable under any Plan; (iii) hire any new officers, executives or
employees at or above the level of vice president (except to replace an officer,
executive or employee) or terminate the employment of any officers, executives
or employees at or above the level of vice president (except for cause), or
promote any officers, executives or employees at or above the level of vice
president (except to replace an officer, executive or employee);
(e) neither the Company nor any of its Subsidiaries shall cancel or
terminate any material insurance policy naming it as a beneficiary or a loss
payable payee, except in the ordinary course of business;
(f) neither the Company nor any of its Subsidiaries shall: (i) incur
or assume any debt except for borrowings under existing revolving credit
facilities in an amount not to exceed $95 million in principal at any one time
outstanding; (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for any material
obligations of any Person (other than the Company or one of its wholly-owned
Subsidiaries); (iii) make any loans, advances or capital contributions to, or
investments in, any other Person (other than to wholly owned Subsidiaries of the
Company or customary loans or advances to non-officer employees in accordance
with past practice); or (iv) make any material capital expenditure or commitment
therefor other than in the ordinary course of business consistent with past
practice and in accordance the Company's budgeted capital expenditures for
fiscal years 2006 and 2007 as previously provided to Parent;
(g) neither the Company nor any of its Subsidiaries shall change any
of the accounting methods, policies, procedures, practices or principles used by
it unless required by GAAP or the SEC;
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(h) neither the Company nor any of its Subsidiaries will adopt a plan
of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other material reorganization of the Company
or any of its Subsidiaries other than the Merger and other than as permitted by
Section 5.6 or 5.16;
(i) neither the Company nor any of its Subsidiaries shall merge or
consolidate with any other Person (other than as permitted by Section 5.6 or
5.16) or acquire assets or capital stock of any Person (other than the
acquisition of inventory in the ordinary course of business consistent with past
practice);
(j) neither the Company nor any of its Subsidiaries will engage in any
transaction with, or enter into any agreement, arrangement, or understanding
with, directly or indirectly, any of the Company's affiliates, including,
without limitation, any transactions, agreements, arrangements or understandings
with any affiliate or other Person covered under Item 404 of Regulation S-K
under the Securities Act that would be required to be disclosed under such Item
404 other than such transactions of the same general nature, scope and magnitude
as are disclosed in the Company SEC Documents;
(k) neither the Company nor any of its Subsidiaries shall enter into
any joint venture, partnership or other similar arrangement;
(l) neither the Company nor any of its Subsidiaries shall (i) enter
into any Contract that if existing on the date hereof would be a "Company
Material Contract" other than Contracts with suppliers and customers in the
ordinary course consistent with past practice, (ii) terminate, amend, supplement
or modify in any material respect any Company Material Contract to which the
Company or any of its Subsidiaries is a party, (iii) waive, release, cancel,
allow to lapse, convey, encumber or otherwise transfer any material rights or
claims thereunder, (iv) change incentive policies or payments under any Company
Material Contracts existing on the date hereof or entered into after the date
hereof, or (v) enter into any Contract relating to the disposition of assets
and/or capital stock except as permitted by Section 5.6;
(m) neither the Company nor any of its Subsidiaries shall settle or
compromise any (i) material Action, whether administrative, civil or criminal,
in law or in equity or (ii) any claim under any insurance policy for the benefit
of the Company or any of its Subsidiaries;
(n) neither the Company nor any of its Subsidiaries shall waive or
fail to enforce any provision of any confidentiality agreement or standstill or
similar agreement to which it is a party;
(o) neither the Company nor any of its Subsidiaries shall make or
change any elections with respect to Taxes, amend any Tax Returns, change any
annual Tax accounting period, adopt or change any Tax accounting method, enter
into any closing agreement, settle or compromise any proceeding with respect to
any Tax claim or assessment, surrender any right to claim a refund of Taxes,
consent to any extension or waiver of the limitation period applicable to any
Tax claim or assessment relating to the Company or any of its Subsidiaries, or
take any other similar action relating to the filing of any Tax Return or the
payment of any Tax;
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(p) neither the Company nor any of its Subsidiaries shall pay,
discharge or satisfy any claim, liability or obligation (including contingent
claims, liabilities and obligations), other than in the ordinary course of
business consistent with past practice;
(q) neither the Company nor any of its Subsidiaries shall enter into
any material line of business other than the line of business in which the
Company and its Subsidiaries is currently engaged as of the date of this
Agreement;
(r) neither the Company nor any of its Subsidiaries shall open or
close a store or other business location (other than those listed on Section
5.1(r) of the Company Disclosure Schedule); and
(s) neither the Company nor any of its Subsidiaries will enter into an
agreement, contract, commitment or arrangement to do any of the foregoing, or to
authorize, recommend, propose or announce an intention to do any of the
foregoing (other than with respect to clause (a) above).
Section 5.2 Access to Information. The Company shall (and shall cause
each of its Subsidiaries to) afford to the officers, employees, accountants,
counsel, financing sources and other representatives of Parent, reasonable
access (including for the purposes of conducting environmental assessments),
during normal business hours upon reasonable notice, during the period prior to
the Effective Time, to all of its and its Subsidiaries' properties, books,
contracts, commitments and records (including any Tax Returns or other Tax
related information pertaining to the Company and its Subsidiaries) and, during
such period, the Company shall (and shall cause each of its Subsidiaries to)
furnish promptly to Parent (a) a copy of each report, schedule, registration
statement and other document filed or received by it during such period pursuant
to the requirements of the federal securities Laws and (b) all other information
concerning its business, properties and personnel as Parent may reasonably
request, including not denying access to any third party reasonably requested by
Parent. Parent will hold any such information which is nonpublic in confidence
in accordance with the provisions of the existing confidentiality agreement
between the Company and Parent, dated November 14, 2005, as amended (the
"Confidentiality Agreement").
Section 5.3 Reasonable Best Efforts.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use its reasonable best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary to
consummate and make effective, in the most expeditious manner practicable, the
Merger and the other transactions contemplated by this Agreement.
(b) The Company and Parent will use reasonable best efforts to: (i)
prepare, as soon as practicable, all filings and other presentations in
connection with seeking any regulatory approval, exemption or other
authorization from any Governmental Authority necessary to consummate the
transactions contemplated hereby; (ii) prosecute such filings and other
presentations with diligence; and (iii) oppose any objections to, appeals from
or petitions to reconsider or reopen any such approval by Persons not party to
this Agreement. The Company
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and Parent will use reasonable best efforts to facilitate obtaining any final
order or orders approving such transactions, consistent with this Agreement
and/or to remove any impediment to the consummation of the transactions
contemplated hereby. Company and Parent will use reasonable best efforts to
furnish all information in connection with the approvals of or filings with any
Governmental Authority and will promptly cooperate with and furnish information
in connection with any such requirements imposed upon Parent or any of its
affiliates in connection with this Agreement and the transactions contemplated
hereby. Parent will use reasonable best efforts to obtain any consent,
authorization, order or approval of, or any exemption by, and to remove any
impediment imposed by any Governmental Authority to allow the consummation of
the transactions contemplated hereby. Parent and the Company will each advise
the other party promptly of any material communication received by such party or
any of its affiliates from the Federal Trade Commission, Department of Justice,
any state attorney general or any other Governmental Authority regarding any of
the transactions contemplated hereby, and of any understandings, undertakings or
agreements (oral or written) such party proposes to make or enter into with the
Federal Trade Commission, Department of Justice, any state attorney general or
any other Governmental Authority in connection with the transactions
contemplated hereby. Parent and the Company will each consult with the other in
advance of any material meetings with the Federal Trade Commission.
(c) In furtherance and not in limitation of Sections 5.3(a) and (b),
each of Parent and the Company shall make an appropriate filing of a
Notification and Report Form pursuant to the HSR Act with respect to the
transactions contemplated hereby as promptly as practicable after the date
hereof, which filings shall specifically request early termination of the
waiting period prescribed by the HSR Act, and thereafter make any other required
submissions with respect to the transactions contemplated hereby under the HSR
Act and to take all other appropriate actions reasonably necessary, proper or
advisable to cause the expiration or termination of the applicable waiting
periods under the HSR Act as soon as practicable.
(d) Notwithstanding the foregoing, Parent shall promptly take, in
order to consummate the transactions contemplated by this Agreement, all actions
necessary (i) to secure the expiration or termination of any applicable waiting
period under the HSR Act (the "HSR Clearance") and/or to resolve any objections
asserted by any Governmental Authority with respect to the transactions
contemplated hereby under any antitrust Law or the Federal Trade Commission Act
(each, an "Objection"), and (ii) to prevent the entry of, and to have vacated,
lifted, reversed or overturned, any decree, judgment, injunction or other order
that would prevent, prohibit, restrict or delay the consummation of the
transactions contemplated hereby, in each case including (A) executing
settlements, undertakings, consent decrees, stipulations or other agreements
with any such party and (B) selling, divesting or otherwise conveying particular
assets or categories of assets or businesses of Parent and its affiliates.
Parent shall respond to and seek to resolve as promptly as practicable any
Objections that are raised. It is understood and agreed by the parties that, for
purposes of this Agreement, the effect of any action taken pursuant to this
Section 5.3(d) shall not, directly or indirectly, be deemed to result in a
breach of the representations and warranties set forth herein nor constitute a
Company Material Adverse Effect.
Section 5.4 Employee Matters. (a) For a period beginning at the
Effective Time and ending December 31, 2006, Parent shall either continue the
existing Plans of the
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Company (other than equity or equity-based plans) or shall provide, or cause the
Surviving Corporation to provide, benefits (excluding, for the avoidance of
doubt, any equity or equity-based awards) to employees of the Company and its
Subsidiaries under substitute plans or arrangements ("Parent Benefit Plans")
that are no less favorable in the aggregate to such employees than those
provided under such existing Plans (other than equity or equity-based plans).
Notwithstanding the foregoing, nothing in this Section is applicable to
Multiemployer Plans.
(b) With respect to any Parent Benefit Plan which is an "employee
benefit plan" as defined in Section 3(3) of ERISA, for purposes of determining
eligibility to participate in such plan, vesting of benefits and benefit accrual
(other than for purposes of any defined benefit pension plan) service with the
Company or any Subsidiary shall be treated as service with Parent or its
Subsidiaries; provided, however, that such service shall not be recognized to
the extent that such recognition would result in a duplication of benefits. Such
service also shall apply for purposes of satisfying any waiting periods,
evidence of insurability requirements or the application of any preexisting
condition limitations under any Parent Benefit Plan that is a welfare benefit
plan. Company employees also shall be given credit for amounts paid under a
corresponding Plan for purposes of applying deductibles, copayments and
out-of-pocket maximums as though such amounts had been paid in accordance with
the terms and conditions of any Parent Benefit Plan in which the Company
employees participate during any such plan year. In addition, Parent will, or
will cause the Company and its Subsidiaries to, credit each employee of the
Company and its Subsidiaries as of the Effective Time with such number of unused
vacation days and other paid time off accrued by each such employee prior to the
Effective Time in accordance with the Company's personnel policies applicable to
such employees on the date hereof.
(c) Following the Effective Time, Parent shall, and shall cause the
Surviving Corporation to, assume and honor all agreements set forth in Section
5.4 of the Company Disclosure Schedule to the extent of the respective terms of
such agreements.
(d) All provisions contained herein with respect to Company employees,
Plans, agreement and any rights thereunder shall not create any right to
continued employment of any Company employee with the Surviving Corporation
after the Effective Time.
Section 5.5 No Solicitation. (a) The Company agrees that, during the
term of this Agreement, it shall not, nor shall it permit any of its
Subsidiaries to, nor shall it authorize or permit any of its or its
Subsidiaries' officers, directors, employees, investment bankers, attorneys,
accountants, agents or other advisors or representatives (collectively,
"Representatives"), directly or indirectly, to:
(i) solicit, initiate or otherwise facilitate (including by way
of furnishing information) or encourage the making by any Person (other
than the other parties hereto) of any proposal, offer or inquiry (including
any proposal from or offer to the Company's shareholders) that constitutes,
or could reasonably be expected to lead to, a proposal for any merger,
reorganization, share exchange, tender offer, exchange offer,
consolidation, recapitalization, liquidation, dissolution, joint venture or
other business combination involving the Company or any of its Subsidiaries
and such Person, or any
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purchase or sale of 10% or more of the capital stock or 10% or more of the
assets of the Company and its Subsidiaries taken as a whole (in each case,
a "Competing Transaction");
(ii) participate in any discussions or negotiations regarding, or
furnish or disclose to any Person any information with respect to or in
furtherance of, or take any other action to facilitate any inquiries with
respect to a Competing Transaction or a proposal, inquiry or offer that
could reasonably lead to a Competing Transaction; or
(iii) execute or enter into any agreement, understanding or
arrangement with respect to any Competing Transaction, or publicly propose
to accept or enter into, any letter of intent, agreement in principle,
merger agreement or other Contract relating to a Competing Transaction, or
approve or recommend or propose to approve or recommend any Competing
Transaction or any agreement, understanding or arrangement relating to any
Competing Transaction (or resolve or authorize or propose to agree to do
any of the foregoing actions);
provided, however, that at any time prior to the Shareholders Meeting:
(b) (i) the Company may take any action described in the foregoing
clause (ii) in respect of any Person, but only if (A) such Person has delivered
an unsolicited bona fide written proposal for a Competing Transaction (under
circumstances in which the Company has complied with its obligations pursuant to
this Section 5.5) that, in the good faith judgment of the Company's Board of
Directors (or any authorized committee thereof), after consultation with its
financial advisors, is a Superior Proposal or is reasonably likely to be a
Superior Proposal, (B) the Board of Directors of the Company (or any authorized
committee thereof), determines in good faith based upon the advice of counsel,
that failure to do so would be a breach of its fiduciary duties under applicable
Law, and (C) the Company gives Parent and Sub at least three business days'
prior written notice of the identity of such Person, the terms and conditions of
such proposal and the Company's intention to take any action described in the
foregoing clause (ii) of Section 5.5(a); provided, further, that (1) prior to
the Company furnishing any confidential information to such Person, such Person
shall have entered into a confidentiality agreement with the Company in
substance substantially similar to and no more favorable to such Person than the
Confidentiality Agreement, which shall include customary standstill provisions,
(2) a copy of any confidential information provided to such Person that has not
previously been delivered to Parent is delivered to Parent simultaneously with
delivery to such Person, and (3) the Company shall promptly (but in any event
within 24 hours) notify Parent in writing of any such inquiries, proposals or
offers received by, any such information requested from, or any such discussions
or negotiations sought to be initiated or continued with, the Company or any of
its Representatives indicating, in connection with such notice, the name of such
Person and the terms and conditions of any inquiries, proposals or offers, and
shall keep Parent informed on a current basis as to the status thereof and of
any modifications to such inquiries, proposals or offers (the Company agreeing
that it and its Subsidiaries will not enter into any confidentiality agreement
with any Person subsequent to the date of this Agreement which prohibits the
Company from providing such information to Parent);
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(ii) the Company may enter into any agreement or arrangement
(other than a confidentiality agreement, which may be entered into if the
conditions of clause (b)(i) above have been met) regarding any such
Competing Transaction, the Company's Board of Directors (or any authorized
committee thereof) may approve or recommend to its shareholders (or resolve
to do so), or publicly propose to approve or recommend to its shareholders
an unsolicited bona fide written proposal for a Competing Transaction or
make a Non-Recommendation Determination in connection with a Superior
Proposal, but only if (A) the Company and its Subsidiaries have complied
with their obligations under this Section 5.5, (B) the Company's Board of
Directors shall have determined in good faith, following consultation with
legal counsel and the Company's financial advisor, that (i) such Competing
Transaction is a Superior Proposal, and (ii) failure to take such action
would be a breach of its fiduciary duties under applicable law, (C) the
Company provides to Parent a written notice, to be delivered promptly, and
in any event within 24 hours, of the Company or any Representative becoming
aware of such Competing Transaction (a "Notice of Superior Proposal"), (i)
advising Parent that the Company's Board of Directors has received a
Superior Proposal, (ii) specifying the terms and conditions of such
Superior Proposal, including the amount per Share that the shareholders of
the Company will receive (valuing any non-cash consideration at what the
Board of Directors of the Company determines in it reasonable good faith
judgment, after consultation with its independent financial advisers, to be
the fair value of the non-cash consideration) and including a copy thereof
with all accompanying documentation, and (iii) identifying the Person
making such Superior Proposal, (D) the Company cooperates and negotiates in
good faith with Parent during the five business day period specified in the
immediately succeeding clause (E) to make such adjustments in the terms and
conditions of this Agreement as would enable the Company to proceed with
the Company Recommendation without a Non-Recommendation Determination, (E)
Parent does not, within five business days of Parent's receipt of the
Notice of Superior Proposal, make an offer that the Board of Directors of
the Company determines in its reasonable good faith judgment (based on the
advice of a financial adviser of nationally recognized reputation) to be as
favorable to the shareholders of the Company as such Superior Proposal, and
(F) in the event the Company intends to enter into any such agreement or
arrangement, the Company has previously terminated this Agreement pursuant
to Section 7.1(c)(ii) and paid the Company Termination Fee pursuant to
Section 7.3(b)(iv).
(iii) Without limiting the generality of the foregoing, the
Company acknowledges and agrees that, in the event any Representative
(whether or not such Representative is purporting to act on behalf of the
Company or any of its Subsidiaries) takes any action that, if taken by the
Company, would constitute a breach of this Section 5.5 by the Company, the
taking of such action by such Representative shall be deemed to constitute
a breach of this Section 5.5 by the Company for purposes of this Agreement.
The Company agrees that it will promptly inform its Subsidiaries and
Representatives of the obligations undertaken in this Section 5.5.
(c) Nothing contained in this Agreement shall limit the Company's
ability to comply in good faith, to the extent applicable, with Rules 14d-9 and
14e-2 of the Exchange Act with regard to a tender or exchange offer or to make
any disclosure that the Company's Board of Directors (or any authorized
committee thereof) determines in good faith upon the advice of
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counsel is required by applicable Law; provided, however, that neither the
Company nor the Company's Board of Directors (nor any committee thereof) shall
(i) recommend that the shareholders of the Company tender their Company Common
Stock in connection with any such tender or exchange offer (or otherwise approve
or recommend any Competing Transaction) or (ii) withdraw or modify the Company
Recommendation, unless in each case the requirements of this Section 5.5 shall
have been satisfied.
(d) As used in this Agreement, "Superior Proposal" means a bona fide,
written proposal by a third-party for a Competing Transaction not solicited in
violation of this Section 5.5 that is on terms that the Company's Board of
Directors (or any authorized committee thereof) determines in good faith, after
consultation with its counsel and financial advisors, would, if consummated,
result in a transaction that would be more favorable to the shareholders of the
Company from a financial point of view (taking into account the identity of the
offerer, the likelihood that the transaction will be consummated and all legal,
financial and regulatory aspects of the proposal, including the terms of any
financing) than the transactions contemplated by this Agreement; provided,
however, that to be a Superior Proposal, a Competing Transaction must result in
a third-party (or the shareholders of such third-party) acquiring, directly or
indirectly, Shares representing at least 100% of the economic and voting power
of the Company Common Stock (or the economic and voting power of the capital
stock of the surviving or ultimate parent entity in such transaction) or all or
substantially all of the assets of the Company and its Subsidiaries, taken as a
whole.
The Company will, and will cause its Subsidiaries and Representatives
to, cease and cause to be terminated immediately all existing discussions or
negotiations with any Persons conducted on or before the date hereof with
respect to any Competing Transaction.
Section 5.6 Shareholders Meeting.
(a) Shareholder Approval Process. Subject to the provisions of
Sections 5.5 and 7.1, the Company shall:
(i) take all action, in accordance with the U.S. federal
securities Laws, the IBCL, all other applicable Law and the Company Charter
Documents, necessary to duly call, give notice of, convene and hold a
special meeting of its shareholders as soon as practicable after the date
of this Agreement to consider and vote on the approval of this Agreement
and the Merger (the "Shareholders Meeting");
(ii) subject to Section 5.6(b), include in the Proxy Statement
the recommendation of the Company's Board of Directors that the
shareholders of the Company vote in favor of the approval of this Agreement
and the Merger (the "Company Recommendation"); and
(iii) use commercially reasonable efforts, in accordance with the
U.S. federal securities Laws, the IBCL and all other applicable Law, to
solicit from its shareholders entitled to vote thereon proxies to be voted
at the Shareholders Meeting sufficient under applicable Law to constitute
the Company Requisite Vote.
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(b) Non-Recommendation Determination. Neither the Board of Directors
of the Company nor any committee thereof shall, except pursuant to the terms and
subject to the conditions set forth in Section 5.5(b)(ii), (i)(A) withdraw or
qualify (or modify or amend in a manner adverse to Parent or Sub), or publicly
propose to withdraw or qualify (or modify or amend in a manner adverse to Parent
or Sub), the Company Recommendation or take any action or make any statement,
filing or release, in connection with the Shareholders Meeting or otherwise,
inconsistent with the Company Recommendation, or (B) recommend, adopt or
approve, or propose publicly to recommend, adopt or approve, any Competing
Transaction (any action described in this clause (i) being referred to herein as
a "Non-Recommendation Determination") or (ii) approve or recommend, or allow the
Company or any of the Company Subsidiaries to execute or enter into, any letter
of intent, memorandum of understanding, agreement in principle, merger
agreement, acquisition agreement, option agreement, joint venture agreement,
partnership agreement or other agreement constituting or related to any
Competing Transaction (other than a confidentiality agreement referred to in
Section 5.5(b)(i)).
Section 5.7 Additional Agreements. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its commercially
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable, whether under applicable
Laws and regulations or otherwise, or to remove any injunctions or other
impediments or delays, legal or otherwise, to consummate and make effective the
Merger and the other transactions contemplated by this Agreement. In case at any
time after the Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper officers and directors of
the Company, Parent and Sub shall use all reasonable efforts to take, or cause
to be taken, all such necessary actions.
Section 5.8 Publicity. So long as this Agreement is in effect, neither
the Company nor Parent nor their affiliates shall issue or cause the publication
of any press release or other public statement or announcement with respect to
this Agreement or the transactions contemplated hereby without prior consent of
the other party, except as may be required by Law or by obligations pursuant to
any listing agreement with a national securities exchange or Nasdaq, and in such
case shall use all reasonable efforts to consult with the other party prior to
such release or announcement being issued and give such other party a reasonable
period of time to comment upon such statement or announcement.
Section 5.9 Notification of Certain Matters. The Company shall give
prompt written notice to Parent, and Parent shall give prompt written notice to
the Company, of (a) the occurrence, or non-occurrence of any event the
occurrence or non-occurrence of which would cause any representation or warranty
of the Company or Parent and Sub, as the case may be, contained in this
Agreement to be untrue or inaccurate in any material respect at or prior to the
Effective Time and (b) any material failure of the Company or Parent, as the
case may be, to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this Section 5.9 shall not limit or otherwise
affect the remedies available hereunder to the party receiving such notice. In
addition, the Company shall give prompt notice to Parent of any communication
received by the Company or any of its Subsidiaries from, or on behalf of, any
party to a Company Material Contract that such party intends to cancel,
terminate or fail or renew such Company Material Contract.
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Section 5.10 Directors' and Officers' Insurance and Indemnification.
(a) Parent agrees that at all times after the Effective Time, it shall cause the
Company to indemnify each person who is now, or has been at any time prior to
the date hereof, a director or officer of the Company or of any of the Company's
Subsidiaries entitled to indemnification (individually an "Indemnified Party"
and collectively the "Indemnified Parties"), to the same extent and in the same
manner as is now provided in the respective articles of incorporation or
charters or by-laws of the Company and such Subsidiaries or by contract, or
otherwise in effect on the date hereof, with respect to any claim, liability,
loss, damage, judgment, fine, cost or expense, including reasonable attorneys'
fees and disbursements (whenever asserted or claimed) based in whole or in part
on, or arising in whole or in part out of, the fact that such person is or was a
director or officer of the Company or any of the Company's Subsidiaries prior to
the Effective Time. The Indemnified Parties shall be entitled to advancement of
expenses to the extent provided in the applicable articles of incorporation,
charters, by-laws or contract. Parent shall cause the Surviving Corporation to,
maintain in effect for not less than six (6) years after consummation of the
Merger the current policies of directors' and officers' liability insurance
maintained by the Company and its Subsidiaries on the date hereof; provided,
however, that if the annual cost of such "tail" insurance policies are not
available at a cost not greater than 250% of the annual premium paid on the date
of this Agreement by the Company for such insurance (the "Insurance Cap"),
Parent shall cause to be obtained as much comparable insurance for as long a
period (not to exceed six (6) years from the Effective Time) as is available for
a cost not to exceed the Insurance Cap.
(b) Promptly after receipt by an Indemnified Party of notice of the
assertion (an "Assertion") of any claim or the commencement of any action,
proceeding or investigation against him or her in respect to which indemnity or
reimbursement may be sought against Parent, the Company, the Surviving
Corporation or a Subsidiary of the Company or the Surviving Corporation
("Indemnitors") hereunder, such Indemnified Party shall notify any Indemnitor in
writing of the Assertion, but the failure to so notify any Indemnitor shall not
relieve any Indemnitor of any liability it may have to such Indemnified Party
hereunder except where such failure shall have materially prejudiced Indemnitor
in defending against such Assertion. No Indemnified Party shall settle any
Assertion without the prior written consent of Parent; provided, however, that
if Parent withholds such consent, then Parent shall provide the Indemnified
Party reasonable assurances that it shall honor the indemnification provisions
of this Section 5.10.
(c) The covenants contained in this Section 5.10 are intended to be in
addition to the rights otherwise available to an Indemnified Party and shall
operate for the benefit of, and shall be enforceable by, each of the Indemnified
Parties and their respective heirs and legal representatives and shall not be
deemed exclusive of any other rights to which an Indemnified Party is entitled,
whether pursuant to Law, contract or otherwise.
(d) In the event that Parent, 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, proper provision shall be made so that the successors or assigns of
Parent
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or the Surviving Corporation, as the case may be, shall succeed to the
obligations set forth in this Section 5.10.
Section 5.11 Proxy Statement.
(a) Filing. As promptly as reasonably practicable, and in any event
within 45 days following the date hereof, the Company shall prepare and shall
file with the SEC a preliminary Proxy Statement, together with a form of proxy,
with respect to the Shareholders Meeting at which the shareholders of the
Company will be asked to vote upon and approve this Agreement and the Merger and
shall use its reasonable best efforts to have the Proxy Statement and form of
proxy cleared by the SEC and shall cause the Proxy Statement to be mailed to the
Company's shareholders as promptly as practicable after the date of this
Agreement. The term "Proxy Statement" shall mean such proxy or information
statement (including, without limitation a Schedule 13E-3 filing, if required to
be filed under the Exchange Act) and all amendments or supplements thereto, if
any, similarly filed and mailed. Parent will provide the Company with any
information that may be reasonably requested in order to effectuate the
preparation and filing of the Proxy Statement pursuant to this Section 5.11. The
Company will provide Parent and its counsel with a reasonable opportunity to
review the Proxy Statement prior to its filing and shall include in such
document or response all comments reasonably proposed by Parent. The Company
will respond to, and provide Parent and its counsel with a reasonable
opportunity to participate in the Company's response to, any comments from the
SEC and will notify Parent promptly upon the receipt of any comments from the
SEC in connection with the filing of, or amendments or supplements to, the Proxy
Statement and shall provide Parent with all correspondence between the Company
and its Representatives, on the one hand, and the SEC and its staff, on the
other hand relating to the Proxy Statement.
(b) Information. Whenever any event occurs which is required to be set
forth in an amendment or supplement to the Proxy Statement, the Company or
Parent, as the case may be, will promptly inform the other party of such
occurrence and cooperate in filing with the SEC and/or mailing to the
shareholders of the Company such amendment or supplement. Each of Parent and the
Company shall cooperate and the Company shall provide Parent (and its counsel)
with a reasonable opportunity to review and comment on any amendment or
supplement to the Proxy Statement prior to filing such with the SEC and shall
include in such document or response all comments reasonably proposed by Parent;
and will provide Parent with a copy of all such filings made with the SEC. The
information provided and to be provided by Parent, Sub and the Company,
respectively, for use in the Proxy Statement shall not contain, on the date the
Proxy Statement is first mailed to the Company's shareholders and on the date of
the Shareholders Meeting, 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 were
made, not misleading, and the Company, Parent and Sub each agree to correct any
information provided by it for use in the Proxy Statement which shall have
become false or misleading in any material respect.
(c) Company SEC Documents. Each of the Company SEC Documents to be
filed by the Company after the date of this Agreement, when filed, will comply
in all material respects with the applicable requirements of the Securities Act
and the Exchange Act, each as in effect on the date so filed. None of the
Company SEC Documents (including any financial
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statements or schedules included or incorporated by reference therein) to be
filed by the Company after the date of this Agreement, when filed, will contain
any untrue statement of a material fact or omit to state a material fact
required to be stated or incorporated by reference therein or necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
(d) Company Financial Statements. Each of the audited and unaudited
financial statements (including any related notes) included in the Company SEC
Documents to be filed by the Company after the date of this Agreement, when
filed, will comply in all material respects with all applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, will have been prepared in accordance with GAAP (except, in the
case of unaudited quarterly statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto) and will fairly present the consolidated
financial position of the Company and its Subsidiaries at the respective dates
thereof and the consolidated results of its and their operations and cash flows
for the periods indicated (subject, in the case of unaudited quarterly
statements, to normal year-end audit adjustments, which were not and are not
expected to be material in amount).
Section 5.12 Cooperation. (a) Without limiting the generality of
Section 5.3, Parent and the Company shall together, or pursuant to an allocation
of responsibility to be agreed between them, coordinate and cooperate (i) in
connection with the preparation of the Proxy Statement and (ii) in seeking any
actions, consents, approvals or waivers of any Governmental Authority as
contemplated hereby or making any such filings, furnishing information required
in connection therewith or with the Proxy Statement and seeking timely to obtain
any such actions, consents, approvals or waivers.
(b) Without limiting the generality of Sections 5.2 and 5.3, prior to
the Closing, the Company shall provide, and shall cause its Subsidiaries to, and
shall use its reasonable best efforts to cause the respective Representatives of
the Company and its Subsidiaries to, provide all cooperation reasonably
requested by Parent in connection with the financing of the transactions
contemplated by this Agreement, including, without limitation, using reasonable
best efforts to cause (i) appropriate officers and employees to be available on
a customary basis to meet with prospective lenders and investors in
presentations, meetings, road shows and due diligence sessions, to assist with
the preparation of offering memoranda, disclosure documents and pro formas in
connection therewith, to execute and deliver any pledge and security documents,
other definitive financing documents, or other certificates, legal opinions or
documents as may be reasonably requested by Parent, (ii) its independent
accountants and counsel to provide assistance to Parent, including providing
consent to Parent to prepare and use their audit reports relating to the Company
and its Subsidiaries, at the cost of Parent, to provide any necessary "comfort
letters" and (iii) delivering financial statements that comply with Regulation
S-X under the Securities Act.
(c) The Company shall, at the request of and in consultation with
Parent, take all actions necessary to satisfy and discharge, on or prior to the
Closing, the 8 7/8% senior subordinated notes due 2007 (the "Notes") issued by
the Company pursuant to that certain Indenture dated as of August 5, 1997, as
amended (the "Indenture"), among the Company, the
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guarantors party thereto and State Street Bank and Trust Company, pursuant to
Article 12 of the Indenture and in compliance with the terms of the Indenture.
(d) Parent and Sub shall take all actions necessary to enforce their
rights pursuant to the Equity Commitment Letter and not amend or waive any
provisions thereunder without the prior written consent of the Company.
Section 5.13 Rights Plan. The Board of Directors of the Company shall
take all further actions (in addition to those referred to in Section 3.21(b))
requested by Parent in order to render the Rights Plan inapplicable to the
Merger and the other transactions contemplated by this Agreement.
Section 5.14 Solvency Letter. The parties shall engage, at the expense
of the Company (except that, if the Closing does not occur, the Company and Sub
shall share such expense equally), an appraisal firm of national reputation
reasonably acceptable to Parent and the Company to deliver a letter in a form
reasonably acceptable to the Special Committee and addressed to the Board of
Directors of the Company (and on which the Special Committee shall be entitled
to rely), the respective Boards of Directors of Parent and Sub supporting the
conclusion that immediately after the Effective Time, and after giving effect to
the Merger and the other transactions contemplated hereby, including the amount
and terms of any debt and/or equity financing on behalf of Parent or Sub in
connection with the transactions contemplated by this Agreement, the Company
will be Solvent (as defined below) (or the equivalent thereof, as determined in
the reasonable discretion of Parent and the Company) (such letter, the "Solvency
Letter"). Without limiting the generality of the foregoing, each of Parent and
the Company shall use their respective reasonable best efforts to (a) make
available their respective officers, agents and other Representatives on a
customary basis and upon reasonable notice and (b) provide or make available
such information concerning the business, properties, contracts, assets and
liabilities of the Company as may reasonably be requested by such appraisal firm
in connection with delivering such Solvency Letter. For purposes of this
Agreement, "Solvent," when used with respect to any Person means that, as of any
date of determination, (i) the amount of the "present fair saleable value" of
the assets of such Person will, as of such date, exceed the amount of all
"liabilities of such Person, contingent or otherwise", as of such date, as such
quoted terms are generally determined in accordance with applicable federal laws
governing determinations of the insolvency of debtors, (ii) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the liability of such Person on its
debts as such debts become absolute and matured, (iii) such Person will not
have, as of such date, an unreasonably small amount of capital with which to
conduct its business and (iv) such Person will be able to pay its debts as they
mature. For purposes of this definition, (A) "debt" means liability on a
"claim," and (B) "claim" means any (x) right to payment, whether or not such a
right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured
or (y) right to an equitable remedy for breach of performance if such breach
gives rise to a right to payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured or unmatured,
disputed, undisputed, secured or unsecured.
Section 5.15 Pre-Closing Reorganization. Upon the written request of
Parent given at least 5 days prior to the Closing Date, the Company shall, prior
to the Closing Date, (i)
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cause each of its Subsidiaries that is treated as a corporation for U.S. federal
income tax purposes and designated in such written request to either merge into
the Company or a designated direct or indirect Subsidiary of the Company,
convert into a limited liability company or merge into a limited liability
company such that, under U.S. federal income tax law, the Company will succeed
to the earnings and profits of each such Subsidiary, and (ii) cause its
Subsidiaries to take such steps as may be designated in such written request in
order to terminate the treatment as a partnership for federal income tax
purposes of any Subsidiary designated in such written request; provided,
however, that the Company shall not be required to take any of the foregoing
actions that would result in material liability or cost to the Company unless
Parent shall first agree to reimburse the Company for such liability or cost in
the event that the Closing does not occur. Following the taking of any actions
as required by this Section 5.15, the Company shall not make, or permit any
Subsidiary to make, any election that would be inconsistent with the intended
effect of such actions.
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to the Obligations of Each Party. The
obligations of the Company, on the one hand, and Parent and Sub, on the other
hand, to consummate the Merger are subject to the satisfaction of the following
conditions:
(a) this Agreement shall have been approved by the shareholders of the
Company in accordance with the IBCL;
(b) no court, arbitrator or governmental body, agency or official
shall have issued any Order, decree or ruling and there shall not be any
statute, rule or regulation, restraining, enjoining or prohibiting the
consummation of the Merger; and
(c) any waiting period applicable to the Merger under the HSR Act
shall have expired or been terminated.
(d) The Board of Directors of the Company, the respective Boards of
Directors of Parent and Sub shall have received the letter referred to in
Section 5.14 or Sub shall have provided to the Board of Directors of the
Company, the Special Committee, the respective Boards of Directors of Parent and
Sub from another appraisal firm a comparable letter in form and substance
reasonably satisfactory to the Special Committee and Parent.
Section 6.2 Conditions to the Obligations of Parent and Sub. The
obligations of Parent and Sub to consummate the Merger are subject to the
satisfaction (or waiver by Parent) of the following further conditions:
(a) the representations and warranties of the Company contained in the
first sentence of Section 3.1 and contained in Sections 3.2(a), 3.2(b) (but only
to the extent it relates to a Subsidiary that is a "significant subsidiary" as
defined in Rule 1-02(w) of Regulation S-X promulgated under the Exchange Act
("Significant Subsidiary")), 3.2(c)(i) (but only to the extent that the Company
failed to disclose Indebtedness exceeding $100,000 in the aggregate), 3.3,
3.9(b), 3.19, 3.20 and 3.21 shall have been true and accurate in all respects as
of the date of this
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Agreement and the Closing Date as if made at and as of such date (except for
those representations and warranties that address matters only as of a
particular date or only with respect to a specific period of time which need
only be true and accurate as of such date or with respect to such period). The
representations and warranties of the Company (other than those listed in the
preceding sentence) shall be true and accurate (without giving effect to any
limitation as to "materiality" or "Company Material Adverse Effect" set forth
therein) as of the date of this Agreement and the Closing Date (except for those
representations and warranties that address matters only as of a particular date
or only with respect to a specific period of time which need only be true and
accurate as of such date or with respect to such period), except to where the
failure of such representations and warranties to be so true and accurate would
not individually or in the aggregate reasonably be expected to have a Company
Material Adverse Effect;
(b) the Company shall have performed in all material respects its
obligations hereunder required to be performed by it at or prior to the Closing
Date;
(c) the Company shall have furnished Parent with a certificate dated
the Closing Date signed on its behalf by its Chief Executive Officer or Chief
Financial Officer to the effect that the conditions set forth in Sections 6.2(a)
and (b) have been satisfied;
(d) any filing or consent with any Governmental Authority the absence
of which would reasonably be expected to have a Company Material Adverse Effect
shall have been obtained;
(e) the Company shall have delivered to Parent evidence reasonably
satisfactory to Parent of the resignation of all directors of the Company and,
as specified by Parent in advance of the Closing, all directors of each
Subsidiary of the Company, in ease case, effective at the Effective Time;
(f) Parent shall have received each of the consents and approvals, and
copies of the notices, described in Section 6.2(f) of the Company Disclosure
Schedule and each such consent, approval or notice (i) shall be in form and
substance reasonably satisfactory to Parent, (ii) shall not be subject to the
satisfaction of any condition that has not been satisfied or waived and (iii)
shall be in full force and effect;
(g) Parent shall have received resignations of the officers of the
Company and its Subsidiaries requested by Parent; and
(h) The Notes shall have been satisfied and discharged by the Company
pursuant to Article 12 of the Indenture.
The rights of Parent pursuant to this Section 6.2 will not be affected by any
investigation conducted or knowledge acquired (or capable of being acquired) by
Parent at any time, whether before or after the execution and delivery of this
Agreement, with respect to the accuracy of any representation or warranty of the
Company.
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Section 6.3 Conditions to the Obligations of the Company. The
obligations of the Company to consummate the Merger are subject to the
satisfaction (or waiver by the Company) of the following further conditions:
(a) the representations and warranties of Parent and Sub contained in
the first two sentences of Section 4.1 and contained in Section 4.2 shall have
been true and accurate in all respects as of the date of this Agreement and the
Closing Date as if made at and as of such date (except for those representations
and warranties that address matters only as of a particular date or only with
respect to a specific period of time which need only be true and accurate as of
such date or with respect to such period). The representations and warranties of
Parent and Sub (other than those listed in the preceding sentence) shall be true
and accurate (without giving effect to any limitation as to "materiality" or
"Parent Material Adverse Effect" set forth therein) as of the date of this
Agreement and the Closing Date (except for those representations and warranties
that address matters only as of a particular date or only with respect to a
specific period of time which need only be true and accurate as of such date or
with respect to such period), except where the failure of such representations
and warranties to be so true and accurate would not individually or in the
aggregate reasonably be expected to have a Parent Material Adverse Effect;
(b) each of Parent and Sub shall have performed in all material
respects all of the respective obligations hereunder required to be performed by
Parent or Sub, as the case may be, at or prior to the Closing Date; and
(c) Parent shall have furnished the Company with a certificate dated
the Closing Date signed on its behalf by its President or Chief Financial
Officer to the effect that the conditions set forth in Section 6.3(a) and (b)
have been satisfied.
Section 6.4 Frustration of Closing Conditions. None of the Company,
Parent or Sub may rely on the failure of any condition set forth in Section 6.1,
6.2 or 6.3, as the case may be, to be satisfied if such failure was caused by
such party's failure to act in good faith or to use its reasonable best efforts
to consummate the Merger and the other transactions contemplated by this
Agreement, as required by and subject to Section 5.3.
ARTICLE VII
TERMINATION
Section 7.1 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, and except as
provided below, whether before or after any approval of this Agreement by the
shareholders of the Company:
(a) by mutual written consent duly authorized by the respective Boards
of Directors of the Company and Parent;
(b) by either the Company or Parent if:
(i) the Merger has not been consummated by October 17, 2006 (the
"Outside Date"); provided, however, that the right to terminate this
Agreement under this Section 7.1(b)(i) shall not be available to any party
whose failure to perform any material
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covenant or obligation under this Agreement has been the principal cause of
or resulted in the failure of the Closing to occur on or before such date;
(ii) five (5) business days shall have elapsed following such
time as any permanent injunction or other similar order of a court of
competent jurisdiction or other competent Governmental Authority, in each
case located in the United States, preventing the consummation of the
transactions contemplated by this Agreement shall have been entered (so
long as such permanent injunction or similar order is still in effect at
the expiration of such five (5) business day period), regardless of whether
such order is appealable or has been appealed and, prior to such
termination, the parties shall have used reasonable best efforts to resist,
resolve or lift, as applicable, such injunction or other similar order; or
(iii) provided that there shall have occurred a duly held meeting
of the Company's shareholders (including any adjournment or postponement
thereof) at which a vote was taken of the Company's shareholders in
accordance with the IBCL, the Company Requisite Vote shall not have been
obtained at the Shareholders Meeting; provided, however, that the right to
terminate this Agreement under this Section 7.1(b)(iii) shall not be
available to the Company if the Company is in breach of its obligations
under Section 5.5, 5.6 or the first sentence of 5.11(a); or
(c) by the Company if:
(i) a breach by Parent or Sub of any representation, warranty,
covenant or agreement contained in this Agreement shall have occurred,
which breach, in the aggregate with all other such breaches, if any, would
give rise, to a failure of the conditions set forth in Section 6.3(a) or
(b) hereof and which is not cured within thirty (30) days following written
notice to the party committing such breach or by its nature or timing
cannot be cured by the Outside Date; or
(ii) prior to the Shareholders Meeting, the Board of Directors
(or any authorized committees thereof) of the Company shall have resolved
to approve and recommend a Superior Proposal after having complied with the
requirements of Section 5.5; or
(d) by Parent:
(i) if a breach by the Company of any representation, warranty,
covenant or agreement contained in this Agreement shall have occurred,
which breach, in the aggregate with all other such breaches, if any, would
give rise to a failure of the conditions set forth in Section 6.2(a) or
Section 6.2(b) hereof and cannot be cured by and which is not cured within
thirty (30) days following written notice to the party committing such
breach or by its nature or timing cannot be cured by the Outside Date; or
(ii) (A) upon a Non-Recommendation Determination, (B) if the
Company's Board of Directors (or any authorized committee thereof) shall
approve or recommend (or resolved to do so) a Superior Proposal, (C) if the
Company shall have breached its obligations under Section 5.5, 5.6 or the
first sentence of 5.11(a), (D) if the
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Company's Board of Directors (or any authorized committee thereof) fails to
reaffirm publicly and unconditionally the Company's Recommendation within
ten (10) business days following Parent's written request to do so (which
request may be made at any time after a Competing Transaction has been
commenced, publicly disclosed or communicated to the Company's Board of
Directors (or any authorized committee thereof)), or (E) if a Competing
Transaction is publicly disclosed and the Company fails to issue a press
release announcing its opposition thereto within ten (10) business days
after such disclosure.
Section 7.2 Notice of Termination; Effect of Termination.
(a) Notice of Termination. The party hereto desiring to terminate this
Agreement pursuant to Section 7.1 shall give written notice of such termination
to the other party in accordance with Section 8.4, specifying the provision
hereof pursuant to which such termination is effected.
(b) Effect of Termination. If this Agreement is terminated pursuant to
Section 7.1, this Agreement shall become void and of no effect with no liability
on the part of any party hereto, except that (i) the agreements contained in the
last sentence of Section 5.2, Section 7.2, and Section 7.3 and in the
Confidentiality Agreement shall survive the termination hereof and (ii) except
as provided in the last sentence of Section 7.3(c), no such termination shall
relieve any party of any liability or damages resulting from any breach by that
party of this Agreement.
Section 7.3 Expenses; Termination Fees.
(a) Expenses. Except as otherwise specified in this Section 7.3 or
agreed in writing by the parties, all fees, costs and expenses incurred in
connection with this Agreement and the transactions contemplated by this
Agreement shall be paid by the party incurring such fees, cost or expense
whether or not the Merger is consummated. If this Agreement is terminated by
Parent or the Company pursuant to Section 7.1(b)(iii), then the Company shall
pay to Parent, in cash by wire transfer of immediately available funds to an
account designated by Parent, within five (5) business days following such
termination, all of Parent's and Sub's out-of-pocket expenses (including all
fees and expenses of counsel, accountants, investment bankers, financing
sources, experts and consultants) incurred by or on behalf of Parent or Sub in
connection with or related to the authorization, preparation, negotiation,
execution and performance of this Agreement, the preparation of the Proxy
Statement, the solicitation of the Company Requisite Vote, financing and all
other matters relating to the closing of the Merger, up to a maximum of
$5,000,000 in the aggregate.
(b) Termination Fee. If this Agreement is terminated:
(i) by Parent or the Company pursuant to Section 7.1(b)(i), and
(A) at or prior to such time a Competing Transaction involving the Company
shall have been commenced, publicly disclosed or communicated to the Board
of Directors (or any authorized committee thereof) of the Company, and (B)
within eighteen (18) months of any such termination, the Company or any of
its affiliates either becomes a party to any
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definitive agreement, letter of intent or agreement in principle in respect
of a Competing Transaction or consummates a transaction that would
constitute a Competing Transaction (which in each case need not be the same
Competing Transaction as the Competing Transaction described in clause
(A)), then the Company shall pay to Parent, in cash by wire transfer in
immediately available funds to an account designated by Parent, on the same
day as the execution of a definitive agreement, letter of intent or
agreement in principle or consummation as applicable, with respect to the
referenced Competing Transaction, is effective, a termination fee and
expense reimbursement in an aggregate amount equal to $10,000,000 (the
"Company Termination Fee");
(ii) by Parent or the Company pursuant to Section 7.1(b)(iii),
and (A) at or prior to the time this Agreement is terminable by either
party pursuant to Section 7.1(b)(iii), a Competing Transaction involving
the Company shall have been commenced, publicly disclosed or communicated
to the Board of Directors (or any authorized committee thereof) of the
Company and not abandoned and (B) within eighteen (18) months of any such
termination, the Company or any of its affiliates either becomes a party to
any definitive agreement, letter of intent or agreement in principle in
respect of a Competing Transaction or consummates a transaction that would
constitute a Competing Transaction (which in each case need not be the same
Competing Transaction as the Competing Transaction described in clause
(A)), then the Company shall pay to Parent the Company Termination Fee in
cash by wire transfer in immediately available funds to an account
designated by Parent, on the same day as the execution of a definitive
agreement, letter of intent or agreement in principle or consummation as
applicable with respect to the referenced Competing Transaction;
(iii) by Parent pursuant to Section 7.1(d)(i), and (A) at or
prior to the time this Agreement is terminable by either party pursuant to
Section 7.1(b)(iii), a Competing Transaction involving the Company shall
have been commenced, publicly disclosed or communicated to the Board of
Directors (or any authorized committee thereof) of the Company and not
abandoned and (B) within eighteen (18) months of any such termination, the
Company or any of its affiliates either becomes a party to any definitive
agreement, letter of intent or agreement in principle in respect of a
Competing Transaction or consummates a transaction that would constitute a
Competing Transaction (which in each case need not be the same Competing
Transaction as the Competing Transaction described in clause (A)), then the
Company shall pay to Parent the Company Termination Fee, in cash by wire
transfer in immediately available funds to an account designated by Parent,
on the same day as the execution of a definitive agreement, letter of
intent or agreement in principle or consummation as applicable with respect
to the referenced Competing Transaction; or
(iv) by Parent pursuant to Section 7.1(d)(ii) or by the Company
pursuant to Section 7.1(c)(ii), then the Company shall pay to Parent the
Company Termination Fee, in cash by wire transfer in immediately available
funds to an account designated by Parent concurrently with and, in the case
of a termination by the Company pursuant to Section 7.1(c)(ii), as a
condition of such termination.
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(c) Proration. If the Company is required to pay the Parent a
Termination Fee with respect to a Competing Transaction in which 10% or more,
but less than 50% of the assets of the Company and its Subsidiaries taken as a
whole are to be acquired by any Person; then the amount of the Termination Fee
shall be prorated using the percentage of EBITDA of the Company and its
Subsidiaries taken as a whole generated by such assets in the Company's last
fiscal year. EBITDA shall mean the Company's earnings before interest, taxes and
depreciation determined on a consolidated basis in accordance with GAAP and in a
manner as is consistent with the Company Financials.
(d) Remedies. Parent, Sub and the Company agree that the provisions
contained in this Section 7.3 are an integral part of the transactions
contemplated by this Agreement, that the damages resulting from the termination
of this Agreement as set forth in Section 7.3(b) of this Agreement are uncertain
and incapable of accurate calculation and that the amounts payable pursuant to
Section 7.3(b) hereof are reasonable forecasts of the actual damages which may
be incurred by the parties under such circumstances. The amounts payable
pursuant to Section 7.3(b) hereof constitute liquidated damages and not a
penalty and shall be the sole monetary remedy in the event a Company Termination
Fee is paid in connection with a termination of this Agreement on the bases
specified in Section 7.3 hereof. The Company (and any successor thereto) shall
indemnify and hold harmless Parent and each of its Subsidiaries for all losses,
costs, damages and expenses arising from any failure or delay of the Company
promptly to pay the Company Termination Fee as and when due pursuant to this
Section 7.3, including the cost of enforcement of its rights under this Section
7.3 (including the fees and expenses of counsel and all other professional
advisors), in addition to the amount of any Company Termination Fee, together
with interest thereon, at the rate of eight (8) percent from the date such
amount was first due.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Definitions. The following terms are defined in the
section of this Agreement set forth after each such term below:
Actions...............................................................3.13
Agreement.........................................................Preamble
Articles of Merger.....................................................1.3
Assertion...........................................................5.10(b)
Certificates.........................................................2.3(b)
Class A Company Common Stock......................................Recitals
Class B Company Common Stock......................................Recitals
Closing................................................................1.2
Closing Date...........................................................1.2
Code...................................................................2.4
Company...........................................................Preamble
Company Balance Sheet................................................3.7(a)
Company Balance Sheet Date...........................................3.7(a)
Company Charter Documents............................................3.1(c)
Company Common Stock..............................................Recitals
Company Disclosure Schedule..........................................3.1(b)
Company Financials...................................................3.7(a)
Company Intellectual Property.........................................3.12
Company Material Adverse Effect......................................3.1(a)
Company Material Contract...........................................3.18(a)
Company Permits.....................................................3.16(b)
Company Recommendation...........................................5.6(a)(ii)
Company Requisite Vote...............................................3.3(a)
Company Rights.......................................................3.2(a)
Company SEC Documents................................................3.6
Company Securities...................................................3.2(a)
Company Stock Option.................................................2.2(a)
Company Stock Plans..................................................2.2(a)
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Company Subsidiary Securities........................................3.2(b)
Company Termination Fee..............................................7.3(b)
Competing Transaction................................................5.5(a)
Confidentiality Agreement............................................5.2
Contract.............................................................3.2(c)
Controlled Group Liability..........................................3.15(a)
Effective Time.......................................................1.3
Environmental Clean-up Site.........................................3.17
Environmental Laws..................................................3.17
Environmental Liabilities...........................................3.17
Environmental Permit................................................3.17
ERISA...............................................................3.15(a)
ERISA Affiliate.....................................................3.15(a)
Equity Commitment Letter...................................... ...Recitals
Exchange Act.........................................................3.1(b)
GAAP.................................................................3.1(a)
Governmental Authority...............................................3.4
Hazardous Substances................................................3.17
HSR Act..............................................................3.4
HSR Clearance........................................................5.3(d)
IBCL..............................................................Recitals
Indebtedness.........................................................3.2(c)
Indemnified Parties.................................................5.10(a)
Indemnified Party...................................................5.10(a)
Indemnitors.........................................................5.10(b)
Indenture...........................................................5.12(c)
Insurance Cap.......................................................5.10(a)
Law..................................................................3.5
Lease Report........................................................3.11(b)
Leased Real Property................................................3.11(b)
Liens................................................................3.2(b)
Merger...............................................................1.1
Merger Consideration.................................................2.1(a)
Multiemployer Plan..................................................3.15(f)
Multiple Employer Plan..............................................3.15(f)
Non-Recommendation Determination.....................................5.6(b)
Notes...............................................................5.12(c)
Notice of Superior Proposal..........................................5.5(b)
Objection............................................................5.3(d)
Order................................................................3.5
Outside Date.........................................................7.1(b)
Owned Real Property.................................................3.11(a)
Parent............................................................Preamble
Parent Benefit Plans.................................................5.4(a)
Parent Material Adverse Effect.......................................4.1
Paying Agent.........................................................2.3(a)
PBGC................................................................3.15(g)
Pension Plan........................................................3.15(a)
Person...............................................................2.3(b)
Personal Property...................................................3.11(c)
Plans...............................................................3.15(a)
Preferred Stock......................................................3.2(a)
Proxy Statement.....................................................5.11(a)
Qualified Plan......................................................3.15(c)
Real Property.......................................................3.11(b)
Real Property Leases................................................3.11(b)
Representatives......................................................5.5(a)
Rights Plan..........................................................3.2(a)
RPTL................................................................3.17
SEC..................................................................2.3(a)
Securities Act.......................................................3.6
Shareholders Meeting.................................................5.6(a)(i)
Shares............................................................Recitals
Significant Subsidiary...............................................6.2(a)
Solvency Letter.....................................................5.14
Special Committee.................................................Recitals
Sub...............................................................Preamble
Subsidiary...........................................................3.1(b)
Subsidiary Charter Documents.........................................3.1(c)
Superior Proposal....................................................5.5(d)
Surviving Corporation................................................1.1
Taxes...............................................................3.14
Taxing Authority....................................................3.14
Tax Return..........................................................3.14
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Section 8.2 Amendment and Modification. Subject to applicable Law,
this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the shareholders of the Company
contemplated hereby, by written agreement of the parties hereto, pursuant to
action taken by their respective Boards of Directors, at any time prior to the
Effective Time with respect to any of the terms contained herein; provided,
however, that after the approval of this Agreement by the shareholders of the
Company, no such amendment, modification or supplement shall reduce or change
the consideration to be received by the Company's shareholders in the Merger.
Section 8.3 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any schedule, instrument
or other document delivered pursuant to this Agreement shall survive the
Effective Time.
Section 8.4 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Parent or Sub, to:
MSH Supermarkets Holding Corp.
c/o Sun Capital Partners, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxx & Bockius LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
(b) if to the Company, to:
Xxxxx Supermarkets, Inc.
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, Xxxxxxx
Attention: X. Xxxxxxxx Butt
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
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with a copy to:
Xxxxx & Xxxxxxx LLP
000 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Section 8.5 Interpretation. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include", "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation". The phrase "made available" in this Agreement shall mean that the
information referred to has been made available to the party to whom such
information is to be made available. The phrases "the date of this Agreement",
"the date hereof", and terms of similar import, unless the context otherwise
requires, shall be deemed to refer to May 2, 2006. As used in this Agreement,
the term "affiliate(s)" shall have the meaning set forth in Rule 12b-2 of the
Exchange Act. For purposes of this Agreement, words in the singular shall be
held to include the plural and vice versa and words of one gender shall be held
to include the other gender as the context requires. As used in this Agreement,
the terms "hereof", "herein", and "herewith" and words of similar import shall,
unless otherwise stated, be construed to refer to this Agreement as a whole
(including all Schedules hereto) and not to any particular provision of this
Agreement, and Article, Section, paragraph and Schedule references are to the
Articles, Sections, paragraphs and Schedules to this Agreement unless otherwise
specified herein. Unless specified herein, all references to any period of days
shall be deemed to be the relevant number of calendar days. As used in this
Agreement, the terms "dollars" or "$" means United States dollars. As used in
this Agreement, the term "cash" means dollars in immediately available funds.
The parties have jointly participated in the negotiating and drafting of this
Agreement. In the event that an ambiguity or a question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties hereto, and no presumption or burden of proof shall arise
favoring or disfavoring any party hereto by virtue of the authorship of any
provisions of this Agreement.
Section 8.6 Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties hereto and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
Section 8.7 Entire Agreement; No Third Party Beneficiaries. This
Agreement, the Equity Commitment Letter and the Confidentiality Agreement
(including the exhibits hereto and the documents and the instruments referred to
herein and therein): (a) constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, among the parties hereto
with respect to the subject matter hereof, and (b) except as provided in
Sections 5.10 with respect to the obligations of Parent and the Surviving
Corporation thereunder, are not intended to confer upon any Person other than
the parties hereto any rights or remedies hereunder.
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Section 8.8 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated hereby may be consummated as
originally contemplated to the fullest extent possible.
Section 8.9 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties hereto
shall be entitled to the remedy of specific performance of the terms hereof, in
addition to any other remedy at law or equity.
Section 8.10 Governing Law. This Agreement and the transactions
contemplated hereby, and all disputes between the parties under or related to
this Agreement or the facts and circumstances leading to its execution, whether
in contract, tort or otherwise, shall be governed by and construed in accordance
with the Laws of the State of Indiana, applicable to contracts executed and
fully performed within the State of Indiana, without regard to Laws that may be
applicable under conflict of laws principles.
Section 8.11 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of Law or otherwise) without the prior written
consent of the other parties, except that Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned Subsidiary of Parent; provided,
however, that no such assignment shall relieve Parent from any of its
obligations hereunder. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
Section 8.12 Consent to Jurisdiction; Waiver of Jury Trial. (a) Each
of the parties hereto:
(i) consents to submit itself to the personal jurisdiction of (A)
the United States District Court for the Southern District of Indiana in the
event any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement to the extent such court would have subject
matter jurisdiction with respect to such dispute and (B) the courts of the State
of Indiana;
(ii) agrees that it will not attempt to deny or defeat such
personal jurisdiction or venue by motion or other request for leave from any
such court;
(iii) agrees that it will not bring any action relating to this
Agreement or any of the transactions contemplated by this Agreement in any court
other than such courts;
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(iv) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to a party at
its address set forth in Section 8.4 or at such other address of which a party
shall have been notified pursuant thereto;
(v) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by Law or shall limit the right
to xxx in any other jurisdiction; and
(vi) agrees to appoint an agent for service of process in
Indiana.
(b) EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING IN RELATION TO THIS AGREEMENT
AND FOR ANY COUNTERCLAIM THEREIN.
* * * * *
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
MSH SUPERMARKETS HOLDING CORP.
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxx
----------------------------------
Title: Vice President
---------------------------------
MS OPERATIONS, INC.
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxx
----------------------------------
Title: Vice President
---------------------------------
XXXXX SUPERMARKETS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
----------------------------------
Title: Executive Vice President --
Finance and Administration
---------------------------------
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