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Exhibit 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
dated as of March 15, 2001
between
DM ACQUISITION CORP.
and
DAIRY MART CONVENIENCE STORES, INC.
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TABLE OF CONTENTS
-----------------
This Table of Contents is not part of the Agreement to
which it is attached but is inserted for convenience only.
Page
No.
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ARTICLE I THE MERGER......................................................................................1
1.01 THE MERGER......................................................................................1
1.02 CLOSING.........................................................................................1
1.03 EFFECTIVE TIME..................................................................................2
1.04 RESTATED CERTIFICATE OF INCORPORATION AND AMENDED AND RESTATED BYLAWS
OF THE SURVIVING CORPORATION....................................................................2
1.05 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION.............................................2
1.06 EFFECTS OF THE MERGER...........................................................................2
1.07 FURTHER ASSURANCES..............................................................................2
1.08 AUTHORIZATION AND VOTING........................................................................3
1.09 ALTERNATIVE MERGER STRUCTURE....................................................................3
ARTICLE II CONVERSION OF SHARES............................................................................3
2.01 CONVERSION OF CAPITAL STOCK.....................................................................3
2.02 EXCHANGE OF CERTIFICATES........................................................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................................8
3.01 ORGANIZATION AND QUALIFICATION..................................................................8
3.02 CAPITAL STOCK...................................................................................8
3.03 AUTHORITY RELATIVE TO THIS AGREEMENT...........................................................10
3.04 NON-CONTRAVENTION; APPROVALS AND CONSENTS......................................................10
3.05 SEC REPORTS AND FINANCIAL STATEMENTS...........................................................11
3.06 ABSENCE OF CERTAIN CHANGES OR EVENTS...........................................................12
3.07 ABSENCE OF UNDISCLOSED LIABILITIES.............................................................12
3.08 LEGAL PROCEEDINGS..............................................................................12
3.09 INFORMATION SUPPLIED...........................................................................13
3.10 COMPLIANCE WITH LAWS AND ORDERS................................................................13
3.11 COMPLIANCE WITH AGREEMENTS; CERTAIN AGREEMENTS.................................................14
3.12 TAXES..........................................................................................15
3.13 EMPLOYEE BENEFIT PLANS; ERISA..................................................................15
3.14 LABOR MATTERS..................................................................................16
3.15 ENVIRONMENTAL MATTERS..........................................................................17
3.16 INTELLECTUAL PROPERTY RIGHTS...................................................................18
3.17 VOTE REQUIRED..................................................................................18
3.18 OPINION OF FINANCIAL ADVISOR...................................................................18
3.19 COMPANY RIGHTS AGREEMENT.......................................................................18
3.20 SECTIONS 11.2 AND 11.3 OF THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION AND SECTION 203 OF THE DGCL NOT APPLICABLE.......................................19
3.21 NO PAYMENTS TO EMPLOYEES, OFFICERS OR DIRECTORS................................................19
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3.22 COMPANY FINANCING..............................................................................19
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER........................................................20
4.01 ORGANIZATION AND QUALIFICATION.................................................................20
4.02 AUTHORITY RELATIVE TO THIS AGREEMENT...........................................................20
4.03 NON-CONTRAVENTION; APPROVALS AND CONSENTS......................................................20
4.04 LEGAL PROCEEDINGS..............................................................................21
4.05 INFORMATION SUPPLIED...........................................................................21
4.06 OWNERSHIP OF COMPANY COMMON STOCK..............................................................22
4.07 BUYER FINANCING................................................................................22
4.08 FRAUDULENT TRANSFER............................................................................23
4.09 OWNERSHIP OF BUYER STOCK.......................................................................23
ARTICLE V COVENANTS OF THE COMPANY.......................................................................23
5.01 COVENANTS OF THE COMPANY.......................................................................23
5.02 NO SOLICITATIONS...............................................................................25
5.03 COMPANY RIGHTS AGREEMENT.......................................................................27
5.04 STOCKHOLDER CLAIMS.............................................................................27
5.05 BUSINESS PLAN..................................................................................27
ARTICLE VI ADDITIONAL AGREEMENTS..........................................................................27
6.01 ACCESS TO INFORMATION; CONFIDENTIALITY.........................................................27
6.02 PREPARATION OF PROXY STATEMENT, SCHEDULE 13E-3 AND OFFERING MATERIALS..........................28
6.03 APPROVAL OF STOCKHOLDERS.......................................................................28
6.04 REGULATORY AND OTHER APPROVALS.................................................................29
6.05 Severance Policy and Other Agreements..........................................................29
6.06 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE.........................................29
6.07 EXPENSES.......................................................................................31
6.08 BROKERS OR FINDERS.............................................................................31
6.09 TAKEOVER STATUTES..............................................................................32
6.10 CONVEYANCE TAXES...............................................................................32
6.11 NEW YORK STATE STOCK TRANSFER TAX..............................................................32
6.12 CONDUCT OF BUSINESS OF BUYER...................................................................32
6.13 FINANCING......................................................................................32
6.14 NOTICE AND CURE................................................................................34
6.15 FULFILLMENT OF CONDITIONS......................................................................34
6.16 OTHER ARRANGEMENTS.............................................................................34
ARTICLE VII CONDITIONS.....................................................................................35
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.....................................35
7.02 CONDITIONS TO OBLIGATION OF BUYER TO EFFECT THE MERGER.........................................35
7.03 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE MERGER...................................36
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER..............................................................37
8.01 TERMINATION....................................................................................37
8.02 EFFECT OF TERMINATION..........................................................................39
8.03 AMENDMENT......................................................................................39
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8.04 WAIVER.........................................................................................39
ARTICLE IX GENERAL PROVISIONS.............................................................................40
9.01 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS..........................40
9.02 NOTICES........................................................................................40
9.03 ENTIRE AGREEMENT; INCORPORATION OF EXHIBITS....................................................41
9.04 PUBLIC ANNOUNCEMENTS...........................................................................41
9.05 NO THIRD PARTY BENEFICIARY.....................................................................41
9.06 NO ASSIGNMENT; BINDING EFFECT..................................................................42
9.07 HEADINGS.......................................................................................42
9.08 INVALID PROVISIONS.............................................................................42
9.09 GOVERNING LAW..................................................................................42
9.10 ENFORCEMENT OF AGREEMENT.......................................................................42
9.11 CERTAIN DEFINITIONS............................................................................42
9.12 COUNTERPARTS...................................................................................44
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GLOSSARY OF DEFINED TERMS
The following terms, when used in this Agreement, have the meanings
ascribed to them in the corresponding Sections of this Agreement listed below:
"affiliate" -- Section 9.11(a)
"Agreement" -- Preamble
"Alternative Merger" -- Section 1.09
"Alternative Proposal" -- Section 5.02
"Antitrust Division" -- Section 6.04
"beneficially" -- Section 9.11(b)
"business day" -- Section 9.11(c)
"Buyer" -- Preamble
"Buyer Commitment Letters" -- Section 4.07(a)
"Buyer Common Stock" -- Section 2.01(a)
"Buyer Disclosure Letter" -- Section 4.01
"Buyer Financing" -- Section 4.07(a)
"Buyer Investors -- Section 4.07(a)
"Buyer Preferred Stock" -- Section 2.01(a)
"Buyer Subscription Agreements" -- Section 4.07(a)
"CERCLA" -- Section 3.15(b)
"Certificate of Merger" -- Section 1.03
"Certificates" -- Section 2.02(b)
"Closing" -- Section 1.02
"Closing Date" -- Section 1.02
"Code" -- Section 2.02(e)
"Commitment Letters" -- Section 4.07(a)
"Company" -- Preamble
"Company Commitment Letters" -- Section 3.22
"Company Common Stock" -- Section 2.01(b)
"Company Disclosure Letter" -- Section 3.01
"Company Financial Statements" -- Section 3.05
"Company Financing" -- Section 3.22
"Company Option Plans" -- Section 2.01(e)
"Company Permits" -- Section 3.10
"Company Plans" -- Section 3.13(a)
"Company Preferred Stock" -- Section 3.02(a)
"Company Rights" -- Section 3.02(a)
"Company Rights Agreement" -- Section 3.02(a)
"Company SEC Reports" -- Section 3.05
"Company Series A Preferred Stock" -- Section 3.02(a)
"Company Stockholders' Approval" -- Section 6.03
"Company Stockholders' Meeting" -- Section 6.03
"Company Warrants" -- Section 2.01(f)
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"Confidentiality Agreement" -- Section 6.01
"Constituent Corporations" -- Section 1.01
"Contracts" -- Section 3.04(a)
"control," "controlling," "controlled
by" and "under common control with" -- Section 9.11(a)
"Debt Financing" -- Section 4.07(a)
"Definitive Preferred Stock Agreements" -- Section 4.02
"DGCL" -- Section 1.01
"Dissenting Share" -- Section 2.01(d)(i)
"Effective Time" -- Section 1.03
"Election" -- Section 1.09
"Environmental Law" -- Section 3.15(d)(i)
"Environmental Permits" -- Section 3.15(a)
"Equity Financing" -- Section 4.07(a)
"Equity Investors" -- Section 4.07(a)
"ERISA" -- Section 3.13(a)
"Exchange Act" -- Section 3.04(b)
"Exchange Agent" -- Section 2.02(a)
"Exchange Offer" -- Section 3.22
"Expenses" -- Section 8.02(b)
"Financing" -- Section 4.07(a)
"Financing Parties" -- Section 6.13(c)
"FTC" -- Section 6.04
"Governmental or Regulatory Authority" -- Section 3.04(a)
"group" -- Section 9.11(f)
"Hazardous Material" -- Section 3.15(d)(ii)
"Indemnified Liabilities" -- Section 6.06(a)
"Indemnified Parties" -- Section 6.06(a)
"Indemnifying Party" -- Section 6.06(a)
"Intellectual Property" -- Section 3.16
"Junior Subordinated Debt Commitment Letter" -- Section 4.07(a)
"Junior Subordinated Debt Financing" -- Section 4.07(a)
"Junior Subordinated Lenders" -- Section 4.07(a)
"knowledge" -- Section 9.11(d)
"laws" -- Section 3.04(a)
"Lien" -- Section 3.02(b)
"Marketing Commitment Letters" -- Section 3.22
"Marketing Partner Financing" -- Section 3.22
"Marketing Partners" -- Section 3.22
"material", "material adverse
effect" and "materially adverse" -- Section 9.11(e)
"Merger" -- Preamble
"Merger Price" -- Section 2.01(c)
"Merger Sub" -- Section 1.09
"Xxxxxx Xxxxxx" -- Section 3.18
"New Notes" -- Section 3.22
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"Offering Materials" -- Section 6.02(b)
"Option Amount" -- Section 2.01(e)
"Options" -- Section 3.02(a)
"orders" -- Section 3.04(a)
"Partnership Investors" -- Section 4.07(a)
"Partnership Subscription Agreements" -- Section 4.07(a)
"Payment Agent" -- Section 2.02(a)
"Payment Fund" -- Section 2.02(a)
"person" -- Section 9.11(f)
"Preferred Stock Commitment Letters" -- Section 4.07(a)
"Preferred Stock Investors" -- Section 4.07(a)
"Proxy Statement" -- Section 3.09
"Representatives" -- Section 9.11(g)
"Required Approvals" -- Section 7.01(c)
"Required Payments" -- Section 7.02(c)
"Schedule 13E-3" -- Section 3.04(b)
"SEC" -- Section 3.04(b)
"Secretary of State" -- Section 1.03
"Securities Act" -- Section 3.05
"Senior Debt Commitment Letter" -- Section 4.07(a)
"Senior Debt Financing" -- Section 4.07(a)
"Senior Lender" -- Section 4.07(a)
"Significant Subsidiaries" -- Section 9.11(h)
"Special Committee" -- Section 1.08
"Stock Grant Amount" -- Section 2.01(e)
"Stockholders" -- Preamble
"Subordinated Debt Commitment Letter" -- Section 3.22
"Subordinated Debt Financing" -- Section 3.22
"Subordinated Lenders" -- Section 3.22
"Subsidiary" -- Section 9.11(i)
"Superior Transaction" -- Section 5.02
"Surviving Corporation" -- Section 1.01
"Surviving Corporation Common Stock" -- Section 2.01(a)
"Surviving Corporation Preferred Stock" -- Section 2.01(a)
"taxes" -- Section 3.12(b)
"Voting Agreement" -- Preamble
"Warrant Amount" -- Section 2.01(f)
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This AGREEMENT AND PLAN OF MERGER dated as of March 15, 2001
(this "AGREEMENT") is made and entered into between DM Acquisition Corp., a
Delaware corporation ("BUYER") and Dairy Mart Convenience Stores, Inc., a
Delaware corporation (the "COMPANY").
WHEREAS, as of the date hereof, all of the outstanding capital
stock of Buyer is owned by Xxxxxx X. Xxxxx, Xx.;
WHEREAS, contemporaneously with the execution and delivery of
this Agreement, Xxxxxx X. Xxxxx, Xx. and DM Associates Limited Partnership (the
"STOCKHOLDERS") entered into a Voting Agreement (the "VOTING AGREEMENT");
WHEREAS, the Boards of Directors of Buyer and the Company have
each determined that it is advisable and in the best interests of their
respective stockholders to consummate, and have approved, the business
combination transaction provided for herein in which Buyer would merge with and
into the Company (the "MERGER"); and
WHEREAS, Buyer and the Company desire to make certain
representations, warranties and agreements in connection with the Merger and
also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I THE MERGER
1.01 THE MERGER. Upon the terms and subject to the conditions of this
Agreement, at the Effective Time (as defined in SECTION 1.03), Buyer shall be
merged with and into the Company in accordance with the General Corporation Law
of the State of Delaware (the "DGCL"). At the Effective Time, the separate
existence of Buyer shall cease and the Company shall continue as the surviving
corporation in the Merger (the "SURVIVING CORPORATION"). Buyer and the Company
are sometimes referred to herein as the "CONSTITUENT CORPORATIONS". As a result
of the Merger, the outstanding shares of capital stock of the Constituent
Corporations shall be converted or cancelled in the manner provided in ARTICLE
II.
1.02 CLOSING. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to SECTION
8.01, and subject to the satisfaction or waiver (where applicable) of the
conditions set forth in ARTICLE VII, the closing of the Merger (the "CLOSING")
will take place at the offices of Xxxxx & Xxxxxxxxx LLP, 3200 National City
Center, Cleveland, Ohio, at 10:00 a.m., local time, on the first business day
following satisfaction of the condition set forth in SECTION 7.01(a), unless
another date, time or place is agreed to in writing by the parties hereto (the
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"CLOSING Date"). At the Closing there shall be delivered to Buyer and the
Company the certificates and other documents and instruments required to be
delivered under ARTICLE VII.
1.03 EFFECTIVE TIME. At the Closing, a certificate of merger (the
"CERTIFICATE OF MERGER") shall be duly prepared and executed by the Surviving
Corporation and thereafter delivered to the Secretary of State of the State of
Delaware (the "SECRETARY OF STATE") for filing, as provided in Section 251 of
the DGCL, as soon as practicable on the Closing Date. The Merger shall become
effective at the time of the filing of the Certificate of Merger with the
Secretary of State (the date and time being referred to herein as the "EFFECTIVE
TIME").
1.04 RESTATED CERTIFICATE OF INCORPORATION AND AMENDED AND RESTATED
BYLAWS OF THE SURVIVING CORPORATION. At the Effective Time, (i) the Certificate
of Incorporation of Buyer as in effect immediately prior to the Effective Time
shall be amended so as to include the indemnification provisions in the
Company's Restated Certificate of Incorporation as of the date hereof and to
change the name of the corporation set forth in Buyer's Certificate of
Incorporation to "Dairy Mart Convenience Stores, Inc.", and, as so amended, such
Certificate of Incorporation shall be the Restated Certificate of Incorporation
of the Surviving Corporation until thereafter amended as provided by law and
such Restated Certificate of Incorporation, and (ii) the Bylaws of Buyer as in
effect immediately prior to the Effective Time shall be amended so as to include
the indemnification provisions in the Company's Bylaws as of the date hereof,
and, as so amended, shall be the Amended and Restated Bylaws of the Surviving
Corporation until thereafter amended as provided by law, the Restated
Certificate of Incorporation of the Surviving Corporation and such Amended and
Restated Bylaws.
1.05 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The directors
of Buyer and the officers of the Company immediately prior to the Effective Time
shall, from and after the Effective Time, be the directors and officers,
respectively, of the Surviving Corporation until their successors shall have
been duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's Restated
Certificate of Incorporation and Amended and Restated Bylaws. At or prior to the
Closing, the Company will deliver to Buyer evidence that is reasonably
satisfactory to Buyer that all of the directors of the Company (other than
Xxxxxx X. Xxxxx, Xx.) have resigned. All such resignations will be effective at
the Effective Time.
1.06 EFFECTS OF THE MERGER. Subject to the foregoing, the effects of
the Merger shall be as provided in the applicable provisions of the DGCL.
1.07 FURTHER ASSURANCES. Each party hereto will, either prior to or
after the Effective Time, execute such further documents, instruments, deeds,
bills of sale, assignments and assurances and take such further actions as may
reasonably be requested by one or more of the others to consummate the Merger,
to vest the Surviving Corporation with full title to all assets, properties,
privileges, rights, approvals,
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immunities and franchises of either of the Constituent Corporations or to effect
the other purposes of this Agreement.
1.08 AUTHORIZATION AND VOTING. The Company hereby represents that its
Board of Directors, at a meeting duly called and held and acting on the
unanimous recommendation of a special committee of the Board of Directors of the
Company comprising all of the members of the Board of Directors other than
Messrs. Xxxxx, Xxxxxx and Xxxxx (the "SPECIAL COMMITTEE"), has (i) unanimously
determined, with Messrs. Xxxxx and Xxxxx abstaining, that this Agreement and the
transactions contemplated hereby, including the Merger, are fair to and in the
best interest of the Company's stockholders, (ii) unanimously, with Messrs.
Xxxxx and Xxxxx abstaining, approved this Agreement and the transactions
contemplated hereby, including the Merger and the Voting Agreement, and (iii)
unanimously, with Messrs. Xxxxx and Xxxxx abstaining, resolved to recommend
approval and adoption of this Agreement and the Merger to its stockholders. The
Company has been advised that all of its directors intend to vote all of their
shares of Company Common Stock in favor of approval and adoption of this
Agreement and the Merger.
1.09 ALTERNATIVE MERGER STRUCTURE. While it is currently contemplated
that the Merger shall be effected through the merger of Buyer with and into the
Company, Buyer shall have the option, in its sole discretion and without
requiring the further consent of the Company or the Company's Board of Directors
or stockholders, to cause the Merger to be effected through an alternative
transaction structure pursuant to which a wholly owned Subsidiary of Buyer
("MERGER SUB") will merge with and into the Company, with the Company being the
Surviving Company (the "ALTERNATIVE MERGER"); PROVIDED, HOWEVER, that the
Alternative Merger shall require the consent of the Company and the Company's
Board of Directors if the Alternative Merger would delay the Closing or require
any additional consent, approval or action of, filing with or notice to any
Governmental or Regulatory Authority. In case of an Alternative Merger, the
effects set forth in SECTION 2.01(a) shall be deemed amended to provided that
each share of common stock of Merger Sub would be converted into a share of
Surviving Corporation Common Stock. Buyer shall make such election by delivering
to the Company a notice (the "ELECTION") electing to effect the Alternative
Merger. The Election Notice shall be available for the inspection of any
stockholder of the Company upon request during normal business hours. For
purposes of this Agreement, all references to the term "Merger" shall be deemed
to include the Alternative Merger, except for such references contained in this
SECTION 1.09. As part of the Proxy Statement and in the manner required by
applicable law, the Company shall describe the provisions of this SECTION 1.09.
ARTICLE II CONVERSION OF SHARES
2.01 CONVERSION OF CAPITAL STOCK. At the Effective Time, by virtue of
the Merger and without any action on the part of the holder thereof:
(a) CAPITAL STOCK OF BUYER. Each issued and outstanding share of
the common stock, par value $0.01 per share, of Buyer ("BUYER COMMON STOCK")
shall be
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converted into and become one fully paid and nonassessable share of common
stock, par value $0.01 per share, of the Surviving Corporation ("SURVIVING
CORPORATION COMMON STOCK"). Each certificate representing outstanding shares of
Buyer Common Stock shall at the Effective Time represent an equal number of
shares of Surviving Corporation Common Stock. Each issued and outstanding share
of preferred stock, par value $0.01 per share, of Buyer ("BUYER PREFERRED
STOCK") shall be converted into and become one fully paid and nonassessable
share of preferred stock, par value $0.01 per share, of the Surviving
Corporation ("SURVIVING CORPORATION PREFERRED STOCK"). Each certificate
representing outstanding shares of Buyer Preferred Stock shall at the Effective
Time represent an equal number of shares of Surviving Corporation Preferred
Stock.
(b) CANCELLATION OF TREASURY STOCK AND STOCK OWNED BY BUYER. All
shares of common stock, par value $0.01 per share, of the Company ("COMPANY
COMMON STOCK") that are owned by the Company as treasury stock and any shares of
Company Common Stock owned by Buyer shall be cancelled and retired and shall
cease to exist and no stock of Buyer or other consideration shall be delivered
in exchange therefor.
(c) EXCHANGE RATIO FOR COMPANY COMMON STOCK. (i) Each issued and
outstanding share of Company Common Stock (other than shares to be cancelled in
accordance with SECTION 2.01(b) and other than Dissenting Shares (as defined in
SECTION 2.01(d)) shall be converted into the right to receive $4.50 in cash,
without interest (the "MERGER PRICE").
(ii) All shares of Company Common Stock converted in accordance
with paragraph (i) of this SECTION 2.01(c) shall no longer be outstanding and
shall automatically be cancelled and retired and shall cease to exist, and each
holder of a certificate representing any such shares shall cease to have any
rights with respect thereto, except the right to receive the Merger Price per
share, upon the surrender of such certificate in accordance with SECTION 2.02,
without interest.
(d) DISSENTING SHARES. (i) Notwithstanding any provision of this
Agreement to the contrary, each outstanding share of Company Common Stock the
holder of which has not voted in favor of the Merger, has perfected such
holder's right to an appraisal of such holder's shares in accordance with the
applicable provisions of the DGCL and has not effectively withdrawn or lost such
right to appraisal (a "DISSENTING SHARE"), shall not be converted into or
represent a right to receive the Merger Price pursuant to SECTION 2.01(c), but
the holder thereof shall be entitled only to such rights as are granted by the
applicable provisions of the DGCL; PROVIDED, HOWEVER, that any Dissenting Share
held by a person at the Effective Time who shall, after the Effective Time,
withdraw the demand for appraisal or lose the right of appraisal, in either case
pursuant to the DGCL, shall be deemed to be converted into, as of the Effective
Time, the right to receive, without interest, the Merger Price pursuant to
SECTION 2.01(c).
(ii) The Company shall give Buyer (x) prompt notice of any written
demands for appraisal, withdrawals of demands for appraisal and any other
instruments
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served pursuant to the applicable provisions of the DGCL relating to the
appraisal process received by the Company and (y) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under the
DGCL. The Company will not voluntarily make any payment with respect to any
demands for appraisal and will not, except with the prior written consent of
Buyer, settle or offer to settle any such demands.
(e) STOCK OPTION PLANS. The Board of Directors of the Company will
take all action that is necessary, including providing any notice, so that at
the Effective Time, each option to acquire a share of Company Common Stock
(other than those held by Xxxxxx X. Xxxxx, Xx. or Buyer pursuant to clause (iii)
below) outstanding under the Company's 1985 Stock Option Plan, the 1990 Stock
Option Plan, 1995 Stock Option and Incentive Award Plan, 1995 Stock Option Plan
for Outside Directors, 1998 Stock Option Plan for Outside Directors and options
to purchase shares of Company Common Stock that were issued outside of any plan
(collectively, the "COMPANY OPTION PLANS") shall be cancelled and each holder of
an option will be entitled to receive an amount in cash, without interest, in
respect of each share of Company Common Stock subject to such option (the
"OPTION AMOUNT") equal to the excess of the Merger Price over the purchase price
therefor pursuant to the Company Option Plans and the related stock option
agreements executed pursuant thereto. All the options to purchase shares of
Company Common Stock that are held by Xxxxxx X. Xxxxx, Xx. will, at his option,
(i) be amended and restated immediately prior to the Effective Time and become
options to purchase shares of the Surviving Corporation Common Stock with such
adjustments to the number of shares purchasable upon the exercise of those
options and the exercise price as the Buyer and Xxxxxx X. Xxxxx, Xx. may agree,
(ii) be exercised immediately prior to the Effective Time, but only to the
extent that any shares of Company Common Stock received are contributed to Buyer
under the Buyer Subscription Agreements, or (iii) contributed or assigned to
Buyer in exchange for shares of Buyer Common Stock. If Xxxxxx X. Xxxxx, Xx.
requests, the Board of Directors of the Company will take such action that is
necessary to permit him to exercise his options by delivering to Xxxxxx X.
Xxxxx, Xx. the number of shares of Company Common Stock equal to (y) the amount
of the excess of (A) the Merger Price multiplied by the aggregate number of
shares purchasable upon the exercise of all his options over (B) the aggregate
purchase price of those shares multiplied by the number of shares purchasable at
the purchase price divided by (z) the Merger Price. Upon the delivery of those
shares of Company Common Stock to Xxxxxx X. Xxxxx, Xx., his options shall be
deemed exercised under clause (ii) above and canceled. Each grant of a right to
receive a share of Company Common Stock outstanding under the Company Option
Plans (other than those held by Xxxxxx X. Xxxxx, Xx.) shall be cancelled and
each holder of such a right shall receive an amount in cash, without interest,
in respect of each share of Company Common Stock subject to such right (the
"STOCK GRANT AMOUNT") equal to the Merger Price. Xxxxxx X. Xxxxx, Xx. will
receive shares of Company Common Stock in respect of any such right immediately
prior to the Effective Time for contribution thereof to Buyer as contemplated
pursuant to the Buyer Subscription Agreements (as defined in SECTION 4.07). On
the Closing Date, the Buyer, and to the extent funds are not available from the
Buyer, the Company, shall deposit in a bank account not within the Company's
control an amount of cash equal to the sum of the Option Amount for each option,
plus the Stock Grant Amount for each right, then
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outstanding under the Company Option Plans (subject to any applicable
withholding tax), together with instructions that such cash be promptly
distributed following the Effective Time to the holders of such options or
Company Common Stock in accordance with this Section.
(f) WARRANTS. Each warrant to subscribe for and purchase shares of
Company Common Stock pursuant to the Note and Warrant Purchase Agreement dated
as of December 1, 1995 and to the Stock Purchase Warrant to Subscribe for and
Purchase Shares of Common Stock of the Company, dated as of December 1, 1995
(collectively, the "COMPANY WARRANTS") shall be changed into an amount in cash
in respect of each share of Company Common Stock subject to such warrant (the
"WARRANT AMOUNT") equal to the Merger Price less the exercise price therefor
pursuant to the Company Warrants and the related warrant agreements. If on the
Closing Date, the Warrant Amount is a positive number, then the Company shall
deposit in a bank account not within the Company's control an amount of cash
equal to the Warrant Amount for each warrant then outstanding under the Company
Warrants (subject to any applicable withholding tax), together with instructions
that such cash be promptly distributed following the Effective Time to the
holders of such warrants in accordance with this Section.
2.02 EXCHANGE OF CERTIFICATES. (a) PAYMENT AGENT. Prior to the mailing
of the Proxy Statement (as defined in SECTION 3.09), Buyer shall appoint an
agent (the "PAYMENT AGENT") for the purpose of exchanging certificates
representing Company Common Stock for the Merger Price. Immediately prior to the
Effective Time, the Buyer, and to the extent funds are not available from the
Buyer, the Company shall deposit with the Payment Agent, a cash amount equal to
the aggregate Merger Price to which holders of shares of Company Common Stock
shall be entitled upon consummation of the Merger, to be held for the benefit of
and distributed to such holders in accordance with this Section. The Payment
Agent shall agree to hold such funds (such funds, together with earnings
thereon, being referred to herein as the "PAYMENT FUND") for delivery as
contemplated by this Section and upon such additional terms as may be agreed
upon by the Payment Agent, the Company and Buyer. If for any reason (including
losses) the Payment Fund is inadequate to pay the cash amounts to which holders
of shares of Company Common Stock shall be entitled, the Surviving Corporation
shall in any event remain liable for the payment thereof. For purposes of
determining the aggregate Merger Price to be made available, the Company and
Buyer shall assume that there are no Dissenting Shares. The Payment Fund shall
not be used for any purpose except as expressly provided in this Agreement.
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable after
the Effective Time, the Surviving Corporation shall cause the Payment Agent to
mail to each holder of record of a certificate or certificates which immediately
prior to the Effective Time represented outstanding shares of Company Common
Stock (the "CERTIFICATES") whose shares are converted pursuant to SECTION
2.01(c) into the right to receive the Merger Price (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon delivery of the Certificates to the
Payment Agent and shall be in such form and have such other
14
provisions as the Surviving Corporation may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Price. Upon surrender of a Certificate for cancellation to the
Payment Agent, together with such letter of transmittal duly executed and
completed in accordance with its terms, the holder of such Certificate shall be
entitled to receive in exchange therefor a check representing the Merger Price
per share of Company Common Stock represented thereby, which such holder has the
right to receive pursuant to the provisions of this ARTICLE II, and the
Certificate so surrendered shall forthwith be cancelled. In no event shall the
holder of any Certificate be entitled to receive interest on any funds to be
received in the Merger, including any interest accrued in respect of the Payment
Fund. In the event of a transfer of ownership of Company Common Stock which is
not registered in the transfer records of the Company, the Merger Price may be
issued to a transferee if the Certificate representing such Company Common Stock
is presented to the Payment Agent accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. 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 Merger Price per
share of Company Common Stock represented thereby as contemplated by this
ARTICLE II.
(c) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All cash
paid upon the surrender for exchange of Certificates in accordance with the
terms hereof shall be deemed to have been paid in full satisfaction of all
rights pertaining to the shares of Company Common Stock represented thereby.
From and after the Effective Time, the stock transfer books 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 which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation for
any reason, they shall be cancelled and exchanged as provided in this Section.
(d) TERMINATION OF PAYMENT FUND. Any portion of the Payment Fund
which remains undistributed to the stockholders of the Company for six (6)
months after the Effective Time shall be delivered to the Surviving Corporation,
upon demand, and any stockholders of the Company who have not theretofore
complied with this ARTICLE II shall thereafter look only to the Surviving
Corporation (subject to abandoned property, escheat and other similar laws) as
general creditors for payment of their claim for the Merger Price per share.
Neither Buyer nor the Surviving Corporation shall be liable to any holder of
shares of Company Common Stock for cash representing the Merger Price delivered
to a public official pursuant to any applicable abandoned property, escheat or
similar law.
(e) WITHHOLDING RIGHTS. Buyer 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 Buyer is required
to deduct and withhold with respect to the making of such payment under the
Internal Revenue Code of
15
1986, as amended (the "CODE"), or any provision of state, local or foreign tax
law. To the extent that amounts are so withheld by Buyer, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the shares of Company Common Stock in respect of which such deduction
and withholding was made by Buyer.
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Buyer as follows:
3.01 ORGANIZATION AND QUALIFICATION. Each of the Company and its
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has full
corporate power and authority to conduct its business as and to the extent now
conducted and to own, use and lease its assets and properties, except, in the
case of the Company's Subsidiaries, for such failures to be so incorporated,
existing and in good standing or to have such power and authority which,
individually or in the aggregate, are not having and could not be reasonably
expected to have a material adverse effect (as defined in SECTION 9.11) on the
Company and its Subsidiaries taken as a whole. Each of the Company and its
Subsidiaries is duly qualified, licensed or admitted to do business and is in
good standing in each jurisdiction in which the ownership, use or leasing of its
assets and properties, or the conduct or nature of its business, makes such
qualification, licensing or admission necessary, except for such failures to be
so qualified, licensed or admitted and in good standing which, individually or
in the aggregate, are not having and could not be reasonably expected to have a
material adverse effect on the Company and its Subsidiaries taken as a whole.
SECTION 3.01 of the letter dated the date hereof and delivered to Buyer by the
Company concurrently with the execution and delivery of this Agreement (the
"COMPANY DISCLOSURE LETTER") sets forth (i) the name and jurisdiction of
incorporation of each Significant Subsidiary (as defined in Section 9.11) of the
Company, (ii) its authorized capital stock, (iii) the number of issued and
outstanding shares of capital stock and (iv) the record owners of such shares.
Except for interests in the Subsidiaries of the Company and as disclosed in
SECTION 3.01 of the Company Disclosure Letter, the Company does not directly or
indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for, any equity or similar interest in, any
corporation, partnership, limited liability company, joint venture or other
business association or entity (other than (i) non-controlling investments in
the ordinary course of business and corporate partnering, development,
cooperative marketing and similar undertakings and arrangements entered into in
the ordinary course of business and (ii) other investments of less than
$100,000). The Company has previously delivered to Buyer correct and complete
copies of the certificate or articles of incorporation and bylaws (or other
comparable charter documents) of the Company and its Significant Subsidiaries.
3.02 CAPITAL STOCK. (a) The authorized capital stock of the Company
consists solely of 30,000,000 shares of Company Common Stock and 1,000,000
shares of preferred stock, par value $0.1 per share ("COMPANY PREFERRED STOCK").
As of March 5, 2001, 5,002,026 shares of Company Common Stock were issued and
outstanding,
16
2,057,178 shares were held in the treasury of the Company and were reserved for
issuance under the Company's Option Plans and the Company Warrants. Since such
date, except as set forth in SECTION 3.02 of the Company Disclosure Letter,
there has been no change in the number of issued and outstanding shares of
Company Common Stock or shares of Company Common Stock held in treasury or
reserved for issuance. As of the date hereof, no shares of Company Preferred
Stock are issued and outstanding and 89,400 shares are designated Series A
Junior Preferred Stock ("COMPANY SERIES A PREFERRED STOCK") and are reserved for
issuance in accordance with the Amended and Restated Rights Agreement dated as
of February 8, 2000, as amended, by and between the Company and American Stock
Transfer & Trust Company, as Rights Agent (the "COMPANY RIGHTS AGREEMENT"),
pursuant to which the Company has issued rights (the "COMPANY RIGHTS") to
purchase shares of Company Series A Preferred Stock. All of the issued and
outstanding shares of Company Common Stock are, and all shares reserved for
issuance will be, upon issuance in accordance with the terms specified in the
instruments or agreements pursuant to which they are issuable, duly authorized,
validly issued, fully paid and nonassessable. Except pursuant to this Agreement
and the Company Rights Agreement and except as set forth in SECTION 3.02 of the
Company Disclosure Letter, there are no outstanding subscriptions, options,
warrants, rights (including "phantom" stock rights), preemptive rights or other
contracts, commitments, understandings or arrangements, including any right of
conversion or exchange under any outstanding security, instrument or agreement
(together, "OPTIONS"), obligating the Company or any of its Subsidiaries to
issue or sell any shares of capital stock of the Company or to grant, extend or
enter into any Option with respect thereto.
(b) Except as disclosed in SECTION 3.02 of the Company
Disclosure Letter, all of the outstanding shares of capital stock of each
Significant Subsidiary of the Company are duly authorized, validly issued, fully
paid and nonassessable and are owned, beneficially and of record, by the Company
or a Subsidiary wholly owned, directly or indirectly, by the Company, free and
clear of any liens, claims, mortgages, encumbrances, pledges, security
interests, equities and charges of any kind (each a "LIEN"). Except as disclosed
in SECTION 3.02 of the Company Disclosure Letter, there are no (i) outstanding
Options obligating the Company or any of its Significant Subsidiaries to issue
or sell any shares of capital stock of any Significant Subsidiary of the Company
or to grant, extend or enter into any such Option or (ii) voting trusts, proxies
or other commitments, understandings, restrictions or arrangements in favor of
any person other than the Company or a Subsidiary wholly owned, directly or
indirectly, by the Company with respect to the voting of or the right to
participate in dividends or other earnings on any capital stock of any
Significant Subsidiary of the Company.
(c) Except as disclosed in SECTION 3.02 of the Company
Disclosure Letter, there are no outstanding contractual obligations of the
Company or any Significant Subsidiary of the Company to repurchase, redeem or
otherwise acquire any shares of Company Common Stock or any capital stock of any
Significant Subsidiary of the Company or to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise) in, any
Subsidiary of the Company or any other person.
17
3.03 AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has full
corporate power and authority to enter into this Agreement and, subject to
obtaining the Company Stockholders' Approval (as defined in SECTION 6.03), to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly approved by the Board of
Directors of the Company, the Board of Directors of the Company has recommended
adoption of this Agreement by the stockholders of the Company and directed that
this Agreement be submitted to the stockholders of the Company for their
consideration, and no other corporate proceedings on the part of the Company or
its stockholders are necessary to authorize the execution, delivery and
performance of this Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby, other than obtaining the Company
Stockholders' Approval. This Agreement has been duly and validly executed and
delivered by the Company and subject to the obtaining of the Company
Stockholders' Approval, constitutes a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
3.04 NON-CONTRAVENTION; APPROVALS AND CONSENTS. (a) Except as set forth
in Section 3.04(a) of the Company Disclosure Letter, the execution and delivery
of this Agreement by the Company do not, and the performance by the Company of
its obligations hereunder and the consummation of the transactions contemplated
hereby will not, conflict with, result in a violation or breach of, constitute
(with or without notice or lapse of time or both) a default under, result in or
give to any person any right of payment or reimbursement, termination,
cancellation, modification or acceleration of, or result in the creation or
imposition of any Lien upon any of the assets or properties of the Company or
any of its Significant Subsidiaries under, any of the terms, conditions or
provisions of (i) the certificates or articles of incorporation or bylaws (or
other comparable charter documents) of the Company or any of its Significant
Subsidiaries, or (ii) subject to the obtaining of the Company Stockholders'
Approval and the taking of the actions described in paragraph (b) of this
Section, (x) any statute, law, rule, regulation or ordinance (together, "LAWS"),
or any judgment, decree, order, writ, permit or license (together, "ORDERS"), of
any court, tribunal, arbitrator, authority, agency, commission, official or
other instrumentality of the United States, any foreign country or any domestic
or foreign state, county, city or other political subdivision (a "GOVERNMENTAL
OR REGULATORY AUTHORITY") applicable to the Company or any of its Subsidiaries
or any of their respective assets or properties, or (y) any note, bond,
mortgage, security agreement, indenture, license, franchise, permit, concession,
contract, lease or other instrument, obligation or agreement of any kind
(together, "CONTRACTS") to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries or any of their
respective assets or properties is bound, excluding from the foregoing clauses
(x) and (y) conflicts, violations, breaches, defaults, terminations,
modifications, accelerations and creations and impositions of Liens which,
individually or in the aggregate, could not
18
be reasonably expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole or on the ability of the Company to consummate the
transactions contemplated by this Agreement.
(b) Except (i) for the filing of the Proxy Statement (as defined
in SECTION 3.09) with the Securities and Exchange Commission (the "SEC")
pursuant to the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder (the "EXCHANGE ACT"), (ii) the filing of a Schedule 13E-3
with the SEC pursuant to the Exchange Act (the "SCHEDULE 13E-3"), (iii) for the
filing of the Certificate of Merger and other appropriate merger documents
required by the DGCL with the Secretary of State, (iv) for obtaining Company
Stockholders' Approval, (v) for obtaining the Company Debt Financing and (vi) as
disclosed in SECTION 3.04 of the Company Disclosure Letter, no consent, approval
or action of, filing with or notice to any Governmental or Regulatory Authority
or other public or private third party is necessary or required under any of the
terms, conditions or provisions of any law or order of any Governmental or
Regulatory Authority or any Contract to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries or
any of their respective assets or properties is bound for the execution and
delivery of this Agreement by the Company, the performance by the Company of its
obligations hereunder or the consummation of the transactions contemplated
hereby, other than such consents, approvals, actions, filings and notices which
the failure to make or obtain, as the case may be, individually or in the
aggregate, could not be reasonably expected to have a material adverse effect on
the Company and its Subsidiaries taken as a whole or on the ability of the
Company to consummate the transactions contemplated by this Agreement.
3.05 SEC REPORTS AND FINANCIAL STATEMENTS. Each form, report, schedule,
registration statement, definitive proxy statement and other document (together
with all amendments thereof and supplements thereto) filed by the Company or any
of its Subsidiaries with the SEC since December 31, 1997 (as such documents have
since the time of their filing been amended or supplemented, the "COMPANY SEC
REPORTS"), are all the documents (other than preliminary material) that the
Company and its Subsidiaries were required to file with the SEC since such date.
As of their respective dates, the Company SEC Reports (i) complied as to form in
all material respects with the requirements of the Securities Act of 1933, as
amended, and the rules and regulations thereunder (the "SECURITIES ACT"), or the
Exchange Act, as the case may be, and (ii) did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim consolidated financial
statements (including, in each case, the notes, if any, thereto) included in the
Company SEC Reports (the "COMPANY FINANCIAL STATEMENTS") complied as to form in
all material respects with the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except as
may be indicated therein or in the notes thereto and except with respect to
unaudited statements as permitted by Form 10-Q of the SEC) and fairly present
(subject, in the case of the unaudited interim financial statements, to
19
normal, recurring year-end audit adjustments (which are not expected to be,
individually or in the aggregate, materially adverse to the Company and its
Subsidiaries taken as a whole)) the consolidated financial position of the
Company and its consolidated subsidiaries as at the respective dates thereof and
the consolidated results of their operations and cash flows for the respective
periods then ended. Except as set forth in SECTION 3.05 of the Company
Disclosure Letter, each Significant Subsidiary of the Company is treated as a
consolidated subsidiary of the Company in the Company Financial Statements for
all periods covered thereby.
3.06 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the
Company SEC Reports filed prior to the date of this Agreement, (a) since October
28, 2000 there has not been any change, event or development having, or that
could be reasonably expected to have, individually or in the aggregate, a
material adverse effect on the Company and its Subsidiaries taken as a whole,
other than events, changes or effects that (i) are caused by general economic
conditions in any region in which the Company and its Subsidiaries conduct
business or conditions affecting the types of businesses operated by the Company
and its Subsidiaries, which conditions do not affect the Company and its
Subsidiaries in a disproportionate manner, or (ii) are related to or result from
the execution and delivery of this Agreement or from any action or inaction on
the part of Buyer or any of its affiliates, and (b) except as disclosed in
SECTION 3.06 of the Company Disclosure Letter, between such date and the date
hereof (i) the Company and its Subsidiaries have conducted their respective
businesses only in the ordinary course consistent with past practice and (ii)
neither the Company nor any of its Subsidiaries has taken any action which, if
taken after the date hereof, would constitute a breach of any provision of
clause (ii) of SECTION 5.01(b).
3.07 ABSENCE OF UNDISCLOSED LIABILITIES. Except for matters reflected
or reserved against in the balance sheet for the period ended October 28, 2000
included in the Company Financial Statements or as disclosed in the Company SEC
Reports or in SECTION 3.07 of the Company Disclosure Letter, neither the Company
nor any of its Subsidiaries had at such date, or has incurred since that date,
any liabilities or obligations (whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due) of any nature that would be required
by generally accepted accounting principles to be reflected on a consolidated
balance sheet of the Company or the notes to the Financial Statements and its
consolidated subsidiaries (including the notes thereto), except liabilities or
obligations (i) which were incurred in the ordinary course of business
consistent with past practice or (ii) which have not been, and could not be
reasonably expected to be, individually or in the aggregate, materially adverse
to the Company and its Subsidiaries taken as a whole.
3.08 LEGAL PROCEEDINGS. Except as disclosed in the Company SEC Reports
filed prior to the date of this Agreement or in SECTION 3.08 of the Company
Disclosure Letter, (i) there are no actions, suits, arbitrations or proceedings
pending or, to the knowledge of the Company, threatened against or relating to,
nor to the knowledge of the Company are there any Governmental or Regulatory
Authority investigations or audits pending or threatened against or relating to,
the Company or any of its Subsidiaries or
20
any of their respective assets and properties which, individually or in the
aggregate, could be reasonably expected to have a material adverse effect on the
Company and its Subsidiaries taken as a whole or on the ability of the Company
to consummate the transactions contemplated by this Agreement, and (ii) neither
the Company nor any of its Subsidiaries is subject to any order of any
Governmental or Regulatory Authority which, individually or in the aggregate, is
having or could be reasonably expected to have a material adverse effect on the
Company and its Subsidiaries taken as a whole or on the ability of the Company
to consummate the transactions contemplated by this Agreement.
3.09 INFORMATION SUPPLIED. (a) The proxy statement relating to the
Company Stockholders' Meeting (as defined in SECTION 6.03), as amended or
supplemented from time to time (as so amended and supplemented, the "PROXY
STATEMENT"), the Schedule 13E-3 and any other documents to be filed by the
Company with the SEC or any other Governmental or Regulatory Authority in
connection with the Merger and the other transactions contemplated hereby will
not, on the date of its filing or at the time of any distribution thereof or, in
the case of the Proxy Statement, on the date it is mailed to stockholders of the
Company and on the date of the Company 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, except that no
representation is made by the Company with respect to information supplied in
writing by or on behalf of Buyer expressly for inclusion therein and information
incorporated by reference therein from documents filed by Buyer or any of its
Subsidiaries with the SEC. The Proxy Statement, the Schedule 13E-3 and any such
other documents filed by the Company with the SEC under the Exchange Act will
comply as to form in all material respects with the requirements of the Exchange
Act.
(b) Neither the information supplied or to be supplied in writing
by or on behalf of the Company for inclusion, nor the information incorporated
by reference from documents filed by the Company or any of its Subsidiaries with
the SEC, in the Proxy Statement, the Schedule 13E-3 or any other documents to be
filed by Buyer or the Company with the SEC or any other Governmental or
Regulatory Authority in connection with the Merger and the other transactions
contemplated hereby will on the date of its filing contain or its distribution,
or in the case of the Proxy Statement, on the date it is mailed to stockholders
of the Company and on the date of the Company's Stockholder Meeting, any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
3.10 COMPLIANCE WITH LAWS AND ORDERS. The Company and its Subsidiaries
hold all permits, licenses, variances, exemptions, orders and approvals of all
Governmental and Regulatory Authorities necessary for the lawful conduct of
their respective businesses (the "COMPANY PERMITS"), except for failures to hold
such permits, licenses, variances, exemptions, orders and approvals which,
individually or in the aggregate, are not having and could not be reasonably
expected to have a material adverse effect on the Company and its Subsidiaries
taken as a whole. The Company and
21
its Subsidiaries are in compliance with the terms of the Company Permits, except
failures so to comply which, individually or in the aggregate, are not having
and could not be reasonably expected to have a material adverse effect on the
Company and its Subsidiaries taken as a whole. Except as disclosed in the
Company SEC Reports filed prior to the date of this Agreement, the Company and
its Subsidiaries are not in violation of or default under any law or order of
any Governmental or Regulatory Authority, except for such violations or defaults
which, individually or in the aggregate, are not having and could not be
reasonably expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole.
3.11 COMPLIANCE WITH AGREEMENTS; CERTAIN AGREEMENTS. (a) Except as
disclosed in the Company SEC Reports filed prior to the date of this Agreement,
neither the Company nor any of its Subsidiaries nor, to the knowledge of the
Company, any other party thereto is in breach or violation of, or in default in
the performance or observance of any term or provision of, and no event has
occurred which, with notice or lapse of time or both, could be reasonably
expected to result in a default under, (i) the certificates or articles of
incorporation or bylaws (or other comparable charter documents) of the Company
or any of its Significant Subsidiaries or (ii) any Contract to which the Company
or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any of their respective assets or properties is bound, except in
the case of clause (ii) for breaches, violations and defaults which,
individually or in the aggregate, are not having and could not be reasonably
expected to have a material adverse effect on the Company and its Subsidiaries
taken as a whole.
(b) Except as disclosed in SECTION 3.11 of the Company Disclosure
Letter or in the Company SEC Reports filed prior to the date of this Agreement
or as provided for in this Agreement, as of the date hereof, neither the Company
nor any of its Subsidiaries is a party to any oral or written (i) consulting
agreement not terminable on thirty (30) days' or less notice involving the
payment of more than $50,000 per annum or $200,000 per annum in the aggregate
for all such agreements; (ii) contracts with any person containing any provision
or covenant prohibiting or limiting the ability of the Company or any Subsidiary
of the Company to engage in any business activity, change its operations or
compete with any person or prohibiting or limiting the ability of any person to
compete with the Company or any Subsidiary of the Company; (iii) partnership,
joint venture, shareholders' or other similar Contracts with any person; (iv)
contracts relating to indebtedness of the Company or any Subsidiary of the
Company in excess of $200,000; (v) union or collective bargaining agreement
which covers any employees; (vi) agreement with any executive officer or other
key employee of the Company or any of its Subsidiaries the benefits of which are
contingent or vest, or the terms of which are materially altered, upon the
occurrence of a transaction involving the Company or any of its Subsidiaries of
the nature contemplated by this Agreement; (vii) agreement with respect to any
executive officer or other key employee of the Company or any of its
Subsidiaries providing any term of employment or compensation guarantee; or
(viii) agreement or plan, including any stock option, stock appreciation right,
restricted stock or stock purchase plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions
22
contemplated by this Agreement or the value of any of the benefits of which will
be calculated on the basis of any of the transactions contemplated by this
Agreement.
3.12 TAXES. (a) Except as disclosed in SECTION 3.12 of the Company
Disclosure Letter, (i) each of the Company and its Subsidiaries has filed all
material tax returns and reports required to be filed by it, or requests for
extensions to file such returns or reports have been timely filed or granted and
have not expired, and all tax returns and reports are complete and accurate in
all respects, except to the extent that such failures to file, have extensions
granted that remain in effect or be complete and accurate in all respects, as
applicable, individually or in the aggregate, would not have a material adverse
effect on the Company and its Subsidiaries taken as a whole, (ii) the Company
and each of its Subsidiaries has paid (or the Company has paid on its behalf)
all taxes shown as due on such tax returns and reports. The most recent
financial statements contained in the Company SEC Reports reflect an adequate
reserve in accordance with generally accepted accounting principles for all
taxes payable by the Company and its Subsidiaries for all taxable periods and
portions thereof accrued through the date of such financial statements, and no
deficiencies for any taxes have been proposed, asserted or assessed against the
Company or any of its Subsidiaries that are not adequately reserved for in
accordance with generally accepted accounting principles, except for
inadequately reserved taxes and inadequately reserved deficiencies that would
not, individually or in the aggregate, have a material adverse effect on the
Company and its Subsidiaries taken as a whole and (iii) no requests for waivers
of the time to assess any taxes against the Company or any of its Subsidiaries
have been granted or are pending, except for requests with respect to such taxes
that have been adequately reserved for in accordance with generally accepted
accounting principles in the most recent financial statements contained in the
Company SEC Reports, or, to the extent not adequately reserved, the assessment
of which would not, individually or in the aggregate, have a material adverse
effect on the Company and its Subsidiaries taken as a whole.
(b) As used in this SECTION 3.12, "TAXES" shall include all
federal, state, local and foreign income, franchise, property, sales, use,
excise and other taxes (including all taxes imposed on gasoline products),
including obligations for withholding taxes from payments due or made to any
other person and any interest, penalties or additions to tax.
3.13 EMPLOYEE BENEFIT PLANS; ERISA. (a) Except as set forth in Company
SEC Reports filed prior to the date of this Agreement or as disclosed in SECTION
3.13 of the Disclosure Letter, the Company has no material "employee benefit
plan" (within the meaning of section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), severance, change-in-control or
employment plan, program or agreement, stock option, bonus plan, or incentive
plan or program ("COMPANY PLANS"). Copies or descriptions of the Company Plans
have been or will be made available to Buyer.
(b) Except as would not have a material adverse effect on the
Company and its Subsidiaries taken as a whole, each Company Plan has been
administered and is in compliance with the terms of such Plan and all applicable
laws, rules and regulations.
23
(c) Except as disclosed on SECTION 3.13(c) of the Disclosure
Letter: (i) each Company Plan intended to be qualified has received a favorable
determination from the Internal Revenue Service and (ii) except as would not
have a material adverse effect on the Company and its Subsidiaries taken as a
whole, to the Company's knowledge, nothing has occurred since that would
adversely affect such qualification.
(d) Except as would not have a material adverse effect on the
Company and its Subsidiaries taken as a whole: (i) no "reportable event" (as
such term is used in section 4043 of ERISA) (other than those events for which
the 30 day notice has been waived pursuant to the regulations) is pending with
respect to any Company Plan, and (ii) no "accumulated funding deficiency" (as
such term is used in section 412 or 4971 of the Code) has occurred during the
last 5 years with respect to any Company Plan.
(e) No litigation or administrative or other proceeding involving
any Company Plans has occurred or, to the Company's knowledge, are threatened,
where, in either case, an adverse determination would result in liability that
would have a material adverse effect on the Company and its Subsidiaries taken
as a whole.
(f) Except as disclosed on SECTION 3.13(f) of the Disclosure
Letter, the Company has not contributed to any "multiemployer plan" (within the
meaning of section 3(37) of ERISA) and neither the Company nor any member of its
Controlled Group (defined as any organization which is a member of a controlled
group of organizations within the meaning of Code sections 414(b), (c), (m) or
(o)) has incurred any withdrawal liability which remains unsatisfied in an
amount which would result in liability that would have a material adverse effect
on the Company and its Subsidiaries taken as a whole.
(g) No Company Plan or plan sponsored by any member of the
Company's Controlled Group has been terminated, where such termination has
resulted in liability under Title IV of ERISA that would have a material adverse
effect on the Company and its Subsidiaries taken as a whole.
3.14 LABOR MATTERS. Except as disclosed in the Company SEC Reports
filed prior to the date of this Agreement or in SECTION 3.14 of the Company
Disclosure Letter, there are no material controversies pending or, to the
knowledge of the Company, threatened between the Company or any of its
Subsidiaries and any representatives of its employees, except as would not,
individually or in the aggregate, have a material adverse effect on the Company
and its Subsidiaries taken as a whole, and, to the knowledge of the Company,
there are no material organizational efforts presently being made involving any
of the now unorganized employees of the Company or any of its Subsidiaries.
Since December 31, 1997, there has been no work stoppage, strike or other
concerted action by employees of the Company or any of its Subsidiaries except
as would not, individually or in the aggregate, have a material adverse effect
on the Company and its Subsidiaries taken as a whole.
24
3.15 ENVIRONMENTAL MATTERS. (a) Each of the Company and its
Subsidiaries has obtained all licenses, permits, authorizations, approvals and
consents from Governmental or Regulatory Authorities which are required under
any applicable Environmental Law (as defined below) in respect of its business
or operations ("ENVIRONMENTAL PERMITS"), except for such failures to have
Environmental Permits which, individually or in the aggregate, could not
reasonably be expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole. Each of such Environmental Permits is in full
force and effect and each of the Company and its Subsidiaries is in compliance
with the terms and conditions of all such Environmental Permits and with any
applicable Environmental Law, except for such failures to be in compliance
which, individually or in the aggregate, could not reasonably be expected to
have a material adverse effect on the Company and its Subsidiaries taken as a
whole.
(b) To the knowledge of the Company, no site or facility now or
previously owned, operated or leased by the Company or any of its Subsidiaries
is listed or proposed for listing on the National Priorities List promulgated
pursuant to the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, and the rules and regulations thereunder ("CERCLA"), or
on any similar state or local list of sites requiring investigation or clean-up.
Except for such releases of Hazardous Materials as would not reasonably be
expected to result in a material adverse effect on the Company and its
Subsidiaries taken as a whole, to the knowledge of the Company, there have been
no releases of Hazardous Materials from facilities owned, operated or leased by
the Company or its Subsidiaries.
(c) To the knowledge of the Company there have been no
environmental investigations, studies, audits, tests, reviews or other analyses
conducted by, or which are in the possession of, the Company or any of its
Subsidiaries in relation to any site or facility now or previously owned,
operated or leased by the Company or any of its Subsidiaries which have not been
made available to Buyer prior to the execution of this Agreement.
(d) As used herein:
(i) "ENVIRONMENTAL LAW" means any law or order of any
Governmental or Regulatory Authority relating to the regulation or
protection of human health, safety or the environment or to emissions,
discharges, releases or threatened releases of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or
wastes into the environment (including, without limitation, ambient
air, soil, surface water, ground water, wetlands, land or subsurface
strata), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling
of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes; and
(ii) "HAZARDOUS MATERIAL" means (A) any petroleum or petroleum
products, flammable materials, explosives, radioactive materials,
asbestos in any form that is or could become friable, urea formaldehyde
foam insulation and
25
transformers or other equipment that contain dielectric fluid
containing levels of polychlorinated biphenyls (PCBs); (B) any
chemicals or other materials or substances which are now or hereafter
become defined as or included in the definition of "hazardous
substances," "hazardous wastes," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants"
or words of similar import under any Environmental Law; and (C) any
other chemical or other material or substance, exposure to which is now
or hereafter prohibited, limited or regulated by any Governmental or
Regulatory Authority under any Environmental Law.
3.16 INTELLECTUAL PROPERTY RIGHTS. The Company and its Subsidiaries
have all right, title and interest in, or a valid and binding license to use,
all Intellectual Property (as defined below) individually or in the aggregate
material to the conduct of the businesses of the Company and its Subsidiaries
taken as a whole. Neither the Company nor any Subsidiary of the Company is in
default (or with the giving of notice or lapse of time or both, would be in
default) under any license to use such Intellectual Property, to the knowledge
of the Company such Intellectual Property is not being infringed by any third
party, and, to the knowledge of the Company, neither the Company nor any
Subsidiary of the Company is infringing any Intellectual Property of any third
party, except for such defaults and infringements which, individually or in the
aggregate, are not having and could not be reasonably expected to have a
material adverse effect on the Company and its Subsidiaries taken as a whole.
For purposes of this Agreement, "INTELLECTUAL PROPERTY" means patents and patent
rights, trademarks and trademark rights, trade names and trade name rights,
service marks and service xxxx rights, service names and service name rights,
copyrights and copyright rights and other proprietary intellectual property
rights and all pending applications for and registrations of any of the
foregoing.
3.17 VOTE REQUIRED. Assuming the accuracy of the representation and
warranty contained in SECTION 4.06 and except to the extent otherwise provided
in the condition set forth in SECTION 7.03(d), the affirmative vote of the
holders of record of at least a majority of the outstanding shares of Company
Common Stock with respect to the adoption of this Agreement is the only vote of
the holders of any class or series of the capital stock of the Company required
to adopt this Agreement and approve the Merger and the other transactions
contemplated hereby under the DGCL.
3.18 OPINION OF FINANCIAL ADVISOR. The Special Committee has received
the opinion of Xxxxxx Xxxxxx & Company, Inc. ("XXXXXX XXXXXX"), dated the date
hereof, a signed copy of which will be delivered to Buyer promptly following the
receipt thereof by the Special Committee, opining to the effect that, as of the
date hereof, the consideration to be received in the Merger by the stockholders
of the Company (other than Xxxxxx X. Xxxxx, Xx. and his affiliates) is fair from
a financial point of view to the stockholders of the Company.
3.19 COMPANY RIGHTS AGREEMENT. The Company and the Board of Directors
of the Company have taken all action necessary to (i) render the Company Rights
inapplicable to this Agreement and the Merger and (ii) ensure that (A) neither
Buyer nor
26
any of its affiliates or associates is or will become an "Acquiring Person" (as
defined in the Company Rights Agreement) by reason of this Agreement or the
Merger and (B) a "Distribution Date" (as defined in the Company Rights
Agreement) shall not occur by reason of this Agreement or the Merger.
3.20 SECTIONS 11.2 AND 11.3 OF THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION AND SECTION 203 OF THE DGCL NOT APPLICABLE. Assuming the accuracy
of the representation and warranty contained in SECTION 4.06, the Company has
taken all necessary actions so that neither the provisions of Sections 11.2 and
11.3 of the Restated Articles of Incorporation nor the provisions of Section 203
of the DGCL will, before the termination of this Agreement, apply to this
Agreement, the Merger or the other transactions contemplated hereby.
3.21 NO PAYMENTS TO EMPLOYEES, OFFICERS OR DIRECTORS. SECTION 3.21 of
the Company Disclosure Letter contains a true and complete list of any Company
Plan which could provide cash and non-cash payments, rights to property or other
contract rights that will become payable, accelerated or vested to or in any
employee, officer or director of the Company or any Subsidiary of the Company as
a result of the Merger.
3.22 COMPANY FINANCING. The Company has, on or prior to the date
hereof, received commitment letters or other written assurances (the "MARKETING
COMMITMENT LETTERS") with or from various third parties (the "MARKETING
PARTNERS") pursuant to which the Marketing Partners have committed, subject to
the conditions contained in the Marketing Commitment Letters, to provide an
aggregate of up to $50 million to the Company as payment for marketing
arrangements with the Company (the "MARKETING PARTNER FINANCING"). The Company
has, on or prior to the date hereof, entered into an Exchange and Voting
Agreement (the "SUBORDINATED DEBT COMMITMENT LETTER" and, together with the
Marketing Commitment Letters, the "COMPANY COMMITMENT LETTERS"), with certain
noteholders listed therein (the "SUBORDINATED LENDERS"), pursuant to which the
Subordinated Lenders have committed, subject to the conditions contained in the
Subordinated Debt Commitment Letter, to exchange their subordinated notes of the
Company (the "OLD NOTES") and receive, for each $10,000 in principal amount of
the Old Notes exchanged therefor, $3,870 in principal amount of a new note of
the Company (the "NEW NOTES"), $6,191.30 in cash and a warrant, which after the
Merger will be a warrant to purchase an agreed-upon percentage of the common
stock of the Surviving Corporation (the "EXCHANGE OFFER"). The Exchange Offer
will also contain terms substantially the same as those set forth in the
Subordinated Debt Commitment Letter (as such terms may be amended in accordance
with the terms thereof and SECTION 6.13 hereof prior to the Effective Time) (the
"SUBORDINATED DEBT FINANCING" and, together with the Marketing Partner
Financing, the "COMPANY FINANCING"). As of the date hereof, to the knowledge of
the Company, none of the Company Commitment Letters has been withdrawn or
modified in any way and the Company does not know of any facts or circumstances
that may reasonably be expected to result in any of the conditions set forth in
the letters relating to the Company Financing not being satisfied.
27
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Company as follows:
4.01 ORGANIZATION AND QUALIFICATION. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has full corporate power and authority to
conduct its business as and to the extent now conducted and to own, use and
lease its assets and properties. Buyer was formed solely for the purpose of
engaging in the transactions contemplated by this Agreement, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby. Buyer has previously delivered to the Company correct and complete
copies of the certificate of incorporation and bylaws of Buyer. Buyer has no
Subsidiaries.
4.02 AUTHORITY RELATIVE TO THIS AGREEMENT. Buyer has full corporate
power and authority to enter into this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement by Buyer and its consummation of the
transactions contemplated hereby have been duly and validly approved by its
Board of Directors and by its stockholders, and no other corporate proceedings
on the part of Buyer or its stockholders are necessary to authorize the
execution, delivery and performance of this Agreement by Buyer and the
consummation by Buyer of the transactions contemplated hereby. Notwithstanding
the foregoing, further action may be necessary to authorize the issuance of
shares of Buyer Preferred Stock pursuant to the Preferred Stock Commitment
Letters (as defined in SECTION 4.07(a)) and to authorize the definitive
agreements and documents relating to the Buyer Preferred Stock and the
definitive agreements relating to the Buyer Debt Financing Agreements and the
transactions contemplated thereby and any such necessary action shall be taken
prior to the Closing. This Agreement has been duly and validly executed and
delivered by Buyer and constitutes a legal, valid and binding obligation of
Buyer enforceable against Buyer in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
4.03 NON-CONTRAVENTION; APPROVALS AND CONSENTS. (a) The execution and
delivery of this Agreement by Buyer does not, and the performance by Buyer of
its obligations hereunder and the consummation of the transactions contemplated
hereby will not, conflict with, result in a violation or breach of, constitute
(with or without notice or lapse of time or both) a default under, result in or
give to any person any right of payment or reimbursement, termination,
cancellation, modification or acceleration of, or result in the creation or
imposition of any Lien (other than Liens contemplated by the Commitment Letters)
upon any of the assets or properties of Buyer under, any of the terms,
conditions or provisions of (i) the certificates or articles of incorporation or
bylaws (or other comparable charter documents) of Buyer, or (ii) subject to the
taking of the actions described in paragraph (b) of this Section, (x) any laws
or orders of any
28
Governmental or Regulatory Authority applicable to Buyer or any of their
respective assets or properties, or (y) any Contracts to which Buyer is a party
or by which Buyer or any of its assets or properties is bound, excluding from
the foregoing clauses (x) and (y) conflicts, violations, breaches, defaults,
terminations, modifications, accelerations and creations and impositions of
Liens which, individually or in the aggregate, could not be reasonably expected
to have a material adverse effect on the ability of Buyer to consummate the
transactions contemplated by this Agreement.
(b) Except (i) for the filing of the Schedule 13E-3 with the SEC,
(ii) for the filing of the Certificate of Merger and other appropriate merger
documents required by the DGCL with the Secretary of State and appropriate
documents with the relevant authorities of other states in which the Constituent
Corporations are qualified to do business, (iii) for obtaining stockholder
approval of Buyer, which has been obtained on the date hereof, (iv) for
obtaining the Buyer Financing and (v) as disclosed in SECTION 4.03 of the Buyer
Disclosure Letter, no consent, approval or action of, filing with or notice to
any Governmental or Regulatory Authority or other public or private third party
is necessary or required under any of the terms, conditions or provisions of any
law or order of any Governmental or Regulatory Authority or any Contract to
which Buyer is a party or by which Buyer or any of its assets or properties is
bound for the execution and delivery of this Agreement by Buyer, the performance
by Buyer of its obligations hereunder or the consummation of the transactions
contemplated hereby, other than such consents, approvals, actions, filings and
notices which the failure to make or obtain, as the case may be, individually or
in the aggregate, could not be reasonably expected to have a material adverse
effect on the ability of Buyer to consummate the transactions contemplated by
this Agreement.
4.04 LEGAL PROCEEDINGS. There are no actions, suits, arbitrations or
proceedings pending or, to the knowledge of Buyer, threatened against or
relating to, nor to the knowledge of Buyer are there any Governmental or
Regulatory Authority investigations or audits pending or threatened against or
relating to, Buyer or any of its assets and properties which, individually or in
the aggregate, could be reasonably expected to have a material adverse effect on
the ability of Buyer to consummate the transactions contemplated by this
Agreement, and Buyer is not subject to any order of any Governmental or
Regulatory Authority which, individually or in the aggregate, could be
reasonably expected to have a material adverse effect on the ability of Buyer to
consummate the transactions contemplated by this Agreement.
4.05 INFORMATION SUPPLIED. Neither the information supplied or to be
supplied in writing by or on behalf of Buyer for inclusion, nor the information
incorporated by reference from documents filed by Buyer with the SEC, in the
Proxy Statement, the Schedule 13E-3 or any other documents to be filed by Buyer
or the Company with the SEC or any other Governmental or Regulatory Authority in
connection with the Merger and the other transactions contemplated hereby will
on the date of its filing or its distribution or, in the case of the Proxy
Statement, on the date it is mailed to stockholders of the Company and on the
date of the Company Stockholders' Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
29
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. All such documents
filed by Buyer or the Company with the SEC under the Exchange Act will comply as
to form in all material respects with the requirements of the Exchange Act.
4.06 OWNERSHIP OF COMPANY COMMON STOCK. Neither Buyer nor any of its
affiliates beneficially owns any shares of Company Common Stock except as set
forth in the Voting Agreement.
4.07 BUYER FINANCING. (a) Buyer has, on or prior to the date hereof,
entered into subscription agreements (the "BUYER SUBSCRIPTION AGREEMENTS"),
pursuant to which the subscribers thereunder (the "BUYER INVESTORS") have
agreed, subject to the terms and conditions contained in the Buyer Subscription
Agreements, to contribute all shares of Company Common Stock that they
singularly or together have the sole power to dispose of, for shares of common
stock of Buyer. Buyer has, on or prior to the date hereof, entered into one or
more commitment letters (the "PREFERRED STOCK COMMITMENT LETTERS"), pursuant to
which the proposed purchasers thereunder (the "PREFERRED STOCK INVESTORS" and,
together with the Buyer Investors, the "EQUITY INVESTORS") have agreed, subject
to the terms and conditions contained in the Preferred Stock Commitment Letters,
to provide an aggregate of up to $24.25 million of funds to Buyer in cash for
shares of preferred and common stock of Buyer, which shares of preferred stock
will contain terms substantially the same as those set forth in the Preferred
Stock Commitment Letters (as such terms may be amended in accordance with the
terms of the Preferred Stock Commitment Letters and SECTION 6.13 hereof prior to
the Effective Time). The financing to be provided to Buyer pursuant to the Buyer
Subscription Agreements and the Preferred Stock Commitment Letters is sometimes
referred to herein as the "EQUITY FINANCING." Buyer has, on or prior to the date
hereof, entered into a commitment letter (the "SENIOR DEBT COMMITMENT LETTER"
and, together with the Buyer Subscription Agreements, the Preferred Stock
Commitment Letters, the "BUYER COMMITMENT LETTERS" and, together with the
Company Commitment Letters, the "COMMITMENT LETTERS"), with Provident Bank (the
"SENIOR LENDER") pursuant to which the Senior Lender has committed, subject to
the conditions contained in the Senior Debt Commitment Letter, to provide an
aggregate of up to $50 million to Buyer in a senior secured credit financing to
Buyer, which senior secured credit financing will contain terms substantially
the same as those set forth in the Senior Debt Commitment Letter (as such terms
may be amended in accordance with the terms thereof and SECTION 6.13 hereof
prior to the Effective Time) (the "SENIOR DEBT FINANCING" and together with the
Company Financing, the "DEBT FINANCING" and, together with the Equity Financing,
the "FINANCING"). The Senior Debt Financing and the Equity Financing are
sometimes referred to herein as the "BUYER FINANCING." As of the date hereof, to
the Buyer's knowledge none of the letters relating to the Financing referred to
above has been withdrawn and Buyer does not know of any facts or circumstances
that may reasonably be expected to result in any of the conditions set forth in
the letters relating to the Financing not being satisfied.
(b) Buyer has previously provided the Company with true and complete
copies of (i) each Buyer Commitment Letter entered into on or prior to the date
hereof,
30
and (ii) the form of each other agreement, if any, to which Buyer, on the one
hand, and any party to a Buyer Commitment Letter, an affiliate of party to a
Buyer Commitment Letter or any other person, on the other hand, to be entered
into on the date hereof and relating to any equity interest of Buyer.
4.08 FRAUDULENT TRANSFER. Buyer believes that the Financing will not
create any liability to the directors and stockholders of the Company under any
federal or state fraudulent conveyance or transfer law. Buyer further believes
that, upon the consummation of the transactions contemplated hereby, including,
without limitation, the Financing, (i) the Surviving Corporation (A) will not be
insolvent, (B) will not be left with insufficient capital with which to engage
in its business and (C) will not have incurred debts beyond its ability to pay
such debts as they mature, and (ii) the capital of the Company will not be
impaired.
4.09 OWNERSHIP OF BUYER STOCK. (a) As of the date of execution of this
Agreement, the proposed equity commitment of each proposed shareholder of Buyer
as of the Effective Time is as set forth in Schedule 4.09(a).
(b) Except as set forth in SECTION 4.09(b) of the Buyer Disclosure
Letter, as of the date hereof, there are no arrangements, understandings or
agreements between any of Buyer or any of their affiliates on the one hand, and
any directors, officers or employees of the Company or any Subsidiary or any
stockholder of the Company on the other hand, relating to the transactions
contemplated hereby.
ARTICLE V COVENANTS OF THE COMPANY
5.01 COVENANTS OF THE COMPANY. At all times from and after the date
hereof until the Effective Time, the Company covenants and agrees as to itself
and its Subsidiaries that (except as expressly contemplated or permitted by this
Agreement or as set forth in SECTION 5.01 of the Company Disclosure Letter, or
to the extent that Buyer shall otherwise previously consent in writing):
(a) ORDINARY COURSE. The Company and its Subsidiaries shall
conduct their respective businesses only in, and neither the Company nor any
such Subsidiary shall take any action except in, the ordinary course consistent
with past practice.
(b) Without limiting the generality of paragraph (a) of this
Section, (i) the Company and its Subsidiaries shall use all reasonable efforts
to preserve intact in all material respects their present business organizations
and reputation, to keep available the services of their key officers and
employees, to maintain their assets and properties in good working order and
condition, ordinary wear and tear excepted, to maintain insurance on their
tangible assets and businesses in such amounts and against such risks and losses
as are currently in effect, to preserve their relationships with customers and
suppliers and others having significant business dealings with them and to
comply in all material respects with all laws and orders of all Governmental or
Regulatory Authorities
31
applicable to them, and (ii) the Company shall not, nor shall it permit any of
its Subsidiaries to, except as otherwise expressly provided for in this
Agreement:
(A) amend or propose to amend its certificate or articles of
incorporation or bylaws (or other comparable corporate charter
documents);
(B) (w) declare, set aside or pay any dividends on or make
other distributions in respect of any of its capital stock except for
the declaration and payment of dividends by a wholly owned Subsidiary
solely to its parent corporation, (x) split, combine, reclassify or
take similar action with respect to any of its capital stock or issue
or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock, (y)
adopt a plan of complete or partial liquidation or resolutions
providing for or authorizing such liquidation or a dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization
or (z) directly or indirectly redeem, repurchase or otherwise acquire
any shares of its capital stock or any Option with respect thereto;
(C) issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or any
Option with respect thereto (other than (w) the issuance of Company
Common Stock pursuant to the Employee Stock Purchase Plan, (x) the
issuance of Company Common Stock or stock appreciation or similar
rights, as the case may be, pursuant to the Company Options Plans, in
each case outstanding on the date of this Agreement and in accordance
with their present terms, (y) the issuance by a wholly owned Subsidiary
of its capital stock to its parent corporation, and (z) the issuance of
Company Rights and reservation of Company Series A Preferred Stock
pursuant to the Company Rights Agreement in accordance with the terms
thereof or modify or amend any right of any holder of outstanding
shares of capital stock or Options with respect thereto;
(D) acquire (by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other manner) any business or any corporation,
partnership, association or other business organization or division
thereof or otherwise acquire or agree to acquire any assets other than
inventory and other assets to be sold or used in the ordinary course of
business consistent with past practice or which are material,
individually or in the aggregate, to such party and its Subsidiaries
taken as a whole;
(E) other than dispositions in the ordinary course of its
business consistent with past practice or disposition of assets which
are not, individually or in the aggregate, material to the Company and
its Subsidiaries taken as a whole, sell, lease, grant any security
interest in or otherwise dispose of or encumber any of its assets or
properties;
32
(F) except to the extent required by applicable law or
generally accepted accounting principles, (x) permit any material
change in (A) any investment, accounting, financial reporting,
allowance or tax practice or policy or (B) any method of calculating
any bad debt, contingency or other reserve for accounting, financial
reporting or tax purposes or (y) make any material tax election or
settle or compromise any material income tax liability with any
Governmental or Regulatory Authority;
(G) (x) (A) incur (which shall not be deemed to include
entering into credit agreements, lines of credit or similar
arrangements until borrowings are made under such arrangements) any
indebtedness for borrowed money or guarantee any such indebtedness or
(B) amend any terms of its existing indebtedness other than in the
ordinary course of its business consistent with past practice or (y)
voluntarily purchase, exchange, cancel, prepay or otherwise provide for
a complete or partial discharge in advance of a scheduled repayment
date with respect to, or waive any right under, any indebtedness for
borrowed money other than in the ordinary course of its business
consistent with past practice;
(H) enter into, adopt, amend in any material respect (except
as may be required by applicable law) or terminate any Company Employee
Benefit Plan, or other agreement, arrangement, plan or policy between
the Company or one of its Subsidiaries and one or more of its
directors, officers or employees, or, except for normal increases in
the ordinary course of business consistent with past practice that, in
the aggregate, do not result in a material increase in benefits or
compensation expense to the Company and its Subsidiaries taken as a
whole, increase in any manner the compensation or fringe benefits of
any director, officer or employee or pay any benefit not required by
any plan or arrangement in effect as of the date hereof;
(I) make any capital expenditures or commitments for additions
to plant, property or equipment constituting capital assets except in
the ordinary course of business consistent with past practice;
(J) make any change in the lines of business in which it
participates or is engaged; or
(K) enter into any Contract, commitment or arrangement to do
or engage in any of the foregoing.
5.02 NO SOLICITATIONS. Prior to the Effective Time, the Company agrees
(a) that neither it nor any of its Subsidiaries or other affiliates shall, and
it shall not authorize or permit their respective Representatives (as defined in
SECTION 9.11) to, directly or indirectly, initiate, solicit, facilitate or
encourage any inquiries or the making or implementation of any proposal or offer
(including, without limitation, any proposal or offer to its stockholders) with
respect to a merger, consolidation, recapitalization,
33
reorganization or other business combination involving the Company or any of its
Subsidiaries or any acquisition or similar transaction (including, without
limitation, a tender or exchange offer) involving the purchase of all or any
significant portion of the assets of the Company and its Subsidiaries taken as a
whole or 15% or more of the outstanding shares of Company Common Stock (any such
proposal or offer being hereinafter referred to as an "ALTERNATIVE PROPOSAL"),
or engage in any negotiations concerning, or furnish or disclose any
confidential information or data to, or have any discussions with, any person or
group relating to an Alternative Proposal (excluding the transactions
contemplated by this Agreement), or otherwise facilitate any effort or attempt
to make or implement an Alternative Proposal, including, without limitation, by
entering into any agreement, arrangement or understanding requiring the Company
to abandon, terminate or fail to consummate the Merger or any other transaction
contemplated by this Agreement; (b) that it will immediately cease and cause to
be terminated any existing activities, discussions or negotiations with any
parties with respect to any of the foregoing, and it will take the necessary
steps to inform such parties with respect to the foregoing; and (c) that it will
notify Buyer in writing immediately (but in any event within 24 hours) if any
such inquiries, proposals or offers are received by, any such information is
requested from, or any such negotiations or discussions are sought to be
initiated or continued with, it or any of such persons or groups and shall
include in any such notice, the material terms of any such Alternative
Proposals; PROVIDED, HOWEVER, that at any time prior to receiving the Company
Stockholders' Approval, the Special Committee may (i) furnish information to
(but only pursuant to a confidentiality agreement that contains terms that are
no more favorable to that person or group than the terms of the Confidentiality
Agreement) or enter into discussions or negotiations with any person or group
that makes an unsolicited BONA FIDE Alternative Proposal, after the date hereof,
if, and so long as (A) the Special Committee determines in good faith by a
resolution duly adopted that such proposal is a Superior Transaction (as defined
below), (B) the Special Committee, after consultation with its outside counsel,
determines in good faith by a resolution duly adopted that the failure to so act
is reasonably likely to result in the Special Committee breaching its fiduciary
duties to stockholders imposed by law, (C) prior to furnishing such information
to, or entering into discussions or negotiations with, such person or group, the
Company provides written notice to Buyer to the effect that it is furnishing
information to, or entering into discussions or negotiations with, such person
or group, and (D) the Company keeps Buyer informed of the status and all
material information with respect to any such discussions or negotiations; and
(ii) to the extent required, comply with Rule 14e-2 promulgated under the
Exchange Act with regard to an Alternative Proposal. Nothing in this SECTION
5.02 shall (x) permit the Company to terminate this Agreement (except as
specifically provided in ARTICLE VIII), (y) permit the Company to enter into any
agreement with respect to an Alternative Proposal for so long as this Agreement
remains in effect (other than a confidentiality agreement under the
circumstances described above), or (z) affect any other obligation of the
Company under this Agreement. "SUPERIOR TRANSACTION" means an Alternative
Proposal that the Special Committee has determined, after consultation which
Xxxxxx Xxxxxx or another nationally recognized investment banking firm, that the
consideration to be received, directly or indirectly, by stockholders of the
Company in connection with such Alternative Proposal is superior,
34
from a financial point of view, to the consideration to be received by them in
the Merger and is reasonably likely to be completed, including with respect to
the financing thereof, taking into account all legal, financial, regulatory and
other aspects of that Alternative Proposal as well as the person or group making
that Alternative Proposal.
5.03 COMPANY RIGHTS AGREEMENT. The Board of Directors of the Company
shall take all action necessary and shall take all action reasonably requested
in writing by Buyer in order to render the Company Rights inapplicable to the
Merger.
5.04 STOCKHOLDER CLAIMS. The Company shall not settle or compromise any
material claim brought by any holder of any securities of the Company or any
creditor of the Company under the Amended and Restated Indenture dated as of
December 1, 1995 by and among the Company, certain subsidiaries of the Company,
as Guarantors and First Bank National Association, as Trustee, or under the
Credit Agreement dated as of December 28, 1999, among the Company, the Banks
from time to time parties thereto and Citizens Bank of Connecticut, as agent, as
amended without the prior written consent of Buyer.
5.05 BUSINESS PLAN. The Company will use its reasonable efforts to
implement the Business and Restructuring Plans that the Board of Directors, upon
the advice of the Special Committee, approved March 9, 2001 and will not amend,
modify or terminate either of those plans or take any other action that is
designed to interfere with the implementation of either of those plans by the
management of the Company, without, in any such case, the approval of the
Chairman of the Board as of the date hereof.
ARTICLE VI ADDITIONAL AGREEMENTS
6.01 ACCESS TO INFORMATION; CONFIDENTIALITY. The Company shall, and
shall cause each of its Subsidiaries to, throughout the period from the date
hereof to the Effective Time, (i) provide Buyer and its Representatives with
full access, upon reasonable prior notice and during normal business hours, to
all officers, employees, agents and accountants of the Company and its
Subsidiaries and their respective assets, properties, books and records, but
only to the extent that such access does not unreasonably interfere with the
business and operations of the Company and its Subsidiaries, and (ii) furnish
promptly to such persons (x) a copy of each report, statement, schedule and
other document filed or received by the Company or any of its Subsidiaries
pursuant to the requirements of federal or state securities laws and each
material report, statement, schedule and other document filed with any other
Governmental or Regulatory Authority, and (y) all other information and data
(including, without limitation, copies of Contracts, Company Employee Benefit
Plans and other books and records) concerning the business and operations of the
Company and its Subsidiaries as Buyer or any of such other persons reasonably
may request. No investigation pursuant to this paragraph or otherwise shall
affect any representation or warranty contained in this Agreement or any
condition to the obligations of the parties hereto. Any such information or
material obtained pursuant to this SECTION 6.01 that
35
constitutes "Evaluation Material" (as such term is defined in the letter
agreement dated as of October 18, 2000 between the Company and Buyer (the
"CONFIDENTIALITY AGREEMENT")) shall be governed by the terms of the
Confidentiality Agreement.
6.02 PREPARATION OF PROXY STATEMENT, SCHEDULE 13E-3 AND OFFERING
MATERIALS. (a) The Company shall prepare and file with the SEC the Proxy
Statement and Schedule 13E-3 as soon as reasonably practicable after the date
hereof, and shall use its best efforts to have the Proxy Statement cleared by
the SEC. If at any time prior to the Effective Time any event shall occur that
should be set forth in an amendment of or a supplement to the Proxy Statement,
the Company shall prepare and file with the SEC such amendment or supplement as
soon thereafter as is reasonably practicable. Buyer and the Company shall
cooperate with each other in the preparation of the Proxy Statement and Schedule
13E-3, and the Company and Buyer shall notify the other of the receipt of any
comments of the SEC with respect to the Proxy Statement or Schedule 13E-3 and of
any requests by the SEC for any amendment or supplement thereto or for
additional information, and shall provide to the other promptly copies of all
correspondence between it or its representatives and the SEC with respect to the
Proxy Statement or Schedule 13E-3. The Company and Buyer shall give the other
and its respective counsel the opportunity to review the Proxy Statement and
Schedule 13E-3 and all responses to requests for additional information by and
replies to comments of the SEC before their being filed with, or sent to, the
SEC. Each of the Company and Buyer agrees to use its best efforts, after
consultation with the other parties hereto, to respond promptly to all such
comments of and requests by the SEC and to cause the Proxy Statement to be
mailed to the holders of Company Common Stock entitled to vote at the Company
Stockholders' Meeting at the earliest practicable time.
(b) The Company shall, and shall cause its Subsidiaries to, use
all reasonable efforts to cooperate with and assist Buyer in preparing such
information packages and offering materials as the Financing Parties (as defined
in SECTION 6.13(c)) may reasonably request (collectively, the "OFFERING
MATERIALS") for use in connection with the offering and/or syndications of
interests, preferred stock, debt securities and loan participations contemplated
by the Commitment Letters, including, without limitation, making senior
management and other representatives of the Company and its Subsidiaries
available (at mutually agreeable times) to participate in meetings with
prospective investors and providing such information and assistance as the
Financing Parties may reasonably request in connection therewith.
6.03 APPROVAL OF STOCKHOLDERS. The Company shall, through its
Board of Directors, duly call, give notice of, convene and hold a meeting of its
stockholders (the "COMPANY STOCKHOLDERS' MEETING") for the purpose of voting on
the adoption of this Agreement (the "COMPANY STOCKHOLDERS' APPROVAL") as soon as
reasonably practicable after the date hereof. The Company shall, through the
Special Committee and its Board of Directors, include in the Proxy Statement the
recommendation of the Board of Directors of the Company that the stockholders of
the Company adopt this Agreement, and shall use its reasonable best efforts to
obtain such adoption, unless the Special Committee determines, after
consultation with its outside counsel, in good faith by a
36
resolution duly adopted that to make such a recommendation that the Special
Committee or the Board of Directors is reasonably likely to breach its fiduciary
duties to the stockholders imposed by law. Notwithstanding the foregoing, no
change, withdrawal or modification of the recommendation of the Board of
Directors of the Company will change any prior approval of the Board of
Directors of the Company for the purpose of causing any state anti-takeover
statute or other state law to be inapplicable to the transactions contemplated
hereby or the obligation of the Board of Directors of the Company to submit this
Agreement to the stockholders of the Company for adoption. At such meeting,
Buyer shall cause all shares of Company Common Stock then owned by Buyer to be
voted in favor of the adoption of this Agreement.
6.04 REGULATORY AND OTHER APPROVALS. Subject to the terms and
conditions of this Agreement and without limiting the provisions of SECTIONS
6.02 and 6.03, each of the Company and Buyer will proceed diligently and in good
faith to, as promptly as practicable, (a) obtain all consents, approvals or
actions of, make all filings with and give all notices to Governmental or
Regulatory Authorities or any other public or private third parties required of
Buyer, the Company or any of the Company's Subsidiaries to consummate the Merger
and the other matters contemplated hereby, and (b) provide such other
information and communications to such Governmental or Regulatory Authorities or
other public or private third parties as the other party or such Governmental or
Regulatory Authorities or other public or private third parties may reasonably
request in connection therewith.
6.05(a) SEVERANCE POLICY AND OTHER AGREEMENTS. With respect to any
officer or employee who is covered by a severance policy or plan, Buyer shall
maintain or cause to be maintained such policy or plan as in effect as of the
date hereof. Buyer shall honor or cause to be honored all severance agreements
and employment agreements with the Company's directors, officers and employees.
(b) CREDIT FOR DEDUCTIBLES. Buyer will, or will cause the
Surviving Corporation to, (i) waive all limitations as to preexisting
conditions, exclusions and waiting periods with respect to participation and
coverage requirements applicable to the employees of the Company under any
welfare plan that such employees may be eligible to participate in after the
Effective Time, (ii) provide each employee of the Company with credit for any
co-payments and deductibles paid prior to the Effective Time in satisfying any
applicable deductible or out-of-pocket requirements under any welfare plans that
such employees are eligible to participate in after the Effective Time, and
(iii) provide each employee of the Company with credit for all service with the
Company and its affiliates under each employee benefit plan, program, or
arrangement of Buyer in which such employees are eligible to participate;
PROVIDED, HOWEVER, that in no event shall the employees be entitled to any
credit to the extent that it would result in a duplication of benefits with
respect to the same period of service.
6.06 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE. (a) From
and after the Effective Time and until the sixth anniversary of the Effective
Time and for so long thereafter as any claim for indemnification asserted on or
prior to such date has not
37
been fully adjudicated, Buyer and the Surviving Corporation (each, an
"INDEMNIFYING PARTY") shall indemnify, defend and hold harmless each person who
is now or who becomes prior to the Effective Time, a director or officer of the
Company or any of its Subsidiaries (the "INDEMNIFIED PARTIES") against (i) all
losses, claims, damages, costs and expenses (including reasonable attorneys'
fees), liabilities, judgments and settlement amounts that are paid or incurred
in connection with any claim, action, suit, proceeding or investigation (whether
civil, criminal, administrative or investigative and whether asserted or claimed
prior to, at or after the Effective Time) that is based in whole or in part on,
or arises in whole or in part out of, the fact that such Indemnified Party is or
was a director or officer or agent of the Company or any of its Subsidiaries and
relates to or arises out of any action or omission occurring at or prior to the
Effective Time ("INDEMNIFIED LIABILITIES"), and (ii) all Indemnified Liabilities
based in whole or in part on, or arising in whole or in part out of, or
pertaining to this Agreement or the transactions contemplated hereby, in each
case to the full extent a corporation is permitted under applicable law to
indemnify its own directors or officers, as the case may be; PROVIDED that no
Indemnifying Party shall be liable for any settlement of any claim effected
without its written consent, which consent shall not be unreasonably withheld;
and PROVIDED, FURTHER, that no Indemnifying Party shall be liable for any
Indemnified Liabilities which occur as a result of the gross negligence or
willful misconduct of any Indemnified Party. Without limiting the foregoing, in
the event that any such claim, action, suit, proceeding or investigation is
brought against any Indemnified Party (whether arising prior to or after the
Effective Time), (w) the Indemnifying Parties will pay expenses in advance of
the final disposition of any such claim, action, suit, proceeding or
investigation to each Indemnified Party to the full extent permitted by
applicable law; PROVIDED that the person to whom expenses are advanced provides
any undertaking required by applicable law to repay such advance if it is
ultimately determined that such person is not entitled to indemnification; (x)
the Indemnified Parties shall retain counsel reasonably satisfactory to the
Indemnifying Parties; (y) the Indemnifying Parties shall pay all reasonable fees
and expenses of such counsel for the Indemnified Parties (subject to the final
sentence of this paragraph) promptly as statements therefor are received; and
(z) the Indemnifying Parties shall use all reasonable efforts to assist in the
defense of any such matter. Any Indemnified Party wishing to claim
indemnification under this Section, upon learning of any such claim, action,
suit, proceeding or investigation, shall notify the Indemnifying Parties, but
the failure so to notify an Indemnifying Party shall not relieve such
Indemnifying Party from any liability which it may have under this paragraph
except to the extent such failure materially prejudices such Indemnifying Party.
The Indemnified Parties as a group may retain only one law firm to represent
them with respect to each such matter unless there is, under applicable
standards of professional conduct, a conflict or potential conflict on any
significant issue between the positions of any two or more Indemnified Parties
in which case, the Indemnified Parties may retain more than one law firm.
(b) Except to the extent required by law, until the sixth
anniversary of the Effective Time, Buyer will not take any action so as to
amend, modify or repeal the provisions for indemnification of directors,
officers or employees contained in the certificates or articles of incorporation
or bylaws (or other comparable charter
38
documents) of the Surviving Corporation and its Subsidiaries (which as of the
Effective Time shall be no more favorable to such individuals than those
maintained by the Company and its Subsidiaries on the date hereof) in such a
manner as would adversely affect the rights of any individual who shall have
served as a director, officer or employee of the Company or any of its
Subsidiaries prior to the Effective Time to be indemnified by such corporations
in respect of their serving in such capacities prior to the Effective Time.
(c) Buyer and the Surviving Corporation shall, until the sixth
anniversary of the Effective Time, cause to be maintained in effect, to the
extent available, the policies of directors' and officers' liability insurance
maintained by the Company and its Subsidiaries as of the date hereof (or
policies of at least the same coverage and amounts containing terms that are no
less advantageous to the insured parties) with respect to claims arising from
facts or events that occurred on or prior to the Effective Time; PROVIDED that
in no event shall Buyer or the Surviving Corporation be obligated to expend in
order to maintain or procure insurance coverage pursuant to this paragraph any
amount per annum in excess of two hundred percent (200%) of the aggregate
premiums payable by the Company and its Subsidiaries in the current fiscal year
(on an annualized basis) for such purpose or pay premiums for more than six
years.
(d) The provisions of this Section are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and each party
entitled to insurance coverage under paragraph (c) above, respectively, and his
or her heirs and legal representatives, and shall be in addition to any other
rights an Indemnified Party may have under the certificate or articles of
incorporation or bylaws of the Surviving Corporation or any of its Subsidiaries,
under the DGCL or otherwise.
6.07 EXPENSES. Except as set forth in SECTION 8.02 or in this SECTION
6.07, whether or not the Merger is consummated, all costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such cost or expense. Contemporaneously with the
execution of this Agreement, the Company has paid the $250,000 fee due to the
Senior Lender pursuant to the Senior Debt Commitment Letter.
6.08 BROKERS OR FINDERS. Buyer and the Company represents, as to itself
and its affiliates, that no agent, broker, investment banker, financial advisor
or other firm or person is or will be entitled to any broker's or finder's fee
or any other commission or similar fee in connection with any of the
transactions contemplated by this Agreement except Xxxxxx Xxxxxx, whose fees and
expenses will be paid by the Company in accordance with the Company's agreement
with such firm (a true and complete copy of which has been delivered by the
Company to Buyer prior to the execution of this Agreement), and Provident
Capital Corp., whose fees and expenses will be paid by Buyer in accordance with
Buyer's agreement with such firm (a true and complete copy of which has been
delivered by Buyer to the Company prior to the execution of this Agreement), and
Buyer and the Company shall indemnify and hold the other harmless from and
against any and all claims, liabilities or obligations with respect to any other
such fee or
39
commission or expenses related thereto asserted by any person on the basis of
any act or statement alleged to have been made by such party or its affiliate.
6.09 TAKEOVER STATUTES. If any "fair price", "moratorium", "control
share acquisition" or other form of antitakeover statute or regulation shall
become applicable to the transactions contemplated hereby, the Company and the
members of the Board of Directors of the Company shall grant such approvals and
take such actions as are reasonably necessary so that the transactions
contemplated hereby may be consummated as promptly as practicable on the terms
contemplated hereby and thereby and otherwise act to eliminate or minimize the
effects of such statute or regulation on the transactions contemplated hereby.
6.10 CONVEYANCE TAXES. The Company and Buyer shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees, and any similar taxes which become payable in
connection with the transactions contemplated by this Agreement that are
required or permitted to be filed on or before the Effective Time.
6.11 NEW YORK STATE STOCK TRANSFER TAX. The Company shall pay, without
deduction or withholding from any amount payable to the holders of Company
Common Stock, any New York State Stock Transfer (and any penalties and interest
with respect to such taxes), which become payable in connection with the
transactions contemplated by this Agreement, on behalf of the stockholders of
the Company. The Company and Buyer shall cooperate in the preparation, execution
and filing of any required returns with respect to such taxes (including returns
on behalf of the stockholders of the Company).
6.12 CONDUCT OF BUSINESS OF BUYER. Prior to the Effective Time, except
as may be required by applicable law subject to the other provisions of this
Agreement, Buyer shall (a) not incur directly or indirectly any liabilities or
obligations other than those incurred in connection with the Merger, and (b) not
engage directly or indirectly in any business or activities of any type or kind
and not enter into any agreements or arrangements with any person, or be subject
to or bound by any obligation or undertaking, which is not contemplated by this
Agreement.
6.13 FINANCING. (a) Neither party will, or seek to, without the prior
consent of the other party (which consent shall not be unreasonably withheld),
amend, modify or waive any material term of the Commitment Letters if such
amendment, modification or waiver would (i) reduce the aggregate amount of funds
committed under the Commitment Letters, (ii) add significant additional
conditions to the consummation of the transactions contemplated by the
Commitment Letters or (iii) have a significant adverse affect on or
significantly delay the receipt of any of the Required Approvals (as defined in
SECTION 7.01(d)) or the consummation of the Merger. Buyer shall enforce, to the
fullest extent permitted under applicable law, the provisions of the Buyer
Commitment Letters and any definitive agreements entered into in contemplation
thereof.
40
The Company shall enforce, to the fullest extent permitted under applicable law,
the provisions of the Company Commitment Letters and definitive documents
entered into in contemplation thereof. Buyer shall use its reasonable efforts to
fulfill all of its obligations under, cause all conditions to funding to be
fulfilled under, and cause the funding to occur under the Buyer Commitment
Letters or any definitive agreements entered into on contemplation thereof. The
Company shall use its reasonable efforts to fulfill all of its obligations
under, cause all conditions to funding to be fulfilled under, and cause the
funding to occur under the Company Commitment Letters or any definitive
agreements entered into on contemplation thereof. Prior to the Effective Time,
Buyer, with respect to the Buyer Commitment Letters or any definitive agreements
entered into in connection therewith, and the Company, with respect to the
Company Commitment Letters or any definitive agreements entered into in
connection therewith, shall give the other person prompt written notice of (i)
any material breach or threatened material breach by any party of the terms or
provisions thereof, (ii) any termination or threatened termination thereof, or
(iii) any exercise or threatened exercise of any "market out" or "material
adverse change" condition thereof.
(b) Buyer and the Company's obligations under SECTION 6.13(a)
shall not be construed in any way as restricting the ability of Buyer or the
Company, as the case may be, to modify, replace or otherwise alter the terms,
conditions or relative amounts of any Financing as long as such modification,
replacement (which need not be the same type of financing) or alteration does
not (i) reduce the aggregate amount of funds committed under the Commitment
Letters or any replacements thereof, or any definitive agreements entered into
in connection therewith, (ii) add significant additional conditions to the
funding contemplated by any Commitment Letter or any definitive agreements
entered into in connection therewith, or (iii) have a significant adverse affect
on or significantly delay the receipt of any of the Required Approvals (as
defined in SECTION 7.01(d)) or the consummation of the Merger.
(c) In connection with the negotiation and execution of the
definitive agreements with respect to the Financing, the Company will, at the
request of Buyer, make the same representations and warranties to each Equity
Investor, Marketing Partner, Senior Lender, or Subordinated Lender, as the case
may be (the "FINANCING PARTIES"), as are made by the Company to Buyer in Article
III hereof or by the Company in any definitive agreements entered into in
connection with the Company Financing, and shall deliver such other documents,
instruments, certificates or opinions as are reasonable and customary in
financings of this type, and pledge, grant security interests in, and otherwise
grant liens on its assets pursuant to such agreements, provided that no
obligation of the Company under any such agreement, pledge, or grant shall be
effective until the Effective Time.
(d) Buyer and the Company will each assist and cooperate with the
other person to obtain all relevant components of the Financing. Notwithstanding
anything to the contrary, except as provided pursuant to SECTION 6.07, neither
Buyer nor the Company will be obligated to advance any funds for fees in respect
of the other person's Commitment Letter or subject any of its assets to any Lien
prior to the Closing.
41
(e) The obligations contained in this SECTION 6.13 are not
intended, nor shall they be construed, to benefit or confer any rights upon any
third party.
6.14 NOTICE AND CURE. Each of Buyer and the Company will notify the
other of, and will use all reasonable efforts to cure before the Closing, any
event, development or circumstance, as soon as practical after it becomes known
to such party, that causes or will cause any covenant or agreement of Buyer or
the Company under this Agreement to be breached or that renders or will render
untrue any representation or warranty of Buyer or the Company contained in this
Agreement. Each of Buyer and the Company also will notify the other in writing
of, and will use all reasonable efforts to cure, before the Closing, any
violation or breach, as soon as practical after it becomes known to such party,
of any representation, warranty, covenant or agreement made by Buyer or the
Company. No notice given pursuant to this Section shall have any effect on the
representations, warranties, covenants or agreements contained in this Agreement
for purposes of determining satisfaction of any condition contained herein.
Notwithstanding any provisions in this Agreement to the contrary, the Company
shall not be in breach of any of its representations or warranties contained in
this Agreement to the extent any officer or director of Buyer had any knowledge
of that breach as of the date of this Agreement after review of the
representations and warranties in Article III and the schedules related thereto.
6.15 FULFILLMENT OF CONDITIONS. Subject to the terms and conditions of
this Agreement, each of Buyer and the Company will take or cause to be taken all
reasonable steps necessary or desirable and proceed diligently and in good faith
to satisfy each condition to the other's obligations contained in this Agreement
and to consummate and make effective the transactions contemplated by this
Agreement, and neither Buyer nor the Company will, nor will it permit any of its
Subsidiaries to, take or fail to take any action that could be reasonably
expected to result in the nonfulfillment of any such condition. Notwithstanding
any provisions in this Agreement to the contrary, the Company shall not be in
breach of any of its covenants or agreements contained in this Agreement to the
extent that any related action or inaction giving rise to such purported breach
was engaged in, authorized, or refused to be taken, by any Person who is also an
officer or director of Buyer. In the event that any portion of the Financing
becomes unavailable, regardless of the reason therefor, Buyer will use its
reasonable best efforts to obtain alternative financing on substantially
comparable or more favorable terms from other sources.
6.16 OTHER ARRANGEMENTS. Buyer shall promptly notify the Company of any
arrangements, understandings or agreements entered into prior to the Company
Stockholders' Meeting between Buyer on the one hand, and any directors, officers
or employees of the Company or any Subsidiary or any stockholder of the Company
on the other hand, relating to the transactions contemplated hereby.
42
ARTICLE VII CONDITIONS
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger is subject to the
fulfillment, at or prior to the Closing, of each of the following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement shall have been adopted
by the requisite vote of the stockholders of the Company under the DGCL.
(b) NO INJUNCTIONS OR RESTRAINTS. No court of competent
jurisdiction or other competent Governmental or Regulatory Authority shall have
enacted, issued, promulgated, enforced or entered any law or order (whether
temporary, preliminary or permanent) which is then in effect and has the effect
of making illegal or otherwise restricting, preventing or prohibiting
consummation of the Merger or the other transactions contemplated by this
Agreement.
(c) GOVERNMENTAL AND REGULATORY AND OTHER CONSENTS AND APPROVALS.
Other than the filing provided for by SECTION 1.03, all consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory Authority
or any other public or private third parties required of Buyer, the Company or
any of their Subsidiaries to consummate the Merger and the other matters
contemplated hereby (the "REQUIRED APPROVALS"), the failure of which to be
obtained or taken could be reasonably expected to have a material adverse effect
on Buyer or the Surviving Corporation and its Subsidiaries, in each case taken
as a whole, or on the ability of Buyer and the Company to consummate the
transactions contemplated hereby shall have been obtained, all in form stance
reasonably satisfactory to Buyer and the Company.
7.02 CONDITIONS TO OBLIGATION OF BUYER TO EFFECT THE MERGER. The
obligation of Buyer to effect the Merger is further subject to the fulfillment,
at or prior to the Closing, of each of the following additional conditions (all
or any of which may be waived in whole or in part by Buyer in its sole
discretion):
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Company in this Agreement that are qualified by, or
subject to, materiality or material adverse effect shall be true and correct and
those that are not so qualified by, or subject to, materiality or material
adverse effect shall be true and correct in all material respects, in each case
as of the Closing Date as though made on and as of the Closing Date or, in the
case of representations and warranties made as of a specified date earlier than
the Closing Date, on and as of such earlier date, except as affected by the
transactions contemplated by this Agreement, and the Company shall have
delivered to Buyer a certificate, dated the Closing Date and executed in the
name and on behalf of the Company by any Executive or Senior Vice President, to
such effect.
(b) PERFORMANCE OF OBLIGATIONS. The Company shall have performed
and complied with, in all material respects, each agreement, covenant and
obligation required by this Agreement to be so performed or complied with by the
Company at or prior to the
43
Closing, and the Company shall have delivered to Buyer a certificate, dated the
Closing Date and executed in the name and on behalf of the Company by any
Executive or Senior Vice President, to such effect.
(c) FINANCING. Buyer shall have obtained financing in an amount
that, together with funds available from the Company, is sufficient to pay the
aggregate Merger Price per share, the aggregate Option Amounts, the aggregate
Warrant Amounts and the aggregate amounts required to be paid pursuant to the
Exchange Offer and to make all other necessary payments of fees and expenses
required to be paid by the Company and Buyer in connection with the transactions
contemplated by this Agreement (the "REQUIRED PAYMENTS"); PROVIDED, that this
condition shall not be applicable if the failure of Buyer to receive the
proceeds of such financing shall have been occasioned by action or the failure
to take action by Buyer which action or inaction also constitutes a breach of
any material covenant, representation or warranty of such party hereunder.
(d) MARKETING PARTNER FINANCING. All the Marketing Partner
Financing shall be paid to the Company at least one business day prior to the
Closing Date.
(e) DISSENTING SHARES. The Company shall not have received notices
from the holder or holders of more than 10% of shares of Company Common Stock
issued and outstanding on the record date for the determination of those
stockholders of the Company entitled to vote on the Merger that such holders
have exercised or intend to exercise their appraisal rights under Section 262 of
the DGCL.
(f) Xxxxxxx X. Xxxxxx shall, as instructed by Xxxxxx X. Xxxxx,
Xx., have either withdrawn as a general partner of DM Management Associates I or
assigned his general partnership interest in DM Management Associates I to
either Xxxxxx X. Xxxxx, Xx. or New DM Management Associates I and the Company,
as instructed by Buyer shall have either withdrawn as a limited partner of New
DM Management Associates I or assigned its interest to DM Associates Limited
Partnership.
(g) The Company shall not be in material default under any of its
obligations that cannot be cured immediately without having a material adverse
effect on the Company.
7.03 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE MERGER. The
obligation of the Company to effect the Merger is further subject to the
fulfillment, at or prior to the Closing, of each of the following additional
conditions (all or any of which may be waived in whole or in part by the Company
in its sole discretion):
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by Buyer in this Agreement that are qualified by, or subject to,
materiality or material adverse effect shall be true and correct and those that
are not so qualified by, or subject to, materiality or material adverse effect
shall be true and correct in all material respects, in each case as of the
Closing Date as though made on and as of the Closing Date or, in the case of
representations and warranties made as of a specified date earlier
44
than the Closing Date, on and as of such earlier date, except as affected by the
transactions contemplated by this Agreement, and Buyer shall have delivered to
the Company a certificate, dated the Closing Date and executed in the name and
on behalf of Buyer by its Chairman of the Board, President or any Executive or
Senior Vice President and in the name and on behalf of Buyer by its Chairman of
the Board, President or any Vice President, to such effect.
(b) PERFORMANCE OF OBLIGATIONS. Buyer shall have performed and
complied with, in all material respects, each agreement, covenant and obligation
required by this Agreement to be so performed or complied with by Buyer at or
prior to the Closing, and Buyer shall have delivered to the Company a
certificate, dated the Closing Date and executed in the name and on behalf of
Buyer by its Chairman of the Board, President or any Executive or Senior Vice
President and in the name and on behalf of Buyer by its Chairman of the Board,
President or any Vice President, to such effect.
(c) SOLVENCY. The Board of Directors of the Company shall have
received advice reasonably satisfactory to the Special Committee from an
independent advisor selected with reasonable care by or on behalf of the Company
confirming the belief of Buyer set forth in the last sentence of SECTION 4.08.
(d) SPECIAL STOCKHOLDER APPROVAL. This Agreement shall have been
approved by the holders of a majority of the shares of Company Common Stock
voting (whether in person or by proxy) at the Company Stockholders' Meeting
other than shares of Company Common Stock owned beneficially by any Person that
is a party to the Voting Agreement (except as to any such affiliate shares of
Company Common Stock owned in a financing or advisory capacity). This condition
shall not be waived by the Company unless (i) it has given written notice of its
intention to so waive to the stockholders of the Company at least 10 business
days prior to the Company Stockholders' Meeting, (ii) such notice is filed with
the SEC, if required, and (iii) if such notice is so filed, it complies as to
form in all material respects with the applicable requirements of the Exchange
Act (except as to any information furnished to the Company by Buyer in writing
specifically for inclusion in such notice).
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER
8.01 TERMINATION. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned, at any time prior to the
Effective Time, whether prior to or after the Company Stockholders' Approval:
(a) By mutual written agreement of the parties hereto duly
authorized by action taken by or on behalf of their respective Boards of
Directors;
(b) By either the Company or Buyer upon notification to the
non-terminating party by the terminating party:
45
(i) at any time after August 31, 2001 if the
Merger shall not have been consummated on or prior to such
date and such failure to consummate the Merger is not caused
by a breach of this Agreement by the terminating party;
(ii) if the Company Stockholders' Approval or the
stockholder approval required pursuant to SECTION 7.03(d)
(unless waived as provided therein) shall not be obtained by
reason of the failure to obtain the requisite vote upon a vote
held at a meeting of such stockholders, or any adjournment
thereof, called therefor;
(iii) if there has been a material breach of any
representation, warranty, covenant or agreement on the part of
the non-terminating party set forth in this Agreement, which
breach is not curable or, if curable, has not been cured
within thirty (30) days following receipt by the
non-terminating party of notice of such breach from the
terminating party; or
(iv) if any court of competent jurisdiction or
other competent Governmental or Regulatory Authority shall
have issued an order making illegal or otherwise restricting,
preventing or prohibiting the Merger and such order shall have
become final and nonappealable;
(c) By the Company if the Special Committee determines in good
faith, based upon the advice of outside counsel that failure to terminate the
Agreement is reasonably likely to result in the Board of Directors breaching its
fiduciary duties to stockholders under applicable law by reason of an
unsolicited BONA FIDE Alternative Proposal for a Superior Transaction having
been made; PROVIDED that the Company shall have complied with the provisions of
SECTION 5.02 and forty-eight (48) hours shall have elapsed after delivery to
Buyer of written notice of such determination; and PROVIDED FURTHER that the
Company's ability to terminate this Agreement pursuant to this paragraph (c) is
conditioned upon the prior payment by the Company to Buyer of any amounts owed
by it pursuant to SECTION 8.02(b);
(d) By Buyer if the Board of Directors of the Company or the
Special Committee shall have withdrawn or modified in a manner adverse to Buyer
its approval or recommendation of this Agreement or the Merger or shall have
recommended an Alternative Proposal to the stockholders of the Company;
(e) By the Company if any of the Buyer Commitment Letters or any
definitive agreement entered into in contemplation thereof shall have been
terminated at any time when Buyer would not be entitled to terminate this
Agreement pursuant to SECTION 8.01(b) or SECTION 8.01(d) and, within twenty (20)
business days after any such termination, that Buyer Commitment Letter or any
definitive agreement entered into in contemplation thereof shall not have been
replaced; or
46
(f) By the Company or Buyer if any of the Company Commitment
Letters, or any definitive agreement entered into in contemplation thereof shall
have been terminated at any time when the terminating party would not be
entitled to terminate this Agreement pursuant to SECTION 8.01(b) or SECTION
8.01(d) (with respect to Buyer only) and, within twenty (20) business days after
any such termination, that Company Commitment Letter or any definitive agreement
entered into in contemplation thereof shall not have been replaced.
8.02 EFFECT OF TERMINATION. (a) If this Agreement is validly terminated
by either the Company or Buyer pursuant to SECTION 8.01, this Agreement will
forthwith become null and void and there will be no liability or obligation on
the part of either the Company or Buyer (or any of their respective
Representatives or affiliates), except (i) that the provisions of the
Confidentiality Agreement, the last sentence of SECTION 6.01, SECTION 6.07,
SECTION 6.08 and this SECTION 8.02 will continue to apply following any such
termination, (ii) that nothing contained herein shall relieve any party hereto
from liability for willful breach of its representations, warranties, covenants
or agreements contained in this Agreement and (iii) as provided in paragraph (b)
below.
(b) If this Agreement is terminated for any reason (other than by
the Company and the Buyer pursuant to 8.01(a) or by the Company pursuant to
SECTION 8.01(b)(iii), then the Company shall pay to Buyer an amount equal to the
actual documented reasonable out-of-pocket fees and expenses Buyer incurred in
connection with this Agreement and the transactions contemplated hereby by wire
transfer of same day funds upon submission of those documented expenses to the
Company, subject to a maximum reimbursement amount of $750,000, which shall not
include amounts paid pursuant to SECTION 6.07.
8.03 AMENDMENT. This Agreement may be amended, supplemented or modified
by action taken by or on behalf of the respective Boards of Directors of the
parties hereto at any time prior to the Effective Time, whether prior to or
after the Company Stockholders' Approval shall have been obtained, but after
such adoption and approval only to the extent permitted by applicable law. No
such amendment, supplement or modification shall be effective unless set forth
in a written instrument duly executed by or on behalf of each party hereto.
8.04 WAIVER. At any time prior to the Effective Time any party hereto,
by action taken by or on behalf of its Board of Directors, may to the extent
permitted by applicable law (i) extend the time for the performance of any of
the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties of the other parties hereto
contained herein or in any document delivered pursuant hereto or (iii) waive
compliance with any of the covenants, agreements or conditions of the other
parties hereto contained herein. No such extension or waiver shall be effective
unless set forth in a written instrument duly executed by or on behalf of the
party extending the time of performance or waiving any such inaccuracy or
non-compliance. No waiver by any party of any term or condition of this
Agreement, in any
47
one or more instances, shall be deemed to be or construed as a waiver of the
same or any other term or condition of this Agreement on any future occasion.
ARTICLE IX GENERAL PROVISIONS
9.01 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. The representations, warranties, covenants and agreements contained
in this Agreement or in any instrument delivered pursuant to this Agreement
shall not survive the Merger but shall terminate at the Effective Time, except
for the agreements contained in ARTICLE I and ARTICLE II, in SECTIONS 6.05,
6.06, 6.07, 6.08, 6.10 and 6.11 and this ARTICLE IX, which shall survive the
Effective Time.
9.02 NOTICES. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered
personally or by facsimile transmission or mailed (first class postage prepaid)
to the parties at the following addresses or facsimile numbers:
If to Buyer, to:
DM Acquisition Corp.
c/o Dairy Mart Convenience Stores, Inc.
One Dairy Mart Way
000 Xxxxxxxxx Xxxxxxx Xxxx
Xxxxxx, Xxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxx X. Xxxxx, Xx.
with a copy to:
Xxxxx & Xxxxxxxxx LLP
3200 National City Center
0000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Facsimile No.: (000) 000-0000
Attn: Xxxxxx X. Xxxxx, Esq.
Xxxx X. Xxxxxxxx, Esq.
If to the Company, to:
Dairy Mart Convenience Stores, Inc.
One Dairy Mart Way
000 Xxxxxxxxx Xxxxxxx Xxxx
Xxxxxx, Xxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxx
48
with a copy to:
Milbank, Tweed, Xxxxxx & XxXxxx LLP
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxxx Xxxxxxxx, Esq.
Xxxxxx Xxxxxxx, Esq.
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, and (iii) if delivered
by mail in the manner described above to the address as provided in this
Section, be deemed given upon receipt (in each case regardless of whether such
notice, request or other communication is received by any other person to whom a
copy of such notice, request or other communication is to be delivered pursuant
to this Section). Any party from time to time may change its address, facsimile
number or other information for the purpose of notices to that party by giving
notice specifying such change to the other parties hereto.
9.03 ENTIRE AGREEMENT; INCORPORATION OF EXHIBITS. (a) This Agreement
supersedes all prior discussions and agreements among the parties hereto with
respect to the subject matter hereof, other than the Confidentiality Agreement
and the Voting Agreement, which shall survive the execution and delivery of this
Agreement in accordance with their terms, and contains, together with the
Confidentiality Agreement and the Voting Agreement, the sole and entire
agreement among the parties hereto with respect to the subject matter hereof.
(b) The Company Disclosure Letter, the Buyer Disclosure Letter and
any Exhibit attached to this Agreement and referred to herein are hereby
incorporated herein and made a part hereof for all purposes as if fully set
forth herein.
9.04 PUBLIC ANNOUNCEMENTS. Except as otherwise required by law or the
rules of any applicable securities exchange or national market system, so long
as this Agreement is in effect, Buyer and the Company will not, and will not
permit any of their respective Representatives to, issue or cause the
publication of any press release or make any other public announcement with
respect to the transactions contemplated by this Agreement without the consent
of the other party, which consent shall not be unreasonably withheld. Buyer and
the Company will cooperate with each other in the development and distribution
of all press releases and other public announcements with respect to this
Agreement and the transactions contemplated hereby, and will furnish the other
with drafts of any such releases and announcements as far in advance as
practicable.
9.05 NO THIRD PARTY BENEFICIARY. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or
49
permitted assigns, and except as provided in SECTION 6.06, (which is intended to
be for the benefit of the persons entitled to therein, and may be enforced by
any of such persons), it is not the intention of the parties to confer
third-party beneficiary rights upon any other person.
9.06 NO ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other parties hereto and any attempt to
do so will be void, except that Buyer may assign any or all of its rights,
interests and obligations hereunder to another direct or indirect wholly owned
Subsidiary of Buyer, PROVIDED that any such Subsidiary agrees in writing to be
bound by all of the terms, conditions and provisions contained herein. Subject
to the preceding sentence, this Agreement is binding upon, inures to the benefit
of and is enforceable by the parties hereto and their respective successors and
assigns.
9.07 HEADINGS. The headings used in this Agreement have been inserted
for convenience of reference only and do not define, modify or limit the
provisions hereof.
9.08 INVALID PROVISIONS. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under any present or future law or order,
and if the rights or obligations of any party hereto under this Agreement will
not be materially and adversely affected thereby, (i) such provision will be
fully severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
and (iii) the remaining provisions of this Agreement will remain in full force
and effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom.
9.09 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware applicable to a contract
executed and performed in such State, without giving effect to the conflicts of
laws principles thereof.
9.10 ENFORCEMENT OF AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specified terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of competent
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
9.11 CERTAIN DEFINITIONS. As used in this Agreement:
(a) the term "AFFILIATE," as applied to any person, shall mean any
other person directly or indirectly controlling, controlled by, or under common
control with, that person; for purposes of this definition, "CONTROL"
(including, with correlative meanings, the terms "CONTROLLING," "CONTROLLED BY"
and "UNDER COMMON CONTROL WITH"), as applied to any person, means the
possession, directly or indirectly, of the power to direct
50
or cause the direction of the management and policies of that person, whether
through the ownership of voting securities, by contract or otherwise;
(b) a person will be deemed to "BENEFICIALLY" own securities if
such person would be the beneficial owner of such securities under Rule 13d-3
under the Exchange Act, including securities which such person has the right to
acquire (whether such right is exercisable immediately or only after the passage
of time);
(c) the term "BUSINESS DAY" means a day other than Saturday,
Sunday or any day on which banks located in the States of Ohio or New York are
authorized or obligated to close;
(d) the term "KNOWLEDGE" or any similar formulation of "KNOWLEDGE"
shall mean, with respect to the Company, the knowledge of the individuals listed
in SECTION 9.11 of the Company Disclosure Letter;
(e) any reference to any event, change or effect being "MATERIAL"
or "MATERIALLY ADVERSE" or having a "MATERIAL ADVERSE EFFECT" on or with respect
to an entity (or group of entities taken as a whole) means such event, change or
effect is material or materially adverse, as the case may be, to the business,
properties, assets, liabilities, financial condition or results of operations of
such entity (or of such group of entities taken as a whole);
(f) the term "PERSON" shall include individuals, corporations,
partnerships, companies, trusts, other entities and groups (which term shall
include a "GROUP" as such term is defined in Section 13(d)(3) of the Exchange
Act);
(g) the "REPRESENTATIVES" of any entity means such entity's
directors, officers, employees, legal, investment banking and financial
advisors, accountants and any other agents and representatives;
(h) the term "SIGNIFICANT SUBSIDIARIES" means, with respect to any
party, the Subsidiaries of such party which constitute "significant
subsidiaries" under Rule 405 promulgated by the SEC under the Securities Act,
any subsidiary that owns, leases or operates any convenience store, Financial
Opportunities, Inc., and any other Subsidiary that is set forth on Exhibit 23 to
the Company's most recent Annual Report on Form 10-K; and
(i) the term "SUBSIDIARY" means, with respect to any party, any
corporation or other organization, whether incorporated or unincorporated, of
which more than fifty percent (50%) of either the equity interests in, or the
voting control of, such corporation or other organization is, directly or
indirectly through Subsidiaries or otherwise, beneficially owned by such party.
51
9.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
52
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
signed by its officer thereunto duly authorized as of the date first above
written.
DM ACQUISITION CORP.
By:/s/ Xxxxxx X. Xxxxx, Xx.
------------------------
Xxxxxx X. Xxxxx, Xx., President
DAIRY MART CONVENIENCE STORES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Exec. V.P.
