AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made as of November 27, 1996, by and
among Central Tractor Farm & Country, Inc., a Delaware corporation ("Company"),
X.X. Childs Equity Partners, L.P., a Delaware limited partnership ("Childs"),
JWC Holdings I, Inc., a Delaware corporation ("Acquiror Parent") and JWC
Acquisition I, Inc., a Delaware corporation ("Acquiror") (Company and Acquiror
being hereinafter sometimes collectively referred to as the "Constituent
Corporations").
RECITALS
A. The respective Boards of Directors of Company and Acquiror deem the
acquisition of Company by Acquiror on the terms and conditions set forth in this
Agreement and Plan of Merger (this "Agreement") to be desirable and generally to
the welfare and advantage of each, and in the best interests of the stockholders
of each.
B. In furtherance of such acquisition, the Boards of Directors of Acquiror
Parent, Acquiror and Company have each approved this Agreement and the merger
(the "Merger") of Acquiror with and into Company in accordance with the Delaware
General Corporation Law (the "DGCL") and upon the terms and subject to the
conditions set forth herein.
C. The Board of Directors of Company has (i) determined that the
consideration to be paid for each share of Common Stock, par value $.01 per
share, of Company ("Company Common Stock") in the Merger is fair to and in the
best interests of the stockholders of Company, (ii) approved this Agreement and
the Merger and the other transactions contemplated hereby and (iii) resolved and
agreed to recommend approval of the Merger and adoption of this Agreement by
such stockholders.
D. As a condition and inducement to Childs', Acquiror Parent's and
Acquiror's entering into this Agreement and incurring the obligations set forth
herein, concurrently with the execution and delivery of this Agreement, Childs,
Acquiror Parent, and Acquiror are entering into a Securities Purchase Agreement
(the "Securities Purchase Agreement") with certain securityholders of Company
parties thereto (collectively, the "Securityholders"), pursuant to which the
Securityholders have agreed to sell all of their shares of Company Common Stock
to Acquiror pursuant to the terms and subject to the conditions set forth in the
Securities Purchase Agreement.
G. The Board of Directors of Company has approved the transactions
contemplated by this Agreement and the Securities Purchase Agreement in
accordance with the provisions of Section 203 of the DGCL.
H. Certain terms used herein are defined in Section 6 of this Agreement.
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NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained and other valuable consideration, the receipt and adequacy
whereof are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby represent, warrant, covenant and agree as follows:
SECTION 1. THE MERGER AND RELATED MATTERS.
1.1 The Merger.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the DGCL, at the Effective Time, Acquiror
shall be merged with and into Company. At the Effective Time, the separate
corporate existence of Acquiror shall cease, and Company shall continue as the
surviving corporation under the name Central Tractor Farm & Country, Inc. (the
"Surviving Corporation").
(b) Upon the terms and subject to the conditions set forth in Section
5, the Merger shall become effective at the time of filing of a certificate of
merger with the Secretary of State of the State of Delaware in accordance with
the provisions of the DGCL (the "Certificate of Merger"), or at such later time
in accordance with the provisions of the DGCL as is specified in the Certificate
of Merger. Company and Acquiror agree to file the Certificate of Merger at the
time of the Closing. The date and time when the Merger shall become effective is
hereinafter referred to as the "Effective Time."
(c) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers and franchises and be subject to all
of the restrictions, disabilities and duties of Acquiror and Company, and the
Merger shall otherwise have the effects provided for under the DGCL.
1.2 Closing. Unless this Agreement shall have been terminated and the
transactions contemplated hereby abandoned pursuant to Section 7, the closing of
the Merger contemplated by this Agreement (the "Closing") shall take place at
the offices of Xxxxxxxx & Worcester LLP, Xxx Xxxx Xxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx at 10:00 a.m., local time, on the third (3rd) Business Day after
the date on which the last of the conditions set forth in Section 5 is fulfilled
or waived or at such other time, date or place as Company, Childs and Acquiror
may mutually agree in writing. The date on which the Closing actually takes
place is hereinafter referred to as the "Closing Date".
1.3 Certificate of Incorporation; By-Laws; Directors and Officers.
(a) The Certificate of Incorporation of Acquiror, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until amended in accordance with the
terms thereof and the DGCL.
(b) The By-laws of Acquiror, as in effect immediately prior to the
Effective Time, shall be the By-laws of the Surviving Corporation until amended
in accordance with
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the terms thereof, the Certificate of Incorporation of the Surviving Corporation
and the DGCL.
(c) The directors of Acquiror immediately prior to the Effective Time
shall be the initial directors of the Surviving Corporation, each to hold office
in accordance with the Certificate of Incorporation and By-laws of the Surviving
Corporation until a successor is elected or appointed and has qualified or until
the earliest of such director's death, resignation, removal or disqualification,
and the officers of Company immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified, or as
otherwise provided in the By-laws of the Surviving Corporation.
1.4 Conversion of Shares. At the Effective Time, by virtue of the Merger
and without any action on the part of Acquiror or Company or their respective
stockholders:
(a) Each share of Company Common Stock, issued and outstanding
immediately prior to the Effective Time (other than Dissenting Shares and shares
held by Childs, Acquiror Parent, Acquiror or any of their wholly owned
Subsidiaries and shares held in the treasury of Company or by any of its wholly
owned Subsidiaries) shall, by virtue of the Merger and without any action on the
part of the holder thereof, be cancelled, extinguished and converted
automatically into the right to receive $14.25 (the "Merger Price"), in cash
payable without interest, to the holder of such share, upon surrender, in the
manner provided in Section 1.5, of the certificate that formerly evidenced such
share, less any required withholding taxes, upon the surrender of the
certificate representing such share .
(b) Prior to the Effective Time, the Board of Directors of Company
(or, if appropriate, any Committee thereof) shall adopt appropriate resolutions
and take all other actions necessary to provide that, except as may be otherwise
agreed in writing between Acquiror and any holder of any Company Option
Securities, each Company Option Security issued and outstanding immediately
prior to the Effective Time (other than Company Option Securities held by Childs
or any of its wholly owned Subsidiaries or held in the treasury of Company or by
any of its wholly owned Subsidiaries) shall, by virtue of the Merger and without
any action on the part of the holder thereof, (i) in the case of Company Option
Securities with a per share exercise price that is less than the Merger Price,
be converted into the right to receive, upon the surrender of the instrument
evidencing such Company Option Security, a cash payment equal to the product
(the "Company Option Security Price") of (A) the number of shares of Company
Common Stock subject to such Company Option Security and (B) the excess, if any,
of the Merger Price over the per share exercise price of the Company Option
Security, and each Company Option Security so converted will, upon such payment,
be canceled, and, (ii) in the case of all other Company Option Securities, shall
be canceled without payment of any consideration therefor and without any
conversion thereof. In no event shall the holder of any Company Option Security
be entitled, from and after the Effective Time, to acquire securities of the
Surviving Corporation or Childs. Anything herein to the contrary
notwithstanding, no interest or dividends shall accrue or be payable or paid on
the Company Option Security Price to any Person hereunder.
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(c) Each share of common stock, par value $0.01 per share, of Acquiror
issued and outstanding immediately prior to the Effective Time shall, by virtue
of the Merger and without any action on the part of the holder thereof, be
converted into one share of common stock, par value $0.01 per share, of the
Surviving Corporation.
(d) Each share of Company Common Stock then held by Childs or any direct or
indirect wholly owned Subsidiary of Childs, or held in the treasury of Company
or by any direct or indirect wholly owned Subsidiary of Company, shall be
canceled without payment of any consideration therefor and without any
conversion thereof.
(e) Notwithstanding anything in this Agreement to the contrary but only in
the circumstances and to the extent provided by the DGCL, shares of Company
Common Stock which are outstanding immediately prior to the Effective Time and
which are held by stockholders who were entitled to and did not vote such shares
in favor of the Merger or consented thereto in writing and who shall have
properly and timely delivered to Company a written demand for payment of the
fair cash value of shares of Company Common Stock in the manner provided in and
complied with all of the relevant provisions of Section 262 of the DGCL
("Dissenting Shares") shall not be converted into or represent the right to
receive the Merger Price. Instead, the holders thereof shall be entitled to
payment of the fair cash value of such shares in accordance with the provisions
of Section 262 of the DGCL; provided, however, that (i) if any holder of
Dissenting Shares shall subsequently deliver a written withdrawal of his demand
for payment of the fair cash value of such shares and the Board of Directors of
Company or the Surviving Corporation, as the case may be, shall consent thereto,
or (ii) if any holder fails to establish and perfect his entitlement to the
relief provided in such Section 262 or if the right of such holder to receive
the fair cash value of such shares of Company Common Stock as to which he seeks
relief otherwise terminates pursuant to Section 262 of the DGCL, such shares
shall thereupon cease to be deemed to be Dissenting Shares and shall be deemed
to have been converted into and represent the right to receive, upon the
surrender of the certificate or certificates representing such shares, as of the
Effective Time, the Merger Price. Company will not settle any demand with
respect to any Dissenting Shares without the consent of Childs and Acquiror.
1.5 Payment. (a) Pursuant to an agreement reasonably satisfactory to
Company, Childs and Acquiror (the "Disbursing Agent Agreement") to be entered
into before the Closing Date among Childs, Acquiror and a disbursing agent to be
selected by Acquiror and reasonably satisfactory to Company (the "Disbursing
Agent"), at or immediately following the Effective Time, Childs shall deposit or
cause to be deposited in trust for the benefit of Company's stockholders cash to
which holders of Company Common Stock and holders of the Company Option
Securities shall be entitled at the Effective Time pursuant to the provisions of
Section 1.4. The Disbursing Agent shall invest the cash deposited with it in
such manner as the Surviving Corporation directs; provided, however, that
substantially all of such investments shall be in obligations of or guaranteed
by the United States of America, in commercial paper obligations receiving the
highest rating from either Xxxxx'x Investors Service, Inc. or Standard & Poor's
Corporation, or in certificates of deposit, bank repurchase agreements or
bankers' acceptances of commercial banks with capital exceeding $1,000,000,000
(collectively, "Permitted Investments") or in money market funds which are
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invested solely in Permitted Investments; provided further, however, that the
maturities of Permitted Investments shall be such as to permit the Disbursing
Agent to make prompt payment of the Merger Price. Any net profit from, or
interest or income produced by, Permitted Investments shall be payable to the
Surviving Corporation as and when requested by the Surviving Corporation. The
Surviving Corporation shall be required to replace any funds lost as a result of
any investment. Any funds remaining unclaimed following the expiration of the
sixth (6th) month after the Effective Time shall be released and repaid or
redelivered by the Disbursing Agent to the Surviving Corporation upon demand,
after which time Persons entitled thereto may look, subject to applicable
escheat and other similar laws, only to the Surviving Corporation, which shall
remain responsible for payment thereof. Notwithstanding the foregoing, neither
the Surviving Corporation or the Disbursing Agent shall be liable to any holder
of a share of Company Common Stock for any Merger Price delivered in respect of
such share to a public official pursuant to any property, escheat or similar
law.
(b) As soon as practicable after the Effective Time, the Disbursing Agent
shall send a notice and transmittal form to each holder of a certificate or
certificates theretofore evidencing shares of Company Common Stock, other than
certificates representing Dissenting Shares (such certificates, other than those
representing shares to be canceled pursuant to Section 1.4(d) and Dissenting
Shares, are collectively referred to herein as the "Certificates"), advising
such holder of the effectiveness of the Merger and the procedure for
surrendering to the Disbursing Agent such Certificate for payment of the Merger
Price. Upon the surrender of a Certificate to the Disbursing Agent together with
and in accordance with such transmittal form, the holder thereof shall be
entitled to receive in exchange therefor the Merger Price payable in respect of
each share of Company Common Stock represented thereby. Upon such surrender, the
Disbursing Agent will promptly pay the Merger Price. Except as otherwise
provided in Section 1.4, until so surrendered, each such Certificate shall be
deemed for all purposes to evidence only the right to receive the Merger Price.
(c) If the Merger Price (or any portion thereof) is to be paid to a Person
other than the Person in whose name the Certificate surrendered in exchange
therefor is registered, it shall be a condition to the payment of the Merger
Price that the Certificate so surrendered shall be properly endorsed or
accompanied by appropriate stock powers and otherwise be in proper form for
transfer, that such transfer otherwise be proper and that the Person requesting
such transfer pay to the Disbursing Agent any transfer or other taxes payable by
reason of the foregoing or establish to the satisfaction of the Disbursing Agent
that such taxes have been paid or are not required to be paid.
(d) In the event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed and subject to such other conditions
as the Board of Directors of the Surviving Corporation may impose, the Surviving
Corporation shall issue in exchange for such lost, stolen or destroyed
Certificate the Merger Price deliverable in respect thereof as determined in
accordance with Section 1.4. When authorizing such issue of the Merger Price in
exchange therefor, the Board of Directors of the Surviving Corporation may, in
its discretion and as a condition precedent to the issuance thereof, require the
owner of such lost,
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stolen or destroyed Certificate to give the Surviving Corporation a bond or
other surety in such sum as it may reasonably direct as indemnity against any
claim that may be made against the Surviving Corporation with respect to the
Certificate alleged to have been lost, stolen or destroyed.
(e) Anything herein to the contrary notwithstanding, no interest or
dividends shall accrue or be payable or paid on any portion of the Merger Price
payable to any Person hereunder.
(f) At and after the Effective Time, each holder of a Certificate or of a
certificate representing shares of Company Common Stock to be canceled pursuant
to Section 1.4(d) or of Dissenting Shares shall cease to have any rights as a
stockholder of Company, except, in the case of the holder of a Certificate for
the right to surrender Certificates in the manner prescribed by Section 1.5(b)
in exchange for payment of the Merger Price or, in the case of the holder of
Dissenting Shares, the right to perfect the right to receive payment for
Dissenting Shares pursuant to Section 262 of the DGCL. No transfer of Company
Common Stock shall be made on the stock transfer books of the Surviving
Corporation at or after the Effective Time.
(g) The Disbursing Agent Agreement shall also contain provisions of a
nature similar to those set forth in this Section with respect to payment of the
Company Option Security Price required to be made with respect to Company Option
Securities as provided for in Section 1.4(b).
SECTION 2. REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS OF COMPANY.
Company represents, warrants, covenants and agrees that:
2.1 Organization and Business; Power and Authority; Effect of Transaction.
(a) Company (i) is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, (ii) has all requisite
corporate power and authority to own or hold under lease its properties and to
conduct its business as now conducted and as presently proposed to be conducted,
and is in possession of all material Governmental Authorizations and Private
Authorizations to the extent required for such ownership and lease of its
property and conduct of its business and (iii) has duly qualified and is
authorized to do business and is in good standing as a foreign corporation in
each jurisdiction in which it owns or leases properties, conducts operations or
maintains a stock of goods, except where the failure to be so qualified would
not have a Material Adverse Effect. Complete and correct copies of the
Certificate of Incorporation and By-laws of Company, each as amended to date,
have heretofore been delivered by Company to Acquiror. Such Certificate of
Incorporation and By-laws are in full force and effect.
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(b) Company has all requisite corporate power and authority necessary to
enable it to execute and deliver, and to perform its obligations under, and to
consummate the transactions contemplated by, this Agreement and each Transaction
Document executed or to be executed by Company; and the execution, delivery and
performance of this Agreement and each Transaction Document executed or to be
executed by Company have been duly authorized by all requisite corporate action,
other than the Company Stockholder Approval. This Agreement has been duly
executed and delivered by Company and constitutes, and each Transaction Document
when executed and delivered by Company will constitute, legal, valid and binding
obligations of Company and each of the other parties, if any, thereto which is
Affiliated with Company, enforceable in accordance with their respective terms.
(c) The authorized and outstanding capital stock of Company is as set forth
in Section 2.1 of the Disclosure Schedule. All of such outstanding capital stock
has been duly authorized and validly issued, is fully paid and nonassessable and
is not subject to any preemptive or similar rights. Except as set forth in
Section 2.1 of the Disclosure Schedule, (i) there is neither outstanding nor has
Company or any Subsidiary agreed to grant or issue any shares of its capital
stock or any Option Security or Convertible Security and (ii) neither Company
nor any Subsidiary is a party to or is bound by any agreement, put or commitment
pursuant to which it is obligated to purchase, redeem or otherwise acquire any
shares of capital stock or any Option Security or Convertible Security. Complete
and correct copies of each of the Company Option Securities and Company
Convertible Securities listed on the Disclosure Schedule, each as amended to
date, have heretofore been made available to Acquiror.
(d) Except as set forth in Section 2.1 of the Disclosure Schedule and
subject to obtaining the Company Stockholder Approval, neither the execution and
delivery of this Agreement or any Transaction Document, nor the consummation of
the transactions herein or therein contemplated, nor compliance with the terms,
conditions and provisions hereof or thereof by Company or any of its
Subsidiaries:
(i) (A) will conflict with, or result in a breach or violation of, or
constitute a default under, any Applicable Law on the part of Company or
any of its Subsidiaries or (B) will conflict with or result in a breach or
violation of, or constitute a default under, any of the Organic Documents
of Company or any of its Subsidiaries or (C) will conflict with, or result
in a breach or violation of, or constitute a default under, or permit the
acceleration of any obligation or liability under, or but for any
requirement of giving of notice or passage of time or both would constitute
such a conflict with, breach or violation of, or default under, or permit
any such acceleration of, any Contractual Obligation of Company or any of
its Subsidiaries, or
(ii) will result in or permit the creation or imposition of any Encumbrance
upon any property now owned or leased by Company or any such other party.
(e) Company does not have any Subsidiaries other than those set forth in
Section 2.1 of the Disclosure Schedule, each of which is wholly owned, is a
corporation which is duly organized, validly existing and in good standing
under the laws of the
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respective state of incorporation set forth opposite its name on the
Disclosure Schedule, and is duly qualified and in good standing as a
foreign corporation in each other jurisdiction in which it owns or leases
properties, conducts operations or maintains a stock of goods, except where
the failure to be so qualified would not have a Material Adverse Effect,
with corporate power and authority to carry on the business in which it is
engaged. Each such Subsidiary is in possession of all Governmental
Authorizations and Private Authorizations required for such ownership and
lease of its property and conduct of its business. Company owns all of the
outstanding capital stock of each such Subsidiary, free and clear of all
Encumbrances, and all such stock has been duly authorized and validly
issued and is fully paid and nonassessable. There are no outstanding Option
Securities or Convertible Securities, or agreements, puts, commitments or
understandings with respect to any of the foregoing, of any nature
whatsoever relating to the authorized and unissued or the outstanding
capital stock of any such Subsidiaries. Except as set forth in Section 2.1
of the Disclosure Schedule, neither Company nor any of its Subsidiaries
owns directly or indirectly any capital stock or equity or proprietary
interest in any other Entity or enterprise, however organized and however
such interest may be denominated or evidenced, or is party to or bound by
any agreements, puts, commitments or understandings pursuant to which it is
obligated to purchase or otherwise acquire any of the foregoing.
2.2 Filings with the Commission; Financial Statements.
(a) Company has filed all forms, reports and documents required to be filed
with the Commission and has made available to Acquiror and Childs (i) its Annual
Report on Form 10-K for the fiscal year ended October 28, 1995, (ii) its
Quarterly Reports on Form 10-Q for the quarters ended January 27, 1996, April
27, 1996 and July 27, 1996, (iii) all other reports or registration statements
filed by Company with the Commission since October 29, 1995, (iv) all proxy
statements relating to Company's meetings of stockholders (whether annual or
special) since October 29, 1995, and (v) all amendments and supplements to all
such reports and registration statements filed by Company with the Commission
pursuant to the requirements of the Exchange Act ((i)-(v) collectively, the
"Company SEC Reports"). Except as disclosed in Section 2.2 of the Disclosure
Schedule, the Company SEC Reports (i) were prepared in all material respects in
accordance with the requirements of the Securities Act or the Exchange Act, as
the case may be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. None of Company's Subsidiaries is required to file any
forms, reports or other documents with the Commission.
(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Company SEC Reports was prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
thereto), and each fairly presents the consolidated financial position of
Company and its Subsidiaries as at the respective dates thereof and the
consolidated results of its operations and cash flows and stockholder equity for
the periods indicated, except that the unaudited interim financial statements
were or are
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subject to normal and recurring year-end adjustments which were not
or are not expected to be material in amount.
2.3 Absence of Certain Changes or Events. Except as set forth in Section
2.3(a) through Section 2.3(f) of the Company Disclosure Schedule or the Company
SEC Reports, since October 29, 1995, Company has conducted its business in the
ordinary course and there has not occurred: (a) any Material Adverse Effect; (b)
any amendments or changes in the Organic Documents of Company or its
Subsidiaries; (c) any damage to, destruction or loss of any asset of Company or
any of its Subsidiaries (whether or not covered by insurance) that constitutes a
Material Adverse Effect; (d) any change by Company in its accounting methods,
principles or practices except as required by any change in generally accepted
accounting principles; (e) any revaluation by Company of any of its or any of
its Subsidiaries' assets, including, without limitation, writing down the value
of inventory or writing off notes or accounts receivable other than in the
ordinary course of business; or (f) any sale, pledge, disposition of or
encumbrance upon any assets of Company or any of its Subsidiaries (except (i)
sales of assets in the ordinary course of business and in a manner consistent
with past practice, (ii) dispositions of obsolete or worthless assets and (iii)
sales of immaterial assets not in excess of $300,000 in the aggregate.
2.4 No Undisclosed Liabilities. Except as is disclosed in Section 2.4 of
the Disclosure Schedule, neither Company nor any of its Subsidiaries has any
liabilities (absolute, accrued, contingent or otherwise), except liabilities (a)
in the aggregate adequately provided for in Company's audited balance sheet
(including any related notes thereto) for the fiscal year ended October 28, 1995
included in the Company's 1995 Annual Report on Form 10-K (the "1995 Company
Balance Sheet"), (b) incurred in the ordinary course of business and not
required under generally accepted accounting principles to be reflected on the
1995 Company Balance Sheet, (c) incurred since October 28, 1995 in the ordinary
course of business consistent with past practice, or (d) incurred in connection
with this Agreement.
2.5 Employee Benefit Plans, Employment Agreements . Except in each case as
set forth in Section 2.5 of the Disclosure Schedule, (i) there has been no
"prohibited transaction," as such term is defined in Section 406 of ERISA and
Section 4975 of the Code, with respect to any employee pension plans (as defined
in Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), any material employee welfare plans (as defined in Section
3(1) of ERISA), or any material bonus, stock option, stock purchase, incentive,
deferred compensation, supplemental retirement, severance and other similar
fringe or employee benefit plans, programs or arrangements (collectively, the
"Company Employee Plans"), which could result in any liability of Company or any
of its Subsidiaries; (ii) all Company Employee Plans are in compliance in all
respects with the requirements prescribed by any and all Laws (including ERISA
and the Code), currently in effect with respect thereto (including all
applicable requirements for notification to participants or the Department of
Labor, Pension Benefit Guaranty Corporation (the "PBGC"), Internal Revenue
Service (the "IRS") or Secretary of the Treasury), and Company and each of its
Subsidiaries have performed all material obligations required to be performed by
them under, are not in any respect in default under or violation of, and have no
knowledge of any material default or violation by any other party to, any of the
Company Employee Plans; (iii) each Company
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Employee Plan intended to qualify under Section 401(a) of the Code and each
trust intended to qualify under Section 501(a) of the Code is the subject of a
favorable determination letter from the IRS, and nothing has occurred which may
reasonably be expected to impair such determination; (iv) all contributions
required to be made to any Company Employee Plan pursuant to Section 412 of the
Code, or the terms of the Company Employee Plan or any collective bargaining
agreement, have been made on or before their due dates; (v) with respect to each
Company Employee Plan, no "reportable event" within the meaning of section 4043
of ERISA (excluding any such event for which the 30-day notice requirement has
been waived under the regulations to Section 4043 of ERISA) nor any event
described in Section 4062, 4063 or 4041 of ERISA has occurred; (vi) no
withdrawal (including a partial withdrawal) has occurred with respect to any
multiemployer plan within the meaning set forth in Section 3(37) of ERISA that
has resulted in, or could reasonably be expected to result in, any withdrawal
liability for Company or any of its Subsidiaries; and (vii) neither Company nor
any of its Subsidiaries has incurred, or reasonably expects to incur, any
liability under Title IV of ERISA (other than liability for premium payments to
the PBGC, and contributions not in default to the respective plans, arising in
the ordinary course).
2.6 Labor Matters. Except as set forth in Section 2.6 of the Disclosure
Schedule: (i) there are no claims or proceedings pending or, to the knowledge of
Company or any of its Subsidiaries, threatened, between Company or any of its
Subsidiaries and any of their respective employees; (ii) neither Company nor any
of its Subsidiaries is a party to any collective bargaining agreement or other
labor union contract applicable to persons employed by Company or its
Subsidiaries, nor does Company or any of its subsidiaries know of any activities
or proceedings of any labor union to organize any such employees; and (iii)
neither Company nor any of its Subsidiaries has any knowledge of any strikes,
slowdowns, work stoppages, lockouts, or threats thereof, by or with respect to
any employees of Company or any of its Subsidiaries.
2.7 Title to Properties; Leases. Company and each of its Subsidiaries has
good and defensible title to all real property, if any, reflected as an asset on
the most recent balance sheet forming part of the financial statements, or used
by Company or any of its Subsidiaries in its business if not so reflected, and
good indefeasible and merchantable title to all other assets, tangible and
intangible, reflected on such balance sheet, or used by Company or any of its
Subsidiaries in its business if not so reflected, or purported to have been
acquired by Company or any of its Subsidiaries since such date (other than
inventory sold, or property, plant and other equipment used up or retired, since
such date, in each case in the ordinary course of business consistent with past
practice of Company and its Subsidiaries), free and clear of all Encumbrances
except for Permitted Encumbrances. Except for financing statements evidencing
Encumbrances referred to in the preceding sentence, no financing statements
under the Uniform Commercial Code and no other filing which names Company or any
of its Subsidiaries as debtor or which covers or purports to cover any of the
property of Company or any of its Subsidiaries is on file in any state or other
jurisdiction, and neither Company nor any Subsidiary has signed or agreed to
sign any such financing statement or filing or any security agreement
authorizing any secured party thereunder to file any such financing statement or
filing. Each Lease or other occupancy or other agreement under which Company or
any of its Subsidiaries holds real or personal property has been duly
authorized,
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executed and delivered by either the Company or the Subsidiaries
which are parties thereto and is a legal, valid and binding obligation of each
of them, enforceable in accordance with its terms. Company and each of its
Subsidiaries has a valid leasehold interest in and enjoys peaceful and
undisturbed possession under all Leases pursuant to which it holds any real
property or tangible personal property. All of such Leases are valid and
subsisting and in full force and effect; and neither Company nor any of its
Subsidiaries nor, to Company's knowledge, any other party thereto, is in default
in the performance, observance or fulfillment of any material obligation,
covenant or condition contained in any such Lease. Neither Company nor any of
its Subsidiaries owns any real property. Section 2.7 of the Disclosure Schedule
lists all material real estate leased by Company or any of its Subsidiaries and
all material Leases. None of the fixed assets and machinery and equipment is
subject to contracts of sale, and none is held by Company or any of its
Subsidiaries as lessee or as conditional sales vendee under any Lease or
conditional sales contract and none is subject to any title retention agreement,
except as set forth in Section 2.7 of the Disclosure Schedule. The real property
(other than land), fixtures, fixed assets and machinery and equipment are in a
state of good repair and maintenance and are in good operating condition.
2.8 Compliance with Contractual Obligations and Private Authorizations.
Section 2.8 of the Disclosure Schedule sets forth a true, accurate and complete
list and description of each Private Authorization and each Contractual
Obligation which individually is material to Company and its Subsidiaries taken
as a whole, all of which are in full force and effect. Each of Company and its
Subsidiaries has obtained all Private Authorizations which are necessary for the
ownership by it of its properties and the conduct of its business as now
conducted or as presently proposed to be conducted, or which, if not obtained
and maintained, would, singly or in the aggregate, have a Material Adverse
Effect. Neither Company nor any Subsidiary is in breach or violation of, or is
in default in the performance, observance or fulfillment of, any Contractual
Obligation or Private Authorization, and no Event exists or has occurred, which
constitutes, or but for any requirement of giving of notice or passage of time
or both would constitute, such a breach, violation or default, under any
Contractual Obligation or Private Authorization, except for such defaults,
breaches or violations, as do not and will not have in the aggregate a Material
Adverse Effect. No Private Authorization is the subject of any pending or, to
Company's knowledge, threatened repudiation, revocation or termination.
2.9 Compliance with Governmental Authorizations and Applicable Law.
Section 2.9 of the Disclosure Schedule contains a brief description of all Legal
Actions which are pending or in which Company or any of its Subsidiaries or any
of its business, operations or properties, or any of its officers or directors
in connection therewith, is, engaged, or which involves the business, operations
or properties of Company or any of its Subsidiaries, or, to Company's knowledge,
which is threatened against Company or any of its Subsidiaries or any of their
business, operations or properties, or any of their officers or directors in
connection therewith.
2.10 Intellectual Property. Each of Company and its Subsidiaries is the
sole and exclusive owner of the material trademarks, trade names, service marks
and copyrights constituting a part of the Intellectual Property, the holder of
the full record title to the
12
trademark registrations and the sole owner of the inventions covered by the
patents and patent applications constituting a part of the Intellectual
Property. Each of Company and its Subsidiaries has the legally defensible right
to use such trademarks, trade names, service marks, patents and copyrights and,
except as set forth in Section 2.10 of the Disclosure Schedule, all the
aforesaid are free and clear of all Encumbrances other than Permitted
Encumbrances. There are no claims of any Person pertaining to such trademarks,
trade names, service marks, patents and copyrights, no Legal Actions are pending
or, to the knowledge of Company, threatened which challenge any of Company's or
its Subsidiaries' respective rights in respect to any of its Intangible Assets,
and none of its Intangible Assets infringes upon or otherwise violates the
rights of any other Person or, to the knowledge of Company, is being infringed
or violated by any other Person, except in each case for any infringement or
violation which could not have a Material Adverse Effect.
2.11 Interested Party Transactions. Except as set forth in Section 2.11 of
the Disclosure Schedule, since the date of Company's proxy statement dated
February 15, 1996, no event has occurred that would be required to be reported
as a Certain Relationship or Related Transaction, pursuant to Item 404 of
Regulation S-K promulgated by the Commission.
2.12 Insurance. Company maintains fire and casualty, general liability,
business interruption, product liability, professional liability and sprinkler
and water damage insurance policies with reputable insurance carriers, which
provide full and adequate coverage for all normal risks incident to the business
of Company and its Subsidiaries and their respective properties and assets and
are in character and amount similar to that carried by entities engaged in
similar business and subject to the same or similar perils or hazards.
2.13 Taxes
(a) Other than as disclosed in Section 2.13 of the Disclosure Schedule, (i)
Company and its Subsidiaries have filed all United States federal income Tax
Returns and all other Tax Returns required to be filed by them, (ii) Company and
its Subsidiaries have paid and discharged all Taxes due in connection with or
with respect to the periods or transactions covered by such Tax Returns and have
paid all other Taxes as are due, except such as are being contested in good
faith by appropriate proceedings (to the extent that any such proceedings are
required) and with respect to which Company is maintaining adequate reserves,
(iii) there are no other material Taxes that would be due if asserted by a
taxing authority, except with respect to which Company is maintaining reserves
to the extent currently required, Except as does not involve or would not result
in any material liability to Company or any of its Subsidiaries (i) there are no
tax liens on any assets of Company or any Subsidiary thereof; and (ii) neither
Company nor any of its Subsidiaries has granted any waiver of any statute of
limitations with respect to, or any extension of a period for the assessment of,
any Tax. The accruals and reserves for Taxes (including deferred taxes)
reflected in the balance sheet of Company as at July 27, 1996 included in
Company's Quarterly Report on Form 10-Q for the quarter ended July 27, 1996 are
in all material respects adequate to cover all Taxes required to be accrued
through the date thereof (including interest and penalties, if any, thereon and
Taxes being contested) in accordance
13
with generally accepted accounting principles applied on a consistent basis with
the 1995 Company Balance Sheet, and the accrual and reserves for Taxes
(including deferred taxes) reflected in the books and records of Company as at
the last day of Company's most recently completed fiscal month end are in all
material respects adequate to cover all Taxes required to be accrued through
such date (including interest and penalties, if any, thereon and Taxes being
contested) in accordance with generally accepted accounting principles applied
on a consistent basis with the 1995 Company Balance Sheet.
(b) Company is not, and has not been, a United States real property holding
corporation (as defined in Section 897(c)(2) of the Code) during the applicable
period specified in Section 897(c)(1)(A)(ii) of the Code. To the knowledge of
Company, neither Company nor any of its Subsidiaries owns any property of a
character, the indirect transfer of which, pursuant to this agreement, would
give rise to any material documentary, stamp or other transfer tax.
2.14 Absence of Sensitive Payments. Neither the Company nor any of its
Subsudiaries (a0 made any contributions, payments or gifts to or for the private
use of any governmental official, employee or agent where either the payment or
purpose of such contribution, payment or gift is illegal under any Applicable
Law, (b) established or maintained any unrecorded fund or asset for any purpose
or made any false or artificial entries on its books, or (c) made any payments
to any payments to any Person with the intention or understanding that any part
of such payment was to be used for any purpose other than that described in the
documents supporting the payment.
2.15 Inapplicability of Specified Statutes. Neither the Company nor any of
its Subsidiaries is a "holding company", or a "subsidiary company" or an
"affiliate" of a "holding company", as such terms are defined in the Public
Utility Holding Company Act of 1935, as amended, or an "investment company" or a
company "controlled" by or acting on behalf of an "investment company", as
defined in the Investment Company Act of 1940, as amended, or a "carrier" or a
person which is in control of a "carrier", as defined in sections 10102 or 11301
of Title 49, U.S.C.
2.16 Material Agreements. Section 2.16 of the Disclosure Schedule lists all
Material Agreements relating to the ownership or operation of the business and
property of Company or any of its Subsidiaries presently held or used by Company
or any of its Subsidiaries or to which Company or such Subsidiary is a party or
to which it or any of its property is subject or bound. True, complete and
correct copies of each of the Material Agreements have been furnished by Company
to Acquiror (or true, complete and correct descriptions thereof have been set
forth in the Disclosure Schedule, if any such Material Agreements are oral).
Each of Company and its Subsidiaries has duly complied in all material respects
with all of the terms and conditions of each such Material Agreement and has not
done or performed, or failed to do or perform (and there is not pending or, to
the knowledge of Company, threatened any claim that Company or any Subsidiary
has not so complied, done and performed or fail to do and perform) any act which
would invalidate or provide grounds for the other party thereto to terminate
(with or without notice, passage of time or both) or materially impair its
rights or
14
benefits, or increase the costs of Company or any Subsidiary, under any of such
Material Agreements.
2.17 Ordinary Course of Business. Except as described in Section 2.17 of
the Disclosure Schedule, each of Company and its Subsidiaries, since October 28,
1995 to the date hereof:
(a) has operated its business in the normal, usual and customary manner in
the ordinary and regular course of business consistent with past practice,
including the maintenance of working capital at normal operating levels
consistent with prior practice;
(b) has not sold or otherwise disposed of any material properties or
assets, other than inventory sold or otherwise disposed of in the ordinary
course of business consistent with past practice;
(c) except in each case in the ordinary course of business consistent with
past practice,
(i) has not incurred any material obligations or liabilities (fixed,
contingent or other);
(ii) has not entered into any material commitments;
(iii) has not sold or transferred any material tangible asset or
canceled any material debts or claims; and
(iv) has not incurred any indebtedness for borrowed money or issued
any debt securities or assumed, guaranteed or endorsed, or
otherwise as an accommodation became responsible for, the
obligations of any person, or made any loans or advances.
(d) has not made or committed to make any additions to its property or any
purchases of machinery or equipment, except for normal maintenance and
replacements and capital expenditures in accordance with the budget therefor
heretofore provided to Acquiror;
(e) has not discharged or satisfied any Encumbrance or paid any obligation
or liability (absolute or contingent) other than current liabilities or
obligations under contracts then existing or thereafter entered into in the
ordinary course of business, and commitments under Leases existing on that date
or incurred since that date in the ordinary course of business;
(f) has not Encumbered any of its tangible property, other than Permitted
Encumbrances;
(g) has not Transferred or Encumbered any Intellectual Property other than
Permitted Encumbrance;
15
(h) has not increased the compensation payable or to become payable to any
of its officers, employees, advisers, consultants, salesmen or agents or
otherwise alter, modify or change the terms of their employment or engagement;
(i) has not waived any rights of substantial value without fair and
adequate consideration;
(j) has not declared, made or paid any Distribution other than any
Distribution from a Subsidiary of Company to Company or to another Subsidiary of
Company; and
(k) has not issued, pledged, granted, split, reclassified, combined or
redeemed any shares of any class of capital stock or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of such
capital stock except for issuances upon exercise of outstanding options or other
convertible securities.
2.18 Broker or Finder. No Person assisted in or brought about the
negotiation of this Agreement or the subject matter of the transactions
contemplated hereby in the capacity of broker, agent or finder or in any similar
capacity on behalf of Company or any of its Subsidiaries other than as set forth
in Section 2.18 of the Disclosure Schedule, which sets forth a true, accurate
and complete description of the arrangements with any such Person.
2.19 Environmental Matters. Except as set forth in Section 2.19 of the
Disclosure Schedule:
(a) The operations of each of Company and its Subsidiaries are in
compliance in all material respects with all applicable Environmental Laws.
(b) To Company's knowledge, all real property currently or formerly owned,
leased or operated by Company or any of its Subsidiaries is free from
contamination by any Hazardous Material. None of Company or its Subsidiaries
has disposed or arranged for the disposal of Hazardous Material so as to give
rise to liability for any off-site disposal or contamination.
(c) To the knowledge of Company, each of Company and its Subsidiaries
currently maintains all Environmental Permits necessary for their operations and
are in compliance in all material respects with such Environmental Permits.
(d) There are no Legal Actions or Environmental Claims pending or, to
Company's knowledge, threatened, nor, to Company's knowledge, investigations
with respect to any Environmental Claim pending or threatened, against any of
Company or its Subsidiaries alleging the violation of any Environmental Law or
asserting claims regarding Environmental Costs and Liabilities under any
Environmental Law.
16
(e) None of Company or its Subsidiaries nor, to the knowledge of Company,
any owner of premises leased or operated by any of Company or its Subsidiaries
has with respect to such premises, filed any formal notice under any
Environmental Law or other Law indicating past or present generation, treatment,
storage, or disposal of Hazardous Material or reporting an Environmental Release
of Hazardous Material into the environment.
(f) There is not now nor, to the knowledge of Company, has there been in
the past on, in or under any real property owned, leased or operated by any of
Company or its Subsidiaries (i) any underground storage tanks, aboveground
storage tanks, dikes or impoundments, (ii) any friable asbestos-containing
materials or (iii) any polychlorinated biphenyls.
2.20 Certain State Statutes Inapplicable. Company's Board of Directors has
approved and ratified, within the meaning of Section 203 of the DGCL, the
transactions contemplated by this Agreement and the Securities Purchase
Agreement, so as to render the provisions of Section 203 of the DGCL
inapplicable to this Agreement and the Securities Purchase Agreement.
2.21 Information Supplied . Neither the proxy statement relating to the
approval by the stockholders of the Company of the Merger (such proxy statement
(including the exhibits thereto and the documents incorporated by reference
therein), as amended or supplemented from time to time, the "Proxy Statement")
nor, if required under the Exchange Act, the Transaction Statement on Schedule
13E-3 (the "Schedule 13E-3") filed by the Company under the Exchange Act with
the Proxy Statement shall, at the respective dates first mailed to the Company's
stockholders, at the time of the Company Stockholders Meeting and at the
Effective Time, as the case may be, 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 the light of the
circumstances under which they are made, not false or misleading or necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies for the Company Stockholders Meeting which shall have
become false or misleading, except that no representation or warranty is made by
Company with respect to information supplied in writing by Acquiror or Acquiror
Parent for inclusion in the Proxy Statement or Schedule 13E-3. The Proxy
Statement and Schedule 13E-3 (if one is required) shall comply in all material
respects as to form with the requirements of the Exchange Act and the rules and
regulations thereunder.
2.22 Opinion of Financial Advisor . On or prior to the date of this
Agreement, Company has received the Fairness Opinion of Xxxxx Xxxxxxx Inc.
("Xxxxx Xxxxxxx").
2.23 Voting Agreements and Noncompetition Agreements. Except as set forth
in Section 2.23 of the Disclosure Schedule, there are no voting trusts or other
agreements or understandings with respect to the voting of Company Common Stock.
Except as set forth in the Disclosure Schedule, none of Company, its
Subsidiaries or any Person in which Company or its Subsidiaries own any interest
is a party to any noncompetition agreement or other agreement or arrangement
which restrains, limits or impedes the current or contemplated
17
business or operations of Company or any of its Subsidiaries or would apply to
Acquiror or any of its Affiliates following the Effective Time.
2.24 Vote Required. The affirmative vote of the holders of a majority of
the outstanding shares of Company Common Stock is the only vote of the holders
of any class or series of Company capital stock necessary or required (under
Applicable Law or otherwise) to approve this Agreement and the transactions
contemplated hereby.
2.25 Consents. Except for (i) as set forth in Section 2.25 of the
Disclosure Schedule, (ii) compliance with and filings under the HSR Act, (iii)
the filing with the Commission of the Proxy Statement, and such reports under
the Exchange Act as may be required in connection with this Agreement and the
transactions contemplated hereby, (iv) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware and appropriate documents
with the relevant authorities of other states in which the Company is qualified
to do business, (v) if required under the Exchange Act, the filing of the
Schedule 13E-3 with the Commission, and (vi) such filings in connection with any
state or local tax which is attributable to the change in beneficial ownership
of Company's or its Subsidiaries' real property, if any (collectively, "Gains
Taxes"), (the items in clauses (i) through (vi) being collectively referred to
herein as ("Company Consents"), no Governmental Authorizations or Private
Authorizations are required to be obtained or made by or with respect to Company
or any of its Subsidiaries on or prior to the Closing Date in connection with
(A) the execution, delivery and performance of this Agreement or any of the
Transaction Documents to which Company is a party, the consummation of the
transactions contemplated hereby and thereby or the taking by Company of any
other action contemplated hereby or thereby, (B) the continuing validity and
effectiveness of (and prevention of any material default under or violation of
the terms of) any Lease or Material Agreement to which any of Company or its
Subsidiaries is a party or any Governmental Authorization of any of Company or
its Subsidiaries or (C) the conduct by Company or any of its Subsidiaries of
their respective businesses following the Closing as conducted on the date
hereof.
2.26 Board Recommendation. The Board of Directors of Company, at a meeting
duly called and held on November 27, 1996, has (A) determined that this
Agreement and the transactions contemplated hereby, including, without
limitation, the Merger, are fair to and in the best interests of the
stockholders of the Company (other than Acquiror Parent and its subsidiaries),
(B) approved and adopted this Agreement and (C) resolved to recommend, subject
to the provisions of Sections 4.5 and 4.8 hereof, that the stockholders of
Company approve and adopt this Agreement and the Merger. Subject to the
provisions of Sections 4.5 and 4.8 hereof, Company has been authorized by Xxxxx
Xxxxxxx, subject to prior review by Xxxxx Xxxxxxx, to include the Fairness
Opinion (or references thereto) in the Proxy Statement and in the Schedule 13E-3
(if one is required). Company hereby consents to the inclusion in the Proxy
Statement and the Schedule 13E-3 of the recommendation of the Board of Directors
of Company described above.
18
SECTION 3. REPRESENTATIONS AND WARRANTIES OF CHILDS,
ACQUIROR PARENT AND ACQUIROR.
Childs, Acquiror Parent and Acquiror represent, warrant, covenant and agree
that:
3.1 Organization and Business; Power and Authority; Effect of Transaction.
(a) Each of Childs, Acquiror Parent and Acquiror (i) is a limited
partnership or corporation, as the case may be, duly organized, validly existing
and in good standing under the laws of its jurisdiction of formation or
incorporation as set forth in the Disclosure Schedule, and (ii) has all
requisite partnership or corporate power and authority, as the case may be, to
own or hold under lease its properties and to conduct its business as now
conducted and as presently proposed to be conducted, and is in possession of all
Governmental Authorizations and Private Authorizations to the extent required
for such ownership and lease of its property and conduct of its business.
(b) Each of Childs, Acquiror Parent and Acquiror has all requisite
partnership or corporate authority, as the case may be, necessary to enable it
to execute and deliver, and to perform its obligations under, and to consummate
the transactions contemplated by, this Agreement and each Transaction Document
executed or to be executed by it; and the execution, delivery and performance of
this Agreement and each such Transaction Document have been duly authorized by
all requisite partnership or corporate action, as the case may be, including
that, if required, of Childs partners, Acquiror Parent's stockholders and
Acquiror's stockholders. This Agreement has been duly executed and delivered by
each of Childs, Acquiror Parent and Acquiror and constitutes, each Transaction
Document executed or to be executed by it when executed and delivered by Childs,
Acquiror Parent or Acquiror will constitute, its legal, valid and binding
obligations, enforceable against it in accordance with their respective terms.
(c) Neither the execution and delivery of this Agreement or any
Transaction Document executed or to be executed by Childs, Acquiror Parent or
Acquiror, nor the consummation of the transactions herein or therein
contemplated, nor compliance with the terms, conditions and provisions hereof or
thereof by Childs, Acquiror Parent or Acquiror:
(i) (A) will conflict with, or result in a breach or violation of, or
constitute a default under, any Applicable Law on the part of Childs,
Acquiror Parent or Acquiror or (B) will conflict with or result in a breach
or violation of, or constitute a default under, any of the certificate of
limited partnership or partnership agreement of Childs or the certificate
of incorporation or by-laws of Acquiror Parent or Acquiror or (C) will
conflict with, or result in a breach or violation of, or constitute a
default under, or permit the acceleration of any obligation or liability
under, or but for any requirement of giving of notice or passage of time or
both would constitute such a conflict with, breach or violation of, or
default under, or permit any such acceleration of, any material Contractual
Obligation of Childs, Acquiror Parent or Acquiror,
19
(ii) will result in or permit the creation or imposition of any
Encumbrance upon any property now owned or leased by Childs or Acquiror, or
(iii) will require any Governmental Authorization or Private
Authorization, except as to the HSR Act and the filing with the Secretary
of State of Delaware of the Certificate of Merger,
except, with respect to clauses (i)(A), (i)(C), (ii) and (iii) above, such
conflicts, breaches, defaults, violations, accelerations, Encumbrances,
authorizations or filings, that individually or in the aggregate are not
reasonably likely to result in a Material Adverse Effect on Childs, Acquiror
Parent or Acquiror.
3.2 Adverse Restrictions . Neither Acquiror, Acquiror Parent or Childs is a
party to or subject to, nor is any of their property subject to, any Applicable
Law, Governmental Authorization, Contractual Obligation or Private
Authorization, which now or, as far as Childs can now reasonably foresee, at any
time in the future could, individually or in the aggregate, have any Material
Adverse Effect on the ability of Childs, Acquiror or Acquiror to perform any of
its obligations set forth in this Agreement or any Transaction Document.
3.3 Information Supplied . The information supplied by Childs, Acquiror
Parent or Acquiror for inclusion in the Proxy Statement and, if required under
the Exchange Act, the Schedule 13E-3 will not, on the date the Proxy Statement
or Schedule 13E-3 (or any amendment or supplement thereto) is first mailed to
stockholders of the Company, at the time of the Company Stockholders Meeting and
at the Effective Time, contain any statement which, at such time and in light of
the circumstances under which it is made, is false or misleading with respect to
any material fact, or omits to state any material fact required to be stated
therein or necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Company Stockholders Meeting
which shall have become false or misleading; provided, however, that Childs,
Acquiror Parent and Acquiror make no representation or warranty with respect to
information supplied by Company for inclusion in the Proxy Statement or Schedule
13E-3. The Proxy Statement and Schedule 13E-3 shall comply in all material
respects as to form with the requirements of the Exchange Act and the rules and
regulations thereunder.
3.4 Broker or Finder . No Person assisted in or brought about the
negotiation of this Agreement or the subject matter of the transactions
contemplated hereby in the capacity of broker, agent or finder or in any similar
capacity on behalf of Acquiror, Acquiror Parent or Childs.
3.5 Financing of the Merger and the Second Disposition . Acquiror Parent
or Acquiror (as the case may be) has all funds, or appropriate commitments for
funds (complete copies of which have been provided to Company), necessary for
the purchase or exchange of all outstanding shares of Company Common Stock,
Company Option Securities and Company Convertible Securities pursuant to the
Merger and the Second Disposition (as defined in the Securities Purchase
Agreement).
20
SECTION 4. COVENANTS OF COMPANY AND CHILDS.
4.1 Access to Information. Company shall afford to each of Childs,
Acquiror Parent and Acquiror and their accountants, counsel, financial advisors,
financing sources and other representatives (the "Representatives") full access
during normal business hours throughout the period prior to the Effective Time
to all of its and its Subsidiaries properties, books, contracts, commitments and
records (including Tax Returns) and, during such period, shall furnish promptly
(i) a copy of each report, schedule and other document filed or received by it
pursuant to the requirements of any Applicable Law (including without limitation
federal or state securities laws) or filed by it with the Commission or any
other Authority in connection with the transactions contemplated by this
Agreement or which may have a material effect on its business, operations,
properties, financial condition, or results of operations and (ii) such other
information concerning any of the foregoing as Childs, Acquiror Parent and
Acquiror shall reasonably request; provided, however, that no investigation
pursuant to this Section shall affect any representations or warranties made
herein or the conditions to the obligations of the respective parties to
consummate the transactions contemplated hereby. Childs, Acquiror Parent and
Acquiror shall hold, and shall use their reasonable business efforts to cause
their Representatives to hold, in strict confidence all non-public documents and
information furnished to Childs, Acquiror Parent and Acquiror in connection with
the transactions contemplated by this Agreement, except that Childs, Acquiror
Parent and Acquiror may disclose such information as may be necessary in
connection with seeking all Governmental Authorizations and any required
approval of Childs' limited partners, and Childs, Acquiror Parent and Acquiror
may disclose any information that is required by Applicable Law to be disclosed.
4.2 Agreement to Cooperate. (a) Each of the parties hereto shall cooperate
and use its best business efforts to prepare and file with the applicable
Authorities as promptly as practicable after the execution of this Agreement all
requisite applications and amendments thereto, together with related
information, data and exhibits, necessary to request issuance of orders
approving the transactions contemplated by this Agreement by all such applicable
Authorities, each of which must be obtained in order to satisfy the conditions
set forth in and Section 5 hereof.
(b) Subject to the terms and conditions herein provided, each of the
parties hereto shall use reasonable efforts or take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable under Applicable Laws to consummate and make effective the
transactions contemplated by this Agreement, including using its reasonable
efforts to obtain all necessary or appropriate waivers, consents and approvals
and Commission "no-action" letters, to effect all necessary registrations,
filings and submissions (including without limitation filings under the HSR Act
and any other submissions requested by the Federal Trade Commissions or
Department of Justice) (and, in such case, to proceed with the Merger as
expeditiously as possible). The parties recognize that the consummation of the
transactions contemplated hereby is subject to the preacquisition notification
requirements of the HSR Act. Each of the parties agrees that it will file with
the Antitrust Division of the Department of Justice and the Federal Trade
Commission a
21
Notification and Report Form in a manner so as to constitute substantial
compliance with the notification requirements of the HSR Act. Each of the
parties covenants and agrees to use its reasonable business efforts to achieve
the prompt termination or expiration of the waiting period or any extension
thereof under the HSR Act.
(c) In addition to the covenants set forth in the preceding subsections of
this Section, Childs, Acquiror Parent and Acquiror and Company each agree to
take such actions as may be necessary to obtain any Governmental Authorizations
legally required for the consummations of the transactions contemplated hereby,
including the making of any Governmental Filings, publications and requests for
extensions and waivers. Nothing in this Section shall be construed to require
(i) Childs Acquiror Parent and Acquiror to (A) sell or otherwise dispose of any
Subsidiary or assets which either alone or in the aggregate with all such other
sales or dispositions would constitute the sale or disposition of a "significant
subsidiary" of Childs Acquiror Parent or Acquiror, (B) take any action the
effectiveness of which cannot be conditioned upon the consummation of the
transactions which would have any Material Adverse Effect on Childs Acquiror
Parent or Acquiror, or (C) take any action which either would have any Material
Adverse Effect on Childs or Acquiror, following the consummation of the
transactions or materially impair the value to Childs Acquiror Parent or
Acquiror of the transactions; or (ii) Company to (A) sell or otherwise dispose
of any of its Subsidiaries or assets which either alone or in the aggregate with
all such other sales or dispositions would constitute the sale or disposition of
a "significant subsidiary" of Company, (B) take any action the effectiveness of
which cannot be conditioned upon the consummation of the transactions which
would have any Material Adverse Effect on Company, or (C) take any action which
either would have any Material Adverse Effect on Childs, Acquiror Parent or
Acquiror, following the transactions or materially impair the value to Childs,
Acquiror Parent or Acquiror of the transactions. For purposes of this Section,
the term "significant subsidiary" shall have the meaning attributed to such term
by Rule 1-02(v) of Regulation S-X of the rules and regulations of the
Commission.
(d) In addition to the covenants set forth in the preceding subsections of
this Section, (i) Company will use its best efforts on or prior to the Closing
Date to obtain the satisfaction of the conditions specified in Section 5 hereof
and (ii) Childs, Acquiror Parent and Acquiror will each use its best efforts on
or prior to the Closing Date to obtain the satisfaction of the conditions
specified in Section 5 hereof. Childs, Acquiror Parent and Acquiror agree to
cooperate with and to assist Company with respect to securing all necessary
Governmental Authorizations and Private Authorizations to the consummation of
the Merger.
(e) Company will promptly notify Childs of any and all Events which would
require any change to be made in the Disclosure Schedule or which could cause or
result in any breach or inaccuracy of Company's representations and warranties
including without limitation those set forth in Section 2, or which could impair
the likelihood that all of the conditions to be satisfied by Company which are
specified in Section 5 will be satisfied on or prior to the Closing Date.
4.3 Expenses. Each party shall pay its own expenses incident to the
negotiation, preparation, performance and enforcement of this Agreement
(including all fees and expenses
22
of its counsel, accountants and other consultants, advisors and representatives
for all activities of such persons undertaken pursuant to this Agreement),
whether or not the transactions contemplated hereby are consummated.
4.4 Public Announcements. Until such time as may be mutually agreed upon by
the parties to this Agreement, neither party hereto shall, without the approval
of the other party, make or cause to be made any press release or other public
announcement that directly or indirectly discloses the transactions contemplated
by this Agreement, except as and to the extent that it is required by law
(including, without limitation, applicable federal and state securities laws) to
make such an announcement.
4.5 Stockholders' Approval. (a) Company shall, as soon as practicable
following consummation of the transactions contemplated by the Securities
Purchase Agreement, submit this Agreement and the transactions contemplated
hereby for the approval of its stockholders at a meeting of stockholders (the
"Company Stockholders Meeting", which term shall include any postponements or
adjournments of such meeting). Unless otherwise required under the applicable
fiduciary duties of the Board of Directors of Company, as determined by such
directors in good faith after consultation with and based upon the opinion of
outside legal counsel, Company shall (i) recommend adoption of this Agreement
and approval of the Merger by the stockholders of Company and include in the
Proxy Statement such recommendation and (ii) use all reasonable best efforts to
solicit from its respective stockholders proxies in favor of adoption of this
Agreement and approval of the Merger and shall take all other action necessary
or advisable to secure the vote or consent of stockholders to obtain such
approvals (the "Company Stockholder Approval"). Without limiting the generality
of the foregoing, Company agrees that its obligations pursuant to the first
sentence of this Section 4.5 shall not be affected by (i) the commencement,
public proposal, public disclosure or communication to Company of any
Acquisition Proposal (as defined in Section 4.8) or (ii) the withdrawal or
modification by the Board of Directors of the Company of its approval or
recommendation of this Agreement or the Merger. The Company Stockholders Meeting
shall be held as soon as practicable following consummation of the transactions
contemplated by the Securities Purchase Agreement. To the extent permitted by
law, Childs, Acquiror Parent and Acquiror each agree to vote all shares of
Company Common Stock beneficially owned by them in favor of the Merger.
4.6 Proxy Statement; Schedule 13E-3. (a) As soon as practicable following
the date of this Agreement, Company shall prepare and file the Proxy Statement
and, if required under the Exchange Act, the Schedule 13E-3, and shall use its
reasonable best efforts to have the Proxy Statement and, if required under the
Exchange Act, the Schedule 13E-3 cleared by the Commission as promptly as
reasonably practicable, and in addition, shall also take any action required to
be taken under Applicable Law in connection with the consummation of the
transactions contemplated by this Agreement. Childs and Acquiror and Company
shall promptly furnish to each other all information, and take such other
actions, as may reasonably be requested in connection with any action by any of
them in connection with the provisions of this Section 4.6.
23
(b) Prior to the date of approval of the Merger by Company's stockholders,
each of Company, Childs and Acquiror shall correct promptly any information
provided by it to be used specifically in the Proxy Statement and, if required
under the Exchange Act, the Schedule 13E-3 that shall have become false or
misleading in any material respect and shall take all steps necessary to file
with the Commission and have cleared by the Commission any amendment or
supplement to the Proxy Statement and, if required under the Exchange Act, the
Schedule 13E-3 as so corrected to be disseminated to the stockholders of Company
to the extent required by Applicable Law. Without limiting the generality of
the foregoing, Company shall notify Childs promptly of the receipt of the
comments of the Commission and of any request by the Commission for amendments
or supplements to the Proxy Statement or Schedule 13E-3, or for additional
information, and shall supply Childs with copies of all correspondence between
Company or its representatives, on the one hand, and the Commission or members
of its staff, on the other hand, with respect to the Proxy Statement or Schedule
13E-3. If at any time prior to the Company Stockholders Meeting any event
should occur relating to Company, Childs or Acquiror or their respective
officers or directors which is required to be described in an amendment or
supplement to the Proxy Statement or Schedule 13E-3, the parties shall promptly
inform each other. Whenever any event occurs which is required to be described
in an amendment or a supplement to the Proxy Statement or Schedule 13E-3,
Company, Childs and Acquiror shall, upon learning of such event, cooperate in
promptly preparing, filing and clearing with the Commission and mailing to the
stockholders of Company such amendment or supplement; provided, however, that,
prior to such mailing, (i) Company, Childs and Acquiror shall consult with each
other with respect to such amendment or supplement, (ii) shall afford each other
reasonable opportunity to comment thereon and (iii) each such amendment or
supplement shall be reasonably satisfactory to the other.
4.7 Company Board Representation; Section 14(f).
(a) If requested in writing by Acquiror, following the purchase by
Acquiror of all the shares of Company Common Stock subject to the Securities
Purchase Agreement, and from time to time thereafter, Acquiror shall be entitled
to designate up to such number of directors, rounded up to the next whole
number, on the Board of Directors of Company as shall give Acquiror
representation on the Board of Directors of Company equal to the product of the
total number of directors on the Board of Directors of Company (giving effect to
the directors elected pursuant to this sentence) multiplied by the percentage
that the aggregate number of shares beneficially owned by Acquiror or any
Affiliate of Acquiror at such time bears to the total number of shares then
outstanding, and Company shall, at such time, promptly take all actions
necessary to cause Acquiror's designees to be elected as directors of Company,
including increasing the size of the Board of Directors of Company or securing
the resignations of incumbent directors or both. At such times, Company shall
use its best efforts to cause persons designated by Acquiror to constitute the
same percentage as persons designated by Acquiror shall constitute of the Board
of Directors of Company of (i) each committee of the Board of Directors of
Company (some of whom may be required to be independent as required by
Applicable Law), (ii) each board of directors of each Subsidiary of Company and
(iii) each committee of each such board, in each case only to the extent
permitted by applicable law.
24
(b) Company shall promptly take all actions required pursuant to Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order to
fulfill its obligations under this Section 4.7 and shall include in the Proxy
Statement such information with respect to Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 to fulfill such
obligations. Childs, Acquiror Parent or Acquiror shall supply to Company and be
solely responsible for any information with respect to either of them and their
nominees, officers, directors and Affiliates required by such Section 14(f) and
Rule 14f-1.
(c) Following the election or appointment of designees of Acquiror pursuant
to this Section 4.7 and prior to the Effective Time, any amendment of this
Agreement or the Certificate of Incorporation or By-laws of Company, any
termination of this Agreement by Company, any extension by Company of the time
for the performance of any of the obligations or other acts of Childs, Acquiror
Parent or Acquiror or waiver of any of Company's rights hereunder shall require
the concurrence of a majority of the directors of Company then in office who
were not designated by Acquiror.
4.8 No Solicitation.
(a) Company shall not, directly or indirectly through any officer,
director, employee, representative or agent of Company or any of its
Subsidiaries (i) solicit, initiate or encourage the initiation of any inquiries
or proposals regarding any merger, sale of substantial assets, sale of share of
capital stock (including without limitation by way of a tender offer) or similar
transactions involving Company or any Subsidiaries of Company other than the
Merger (any of the foregoing inquiries or proposals being referred to herein as
an "Acquisition Proposal"), (ii) engage in negotiations or discussions
concerning, or provide any nonpublic information to any person relating to, any
Acquisition Proposal or (iii) agree to, approve or recommend any Acquisition
Proposal. Nothing contained in this Section 4.8(a) shall prevent the Board of
Directors of Company from considering, discussing, or providing any nonpublic
information to any person relating to, a bona fide Acquisition Proposal not
solicited in violation of this Agreement, provided the Board of Directors of
Company determines in good faith (upon advice of outside counsel) that it is
required to do so in order to discharge properly its fiduciary duties. Nothing
contained in this Section 4.8(a) shall prohibit the Board of Directors of
Company from complying with Rule 14e-2 promulgated under the Exchange Act with
regard to a tender or exchange offer.
(b) Company shall immediately notify Childs and Acquiror Parent after
receipt of any Acquisition Proposal, or any modification of or amendments to any
Acquisition Proposal, or any request for nonpublic information relating to
Company or any of its Subsidiaries in connection with an Acquisition Proposal or
for access to the properties, books or records of Company or any Subsidiary by
any person or entity that informs the Board of Directors of Company or such
Subsidiary that it is considering making, or has made, an Acquisition Proposal.
Such notice to Childs and Acquiror Parent shall be made orally and in writing,
and shall indicate whether Company is providing or intends to provide the person
making the Acquisition Proposal with access to information concerning Company as
provided in Section 4.8(c).
25
(c) If the Board of Directors of Company receives a request for material
nonpublic information by a person who makes, or indicates that it is considering
making, a bona fide Acquisition Proposal, and the Board of Directors determines
in good faith and upon the advice of outside counsel that it is required to
cause Company to act as provided in this Section 4.8(c) in order to discharge
properly the directors' fiduciary duties, then, provided such person has
executed a confidentiality agreement substantially similar to the one then in
effect between Company and Childs and Acquiror, Company may provide such person
with access to information regarding Company.
(d) Company shall immediately cease and cause to be terminated any
existing discussions or negotiations with any persons (other than Childs,
Acquiror Parent and Acquiror) conducted heretofore with respect to any of the
foregoing. Company agrees not release any third party from the confidentiality
and standstill provisions of any confidentiality agreement to which Company is a
party.
(e) Company shall ensure that the officers, directors and employees its
Subsidiaries and any investment banker or other advisor or representative
retained by Company are aware of the restrictions described in this Section 4.8.
4.9 Tax Returns. Without the prior written consent of Childs, neither
Company nor any of its Subsidiaries shall make or change any election, change an
annual accounting or Tax period, adopt or change any accounting method, file any
amended Tax Return, enter into any closing agreement, settle any Tax claim
relating to Company or its Subsidiaries, surrender any right to claim a refund
of Taxes, take or omit to take any similar action with respect to Taxes (other
than the filing of any original Tax Return), if any such election, adoption,
change, amendment, agreement, settlement, surrender or other action or omission
would have the effect of increasing the Tax liability of Company and its
Subsidiaries, by more than an aggregate amount of $250,000; provided, however,
that Company may consent to an extension of a limitation period applicable to a
Tax claim without Childs's prior written consent (and Company will notify Childs
of any such extension no later than five (5) Business Days after taking such
action if it would relate to the Company or its Subsidiaries).
4.10 Indemnification and Insurance.
(a) The By-Laws of the Surviving Corporation shall contain the
provisions with respect to indemnification set forth in the Certificate of
Incorporation of Company on the date hereof, which provisions shall not be
amended, repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would adversely affect the rights thereunder
of individuals who on or prior to the Effective Time were directors, officers,
employees or agents of Company, unless such modification is required by law.
(b) Company shall, to the fullest extent permitted under Applicable
Law or under Company's Certificate of Incorporation or By-Laws and regardless of
whether the Merger becomes effective, indemnify and hold harmless, and, after
the Effective Time, Acquiror Parent and the Surviving Corporation shall, to the
fullest extent permitted under Applicable Law or under the Surviving
Corporation's Certificate of Incorporation or By-Laws
26
as in effect at the Effective Time, indemnify and hold harmless, each present
and former director, officer or employee of Company or any of its Subsidiaries
(collectively, the "Indemnified Parties") against any costs or expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation whether civil, criminal, administrative or
investigative, (x) arising out of or pertaining to the transactions contemplated
by this Agreement or the Securities Purchase Agreement or (y) otherwise with
respect to any acts or omissions occurring at or prior to the Effective Time, to
the same extent as provided in Company's Certificate of Incorporation or By-Laws
or any applicable contract or agreement as in effect on the date hereof, in each
case for a period of six years after the date hereof. In the event of any such
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), (i) any counsel retained by the Indemnified Parties
for any period after the Effective Time shall be reasonably satisfactory to the
Surviving Corporation, (ii) after the Effective Time, the Surviving Corporation
shall pay the reasonable fees and expenses of such counsel, promptly after
statements therefor are received, and (iii) the Surviving Corporation will
cooperate in the defense of any such matter; provided, however, that the
Surviving Corporation shall not be liable for any settlement effected without
its written consent (which consent shill not be unreasonably withheld); and
provided, further, that, in the event that any claim or claims for
indemnification are asserted or made within such six-year period, all rights to
indemnification in respect of any such claim or claims shall continue until the
disposition of any and all such claims. The Indemnified Parties as a group may
seek reimbursement pursuant to the foregoing indemnification arrangements for
the fees and expenses of only one law firm representing them with respect to any
single action.
(c) Acquiror Parent and the Surviving Corporation shall honor and fulfill
in all respects the obligations of Company pursuant to indemnification
agreements with Company's directors and of officers existing at or before the
Effective Time.
(d) For a period of six years after the Effective Time, Acquiror Parent
shall cause the Surviving Corporation to maintain in effect, if available,
directors' and officers' liability insurance covering those persons who are
currently covered by Company's directors' and officers' liability insurance
policy (a copy of which has been made available to Acquiror Parent) on terms
comparable to those now applicable to directors and officers of Company;
provided, however, that in no event shall Acquiror Parent or the Surviving
Corporation be required to expend in excess of 150% of the annual premium
currently paid by Company for such coverage; and provided further, that if the
premium for such coverage exceeds such amount, Acquiror Parent or the Surviving
Corporation shall purchase a policy with the greatest coverage available for
such 150% of the annual premium.
(e) This Section 4.10 shall survive the consummation of the Merger at the
Effective Time, is intended to benefit Company, the surviving Corporation and
the Indemnified Parties, shall be binding on all successors and assigns of
Acquiror Parent and the Surviving Corporation and shall be enforceable by the
Indemnified Parties.
4.11 Convertible Securities. On or immediately following the Second
Disposition Effective Date (as defined in the Securities Purchase Agreement),
Company shall prepay all
27
Company Convertible Securities owned by the Securityholders, in accordance with
Section 3.6 of the Securities Purchase Agreement.
4.12 Financing. (a) Company agrees to provide, and will cause its
Subsidiaries and its and their respective officers and employees to provide, all
necessary cooperation in connection with the arrangement of any financing to be
consummated contemporaneous with or at or after the Second Disposition Effective
Date (as defined in the Securities Purchase Agreement) or the Effective Time in
respect of the transactions contemplated by the Securities Purchase Agreement or
this Agreement, including without limitation, the execution and delivery of any
commitment letters, underwriting or placement agreements, pledge and security
documents, other definitive financing documents, or other requested certificates
or documents relating to the Second Disposition or the Merger or any refinancing
of any existing indebtedness of Company or any of its Subsidiaries under which a
default or event of default could occur as a result of the transactions
contemplated by the Securities Purchase Agreement or this Agreement.
(b) Each of Childs, Acquiror Parent and Acquiror hereby agree to use their
reasonable efforts to arrange the financing in respect of the transactions
contemplated by this Agreement described in Section 3.5 hereof, including, using
their reasonable efforts to satisfy all conditions applicable to Childs,
Acquiror Parent and Acquiror in the commitment letters and the definitive
agreements relating thereto.
4.13 Conduct of Business by Company Pending the Effective Time . Company
covenants and agrees that, between the date of this Agreement and the Effective
Time, unless Acquiror Parent shall otherwise agree in writing, (i) the business
of Company and its Subsidiaries shall be conducted only in, and Company and its
Subsidiaries shall not take any action except in, the ordinary course of
business and in a manner substantially consistent with past practice including
the maintenance of working capital at normal operating levels, (2) Company shall
use all reasonable efforts to preserve substantially intact its business
organization, to keep available the services of the current officers, employees
and consultants of Company and its Subsidiaries and to preserve the current
relationships of Company and its Subsidiaries with customers, suppliers and
other persons with which Company or any of its Subsidiaries has significant
business relations and (3) Company shall not, and shall not permit any
Subsidiary to:
(a) amend or otherwise change its Organic Documents;
(b) sell or otherwise dispose of any material properties or assets, other
than inventory sold or otherwise disposed of in the ordinary course of business
consistent with past practice;
(c) except in each case in the ordinary course of business consistent with
past practice,
(i) incur any material obligations or liabilities (fixed, contingent
or other);
28
(ii) enter into any material commitments;
(iii) sell or transfer any material tangible asset or cancel any
material debts or claims; or
(iv) 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 or advances;
(d) make or commit to make any additions to its property, capital
expenditures or any purchases of machinery or equipment, except for normal
maintenance and replacements and capital expenditures in accordance with the
budget therefor heretofore provided to Acquiror;
(e) discharge or satisfy any Encumbrance or pay any obligation or liability
(absolute or contingent) other than current liabilities or obligations under
contracts existing on the date hereof or hereafter entered into in the ordinary
course of business, and commitments under Leases existing on the date hereof or
incurred since such date in the ordinary course of business;
(f) Encumber any of its tangible property, other than Permitted
Encumbrances;
(g) transfer or Encumber any Intellectual Property, other than Permitted
Encumbrances;
(h) (i) increase the compensation payable or to become payable to any of
its officers, employees, advisers, consultants, salesmen or agents or otherwise
alter, modify or change the terms of their employment or engagement, (ii) except
in accordance with Company's current policies, grant any severance or
termination pay to, or enter into any employment or severance agreement with,
any director, officer or other employee of Company or any Subsidiary or enter
into or amend any collective bargaining agreement, or (iii) establish, adopt,
enter into or amend any bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation or other
plan, trust or fund for the benefit of any director, officer or class of
employees; or
(i) settle or compromise any pending or threatened litigation which is
material or which relates to the transactions contemplated hereby or waive any
rights of substantial value without fair and adequate consideration;
(j) declare, make or pay any Distribution other than any Distribution from
a Subsidiary of Company to Company or to another Subsidiary of Company;
(k) issue, pledge, grant, dispose of, Encumber, or authorize the issuance,
sale, pledge, grant, disposition or Encumbrance of any shares of any class of
capital stock of
29
Company or any Subsidiary or options, warrants, convertible securities or other
rights of any kind to acquire any shares of such capital stock except for
issuances upon exercise of outstanding Company Option Securities or Company
Convertible Securities;
(l) reclassify, combine, split, divide or redeem, purchase or otherwise
acquire, directly or indirectly, any of its capital stock; or
(m) acquire (including, without limitation, by merger, consolidation, or
acquisition of stock or assets) any interest in any corporation, partnership,
other business organization or any division thereof or any assets (other than
inventory, equipment and similar assets acquired int he ordinary course of
business).
SECTION 5. CONDITIONS PRECEDENT TO THE MERGER.
5.1 Conditions to Obligation of Each Party to Effect the Merger. The
respective obligations of Company, Childs Acquiror Parent and Acquiror to
consummate the Merger shall be subject to the satisfaction or waiver (subject to
Applicable Law) of the following conditions:
(a) Stockholder Approval. The Merger shall have been approved and adopted
by the affirmative vote of a majority of the stockholders of Company.
(b) No Change in Law; No Opposition. No Authority shall have enacted,
issued, promulgated, enforced or entered any law, order, executive order, stay,
decree, judgment, injunction or other order or statute, rule or regulation which
is in effect and which has the effect of making the acquisition of shares of
Company Common Stock by Childs, Acquiror Parent or Acquiror or any Affiliate of
any of them illegal or otherwise preventing or prohibiting consummation of the
transactions contemplated hereby.
(c) Antitrust Improvement Act. The filing and waiting period requirements
under the HSR Act relating to the consummation of the Merger shall have expired
or been terminated.
(d) Solvency Letters. Acquiror shall have delivered letters, in form and
substance reasonably satisfactory to Company, attesting to the solvency of the
Surviving Corporation individually, and the Surviving Corporation and its
Subsidiaries, taken as a whole, immediately before and immediately after giving
effect to the Merger, from its chief financial officer.
(e) Securities Purchase Agreement. The transactions contemplated by the
Securities Purchase Agreement shall have been consummated.
30
5.2 Conditions to Obligtions of Childs. The obligations of Childs, Acquiror
Parent and Acquiror to effect the Merger are further subject to the satisfaction
at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and warranties of
Company set forth in this Agreement that are qualified as to materiality shall
be true and correct and any such representations and warranties that are not so
qualified shall be true and correct in all material respects, in each case as of
the date of this Agreement and as of the Closing Date as though made on and as
of the Closing Date (other than representations and warranties which address
matters only as of a certain date which shall be true and correct (or true and
correct in all material respects, as the case may be) as of such certain date).
Childs shall have received a certificate signed on behalf of Company by the
chief executive officer and the chief financial officer of Company to the effect
set forth in this paragraph.
(b) Performance of Obligations of Company. Company shall have performed the
obligations required to be performed by it under this Agreement at or prior to
the Closing Date (except for such failures to perform as would not have a
Material Adverse Effect on Company).
(c) No Material Adverse Change. There shall not have occurred any event or
change in circumstances involving Company or any of its Subsidiaries that,
individually or when taken together with all other such events or changes in
circumstances, is or is reasonably likely to be materially adverse to the
business, operations, properties, financial condition or results of operations
of Company and its Subsidiaries taken as a whole, or does or is reasonably
likely to delay or prevent the consummation of the transactions contemplated by
the Merger Agreement.
(d) Financing. The closings of the financings described in each of the
commitment letters, dated November 26, 1996, of Fleet National Bank and
NationsBank, N.A. to provide sufficient funds to consummate the Merger shall
have taken place.
5.3 Conditions to Obligations of Company. The obligations of Company to
effect the Merger are further subject to the satisfaction at or prior to the
Effective Time of the following conditions:
(a) Representations and Warranties. The representations and warranties of
Childs, Acquiror Parent and Acquiror set forth in this Agreement that are
qualified as to materiality shall be true and correct and any such
representations and warranties that are not so qualified shall be true and
correct in all material respects, in each case as of the date of this Agreement
and as of the Closing Date as though made on and as of the Closing Date (other
than representations and warranties which address matters only as of a certain
date which shall be true and correct (or true and correct in all material
respects, as the case may be) as of such certain date). Company shall have
received a certificate signed on behalf of Childs, Acquiror Parent and Acquiror
by an authorized officer of each to the effect set forth in this paragraph.
31
(b) Performance of Obligations of Childs. Each of Childs, Acquiror Parent
and Acquiror shall have performed the obligations required to be performed by it
under this Agreement at or prior to the Closing Date (except for such failures
to perform as have not had or could not reasonably be expected, either
individually or in the aggregate, to materially adversely affect the ability of
each of Childs, Acquiror Parent Acquiror to consummate the transactions herein
contemplated or perform its obligations hereunder).
SECTION 6. DEFINITIONS.
6.1 Principles of Construction. As used herein, unless the context
otherwise requires, the following terms (or any variant in the form thereof)
have the following respective meanings. Terms defined in the singular shall have
a comparable meaning when used in the plural, and vice versa, and the reference
to any gender shall be deemed to include all genders. Except where the context
otherwise requires, references to "this Section" or words of similar import
shall be deemed to refer to the entire section and not a particular subsection
and references to "hereunder," "herein," "hereof" or words of similar import
shall be deemed to refer to the entire Agreement and not the particular Section
or subsection or other provision. The words "includes" and "including" are not
limiting and mean "including without limitation." In computation or periods of
time from a specified date to a later specified date, the word "from" means
"from and including," the words "to" and "until" each means "to but excluding,"
and the word "through" means "to and including." Unless otherwise defined or the
context otherwise clearly requires, terms for which meanings are provided in
this Agreement shall have such meanings when used in the Disclosure Schedule and
each Instrument, notice, certificate, communication, opinion or other document
executed or required to be executed pursuant hereto or thereto or otherwise
delivered, from time to time, pursuant hereto or thereto. All accounting terms
not specifically defined herein shall be construed in accordance with GAAP.
References to any statute or regulation are to be construed as including all
statutory and regulatory provisions consolidating, amending or replacing such
statute or regulation.
6.2 "Acquiror" is defined in the preamble preceding the Recitals.
6.3 "Acquiror Parent" is defined in the preamble preceding the Recitals.
6.4 "Acquisition Proposal" is defined in Section 4.8.
6.5 "Affiliate," when used with respect to any Person, shall mean (a) any
other Person at the time directly or indirectly controlling, controlled by or
under direct or indirect common control with such Person, (b) any other Person
of which such Person at the time owns, or has the right to acquire, directly or
indirectly, five percent (5%) or more on a consolidated basis of the equity or
beneficial interest, (c) any other Person which at the time owns, or has the
right to acquire, directly or indirectly, five percent (5%) or more of any class
of the capital stock or beneficial interest of such Person, (d) any executive
officer (as defined in the Exchange Act) or director of such Person, and (e)
when used with respect to an individual, shall include a spouse, any descendant,
or any other relative (by blood, adoption or
32
marriage) within the third degree of such individual or a trust for the benefit
of any such spouse, descendant or relative. A Person shall be deemed to be
"controlled by" any other Person if such other Person possesses, directly or
indirectly, power to direct or cause the direction of the management or policies
of such Person or the disposition of its assets or properties, whether by stock,
equity or other ownership, by contract, arrangement or understanding, or
otherwise.
6.6 "Agreement" is defined in the Recitals.
6.7 "Applicable Law" shall mean any Law of any Authority, whether domestic
or foreign, including all federal and state Laws, to which the Person in
question is subject or by which it or any of its property is bound, and
including without limitation any: (a) administrative, executive, judicial,
legislative or other statute, code, consent decree, constitution, decree,
directive, enactment, finding, guideline, injunction, interpretation, judgment,
law, order, ordinance, policy statement, proclamation, promulgation, regulation,
requirement, rule, rule of law, rule of public policy, settlement agreement, or
writ, of any Authority, domestic or foreign; (b) common law or other legal or
quasi-legal precedent; or (c) arbitrator's, mediator's or referee's award,
decision, finding or recommendation, or, in any case, any particular section,
part or provision thereof.
6.8 "Authority" shall mean any governmental or quasi-governmental
authority, whether administrative, executive, judicial, legislative or other, or
any combination thereof, including any federal, state, territorial, county,
municipal or other government or governmental or quasi-governmental agency,
arbitrator, authority, board, body, branch, bureau, central bank or comparable
agency or entity, commission, corporation, court, department, instrumentality,
master, mediator, panel, referee, system or other political unit or subdivision
or other entity of any of the foregoing, whether domestic or foreign.
6.9 "Benefit Arrangement" shall mean any benefit arrangement (whether or
not written), including (a) any employment or consulting agreement, (b) any
arrangement providing for insurance coverage or workers' compensation benefits,
(c) any incentive bonus or deferred bonus arrangement, (d) any arrangement
providing termination allowance, severance or similar benefits, (e) any equity
compensation plan, (f) any deferred compensation plan and (g) any compensation
policy and practice, but excluding in any event any Employee Benefit Plan.
6.10 "Business Day" shall mean any day on which the principal offices of
the Commission 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 or Boston, Massachusetts.
6.11 "Certificate of Merger" is defined in Section 1.1.
6.12 "Certificates" is defined in Section 1.5.
6.13 "Childs" is defined in the preamble preceding the Recitals.
33
6.14 "Closing" is defined in Section 1.2.
6.15 "Closing Date" is defined in Section 1.2.
6.16 "COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended, as set forth in Section 4980B of the Code and Part 6 of
Title I of ERISA.
6.17 "Code" shall mean the United States Internal Revenue Code of 1986, and
the rules and regulations thereunder, all as from time to time in effect, or any
successor law, rules or regulations, and any reference to any statutory or
regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision.
6.18 "Commission" shall mean the Securities and Exchange Commission or any
successor Authority.
6.19 "Company" is defined in the preamble preceding the Recitals.
6.20 "Company Benefit Arrangement" shall mean any Benefit Arrangement
maintained by Company or any of its Subsidiaries, or any ERISA Affiliates of
Company or any of its Subsidiaries, covering any employees, directors or former
directors of Company or any of its Subsidiaries or any ERISA Affiliates of
Company or any of its Subsidiaries, and the beneficiaries of any of them.
6.21 "Company Common Stock" is defined in the Recitals
6.22 "Company Consents" is defined in Section 2.25.
6.23 "Company Convertible Securities" shall mean any Convertible Securities
directly or indirectly convertible into or exchangeable for shares of Company
Common Stock.
6.24 "Company Employee" shall mean any present employee of Company or any
of its Subsidiaries.
6.25 "Company Employee Plans" is defined in Section 2.5.
6.26 "Company Option Securities" shall mean any Option Securities for the
purchase or other acquisition of shares of Company Common Stock.
6.27 "Company Option Security Price" is defined in Section 1.4.
6.28 "Company SEC Reports" is defined in Section 2.2.
6.29 "Company Stockholder Approval" is defined in Section 4.5.
6.30 "Company Stockholders Meeting" is defined in Section 4.5.
34
6.31 "Constituent Corporations" is defined in the preamble preceding the
Recitals.
6.32 "Contractual Obligation" shall mean, with respect to any Person, any
term, condition, provision, representation, warranty, agreement, covenant,
undertaking, commitment, indemnity or other obligation set forth or which is
outstanding or existing under any Instrument (including without limitation any
Instrument relating to or evidencing any indebtedness or capital lease
obligation) to which such Person is a party or by which it or any of its
properties is bound.
6.33 "Convertible Securities" shall mean, with respect to any Person, any
evidences of indebtedness, shares of capital stock (other than common stock) or
other securities directly or indirectly convertible into or exchangeable for
shares of common stock, whether or not the right to convert or exchange
thereunder is immediately exercisable or is conditioned upon the passage of
time, the occurrence or non-occurrence or existence or non-existence of some
other Event, or both.
6.34 "Disbursing Agent" is defined in Section 1.5.
6.35 "Disbursing Agent Agreement" is defined in Section 1.5.
6.36 "Disclosure Schedule" shall mean the disclosure schedule dated as of
the date of this Agreement heretofore delivered by Company to Childs and
Acquiror.
6.37 "Dissenting Shares" is defined in Section 1.4.
6.38 "Distribution" shall mean, with respect to any Person: (a) the
declaration or payment of any dividend on or in respect of any shares of any
class of capital stock of such Person; (b) the purchase, redemption or other
retirement of any shares of any class of capital stock of such Person or any
shares of capital stock of any Subsidiary owned by a Person other than such
Person or a wholly owned Subsidiary of such Person; and (c) any other
distribution on or in respect of any shares of any class of capital stock of
such Person or any shares of capital stock of any Subsidiary owned by a Person
other than such Person or a wholly owned Subsidiary of such Person.
6.39 "DGCL" is defined in the Recitals.
6.40 "Effective Time" is defined in Section 1.1.
6.41 "Employee Benefit Plan" shall mean any benefit plan, as defined in
Section 3(3) of ERISA.
6.42 "Encumber" or "Encumbrance" shall mean any of the following: mortgage;
lien (statutory or other); preference, priority or other security agreement,
arrangement or interest; hypothecation, pledge or other deposit arrangement;
assignment; charge; levy; executory seizure; attachment; garnishment;
encumbrance (including any easement, exception, variance, reservation or
limitation, right of way, zoning restriction, building or use restriction,
35
and the like); conditional sale, title retention or other similar agreement,
arrangement, device or restriction; preemptive or similar right; any financing
lease involving substantially the same economic effect as any of the foregoing;
the filing of any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction; restriction on sale, transfer, assignment,
disposition or other alienation; or any option, equity, claim or right of or
obligation to, any other Person, of whatever kind and character.
6.43 "Entity" shall mean any corporation, firm, unincorporated
organization, association, partnership, limited liability company, a trust
(inter vivos or testamentary), an estate of a deceased, insane or incompetent
individual, business trust, joint stock company, joint venture or other
organization, entity or business, whether acting in an individual, fiduciary or
other capacity, or any Authority.
6.44 "Environmental Claim" means any notice received by Company or any of
its Subsidiaries of violation, action, claim, Environmental Lien, demand,
abatement or other order or direction (conditional or otherwise) by any
Authority or any other Person for personal injury (including sickness, disease
or death), tangible or intangible property damage, damage to the environment,
pollution, contamination or other adverse effects on the environment, or for
fines, penalties or restrictions resulting from or based upon (a) the existence
of an Environmental Release (including, without limitation, a sudden or non-
sudden accidental or non-accidental Environmental Release) of, or exposure to,
any Hazardous Material, noxious odor or illegal audible noise in, into or onto
the environment (including, without limitation, the air, soil, surface water or
groundwater) at, in, by, from or related to any property presently or formerly
owned, operated or leased by any of Company or its Subsidiaries or any
activities or operations thereon; (b) the transportation, storage, treatment or
disposal of Hazardous Material in connection with any property presently or
formerly owned, operated or leased by any of Company or its Subsidiaries or
their operations or facilities; or (c) the violation, or alleged violation, of
any Environmental Law relating to environmental matters connected with any
property presently or formerly owned, leased or operated by any of Company or
its Subsidiaries.
6.45 "Environmental Costs and Liabilities" means any and all losses,
liabilities, obligations, damages, fines, penalties, judgments, actions, claims,
costs and expenses (including, without limitation, fees, disbursements and
expenses of legal counsel, experts, engineers and consultants and the costs of
investigation and feasibility studies and Remedial Action) arising from or under
any Environmental Law or contract, agreement or similar arrangement with any
Authority or other Person required under any Environmental Law.
6.46 "Environmental Law" shall mean any Law relating to or otherwise
imposing liability or standards of conduct concerning pollution or protection of
the environment or health or safety, occupational or other, including without
limitation Laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals, noises, odors or industrial,
toxic or hazardous substances, materials or wastes, including without limitation
Hazardous Materials, whether solid, liquid or gaseous in nature and whether as
matter or energy, into the environment (including, without limitation, ambient
air, surface water, ground water, mining or reclamation or mined land, land
surface or subsurface
36
strata) or otherwise relating to the manufacture, processing, generation,
distribution, use, treatment, storage, disposal, cleanup, transport or handling
of pollutants, contaminants, chemicals or industrial, toxic or hazardous
substances or wastes, whether solid, liquid or gaseous in nature, including
without limitation any Law relating to reporting, licensing, permitting,
investigation and remediation of any of the foregoing. Environmental Laws shall
include without limitation the Comprehensive Environmental Response,
compensation and Liability Act (42 U.S.C. Section 9601 et seq.), the Hazardous
Material Transportation Act (49 U.S.C. Section 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the Clean Water
Act (Federal Water Pollution Control Act) (33 U.S.C. Section 1251 et seq.), the
Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control Act
(15 U.S.C. Section 2601 et seq.), the Safe Drinking Water Act (42 U.S.C. Section
300f et seq.), the Endangered Species Act (16-U.S.C. Section 1531 et seq.), the
Emergency Planning and Community Right-to-Know Act of 1986 (42 U.S.C. Section
11001 et seq.), the Occupational Safety and Health Act (29 U.S.C. Section 651 et
seq.), the Federal Insecticide, Fungicide Rodenticide Act (7 U.S.C. Section 136
et seq.), the Food, Drug and Cosmetic Act (21 U.S.C. Section 301 et seq.), the
Medical Waste Tracking Act of 1988, Pub. L. No. 100-582, 102 Stat. 2950 (1988),
and the Surface Mining Control and Reclamation Act of 1977 (30 U.S.C. Section
1201 et seq.), as such laws have been amended or supplemented from time to time,
and any analogous present or future federal, state, local or foreign statutes,
including transfer of ownership notification statutes.
6.47 "Environmental Lien" means any Encumbrance arising under any
Environmental Law.
6.48 "Environmental Permit" means any permit, approval, authorization,
license, variance, registration or permission required under any applicable
Environmental Law.
6.49 "Environmental Release" means any release, spill, emission, leaking,
pumping, pouring, dumping, emptying, injection, deposit, disposal, discharge,
dispersal, leaching, or migration on or into the indoor or outdoor environment
or into or out of any property not authorized under any Environmental Permit and
requiring notification under any applicable Environmental Law.
6.50 "ERISA" is defined in Section 2.5.
6.51 "ERISA Affiliate" shall mean a Person and/or such Person's
Subsidiaries or any trade or business (whether or not incorporated) which is
under common control with such Person's or such Person's Subsidiaries or which
is treated as a single employer with such Person or any Subsidiary of such
Person under Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(f)
of ERISA.
6.52 "Event" shall mean the occurrence or existence of any act, action,
activity, circumstance, condition, event, fact, failure to act, incident or
practice, or any set or combination of any of the foregoing.
37
6.53 "Exchange Act" shall mean the Securities Exchange Act of 1934, and the
rules and regulations of the Commission thereunder, all as from time to time in
effect, or any successor law, rules or regulations, and any reference to any
statutory or regulatory provision shall be deemed to be a reference to any
successor statutory or regulatory provision.
6.54 "Fairness Opinion" shall mean the opinion of Xxxxx Xxxxxxx to the
effect that the consideration to be received by the holders of shares of Company
Common Stock in the Merger is fair from a financial point of view to such
holders.
6.55 "GAAP" shall mean, with respect to any Person, except to the extent
that a deviation therefrom is expressly required by this Agreement, generally
accepted accounting principles applied on a consistent basis (a) as set forth in
Opinions of the Accounting Principles Board of the American Institute of
Certified Public Accountants ("AICPA") and/or in statements of the Financial
Accounting Standards Board that are applicable in the circumstances as of the
date in question, (b) when not inconsistent with such opinions and statements,
as set forth in other AICPA publications and guidelines and/or (c) that
otherwise arise by custom for the particular industry. The requirement that such
principles be consistently applied means that the accounting principles in a
current period are comparable in all material respects to those applied in
preceding period. All accounting and financial terms used in this Agreement, all
determinations and computations required to be made pursuant to the provisions
of this Agreement, and the compliance with each covenant contained in this
Agreement that relates to financial matters shall, except as otherwise
specifically provided to the contrary, be determined in accordance with GAAP as
defined in this paragraph.
6.56 "Gains Taxes" is defined in Section 2.25.
6.57 "Governmental Authorizations" shall mean all approvals, concessions,
consents, exemptions, franchises, licenses, permits, plans, registrations and
other authorizations of and all reports to and filings with all Authorities.
6.58 "Hazardous Material" means any substance, material or waste which is
regulated by any Authority in jurisdictions in which any of Company or its
Subsidiaries operates, including, (a) any material, substance or waste which is
defined as a "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste," "restricted hazardous waste," "contaminant," "toxic
waste" or "toxic substance" under any provision of Environmental Law, and (b)
petroleum, petroleum products, asbestos and polychlorinated biphenyls.
6.59 "HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act
of 1976, and the rules and regulations thereunder, all as from time to time in
effect, or any successor law, rules or regulations, and any reference to any
statutory or regulatory provision shall be deemed to be a reference to any
successor statutory or regulatory provision.
6.60 "Indemnified Parties" is defined in Section 4.10.
38
6.61 "Instrument" shall mean any agreement, bond, contract, debenture,
indenture, lease, letter of credit, mortgage, note, commitment, memorandum,
certificate, notice, document or other writing (whether by formal agreement,
letter or otherwise), or any oral arrangement, understanding or commitment,
under which any debt, liability or other obligation is evidenced, assumed or
undertaken, or any lien (or right or interest therein) is granted, perfected or
exists.
6.62 "Intellectual Property" shall mean, with respect to any Person, any
and all research, information, inventions, designs, procedures, developments,
discoveries, improvements, patents and applications therefor, trademarks and
applications therefor, service marks, tradenames, copyrights and applications
therefor, trade secrets, drawing, plans, systems, methods, specifications,
computer software programs, tapes, discs and related data processing software
owned by such Person or in which it has an interest and all other manufacturing,
engineering, technical, research and development data and know-how made,
conceived, developed and/or acquired by such Person, which relate to the
manufacture, production or processing of any products developed or sold by such
Person or which are within the scope of or usable in connection with such
Person's business as it may, from time to time, hereafter be conducted or
proposed to be conducted.
6.63 "IRS" or the "Service" is defined in Section 2.5.
6.64 "Law" shall mean any action, approval, authorization, code, consent
decree, constitution, demand, decree, directive, enactment, finding, guideline,
injunction, interpretation, judgment, law, license, order, ordinance, permit,
policy statement, proclamation, promulgation, regulation, requirement, rule,
rule of law, rule of public policy, settlement agreement, statute, or writ, or
the common law, or any particular section, part or provision thereof, or any
interpretation, directive, guideline or request (whether or not having the force
of law), of any Authority, including without limitation the judicial systems
thereof, or any particular section, part or provision thereof.
6.65 "Lease" shall mean any lease of property, whether real, personal or
mixed.
6.66 "Legal Action" shall mean, with respect to any Person, any litigation
or legal or other actions, arbitrations, investigations, proceedings or suits,
at law or in arbitration, equity or admiralty (whether or not purported to be
brought on behalf of such Person) affecting such Person or any of its business
or property or assets.
6.67 "Material Adverse Effect" or "Material Adverse Change" in respect of
any Person shall mean any change, effect or circumstance that, individually or
when taken together with all other such changes, effects or circumstances that
have occurred prior to the date of determination of the occurrence of the
Material Adverse Effect, (a) is or is reasonably likely to be materially adverse
to the business, operations, properties, financial condition or results of
operations of such Person and its Subsidiaries taken as a whole, or (b) does or
is reasonably likely to delay or prevent the consummation of the transactions
contemplated hereby.
39
6.68 "Material Agreement" or "Material Commitment" shall mean, with respect
to any Person, any Contractual Obligation which (a) was not entered into in the
ordinary course of business, (b) was entered into in the ordinary course of
business which (i) involves the purchase, sale or lease of goods or materials or
performance of services aggregating more than $250,000, (ii) extends for more
than twelve (12) months, or (iii) is not terminable on thirty (30) days' or less
notice without penalty or other payment or (c) involves indebtedness for money
borrowed or capital lease obligations in excess of $250,000.
6.69 "Merger" is defined in the Recitals.
6.70 "Merger Price" is defined in Section 1.4.
6.71 "Multiemployer Plan" shall mean a multiemployer plan, as defined in
Sections 3(37) and 4001(a)(3) of ERISA.
6.72 "1995 Company Balance Sheet" is defined in Section 3.4.
6.73 "Option Securities" shall mean all rights, options and warrants, and
calls or commitments evidencing the right, to subscribe for, purchase or
otherwise acquire shares of capital stock or Convertible Securities, whether or
not the right to subscribe for, purchase or otherwise acquire is immediately
exercisable or is conditioned upon the passage of time, the occurrence or non-
occurrence or the existence or non-existence of some other Event.
6.74 "Organic Documents" shall mean, with respect to any Entity, the
instrument, as from time to time in effect, filed by such Entity under the laws
of its jurisdiction of organization for the purpose of effecting such
organization, its by-laws, partnership agreement, management agreement,
operating agreement and all stockholder, partner and member agreements, voting
trusts and similar arrangements applicable to any of its capital stock,
partnership interests or membership interests.
6.75 "PBGC" is defined in Section 2.5.
6.76 "Pension Plan" shall mean any employer pension benefit plan, as
defined in Section 3(2) of ERISA.
6.77 "Permitted Encumbrances" shall mean the following: (a) liens for
taxes, assessments and governmental charges not yet due and payable; (b) rights
reserved to any Authority to regulate the affected property; (c) as to leased
assets, interests of lessors and encumbrances affecting the interests of the
lessors; and (d) leases, encumbrances or restrictions that do not in any
material respect, individually or in the aggregate, affect or impair the value
or use of the affected asset or property.
6.78 "Permitted Investments" is defined in Section 1.5.
6.79 "Person" shall mean any natural individual or any Entity.
40
6.80 "Xxxxx Xxxxxxx" is defined in Section 2.22.
6.81 "Private Authorizations" shall mean all franchises, permits, licenses,
approvals, consents, concessions and other authorizations of or filings with all
Persons (other than Authorities) including without limitation those with respect
to patents, trademarks, service marks, trade names, copyrights, computer
software programs, technology and know-how.
6.82 "Prohibited Transaction" shall mean a transaction that is prohibited
under Section 4975 of the Code or Section 406 of ERISA and not exempt under
Section 4975 of the Code or Section 408 of ERISA, respectively.
6.83 "Proxy Statement" is defined in Section 2.21.
6.84 "Remedial Action" means all actions required under any applicable
Environmental Law or otherwise undertaken by any Authority, including any
capital expenditures, required or undertaken to (a) clean up, remove, treat, or
in any other way address any Hazardous Material; (b) prevent an Environmental
Release or the threat of an Environmental Release, or minimize any further
Environmental Release so it does not migrate or endanger or threaten to endanger
public health or welfare or the indoor or outdoor environment; (c) perform pre-
remedial studies and investigations or post-remedial monitoring and care; or (d)
bring facilities on any property owned, operated or leased by any of Company or
its Subsidiaries and operations conducted thereon into compliance with any
applicable Environmental Law or Environmental Permit.
6.85 "Representatives" is defined in Section 5.1.
6.86 "Reportable Event" shall mean a "reportable event", as defined in
Section 4043 of ERISA, whether or not the reporting of such event to the Pension
Benefit Guaranty Corporation has been waived.
6.87 "Schedule 13E-3" is defined in Section 2.21
6.88 "Securities Act" shall mean the Securities Act of 1933, as amended.
6.89 "Securities Purchase Agreement" is defined in the Recitals.
6.90 "Subsidiary" shall mean, with respect to any Person, any Entity a
majority of the capital stock ordinarily entitled to vote for the election of
directors, or if no such voting stock is outstanding a majority of the equity
interests, of which is owned directly or indirectly by such Person or any other
Person which is a Subsidiary of such Person.
6.91 "Surviving Corporation" is defined in Section 1.1.
6.92 "Tax" or "Taxes" shall mean all taxes, charges, fees, imposts, levies
or other assessments, including, without limitation, all net income, franchise,
profits, gross receipts, capital, sales, use, ad valorem, value added, transfer,
transfer gains, inventory, capital stock,
41
license, withholding, payroll,
employment, social security, unemployment, excise, severance, stamp, occupation,
real or personal property, and estimated taxes, water, rent and sewer service
charges, custom duties, fees, assessments and charges of any kind whatsoever,
together with any interest and any penalties, fines, additions to tax or
additional amounts thereon, imposed by any taxing authority or other Authority
(federal, state, local or foreign) and shall include any transferee liability in
respect of Taxes.
6.93 "Tax Return" shall mean any return, declaration, report, estimate,
information return or statement required to be filed in respect of any Taxes.
6.94 "Termination Date" is defined in Section 7.1.
6.95 "Transfer" shall mean any sale, assignment, conveyance, transfer or
other disposition, mortgage, pledge or other Encumbrance, lease, exchange,
abandonment, parting with control of, gift, granting of an option or proxy or
other act of alienation.
6.96 "Transaction Document" shall mean any Instrument executed or to be
executed in connection with the consummation of the Merger and the other
transactions contemplated hereby, whether or not expressly referred to in this
Agreement.
SECTION 7. TERMINATION.
7.1 Termination. Anything contained in this Agreement to the contrary
notwithstanding, this Agreement may be terminated and the Merger and the other
transactions contemplated by this Agreement may be abandoned at any time prior
to the Effective Time, whether before or after the Company Stockholder Approval:
(a) By mutual agreement of the parties duly authorized by the board of
directors of each party; or
(b) By Childs or the Company if the Merger shall not have been consummated
on or before March 30, 1997 (the "Termination Date"); or
(c) By Childs or the Company if the Securities Purchase Agreement shall
have been terminated pursuant to Section 8.1 thereof; or
(d) By either party, if a court of competent jurisdiction or governmental,
regulatory or administrative agency or commission shall have issued an order,
decree or ruling (which order, decree, ruling or action the parties hereto shall
use their best efforts to lift or reverse), in each case permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement, and such order, decree, ruling or other action shall have become
final and nonappealable; or
(e) (i) By Company, if both (A) it is not in material breach of any of its
representations, warranties or covenants contained herein or in any Transaction
Document and
42
(B) there has been a material breach of a representation or warranty in this
Agreement by Childs, Acquiror Parent or Acquiror, or a material breach by
Childs, Acquiror Parent or Acquiror of any covenant set forth herein, or a
failure of any condition to which the obligations of Company hereunder are
subject, and such breach or failure cannot be cured by the Termination Date and
has not been waived, or (ii) by Childs, Acquiror Parent and Acquiror, if both
(A) neither Childs, Acquiror Parent nor Acquiror is in material breach of any of
its representations, warranties or covenants contained herein or in any
Transaction Document and (B) there has been a material breach of a
representation or warranty in this Agreement by Company, or a material breach by
Company of any covenant set forth herein, or a failure of any condition to which
the obligations of Childs, Acquiror Parent and Acquiror hereunder are subject,
and such breach or failure cannot be cured by the Termination Date and has not
been waived; or
(f) By Childs, Acquiror Parent or Acquiror if the Board of Directors of
Company shall have (A) withdrawn or modified (including by amendment of the
Proxy Statement) , in a manner adverse to Acquiror, its approval or
recommendation of this Agreement or the Merger or any of the transactions
contemplated hereby, (B) failed to include such recommendation in the Proxy
Statement, (C) approved or recommended any Acquisition Proposal from any Person
other than Childs, Acquiror Parent or Acquiror or (D) resolved to do any of the
foregoing.
In the event of any termination pursuant to this Section (other than
pursuant to paragraph (a)), written notice setting forth the reasons thereof
shall forthwith be given by the terminating party to the other party and, in the
case of paragraph (d), such termination may not occur unless the breach or
failure set forth in such notice shall not have been cured by the earlier to
occur of (x) the Termination Date and (y) the seventh (7th) day after such
written notice.
7.2 Effect of Termination. In the event of termination of this Agreement
pursuant to Section 7.1, this Agreement shall forthwith become void, there shall
be no liability on the part of any party, or any of its respective stockholders,
partners, officers or directors, to the other and all rights and obligations of
each party shall cease; except that such termination shall not relieve any party
from liability for any misrepresentation or breach of any of its warranties,
covenants or agreements set forth in this Agreement.
SECTION 8. GENERAL PROVISIONS.
8.1 Effectiveness of Representations and Warranties. All representations,
warranties, covenants and agreements made in this Agreement or in any agreement,
instrument, other document or certificates delivered in connection with the
transactions contemplated hereby shall be deemed material and relied on by each
party notwithstanding any investigation made by it or on its behalf. The
representations, warranties and agreements in this Agreement shall terminate at
the Effective Time or upon the termination of this Agreement pursuant to Section
7.1, as the case may be, except for those covenants and agreements contained
herein that by their terms apply or are to be performed in whole or in
43
part after the Effective Time. Nothing in this Section 8.1 shall relieve any
party for any breach of any representation, warranty or agreement in this
Agreement occurring prior to termination.
8.2 Entire Agreement. This Agreement (which term, unless the context--
otherwise specifically requires, includes any exhibits or schedules
hereto and all agreements, instruments, other documents and certificates
delivered pursuant hereto or thereto) constitutes the entire agreement
between the parties with respect to the subject matter hereof and
supersedes all prior agreements, arrangements, covenants, promises,
conditions, understandings, inducements, representations and
negotiations, expressed or implied, written or oral, between them as to
such subject matter, including, without limitation, any so-called
"letters of intent" and confidentiality agreements with respect thereto.
8.3 Waivers; Amendments. Anything in this Agreement to the contrary
notwithstanding, amendments to and modifications of this Agreement may be made,
required consents and approvals may be granted, compliance with any term,
covenant, agreement, condition or other provision set forth herein may be
omitted or waived, and misrepresentations and breaches of warranties may be
waived, either generally or in a particular instance and either retroactively or
prospectively with, but only with, the written consent of the party entitled to
the benefit thereof.
8.4 Assignment; Successors and Assigns. This Agreement shall not be
assignable by either party without the prior written consent of the
other. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, executors,
legal representatives, successors and permitted assigns, including,
without limitation, successors by operation of law pursuant to any
merger, consolidation or sale of assets involving any of the parties.
Nothing in this Agreement expressed or implied is intended to and shall
not be construed to confer upon or create in any person (other than the
parties hereto and their permitted successors and assigns) any rights or
remedies under or by reason of this Agreement, including without
limitation any rights to enforce this Agreement.
8.5 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
facsimile, telegram or telex or by registered or certified mail (postage
prepaid, return receipt requested) 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 8.5):
44
If to Childs, Acquiror Parent or Acquiror, at:
c/o X.X. Childs Associates, L.P.
Xxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxx
Facsimile: 617-753-1101
with copies to: Xxxxxxxxxxx Xxxxx, Esq.
Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: 617-338-2880
and
Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 000-000-0000
If to Company, at:
Central Tractor Farm & Country, Inc.
0000 Xxxxxxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000
Attention: President
Facsimile: 000-000-0000
with a copy to:
Xxxxx X. Xxxxxx, Esq.
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: 000-000-0000
or to such other person(s), telex or facsimile number(s) or address(es) as the
party to receive any such communication or notice may have designated by written
notice to the other party.
8.6 Severability. If any provision of this Agreement shall be held or
deemed to be, or shall in fact be, invalid, inoperative, illegal or
unenforceable as applied to any particular case in any jurisdiction or
jurisdictions, or in all jurisdictions or in all cases, because of the
conflicting of any provision with any constitution or statute or rule of public
policy or for any
45
other reason, such circumstance shall not have the effect of rendering the
provision or provisions in question invalid, inoperative, illegal or
unenforceable in any other jurisdiction or in any other case or circumstance or
of rendering any other provision or provisions herein contained invalid,
inoperative, illegal or unenforceable to the extent that such other provisions
are not themselves actually in conflict with such constitution, statute or rule
of public policy, but this Agreement shall be reformed and construed in any such
jurisdiction or case as if such invalid, inoperative, illegal or unenforceable
provision had never been contained herein and such provision reformed so that it
would be valid, operative and enforceable to the maximum extent permitted in
such jurisdiction or in such case, except when such reformation and construction
would operate as an undue hardship on either party, or constitute a substantial
deviation from the general intent and purpose of such party as reflected in this
Agreement.
8.7 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument, binding upon all the parties hereto,
notwithstanding that all the parties are not signatories to the original or the
same counterpart. In pleading or proving any provision of this Agreement, it
shall not be necessary to produce more than one of such counterparts.
8.8 Section Headings. The headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
8.9 Further Acts. Each of the parties hereto agrees to do all such things
and execute and deliver all such further instruments, agreements and documents
and to take all such further action as any other party may reasonably request in
order to effectuate the terms and conditions of this Agreement.
8.10 Governing Law. Except for provisions required to be governed by the
General Corporation Law of the State of Delaware, the validity, interpretation,
construction and performance of this Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts made and performed in such jurisdiction and, in any event, without
giving effect to any choice or conflict of laws provision or rule that would
cause the application of domestic substantive laws of any other jurisdiction.
8.11 Consent to Jurisdiction and Service. To the extent permitted by
Applicable Law, hereby absolutely and irrevocably consents and submits to the
jurisdiction of the courts of the State of Delaware and of any Federal Court
located in the said jurisdiction in connection with any actions or proceedings
brought against it by any other party to this Agreement arising out of or
relating to this Agreement and hereby irrevocably agrees that all claims in
respect of any such action or proceeding may be heard and determined in any such
court.
8.12 No Presumption. This Agreement shall be construed without regard to
any presumption or other rule requiring construction against the party causing
this Agreement to be drafted.
46
IN WITNESS WHEREOF, and have each caused this Agreement to be entered into
and signed, effective and delivered as of the date first-above written.
COMPANY:
-------
CENTRAL TRACTOR FARM
& COUNTY, INC.
By:____________________________
Name:
Title:
CHILDS:
------
X.X. CHILDS EQUITY PARTNERS, L.P.
By: X.X. CHILDS ADVISORS, L.P.,
its general partner
By: X.X. CHILDS ASSOCIATES, L.P.,
its general partner
By: X.X. CHILDS ASSOCIATES, INC.,
its general partner
By:___________________________
Name:
Title:
ACQUIROR PARENT:
---------------
JWC HOLDINGS I, INC.
By:___________________________
Name:
Title:
47
ACQUIROR:
--------
JWC ACQUISITION I, INC.
By:_____________________________
Name:
Title:
