EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
MOUNTAIN ACQUISITION CORP.
THE SHAREHOLDERS NAMED HEREIN
MIKASA, INC.
AND
X. X. XXXXXX INDUSTRIES, S.A.
September 10, 2000
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER...........................................................2
SECTION 1.01 Issuance of Preference Shares...............................2
SECTION 1.02 The Merger .................................................2
SECTION 1.03 Effective Time; Closing.....................................2
SECTION 1.04 Effect of the Merger........................................3
SECTION 1.05 Certificate of Incorporation; By-laws.......................3
SECTION 1.06 Directors and Officers......................................3
SECTION 1.07 Additional Actions..........................................3
ARTICLE II CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES; DEPOSIT.........4
SECTION 2.01 Effect on Capital Stock. ..................................4
SECTION 2.02 Exchange of Certificates....................................5
SECTION 2.03 Company Stock Options; Plans................................7
SECTION 2.04 Shares of Dissenting Stockholders...........................8
SECTION 2.05 Adjustment of Merger Consideration..........................9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................9
SECTION 3.01 Organization and Qualification; Subsidiaries................9
SECTION 3.02 Certificate of Incorporation and By-laws...................10
SECTION 3.03 Capitalization.............................................10
SECTION 3.04 Authority Relative to this Agreement.......................11
SECTION 3.05 No Conflict; Required Filings and Consents.................11
SECTION 3.06 SEC Filings; Financial Statements; Undisclosed Liabilities.12
SECTION 3.07 Absence of Certain Changes or Events.......................13
SECTION 3.08 Absence of Litigation......................................15
SECTION 3.09 Stockholder Vote Required..................................15
SECTION 3.10 Opinion of Financial Advisor...............................15
SECTION 3.11 Brokers ...................................................15
SECTION 3.12 Company Action.............................................15
SECTION 3.13 Information Supplied.......................................16
SECTION 3.14 Environmental and Safety Matters...........................16
SECTION 3.15 Real Property..............................................16
SECTION 3.16 Personal Property..........................................17
SECTION 3.17 Contracts .................................................17
SECTION 3.18 Insurance Policies.........................................18
SECTION 3.19 Compliance with Laws.......................................18
SECTION 3.20 Tax Matters................................................18
SECTION 3.21 Employment Agreements......................................20
SECTION 3.22 Change of Control Provisions...............................20
SECTION 3.23 Permits ...................................................20
SECTION 3.24 Employee Benefit Plans.....................................20
SECTION 3.25 Intellectual Property Rights...............................22
SECTION 3.26 Unions ....................................................22
SECTION 3.27 Affiliated Transactions....................................23
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF MERGER SUB AND PARENT............23
SECTION 4.01 Organization and Qualification; Subsidiaries...............23
SECTION 4.02 Charter Documents and By-laws..............................24
SECTION 4.03 Authority Relative to this Agreement.......................24
SECTION 4.04 No Conflict; Required Filings and Consents.................24
SECTION 4.05 Interim Operations of Merger Sub...........................25
SECTION 4.06 Information Supplied.......................................25
SECTION 4.07 Brokers ...................................................25
SECTION 4.08 Litigation ................................................25
SECTION 4.09 Capitalization of Merger Sub...............................25
SECTION 4.10 Capitalization of Surviving Corporation....................26
SECTION 4.11 Financing .................................................26
SECTION 4.12 Share Ownership............................................26
SECTION 4.13 Arrangements with Shareholders.............................26
SECTION 4.14 Ownership of VCA...........................................26
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS..................26
SECTION 5.01 No Conflict; Required Filings and Consents.................26
SECTION 5.02 Ownership of Shares........................................27
ARTICLE VI CONDUCT OF BUSINESS PENDING THE MERGER.............................27
SECTION 6.01 Conduct of Business by the Company Pending the Merger......27
ARTICLE VII ADDITIONAL AGREEMENTS.............................................30
SECTION 7.01 Shareholders' Meeting......................................30
SECTION 7.02 Preparation of Proxy Statement.............................31
SECTION 7.03 Appropriate Action; Consents; Filings; Further Assurances..32
SECTION 7.04 Access to Information; Confidentiality.....................33
SECTION 7.05 No Solicitation............................................34
SECTION 7.06 Indemnification and Insurance..............................36
SECTION 7.07 Notification of Certain Matters............................37
SECTION 7.08 Public Announcements.......................................38
SECTION 7.09 Employment Agreements......................................38
SECTION 7.10 Certain Assistance.........................................39
SECTION 7.11 Exchange Act and NYSE Filings..............................39
SECTION 7.12 Representations............................................40
SECTION 7.13 Support Agreement..........................................40
SECTION 7.14 Incentive Compensation Plan; Employee Benefits.............40
SECTION 7.15 Application of Section 16(a) of the Exchange Act...........41
SECTION 7.16 Performance by Merger Sub..................................41
ARTICLE VIII CONDITIONS TO THE MERGER.........................................41
SECTION 8.01 Conditions to the Obligations of Each Party................41
SECTION 8.02 Conditions to the Obligations of Parent and Merger Sub.....42
SECTION 8.03 Conditions to the Obligations of the Company and the
Shareholders...............................................42
SECTION 8.04 Conditions to the Obligations of the Shareholders..........43
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER..................................43
SECTION 9.01 Termination...............................................43
SECTION 9.02 Method of Termination; Effect of Termination..............45
SECTION 9.03 Fees and Expenses.........................................45
SECTION 9.04 Amendment ................................................46
SECTION 9.05 Waiver ...................................................46
ARTICLE X GENERAL PROVISIONS..................................................46
SECTION 10.01 Non-Survival of Representations, Warranties and
Agreements................................................46
SECTION 10.02 Notices ..................................................46
SECTION 10.03 Certain Definitions.......................................48
SECTION 10.04 Accounting Terms..........................................50
SECTION 10.05 Severability..............................................50
SECTION 10.06 Entire Agreement; Assignment..............................51
SECTION 10.07 Parties in Interest.......................................51
SECTION 10.08 Specific Performance......................................51
SECTION 10.09 Governing Law.............................................51
SECTION 10.10 Headings .................................................52
SECTION 10.11 Counterparts..............................................52
SECTION 10.12 Construction..............................................52
SECTION 10.13 Capacity .................................................52
SECTION 10.14 Company Disclosure Statement..............................52
Exhibits
Exhibit A The Preference Amendment
Exhibit B Conversion of Common Stock into New Preference Stock
Exhibit C Employment Agreements
Exhibit D Stockholders' Agreement
Exhibit E Incentive Compensation Plan
Exhibit F Support Agreement
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER dated September 10, 2000 (this
"Agreement") is by and among Mountain Acquisition CORP., a Delaware corporation,
("Merger Sub"), Mikasa, Inc., a Delaware corporation (the "Company"), for
purposes of Articles I, V, VIII and X and Sections 7.03, 7.05, 7.07, 7.08, 7.09,
7.12, 7.13, 9.04 and 9.05 only, Xxxxxx Xxxxx, Xxxxxxx Xxxxxxx, The Xxxxxxx
Xxxxxxx Xxxxxxx Separate Property Trust, Xxxxxxx Xxxxxxxxxx, Xxxxxx Xxxxxxx and
the Xxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxxx Revocable Living Trust
(collectively, the "Shareholders"), and X. X. Xxxxxx Industries, S.A., a societe
anonyme organized under the laws of France ("Parent");
WHEREAS, Merger Sub is a new corporation formed by Parent for the
purpose of entering into this Agreement and consummating the transactions
contemplated hereby;
WHEREAS, the Board of Directors of the Company has deemed it advisable
in connection with the transactions contemplated by this Agreement and subject
to the terms and conditions hereof that the Company amend its Certificate of
Incorporation or adopt a Certificate of Designation (the "Preference Amendment")
to provide for the authorization to create and issue up to 500,000 shares of
Preferred Stock, par value $0.01 per share (the "New Preference Stock"), of the
Company having the terms set forth on Exhibit A;
WHEREAS, immediately prior to the Effective Time (as defined below),
the Shareholders shall convert the number of shares of their Common Stock, par
value $0.01, of the Company (the "Company Common Stock") into New Preference
Stock in the amounts set forth on Exhibit B;
WHEREAS, immediately prior to the Effective Time, Parent shall (i) make
a capital contribution in cash into Merger Sub in an amount equal to the
aggregate Merger Consideration to be paid hereunder and (ii) if necessary, repay
any indebtedness of the Company required to be repaid as a result of the Merger;
WHEREAS, the respective Boards of Directors of the Company and Merger
Sub have approved and declared advisable a merger (the "Merger") of Merger Sub
with and into the Company upon the terms and subject to the conditions set forth
in this Agreement, with the Company surviving the Merger as the surviving
corporation (the "Surviving Corporation"), and the Board of Directors of the
Company has recommended that the holders of shares of Company Common Stock
approve the Merger and the other transactions contemplated by this Agreement
upon the terms of this Agreement;
WHEREAS, the Merger is subject to the affirmative vote of at least a
majority of the outstanding shares of Company Common Stock and the satisfaction
of certain other conditions described in this Agreement; and
WHEREAS, the Boards of Directors of Merger Sub and the Company have
determined that the Merger is in furtherance of and consistent with their
respective long-term business strategies and is fair to and in the best
interests of their respective stockholders.
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NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained and intending to be legally bound
hereby, the parties hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 Issuance of Preference Shares.
(a) Authorization. Upon the terms and subject to the conditions set
forth in this Agreement, prior to the Effective Time, the Company shall
have amended its Certificate of Incorporation or adopted a Certificate of
Designation in the form of Exhibit A hereto to authorize the creation,
issuance and sale of 500,000 shares of New Preference Stock.
(b) Conversion of Company Common Stock into Preference Shares. Upon the
terms and subject to the conditions set forth in this Agreement, the
Shareholders agree to convert immediately prior to the Effective Time,
shares of Company Common Stock into New Preference Stock (the "Preference
Exchange") in the amounts set forth on Exhibit B hereto.
(c) Capital Contribution. Upon the terms and subject to the conditions
set forth in this Agreement, immediately prior to the Effective Time,
Parent shall make an aggregate capital contribution of $244,936,705 in cash
into Merger Sub in exchange for 244,936.705 shares of common stock, par
value $.01 per share, of Merger Sub (the "Capital Contribution").
SECTION 1.02 The Merger. Upon the terms and subject to the conditions
set forth in Article VIII, and in accordance with the provisions of the Delaware
General Corporation Law (the "DGCL"), at the Effective Time (as defined below),
Merger Sub shall be merged with and into the Company. As a result of the Merger,
the separate corporate existence of Merger Sub shall cease, and the Company
shall be the Surviving Corporation of the Merger.
SECTION 1.03 Effective Time; Closing. As promptly as practicable, and
in no event later than two business days after the satisfaction or, if
permissible, waiver of the conditions set forth in Article VIII (other than
those conditions that can only be satisfied on the Closing Date (as defined
below)), the parties hereto shall cause the Merger to be consummated by filing a
certificate of merger (the "Certificate of Merger") with the Secretary of State
of the State of Delaware, in such form as is required by, and executed in
accordance with, the DGCL. The term "Effective Time" means the date and time of
the filing of the Certificate of Merger with the Secretary of State of the State
of Delaware (or such later time as may be agreed by the parties hereto and
specified in the Certificate of Merger). Immediately prior to the filing of the
Certificate of Merger, a closing (the "Closing") will be held at the offices of
Xxxxxxxx & Xxxxx, Citigroup Center, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 (or such other place as the parties may agree). The date on which such
Closing takes place shall be referred to herein as the "Closing Date".
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SECTION 1.04 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of the DGCL.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all the property, rights, immunities, privileges, powers,
franchises and licenses of the Company and Merger Sub shall vest in the
Surviving Corporation, without further act or deed, and all debts, liabilities,
obligations, restrictions and duties of each of the Company and Merger Sub shall
become the debts, liabilities, obligations, restrictions and duties of the
Surviving Corporation.
SECTION 1.05 Certificate of Incorporation; By-laws.
(a) Certificate of Incorporation. From and after the Effective Time,
the Certificate of Incorporation of Merger Sub in effect immediately prior
to the Effective Time shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter amended in accordance with its terms
and as provided by the DGCL and this Agreement, except that, as of the
Effective Time, Article I of such Certificate of Incorporation shall be
amended to read as follows: "The name of the Corporation is Mikasa, Inc.
(b) Bylaws. From and after the Effective Time, the By-laws of the
Company as in effect immediately prior to the Effective Time shall be the
By-laws of the Surviving Corporation until thereafter amended in accordance
with its terms and as provided by the DGCL and the Certificate of
Incorporation of the Surviving Corporation.
SECTION 1.06 Directors and Officers.
(a) Directors. From and after the Effective Time, the directors of
Merger Sub immediately prior to the Effective Time shall be the directors
of the Surviving Corporation until the earlier of their resignation or
removal or until their respective successors are duly elected and
qualified, as the case may be, in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation, the DGCL and this
Agreement.
(b) Officers. From and after the Effective Time, the officers of the
Company immediately prior to the Effective Time shall be the officers of
the Surviving Corporation and shall hold office until the earlier of their
resignation or removal or until their respective successors are duly
elected and qualified, as the case may be, in accordance with the
Certificate of Incorporation and By-laws of the Surviving Corporation, the
DGCL and this Agreement.
SECTION 1.07 Additional Actions. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any further
deeds, assignments or assurances in law or any other acts are necessary or
desirable to (a) vest, perfect or confirm, of record or otherwise, in the
Surviving Corporation its rights, title or interest in, to or under any of the
rights, properties or assets of the Company or its subsidiaries, or (b)
otherwise carry out the provisions of this Agreement, the Company and its
officers and directors shall be deemed to have granted to the Surviving
Corporation an irrevocable power of attorney to execute and deliver all such
deeds, assignments or assurances in law and to take all acts necessary, proper
or desirable to
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vest, perfect or confirm title to and possession of such rights, properties or
assets in the Surviving Corporation and otherwise to carry out the provisions of
this Agreement, and the officers and directors of the Surviving Corporation are
authorized in the name of the Company to take any and all such action.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES; DEPOSIT
SECTION 2.01 Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
Company Common Stock or any shares of capital stock of Merger Sub:
(a) Capital Stock of Merger Sub. Each share of common stock of Merger
Sub issued and outstanding immediately prior to the Effective Time shall be
converted into the right to receive one share of New Preference Stock.
(b) Cancellation of Company Owned Stock. All shares of Company Common
Stock and New Preference Stock (if any) that are held in the treasury of
the Company or by any wholly owned subsidiary of the Company shall be
canceled and retired and shall cease to exist without any consideration
payable therefor.
(c) Conversion of Company Common Stock. Each share of Company Common
Stock issued and outstanding immediately prior to the Effective Time (other
than shares of the Company Common Stock referred to in Section 2.01(b))
shall be converted into (as provided in and subject to the limitations set
forth in this Article II) the right to receive from the Surviving
Corporation in cash, $16.50 (the "Merger Consideration") without interest
thereon upon surrender of the certificate previously representing such
share of Company Common Stock as provided in Section 2.02(c). As of the
Effective Time, all such shares of Company Common Stock shall no longer be
outstanding and shall automatically be canceled and retired and shall cease
to exist, and each holder of a certificate representing any such share of
Company Common Stock shall cease to have any rights with respect thereto,
except the right to receive the cash into which their shares of Company
Common Stock have been converted by the Merger as provided in this Section
2.01(c).
(d) Conversion of New Preference Stock. Each share of New Preference
Stock issued and outstanding immediately after the Effective Time (other
than shares of New Preference Stock to be canceled pursuant to Section
2.01(b)) shall be converted into (as provided in and subject to the
limitations set forth in this Article II) and become one fully paid and
nonassessable share of Common Stock, par value $0.01, of the Surviving
Corporation (the "Surviving Corporation Common Stock"), upon the surrender
of the certificate previously representing such shares of New Preference
Stock, and all such shares of New Preference Stock shall no longer be
outstanding and shall automatically be canceled and retired and shall cease
to exist, and each holder of a certificate representing any such share of
New Preference Stock shall cease to have any rights with respect thereto,
except the right to receive the Surviving Corporation Common Stock into
which
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their shares of New Preference Stock have been converted by the Merger as
provided in this Section 2.01(d).
(e) Further Amendment. Notwithstanding any provision to the contrary,
the parties agree to amend this Agreement prior to Closing to permit shares
of Company Common Stock and/or Company Stock Options (as defined below)
owned by certain employees or directors of the Company as mutually agreed
by the Company and Merger Sub to be converted into shares of New Preference
Stock with corresponding adjustments to be made to this Section 2.01 and
the related definitions.
SECTION 2.02 Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Merger Sub shall, with
the approval of the Company, designate a bank or trust company to act as
paying agent in the Merger (the "Paying Agent").
(b) At the Closing, Merger Sub shall deliver:
(i) to each person (who has been identified on a list to be
provided to Merger Sub by the Company not later than five business days
before the Closing) who has surrendered to the Company prior to the
Closing one or more certificates which immediately prior to the
Effective Time represented shares of Company Common Stock (such
certificates, the "Certificates") by wire transfer of immediately
available funds, the amount of cash into which the shares of Company
Common Stock represented by the Certificates so surrendered have been
converted pursuant to the provisions of this Article II;
(ii) to the Shareholders who shall have surrendered to the
Merger Sub at the Closing the certificates which, immediately prior to
the Effective Time, represented shares of outstanding New Preference
Stock, the securities of the Surviving Corporation into which the
shares of New Preference Stock represented by such certificates have
been converted pursuant to the provisions of this Article II; and
(iii) to the Paying Agent, for the benefit of the holders of
Company Common Stock not so listed as provided in clause (i) above,
funds in the aggregate amount into which such shares of Company Common
Stock shall have been converted pursuant to the provisions of this
Article II.
(c) Exchange Procedure. Promptly after the Effective Time, the
Surviving Corporation shall mail to each holder of record of Certificates
not surrendered pursuant to Section 2.02(b), (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 address specified therein) and (ii) instructions for
use in effecting the surrender of the Certificates in exchange for the
Merger Consideration. Upon surrender of a Certificate for cancellation to
the Paying Agent, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Paying Agent,
the holder of such Certificate shall be entitled to receive promptly in
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exchange therefor from the Paying Agent the amount of cash into which the
shares of Company Common Stock theretofore represented by such Certificate
shall have been converted pursuant to Section 2.01, and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of
ownership of the shares of Company Common Stock that is not registered in
the transfer records of the Company, payment may be made to a person other
than the person in whose name the Certificate so surrendered is registered,
if such Certificate shall be properly endorsed or otherwise be in proper
form for transfer and the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other
than the registered holder of such Certificate or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is
not applicable. Until surrendered as contemplated by this Section 2.02,
each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the amount of cash,
without interest, into which the shares of Company Common Stock theretofore
represented by such Certificate shall have been converted pursuant to
Section 2.01. No interest will be paid or will accrue on the cash payable
upon the surrender of any Certificate. In the event any Certificate shall
have been lost, stolen or destroyed, upon making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen or
destroyed, the Surviving Corporation will pay in exchange for such lost,
stolen or destroyed Certificate, the cash payable in respect of the shares
represented by such Certificate as determined in accordance with this
Article II, except that when authorizing such payment, the Board of
Directors of the Surviving Corporation, may, in its discretion and as a
condition precedent to such payment, require the owner of such lost, stolen
or destroyed Certificate to deliver a bond in such sum as it may reasonably
direct as indemnity against any claim that may be made against the
Surviving Corporation or the Paying Agent with respect to such Certificate.
(d) Withholding. Merger Sub, Surviving Corporation and Paying Agent
shall be entitled to deduct and withhold from the Merger Consideration
otherwise payable or issuable pursuant to this Agreement to any holder of
Company Common Stock such amount as is required to be deducted and withheld
with respect to such payment or issuance under any provision of U.S.
federal, state or local tax law or any foreign tax law applicable because
of the residence or citizenship of the holder. To the extent that amounts
are so withheld, such withheld amounts shall promptly be paid to the
appropriate governmental authority and shall be treated for all purposes of
this Agreement as having been paid to the holder of Company Common Stock in
respect of which such deduction and withholding was made.
(e) Closing of Stock Transfer Books. All cash paid upon the surrender
of Certificates in accordance with the terms of this Article II shall be
deemed to have been paid in full satisfaction of all rights pertaining to
the shares of Company Common Stock theretofore represented by such
Certificates. At 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 that were outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation or the Paying Agent for any reason,
they shall be canceled and exchanged as provided in this Article II.
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(f) No Liability. At any time following the expiration of twelve months
after the Effective Time, the Surviving Corporation shall be entitled to
require the Paying Agent to deliver to it any funds (including any interest
received with respect thereto) which had been made available to the Paying
Agent and which have not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look to the Surviving
Corporation (subject to any applicable abandoned property, escheat or
similar law) only as general creditors thereof with respect to the Merger
Consideration payable upon due surrender of their Certificates, without any
interest thereon; provided, however, with respect to any Certificates which
shall not have been surrendered prior to five years after the Closing Date,
the unclaimed cash payable in exchange for such Certificates shall, to the
extent permitted by applicable abandoned property, escheat or similar law,
become the property of the Surviving Corporation, free and clear of all
claims or interests of any person previously entitled thereto.
Notwithstanding the foregoing, none of Merger Sub, the Shareholders, the
Company, the Paying Agent or Parent shall be liable to any person in
respect of any cash delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
SECTION 2.03 Company Stock Options; Plans.
(a) Option Consideration. Except as set forth in this Section 2.03 and
except to the extent that Merger Sub and the holder of any option otherwise
agree in writing prior to or contemporaneously with the Effective Time:
(i) At the Effective Time, each outstanding option to purchase
Company Common Stock (a "Company Stock Option") granted pursuant to the
Company's Long-Term Incentive Plan, 1998 Long-Term Stock Incentive Plan
or Non-Employee Directors Stock Option Plan (collectively, the "Company
Stock Option Plans") shall become 100% vested and immediately
exercisable;
(ii) Each holder of a Company Stock Option outstanding as of
the Effective Time shall be entitled to receive, and shall be paid in
full satisfaction of such Company Stock Option, a cash payment in an
amount in respect thereof equal to the product of (x) the excess, if
any, of the Merger Consideration over the exercise price of each such
Company Stock Option, and (y) the number of shares of Company Common
Stock subject to the Company Stock Option immediately prior to the
Effective Time, less any income or employment tax withholding required
under any provision of U.S. federal, state or local tax law or any
foreign tax law applicable because of the residence or citizenship of
the holder (the "Option Consideration"). To the extent that amounts are
so withheld by the Surviving Corporation and paid to the applicable
Governmental Authority, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of such
Company Stock Option. Upon delivery of the related Option
Consideration, the Company Stock Option shall be canceled. The
acceptance by the holder of a Company Stock Option of the related
Option Consideration shall be deemed to be a release of all rights the
holder had or may have had in respect of that Company Stock Option; and
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(iii) Prior to the Effective Time, the Board of Directors of
the Company and/or the appropriate committee of the Board of Directors
shall determine that each Company Stock Option shall be exercisable at
and following the Effective Time at its then existing exercise price
for the Merger Consideration, less any income or employment tax
withholding required under any provision of U.S. federal, state, local
or foreign tax law. Each Company Stock Option, the obligations under
which have not been satisfied in accordance with the provisions of this
Section 2.03(a), shall be exercisable following the Effective Time in
accordance with such determination.
(b) No Other Rights. Except as may otherwise be agreed in writing by
Merger Sub and the Company, following the Effective Time, no holder of
Company Stock Options or any participant in the Company Stock Option Plans
shall have any rights thereunder to acquire any equity securities of the
Company, the Surviving Corporation or any subsidiary thereof.
(c) Termination of Other Plans and Programs. Except as may otherwise be
agreed in writing by Merger Sub and the Company, all other plans, programs
or arrangements providing for the issuance or grant of any other interest
in respect of the capital stock of the Company or any of its subsidiaries
shall terminate as of the Effective Time, and no participant in any such
plans, programs or arrangements shall have any rights thereunder to acquire
any equity securities of the Company, the Surviving Corporation or any
subsidiary thereof.
SECTION 2.04 Shares of Dissenting Stockholders.
(a) Notwithstanding anything in this Agreement to the contrary, any
shares of Company Common Stock that are issued and outstanding as of the
Effective Time and that are held by a holder who has not voted in favor of
the Merger or consented thereto in writing and who has properly exercised
his or her appraisal rights (the "Dissenting Shares") under the DGCL, shall
not be converted into the right to receive the Merger Consideration, unless
and until such holder shall have failed to perfect, or shall have
effectively withdrawn or lost, his or her right to dissent from the Merger
under the DGCL and to receive such consideration as may be determined to be
due with respect to such Dissenting Shares pursuant to and subject to the
requirements of the DGCL. If, after the Effective Time, any such holder
shall have failed to perfect or shall have effectively withdrawn or lost
such right, each share of such holder's Company Common Stock shall
thereupon be deemed to have been converted into and to have become, as of
the Effective Time, the right to receive, without interest or dividends
thereon, the consideration provided for in this Article II.
(b) The Company shall give Merger Sub and Parent (i) prompt notice of
any notices or demands for appraisal or payment for shares of Company
Common Stock received by the Company and (ii) the opportunity to
participate in and direct all negotiations and proceedings with respect to
any such demands or notices. The Company shall not, without prior written
consent of Merger Sub and Parent, make any payments
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with respect to, or settle, offer to settle or otherwise negotiate, with
respect to any such demands.
(c) Dissenting Shares, if any, after payments of fair value in respect
thereto have been made to the holders thereof pursuant to the DGCL, shall
be canceled.
SECTION 2.05 Adjustment of Merger Consideration. In the event that,
subsequent to the date of this Agreement but prior to the Effective Time, the
outstanding shares of Company Common Stock shall have been changed into a
different number of shares of a different class as a result of a stock split,
reverse stock split, stock dividend, subdivision, reclassification, split,
combination, exchange, recapitalization or other similar transaction, the Merger
Consideration shall be appropriately adjusted.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in a separate disclosure schedule referring to the
Sections contained in this Agreement, which has been delivered by the Company to
Merger Sub prior to the execution of this Agreement (the "Company Disclosure
Statement"), the Company hereby represents and warrants to Merger Sub that:
SECTION 3.01 Organization and Qualification; Subsidiaries.
(a) Each of the Company and its subsidiaries is a corporation or other
legal entity duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has the requisite
organizational power and authority and all necessary governmental approvals
to own, lease and operate the properties and assets it currently owns,
operates or holds under lease and to carry on its business as it is now
being conducted, except where the failure to be organized, existing or in
good standing or to have such organizational power and authority or
approvals would not, individually or in the aggregate, have a Company
Material Adverse Effect (as defined below). Except as set forth in Section
3.01(a) of the Company Disclosure Statement, each of the Company and its
subsidiaries is duly qualified or licensed as a foreign entity to do
business, and is in good standing, in each jurisdiction where the character
of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except for such
failures to be so qualified or licensed and in good standing that would
not, individually or in the aggregate, have a Company Material Adverse
Effect. The term "Company Material Adverse Effect" means, when used in
connection with the Company, any change, effect, event, occurrence,
condition or development that is or is reasonably likely to be materially
adverse to (i) the business, assets, liabilities, properties, results of
operations or condition (financial or otherwise) of the Company and its
subsidiaries, taken as a whole or (ii) the ability of the Company to timely
perform its obligations under this Agreement, other than effects due to (A)
general economic, market or political conditions, (B) matters generally
affecting the industries in which such person operates or (C) the
announcement or expectation of this Agreement or the Transactions.
9
(b) Except as set forth in Section 3.01 of the Company Disclosure
Statement, 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. All outstanding equity interests of each such
subsidiary of the Company have been duly authorized and validly issued and
are fully paid and non-assessable, and are owned, directly or indirectly,
by the Company free and clear of any Liens, and there are no outstanding
options, warrants, convertible securities, calls, rights, commitments,
preemptive rights or agreements or instruments or understandings of any
character, obligating any subsidiary of the Company to issue, deliver or
sell, or cause to be issued, delivered or sold, contingently or otherwise,
additional equity interests in such subsidiary or any securities or
obligations convertible or exchangeable for such equity interests or to
grant, extend or enter into any such option, warrants, convertible
security, call, right, commitment, preemptive right or agreement, in each
case except as provided by applicable law.
SECTION 3.02 Certificate of Incorporation and By-laws. The Company has
heretofore made available to merger Sub complete and correct copies of its
Certificate of Incorporation and By-laws, each as amended to the date hereof.
Such Certificate of Incorporation and By-laws are in full force and effect. The
Company is not in violation of any provision of its Certificate of Incorporation
or By-laws.
SECTION 3.03 Capitalization. The authorized capital stock of the
Company consists of (i) 80,000,000 shares of Company Common Stock and (ii)
2,000,000 shares of preferred stock, par value $.01 per share ("Preferred
Stock"). As of the date hereof, there are 16,985,445 shares of Company Common
Stock issued and outstanding, no shares of Preferred Stock outstanding (and
after the Preference Amendment and the Preference Exchange pursuant to Section
1.01(b) but prior to the Effective Time, there shall be 44,101.20 shares of New
Preference Stock issued and outstanding). Section 3.03 of the Company Disclosure
Statement sets forth the number of shares of Company Common Stock to be received
upon exercise or conversion and the exercise or conversion price of each
outstanding Company Stock Option. Except for the Company Stock Options granted
under the Company Stock Option Plans or as expressly contemplated by this
Agreement or as set forth in Section 3.03 of the Company Disclosure Statement,
there are no existing options, warrants, convertible securities, calls,
subscriptions, or other rights or other agreements or commitments obligating the
Company to issue, transfer or sell, or caused to be issued, transferred or sold,
contingently or otherwise, any shares of capital stock of the Company or any
other securities convertible into or evidencing the right to subscribe for or
purchase any such shares. Except as identified and described in Section 3.03 of
the Company Disclosure Statement, there are no outstanding stock appreciation
rights or similar phantom equity securities issued by the Company with respect
to the capital stock of the Company. All issued and outstanding shares of
Company Common Stock are duly authorized and validly issued, fully paid,
non-assessable and free of preemptive rights with respect thereto. All shares of
New Preference Stock to be issued to (i) the Shareholders pursuant to the
Preference Exchange and (ii) Parent in connection with the Capital Contribution,
shall, when issued in accordance with the terms of this Agreement and other
applicable agreements, be duly authorized and validly issued, fully paid,
non-assessable and free of preemptive rights with respect thereto.
10
SECTION 3.04 Authority Relative to this Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement,
and, subject to obtaining the necessary Governmental Approvals, the adoption of
this Agreement and the Preference Amendment by the requisite holders of the
shares of Company Common Stock and the filing and recordation of appropriate
merger documents and the Preference Amendment under applicable Law, to perform
its obligations hereunder and to consummate the Merger and the other
Transactions. The execution and delivery of this Agreement by the Company and
the consummation by the Company of the Transactions have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the Transactions (other than obtaining the necessary Governmental
Approvals, the adoption of this Agreement and, if required, the Preference
Amendment by the holders of the requisite majority of the shares of Company
Common Stock and the filing and recordation of appropriate merger documents and
the Preference Amendment as required by applicable Law). This Agreement has been
duly and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Merger Sub, constitutes a legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
SECTION 3.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Company does
not, and the consummation by the Company of the Transactions will not (i)
conflict with or violate the Certificate of Incorporation or By-laws of the
Company or any of its subsidiaries, (ii) conflict with or violate any
domestic (federal, state or local) or foreign law, rule, regulation, order,
judgment or decree of any Governmental Authority (collectively, "Laws")
applicable to the Company, its subsidiaries or by which any of its
properties or assets is bound or affected, except for such conflicts or
violations that, individually or in the aggregate, would not have a Company
Material Adverse Effect, or (iii) result in a violation or breach of or
constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien on any property or asset of the Company or its
subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or its subsidiaries is a party or by which
the Company, its subsidiaries or any of its properties or assets is bound
or affected, except as disclosed in Section 3.05(a) of the Company
Disclosure Statement and except for any such violations, breaches, defaults
or other occurrences that, individually or in the aggregate, would not have
a Company Material Adverse Effect and will not prevent or materially delay
the consummation of the Transactions.
(b) Except as disclosed in Section 3.05(b) of the Company Disclosure
Statement, the execution and delivery of this Agreement by the Company does
not, and the consummation by the Company of the Transactions will not,
require any consent, approval, authorization or permit of, or filing with
or notification to, any Governmental Authority (collectively, "Governmental
Approvals"), except (i) for applicable
11
requirements, if any, of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Securities Act of 1933, as amended (the
"Securities Act"), state securities or "blue sky" laws ("Blue Sky Laws"),
the rules of the New York Stock Exchange ("NYSE"), state takeover laws, the
pre-merger notification requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
thereunder (the "HSR Act"), and filing and recordation of appropriate
merger and amendment documents as required by the DGCL, or (ii) where
failure to obtain such consents, approvals, authorizations or permits, or
to make such filings or notifications, individually or in the aggregate,
would not have a Company Material Adverse Effect.
SECTION 3.06 SEC Filings; Financial Statements; Undisclosed
Liabilities.
(a) The Company has filed all forms, reports and documents required to
be filed by it with the Securities and Exchange Commission (the "SEC")
since December 31, 1997 and has made available to the Merger Sub all
registration statements filed by the Company with the SEC, including all
exhibits filed in connection therewith (on all forms applicable to the
registration of securities) since December 31, 1997 and prior to the date
of this Agreement (collectively, the "Company SEC Reports"). As of their
respective dates, the Company SEC Reports (and giving effect to any
amendments thereof) (i) complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be,
and the rules and regulations thereunder 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
made therein, in the light of the circumstances under which they were made,
not misleading. The Company will notify Merger Sub promptly after any
Company SEC Reports filed subsequent to the date hereof and prior to the
Effective Time become publicly available.
(b) Each of the financial statements (including, in each case, any
notes and schedules thereto) contained in the Company SEC Reports complied
as to form with the applicable accounting requirements and rules and
regulations of the SEC and was prepared in accordance with United States
generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the periods indicated (except as may be indicated in the
notes thereto), and each fairly presented in all material respects the
consolidated financial position, results of operations or cash flows, as
the case may be, of the Company and its consolidated subsidiaries as at the
respective dates thereof and for the respective periods indicated therein
in accordance with GAAP, subject, in the case of unaudited statements (the
"Interim Financial Statements"), to the absence of footnotes and to normal
and recurring year-end adjustments none of which would, individually or in
the aggregate, have a Company Material Adverse Effect.
(c) Neither the Company nor its subsidiaries have any liabilities or
obligations (whether known or unknown, whether asserted or unasserted,
whether absolute or contingent, whether accrued or unaccrued, whether
liquidated or unliquidated and whether due or to become due, including any
liability for taxes) material to the Company and its subsidiaries taken as
a whole other than such liabilities or obligations (i) disclosed in Section
3.06(c) of the Company Disclosure Statement, (ii) disclosed or reserved
against in the most recent consolidated balance sheet of the Company filed
with the SEC,
12
(iii) incurred in the ordinary course of business consistent with past
practice (none of which is a liability arising from breach of contract,
breach of warranty, tort or claim for infringement) since the date of the
most recent audited consolidated balance sheet of the Company filed with
the SEC, (iv) under the Contracts (none of which is a liability for breach
of contract), or (v) that are not required by GAAP to have been included in
the most recent consolidated balance sheet of the Company filed with the
SEC.
SECTION 3.07 Absence of Certain Changes or Events. Except as disclosed
in Section 3.07 of the Company Disclosure Statement or the Company SEC Reports
or as contemplated by this Agreement, since January 1, 2000, neither the Company
nor its subsidiaries have, directly or indirectly:
(a) redeemed, purchased, otherwise acquired, or agreed to redeem,
purchase or otherwise acquire, any shares of capital stock of the Company,
or declared, set aside or paid any dividend or otherwise made a
distribution (whether in cash, stock or property or any combination
thereof) in respect of its capital stock (other than between the Company
and a wholly-owned subsidiary thereof);
(b) authorized for issuance, issued, sold, delivered, granted or issued
any options, warrants, calls, subscriptions or other rights for, or
otherwise agreed or committed to issue, sell, deliver or grant any shares
of any class of capital stock of the Company or any securities convertible
into or exchangeable or exercisable for shares of any class of capital
stock of the Company or its subsidiaries, other than pursuant to and in
accordance with (i) the Company Stock Option Plans or (ii) the terms of the
agreements listed in Section 3.03 of the Company Disclosure Statement;
(c) except in the ordinary course of business (i) created or incurred
any indebtedness for borrowed money in excess of $1,000,000, (ii) assumed,
guaranteed, endorsed or otherwise as an accommodation become responsible
for the obligations of any other individual, firm or corporation, made any
loans or advances to any other individual, firm or corporation in excess of
$1,000,000, (iii) incurred any liabilities except for liabilities which,
individually and in the aggregate, would not have a Company Material
Adverse Effect; or (iv) mortgaged, pledged or subjected to any material
lien or encumbrance, any asset having a book or market value in excess of
$1,000,000;
(d) instituted any material change in its accounting methods,
principles or practices except as required by GAAP;
(e) revalued any of its assets in any material respect, including
without limitation, writing down the value of inventory or writing off
notes or accounts receivables except for (i) amounts previously reserved as
reflected in the Company's December 31, 1999 audited consolidated balance
sheet, or (ii) revaluations and write downs of the value of inventory in
the ordinary course of business;
(f) suffered any damage, destruction or loss, whether covered by
insurance or not, except for such as would not, individually and in the
aggregate, have a Company Material Adverse Effect;
13
(g) suffered any adverse change, or any development involving a
prospective adverse change, except for those changes or prospective changes
which, individually and in the aggregate, would not have a Company Material
Adverse Effect;
(h) granted any material increase in the base compensation of, or made
any other material change in the employment terms for, any of its
directors, officers and employees, except for increases or changes
reflecting or based upon changed responsibilities or duties and increases
or changes made in the ordinary course of business consistent with past
practice;
(i) adopted, modified or terminated any bonus, profit-sharing,
incentive, severance or other plan or contract for the benefit of any of
its directors, officers and employees other than such adoptions,
modifications and terminations which do not materially increase the
aggregate cost of such plan or contract;
(j) except for provision of services or sales in the ordinary course of
business (i) sold, leased, licensed, assigned, transferred or otherwise
disposed of any of its assets or property having a book or market value, in
excess of $1,000,000 or (ii) entered into, or consented to the entering
into of, any agreement granting a preferential right to sell, lease,
license, assign, transfer or otherwise dispose of any of such assets;
(k) entered into any new line of business that is substantially and
materially different from the Company's business as of December 31, 1999,
or incurred or committed to incur any capital expenditures, obligations or
liabilities in connection therewith in excess of $5,000,000 in the
aggregate;
(l) acquired or agreed to acquire by merging or consolidating with, or
agreed to acquire by purchasing a substantial portion of the assets of, or
in any other manner, any business of any other person;
(m) made any cancellation or waiver of (i) any right material to the
operation of the business of the Company or its subsidiaries, or (ii) any
material debts or claims against any affiliate of the Company;
(n) made any disposition of, or failed to enforce, maintain or keep in
effect any patent, trademark, service xxxx, trade name, copyright or trade
secret of the Company or its subsidiaries or any registration or
application for registration thereof or right or interest therein, to the
extent material to the Company and its subsidiaries taken as a whole;
(o) to the knowledge of the Company, entered into any agreement,
arrangement or transaction with any affiliate of the Company;
(p) entered into any agreement, arrangement or transaction to purchase
any real property to the extent material to the Company and its
subsidiaries taken as a whole; or
14
(q) agreed to (i) do any of the things described in the preceding
clauses (a) through (p) other than as contemplated or provided for in this
Agreement or (ii) take, whether in writing or otherwise, any action which,
if taken prior to the date of this Agreement, would have made any
representation or warranty in this Article III untrue or incorrect.
SECTION 3.08 Absence of Litigation. Except as disclosed in Section 3.08
of the Company Disclosure Statement, as of the date hereof there is no claim,
action, proceeding or investigation pending or, to the Company's Knowledge,
threatened against the Company, its subsidiaries, or any of its properties or
assets, before any court, arbitrator or Governmental Authority, which,
individually or in the aggregate, would have a Company Material Adverse Effect.
Except as disclosed on Section 3.08 of the Company Disclosure Statement as of
the date hereof, neither the Company nor its subsidiaries nor any of its
properties or assets is subject to any order, writ, judgment, injunction,
decree, determination or award which would have, individually or in the
aggregate, a Company Material Adverse Effect.
SECTION 3.09 Stockholder Vote Required. The affirmative vote of the
holders of at least a majority of the outstanding shares of Company Common Stock
held by all stockholders is the only vote of the holders of any class or series
of capital stock of the Company necessary to approve the Merger, this Agreement,
the Preference Amendment and the transactions contemplated hereby under the DGCL
and the Company's Certificate of Incorporation.
SECTION 3.10 Opinion of Financial Advisor. The special committee of the
Company's Board of Directors (the "Special Committee") has received the opinion,
dated as of the date hereof, of CIBC World Markets (the "Special Committee
Financial Advisor"), to the effect that, as of the date thereof, and subject to
the qualifications and limitations set forth therein, the Merger Consideration
is fair to the Company's stockholders (other than the Shareholders) from a
financial point of view.
SECTION 3.11 Brokers. Except as disclosed in Section 3.11 of the
Company Disclosure Statement, no broker, finder or investment banker (other than
the Special Committee Financial Advisor and UBS Warburg) is entitled to any
brokerage, finder's or other fee or commission in connection with the Merger
based upon arrangements made by or on behalf of the Company or which are to be
paid by the Company. The Company has heretofore furnished to Merger Sub a
complete and correct copy of all agreements between the Company and the Special
Committee Financial Advisor or any other firms pursuant to which the Special
Committee Financial Advisor or any such firms would be entitled to any payment
relating to the Merger, and there have been no amendments to such agreements.
SECTION 3.12 Company Action. The Company's Board of Directors (at a
meeting duly called and held) has by requisite vote of directors (i) approved
and adopted this Agreement and the Transactions, and such approval is sufficient
to render inapplicable to this Agreement and the Transactions, the provisions of
Section 203 of the DGCL to the extent, if any, any such section is applicable to
this Agreement and the Transactions and (ii) subject to Section 7.05 hereof,
agreed to recommend that the stockholders of the Company approve and adopt this
Agreement and the Transactions.
15
SECTION 3.13 Information Supplied. The Proxy Statement (as defined
below) and any other document to be filed by the Company with the SEC or any
Governmental Authority in connection with the Transactions (the "Other Filings")
will not, in the case of the Proxy Statement, at the time of mailing thereof to
the Company's shareholders, or, in the case of all other such documents, at the
respective times filed with the SEC or other Governmental Authority, 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 made therein,
in light of the circumstances in which they were made, not misleading; provided,
that the Company makes no representation with respect to any information
provided by Parent, Merger Sub or any Shareholder. The Proxy Statement (except
for those portions relating to Parent or Merger Sub) at the time of the mailing
thereof to the Company's shareholders will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder.
SECTION 3.14 Environmental and Safety Matters. Except as set forth in
Section 3.14 of the Company Disclosure Statement and except as would not have a
Company Material Adverse Effect, the Company and its Subsidiaries are (i) in
compliance with all applicable Environmental Laws, (ii) have received and are in
compliance with all permits, licenses or other approvals required under
applicable Environmental Laws for the conduct of their respective businesses,
and (iii) have not received notice of any actual or potential material liability
for the investigation or remediation of any disposal or release of Hazardous
Materials.
SECTION 3.15 Real Property.
(a) Except as set forth on Section 3.15 of the Company Disclosure
Statement, (i) the Company and its Subsidiaries have good and marketable
title to all Owned Real Property, in each case free and clear of any Liens,
except for Permitted Encumbrances, and (ii) any Leased Real Property held
by a Company or a Subsidiary of the Company is held under a valid,
subsisting and enforceable Lease, with such exceptions as would not,
individually or in the aggregate, have a Company Material Adverse Effect.
(b) The term "Permitted Encumbrances" shall mean: (A) real estate
taxes, assessments and other governmental levies, fees or charges imposed
with respect to such Real Property which are not due and payable as of the
Closing Date; (B) mechanics liens and similar liens for labor, materials or
supplies provided with respect to such Real Property incurred in the
ordinary course of business for amounts which are not delinquent and which
would not, individually or in the aggregate, have a Company Material
Adverse Effect; (C) zoning, building codes and other land use Laws
regulating the use or occupancy of such Real Property or the activities
conducted thereon which are imposed by any Governmental Authority which are
not violated by the current use or occupancy of such Real Property or the
operation of the Company's business thereon in any material respect; and
(D) easements, covenants, conditions, restrictions and other similar
matters of record affecting title to such Real Property which do not or
would not materially impair the current use or occupancy of such Real
Property.
(c) Except as set forth on Section 3.15 of the Company Disclosure
Statement, to the Company's Knowledge, (A) all material permits, licenses
and other approvals
16
necessary to the current occupancy and use of the Real Property have been
obtained, are in full force and effect had have not been violated by the
Company in any material respect and (B) there exists no material violation
by the Company of any material covenant, condition, restriction, easement,
agreement or order affecting any portion of the Real Property that
individually or in the aggregate would have a Company Material Adverse
Effect. All facilities located on the Real Property are supplied with
adequate utilities and other services necessary for the conduct of the
Company's business as currently conducted. There is no pending or, to the
Knowledge of the Company, threatened condemnation proceeding, or material
lawsuit or administrative action affecting any portion of the Real Property
to which the Company or its subsidiaries is a named party that could be
material to the Company and its subsidiaries taken as a whole.
SECTION 3.16 Personal Property.
(a) Each of the Company and its subsidiaries has good title to all
personalty of any kind or nature that is material to the Company and its
subsidiaries which the Company or its subsidiaries purport to own, free and
clear of all Liens, except for (i) Liens disclosed on Section 3.16 of the
Company Disclosure Statement, (ii) Liens for non-delinquent taxes and
non-delinquent statutory liens arising other than by reason of default,
(iii) statutory Liens of landlords, liens of carriers, warehousemen,
mechanics and materialmen incurred in the ordinary course of business for
sums not yet due; (iv) Liens incurred or deposits made in the ordinary
course of business in connection with worker's compensation, unemployment
insurance and other types of social security, (v) purchase money Liens, and
(vi) Liens which do not materially detract from the value or use of said
personalty. The Company and its subsidiaries, as lessees, have the right
under valid and subsisting leases to use and possess all personalty that is
material to the Company and its subsidiaries taken as a whole and is leased
by the Company or its subsidiaries as now used or possessed by the Company
or its subsidiaries, as applicable.
(b) All machinery, equipment and other tangible assets currently being
used by the Company or its subsidiaries which are owned or leased by the
Company or its subsidiaries and that are material to the Company and its
subsidiaries taken as a whole are usable in the ordinary course of business
and are reasonably adequate and suitable for the uses to which they are
being put, except where any other condition of any machinery, equipment or
other tangible asset would not have a Company Material Adverse Effect.
SECTION 3.17 Contracts. The Company has made available to Merger Sub
true and correct copies of all written agreements of the Company or its
subsidiaries (other than contracts or leases for the sale in the ordinary course
of business of the Company's services or products) that are currently in effect
and that are (i) material license agreements or franchise agreements with any
person that provides services in the name of or on behalf of the Company; (ii)
material leases, sales contracts and other agreements with respect to any
personal property of the Company or its subsidiaries which provide for the
receipt or expenditure by the Company or its subsidiaries after the date of this
Agreement, of more than $1,000,000; (iii) contracts or commitments for capital
expenditures or acquisitions in excess of $1,000,000 for one project or set of
related projects; (iv) guarantees of third party obligations; (v) agreements
(including non-competition agreements) which restrict the kinds of businesses in
which the Company or its
17
subsidiaries may engage or the geographical area in which any of them may
conduct their business; (vi) indentures, mortgages, loan agreements or other
agreements relating to the borrowing of money by the Company, the granting of
Liens by the Company or lines of credit by the Company, in each case, involving
an amount in excess of $1,000,000; (vii) collective bargaining agreements, if
any; (viii) material licenses, agreements, assignments or contracts (whether as
licensor or licensee, assignor or assignee) relating to any patent and trademark
rights; (ix) brokerage or finder's agreements; (x) joint venture agreements,
partnership agreements or similar agreements; or (xi) stock purchase agreements,
asset purchase agreements or other acquisition or divestiture agreements
executed within the last five years, in each case, involving an amount in excess
of $1,000,000; (all items so made available or required to be made available to
Merger Sub being hereinafter referred to as "Contracts"). Except as disclosed in
Section 3.17 of the Company Disclosure Statement, (i) all Contracts are valid
and subsisting and in full force and effect, and each of the Company and its
subsidiaries has duly performed its obligations thereunder in all material
respects to the extent such obligations have accrued, and (ii) there has not
occurred thereunder any breach or default by the Company, its subsidiaries, or,
to the Company's Knowledge, by any other party thereto that continues to exist,
or any event which with the passage of time or the giving of notice, or both,
would result in a breach or default or event of non-compliance thereunder by the
Company, its subsidiaries, or, to the Knowledge of the Company, by any other
party thereto, except for such failures to be in full force and effect, failures
to perform, breaches or defaults that, individually or in the aggregate, would
not be material to the Company and its subsidiaries taken as a whole.
SECTION 3.18 Insurance Policies. The Company has made available to
Merger Sub all material insurance policies of the Company and its subsidiaries,
and each such policy is in full force and effect. No written notice of
cancellation or termination has been received by the Company or its subsidiaries
with respect to any such policy. To the Knowledge of the Company, there are no
pending claims against such insurance by the Company or its subsidiaries as to
which the insurers have denied coverage or otherwise reserved rights.
SECTION 3.19 Compliance with Laws. Except as set forth in Section 3.19
of the Company Disclosure Statement, neither the Company nor its subsidiaries
are in violation of or have violated or failed to comply with any Law or
judgment applicable to its business or operations, except for violations and
failures to comply that would not, individually or in the aggregate, result in a
Company Material Adverse Effect.
SECTION 3.20 Tax Matters.
(a) Except as disclosed on Section 3.20(a) of the Company Disclosure
Statement, the Company and each subsidiary of the Company have filed all
material Tax Returns that were required to be filed prior to the date
hereof by any of them (taking into account all available extensions). All
such Tax Returns were correct and complete in all material respects. All
Taxes shown as due on such returns by any of the Company and each
subsidiary of the Company have been paid. Except with respect to any of the
Company's or its subsidiaries' Tax Returns for the 1999 tax year, none of
the Company or any subsidiary of the Company currently is the beneficiary
of any extension of time within which to file any Tax Return. To the
Company's Knowledge, there are no material Liens on any of the assets of
any of the Company or any subsidiary of the
18
Company that arose in connection with any failure (or alleged failure) to
pay any material Tax.
(b) The Company and each subsidiary of the Company have withheld and
paid all material Taxes required to have been withheld and paid by
applicable Law.
(c) To the Company's Knowledge, no material undisputed deficiencies for
any Tax has been proposed in writing, asserted or assessed, in each case by
any taxing authority, against the Company or any subsidiary of the Company.
Section 3.20(c) of the Company Disclosure Statement lists all federal,
state and foreign income Tax Returns filed with respect to any of the
Company and any subsidiary of the Company for taxable periods ended on or
after December 31, 1996, indicates those income Tax Returns (with respect
to Taxes that are material to the Company and its Subsidiaries, taken as a
whole) for such periods that have been audited, and indicates those income
Tax Returns that currently are the subject of audit. The Company has made
available to Merger Sub correct and complete copies of all federal income
Tax Returns, examination reports, and statements of deficiencies assessed
against or agreed to by any of the Company or any subsidiary of the Company
since December 31, 1996.
(d) Neither the Company nor any subsidiary of the Company has waived
any statute of limitations in respect of material Taxes or agreed to any
extension of time with respect to a material Tax assessment or deficiency.
(e) Except as set forth on Section 3.20(e) of the Company Disclosure
Statement or as contemplated by this Agreement, neither the Company nor any
subsidiary of the Company has made any payments, is obligated to make any
payments, or is a party to any agreement that under certain circumstances
could obligate it to make any payments that will not be deductible under
Code ss.280G or Code ss.162(m). Neither the Company nor any subsidiary of
the Company has been a United States real property holding corporation
within the meaning of Code ss.897(c)(2) during the applicable period
specified in Code ss.897(c)(1)(A)(ii). Neither the Company nor any
subsidiary of the Company is a party to any Tax allocation or sharing
agreement. Neither the Company nor any of its subsidiaries has been a
member of an affiliated group filing a consolidated U.S. federal income Tax
Return other than a group the common parent of which is the Company.
(f) Neither the Company nor any subsidiary of the Company has any
liability for any material Taxes of any person other than the Company and
the subsidiaries of the Company (i) under Treas. Reg.ss.1.1502-6 (or any
similar provision of state, local, or foreign law), (ii) as a transferee or
successor, (iii) by contract, or (iv) otherwise.
(g) Except as disclosed on Section 3.20(g) of the Company Disclosure
Statement, neither the Company nor any subsidiary of the Company will be
required to make any material adjustment to taxable income under Code
ss.481 (or any similar provision of state, local, or foreign law) for any
period ending on or after the Closing Date by reason of a voluntary change
in accounting method initiated by the Company or any of its subsidiaries on
or prior to the Closing Date and neither the Internal Revenue
19
Service nor any other governmental authority has initiated or proposed any
such change in accounting method.
(h) The Company shall not be required as a result of any "closing
agreement," entered into on or prior to the date of this Agreement as
described in Section 7121 of the Code (or any corresponding provision of
state, local or foreign income Tax law), to include any item of income in,
or exclude any item of deduction from, taxable income for any taxable
period (or portion thereof) ending after the Closing Date.
SECTION 3.21 Employment Agreements. Except as disclosed on Section 3.21
of the Company Disclosure Statement or as expressly contemplated by this
Agreement, there are no employment, consulting, severance or indemnification
agreements between the Company and any directors, officers, or other employees
of the Company or any of its subsidiaries providing for (i) payments in excess
of $200,000 per year, (ii) severance payments, or (iii) any bonus or special
payment obligation of the Company or any of its subsidiaries payable in
connection with the sale, acquisition, or change of control of the Company or
any of its subsidiaries.
SECTION 3.22 Change of Control Provisions. Except as disclosed on
Section 3.22 of the Company Disclosure Statement or with respect to any lease
agreement, to the Company's Knowledge, none of the arrangements, agreements or
understandings set forth in Article III hereof and none of the Company's
employee benefit plans, programs or arrangements contain any provision that
would become operative as a result of the Merger and that will result in
payments by the Company or its subsidiaries in excess of $500,000, either
individually or in the aggregate.
SECTION 3.23 Permits. Except as set forth in Section 3.23 of the
Company Disclosure Statement, each of the Company and its subsidiaries has all
Permits, except for those Permits the failure to have would not, individually or
in the aggregate, have a Company Material Adverse Effect (the "Material
Permits"). Except as set forth in Section 3.23 of the Company Disclosure
Statement, to the Knowledge of the Company, all Material Permits are in full
force and effect except where the failure to be so in effect would not have a
Company Material Adverse Effect. Except as set forth in Section 3.23 of the
Company Disclosure Statement, no outstanding notice of cancellation or
termination has been delivered to the Company or its subsidiaries in connection
with any Material Permit nor, to the Knowledge of the Company, has any such
cancellation or termination been threatened. Except as set forth in Section 3.23
of the Company Disclosure Statement, to the Knowledge of the Company, no
application, action or proceeding for the modification of any such Material
Permit is pending or threatened that may result in the revocation, modification,
nonrenewal or suspension of any Material Permit.
SECTION 3.24 Employee Benefit Plans.
(a) Section 3.24 of the Company Disclosure Statement contains a list of
each material employee benefit plan (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), and
each other material plan, program, policy, practice, arrangement or
contract (whether group or individual) providing for payments, deferred
compensation or benefits or reimbursements to employees or former employees
(or their beneficiaries or dependents) of the Company or
20
with respect to which the Company has any material liability or potential
material liability. For purposes of Section 3.25 of the Company Disclosure
Statement, "Company" shall be deemed to include any entity required to be
aggregated with the "Company" under Section 414(b), (c), (m) or (o) of the
Code or Section 4001 of ERISA, at any relevant time. Each item listed in
Section 3.25 of the Company Disclosure Statement is a "Benefit Plan."
(b) Each Benefit Plan that is intended to be qualified within the
meaning of Section 401(a) of the Code has received a determination from the
Internal Revenue Service (the "IRS") that such Benefit Plan is qualified
under Section 401(a) of the Code, and, to the Knowledge of the Company,
nothing has occurred since the date of such determination that would
reasonably be expected to adversely affect the qualification of such
Benefit Plan.
(c) Except as disclosed on Section 3.24 of the Company Disclosure
Statement, the Company does not have any material liability or potential
material liability (including, but not limited to, withdrawal liability)
with respect to (i) any "employee pension benefit plan" (as such term is
defined in Section 3(2) of ERISA) that is subject to Section 302 of Title I
of ERISA, Title IV of ERISA or Section 412 of the Code, or (ii) any
"multiemployer plan" (as such term is defined in Section 3(37) of ERISA).
(d) Except as disclosed on Section 3.22 or 3.24 of the Company
Disclosure Statement, none of the Benefit Plans obligates the Company to
pay any separation, severance, termination or similar benefit solely as a
result of any transaction contemplated by this Agreement or solely as a
result of a change in control or ownership within the meaning of Section
280G of the Code.
(e) Each Benefit Plan and any related trust, insurance contract or fund
has been maintained, funded and administered in compliance in all material
respects with its respective terms and in compliance in all material
respects with all applicable laws and regulations, including, but not
limited to, ERISA and the Code.
(f) The Company has complied with the health care continuation
requirements of Part 6 of Subtitle B of Title I of ERISA and Section 4980B
of the Code ("COBRA") in all material respects.
(g) With respect to each Benefit Plan, the Company has made available
to Merger Sub true, complete and correct copies of (to the extent
applicable) (i) all documents pursuant to which the Benefit Plan is
maintained, funded and administered, (ii) the most recent annual report
(Form 5500 series) filed with the IRS (with applicable attachments), (iii)
the most recent financial statement, (iv) the most recent summary plan
description provided to participants, and (v) the most recent determination
letter received from the IRS.
(h) With respect to each Benefit Plan, all material payments, premiums,
contributions or reimbursements for all periods (or partial periods) ending
prior to or as of the Closing required to be made pursuant to any Benefit
Plan shall have been made or
21
properly accrued on the Company's most recent audited consolidated balance
sheet filed with the SEC.
(i) Except as set forth on Section 3.24 of the Company Disclosure
Statement or as required by any Laws or any Governmental Authority, the
Company does not maintain, contribute to or sponsor any material employee
benefit plan, agreement or arrangement providing for payments, deferred
compensation or benefits or reimbursements applicable to employees outside
the United States (the "Foreign Plans"). Each Foreign Plan is in compliance
in all material respects with all laws applicable thereto and the
respective requirements of such Foreign Plan's governing documents.
SECTION 3.25 Intellectual Property Rights. Except as disclosed in
Section 3.25 of the Company Disclosure Statement: (i) each of the Company and
its subsidiaries owns and possesses all right, title and interest in and to, or
has a valid and enforceable license to use, all of the Intellectual Property
Rights necessary for the operation of the business of the Company and its
subsidiaries as currently conducted free and clear of all encumbrances, licenses
or other restrictions that would materially interfere with the use of such
Intellectual Property Rights as currently used, except for any such failure to
own or possess that would not, individually or in the aggregate, have a Company
Material Adverse Effect; (ii) no claim by any third party contesting the
validity, enforceability, use or ownership of any of the Intellectual Property
Rights owned or used by the Company or its subsidiaries is pending or, to the
Knowledge of the Company is threatened, and to the Knowledge of the Company,
there are no grounds for the same, except for any such claim that would not,
individually or in the aggregate, have a Company Material Adverse Effect; (iii)
no loss or expiration of any Intellectual Property Right owned or used by the
Company or its subsidiaries is threatened, pending or reasonably foreseeable
which would have a Company Material Adverse Effect; (iv) neither the Company nor
its subsidiaries have received any notices of, and, to the Company's Knowledge,
there is no infringement or misappropriation by, or conflict with, any third
party with respect to the Intellectual Property Rights owned or used by the
Company or its subsidiaries (including, without limitation, any demand or
request that the Company or its subsidiaries license any rights from a third
party), except for any such infringement, misappropriation or conflict that
would not, individually or in the aggregate, have a Company Material Adverse
Effect; (v) neither the Company nor its subsidiaries, to the Company's
Knowledge, have infringed, misappropriated or otherwise violated any
Intellectual Property Rights of any third parties and, to the Company's
Knowledge, there is no infringement, misappropriation or violation which will
occur as a result of the continued operation of the business of the Company and
its subsidiaries as currently conducted, except for any such infringement,
misappropriation or violation that would not, individually or in the aggregate,
have a Company Material Adverse Effect; and (vi) each of the Company and its
subsidiaries has taken commercially reasonable steps to protect, maintain and
safeguard the Intellectual Property Rights owned or used by the Company or its
subsidiaries that are material to the Company and its subsidiaries taken as a
whole.
SECTION 3.26 Unions. Except as set forth on Section 3.26 of the Company
Disclosure Statement, since January 1, 2000 no executive of the Company or any
of its subsidiaries and no group of employees of the Company or any of its
subsidiaries, has terminated, or to the Knowledge of the Company, plans to
terminate, employment with the Company or any of its subsidiaries. Except as set
forth on Section 3.26 of the Company
22
Disclosure Statement, there are no collective bargaining or other labor union
agreements applicable to any employees or by which the Company or any of its
subsidiaries is bound. As of the date hereof, no work stoppage, material
grievance, material claim of unfair labor practice, or dispute against the
Company or any of its subsidiaries has occurred within the past five (5) years,
is pending or, to the Knowledge of the Company, threatened, and to the Knowledge
of the Company there is no basis for any of the foregoing. To the Knowledge of
the Company, there is no organizational activity being made or threatened by or
on behalf of any labor union with respect to any employees of Company or any of
its subsidiaries.
SECTION 3.27 Affiliated Transactions. Except as set forth in Section
3.17, Section 3.21 or Section 3.27 of the Company Disclosure Statement or in the
Schedule 14A filed with respect to the annual meeting of the Company's
stockholders held on May 24, 2000, there are no agreements or contracts between
the Company or any of its subsidiaries, on the one hand, and any person who is
an officer, director or affiliate of the Company or any of its subsidiaries, or,
to the knowledge of the Company, any immediate family member, any relative of
any of the foregoing or any entity of which any of the foregoing is an
affiliate, on the other hand. Correct and complete copies of such documents have
previously been made available to Merger Sub.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
MERGER SUB AND PARENT
Except as disclosed in a separate disclosure schedule referring to the
Sections contained in this Agreement, which has been delivered by Merger Sub to
the Company prior to the execution of this Agreement (the "Merger Sub Disclosure
Schedule"), Merger Sub and Parent jointly and severally represent and warrant to
the Company that:
SECTION 4.01 Organization and Qualification; Subsidiaries. Each of
Merger Sub and Parent is a legal entity duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization and has the requisite organizational power and authority and all
necessary governmental approvals to own, lease and operate its properties and to
carry on its business as it is now being conducted. Each of Merger Sub and
Parent is duly qualified or licensed as a foreign entity to do business, and is
in good standing, in each jurisdiction where the character of the properties
owned, leased or operated by it or the nature of its business makes such
qualification or licensing necessary, except for such failures to be so
qualified or licensed and in good standing that, individually or in the
aggregate, would not have a Merger Sub Material Adverse Effect. The term "Merger
Sub Material Adverse Effect" means, when used in connection with the Merger Sub,
any change, effect, event, occurrence, condition or development that is or is
reasonably likely to be materially adverse to (i) the business, assets,
liabilities, value, properties, results of operations, prospects or condition
(financial or otherwise) of Merger Sub or Parent or (ii) the ability of Merger
Sub or Parent to timely perform its obligations under this Agreement, other than
effects due to (A) general economic, market or political conditions, (B) matters
generally affecting the industries in which such person operates or (C) the
announcement or expectation of this Agreement or the Transactions.
23
SECTION 4.02 Charter Documents and By-laws. Merger Sub has heretofore
furnished to the Company a complete and correct copy of the Certificate of
Incorporation and By-laws, each as amended to date, of Merger Sub. Such charter
documents are in full force and effect. Merger Sub is not in violation of any
provision of its charter documents.
SECTION 4.03 Authority Relative to this Agreement. Each of Merger Sub
and Parent has all necessary organizational power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the Transactions. The execution and delivery of this Agreement by Merger Sub or
Parent and the consummation by Merger Sub or Parent of the Transactions have
been duly and validly authorized by all necessary organizational action and no
other organizational proceedings on the part of Merger Sub or Parent are
necessary to authorize this Agreement or to consummate the Transactions (other
than, with respect to the Merger, the filing and recordation of appropriate
merger documents as required by the DGCL). This Agreement has been duly and
validly executed and delivered by Merger Sub or Parent and, assuming the due
authorization, execution and delivery by the Company, constitutes a legal, valid
and binding obligation of Merger Sub or Parent enforceable against Merger Sub or
Parent in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
SECTION 4.04 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Merger Sub or
Parent does not, and the consummation of the Transactions by Merger Sub or
Parent will not (i) conflict with or violate the charter documents, By-laws
or other organizational documents of Merger Sub or Parent, (ii) conflict
with or violate any Law applicable to Parent or Merger Sub or by which any
property or asset of Merger Sub or Parent is bound or affected, except for
such conflicts or violations which would not, individually or in the
aggregate, have a Merger Sub Material Adverse Effect, or (iii) result in a
violation or any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Merger Sub or Parent
is a party or by which Merger Sub or Parent or any property or asset of
Merger Sub or Parent is bound or affected, except for any such breaches or
defaults which, individually or in the aggregate, would not have a Merger
Sub Material Adverse Effect.
(b) The execution and delivery of this Agreement by Merger Sub or
Parent does not, and the consummation of this Agreement by Merger Sub or
Parent will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any government or subdivision thereof,
or any administration, governmental or regulatory authority, agency,
commission, tribunal or body, domestic, foreign or supranational, except
(i) for applicable requirements, if any, of the Exchange Act, the
Securities Act, Blue Sky Laws, the rules of any applicable stock exchange,
state takeover laws, the pre-merger notification requirements of the HSR
Act, and filing and recordation of appropriate merger documents as required
by the DGCL or any other applicable state law, and (ii) where the failure
to obtain such other consents, approvals, authorizations, or
24
permits, or to make such filings or notifications, individually or in the
aggregate is not reasonably likely to have a Merger Sub Adverse Effect.
SECTION 4.05 Interim Operations of Merger Sub. Merger Sub was formed
solely for the purpose of engaging in the transactions contemplated hereby, has
engaged in no other business activities (other than those incident to its
organization and the execution of this Agreement) and has conducted its
operations only as contemplated hereby.
SECTION 4.06 Information Supplied. None of the information supplied or
to be supplied by Merger Sub or Parent specifically for inclusion or
incorporation by reference in the Proxy Statement or the Other Filings, at the
respective time filed with the SEC or such other Governmental Authority, and, in
addition, in the case of the Proxy Statement, at the date it is first mailed to
the Company's shareholders or at the time of the Shareholders Meeting (as
defined below), contains or will 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.
SECTION 4.07 Brokers. Except as disclosed in Section 4.07 of the Merger
Sub Disclosure Schedule, no broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the Merger
based upon arrangements made by or on behalf of Merger Sub or Parent.
SECTION 4.08 Litigation. There is no (i) claim, action, suit or
proceeding pending or, to the best knowledge of the Merger Sub and Parent,
threatened against Merger Sub or Parent, before any court, arbitrator or
Governmental Authority, or (ii) outstanding judgment, order, writ, injunction or
decree of any court, arbitrator or Governmental Authority in a proceeding to
which Merger Sub or any of its assets is subject except, in the case of clauses
(i) and (ii) above, such as would not, individually or in the aggregate, have a
Merger Sub Material Adverse Effect.
SECTION 4.09 Capitalization of Merger Sub. Immediately prior to the
Effective Time, the authorized capital stock of Merger Sub will consist solely
of 300,000 shares of Common Stock, par value $0.01 per share ("Merger Sub Common
Stock"). Immediately prior to the Effective Time, there will be 244,936.705
shares of Merger Sub Common Stock issued and outstanding all of which shall have
been issued to Parent in exchange for an aggregate capital contribution by
Parent of $244,936,705 in cash into Merger Sub), and no other shares of capital
stock of Merger Sub will be issued or outstanding. Immediately prior to the
Effective Time, each outstanding share of capital stock of Merger Sub will be
owned by Parent. Except as provided in, or contemplated by, this Agreement,
there are no authorized or outstanding options, warrants, convertible
securities, calls, rights, commitments, preemptive rights or agreements or
instruments or understandings of any character, to which Merger Sub is a party
or by which Merger Sub is bound, obligating Merger Sub to issue, deliver or
sell, or cause to be issued, delivered or sold, contingently or otherwise,
additional shares of capital stock of Merger Sub or any securities or
obligations convertible into or exchangeable for such shares or to grant, extend
or enter into any such option, warrant, convertible security, call, right
commitment, preemptive right or agreement.
25
SECTION 4.10 Capitalization of Surviving Corporation. As of the
Effective Time, the authorized capital stock of the Surviving Corporation will
consist solely of 1,000,000 shares of Common Stock, par value $0.01 per share
("Surviving Corp. Common Stock"). As of the Effective Time, there will be
289,037.905 shares of Surviving Corp. Common Stock issued and outstanding, and
no other shares of capital stock of the Surviving Corporation shall be issued or
outstanding. Except as provided in, or contemplated by, this Agreement, as of
the Effective Time there shall be no authorized or outstanding options,
warrants, convertible securities, calls, rights, commitments, preemptive rights
or agreements or instruments or understandings of any character, to which the
Surviving Corporation shall be a party or by which the Surviving Corporation
shall be bound, or obligating the Surviving Corporation to issue, deliver or
sell, or cause to be issued, delivered or sold, contingently or otherwise,
additional shares of capital stock of the Surviving Corporation or any
securities or obligations convertible into or exchangeable for such shares or to
grant, extend or enter into any such option, warrant, convertible security,
call, right commitment, preemptive right or agreement.
SECTION 4.11 Financing. Parent has sufficient cash on hand to
consummate the Capital Contribution, the Merger, the repayment of indebtedness
of the Company, if any, required to be repaid as a result of the Merger, and the
other transactions contemplated hereby to be consummated at the Effective Time.
Such funds are, and at the Closing will be, available for such purposes.
SECTION 4.12 Share Ownership. Parent does not beneficially own any
Company Common Stock.
SECTION 4.13 Arrangements with Shareholders. There are no agreements,
arrangements or understandings between Parent and its affiliates, on the one
hand, and the Shareholders and their affiliates (other than the Company), on the
other hand, except as expressly referred to in this Agreement.
SECTION 4.14 Ownership of VCA. Parent is the owner of 50% of the issued
and outstanding shares of capital stock of Verrerie Cristallerie D'Arques.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each Shareholder hereby severally but not jointly represents and
warrants to the Company that:
SECTION 5.01 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by such Shareholder
and the consummation of the Transactions by such Shareholder will not, (i)
violate any Law applicable to such Shareholder, (ii) prevent or materially
delay the consummation of the Merger or (iii) result in a violation or any
breach of or constitute a default (or an event which with notice or lapse
of time or both would become a default) under any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which any Shareholder is a party.
26
(b) The execution and delivery of this Agreement by such Shareholder
does not, and the consummation of the Transactions by such Shareholder will
not, require any consent, approval, authorization or permit of, or filing
with or notification to, any Governmental Authority, except for applicable
requirements, if any, of the Exchange Act, the Securities Act, Blue Sky
Laws, the rules of any applicable exchange, state takeover laws, the
pre-merger notification requirements of the HSR Act, and filings and
recordation of appropriate merger and amendment documents as required by
the DGCL or any other applicable state law.
SECTION 5.02 Ownership of Shares. All record and beneficial owners of
the Owned Shares are listed on Exhibit B hereto, and such Owned Shares are owned
free and clear of any liens or encumbrances and free of any other limitation or
restriction (including, without limitation, any restriction on the right to
vote, sell or otherwise dispose of the Owned Shares or any interest therein)
except pursuant to this Agreement, the Support Agreement (as defined below) or
applicable securities Laws. The Owned Shares indicated on such Schedule
constitute all of the capital stock of the Company owned of record or
beneficially owned by such Shareholder.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.01 Conduct of Business by the Company Pending the Merger. The
Company covenants and agrees that, between the date of this Agreement and the
Effective Time, except as set forth in Section 6.01 of the Company Disclosure
Statement or as otherwise expressly provided for in this Agreement, unless
Merger Sub shall otherwise agree in writing (which will not be unreasonably
withheld or delayed) the Company shall, and shall cause its subsidiaries to,
conduct its business in the ordinary course and in a manner consistent in all
material respects with past practice. The Company shall, and shall cause its
subsidiaries to, use commercially reasonable efforts to (i) preserve intact its
business organization, (ii) keep available the services of the current officers,
key employees and consultants of the Company and its subsidiaries, (iii)
preserve the current relationships of the Company and its subsidiaries with
customers, franchisees, distributors, suppliers, licensors, licensees,
contractors and other persons with which the Company or its subsidiaries has
significant business relations, (iv) maintain all assets in good repair and
condition (except for ordinary wear and tear) other than those disposed of in
the ordinary course of business, (v) maintain all insurance necessary to the
conduct of the Company's business as currently conducted, (vi) maintain its
books of account and records in the usual, regular and ordinary manner, and
(vii) maintain, enforce and protect all of the material Intellectual Property
Rights owned or used by the Company or its subsidiaries in a manner consistent
in all material respects with past practice. By way of amplification and not
limitation, except as contemplated by this Agreement, or as set forth in Section
6.01 of the Company Disclosure Statement, the Company shall not, and shall cause
its subsidiaries not to, between the date of this Agreement and the Effective
Time, directly or indirectly do, or propose to do, any of the following without
the prior written consent of Merger Sub (which shall not be unreasonably
withheld or delayed).
(a) amend or otherwise change its Certificate of Incorporation or
By-laws, except to the extent contemplated by the Preference Amendment;
27
(b) issue, sell, pledge, dispose of, grant or encumber, or authorize
the issuance, sale, pledge, disposition, grant or encumbrance of, (i) any
shares of capital stock of any class of the Company (other than pursuant to
and in accordance with the Company Stock Option Plans and other stock
purchase plans, if any, and the agreements listed in Section 3.03 of the
Company Disclosure Statement or in connection with the Preference Exchange
or the Capital Contribution) or its subsidiaries, or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of
such capital stock, or any other ownership interest (including, without
limitation, any phantom interests), of the Company or its subsidiaries or
(ii) any assets of the Company or its subsidiaries, except for sales in the
ordinary course of business consistent with past practice and other asset
sales for consideration or having a fair market value aggregating not more
than $500,000;
(c) except any regular dividend paid in an amount and manner consistent
with past practice, declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock (other than between any wholly-owned subsidiary
of the Company and the Company);
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, or propose to redeem, purchase or otherwise acquire,
directly or indirectly, any of its capital stock, other than in connection
with the Preference Exchange;
(e) acquire (including, without limitation, by merger, consolidation or
acquisition of stock or assets) or agree to acquire any corporation,
partnership, limited liability company, or other business organization or
division thereof;
(f) (i) incur or agree to incur any indebtedness for borrowed money or
issue any debt securities or assume, guarantee or endorse, or otherwise as
an accommodation become responsible for, the obligations of any person, or
make any loans, advances, or capital contributions to or investments in,
any other person, except in an amount not in excess of $500,000; or (ii)
authorize capital expenditures which are, in the aggregate, in excess of
$5,000,000;
(g) acquire, or agree to acquire, sell or dispose of any Real Property
or other material assets, other than sales or other dispositions of fixed
assets (other than Real Property) or sales or other dispositions of
inventory and the purchase of supplies and equipment, in each case, in the
ordinary course of business consistent with past practice;
(h) enter into, establish, adopt, amend or renew any material
employment, consulting, severance or similar agreement or arrangements with
any director or executive officer or grant any salary or wage increase to
any executive officer (other than in the ordinary course);
(i) establish, adopt, amend, or materially increase benefits under, any
material pension, retirement, stock option, stock purchase, savings, profit
sharing, deferred compensation, consulting, welfare benefit contract, plan
or arrangement (other than as
28
may be required by applicable law), or terminate the Company's defined
benefit pension plan or take any action in respect thereof;
(j) except as required by Law, enter into any labor or collective
bargaining agreement, memorandum of understanding, grievance settlement or
any other agreement or commitment to or relating to any labor union;
(k) discharge or satisfy any material Lien or pay or satisfy any
material obligation or liability (fixed or contingent) except in the
ordinary course of business consistent with past practice, or commence any
voluntary petition, proceeding or action under any bankruptcy, insolvency
or other similar law;
(l) make or institute any change in accounting procedures or practices
in its accounting procedures and practices unless mandated by GAAP;
(m) enter into any material agreement or other arrangement with any
director, executive officer, employee or stockholder of the Company or its
subsidiaries or, to the Knowledge of the Company, any affiliate of the
foregoing, except in the ordinary course of business;
(n) enter into any agreement or other arrangement that is reasonably
likely to be material to the business of the Company or its subsidiaries,
except in the ordinary course of business consistent with past practice;
(o) make or change any election, change an annual accounting period,
adopt or change any accounting method, file any amended Tax Return, enter
into any material closing agreement, settle any material Tax claim or
material assessment relating to the Company or its subsidiaries, surrender
any right to claim a refund of Taxes, consent to any extension or waiver of
the limitation period applicable to any material Tax claim or material
assessment relating to the Company or its subsidiaries, fail to timely file
any Tax Return, take a position on a Tax Return not in keeping with prior
practice or take any other similar action, or omit to take any action
relating to the filing of any Tax Return or the payment of any Tax, if such
election, adoption, change, amendment, agreement, settlement, surrender,
consent or other action or omission could have the effect of materially
increasing the present or future Tax liability or materially decreasing any
present or future Tax asset of the Company or its subsidiaries;
(p) take any action or omit to take any action which would result in a
violation of any applicable Law or would cause a breach of any agreement,
contract or commitment, which violation or breach would have a Company
Material Adverse Effect;
(q) license, assign or otherwise transfer to any person or entity any
rights to any material Intellectual Property Rights owned or used by the
Company or its subsidiaries, except in the ordinary course of business
consistent with past practice;
(r) amend, extend, renew or terminate any Lease, and shall not enter
into any new lease, sublease, license or other agreement for the use or
occupancy of any real property, except in the ordinary course of business
consistent with past practice, for
29
which annual rental payments do not exceed $250,000 or for any real
property used as a distribution center;
(s) settle or enter into any agreement or arrangement related to the
settlement of any action, suit, claim, controversy, investigation or
pending litigation arising in connection with or related to the
transactions contemplated by this Agreement;
(t) fail to maintain, enforce or protect any material Intellectual
Property Rights owned or used by the Company or its subsidiaries, except in
the ordinary course of business consistent with past practice; or
(u) authorize or propose, or agree to take, any of the foregoing
actions prohibited under Section 6.01.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 Shareholders' Meeting.
(a) Subject to the provisions of Section 7.05 and Section 9.01, the
Company shall, consistent with applicable law, call and hold a meeting of
the holders of shares of Company Common Stock (the "Shareholders' Meeting")
as promptly as practicable for the purpose of voting upon the approval and
adoption of this Agreement and the Transactions. The Company, through its
Board of Directors or a committee thereof, shall recommend to its
shareholders approval and adoption of this Agreement and the Transactions,
which recommendation shall be contained in the Proxy Statement (as defined
below); provided, however, that the Board of Directors of the Company or a
committee thereof may fail to make its recommendation to the shareholders
of the Company or may withdraw, modify or change its recommendation to the
shareholders of the Company if the Board of Directors or the Special
Committee determines in good faith, following consultation with its outside
counsel as to legal matters, that its fiduciary duties require it to do so.
The Company shall use reasonable best efforts to solicit from the holders
of shares of Company Common Stock proxies in favor of the approval and
adoption of the Merger, and shall take all other action reasonably
necessary or advisable to secure the vote or consent of such holders
required by the DGCL unless the Board of Directors or the Special Committee
determines in good faith, following consultation with its outside counsel
as to legal matters, that its fiduciary duties require otherwise
(b) Each of Merger Sub, Parent and their subsidiaries shall vote (or
consent with respect to) any shares of Company Common Stock beneficially
owned by it, or with respect to which it has the power (by agreement, proxy
or otherwise) or cause to be voted (or to provide a consent), in favor of
the approval and adoption of this Agreement at any meeting of the
shareholders of the Company at which this Agreement shall be submitted for
approval and adoption and at all adjournments or postponements thereof (or,
if applicable, by any action of the shareholders of the Company by consent
in lieu of a meeting).
30
SECTION 7.02 Preparation of Proxy Statement.
(a) The Company shall, as soon as practicable (and if all other parties
hereto comply with their obligations under this Section 7.02, within thirty
(30) days after the date hereof), prepare and file (after providing Merger
Sub with a reasonable opportunity to review and comment thereon)
preliminary proxy materials (including, without limitation, a Schedule
13E-3 filing, if required to be filed under the Exchange Act) relating to
the meeting of the holders of shares of Company Common Stock to be held in
connection with the Transactions (together with any amendments thereof or
supplements thereto, the "Proxy Statement") (or, if requested by Merger Sub
and permitted by Law, an information statement in lieu of a proxy statement
pursuant to Rule 14C under the Exchange Act, with all references herein to
the Proxy Statement being deemed to refer to such information statement, to
the extent applicable) with the SEC and shall use its commercially
reasonable efforts to respond to any comments of the SEC (after providing
Merger Sub with a reasonable opportunity to review and comment thereon) and
to cause the Proxy Statement to be mailed to the Company's shareholders as
promptly as practicable after responding to all such comments to the
satisfaction of the SEC staff. The Company shall notify Merger Sub promptly
of the receipt of any comments from the SEC and of any request by the SEC
for amendments or supplements to the Proxy Statement or for additional
information and shall supply Merger Sub with copies of all correspondence
between the Company or any of its representatives, on the one hand, and the
SEC, on the other hand, with respect to the Proxy Statement or the
Transactions. The Company will cause the Proxy Statement (other than
portions relating to Parent or Merger Sub) to comply in all material
respects with the applicable provisions of the Exchange Act and the rules
and regulations thereunder applicable to the Proxy Statement and the
solicitation of proxies for the Shareholders' Meeting (including any
requirement to amend or supplement the Proxy Statement). Merger Sub and
Parent shall cooperate with the Company in the preparation of the Proxy
Statement, and without limiting the generality of the foregoing, each party
shall furnish to the other such information relating to it and its
affiliates and the Transactions and such further and supplemental
information as may be reasonably requested by the other party and shall
promptly notify the other party of any change in such information. If at
any time prior to the Shareholders Meeting there shall occur any event that
should be set forth in an amendment or supplement to the Proxy Statement,
the Company shall promptly prepare and mail to its shareholders such an
amendment or supplement; provided, that no such amendment or supplement to
the Proxy Statement will be made by the Company without providing Merger
Sub a reasonable opportunity to review and comment thereon.
(b) Unless the Board of Directors or the Special Committee determines
in good faith, following consultation with its outside counsel as to legal
matters, that its fiduciary duties require otherwise, the Company agrees to
include in the Proxy Statement the unanimous recommendation of the voting
members of the Company's Board of Directors, subject to any modification,
amendment or withdrawal thereof, and represents that the Special Committee
Financial Advisor has, subject to the terms of its engagement letter with
the Company, consented to the inclusion of references to its opinion in the
Proxy Statement.
31
SECTION 7.03 Appropriate Action; Consents; Filings; Further Assurances.
(a) Subject to Section 7.05 hereof, the Company and Merger Sub shall
use commercially reasonable efforts to (i) take, or cause to be taken, all
appropriate action and do, or cause to be done, all things necessary,
proper or advisable under applicable Law or otherwise to consummate the
Transactions and make effective the Merger as promptly as practicable, (ii)
obtain expeditiously from any Governmental Authorities any consents,
licenses, permits, waivers, approvals, authorizations or orders required to
be obtained or made by Merger Sub, or the Company or any of its
subsidiaries in connection with the authorization, execution and delivery
of this Agreement and the consummation of the Transactions, and (iii) as
promptly as practicable, make all necessary filings, and thereafter make
any other required submissions, with respect to this Agreement and the
Transactions required under (A) the Securities Act and the Exchange Act,
and any other applicable federal or state securities Laws, (B) the HSR Act
and any related governmental request thereunder and (C) any other
applicable Law; provided, that Merger Sub and the Company shall cooperate
with each other in connection with the making of all such filings,
including providing copies of all such documents to the non-filing party
and its advisors prior to filing. From the date of this Agreement until the
Effective Time, each party shall promptly notify the other party in writing
of any pending or, to the knowledge of the first party, threatened action,
proceeding or investigation by any Governmental Authority or any other
person (i) challenging or seeking material damages in connection with the
Merger or the conversion of the Company Common Stock into cash pursuant to
the Merger or (ii) seeking to restrain or prohibit the consummation of the
Transactions or otherwise limit the right of Surviving Corporation to own
or operate all or any portion of the businesses or assets of the Company or
its subsidiaries, which in either case would have a Company Material
Adverse Effect prior to or after the Effective Time, or a Surviving
Corporation Material Adverse Effect after the Effective Time. The term
"Surviving Corporation Material Adverse Effect" means, when used in
connection with the Surviving Corporation, any change, effect, event,
occurrence, condition or development that is or is reasonably likely to be
materially adverse to the business, assets, liabilities, value, properties,
results of operations, prospects or condition (financial or otherwise) of
the Surviving Corporation or its subsidiaries, taken as a whole, other than
effects due to (A) general economic, market or political conditions, (B)
matters generally affecting the industries in which such person operates or
(C) the announcement or expectation of this Agreement or the Transactions.
(b) The Company, the Shareholders, Parent and Merger Sub shall promptly
furnish to each other all information required for any application or other
filing to be made pursuant to the rules and regulations of any applicable
Law (including all information required to be included in the Proxy
Statement) in connection with the Transactions.
(c) (i) Merger Sub, Parent and the Company shall give (or shall cause
its respective subsidiaries to give) any notices to third parties and use,
and cause its respective subsidiaries to use, their reasonable efforts to
obtain any third party consents, (A) necessary, proper or advisable to
consummate the Transactions, (B) disclosed or required to be disclosed in
the Company Disclosure Statement or Merger Sub Disclosure
32
Statement or (C) required to prevent a Company Material Adverse Effect from
occurring prior to or after the Effective Time or a Surviving Corporation
Material Adverse Effect from occurring after the Effective Time.
(ii) In the event that Merger Sub, Parent or the Company shall fail to
obtain any third party consent described in subsection (c)(i) above, it
shall use its commercially reasonable efforts, and shall take any such
actions reasonably requested by the other parties, to minimize any adverse
effect upon the Company, Parent and Merger Sub, their respective
subsidiaries, and their respective businesses resulting, or which could
reasonably be expected to result after the Effective Time, from the failure
to obtain such consent.
(d) If any state takeover statute or similar statute or regulation
becomes applicable to this Agreement or any of the Transactions, the
Company, Parent and Merger Sub will take all reasonable actions necessary
to ensure that the Merger and the other Transactions may be consummated as
promptly as practicable on the terms contemplated by this Agreement and
otherwise to minimize the effect of such statute or regulation on the
Merger and the other Transactions.
(e) If at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement,
including the execution of additional documents, the proper officers and
directors of each party to this Agreement (including the Shareholders)
shall take all such reasonably necessary actions. At and after the
Effective Time, the officers and directors of the Surviving Corporation
will be authorized to execute and deliver, in the name and on behalf of the
Company, any other actions to vest, perfect or confirm of record or
otherwise in the Surviving Corporation any and all right, title and
interest in, to and under any of the rights, properties or assets of the
Company acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger.
SECTION 7.04 Access to Information; Confidentiality.
(a) The parties shall comply with, and shall cause their respective
Representatives (as defined below) to comply with, to the extent permitted
by applicable Law, all of their respective obligations under the
Confidentiality Agreement dated December 10, 1999 (the "Confidentiality
Agreement") between the Company and Parent.
(b) Subject to the Confidentiality Agreement, from the date hereof to
the Effective Time, the Company shall (and shall cause each of its
subsidiaries to) provide to Merger Sub (and its officers, directors,
employees, accountants, consultants, legal counsel, agents and other
representatives, collectively, "Representatives") reasonable access to all
information and documents which Merger Sub may reasonably request regarding
the business, assets, liabilities, employees and other aspects of the
Company or its subsidiaries, except for attorney-client privilege
information and information that is attorney work product.
33
(c) From the date hereof to the Effective Time, the Company shall (and
shall cause each of its subsidiaries to): (i) provide to Merger Sub and its
Representatives access at reasonable times upon prior notice to the
officers, employees, agents, properties, offices and other facilities of
the Company and its subsidiaries and to the books and records thereof and
(ii) reasonably promptly furnish such information concerning the business,
properties, contracts, assets, liabilities, personnel and other aspects of
the Company and its subsidiaries as Merger Sub or its Representatives may
reasonably request, except for attorney-client privilege information and
information that is attorney work product.
(d) No investigation by any party, whether prior to the execution of
this Agreement or pursuant to this Section 7.04, shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
SECTION 7.05 No Solicitation.
(a) The Company and the Shareholders (solely in their capacity as such)
shall not, and the Company shall cause its subsidiaries not to, and the
Company agrees that it shall not authorize any of its directors, officers,
employees, agents or representatives to, directly or indirectly, solicit,
initiate or encourage (including by way of furnishing or disclosing
non-public information) any inquiries, discussions or the making of any
proposal with respect to any merger, consolidation or other business
combination involving the Company or the acquisition of any nature of a
material portion of the assets (including stock of subsidiaries) of the
Company and its subsidiaries taken as a whole or the capital stock of the
Company (a "Competing Transaction") or negotiate or discuss a proposal with
respect to a Competing Transaction with any person other than the Merger
Sub and Parent and directors, officers, employees and representatives of
Merger Sub, Parent and the Company; provided, however, that the Company and
its directors, officers, employees, agents or representatives may, to the
extent required by the fiduciary obligations of the Board of Directors or
the Special Committee as determined in good faith, following consultation
with its outside counsel as to legal matters, in response to an unsolicited
proposal for or request to discuss a Competing Transaction from any person
that was not solicited by the Company after the date hereof and that did
not otherwise result from the breach of this Section 7.05, (w) furnish
information with respect to the Company to such person pursuant to a
customary confidentiality agreement (which need not contain any
"standstill" provisions); (x) participate in discussions or negotiations
with such person regarding any Competing Transaction; (y) conduct or
participate in "due diligence" inquiries and (z) take all such other
actions as the Company's Board of Directors or the Special Committee
thereof determine are reasonably necessary in order to review or respond to
the proposed Competing Transaction.
(b) Neither the Company (or any of its subsidiaries) nor the Board of
Directors of the Company nor any committee thereof shall (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Merger
Sub, the approval, adoption or recommendation by the Board of Directors of
the Company or any such committee of this Agreement, the Merger or the
other Transactions, (ii) approve or
34
recommend, or propose to approve or recommend, any Competing Transaction,
(iii) approve or recommend, or propose to approve or recommend, or execute
or enter into, any letter of intent, agreement in principle, merger
agreement, acquisition agreement, option agreement or other relating to any
Competing Transaction or propose or agree to do any of the foregoing, or
(iv) submit any Competing Transaction at the Shareholder's Meeting for
purposes of voting upon approval and adoption of the Competing Transaction;
provided, however, that the Company may, to the extent required by the
fiduciary obligations of the Board of Directors of the Company, as
determined in good faith by a majority vote of the Board of Directors of
the Company or the Special Committee thereof following consultation with
its outside counsel as to legal matters, and after compliance with Section
7.05(d), (A) terminate this Agreement pursuant to Section 9.01(g), (B)
approve or recommend a Competing Transaction, (C) withdraw or modify its
recommendation of the Merger, (D) submit a Competing Transaction to the
stockholders of the Company or (E) take any other action consistent with
its fiduciary duties. Notwithstanding the foregoing or Section 7.05(a), the
Company and its Board of Directors at all times may take all such actions
as are reasonably necessary pursuant to Rule 14d-9 or Rule 14e-2 under the
Exchange Act. Notwithstanding anything in this Agreement to the contrary,
nothing herein shall (x) prevent or restrict the Board of Directors or the
Special Committee from withdrawing or modifying its recommendation of the
Merger to the extent the Board of Directors or the Special Committee
determines in good faith based upon advice of counsel that it is required
to do so in order to satisfy its fiduciary duties under applicable Law, (y)
limit the ability of the Board of Directors or the Special Committee to
make any disclosure to the Company's stockholders that the Board of
Directors or the Special Committee determines in good faith based upon
advice of counsel is required to be made in order to satisfy its fiduciary
duties under applicable Law or (z) limit the Company's ability to make any
disclosure required by applicable Law.
(c) Subject to the fiduciary obligations of the Board of Directors of
the Company or a committee thereof, as determined in good faith by a
majority vote of the Board of Directors of the Company or the Special
Committee thereof following consultation with its outside counsel as to
legal matters, the provisions of Sections 7.05(a) and (b) above and
compliance with applicable securities laws, (a) the Company promptly (and
in any event within 24 hours of the relevant event) shall advise Merger Sub
orally and in writing of any Competing Transaction and the identity of the
person making any such Competing Transaction, and, in each case, the
material terms and conditions thereof, including any material amendment or
other modifications to the terms of any such Competing Transaction or
inquiry and (b) the Company shall keep Merger Sub reasonably apprised of
the status of any proposal relating to a Competing Transaction on a current
basis.
(d) Prior to taking any action described in clauses (i), (ii), (iii) or
(iv) of Section 7.05(b), the Company shall terminate this Agreement under
Section 9.01(g), and pay the Merger Sub all amounts as provided in Section
9.03(c).
35
SECTION 7.06 Indemnification and Insurance.
(a) Merger Sub and the Company agree that for six years from and after
the Effective Time, the indemnification obligations set forth in the
Company's or any subsidiary's Certificate of Incorporation and the
Company's By-Laws, as amended, or other organizational documents, in each
case as of the date of this Agreement, shall survive the Merger as
continuing obligations of the Surviving Corporation and shall not be
amended, repealed or otherwise modified after the Effective Time in any
manner that would adversely affect the rights thereunder of the individuals
who on or at any time prior to the Effective Time were entitled to
indemnification thereunder with respect to matters occurring prior to the
Effective Time. In addition, Merger Sub and the Company agree that the
indemnification obligations of the Company or any Subsidiary as set forth
in other indemnification agreements to which it is a party shall be
continuing obligations of the Surviving Corporation and shall not be
amended, repealed or otherwise modified after the Effective Time, except as
permitted by the terms and provisions of those agreements.
(b) The Surviving Corporation and the Company shall maintain in effect,
for six years or until the applicable statute of limitations expires, from
and after the Effective Time, directors' and officers' liability insurance
policies covering the persons who are currently covered in their capacities
as directors and officers (the "Covered Parties") by the Company's current
directors' and officers' policies and on terms not materially less
favorable than the existing insurance coverage with respect to matters
occurring prior to the Effective Time; provided, however, in the event the
annual premium for such coverage exceeds an amount equal to 200% of the
last annual premium paid immediately prior to the date hereof by the
Company for such coverage, the Surviving Corporation shall notify the
Covered Parties who shall then elect as a group either (i) to allow the
Surviving Corporation to obtain as much comparable insurance as possible
for an annual premium equal to 200% of the last annual premium paid
immediately prior to the date hereof by the Company, or (ii) to seek
coverage from another carrier, in which event the Surviving Corporation
shall reimburse the Covered Parties the cost of such alternate coverage up
to an amount equal to 200% of the last annual premium paid immediately
prior to the date hereof by the Company for such coverage.
(c) In addition to, and not in lieu of the foregoing, the Merger Sub
agrees that Surviving Corporation shall indemnify, defend (with mutually
acceptable counsel) and hold harmless all current and former officers and
directors of the Company and its subsidiaries (the "Indemnified Parties")
to the fullest extent permitted by the DGCL and in the Certificate of
Incorporation and By-laws of the Company, as in effect as of the date
hereof, from and against all liabilities, costs, expenses and claims
(including without limitation reasonable legal fees and disbursements,
which shall be paid, reimbursed or advanced by the Surviving Corporation in
a manner consistent with applicable provisions of the Company's By-laws as
in effect on the date hereof) arising out of actions taken prior to the
Effective Time in performance of their duties as directors or officers of
the Company or any subsidiary, in connection with the Merger and the other
Transactions contemplated hereby, which may be asserted against the
Indemnified Parties from and after the date of this Agreement other than in
respect of any Company Common Stock or
36
Company Stock Options held by directors or officers prior to or after the
Effective Time; provided, however, that the Surviving Corporation's
obligations to the Indemnified Parties under this Section 7.06(c) shall not
be effective until consummation of the Merger; provided, further, that the
Surviving Corporation shall not have any obligation hereunder to any
Indemnified Party if the indemnification of such Indemnified Party in the
manner contemplated hereby is determined pursuant to a final non-appealable
judgment rendered by a court of competent jurisdiction to be prohibited by
applicable Law or if the indemnification of the Indemnified Party is not
within the power of the Surviving Corporation under the DGCL.
(d) In the event that any action, suit, proceeding or investigation
relating thereto or to the transactions contemplated by this Agreement is
commenced, whether before or after the Effective Time, the parties hereto
agree to cooperate and use their respective reasonable efforts to
vigorously defend against and respond thereto.
(e) Following the Effective Time Parent shall cause Merger Sub and the
Surviving Corporation to perform their obligations under this Section 7.06.
SECTION 7.07 Notification of Certain Matters. From and after the date
of this Agreement until the Effective Time, each party hereto shall promptly
notify the other parties hereto of:
(a) the occurrence, or non-occurrence, of any event the occurrence or
non-occurrence of which would be reasonably likely to cause any (i)
representation or warranty contained in this Agreement to be untrue or
inaccurate in any respect or (ii) any covenant or any condition to the
obligations of any party to effect the Merger not to be complied with or
satisfied;
(b) the failure of any party hereto to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
pursuant to this Agreement;
(c) the receipt of any notice or other communication from any person
alleging that the consent of such person is or may be required in
connection with the Transactions;
(d) the receipt of any notice or other communication from any
Governmental Authority in connection with the Transactions; and
(e) any actions, suits, claims, investigations or proceedings commenced
or, to the knowledge of the party, threatened against, relating to or
involving or otherwise affecting the Company or Merger Sub, which relates
to the consummation of the Transactions;
in each case, to the extent such event or circumstance is or becomes known to
the party required to give such notice; provided, however, that the delivery of
any notice pursuant to this Section 7.07 shall not be deemed to be an amendment
of this Agreement or any Section in the Company Disclosure Statement or the
Merger Sub Disclosure Statement, as the case may be, and shall not cure any
breach of any representation or warranty requiring disclosure of such matter
prior to the date of this Agreement.
37
SECTION 7.08 Public Announcements. Merger Sub, the Company and the
Shareholders shall use reasonable efforts to consult with each other before
issuing any press release or otherwise making any public statements with respect
to this Agreement or any of the Transactions. Prior to the Closing, Merger Sub,
Parent, the Company and the Shareholders shall not issue any such press release
or make any such public statement without the prior consent of the other parties
(which consent shall not be unreasonably withheld), except as may be required by
Law or any listing agreement with the New York Stock Exchange or any national
securities exchange to which Merger Sub or the Company is a party and, in such
case, shall use reasonable efforts to consult with all the parties hereto prior
to such release or statement being issued. The parties shall agree on the text
of a joint press release by which Merger Sub and the Company will announce the
execution of this Agreement. Such initial press release announcing the execution
of this Agreement, which press release shall be issued in the manner that is
customary for issuing a press release for a transaction such as the Merger and
consistent with the past practices of the Company, may include the following
language and the inclusion of such language shall not be a breach of any
provision of this Agreement and shall not constitute solicitation of a Competing
Transaction or a proposal therefor:
"Notwithstanding its recommendation and
consistent with the terms of the Merger Agreement, the
Special Committee of the Company's Board of Directors has
requested that the Special Committee's financial advisor,
CIBC World Markets, be available to receive unsolicited
inquiries from any other parties interested in the possible
acquisition of the Company. If the Special Committee of the
Company's Board of Directors concludes that the failure to
provide information to, or engage in discussions or
negotiations with, such parties would be inconsistent with
its fiduciary duties to the Company's stockholders, CIBC
World Markets, in conjunction with the Special Committee of
the Company's Board of Directors, may provide information to
and engage in discussions and negotiations with such parties
in connection with any such indicated interest. Under
specified circumstances, the Company has the right to
terminate the merger agreement and to enter into an
agreement with a party proposing a competing transaction.
The obligation of certain shareholders to support the merger
agreement would also terminate upon the termination of the
merger agreement. The full text of the merger agreement,
which describes the obligations of the Company under such
circumstances, as well as the shareholder support agreement,
will be timely filed by the Company with the SEC and should
be available at no cost from the SEC's web site,
xxx.xxx.xxx."
SECTION 7.09 Employment Agreements; Stockholders' Agreement.
(a) Simultaneously herewith, the Company is entering into employment
agreements with each of Messrs. Blake, Dingman, Xxxxxxxxxx and Xxxxxxx
(collectively,
38
the "Employment Agreements") in the forms of Exhibit C-1, Exhibit C-2,
Exhibit C-3 and Exhibit C-4, respectively, attached hereto. From and after
the Effective Time, Merger Sub and the Surviving Corporation shall have no
obligation to Xxxxxx X. Xxxxx under that certain Employment and Consulting
Agreement dated August 6, 1996 by and between Xxxxxx X. Xxxxx, American
Commercial Incorporated and the Company, and such agreement shall be hereby
terminated and of no further force or effect at and as of the Effective
Time.
(b) Simultaneously herewith, the Company, Parent and the Shareholders
are entering into a Stockholders' Agreement in the form attached as Exhibit
D hereto (the "Stockholders' Agreement").
SECTION 7.10 Certain Assistance.
(a) At or prior to Closing, the Company shall, and shall cause its
subsidiaries to, take such commercially reasonable steps as may be
requested by Merger Sub in connection with the following:
(i) At Merger Sub's reasonable request, with respect
to any material parcel of leased real property, the Company
shall use reasonable efforts to deliver to Merger Sub a
nondisturbance agreement, a consent and waiver and/or an
estoppel letter executed by the landlord, lessor, and/or
licensor of such leased real property, in each case, in form
and substance reasonably acceptable to Merger Sub;
(ii) At Merger Sub's reasonable request, the Company
shall furnish such financial statements as may be reasonably
requested by Merger Sub in connection with the financing of
the Transactions; and
(iii) At Merger Sub's reasonable request, the Company
shall take or cause to be taken any other reasonable actions
reasonably necessary to arrange financing for the Company or
obtain amendments or waivers to contracts and agreements
relating to indebtedness of the Company existing as of the
date of this Agreement.
(b) No actions taken at the direction of Merger Sub by or on behalf of
the Company in connection with its obligations under this Section 7.10 or
arising as a result of the taking of such action shall constitute a breach
of any representation or warranty of the Company contained in this
Agreement for any purpose hereunder. Notwithstanding anything to the
contrary set forth herein, the effectiveness of any such actions by the
Company shall be conditioned upon the consummation of the Merger. Nothing
contained in this Section 7.10 shall be deemed to constitute a condition to
any obligation of Parent or Merger Sub hereunder that Parent or Merger Sub
receive any financing in connection with the Transaction.
SECTION 7.11 Exchange Act and NYSE Filings. Unless an exemption shall
be expressly applicable, or unless Merger Sub or the Company, as the case may
be, agrees otherwise in writing, the Company and Merger Sub and their respective
affiliates will timely file
39
with the SEC and the NYSE all reports required to be filed by it pursuant to the
rules and regulations of the SEC and NYSE (including, without limitation, all
required financial statements). Such reports and other information shall comply
in all material respects with all of the requirements of the SEC and NYSE rules
and regulations, and when filed, will not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
SECTION 7.12 Representations. Subject to the terms and conditions
hereof, each of the Company and the Merger Sub, except as required by Law, (a)
will use reasonable efforts to take all action necessary to render true and
correct as of the Closing its respective representations and warranties
contained in this Agreement to the extent necessary to satisfy any applicable
condition set forth in Article VIII hereof, (b) will refrain from taking any
action that would render any such representation or warranty untrue or incorrect
as of such time if such action would cause any applicable condition in Article
VIII hereof and fail to be satisfied and (c) will perform or cause to be
satisfied each agreement, covenant or condition to be performed or satisfied by
it to the extent necessary to satisfy any applicable condition set forth in
Article VIII hereof.
SECTION 7.13 Support Agreement. Each of the Shareholders and Merger Sub
shall comply with all of their respective obligations under the Support
Agreement.
SECTION 7.14 Incentive Compensation Plan; Employee Benefits.
(a) The Company has adopted the Mikasa, Inc. Incentive Compensation
Plan in the form attached as Exhibit E hereto ("Incentive Compensation
Plan"), with effect from and after the Effective Time.
(b) From the Effective Time and until at least December 31, 2003,
Parent shall, or shall cause the Surviving Corporation or its subsidiaries
to, either maintain the Benefit Plans or provide benefits to current and
former employees of the Company and its subsidiaries (together, "Company
Employees") that are in the aggregate comparable to the benefits provided
under such Benefit Plans immediately prior to the Effective Time (other
than equity based benefits). Without limiting the generality of the
foregoing, from the Effective Time and until at least December 31, 2003,
Parent shall, or shall cause the Surviving Corporation or its subsidiaries
to: (i) except as otherwise provided therein, maintain the Incentive
Compensation Plan and (ii) assume and honor any obligations of the Company
under any individual or group severance plans, programs or agreements for
Company Employees set forth on Section 7.14 of the Company Disclosure
Statement, as such plans, programs and agreements exist and are effective
as of the Effective Time.
(c) With respect to any employee benefit plans of Parent which become
applicable to Company Employees ("Parent Plans"), Parent shall, or shall
cause the Surviving Corporation or its subsidiaries to: (i) waive all
pre-existing conditions, exclusions, and waiting periods with respect to
participation and coverage requirements applicable to the Company Employees
under any Parent Plans in which such employees may be eligible to
participate after the Effective Time; (ii) provide each Company
40
Employee with credit for any co-payments and deductibles paid prior to the
Effective Time (to the same extent such credit was given under the
analogous Benefit Plan prior to the Effective Time) in satisfying any
applicable deductible or out-of-pocket requirements under any Parent Plans
in which such employees may be eligible to participate after the Effective
Time; and (iii) recognize all service of the Company Employees with the
Company or any of its subsidiaries for purposes of eligibility and vesting
in any Parent Plan in which the Company Employees may be eligible to
participate after the Effective Time; provided, that the foregoing shall
not apply to the extent it would result in duplication of benefits.
SECTION 7.15 Application of Section 16(a) of the Exchange Act. Prior to
the Effective Time, Parent and the Company shall take all such steps as may be
required to cause the transactions contemplated by this Agreement, including any
dispositions of Company Common Stock (including derivative securities with
respect to the Company Common Stock) and acquisitions of New Preference Stock
(including derivative securities with respect to New Preference Stock) by each
Person who is subject to the reporting requirements of Section 16(a) of the
Exchange Act with respect to the Company to be exempt under Rule 16b-3
promulgated under the Exchange Act.
SECTION 7.16 Performance by Merger Sub. Parent shall cause Merger Sub
to perform its obligations hereunder.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01 Conditions to the Obligations of Each Party. The
obligations of the Company, Merger Sub and the Shareholders to consummate the
Merger are subject to the satisfaction (or, if permitted by applicable Law,
waiver by the party for whose benefit such condition exist) of the following
conditions:
(a) this Agreement and the Transactions shall have been approved and
adopted by the affirmative vote of the holders of at least a majority of
the outstanding shares of Company Common Stock, in accordance with the DGCL
and the Company's Certificate of Incorporation;
(b) any applicable waiting period under the HSR Act relating to the
Merger shall have expired or been terminated;
(c) no order, statute, rule, regulation, executive order, stay, decree,
judgment or injunction shall have been enacted, entered, issued,
promulgated or enforced by any Governmental Authority or a court of
competent jurisdiction which has the effect of making the Merger illegal or
otherwise prohibiting consummation of the Merger or of limiting or
restricting the Surviving Corporation's or Merger Sub's conduct or
operation of the business of the Company after the Merger; and
(d) all other necessary and material governmental and regulatory
clearances, consents, or approvals shall have been received.
41
SECTION 8.02 Conditions to the Obligations of Parent and Merger Sub.
The obligations of Merger Sub to consummate the Merger are subject to the
satisfaction or, if permitted by applicable Law, waiver by Merger Sub of the
following further conditions:
(a) (i) The Company shall have performed in all material respects all
of its obligations hereunder required to be performed by it at or prior to
the Effective Time; (ii) the representations and warranties of the Company
contained in this Agreement shall, in the aggregate, be true and correct in
all respects material to the Company and its subsidiaries taken as a whole
on and as of the Closing Date as if made at and as of such time, except for
representations and warranties expressly made as of a specified date, which
shall (when taken together with all other representations and warranties of
the Company) have been true and correct in all respects material to the
Company and its subsidiaries taken as a whole as of such specified date;
and (iii) Merger Sub shall have received a certificate signed by an
executive officer of the Company as to compliance with the conditions set
forth in this paragraph 8.02(a);
(b) Since the date of this Agreement, no event shall have occurred and
be continuing which constitutes a Company Material Adverse Effect;
(c) The Company shall have amended its Certificate of Incorporation to
provide for the Preference Amendment or filed an appropriate Certificate of
Designation to provide for the Preference Stock;
(d) The Preference Exchange shall have been completed on the terms set
forth in this Agreement;
(e) The Company shall have obtained all consents, authorizations,
approvals and waivers from third parties, in form reasonably acceptable to
Merger Sub, which are necessary in order to enable (i) the consummation of
the Transactions by the Company, and (ii) the Surviving Corporation to
conduct its business in all material respects after the Closing Date on the
same basis as conducted prior to the date hereof, in each case, except for
those failure of which to obtain would not have a Company Material Adverse
Effect; and
(f) Not more than seven percent (7.0%) of the shares of Company Common
Stock outstanding immediately prior to the Effective Time shall be
Dissenting Shares.
SECTION 8.03 Conditions to the Obligations of the Company and the
Shareholders. The obligations of the Company and the Shareholders to consummate
the Merger are subject to the satisfaction or, if permitted by applicable Law,
waiver by the Company or the Shareholders, as the case may be, of the following
further conditions:
(a) (i) Merger Sub and Parent shall have performed in all material
respects all of their respective obligations hereunder required to be
performed by them at or prior to the Effective Time; (ii) each of the
representations and warranties of Merger Sub and Parent contained in this
Agreement shall be true and correct in all material respects, in each case
as of the Closing Date as if made at and as of such time; and (iii) the
Company and Shareholders shall have received a certificate signed by an
executive officer of
42
Merger Sub and by an executive officer of Parent as to compliance with the
conditions set forth in this paragraph 8.03(a); and
(b) Parent shall have made the Capital Contribution in exchange for
common stock of Merger Sub.
SECTION 8.04 Conditions to the Obligations of the Shareholders. The
obligations of the Shareholders to consummate the Preference Exchange are
subject to the satisfaction, or if, permitted by applicable Law, waiver by the
Shareholders, of the following conditions:
(a) the conditions set forth in Section 8.01 of this Agreement;
(b) the conditions set forth in paragraph (c) of Section 8.02; and
(c) the conditions set forth in paragraphs (a) (other than clause
(iii)) and (b) of Section 8.03.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, notwithstanding
any requisite approval and adoption of this Agreement and the transactions
contemplated hereby by the shareholders of the Company:
(a) by written consent of the Company and Merger Sub;
(b) by Merger Sub or the Company if (i) the waiting period applicable
to the consummation of the Merger under the HSR Act shall not have expired
or been terminated prior to Xxxxx 00, 0000, (xx) any court of competent
jurisdiction in the United States or other United States Governmental
Authority shall have issued an order (other than a temporary restraining
order), decree or ruling, or taken any other action, restraining, enjoining
or otherwise prohibiting the Merger (provided, however, that neither party
may terminate this Agreement pursuant to this Section 9.01(b)(ii) prior to
March 31, 2001 if the party subject to such order, decree or ruling is
using its reasonable efforts to have such order, decree or ruling removed,
unless such order, decree or ruling shall have become final and
non-appealable), or (iii) the Effective Time shall not have occurred on or
before March 31, 2001; provided, that the right to terminate this Agreement
under this Section 9.01(b) shall not be available to any party whose
failure to fulfill any material obligation under this Agreement has been
the cause of or resulted in the failure of the Effective Time to occur on
or before such date;
(c) by Merger Sub or the Company, if the Shareholders' Meeting shall
have been held and the holders of outstanding shares of Company Common
Stock shall have failed to approve and adopt this Agreement at such meeting
(including any adjournment or postponement thereof in accordance with
applicable Law); provided, that subject to Section 7.05, the right to
terminate this Agreement under this Section 9.01(c) shall not be
43
available to the Company if its breach of any material obligation under
this Agreement has been the cause of or resulted in the failure to obtain
such shareholder approval; provided, further, that, if such breach is
curable by the Company through the exercise of its best efforts, and the
Company continues to exercise such best efforts, Merger Sub may not
terminate this Agreement under this Section 9.01(c) unless such breach
continues for a period of 30 days from the date on which Merger Sub
delivers to the Company written notice setting forth in reasonable detail
the circumstances giving rise to such breach; and provided, further, that
the right to terminate this Agreement under this Section 9.01(c) shall not
be available to Merger Sub unless it shall have used its commercially
reasonable efforts to enforce its rights to vote, or to cause the
Shareholders to vote, in favor of the Merger;
(d) by Merger Sub if the Board of Directors of the Company or any
committee thereof (i) shall withdraw, modify in a manner adverse to Merger
Sub, or refrain from giving its approval or recommendation of this
Agreement or any of the Transactions or (ii) recommends a Competing
Transaction with respect to the Company to the Company's stockholders
pursuant to Section 7.05;
(e) by the Company, upon a material breach of any representation,
warranty, or agreement set forth in this Agreement such that the condition
set forth in Section 8.03(a) would not be satisfied; provided, however,
that, if such breach is curable by Merger Sub through the exercise of its
best efforts and Merger Sub continues to exercise such best efforts, the
Company may not terminate this Agreement under this Section 9.01(e) unless
such breach continues for a period of 30 days from the date on which the
Company delivers to Merger Sub written notice setting forth in reasonable
detail the circumstances giving rise to such breach;
(f) by Merger Sub, upon (i) a material breach of any representation,
warranty, or agreement set forth in this Agreement such that the conditions
set forth in Section 8.02(a) or Section 8.02(b) would not be satisfied;
provided, however, that, if such breach is curable by the Company or the
Shareholders, as the case may be, through the exercise of their best
efforts and the Company or the Shareholders, as the case may be, continues
to exercise such best efforts, Merger Sub may not terminate this Agreement
under this Section 9.01(f)(i) unless such breach continues for a period of
30 days from the date on which Merger Sub delivers to the Company or the
Shareholders, as the case may be, written notice setting forth in
reasonable detail the circumstances giving rise to such breach, or (ii) the
occurrence of any change, effect, event, occurrence, condition or
development which (individually or in the aggregate) constitutes a Company
Material Adverse Effect; provided, however, that, if such Company Material
Adverse Effect is curable by the Company or the Shareholders, as the case
may be, through the exercise of their best efforts and the Company or the
Shareholders, as the case may be, continues to exercise such best efforts,
Merger Sub may not terminate this Agreement under this Section 9.01(f)(ii)
unless such Company Material Adverse Effect continues for a period of 30
days from the date on which Merger Sub delivers to the Company or the
Shareholders, as the case may be, written notice setting forth in
reasonable detail the circumstances giving rise to such Company Material
Adverse Effect; or
44
(g) by the Company in accordance with Section 7.05(d).
SECTION 9.02 Method of Termination; Effect of Termination.
(a) Any such right of termination hereunder shall be exercised by
advance written notice of termination given by the terminating party to the
other parties hereto in the manner hereinafter provided in Section 10.02.
Any such right of termination shall not be an exclusive remedy hereunder
but shall be in addition to any other legal or equitable remedies that may
be available to any non-defaulting party hereto arising out of any default
hereunder by any other party hereto.
(b) Except as provided in Section 10.01, in the event of the
termination of this Agreement pursuant to Section 9.01, this Agreement
shall forthwith become void, there shall be no liability under this
Agreement on the part of any of the parties hereto or any of their
respective officers or directors and all rights and obligations of any
party hereto shall cease, except for (i) fraud and (ii) as set forth in
Section 9.03; provided, however, that nothing herein shall relieve any
party from liability for, or be deemed to waive any rights of specific
performance of this Agreement available to a party by reason of, any
intentional breach by the other party or parties of this Agreement.
SECTION 9.03 Fees and Expenses
(a) In the event that it is judicially determined that termination of
this Agreement was caused by an intentional breach of this Agreement, then,
in addition to the remedies at law or equity for breach of this Agreement,
the party so found to have intentionally breached this Agreement shall
indemnify and hold harmless the other parties for their respective
reasonable costs, fees and expenses of their counsel, accountants,
financial advisors and other experts and advisors as well as reasonable
fees and expenses incident to the negotiation, preparation and execution of
this Agreement and the attempted consummation of the Transactions, the
related documentation and the shareholders' meetings and consents
("Costs").
(b) In the event that this Agreement is terminated (i) pursuant to
paragraph 9.01(f) of Section 9.01 due to the intentional breach by the
Company or any Shareholder of any representation, warranty, covenant or
agreement contained herein, or (ii) pursuant to paragraph (c) of Section
9.01, the Company shall, within five business days of such termination, pay
Merger Sub by wire transfer of immediately available funds to an account
specified by Merger Sub an amount in cash equal to $1,445,000; provided,
however, that the Merger Sub shall have no right to receive any amount
pursuant to this Section 9.03(c) if Merger Sub's or Parent's material
failure to fulfill any obligation or breach of any representation, warranty
or covenant under this Agreement caused or resulted in the termination of
this Agreement.
(c) In the event that this Agreement is terminated by Merger Sub or the
Company pursuant to paragraphs (d) or (g) of Section 9.01, the Company
shall, within five business days after such termination, pay the Merger Sub
by wire transfer of immediately available funds to an account specified by
the Merger Sub a payment in an
45
amount equal to $7,225,000; provided, however, that the Merger Sub shall
have no right to receive any amount pursuant to this Section 9.03(c) if
Merger Sub's or Parent's material failure to fulfill any obligation or
breach of any representation, warranty or covenant under this Agreement
caused or resulted in the termination of this Agreement.
(d) Except as provided in this Section 9.03, all expenses incurred by
the parties hereto shall be borne solely and entirely by the party which
has incurred the same; provided, however, that (i) the Company shall bear
all expenses related to printing, filing and mailing the Proxy Statement
and all SEC and other regulatory filing fees incurred in connection with
the Proxy Statement, and (ii) Merger Sub and the Company shall bear equally
all expenses incurred by the parties hereto and their respective
affiliates, if applicable, in connection with any filing under the HSR Act
due to the transactions contemplated herein.
SECTION 9.04 Amendment. This Agreement may be amended by the parties
hereto at any time prior to the Effective Time; provided, that after the
approval and adoption of this Agreement by the stockholders of the Company as
contemplated in Section 8.01(a), no amendment may be made which would (a) change
the amount or the type of Merger Consideration to be received by the
shareholders of the Company pursuant to the Merger, (b) change any other term or
condition of the Agreement if such change would materially and adversely affect
the Company or the holders of shares of Company Common Stock or New Preference
Stock or (c) without the vote of the stockholders entitled to vote on the
matter, change any term of the Certificate of Incorporation of the Company. This
Agreement may not be amended except by an instrument in writing signed by all of
the parties hereto.
SECTION 9.05 Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any obligation or other
act of any other party hereto, (b) waive any inaccuracy in the representations
and warranties of the other party contained herein or in any document,
certificate or writing delivered by the other party pursuant hereto and (c)
waive compliance with any agreement or condition to its obligations (other than
the conditions set forth in paragraphs (a) and (b) of Section 8.01) contained
herein. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party or parties to be bound thereby.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement and
any certificate delivered pursuant hereto by any person shall terminate at the
Effective Time or upon the termination of this Agreement pursuant to Section
9.01, as the case may be, except that the agreements set forth in Articles I and
II and Sections 7.03(e), 7.06, 7.09, 7.10, 7.12, 7.14, 7.15 and 7.16 shall
survive the Effective Time indefinitely, and those set forth in Sections
7.05(d), 7.08, 9.02 and 9.03 and this Article X shall survive termination
indefinitely.
SECTION 10.02 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have
46
been duly given upon receipt) by delivery in person, by facsimile or by
registered or certified mail (postage prepaid, return receipt requested) or by a
nationally recognized overnight courier service to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 10.02):
if to Parent or Merger Sub:
x/x X. X. Xxxxxx Xxxxxxxxxx
00 xxx Xxxxxx Danvers
62510 Arques, France
Telecopy: 33 3 21 95 4774
Attention: Xx. Xxxx Xxxxxxxx
with copies to:
Xxxxxxxx & Xxxxx
Citigroup Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxxxx Xxxxx, Esq.
if to the Company or any Shareholder:
Mikasa, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Telecopy: (000) 000-0000
Attention: General Counsel
with a copy to:
Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxxxx
and Xxxxxxx X. Xxxxx
and to
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
Xxxxx Xxxxxxxx, Esq.
47
SECTION 10.03 Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliate" of a specified person means a person who directly or
indirectly through one or more intermediaries controls, is controlled by,
or is under common control with, such specified person;
(b) "beneficial owner" with respect to any shares means a person who
shall be deemed to be the beneficial owner of such shares which such person
beneficially owns, as defined in Rule 13d-3 under the Exchange Act;
(c) "business day" means any day on which the principal offices of the
SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized to close in New York, New York;
(d) "Code" means the Internal Revenue Code of 1986, as amended;
(e) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of
voting securities, as trustee or executor, by contract or credit
arrangement or otherwise;
(f) "Environmental Laws" means any federal, state or local law,
statute, rule or regulation relating to releases, discharges, emissions or
disposals to air, water, land or groundwater of Hazardous Materials; to the
treatment, storage, disposal or management of Hazardous Materials; to
exposure to toxic, hazardous or other controlled, prohibited or regulated
substances; and to the transportation, release or any other use of
Hazardous Materials, including the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. 9601, et seq. ("CERCLA"), the
Resource Conservation and Recovery Act, 42 U.S.C. 6901, et seq. ("RCRA"),
the Toxic Substances Control Act, 15 U.S.C. 2601, et seq. ("TSCA"), the
Occupational, Safety and Health Act, 29 U.S.C. 651, et seq., the Clean Air
Act, 42 U.S.C. 7401, et seq., the Federal Water Pollution Control Act, 33
U.S.C. 1251, et seq., the Safe Drinking Xxxxx Xxx, 00 X.X.X. 000x, et seq.,
the Hazardous Materials Transportation act, 49 U.S.C. 1802 et seq. ("HMTA")
and the Emergency Planning and Community Right to Know Act, 42 U.S.C. 11001
et seq. ("EPCRA");
(g) "Governmental Authority" means any United States (federal, state or
local), foreign or supra-national Government, or governmental, regulatory
or administrative authority, agency or commission;
(h) "Hazardous Materials" shall mean every element, compound, chemical
mixture, contaminant, pollutant, material, waste or other substance which
is specifically defined or identified as hazardous or toxic under
Environmental Laws or the release of which is specifically regulated under
Environmental Laws. Without limiting the generality of the foregoing, the
term includes: "hazardous substances" as defined in CERCLA; "extremely
hazardous substances" as defined in EPCRA; "hazardous waste"
48
as defined in RCRA; "hazardous materials" as defined in HMTA; and "chemical
substance or mixture" as defined in TSCA;
(i) "Indebtedness" means any liability or obligation of the Company or
any of its subsidiaries, whether primary or secondary, absolute or
contingent for (i) borrowed money, (ii) evidenced by notes, bonds,
debentures or similar instruments, or (iii) secured by Liens on any assets
of the Company or any of its subsidiaries;
(j) "Intellectual Property Rights" means all patents, patent
applications and patent disclosures; all inventions (whether or not
patentable and whether or not reduced to practice); all trademarks, service
marks, trade dress, trade names and corporate names and all the goodwill
associated therewith; all mask works; all registered and unregistered
statutory and common law copyrights; all registrations, applications and
renewals for any of the foregoing; and all trade secrets, confidential
information, ideas, formulae, compositions, know-how, manufacturing and
production processes and techniques, research information, drawings,
specifications, designs, plans, improvements, proposals, technical and
computer data, documentation and software, financial business and marketing
plans, customer and supplier lists and related information, marketing
materials and all other proprietary rights;
(k) "Knowledge" with respect to the Company, means the actual
knowledge, after reasonable investigation, of Xxxxxx Xxxxx, Xxxxxxx
Xxxxxxx, Xxxxxxx Xxxxxxxxxx, Xxx Xxxxx, and Xxxxxx Xxxxxx;
(l) "Leased Real Property" means all leasehold or subleasehold estates
and other rights to use or occupy any land, buildings, structures,
improvements, fixtures or other interest in real property held by the
Company or any Subsidiary that is material to the Company and its
subsidiaries taken as a whole;
(m) "Leases" means all leases, subleases, licenses, concessions and
other agreements (written or oral) pursuant to which the Company or any
Subsidiary holds any Leased Real Property, including the right to all
security deposits and other amounts and instruments deposited by or on
behalf of the Company or any Subsidiary thereunder;
(n) "Lien" shall mean, with respect to any property or asset, any
mortgage, pledge, security interest, lien (statutory or other), charge,
encumbrance or other similar restrictions or limitations of any kind or
nature whatsoever on or with respect to such property or asset;
(o) "Owned Real Property" means all land, together with all buildings,
structures, improvements and fixtures located thereon, and all easements
and other rights and interests appurtenant thereto, owned by the Company or
any Subsidiary that is material to the Company and its subsidiaries taken
as a whole;
(p) "Owned Shares" means the aggregate shares of Company Common Stock
owned beneficially and of record by the Shareholders as of the date hereof
(as such number may be reduced as a result of the conversion of shares into
New Preference Stock as contemplated by this Agreement);
49
(q) "Permits" shall mean all franchises, licenses, authorizations,
approvals, permits, consents or other rights granted by any Governmental
Authority and all certificates of convenience or necessity, immunities,
privileges, licenses, concessions, consents, grants, ordinances and other
rights, of every character whatsoever required for the conduct of business
and the use of properties by the Company as currently conducted or used;
(r) "person" means an individual, corporation, limited liability
company, partnership, limited partnership, syndicate, person (including,
without limitation, a "person" as defined in Section 13(d)(3) of the
Exchange Act), trust, association or entity or government, political
subdivision, agency or instrumentality of a government;
(s) "Real Property" means, with respect to the Company or any
subsidiary, as applicable, all of the Owned Real Property and Leased Real
Property which is used by any such person in connection with the operation
of its business;
(t) "subsidiary" or "subsidiaries" of any person means any corporation,
partnership, joint venture or other legal entity of which such person
(either above or through or together with any other subsidiary), owns,
directly or indirectly, 50% or more of the stock or other equity interests,
the holders of which are generally entitled to vote for the election of the
board of directors or other governing body of such corporation or other
legal entity;
(u) "Support Agreement" means that certain Support Agreement, dated as
of the date hereof, by and among Merger Sub and the Shareholders in the
form of Exhibit F hereto;
(v) "Tax" or "Taxes" means federal, state, county, local, foreign or
other income, gross receipts, ad valorem, franchise, profits, sales or use,
transfer, registration, excise, utility, environmental, communications,
real or personal property, capital stock, license, payroll, wage or other
withholding, employment, social security (or similar), severance, stamp,
unemployment, disability, occupation, alternative or add-on minimum,
estimated and other taxes of any kind whatsoever (including deficiencies,
penalties, additions to tax, and interest attributable thereto) whether
disputed or not;
(w) "Tax Return" means any declaration, report, claim for refund,
return, information report or filing with respect to Taxes, including any
schedules or attachments thereto and including any amendments thereof; and
(x) "Transactions" means the Merger, the Preference Amendment and the
other transactions contemplated by this Agreement.
SECTION 10.04 Accounting Terms. All accounting terms used herein which
are not expressly defined in this Agreement shall have the respective meanings
given to them in accordance with GAAP.
SECTION 10.05 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law,
or public policy, all other
50
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the Merger is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the Merger be consummated
as originally contemplated to the fullest extent possible.
SECTION 10.06 Entire Agreement; Assignment. This Agreement (including
the Exhibits, the Merger Sub Disclosure Schedule and the Company Disclosure
Statement, which are hereby incorporated herein and made a part hereof for all
purposes as if fully set forth herein), the Support Agreement and the
Confidentiality Agreement constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the other
parties, which shall not be unreasonably withheld, except that Merger Sub may
assign all or any of its rights and obligations hereunder to any affiliate of
Parent or Merger Sub; provided, that no such assignment shall change the amount
or nature of the Merger Consideration or relieve the assigning party of its
obligations hereunder if such assignee does not perform such obligations.
SECTION 10.07 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, other than Section 7.06 (which is intended to be for the
benefit of the persons covered thereby and may be enforced by such persons).
SECTION 10.08 Specific Performance. The parties hereto agree that
irreparable damage would occur in the vent any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to specific performance of the terms hereof, in addition to any other remedy
at law or in equity.
SECTION 10.09 Governing Law. The provisions of this agreement and the
documents delivered pursuant hereto shall be governed by and construed in
accordance with the laws of the State of Delaware (excluding any conflict of law
rule or principle that would refer to the laws of another jurisdiction). The
parties hereto agree that any suit, action or proceeding seeking to enforce any
provision of, or based on any mater arising out of, this Agreement may be
brought in the United States District Court for the District of Delaware or any
other Delaware State court (and in the appropriate appellate courts), and each
of the parties hereby (a) consents to the jurisdiction of such courts in any
such suit, action or proceeding, (b) irrevocably waives any objection which it
may now or hereafter have to the laying of the venue of any such suit, action or
proceeding in any such court or that any such suit, action or proceeding which
is brought in any such court has been brought in an inconvenient forum and (c)
agrees not to bring any action related to this agreement or the transactions
contemplated hereby in any other court (except to enforce the judgment of such
courts). Process in any such suit, action or proceeding
51
may be served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each party
agrees that service of process on such party in the manner provided for notices
in Section 10.02 shall be deemed effective service of process on such party.
EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, TRIAL BY JURY IN ANY SUIT, ACTION
OR PROCEEDING ARISING HEREUNDER.
SECTION 10.10 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 10.11 Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed and delivered shall be deemed to be an original but all
of which taken together shall constitute one and the same agreement.
SECTION 10.12 Construction. This Agreement and any documents or
instruments delivered pursuant hereto or in connection herewith shall be
construed without regard to the identity of the person who drafted the various
provisions of the same. Each and every provision of this Agreement and such
other documents and instruments shall be construed as though all of the parties
participated equally in the drafting of the same. Consequently, the parties
acknowledge and agree that any rule of construction that a document is to be
construed against the drafting party shall not be applicable either to this
Agreement or such other documents and instruments.
SECTION 10.13 Capacity. No Shareholder shall be deemed to make any
agreement or understanding hereunder in his capacity as a director, employee or
officer of the Company. Each Shareholder has executed this Agreement solely in
his capacity as the record holder and beneficial owner of, or the trustee of a
trust whose beneficiaries are the beneficial owners of, such Shareholder's
shares of Company Common Stock, and no obligation of a Shareholder set forth
herein shall limit or affect any actions taken by, or require that any action be
taken by, such Shareholder in his capacity as an officer, employee or director
of the Company.
SECTION 10.14 Company Disclosure Statement. The Company Disclosure
Statement is qualified in its entirety by reference to the specific provisions
of this Agreement, and the matters set forth therein are not intended to
constitute, and shall not be construed to constitute, representations or
warranties of the Company, except and to the extent provided in this Agreement.
Inclusion of information in the Company Disclosure Statement shall not be
construed as an admission that such information is material to the Company.
Matters disclosed in any numbered section of the Company Disclosure Statement
shall be deemed to be disclosed for purposes of all other numbered sections of
the Company Disclosure to the extent that it is reasonably apparent that such
matter is applicable to such other numbered sections.
* * * * *
52
IN WITNESS WHEREOF, Merger Sub, the Shareholders, Parent and the
Company have caused this Agreement to be executed as of the date first written
above by their respective officers thereunto duly authorized.
X. X. XXXXXX INDUSTRIES
By: /s/ A. Ibled
--------------------------------------
Name: A. Ibled
Title: President
MOUNTAIN ACQUISITION CORP.
By: /s/ X. Xxxxxx
---------------------------------------
Name: X. Xxxxxx
Title: Authorized Representative
MIKASA, INC.
By: /s/ Xxx Xxxxx
---------------------------------------
Name: Xxx Xxxxx
Title: Secretary
FOR PURPOSES OF ARTICLES I, V, VIII AND X
AND SECTIONS 7.03, 7.05, 7.07, 7.08, 7.09,
7.12, 7.13, 9.04 AND 9.05 ONLY
SHAREHOLDERS
XXXXXXX X. XXXXXXX, on behalf of
himself, and
THE XXXXXXX XXXXXXX XXXXXXX
SEPARATE PROPERTY TRUST
/s/ Xxxxxxx X. Xxxxxxx
------------------------------------------
Address: x/x Xxx Xxxxxx Xxxxx, Xxxxxxxx
Xxx Xxxxxx 00000-0000
XXXXXX X. XXXXX
/s/ Xxxxxx X. Xxxxx
------------------------------------------
Address: x/x Xxx Xxxxxx Xxxxx, Xxxxxxxx
Xxx Xxxxxx 00000-0000
XXXXXXX X. XXXXXXXXXX
/s/ Xxxxxxx X. Xxxxxxxxxx
------------------------------------------
Address: x/x Xxx Xxxxxx Xxxxx, Xxxxxxxx
Xxx Xxxxxx 00000-0000
XXXXXX X. XXXXXXX, on behalf of
himself, and
THE XXXXXX X. XXXXXXX AND
XXXXXX X. XXXXXXX
REVOCABLE LIVING TRUST
/s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Address: x/x Xxx Xxxxxx Xxxxx, Xxxxxxxx
Xxx Xxxxxx 00000-0000
Exhibit A
CERTIFICATE OF DESIGNATIONS
of
SERIES A PREFERRED STOCK
of
MIKASA, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
--------------
Mikasa, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "Corporation"), hereby certifies
that the following resolution was adopted by the Board of Directors of the
Corporation (the "Board of Directors") pursuant to authority of the Board of
Directors as required by Section 151 of the General Corporation Law of the State
of Delaware:
FURTHER RESOLVED, that, effective upon the filing of a Certificate of
Designations with the office of the Secretary of State of the State of Delaware,
pursuant to the authority granted to and vested in the Board of Directors in
accordance with the provisions of the Certificate of Incorporation of the
Corporation, as amended (the "Certificate of Incorporation"), the Board of
Directors hereby creates a series of the Corporation's previously authorized
preferred stock, par value $.01 per share (the "Preferred Stock"), and hereby
states the designation and number thereof, and fixes the voting powers,
preferences and relative, participating, optional and other special rights, and
the qualifications, limitations and restrictions thereof, as follows:
Series A Preferred Stock:
I. Designation and Amount
----------------------
The designation of this series of shares shall be "Series A Preferred
Stock" (the "Series A Preferred Stock") and the number of shares constituting
such series shall be 500,000. Shares of Series A Preferred Stock shall be issued
by the Corporation, as required by the Agreement and Plan of Merger (the "Merger
Agreement"), among the Corporation, X.X. Xxxxxx Industries, S.A., Mountain
Acquisition Corp. and certain shareholders of the Corporation, dated September
10, 2000, by a resolution or resolutions of the Board of Directors. The number
of shares of the Series A Preferred Stock may be decreased from time to time by
a resolution or resolutions of the Board of Directors; provided, however, that
such number shall not be decreased below the sum of the aggregate number of
shares of the Series A Preferred Stock then outstanding and the number of shares
of the Series A Preferred Stock that the Corporation may be obligated to issue
pursuant to the Merger Agreement.
II. Rank
----
A. With respect to dividend rights, the Series A Preferred Stock shall rank
pari passu with the Common Stock.
B. With respect to the distribution of assets upon liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary, the Series A
Preferred Stock shall rank pari passu with the Common Stock.
III. Dividends
---------
So long as any shares of the Series A Preferred Stock are outstanding, the
Board of Directors shall not declare, and the Corporation shall not pay or set
apart for payment any dividend on any Common Stock or make any distribution in
respect of the Common Stock, either directly or indirectly, and whether in cash,
obligations or shares of the Corporation or other property without also making
the same dividend, payment or distribution in respect of the Series A Preferred
Stock, upon all the same terms and at the same times, as if each share of Series
A Preferred Stock were a share of Common Stock; provided, however, that, if the
Corporation shall pay a dividend or make a distribution to holders of shares of
Common Stock in shares of Common Stock, then in any such case the Corporation
shall pay an equivalent dividend or make an equivalent distribution to the
holders of shares of Series A Preferred Stock in additional shares of Series A
Preferred Stock.
Dividends shall be paid only when, as and if declared by the Board of
Directors out of funds at the time legally available for the payment of
dividends. Dividends on the Series A Preferred Stock shall not be cumulative.
IV. Liquidation Preference
----------------------
In the event of a liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of then-outstanding
shares of Series A Preferred Stock shall be entitled to receive out of the
assets of the Corporation, whether such assets are capital or surplus of any
nature, an amount per share equal to the amount per share payable with respect
to the Common Stock in connection with such liquidation, dissolution or winding
up.
V. Voting Rights
-------------
A. The holders of shares of Series A Preferred Stock shall have no voting
rights except as set forth below or as otherwise from time to time required by
law.
B. So long as any shares of the Series A Preferred Stock are outstanding,
each share of Series A Preferred Stock shall entitle the holder thereof to vote
on all matters voted on by holders of Common Stock, and the holders of shares of
Series A Preferred Stock shall vote together with holders of shares of Common
Stock as a single class. With respect to any such vote, each share of Series A
Preferred Stock shall entitle its holder to a number of votes equal to the
number of votes to which a holder of a share of Common Stock is entitled.
C. The Corporation shall not, from and after the date of the original
issuance of the Series A Preferred Stock, enter into any agreement, amend or
modify any existing agreement or obligation, or issue any security that
prohibits, conflicts or is inconsistent with, or would be breached by, the
Corporation's performance of its obligations hereunder.
VI. Exchange for Common Stock
-------------------------
Each share of Series A Preferred Stock shall be exchanged for one share of
Common Stock as and when required pursuant to the Merger Agreement.
VII. Miscellaneous
-------------
A. Reacquired Shares. Any shares of Series A Preferred Stock redeemed,
purchased or otherwise acquired by the Corporation, directly or indirectly, in
any manner whatsoever shall be retired and canceled promptly after the
acquisition thereof (and shall not be deemed to be outstanding for any purpose)
and, if necessary to provide for the lawful redemption or purchase of such
shares, the capital represented by such shares shall be reduced in accordance
with the Delaware General Corporation Law. All such shares of Series A Preferred
Stock shall upon their cancellation and upon the filing of an appropriate
certificate with the Secretary of State of the State of Delaware, become
authorized but unissued shares of Preferred Stock of the Corporation and may be
reissued as part of another series of Preferred Stock of the Corporation subject
to the conditions or restrictions on issuance set forth herein.
B. Enforcement. Any registered holder of shares of Series A Preferred Stock
may proceed to protect and enforce its rights and the rights of such holders by
any available remedy by proceeding at law or in equity to protect and enforce
any such rights, whether for the specific enforcement of any provision in this
Certificate of Designations or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy.
C. Transfer Taxes. Except as otherwise agreed upon pursuant to the terms of
this Certificate of Designations, the Corporation shall pay any and all
documentary, stamp or similar issue or transfer taxes and other governmental
charges that may be imposed under the laws of the United States of America or
any political subdivision or taxing authority thereof or therein in respect of
any issue or delivery of Common Stock or other securities or property issued on
account of shares of Series A Preferred Stock pursuant hereto or certificates
representing such shares or securities. The Corporation shall not, however, be
required to pay any such tax or other charge that may be imposed in connection
with any transfer involved in the issue or transfer and delivery of any
certificate for Common Stock or other securities or property in a name other
than that in which the shares of Series A Preferred Stock on account of which
such securities were issued were registered, and no such issue or delivery shall
be made unless and until the person requesting such issue has paid to the
Corporation the amount of any such tax or has established to the satisfaction of
the Corporation that such tax has been paid or is not payable.
IN WITNESS WHEREOF, this Certificate of Designations is executed on behalf
of the Corporation by its [officer] and attested by its [officer], this [ ]
day of [ ], 2000.
MIKASA, INC.
By:
---------------------------------------
Name:
Title:
[Corporate Seal]
ATTEST:
----------------------------------------
EXHIBIT B
MIKASA, INC.
Schedule of Rollover and Common Shares
As of September 10, 2000
Owned Number of Shares Number of New
Shareholder Common Shares* to be Rolled over Preference Shares
----------- -------------- ----------------- -----------------
Xxxxxx X. Xxxxx 3,956,353 1,186,500 19,577.25
Xxxxxxx X. Xxxxxxx
Xxxxxxx Xxxxxxx Xxxxxxx and Xxxxx
Xxxxx Xxxxxxx Community Property
Trust 109,845 0 0
Xxxxxxx Xxxxxxx Xxxxxxx Separate
Property Trust 1,184,192 388,200 6,405.30
Xxxxxxx X. Xxxxxxxxxx 1,587,038 476,100 7,855.65
Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxxx
Revocable Living Trust 2,488,469 622,000 10,263.00
--------- ---------- ---------
Total 9,325,897 2,672,800 44,101.20
* Does not include shares of Common Stock that may be deemed to be beneficially
owned by reason of ownership of options to purchase shares of Common Stock
exercisable within 60 days as follows: Xx. Xxxxx, 172,500 shares; Xx. Xxxxxxx,
422,500 shares; and Xx. Xxxxxxxxxx, 165,000 shares.
Prior to September 24, 2000, a certain other holder of Common Stock may exchange
up to 318,000 shares of Common Stock for shares of New Preference Stock. In such
event, the parties agree equitably to amend the Agreement to reduce the Capital
Contribution by Parent by the value of such shares.
EXHIBIT C-1
EMPLOYMENT AGREEMENT
--------------------
AGREEMENT, dated this 10th day of September, 2000 (the "Agreement"),
between Mikasa, Inc., a Delaware corporation, and any successor thereto (the
"Employer") and Xxxxxx X. Xxxxx (the "Employee").
WHEREAS, the Employer, X.X. Xxxxxx Industries, S.A. ("JGD"), the
Employee, Mountain Acquisition CORP., ("Merger Sub") and certain other parties,
have entered into an Agreement and Plan of Merger, dated the date hereof (the
"Merger Agreement"), providing for the merger of Merger Sub with and into the
Employer, with the Employer as the surviving corporation (the "Merger");
WHEREAS, this Agreement is made in connection with the Merger
Agreement, pursuant to which the Employee will receive significant benefits;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Employment, Duties and Agreements.
---------------------------------
(a) Subject to the terms and conditions set forth herein, the Employer
hereby agrees to employ the Employee, and the Employee hereby accepts the
employment of, and agrees to serve, the Employer during the employment period as
determined pursuant to Section 3 hereof (the "Employment Period") in such
position and with such title as may be mutually agreed upon by the Employer and
the Employee. The Employee's authority, duties and responsibilities shall be
such authority, duties and responsibilities as the Employer (acting through its
Board of Directors (the "Board of Directors") or other authorized person) may
reasonably determine from time to time as are generally consistent with the
mutually agreed upon position and title and as such authority, duties and
responsibilities exist as of the Closing (as such term is defined in the Merger
Agreement) or as may be otherwise agreed between the Employer and the Employee.
The Employee shall report to the Board of Directors. In rendering his employment
hereunder, the Employee shall be subject to, and shall act in accordance with,
all reasonable instructions and directions of the Employer and all applicable
policies and rules of the Employer.
(b) During the Employment Period, the Board of Directors may request
that the Employee serve as a member of the Board of Directors or as a member of
any management committee or board of directors of any subsidiary of the
Employer, and, if so requested, the Employee agrees to serve as a member of the
Board of Directors or as a member of any other such management committee or
board of directors. The Employer agrees to indemnify the Employee against all
liabilities, costs, charges and expenses whatsoever incurred by the Employee in
connection with any threatened, pending or completed action, suit or proceeding
to which the Employee may be made a party or may be threatened to be made a
party by reason of the Employee's having served on the Board of Directors or as
a member of any management committee or board of directors of any subsidiary of
the Employer to the fullest extent permitted by applicable law and by the
by-laws and certificate of incorporation of the Employer.
(c) During the Employment Period and as long as the Employer shall not
be in default of a material obligation hereunder or under the Stockholders'
Agreement between the Employee, the Employer, JGD and certain other parties
named therein, dated the date hereof (the "Stockholders' Agreement"), the
Employee shall devote his full business time and energy, attention, skills and
ability to the performance of his obligations hereunder on an exclusive basis,
shall faithfully and diligently endeavor to promote the business and best
interests of the Employer, and shall make available to the Employer all
knowledge possessed by him relating to any aspect of his duties and
responsibilities hereunder.
(d) During the Employment Period and so long as the Employer shall not
be in default of a material obligation hereunder or under the Stockholders'
Agreement, the Employee may not, except as provided in this Agreement, without
the prior written consent of the Employer operate, participate in the
management, operations or control of, or act as an employee, officer or director
of, any type of business or service (other than as an employee of the Employer);
provided that (i) the Employee may invest in any publicly traded companies where
the Employee's investment is less than 5% of the outstanding stock of such
company, (ii) the Employee may not serve on the Board of Directors of any
Competitor (as defined below) and may serve on the board of directors of any
other company with the prior written consent of the Board of Directors (which
consent shall not be unreasonably withheld) and (iii) the Employee may engage on
behalf of the Employer in industry activities relating to the business of the
Employer such as industry trade groups.
2. Compensation.
------------
(a) As compensation for the agreements made by the Employee herein and
the performance by the Employee of his obligations hereunder, during the
Employment Period, the Employer shall pay the Employee, not less than once a
month, an annual base salary at the rate of US$350,000 per annum ("Annual Base
Salary"). The Employee's Annual Base Salary shall be reviewed each year by the
Board of Directors on the first day of each January during the Employment
Period; provided that the Annual Base Salary may not be reduced.
(b) In addition to the Annual Base Salary, the Employee shall be
entitled to annual cash bonus compensation ("Annual Bonus") during the
Employment Period in the discretion of the Board of Directors; provided that the
Annual Bonus with respect to any fiscal year shall be no less than the annual
cash bonus compensation received by the Employee from the Employer with respect
to fiscal year 1999 so long as Net Income (as defined below) for such fiscal
year is at least equal to Net Income recorded in the Employer's financial
statements for fiscal year 1999, subject to reasonable adjustment as mutually
agreed by the Employer and the Employee in the event any transaction or
corporate event occurs which affects the Employer's capitalization or any other
transaction or corporate event (other than the Merger), including without
limitation any other transactions with JGD or any of its affiliates, outside of
the ordinary course of business occurs which could reasonably be expected to
have a substantial impact on the Employer's Net Income; and provided, further
that, during the Employment Period, the Employee shall not be entitled to
receive any annual cash bonus compensation pursuant to any plan, program or
arrangement of the Employer other than this Agreement and the Incentive
Compensation Plan (as defined below). Any Annual Bonus shall be paid as soon as
reasonably determinable but no later than March 15th of the fiscal year
following the fiscal year to which such Annual Bonus relates. For purposes of
this Agreement, "Net Income" means, with respect to any fiscal year of the
Employer, the net after-tax income of the Employer (excluding (i) the
amortization of any pushed-down goodwill resulting from the Merger, (ii) any
ongoing financing or interest charges (including any fees associated therewith)
incurred as a result of a change in the Employer's pre-Merger capital structure
resulting from the Merger and any one time or extraordinary charges resulting
from the Merger, (iii) any one time or extraordinary charges resulting from any
acquisition or disposition of a business, Person (as defined in the Merger
Agreement) or assets by the Employer or any of its subsidiaries or any merger,
consolidation or other business combination involving the Employer after the
Effective Time (as defined in the Merger Agreement) other than acquisition or
disposition of assets in the ordinary course of business consistent with past
practice, (iv) the impact of any change in the Employer's accounting policies or
procedures and (v) any expense related to the Incentive Compensation Plan).
(c) The Employee shall be entitled to participate in the Mikasa, Inc.
Incentive Compensation Plan, as adopted on the date hereof (the "Incentive
Compensation Plan").
(d) During the Employment Period, the Employee shall be entitled to
receive benefits and perquisites from the Employer, including without
limitation, reimbursement of customary business expenses, reasonable
reimbursement for gasoline expenses incurred for business purposes, vacation,
life, short-term disability and long-term disability insurance, medical and
dental insurance, 401(k) and pension benefits, which are no less favorable in
the aggregate than those benefits and perquisites received by the Employee prior
to the Closing (the "Benefits").
(e) The Employee's principal work location shall be at the offices of
the Employer in Secaucus, New Jersey, but the Employee will undertake such
reasonable travel as may from time to time be required in connection with the
performance of his obligations hereunder.
3. Employment Period.
-----------------
The Employment Period shall commence on the date of the Closing and
shall terminate on December 31, 2002 (the "Scheduled Termination Date");
provided, however, that the Employment Period shall terminate prior to the
Scheduled Termination Date upon the earliest to occur of the following events:
(a) The Employee's death, in which event the Employment Period shall
terminate as of the date his death occurs. In the event of the termination of
the Employment Period pursuant to this Section 3(a), the Employer shall promptly
pay to the Employee's estate a lump sum in cash equal to the sum of (i) any
earned but unpaid Annual Base Salary; (ii) any earned but unpaid Annual Bonus to
which the Employee is entitled for a fiscal year completed prior to such
termination (the amounts in clauses (i) and (ii), collectively, the "Accrued
Obligations"); and (iii) the amount equal to the product of (x) his Annual Base
Salary at the time of such termination and (y) a fraction, the numerator of
which is the number of days from the date of termination to and including the
Scheduled Termination Date and the denominator of which is 365 (the amount in
clause (iii), the "Termination Payment").
(b) The physical disability or mental incapacity of the Employee which
entitles him to benefits under a long-term disability plan of the Employer or
which would entitle the Employee to benefits if he were a participant in such
plan or which would otherwise qualify the Employee for social security
disability insurance benefits, in which event the Employment Period shall
terminate as of the first date that the Employee would be able to receive
benefits under such plan or receive such social security disability insurance
benefits. In the event of the termination of the Employment Period pursuant to
this Section 3(b), the Employer shall promptly pay to the Employee a lump sum in
cash equal to the sum of (i) the Accrued Obligations; and (ii) the Termination
Payment.
(c) Termination by the Employer of the Employment Period for Cause (as
defined below), in which event the Employment Period shall terminate as of his
last day of employment. In the event of the termination of the Employment Period
pursuant to this Section 3(c), the Employer shall promptly pay to the Employee a
lump sum in cash equal to the Accrued Obligations. For purposes of this
Agreement, "Cause" means (i) any willful violation by the Employee of this
Agreement or the Stockholders' Agreement that has a material adverse effect on
the Employer or its affiliates; (ii) any willful engaging by the Employee, in
the Employee's capacity as an employee of the Employer, in gross misconduct that
has, or is intended to have, a material adverse effect on the Employer or its
affiliates; or (iii) any conviction of the Employee of a felony or other serious
crime involving moral turpitude; provided that any act or failure to act of the
Employee shall not be considered "willful" unless done or omitted to be done by
the Employee not in good faith and without reasonable belief that the Employee's
action or omission was in the best interest of the Employer.
(d) Termination by the Employer of the Employment Period without Cause,
in which event the Employment Period shall terminate as of his last day of
employment. In the event of the termination of the Employment Period pursuant to
this Section 3(d), the Employer shall promptly pay to the Employee a lump sum in
cash equal to the sum of (i) the Accrued Obligations; and (ii) the Termination
Payment.
(e) Termination by the Employee of the Employment Period for Good
Reason (as defined below), in which event the Employment Period shall terminate
as of his last day of employment. In the event of the termination of the
Employment Period pursuant to this Section 3(e), the Employer shall promptly pay
to the Employee a lump sum in cash equal to the sum of (i) the Accrued
Obligations; and (ii) the Termination Payment. For purposes of the Incentive
Compensation Plan, the termination by the Employee of the Employment Period for
Good Reason pursuant to this Section 3(e) shall be treated under the Incentive
Compensation Plan as a termination of employment by the Employer without Cause.
For purposes of this Agreement, "Good Reason" means (w) the assignment to the
Employer of any duties or responsibilities which are materially inconsistent
with the Employer's position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated hereby, or
any other action by the Employer which results in a material diminution in such
position, authority, duties or responsibilities; (x) a significant reduction by
the Employer in the compensation (including salary and bonuses) and/or benefits
provided to the Employee hereunder; (y) any material breach or violation of any
material provision of this Agreement or the Stockholders' Agreement by the
Employer or JGD which is not cured promptly after receipt by the Employer or JGD
of written notice from the Employee setting forth the specific breach or
violation; or (z) the Employer's requiring the Employee to be based at any
office or location outside of northern New Jersey.
(f) Termination by the Employee of the Employment Period without Good
Reason, in which event the Employment Period shall terminate as of his last day
of employment. In the event of the termination of the Employment Period pursuant
to this Section 3(f), the Employer shall promptly pay to the Employee a lump sum
in cash equal to the Accrued Obligations.
(g) Following any termination of the Employment Period pursuant to
Section 3(a), 3(b), 3(d) or 3(e) of this Agreement, the Employer shall continue
to provide the Benefits to the Employee and his eligible dependents until the
Scheduled Termination Date as if his employment had not terminated; provided
that the Employee's or his eligible dependent's continued participation in the
plans, programs and arrangements pursuant to which the Benefits are provided is
possible under the general terms and provisions of such plans, programs and
arrangements. In the event that the Employee's participation in any such plan,
program or arrangement is prohibited, the Employer shall arrange to provide the
Employee and his eligible dependents with benefits substantially similar to
those which the Employee and his eligible dependents are entitled to receive
under such plans, programs or arrangements for such period.
(h) Following the termination of his employment with the Employer at
any time for any reason, the Employee and his spouse will each continue to
receive until he or she, respectively, reaches age 65 or dies at the Employer's
expense medical and dental insurance benefits substantially similar to those
benefits received during the Employment Period.
(i) The Employee shall not be obligated to seek or accept any future
employment or in any way mitigate damages as a condition to the receipt of any
payments required to be made to the Employee hereunder and the Employer shall
not be entitled to offset any amounts against any such payments.
(j) Nothing in this Agreement shall impair the rights of the Employee
to any benefits to which he may be or become entitled pursuant to the terms of
any employee benefit plan, program or arrangement of the Employer.
4. Restrictive Covenants.
---------------------
(a) During the 18-month period following the termination of his
employment with the Employer at any time for any reason (whether during or after
the Employment Period), and so long as the Employer is not in default of a
material obligation hereunder or under the Stockholders' Agreement, the Employee
agrees not to engage in any aspect of the Company Business (as hereinafter
defined) in the United States. The Employee shall be deemed to be engaging in
Company Business if he directly or indirectly, whether or not for compensation,
participates in the ownership, management, operation or control of any
Competitor (as hereinafter defined) or is employed by or performs consulting
services for any Competitor; provided, however, that if such Competitor renders
substantial services other than Company Business, the Employee shall not be
prohibited from engaging in any such activities solely in connection with such
other services; and provided, further, that the Employee may make passive
investments in publicly traded companies that engage in Company Business in the
United States where Employee's investment is less than 5% of the outstanding
stock of such company.
(b) During the 18-month period following the termination of his
employment with the Employer at any time for any reason (whether during or after
the Employment Period), and so long as the Employer is not in default of a
material obligation hereunder or under the Stockholders' Agreement, the Employee
agrees not to solicit any existing employee of the Employer or its affiliates to
be employed by a Competitor in the United States.
(c) For purposes of Section 4:
(i) The "Company Business" is the manufacture and sale of
ceramic dinnerware, crystal and glassware products.
(ii) A "Competitor" is any corporation, firm, partnership,
proprietorship or other entity which engages in any Company Business
and which is a competitor of the Employer with respect to such Company
Business.
(d) The Employee hereby agrees that:
(i) Each of the covenants contained in Sections 4(a) and 4(b)
hereof shall be construed as a separate covenant.
(ii) If, in any judicial proceeding, a court shall refuse to
enforce any of the separate covenants of Section 4(a) or 4(b) hereof,
then such unenforceable covenant shall be deemed limited under this
Agreement to the smallest extent permissible under applicable law for
the purpose of such proceeding or any other judicial proceeding to the
extent necessary to permit the provisions of Sections 4(a) and 4(b)
hereof to be enforced to the fullest extent permissible under
applicable law.
(e) The Employee agrees to deliver promptly to the Employer upon the
termination of his employment hereunder for any reason, or at any other time
that the Employer may so request, all proprietary or confidential documents (and
all copies thereof) relating to the Company Business and all other property
associated therewith, which he may then possess or have under his control.
(f) The parties hereto hereby declare that it is impossible to measure
in money the damages which will accrue to the Employer by reason of a failure by
the Employee to perform any of his obligations under this Agreement and, in
particular, under this Section 4. Accordingly, if the Employer institutes any
action or proceeding to enforce the provisions hereof, to the extent permitted
by applicable law, the Employee hereby waives the claim or defense that the
Employer has an adequate remedy at law, and the Employee shall not urge in any
such action or proceeding the claim or defense that any such remedy at law
exists.
(g) The restrictions in this Section 4 shall be in addition to any
restrictions imposed on the Employee by statute or at common law.
5. Attorneys' Fees.
---------------
If the Employee prevails in any litigation or arbitration commenced
(including any proceedings in a bankruptcy court) between the parties hereto
concerning any provision of this Agreement or the rights and duties of any party
hereunder, in addition to such other relief as may be granted, the Employer
shall reimburse the Employee for his attorneys' fees and court costs incurred by
reason of such litigation or arbitration.
6. Miscellaneous.
-------------
(a) Any notice or other communication required or permitted under this
Agreement shall be effective only if it is in writing and delivered personally
or sent by registered or certified mail, postage prepaid, addressed as follows:
If to the Employer:
Mikasa, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxxxx, XX 00000-0000
Attention: Chief Executive Officer
General Counsel
If to the Employee:
Xxxxxx X. Xxxxx
c/o Mikasa, Inc.
One Mikasa Drive
Secaucus, NJ 07096-1549
Copy to:
X.X. Xxxxxx Industries, S.A.
00 xxx Xxxxxx Xxxxxxx
00000 Xxxxxx, Xxxxxx
Attention: Xx. Xxxx Xxxxxxxx
or to such other address as any party hereto may designate by notice to the
others, and shall be deemed to have been given upon receipt.
(b) This Agreement constitutes the entire agreement among the parties
hereto with respect to the matters addressed herein, and supersedes and is in
full substitution for any and all prior understandings or agreements with
respect to the subject matter hereof, including without limitation, the
Employment and Consulting Agreement dated August 6, 1996, between Xxxxxx X.
Xxxxx and American Commercial, Incorporated and Mikasa, Inc. and the Stock
Purchase Agreement dated August 6, 1996, between Xxxxxx X. Xxxxx and Mikasa,
Inc.
(c) This Agreement may be amended only by an instrument in writing
signed by the parties hereto, and any provision hereof may be waived only by an
instrument in writing signed by the party against whom or which enforcement of
such waiver is sought. The failure of any party hereto at any time to require
the performance by any other party hereto of any provision hereof shall in no
way affect the full right to require such performance at any time thereafter,
nor shall the waiver by any party hereto of a breach of any provision hereof be
taken or held to be a waiver of any succeeding breach of such provision or a
waiver of the provision itself or a waiver of any other provision of this
Agreement.
(d) This Agreement is binding on and is for the benefit of the parties
hereto and their respective successors, heirs, executors, administrators and
other legal representatives. Neither this Agreement nor any right or obligation
hereunder may be assigned by the Employer or by the Employee.
(e) If any provision of this Agreement or portion thereof is so broad,
in scope or duration, so as to be unenforceable, such provision or portion
thereof shall be interpreted to be only so broad as is enforceable.
(f) The Employer may withhold from any amounts payable to the Employee
hereunder all federal, state, city or other taxes that the Employer may
reasonably determine are required to be withheld pursuant to any applicable law
or regulation.
(g) This Agreement shall be governed by and construed in accordance
with the laws of the State of New Jersey, without reference to its principles of
conflicts of law.
(h) This Agreement may be executed in several counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument.
(i) The headings in this Agreement are inserted for convenience of
reference only and shall not be a part of or control or affect the meaning of
any provision hereof.
(j) Other than this Section 6(j), which shall be effective upon
execution of this Agreement, the other provisions of this Agreement shall become
effective immediately following the Effective Time and shall not be in full
force or effect prior thereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
MIKASA, INC.
By:
---------------------------------------
Name:
Title:
XXXXXX X. XXXXX
------------------------------------------
EXHIBIT C-2
EMPLOYMENT AGREEMENT
--------------------
AGREEMENT, dated this 10th day of September, 2000 (the "Agreement"),
between Mikasa, Inc., a Delaware corporation, and any successor thereto (the
"Employer") and Xxxxxxx X. Xxxxxxx (the "Employee").
WHEREAS, the Employer, X.X. Xxxxxx Industries, S.A. ("JGD"), the
Employee, Mountain Acquisition CORP., ("Merger Sub") and certain other parties,
have entered into an Agreement and Plan of Merger, dated the date hereof (the
"Merger Agreement"), providing for the merger of Merger Sub with and into the
Employer, with the Employer as the surviving corporation (the "Merger");
WHEREAS, this Agreement is made in connection with the Merger
Agreement, pursuant to which the Employee will receive significant benefits;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Employment, Duties and Agreements.
---------------------------------
(a) Subject to the terms and conditions set forth herein, the Employer
hereby agrees to employ the Employee as Chief Executive Officer, President and
Chief Operating Officer of the Employer and the Employee hereby accepts the
employment of, and agrees to serve, the Employer in such capacity during the
employment period as determined pursuant to Section 3 hereof (the "Employment
Period"). The Employee's authority, duties and responsibilities shall be such
authority, duties and responsibilities as the Employer (acting through its Board
of Directors (the "Board of Directors") or other authorized person) may
reasonably determine from time to time as are generally consistent with the
above job title as they exist as of the Closing (as such term is defined in the
Merger Agreement) or as may be otherwise agreed between the Employer and the
Employee. The Employee shall report to the Board of Directors. In rendering his
employment hereunder, the Employee shall be subject to, and shall act in
accordance with, all reasonable instructions and directions of the Employer and
all applicable policies and rules of the Employer.
(b) During the Employment Period, the Board of Directors may request
that the Employee serve as a member of the Board of Directors or as a member of
any management committee or board of directors of any subsidiary of the
Employer, and, if so requested, the Employee agrees to serve as a member of the
Board of Directors or as a member of any other such management committee or
board of directors. The Employer agrees to indemnify the Employee against all
liabilities, costs, charges and expenses whatsoever incurred by the Employee in
connection with any threatened, pending or completed action, suit or proceeding
to which the Employee may be made a party or may be threatened to be made a
party by reason of the Employee's having served on the Board of Directors or as
a member of any management committee or board of directors of any subsidiary of
the Employer to the fullest extent permitted by applicable law and by the
by-laws and certificate of incorporation of the Employer.
(c) During the Employment Period and as long as the Employer shall not
be in default of a material obligation hereunder or under the Stockholders'
Agreement between the Employee, the Employer, JGD and certain other parties
named therein, dated the date hereof (the "Stockholders' Agreement"), the
Employee shall devote his full business time and energy, attention, skills and
ability to the performance of his obligations hereunder on an exclusive basis,
shall faithfully and diligently endeavor to promote the business and best
interests of the Employer, and shall make available to the Employer all
knowledge possessed by him relating to any aspect of his duties and
responsibilities hereunder.
(d) During the Employment Period and so long as the Employer shall not
be in default of a material obligation hereunder or under the Stockholders'
Agreement, the Employee may not, except as provided in this Agreement, without
the prior written consent of the Employer operate, participate in the
management, operations or control of, or act as an employee, officer or director
of, any type of business or service (other than as an employee of the Employer);
provided that (i) the Employee may invest in any publicly traded companies where
the Employee's investment is less than 5% of the outstanding stock of such
company, (ii) the Employee may not serve on the Board of Directors of any
Competitor (as defined below) and may serve on the board of directors of any
other company with the prior written consent of the Board of Directors (which
consent shall not be unreasonably withheld) and (iii) the Employee may engage on
behalf of the Employer in industry activities relating to the business of the
Employer such as industry trade groups.
2. Compensation.
------------
(a) As compensation for the agreements made by the Employee herein and
the performance by the Employee of his obligations hereunder, during the
Employment Period, the Employer shall pay the Employee, not less than once a
month, an annual base salary at the rate of US$350,000 per annum ("Annual Base
Salary"). The Employee's Annual Base Salary shall be reviewed each year by the
Board of Directors on the first day of each January during the Employment
Period; provided that the Annual Base Salary may not be reduced.
(b) In addition to the Annual Base Salary, the Employee shall be
entitled to annual cash bonus compensation ("Annual Bonus") during the
Employment Period in the discretion of the Board of Directors; provided that the
Annual Bonus with respect to any fiscal year shall be no less than the annual
cash bonus compensation received by the Employee from the Employer with respect
to fiscal year 1999 so long as Net Income (as defined below) for such fiscal
year is at least equal to Net Income recorded in the Employer's financial
statements for fiscal year 1999, subject to reasonable adjustment as mutually
agreed by the Employer and the Employee in the event any transaction or
corporate event occurs which affects the Employer's capitalization or any other
transaction or corporate event (other than the Merger), including without
limitation any other transactions with JGD or any of its affiliates, outside of
the ordinary course of business occurs which could reasonably be expected to
have a substantial impact on the Employer's Net Income; and provided, further
that, during the Employment Period, the Employee shall not be entitled to
receive any annual cash bonus compensation pursuant to any plan, program or
arrangement of the Employer other than this Agreement and the Incentive
Compensation Plan (as defined below). Any Annual Bonus shall be paid as soon as
reasonably determinable but no later than March 15th of the fiscal year
following the fiscal year to which such Annual Bonus relates. For purposes of
this Agreement, "Net Income" means, with respect to any fiscal year of the
Employer, the net after-tax income of the Employer (excluding (i) the
amortization of any pushed-down goodwill resulting from the Merger, (ii) any
ongoing financing or interest charges (including any fees associated therewith)
incurred as a result of a change in the Employer's pre-Merger capital structure
resulting from the Merger and any one time or extraordinary charges resulting
from the Merger, (iii) any one time or extraordinary charges resulting from any
acquisition or disposition of a business, Person (as defined in the Merger
Agreement) or assets by the Employer or any of its subsidiaries or any merger,
consolidation or other business combination involving the Employer after the
Effective Time (as defined in the Merger Agreement) other than acquisition or
disposition of assets in the ordinary course of business consistent with past
practice, (iv) the impact of any change in the Employer's accounting policies or
procedures and (v) any expense related to the Incentive Compensation Plan).
(c) The Employee shall be entitled to participate in the Mikasa, Inc.
Incentive Compensation Plan, as adopted on the date hereof (the "Incentive
Compensation Plan").
(d) During the Employment Period, the Employee shall be entitled to
receive benefits and perquisites from the Employer, including without
limitation, reimbursement of customary business expenses, reasonable
reimbursement for gasoline expenses incurred for business purposes, vacation,
life, short-term disability and long-term disability insurance, medical and
dental insurance, 401(k) and pension benefits, which are no less favorable in
the aggregate than those benefits and perquisites received by the Employee prior
to the Closing (the "Benefits").
(e) The Employee's principal work location shall be at the offices of
the Employer in Secaucus, New Jersey, but the Employee will undertake such
reasonable travel as may from time to time be required in connection with the
performance of his obligations hereunder.
3. Employment Period.
-----------------
The Employment Period shall commence on the date of the Closing and
shall terminate on December 31, 2002 (the "Scheduled Termination Date");
provided, however, that the Employment Period shall terminate prior to the
Scheduled Termination Date upon the earliest to occur of the following events:
(a) The Employee's death, in which event the Employment Period shall
terminate as of the date his death occurs. In the event of the termination of
the Employment Period pursuant to this Section 3(a), the Employer shall promptly
pay to the Employee's estate a lump sum in cash equal to the sum of (i) any
earned but unpaid Annual Base Salary; (ii) any earned but unpaid Annual Bonus to
which the Employee is entitled for a fiscal year completed prior to such
termination (the amounts in clauses (i) and (ii), collectively, the "Accrued
Obligations"); and (iii) the amount equal to the product of (x) his Annual Base
Salary at the time of such termination and (y) a fraction, the numerator of
which is the number of days from the date of termination to and including the
Scheduled Termination Date and the denominator of which is 365 (the amount in
clause (iii), the "Termination Payment").
(b) The physical disability or mental incapacity of the Employee which
entitles him to benefits under a long-term disability plan of the Employer or
which would entitle the Employee to benefits if he were a participant in such
plan or which would otherwise qualify the Employee for social security
disability insurance benefits, in which event the Employment Period shall
terminate as of the first date that the Employee would be able to receive
benefits under such plan or receive such social security disability insurance
benefits. In the event of the termination of the Employment Period pursuant to
this Section 3(b), the Employer shall promptly pay to the Employee a lump sum in
cash equal to the sum of (i) the Accrued Obligations; and (ii) the Termination
Payment.
(c) Termination by the Employer of the Employment Period for Cause (as
defined below), in which event the Employment Period shall terminate as of his
last day of employment. In the event of the termination of the Employment Period
pursuant to this Section 3(c), the Employer shall promptly pay to the Employee a
lump sum in cash equal to the Accrued Obligations. For purposes of this
Agreement, "Cause" means (i) any willful violation by the Employee of this
Agreement or the Stockholders' Agreement that has a material adverse effect on
the Employer or its affiliates; (ii) any willful engaging by the Employee, in
the Employee's capacity as an employee of the Employer, in gross misconduct that
has, or is intended to have, a material adverse effect on the Employer or its
affiliates; or (iii) any conviction of the Employee of a felony or other serious
crime involving moral turpitude; provided that any act or failure to act of the
Employee shall not be considered "willful" unless done or omitted to be done by
the Employee not in good faith and without reasonable belief that the Employee's
action or omission was in the best interest of the Employer.
(d) Termination by the Employer of the Employment Period without Cause,
in which event the Employment Period shall terminate as of his last day of
employment. In the event of the termination of the Employment Period pursuant to
this Section 3(d), the Employer shall promptly pay to the Employee a lump sum in
cash equal to the sum of (i) the Accrued Obligations; and (ii) the Termination
Payment.
(e) Termination by the Employee of the Employment Period for Good
Reason (as defined below), in which event the Employment Period shall terminate
as of his last day of employment. In the event of the termination of the
Employment Period pursuant to this Section 3(e), the Employer shall promptly pay
to the Employee a lump sum in cash equal to the sum of (i) the Accrued
Obligations; and (ii) the Termination Payment. For purposes of the Incentive
Compensation Plan, the termination by the Employee of the Employment Period for
Good Reason pursuant to this Section 3(e) shall be treated under the Incentive
Compensation Plan as a termination of employment by the Employer without Cause.
For purposes of this Agreement, "Good Reason" means (w) the assignment to the
Employer of any duties or responsibilities which are materially inconsistent
with the Employer's position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated hereby, or
any other action by the Employer which results in a material diminution in such
position, authority, duties or responsibilities; (x) a significant reduction by
the Employer in the compensation (including salary and bonuses) and/or benefits
provided to the Employee hereunder; (y) any material breach or violation of any
material provision of this Agreement or the Stockholders' Agreement by the
Employer or JGD which is not cured promptly after receipt by the Employer or JGD
of written notice from the Employee setting forth the specific breach or
violation; or (z) the Employer's requiring the Employee to be based at any
office or location outside of northern New Jersey.
(f) Termination by the Employee of the Employment Period without Good
Reason, in which event the Employment Period shall terminate as of his last day
of employment. In the event of the termination of the Employment Period pursuant
to this Section 3(f), the Employer shall promptly pay to the Employee a lump sum
in cash equal to the Accrued Obligations.
(g) Following any termination of the Employment Period pursuant to
Section 3(a), 3(b), 3(d) or 3(e) of this Agreement, the Employer shall continue
to provide the Benefits to the Employee and his eligible dependents until the
Scheduled Termination Date as if his employment had not terminated; provided
that the Employee's or his eligible dependent's continued participation in the
plans, programs and arrangements pursuant to which the Benefits are provided is
possible under the general terms and provisions of such plans, programs and
arrangements. In the event that the Employee's participation in any such plan,
program or arrangement is prohibited, the Employer shall arrange to provide the
Employee and his eligible dependents with benefits substantially similar to
those which the Employee and his eligible dependents are entitled to receive
under such plans, programs or arrangements for such period.
(h) Following the termination of his employment with the Employer at
any time for any reason, the Employee and his spouse will each continue to
receive until he or she, respectively, reaches age 65 or dies at the Employer's
expense medical and dental insurance benefits substantially similar to those
benefits received during the Employment Period.
(i) The Employee shall not be obligated to seek or accept any future
employment or in any way mitigate damages as a condition to the receipt of any
payments required to be made to the Employee hereunder and the Employer shall
not be entitled to offset any amounts against any such payments.
(j) Nothing in this Agreement shall impair the rights of the Employee
to any benefits to which he may be or become entitled pursuant to the terms of
any employee benefit plan, program or arrangement of the Employer.
4. Restrictive Covenants.
---------------------
(a) During the 18-month period following the termination of his
employment with the Employer at any time for any reason (whether during or after
the Employment Period), and so long as the Employer is not in default of a
material obligation hereunder or under the Stockholders' Agreement, the Employee
agrees not to engage in any aspect of the Company Business (as hereinafter
defined) in the United States. The Employee shall be deemed to be engaging in
Company Business if he directly or indirectly, whether or not for compensation,
participates in the ownership, management, operation or control of any
Competitor (as hereinafter defined) or is employed by or performs consulting
services for any Competitor; provided, however, that if such Competitor renders
substantial services other than Company Business, the Employee shall not be
prohibited from engaging in any such activities solely in connection with such
other services; and provided, further, that the Employee may make passive
investments in publicly traded companies that engage in Company Business in the
United States where Employee's investment is less than 5% of the outstanding
stock of such company.
(b) During the 18-month period following the termination of his
employment with the Employer at any time for any reason (whether during or after
the Employment Period), and so long as the Employer is not in default of a
material obligation hereunder or under the Stockholders' Agreement, the Employee
agrees not to solicit any existing employee of the Employer or its affiliates to
be employed by a Competitor in the United States.
(c) For purposes of Section 4:
(i) The "Company Business" is the manufacture and sale of
ceramic dinnerware, crystal and glassware products.
(ii) A "Competitor" is any corporation, firm, partnership,
proprietorship or other entity which engages in any Company Business
and which is a competitor of the Employer with respect to such Company
Business.
(d) The Employee hereby agrees that:
(i) Each of the covenants contained in Sections 4(a) and 4(b)
hereof shall be construed as a separate covenant.
(ii) If, in any judicial proceeding, a court shall refuse to
enforce any of the separate covenants of Section 4(a) or 4(b) hereof,
then such unenforceable covenant shall be deemed limited under this
Agreement to the smallest extent permissible under applicable law for
the purpose of such proceeding or any other judicial proceeding to the
extent necessary to permit the provisions of Sections 4(a) and 4(b)
hereof to be enforced to the fullest extent permissible under
applicable law.
(e) The Employee agrees to deliver promptly to the Employer upon the
termination of his employment hereunder for any reason, or at any other time
that the Employer may so request, all proprietary or confidential documents (and
all copies thereof) relating to the Company Business and all other property
associated therewith, which he may then possess or have under his control.
(f) The parties hereto hereby declare that it is impossible to measure
in money the damages which will accrue to the Employer by reason of a failure by
the Employee to perform any of his obligations under this Agreement and, in
particular, under this Section 4. Accordingly, if the Employer institutes any
action or proceeding to enforce the provisions hereof, to the extent permitted
by applicable law, the Employee hereby waives the claim or defense that the
Employer has an adequate remedy at law, and the Employee shall not urge in any
such action or proceeding the claim or defense that any such remedy at law
exists.
(g) The restrictions in this Section 4 shall be in addition to any
restrictions imposed on the Employee by statute or at common law.
5. Attorneys' Fees.
---------------
If the Employee prevails in any litigation or arbitration commenced
(including any proceedings in a bankruptcy court) between the parties hereto
concerning any provision of this Agreement or the rights and duties of any party
hereunder, in addition to such other relief as may be granted, the Employer
shall reimburse the Employee for his attorneys' fees and court costs incurred by
reason of such litigation or arbitration.
6. Miscellaneous.
-------------
(a) Any notice or other communication required or permitted under this
Agreement shall be effective only if it is in writing and delivered personally
or sent by registered or certified mail, postage prepaid, addressed as follows:
If to the Employer:
Mikasa, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxxxx, XX 00000-0000
Attention: Chief Financial Officer
General Counsel
If to the Employee:
Xxxxxxx X. Xxxxxxx
c/o Mikasa, Inc.
One Mikasa Drive
Secaucus, NJ 07096-1549
Copy to:
X.X. Xxxxxx Industries, S.A.
00 xxx Xxxxxx Xxxxxxx
00000 Xxxxxx, Xxxxxx
Attention: Xx. Xxxx Xxxxxxxx
or to such other address as any party hereto may designate by notice to the
others, and shall be deemed to have been given upon receipt.
(b) This Agreement constitutes the entire agreement among the parties
hereto with respect to the matters addressed herein, and supersedes and is in
full substitution for any and all prior understandings or agreements with
respect to the subject matter hereof.
(c) This Agreement may be amended only by an instrument in writing
signed by the parties hereto, and any provision hereof may be waived only by an
instrument in writing signed by the party against whom or which enforcement of
such waiver is sought. The failure of any party hereto at any time to require
the performance by any other party hereto of any provision hereof shall in no
way affect the full right to require such performance at any time thereafter,
nor shall the waiver by any party hereto of a breach of any provision hereof be
taken or held to be a waiver of any succeeding breach of such provision or a
waiver of the provision itself or a waiver of any other provision of this
Agreement.
(d) This Agreement is binding on and is for the benefit of the parties
hereto and their respective successors, heirs, executors, administrators and
other legal representatives. Neither this Agreement nor any right or obligation
hereunder may be assigned by the Employer or by the Employee.
(e) If any provision of this Agreement or portion thereof is so broad,
in scope or duration, so as to be unenforceable, such provision or portion
thereof shall be interpreted to be only so broad as is enforceable.
(f) The Employer may withhold from any amounts payable to the Employee
hereunder all federal, state, city or other taxes that the Employer may
reasonably determine are required to be withheld pursuant to any applicable law
or regulation.
(g) This Agreement shall be governed by and construed in accordance
with the laws of the State of New Jersey, without reference to its principles of
conflicts of law.
(h) This Agreement may be executed in several counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument.
(i) The headings in this Agreement are inserted for convenience of
reference only and shall not be a part of or control or affect the meaning of
any provision hereof.
(j) Other than this Section 6(j), which shall be effective upon
execution of this Agreement, the other provisions of this Agreement shall become
effective immediately following the Effective Time and shall not be in full
force or effect prior thereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
MIKASA, INC.
By:
------------------------------------------
Name:
Title:
XXXXXXX X. XXXXXXX
------------------------------------------
EXHIBIT C-3
EMPLOYMENT AGREEMENT
--------------------
AGREEMENT, dated this 10th day of September, 2000 (the "Agreement"),
between Mikasa, Inc., a Delaware corporation, and any successor thereto (the
"Employer") and Xxxxxxx X. Xxxxxxxxxx (the "Employee").
WHEREAS, the Employer, X.X. Xxxxxx Industries, S.A. ("JGD"), the
Employee, Mountain Acquisition CORP., ("Merger Sub") and certain other parties,
have entered into an Agreement and Plan of Merger, dated the date hereof (the
"Merger Agreement"), providing for the merger of Merger Sub with and into the
Employer, with the Employer as the surviving corporation (the "Merger");
WHEREAS, this Agreement is made in connection with the Merger
Agreement, pursuant to which the Employee will receive significant benefits;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Employment, Duties and Agreements.
---------------------------------
(a) Subject to the terms and conditions set forth herein, the Employer
hereby agrees to employ the Employee as Executive Vice President -- Operations
of the Employer and the Employee hereby accepts the employment of, and agrees to
serve, the Employer in such capacity during the employment period as determined
pursuant to Section 3 hereof (the "Employment Period"). The Employee's
authority, duties and responsibilities shall be such authority, duties and
responsibilities as the Employer (acting through its Board of Directors (the
"Board of Directors") or other authorized person) may reasonably determine from
time to time as are generally consistent with the above job title as they exist
as of the Closing (as such term is defined in the Merger Agreement) or as may be
otherwise agreed between the Employer and the Employee. The Employee shall
report to the Board of Directors. In rendering his employment hereunder, the
Employee shall be subject to, and shall act in accordance with, all reasonable
instructions and directions of the Employer and all applicable policies and
rules of the Employer.
(b) During the Employment Period, the Board of Directors may request
that the Employee serve as a member of the Board of Directors or as a member of
any management committee or board of directors of any subsidiary of the
Employer, and, if so requested, the Employee agrees to serve as a member of the
Board of Directors or as a member of any other such management committee or
board of directors. The Employer agrees to indemnify the Employee against all
liabilities, costs, charges and expenses whatsoever incurred by the Employee in
connection with any threatened, pending or completed action, suit or proceeding
to which the Employee may be made a party or may be threatened to be made a
party by reason of the Employee's having served on the Board of Directors or as
a member of any management committee or board of directors of any subsidiary of
the Employer to the fullest extent permitted by applicable law and by the
by-laws and certificate of incorporation of the Employer.
(c) During the Employment Period and as long as the Employer shall not
be in default of a material obligation hereunder or under the Stockholders'
Agreement between the Employee, the Employer, JGD and certain other parties
named therein, dated the date hereof (the "Stockholders' Agreement"), the
Employee shall devote his full business time and energy, attention, skills and
ability to the performance of his obligations hereunder on an exclusive basis,
shall faithfully and diligently endeavor to promote the business and best
interests of the Employer, and shall make available to the Employer all
knowledge possessed by him relating to any aspect of his duties and
responsibilities hereunder.
(d) During the Employment Period and so long as the Employer shall not
be in default of a material obligation hereunder or under the Stockholders'
Agreement, the Employee may not, except as provided in this Agreement, without
the prior written consent of the Employer operate, participate in the
management, operations or control of, or act as an employee, officer or director
of, any type of business or service (other than as an employee of the Employer);
provided that (i) the Employee may invest in any publicly traded companies where
the Employee's investment is less than 5% of the outstanding stock of such
company, (ii) the Employee may not serve on the Board of Directors of any
Competitor (as defined below) and may serve on the board of directors of any
other company with the prior written consent of the Board of Directors (which
consent shall not be unreasonably withheld) and (iii) the Employee may engage on
behalf of the Employer in industry activities relating to the business of the
Employer such as industry trade groups.
2. Compensation.
------------
(a) As compensation for the agreements made by the Employee herein and
the performance by the Employee of his obligations hereunder, during the
Employment Period, the Employer shall pay the Employee, not less than once a
month, an annual base salary at the rate of US$275,000 per annum ("Annual Base
Salary"). The Employee's Annual Base Salary shall be reviewed each year by the
Board of Directors on the first day of each January during the Employment
Period; provided that the Annual Base Salary may not be reduced.
(b) In addition to the Annual Base Salary, the Employee shall be
entitled to annual cash bonus compensation ("Annual Bonus") during the
Employment Period in the discretion of the Board of Directors; provided that the
Annual Bonus with respect to any fiscal year shall be no less than the annual
cash bonus compensation received by the Employee from the Employer with respect
to fiscal year 1999 so long as Net Income (as defined below) for such fiscal
year is at least equal to Net Income recorded in the Employer's financial
statements for fiscal year 1999, subject to reasonable adjustment as mutually
agreed by the Employer and the Employee in the event any transaction or
corporate event occurs which affects the Employer's capitalization or any other
transaction or corporate event (other than the Merger), including without
limitation any other transactions with JGD or any of its affiliates, outside of
the ordinary course of business occurs which could reasonably be expected to
have a substantial impact on the Employer's Net Income; and provided, further
that, during the Employment Period, the Employee shall not be entitled to
receive any annual cash bonus compensation pursuant to any plan, program or
arrangement of the Employer other than this Agreement and the Incentive
Compensation Plan (as defined below). Any Annual Bonus shall be paid as soon as
reasonably determinable but no later than March 15th of the fiscal year
following the fiscal year to which such Annual Bonus relates. For purposes of
this Agreement, "Net Income" means, with respect to any fiscal year of the
Employer, the net after-tax income of the Employer (excluding (i) the
amortization of any pushed-down goodwill resulting from the Merger, (ii) any
ongoing financing or interest charges (including any fees associated therewith)
incurred as a result of a change in the Employer's pre-Merger capital structure
resulting from the Merger and any one time or extraordinary charges resulting
from the Merger, (iii) any one time or extraordinary charges resulting from any
acquisition or disposition of a business, Person (as defined in the Merger
Agreement) or assets by the Employer or any of its subsidiaries or any merger,
consolidation or other business combination involving the Employer after the
Effective Time (as defined in the Merger Agreement) other than acquisition or
disposition of assets in the ordinary course of business consistent with past
practice, (iv) the impact of any change in the Employer's accounting policies or
procedures and (v) any expense related to the Incentive Compensation Plan).
(c) The Employee shall be entitled to participate in the Mikasa, Inc.
Incentive Compensation Plan, as adopted on the date hereof (the "Incentive
Compensation Plan").
(d) During the Employment Period, the Employee shall be entitled to
receive benefits and perquisites from the Employer, including without
limitation, reimbursement of customary business expenses, reasonable
reimbursement for gasoline expenses incurred for business purposes, vacation,
life, short-term disability and long-term disability insurance, medical and
dental insurance, 401(k) and pension benefits, which are no less favorable in
the aggregate than those benefits and perquisites received by the Employee prior
to the Closing (the "Benefits").
(e) The Employee's principal work location shall be at the offices of
the Employer in Secaucus, New Jersey, but the Employee will undertake such
reasonable travel as may from time to time be required in connection with the
performance of his obligations hereunder.
3. Employment Period.
-----------------
The Employment Period shall commence on the date of the Closing and
shall terminate on December 31, 2002 (the "Scheduled Termination Date");
provided, however, that the Employment Period shall terminate prior to the
Scheduled Termination Date upon the earliest to occur of the following events:
(a) The Employee's death, in which event the Employment Period shall
terminate as of the date his death occurs. In the event of the termination of
the Employment Period pursuant to this Section 3(a), the Employer shall promptly
pay to the Employee's estate a lump sum in cash equal to the sum of (i) any
earned but unpaid Annual Base Salary; (ii) any earned but unpaid Annual Bonus to
which the Employee is entitled for a fiscal year completed prior to such
termination (the amounts in clauses (i) and (ii), collectively, the "Accrued
Obligations"); and (iii) the amount equal to the product of (x) his Annual Base
Salary at the time of such termination and (y) a fraction, the numerator of
which is the number of days from the date of termination to and including the
Scheduled Termination Date and the denominator of which is 365 (the amount in
clause (iii), the "Termination Payment").
(b) The physical disability or mental incapacity of the Employee which
entitles him to benefits under a long-term disability plan of the Employer or
which would entitle the Employee to benefits if he were a participant in such
plan or which would otherwise qualify the Employee for social security
disability insurance benefits, in which event the Employment Period shall
terminate as of the first date that the Employee would be able to receive
benefits under such plan or receive such social security disability insurance
benefits. In the event of the termination of the Employment Period pursuant to
this Section 3(b), the Employer shall promptly pay to the Employee a lump sum in
cash equal to the sum of (i) the Accrued Obligations; and (ii) the Termination
Payment.
(c) Termination by the Employer of the Employment Period for Cause (as
defined below), in which event the Employment Period shall terminate as of his
last day of employment. In the event of the termination of the Employment Period
pursuant to this Section 3(c), the Employer shall promptly pay to the Employee a
lump sum in cash equal to the Accrued Obligations. For purposes of this
Agreement, "Cause" means (i) any willful violation by the Employee of this
Agreement or the Stockholders' Agreement that has a material adverse effect on
the Employer or its affiliates; (ii) any willful engaging by the Employee, in
the Employee's capacity as an employee of the Employer, in gross misconduct that
has, or is intended to have, a material adverse effect on the Employer or its
affiliates; or (iii) any conviction of the Employee of a felony or other serious
crime involving moral turpitude; provided that any act or failure to act of the
Employee shall not be considered "willful" unless done or omitted to be done by
the Employee not in good faith and without reasonable belief that the Employee's
action or omission was in the best interest of the Employer.
(d) Termination by the Employer of the Employment Period without Cause,
in which event the Employment Period shall terminate as of his last day of
employment. In the event of the termination of the Employment Period pursuant to
this Section 3(d), the Employer shall promptly pay to the Employee a lump sum in
cash equal to the sum of (i) the Accrued Obligations; and (ii) the Termination
Payment.
(e) Termination by the Employee of the Employment Period for Good
Reason (as defined below), in which event the Employment Period shall terminate
as of his last day of employment. In the event of the termination of the
Employment Period pursuant to this Section 3(e), the Employer shall promptly pay
to the Employee a lump sum in cash equal to the sum of (i) the Accrued
Obligations; and (ii) the Termination Payment. For purposes of the Incentive
Compensation Plan, the termination by the Employee of the Employment Period for
Good Reason pursuant to this Section 3(e) shall be treated under the Incentive
Compensation Plan as a termination of employment by the Employer without Cause.
For purposes of this Agreement, "Good Reason" means (w) the assignment to the
Employer of any duties or responsibilities which are materially inconsistent
with the Employer's position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated hereby, or
any other action by the Employer which results in a material diminution in such
position, authority, duties or responsibilities; (x) a significant reduction by
the Employer in the compensation (including salary and bonuses) and/or benefits
provided to the Employee hereunder; (y) any material breach or violation of any
material provision of this Agreement or the Stockholders' Agreement by the
Employer or JGD which is not cured promptly after receipt by the Employer or JGD
of written notice from the Employee setting forth the specific breach or
violation; or (z) the Employer's requiring the Employee to be based at any
office or location outside of northern New Jersey.
(f) Termination by the Employee of the Employment Period without Good
Reason, in which event the Employment Period shall terminate as of his last day
of employment. In the event of the termination of the Employment Period pursuant
to this Section 3(f), the Employer shall promptly pay to the Employee a lump sum
in cash equal to the Accrued Obligations.
(g) Following any termination of the Employment Period pursuant to
Section 3(a), 3(b), 3(d) or 3(e) of this Agreement, the Employer shall continue
to provide the Benefits to the Employee and his eligible dependents until the
Scheduled Termination Date as if his employment had not terminated; provided
that the Employee's or his eligible dependent's continued participation in the
plans, programs and arrangements pursuant to which the Benefits are provided is
possible under the general terms and provisions of such plans, programs and
arrangements. In the event that the Employee's participation in any such plan,
program or arrangement is prohibited, the Employer shall arrange to provide the
Employee and his eligible dependents with benefits substantially similar to
those which the Employee and his eligible dependents are entitled to receive
under such plans, programs or arrangements for such period.
(h) Following the termination of his employment with the Employer at
any time for any reason, the Employee and his spouse will each continue to
receive until he or she, respectively, reaches age 65 or dies at the Employer's
expense medical and dental insurance benefits substantially similar to those
benefits received during the Employment Period.
(i) The Employee shall not be obligated to seek or accept any future
employment or in any way mitigate damages as a condition to the receipt of any
payments required to be made to the Employee hereunder and the Employer shall
not be entitled to offset any amounts against any such payments.
(j) Nothing in this Agreement shall impair the rights of the Employee
to any benefits to which he may be or become entitled pursuant to the terms of
any employee benefit plan, program or arrangement of the Employer.
4. Restrictive Covenants.
---------------------
(a) During the 18-month period following the termination of his
employment with the Employer at any time for any reason (whether during or after
the Employment Period), and so long as the Employer is not in default of a
material obligation hereunder or under the Stockholders' Agreement, the Employee
agrees not to engage in any aspect of the Company Business (as hereinafter
defined) in the United States. The Employee shall be deemed to be engaging in
Company Business if he directly or indirectly, whether or not for compensation,
participates in the ownership, management, operation or control of any
Competitor (as hereinafter defined) or is employed by or performs consulting
services for any Competitor; provided, however, that if such Competitor renders
substantial services other than Company Business, the Employee shall not be
prohibited from engaging in any such activities solely in connection with such
other services; and provided, further, that the Employee may make passive
investments in publicly traded companies that engage in Company Business in the
United States where Employee's investment is less than 5% of the outstanding
stock of such company.
(b) During the 18-month period following the termination of his
employment with the Employer at any time for any reason (whether during or after
the Employment Period), and so long as the Employer is not in default of a
material obligation hereunder or under the Stockholders' Agreement, the Employee
agrees not to solicit any existing employee of the Employer or its affiliates to
be employed by a Competitor in the United States.
(c) For purposes of Section 4:
(i) The "Company Business" is the manufacture and sale of
ceramic dinnerware, crystal and glassware products.
(ii) A "Competitor" is any corporation, firm, partnership,
proprietorship or other entity which engages in any Company Business
and which is a competitor of the Employer with respect to such Company
Business.
(d) The Employee hereby agrees that:
(i) Each of the covenants contained in Sections 4(a) and 4(b)
hereof shall be construed as a separate covenant.
(ii) If, in any judicial proceeding, a court shall refuse to
enforce any of the separate covenants of Section 4(a) or 4(b) hereof,
then such unenforceable covenant shall be deemed limited under this
Agreement to the smallest extent permissible under applicable law for
the purpose of such proceeding or any other judicial proceeding to the
extent necessary to permit the provisions of Sections 4(a) and 4(b)
hereof to be enforced to the fullest extent permissible under
applicable law.
(e) The Employee agrees to deliver promptly to the Employer upon the
termination of his employment hereunder for any reason, or at any other time
that the Employer may so request, all proprietary or confidential documents (and
all copies thereof) relating to the Company Business and all other property
associated therewith, which he may then possess or have under his control.
(f) The parties hereto hereby declare that it is impossible to measure
in money the damages which will accrue to the Employer by reason of a failure by
the Employee to perform any of his obligations under this Agreement and, in
particular, under this Section 4. Accordingly, if the Employer institutes any
action or proceeding to enforce the provisions hereof, to the extent permitted
by applicable law, the Employee hereby waives the claim or defense that the
Employer has an adequate remedy at law, and the Employee shall not urge in any
such action or proceeding the claim or defense that any such remedy at law
exists.
(g) The restrictions in this Section 4 shall be in addition to any
restrictions imposed on the Employee by statute or at common law.
5. Attorneys' Fees.
---------------
If the Employee prevails in any litigation or arbitration commenced
(including any proceedings in a bankruptcy court) between the parties hereto
concerning any provision of this Agreement or the rights and duties of any party
hereunder, in addition to such other relief as may be granted, the Employer
shall reimburse the Employee for his attorneys' fees and court costs incurred by
reason of such litigation or arbitration.
6. Miscellaneous.
-------------
(a) Any notice or other communication required or permitted under this
Agreement shall be effective only if it is in writing and delivered personally
or sent by registered or certified mail, postage prepaid, addressed as follows:
If to the Employer:
Mikasa, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxxxx, XX 00000-0000
Attention: Chief Executive Officer
General Counsel
If to the Employee:
Xxxxxxx X. Xxxxxxxxxx
c/o Mikasa, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxxxx, XX 00000-0000
Copy to:
X.X. Xxxxxx Industries, S.A.
00 xxx Xxxxxx Xxxxxxx
00000 Xxxxxx, Xxxxxx
Attention: Xx. Xxxx Xxxxxxxx
or to such other address as any party hereto may designate by notice to the
others, and shall be deemed to have been given upon receipt.
(b) This Agreement constitutes the entire agreement among the parties
hereto with respect to the matters addressed herein, and supersedes and is in
full substitution for any and all prior understandings or agreements with
respect to the subject matter hereof.
(c) This Agreement may be amended only by an instrument in writing
signed by the parties hereto, and any provision hereof may be waived only by an
instrument in writing signed by the party against whom or which enforcement of
such waiver is sought. The failure of any party hereto at any time to require
the performance by any other party hereto of any provision hereof shall in no
way affect the full right to require such performance at any time thereafter,
nor shall the waiver by any party hereto of a breach of any provision hereof be
taken or held to be a waiver of any succeeding breach of such provision or a
waiver of the provision itself or a waiver of any other provision of this
Agreement.
(d) This Agreement is binding on and is for the benefit of the parties
hereto and their respective successors, heirs, executors, administrators and
other legal representatives. Neither this Agreement nor any right or obligation
hereunder may be assigned by the Employer or by the Employee.
(e) If any provision of this Agreement or portion thereof is so broad,
in scope or duration, so as to be unenforceable, such provision or portion
thereof shall be interpreted to be only so broad as is enforceable.
(f) The Employer may withhold from any amounts payable to the Employee
hereunder all federal, state, city or other taxes that the Employer may
reasonably determine are required to be withheld pursuant to any applicable law
or regulation.
(g) This Agreement shall be governed by and construed in accordance
with the laws of the State of New Jersey, without reference to its principles of
conflicts of law.
(h) This Agreement may be executed in several counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument.
(i) The headings in this Agreement are inserted for convenience of
reference only and shall not be a part of or control or affect the meaning of
any provision hereof.
(j) Other than this Section 6(j), which shall be effective upon
execution of this Agreement, the other provisions of this Agreement shall become
effective immediately following the Effective Time and shall not be in full
force or effect prior thereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
MIKASA, INC.
By:
------------------------------------------
Name:
Title:
XXXXXXX X. XXXXXXXXXX
------------------------------------------
EXHIBIT C-4
EMPLOYMENT AGREEMENT
--------------------
AGREEMENT, dated this 10th day of September, 2000 (the "Agreement"),
between Mikasa, Inc., a Delaware corporation, and any successor thereto (the
"Employer") and Xxxxxx X. Xxxxxxx (the "Employee").
1. Employment, Duties and Agreements.
---------------------------------
(a) Subject to the terms and conditions set forth herein, the Employer
hereby agrees to employ the Employee as Chairman Emeritus of the Employer and
the Employee hereby accepts the employment of, and agrees to serve, the Employer
in such capacity during the employment period as determined pursuant to Section
3 hereof (the "Employment Period"). The Employee's authority, duties and
responsibilities shall be such authority, duties and responsibilities as the
Employer (acting through its Board of Directors (the "Board of Directors") or
other authorized person) may reasonably determine from time to time as are
substantially similar to those performed by the Employee prior to the Closing
(as such term is defined in the Agreement and Plan of Merger among the Employer,
X.X. Xxxxxx Industries, S.A. ("JGD") and certain other parties, dated as of the
date hereof (the "Merger Agreement")). The Employee shall report to the Board of
Directors. In rendering his employment hereunder, the Employee shall be subject
to, and shall act in accordance with, all reasonable instructions and directions
of the Employer and all applicable policies and rules of the Employer.
(b) During the Employment Period, the Board of Directors may request
that the Employee serve as a member of the Board of Directors or as a member of
any management committee or board of directors of any subsidiary of the
Employer, and, if so requested, the Employee agrees to serve as a member of the
Board of Directors or as a member of any other such management committee or
board of directors. The Employer agrees to indemnify the Employee against all
liabilities, costs, charges and expenses whatsoever incurred by the Employee in
connection with any threatened, pending or completed action, suit or proceeding
to which the Employee may be made a party or may be threatened to be made a
party by reason of the Employee's having served, at the request of the Employer,
on the Board of Directors or as a member of any management committee or board of
directors of any subsidiary of the Employer to the fullest extent permitted by
applicable law and by the by-laws and certificate of incorporation of the
Employer.
(c) During the Employment Period and as long as the Employer shall not
be in default of a material obligation hereunder or under the Stockholders'
Agreement between the Employee, the Employer, JGD and certain other parties
named therein, dated the date hereof, the Employee shall devote all necessary
business time and energy, attention, skills and ability to the performance of
his obligations hereunder, shall faithfully and diligently endeavor to promote
the business and best interests of the Employer, and shall make available to the
Employer all knowledge possessed by him relating to any aspect of his duties and
responsibilities hereunder.
2. Compensation.
------------
(a) As compensation for the agreements made by the Employee herein and
the performance by the Employee of his obligations hereunder, during the
Employment Period, the Employer shall pay the Employee, not less than once a
month, an annual base salary at the rate of US$15,000 per annum ("Annual Base
Salary"). The Employee's Annual Base Salary shall be reviewed each year by the
Board of Directors on the first day of each January during the Employment
Period; provided that the Annual Base Salary may not be reduced.
(b) During the Employment Period, the Employee and his eligible
dependents (to the extent such eligible dependents received such benefits and
perquisites prior to the Closing) shall be entitled to receive benefits and
perquisites from the Employer, including without limitation, reimbursement of
customary business expenses, gas cards (for the Employee and his spouse),
vacation, life, short-term disability and long-term disability insurance,
medical and dental insurance, 401(k) and pension benefits, which are no less
favorable in the aggregate than those benefits and perquisites received by the
Employee and his eligible dependents prior to the Closing.
(c) During the Employment Period, the Employer shall provide the
Employee with an office and administrative support substantially similar to
those provided to the Employee prior to the Closing.
3. Employment Period.
-----------------
The Employment Period shall commence on the date of the Closing and
shall terminate on December 31, 2002.
4. Attorneys' Fees.
---------------
If the Employee prevails in any litigation or arbitration commenced
(including any proceedings in a bankruptcy court) between the parties hereto
concerning any provision of this Agreement or the rights and duties of any party
hereunder, in addition to such other relief as may be granted, the Employer
shall reimburse the Employee for his attorneys' fees and court costs incurred by
reason of such litigation or arbitration.
5. Miscellaneous.
-------------
(a) Any notice or other communication required or permitted under this
Agreement shall be effective only if it is in writing and delivered personally
or sent by registered or certified mail, postage prepaid, addressed as follows:
If to the Employer:
Mikasa, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxxxx, XX 00000-0000
Attention: Chief Executive Officer
General Counsel
If to the Employee:
Xxxxxx X. Xxxxxxx
c/o Mikasa, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxxxx 00000-0000
Copy to:
X.X. Xxxxxx Industries, S.A.
00 xxx Xxxxxx Xxxxxxx
00000 Xxxxxx, Xxxxxx
Attention: Xx. Xxxx Xxxxxxxx
or to such other address as any party hereto may designate by notice to the
others, and shall be deemed to have been given upon receipt.
(b) This Agreement constitutes the entire agreement among the parties
hereto with respect to the matters addressed herein, and supersedes and is in
full substitution for any and all prior understandings or agreements with
respect to the subject matter hereof.
(c) This Agreement may be amended only by an instrument in writing
signed by the parties hereto, and any provision hereof may be waived only by an
instrument in writing signed by the party against whom or which enforcement of
such waiver is sought. The failure of any party hereto at any time to require
the performance by any other party hereto of any provision hereof shall in no
way affect the full right to require such performance at any time thereafter,
nor shall the waiver by any party hereto of a breach of any provision hereof be
taken or held to be a waiver of any succeeding breach of such provision or a
waiver of the provision itself or a waiver of any other provision of this
Agreement.
(d) This Agreement is binding on and is for the benefit of the parties
hereto and their respective successors, heirs, executors, administrators and
other legal representatives. Neither this Agreement nor any right or obligation
hereunder may be assigned by the Employer or by the Employee.
(e) If any provision of this Agreement or portion thereof is so broad,
in scope or duration, so as to be unenforceable, such provision or portion
thereof shall be interpreted to be only so broad as is enforceable.
(f) The Employer may withhold from any amounts payable to the Employee
hereunder all federal, state, city or other taxes that the Employer may
reasonably determine are required to be withheld pursuant to any applicable law
or regulation.
(g) This Agreement shall be governed by and construed in accordance
with the laws of the State of New Jersey, without reference to its principles of
conflicts of law.
(h) This Agreement may be executed in several counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument.
(i) The headings in this Agreement are inserted for convenience of
reference only and shall not be a part of or control or affect the meaning of
any provision hereof.
(j) Other than this Section 5(j), which shall be effective upon
execution of this Agreement, the other provisions of this Agreement shall become
effective immediately following the Effective Time and shall not be in full
force or effect prior thereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
MIKASA, INC.
By:
---------------------------------------
Name:
Title:
XXXXXX X. XXXXXXX
------------------------------------------
EXHIBIT D
STOCKHOLDERS' AGREEMENT (this "Agreement"), dated September 10, 2000,
between Mikasa, Inc. (the "Company"), X.X. Xxxxxx Industries, S.A. (the
"Majority Stockholder") and the persons and trusts listed on Annex A hereto.
Each such person listed on Annex A hereto (together with the trust listed on
Annex A hereto with respect to such person) is sometimes referred to herein as a
"Management Stockholder" and together, the "Management Stockholders."
WHEREAS, the Company, the Majority Stockholder, the Management
Stockholders and Mountain Acquisition Corp., a Delaware corporation
("MergerCo"), have entered into an Agreement and Plan of Merger, dated the date
hereof (the "Merger Agreement"), providing for the merger of MergerCo with and
into the Company, with the Company as the surviving corporation (the "Merger");
WHEREAS, immediately following the consummation of the transactions
contemplated by the Merger Agreement, the Majority Stockholder and the
Management Stockholders will together own all of the shares of the outstanding
common stock, par value of $0.01 per share (the "Common Stock"), of the Company
(as the surviving corporation in the Merger); and
WHEREAS, the Company, the Majority Stockholder and each of the
Management Stockholders desire, for their mutual benefit and protection, to
enter into this Agreement to set forth their respective rights and obligations
with respect to the shares of Common Stock, whether issued or acquired in
connection with the Merger or issued or acquired thereafter, and any securities
that may be issued or distributed or be issuable in respect of any such shares
of Common Stock by way of stock dividend, stock split or other distribution,
merger, consolidation, exchange offer, recapitalization or reclassification or
similar transaction (the "Shares");
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following capitalized terms
shall have the meanings set forth below.
"Accounting Firm" has the meaning set forth in Section 3.14(i).
"Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with such Person.
For purposes of this Agreement, the term "control," (including, with correlative
meanings, the terms "controlling," "controlled by," and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of voting securities
or by contract or otherwise.
"Agreement" has the meaning set forth in the recitals hereto.
"Annual Dividend" has the meaning set forth in Section 3.14(iii).
"Beneficial Owner" has the meaning set forth in Rule 13d-3 promulgated
under the Exchange Act as in effect on the date hereof. The terms "Beneficial
Ownership" and "Beneficially Own" shall have correlative meanings.
"Board" has the meaning set forth in Section 8.1.
"Business Day" means any day that is not a Saturday, Sunday or legal
holiday in the City of New York.
"Call" has the meaning set forth in Section 3.1.
"Cause" means, with respect to the termination of employment of a Senior
Manager by the Company, (i) any willful violation by the Senior Manager of this
Agreement or his Employment Agreement, if any, that has a material adverse
effect on the Company or its Affiliates; (ii) any willful engaging by the Senior
Manager, in the Senior Manager's capacity as an employee of the Company, in
gross misconduct that has, or is intended to have, a material adverse effect on
the Company or its Affiliates; or (iii) any conviction of the Senior Manager of
a felony or other serious crime involving moral turpitude; provided, that any
act or failure to act of the Senior Manager shall not be considered "willful"
unless done or omitted to be done by the Senior Manager not in good faith and
without reasonable belief that the Senior Manager's action or omission was in
the best interest of the Company.
"Change in Management Date" means, with respect to a Put or Call exercised
pursuant to Section 3.7 or Section 3.8, any date prior to the end of Fiscal Year
2003 on which the employment of the second of two Senior Managers with the
Company is terminated for any reason.
"Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Common Stock" has the meaning set forth in the recitals hereto.
"Company" has the meaning set forth in the recitals hereto.
"Control Transaction" means a transaction resulting in: (i) the JGD Group
ceasing to Beneficially Own at least 50% of the Voting Power of the Voting
Securities of the Majority Stockholder or the Company then outstanding; (ii) the
Majority Stockholder ceasing to Beneficially Own 50% of the Voting Power of the
Voting Securities of the Company; (iii) the merger, consolidation or other
business combination of the Majority Stockholder or the Company with any other
Person other than, in the case of the Majority Stockholder, any member of the
JGD Group; (iv) the Majority Stockholder or the Company selling, leasing or
otherwise transferring 50% or more of its assets to any Person(s); or (v) the
liquidation, dissolution or winding-up of the Majority Stockholder or the
Company.
"Control Transaction Date" means, with respect to any Put exercised
pursuant to Section 3.12, any date prior to the end of Fiscal Year 2003 on which
a definitive agreement with respect to a Control Transaction is executed or
announced.
"Cumulative Net Income Per Share" means, with respect to any Fiscal Year,
the net after-tax income of the Company (excluding (i) the amortization of any
pushed-down goodwill resulting from the Merger, (ii) any ongoing financing or
interest charges (including any fees associated therewith) incurred as a result
of a change in the Company's pre-Merger capital structure resulting from the
Merger and any one time or extraordinary charges resulting from the Merger,
(iii) any one time or extraordinary charges resulting from any acquisition or
disposition of a business, Person or assets by the Company or any of its
subsidiaries or any merger, consolidation or other business combination
involving the Company after the Effective Time other than acquisition or
disposition of assets in the ordinary course of business consistent with past
practice, (iv) the impact of any change in the Company's accounting policies or
procedures and (v) any expense related to the Incentive Compensation Plan)
calculated on a cumulative basis with respect to such Fiscal Year and all the
Fiscal Years completed prior to such Fiscal Year, if any, beginning with Fiscal
Year 2001, divided by the number of Shares of Common Stock issued and
outstanding immediately following the Effective Time.
"Delivery Date" has the meaning set forth in Section 4.2.
"Disability" means the physical disability or mental incapacity of a Senior
Manager which entitles such Senior Manager to benefits under a long term
disability plan of the Company or which would entitle such Senior Manager to
benefits if he were a participant in such plan or which would otherwise qualify
such Senior Manager for social security disability insurance benefits.
"Dividend Gross Up" has the meaning set forth in Section 3.14(iii).
"Drag-Along Notice" has the meaning set forth in Section 4.1.
"Drag-Along Sale" has the meaning set forth in Section 4.1.
"Effective Time" has the meaning set forth in the Merger Agreement.
"Elected Shares" has the meaning set forth in Section 5.2.
"Employment Agreement" means, with respect to a Senior Manager, the
Employment Agreement, if any, between him and the Company, dated the date
hereof, and/or any subsequent employment agreement mutually agreed upon between
such Senior Manager and the Company.
"Equity Securities" of any Person, means any and all common stock,
preferred stock and any other class of capital stock of, and any partnership or
limited liability company interests in, such Person or any other similar
interests of any Person that is not a corporation, partnership or limited
liability company.
"Excess Pro Rata Portion" has the meaning set forth in Section 5.2.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Family Member" has the meaning set forth in Section 2.4.
"First Six Months Fiscal Year" has the meaning set forth in Section 3.9.
"Fiscal Year" means a fiscal year of the Company.
"General Put-Call Price" has the meaning set forth in Section 3.9.
"Good Reason" means (i) the assignment to the Senior Manager of any duties
or responsibilities which are materially inconsistent with the Senior Manager's
position (including status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by such Senior Manager's
Employment Agreement, if any, or as in effect at the time of expiration of such
Employment Agreement, if any, or any other action by the Company which results
in a material diminution in such position, authority, duties or
responsibilities; (ii) a significant reduction by the Company in the
compensation (including salary and bonuses) and/or benefits provided to the
Senior Manager under his Employment Agreement, if any, or as in effect at the
time of expiration of such Employment Agreement, if any; (iii) any material
breach or violation of any material provision of this Agreement or the Senior
Manager's Employment Agreement, if any, by the Company or the Majority
Stockholder which is not cured promptly after receipt by the Company or the
Majority Stockholder of written notice from the Senior Manager setting forth the
specific breach or violation; or (iv) the Company's requiring the Senior Manager
to be based at any office or location outside of northern New Jersey.
"Incentive Compensation Plan" means the Mikasa, Inc. Incentive Compensation
Plan, adopted as of the date hereof.
"Indemnified Party" shall have the meaning set forth in Section 6.7(ii).
"Indemnifying Party" shall have the meaning set forth in Section 6.7(ii).
"JGD Group" means X.X. Xxxxxx Industries, S.A., and its Affiliates.
"Losses" means claims, damages, liabilities, costs (including, without
limitation, costs of preparation, investigation and reasonable attorneys' fees
and disbursements in connection with any action) and expenses.
"Majority Stockholder" has the meaning set forth in the recitals hereto.
"Management Stockholder" has the meaning set forth in the recitals hereto.
"Merger" has the meaning set forth in the recitals hereto.
"MergerCo" has the meaning set forth in the recitals hereto.
"Merger Agreement" has the meaning set forth in the recitals hereto.
"Merger Consideration" has the meaning set forth in the Merger Agreement.
"Minimum Guaranteed Amount" means, with respect to a Share, the sum of (i)
(a) the Merger Consideration (as equitably adjusted to reflect changes in the
number of Shares resulting from transactions agreed to by the parties that take
place as of, or immediately prior to, the Effective Time) minus (b) the
aggregate amount of any dividends in respect of such Share the record date for
which is following the Effective Time and prior to the payment of the price for
the applicable Put or Call and (ii) the Dividend Gross Up, if any, in respect of
such Share.
"Nominee" has the meaning set forth in Section 8.2.
"Non-Elected Shares" has the meaning set forth in Section 5.2.
"Notice" has the meaning set forth in Section 3.14.
"Opinion" has the meaning set forth in Section 4.1.
"Other Holders" has the meaning set forth in Section 6.l(ii).
"Other Manager" means Xxxxxx X. Xxxxxxx.
"Period One" has the meaning set forth in Section 3.12.
"Period One Control Transaction Price" has the meaning set forth in Section
3.12.
"Period Two" has the meaning set forth in Section 3.12.
"Permitted Transferee" has the meaning set forth in Section 2.4.
"Person" means an individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or other agency or political subdivision thereof.
"Piggyback Registration" means a registration by the Company of Registrable
Shares under the Securities Act pursuant to Section 6.1.
"Pro Rata Portion" has the meaning set forth in Section 5.2.
"Public Offering Event" has the meaning set forth in Section 9.1.
"Put" has the meaning set forth in Section 3.1.
"Registrable Shares" means any Shares; provided, however, that any such
securities shall cease to be Registrable Shares to the extent (i) a registration
statement with respect to the offer and sale of such securities has been
declared effective under the Securities Act and such securities have been
disposed of in accordance with the plan of distribution set forth in such
registration statement, (ii) such securities have been distributed pursuant to
Rule 144 (or any similar provision then in force) under the Securities Act,
(iii) such securities shall have been otherwise transferred and new certificates
for them not bearing a legend restricting transfer under the Securities Act
shall have been delivered by the Company and they may be publicly resold without
registration or qualification of them under the Securities Act or any state
securities or blue sky law then in force, or (iv) such securities may be sold by
a Management Stockholder pursuant to Rule 144 under the Securities Act (or any
similar provision then in force) within any three-month period.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Second Six Months Fiscal Year" has the meaning set forth in Section 3.9.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Selling Holder" means, with respect to a registration statement under the
Securities Act in connection with a Piggyback Registration, a holder of Shares
whose Registrable Shares are included therein.
"Senior Manager" means Xxxxxx X. Xxxxx, Xxxxxxx X. Xxxxxxx or Xxxxxxx X.
Xxxxxxxxxx, as the case may be.
"Shares" has the meaning set forth in the recitals hereto.
"Tag-Along Allotment" has the meaning set forth in Section 5.2.
"Tag-Along Notice Date" has the meaning set forth in Section 5.3.
"Tag-Along Sale" has the meaning set forth in Section 5.1.
"Tag-Along Sale Date" has the meaning set forth in Section 5.3.
"Tag-Along Sale Notice" has the meaning set forth in Section 5.3.
"Target Cumulative Net Income Per Share" means, at the end of (i) Fiscal
Year 2001, US$26,000,000, (ii) Fiscal Year 2002, US$52,000,000 and (iii) Fiscal
Year 2003, US$78,000,000, in each case divided by the number of Shares issued
and outstanding immediately following the Effective Time; provided, that in each
case, such figures are subject to reasonable adjustment as mutually agreed by
the Majority Stockholder, the Company and the Management Stockholders if
necessary to preserve the economic benefits to the parties contemplated by this
Agreement in the event (a) any transaction or corporate event occurs which
affects the Company's capitalization or (b) any other transaction or corporate
event (other than the Merger), including without limitation any other
transactions with the Majority Stockholder or any of its Affiliates, outside of
the ordinary course of business occurs which could reasonably be expected to
have a substantial impact on the Company's Cumulative Net Income Per Share.
"Taxes" has the meaning set forth in Section 3.14(iii).
"Terminating Nominee" has the meaning set forth in Section 8.4.
"Termination Date" means the date upon which a Senior Manager's employment
with the Company is terminated for any reason.
"Transfer" means, with respect to any property, to directly or indirectly
sell, hypothecate, give, bequeath, transfer, assign, pledge or in any other way
whatsoever encumber or dispose of such property, whether for or without
consideration, and whether voluntarily or involuntarily or by operation of law.
"Transferee" has the meaning set forth in Section 2.1.
"2003 Put-Call Price" means, with respect to any Share, the sum of (i) the
Minimum Guaranteed Amount plus (ii) the product of 8.7 multiplied by a fraction
the numerator of which is (a) and the denominator of which is (b), where (a)
equals the excess, if any, of (A) Cumulative Net Income Per Share for Fiscal
Year 2003 over (B) Target Cumulative Net Income Per Share for Fiscal Year 2003
and (b) equals 3.
"Voting Power" means, with respect to any Voting Securities, the aggregate
number of votes attributable to such Voting Securities that could generally be
cast by the holders thereof for the election of directors or similar managing
persons at the time of determination (assuming such election were then being
held).
"Voting Securities" means, (i) with respect to the Company, the Equity
Securities of the Company entitled to vote generally for the election of
directors of the Company, (ii) with respect to the Majority Stockholder, the
Equity Securities of the Majority Stockholder entitled to vote generally for the
election of directors of the Majority Stockholder, and (iii) with respect to any
other Person, any securities of or interests in such Person entitled to vote
generally for the election of directors or any similar managing person of such
Person.
1.2 Construction and Interpretation.
(a) The words "hereof," "herein" and "hereunder" and words of similar
import, when used in this Agreement, shall refer to this Agreement as a whole
and not any particular provision of this Agreement.
(b) Where the context so indicates or requires, the masculine, feminine or
neuter gender, and the singular or plural number, shall be deemed to be or
include the other genders or number, as the case may be.
(c) Except as otherwise indicated, references herein to any "Article,"
"Section," "Annex" or "Schedule" mean an Article or Section of, or an Annex or
Schedule to, this Agreement, as the case may be. Except as otherwise indicated,
references herein to a "party" or the "parties" refers to a party or the
parties, as the case may be, to this Agreement.
(d) Unless otherwise expressly provided herein, in the computation of a
period of time from a specified date to a later specified date, the word "from"
means "from and including", the words "to" and "until" each mean "to but
excluding," and the word "within" means "from and excluding a specified date and
to and including a later specified date."
(e) All Annexes and Schedules attached to this Agreement or expressly
identified herein are incorporated herein by reference and made a part hereof.
ARTICLE II
STOCK TRANSFERS
2.1 General Restrictions on Transfer. The Management Stockholders agree
that they will not Transfer any Shares Beneficially Owned by them (or any
interest therein) to another Person (any such Person, a "Transferee"), other
than in accordance with all applicable provisions of this Agreement. The Company
shall not transfer on its books any Shares to any Person if the relevant
Transfer is not made in accordance with all applicable provisions of this
Agreement, and any purported Transfer in violation hereof shall be null and void
ab initio and of no effect.
2.2 Agreement to Be Bound. No Transfer of Shares by a Management
Stockholder to a Permitted Transferee shall be effective (and the Company shall
not transfer on its books any Shares) unless the certificates representing such
Shares issued to the Permitted Transferee shall bear the legend provided in
Section 2.3, if such a legend is required by Section 2.3. By accepting any
Transfer of Shares, any Permitted Transferee shall be deemed to have agreed to
be bound by the terms of this Agreement and to have accepted the rights and
obligations set forth hereunder as if it were the transferor of the relevant
Shares, and upon the request of the Company such Permitted Transferee shall
execute and deliver to the Company an instrument or instruments in form and
substance reasonably satisfactory to the Company and the Majority Stockholder
confirming that the Permitted Transferee agrees to be bound by the terms of this
Agreement and accepts the rights and obligations set forth hereunder as if it
were the transferor of the relevant Shares.
2.3 Legend. In addition to any other legend which may be required by
applicable law, each share certificate representing Shares which are
Beneficially Owned by the Management Stockholders shall have endorsed on its
face the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR THE SECURITIES LAWS OF ANY JURISDICTION. SUCH
SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
ASSIGNED, ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO (I) A REGISTRATION STATEMENT WITH RESPECT
TO SUCH SECURITIES THAT IS EFFECTIVE UNDER SUCH ACT, OR (II)
ANY EXEMPTION FROM REGISTRATION UNDER SUCH ACT.
IN ADDITION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE
MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED
OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER COMPLIES WITH
THE PROVISIONS OF A STOCKHOLDERS' AGREEMENT, DATED SEPTEMBER
10, 2000 (THE "STOCKHOLDERS' AGREEMENT"), A COPY OF WHICH IS
ON FILE AND MAY BE INSPECTED AT THE PRINCIPAL OFFICE OF THE
COMPANY. NO TRANSFER OF THE SECURITIES WILL BE MADE ON THE
BOOKS OF THE COMPANY UNLESS SUCH TRANSFER IS MADE IN
COMPLIANCE WITH THE TERMS OF SUCH STOCKHOLDERS' AGREEMENT. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO
OTHER RIGHTS AND OBLIGATIONS SET FORTH IN SUCH STOCKHOLDERS'
AGREEMENT.
To the extent the Company shall be satisfied, in its reasonable discretion, that
the circumstances or provisions requiring any of the above legends have ceased
to be effective, the Company will upon request reissue certificates without the
applicable legend or legends.
2.4 Permitted Transfers. Each Management Stockholder may only Transfer
Shares (i) on such Management Stockholder's death by bequest or inheritance to
such Management Stockholder's executors, administrators, testamentary trustees,
heirs, legatees or beneficiaries, (ii) to such Management Stockholder's spouse
or such Management Stockholder's lineal descendants (by blood or adoption)
(hereinafter, a "Family Member"), (iii) to a trust or custodianship the
beneficiaries of which may include only such Management Stockholder or Family
Members, (iv) to a trust or foundation which is tax-exempt pursuant to Section
501(c)(3) of the Internal Revenue Code of 1986, as amended, and which is
organized and operated exclusively for charitable purposes (each Person
designated in clauses (i) through (iv), a "Permitted Transferee"), (v) to the
Majority Stockholder and any of its Affiliates or (vi) as required by applicable
law. Each Management Stockholder may also Transfer Shares in accordance with
Article III, Article IV and Article V hereof.
ARTICLE III
PUT-CALL RIGHTS
3.1 Put-Call Terms. The Majority Stockholder shall have the right (but not
the obligation) to purchase the Shares Beneficially Owned by the Management
Stockholders (a "Call"), and the Management Stockholders shall have the right
(but not the obligation) to cause the Majority Stockholder to purchase such
Shares (a "Put"), at the times, upon the terms and subject to the conditions set
forth in this Article III.
3.2 2003 Put-Call. Notwithstanding any other provision of this Article III,
following the end of Fiscal Year 2003, the Majority Stockholder shall have the
right to Call all (but not less than all) of the Shares Beneficially Owned by
any one or more Management Stockholders and each Management Stockholder shall
have the right to Put all (but not less than all) of the Shares Beneficially
Owned by such Management Stockholder; provided, that the Notice in respect of
each such Call and Put must be given to the Majority Stockholder or Management
Stockholder, as applicable, during the sixty-day period following the completion
of the audit of the Company's financial statements for Fiscal Year 2003; and
provided, further, that each such Call and Put shall be exercised for a price
per Share equal to the 2003 Put-Call Price.
3.3 Death or Disability Termination. If, prior to the end of Fiscal Year
2003, a Senior Manager's employment with the Company shall be terminated as a
result of his death or Disability, (i) the Majority Stockholder shall have the
right to Call all (but not less than all) of the Shares Beneficially Owned by
such Senior Manager and (ii) such Senior Manager shall have the right to Put all
(but not less than all) of the Shares Beneficially Owned by such Senior Manager;
provided, that the Notice in respect of each such Call and Put must be given to
the Majority Stockholder or Senior Manager, as applicable, during the 180-day
period following the Termination Date; and provided, further, that each such
Call and Put shall be exercised for a price per Share equal to the General
Put-Call Price.
3.4 Without Cause Termination. If, prior to the end of Fiscal Year 2003, a
Senior Manager's employment with the Company shall be terminated by the Company
without Cause:
(i) such Senior Manager shall have the right to Put all (but not less than
all) of the Shares Beneficially Owned by such Senior Manager; provided, that the
Notice in respect of such Put must be given to the Majority Stockholder during
the sixty-day period following the Termination Date; and provided, further, that
the Put shall be exercised for a price per Share equal to the General Put-Call
Price; and
(ii) the Majority Stockholder shall have the right to Call all (but not
less than all) of the Shares Beneficially Owned by such Senior Manager;
provided, that the Call shall be exercised for a price per Share equal to the
General Put-Call Price; and provided, further, that the Notice in respect of
such Call must be given to such Senior Manager:
(a) during the sixty-day period following the completion of the audit of
the Company's financial statements for Fiscal Year 2001, if the Termination Date
occurs during Fiscal Year 2001; provided, however, that the Majority Stockholder
shall have no such right to Call such Shares if Cumulative Net Income Per Share
for Fiscal Year 2001 is at least 70% of Target Cumulative Net Income Per Share
for Fiscal Year 2001;
(b) during the sixty-day period following the Termination Date, if the
Termination Date occurs during the first six months of Fiscal Year 2002;
provided, however that the Majority Stockholder shall have no such right to Call
such Shares if Cumulative Net Income Per Share for Fiscal Year 2001 is at least
70% of Target Cumulative Net Income Per Share for Fiscal Year 2001;
(c) during the sixty-day period following the completion of the audit of
the Company's financial statements for Fiscal Year 2002, if the Termination Date
occurs during the second six months of Fiscal Year 2002; provided, however that
the Majority Stockholder shall have no such right to Call such Shares if
Cumulative Net Income Per Share for Fiscal Year 2002 is at least 75% of Target
Cumulative Net Income Per Share for Fiscal Year 2002;
(d) during the sixty-day period following the Termination Date, if the
Termination Date occurs during the first six months of Fiscal Year 2003;
provided, however, that the Majority Stockholder shall have no such right to
Call such Shares if Cumulative Net Income Per Share for Fiscal Year 2002 is at
least 75% of Target Cumulative Net Income Per Share for Fiscal Year 2002; and
(e) during the sixty-day period following the completion of the audit of
the Company's financial statements for Fiscal Year 2003, if the Termination Date
occurs during the second six months of Fiscal Year 2003; provided, however, that
the Majority Stockholder shall have no such right to Call such Shares if
Cumulative Net Income Per Share for Fiscal Year 2003 is at least 85% of Target
Cumulative Net Income Per Share for Fiscal Year 2003.
3.5 Good Reason Termination. If, prior to the end of Fiscal Year 2003, a
Senior Manager terminates his employment with the Company for Good Reason, such
Senior Manager shall have the right to Put all (but not less than all) of the
Shares Beneficially Owned by such Senior Manager; provided, that the Notice in
respect of such Put is given to the Majority Stockholder during the sixty-day
period following the Termination Date; and provided, further, that such Put
shall be exercised for a price per Share equal to the General Put-Call Price.
3.6 Without Good Reason Termination. If, prior to the end of Fiscal Year
2003, a Senior Manager terminates his employment with the Company without Good
Reason, the Majority Stockholder shall have the right to Call all (but not less
than all) of the Shares Beneficially Owned by such Senior Manager; provided,
that the Notice in respect of such Call must be given to the Senior Manager
during the sixty-day period following the Termination Date; and provided,
further, that such Call shall be exercised for a price per Share equal to the
General Put-Call Price.
3.7 Change in Senior Management Termination. If, prior to the end of Fiscal
Year 2003, any two Senior Managers cease to be employed by the Company for any
reason other than as a result of the termination of each such Senior Manager's
employment by the Company for Cause, each Other Manager shall have the right to
Put all (but not less than all) of the Shares Beneficially Owned by such Other
Manager; provided, that the Notice in respect of such Put must be given to the
Majority Stockholder during the sixty-day period following the Change in
Management Date; and provided, further, that such Put shall be exercised for a
price per Share equal to the General Put-Call Price.
3.8 Change in Senior Management For Cause. If, prior to the end of Fiscal
Year 2003, any two Senior Managers cease to be employed by the Company as a
result of the termination of each such Senior Manager's employment by the
Company for Cause, (i) the Majority Stockholder shall have the right to Call all
(but not less than all) of the Shares Beneficially Owned by each Other Manager
and (ii) each Other Manager shall have the right to Put all (but not less than
all) of the Shares Beneficially Owned by such Other Manager; provided, that the
Notice in respect of each such Call and Put must be given to the Majority
Stockholder or Other Manager, as applicable, during the sixty-day period
following the Change in Management Date; and provided, further, that each such
Call and Put shall be exercised for a price per Share equal to the General
Put-Call Price.
3.9 Calculation of the General Put-Call Price. The General Put-Call Price
of a Share in respect of a Put or Call exercised pursuant to Section 3.3,
Section 3.4, Section 3.5, Section 3.6, Section 3.7 or Section 3.8 with respect
to a Termination Date or Change in Management Date, as applicable, occurring
within the first six months of any Fiscal Year shall equal the sum of (i) the
Minimum Guaranteed Amount plus (ii) the product of 8.7 multiplied by a fraction,
the numerator of which is (a) and the denominator of which is (b), where (a)
equals the excess, if any, of (A) Cumulative Net Income Per Share for the last
completed Fiscal Year which began after Fiscal Year 2000 and ended prior to the
Termination Date or Change in Management Date, as applicable (the "First Six
Months Fiscal Year"), over (B) Target Cumulative Net Income Per Share for the
First Six Months Fiscal Year and (b) equals the number of completed Fiscal Years
taken into account in the calculation of Cumulative Net Income Per Share
pursuant to (A) above.
The General Put-Call Price of a Share in respect of a Put or Call exercised
pursuant to Section 3.3, Section 3.4, Section 3.5, Section 3.6, Section 3.7 or
Section 3.8 with respect to a Termination Date or Change in Management Date, as
applicable, occurring within the second six months of any Fiscal Year following
Fiscal Year 2000 shall equal the sum of (i) the Minimum Guaranteed Amount plus
(ii) the product of 8.7 multiplied by a fraction, the numerator of which is (a)
and the denominator of which is (b), where (a) equals the excess, if any, of (A)
Cumulative Net Income Per Share for the Fiscal Year in which the Termination
Date or Change in Management Date, as applicable, occurs (the "Second Six Months
Fiscal Year") over (B) Target Cumulative Net Income Per Share for the Second Six
Months Fiscal Year and (b) equals the number of completed Fiscal Years taken
into account in the calculation of Cumulative Net Income Per Share pursuant to
(A) above.
3.10 For Cause Termination. If, prior to the end of Fiscal Year 2003, a
Senior Manager's employment with the Company shall be terminated by the Company
for Cause, the Majority Stockholder shall have the right to Call all (but not
less than all) of the Shares Beneficially Owned by such Senior Manager;
provided, that the Notice in respect of such Call must be given to the Senior
Manager during the sixty-day period following the Termination Date; and
provided, further, that such Call shall be exercised for a price per Share equal
to the Minimum Guaranteed Amount.
3.11 Failure to Renew Employment Agreement. If a Senior Manager and the
Company fail to execute an agreement with respect to the employment by the
Company of such Senior Manager after December 31, 2002, such Senior Manager
shall have the right to Put all (but not less than all) of the Shares
Beneficially Owned by such Senior Manager; provided, that the Notice in respect
of such Put must be given to the Majority Stockholder during the sixty-day
period following the completion of the audit of the Company's financial
statements for Fiscal Year 2002; and provided, further, that such Put shall be
exercised for a price per Share equal to the sum of (i) the Minimum Guaranteed
Amount plus (ii) the product of 8.7 multiplied by a fraction, the numerator of
which is (a) and the denominator of which is (b), where (a) equals the excess,
if any, of (A) Cumulative Net Income Per Share for Fiscal Year 2002 over (B)
Target Cumulative Net Income Per Share for Fiscal Year 2002 and (b) equals 2.
3.12 Control Transaction. Subject to the provisions of Articles IV and V,
if, prior to the end of Fiscal Year 2003, a definitive agreement with respect to
a Control Transaction is executed or announced, each Management Stockholder
shall have the right to Put all (but not less than all) of the Shares
Beneficially Owned by such Management Stockholder; provided, that the Notice in
respect of such Put must be given to the Majority Stockholder either (x) during
the sixty-day period following the Control Transaction Date ("Period One") or
(y) during the sixty-day period following the completion of the Company's audit
for the Fiscal Year in which the Control Transaction Date occurs ("Period Two");
provided, however, that if the Notice is given to the Majority Stockholder on a
day that is within both Period One and Period Two, the Management Stockholder
shall determine the period in which the Notice was given; and provided, further,
that such Put shall be exercised for a price per Share equal to the Minimum
Guaranteed Amount plus:
(i) in the event Notice of such Put is given during Period One, the product
of 8.7 multiplied by a fraction, the numerator of which is (a) and the
denominator of which is (b), where (a) equals the excess, if any, of (A)
Cumulative Net Income Per Share for the last completed Fiscal Year which began
after Fiscal Year 2000 and ended prior to the Control Transaction Date over (B)
Target Cumulative Net Income Per Share for such Fiscal Year and (b) equals the
number of completed Fiscal Years taken into account in the calculation of
Cumulative Net Income Per Share pursuant to (A) above (the "Period One Control
Transaction Price"), or
(ii) in the event Notice of such Put is given during Period Two, the
product of 8.7 multiplied by a fraction, the numerator of which is (a) and the
denominator of which is (b), where (a) equals the excess, if any, of (A)
Cumulative Net Income Per Share for the Fiscal Year in which the Control
Transaction occurs over (B) Target Cumulative Net Income Per Share for such
Fiscal Year and (b) equals the number of completed Fiscal Years taken into
account in the calculation of Cumulative Net Income Per Share pursuant to (A)
above.
3.13 Purchase Right. Unless otherwise agreed in writing by the applicable
Management Stockholder, in the event that any Management Stockholder continues
to Beneficially Own Shares on the sixty-first day following the completion of
the audit of the Company's financial statements for Fiscal Year 2003 and no
Notice has been given pursuant to this Article III or Section 4.5 during the
immediately preceding sixty-day period with respect to such Management
Stockholder's Shares, all of such Management Stockholder's Shares shall be
automatically purchased by the Majority Stockholder within five Business Days
thereafter for a price per Share equal to the 2003 Put-Call Price and the
aggregate purchase price for such Management Stockholder's Shares shall be paid
to such Management Stockholder in a lump sum cash payment on such date of
purchase.
3.14 General. The parties agree that the following terms shall be
applicable to the exercise of a Put or Call pursuant to Section 3.2 through
Section 3.12 and Section 4.5 hereof and any purchase of Shares pursuant to
Section 3.13 hereof:
(i) The audit of the Company's financial statements for any Fiscal Year
shall be completed as soon as reasonably practicable and in no event later than
ninety days following the end of the relevant Fiscal Year and must be performed
by a nationally recognized accounting firm mutually agreed upon by the Senior
Managers, the Company and the Majority Stockholder (the "Accounting Firm");
provided, that if the Senior Managers, the Company and the Majority Stockholder
cannot agree upon an accounting firm, the Senior Managers, the Company and the
Majority Stockholder shall each appoint a nationally recognized accounting firm
which firms shall select a nationally recognized accounting firm which shall
then be the Accounting Firm.
(ii) A party exercising a Put or Call pursuant to this Article III or
Section 4.5 shall exercise such right by giving to the other party a written
notice (the "Notice") in accordance with the relevant provisions hereof
specifying such party's intent to Put or Call Shares Beneficially Owned by the
relevant Management Stockholder. The effective date on which a Put or Call is
exercised pursuant to such Notice shall be the tenth Business Day following the
later of (a) the date on which such Notice is given to the Majority Stockholder
or Management Stockholder, as applicable, and (b) the completion of the audit of
the Company's financial statements for the last Fiscal Year with respect to
which the exercise price for such Put or Call is calculated, if any; provided,
however, that the effective date of exercise of a Put exercised pursuant to
Section 4.5 must be prior to the Drag-Along Sale Date. Notwithstanding the prior
sentence, the effectiveness of, and the obligation of the Majority Stockholder
to honor, the exercise of a Put exercised pursuant to Section 3.12 shall be
subject to the consummation of the Control Transaction and the effective date of
such Put shall be the later of (x) the date determined pursuant to the
immediately preceding sentence and (y) the date of the consummation of the
Control Transaction; provided, however, that a Management Stockholder may
exercise any other Put right he may have pursuant to this Article III or Section
4.5 prior to the effectiveness of a Put exercised pursuant to Section 3.12
notwithstanding any Notice he may have given under Section 3.12. The aggregate
exercise price shall be paid to the relevant Management Stockholder in a lump
sum cash payment on the effective date of exercise of a Put or Call pursuant to
this Article III or Section 4.5.
(iii) (a) The term "Dividend Gross Up" means, with respect to a Share, the
amount equal to the sum of (A) the excess, if any, of (I) all U.S. federal,
state and local income taxes and/or any foreign taxes applicable because of the
residence or citizenship of the Management Stockholder ("Taxes") required to be
paid by the Management Stockholder with respect to any and all Annual Dividends
on such Share over (II) the Taxes the Management Stockholder would have been
required to pay if an amount equal to such Annual Dividends had been paid to the
Management Stockholder as part of the purchase price for such Share pursuant to
the applicable Put or Call and (B) an additional amount such that the net amount
retained by the Management Stockholder after the payment of all Taxes on the
amounts described in this Section 3.14(iii) is equal to the amount described in
clause (A) of this Section 3.14(iii).
(b) The Dividend Gross Up shall be determined by the Accounting Firm. The
tax rate to be used to determine the Dividend Gross Up shall be each Management
Stockholder's actual marginal tax rate for each applicable tax year.
(c) The term "Annual Dividend" means, with respect to a Share, the
aggregate dividends received by a Management Stockholder in any one Fiscal Year
on or after the Effective Time and prior to the payment of the price for the
applicable Put or Call in excess of $.20 per Share (as equitably adjusted to
reflect changes in the number of Shares resulting from transactions agreed to by
the parties that take place as of, or immediately prior to, the Effective Time).
(iv) The Management Stockholders, the Majority Stockholder and the Company
shall provide the Accounting Firm with all information reasonably required by
the Accounting Firm to make any determination required to be made by it under
this Agreement. Any assumptions not specified herein required to be used by the
Accounting Firm in determining the Dividend Gross Up shall be made by the
Accounting Firm in a reasonable manner that is intended to effectuate the
purposes of this Agreement. In making such determination, with respect to any
matter which is uncertain, the Accounting Firm shall adopt the position which it
believes more likely than not would be adopted by the Internal Revenue Service.
The Accounting Firm shall provide detailed supporting calculations with respect
to its determination to the Company, the Majority Stockholder and the relevant
Management Stockholder; provided, that the Accounting Firm shall not provide the
Company or the Majority Stockholder with the actual tax returns of the
Management Stockholder or any information concerning the Management Stockholder
that it is not reasonably necessary for the Company to fully understand the
basis for such determination. All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any determination by the Accounting Firm
hereunder shall be final, binding and conclusive upon the Company, the Majority
Stockholder and the Management Stockholder, absent manifest error.
(v) Any amounts payable pursuant to this Article III shall be subject to
such income or employment tax withholding as may be required under any provision
of U.S. federal, state or local tax law or any foreign tax law applicable
because of the residence or citizenship of the applicable Management
Stockholder, if any.
(vi) The Accounting Firm shall determine the exercise price with respect to
any Put or Call exercised pursuant to Section 3.2 through Section 3.12 and
Section 4.5 hereof and the purchase price with respect to any purchase of Shares
pursuant to Section 3.13 hereof.
ARTICLE IV
DRAG-ALONG RIGHTS
4.1 Drag-Along Rights. Subject to the provisions of Section 4.3 and Section
4.4, if the Majority Stockholder desires to sell more than 85% of the Shares
Beneficially Owned by it in good faith to an independent purchaser that is not
an Affiliate of the Majority Stockholder in an arms'-length negotiated
transaction, and said Transferee desires to acquire all or substantially all of
the issued and outstanding Shares upon the same terms and conditions as such
Transferee agreed to with the Majority Stockholder, each Management Stockholder
agrees to sell (a "Drag-Along Sale"), at the Majority Stockholder's request, a
proportion of the Shares Beneficially Owned by him to said Transferee (or to
vote all of such Shares in favor of any merger or other transaction which would
effect a sale of such Shares and waive all applicable dissenters or similar
rights) equal to the proportion of Shares Beneficially Owned by the Majority
Stockholder which are to be sold in the relevant transaction as specified in the
applicable Drag-Along Notice, at the same price, at the same time and on the
same terms and conditions as the Majority Stockholder shall have agreed to with
such Transferee with respect to the Majority Stockholder's Shares. In the event
a Drag-Along Sale is to be required, the Majority Stockholder shall give written
notice (the "Drag-Along Notice") of such sale to the Management Stockholders not
more than thirty or less than fifteen days prior to the proposed date of the
Drag-Along Sale (the "Drag-Along Sale Date") including (i) the proposed amount
of consideration to be received by the Beneficial Owners of Shares, (ii) the
name and address of the Transferee, (iii) the date of the proposed Transfer,
(iv) the number of Shares Beneficially Owned as of the close of business on the
day immediately prior to the date of delivery of the Drag-Along Notice by the
Management Stockholder to whom the notice is sent, (v) confirmation that the
Transferee has agreed to purchase the Management Stockholders' Shares in
accordance with the terms hereof, (vi) the Opinion and (vii) any other material
terms and conditions of the proposed Transfer.
4.2 Delivery of Certificates. On the date that is at least one Business Day
before the Drag-Along Sale Date (the "Delivery Date"), each Management
Stockholder shall deliver a certificate or certificates for all of his Shares to
be included in such Drag-Along Sale duly endorsed for Transfer, free and clear
of any lien, claim, encumbrance, charge or security interest of any kind to such
Transferee in the manner and at the address indicated in the Drag-Along Notice
against delivery of the purchase price for such Management Stockholder's Shares.
4.3 Consideration. The provisions of this Article IV shall only apply if
cash is one of the forms of consideration to be received in the Drag-Along Sale
and the Management Stockholder has the right, in his sole discretion, to receive
cash as the sole form of consideration he will receive for his Shares.
4.4 Cooperation. Each Management Stockholder participating in a Drag-Along
Sale shall make commercially reasonable efforts to cooperate in good faith with
the Majority Stockholder in connection with the consummation of a Drag-Along
Sale; provided, that a Management Stockholder shall not be required to (i) make
any representations or warranties other than standard representations concerning
ownership of his Shares or (ii) agree to indemnify any Person except with
respect to such Management Stockholder's own actions and disclosures; and
provided, further, that a Management Stockholder's total liability pursuant to
any such indemnity in connection with a Drag-Along Sale shall not exceed the net
proceeds received by such Management Stockholder in such Drag-Along Sale.
4.5 Put Right. Notwithstanding any other provision of this Article IV, in
the event the Majority Stockholder's sale to which the Drag-Along Sale relates
would constitute a Control Transaction, each Management Stockholder shall have
the right to Put all (but not less than all) of the Shares Beneficially Owned by
such Management Stockholder; provided, that the Notice in respect of such Put
must be given to the Majority Stockholder during the period beginning on the
date of the Management Stockholder's receipt of the Drag-Along Notice and ending
on the fifth Business Day immediately prior to the Delivery Date; and provided,
further, that the Put shall be exercised for a price per Share equal to the
Period One Control Transaction Price.
ARTICLE V
TAG-ALONG RIGHTS
5.1 Right to Participate in Sale. In the event that the Majority
Stockholder shall determine to sell Shares Beneficially Owned by it to a third
party or third parties excluding any member of the JGD Group, each Management
Stockholder shall have the right to sell in such transaction, on the same terms
and conditions as apply to the sale of the Majority Stockholder's Shares (a
"Tag-Along Sale"), a number of such Management Stockholder's Shares not to
exceed such Management Stockholder's Tag-Along Allotment.
5.2 Tag-Along Allotment. The maximum number of Shares that a Management
Stockholder shall be entitled to include in such Tag-Along Sale pursuant to
Section 5.1 (the "Tag-Along Allotment") shall be the sum of (i) the Pro Rata
Portion and (ii) the Excess Pro Rata Portion of his Shares. For purposes of this
Article V, "Pro Rata Portion" shall mean, with respect to Shares Beneficially
Owned by a Management Stockholder or Majority Stockholder, as the case may be, a
number equal to the product of (a) the total number of such Shares then
Beneficially Owned by the Management Stockholder or the Majority Stockholder, as
the case may be, and (b) a fraction, the numerator of which shall be the total
number of such Shares proposed to be acquired by the Transferee as set forth in
the Tag-Along Sale Notice and the denominator of which shall be the total number
of such Shares then issued and outstanding (including such Shares proposed to be
sold by the Majority Stockholder); provided, however, that any fraction of a
Share resulting from such calculation shall be disregarded for purposes of
determining the Pro Rata Portion. For purposes of this Article V, "Excess Pro
Rata Portion" shall mean, with respect to Shares Beneficially Owned by a
Management Stockholder or the Majority Stockholder, as the case may be, a number
equal to the product of (x) the number of Non-Elected Shares and (y) a fraction,
the numerator of which shall be such Management Stockholder's Pro Rata Portion
with respect to such Shares, and the denominator of which shall be the sum of
(1) the aggregate Pro Rata Portions with respect to the shares of Common Stock
of all of the Management Stockholders that have elected to exercise in full
their rights to sell their Pro Rata Portion of Shares, and (2) the Majority
Stockholder's Pro Rata Portion of Shares (the aggregate amount of such
denominator is hereinafter referred to as the "Elected Shares"). For purposes of
this Article V, "Non-Elected Shares" shall mean the excess, if any, of the total
number of Shares proposed to be acquired by a Transferee as set forth in the
Tag-Along Sale Notice, less the amount of Elected Shares. Notwithstanding the
foregoing, if the consummation of the sale by the Majority Stockholder to which
the Tag-Along Sale relates would result in the proportion of issued and
outstanding Shares Beneficially Owned by the Majority Stockholder equaling less
than 50% of the proportion of issued and outstanding Shares Beneficially Owned
by the Majority Stockholder immediately following the Effective Time (before
application of the provisions of this Section 5.2), each Management
Stockholder's Tag-Along Allotment with respect to such Tag-Along Sale shall be
deemed to be equal to 100% of the number of Shares Beneficially Owned by such
Management Stockholder as of the close of business on the day immediately prior
to the Tag-Along Notice Date.
5.3 Sale Notice. The Majority Stockholder shall provide each Management
Stockholder with written notice (the "Tag-Along Sale Notice") not more than
sixty days nor less than twenty days prior to the proposed date (the "Tag-Along
Sale Date") of the Tag-Along Sale. Each Tag-Along Sale Notice shall be
accompanied by a copy of any written agreement relating to the Tag-Along Sale
and shall set forth (i) the name and address of each proposed Transferee of
Shares in the Tag-Along Sale; (ii) the number of Shares proposed to be sold by
the Majority Stockholder; (iii) the proposed amount and form of consideration to
be paid for such Shares and the terms and conditions of payment offered by the
proposed Transferees; (iv) the aggregate number of Shares Beneficially Owned by
the Management Stockholder as of the close of business on the day immediately
prior to the date of delivery of the Tag-Along Sale Notice (the "Tag-Along Sale
Notice Date"); (v) the Management Stockholder's Tag-Along Allotment assuming
such Management Stockholder elected to include the maximum number of Shares
possible in the Tag-Along Sale; (vi) confirmation that the Transferee has been
informed of the rights provided for in this Article V and has agreed to purchase
Shares in accordance with the terms hereof; and (vii) the Tag-Along Sale Date.
5.4 Tag-Along Notice. (i) Any Management Stockholder wishing to participate
in the Tag-Along Sale shall provide written notice (the "Tag-Along Notice") to
the Majority Stockholder no more than fifteen days after delivery of the
Tag-Along Sale Notice. The Tag-Along Notice shall set forth the number of Shares
that such Management Stockholder elects to include in the Tag-Along Sale, which
shall not exceed such Management Stockholder's Tag-Along Allotment. The
Tag-Along Notice given by any Management Stockholder shall constitute such
Management Stockholder's binding agreement to sell the Shares specified in the
Tag-Along Notice on the terms and conditions applicable to the Tag-Along Sale;
provided, however, that in the event that there is any material change in the
terms and conditions of such Tag-Along Sale applicable to a Management
Stockholder after such Management Stockholder gives his Tag-Along Notice, then,
notwithstanding anything herein to the contrary, such Management Stockholder
shall have the right to withdraw from participation in the Tag-Along Sale with
respect to all of the Shares referred to in his Tag-Along Notice. If the
Transferee does not consummate the purchase of all of the Shares requested to be
included in the Tag-Along Sale by any Management Stockholder on the same terms
and conditions applicable to the Majority Stockholder, then the Majority
Stockholder shall not consummate the Tag-Along Sale of any of its Shares to such
Transferee, unless the Shares of all Management Stockholders and the Majority
Stockholder in the Tag-Along Sale are reduced or limited pro rata in proportion
to the respective number of Shares actually sold in any such Tag-Along Sale and
all other terms and conditions of the Tag-Along Sale are the same for each
Management Stockholder participating therein and the Majority Stockholder.
(ii) If a Tag-Along Notice from any Management Stockholder is not given to
the Majority Stockholder within the fifteen day period specified above, the
Majority Stockholder shall have the right to consummate the Tag-Along Sale
without the participation of such Management Stockholder, but only on terms and
conditions which are no more favorable in any material respect to the Majority
Stockholder than as stated in the Tag-Along Sale Notice and only if such
Tag-Along Sale occurs on a date within 120 days of the Tag-Along Sale Notice
Date.
5.5 Delivery of Certificates. On the Tag-Along Sale Date, each
participating Management Stockholder shall deliver a certificate or certificates
for the Shares to be sold by such Management Stockholder in connection with the
Tag-Along Sale, duly endorsed for transfer free and clear of any lien, claim,
encumbrance, charge or security interest of any kind to the Transferee in the
manner and at the address indicated in the Tag-Along Notice against delivery of
the purchase price for such participating Management Stockholder's Shares.
5.6 Not Applicable to Drag-Along Sales. The provisions of this Article V
shall not apply to any transaction in connection with which the Majority
Stockholder exercises its rights pursuant to Section 4.1.
5.7 Cooperation. Each Management Stockholder participating in a Tag-Along
Sale shall make commercially reasonable efforts to cooperate in good faith with
the Majority Stockholder in connection with the consummation of the Tag-Along
Sale, including, without limitation, by executing an agreement in respect of the
Tag-Along Sale containing customary representations, warranties, indemnities and
agreements.
5.8 Put Right. Notwithstanding any other provision of this Article V, in
the event the Majority Stockholder's sale to which the Tag-Along Sale relates
would constitute a Control Transaction, each Management Stockholder shall have
the right to exercise either his rights pursuant to this Article V, his rights
pursuant to Section 3.12 or his rights under both Article V and Section 3.12 (in
the latter case, with respect to the Shares not included in the Tag-Along Sale
pursuant to Article V), in his sole discretion.
ARTICLE VI
REGISTRATION RIGHTS
6.1 Piggyback Registration. (i) If the Company at any time proposes to
register any securities under the Securities Act, whether or not for sale for
its own account, on a form and in a manner which would permit registration of
Registrable Shares for a public offering under the Securities Act (other than a
registration statement on Form S-4 or Form S-8 or any successor form thereto),
the Company shall give written notice of the proposed registration to each
Management Stockholder at least fifteen days prior to the filing thereof, and
each Management Stockholder shall have the right to request that all or any part
of his Registrable Shares of the same class or series of the securities proposed
to be registered by the Company be included in such registration by giving
written notice to the Company within fifteen days after the delivery of such
notice by the Company. If the registration statement is to cover an underwritten
offering, such Registrable Shares shall be included in the underwriting on the
same terms and conditions as the securities otherwise being sold through the
underwriters.
(ii) Priority on Piggyback Registrations. If a Piggyback Registration
relates to an underwritten primary offering of securities and the underwriters
of such offering determine in their good faith judgment that the aggregate
number of securities which the Company, the Selling Holders and all other
eligible security holders of the Company (the "Other Holders") propose to
include in such offering exceeds the maximum number of securities that can
reasonably be expected to be sold within a price range acceptable to the
Company, the Company will include in such registration, first, the securities
which the Company proposes to sell and, second, the securities of such Selling
Holders and Other Holders on a pro-rata basis among all such Selling Holders and
Other Holders, taken together, based on the number of securities of the Company
requested to be included by all Selling Holders and Other Holders who have
requested that securities owned by them be so included (it being agreed and
understood, however, that such managing underwriters shall have the right to
eliminate entirely the participation in such offering by all Selling Holders and
Other Holders).
(iii) Underwriters. Shares proposed to be registered and sold for the
account of any Selling Holder pursuant to a Piggyback Registration shall be sold
to prospective underwriters selected or approved by the Company, on the terms
and subject to the conditions of one or more underwriting agreements negotiated
between the Company, the Selling Holders and Other Holders participating in such
registration, and such prospective underwriters. The Selling Holders shall be
permitted to withdraw all or a part of the securities held by such Selling
Holders which were to be included in such Piggyback Registration at any time
prior to the effective date of the registration.
(iv) Compliance. Notwithstanding any other provisions hereof, the Company
shall use its best efforts to ensure that (a) any registration statement filed
in connection with a Piggyback Registration, and any amendment thereto, and any
prospectus forming a part thereof, and any supplement thereto, complies in all
material respects with the Securities Act, (b) any registration statement filed
in connection with a Piggyback Registration, and any amendment thereto, does
not, when it becomes effective, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and (c) any prospectus forming part
of any registration statement filed in connection with a Piggyback Registration,
and any supplement to such prospectus, does not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they are made,
not misleading.
6.2 Registration Statement. In connection with any Piggyback Registration
pursuant to this Agreement, the Company will furnish each Selling Holder and
each underwriter, if any, with a copy of the registration statement and all
amendments thereto and will supply each such Selling Holder with copies of any
prospectus included therein (including a preliminary prospectus and all
amendments and supplements thereto), in each case including all exhibits, and
such other documents as may be reasonably requested, in such quantities as may
be reasonably necessary for the purposes of the proposed offer and sale covered
by such registration (the Company hereby consenting to the use in accordance
with all applicable law of each such registration statement or amendment or
post-effective amendment thereto, and each such prospectus or preliminary
prospectus or supplement thereto). In connection with any Piggyback
Registration, the Company will, at the request of the managing underwriter with
respect thereto or, if not an underwritten offering, at the request of the
Selling Holders, use its best efforts to register or qualify the Registrable
Shares covered by such Piggyback Registration for sale under the securities laws
of such states as is required to permit the offer and sale of such Registrable
Shares as contemplated by the applicable registration statement and to keep each
such registration or qualification effective during the period such registration
statement is required to be kept effective and to do such other acts or things
reasonably necessary to enable the disposition in such jurisdictions of the
securities covered by the applicable registration statement in accordance with
the securities laws of such jurisdictions. In connection with any offering of
Registrable Shares registered pursuant to this Agreement, the Company shall (i)
furnish each Selling Holder, at the Company's expense and at least three
Business Days prior to the sale of any Registrable Shares, with unlegended
certificates in a form eligible for deposit with The Depository Trust Company
representing ownership of the Registrable Shares which are sold pursuant to the
registration statement, in such denominations and registered in such names as
the managing underwriter, if any, or such Selling Holder shall reasonably
request, and (ii) instruct the transfer agent and registrar of the Shares to
release any stop transfer orders with respect to the Registrable Shares so sold.
6.3 Registration Procedures. In connection with the Company's obligations
to effect a Piggyback Registration pursuant to Section 6.1, the Company will as
expeditiously as is practicable:
(i) prepare and file with the Commission such amendments and post-effective
amendments to the registration statement with respect to such Shares and such
supplements to the prospectus used in connection therewith as may be necessary
to keep such registration statement effective and to comply with the provisions
of the Securities Act with respect to the offer and sale of all securities
covered by such registration statement, in accordance with the terms hereof;
(ii) cause all Registrable Shares covered by the registration statement to
be listed on each securities exchange on which identical securities issued by
the Company are then listed or are to be listed if requested by the Selling
Holders holding a majority in number of the Registrable Shares covered by such
registration statement or the managing underwriters, if any, and cooperate and
assist in any filings required to be made with any such securities exchange or
other regulatory body in connection therewith or otherwise;
(iii) notify each Selling Holder and the managing underwriter, if any,
promptly (and in any event within two Business Days): (a) when any registration
statement, prospectus or any supplement or amendment thereto has been filed, and
with respect to the registration statement or any post-effective amendment, when
the same has become effective; (b) of any request by the Commission or any other
federal or state governmental authority for any amendments or supplements to any
registration statement or prospectus or for additional information; (c) of the
issuance by the Commission of any stop order suspending the effectiveness of any
registration statement or the initiation of any proceedings for that purpose;
(d) if, at any time prior to the closing contemplated by an underwriting
agreement entered into in connection with such registration statement, that the
representations and warranties of the Company contained in such agreement cease
to be true and correct; (e) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Shares for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose; (f) of the happening of any event which makes any statement made in the
registration statement, the prospectus or any document incorporated or deemed to
be incorporated therein by reference untrue or which requires the making of any
changes in the registration statement, the prospectus or any document
incorporated therein by reference in order to make the statements therein not
misleading; and (g) of the Company's reasonable determination that a
post-effective amendment to any registration statement would be required;
(iv) use its best efforts to prevent the issuance of any order suspending
the effectiveness of the registration statement or of any order preventing or
suspending the use of a prospectus or suspending the qualification of any of the
Shares included therein for sale in any jurisdiction and, in the event of the
issuance of any stop order suspending the effectiveness of the registration
statement, or of any order suspending or preventing the use of any related
prospectus or suspending the qualification of any Shares included in such
registration statement for sale in any jurisdiction, use its best efforts to
promptly obtain the withdrawal of any such order;
(v) furnish to each Selling Holder and the managing underwriters, if any,
at the Company's expense, one signed copy of the registration statement and any
post-effective amendment thereto, including financial statements and schedules,
all documents incorporated therein by reference and all exhibits (including
those incorporated by reference);
(vi) as promptly as practicable, if required, based on the advice of the
Company's counsel, or, if necessary, upon the occurrence of any event
contemplated by Section 6.3(iii) hereof, prepare and file a supplement or
post-effective amendment to the registration statement, the related prospectus
or any document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the Shares, the
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not misleading;
(vii) provide and cause to be maintained a transfer agent and registrar for
all Registrable Shares covered by such registration statement from and after a
date not later than the effective date of such registration statement;
(viii) use its reasonable best efforts to provide a CUSIP number for the
Registrable Shares covered by such registration statement, not later than the
effective date of such registration statement;
(ix) use its reasonable best efforts to (a) obtain opinions of counsel to
the Company (which counsel and opinions shall be reasonably satisfactory to the
managing underwriters, if any, and the Selling Holders), and updates thereof
addressed to the managing underwriters, if any, and the Selling Holders,
covering the matters customarily covered in opinions provided in underwritten
offerings and such other matters as may be reasonably requested by the
underwriters, if any, or the Selling Holders; and (b) obtain "cold comfort"
letters and updates thereof (which letters and updates shall be reasonably
satisfactory to the managing underwriters, if any, and the Selling Holders) from
the Company's independent certified public accountants addressed to the Selling
Holders and managing underwriters, if any (and, if necessary, any other
independent certified public accountants of any subsidiary of the Company or of
any business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the registration
statement), such letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters by accountants in connection
with underwritten offerings and such other matters as the underwriters, if any,
or the Selling Holders shall reasonably request. The above shall be done at each
closing under such underwriting or similar agreement or as and to the extent
required thereunder or, if not an underwritten offering, as otherwise reasonably
requested by the Selling Holders;
(x) make available for inspection by a representative of the holders of a
majority of the Registrable Shares being sold and any attorneys or accountants
retained by such holders (and, to the extent reasonably requested, furnish
copies), in connection with the preparation of a registration statement pursuant
to this Agreement, all financial and other records and pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such representative(s), attorney(s) or accountant(s) in connection with such
registration;
(xi) enter into such agreements reasonably requested by the Selling Holders
(including, as applicable, an underwriting agreement in form, scope and
substance as is customary in similar offerings and is reasonably satisfactory to
the Company) and take all such other customary and reasonable actions in
connection therewith (including such customary and reasonable actions as may be
requested by the managing underwriters, if any) in order to expedite or
facilitate the disposition of the Registrable Shares, and in such connection,
whether or not an underwriting agreement is entered into and whether or not the
registration is an underwritten registration:
(a) make such representations and warranties to the Selling Holders and the
underwriters, if any, with respect to the business of the Company and the
registration statement, prospectus and documents, if any, incorporated or deemed
to be incorporated by reference therein, in each case, in form, substance and
scope as are customarily made by issuers to underwriters in underwritten
offerings and confirm the same, if and when reasonably requested; and
(b) deliver such documents and certificates as may be reasonably requested
by the holders of a majority of the Registrable Shares being included in the
registration statement or the managing underwriters, if any, to evidence
compliance with clause (a) above and with any provisions contained in the
underwriting agreement or other similar agreement entered into by the Company.
The above shall be done at each closing under such underwriting or similar
agreement or, if not an underwritten offering, when otherwise reasonably
requested by the Selling Holders.
(xiii) if requested by the managing underwriter in an underwritten offering
of Registrable Shares, use reasonable efforts to cause each holder of ten
percent (10%) or more of the securities of the same class as the securities
included in such underwritten offering, or any securities convertible into or
exchangeable or exercisable for such securities, in each case purchased from the
Company at any time after the date of this Agreement (other than in a registered
public offering) to agree not to effect any public or private sale or
distribution or otherwise dispose (including sales pursuant to Rule 144
promulgated under the Securities Act) of any such securities during the ten days
prior to and the ninety days after such underwritten offering has been completed
(except as part of such underwritten registration, if otherwise permitted),
unless the underwriters managing such registration otherwise agree;
(xiv) if requested, furnish each Selling Holder with a copy (or a
reasonable number of copies, as requested) of the registration statement
(together with the exhibits thereto) and each amendment thereto prior to the
filing thereof with the Commission;
(xv) if requested by the managing underwriters, if any, or a Selling
Holder, promptly incorporate in a prospectus, supplement or post-effective
amendment such information as the managing underwriters, if any, or such Selling
Holder reasonably requests to be included therein relating to the sale of the
Registrable Shares, including, without limitation, information with respect to
the number of Registrable Shares being sold to underwriters, the purchase price
being paid therefor by such underwriters or such Selling Holders and with
respect to any other terms of the underwritten offering of the Registrable
Shares to be sold in such offering; and make all required filings of such
prospectus, supplement or post-effective amendment promptly following
notification of the matters to be incorporated in such supplement or
post-effective amendment;
(xvi) upon the occurrence of any event that would cause a registration
statement (a) to contain a material misstatement or omission or (b) to be not
effective and usable for the offer and sale of Registrable Shares, the Company
shall promptly file an amendment to such registration statement, in the case of
clause (a), correcting any such misstatement or omission and, in the case of
either clause (a) or (b), use its commercially reasonable efforts to cause such
amendment to be declared effective and such registration statement to become
usable as soon as reasonably practicable thereafter;
(xvii) otherwise use its reasonable best efforts to (a) comply with all
applicable rules and regulations of the Commission and to take all other steps
reasonably necessary to effect the registration of the Registrable Shares
covered by such registration statement as contemplated hereby, and (b) make
available to its security holders an earnings statement which satisfies the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or
any successor rule thereto) no later than forty-five days after the end of any
twelve-month period (or ninety days after the end of any twelve-month period if
such period is a fiscal year) (or in each case within such extended period of
time as may be permitted by the Commission for filing the applicable report with
the Commission) (A) commencing at the end of any fiscal quarter in which Shares
are sold to underwriters in a firm commitment or best efforts underwritten
offering and (B) if not sold to underwriters in such an offering, commencing on
the first day of the first fiscal quarter of the Company after the effective
date of a registration statement, which statements shall cover said twelve-month
periods; and
(xviii) in connection with any underwritten offering, cooperate with all
marketing efforts reasonably requested by the managing underwriter or managing
underwriters in connection with the sale of the Shares, including, without
limitation, participation in a reasonable number of road-show presentations and
other marketing activity by members of the Company's senior management and other
employees of the Company requested by such managing underwriter or managing
underwriters.
6.4 Holdback Agreements. The Company and each Management Stockholder
agrees, if requested (pursuant to a timely written notice) by the managing
underwriter or underwriters in an underwritten offering effected in connection
with a Piggyback Registration, not to effect any public sale or distribution of
any of the Company's Shares, including a sale pursuant to Rule 144, except as
part of such underwritten offering, during the period beginning ten days prior
to, and ending one hundred and eighty days after, the closing date of the
underwritten offering made pursuant to such registration statement. The
foregoing provisions shall not apply to the Company or any holder of Registrable
Shares if such Person is prevented by applicable law or regulation from entering
into any such agreement; provided, however, that any such Person shall undertake
not to effect any public sale or distribution of the class of securities covered
by such registration statement (except as part of such underwritten offering)
during such period unless it has provided sixty days' prior written notice of
such sale or distribution to the managing underwriter.
6.5 Registration Expenses. All expenses, disbursements and fees incurred by
the Company and the Selling Holders in connection with carrying out their
obligations under this Article VI, including, but not limited to, (i) the
reasonable and documented fees and expenses of one law firm (plus local counsel)
for the Selling Holders, (ii) all registration, filing fees and expenses
(including fees with respect to filings made with any securities exchange and
the fees and expenses of any "qualified independent underwriter" and its
counsel, as may be required by the rules and regulations of any securities
exchange), (iii) fees and expenses of compliance with state securities or blue
sky laws (including fees and disbursements of counsel for the underwriters or
Selling Holders in connection with blue sky qualifications of the Registrable
Shares and determinations of their eligibility for investment under the laws of
such jurisdiction as the managing underwriters or holders of a majority of the
Registrable Shares being sold may designate), (iv) printing expenses (including
printing certificates for the Registrable Shares to be sold and the registration
statements and prospectuses), messenger and delivery expenses, duplication, word
processing, and telephone expenses, (v) fees and disbursements of counsel for
the Company, (vi) fees and disbursements of all independent certified public
accountants of the Company incurred in connection with such registration
(including the expenses of any special audit and "cold comfort" letters incident
to such registration) and fees and disbursements of underwriters (excluding
discounts, commissions or fees of underwriters, selling brokers, dealer managers
or similar securities industry professionals relating to the distribution of the
Registrable Shares which shall be borne by the seller thereof) and other Persons
retained by the Company, (vii) internal expenses of the Company, including all
salaries and expenses of its officers and employees performing legal or
accounting duties, (viii) expenses of any annual audit or quarterly review,
including the fees and expenses of any Person, including special experts,
retained by the Company with regard to such annual audit or quarterly review,
(ix) the expense of any liability insurance, and (x) the expenses and fees for
listing the securities to be registered on each securities exchange on which
similar securities issued by the Company are then listed or to be listed will be
borne by the Company regardless of whether a registration statement becomes
effective.
6.6 Conditions to Selling Holders' Piggyback Registration Rights. It shall
be a condition of each Selling Holder's rights hereunder that:
(i) Cooperation. Such Selling Holder shall cooperate with the Company by
supplying information and executing documents relating to such Selling Holder or
the securities of the Company owned by such Selling Holder in connection with
the relevant registration that are reasonably requested by the Company;
(ii) Undertakings. Such Selling Holder shall enter into any undertakings
and take such other action relating to the conduct of the proposed offering
which the Company or the underwriters may reasonably request as being necessary
to insure compliance with federal and state securities laws and the rules or
other requirements of any securities exchange or which the Company or the
underwriters may reasonably request to otherwise effectuate the offering; and
(iii) Indemnification. Such Selling Holder shall execute and deliver an
agreement to indemnify to the fullest extent permitted by law and hold harmless
the Company, each of its directors, each of its officers who has signed the
registration statement, any underwriter (as defined in the Securities Act), and
each Person, if any, who controls the Company or such underwriter within the
meaning of the Securities Act, against such Losses to which the Company or any
such director, officer, underwriter or controlling person may become subject
under the Securities Act or otherwise, in such manner as is customary for
registrations of the type then proposed, but only with respect to written
information about or pertaining to such Selling Holder furnished by such Selling
Holder specifically for inclusion in a registration statement filed in
connection with a registration made under this Article VI.
6.7 Indemnification.
(i) Indemnification by the Company. In the case of any offering registered
under the Securities Act pursuant to this Agreement, the Company agrees to
indemnify to the fullest extent permitted by law and hold harmless each Selling
Holder against any and all Losses, to which they or any of them may become
subject under the Securities Act or any other statute or under common law or
otherwise, insofar as any such Losses shall arise out of, be caused by or shall
be based upon (a) any untrue statement or alleged untrue statement of a material
fact contained in a registration statement relating to the offer or sale of the
Registrable Shares covered thereby, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (b) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus (as amended
or supplemented if the Company shall have filed with the Commission any
amendment thereof or supplement thereto) or prospectus (as amended or
supplemented if the Company shall have filed with the Commission any amendment
thereof or supplement thereto, including the information deemed part of such
registration statement pursuant to Rule 430A promulgated under the Securities
Act), or the omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the indemnification agreement contained in this Section 6.7 shall not apply
to such Losses which shall arise from the sale of Registrable Shares to any
Person if such Losses shall arise out of, shall be caused by or shall be based
upon any such untrue statement or alleged untrue statement, or any such omission
or alleged omission, (x) if such statement or omission shall have been made in
reliance upon and in conformity with information furnished in writing to the
Company by and about such Selling Holder specifically for use in connection with
the preparation of the registration statement or any preliminary prospectus or
prospectus contained in the registration statement or any such amendment thereof
or supplement thereto; (y) if such untrue statement or omission was made in any
preliminary prospectus to the extent that (A) the prospectus corrected such
untrue statement or such omission and (B) the Selling Holder was legally
required to and failed to send or deliver a copy of the prospectus with or prior
to the delivery of written confirmation of the sale by such Selling Holder of
Registrable Shares to the Person asserting the claim from which such Losses
arise and the Company made the prospectus available to such Selling Holder in
accordance with the terms of the Agreement; or (z) if any such Losses arise out
of, are caused by or are based upon an untrue statement or omission in the
prospectus, to the extent that (A) such untrue statement or omission is
corrected in an amendment or supplement to the prospectus and (B) having
previously been furnished by or on behalf of the Company with copies of the
prospectus as so amended or supplemented, such Selling Holder was legally
required but failed to deliver such prospectus as so amended or supplemented,
prior to or concurrently with the sale of Shares to the Person asserting the
claim from which such Losses arise. This indemnity shall be in addition to any
other indemnification arrangements to which the Company may otherwise be a
party.
(ii) Conduct of Indemnification Proceedings. Any Person entitled to
indemnity under this Agreement (an "Indemnified Party") shall give prompt
written notice to the party from which such indemnity is sought (the
"Indemnifying Party") of any claim or of the commencement of any proceeding with
respect to which such Indemnified Party seeks indemnification or contribution
pursuant hereto; provided, however, that the failure so to notify the
Indemnifying Party shall not relieve the Indemnifying Party from any obligation
or liability except to the extent that the Indemnifying Party has been actually
and materially prejudiced by such failure. The Indemnifying Party shall have the
right exercisable by giving written notice to an Indemnified Party promptly
after the receipt of written notice from such Indemnified Party of such claim or
proceeding to assume, at the Indemnifying Party's expense, the defense of any
such claim or proceeding, with counsel reasonably satisfactory to such
Indemnified Party; provided, however, that under such circumstances an
Indemnified Party shall have the right to employ separate counsel in any such
claim or proceeding and to participate in the defense thereof; provided further,
however, that the fees and expenses of such separate counsel shall be at the
expense of such Indemnified Party unless: (a) the Indemnifying Party agrees to
pay such fees and expenses; or (b) the Indemnifying Party fails promptly to
assume the defense of such claim or proceeding or fails to employ counsel
reasonably satisfactory to such Indemnified Party; or (c) the Indemnified Party
shall have been advised by counsel that (A) there may be one or more material
defenses available to such Indemnified Party that are different from or
additional to those available to the Indemnifying Party or its Affiliates, or
(B) a conflict of interest likely exists if one counsel represents such
Indemnified Party and such Indemnifying Party or its Affiliate, in which case,
if such Indemnified Party notifies the Indemnifying Party in writing that it
elects to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof, it
being understood, however, that the Indemnifying Party shall not, in connection
with any one such claim or proceeding, or separate but substantially similar or
related claims or proceedings arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (together with appropriate local counsel which such counsel
shall be designated by the Indemnified Party and be reasonably acceptable to the
Indemnifying Party) at any time for such Indemnified Party, or for fees and
expenses that are not reasonable. Whether or not such defense is assumed by the
Indemnifying Party, such Indemnifying Party will not be subject to any liability
for any settlement made without its consent (which consent shall not be
unreasonably withheld). The Indemnifying Party shall not consent to entry of any
judgment or settle or compromise any pending or threatened claim, action or
proceeding, unless it contains as an unconditional term thereof the giving by
the claimant or plaintiff to the Indemnified Party of a release, in form and
substance satisfactory to such Indemnified Party, from all liability in respect
of such claim or litigation for which such Indemnified Party would be entitled
to indemnification hereunder.
(iii) Contribution. (a) If the indemnification provided for in this Section
6.7 is unavailable to an Indemnified Party in respect of any Losses or is
insufficient to hold such Indemnified Party harmless, then, except to the extent
that contribution is not permitted under Section 11(f) of the Securities Act,
each applicable Indemnifying Party shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, in such proportion
as is appropriate to reflect the relative fault of the Indemnifying Party, on
the one hand, and such Indemnified Party, on the other hand, in connection with
the actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations appropriate under the circumstances. The
relative fault of such Indemnifying Party, on the one hand, and such Indemnified
Party, on the other hand, shall be determined by reference to, among other
things, whether any action in question, including any untrue statement of a
material fact or omission to state a material fact, has been taken or made by,
or relates to information supplied by, such Indemnifying Party or Indemnified
Party, and the parties' relative intent, knowledge, access to information
concerning the matter with respect to which the claim was asserted and
opportunity to correct or prevent such action, statement or omission. The amount
paid or payable by a party as a result of any Losses shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
(b) The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6.7 were determined by pro-rata allocation
or by any other method of allocation that does not take into account the
equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 6.7, no Indemnifying Party that
is a Selling Holder shall be required to contribute any amount in excess of the
amount by which the net proceeds received by such Selling Holder from the sale
of Shares exceeds the amount of any damages that such Selling Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11 (f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
(iv) Underwriting Agreement to Govern. At such time as an underwriting
agreement with respect to a particular underwriting is entered into, the terms
of any such underwriting agreement shall govern with respect to the matters set
forth therein to the extent inconsistent with this Section 6.7; provided,
however, that the indemnification provisions of such underwriting agreement as
they relate to Selling Holders are customary for registrations of the type then
proposed and provide for indemnification by such Selling Holders only with
respect to written information regarding such Selling Holder furnished by such
Selling Holders.
6.8 Rule 144. Following a Public Offering Event, the Company shall file the
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the Commission thereunder and will take
such further action as any holder of Registrable Shares may reasonably request,
all to the extent required from time to time to enable such holder to sell
Shares without registration under the Securities Act within the limitation of
the exemptions provided by Rule 144. Upon the request of any Management
Stockholder, the Company will deliver to such Management Stockholder a written
statement as to whether it has complied with such requirements.
6.9 Termination of Registration Rights. The rights of a Management
Stockholder pursuant to this Article VI shall terminate with respect to Shares
held by such Management Stockholder to the extent such Shares may be sold by
such Management Stockholder pursuant to Rule 144 under the Securities Act (or
any similar provision then in force) within any three-month period.
ARTICLE VII
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
7.1 Representations and Warranties of the Company .
The Company represents and warrants to the Management Stockholders and the
Majority Stockholder as follows:
(i) Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(ii) Authority. The Company has full corporate power and authority to
execute, deliver and perform all of its obligations under Agreement and to
consummate the transactions contemplated hereby.
(iii) Binding Obligation. The execution, delivery and performance of this
Agreement by the Company and the consummation by it of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on its part, and, assuming the due execution by the party
seeking enforcement against the Company, this Agreement constitutes a binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except insofar as enforceability may be limited by bankruptcy,
insolvency, moratorium or other laws which may affect creditors rights and
remedies generally and by principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
(iv) No Conflict. The execution, delivery and performance of this Agreement
by the Company and the consummation by it of the transactions contemplated
hereby will not, with or without the giving of notice or the lapse of time, or
both, (a) violate any provision of law, statute, rule or regulation to which it
is subject, (b) violate any order, judgment or decree applicable to it, or (c)
conflict with, or result in a breach or default under, any term or condition of
its certificate or articles of incorporation or its bylaws or any material
agreement or other material instrument to which it is a party or by which it or
its property is bound.
7.2 Representations and Warranties of the Majority Stockholder. The
Majority Stockholder represents and warrants to each Management Stockholder and
to the Company as follows:
(i) Organization. It is a societe anonyme duly organized, validly existing
and in good standing under the laws of France.
(ii) Authority. It has full power and authority to execute, deliver and
perform this Agreement and to consummate the transactions contemplated hereby.
(iii) Binding Obligation. The execution, delivery and performance of this
Agreement by it and the consummation by it of the transactions contemplated
hereby have been duly and validly authorized by all necessary action on its
part, and, assuming the due execution by the party seeking enforcement against
it, this Agreement constitutes its binding obligation, enforceable against it in
accordance with its terms, except insofar as enforceability may be limited by
bankruptcy, insolvency, moratorium or other laws which may affect creditors'
rights and remedies generally and by principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
(iv) No Conflict. The execution, delivery and performance of this Agreement
by it and the consummation by it of the transactions contemplated hereby will
not, with or without the giving of notice or the lapse of time, or both, (a)
violate any provision of law, statute, rule or regulation to which it is
subject, (b) violate any order, judgment or decree applicable to it, or (c)
conflict with, or result in a breach or default under, any term or condition of
its certificate of incorporation, bylaws, trust or equivalent governing document
or any material agreement or other material instrument to which it is a party or
by which it or its property is bound.
(v) Ownership of VCA. The Majority Stockholder is the owner of 50% of the
issued and outstanding shares of capital stock of Verrerie Cristallerie
D'Arques.
7.3 Representations and Warranties of the Management Stockholders. Each of
the Management Stockholders represents and warrants to each other, to the
Company and to the Majority Stockholder as follows:
(i) Valid Trust. If a trust, the trust agreement creating such trust is a
legal, valid and binding trust agreement, and such trust is a valid trust under
the laws of the jurisdiction in which it was created.
(ii) Authority. If a trust, such trust has the requisite power and
authority to execute, deliver, and perform all of its obligations under, this
Agreement and to consummate the transactions contemplated hereby.
(iii) Binding Obligation. Assuming the due execution by the party seeking
enforcement against him, this Agreement constitutes his binding obligation,
enforceable against him in accordance with its terms, except insofar as
enforceability may be limited by bankruptcy, insolvency, moratorium or other
laws which may affect creditors' rights and remedies generally and by principles
of equity (regardless of whether enforceability is considered in a proceeding in
equity or at law).
(iv) No Conflict. The execution, delivery and performance of this Agreement
by him and the consummation by him of the transactions contemplated hereby will
not, with or without the giving of notice or the lapse of time, or both, (a)
violate any provision of law, statute, rule or regulation to which he is
subject, (b) violate any order, judgment or decree applicable to him, or (c)
conflict with, or result in a breach or default under, any term or condition of
any material agreement or other material instrument to which he is a party or by
which he or his property is bound.
7.4 Additional Representations and Warranties of the Management
Stockholders and the Majority Stockholder Each of the Management Stockholders
represents and warrants to the Majority Stockholder and to the Company, and the
Majority Stockholder represents and warrants to each of the Management
Stockholders and the Company that the Shares Beneficially Owned by him or it
were acquired for investment only and not with a view to any public distribution
thereof, and there is not any current plan or intention on such party's part to
offer to sell, exchange or otherwise dispose of the Shares Beneficially Owned by
him or it in violation of any of the requirements of the Securities Act.
7.5 Additional Agreements of the Company, the Majority Stockholder and the
Management Stockholders
(i) Each of the Majority Stockholder and the Company agree to give notice
in writing to each of the Other Managers of the termination of employment with
the Company of a Senior Manager for any reason no later than three Business Days
after the Termination Date.
(ii) Each of the Majority Stockholder and the Company agree to give notice
in writing to each of the Management Stockholders of the execution or
announcement of a definitive agreement with respect to a Control Transaction no
later than three Business Days after the Control Transaction Date.
(iii) The Majority Stockholder hereby agrees to guarantee absolutely and
unconditionally all of the obligations of the Company to the Management
Stockholders under Article III and Section 4.5 of this Agreement irrespective of
any circumstances whatsoever which might otherwise constitute a legal or
equitable discharge or defense of the liabilities of a surety or guarantor or
that otherwise limit recourse against the Majority Stockholder, other than
performance; provided, that the obligations of the Majority Stockholder under
this Section 7.5(iii) are independent of the obligations of the Company and a
separate action or actions may be brought and prosecuted against the Majority
Stockholder whether or not action is brought against the Company and whether or
not the Company is joined in any such action or actions.
(iv) Each of the Majority Stockholder, the Company and each Management
Stockholder agree that with respect to any Shares Beneficially Owned by a
Management Stockholder which are held in a trust, such Shares shall be treated
for all purposes under this Agreement as Shares held directly by such Management
Stockholder.
ARTICLE VIII
BOARD OF DIRECTORS
8.1. Board Composition. Commencing as of the Effective Time and so long as
any Senior Manager continues to Beneficially Own any Shares, the Senior Managers
who then Beneficially Own Shares shall have the right to nominate a number of
persons as candidates for election as members of the Board of Directors of the
Company (the "Board") equal to the number of Senior Managers who then
Beneficially Own Shares. The Majority Stockholder shall be entitled to nominate
any number of candidates for election in its sole discretion. As used herein,
the term "Nominees" refers to each person nominated to be elected to the Board.
The Majority Stockholder may cause the total number of members of the Board to
be increased at any time in its discretion, and the Management Stockholders
shall take all necessary actions reasonably requested by the Majority
Stockholder to effectuate the foregoing.
8.2. Board Action. Except as otherwise expressly provided herein or as
required by law, all actions to be taken by the Board will require the
affirmative vote of a majority of the members of the Board.
8.3. Election of Nominees. Each party hereto will use his or its best
efforts to cause the Nominees to be elected in any and all elections of
directors of the Company held during the period specified in Section 8.1 hereof.
Without limiting the generality of the foregoing, each of the Management
Stockholders and the Majority Stockholder will vote, grant a consent with
respect to, or cause to be voted for the election of the Nominees, in all
elections of directors of the Company held, or written consents in lieu thereof
given, during the period specified in Section 8.1 hereof, all securities
entitled to vote or consent in such election that such Person has the power to
vote or with respect to which such Person has the power to grant a consent (or
in respect of which such Person has the power to direct the vote or grant a
consent) in accordance with the terms of this Section 8.3.
8.4. Vacancies. Each Nominee will hold his or her office as a director of
the Company until the earlier of (i) the expiration of his or her term as
provided in the Company's certificate of incorporation, by-laws or applicable
law and (ii) his or her death, resignation, incapacity or removal from the Board
in accordance with Section 8.5. If any Nominee designated pursuant to Section
8.1 ceases to serve as a director of the Company for any reason during his or
her term (a "Terminating Nominee"), a Nominee for the vacancy resulting
therefrom may be designated by the party who originally designated the
Terminating Nominee.
8.5. Removal of Nominees. Only the Senior Managers may remove a Nominee
designated by the Senior Managers from the Board and only the Majority
Stockholder may remove a Nominee designated by the Majority Stockholder from the
Board. Any such Nominee may be removed by the Senior Managers or the Majority
Stockholder, as applicable, at any time, for any reason. If at any time the
Senior Managers or the Majority Stockholder, as applicable, shall desire to have
a Nominee removed from the Board pursuant to this Section 8.5, the Senior
Managers or the Majority Stockholder, as applicable, shall so notify the
Company, and each party hereto shall use its best efforts to take or cause to be
taken all such action as may be required to remove such Nominee from the Board.
8.6. Committees. Commencing as of the Effective Time and so long as any
Senior Manager continues to Beneficially Own any Shares, each committee of the
Board established by the Board shall have at least one director designated by
the Senior Managers, unless such committee is required by the Company's
certificate of incorporation, by-laws or applicable law to be composed entirely
of non-executive directors.
8.7. Compensation. The directors shall not receive any compensation for
their services, but shall be entitled to be reimbursed for reasonable
out-of-pocket expenses incurred in connection therewith.
ARTICLE IX
GENERAL
9.1 Public Offering. In the event the Company effects a bona fide offering
of Shares to the public (a "Public Offering Event"), (i) at the election of a
Management Stockholder, the provisions of Article II hereof shall cease to be
effective with respect to such Management Stockholder's Shares, (ii) the
purchase provisions of Section 3.13 shall cease to be effective with respect to
the Shares of the Management Stockholders, (iii) the right of the Majority
Stockholder to Call the Shares of any Management Stockholder pursuant to Article
III hereof shall cease to be effective and (iv) the right of each Management
Stockholder to Put his Shares to the Majority Stockholder pursuant to Article
III or Section 4.5 hereof shall cease to be effective at the time that more than
50% of the issued and outstanding Shares are held by members of the public
unrelated to the Majority Stockholder or any of its Affiliates or any of the
Management Stockholders. Upon any Transfer of Shares by a Management Stockholder
following any Public Offering Event, any remaining provisions of this Agreement
relating to such Shares shall cease to be effective.
9.2 Anti-Dilution Adjustments. In the event the Company changes the number
of Shares issued and outstanding as a result of a stock split, stock dividend,
recapitalization, subdivision, reclassification, combination, exchange of
shares, issuance of Shares for less than fair value or similar transaction with
respect to the issued and outstanding Shares, adjustments shall be made to the
provisions set forth herein so as to preserve, as nearly as practicable, the
economic benefits to the parties contemplated hereby.
9.3 Recapitalization, Exchanges, Etc., Affecting the Shares. The provisions
of this Agreement shall apply to the full extent set forth herein with respect
to (i) the Shares and (ii) any and all Common Stock or any common stock of any
successor or assign of the Company which may be issued in respect of, in
exchange for, or in substitution for any Shares, as a result of a
recapitalization, reclassification, merger, consolidation or other transaction.
9.4 Injunctive Relief. It is hereby agreed and acknowledged that it will be
impossible to measure in money the damages that would result from a failure by
any party to comply with any of the terms of this Agreement. Any party hereto
shall, therefore, be entitled to injunctive relief, including specific
performance, to enforce the terms of this Agreement, without the posting of any
bond. If an action should be brought in equity to enforce any of the provisions
of this Agreement, none of the parties hereto shall raise the defense that there
is an adequate remedy at law.
9.5 Notices. (i) Except as otherwise expressly provided herein, any and all
notices, demands or other communications required or permitted hereunder shall
be in writing and shall be made by hand delivery, or by first-class, registered
or certified mail with postage prepaid or by facsimile or telecopy, addressed to
the relevant party at the address set forth below:
(a) If to the Company, to:
Mikasa, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Chief Executive Officer
General Counsel
with a copy (which shall not constitute notice) to:
Xxxxxxxx & Xxxxx
Citigroup Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx Xxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) If to the Majority Stockholder, to:
X.X. Xxxxxx Industries, S.A.
00 xxx Xxxxxx Xxxxxxx
00000 Xxxxxx, Xxxxxx
Telecopy: 33 3 21 95 4774
Attention: Xx. Xxxx Xxxxxxxx
with a copy (which shall not constitute notice) to:
Xxxxxxxx & Xxxxx
Citigroup Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx Xxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(c) If to any of the Management Stockholders, to the address and/or
telephone number set forth below such Management Stockholder's name on the
signature pages hereto or to such other address as such Management Stockholder
shall have provided.
with a copy (which shall not constitute notice) to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Xxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(ii) Any party may change its address for notice by notice given to each
other party in accordance with the foregoing. No objection may be made to the
method of delivery of any notice actually and timely given.
9.6 Permitted Transferees Bound. All Shares Beneficially Owned by a
Permitted Transferee shall, for all purposes, be subject to the terms of this
Agreement, whether or not such Permitted Transferee has executed a consent to be
bound by this Agreement. Notwithstanding anything to the contrary contained
herein, any Person who purchases Shares from a Management Stockholder pursuant
to a Tag-Along Sale or Drag-Along Sale shall not be bound by this Agreement.
9.7 Effectiveness; Amendment; Waiver. Except as otherwise expressly set
forth herein, this Agreement may be amended, modified, supplemented or
terminated only by a written agreement of the Majority Stockholder, the Company
and such Management Stockholders as Beneficially Owned in the aggregate at least
80% of all Shares Beneficially Owned by all Management Stockholders at the time
of the execution of such written agreement; provided, however, that all parties
hereto agree that this Agreement and all other related agreements (including the
Merger Agreement) shall be amended to the extent required in order to provide
for the addition of Management Stockholders as parties to this Agreement and
such other relevant agreements in accordance with Annex A hereto. Other than
this Section 9.7, which shall be effective upon execution of this Agreement, the
other provisions of this Agreement shall become effective immediately following
the Effective Time and shall not be in full force or effect prior thereto.
9.8 Additional Documents; Further Assurances. Each party hereto agrees to
execute any and all further documents and writings and to perform such other
reasonable actions which may be or become necessary to effect the terms of this
Agreement.
9.9 No Third-Party Benefits. Nothing in this Agreement shall confer any
rights upon any Person other than the parties hereto and their respective
permitted successors and assigns.
9.10 Successors and Assigns. Except as otherwise expressly set forth
herein, this Agreement shall be binding upon and shall inure to the benefit of
the parties hereto, and their respective successors and permitted assigns;
provided, however, (i) neither this Agreement nor any rights or obligations
hereunder may be assigned by the Company or the Majority Stockholder, except
that the Majority Stockholder may assign its rights and obligations (except its
obligations under Section 7.5(iii)) hereunder (including the rights and
obligations to purchase Shares and pay the exercise price pursuant to any Put or
Call exercised hereunder or the purchase right pursuant to Section 3.13) to the
Company or any member of the JGD Group, provided, that any such assignment shall
not relieve the Majority Stockholder of its obligations hereunder, and (ii) no
rights or obligations of any Management Stockholder under this Agreement may be
transferred or assigned except that any Management Stockholder shall be
permitted to transfer its rights and obligations hereunder in connection with a
Transfer of Shares made to a Permitted Transferee in compliance with all of the
provisions of this Agreement.
9.11 Severability. In case any one or more of the provisions contained in
this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein; provided, however, that the parties hereto shall
use their reasonable best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
invalid, illegal or unenforceable term, provision, covenant or restriction.
9.12 Integration. This Agreement contains the entire understanding of the
parties with respect to the subject matter hereof. There are no restrictions,
agreements, promises, representations, warranties, covenants or undertakings
with respect to the subject matter hereof other than those expressly set forth
or referred to herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to its subject matter.
9.13 Governing Law. THE RIGHTS AND LIABILITIES OF THE PARTIES SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK, APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED IN SUCH STATE.
9.14 Attorneys' Fees. If a Management Stockholder prevails in any
litigation or arbitration commenced (including any proceedings in a bankruptcy
court) between the parties hereto concerning any provision of this Agreement or
the rights and duties of any Person hereunder, in addition to such other relief
as may be granted, the Majority Stockholder shall reimburse the Management
Stockholder for his attorneys' fees and court costs incurred by reason of such
litigation or arbitration.
9.15 Headings. The headings and table of contents in this Agreement are
inserted only as a matter of convenience, and in no way define, limit, or extend
or interpret the scope of this Agreement or of any particular Section.
9.16 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.17 Consent to Jurisdiction. Each party hereto agrees that any proceeding
arising out of or relating to this Agreement or the breach or threatened breach
of this Agreement may be commenced and prosecuted in a court in the State of New
York. Each party hereto hereby irrevocably and unconditionally consents and
submits to the non-exclusive personal jurisdiction of any court in the State of
New York in respect of any such proceeding. Each party hereto consents to
service of process upon it with respect to any such proceeding by registered
mail, return receipt requested, and by any other means permitted by applicable
laws and rules. Each party hereto waives any objection that it may now or
hereafter have to the laying of venue of any such proceeding in any court in the
State of New York and any claim that it may now or hereafter have that any such
proceeding in any court in the State of New York has been brought in an
inconvenient forum.
9.18 No Inconsistent Agreements. No party will hereafter enter into any
agreements with respect to the Shares which are inconsistent with or violate or
limit in any material respects the rights granted to the other parties in this
Agreement.
9.19 Inclusion of Trusts. Reference to any Management Stockholder made
herein, including by use of the term "him" or the possessive "his" with respect
to such Management Stockholder, shall be deemed to include any trust referred to
on Annex A hereof with respect to such Management Stockholder. Unless otherwise
transferred in accordance with the terms hereof, a Management Stockholder shall
be deemed to Beneficially Own any Shares held by any trust referred to on Annex
A hereto with respect to such Management Stockholder.
* * * * * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
MIKASA, INC.
By:
----------------------------------------
Name:
Title:
X.X. XXXXXX INDUSTRIES, S.A.
By:
---------------------------------------
Name:
Title:
MANAGEMENT STOCKHOLDERS
XXXXXXX X. XXXXXXX, on behalf of
himself, and
THE XXXXXXX XXXXXXX XXXXXXX
SEPARATE PROPERTY TRUST
------------------------------------------
Address:
XXXXXX X. XXXXX
------------------------------------------
Address:
XXXXXXX X. XXXXXXXXXX
------------------------------------------
Address:
XXXXXX X. XXXXXXX, on behalf of
himself, and
THE XXXXXX X. XXXXXXX AND
XXXXXX X. XXXXXXX REVOCABLE
LIVING TRUST
------------------------------------------
Address:
-------------------------------------------------------------------------------
ANNEX A
MANAGEMENT STOCKHOLDERS
Xxxxxxx X. Xxxxxxx, together with the
Xxxxxxx Xxxxxxx Xxxxxxx Separate Property
Trust
Xxxxxx X. Xxxxx
Xxxxxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxxxxx, together with the
Xxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxxx
Revocable Living Trust
Prior to September 24, 2000, a certain other holder of Common Stock may exchange
up to 318,000 shares of Common Stock for shares of New Preference Stock (as
defined in the Merger Agreement).
EXHIBIT E
MIKASA, INC.
INCENTIVE COMPENSATION PLAN
1. Definitions
(a) "Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or
under common control with such Person. For purposes of this
Plan, the term "control," (including, with correlative
meanings, the terms "controlling," "controlled by," and "under
common control with"), as used with respect to any Person,
shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of
voting securities or by contract or otherwise.
(b) "Award" means a unit representing a fixed percentage of
the Plan Pool.
(c) "Beneficial Owner" has the meaning set forth in Rule 13d-3
promulgated under the Exchange Act as in effect on the date
hereof. The terms "Beneficial Ownership" and "Beneficially
Own" shall have correlative meanings.
(d) "Board" means the Board of Directors of Mikasa.
(e) "Cause" means, with respect to the termination of
employment of a Participant by Mikasa, (i) any willful
engaging by the Participant, in the Participant's capacity as
an employee of Mikasa, in gross misconduct that has, or is
intended to have, a material adverse effect on Mikasa or its
Affiliates; (ii) any conviction of the Participant of a felony
or other serious crime involving moral turpitude or (iii) any
other circumstance that would constitute "Cause" under any
written employment agreement with Mikasa to which the
Participant is a party; provided, that any act or failure to
act of the Participant shall not be considered "willful"
unless done or omitted to be done by the Participant not in
good faith and without reasonable belief that the
Participant's action or omission was in the best interest of
Mikasa.
(f) "Committee" means a committee composed of four individuals
designated by JGD (or, at JGD's option, two individuals with
two votes each) ("JGD Designees") and three executive officers
of Mikasa selected by the Board prior to the consummation of
the Merger ("Mikasa Designees"); provided, that if any of the
Mikasa Designees ceases to be an employee of Mikasa for any
reason, such executive officer shall cease to be a Mikasa
Designee and another executive officer of Mikasa will be
selected by the departing Mikasa Designee together with (or
solely by, if the Mikasa Designee has died) the remaining
Mikasa Designees, and such other executive officer will
thereby become a Mikasa Designee.
(g) "Consummation Date" has the meaning set forth in Section 8
hereof.
(h) "Control Transaction" means a transaction resulting in:
(i) the JGD Group ceasing to Beneficially Own at least 50% of
the Voting Power of the Voting Securities of Mikasa then
outstanding; (ii) the merger, consolidation or other business
combination of Mikasa with any other Person; (iii) Mikasa
selling, leasing or otherwise transferring 50% or more of its
assets to any Person(s); or (iv) the liquidation, dissolution
or winding-up of Mikasa.
(i) "Disability" means the physical disability or mental
incapacity of a Participant which entitles such Participant to
benefits under a long term disability plan of Mikasa or which
would entitle such Participant to benefits if he were a
participant in such plan or which would otherwise qualify such
Participant for social security disability insurance benefits.
(j) "Effective Time" has the meaning set forth in the Merger
Agreement.
(k) "Equity Securities" of any Person, means any and all
common stock, preferred stock and any other class of capital
stock of, and any partnership or limited liability company
interests in, such Person or any other similar interests of
any Person that is not a corporation, partnership or limited
liability company.
(l) "Exchange Act" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated
thereunder.
(m) "Fiscal Year" means a fiscal year of Mikasa occurring
during the Plan Period.
(n) "Formula" shall have the meaning set forth in Section 4
hereof.
(o) "Grant Date" means, with respect to a Fiscal Year, the
date, which shall be as soon as practicable following the
completion of such Fiscal Year, on which grants of Awards are
made to Participants generally pursuant to Section 3 hereof
with respect to such completed Fiscal Year.
(p) "JGD" means X.X. Xxxxxx Industries, S.A., a societe
anonyme organized under the laws of France, and any successor
thereto.
(q) "JGD Group" means JGD and its Affiliates.
(r) "Merger" has the meaning set forth in the Merger
Agreement.
(s) "Merger Agreement" means the Agreement and Plan of Merger,
dated September 10, 2000, among Mikasa, JGD, Mountain
Acquisition Corp. and certain other parties, as it may be
amended from time to time.
(t) "Mikasa" means Mikasa, Inc., a Delaware corporation, and
any successor thereto.
(u) "Net Income" means, with respect to any Fiscal Year, the
net after-tax income of Mikasa (excluding (i) the amortization
of any pushed-down goodwill resulting from the Merger, (ii)
any ongoing financing or interest charges (including any fees
associated therewith) incurred as a result of a change in
Mikasa's pre-Merger capital structure resulting from the
Merger and any one time or extraordinary charges resulting
from the Merger, (iii) any one time or extraordinary charges
resulting from any acquisition or disposition of a business,
Person or assets by Mikasa or any of its subsidiaries or any
merger, consolidation or other business combination involving
Mikasa after the Effective Time other than acquisition or
disposition of assets in the ordinary course of business
consistent with past practice, (iv) the impact of any change
in Mikasa's accounting policies or procedures and (v) any
expense related to this Plan).
(v) "Participants" shall mean the Mikasa Designees and the
employees of Mikasa as may be selected by the Mikasa Designees
from time to time to participate in this Plan pursuant to
Section 3 hereof.
(x) "Person" means an individual, corporation, partnership,
limited liability company, joint venture, association,
joint-stock company, trust, unincorporated organization or
government or other agency or political subdivision thereof.
(y) "Plan" means this Mikasa, Inc. Incentive Compensation
Plan.
(z) "Plan Period" means Fiscal Years 2000, 2001, 2002 and
2003; provided, that the Plan Period will continue until the
Grant Date with respect to Fiscal Year 2003.
(aa) "Plan Pool" means the cash pool to be distributed to the
Participants in accordance with this Plan; provided that the
Plan Pool shall not exceed the Plan Pool Maximum.
(bb) "Plan Pool Maximum" means $15,000,000.
(cc) "Voting Power" means, with respect to any Voting
Securities, the aggregate number of votes attributable to such
Voting Securities that could generally be cast by the holders
thereof for the election of directors or similar managing
persons at the time of determination (assuming such election
were then being held).
(dd) "Voting Securities" means, (i) with respect to Mikasa,
the Equity Securities of Mikasa entitled to vote generally for
the election of directors of Mikasa, and (ii) with respect to
any other Person, any securities of or interests in such
Person entitled to vote generally for the election of
directors or any similar managing person of such Person.
2. Administration of this Plan
This Plan shall be administered by the Committee. Except to the extent
authority is expressly granted to the Mikasa Designees or the JGD Designees
hereunder, the Committee shall have full authority to administer this Plan,
including authority to interpret and construe any provision of this Plan and to
adopt such rules and regulations for administering this Plan as it may deem
necessary. Decisions of the Committee shall be final and binding on all parties.
No member of the Board or the Committee shall be liable to any Participant for
any action, omission, or determination relating to this Plan.
3. Grant of Awards
The percentage of the Plan Pool represented by all of the Awards
granted pursuant to this Section 3 shall not equal greater than 100%; provided
that the percentages of the Plan Pool represented by any Awards or portions
thereof that are forfeited by Participants pursuant to Section 7 hereof may be
reallocated as new Awards to newly-hired employees, employees who have been
promoted or employees whose job responsibilities have been increased, whether or
not such employees have already received Awards pursuant to this Plan, as may be
determined by the JGD Designees (if such employees are Mikasa Designees) or the
Mikasa Designees. On the Grant Date with respect to each Fiscal Year during the
Plan Period (a) the JGD Designees shall grant an Award to each Mikasa Designee
and (b) the Mikasa Designees, in consultation with the JGD Designees (whose
opinion shall be taken into account), shall grant an Award to each of the other
Participants in the Plan; provided that on the Grant Date with respect to Fiscal
Year 2000 Awards shall be granted with respect to 25% of the Plan Pool and on
each successive Grant Date Awards shall be granted such that the aggregate
Awards outstanding on the Grant Date with respect to Fiscal Years 2001, 2002 and
2003 shall equal at least 50%, 75% and 100% of the Plan Pool, respectively; and
provided further that an employee hired, promoted or whose job responsibilities
increased after the Grant Date with respect to any Fiscal Year may be granted an
Award at the time of such event.
4. Plan Pool
With respect to each Fiscal Year, as soon as practicable following the
completion of the audit of Mikasa's financial statements for such Fiscal Year,
an irrevocable amount will be credited to a bookkeeping account for the Plan
Pool. Each such annual irrevocable amount credited shall be determined by Mikasa
in accordance with the formula set forth on the attached Exhibit A ("Formula"),
which determination shall be confirmed by Mikasa's auditors in conjunction with
the completion of the audit for such Fiscal Year; provided that in no event
shall the Plan Pool be greater than the Plan Pool Maximum.
5. Payment of Awards
Subject to Sections 8 and 9, as soon as practicable following the
completion of the audit of Mikasa's financial statements for Fiscal Year 2003,
(i) the Plan Pool will be determined by Mikasa by applying the Formula with
respect to Fiscal Year 2003 and adding the result of such application to the
amounts credited to the Plan Pool with respect to prior Fiscal Years, which
determination shall be confirmed by Mikasa's auditors in conjunction with the
completion of the audit for Fiscal Year 2003, (ii) the Committee will calculate
the cash payments to be made to the Participants based upon their aggregate
vested and outstanding Awards and (iii) Mikasa shall make the cash payments to
all Participants with respect to their aggregate vested and outstanding Awards.
6. Vesting of Awards
On each Grant Date, so long as a Participant is employed by Mikasa on
such Grant Date, the aggregate Awards granted to such Participant on or prior to
such Grant Date shall vest as follows: (i) with respect to Fiscal Year 2000's
Grant Date, 0%; (ii) with respect to Fiscal Year 2001's Grant Date, 30%; (iii)
with respect to Fiscal Year 2002's Grant Date, 60%; and (iv) with respect to
Fiscal Year 2003's Grant Date, 100%.
7. Termination of Employment
(a) Termination of Employment by Mikasa for Cause. Unless set
forth otherwise in any written employment agreement between
Mikasa and a Participant, if Mikasa terminates the employment
of a Participant with Mikasa for Cause during the Plan Period,
such Participant shall forfeit all of his Awards (whether or
not vested) and shall not be entitled to any payments by
Mikasa with respect to such Awards pursuant to this Plan or
otherwise.
(b) Termination of Employment by the Participant. Unless set
forth otherwise in any written employment agreement between
Mikasa and a Participant, if a Participant terminates his
employment with Mikasa for any reason during the Plan Period,
Mikasa shall pay to such Participant at the time payments
under the Plan are made generally to other Participants a cash
amount based upon the aggregate vested portion of his Awards
as of the date of such termination, but the Participant shall
forfeit the unvested portion of his Awards upon such
termination and shall not be entitled to any payments by
Mikasa with respect to such unvested portion pursuant to this
Plan or otherwise.
(c) Termination of Employment due to Death or Disability or by
Mikasa without Cause. Unless set forth otherwise in any
written employment agreement between Mikasa and a Participant,
if a Participant's employment with Mikasa is terminated as a
result of the death or Disability of the Participant or Mikasa
terminates the employment of a Participant with Mikasa without
Cause during the Plan Period, such Participant's aggregate
Awards shall automatically vest in full upon such termination,
and Mikasa shall pay to the Participant at the time payments
under the Plan are made generally to other Participants a cash
amount based upon his aggregate vested and outstanding Awards.
8. Control Transactions
Upon the date of the consummation of a Control Transaction (the
"Consummation Date"), the Plan Pool shall be determined by Mikasa (which
determination shall be confirmed by Mikasa's auditors) by adding (i) the amounts
credited to the Plan Pool with respect to the Fiscal Years in the Plan Period
completed prior to the Consummation Date, (ii) if a Fiscal Year has been
completed prior to the Consummation Date but no amount has yet been credited,
the result of the application of the Formula with respect to such Fiscal Year
and (iii) with respect to the uncompleted Fiscal Year during which the
Consummation Date occurs, the result of the application of the Formula with
respect to the completed portion of such Fiscal Year. As soon as practicable
after the determination of the Plan Pool, payments shall be made to the
Participants in accordance with their aggregate outstanding Awards (regardless
of whether such Awards are vested or unvested) and the Committee will also
distribute any unallocated portion of the Plan Pool among the Participants in
such manner as it may determine in its discretion.
9. Termination and Amendment
The Committee may terminate or amend this Plan at any time, in whole or
in part, in its discretion, subject to the agreement of at least two Mikasa
Designees. Upon termination of the Plan, the Plan Pool shall be determined by
Mikasa (which determination shall be confirmed by Mikasa's auditors), subject to
the Plan Pool Maximum, by adding (i) the amounts credited to the Plan Pool with
respect to the Fiscal Years in the Plan Period completed prior to the date of
such termination, (ii) if a Fiscal Year has been completed prior to the date of
such termination but no amount has yet been credited, the result of the
application of the Formula with respect to such Fiscal Year, and (iii) with
respect to the uncompleted Fiscal Year during which such termination occurs, the
result of the application of the Formula with respect to the completed portion
of such Fiscal Year. As soon as practicable after the determination of the Plan
Pool, payments shall be made to the Participants in accordance with their
aggregate outstanding Awards (regardless of whether such Awards are vested or
unvested) and the Committee will also distribute any unallocated portion of the
Plan Pool among the Participants in such manner as it may determine in its
discretion.
10. Certain Adjustments
In the event of a merger or consolidation involving Mikasa, the
acquisition or disposition by Mikasa of any substantial business unit, the
occurrence of any transaction or corporate event which affects Mikasa's
capitalization or the occurrence of any other transaction or corporate event
(other than the Merger), including without limitation any other transactions
with JGD or any of its Affiliates, outside of the ordinary course of business
which could reasonably be expected to have a substantial impact on Mikasa's Net
Income for any Fiscal Year, the Committee will review, in good faith, the effect
of such event on the operation of the Plan and will reasonably adjust the
Formula as it determines to be appropriate in light of the circumstances,
subject to the agreement of at least two Mikasa Designees.
11. Miscellaneous
(a) Non-Assignability. The right of a Participant or of any
other person to any payment under this Plan shall not be
assigned, transferred, pledged or encumbered, and any
purported assignment, transfer, pledge or encumbrance shall be
null and void.
(b) Beneficiaries. If a Participant shall not be alive at the
time an amount is to be paid to the Participant under this
Plan, the amount shall be paid to his beneficiary designated
pursuant to this Section 11(b) or to his estate if he shall
have no such beneficiary. Each Participant may designate or
change his beneficiary by delivering a written designation to
the Committee.
(c) Applicable Law. This Plan and all rights under this Plan
shall be governed by and construed in accordance with the laws
of the State of New Jersey, without reference to its
principles of conflicts of law.
(d) Applicable Withholdings. Mikasa may withhold from any
amounts payable to the Participants under this Plan all
federal, state, city or other taxes that Mikasa may reasonably
determine are required to be withheld pursuant to any
applicable law or regulation.
(e) No Contract of Employment. Nothing contained in this Plan
shall confer upon any Participant any right with respect to
the continuation of such Participant's employment by Mikasa or
interfere in any way with the right of Mikasa at any time to
terminate such employment.
(f) No Right to Participate. Except as otherwise set forth
herein or in any written employment agreement between Mikasa
and a Participant, no employee shall have any claim or right
to participate in this Plan. The selection of an employee to
be granted an Award pursuant to this Plan with respect to any
Fiscal Year shall not give such employee any right to be
granted an Award with respect to any subsequent Fiscal Year.
Except as otherwise set forth herein, the administration of
the Plan is intended to be entirely discretionary on the part
of the Committee.
(f) Plan Unfunded. This Plan shall be unfunded. Payments under
this Plan shall be made from the general assets of Mikasa. The
Participants in this Plan shall be general unsecured creditors
of Mikasa. No Participant shall have any right, title, claim
or interest in or with respect to any specific assets of
Mikasa in connection with the Participant's participation in
this Plan.
(g) Construction. All references herein to the masculine
gender shall include the feminine. All Exhibits attached to
this Plan are incorporated herein by reference and made a part
hereof. The headings in this Plan are inserted for convenience
of reference only and shall not be a part of or control or
affect the meaning of any provision hereof.
(h) Example. An example of a Participant's receipt of Awards
and payout of such Awards under various scenarios is attached
hereto as Exhibit B for illustrative purposes only. To the
extent that the attached example is inconsistent with the
express terms of this Plan, the express terms of this Plan
shall govern.
EXHIBIT A
FORMULA
(*) : % of incremental Net Income credited to Plan Pool
Plan Pool Maximum : 15,000,000
Minimum Net Income for each Fiscal Year which must be achieved in order for
any amounts to be credited to the Plan Pool with respect to such Fiscal
Year
2000 2001
17,500,000 21,000,000
2000 2001
Net Income % (*) Net Income %(*)
From Up to From Up to
- 7,500,000 0.0% - 10,000,000 0.0%
7,500,000 12,500,000 3.0% 10,000,000 16,000,000 3.0%
12,500,000 15,000,000 11.0% 16,000,000 20,000,000 11.0%
15,000,000 25,000,000 13.5% 20,000,000 30,000,000 13.5%
If more than 25,000,000 15.0% If more than 30,000,000 15.0%
2002 2003
23,800,000 27,700,000
2002 2003
Net Income % (*) Net Income % (*)
From Up to From Up to
- 12,000,000 0.0% - 15,000,000 0.0%
12,000,000 16,000,000 3.0% 15,000,000 18,000,000 3.0%
16,000,000 25,000,000 11.0% 18,000,000 25,000,000 11.0%
25,000,000 37,000,000 13.5% 25,000,000 44,000,000 13.5%
If more than 37,000,000 15.0% If more than 44,000,000 15.0%
Examples (for illustrative purposes only)
2000 2001 2002 2003
Net Income 15,000,000 19,200,000 23,400,000 27,600,000
Credit to Plan Pool 0 0 0 0
Plan Pool 0 0 0 0
Net Income 22,500,000 28,800,000 35,100,000 41,400,000
Credit to Plan Pool 1,437,500 1,808,000 2,473,500 3,074,000
Plan Pool 1,437,500 3,245,500 5,719,000 8,793,000
Net Income 25,000,000 32,000,000 39,000,000 46,000,000
Credit to Plan Pool 1,775,000 2,270,000 3,030,000 3,725,000
Plan Pool 1,775,000 4,045,000 7,075,000 10,800,000
Net Income 27,500,000 35,200,000 42,900,000 50,600,000
Credit to Plan Pool 2,150,000 2,750,000 3,615,000 4,415,000
Plan Pool 2,150,000 4,900,000 8,515,000 12,930,000
Net Income 32,500,000 41,600,000 50,700,000 59,800,000
Credit to Plan Pool 2,900,000 3,710,000 4,785,000 5,795,000
Plan Pool 2,900,000 6,610,000 11,395,000 15,000,000
EXHIBIT F
SUPPORT AGREEMENT
This SUPPORT AGREEMENT, is entered into as of September 10, 2000, among X.
X. Xxxxxx Industries, S.A., a societe anonyme organized under the law of France
("Diamond"), Mountain Acquisition Corp., a Delaware corporation ("MAC"), and the
persons listed on Schedule A hereto (each a "Shareholder", and, collectively,
the "Shareholders"). Capitalized terms not otherwise defined herein have the
meanings set forth in the Merger Agreement (defined below).
WHEREAS, Mikasa, Inc., a Delaware corporation (the "Company"), the
Shareholders, Diamond and MAC have, simultaneously with the execution and
delivery of this Agreement, entered into an Agreement and Plan of Merger (as the
same may be amended or supplemented, the "Merger Agreement") providing for the
merger of MAC with and into the Company (the "Merger"), which Merger Agreement
and Merger have been recommended by the Special Committee of the Company's Board
of Directors;
WHEREAS, each Shareholder is the record and beneficial owner of the number
of shares of Common Stock, par value $.01 per share, of the Company (the
"Company Common Stock") set forth opposite such Shareholder's name on Schedule A
hereto and under the heading "Total Shares" (such shares of the Company Common
Stock, as such shares may be adjusted by stock dividend, stock split,
recapitalization, combination or exchange of shares, merger, consolidation,
reorganization or other change or transaction of or by the Company, together
with shares of the Company Common Stock that may be acquired after the date
hereof by such Shareholder, including shares of the Company Common Stock
issuable upon the exercise of options to purchase the Company Common Stock (as
the same may be adjusted as aforesaid), being collectively referred to herein as
the "Shares"); and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Diamond and MAC have requested that the Shareholders enter into this
Agreement.
NOW, THEREFORE, to induce Diamond and MAC to enter into, and in
consideration of it entering into, the Merger Agreement, and in consideration of
the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Representations and Warranties of the Shareholders. Each Shareholder
acting solely in its capacity as a holder of the shares and not as a director or
employee of the Company or in any other capacity, hereby, severally and not
jointly, represents and warrants to, and agrees with, Diamond and MAC as
follows:
(a) Authority. The Shareholder has all requisite power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by the Shareholder. This Agreement has been duly executed and
delivered by the Shareholder and, assuming this Agreement constitutes a valid
and binding obligation of Diamond and MAC, constitutes a valid and binding
obligation of the Shareholder enforceable against the Shareholder in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and other similar laws now or hereafter in
effect relating to creditors rights generally and general principles of equity
(regardless of whether enforcement is considered in a proceeding in law or
equity). Except for the expiration or termination of the waiting periods under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and filings with the Securities and Exchange Commission, neither the
execution, delivery or performance of this Agreement by the Shareholder nor the
consummation by the Shareholder of the transactions contemplated hereby will (i)
require any filing with, or permit, authorization, consent or approval of, any
federal, state, local, municipal or foreign or other government or subdivision,
branch, department or agency thereof or any governmental or quasi-governmental
authority of any nature, including any court or other tribunal (a "Governmental
Entity"), (ii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default under, or give rise to
any right of termination, amendment, cancellation or acceleration under, or
result in the creation of any lien, charge, security interest or other
encumbrance of any nature (a "Lien") upon any of the properties or assets of the
Shareholder under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, license, permit, concession, franchise, contract,
agreement or other instrument or obligation (a "Contract") to which the
Shareholder is a party or by which the Shareholder or any of the Shareholder's
properties or assets, including the Shareholder's Shares, may be bound or (iii)
violate any judgment, order, writ, preliminary or permanent injunction or decree
(an "Order") or any statute, law, ordinance, rule or regulation of any
Governmental Entity (a "Law") applicable to the Shareholder or any of the
Shareholder's properties or assets, including the Shareholder's Shares.
(b) The Shares. The Shareholder's Shares and the certificates
representing such Shares are now, and at all times during the term hereof will
be, held by such Shareholder, or by a nominee or custodian for the benefit of
such Shareholder, and the Shareholder has good and marketable title to such
Shares, free and clear of any Liens, proxies, voting trusts or agreements,
understandings or arrangements with respect to the ownership, transfer or voting
of the Shares, except for any such Liens or proxies arising hereunder. The
Shareholder owns of record or beneficially no shares of the Company Common Stock
other than such Shareholder's Shares and shares of the Company Common Stock
issuable upon the exercise of Company stock options, as set forth on Schedule A
hereto.
(c) Merger Agreement. The Shareholder understands and acknowledges that
Diamond and MAC are entering into the Merger Agreement in reliance upon the
Shareholder's execution and delivery of this Agreement. The Shareholder
covenants and agrees that it will timely perform all of its obligations under
the Merger Agreement.
2. Representations and Warranties of Diamond and MAC. Diamond and MAC
hereby jointly and severally represent and warrant to, and agree with, the
Shareholders as follows:
(a) Authority. Diamond and MAC each have the requisite organizational
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by Diamond and MAC and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary organizational
action on the part of Diamond and MAC. This Agreement has been duly executed and
delivered by Diamond and MAC and, assuming this Agreement constitutes a valid
and binding obligation of the Shareholders, constitutes a valid and binding
obligation of Diamond and MAC enforceable in accordance with its terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar laws now or hereafter in effect relating to
creditors rights generally and general principles of equity (regardless of
whether enforcement is considered in a proceeding in law or equity). Except for
the expiration or termination of the waiting periods under the HSR Act, and
filings with the Securities and Exchange Commission, neither the execution,
delivery or performance of this Agreement by Diamond or MAC nor the consummation
by Diamond or MAC of the transactions contemplated hereby will (i) require any
filing with, or permit, authorization, consent or approval of, any Governmental
Entity, (ii) result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default under, or give rise to any right
of termination, amendment, cancellation or acceleration under, or result in the
creation of any Lien, upon any of the properties or assets of Diamond or MAC
under, any of the terms, conditions or provisions of any Contract to which
Diamond or MAC is a party or by which Diamond or MAC or any of their respective
properties or assets may be bound or (iii) violate any Order or Law applicable
to Diamond or MAC or any of their respective properties or assets.
(b) Securities Act. The Shares will be acquired in compliance with, and
Diamond and MAC will not offer to sell or otherwise dispose of any Shares so
acquired by it in violation of the registration requirements of, the Securities
Act of 1933, as amended.
(c) Merger Agreement. Diamond and MAC each covenant and agree that it
will timely perform all of its obligations under the Merger Agreement.
3. Covenants of the Shareholders. Each Shareholder, severally and not
jointly, to the extent he has the capacity to vote, solely in his capacity as
holder of the Shares and not as a director or employee of the Company or in any
other capacity, agrees as follows:
(a) Such Shareholder shall not, except as contemplated by the terms of
this Agreement or the Merger Agreement, (i) sell, transfer, pledge, assign or
otherwise dispose of, or enter into any Contract, option or other arrangement
(including any profit sharing arrangement) or understanding with respect to the
sale, transfer, pledge, assignment or other disposition of his Shares to any
person other than Diamond, MAC or their designees, (ii) enter into any voting
arrangement, whether by proxy, voting agreement, voting trust, power-of-attorney
or otherwise, with respect to his Shares or (iii) take any other action that
would in any way materially restrict, limit, interfere with or frustrate the
performance of his obligations hereunder or the transactions contemplated
hereby.
(b) At any meeting of shareholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval (including by
written consent) with respect to the Merger and the Merger Agreement is sought,
each Shareholder shall as requested by MAC (including, without limitation, by
cooperating with MAC with respect to the proxy granted to MAC pursuant to
Section 6 below), vote (or cause to be voted) such Shareholder's Shares in favor
of the Merger, the adoption by the Company of the Merger Agreement and the
approval of the other transactions contemplated by the Merger Agreement. At any
meeting of stockholders of the Company or at any adjournment thereof or in any
other circumstances upon which the vote, consent or other approval of
stockholders of the Company is sought, such Shareholder shall as requested by
MAC as provided above vote (or cause to be voted) such Shareholder's Shares
against (i) any Competing Transaction (as defined in the Merger Agreement) or
(ii) any amendment of the Company's Certificate of Incorporation or by-laws or
other proposal or transaction involving the Company or any of its subsidiaries,
which amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify the Merger Agreement, the Merger or any of the
other transactions contemplated by the Merger Agreement (collectively,
"Frustrating Transactions").
4. Notice of Acquisition of Additional Shares. Each Shareholder hereby
agrees, while this Agreement is in effect, to promptly notify MAC of the number
of any new shares of Company Common Stock acquired by such Shareholder, if any,
after the date hereof.
5. Grant of Proxy Coupled with an Interest; Appointment of Proxy.
(a) Each Shareholder hereby grants to, and appoints, Xxxx Xxxxxxxx, and
any other individual who shall hereafter be designated by MAC, such
Shareholder's proxy and attorney-in-fact (with full power of substitution), for
and in the name, place and stead of such Shareholder, to vote such Shareholder's
Shares, or grant a consent or approval in respect of such Shares, at any meeting
of stockholders of the Company or at any adjournment thereof or in any other
circumstances upon which their vote, consent or other approval is sought, (i) in
favor of the Merger, the adoption by the Company of the Merger Agreement and the
approval of the other transactions contemplated by the Merger Agreement and (ii)
against any Competing Transaction or Frustrating Transaction.
(b) Each Shareholder represents that any proxies heretofore given in
respect of such Shareholder's Shares are not irrevocable, and that all such
proxies, if any, are hereby revoked.
(c) Each Shareholder hereby affirms that the proxy set forth in this
Section 5 is coupled with an interest and is irrevocable until the termination
of this Section 5 in accordance with Section 13 hereof. Each Shareholder hereby
further affirms that the proxy is given in connection with the execution of the
Merger Agreement, and that this proxy is given to secure the performance of the
duties of such Shareholder under this Agreement.
6. Further Assurances. Each Shareholder will, from time to time, execute
and deliver, or cause to be executed and delivered, such additional or further
transfers, assignments, endorsements, consents and other instruments as Diamond
or MAC may reasonably request for the purpose of effectively carrying out the
transactions contemplated by this Agreement and to vest the power to vote such
Shareholder's Shares as contemplated by Section 3. Diamond and MAC each agree to
use reasonable efforts to take, or cause to be taken, all actions necessary to
comply promptly with all legal requirements that may be imposed with respect to
the transactions contemplated by this Agreement and the Merger Agreement
(including legal requirements of the HSR Act).
7. Competing Transaction Fee.
(a) Each Shareholder agrees, severally and not jointly, that in the
event the Company or such Shareholder consummates or participates in a Competing
Transaction (including, without limitation, by means of a tender offer) or
enters into definitive agreements related to a Competing Transaction at any time
during the twelve month period after the termination of the Merger Agreement (i)
pursuant to Sections 9.01(d)(ii) or 9.01(g) of the Merger Agreement or (ii)
pursuant to Sections 9.01(c), 9.01(d)(i) or 9.01(f)(i) of the Merger Agreement
(provided that in the case of this clause (ii), a proposal relating to any
Competing Transaction has been made to the Company or a Shareholder at or prior
to the time of the termination by Diamond and MAC of the Merger Agreement
pursuant to Sections 9.01(c), 9.01(d)(i) or 9.01(f)(i) thereof), such
Shareholder shall pay to Diamond an amount in cash equal to the Competing
Transaction Fee simultaneously with the closing of a Competing Transaction that
was consummated or participated in within such twelve month period following the
termination of the Merger Agreement or with respect to which a definitive
agreement was entered into as described above within such twelve month period
following the termination of the Merger Agreement.
(b) For purposes hereof, the "Competing Transaction Fee" shall mean,
with respect to each Shareholder, the product of (x) .50, multiplied by (y) (1)
the total number of Shares owned by such Shareholder as of the time of
termination of the Merger Agreement minus (2) the number of Shares (if any) that
such Shareholder rolls over in, or otherwise retains following, the Competing
Transaction (provided that if the number of Shares to be rolled over or
otherwise retained by such Shareholder in the Competing Transaction is greater
than the number of Shares to be rolled over by such Shareholder in the Merger,
the number of Shares for purposes of this clause (2) shall be the number of
Shares to be rolled over by such Shareholder in the Merger), multiplied by (z)
the excess, if any, of (1) the highest price per share of Company Common Stock
(whether paid to a Shareholder or any other holder of Company Common Stock) paid
in such Competing Transaction over (2) $16.50.
For purposes of clarity, if the Company or any Shareholder enters into any
agreement or understanding relating to any Competing Transaction prior to the
date which is twelve months after the termination of the Merger Agreement as
provided in paragraph (a) above and such Competing Transaction is consummated at
anytime thereafter, the Competing Transaction Fee will be payable upon
consummation of such Competing Transaction regardless of whether such Competing
Transaction is consummated prior to or after the date which is twelve months
after the termination of the Merger Agreement as provided in paragraph (a)
above. Notwithstanding anything in this Agreement to the contrary, no amount
shall be payable by a Shareholder pursuant to this Section 7 unless and until a
Competing Transaction is consummated as described in paragraph (a) above.
8. Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of, and be enforceable by,
the parties hereto and their respective successors and assigns. Notwithstanding
the foregoing, Diamond and MAC shall each have the right to assign its rights,
interests and obligations hereunder to any of its affiliates at its sole option
and without the prior written consent of the other parties hereto; provided that
no such assignment shall relieve Diamond or MAC of its respective obligations
hereunder. Notwithstanding anything contained in this Agreement to the contrary,
nothing in this Agreement, expressed or implied, is intended to confer on any
person other than the parties hereto or their respective heirs, successors,
executors, administrators and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
9. General Provisions.
(a) Payments. All payments required to be made to any party to this
Agreement shall be made by Wire Transfer to an account designated by the
recipient at least one business day prior to such payment.
(b) Expenses. Subject to the terms of the Merger Agreement, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expense.
(c) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(d) Notice. All notices and other communications hereunder shall be in
writing and shall be deemed given upon receipt to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(i) if to Diamond or MAC, to
c/o X. X. Xxxxxx Industries
00 xxx Xxxxxx Xxxxxxx
00000 Xxxxxx, Xxxxxx
Telecopy: 33 3 21 95 4774
Attention: Xx. Xxxx Xxxxxxxx
with a copy to:
Xxxxxxxx & Xxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxxxx Xxxxx, Esq.
and
(ii) if to a Shareholder, to the address set forth under the
name of such Shareholder on Schedule A hereto
with a copy to:
Cleary, Gottlieb, Xxxxx and Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
Xxxxx Xxxxxxxx, Esq.
(e) Interpretation. When a reference is made in this Agreement to a
Section, such reference shall be to a Section of this Agreement unless otherwise
indicated. The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Wherever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
(f) Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
(g) Entire Agreement. This Agreement (including the documents and
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to any
applicable conflicts of law principles.
(i) Publicity. Diamond and MAC on the one hand and the Shareholders on
the other hand shall consult with each other and the Company before issuing any
press release or otherwise making any public statements with respect to this
Agreement or any of the transactions contemplated by the Merger Agreement. Prior
to the closing of the Merger, Diamond, MAC and the Shareholders shall not issue
any such press release or make any such public statement without the prior
consent of the other (which consent shall not be unreasonably withheld), except
as may be required by Law or any listing agreement with the NYSE or any
securities exchange to which Diamond, MAC or the Company is a party and, in such
case, shall use reasonable effects to consult with all the parties hereto prior
to such release or statement being issued. The parties shall agree on the text
of a joint press release by which Diamond, MAC and the Company will announce the
execution of this Agreement.
10. Shareholder Capacity. No person executing this Agreement who is or
becomes during the term hereof a director, employee or officer of the Company
makes any agreement or understanding herein in his or her capacity as a
director, employee or officer of the Company. Each Shareholder signs solely in
his capacity as the record holder and beneficial owner of, or the trustee of a
trust whose beneficiaries are the beneficial owners of, such Shareholder's
Shares and nothing herein shall limit or affect any actions taken by, or
requires that any actions be taken by, such Shareholder in his capacity as an
officer, employee or director of the Company.
11. Enforcement. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in a court of the United States in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto waives any right to trial by jury with
respect to any claim or proceeding related to or arising out of this Agreement
or any of the transactions contemplated hereby.
12. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
13. Termination. The provisions of Sections 3, 4 and 5 hereof shall
terminate automatically and be of no further force and effect on the earlier to
occur of (a) the consummation of the Transactions (as defined in the Merger
Agreement) and (b) the termination of the Merger Agreement, and the other
provisions (including, without limitation, Section 7) of this Agreement shall
survive any termination of the Merger Agreement.
* * * * *
IN WITNESS WHEREOF, Diamond, MAC and each Shareholder have caused this
Agreement to be duly authorized, executed and delivered, all as of the date
first written above.
X.X. XXXXXX INDUSTRIES
By:
---------------------------------------
Its:
MOUNTAIN ACQUISITION CORP.
By:
---------------------------------------
Its:
SHAREHOLDERS:
XXXXXXX X. XXXXXXX, on behalf of
himself, and
THE XXXXXXX XXXXXXX XXXXXXX
AND XXXXX XXXXX XXXXXXX
COMMUNITY PROPERTY TRUST,
and
THE XXXXXXX XXXXXXX XXXXXXX
SEPARATE PROPERTY TRUST
------------------------------------------
Address:
XXXXXX X. XXXXX
------------------------------------------
Address:
XXXXXXX X. XXXXXXXXXX
------------------------------------------
Address:
XXXXXX X. XXXXXXX, on behalf
of himself, and
THE XXXXXX X. XXXXXXX
AND XXXXXX X. XXXXXXX REVOCABLE
LIVING TRUST
------------------------------------------
Address:
SCHEDULE A
Options to Purchase
Shareholder Common Shares Common Shares
---------- ------------- -------------------
Xxxxxx X. Xxxxx 3,956,353 247,500
---------------
Xxxxxxx X. Xxxxxxx 0 497,500
------------------
Xxxxxxx Xxxxxxx Xxxxxxx and Xxxxx
Xxxxx Dingmanperty Trust 109,845 0
Xxxxxxx Xxxxxxx Xxxxxxx Separate
Property Trust 1,184,192 0
Xxxxxxx X. Xxxxxxxxxx 1,587,038 240,000
---------------------
Xxxxxx X. Xxxxxxx 0 0
-----------------
Xxxxxx X. Xxxxxxx and Xxxxxx X.
Xxxxxxx Revocable Living Trust 2,488,469 0
--------- ---------
Total 9,325,897 985,000
