Exhibit 2
---------
Execution Copy
AGREEMENT AND PLAN OF MERGER
By and Among
Central Tractor Farm & Country, Inc.
("Company"),
X.X. Childs Equity Partners, L.P.
("Childs"),
JWC Holdings I, Inc.
("Acquiror Parent")
and
JWC Acquisition I, Inc.
("Acquiror")
November 27, 1996
TABLE OF CONTENTS
SECTION 1. THE MERGER AND RELATED MATTERS. . . . . . . . . . . . . . . 5
1.1 The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.2 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.3 Certificate of Incorporation; By-Laws; Directors and Officers . . 5
1.4 Conversion of Shares. . . . . . . . . . . . . . . . . . . . . . 6
1.5 Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2. REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS OF COMPANY. . . . . . . . . . . . . . . . . . . 9
2.1 Organization and Business; Power and Authority; Effect of
Transaction. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.2 Filings with the Commission; Financial Statements. . . . . . . . 10
2.3 Absence of Certain Changes or Events. . . . . . . . . . . . . . 11
2.4 No Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . 11
2.5 Employee Benefit Plans, Employment Agreements . . . . . . . . . 11
2.6 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.7 Title to Properties; Leases. . . . . . . . . . . . . . . . . . . 12
2.8 Compliance with Contractual Obligations and Private
Authorizations. . . . . . . . . . . . . . . . . . . . . . . . . 13
2.9 Compliance with Governmental Authorizations and Applicable Law. 13
2.10 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . 14
2.11 Interested Party Transactions. . . . . . . . . . . . . . . . . . 14
2.12 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.14 Absence of Sensitive Payments. . . . . . . . . . . . . . . . . . 15
2.15 Inapplicability of Specified Statutes. . . . . . . . . . . . . . 15
2.16 Material Agreements. . . . . . . . . . . . . . . . . . . . . . . 15
2.17 Ordinary Course of Business. . . . . . . . . . . . . . . . . . . 16
2.18 Broker or Finder. . . . . . . . . . . . . . . . . . . . . . . . 17
2.19 Environmental Matters. . . . . . . . . . . . . . . . . . . . . 17
2.20 Certain State Statutes Inapplicable. . . . . . . . . . . . . . . 17
2.21 Information Supplied . . . . . . . . . . . . . . . . . . . . . . 18
2.22 Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . 18
2.23 Voting Agreements and Noncompetition Agreements . . . . . . . . . 18
2.24 Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.25 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.26 Board Recommendation. . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3. REPRESENTATIONS AND WARRANTIES OF CHILDS,
ACQUIROR PARENT AND ACQUIROR. . . . . . . . . . . . . . . 19
3.1 Organization and Business; Power and Authority; Effect of
Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.2 Adverse Restrictions . . . . . . . . . . . . . . . . . . . . . . 20
3.3 Information Supplied . . . . . . . . . . . . . . . . . . . . . . 20
3.4 Broker or Finder . . . . . . . . . . . . . . . . . . . . . . . . 21
3.5 Financing of the Merger and the Second Disposition . . . . . . . 21
SECTION 4. COVENANTS OF COMPANY AND CHILDS. . . . . . . . . . . . . . 21
4.1 Access to Information. . . . . . . . . . . . . . . . . . . . . . 21
4.2 Agreement to Cooperate. . . . . . . . . . . . . . . . . . . . . 21
4.3 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.4 Public Announcements. . . . . . . . . . . . . . . . . . . . . . 23
4.5 Stockholders' Approval. . . . . . . . . . . . . . . . . . . . 23
4.6 Proxy Statement; Schedule 13E-3. . . . . . . . . . . . . . . . 24
4.7 Company Board Representation; Section 14(f) . . . . . . . . . . 24
4.8 No Solicitation. . . . . . . . . . . . . . . . . . . . . . . . . 25
4.9 Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.10 Indemnification and Insurance . . . . . . . . . . . . . . . . . . 26
4.11 Convertible Securities. . . . . . . . . . . . . . .. . . . . . . 27
4.12 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.13 Conduct of Business by Company Pending the Effective Time . . . . 28
SECTION 5. CONDITIONS PRECEDENT TO THE MERGER. . . . . . . . . . . . . 30
5.1 Conditions to Obligation of Each Party to Effect the Merger . . . 30
5.2 Conditions to Obligations of Childs . . . . . . . . . . . . . . . 30
5.3 Conditions to Obligations of Company . . . . . . . . . . . . . . 31
SECTION 6. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 31
6.1 Principles of Construction . . . . . . . . . . . . . . . . . . . 31
SECTION 7. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . 41
7.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . 42
SECTION 8. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . 42
8.1 Effectiveness of Representations and Warranties. . . . . . . . . 42
8.2 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . 42
8.3 Waivers; Amendments. . . . . . . . . . . . . . . . . . . . . . . 42
8.4 Assignment; Successors and Assigns. . . . . . . . . . . . . . . 42
8.5 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.6 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.7 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.8 Section Headings. . . . . . . . . . . . . . . . . . . . . . . . 44
8.9 Further Acts. . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.10 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 44
8.11 Consent to Jurisdiction and Service. . . . . . . . . . . . . . . 44
8.12 No Presumption. . . . . . . . . . . . . . . . . . . . . . . . . . 44
SCHEDULES AND EXHIBITS
Disclosure Schedule
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.
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 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.
(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
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, 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.
(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 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 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 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, 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 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 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 Company nor any of its
Subsidiaries (a) made any contributions, payments or gifts to or for the
private use of any governmental official, employee or agent where either the
payment or the 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 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 Company nor any of its
Subsidiaries is a "holding company", or a "subsidiary company" or an "af-
filiate" 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 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;
(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. None of Company or its Subsidiaries has received any claims
or notices alleging liability under any Environmental Law.
(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
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.
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,
(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).
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 transac-
tions 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
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, publica-
tions 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 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 ap-
proval 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.
(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.
(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).
(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 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 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);
(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 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.
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.
(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 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.
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.
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, 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 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.
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.
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 manufactur-
ing, 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.
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.
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, 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 (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 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 par-
ties 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):
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 unenforce-
able 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
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.
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: /s/ Xxxx Xxxxxxxxxx
Name: Xxxx Xxxxxxxxxx
Title: Exec. Vice President - Finance
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: /s/ Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: Vice President
ACQUIROR PARENT:
JWC HOLDINGS I, INC.
By: /s/ Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: Vice President
ACQUIROR:
JWC ACQUISITION I, INC.
By: /s/ Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: Vice President
