Exhibit (d)(3)
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
Dated as of June 18, 2004
Among
XXXXX APPAREL GROUP, INC.,
MSC ACQUISITION CORP.
And
XXXXXXX SHOE COMPANY INC.
TABLE OF CONTENTS
Page
ARTICLE I
The Offer and the Merger
SECTION 1.01. The Offer....................................................1
SECTION 1.02. Company Actions..............................................3
SECTION 1.03. The Merger...................................................4
SECTION 1.04. Closing......................................................4
SECTION 1.05. Effective Time...............................................4
SECTION 1.06. Effects of the Merger........................................5
SECTION 1.07. Certificate of Incorporation and By-laws.....................5
SECTION 1.08. Directors....................................................5
SECTION 1.09. Officers.....................................................5
ARTICLE II
Conversion of Securities; Exchange of Certificates
SECTION 2.01. Conversion of Capital Stock..................................5
SECTION 2.02. Exchange of Certificates.....................................6
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of the Company................9
SECTION 3.02. Representations and Warranties of Parent and Sub............24
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business.........................................27
SECTION 4.02. No Solicitation.............................................31
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Proxy Statement; Stockholders' Meeting...33
SECTION 5.02. Access to Information; Confidentiality......................35
SECTION 5.03. Commercially Reasonable Efforts; Notification...............35
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SECTION 5.04. Company Stock Options.......................................36
SECTION 5.05. Indemnification, Exculpation and Insurance..................36
SECTION 5.06. Fees and Expenses...........................................37
SECTION 5.07. Public Announcements........................................38
SECTION 5.08. Rights Agreement............................................39
SECTION 5.09. Transfer Taxes..............................................39
SECTION 5.10. Directors...................................................39
SECTION 5.11. Employee Matters............................................40
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation to Effect the Merger..41
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination.................................................42
SECTION 7.02. Effect of Termination.......................................43
SECTION 7.03. Amendment...................................................43
SECTION 7.04. Extension; Waiver...........................................43
SECTION 7.05. Procedure for Termination, Amendment, Extension or Waiver...44
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and Warranties...............44
SECTION 8.02. Notices.....................................................44
SECTION 8.03. Definitions.................................................45
SECTION 8.04. Interpretation..............................................46
SECTION 8.05. Counterparts................................................46
SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries..............46
SECTION 8.07. Governing Law...............................................46
SECTION 8.08. Assignment..................................................46
SECTION 8.09. Consent to Jurisdiction.....................................47
SECTION 8.10. Waiver of Jury Trial........................................47
SECTION 8.11. Enforcement.................................................47
Exhibit A - Conditions to the Offer
Exhibit B - Amended and Restated Certificate of Incorporation of the
Surviving Company
ii
AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as
of June 18, 2004, among Xxxxx Apparel Group, Inc., a
Pennsylvania corporation ("Parent"), MSC Acquisition
Corp., a New York corporation and an indirect wholly
owned subsidiary of Parent ("Sub"), and Xxxxxxx Shoe
Company Inc., a Delaware corporation (the "Company").
WHEREAS Sub has outstanding an offer (the "Existing Offer", and, as
amended from time to time in accordance with this Agreement, the "Offer") to
purchase all the outstanding shares of Class A Common Stock, par value $.01 per
share, of the Company (the "Company Common Stock"), including the associated
Rights (as defined in Section 3.01(c)), on the terms and subject to the
conditions set forth in the Offer to Purchase dated March 23, 2004 (as amended
and supplemented from time to time, the "Offer to Purchase"), and in the related
letter of transmittal;
WHEREAS the Board of Directors of each of the Company and Sub has approved
and declared advisable, and the Board of Directors of Parent has approved, this
Agreement and the merger of Sub with and into the Company, upon the terms and
subject to the conditions set forth in this Agreement (the "Merger"), whereby
each issued and outstanding share of the Company Common Stock not directly owned
by Parent, Sub or the Company (other than Appraisal Shares (as defined in
Section 2.01(b))), will be converted into the right to receive the per share
consideration paid pursuant to the Offer;
WHEREAS the Board of Directors of the Company has determined that the
terms of the Offer, the Merger, this Agreement and the other transactions
contemplated hereby are fair and in the best interests of the Company's
stockholders and resolved and agreed to recommend that the Company's
stockholders accept the Offer, tender their shares of Company Common Stock
pursuant to the Offer and adopt this Agreement (if required by law);
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements set forth herein, and subject to the
conditions set forth herein, the parties hereto agree as follows:
ARTICLE I
The Offer and the Merger
SECTION 1.01. The Offer. (a) Subject to the conditions of this Agreement,
as promptly as practicable after the date of this Agreement, Sub shall, and
Parent shall cause Sub to, amend the Existing Offer to reflect the terms and
conditions of this Agreement, including the purchase price of $23.25 per share
of Company Common
Stock (and associated Right), net to the seller in cash, without interest
thereon (the "Offer Price"), and to set July 6, 2004 (the "Initial Expiration
Date"), as the expiration date for the Offer. The obligations of Sub to, and of
Parent to cause Sub to, accept for payment, and pay for, any shares of Company
Common Stock tendered pursuant to the Offer are subject only to the satisfaction
or waiver by Sub of the conditions set forth in Exhibit A. Sub expressly
reserves the right, subject to the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), to waive any condition to the Offer or modify the terms of
the Offer, except that, without the consent of the Company, Sub shall not (i)
reduce the number of shares of Company Common Stock subject to the Offer, (ii)
reduce the Offer Price, (iii) waive or change the Minimum Tender Condition (as
defined in Exhibit A), (iv) add to the conditions set forth in Exhibit A, modify
any condition set forth in Exhibit A or amend any term of the Offer set forth in
this Agreement, in each case, in any manner adverse to the holders of Company
Common Stock, (v) extend the Offer or (vi) change the form of consideration
payable in the Offer (other than by adding consideration). Notwithstanding the
foregoing, Sub may, without the consent of the Company, (i) extend the Offer
from time to time for one or more additional periods of not more than five
business days each, or such longer period as may be approved by the Company, if
at the scheduled expiration date of the Offer any of the conditions set forth in
Exhibit A to Sub's obligation to purchase shares of Company Common Stock are not
satisfied or (if permitted) waived, until such time as such conditions are
satisfied or waived and (ii) extend the Offer for any period required by any
rule, regulation, interpretation or position of the Securities and Exchange
Commission (the "SEC") or the staff thereof applicable to the Offer; provided,
that, the expiration date of the Offer shall not be extended beyond July 19,
2004 (the "Outside Date"). In addition, if, at the scheduled or extended
expiration date of the Offer, all the conditions to the Offer have been
satisfied or waived but the Company Common Stock tendered and not withdrawn
pursuant to the Offer constitutes less than 90% of the outstanding Company
Common Stock, without the consent of the Company, Sub shall (subject to
applicable law) have the right to provide for a "subsequent offering period" (as
contemplated by Rule 14d-11 under the Exchange Act, for up to 20 business days
after Sub's acceptance for payment of the shares of Company Common Stock then
tendered and not withdrawn pursuant to the Offer. Upon the terms and subject to
the conditions of the Offer and this Agreement, Sub shall, and Parent shall
cause Sub to, accept for payment and pay for all shares of Company Common Stock
validly tendered and not withdrawn pursuant to the Offer that Sub becomes
obligated to purchase pursuant to the Offer as soon as practicable after the
expiration of the Offer in accordance with Exchange Act Rule 14e-1(c) or (in the
case of shares tendered during any subsequent offering period) as soon as
practicable following the valid tender thereof in accordance with Exchange Act
Rule 14d-11.
(b) As promptly as reasonably practicable after the date of this
Agreement, Parent and Sub shall amend the Tender Offer Statement on Schedule TO
(the "Schedule TO") with respect to the Existing Offer, and file such amendment
(the "Schedule TO Amendment") with the SEC. The Schedule TO Amendment shall
contain a supplement to the Offer to Purchase and a revised form of the letter
of transmittal (such Schedule TO and the documents included therein pursuant to
which the Offer will be made, together with any supplements or amendments
thereto, the "Offer Documents"). Parent and Sub shall promptly mail the
supplement to the Offer to Purchase and revised
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letter of transmittal to holders of shares of Company Common Stock. Each of
Parent, Sub and the Company shall promptly correct any information provided by
it for use in the Offer Documents if and to the extent that such information
shall have become false or misleading in any material respect, and each of
Parent and Sub shall take all steps necessary to amend or supplement the Offer
Documents and to cause the Offer Documents as so amended or supplemented to be
filed with the SEC and to be disseminated to the Company's stockholders, in each
case as and to the extent required by applicable federal securities laws. Parent
and Sub shall provide the Company and its counsel in writing with any comments
Parent, Sub or their counsel may receive after the date of this Agreement from
the SEC or its staff with respect to the Offer Documents promptly after the
receipt of such comments.
(c) Parent shall provide or cause to be provided to Sub on a timely basis
the funds necessary to purchase any shares of Company Common Stock that Sub
becomes obligated to purchase pursuant to the Offer.
(d) As promptly as practicable after the date of this Agreement, Parent
and Sub shall terminate their solicitation of written consents from the
Company's stockholders in connection with the Existing Offer and amend their
Consent Statement filed with the SEC on April 21, 2004 to provide for such
termination.
SECTION 1.02. Company Actions. (a) The Board of Directors of the Company
hereby approves of, recommends and consents to the Offer, the Merger and the
other transactions contemplated by this Agreement.
(b) On the date the Schedule TO Amendment is filed with the SEC, the
Company shall file with the SEC an amendment (the "Schedule 14D-9 Amendment") to
its Solicitation/Recommendation Statement on Schedule 14D-9 originally filed on
March 29, 2004 with respect to the Offer, including an Information Statement (as
defined in Section 3.01(d)) (such Schedule 14D-9, as amended from time to time,
the "Schedule 14D-9"), and shall promptly mail the Schedule 14D-9 Amendment
(including the Information Statement) to the holders of Company Common Stock.
The Schedule 14D-9 shall describe the recommendations referred to in the second
paragraph of Section 3.01(d). Each of the Company, Parent and Sub shall promptly
correct any information provided by it for use in the Schedule 14D-9 (including
the Information Statement) if and to the extent that such information shall have
become false or misleading in any material respect, and the Company shall take
all steps necessary to amend or supplement the Schedule 14D-9 (including the
Information Statement) and to cause the Schedule 14D-9 (including the
Information Statement) as so amended or supplemented to be filed with the SEC
and disseminated to the Company's stockholders, in each case as and to the
extent required by applicable federal securities laws. The Company shall provide
Parent and its counsel in writing with any comments the Company or its counsel
may receive after the date of this Agreement from the SEC or its staff with
respect to the Schedule 14D-9 or the Information Statement promptly after the
receipt of such comments.
(c) In connection with the Offer, the Company shall cause its transfer
agent to furnish Sub promptly with mailing labels containing the names and
addresses of
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the record holders of Company Common Stock as of a date no earlier than two
business days prior to the date hereof and of those persons becoming record
holders subsequent to such date, together with copies of all lists of
stockholders, security position listings and computer files and all other
information in the Company's possession or control regarding the beneficial
owners of Company Common Stock, and shall furnish to Sub such information and
assistance (including updated lists of stockholders, security position listings
and computer files) as Parent may reasonably request in communicating the Offer
to the Company's stockholders. Subject to the requirements of applicable
statutes, laws (including common law), ordinances, rules or regulations, and,
except for such steps as are necessary to disseminate the Schedule TO and the
Offer Documents and any other documents necessary to consummate the Offer and
the transactions contemplated by this Agreement, Parent and Sub shall keep
confidential the information contained in any such labels, lists, listings and
files, shall use such information only in connection with the Offer and the
Merger, and, if this Agreement shall be terminated, shall promptly deliver to
the Company all copies of such information then in their possession.
SECTION 1.03. The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the General Corporation Law of
the State of Delaware ("DGCL") and the Business Corporation Law of the State of
New York ("NYBCL"), Sub shall be merged with and into the Company at the
Effective Time (as defined in Section 1.05). At the Effective Time, the separate
corporate existence of Sub shall cease and the Company shall continue as the
surviving corporation (the "Surviving Corporation") in the Merger and shall
succeed to and assume all the rights and obligations of Sub in accordance with
the DGCL and the NYBCL. At the election of Parent, any other direct or indirect
wholly owned subsidiary of Parent may be substituted for Sub as a constituent
corporation in the Merger.
SECTION 1.04. Closing. Upon the terms and subject to the conditions set
forth in this Agreement, the closing of the Merger (the "Closing") will take
place at 11:00 a.m., New York time, on the second business day after the
satisfaction or (to the extent permitted by applicable law) waiver of the
conditions set forth in Article VI (other than those that by their terms cannot
be satisfied until the time of the Closing), at the offices of Cravath, Swaine &
Xxxxx LLP, 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other time,
date or place agreed to in writing by Parent and the Company. The date on which
the Closing occurs is referred to in this Agreement as the "Closing Date".
SECTION 1.05. Effective Time. Upon the terms and subject to the conditions
set forth in this Agreement, as soon as practicable after the Closing and on the
Closing Date, a certificate of merger or other appropriate documents (in any
such case, the "Certificate of Merger") shall be duly prepared, executed and
acknowledged by the parties in accordance with the relevant provisions of the
DGCL and the NYBCL and filed with the Secretary of State of the State of
Delaware and the Secretary of State of the State of New York. The Merger shall
become effective upon the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware and the Secretary of State of the State of New
York or at such subsequent time or date as Parent and the Company
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shall specify in the Certificate of Merger. The time at which the Merger becomes
effective is referred to in this Agreement as the "Effective Time".
SECTION 1.06. Effects of the Merger. The Merger shall have the effects set
forth in Section 259 of the DGCL and Section 907 of the NYBCL. Without limiting
the generality of the foregoing, and subject thereto, at the Effective Time all
the property, rights, privileges, powers and franchises of the Company and Sub
shall be vested in the Surviving Corporation, and all debts, liabilities,
obligations and duties of the Company and Sub shall become the debts,
liabilities, obligations and duties of the Surviving Corporation.
SECTION 1.07. Certificate of Incorporation and By-laws. (a) The Amended
and Restated Certificate of Incorporation of the Company (the "Company
Certificate") as in effect immediately prior to the Effective Time shall be
amended at the Effective Time to be in the form of Exhibit B and, as so amended,
such Company Certificate shall be the Amended and Restated Certificate of
Incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable law.
(b) The By-laws of Sub as in effect immediately prior to the Effective
Time shall be the By-laws of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable law.
SECTION 1.08. Directors. The directors of Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
SECTION 1.09. Officers. The officers of Sub immediately prior to the
Effective Time shall be the officers of the Surviving Corporation until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
ARTICLE II
Conversion of Securities; Exchange of Certificates
SECTION 2.01. Conversion of Capital Stock. (a) At the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of capital stock of the Company, Parent or Sub:
(i) Capital Stock of Sub. Each issued and outstanding share of
common stock, par value $0.01 per share, of Sub shall be converted into one
share of common stock, par value $0.01 per share, of the Surviving Corporation.
(ii) Cancelation of Treasury Stock and Parent-Owned Stock. Each
share of Company Common Stock owned by the Company, Parent or Sub or any
wholly-
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owned subsidiary thereof immediately prior to the Effective Time shall
automatically be canceled and shall cease to exist and no consideration shall be
delivered in exchange therefor. Each share of Company Common Stock that is owned
by any less than wholly-owned subsidiary of the Company or Parent (other than
Sub) shall automatically be converted into one fully paid and nonassessable
share of common stock, par value $.01 per share, of the Surviving Corporation.
(iii) Conversion of Company Common Stock. Each share of Company
Common Stock that is issued and outstanding immediately prior to the Effective
Time (other than shares to be canceled in accordance with Section 2.01(a)(ii)
and Appraisal Shares (as defined below)) shall be converted into the right to
receive the Offer Price in cash (the "Merger Consideration"). At the Effective
Time, all such shares of Company Common Stock shall no longer be outstanding and
shall automatically be canceled and shall cease to exist, and each holder of a
certificate that immediately prior to the Effective Time represented any such
shares of Company Common Stock shall cease to have any rights with respect
thereto, except the right to receive Merger Consideration upon surrender of such
certificate in accordance with Section 2.02, without interest.
(b) Appraisal Rights. Notwithstanding anything in this Agreement to the
contrary, shares (the "Appraisal Shares") of Company Common Stock issued and
outstanding immediately prior to the Effective Time that are held by any holder
who is entitled to demand and properly demands appraisal of such shares pursuant
to, and who complies in all respects with, the provisions of Section 262 of the
DGCL ("Section 262") shall not be converted into the right to receive the Merger
Consideration as provided in Section 2.01(a)(iii), but instead such holder shall
be entitled to payment of the fair value of such shares in accordance with the
provisions of Section 262. At the Effective Time, all Appraisal Shares shall
automatically be canceled and shall cease to exist or be outstanding, and each
holder of Appraisal Shares shall cease to have any rights with respect thereto,
except the right to receive the fair value of such shares in accordance with the
provisions of Section 262. Notwithstanding the foregoing, if any such holder
shall fail to perfect or otherwise shall waive, withdraw or lose the right to
appraisal under Section 262 or a court of competent jurisdiction shall determine
that such holder is not entitled to the relief provided by Section 262, then the
right of such holder to be paid the fair value of such holder's Appraisal Shares
under Section 262 shall cease to exist and such Appraisal Shares shall be deemed
to have been converted at the Effective Time into, and shall have become
exchangeable for, the right to receive the Merger Consideration as provided in
Section 2.01(a)(iii). The Company shall serve prompt notice to Parent of any
written demands for appraisal of any shares of Company Common Stock, and Parent
shall have the right to participate in and direct all negotiations and
proceedings with respect to such demands. The Company shall not, without the
prior written consent of Parent, make any payment with respect to, or settle or
offer to settle, any such demands, or agree to do any of the foregoing.
SECTION 2.02. Exchange of Certificates. (a) Paying Agent. Prior to the
Effective Time, Parent shall designate The Bank of New York to act as paying
agent (the "Paying Agent") for the payment of the Merger Consideration upon
surrender of the certificates representing Company Common Stock and shall
deposit, or cause the
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Surviving Corporation to deposit with the Paying Agent, on a timely basis, as
and when needed after the Effective Time, cash necessary to pay the aggregate
Merger Consideration in accordance with Section 2.01(a)(iii) (such cash being
hereinafter referred to as the "Exchange Fund"). The Paying Agent shall,
pursuant to irrevocable instructions, make payments out of the Exchange Fund as
provided for in this Article II and the Exchange Fund shall not be used for any
other purpose. All expenses of the Paying Agent shall be paid by Sub or the
Surviving Corporation.
(b) Exchange Procedure. As soon as reasonably practicable after the
Effective Time, Parent shall cause the Paying Agent to mail to each holder of
record of an outstanding certificate or outstanding certificates
("Certificates") which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock whose shares were converted into the
right to receive the Merger Consideration with respect thereto pursuant to
Section 2.01, (i) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates held
by such person shall pass, only upon proper delivery of the Certificates to the
Paying Agent and shall be in customary form and have such other provisions as
Parent may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for the Merger Consideration with
respect thereto. Upon surrender of a Certificate for cancelation to the Paying
Agent, together with such letter of transmittal, duly completed and validly
executed, and such other documents as may reasonably be required by the Paying
Agent, the holder of such Certificate shall be entitled to receive in exchange
therefor the amount of cash that such holder has the right to receive pursuant
to this Article II, and the Certificate so surrendered shall forthwith be
canceled. Such payment of the Merger Consideration shall be sent to such holder
promptly by the Paying Agent after receipt by the Paying Agent of such
Certificate, together with such letter of transmittal duly completed and validly
executed along with such other documents as may reasonably be required by the
Paying Agent. In the event of a transfer of ownership of Company Common Stock
that is not registered in the transfer records of the Company, payment of the
Merger Consideration may be made to a person other than the person in whose name
the Certificate so surrendered is registered if such Certificate shall be
properly endorsed or otherwise be in proper form for transfer and the person
requesting such issuance shall pay any transfer or other Taxes required by
reason of the payment of the Merger Consideration to a person other than the
registered holder of such Certificate or establish to the satisfaction of the
Paying Agent that such tax has been paid or is not applicable. Until surrendered
as contemplated by this Section 2.02(b), each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender the amount of cash, without interest, into which the shares of Company
Common Stock theretofore represented by such Certificate have been converted
pursuant to Section 2.01. No interest shall be paid or shall accrue on any cash
payable upon surrender of any Certificate.
(c) No Further Ownership Rights in Company Common Stock. All cash paid
upon the surrender for exchange of Certificates in accordance with the terms of
this Article II shall be deemed to have been paid in full satisfaction of all
rights pertaining to the shares of Company Common Stock formerly represented by
such Certificates. At the close of business on the day on which the Effective
Time occurs the stock transfer books
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of the Company shall be closed, and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the shares
of Company Common Stock that were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to the Surviving
Corporation or the Paying Agent for transfer or any other reason, they shall be
canceled and exchanged as provided in this Article II.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund that
remains undistributed to the holders of the Certificates for six months after
the Effective Time shall be delivered to Parent, upon demand, and any holders of
the Certificates who have not theretofore complied with this Article II shall
thereafter look only to Parent for, and Parent shall be liable for, the Merger
Consideration.
(e) No Liability. None of Parent, Sub, the Company or the Paying Agent or
any employee, officer, director, agent or affiliate thereof, shall be liable to
any person in respect of cash from the Exchange Fund in each case delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law. If any Certificates shall not have been surrendered prior to six
years after the Effective Time (or immediately prior to such earlier date on
which any Merger Consideration would otherwise escheat to or became the property
of any Governmental Entity (as defined in Section 3.01(d)), any such Merger
Consideration in respect thereof shall, to the extent permitted by applicable
law, become the property of Parent, free and clear of all claims or interest of
any person previously entitled thereto.
(f) Investment of Exchange Fund. The Paying Agent shall invest any cash
included in the Exchange Fund, as directed by Parent, on a daily basis. Any
interest or other income resulting from such investments shall be paid to
Parent.
(g) Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by Parent, the
posting by such person of a bond in such reasonable amount as Parent may direct
as indemnity against any claim that may be made against it with respect to such
Certificate, the Paying Agent will issue in exchange for such lost, stolen or
destroyed Certificate the Merger Consideration with respect thereto.
(h) Withholding Rights. Parent, the Surviving Corporation or the Paying
Agent shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of Company Common
Stock such amounts as Parent, the Surviving Corporation or the Paying Agent is
required to deduct and withhold with respect to the making of such payment under
the Internal Revenue Code of 1986, as amended (the "Code"), or any other
provision of domestic or foreign (whether national, federal, state, provincial,
local or otherwise) tax law. To the extent that amounts are so withheld and paid
over to the appropriate taxing authority by Parent, the Surviving Corporation or
the Paying Agent, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of the shares of
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Company Common Stock in respect of which such deduction and withholding was made
by Parent, the Surviving Corporation or the Paying Agent.
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of the Company. Except as set
forth on the disclosure schedule (with specific reference to the Section or
Subsection of this Agreement to which the information stated in such disclosure
relates, with such disclosure to be applicable to other Sections or Subsections
of this Agreement to the extent a matter is disclosed in such a way as to make
its relevance to the information called for by such other Section or Subsections
reasonably apparent on its face) delivered by the Company to Parent prior to the
execution of this Agreement (the "Company Disclosure Schedule"), the Company
represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Power. Each of the Company and its
subsidiaries (as defined in Section 8.03) (i) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (ii) has all requisite corporate, company or partnership power and
authority to carry on its business as now being conducted and (iii) is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership, leasing or
operation of its properties makes such qualification or licensing necessary,
other than in the case of clauses (i) (as it relates to the good standing of the
subsidiaries of the Company), (ii) and (iii), where such failure, individually
or in the aggregate, has not had and is not reasonably likely to have a Company
Material Adverse Effect (as defined in Section 8.03). The Company has made
available to Parent true and complete copies of the Company Certificate and the
By-laws of the Company (the "Company By-laws") and, upon request, will make
available to Parent after the date of this Agreement true and complete copies of
the certificate of incorporation and by-laws (or similar organizational
documents) of each of its subsidiaries, in each case as amended to the date of
this Agreement.
(b) Subsidiaries. Except as disclosed in the Filed Company SEC Documents
(as defined in Section 3.01(e)), the Company has no subsidiaries. Except as
otherwise set forth in the Filed Company SEC Documents, all the outstanding
shares of capital stock or other equity or voting interests of each subsidiary
of the Company are owned by the Company, by another wholly owned subsidiary of
the Company or by the Company and another wholly owned subsidiary of the
Company, free and clear of all pledges, claims, liens, charges, options, rights
of first refusal, encumbrances and security interests of any kind or nature
whatsoever (collectively, "Liens"), and are duly authorized, validly issued,
fully paid and nonassessable. Except for the capital stock of, or other equity
or voting interests in, its subsidiaries, the Company does not own, directly or
indirectly, any capital stock, membership interest, partnership interest, joint
venture interest, or other equity or voting interests in, any person.
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(c) Capital Structure. The authorized capital stock of the Company
consists of 20,000,000 shares of Company Common Stock and 1,000,000 shares of
preferred stock, par value $.01 per share (the "Company Preferred Stock", and
together with the Company Common Stock, the "Company Capital Stock"). At the
close of business on June 16, 2004, (i) 14,876,431 shares of Company Common
Stock were issued and outstanding, (ii) no shares of Company Common Stock were
held by the Company in its treasury, (iii) 2,266,082 shares of Company Common
Stock were reserved for issuance pursuant to the 1994 Stock Incentive Plan, as
amended prior to the date hereof, and the 2003 Stock Incentive Plan (such plans,
collectively, the "Company Stock Plans") (of which 1,742,527 shares were subject
to outstanding Company Stock Options (as defined below)), (iv) 15,000 shares of
Company Preferred Stock were reserved for issuance upon the exercise of the
rights (the "Rights") issued to the holders of Company Common Stock pursuant to
the Rights Agreement dated as of November 2, 1998, as amended, between the
Company and EquiServe Trust Company, N.A., as rights agent (the "Rights
Agreement") and (v) no shares of Company Preferred Stock were issued or
outstanding or were held by the Company as treasury shares. Section 3.01(c) of
the Company Disclosure Schedule sets forth, as of the close of business on June
16, 2004, the aggregate number of shares of Company Common Stock subject to
outstanding options (collectively, the "Company Stock Options") to purchase or
receive Company Common Stock granted under the Company Stock Plans or otherwise
and the weighted average exercise price of such Company Stock Options. Each
Company Stock Option may, by its terms, be canceled and converted into the right
to receive cash in connection with the Merger. All outstanding shares of Company
Capital Stock are, and all shares which may be issued pursuant to the Company
Stock Options will be, when issued in accordance with the terms thereof, duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. There are no bonds, debentures, notes or other indebtedness
of the Company having the right to vote (or convertible into, or exchangeable
for, securities having the right to vote) on any matters on which stockholders
of the Company may vote. Except as set forth above in this Section 3.01(c), as
of the date of this Agreement, (x) there are not issued, reserved for issuance
or outstanding (A) any shares of Company Capital Stock or other voting
securities or equity interests of the Company, (B) any securities of the Company
convertible into or exchangeable or exercisable for shares of Company Capital
Stock or other voting securities or equity interests of the Company or (C) any
stock appreciation rights, "phantom" stock rights, performance units, rights to
receive shares of Company Common Stock on a deferred basis, warrants, calls,
options or other rights to acquire from the Company or any of its subsidiaries,
and no obligation of the Company or any of its subsidiaries to issue, any
Company Capital Stock, voting securities, equity interests or securities
convertible into or exchangeable or exercisable for capital stock or voting
securities of the Company and (y) there are not any outstanding obligations of
the Company or any of its subsidiaries to repurchase, redeem or otherwise
acquire any such securities or to issue, deliver or sell, or cause to be issued,
delivered or sold, any such securities. Neither the Company nor any of its
subsidiaries is a party to any voting agreement with respect to the voting of
any such securities. Except as set forth above in this Section 3.01(c), as of
the date of this Agreement, there are no outstanding (1) securities of the
Company or any of its subsidiaries convertible into or exchangeable or
exercisable for shares of capital stock or
10
voting securities or equity interests of any subsidiary of the Company, (2)
warrants, calls, options or other rights to acquire from the Company or any of
its subsidiaries, and no obligation of the Company or any of its subsidiaries to
issue, any capital stock, voting securities, equity interests or securities
convertible into or exchangeable or exercisable for capital stock or voting
securities of any subsidiary of the Company or (3) obligations of the Company or
any of its subsidiaries to repurchase, redeem or otherwise acquire any such
outstanding securities or to issue, deliver or sell, or cause to be issued,
delivered or sold, any such securities.
(d) Authority; Noncontravention. The Company has the requisite corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, subject, in the case of the consummation of
the Merger and if required by applicable law, to obtaining the Stockholder
Approval (as defined in Section 3.01(s)). The execution and delivery of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company and no other corporate proceedings on the part of the
Company are necessary to approve this Agreement or to consummate the
transactions contemplated by this Agreement, subject, in the case of the
consummation of the Merger and if required by applicable law, to obtaining the
Stockholder Approval. This Agreement has been duly executed and delivered by the
Company and, assuming the due authorization, execution and delivery of this
Agreement by Parent and Sub, constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, subject
to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or law) and an implied covenant of good faith and fair dealing.
The Board of Directors of the Company, at a meeting duly called and held
at which all directors of the Company were present, duly and unanimously adopted
resolutions (i) approving and declaring advisable this Agreement, the Offer, the
Merger and the other transactions contemplated hereby, (ii) determining that the
terms of the Offer, the Merger, this Agreement and the other transactions
contemplated hereby are fair to and in the best interests of the Company's
stockholders and (iii) recommending that the Company's stockholders accept the
Offer, tender their shares pursuant to the Offer and adopt this Agreement (if
required by applicable law), which resolutions have not been subsequently
rescinded, modified or withdrawn in any way except as permitted by Section
4.02(b). In addition, the Board of Directors of the Company has taken all the
actions and made all the approvals set forth in Sections 3.01(r) and 3.01(v).
The members of the Board of Directors of the Company have advised the
Company that they intend to tender all shares of Company Common Stock owned by
them into the Offer, except for the tender of shares of Company Common Stock
that would subject a member of the Board of Directors of the Company to
liability under Section 16(b) under the Exchange Act.
11
Except as set forth in Section 3.01(d) of the Company Disclosure Schedule,
the execution and delivery of this Agreement by the Company and the consummation
by the Company of the transactions contemplated hereby and compliance by the
Company with the provisions hereof do not and will not conflict with, or result
in any violation or breach of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of, or result in, termination,
cancelation or acceleration of any obligation or to loss of a material benefit
under, or result in the creation of any Lien in or upon any of the properties or
assets of the Company or any of its subsidiaries under, or give rise to any
increased, additional, accelerated or guaranteed rights or entitlements to any
third party under, any provision of (i) the Company Certificate or the Company
By-laws or the certificate of incorporation or by-laws (or similar
organizational documents) of any of its subsidiaries, (ii) any loan or credit
agreement, bond, debenture, note, mortgage, indenture, guarantee, license, lease
or other contract, commitment, agreement, instrument, obligation, arrangement,
understanding, undertaking, permit, concession or franchise (each, including all
amendments thereto, a "Contract"), to which the Company or any of its
subsidiaries is a party or any of their respective properties or assets is
subject or (iii) subject to the governmental filings and other matters referred
to in the following paragraph, any (A) statute, law, ordinance, rule or
regulation or (B) judgment, order or decree, in each case, applicable to the
Company or any of its subsidiaries or to which their respective properties or
assets are bound, other than, in the case of clauses (ii) and (iii), any such
conflicts, violations, breaches, defaults, rights, results, losses, Liens or
entitlements that, individually or in the aggregate, have not had and are not
reasonably likely to have a Company Material Adverse Effect and, in the case of
clause (ii), for such Contracts that have been filed as an exhibit to the Filed
Company SEC Documents.
No consent, approval, order or authorization of, or registration,
declaration or filing with, any domestic or foreign (whether national, federal,
state, provincial, local or otherwise) government or any court, administrative
agency or commission or other governmental or regulatory authority or agency,
domestic, foreign or supranational (each, a "Governmental Entity"), is required
by or with respect to the Company or any of its subsidiaries in connection with
the execution and delivery of this Agreement by the Company or the consummation
by the Company of the transactions contemplated hereby or compliance by the
Company with the provisions hereof, except for (1) such filings and approvals
necessary to comply with applicable federal and state securities laws, including
compliance with the applicable requirements of the Exchange Act such as the
filing with the Securities and Exchange Commission (the "SEC") of (A) the
Schedule 14D-9 Amendment, (B) a proxy or information statement relating to the
approval of this Agreement by the Company's stockholders (the "Proxy
Statement"), if required by law, (C) any information statement (the "Information
Statement") required to be filed in connection with the Offer pursuant to Rule
14f-1 of the Exchange Act, and (D) such reports under Section 13(a) of the
Exchange Act as may be required in connection with this Agreement, the Offer,
the Merger and the other transactions contemplated hereby, (2) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware and
the Secretary of State of the State of New York and appropriate documents with
the relevant authorities of Massachusetts and the other states in which the
Company
12
or any of its subsidiaries is qualified to do business and (3) any filings
required under the rules and regulations of The Nasdaq Stock Market Inc.
("Nasdaq").
(e) SEC Documents; Liabilities. The Company has filed with the SEC all
forms, reports, schedules, statements and other documents required to be filed
with the SEC by the Company since October 31, 2002 (together with all
information incorporated therein by reference, the "Company SEC Documents"). No
subsidiary of the Company is required to file any form, report, schedule,
statement or other document with the SEC pursuant to the Section 12(b), 12(g) or
15(d) of the Exchange Act. As of their respective filing dates, the Company SEC
Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act,
as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such Company SEC Documents as of their respective
filing dates, and none of the Company SEC Documents at the time they were filed
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements (including the related notes) included in
the Company SEC Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles ("GAAP") (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto or
to the extent required by changes in GAAP) and fairly present in all material
respects the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and their respective consolidated results
of operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal and recurring year-end audit adjustments).
Except as referenced or reflected in the Company SEC Documents filed and
publicly available prior to the date of this Agreement (each, a "Filed Company
SEC Document"), including the financial statements included therein, the Company
and its subsidiaries have no liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise), other than liabilities and
obligations that, individually or in the aggregate, have not had and are not
reasonably likely to have a Company Material Adverse Effect.
As of the date of this Agreement, (i) the only outstanding indebtedness
for borrowed money of the Company and its subsidiaries is under letters of
credit under the Demand Credit Facility, dated September 2, 1998, as amended on
April 30, 2001 and April 28, 2003, between the Company and Fleet National Bank,
and the aggregate amount of indebtedness outstanding under such letters of
credit is less than $40 million and (ii) there are no guarantees by the Company
or any of its subsidiaries of indebtedness of third parties for borrowed money.
(f) Information Supplied. None of the information supplied or to be
supplied by the Company expressly for inclusion or incorporation by reference in
(i) the Offer Documents, the Schedule 14D-9 or the Information Statement will,
at the time such document is filed with the SEC, at any time it is amended or
supplemented or at the time
13
it is first published, sent or given to the Company's stockholders, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading,
or (ii) the Proxy Statement (if any) will, at the date it is first mailed to the
Company's stockholders or at the time of the Stockholders Meeting (as defined in
Section 5.01(b)), contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The Schedule 14D-9, the Information Statement and the
Proxy Statement will comply in all material respects with the applicable
requirements of the Exchange Act and the rules and regulations promulgated
thereunder. Notwithstanding the foregoing, 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 for inclusion or
incorporation by reference therein.
(g) Absence of Certain Changes or Events. Except as disclosed in the Filed
Company SEC Documents, since October 31, 2003 through the date of this
Agreement, (i) the Company and its subsidiaries have conducted their respective
businesses, in all material respects, in the ordinary course consistent with
past practice and (ii) there has not been (A) any change, development, effect or
condition that, individually or in the aggregate, constitutes, has had, or is
reasonably likely to have a Company Material Adverse Effect, (B) any
declaration, setting aside or payment of any dividend on, or other distribution
(whether in cash, stock or property) in respect of, any of the Company's or any
of its subsidiaries' capital stock except for dividends by a wholly owned
subsidiary of the Company to its parent, (C) any purchase, redemption or other
acquisition by the Company or its subsidiaries of any shares of capital stock or
any other securities of the Company or any of its subsidiaries or any options,
warrants or rights to acquire such shares or other securities, (D) any split,
combination or reclassification of any of the Company's or any of its
subsidiaries' capital stock or any issuance or the authorization of any issuance
of any other securities in respect of, in lieu of or in substitution for shares
of capital stock or other securities of the Company or any of its subsidiaries,
except for the issuance of Company Common Stock (and associated Rights) upon the
exercise of Company Stock Options outstanding on June 16, 2004 and in accordance
with their terms as in effect on such date, (E) amendment or authorization to
amend the certificate of incorporation or by-laws (or similar organizational
documents) of the Company or any of its subsidiaries, (F) any material change in
accounting methods, principles or practices by the Company or any of its
subsidiaries, except insofar as may have been required by a change in GAAP or
applicable law, (G) any material election with respect to taxes by the Company
or any of its subsidiaries or any settlement or compromise of any material tax
liability or refund or (H) any revaluation by the Company or any of its
subsidiaries of any of the material assets of the Company and its subsidiaries,
taken as a whole. Except as set forth in the Filed Company SEC Documents, since
October 31, 2003 through the date of this Agreement, the Company and its
subsidiaries have not (1) acquired, or agreed to acquire, (x) by merging or
consolidating with, or by purchasing all or a substantial portion of the assets
of, or by any other manner, any assets constituting a business or any
corporation, partnership, limited liability company, joint venture or
association or other entity or division thereof, or any direct or indirect
interest in any of the foregoing, or (y) any assets that are material to the
14
Company and its subsidiaries, taken as a whole, other than inventory acquired in
the ordinary course of business consistent with past practice, (2) directly or
indirectly sold, leased, licensed, sold and leasedback, mortgaged or otherwise
encumbered or subjected to any Lien or otherwise disposed of any of their
properties or assets or any interest therein that are material to the Company
and its subsidiaries, taken as a whole, except sales of inventory in the
ordinary course of business consistent with past practice or (3) (A) entered
into, modified, amended or terminated any Contract that is material to the
Company and its subsidiaries, taken as a whole, or (B) sold, transferred or
licensed to any person any material rights to the Intellectual Property of the
Company and its subsidiaries, taken as a whole.
(h) Litigation. Except as disclosed in the Filed Company SEC Documents,
there is no suit, claim, action, investigation or proceeding pending or, to the
knowledge of the Company, threatened against or affecting the Company or any of
its subsidiaries or any of their respective properties or assets that,
individually or in the aggregate, has had or is reasonably likely to have a
Company Material Adverse Effect, nor is there any judgment, order or decree
outstanding against, or, to the knowledge of the Company, investigation,
proceeding, notice of violation, order of forfeiture or complaint by any
Governmental Entity involving, the Company or any of its subsidiaries that,
individually or in the aggregate, has had or are reasonably likely to have a
Company Material Adverse Effect; provided that for purposes of this paragraph
(h), any such suit, claim, action, investigation, proceeding, judgment, order,
decree, investigation, notice, order or complaint shall not be deemed to have a
Company Material Adverse Effect if and to the extent it is based on, or related
to, the transactions contemplated by this Agreement.
(i) Contracts. Except for Contracts filed as exhibits to the Filed Company
SEC Documents, as of the date of this Agreement, there are no Contracts that are
required to be filed as an exhibit to any Company SEC Document under the
Exchange Act and the rules and regulations promulgated thereunder.
None of the Company or any of its subsidiaries is in violation or breach
of or default (with or without notice or lapse of time or both) under, or has
waived or failed to enforce any rights or benefits under, any Contract to which
it is a party or any of its properties or assets is subject, and, to the
knowledge of the Company, no other party to any of its Contracts is in violation
or breach of or default (with or without notice or lapse of time or both) under,
or has waived or failed to enforce any rights or benefits under, and there has
occurred no event giving to others any right of termination, amendment or
cancelation of, with or without notice or lapse of time or both, any such
Contract except, in each case, for violations, breaches, defaults, waivers or
failures to enforce rights or benefits, or events, that, individually or in the
aggregate, have not had and are not reasonably likely to have a Company Material
Adverse Effect.
(j) Compliance with Laws. Except with respect to Environmental Laws (as
defined in Section 3.01(m)(v)), which is the subject of Section 3.01(m), the
Company and its subsidiaries are in compliance in all material respects with all
statutes, laws, ordinances, rules, regulations, judgments, orders and decrees to
which the Company or
15
any of its subsidiaries is subject. Except as set forth in the Filed Company SEC
Documents, none of the Company or any of its subsidiaries has received, since
October 31, 2002, a notice or other written communication from a Governmental
Entity alleging or relating to a possible violation of any applicable statute,
law, ordinance, rule, regulation, judgment, order or decree, except for such
instances of violations that, individually or in the aggregate, have not had and
are not reasonably likely to have a Company Material Adverse Effect. Except with
respect to Environmental Laws (which is the subject of Section 3.01(m)) or as
disclosed in the Filed Company SEC Documents, the Company and its subsidiaries
have in effect all permits, licenses, variances, exemptions, authorizations,
operating certificates, franchises, orders and approvals of all Governmental
Entities (collectively, "Permits") necessary or advisable for them to own, lease
or operate their properties and assets and to carry on their businesses and
operations as now conducted, and there has occurred no violation of, default
(with or without notice or lapse of time or both) under, or event giving to
others any right of termination, amendment or cancelation of, with or without
notice or lapse of time or both, any such Permit, except for such Permits, the
failure to have, and such violations, defaults or events that, individually or
in the aggregate, have not had and are not reasonably likely to have a Company
Material Adverse Effect. There has not occurred an event which, to the knowledge
of the Company, could reasonably be expected to result in the revocation,
cancelation, non-renewal or adverse modification of any such Permit, except for
such revocations, cancelations, non-renewals or modifications that, individually
or in the aggregate, have not had and are not reasonably likely to have a
Company Material Adverse Effect.
(k) Absence of Changes in Benefit Plans and Benefit Agreements.
(i) Since October 31, 2003, through the date of this Agreement, except as set
forth on Section 3.01(k) of the Company Disclosure Schedule, none of the Company
or any of its subsidiaries has terminated, adopted, amended or agreed to amend
any bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock appreciation, restricted
stock, stock option, "phantom" stock, performance, retirement, thrift, savings,
stock bonus, cafeteria, paid time off, perquisite, fringe benefit, vacation,
severance, disability, death benefit, hospitalization, medical, welfare benefit
or other plan, program, policy, arrangement or understanding (whether or not
legally binding) maintained or contributed to, or required to be maintained or
contributed to, by the Company or any other person or entity that, together with
the Company, is treated as a single employer under Section 414(b), (c), (m) or
(o) of the Code (each, a "Commonly Controlled Entity"), in each case providing
benefits to any current or former directors, officers, employees or consultants
of the Company or any of its subsidiaries (collectively, "Company Benefit
Plans"), or has made any change in any actuarial or other assumption used to
calculate funding obligations with respect to any Company Pension Plan (as
defined in Section 3.01(n)) or any change in the manner in which contributions
to any Company Pension Plans are made or the basis on which such contributions
are determined. Except as set forth on Section 3.01(k) of the Company Disclosure
Schedule, there exist no (A) employment, consulting, deferred compensation,
severance, termination or indemnification agreements or arrangements between the
Company or any of its subsidiaries, on the one hand, and any current or former
director, officer, employee or consultant of the Company or any of its
subsidiaries, on the other
16
hand, other than any immaterial agreement or arrangement with a person who as of
the date of this Agreement is not a director or officer of the Company or (B)
agreements or arrangements between the Company or any of its subsidiaries, on
the one hand, and any current or former director, officer, employee or
consultant of the Company or any of its subsidiaries, on the other hand, the
benefits of which are contingent, or the terms of which are materially altered,
upon the occurrence of a transaction involving the Company or its subsidiaries
of the nature contemplated by this Agreement, other than any immaterial
agreement or arrangement with a person who as of the date of this Agreement is
not a director or officer of the Company (all such agreements and arrangements
described in clauses (A) and (B), collectively, "Company Benefit Agreements").
Since October 31, 2003, through the date of this Agreement, except as set forth
on Section 3.01(k) of the Company Disclosure Schedule, none of the Company or
any of its subsidiaries has terminated, adopted, amended or agreed to amend any
Company Benefit Agreement.
(ii) Since October 31, 2003, through the date of this Agreement,
except as set forth on Section 3.01(k) of the Company Disclosure Schedule, there
has not been (A) any grant by the Company or any of its subsidiaries to any
current or former director, officer, employee or consultant of any increase, in
compensation, bonus or other benefits, except for increases of cash compensation
and bonus in the ordinary course of business consistent with past practice, (B)
any grant by the Company or any of its subsidiaries to any current or former
director, officer, employee or consultant of the right to receive any severance,
change in control or termination pay, or increases therein, (C) any payment of
any benefit to any current or former director, officer, employee or consultant
or any grant or amendment of any award (including in respect of stock options,
stock appreciation rights, performance units, restricted stock or other
stock-based or stock-related awards or the removal or modification of any
restrictions in any Company Benefit Agreement or Company Benefit Plan or awards
made thereunder), except as required to comply with any applicable law or
pursuant to any Company Benefit Agreement or Company Benefit Plan in accordance
with its terms as in effect on October 31, 2003, (D) any adoption or entering
into of any collective bargaining agreement or other labor union contract
applicable to the employees of the Company or any subsidiary thereof, (E) the
taking of any action to fund or in any other way secure the payment of
compensation or benefits under any Company Benefit Plan, Company Benefit
Agreement or other Contract or (F) the taking of any action to accelerate the
vesting or payment of any compensation or benefit under any Company Benefit Plan
or Company Benefit Agreement or other Contract.
(iii) The aggregate amount of all payments or other economic
benefits that could be received by the persons listed on Section 3.01(k) of the
Company Disclosure Schedule (whether in cash or property or the vesting of
property) as a result of the execution and delivery of this Agreement by the
Company, the obtaining of the Stockholder Approval, the Offer or the
consummation of the Merger or any of the other transactions contemplated by this
Agreement (including as a result of termination of employment on or following
the Effective Time) and that would be characterized as "excess parachute
payments" (as defined in Section 280G(b)(1) of the Code) (any such payment or
benefit, an "Excess Parachute Payment") does not exceed the amount set
17
forth on such Section of the Company Disclosure Schedule opposite the names of
such persons. Except as set forth above, no person who is a "disqualified
individual" (as such term is defined in Treasury Regulation Section 1.280G-1)
with respect to the Company could receive any Excess Parachute Payments.
(iv) Other than payments that may be made to the groups of persons
listed in Section 3.01(k) of the Company Disclosure Schedule in the aggregate
amounts set forth therein, neither the execution and delivery of this Agreement
by the Company, the obtaining of the Stockholder Approval, the Offer nor the
consummation of the Merger or any of the other transactions contemplated by this
Agreement will (A) entitle any current or former director, officer, employee or
consultant of the Company or any of its subsidiaries to severance, change in
control or termination pay, (B) except pursuant to the Company Stock Plans,
accelerate the time of payment or vesting or trigger any payment or funding
(through a grantor trust or otherwise) of compensation or benefits under, or
increase the amount payable or trigger any other material obligation pursuant
to, any Company Benefit Plan or Company Benefit Agreement or (C) result in any
breach or violation of, or a default under, any Company Benefit Plan or Company
Benefit Agreement.
(v) Except as set forth on Section 3.01(k) of the Company
Disclosure Schedule, no person is entitled to receive any additional payment
from the Company or any of its subsidiaries or any other person in the event
that the excise tax under Section 4999 of the Code is imposed on such person.
(l) Labor Matters. There are no collective bargaining agreements or other
labor union contracts applicable to any employees of the Company or any of its
subsidiaries. There is no labor dispute, strike, work stoppage or lockout, or,
to the knowledge of the Company, threat thereof, by or with respect to employees
of the Company or any of its subsidiaries, except where such dispute, strike,
work stoppage or lockout, individually or in the aggregate, has not had and is
not reasonably likely to have a Company Material Adverse Effect.
(m) Environmental Matters. Except as disclosed in the Filed Company SEC
Documents and except for such matters that, individually or in the aggregate,
have not had and are not reasonably likely to have a Company Material Adverse
Effect: (i) each of the Company and its subsidiaries possesses all Environmental
Permits (as defined below) necessary to conduct its businesses and operations as
now conducted, and is in compliance with all such Environmental Permits;
(ii) each of the Company and its subsidiaries is in compliance with
all applicable Environmental Laws (as defined below), and none of the Company or
its subsidiaries has received any communication from any Governmental Entity or
other person that alleges that the Company or any of its subsidiaries has
violated or has, or may have, liability under any Environmental Law;
(iii) there are no Environmental Claims (as defined below) pending
or, to the knowledge of the Company, threatened (A) against the Company or any
of its
18
subsidiaries or (B) against any person whose liability for any Environmental
Claim the Company or any of its subsidiaries has retained or assumed, either
contractually or by operation of law, and none of the Company or its
subsidiaries has contractually retained or assumed any liabilities or
obligations that could reasonably be expected to provide the basis for any
Environmental Claim; and
(iv) to the knowledge of the Company, there have been no releases of
any Hazardous Materials (as defined below) that could reasonably be expected to
form the basis of any Environmental Claim against the Company or any of its
subsidiaries.
(v) Definitions. (A) "Environmental Claims" means any and all
administrative, regulatory or judicial actions, orders, decrees, suits, demands,
demand letters, directives, claims, liens, investigations, proceedings or
notices of noncompliance or violation by any Governmental Entity or other person
alleging potential responsibility or liability (including potential
responsibility or liability for costs of enforcement, investigation, cleanup, or
other response, removal or remediation conducted by or on behalf of a
Governmental Entity, natural resources damages, property damage, personal
injuries or penalties or for contribution, indemnification, cost recovery,
compensation or injunctive relief) arising out of, based on or related to (x)
the presence, release or threatened release of, or exposure to, any Hazardous
Materials at any location, whether or not currently or formerly owned, operated,
leased or managed by the Company or any of its subsidiaries, or (y)
circumstances forming the basis of any violation or alleged violation of any
Environmental Law.
(B) "Environmental Laws" means all domestic or foreign (whether national,
federal, state, provincial or otherwise) laws, rules, regulations, orders,
decrees, judgments or binding agreements issued, promulgated or entered into by
or with any Governmental Entity relating to pollution or protection of the
environment (including ambient air, surface water, groundwater, soils or
subsurface strata) or human health or safety.
(C) "Environmental Permits" means all permits, licenses, registrations and
other authorizations required under applicable Environmental Laws.
(D) "Hazardous Materials" means all hazardous, toxic, explosive or
radioactive substances, wastes or other pollutants, including petroleum or
petroleum distillates, asbestos or asbestos containing material, polychlorinated
biphenyls ("PCBs") or PCB containing material or equipment, radon gas,
infectious or medical wastes, that are regulated pursuant to any Environmental
Law.
(n) ERISA Compliance. (i) Section 3.01(n) of the Company Disclosure
Schedule contains a list of all Company Benefit Plans, including each "employee
pension benefit plan" (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) (sometimes referred to herein
as a "Company Pension Plan"), and "employee welfare benefit plan" (as defined in
Section 3(1) of ERISA). The Company has delivered or made available to Parent
complete and correct copies of (A) each material Company Benefit Plan and
Company Benefit Agreement (or,
19
in the case of any unwritten Company Benefit Plan or Company Benefit Agreement,
a description thereof), (B) the most recent annual reports on Form 5500 filed
with the Internal Revenue Service with respect to each such Company Benefit Plan
(if any such report was required), (C) the most recent summary plan description
for each such Company Benefit Plan for which such summary plan description is
required, (D) each trust agreement and group annuity contract relating to any
such Company Benefit Plan and (E) the most recent Internal Revenue Service
determination or opinion letter for each Company Pension Plan intended to be
tax-qualified under Section 401(a) of the Code.
(ii) Each Company Benefit Plan has been administered in accordance
with its terms. The Company, its subsidiaries and their employees and each
Company Benefit Plan are in compliance with the applicable provisions of ERISA
and the Code, and all other applicable laws, except to the extent that any
noncompliance, individually or in the aggregate, has not had and is not
reasonably likely to have a Company Material Adverse Effect.
(iii) All Company Pension Plans intended to be tax-qualified have
received favorable determination or opinion letters from the Internal Revenue
Service with respect to "TRA" (as defined in Section 1 of Rev. Proc. 93-39), to
the effect that such Company Pension Plans are qualified and exempt from federal
income taxes under Sections 401(a) and 501(a), respectively, of the Code, and no
such determination or opinion letter has been revoked nor, to the knowledge of
the Company, has any such revocation been threatened, nor has any such Company
Pension Plan been amended since the date of its most recent determination or
opinion letter or application therefor in any respect that is reasonably likely
to adversely affect its qualification.
(iv) With respect to each Company Benefit Plan that is an employee
welfare benefit plan, whether or not subject to ERISA, such Company Benefit Plan
(including any such plan covering retirees or other former employees) may be
amended or terminated on or at any time after the Effective Time without the
imposition of any material liability on the Company or any of its subsidiaries.
Except as set forth on Section 3.01(n) of the Company Disclosure Schedule,
neither the Company nor any of its subsidiaries has any obligations for retiree
health or life benefits under any Company Benefit Plan or Company Benefit
Agreement.
(v) Neither the Company nor any Commonly Controlled Entity has
maintained, contributed to or been obligated to maintain or contribute to, or
has or expects to incur any actual or contingent liability under, any Company
Benefit Plan that is (A) a "defined benefit plan" (as defined in Section 3(35)
of ERISA) or that is otherwise subject to Section 302 or Title IV of ERISA or
Section 412 of the Code or (B) a "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA).
(o) Taxes. (i) Each of the Company and its subsidiaries and any
consolidated, combined, unitary, affiliates or aggregate group of which the
Company and any of its subsidiaries is a member (an "affiliated group"), has
timely filed all material Tax Returns (as defined below in clause (v)) required
to be filed by it and each such return was complete and correct in all material
respects at the time of filing. Each of the
20
Company and each of its subsidiaries and any affiliated group has timely paid or
caused to be timely paid all Taxes shown on such Tax Returns to be due with
respect to the taxable periods covered by such Tax Returns (including Taxes for
which no Tax Returns are required to be filed) and all other material Taxes as
are due. The most recent financial statements contained in the Filed Company SEC
Documents reflect an adequate reserve (in addition to any reserve for deferred
Taxes established to reflect timing differences between book and tax income) for
all Taxes payable by the Company and its subsidiaries and any affiliated group
for all taxable periods and portions thereof through the date of such financial
statements, including as a result of being party to any tax sharing agreement or
as a result of any express or implied obligation to indemnify any other person
with respect to the payment of any Tax.
(ii) No Liens for Taxes exist with respect to any assets or
properties of the Company or any of its subsidiaries, except for statutory Liens
for Taxes not yet due.
(iii) None of the Company or any of its subsidiaries has constituted
either a "distributing corporation" or a "controlled corporation" (in each case,
within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of
stock qualifying for tax-free treatment under Section 355(e) of the Code (A) in
the two years prior to the date of this Agreement or (B) in a distribution that
could otherwise constitute part of a "plan" or "series of related transactions"
(within the meaning of Section 355(e) of the Code) in conjunction with the
Merger.
(iv) The Company was not, at any time during the period specified in
Section 897(c)(1)(A)(ii) of the Code, a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code.
(v) As used in this Agreement, (A) "Taxes" shall include (1) all
forms of taxation, whenever created or imposed, and whether domestic or foreign,
and whether imposed by a national, federal, state, provincial, local or other
Governmental Entity, including all interest, penalties and additions imposed
with respect to such amounts and (2) liability for the payment of any amounts of
the type described in clause (1) as a result of being a member of an affiliated,
consolidated, combined or unitary group and (B) "Tax Returns" shall mean all
domestic or foreign (whether national, federal, state, provincial, local or
otherwise) returns, declarations, statements, reports, schedules, forms and
information returns relating to Taxes and any amended Tax Return.
(p) Title to Properties. (i) Each of the Company and its subsidiaries has
good and, in the case of real property, marketable title to, or valid leasehold
interests in, all of its properties and assets except for such as are no longer
used or useful in the conduct of its businesses or as have been disposed of in
the ordinary course of business and except for defects in title, easements,
restrictive covenants and similar encumbrances that, individually or in the
aggregate, have not had and are not reasonably likely to have a Company Material
Adverse Effect. All such properties and assets, other than properties and assets
in which the Company or any of its subsidiaries has a leasehold interest, are
free and clear of all Liens, except for (A) Liens for current Taxes or
assessments not delinquent, (B) builder, mechanic, warehousemen, materialmen,
contractor, workmen,
21
repairmen, carrier or other similar Liens arising and continuing in the ordinary
course of business for obligations that are not delinquent, (C) the rights, if
any, of vendors having possession of tooling of the Company and its
subsidiaries, (D) Liens securing rental payments under capital lease
arrangements and (E) other Liens that, individually or in the aggregate, have
not had and are not reasonably likely to have a Company Material Adverse Effect.
(ii) Each of the Company and its subsidiaries has complied with the
terms of all leases to which it is a party and under which it is in occupancy,
and all such leases are in full force and effect, except for such noncompliances
or failures to be in full force and effect that, individually or in the
aggregate, have not had and are not reasonably likely to have a Company Material
Adverse Effect. The Company and its subsidiaries enjoy peaceful and undisturbed
possession under all such leases, except for failures to do so that,
individually or in the aggregate, have not had and are not reasonably likely to
have a Company Material Adverse Effect.
(q) Intellectual Property. (i) The Company and its subsidiaries own, or
are validly licensed or otherwise have the right to use, all Intellectual
Property (as defined below in clause (iii)) that is material to their businesses
and operations as now being conducted, except where the failure to have such
rights, individually or in the aggregate, has not had and is not reasonably
likely to have a Company Material Adverse Effect.
(ii) To the knowledge of the Company, none of the Company or any of
its subsidiaries has interfered with, infringed upon, misappropriated or
otherwise come into conflict with any Intellectual Property or other proprietary
information of any other person, except for any such interference, infringement,
misappropriation or other conflict that, individually or in the aggregate, has
not had and is not reasonably likely to have a Company Material Adverse Effect.
None of the Company or any of its subsidiaries has received any written charge,
complaint, claim, demand or notice alleging any such interference, infringement,
misappropriation or other conflict (including any claim that the Company or any
of its subsidiaries must license or refrain from using any Intellectual Property
or other proprietary information of any other person), or is party to or the
subject of any pending or, to the knowledge of the Company, threatened, suit,
claim, action, investigation or proceeding before or by any Governmental Entity
with respect to any such infringement, misappropriation or conflict, that has
not been settled or otherwise fully resolved, except for any such charge,
complaint, claim, demand, notice, suit, action, investigation or proceeding
that, individually or in the aggregate, has not had and is not reasonably likely
to have a Company Material Adverse Effect. Except as disclosed in the Filed
Company SEC Documents, to the knowledge of the Company, no other person has
interfered with, infringed upon, misappropriated or otherwise come into conflict
with any Intellectual Property owned by, licensed to or otherwise used by the
Company or any of its subsidiaries, except for any such interference,
infringement, misappropriation or other conflict that, individually or in the
aggregate, has not had and is not reasonably likely to have a Company Material
Adverse Effect.
(iii) As used in this Agreement, "Intellectual Property" shall mean
trademarks (registered or unregistered), service marks, brand names,
certification marks,
22
trade dress, assumed names, tradenames and other indications of origin, the
goodwill associated with the foregoing and registrations in any jurisdiction of,
and applications in any jurisdiction to register, the foregoing, including any
extension, modification or renewal of any such registration or application;
trade secrets and confidential information and rights in any jurisdiction to
limit the use or disclosure thereof by any person; registration or applications
for registration of copyrights in any jurisdiction, and any renewals or
extensions thereof; any similar intellectual property or proprietary rights
similar to any of the foregoing; licenses, immunities, covenants not to xxx and
the like relating to any of the foregoing; and any claims or causes of action
arising out of or related to any infringement, misuse or misappropriation of any
of the foregoing.
(r) State Takeover Statutes. Assuming the accuracy of Parent's and Sub's
representations in Section 3.02(f), the approval of this Agreement, the Offer,
the Merger and the other transactions contemplated hereby by the Board of
Directors of the Company referred to in Section 3.01(d) constitutes approval of
the Merger for purposes of Section 203 of the DGCL and represents the only
action necessary to ensure that the restrictions on "business combinations" (as
such term is defined therein) set forth in Section 203 of the DGCL does not and
will not apply to the execution or delivery of this Agreement or the
consummation of the Offer, the Merger and the other transactions contemplated
hereby. The Board of Directors of the Company has approved the consummation of
the Offer, the Merger and the other transactions contemplated hereby for
purposes of Chapter 110C of the Massachusetts Business Corporation Law. To the
knowledge of the Company, no other state takeover or similar statute or
regulation is applicable to this Agreement, the Offer, the Merger or any of the
other transactions contemplated hereby.
(s) Voting Requirements. The affirmative vote at the Stockholders Meeting
(as defined in Section 5.01(b)) or any adjournment or postponement thereof or
the written consent in lieu thereof of the holders of a majority of the votes
represented by all the outstanding shares of Company Common Stock in favor of
adopting this Agreement (the "Stockholder Approval") is, if required by
applicable law, the only vote of the holders of any class or series of Company
Capital Stock necessary to approve or adopt this Agreement or the Merger (if
such adoption is required by applicable law). The affirmative vote of the
holders of Company Capital Stock, or any of them, is not necessary to consummate
any transaction contemplated hereby other than the Merger; provided that no such
affirmative vote shall be required if the Merger can be effected pursuant to
Section 253 of the DGCL.
(t) Brokers; Fees and Expenses. No broker, investment banker, financial
advisor or other person, other than Xxxxxx Brothers Inc., the fees and expenses
of which will be paid by the Company, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. The Company has delivered to Parent true and complete
copies of all agreements under which any such fees or expenses are payable and
all indemnification and other agreements related to the engagement of the
persons to whom such fees are payable.
23
(u) Opinion of Financial Advisor. The Company has received the opinion of
Xxxxxx Brothers Inc., stating that, as of the date of the opinion and subject to
the qualifications and limitations set forth in its written opinion, the
consideration to be received in the Offer and Merger by the Company's
stockholders (other than Parent, Sub and their affiliates) is fair, from a
financial point of view, to the Company's stockholders, a copy of which opinion
will be delivered to Parent by the Company promptly after receipt by the
Company.
(v) Rights Agreement. The Company has delivered or made available to
Parent a complete and correct copy of the Rights Agreement, as amended to the
date of this Agreement. The Company and the Board of Directors of the Company
have taken all action necessary (i) to render the Rights inapplicable to this
Agreement, the Offer, the Merger and the other transactions contemplated hereby
and (ii) to ensure that (A) no "Distribution Date" (as such term is defined in
the Rights Agreement) will occur as a result of the approval, execution or
delivery of this Agreement or the consummation of the Offer, the Merger and the
other transactions contemplated hereby, (B) neither Parent nor Sub will be a
"15% Stockholder" (as such term is defined in the Rights Agreement) as a result
of the approval, execution or delivery of this Agreement or the consummation of
the Offer, the Merger and the other transactions contemplated hereby and (iii)
to provide that the Rights will expire immediately prior to the Effective Time.
SECTION 3.02. Representations and Warranties of Parent and Sub. Parent and
Sub represent and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of Parent and Sub
(i) is a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (ii) has all requisite
corporate power and authority to carry on its business as now being conducted
and (iii) is duly qualified or licensed to do business and is in good standing
in each jurisdiction in which the nature of its business or the ownership,
leasing or operation of its properties makes such qualification or licensing
necessary, other than in the case of clause (iii), where the failure to be so
qualified or licensed or in good standing, individually or in the aggregate, is
not reasonably likely to prevent or materially impede or delay the consummation
of the Offer, the Merger or any of the other transactions contemplated hereby or
have a material adverse effect on the ability of Parent and Sub to perform their
obligations under this Agreement (a "Parent Material Adverse Effect"). Parent
has made available to the Company true and complete copies of its Restated
Articles of Incorporation and By-laws and the Certificate of Incorporation and
By-laws of Sub, in each case as amended to the date of this Agreement.
(b) Authority; Noncontravention. Parent and Sub have the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement by Parent and Sub and the consummation by Parent and
Sub of the transactions contemplated by this Agreement have been duly authorized
by all necessary corporate action on the part of Parent and Sub and no other
corporate proceedings on the part of Parent or Sub are necessary to approve this
Agreement or to consummate the
24
transactions contemplated by this Agreement, except for the approval of Parent,
as the sole stockholder of Sub, of the Offer, the Merger, this Agreement and the
other transactions contemplated hereby which approval Parent has given. This
Agreement has been duly executed and delivered by Parent and Sub and, assuming
the due authorization, execution and delivery of this Agreement by the Company,
constitutes a valid and binding obligation of Parent and Sub, enforceable
against Parent and Sub in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or law) and
an implied covenant of good faith and fair dealing.
The execution and delivery of this Agreement by Parent and Sub and the
consummation by Parent and Sub of the transactions contemplated hereby and the
compliance by Parent and Sub with the provisions of this Agreement do not and
will not conflict with, or result in any violation or breach of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of, or result in, termination, cancelation or acceleration of any
obligation or to loss of a material benefit under, or result in the creation of
any Lien upon any of the properties or assets of Parent under, or give rise to
any increased, additional, accelerated or guaranteed rights or entitlements to
any third party under, any provision of (i) the Restated Articles of
Incorporation or By-laws of Parent or the Certificate of Incorporation or
By-laws of Sub, (ii) any Contract to which Parent or Sub is a party or any of
their respective properties or assets is subject or (iii) subject to the
governmental filings and other matters referred to in the following paragraph,
any (A) statute, law, ordinance, rule or regulation or (B) judgment, order or
decree, in each case, applicable to Parent or Sub or to which their respective
properties or assets are bound, other than, in the case of clauses (ii) and
(iii), any such conflicts, violations, defaults, rights, results, losses, Liens
or entitlements that, individually or in the aggregate, has not had and are not
reasonably likely to have a Parent Material Adverse Effect.
No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to Parent or Sub in connection with the execution and delivery of this
Agreement by Parent and Sub or the consummation by Parent and Sub of the
transactions contemplated hereby or the compliance by Parent and Sub with the
provisions of this Agreement, except for (1) such filings and approvals
necessary to comply with applicable federal and state securities laws, including
compliance with the applicable requirements of the Exchange Act such as the
filing with the SEC of (A) the Offer Documents and (B) such reports under
Section 13 and 16 of the Exchange Act as may be required in connection with this
Agreement, the Offer, the Merger and the other transactions contemplated hereby
and (2) the filing of the Certificate of Merger with the Secretary of State of
the State of Delaware and the Secretary of State of the State of New York and
appropriate documents with the relevant authorities of Massachusetts and the
other states in which the Company or any of its subsidiaries is qualified to do
business and (3) any filings required under the rules and regulations of Nasdaq
or the New York Stock Exchange.
25
(c) Information Supplied. None of the information supplied or to be
supplied by Parent or Sub expressly for inclusion or incorporation by reference
in (i) the Offer Documents, the Schedule 14D-9 Amendment or the Information
Statement will, at the time such document is filed with the SEC, at any time it
is amended or supplemented or at the time it is first published, sent or given
to the Company's stockholders, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, or (ii) the Proxy Statement (if any)
will, at the date it is first mailed to the Company's stockholders or at the
time of the Stockholders Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Offer Documents will comply in
all material respects with the applicable requirements of the Exchange Act and
the rules and regulations thereunder, and the Offer shall comply in all material
respects with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder. Notwithstanding the foregoing, no representation or
warranty is made by Parent or Sub with respect to statements made or
incorporated by reference therein based on information supplied by the Company
for inclusion or incorporation by reference therein.
(d) Brokers. No broker, investment banker, financial advisor or other
person, other than Bear, Xxxxxxx & Co. Inc., the fees and expenses of which will
be paid by Parent, is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of Parent.
(e) Interim Operations of Sub. Sub was formed solely for the purpose of
engaging in the transactions contemplated hereby and has engaged in no business
other than in connection with the transactions contemplated by this Agreement
(including matters ancillary to the Existing Offer prior to the date of this
Agreement).
(f) Company Capital Stock. As of the date hereof, except for (i) 50 shares
of Company Common Stock owned by Sub and (ii) 50 shares of Company Common Stock
owned by Parent, none of Parent, Sub or any of their respective subsidiaries
beneficially owns any Company Capital Stock and none of Parent, Sub or any of
their respective subsidiaries, affiliates or associates is an "interested
stockholder", as such term is defined in Section 203 of the DGCL or has been an
"interested stockholder" in the three years prior to this Agreement.
(g) Financing. Parent has access to sufficient funds to consummate the
Offer, the Merger and the other transactions contemplated hereby on the terms
and subject to the conditions contemplated hereby.
26
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business. (a) Conduct of Business. During the
period from the date of this Agreement to the Effective Time, except as
consented to in writing by Parent, as required by law, or as expressly
contemplated by this Agreement, the Company shall, and shall cause its
subsidiaries to, carry on their respective businesses, and continue all pricing,
sales, receivables and payables practices, in the ordinary course consistent
with past practice and comply with all applicable laws, rules and regulations
and use all commercially reasonable efforts to preserve their assets, brands,
licenses and technology and their relationships with customers, suppliers,
licensors, licensees, distributors and others having business dealings with
them. Without limiting the generality of the foregoing, during the period from
the date of this Agreement to the Effective Time, except as consented to in
writing by Parent, as set forth in Section 4.01(a) of the Company Disclosure
Schedule or as expressly permitted by this Agreement, the Company shall not, and
shall not permit any of its subsidiaries to:
(i) (A) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock or property) in respect of,
any of its capital stock, except for dividends by a wholly owned
subsidiary of the Company to its parent, (B) purchase, redeem or otherwise
acquire shares of capital stock or any other securities of the Company or
its subsidiaries or any options, warrants, or rights to acquire any such
shares or other securities or (C) split, combine, reclassify or otherwise
change any of its capital stock or other securities or issue or authorize
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or any of its other
securities, other than the issuance of Company Common Stock (and
associated Rights) upon the exercise of Company Stock Options outstanding
on June 16, 2004 and in accordance with their terms as in effect on such
date;
(ii) issue, deliver, sell, grant, pledge or otherwise encumber or
subject to any Lien any shares of its capital stock, any other voting
securities or any securities convertible into, or exchangeable for, or any
rights, warrants or options to acquire, any such shares, voting securities
or convertible or exchangeable securities, or any stock appreciation
rights, "phantom" stock rights, performance units, rights to receive
shares of Company Capital Stock on a deferred basis or other rights that
are linked to the value of Company Common Stock, including pursuant to
Contracts as in effect on the date hereof (other than the issuance of
shares of Company Common Stock upon the exercise of Company Stock Options
outstanding on June 16, 2004 in accordance with their terms as in effect
on such date);
(iii) amend or authorize to amend its certificate of incorporation
or by-laws (or similar organizational documents);
(iv) directly or indirectly acquire or agree to acquire (A) by
merging or consolidating with, or by purchasing all or a substantial
portion of the assets of, or
27
by any other manner, any assets constituting a business or any
corporation, partnership, limited liability company, joint venture or
association or other entity or division thereof, or any direct or indirect
interest in any of the foregoing, or (B) any assets that are material to
the Company and its subsidiaries, other than inventory acquired in the
ordinary course of business consistent with past practice;
(v) directly or indirectly sell, lease, license, sell and leaseback,
mortgage or otherwise encumber or subject to any Lien or otherwise dispose
of any of its properties or assets or any interest therein that are
material to the Company and its subsidiaries, taken as a whole, except
sales of inventory in the ordinary course of business consistent with past
practice;
(vi) (x) incur any indebtedness for borrowed money or guarantee any
indebtedness of another person or issue or sell any debt securities or
options, warrants, calls or other rights to acquire any debt securities of
the Company or any of its subsidiaries, guarantee any debt securities of
another person, enter into any "keep well" or other agreement to maintain
any financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing or (y) make
any loans, advances or capital contributions to, or investments in, any
other person, other than the Company or any direct or indirect wholly
owned subsidiary of the Company;
(vii) incur or commit to incur any capital expenditure that in the
aggregate are in excess of $250,000;
(viii) (A) pay, discharge, settle or satisfy any claims (including
claims of stockholders), liabilities or obligations (whether absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction in the ordinary course of business
consistent with past practice or as required by their terms as in effect
on the date of this Agreement of claims, liabilities or obligations
reflected or reserved against in the most recent consolidated financial
statements (or the notes thereto) of the Company included in the Filed
Company SEC Documents (for amounts not in excess of such reserves) or
incurred since the date of such financial statements in the ordinary
course of business consistent with past practice, (B) waive, release,
grant or transfer any right of material value to the Company and its
subsidiaries, taken as a whole, or (C) waive any material benefits of, or
agree to modify in any respect adverse to the Company or its subsidiaries,
or fail to enforce any confidentiality, standstill or similar agreement to
which the Company or any of its subsidiaries is a party;
(ix) (A) enter into, modify, amend or terminate any Contract that is
material to the Company and its subsidiaries, taken as a whole, or (B)
sell, transfer or license to any person or otherwise extend, amend or
modify any rights to the Intellectual Property of the Company or any of
its subsidiaries;
(x) take any action (or omit to take any action that the Company or
such subsidiary may legally take) if such action (or omission) is
reasonably likely to
28
result in (A) any representation and warranty of the Company set forth in
this Agreement that is qualified as to materiality becoming untrue, (B)
any such representation and warranty that is not so qualified becoming
untrue in any material respect or (C) any condition to the Offer set forth
in Exhibit A or any condition to the Merger set forth in Article VI not
being satisfied;
(xi) commence any suit, action or proceeding (other than a suit,
claim, action or proceeding as a result of a suit, action or proceeding
commenced against the Company or any of its subsidiaries);
(xii) change its fiscal year;
(xiii) change its financial or tax accounting methods, principles or
practices, except insofar as may have been required by a change in GAAP or
applicable law;
(xiv) make any material election with respect to taxes or enter into
any settlement or compromise of any material tax liability or refund;
(xv) revalue any of its material assets;
(xvi) terminate, adopt, amend or agree to amend any Company Benefit
Agreement or Company Benefit Plan;
(xvii) (A) grant any current or former director, officer, employee
or consultant any increase in compensation, bonus or other benefits, or
pay any bonus of any kind or amount to any current or former director,
officer, employee or consultant, except to the extent required to comply
with any applicable law or with any Company Benefit Plan or Company
Benefit Agreement set forth on Section 3.01(k) or Section 3.01(n) of the
Company Disclosure Schedule in accordance with its terms as in effect on
the date hereof, (B) grant or pay to any current or former director,
officer, employee or consultant any severance, change in control or
termination pay, or increases therein, except to the extent required to
comply with any applicable law or with any Company Benefit Plan or Company
Benefit Agreement set forth on Section 3.01(k) or Section 3.01(n) of the
Company Disclosure Schedule in accordance with its terms as in effect on
the date hereof, (C) pay any benefit or grant or amend any award
(including in respect of stock options, stock appreciation rights,
performance units, restricted stock or other stock-based or stock-related
awards or the removal or modification of any restrictions in any Company
Benefit Agreement or Company Benefit Plan or awards made thereunder),
except to the extent required to comply with any applicable law or with
any Company Benefit Plan or Company Benefit Agreement set forth on Section
3.01(k) or Section 3.01(n) of the Company Disclosure Schedule in
accordance with its terms as in effect on the date hereof, (D) adopt or
enter into any collective bargaining agreement or other labor union
contract applicable to the employees of the Company or any subsidiary
thereof, (E) take any action to fund or in any other way secure the
payment of compensation or benefits under any
29
Company Benefit Plan, Company Benefit Agreement or other Contract, except
to the extent required to comply with any applicable law or with any
Company Benefit Plan, Company Benefit Agreement or other Contract set
forth on Section 3.01(k) or Section 3.01(n) of the Company Disclosure
Schedule in accordance with its terms as in effect on the date hereof or
(F) take any action to accelerate the vesting or payment of any
compensation or benefit under any Company Benefit Plan or Company Benefit
Agreement or other Contract; or
(xviii) authorize any of, or commit, resolve or agree to take any
of, the foregoing actions.
(b) Certain Tax Matters. During the period from the date of this Agreement
to the Effective Time, the Company shall, and shall cause each of its
subsidiaries to, cause any and all existing tax sharing agreements, tax
indemnity obligations and similar agreements, arrangements and practices with
respect to Taxes to which the Company or any of its subsidiaries is a party or
by which the Company or any of its subsidiaries is otherwise bound (other than
any such agreement, arrangement or practice to which any person other than the
Company or any of its subsidiaries is a party or is otherwise entitled to
indemnification or any similar right) to be terminated as of the Closing Date so
that after such date neither the Company nor any of its subsidiaries shall have
any further rights or liabilities thereunder. The Company shall deliver to Sub
at the Closing a certificate, in compliance with Treasury Regulations Section
1.1445-2, certifying that the transactions contemplated hereby are exempt from
withholding under Section 1445 of the Code.
(c) Advice of Changes; Filings. The Company shall (i) confer with Parent
on a regular and frequent basis to report on operational matters and other
matters reasonably requested by Parent and (ii) promptly advise Parent orally
and in writing of any change or event that has had or is reasonably likely to
have a Company Material Adverse Effect. Upon obtaining knowledge thereof, the
Company shall give prompt notice to Parent of any representation or warranty
made by it contained in this Agreement becoming untrue or inaccurate such that
the conditions set forth in Exhibit A or Article VI would not be satisfied;
provided, however, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement. The Company and Parent shall
each promptly provide the other copies of all filings made by such party with
any Governmental Entity in connection with this Agreement and the transactions
contemplated hereby, other than the portions of such filings that include
confidential information not directly related to the transactions contemplated
by this Agreement.
(d) Litigation. The Company shall provide to Parent immediate written
notice and copies of all pleadings and correspondence in connection with any
suit, claim, action, investigation or proceeding before or by a Governmental
Entity against the Company and its subsidiaries and/or their directors relating
to the Offer, the Merger or any of the other transactions contemplated by this
Agreement.
30
SECTION 4.02. No Solicitation. (a) The Company shall not, nor shall it
authorize or permit any of its subsidiaries to, nor authorize or permit any
director, officer or employee of the Company or any of its subsidiaries or any
investment banker, financial advisor, attorney, accountant or other advisor,
agent or representative of the Company or any of its subsidiaries to (and shall
instruct such persons not to), directly or indirectly, (i) solicit, initiate or
encourage, or take any other action to facilitate, any Takeover Proposal (as
defined below) or any inquiries or the making of any proposal that constitutes
or could reasonably be expected to lead to a Takeover Proposal or (ii) enter
into, continue or otherwise participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, or
otherwise cooperate in any way with, any Takeover Proposal. The Company shall,
and shall cause each of its subsidiaries and each director, officer and employee
of the Company or any of its subsidiaries and each investment banker, financial
advisor, attorney, accountant or other advisor, agent or representative of the
Company or any of its subsidiaries to, immediately cease and cause to be
terminated all existing discussions or negotiations with any person conducted
heretofore with respect to any Takeover Proposal and request the prompt return
or destruction of all confidential information previously furnished.
Notwithstanding the foregoing, at any time prior to the acceptance for payment
of shares of Company Common Stock pursuant to the Offer, the Board of Directors
of the Company may, in response to a bona fide written Takeover Proposal that
such Board of Directors determines in good faith (after consultation with
outside counsel and a financial advisor of nationally recognized reputation)
constitutes or is reasonably likely to lead to a Superior Proposal (as defined
below), and which Takeover Proposal was unsolicited and did not otherwise result
from a breach of this Section 4.02, and subject to compliance with Section
4.02(c), (x) furnish information with respect to the Company and its
subsidiaries to the person making such Takeover Proposal (and its
representatives) pursuant to a customary confidentiality agreement not less
restrictive as a whole of such person than the Confidentiality Agreement (as
defined in Section 5.02); provided that all such information not previously
provided to Parent is provided or made available on a prior or substantially
concurrent basis to Parent, and (y) participate in discussions or negotiations
with the person making such Takeover Proposal (and its representatives)
regarding such Takeover Proposal. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the preceding
sentence by any director, officer or employee of the Company or any of its
subsidiaries or any investment banker, financial advisor, attorney, accountant
or other advisor, agent or representative of the Company or any of its
subsidiaries shall be deemed to be a breach of this Section 4.02(a) by the
Company.
The term "Takeover Proposal" means any inquiry, proposal or offer from any
person relating to any direct or indirect acquisition or purchase, in one
transaction or a series of transactions, including any merger, consolidation,
tender offer, exchange offer, stock acquisition, asset acquisition, binding
share exchange, business combination, recapitalization, liquidation,
dissolution, joint venture or similar transaction, of (A) assets or businesses
that constitute or represent 15% or more of the total revenue, operating income
or assets of the Company and its subsidiaries, taken as a whole, or (B) 15% or
more of the outstanding shares of Company Common Stock or capital stock of, or
other equity or voting interests in, any of the Company's subsidiaries directly
or indirectly
31
holding, individually or taken together, the assets or businesses referred to in
clause (A) above, in each case other than the transactions contemplated by this
Agreement.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) (A) withdraw (or modify in a manner adverse to Parent or Sub)
the approval, recommendation or declaration of advisability by such Board of
Directors or any such committee of this Agreement, the Offer, the Merger or any
of the other transactions contemplated hereby, (B) determine that this
Agreement, the Offer, the Merger or any of the other transactions contemplated
hereby, is no longer advisable, (C) recommend that the stockholders of the
Company reject this Agreement, the Offer, the Merger or any of the other
transactions contemplated hereby, (D) recommend the approval or adoption of any
Takeover Proposal or (E) resolve, agree or propose to take any such actions
(each such action set forth in this Section 4.02(b)(i) being referred to herein
as an "Adverse Recommendation Change"), (ii) adopt or approve any Takeover
Proposal or resolve, agree or propose to adopt or approve any Takeover Proposal,
or (iii) cause or permit the Company to enter into any letter of intent,
memorandum of understanding, agreement in principle, acquisition agreement,
merger agreement, option agreement, joint venture agreement, partnership
agreement or other agreement (each, an "Acquisition Agreement") constituting or
related to, or which is intended to or is reasonably likely to lead to, any
Takeover Proposal (other than a confidentiality agreement referred to in Section
4.02(a)), or resolve or agree to take any such actions. Notwithstanding the
foregoing, at any time prior to the acceptance of shares of Company Common Stock
for payment pursuant to the Offer, the Board of Directors of the Company may (i)
if such Board of Directors determines in good faith (after consultation with
outside counsel) that the failure to do so would result in a breach of its
fiduciary duties to the stockholders of the Company under applicable law, make
an Adverse Recommendation Change or (ii) solely in response to a Superior
Proposal that was unsolicited and did not otherwise result from a breach of this
Section 4.02, cause the Company to terminate this Agreement pursuant to Section
7.01(f) and concurrently enter into a binding Acquisition Agreement containing
the terms of a Superior Proposal; provided, however, that (A) no such
termination of this Agreement by the Company may be made, in each case until
after the third business day following Parent's receipt of written notice from
the Company advising Parent that the Board of Directors of the Company intends
to terminate this Agreement pursuant to Section 7.01(f) and specifying the terms
and conditions of, and the identity of any person making, the Superior Proposal
(it being understood and agreed that any amendment to the financial terms or any
other material term of such Superior Proposal shall require a new written notice
by the Company and a new three business day period) and (B) the Company shall
not terminate this Agreement pursuant to Section 7.01(f), and any purported
termination pursuant to Section 7.01(f) shall be void and of no force or effect,
unless the Company shall have complied with all applicable requirements of
Sections 5.06(b) (including the payment of the Termination Fee (as defined in
Section 5.06(b)) prior to or simultaneously with such termination). In
determining whether to make an Adverse Recommendation Change or to terminate
this Agreement as described in this Section 4.02(b), the Board of Directors of
the Company shall take into account any changes to the financial and other terms
of this Agreement proposed by Parent in response to any such written notice by
the Company or otherwise.
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The term "Superior Proposal" means any bona fide written offer by a third
party that (i) if consummated would result in such third party (or in the case
of a direct merger between such third party and the Company, the stockholders of
such third party) acquiring, directly or indirectly, more than 50% of the voting
power of the Company Common Stock or all or substantially all the assets of the
Company and its subsidiaries, taken as a whole, that the Board of Directors of
the Company determines in its good faith judgment (after consultation with a
financial advisor of nationally recognized reputation) is more favorable to the
Company's stockholders than the Offer and the Merger, taking into account, among
other things, any changes to the terms of this Agreement offered by Parent in
response to such Superior Proposal or otherwise, (ii) is reasonably capable of
being completed, taking in to account all financial, legal, regulatory and other
aspects of such proposal and (iii) is not contingent upon receipt of financing.
(c) In addition to the obligations of the Company set forth in paragraphs
(a) and (b) of this Section 4.02, the Company promptly shall advise Parent in
writing of any request for information that the Company reasonably believes
contemplates a Takeover Proposal or of any Takeover Proposal, or any inquiry the
Company reasonably believes could lead to any Takeover Proposal, the terms and
conditions of such request, Takeover Proposal or inquiry (including any
subsequent material amendment or modification to such terms and conditions) and
the identity of the person making any such request, Takeover Proposal or
inquiry. The Company shall keep Parent informed in all material respects on a
timely basis of the status and details (including material amendments or
proposed amendments) of any such request, Takeover Proposal or inquiry.
(d) Nothing contained in this Section 4.02 or elsewhere in this Agreement
shall prohibit the Company from (i) taking and disclosing to its stockholders a
position contemplated by Rule 14e-2(a) and Rule 14d-9 promulgated under the
Exchange Act or (ii) making any disclosure to the Company's stockholders if, in
the good faith judgment of the Board of Directors of the Company, after
consultation with outside counsel, failure so to disclose would be inconsistent
with applicable law; provided, however, that in no event shall the Company or
its Board of Directors or any committee thereof take, agree or resolve to take
any action prohibited by Section 4.02(b).
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Proxy Statement; Stockholders' Meeting.
(a) If the adoption of this Agreement by the Company's stockholders is required
by applicable law, as promptly as practicable following the acceptance of shares
of Company Common Stock in the Offer, the Company and Parent shall prepare and
the Company shall file with the SEC the Proxy Statement and the Company shall
use its commercially reasonable efforts to respond as promptly as practicable to
any comments of the SEC with respect thereto and to cause the Proxy Statement to
be mailed to the stockholders of the Company as promptly as practicable
following the expiration of the Offer. The Company shall promptly notify Parent
upon the receipt of any comments
33
from the SEC or the staff of the SEC or any request from the SEC or the staff of
the SEC for amendments or supplements to the Proxy Statement and shall provide
Parent with copies of all correspondence between the Company and its
representatives, on the one hand, and the SEC and the staff of the SEC, on the
other hand. If at anytime prior to the receipt of Stockholder Approval there
shall occur any event that should be set forth in an amendment or supplement to
the Proxy Statement, the Company shall promptly prepare and mail to its
stockholders such an amendment or supplement. Notwithstanding the foregoing,
prior to filing or mailing the Proxy Statement (or any amendment or supplement
thereto) or responding to any comments of the SEC or the staff of the SEC with
respect thereto, the Company (i) shall provide Parent an opportunity to review
and comment on such document or response and (ii) shall include in such document
or response all comments reasonably proposed by Parent; provided, that Parent
shall use commercially reasonable efforts to provide or cause to be provided its
comments to the Company as promptly as reasonably practicable after the Proxy
Statement is transmitted to Parent for its review. The Company shall not mail
any Proxy Statement to which Parent reasonably objects.
(b) If the adoption of this Agreement by the Company's stockholders is
required by applicable law, the Company shall, as promptly as practicable
following the acceptance of shares of Company Common Stock in the Offer,
establish a record date (which will be as promptly as reasonably practicable
following the date of this Agreement) for, duly call, give notice of, convene
and hold a meeting of its stockholders (the "Stockholders Meeting") for the
purpose of obtaining the Stockholder Approval, regardless of whether the Board
of Directors of the Company determines at any time that this Agreement or the
Merger is no longer advisable or recommends that the stockholders of the Company
reject this Agreement or the Merger. The Company shall cause the Stockholders
Meeting to be held as promptly as practicable following the acceptance of shares
of Company Common Stock in the Offer. The Company shall, through its Board of
Directors, recommend to its stockholders that they adopt this Agreement, and
shall include such recommendation in the Proxy Statement, in each case subject
to its rights under Section 4.02(b). Without limiting the generality of the
foregoing, the Company agrees that its obligations pursuant to this Section
5.01(b) shall not be affected by the commencement, public proposal, public
disclosure or communication to the Company or any other person of any Takeover
Proposal or the occurrence of any Adverse Recommendation Change. Notwithstanding
the foregoing, if Sub or any other subsidiary of Parent shall acquire at least
90% of the outstanding shares of Company Common Stock, the parties shall take
all necessary and appropriate action to cause the Merger to become effective as
soon as practicable after the expiration of the Offer without the adoption of
this Agreement by the stockholders of the Company in accordance with Section 253
of the DGCL and Section 907 of the NYBCL.
(c) Parent shall cause all shares of Company Common Stock purchased
pursuant to the Offer and all other shares of Company Common Stock owned by
Parent, Sub or any other subsidiary or controlled affiliate of Parent to be
voted in favor of this Agreement and the transactions contemplated hereby.
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SECTION 5.02. Access to Information; Confidentiality. The Company shall,
and shall cause each of its subsidiaries to, afford to Parent and to Parent's
officers, employees, investment bankers, financial advisors, attorneys,
accountants and other advisors, agents and representatives reasonable and prompt
access during normal business hours during the period prior to the Effective
Time or, if earlier, the termination of this Agreement in accordance with its
terms to all their respective properties, assets, books, contracts, commitments,
directors, officers, employees, attorneys, accountants, auditors, other
advisors, agents and representatives and records and, during such period, the
Company shall, and shall cause each of its subsidiaries to, make available to
Parent on a prompt basis (i) a copy of each report, schedule, form, statement
and other document filed or received by it during such period pursuant to the
requirements of domestic or foreign (whether national, federal, state,
provincial, local or otherwise) laws and (ii) all other information concerning
its business, properties and personnel as Parent may reasonably request
(including using commercially reasonable efforts to make available the work
papers of KPMG LLP). Except as required by law, Parent will hold, and will
direct its officers, employees, investment bankers, financial advisors,
attorneys, accountants and other advisors, agents and representatives to hold
any and all information received from the Company, directly or indirectly, in
confidence in accordance with the Confidentiality Agreement between Parent and
the Company dated as of June 8, 2004 (the "Confidentiality Agreement").
SECTION 5.03. Commercially Reasonable Efforts; Notification. Upon the
terms and subject to the conditions set forth in this Agreement, each of the
parties agrees to use its commercially reasonable efforts to take, or cause to
be taken, all actions, that are necessary, proper or advisable to consummate and
make effective, in the most expeditious manner practicable, the Offer, the
Merger and the other transactions contemplated by this Agreement, including
using all commercially reasonable efforts to accomplish the following: (i) the
taking of all reasonable acts necessary to cause the conditions precedent set
forth in Exhibit A and Article VI to be satisfied, (ii) the obtaining of all
necessary actions or nonactions, waivers, consents, approvals, orders and
authorizations from Governmental Entities and the making of all necessary
registrations, declarations and filings and the taking of all reasonable steps
as may be necessary to obtain an approval or waiver from, or to avoid an action
or proceeding by, any Governmental Entity and (iii) the obtaining of all
necessary consents, approvals or waivers from third parties. In connection with
and without limiting the foregoing, the Company and its Board of Directors
shall, if any state takeover statute or similar statute or regulation is or
becomes applicable to this Agreement, the Offer, the Merger or any of the other
transactions contemplated hereby, take all action necessary to ensure that the
Offer, the Merger and the other transactions contemplated hereby may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation on
this Agreement, the Offer, the Merger and the other transactions contemplated
hereby. Notwithstanding the foregoing or any other provision of this Agreement
to the contrary, in no event shall Parent or Sub be required to agree or proffer
to divest or hold separate, or take any other action with respect to, any of the
assets (whether tangible or intangible) or businesses of Parent and its
subsidiaries, taken as a whole, or the Company and subsidiaries, taken as a
whole, and the Company shall not, and shall not permit any of its subsidiaries
to, take any such
35
action with respect to any such assets or businesses without the express written
consent of Parent. The Company and Parent shall provide such assistance,
information and cooperation to each other as is reasonably requested in
connection with the foregoing and, in connection therewith, shall notify the
other person promptly following the receipt of any comments from any
Governmental Entity and of any request by any Governmental Entity for
amendments, supplements or additional information in respect of any
registration, declaration or filing with such Governmental Entity and shall
supply the other person with copies of all correspondence between such person or
any of its representatives, on the one hand, and any Governmental Entity, on the
other hand.
SECTION 5.04. Company Stock Options. (a) As soon as practicable following
the date of this Agreement, the Board of Directors of the Company (or, if
appropriate, any committee administering the Company Stock Plans) shall adopt
such resolutions or take such other actions (if any) as may be required to
effect the following:
(i) each Company Stock Option outstanding and unexercised
immediately prior to the Effective Time shall be canceled as of the
Effective Time with the holder thereof becoming entitled to receive an
amount in cash equal to the product of (A) the excess of the Merger
Consideration over the exercise price per share of Company Common Stock
under such Company Stock Option multiplied by (B) the number of shares of
Company Common Stock subject to such Company Stock Option; and
(ii) make such other changes to the Company Stock Plans as Parent
and the Company may agree are appropriate to give effect to the Merger.
(b) All amounts payable pursuant to this Section 5.04 shall be
subject to any required withholding of taxes and shall be paid without interest.
(c) The Company shall ensure that following the Effective Time no
holder of a Company Stock Option or any participant in any Company Stock Plan or
other Company Benefit Plan or Company Benefit Agreement shall have any right
thereunder to acquire any capital stock of the Company, the Surviving
Corporation or any of their respective subsidiaries or any interest in respect
of any such capital stock (including any "phantom" stock, "phantom" stock
rights, stock appreciation rights or stock-based performance units).
SECTION 5.05. Indemnification, Exculpation and Insurance. (a) Parent and
Sub agree that all rights to indemnification, advancement of expenses and
exculpation from liabilities for acts or omissions occurring at or prior to the
Effective Time now existing in favor of the current or former directors and
officers of the Company and its subsidiaries as provided in their respective
certificates of incorporation or by-laws (or similar organizational documents),
under the DGCL or otherwise shall be assumed and performed by the Surviving
Corporation, without further action, at the Effective Time and shall survive the
Merger and shall continue in full force and effect in accordance with their
terms from and after the Effective Time.
36
(b) In the event that Parent, the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person and
is not the continuing or surviving corporation or entity of such consolidation
or merger or (ii) transfers or conveys all or substantially all its properties
and assets to any person, then, and in each such case, Parent shall cause proper
provision to be made so that the successor and assign of Parent or the Surviving
Corporation assumes the obligations set forth in this Section 5.05, and in such
event all references to the Surviving Corporation in this Section 5.05 shall be
deemed a reference to such successor and assign.
(c) For six years after the Effective Time, Parent shall maintain in
effect the Company's current directors' and officers' liability insurance
covering each person currently covered by the Company's directors' and officers'
liability insurance policy for acts or omissions occurring prior to the
Effective Time on terms with respect to such coverage and amounts no less
favorable in any material respect to such directors and officers than those of
such policy as in effect on the date of this Agreement; provided that Parent may
substitute therefor insurance policies of a reputable and financially sound
insurance company the terms of which, including coverage and amount, are no less
favorable in any material respect to such directors and officers than the
insurance coverage otherwise required under this Section 5.05(c); provided,
however, that in no event shall Parent be required to pay annual premiums for
insurance under this Section 5.05(c) in excess of 200% of the amount of the
aggregate premiums paid by the Company for fiscal year 2004 for such purpose
(which fiscal year 2004 premiums are hereby represented and warranted by the
Company to be $314,000); provided that Parent shall nevertheless be obligated to
provide such coverage as may be obtained for such 200% amount. The Company will
seek to obtain, and may obtain, prior to the acceptance of shares of Company
Common Stock in the Offer, irrevocable directors' and officers' liability
insurance having a term of six years which covers the items described in this
Section 5.05(c); provided, that, (i) the Company may only obtain such insurance
if the cost thereof is $942,000 or less and reasonable advance notice is
provided to Parent and (ii) prior to the acceptance of shares of Company Common
Stock in the Offer, Parent may require the Company to substitute therefor
insurance policies of a reputable and financially sound insurance company the
terms of which, including coverage and amount, are no less favorable in any
material respect to insurance proposed to be obtained by the Company.
(d) Parent shall cause the Surviving Corporation to comply with its
obligations set forth in this Section 5.05, including by promptly providing any
necessary funds to satisfy such obligations.
(e) The provisions of this Section 5.05 shall survive consummation of the
Merger and are intended to be for the benefit of, and will be enforceable by,
each indemnified party, his or her heirs and his or her representatives.
SECTION 5.06. Fees and Expenses. (a) All fees and expenses incurred in
connection with this Agreement, the Offer, the Merger and the other transactions
contemplated hereby shall be paid by the party incurring such fees or expenses,
whether or not the Offer or the Merger is consummated, except that the expenses
incurred in
37
connection with the filing, printing and mailing the Offer Documents, the
Schedule 14d-9, the Information Statement and the Proxy Statement and the
solicitation of the Stockholder Approved (if required by applicable law) shall
be shared equally by Parent and the Company.
(b) In the event that (i) (A) a Takeover Proposal has been made to the
Company or its stockholders or a Takeover Proposal shall have otherwise become
publicly known, (B) thereafter this Agreement is terminated by either Parent or
the Company pursuant to Section 7.01(b)(i) or 7.01(b)(iii), (C) the Offer
remained open until the earlier of (1) the scheduled expiration date thereof and
(2) the termination of this Agreement in accordance with its terms, and the
Minimum Tender Condition (as such term is defined in Exhibit A) was not met and
(D) within 12 months after such termination, the Company or any of its
subsidiaries enters into any Acquisition Agreement with respect to, or
consummates, any Takeover Proposal (provided that, for purposes of this Section
5.06(b), the number "35" shall be substituted for the number "15" in the
definition of Takeover Proposal), (ii) this Agreement is terminated by the
Company pursuant to Section 7.01(f) or (iii) this Agreement is terminated by
Parent pursuant to Section 7.01(c), then the Company shall pay Parent a fee
equal to $10,400,000 (the "Termination Fee") by wire transfer of same day funds
to an account designated by Parent (x) in the case of a termination by the
Company pursuant to Section 7.01(f), prior to or simultaneously with such
termination, (y) in the case of a termination by Parent pursuant to Section
7.01(c), within two business days after such termination and (z) in the case of
a payment as a result of any event referred to in Section 5.06(b)(i)(D), upon
the first to occur of such events. The Company acknowledges that the agreements
contained in this Section 5.06(b) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Parent would
not enter into this Agreement; accordingly, if the Company fails promptly to pay
the amounts due pursuant to this Section 5.06(b), and, in order to obtain such
payment, Parent commences a suit that results in a judgment against the Company
for the amounts set forth in this Section 5.06(b), the Company shall pay to
Parent its costs and expenses (including attorneys' fees and expenses in
connection with such suit, together with interest on the amounts set forth in
this Section 5.06 at a rate per annum equal to 4%.
SECTION 5.07. Public Announcements. Unless otherwise required by
applicable law, Parent and Sub, on the one hand, and the Company, on the other
hand, shall, to the extent reasonably practicable, consult with each other
before issuing, and give each other a reasonable opportunity to review and
comment upon, any press release or other public statements with respect to this
Agreement, the Offer, the Merger and the other transactions contemplated hereby
and shall not issue any such press release or make any public announcement prior
to such consultation, except as may be required by applicable law, court process
or by obligations pursuant to any listing agreement with Nasdaq or any national
securities exchange. The parties agree that the initial press release to be
issued with respect to the transactions contemplated by this Agreement shall be
in the form heretofore agreed to by the parties.
38
SECTION 5.08. Rights Agreement. The Board of Directors of the Company
shall take all further action (in addition to that referred to in Section
3.01(v)) necessary or desirable (including redeeming the Rights immediately
prior to the Effective Time or amending the Rights Agreement if reasonably
requested by Parent) in order to render the Rights inapplicable to the Offer,
the Merger and the other transactions contemplated hereby. If any "Distribution
Date" occurs under the Rights Agreement at any time during the period from the
date of this Agreement to the Effective Time, the Company and Parent shall make
such adjustment to the Offer Price and/or Merger Consideration as the Company
and Parent shall mutually agree so as to preserve the economic benefits that the
Company and Parent each reasonably expected on the date of this Agreement to
receive as a result of the consummation of the Offer, the Merger and the other
transactions contemplated hereby. Except as provided in this Section 5.08, the
Company shall not (i) amend, modify or waive any provision of the Rights
Agreement or (ii) take any action to redeem the Rights or render the Rights
inapplicable to any transaction.
SECTION 5.09. Transfer Taxes. All stock transfer, real estate transfer,
documentary, stamp, recording and other similar Taxes (including interest,
penalties and additions to any such Taxes) incurred in connection with this
Agreement the Offer, the Merger and any of the transactions contemplated hereby
shall be paid by the Company out of its own funds.
SECTION 5.10. Directors. (a) Promptly upon the acceptance for payment of,
and payment by Sub for, any shares of Company Common Stock pursuant to the
Offer, Sub shall be entitled to designate for appointment or election to the
then existing Board of Directors of the Company, upon written notice to the
Company, such number of directors on the Board of Directors of the Company as
will give Sub, subject to compliance with Section 14(f) of the Exchange Act,
representation on the Board of Directors of the Company equal to that number of
directors, rounded down to the nearest whole number, which is the product of (a)
the total number of directors on the Board of Directors of the Company (giving
effect to the directors elected pursuant to this sentence) multiplied by (b) the
percentage that (i) such number of shares of Company Common Stock so accepted
for payment and paid for by Sub bears to (ii) the number of such shares
outstanding, and the Company shall use its reasonable efforts, at such time, to
cause Sub's designees to be so elected, provided, however, that in the event
that Sub's designees are appointed or elected to the Board of Directors of the
Company, until the Effective Time the Board of Directors of the Company shall
have at least two directors who are Directors on the date of this Agreement and
who are not officers of the Company or representatives of any affiliates of the
Company (the "Independent Directors"); and provided further that, in such event,
if the number of Independent Directors shall be reduced below two for any reason
whatsoever, any remaining Independent Directors (or Independent Director, if
there shall be only one remaining) shall be entitled to designate persons to
fill such vacancies who shall be deemed to be Independent Directors for purposes
of this Agreement or, if no Independent Directors then remain, the other
directors shall designate two persons to fill such vacancies who are not
officers, stockholders or affiliates of the Company, Parent or Sub, and such
persons shall be deemed to be Independent Directors for purposes of this
Agreement. Subject to
39
applicable law, the Company shall, upon request of Sub, use its reasonable
efforts to cause Sub's designees to be elected to the Company Board of
Directors, including mailing to its stockholders the Information Statement
containing the information required by Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder, and the Company shall use its reasonable
efforts to make such mailing with the mailing of the Schedule 14D-9 (provided
that Sub shall have provided to the Company on a timely basis all information
required to be included in the Information Statement with respect to Sub's
designees). Sub and Parent shall supply to the Company all information with
respect to Sub, Parent and their nominees, officers, directors and affiliates
required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder. In connection with the foregoing, the Company shall promptly, at the
option of Sub, to the extent necessary, either increase the size of the Board of
Directors of the Company or obtain the resignation of such number of its current
directors as is necessary to enable Sub's designees to be elected or appointed
to the Board of Directors of the Company as provided above.
(b) Notwithstanding anything in this Agreement to the contrary, following
the time directors designated by Sub constitute a majority of the Company's
Board of Directors and prior to the Effective Time, the affirmative vote of a
majority of the Independent Directors shall be required to (i) amend, modify or
terminate this Agreement on behalf of the Company, (ii) exercise or waive any of
the Company's rights, benefits or remedies hereunder, (iii) amend the Company
Certificate or Company By-laws if such action would adversely affect the holders
of Company Common Stock other than Parent and Sub, (iv) extend the time for
performance of any obligation of Parent or Sub hereunder (v) extend or alter the
Effective Time or (vi) take any other action under or in connection with this
Agreement required to be taken by the Company's Board of Directors.
(c) Prior to the Effective Time, the Company shall cause each member of
its Board of Directors, other than Sub's designees, to execute and deliver a
letter effectuating his or her resignation as a director of such Board of
Directors effective immediately prior to the Effective Time.
SECTION 5.11. Employee Matters.
(a) Parent agrees that, for a period of one year after the Effective Time,
it shall, or shall cause the Surviving Corporation to, provide the employees of
the Company as of the Effective Time who remain employees of the Company
thereafter ("Company Employees") with either employee benefits substantially
comparable in the aggregate to those available to such Company Employees as of
the date hereof (excluding for all purposes stock-based plans and other
equity-based compensation arrangements) or employee benefits substantially
comparable in the aggregate to those available to similarly situated employees
of Parent.
(b) Parent agrees that it shall, or shall cause the Surviving Corporation
to, cause the employee benefit plans that cover Company Employees after the
Effective Time to credit such Company Employees for their service with the
Company and its
40
affiliates (and any predecessors) for purposes of eligibility and vesting under
such plans (and also to credit such service under any applicable vacation or
severance policies or programs) to the same extent that such service was
credited under any similar plan of the Company, but not to the extent such
credit would result in a duplication of benefits. Such plans also shall permit
Company Employees (and their eligible spouses and dependents) to participate in
such plans without being subject to any waiting periods or any restrictions or
limitations for pre-existing conditions, except to the extent that such
restrictions or limitations would have been applicable under the comparable
Company plan as of the Effective Time. In addition, each plan will credit
Company Employees (and their eligible spouses and dependents) with amounts, if
any, paid during the applicable plan year in which the Effective Time occurs
under the plan towards deductibles, co-pays and out-of-pocket maximums.
(c) Nothing contained in this Section 5.11 or elsewhere in this Agreement
shall be construed to prevent, from and after the Effective Time, the
termination of employment of any individual Company Employee or any change in
the particular employee benefits available to any such individual Company
Employee or the amendment or termination of any particular Company Benefit Plan
or Company Benefit Agreement in accordance with the terms of such Company
Benefit Plan or Company Benefit Agreement.
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation to Effect the Merger.
The obligation of each party to effect the Merger is subject to the
satisfaction, or to the waiver by such party, on or prior to the Closing Date of
each of the following conditions:
(a) Stockholder Approval. The Stockholder Approval (if required by
applicable law) shall have been obtained.
(b) No Injunctions or Legal Restraints. No temporary restraining order,
preliminary or permanent injunction or other order or decree issued by any court
of competent jurisdiction or other legal restraint or prohibition (collectively,
"Legal Restraints") that has the effect of preventing the consummation of the
Merger shall be in effect.
(c) Purchase of Shares in the Offer. Parent, Sub or their affiliates shall
have purchased, or caused to be purchased, the shares of Company Common Stock
properly tendered pursuant to the Offer and not withdrawn.
41
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination. This Agreement may be terminated, the Offer and
the Merger contemplated hereby may be abandoned, at any time prior to the
Effective Time, whether before or after the Stockholder Approval (if any) has
been obtained:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) unless any Company Common Stock has been accepted for
payment pursuant to the Offer, if the Merger shall not have been
consummated by the Outside Date, unless failure to consummate the
Merger prior to such date principally results from a material breach
of this Agreement by the party seeking to terminate this Agreement;
(ii) if there exists any Legal Restraint permanently
enjoining, restraining or otherwise prohibiting the Offer or the
Merger and such order, decree, ruling to other action shall be in
effect and shall have become final and nonappealable; provided,
that, the party seeking to terminate shall have used its reasonable
efforts to challenge such Legal Restraint; or
(iii) if the Offer has expired or has been terminated in
accordance with the terms set forth in this Agreement (including
Exhibit A) without Company Common Stock having been accepted for
payment pursuant to the Offer; provided, however, that the
terminating party is not then in material breach of any
representation, warranty or covenant contained in this Agreement;
(c) by Parent, in the event that (1) an Adverse Recommendation
Change shall have occurred or been proposed or (2) the Board of Directors
of the Company fails publicly to reaffirm its recommendation of this
Agreement, the Offer, the Merger or any of the other transactions
contemplated by this Agreement within three business days of receipt of a
written request by Parent to provide such reaffirmation following a
Takeover Proposal (which reaffirmation must also include unconditional
rejection of such Takeover Proposal); provided, however, that this
Agreement may not be terminated pursuant to this clause if Sub has
accepted shares of Company Common Stock for payment pursuant to the Offer;
(d) by Parent if the Company breaches or fails to perform in any
material respect any of its representations, warranties or covenants
contained in this Agreement, which breach or failure to perform (i) would
give rise to the failure of a condition set forth in Exhibit A, and (ii)
cannot be or has not been cured within
42
30 days after the giving of written notice to the Company of such breach
(provided that Parent is not then in material breach of any
representation, warranty or covenant contained in this Agreement);
provided, however, that this Agreement may not be terminated pursuant to
this clause if Sub has accepted shares of Company Common Stock for payment
pursuant to the Offer;
(e) by the Company if Parent breaches or fails to perform in any
material respect any of its representations, warranties or covenants
contained in this Agreement, which breach or failure to perform cannot be
or has not been cured within 30 days after the giving of written notice to
Parent of such breach (provided that the Company is not then in material
breach of any representation, warranty or covenant in this Agreement);
provided, however, that this Agreement may not be terminated pursuant to
this clause if Sub has accepted shares of Company Common Stock for payment
pursuant to the Offer; or
(f) by the Company prior to the acceptance of shares of Company
Common Stock pursuant to the Offer in accordance with Section 4.02(b);
provided, however, that the Company shall have complied with all
provisions thereof, including the notice provisions therein.
SECTION 7.02. Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 7.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Sub or the Company, other than the
provisions of the last sentence of Section 1.02(c), Section 3.01(t), Section
3.02(d), the last sentence of Section 5.02, Section 5.06, this Section 7.02 and
Article VIII, which shall survive such termination; provided, however, that no
such termination shall relieve any party hereto from any liability or damages
resulting from a material and intentional breach by a party of any of its
representations, warranties or covenants set forth in this Agreement.
SECTION 7.03. Amendment. This Agreement may be amended by the parties
hereto at any time, whether before or after the Stockholder Approval has been
obtained (if required by applicable law); provided, however, that after such
approval or adoption has been obtained (if required by applicable law), there
shall be made no amendment that by law requires further approval or adoption by
stockholders without such further approval or adoption. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties hereto.
SECTION 7.04. Extension; Waiver. At any time prior to the Effective Time,
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained herein or in any document delivered
pursuant hereto or (c) waive compliance with any of the agreements or conditions
contained herein; provided, however, that after the Stockholder Approval has
been obtained (if required by applicable law), there shall be made no waiver
that by law requires further approval or adoption by stockholders without such
further approval or adoption. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in
43
writing signed on behalf of such party. The failure or delay by any party to
this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of such rights nor shall any single or partial
exercise by any party to this Agreement of any of its rights under this
Agreement preclude any other or further exercise of such rights or any other
rights under this Agreement.
SECTION 7.05. Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 7.01, an amendment of this
Agreement pursuant to Section 7.03 or an extension or waiver pursuant to Section
7.04 shall, in order to be effective, require in the case of Parent, Sub or the
Company, action by its Board of Directors or the duly authorized designee of its
Board of Directors, subject to the provisions of Section 5.10(b).
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any certificate or
instrument delivered pursuant to this Agreement, including any rights arising
out of any breach of such representations or warranties, shall survive the
Effective Time. This Section 8.01 shall not limit this Article VIII or any
covenant or agreement of the parties which by its terms applies, or is to be
performed in whole or in part, after the Effective Time.
SECTION 8.02. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally or on the next business day after deposit with a recognized
overnight courier having next business day delivery (providing proof of
delivery) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
if to Parent or Sub, to:
Xxxxx Apparel Group, Inc.
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Chief Operating and Financial Officer
General Counsel
with copies to:
Cravath, Swaine & Xxxxx LLP
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
44
if to the Company, to:
Xxxxxxx Shoe Company Inc.
000 Xxxxxxx Xxxxxx
Xxxx Xxxx (Xxxxxx), XX 00000-0000
Attention: Chief Executive Officer
with a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxxxx X. Xxxxx, Esq.
Xxxxx X. Xxxxxx, Esq.
SECTION 8.03. Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person;
(b) "Company Material Adverse Effect" means any change, development,
effect or condition that, individually or in the aggregate, (i) has had, or is
reasonably likely to have, a material and adverse effect on the business,
properties, assets, liabilities, condition (financial or otherwise) or results
of operations of the Company and its subsidiaries, taken as a whole and (ii) has
had, or is reasonably likely to have, a material adverse effect on the ability
of the Company to consummate the Merger and to perform its obligations under
this Agreement (and which otherwise relates to the Company or its subsidiaries),
other than, in the case of any of the foregoing, (1) the effects of changes that
are generally applicable to the industry and markets in which the Company and
its subsidiaries operate, (2) the effects of changes that are generally
applicable to the United States economy or securities markets or the world
economy or international securities markets or (3) any effects on the employees,
suppliers, licensors or customers of the Company and its subsidiaries directly
resulting from the public announcement of this Agreement, the transactions
contemplated hereby or the consummation of such transactions; provided, that,
this clause (3) shall be disregarded for purposes of determining the accuracy of
the representations and warranties contained in Section 3.01(d);
(c) "person" means an individual, corporation, partnership, joint venture,
association, trust, limited liability company, Governmental Entity,
unincorporated organization or other entity;
(d) a "subsidiary" of any person means another person of which an amount
of the outstanding voting securities or other voting ownership or voting
partnership interests sufficient to elect at least a majority of its Board of
Directors
45
or other governing body (or, if there are no such voting interests,
more than 50% of the outstanding equity interests) is owned directly or
indirectly by such first person; and
(e) "to the knowledge of the Company" means the actual knowledge by any
executive officer of the Company of the existence or absence of facts which
would contradict a particular representation or warranty of the Company.
SECTION 8.04. Interpretation. When a reference is made in this Agreement
to a Section, Subsection, Exhibits or Schedule, such reference shall be to a
Section or Subsection of, or an Exhibit or Schedule to, this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. The words "date hereof" shall refer to the date of this Agreement.
The term "or" is not exclusive. The word "extent" in the phrase "to the extent"
shall mean the degree to which a subject or other thing extends, and such phrase
shall not mean simply "if". The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms. Any
agreement or instrument defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement or instrument as from
time to time amended, modified or supplemented. References to a person are also
to its permitted successors and assigns.
SECTION 8.05. Counterparts. This Agreement may be executed in one or more
counterparts (including telecopy), all of which shall be considered one and the
same agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other parties.
SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries. This
Agreement and the Confidentiality Agreement constitute the entire agreement, and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter of this Agreement and the
Confidentiality Agreement and except for the provisions of Section 5.05 of this
Agreement, are not intended to confer upon any person other than the parties
hereto and thereto (and their respective successors and assigns) any rights or
remedies.
SECTION 8.07. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 8.08. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned, in whole or in part
(except by operation of law), by any of the parties hereto without the prior
written consent of the other parties hereto, except that Sub may assign, in its
sole discretion, any of or all its
46
rights, interests and obligations under this Agreement to Parent or to any
direct or indirect wholly owned subsidiary of Parent, but no such assignment
shall relieve Sub of any of its obligations hereunder. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by, the parties hereto and their respective successors and assigns.
SECTION 8.09. Consent to Jurisdiction. Each of the parties hereto
irrevocably and unconditionally submits to the exclusive jurisdiction of (a) any
Delaware State court and (b) any Federal court of the United States of America
sitting in the State of Delaware, for the purposes of any suit, action or other
proceeding arising out of this Agreement or any transaction contemplated hereby
(and each agrees that no such action, suit or proceeding relating to this
Agreement shall be brought by it or any of its affiliates except in such
courts). Each of the parties hereto further agrees that, to the fullest extent
permitted by applicable law, service of any process, summons, notice or document
by U.S. registered mail to such person's respective address set forth above
shall be effective service of process for any action, suit or proceeding in
Delaware with respect to any matters to which it has submitted to jurisdiction
as set forth above in the immediately preceding sentence. Each of the parties
hereto irrevocably and unconditionally waives (and agrees not to plead or claim)
any objection to the laying of venue of any action, suit or proceeding arising
out of this Agreement or the transactions contemplated hereby in (a) any
Delaware State court or (b) any Federal court of the United States of America
sitting in the State of Delaware, or that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
SECTION 8.10. Waiver of Jury Trial. Each party hereto hereby waives, to
the fullest extent permitted by applicable law, any right it may have to a trial
by jury in respect of any suit, action or other proceeding directly or
indirectly arising out of, under or in connection with this Agreement. Each
party hereto (a) certifies that no representative, agent or attorney of any
other party has represented, expressly or otherwise, that such other party would
not, in the event of any action, suit or proceeding, seek to enforce the
foregoing waiver and (b) acknowledges that it and the other parties hereto have
been induced to enter into this Agreement, by, among other things, the mutual
waiver and certifications in this Section 8.10.
SECTION 8.11. Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Delaware State court or any
Federal court of the United States of America sitting in the State of Delaware,
this being in addition to any other remedy to which they are entitled at law or
in equity.
47
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
XXXXX APPAREL GROUP, INC.,
by /s/ Xxxxx Xxxxxxxxx
--------------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: President and Chief Executive Officer
MSC ACQUISITION CORP.,
by /s/ Xxxxx Xxxxxxxxx
--------------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
XXXXXXX SHOE COMPANY INC.,
by /s/ Xxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chairman of the Board and
Chief Executive Officer
48
EXHIBIT A
Conditions of the Offer
Notwithstanding any other term of the Offer or this Agreement, Sub shall
not be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-l(c) under the Exchange Act (relating
to Sub's obligation to pay for or return tendered shares of Company Common Stock
promptly after the termination or withdrawal of the Offer), to pay for any
shares of Company Common Stock tendered pursuant to the Offer unless there shall
have been validly tendered and not withdrawn prior to the expiration of the
Offer a number of shares of Company Common Stock that, together with the shares
of Company Common Stock then owned by Parent and Sub, would represent at least a
majority of the Fully Diluted Shares (the "Minimum Tender Condition"). The term
"Fully Diluted Shares" means all outstanding securities entitled generally to
vote in the election of directors of the Company on a fully diluted basis, after
giving effect to the exercise or conversion of all options, rights and
securities exercisable or convertible into such voting securities, other than
potential dilution attributable to the Rights. Furthermore, notwithstanding any
other term of the Offer or this Agreement, Sub shall not be required to accept
for payment or, subject as aforesaid, to pay for any shares of Company Common
Stock not theretofore accepted for payment or paid for, and may terminate or
amend the Offer, with the consent of the Company or if, at any time on or after
the date of this Agreement and before or at the time of the acceptance of such
shares for payment or the payment therefor, any of the following conditions
exists:
(a) there shall be instituted or pending any action or proceeding by
any Governmental Entity, (1)(A) challenging or seeking to make illegal, to
delay or otherwise directly or indirectly to restrain or prohibit the
making of the Offer, the acceptance for payment of, or payment for, some
or all the shares of Company Common Stock by Sub, Parent or any other
affiliate of Parent or the consummation by Sub, Parent or any other
affiliate of Parent of the Merger or the other transactions contemplated
by this Agreement or (B) seeking to obtain damages in connection
therewith, (2) seeking to restrain or prohibit the full rights of
ownership or operation by Sub, Parent or any other affiliate of Parent of
all or any portion of the business or assets of the Company and its
subsidiaries or of Parent or its affiliates, or to compel Sub, Parent or
any other affiliate of Parent to dispose of or hold separate all or any
portion of the business or assets of Parent or its affiliates or the
Company or any of its subsidiaries or seeking to impose any limitation on
the ability of Sub, Parent or any other affiliate of Parent to conduct
their respective businesses or own such assets, (3) seeking to impose or
confirm limitations on the ability of Sub, Parent or any other affiliate
of Parent effectively to exercise full rights of ownership of the shares
of Company Common Stock or Rights, including, without limitation, the
right to vote any shares of Company Common Stock acquired by any such
person on all matters properly presented to the Company's stockholders,
(4) seeking to require divestiture by Sub, Parent or any other affiliate
of Parent of any shares of Company Common Stock or (5)
seeking any material diminution in the benefits expected to be derived by
Sub, Parent or any other affiliate of Parent as a result of the Offer, the
Merger or any transactions contemplated by this Agreement;
(b) there shall be any action taken or any statute, rule,
regulation, interpretation, judgment, order, decree or injunction enacted,
enforced, promulgated, amended, issued or deemed applicable (1) to Sub,
Parent or any other affiliate of Parent or (2) to the Offer, the Merger or
the other transactions contemplated by this Agreement, by any Governmental
Entity, which might directly or indirectly result in any of the
consequences referred to in clauses (1) through (5) of paragraph (a)
above;
(c) any Company Material Adverse Effect shall have occurred or be
reasonably likely to occur;
(d) (1) an Adverse Recommendation Change shall have occurred or been
proposed or (2) the Board of Directors of the Company fails publicly to
reaffirm its recommendation of this Agreement, the Offer, the Merger or
any of the other transactions contemplated by this Agreement within three
business days of receipt of a written request by Parent to provide such
reaffirmation following a Takeover Proposal (which reaffirmation must also
include the unconditional rejection of such Takeover Proposal);
(e) (i) any representation or warranty of the Company set forth in
Section 3.01(a), 3.01(c), 3.01(k), 3.01(r), 3.01(s), 3.01(t), 3.01(u) or
3.01(v), the second paragraph of Section 3.01(d) or clauses (B), (C), (D)
or (E) of Section 3.01(g) shall not be true and correct in all material
respects as of such time (except to the extent such representation and
warranty expressly relates to an earlier time, in which case on and as of
such earlier time) or (ii) any other representation or warranty of the
Company set forth in this Agreement shall not be true and correct as of
such time (except to the extent such representation and warranty expressly
relates to an earlier time, in which case on and as of such earlier time),
except, in the case of clause (ii), to the extent that the facts or
matters as to which such representation or warranty is not so true and
correct as of such date (without giving effect to any qualifications or
limitations as to "materiality" or "Company Material Adverse Effect" set
forth therein), individually or in the aggregate, have not had and are not
reasonably likely to have a Company Material Adverse Effect;
(f) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under this
Agreement;
(g) any approval, permit, authorization, consent or other action or
non-action of any Governmental Entity or third party which is material to
the Company and its subsidiaries, taken as a whole, and which is necessary
to consummate the Merger shall not have been obtained; or
A-2
(h) this Agreement shall have been terminated in accordance with its
terms;
which, in the reasonable judgment of Sub or Parent, in any such case, and
regardless of the circumstances giving rise to any such condition (including any
action or inaction by Parent or any of its affiliates), makes it inadvisable to
proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Sub and Parent and
may be asserted by Sub or Parent regardless of the circumstances giving rise to
such condition or may (subject to Section 1.01) be waived by Sub and Parent in
whole or in part at any time and from time to time in their sole discretion. The
failure by Parent, Sub or any other affiliate of Parent at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right, the
waiver of any such right with respect to particular facts and circumstances
shall not be deemed a waiver with respect to any other facts and circumstances
and each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
A-3
EXHIBIT B
TO THE MERGER AGREEMENT
Amended and Restated Certificate of Incorporation
of the Surviving Corporation
FIRST: The name of the corporation (hereinafter called the "Corporation")
is Xxxxxxx Shoe Company Inc.
SECOND: The address, including street, number, city, and county, of the
registered office of the Corporation in the State of Delaware is 0000 Xxxxxx
Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000, County of New Castle; and the name of the
registered agent of the Corporation in the State of Delaware at such address is
the Corporation Service Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The aggregate number of shares which the Corporation shall have
authority to issue is 1,000 shares of Common Stock, par value $.01 per share.
FIFTH: In furtherance and not in limitation of the powers conferred upon
it by law, the Board of Directors of the Corporation is expressly authorized to
adopt, amend or repeal the By-laws of the Corporation.
SIXTH: To the fullest extent permitted by the General Corporation Law of
the State of Delaware as it now exists and as it may hereafter be amended, no
director or officer of the Corporation shall be personally liable to the
Corporation or any of its stockholders for monetary damages for breach of
fiduciary duty as a director or officer; provided, however, that nothing
contained in this Article SIXTH shall eliminate or limit the liability of a
director or officer (i) for any breach of the director's or officer's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) pursuant to Section 174 of the General Corporation Law of the State
of Delaware or (iv) for any transaction from which the director or officer
derived an improper personal benefit. No amendment to or repeal of this Article
SIXTH shall apply to or have any effect on the liability or alleged liability of
any director or officer of the Corporation for or with respect to any acts or
omissions of such director or officer occurring prior to such amendment or
repeal. Any repeal or modification of this Article SIXTH shall not adversely
affect any right or protection of a director of the Corporation existing at the
time of such repeal or modification.
SEVENTH: The Corporation shall, to the fullest extent permitted by Section
145 of the General Corporation Law of the State of Delaware, as the same may be
amended and supplemented, indemnify any and all persons whom it shall have power
to indemnify under said Section from and against any and all of the expenses,
liabilities,
B-1
or other matters referred to in or covered by said Section. Such indemnification
shall be mandatory and not discretionary. The indemnification provided for
herein shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his or her official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director, officer,
employee, or agent and shall inure to the benefit of the heirs, executors, and
administrators of such a person. Any repeal or modification of this Article
SEVENTH shall not adversely affect any right to indemnification of any persons
existing at the time of such repeal or modification with respect to any matter
occurring prior to such repeal or modification.
The Corporation shall to the fullest extent permitted by the General
Corporation Law of the State of Delaware advance all costs and expenses
(including, without limitation, attorneys' fees and expenses) incurred by any
director or officer within 15 days of the presentation of same to the
Corporation, with respect to any one or more actions, suits or proceedings,
whether civil, criminal, administrative or investigative, so long as the
Corporation receives from the director or officer an unsecured undertaking to
repay such expenses if it shall ultimately be determined that such director or
officer is not entitled to be indemnified by the Corporation under the General
Corporation Law of the State of Delaware. Such obligation to advance costs and
expenses shall be mandatory, and not discretionary, and shall include, without
limitation, costs and expenses incurred in asserting affirmative defenses,
counterclaims and cross claims. Such undertaking to repay may, if first
requested in writing by the applicable director or officer, be on behalf of
(rather than by) such director or officer, provided that in such case the
Corporation shall have the right to approve the party making such undertaking.
EIGHTH: Unless and except to the extent that the By-laws of the
Corporation shall so require, the election of directors of the Corporation need
not be by written ballot.
B-2
