EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SERVICE CORPORATION INTERNATIONAL,
CORONADO ACQUISITION CORPORATION
AND
ALDERWOODS GROUP, INC.
DATED AS OF APRIL 2, 2006
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TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER........................................................1
Section 1.1 The Merger..................................................1
Section 1.2 Closing; Effective Time.....................................1
Section 1.3 Effects of the Merger.......................................1
Section 1.4 Conversion of Company Capital Stock.........................2
Section 1.5 Merger Sub Common Stock.....................................2
Section 1.6 Company Dissenting Shares...................................2
Section 1.7 Options and Equity-related Securities.......................3
Section 1.8 Certificate of Incorporation................................4
Section 1.9 Bylaws......................................................4
Section 1.10 Directors and Officers of Surviving Corporation.............4
Section 1.11 Taking of Necessary Action; Further Action..................4
Section 1.12 Exchange Fund...............................................5
Section 1.13 Exchange of Shares..........................................5
Section 1.14 Withholding.................................................6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................6
Section 2.1 Corporate Organization, Standing and Power..................6
Section 2.2 Capitalization..............................................7
Section 2.3 Authority; No Violation.....................................8
Section 2.4 Consents and Approvals......................................9
Section 2.5 SEC Documents; Financial Statements........................10
Section 2.6 Absence of Certain Changes or Events.......................11
Section 2.7 Past Business Practices....................................13
Section 2.8 Undisclosed Liabilities....................................13
Section 2.9 Legal Proceedings..........................................13
Section 2.10 Taxes and Tax Returns......................................14
Section 2.11 Employee Benefit Plans.....................................15
Section 2.12 Employee Matters...........................................18
Section 2.13 Compliance with Applicable Law and Regulatory Matters......18
Section 2.14 Material Contracts.........................................19
Section 2.15 Environmental Liability....................................21
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Section 2.16 Insurance..................................................23
Section 2.17 Intellectual Property......................................23
Section 2.18 Assets and Property........................................24
Section 2.19 Investments................................................25
Section 2.20 Pre-Need Insurance.........................................26
Section 2.21 Takeover Statutes; Charter Provisions......................26
Section 2.22 Opinion....................................................27
Section 2.23 Broker's Fees..............................................27
Section 2.24 Company Information........................................27
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB..........27
Section 3.1 Corporate Organization, Standing and Power.................27
Section 3.2 Authority; No Violation....................................28
Section 3.3 Consents and Approvals.....................................29
Section 3.4 Disclosure Documents.......................................29
Section 3.5 Interim Operations of Merger Sub...........................29
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME..............................29
Section 4.1 Conduct of Business Prior to the Effective Time............29
Section 4.2 Conduct of Business of the Company.........................30
Section 4.3 No Solicitation............................................34
Section 4.4 Financing Assistance.......................................36
ARTICLE V ADDITIONAL AGREEMENTS............................................37
Section 5.1 Regulatory Matters.........................................37
Section 5.2 Access to Information......................................40
Section 5.3 Stockholder Approval.......................................40
Section 5.4 Public Disclosure..........................................41
Section 5.5 Reasonable Best Efforts and Further Assurances.............41
Section 5.6 Indemnification; Director and Officer Insurance............42
Section 5.7 Advice of Changes..........................................43
Section 5.8 Takeover Statutes..........................................43
Section 5.9 ESPP.......................................................44
Section 5.10 Benefits for Company Employees.............................44
ARTICLE VI CONDITIONS PRECEDENT.............................................45
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Section 6.1 Conditions to Each Party's Obligations to Effect the
Merger.....................................................45
Section 6.2 Conditions to Obligations of Parent and Merger Sub.........45
Section 6.3 Conditions to Obligation of the Company....................46
ARTICLE VII TERMINATION AND AMENDMENT........................................47
Section 7.1 Termination................................................47
Section 7.2 Effect of Termination......................................49
Section 7.3 Expenses and Termination Fees..............................49
Section 7.4 Amendment..................................................50
Section 7.5 Extension; Waiver..........................................50
ARTICLE VIII DEFINITIONS......................................................50
Section 8.1 Certain Defined Terms......................................50
ARTICLE IX GENERAL PROVISIONS...............................................59
Section 9.1 Nonsurvival of Representations, Warranties and Agreements..59
Section 9.2 Notices....................................................59
Section 9.3 Interpretation.............................................60
Section 9.4 Counterparts...............................................60
Section 9.5 Entire Agreement...........................................60
Section 9.6 Assignment.................................................60
Section 9.7 Third Party Beneficiaries..................................61
Section 9.8 Governing Law; Jurisdiction................................61
Section 9.9 Rules of Construction......................................61
Section 9.10 Waiver of Jury Trial.......................................61
Section 9.11 Severability...............................................62
Section 9.12 Specific Performance.......................................62
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("AGREEMENT"), dated as of April 2, 2006, by
and among Service Corporation International, a Texas corporation ("Parent"),
Coronado Acquisition Corporation, a Delaware corporation and a wholly-owned
subsidiary of Parent ("MERGER SUB"), and Alderwoods Group, Inc., a Delaware
corporation (the "COMPANY"). Certain capitalized terms have the meanings given
to such terms in Article VIII.
RECITALS
WHEREAS, the Board of Directors of the Company (the "COMPANY BOARD") has
unanimously (i) determined that the Merger and this Agreement are advisable,
fair to, and in the best interests of the Company and its stockholders, (ii)
approved this Agreement, and (iii) resolved to recommend that the stockholders
of the Company approve this Agreement; and
WHEREAS, the Company, Parent and Merger Sub, desire to make those
representations, warranties, covenants and agreements specified herein in
connection with this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER. At the Effective Time, and subject to and upon the
terms and conditions of this Agreement and the applicable provisions of Delaware
Law, Merger Sub shall merge with and into the Company. The Company shall be the
Surviving Corporation in the Merger and shall continue its corporate existence
under Delaware Law as a wholly-owned subsidiary of Parent. Upon consummation of
the Merger, the separate corporate existence of Merger Sub shall terminate.
SECTION 1.2 CLOSING; EFFECTIVE TIME. The Closing shall take place as soon
as practicable, and in any event not later than five Business Days after the
satisfaction or waiver of each of the conditions set forth in Article VI hereof
(other than those conditions that by their nature are to be fulfilled at Closing
but subject to waiver or fulfillment of those conditions) or at such other time
as the parties hereto may agree (the "CLOSING DATE"). The Closing shall take
place at the offices of Wachtell, Lipton, Xxxxx & Xxxx, 00 Xxxx Xxxxx-Xxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other location as the parties
hereto may agree in writing. The Merger shall become effective at the Effective
Time as set forth in the Certificate of Merger, which shall be filed with the
Secretary of State of the State of Delaware on the Closing Date.
SECTION 1.3 EFFECTS OF THE MERGER. At and after the Effective Time, the
Merger shall have the effects set forth in the applicable provisions of Delaware
Law. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time, all the property, rights, privileges, powers and franchises
of the Company and Merger Sub shall vest in the Surviving Corporation, and all
debts, liabilities and duties of the Company and Merger Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
SECTION 1.4 CONVERSION OF COMPANY CAPITAL STOCK. At the Effective Time, by
virtue of the Merger and without any action on the part of Parent, the Company
or the holder of any of the following securities:
(a) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than (i) shares of Company Common
Stock held by Parent, Merger Sub, or the Company, which shares will
automatically be canceled and retired and will cease to exist and will not be
entitled to consideration in exchange therefor, and (ii) Company Dissenting
Shares) shall be converted into the right to receive $20.00 per share in cash,
subject to adjustment as provided in Section 1.4(c) (the "MERGER
CONSIDERATION").
(b) All shares of Company Common Stock converted into the Merger
Consideration pursuant to this Section 1.4 shall no longer be outstanding and
shall automatically be cancelled and shall cease to exist as of the Effective
Time, and each certificate previously representing any such shares of Company
Common Stock shall thereafter represent only the right to receive, with respect
to each underlying share of Company Common Stock, the Merger Consideration.
(c) If, prior to the Effective Time, the outstanding shares of Company
Common Stock shall have been increased, decreased, changed into or exchanged for
a different number or kind of shares or securities as a result of a
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split, or other similar change in capitalization, then an
appropriate and proportionate adjustment shall be made to the relevant Merger
Consideration.
SECTION 1.5 MERGER SUB COMMON STOCK. At the Effective Time, by virtue of
the Merger and without any action on the part of Parent or the Company, each
share of the common stock, par value $.01 per share, of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be converted into one
fully paid and nonassessable share of common stock, par value $.01 per share, of
the Surviving Corporation.
SECTION 1.6 COMPANY DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the contrary,
shares of Company Common Stock that are outstanding immediately prior to the
Effective Time and that are held by stockholders who shall have neither voted in
favor of the Merger nor consented thereto in writing and who shall have demanded
properly in writing appraisal for such shares in accordance with Section 262 of
Delaware Law (collectively, the "COMPANY DISSENTING SHARES") shall not be
converted into, or represent the right to receive, the Merger Consideration.
Such stockholders shall be entitled to receive payment of the appraised value of
such shares of Company Common Stock held by them in accordance with the
provisions of Section 262 of Delaware Law, except that all Company Dissenting
Shares held by stockholders who shall have failed to perfect or who effectively
shall have withdrawn or lost their rights to appraisal of such shares under
Section 262 of Delaware Law shall thereupon be deemed to have been converted
into, and to have become exchangeable for, as of the Effective Time, the right
to receive the Merger Consideration, without any interest thereon, upon
surrender, in the manner provided in
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Section 1.13, of the certificate or certificates that formerly evidenced such
shares of Company Common Stock.
(b) The Company shall give Parent (i) prompt notice of any demands for
appraisal received by the Company, withdrawals of such demands, and any other
related instruments received by the Company and (ii) the opportunity to
participate in all negotiations and proceedings with respect to demands for
appraisal under Delaware Law. Prior to the Effective Time, the Company shall
not, except with the prior written consent of Parent, make any payment with
respect to any demands for appraisal or offer to settle or settle any such
demands.
SECTION 1.7 OPTIONS AND EQUITY-RELATED SECURITIES.
(a) COMPANY OPTIONS. Immediately prior to the Effective Time, the
Company shall cause each outstanding Company Option, whether or not then
exercisable, to be cancelled and surrendered by the holder of such Company
Option in exchange for the right to receive, as soon as practicable following
the Effective Time but in no event later than five Business Days following the
Effective Time, a lump sum cash payment equal to the product of (i) the number
of shares subject to such Company Option and (ii) the excess, if any, of (A) the
Merger Consideration over (B) the exercise price per share of such Company
Option, subject to tax withholding by Parent and the Surviving Corporation in
accordance with Section 1.14.
(b) COMPANY WARRANTS. At the Effective Time, each outstanding Company
Warrant shall automatically be converted into the right to receive, upon the
payment of the exercise price prior to the expiration date pursuant to the terms
of such Company Warrant, a lump sum cash payment equal to the product of (i) the
number of shares subject to such Company Warrant and (ii) the Merger
Consideration, subject to tax withholding in accordance with the terms of such
Company Warrant or Section 1.14; provided, however, that a holder of a Company
Warrant may elect to reduce the amount of cash that such holder would otherwise
be entitled to receive upon such exercise pursuant to this Section 1.7(b) in
exchange for a corresponding reduction in the exercise price.
(c) RESTRICTED STOCK UNITS. The Board of Directors of the Company, or
the appropriate committee thereof, shall take such action as is necessary so
that at the Effective Time, each outstanding restricted stock unit representing
one hypothetical share of Company Common Stock granted under any of the Company
Stock Plans (the "RESTRICTED STOCK UNITS"), whether or not then vested, shall
automatically be cancelled at the Effective Time, and converted into the right
to receive, as soon as practicable following the Effective Time but in no event
later than five Business Days following the Effective Time, a lump sum cash
payment equal to the Merger Consideration, subject to tax withholding by Parent
and the Surviving Corporation in accordance with Section 1.14. For the avoidance
of doubt, in no event shall a holder of Restricted Stock Units be entitled to a
payment with respect to Restricted Stock Units under both this Section 1.7(c)
and Section 1.4(a).
(d) DIRECTOR DEFERRED STOCK. The Board of Directors of the Company, or
the appropriate committee thereof, shall take such action as is necessary so
that at the Effective Time, each share of Company Common Stock held in the
deferral accounts of non-employee directors (the "DEFERRED STOCK") under the
Company's Director Compensation Plan (the "DCP")
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shall automatically be cancelled at the Effective Time, and converted into the
right to receive, as soon as practicable following the Effective Time but in no
event later than five Business Days following the Effective Time, a lump sum
cash payment equal to the Merger Consideration. For the avoidance of doubt, in
no event shall a holder of Deferred Stock be entitled to a payment with respect
to Deferred Stock under both this Section 1.7(d) and Section 1.4(a).
(e) ACTIONS. Prior to the Effective Time, the Company shall deliver
appropriate notices (which notices shall have been approved by Parent, such
approval not to be unreasonably withheld or delayed) to each holder of Company
Options, Company Warrants, Restricted Stock Units and Deferred Stock setting
forth each holder's rights pursuant to the respective Company Stock Plans and
the Company Warrants, as the case may be, stating that such Company Options,
Company Warrants, Restricted Stock Units or Deferred Stock, as applicable, shall
be treated in the manner set forth in this Section 1.7. The Company shall cause
the administrator of the Company Stock Plans to take such actions under the
Company Stock Plans as are necessary to accomplish the provisions of this
Section 1.7. In addition, the Company shall take all actions reasonably
necessary to ensure that (i) the Company Stock Plans will terminate as of the
Effective Time and (ii) after the Effective Time the Surviving Corporation will
not be bound by any options, rights, units, awards or arrangements which would
entitle any Person, other than Parent or its Subsidiaries, to beneficially own
shares of the Surviving Corporation or receive any payments (other than as set
forth in this Section 1.7) in respect of such options, rights, units, awards or
arrangements or shares.
SECTION 1.8 CERTIFICATE OF INCORPORATION. At the Effective Time, the
certificate of incorporation of the Company shall be amended to read in its
entirety in the same fashion as the certificate of incorporation of Merger Sub,
other than the exculpation and indemnification provisions (which shall remain
unchanged from those set forth in the Company's certificate of incorporation as
of the date hereof), and corporate name (which shall remain Alderwoods Group,
Inc.), and, as so amended, shall be the certificate of incorporation of the
Surviving Corporation until amended in accordance with applicable law.
SECTION 1.9 BYLAWS. At the Effective Time, the bylaws of the Company shall
be amended to read in their entirety in the same fashion as the bylaws of Merger
Sub, other than references to the corporate name of the Company (which shall
remain Alderwoods Group, Inc.), and, as so amended, shall be the bylaws of the
Surviving Corporation until amended in accordance with applicable law.
SECTION 1.10 DIRECTORS AND OFFICERS OF SURVIVING CORPORATION. At the
Effective Time, (a) the directors of the Surviving Corporation shall be the
existing members of the Board of Directors of Merger Sub and (b) the officers of
the Surviving Corporation shall be the existing officers of the Company.
SECTION 1.11 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time
after the Effective Time, any further action is necessary or desirable to carry
out the purposes of this Agreement or to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of the Company and Merger Sub, the Company, Parent and
Merger Sub shall cause their respective officers to take all such lawful and
necessary action, so long as such action is not inconsistent with this
Agreement.
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SECTION 1.12 EXCHANGE FUND. At or prior to the Effective Time, Parent will
deposit, or cause Merger Sub to deposit, an amount of cash in an Exchange Fund
with the Exchange Agent sufficient to pay the Merger Consideration in respect of
the shares of Company Common Stock that are to be converted into the right to
receive cash pursuant to Section 1.4. If, for any reason, the cash in the
Exchange Fund shall be insufficient to fully satisfy all of the payment
obligations to be made in cash by the Exchange Agent hereunder, Parent shall
promptly deposit cash into the Exchange Fund in an amount which is equal to the
deficiency in the amount of cash required to fully satisfy such cash payment
obligations.
SECTION 1.13 EXCHANGE OF SHARES.
(a) As soon as practicable after the Effective Time, Parent shall
cause the Exchange Agent to mail to each holder of record of one or more
certificates ("CERTIFICATES") that immediately prior to the Effective Time
represented shares of Company Common Stock whose shares are being converted into
the Merger Consideration pursuant to Section 1.4 a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent) and instructions for use in effecting the surrender of the Certificates
in exchange for the Merger Consideration. Upon proper surrender of a Certificate
for exchange and cancellation to the Exchange Agent, together with such properly
completed letter of transmittal, duly completed and executed, and such other
documents or information as may be required, the holder of such Certificate
shall receive the amount of Merger Consideration provided in Section 1.4, and
the Certificate so surrendered shall forthwith be cancelled. No interest shall
be paid or accrued on any cash or on any unpaid dividends or distributions
payable to holders of Certificates.
(b) After the Effective Time, there shall be no transfers on the stock
transfer books of the Company of the shares of Company Common Stock that were
issued and outstanding immediately prior to the Effective Time. If, after the
Effective Time, any Certificates are presented for transfer to the Exchange
Agent, each such Certificate shall, subject to compliance with the provisions of
Section 1.13(a), be cancelled and exchanged for the Merger Consideration as
provided in this Section 1.13. In the event of a transfer of ownership of any
share of Company Common Stock prior to the Effective Time that has not been
registered in the transfer records of the Company, the Merger Consideration
payable in respect of such share of Company Common Stock shall be paid to the
transferee of such share only if the Certificate that previously represented
such share is properly endorsed or otherwise in proper form for transfer and is
presented to the Exchange Agent accompanied by all documents required to
evidence and effect such transfer, and to establish to the satisfaction of
Parent that any transfer or other Taxes have been paid or are not applicable.
(c) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of the Company for 6 months after the Effective Time shall be paid
to the Surviving Corporation. Any stockholders of the Company who have not
theretofore complied with this Article I shall thereafter look only to the
Surviving Corporation for payment of the Merger Consideration deliverable in
respect of each share of Company Common Stock such stockholder holds as
determined pursuant to this Agreement without any interest thereon.
Notwithstanding the foregoing, none of the Surviving Corporation, the Company,
Parent, the Exchange Agent or any other person shall be liable to any former
holder of shares of Company Common Stock for
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any amount delivered in good faith to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(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, if reasonably required by
Parent, the posting by such person of a bond in such amount as Parent may
determine is reasonably necessary as indemnity against any claim that may be
made against it with respect to such Certificate, and upon compliance with the
relevant provisions of Section 1.13(a), the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed Certificate the relevant Merger
Consideration such holder has a right to receive pursuant to this Article I.
SECTION 1.14 WITHHOLDING. Parent and the Surviving Corporation shall be
entitled to deduct and withhold from the Merger Consideration deliverable under
this Agreement, and from any other payments made pursuant to this Agreement,
such amounts as Parent and the Surviving Corporation are required to deduct and
withhold with respect to such delivery and payment under the Code or any
provision of state, local, provincial or foreign tax law. To the extent that
amounts are so withheld, such withheld amounts shall be treated for all purposes
of this Agreement as having been delivered and paid to the holder of shares of
Company Common Stock, Company Options, Company Warrants or Restricted Stock
Units in respect of which such deduction and withholding was made by Parent and
the Surviving Corporation.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub as follows:
SECTION 2.1 CORPORATE ORGANIZATION, STANDING AND POWER. Each of the Company
and its Subsidiaries is a corporation, or other entity as listed in Section 2.1
of the Company Disclosure Schedules, duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization. Each of the
Company and its Subsidiaries has the corporate power to own, lease and operate
its properties and assets and to carry on its business as now being conducted
and is duly qualified to do business and is in good standing in each
jurisdiction in which the nature of any business conducted by the Company or its
Subsidiaries or the character or location of any properties or assets owned or
leased by the Company or its Subsidiaries makes such licensing or qualification
necessary, other than such corporate power or defects in qualification or good
standing that, individually or in the aggregate, would not reasonably be
expected to have a Company Material Adverse Effect. True, correct and complete
copies of the certificate of incorporation, bylaws and any other charter or
organizational documents of the Company and its Subsidiaries as in effect at the
date of this Agreement have heretofore been furnished or made available to
Parent. Neither the Company nor any of its Subsidiaries is in violation of any
of the provisions of its certificate or articles of incorporation or bylaws or
other charter or organizational documents, each as amended.
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SECTION 2.2 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
100,000,000 shares of Company Common Stock and 10,000,000 shares of preferred
stock, par value $0.01 per share. As of the close of business on March 31, 2006
(i) 40,471,483 shares of Company Common Stock were issued and outstanding, (ii)
5,004,750 shares of Company Common Stock were reserved for issuance upon the
exercise of outstanding Company Options, (iii) no shares of Company Common Stock
were held in the treasury of the Company, (iv) 611,350 shares of Company Common
Stock were reserved for issuance pursuant to Company Options not yet granted,
(v) 2,992,000 shares of Company Common Stock were reserved for issuance upon the
exercise of outstanding Company Warrants, (vi) 231,400 shares of Company Common
Stock were reserved for issuance in respect of Restricted Stock Units (it being
understood that the shares described in this clause (vi) are not included in the
number referred to in clause (i) above), (vii) no shares of preferred stock of
the Company were issued and outstanding, (viii) 173,451 shares of Company Common
Stock were held in reserve by the trustee for distribution pursuant to the Plan
(it being understood that the shares described in this clause (viii) are not
included in the number referred to in clause (i) above) and (ix) 37,392 shares
of Company Common Stock were subject to issuance and held in participants'
deferral accounts under the DCP (it being understood that the shares described
in this clause (ix) are included in the number referred to in clause (i) above).
All of such shares that are issued and outstanding are duly authorized, validly
issued, fully paid and nonassessable. There are no bonds, debentures, notes or
other indebtedness or securities of the Company that have the right to vote (or
that are convertible into, or exchangeable for, securities having the right to
vote) on any matters on which stockholders of the Company may vote. Except as
set forth above, as of the close of business of March 31, 2006, no shares of
capital stock or other voting securities of the Company are issued, reserved for
issuance or outstanding and, except as permitted under Section 4.2(e), no shares
of capital stock or other voting securities of the Company shall be issued or
become outstanding after the date hereof other than shares of Company Common
Stock (not in excess of the amounts reserved therefor, as set forth above)
issued upon exercise of Company Options or Company Warrants, in satisfaction of
Restricted Stock Units, pursuant to grants of deferred shares under the DCP or
under the Plan. Section 2.2(a) of the Company Disclosure Schedules sets forth a
true and correct list, as of the close of business on March 31, 2006, of all
rights of any character relating to the issued or unissued capital stock of the
Company and each of its Subsidiaries, or obligating the Company or any of its
Subsidiaries to issue, grant or sell any shares of capital stock of, or other
equity interests in, or securities convertible into or exchangeable or issuable
for equity interests in, the Company or any of its Subsidiaries, including the
exercise price of any such interests.
(b) Except as described in Section 2.2(b) of the Company Disclosure
Schedules, all of the outstanding shares of capital stock, voting securities or
other equity interests of each Subsidiary of the Company are owned, directly or
indirectly, by the Company, and are duly authorized, validly issued, fully paid
and nonassessable, free and clear of all Liens (other than Permitted Liens).
Except as described in Section 2.2(b) of the Company Disclosure Schedules, there
are no outstanding subscriptions, options, warrants, puts, calls, rights,
exchangeable or convertible securities or other commitments or agreements of any
character relating to the issued or unissued capital stock or other securities
of any such Subsidiary, or otherwise obligating the Company or any such
Subsidiary to issue, transfer, sell, purchase, redeem or otherwise acquire any
such securities.
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(c) Except as described in Section 2.2(c) of the Company Disclosure
Schedules, neither the Company nor any of its Subsidiaries owns, or has any
contract or other obligation to acquire, any equity securities or other
securities of, or otherwise invest in, any Person (other than Subsidiaries of
the Company) or any direct or indirect equity or ownership interest in any other
business. Except as described in Section 2.2(c) of the Company Disclosure
Schedules, neither the Company nor any Subsidiary is a general partner of any
general or limited partnership or the managing member of any limited liability
company (other than any such limited liability company that is a Subsidiary of
the Company).
(d) There are no voting trusts or other agreements or understandings
to which the Company or any of its Subsidiaries is a party with respect to the
voting of any of the capital stock of the Company or any of its Subsidiaries.
Except as described in Section 2.2(d) of the Company Disclosure Schedules, none
of the Company or any of its Subsidiaries is obligated under any registration
rights or similar agreements to register any shares of capital stock of the
Company or any of its Subsidiaries on behalf of any Person.
(e) The list referred to in the final sentence of Section 2.2(a) sets
forth the name of each holder and the number of shares of Company Common Stock
subject to each such option or other security or interest, the date of grant,
the exercise or vesting schedule, the exercise price per share and the term of
each such option or other security or interest. No shares of Company Common
Stock are held by the Company or any of its Subsidiaries. All shares of Company
Common Stock subject to issuance as described above shall, upon issuance on the
terms and conditions specified in the instruments pursuant to which they are
issuable, be duly authorized, validly issued, fully paid and nonassessable.
Except as set forth in Section 2.2(e) of the Company Disclosure Schedules, none
of the Company or any of its Subsidiaries has any contract or other obligation
to repurchase, redeem or otherwise acquire any shares of Company Common Stock or
any other capital stock or other securities of any of the Company or its
Subsidiaries, or to make any investment (in the form of a loan, capital
contribution or otherwise) in any of the Company's Subsidiaries or any other
Person. Section 2.2(e) of the Company Disclosure Schedules sets forth a true,
correct and complete list of all direct or indirect Subsidiaries of the Company
as of the date of this Agreement (including such Subsidiary's (i) name, (ii)
jurisdiction of incorporation, (iii) authorized and outstanding shares of
capital stock and (iv) record and beneficial owners of such capital stock,
except in the cases of (iii) and (iv) where such owners are the Company or one
or more indirect, wholly-owned Subsidiaries of the Company) and specifically
identifies each Subsidiary of the Company that qualifies as a "Significant
Subsidiary" of the Company, as such term is defined in Regulation S-X (17 CFR
xx.xx. 210.1-01, et seq.) promulgated by the SEC.
SECTION 2.3 AUTHORITY; NO VIOLATION.
(a) The Company has full corporate power and authority to execute and
deliver this Agreement and, subject to receipt of the Company Stockholder
Approval, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the Merger and the
transactions contemplated hereby have been duly and validly approved and adopted
by the Company Board. The Company Stockholder Approval is the only vote of the
holders of any class or series of the capital stock of the Company or any of its
Subsidiaries necessary to adopt this Agreement, approve the Merger or
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consummate any of the other transactions contemplated by this Agreement, and no
other corporate proceedings on the part of the Company other than the receipt of
the Company Stockholder Approval are necessary to approve this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by the Company, and, assuming due
authorization, execution, and delivery by Parent and Merger Sub, constitutes the
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or similar Laws and Regulations generally affecting the rights of
creditors and subject to general equity principles.
(b) The Company Board has (i) received the opinion of its financial
advisor, Bear, Xxxxxxx & Co. Inc. (the "FINANCIAL ADVISOR") to the effect that
the Merger Consideration to be received by the holders of shares of Company
Common Stock is fair from a financial point of view to such holders along with
the consent of the Financial Advisor to include such opinion in full in the
Proxy Statement and (ii) by unanimous vote of all the directors, at a meeting
duly called and held prior to the execution of this Agreement: (A) duly approved
and declared advisable this Agreement, and the transactions contemplated hereby,
including the Merger; (B) determined that this Agreement and the transactions
contemplated by this Agreement, including the Merger, are advisable, fair to,
and in the best interests of the Company and its stockholders; (C) subject to
the provisions of Section 4.3, resolved to make the Company Board
Recommendation; and (D) subject to the provisions of Section 4.3, directed that
this Agreement be submitted to the holders of shares of Company Common Stock for
their adoption.
(c) Neither the execution and delivery of this Agreement by the
Company nor the consummation by the Company of the transactions contemplated
hereby, nor compliance by the Company with any of the terms or provisions
hereof, will (i) violate any provision of the certificates of incorporation or
bylaws or other charter or organizational documents of the Company or any of its
Subsidiaries, (ii) assuming that the consents and approvals referred to in
Section 2.4 are duly obtained, violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to the
Company or any of its Subsidiaries or any of their respective properties or
assets or (iii) assuming that the consents and approvals referred to in Section
2.4 are duly obtained, and except as described in Section 2.3(c) of the Company
Disclosure Schedules, violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default under,
result in the termination of or a right of termination or cancellation under,
accelerate the performance required by or rights or obligations under, or result
in the creation of any Lien upon any of the respective properties or assets of
the Company or any of its Subsidiaries under (in each case, or an event that,
with notice or lapse of time, or both, would result in such effect), any of the
terms, conditions or provisions of any Contract or other instrument or
obligation to which the Company or any of its Subsidiaries is a party, or by
which they or any of their respective properties, assets or business activities
may be bound or affected, except (in the case of clauses (ii) and (iii) above)
for such violations, conflicts, breaches, defaults or the loss of benefits that
would not reasonably be expected to have, either individually or in the
aggregate, a Company Material Adverse Effect.
SECTION 2.4 CONSENTS AND APPROVALS. Except for (i) any approvals or filings
required by the Xxxx-Xxxxx-Xxxxxx Anti-Trust Improvements Act of 1976, as
amended (the "HSR ACT"),
9
and the Competition Act (Canada), as amended (the "COMPETITION ACT"), (ii) any
approvals, notice filings or applications for review required under the
Investment Canada Act of 1985 (the "INVESTMENT CANADA ACT"), (iii) the Company
Stockholder Approval and (iv) the filing with the SEC of the Proxy Statement, no
consents or approvals of or filings or registrations with any Governmental
Entity or with any third party are necessary in connection with the execution
and delivery by the Company of this Agreement or the consummation by the Company
of the Merger and the other transactions contemplated hereby.
SECTION 2.5 SEC DOCUMENTS; FINANCIAL STATEMENTS.
(a) The Company has furnished or made available to Parent a true and
complete copy of the Company SEC Documents with respect to periods beginning on
or after December 29, 2002, and ending on the date hereof. As of their
respective filing dates, the Company SEC Documents complied in all material
respects with the requirements of the Exchange Act and the Securities Act, and
none of the Company SEC Documents when filed, and if amended or supplemented as
of the date of such amendment or supplement, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
(b) The audited consolidated financial statements and unaudited
interim consolidated financial statements included in the Company SEC Documents
(collectively, the "COMPANY FINANCIAL STATEMENTS") complied in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto as of their respective dates,
and have been prepared in accordance with GAAP applied on a basis consistent
throughout the periods indicated. As of the date of the filing thereof, the
Company Financial Statements fairly present in all material respects the
consolidated financial condition and operating results of the Company and its
Subsidiaries at the dates and during the periods indicated therein (subject, in
the case of unaudited statements, to normal and recurring year-end adjustments).
(c) Each of the principal executive officer and the principal
financial officer of the Company (or each former principal executive officer and
former principal financial officer of the Company, as applicable) has made all
certifications required under Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act of
2002 and the related rules and regulations promulgated thereunder and under the
Exchange Act (collectively, the "XXXXXXXX-XXXXX ACT") with respect to the
Company SEC Documents, and the Company has furnished or made available to Parent
a summary of any disclosure made by the Company's management to the Company's
auditors and audit committee referred to in such certifications. For purposes of
the preceding sentence, "principal executive officer" and "principal financial
officer" shall have the meanings ascribed to such terms in the Xxxxxxxx-Xxxxx
Act.
(d) The Company and its Subsidiaries have designed and maintain a
system of internal control over financial reporting (as defined in Rules
13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to provide reasonable
assurances regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with GAAP. The
Company (i) has designed and maintains disclosure controls and procedures (as
10
defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) that are designed
to ensure that material information required to be disclosed by the Company in
the reports that the Company or such Subsidiary files or submits under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms, and (ii) has disclosed and
reported, based on its most recent evaluation of its internal control over
financial reporting prior to the date hereof, to the Company's auditors and the
audit committee of the Company Board (A) any significant deficiencies and
material weaknesses in the design or operation of its internal control over
financial reporting that are reasonably likely to adversely affect in any
material respect the ability to record, process, summarize and report financial
information and (B) any fraud, whether or not material, that involves management
or other employees who have a significant role in the Company's internal control
over financial reporting. The Company has heretofore furnished or made available
to Parent complete and correct copies of the Company's final report to the audit
committee of the Company Board for the fiscal years ended January 1, 2005, and
December 31, 2005, and all subsequent regular quarterly updates, in each case in
respect of the matters described in clause (ii) of the immediately preceding
sentence.
(e) Except for matters resolved prior to the date hereof and except as
described in Section 2.5(e) of the Company Disclosure Schedules, (i) to the
Knowledge of the Company, neither the Company nor any of its Subsidiaries nor
any director, officer, employee, auditor, accountant or representative of the
Company or of any its Subsidiaries has received or otherwise had or obtained
Knowledge of any material complaint, allegation, assertion or claim, whether
written or oral, regarding the accounting or auditing practices, procedures,
methodologies or methods of the Company or any of its Subsidiaries or their
respective internal accounting controls, including any material complaint,
allegation, assertion or claim that the Company or any of its Subsidiaries has
engaged in questionable accounting or auditing practices, and (ii) no attorney
representing the Company or any of its Subsidiaries, whether or not employed by
the Company or any of its Subsidiaries, has reported evidence of a material
violation of securities laws, breach of fiduciary duty or similar violation by
the Company or any of its officers, directors, employees or agents to the
Company Board or any committee thereof or to the General Counsel or Chief
Executive Officer of the Company.
(f) As of the date of this Agreement, to the Knowledge of the Company,
there is no applicable accounting rule, consensus or pronouncement that has been
adopted by the SEC, the Financial Accounting Standards Board, the Emerging
Issues Task Force or any similar body but that is not in effect as of the date
of this Agreement that, if implemented, would reasonably be expected to have a
Company Material Adverse Effect.
SECTION 2.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. From December 31, 2005 to
the date hereof, (a) the Company and each of its Subsidiaries has conducted its
business only in the ordinary course consistent with past practice; there has
not been any change, event or condition that would reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect; and
(b) there has not been:
(i) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any
Company Common Stock or any repurchase for value by the Company of any
Company Common Stock or Company Stock Options, Restricted Stock Units or
Company Warrants;
11
(ii) any split, combination or reclassification of any Company Common
Stock or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares of
Company Common Stock;
(iii) (A) any granting by the Company or any of its Subsidiaries to
any current or former director, officer, employee or independent contractor
of the Company or any of its Subsidiaries (each, a "PARTICIPANT") of any
loan or any increase in any type of compensation, benefits, perquisites or
any bonus or award, except for grants of normal cash bonus opportunities
and normal increases of cash compensation (including compensation in
connection with new hires), in each case in the ordinary course of business
consistent with past practice or as was required under employment
agreements in effect as of December 31, 2005, (B) any payment of any bonus
to any Participant, except for bonuses paid in the ordinary course of
business consistent with past practice, (C) any granting by the Company or
any of its Subsidiaries to any Participant of any severance, change in
control, termination or similar compensation, pay or benefits or increases
therein, or of the right to receive any severance, change in control,
termination or similar compensation, pay or benefits or increases therein,
except (x) as was required under any employment, severance, termination or
equity agreements in effect as of December 31, 2005, (y) in the ordinary
course of business consistent with past practice in connection with new
hires (i) to replace departed employees or (ii) otherwise in a manner that
did not involve an aggregate liability of the Company with respect to
severance, change in control, termination or similar benefits in excess of
$750,000 and (z) in the ordinary course of business consistent with past
practice in connection with promotions made in the ordinary course of
business consistent with past practice, (D) any entry by the Company or any
of its Subsidiaries into, or any amendment of, (i) any material employment,
deferred compensation, severance, change in control, termination, employee
benefit, loan, indemnification, retention, stock repurchase, stock option,
consulting or similar agreement, commitment or obligation between the
Company or any of its Subsidiaries, on the one hand, and any Participant,
on the other hand, and (ii) any agreement between the Company or any of its
Subsidiaries, on the one hand, and any Participant, on the other hand, the
benefits of which are contingent, or the terms of which are materially
altered, upon the occurrence of transactions involving the Company or any
of its Subsidiaries of the nature contemplated by this Agreement or (E)
except as disclosed in the Company SEC Documents filed after December 31,
2005 but prior to the date hereof, granting or other issuance of any
Company Stock Options or Restricted Stock Units;
(iv) any damage, destruction or loss, whether or not covered by
insurance, that, individually or in the aggregate, would reasonably be
expected to have a Company Material Adverse Effect;
(v) any change in accounting methods, principles or practices by the
Company or any of its Subsidiaries, except for any change which is not
material or which is required by a change in GAAP or applicable Laws and
Regulations;
12
(vi) any material elections with respect to Taxes by the Company or
any of its Subsidiaries or settlement or compromise by the Company or any
of its Subsidiaries of any material Tax liability or refund;
(vii) any entry into, or amendment, termination or waiver of, any
Material Contract; or
(viii) any revaluation by the Company or any of its Subsidiaries of
any of the assets of the Company or any of its Subsidiaries, except insofar
as may have been required by applicable Laws and Regulations or that would
not reasonably be expected to have a Company Material Adverse Effect.
SECTION 2.7 PAST BUSINESS PRACTICES. To the Knowledge of the Company,
except as would not reasonably be expected to result in a Company Material
Adverse Effect, since January 2, 2002, the business and services provided by the
Company and its Subsidiaries have been conducted and rendered in a professional
and competent manner consistent with prevailing standards, practices and customs
at the time the services were rendered.
SECTION 2.8 UNDISCLOSED LIABILITIES.
(a) Neither the Company nor any of its Subsidiaries has any material
obligations or liabilities of any nature (known or unknown, matured or
unmatured, fixed, absolute, accrued, contingent or otherwise and whether due or
to become due) other than (i) those set forth or adequately provided for in the
consolidated balance sheet (and the related notes thereto) of the Company and
its Subsidiaries as of December 31, 2005, (ii) those incurred in the ordinary
course of business consistent with past practice since December 31, 2005, and
(iii) those incurred in connection with the execution of this Agreement.
(b) Neither the Company nor any of its Subsidiaries has given or made
any express warranties to any third parties with respect to any merchandise sold
or services performed. To the Knowledge of the Company, there is no state of
facts or event which could form the basis of a claim against the Company or any
of its Subsidiaries for liability on account of any express or implied warranty
that would, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.
SECTION 2.9 LEGAL PROCEEDINGS. Except as described in Section 2.9 of the
Company Disclosure Schedules, neither the Company nor any of its Subsidiaries is
a party to any, and there are no pending or, to the Knowledge of the Company,
threatened, legal, administrative, arbitral or other proceedings, claims,
actions or governmental or regulatory investigations of any nature against the
Company or any of its Subsidiaries, except as could not reasonably be expected,
individually or in the aggregate, to result in a Company Material Adverse
Effect. To the Knowledge of the Company, there is no basis for any proceeding,
claim or any action against the Company or any of its Subsidiaries that could
reasonably be expected to have a Company Material Adverse Effect. There is no
injunction, order, judgment or decree imposed upon the Company, any of its
Subsidiaries or the assets of the Company or any of its Subsidiaries that would
reasonably be expected to have a Company Material Adverse Effect. The Company is
in compliance with all material obligations with respect to prosecuting or
defending each action
13
listed on Section 2.9 of the Company Disclosure Schedules, and no such listed
action, individually or in the aggregate, could reasonably be expected to have
or result in a Company Material Adverse Effect.
SECTION 2.10 TAXES AND TAX RETURNS.
(a) (i) The Company and each of its Subsidiaries have filed or caused
to be filed all material federal, state, local and foreign Tax returns and
reports required to be filed with any Taxing Authority; (ii) all such Tax
returns and reports are correct and complete in all material respects; (iii) the
Company and its Subsidiaries have paid or caused to be paid all Taxes shown on
such returns and reports as due and payable by any of such companies, other than
any such Taxes that are being contested in good faith and are adequately
reserved against or provided for (in accordance with GAAP) in the Company
Financial Statements dated as of December 31, 2005 contained in the Company SEC
Documents filed prior to the date hereof (the "MOST RECENT FINANCIAL
STATEMENTS"); (iv) the Company and each of its Subsidiaries do not have any
material liability for Taxes for any current or prior tax periods in excess of
the amount reserved or provided for in the Most Recent Financial Statements (but
excluding, for this purpose only, any liability reflected thereon for deferred
Taxes to reflect temporary differences between tax and financial accounting
bases); and (v) except as set forth in Section 2.10(a) of the Company Disclosure
Schedules, the Tax returns referred to in clause (i) have been examined by the
relevant Taxing Authority or the period for assessment of the Taxes in respect
of which such Tax returns were required to be filed has expired.
(b) No material Tax return of the Company or any of its Subsidiaries
is under audit or examination by any Taxing Authority, and no written notice or,
to the Knowledge of the Company, unwritten notice of such an audit or
examination has been received by the Company or any of its Subsidiaries. Each
material assessed deficiency resulting from any audit or examination relating to
Taxes by any Taxing Authority has been timely paid and there is no material
assessed deficiency, refund litigation, proposed adjustment or matter in
controversy with respect to any Taxes of the Company or any of its Subsidiaries.
(c) There are no material disputes pending with respect to, or claims
or assessments asserted in writing for any material amount of Taxes upon the
Company or any of its Subsidiaries, nor has the Company or any of its
Subsidiaries given or been requested in writing to give any currently effective
waivers extending the statutory period of limitation applicable to any material
Tax return for any period.
(d) Except as described in Section 2.10(d) of the Company Disclosure
Schedules, since January 3, 2002, neither the Company nor any of its
Subsidiaries has been required to include in income any material adjustment
pursuant to Section 481 of the Code by reason of a voluntary change in
accounting method initiated by the Company or any of its Subsidiaries, and the
IRS has not initiated or proposed any such material adjustment or change in
accounting method (including any method for determining reserves for bad debts
maintained by the Company or any Subsidiary).
(e) Neither the Company nor any of its Subsidiaries (i) is a party to
a material Tax allocation or Tax sharing agreement (other than an agreement
solely among members of a
14
group the common Parent of which is the Company) or (ii) has any material
liability for the Taxes of any Person (other than any of the Company or any of
its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or successor, by
contract, or otherwise.
(f) The Company and each of its Subsidiaries have withheld from their
employees, customers and any other applicable payees proper and accurate amounts
for all periods through the date hereof in compliance with all tax withholding
provisions of applicable federal, state, local and foreign laws, except for such
amounts that, individually or in the aggregate, are not material.
(g) Except as would not reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect, the Company and each of
its Subsidiaries are in compliance with all applicable rules and regulations
regarding the solicitation, collection and maintenance of any forms,
certifications and other information required in connection with federal, state,
local or foreign tax withholding or reporting.
(h) The Company has furnished or made available to Parent complete and
accurate copies of all income and franchise Tax returns, and any amendments
thereto, filed by the Company or any of its Subsidiaries for the preceding three
taxable years.
(i) Within the last three years, neither the Company nor any of its
Subsidiaries has distributed stock of another Person, or has had its stock
distributed by another Person, in a transaction that was purported or intended
to be governed in whole or in part by Code Section 355.
(j) The Company is not (and during the time period specified in
Section 897(c)(1)(A)(ii) has not been) a "United States real property holding
corporation" within the meaning of Section 897(c)(2) of the Code.
(k) Neither the Company nor any of its Subsidiaries has participated
in any "listed transaction" as defined in Treasury Regulation Section 1.6011-4.
SECTION 2.11 EMPLOYEE BENEFIT PLANS.
(a) Section 2.11(a) of the Company Disclosure Schedules sets forth a
list of all "employee benefit plans," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and all other
employee benefit or executive compensation arrangements, agreements, perquisite
programs or payroll practices, including any such arrangements or payroll
practices providing severance pay, sick leave, vacation pay, salary continuation
for disability, retirement benefits, deferred compensation, bonus pay, incentive
pay, stock options and restricted stock units (including those held by
directors, employees, and consultants), hospitalization insurance, medical
insurance, life insurance, scholarships or tuition reimbursements, and any
employment, change of control, severance, retention or consulting agreements or
arrangements that are maintained by the Company, any Subsidiary or any entity
within the same "controlled group" as the Company or Subsidiary, within the
meaning of Section 4001(a)(14) of ERISA (a "COMPANY ERISA AFFILIATE") or to
which the Company, any Subsidiary of the Company or Company ERISA Affiliate is
obligated to contribute thereunder
15
for current or former directors, officers, employees or consultants of the
Company, any Subsidiary or Company ERISA Affiliate (the "COMPANY BENEFIT
PLANS").
(b) Except as described in Section 2.11(b) of the Company Disclosure
Schedules, none of the Company Benefit Plans is a "multiemployer plan," as
defined in Section 4001(a)(3) of ERISA (a "COMPANY MULTIEMPLOYER PLAN") or a
plan that has two or more contributing sponsors at least two of whom are not
under common control, within the meaning of Section 4063 of ERISA (a "MULTIPLE
EMPLOYER PLAN"). Except as described in Section 2.11(b) of the Company
Disclosure Schedules, none of the Company, any Subsidiary nor any Company ERISA
Affiliate has contributed to or been obligated to contribute to any
Multiemployer Plan or Multiple Employer Plan. Except as described in Section
2.11(b) of the Company Disclosure Schedules, none of the Company, any Subsidiary
nor any Company ERISA Affiliate has withdrawn in a complete or partial
withdrawal from any Company Multiemployer Plan, nor has any of them incurred any
liability due to such withdrawal or the termination or reorganization of a
Company Multiemployer Plan.
(c) None of the Company Benefit Plans is a "single employer plan," as
defined in Section 4001(a)(15) of ERISA, that is subject to Title IV of ERISA.
Neither the Company nor any Subsidiary maintains, or is required, either
currently or in the future, to provide, welfare benefits to employees, former
employees or retirees after their termination of employment and there does not
now exist, nor do any circumstances exist that could result in, any Controlled
Group Liability that could be reasonably expected to be a liability of the
Company or any of its Subsidiaries following the Effective Time. "CONTROLLED
GROUP LIABILITY" means any and all liabilities (i) under Title IV of ERISA, (ii)
under Section 302 of ERISA, (iii) under Sections 412 and 4971 of the Code and
(iv) as a result of a failure to comply with the continuation coverage
requirements of Section 601 et seq. of ERISA and Section 4980B of the Code, and
(v) under corresponding or similar provisions of foreign laws or regulations.
(d) Except as would not reasonably be expected to result in a Company
Material Adverse Effect, each Company Benefit Plan that is intended to qualify
under Section 401(a) of the Code, and each trust maintained pursuant thereto,
has been determined by the IRS to be so qualified, and, to the Company's
Knowledge, nothing has occurred since the date of such determination with
respect to such Company Benefit Plan that would cause the loss of such
qualification or exemption or the imposition of any liability, penalty or tax
under ERISA or the Code.
(e) Except as would not reasonably be expected to result in a Company
Material Adverse Effect, all contributions (including all employer contributions
and employee salary reduction contributions) required to have been made under
any of the Company Benefit Plans to any funds or trusts established thereunder
or in connection therewith have been made by the due date thereof, other than a
failure to make contributions that is not material.
(f) There has been no material violation of ERISA or the Code with
respect to the filing of applicable reports, documents and notices regarding the
Company Benefit Plans with the Secretary of Labor or the Secretary of the
Treasury or the furnishing of required reports, documents or notices to the
participants or beneficiaries of the Company Benefit Plans.
16
(g) Except as would not reasonably be expected to result in a Company
Material Adverse Effect, none of the Company, its Subsidiaries, the officers of
the Company or any of its Subsidiaries or the Company Benefit Plans that are
subject to ERISA, any trusts created thereunder or any trustee or administrator
thereof, has engaged in a non-exempt "prohibited transaction" (as such term is
defined in Section 406 of ERISA or Section 4975 of the Code) or any other breach
of fiduciary responsibility that could subject the Company, any of its
Subsidiaries or any officer of the Company or any of its Subsidiaries to any tax
or penalty on prohibited transactions imposed by such Section 4975 or to any
liability under Section 502(i) or (1) of ERISA.
(h) Except as set forth in Section 2.11(h) of the Company Disclosure
Schedules, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or in
conjunction with any other event) result in, cause the accelerated vesting,
funding or delivery of, or increase the amount or value of, any payment or
benefit to any employee, officer or director of the Company or any of its
Subsidiaries, or result in any limitation on the right of the Company or any of
its Subsidiaries to amend, merge, terminate or receive a reversion of assets
from any Company Benefit Plan or related trust. Without limiting the generality
of the forgoing, except as set forth in Section 2.11(h) of the Company
Disclosure Schedules, no amount paid or payable (whether in cash, in property,
or in the form of benefits) by the Company or any of its Subsidiaries in
connection with the transactions contemplated hereby (either solely as a result
thereof or as a result of such transactions in conjunction with any other event)
will be non-deductible for federal income tax purposes to the Company or any of
its Subsidiaries due to Section 280G of the Code. No Company Benefit Plan is, or
could be as a result of the execution and delivery of this Agreement or the
consummation of the transactions contemplated by this Agreement, in material
violation of the provisions of Section 409A of the Code or the regulations
promulgated thereunder.
(i) True, correct and complete copies of the following documents, with
respect to each of the Company Benefit Plans, have been furnished or made
available to Parent by the Company: (i) all current Company Benefit Plans and
related trust documents, and amendments thereto; (ii) the most recent Forms
5500; (iii) the current summary plan descriptions and any material modifications
thereto, if any (in each case, whether or not required to be furnished under
ERISA); (iv) the most recent annual financial report, if any; (v) the most
recent actuarial report, if any; and (vi) the most recent determination letter
from the IRS, if any. Except as specifically provided in the foregoing documents
delivered or made available to Parent, there are no amendments to any Company
Benefit Plan that have been adopted or approved nor has the Company or any of
its Subsidiaries undertaken to make any such amendments or to adopt or approve
any new Company Benefit Plan.
(j) Except as described in Section 2.11(j) of the Company Disclosure
Schedules, there are no material (individually or in the aggregate) pending
actions, claims or lawsuits that have been asserted, instituted or, to the
Company's Knowledge, threatened, against the Company Benefit Plans, the assets
of any of the trusts under such plans or the plan sponsor or the plan
administrator, or against any fiduciary of the Company Benefit Plans with
respect to the operation of such plans (other than routine benefit claims).
17
(k) All Company Benefit Plans have been maintained and administered,
in all material respects, in accordance with their terms and with all provisions
of applicable Laws and Regulations, including ERISA and the Code, respectively
(including rules and regulations thereunder), and all employees required to be
included as participants by the terms of such plans have been properly included,
except to the extent that any failure to so include the employees would not
subject the Company or any of its Subsidiaries to any material liability.
(l) Except as would not result in any material liability to the
Company or any of its Subsidiaries, all Company Benefit Plans subject to the
laws of any jurisdiction outside of the United States (i) have been maintained
in accordance with all applicable requirements, (ii) if they are intended to
qualify for special tax treatment meet all requirements for such treatment, and
(iii) if they are intended to be funded and/or book-reserved are fully funded
and/or book reserved, as appropriate, based upon reasonable actuarial
assumptions.
SECTION 2.12 EMPLOYEE MATTERS.
(a) The Company and each of its Subsidiaries is in compliance in all
material respects with all applicable Laws and Regulations respecting the
employment of employees and the engagement of leased employees, consultants and
independent contractors, including all Laws and Regulations regarding
discrimination and/or harassment, affirmative action, terms and conditions of
employment, wage and hour requirements (including the proper classification,
compensation and related withholding with respect to employees, leased
employees, consultants and independent contractors), leaves of absence,
reasonable accommodation of disabilities, occupational safety and health,
workers' compensation and employment practices. Neither the Company nor any of
its Subsidiaries is engaged in any unfair labor practice. Except as listed on
Section 2.12(a) of the Company Disclosure Schedules, neither the Company nor any
of its Subsidiaries is a party to any collective bargaining agreement or other
labor union contract. No labor organization or group of employees of the Company
or any of its Subsidiaries has made a pending demand for recognition or
certification, and there are no representation or certification proceedings or
petitions seeking a representation proceeding presently pending or threatened to
be brought or filed, with the National Labor Relations Board or any other labor
relations tribunal or authority. There are no organizing activities, strikes,
work stoppages, slowdowns, lockouts, material arbitrations or material
grievances, or other material labor disputes pending or threatened against or
involving the Company or any of its Subsidiaries.
(b) Each individual who renders services to the Company or any of its
Subsidiaries who is classified by the Company or such Subsidiary, as applicable,
as having the status of an independent contractor or other non-employee status
for any purpose (including for purposes of taxation and tax reporting and under
Company Benefit Plans) is properly so characterized.
SECTION 2.13 COMPLIANCE WITH APPLICABLE LAW AND REGULATORY MATTERS.
(a) Except as would not reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect, the Company and each of
its Subsidiaries have, since January 2, 2002, complied with all applicable Laws
and Regulations and Authorizations, and are not in violation of, and have not
received any notices of violation with respect to, any
18
Laws and Regulations or Authorizations in connection with the conduct of their
respective businesses or the ownership or operation of their respective
businesses, assets and properties.
(b) Set forth on Section 2.13(b) of the Company Disclosure Schedules
are all material licenses, permits, certificates, authorizations, variances and
franchises (collectively the "AUTHORIZATIONS") held by the Company and each of
its Subsidiaries, which constitute all material Authorizations necessary for the
ownership or use of its assets and properties and the conduct of its business.
Except as would not be material to the Company, all such Authorizations are in
full force and effect and there are no proceedings pending or, to the Knowledge
of the Company or any of its Subsidiaries, threatened that seek the revocation,
cancellation, suspension or adverse modification thereof.
(c) Section 2.13(c) of the Company Disclosure Schedules sets forth a
description of each Governmental Order applicable to the Company or any of its
Subsidiaries, and no such Governmental Order has had or would reasonably be
expected to have a Company Material Adverse Effect.
(d) Neither the Company nor any of its Subsidiaries is, or at the
Effective Time will be, required to be registered as an investment company under
the Investment Company Act of 1940, as amended.
SECTION 2.14 MATERIAL CONTRACTS.
(a) Section 2.14(a) of the Company Disclosure Schedules lists, as of
the date hereof, each of the following Contracts of the Company and each of its
Subsidiaries (such Contracts, together with all the contracts and agreements
disclosed in Section 2.14(a) of the Company Disclosure Schedules being,
collectively, "MATERIAL CONTRACTS"):
(i) any Contract entered into for the acquisition of the securities of
or any material portion of the assets of any other Person;
(ii) (A) all Contracts (or groups of related Contracts) that provide
for, or pursuant to which the Company (together with its Subsidiaries) is
reasonably likely to make or otherwise provide payments or consideration or
other performance in an amount or value in excess of $150,000 in the
aggregate during the calendar year ended December 31, 2006, or $750,000 in
the aggregate over the remaining term of such Contract and, in each case,
that cannot be cancelled by the Company or any of its Subsidiaries without
penalty or further payment or without more than 60 days' notice and (B) all
Contracts (or groups of related Contracts) that provide for, or pursuant to
which the Company (together with its Subsidiaries) is reasonably likely to
receive an amount or value in excess of $150,000 in the aggregate during
2006 or $750,000 in the aggregate over the remaining term;
(iii) (A) exclusive dealing, requirements or take-or-pay Contracts or
(B) Contracts containing any provision providing for an "earn-out,"
contingent purchase price or similar contingent payment obligation on the
part of the Company or any Subsidiary of the Company;
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(iv) (A) any Contract evidencing a capitalized lease obligation or
otherwise relating to Indebtedness of the Company or any of its
Subsidiaries or relating to any direct or indirect guaranty, support,
indemnification, assumption, endorsement, or similar commitment by the
Company or any of its Subsidiaries with respect to obligations, liabilities
or Indebtedness of any other Person, and (B) any Hedging Agreement;
(v) all Contracts with any Governmental Entity;
(vi) all Contracts that limit or purport to limit the ability of the
Company or any of its Subsidiaries or Affiliates, or any of their
respective employees to: (A) sell any products or services of or to any
other Person, (B) engage in any line of business or (C) compete with or
obtain products or services from any other Person or limit the ability of
any Person to provide products or services to the Company or any of its
Subsidiaries, in each case, in any geographic area or during any period of
time;
(vii) all Contracts between the Company or any of its Subsidiaries, on
the one hand, and any Affiliate, director, officer, employee or holder of
more than 1% of the Company Common Stock (or any of their respective
Affiliates), on the other hand, other than (A) Contracts between the
Company and any of its wholly-owned Subsidiaries, and (B) Contracts among
wholly-owned Subsidiaries of the Company;
(viii) all (A) leases (or groups of related leases) of personal
property providing for annual rentals of $150,000 or more or aggregate
future payments of $750,000 or more in either case that cannot be
terminated on not more than 60 days' notice without payment by any Company
or Subsidiary of the Company of any penalty of not more than $50,000 and
(B) Real Property Leases;
(ix) all Contracts under which the Company or any of its Subsidiaries
has granted or received the right to use any Company Intellectual Property
(other than licenses for readily available commercial software), including
any Contract pursuant to which any Person is authorized to use or has an
ownership or security interest in any Company Intellectual Property;
(x) all Contracts relating to the disposition of any business or
portion thereof (whether by merger, sale of stock, sale of assets, grant of
right to acquire, use, access or otherwise), any product line, product
group, or product offering or any material amount of assets;
(xi) all Contracts (or groups of related Contracts) obligating the
Company or any of its Subsidiaries to make capital expenditures in excess
of $150,000 in any one year or $750,000 in the aggregate;
(xii) all partnership, joint venture, agreement of alliance or
cooperation or other similar agreements or arrangements or agreements
providing for the formation of any such relationship or involving an equity
investment by or in the Company or any of its Subsidiaries;
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(xiii) all Contracts (or groups of related Contracts) relating to
research and development involving expenditures in excess of $150,000;
(xiv) each (A) form of trust agreement (or similar Contract) generally
utilized by the Company related to (i) cemetery merchandise and services,
(ii) cemetery care or (iii) prearranged funerals (in each case, and any
executed version that differs materially from the form) and (B) management
or sales contract with respect to management of sales of any cemetery;
(xv) all other Contracts (or groups of related Contracts) not made in
the ordinary course of business involving payments to or from the Company
and its Subsidiaries in excess of $750,000; and
(xvi) all other Contracts, whether or not made in the ordinary course
of business, which are material to the Company and its Subsidiaries, taken
as a whole, or to the conduct of the business of the Company and its
Subsidiaries, taken as a whole, or the absence of which would, in the
aggregate, have a Company Material Adverse Effect.
(b) The Company and each of its Subsidiaries have performed all of the
obligations required to be performed by them and are entitled to all accrued
benefits under, and are not alleged to be in default in respect of, each
Material Contract to which the Company or any Subsidiary is a party or by which
the Company or any Subsidiary is bound, except as would not, individually or in
the aggregate, be material to the Company. Each of the Material Contracts is in
full force and effect and, upon consummation of the Merger, shall continue in
full force and effect without penalty, acceleration, alteration, change in
terms, termination, repurchase right or other adverse consequence, and there
exists no default or event of default or event, occurrence, condition or act,
with respect to the Company or any of its Subsidiaries or, to the Company's
Knowledge, with respect to any other contracting party, that, with the giving of
notice, the lapse of the time or the happening of any other event or condition,
would become a default or event of default under any Material Contract, except,
as would not, individually or in the aggregate, be material to the Company.
True, correct and complete copies of all Material Contracts have been furnished
or made available to Parent or filed prior to the date hereof as exhibits to the
Company SEC Documents.
SECTION 2.15 ENVIRONMENTAL LIABILITY.
(a) The Company and each of its Subsidiaries has been since January 2,
2002 and currently is in compliance with all Environmental Laws, including
possessing and complying with all Environmental Permits, except for such
non-compliance as would not reasonably be expected to have a Company Material
Adverse Effect. To the Company's Knowledge, there are no conditions or
circumstances that would limit or preclude it or its Subsidiaries from renewing
such Environmental Permits.
(b) There is no pending or, to the Knowledge of the Company,
threatened investigation, action, claim, lawsuit, review or administrative
proceeding against the Company or any of its Subsidiaries, under or pursuant to
any Environmental Law (an "ENVIRONMENTAL CLAIM"), that would reasonably be
expected to have a Company Material Adverse Effect.
21
Neither the Company nor any of its Subsidiaries has received any notice,
notification, demand, citation, summons or order from any Person alleging that
the Company or any of its Subsidiaries has been or is in violation of any
Environmental Law or otherwise may be liable under any applicable Environmental
Law, which violation or liability is unresolved and would reasonably be expected
to have a Company Material Adverse Effect. Neither the Company nor any of its
Subsidiaries has received any request for information from any Person related to
liability under or compliance with any applicable Environmental Law, except for
such matters as would not, if they matured into a claim against the Company or
any of its Subsidiaries, reasonably be expected to have a Company Material
Adverse Effect.
(c) With respect to the real property that is currently owned, leased
or operated by the Company or any of its Subsidiaries, there have been no
contaminations, spills, discharges or releases (as such term is defined by
CERCLA without regard to the exceptions therein) of Hazardous Substances on,
underneath, or migrating to or from any of such real property that would
reasonably be expected to have a Company Material Adverse Effect.
(d) With respect to real property that was formerly owned, leased or
operated by the Company or any of its Subsidiaries, to the Knowledge of the
Company, there were no contaminations, spills, discharges or releases (as such
term is defined by the CERCLA without regard to the exceptions therein) of
Hazardous Substances on, underneath, or migrating to or from any of such real
property during or prior to the Company's or any of its Subsidiaries' ownership
or operation of such real property that would reasonably be expected to result
in a Company Material Adverse Effect.
(e) Except for such matters that, individually or in the aggregate,
would not reasonably be expected to have a Company Material Adverse Effect,
neither the Company nor any of its Subsidiaries has entered into or agreed to,
or is otherwise subject to, any judgment relating to any Environmental Law or to
the investigation or remediation of Hazardous Substances.
(f) Except for such matters that, individually or in the aggregate,
would not reasonably be expected to have a Company Material Adverse Effect,
there has been no treatment, storage or release of any Hazardous Substances that
would reasonably be expected to form the basis of any Environmental Claim
against the Company or any of its Subsidiaries or against any Person whose
liabilities for such Environmental Claims the Company or any of its Subsidiaries
has retained or assumed, either contractually or by operation of law.
(g) Except as disclosed in Section 2.15(g) of the Company Disclosure
Schedules, there are no underground storage tanks at, on, under or about (i) any
Real Property or (ii) to the Knowledge of the Company, any other property
operated by the Company or any of its Subsidiaries.
(h) Except for such matters that, individually or in the aggregate,
would not reasonably be expected to have a Company Material Adverse Effect, and
except as described in Section 2.15(h) of the Company Disclosure Schedules, to
the Knowledge of the Company, any asbestos-containing material that is at, under
or about property owned, operated or leased by the Company or any of its
Subsidiaries is non-friable or encapsulated and in good condition
22
according to the generally accepted standards and practices governing such
material, and its presence or current condition does not violate or otherwise
require abatement or removal pursuant to any applicable Environmental Law. No
matter listed on Section 2.15(h) of the Company Disclosure Schedules,
individually or in the aggregate, could reasonably be expected to have or result
in a Company Material Adverse Effect.
(i) The Company and its Subsidiaries have furnished or made available
to Parent complete and correct copies of all material environmental site
assessment reports, studies, and correspondence on environmental matters (in
each instance relevant to the Company or its Subsidiaries) relating to their
respective operations, assets, businesses or properties.
(j) Except as would not reasonably be expected to have a Company
Material Adverse Effect, to the Knowledge of the Company, there are no past or
present conditions, events, circumstances, facts, activities, practices,
incidents, actions, omissions or plans (A) that could reasonably be expected to
interfere with or prevent continued compliance by the Company or any of its
Subsidiaries with Environmental Laws or (B) that could reasonably be expected to
give rise to any liability or other obligation of the Company or any of its
Subsidiaries under any Environmental Laws.
SECTION 2.16 INSURANCE. The Company has in full force and effect the
insurance coverage with respect to its business and the businesses of its
Subsidiaries set forth in Section 2.16 of the Company Disclosure Schedules.
There is no material claim pending under any of such policies as to which
coverage has been questioned, denied or disputed by the underwriters of such
policies or bonds. All premiums due and payable under all such policies have
been paid and the Company and its Subsidiaries are otherwise in compliance in
all material respects with the terms of such policies. The Company has no
Knowledge of any threatened early termination of, or material premium increase
with respect to, any of such policies.
SECTION 2.17 INTELLECTUAL PROPERTY.
(a) The Company or its Subsidiaries owns or has the right to use all
Intellectual Property necessary to conduct the Company's and its Subsidiaries'
businesses as presently conducted ("COMPANY INTELLECTUAL PROPERTY").
(b) The Company Intellectual Property is valid and enforceable and is
not subject to any outstanding judgment, injunction, order, decree or agreement
threatening the ownership, validity or use thereof by the Company or any of its
Subsidiaries.
(c) To the Knowledge of the Company, the conduct of the Company's and
its Subsidiaries' businesses or use by the Company or any of its Subsidiaries of
the Company Intellectual Property does not infringe, violate, misappropriate or
misuse any intellectual property rights or any other proprietary right of any
Person or give rise to any obligations to any Person.
(d) To the Knowledge of the Company, the Company Intellectual Property
is not being infringed by any other Person.
23
(e) Section 2.17(e) of the Company Disclosure Schedules sets forth a
list of all licenses, sublicenses and other agreements to which the Company or
any Subsidiary is a party and pursuant to which any material Intellectual
Property (i) is licensed (A) by the Company or any of its Subsidiaries to any
Person (other than the Company or any such Subsidiary) or (B) by any Person
(other than the Company or such Subsidiary) to the Company or any such
Subsidiary or (ii) is developed (A) by the Company or any of its Subsidiaries
for any Person (other than the Company or any such Subsidiary) or (ii) by any
Person (other than the Company or any such Subsidiary) for the Company or any
such Subsidiary.
(f) Except as described in Section 2.17(f) of the Company Disclosure
Schedules, other than the standard restrictive terms of "shrink-wrap" license
agreements of "off-the-shelf" software that is generally available for purchase
by Parent or its Subsidiaries for less than $100,000 for all of such software,
there are no restrictions on the direct or indirect transfer of any Intellectual
Property owned by the Company or any Subsidiary of the Company or any license,
or any interest therein, held by the Company or any such Subsidiary in respect
of any Intellectual Property, and neither the Company nor any of its
Subsidiaries has granted any material license, authorization or permission to
use any such Intellectual Property.
SECTION 2.18 ASSETS AND PROPERTY.
(a) Except as described in Section 2.18(a) of the Company Disclosure
Schedules, the Company and its Subsidiaries have good and marketable title to or
a valid leasehold estate, free and clear of any Liens (other than Permitted
Liens), in all properties and assets reflected on the December 31, 2005 balance
sheet contained in the Most Recent Financial Statements or acquired after the
date thereof (except for properties or assets subsequently sold, and leases that
are subsequently terminated, in the ordinary course of business or otherwise as
contemplated by this Agreement).
(b) Section 2.18(b) of the Company Disclosure Schedule sets forth a
true, correct and complete list of all real property owned in fee simple by the
Company or any of its Subsidiaries (collectively, the "OWNED REAL PROPERTY").
Except as described in Section 2.18(a) of the Company Disclosure Schedules, the
Company (either directly or through one of its Subsidiaries) has good and
marketable fee simple title, free and clear of any Liens (other than Permitted
Liens), to each such parcel of Owned Real Property. Except as described in
Section 2.18(b) of the Company Disclosure Schedules, with respect to each such
parcel of Owned Real Property: (i) there are no leases, subleases, licenses,
concessions or other agreements, written or oral, granting to any Person (other
than the Company or any of its Subsidiaries) the right of use or occupancy of
any portion of such parcel; and (ii) there are no outstanding rights of first
refusal or first offer or options or other third-party rights to purchase such
parcel.
(c) Section 2.18(c) of the Company Disclosure Schedules sets forth a
true, correct and complete list of all of Real Property Leases and each leased
and subleased parcel of real property in which the Company or any of its
Subsidiaries is a tenant or subtenant (collectively, the "LEASED REAL PROPERTY")
and for each Real Property Lease indicates: (i) its term and any options to
extend the term; and (ii) the current rent payable (including all occupancy
costs other than utilities). The Company (either directly or through one of its
Subsidiaries) holds a valid and existing leasehold or subleasehold interest as
applicable in the
24
Leased Real Property under each of the Real Property Leases listed in Section
2.18(c) of the Company Disclosure Schedules. The Company has furnished or made
available to Parent and Merger Sub true, correct and complete copies of each of
the Real Property Leases, including all material amendments, modifications, side
agreements, consents, subordination agreements and guarantees. To the Knowledge
of the Company: (A) there are no material disputes, oral agreements or rent
forbearance programs in effect as to any Real Property Lease; (B) the Company
has not assigned, transferred, conveyed, mortgaged, deeded in trust or
encumbered any interest in any Real Property Lease; (C) the Company (either
directly or through one of its Subsidiaries) is in possession, and no party
other than the Company and its Subsidiaries has the right to possession, of any
real property demised under the Real Property Lease; and (D) each guaranty by
the Company or any of its Subsidiaries is in full force and effect and no
default has occurred thereunder.
(d) The Owned Real Property and the Leased Real Property are referred
to collectively herein as the "REAL PROPERTY." Except as would not, individually
or in the aggregate, reasonably be expected to have a Company Material Adverse
Effect, (i) the Company has not received written notice of any proceedings in
eminent domain, condemnation or other similar proceedings that are pending, and,
to the Company's Knowledge, there are no such proceedings threatened, affecting
any portion of the Real Property and (ii) the Company has not received written
notice of the existence of any outstanding writ, injunction, decree, order or
judgment or of any pending proceeding, and, to the Company's Knowledge, there is
no such writ, injunction, decree, order, judgment or proceeding threatened,
relating to the ownership, lease, use, occupancy or operation by any Person of
the Real Property.
(e) To the Knowledge of the Company, there are no violations of any
covenants, conditions, restrictions, easements, agreements or orders that affect
such Real Property or the use or occupancy thereof other than those that do not,
individually or in the aggregate, constitute a Company Material Adverse Effect.
To the Knowledge of the Company, all developed but unsold and undeveloped areas
existing within the cemeteries operated by the Company are fully useable for
cemetery purposes, without material legal, environmental or physical restriction
or impediment of any kind, except normally associated costs of cemetery
preparation and development.
(f) As of January 1, 2006, the acreage of Rose Hills included (i) at
least 1,430 total acres, (ii) at least 303 acres that are readily developable
for cemetery purposes and (iii) at least 367 acres of rugged terrain.
SECTION 2.19 INVESTMENTS.
(a) All funds received by the Company or any of its Subsidiaries in
connection with funeral or cemetery preneed agreements or for undelivered
funeral or cemetery merchandise and services ("PRENEED AGREEMENTS"), as well as
all funds designated for endowment or perpetual care have been deposited on a
timely basis in appropriate accounts and administered and reported in all
material respects (i) in accordance with the terms of agreements with the
purchasers and (ii) as required by applicable Laws and Regulations. On an
aggregate basis, the principal and interest earnings of the accounts, trusts or
other deposits held pursuant to Preneed Agreements is equal to or greater than
the cost of performing such Preneed Agreements.
25
(b) The Company and its Subsidiaries, and any preneed funeral trust,
cemetery care trust, cemetery merchandise and services trust or similar entity
established by the Company or any such Subsidiary, have good and marketable
title to all securities, mortgages and other investments (collectively, the
"INVESTMENTS") owned by the Company and its Subsidiaries and any such trust or
similar entity established by the Company or any such Subsidiary.
(c) None of the Investments is in material default, and all
Investments held in any such trust or similar entity are in compliance with
industry regulatory standards and are owned and administered in accordance with
prudent man trust standards; and all Investments owned by the Company and its
Subsidiaries are investment grade debt obligations, repurchase agreements having
a maturity of no more than 30 days or insurance policies.
SECTION 2.20 PRENEED INSURANCE.
(a) The Company has furnished or made available to the Parent and
Merger Sub all regulatory examination reports for Mayflower National Life
Insurance Company and National Capital Life Insurance Company since December 31,
2002 and for Security Plan Life Insurance Company from December 31, 2000 through
October 1, 2004. Except for filings with the SEC, the Company and each of its
Subsidiaries have timely filed all regulatory reports, schedules, forms,
registrations and other material documents, together with any amendments
required to be made with respect thereto, that they were required to file since
December 31, 2002 with any Governmental Entity related to insurance or holding
or investing funds for or on behalf of, or otherwise for the benefit of, third
parties (the "OTHER COMPANY DOCUMENTS"), and have paid all material taxes, fees
and assessments due and payable in connection therewith. There is no material
unresolved violation or exception with respect to any report or statement
relating to any examination of the Company or any of its Subsidiaries related to
insurance or holding or investing funds for or on behalf of, or otherwise for
the benefit of, third parties. No Other Company Documents, as of their
respective dates, except as amended or supplemented by an Other Company Document
filed prior to the date hereof, contained, and no Other Company Documents filed
subsequent to the date hereof will contain as of their respective dates, any
untrue statement of a material fact or omitted (or will omit) to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Company has furnished or made available to Parent a true and
complete copy of each material Other Company Document.
(b) Except as set forth in Section 2.20(b) of the Company Disclosure
Schedules, neither the Company nor any of its Subsidiaries is a party to any
written agreement, consent agreement or memorandum of understanding with, or is
a party to any commitment letter or similar undertaking to or is a recipient of
any supervisory letter from or has adopted any resolutions at the request of any
Governmental Entity related to insurance or holding or investing funds for or on
behalf of, or otherwise for the benefit of, third parties that restricts in any
respect the conduct of its business or that in any manner relates to its capital
adequacy, its policies, its management or its business.
SECTION 2.21 TAKEOVER STATUTES; CHARTER PROVISIONS. The Company Board has
unanimously approved the Merger and this Agreement and the transactions
contemplated thereby, and such approval is sufficient to render inapplicable to
the Merger and this Agreement
26
and the transactions contemplated thereby the limitations on business
combinations contained in any restrictive provision of any "fair price,"
"moratorium," "control share acquisition," "interested stockholder" or other
similar anti-takeover statute or regulation (including Section 203 of Delaware
Law to the extent applicable) ("TAKEOVER STATUTE") or restrictive provision of
any applicable anti-takeover provision in the Company's Certificate of
Incorporation or Bylaws. No other state anti-takeover statute or similar statute
or regulation or other comparable anti-takeover provision of the Company's
Certificate of Incorporation or Bylaws applies to the Merger, this Agreement or
any of the transactions contemplated by this Agreement.
SECTION 2.22 OPINION. Prior to the execution of this Agreement, the Company
has received an opinion from the Financial Advisor to the effect described in
Section 2.3(b). Such opinion has not been amended or rescinded as of the date
hereof.
SECTION 2.23 BROKER'S FEES. Except for the Financial Advisor, neither the
Company nor any of its Subsidiaries has employed any broker or finder or
incurred any liability for any broker's fees, commissions or finder's fees in
connection with the Merger or related transactions contemplated by this
Agreement. The Company has heretofore furnished or made available to Parent a
complete and correct copy of all agreements between the Company or any of its
Subsidiaries and the Financial Advisor pursuant to which such firm would be
entitled to any payment relating to the transactions contemplated hereunder.
SECTION 2.24 COMPANY INFORMATION. The Proxy Statement will not, at the date
it is first mailed to shareholders of the Company or at the time of the Company
Stockholders' Meeting (other than with respect to any information supplied by
Parent or Merger Sub for inclusion therein), contain any untrue statement of
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; PROVIDED, HOWEVER,
that this representation and warranty shall not apply to any information that
subsequently changes or becomes incomplete or incorrect to the extent such
changes or failure to be complete or correct are promptly disclosed to Parent
and Merger Sub, and the Company uses its reasonable best efforts, with the
reasonable cooperation of Parent and Merger Sub, to prepare, file or disseminate
updated information to the extent required by applicable Laws and Regulations.
The Company will cause the Proxy Statement and all related SEC filings to comply
as to form in all material respects with the requirements of the Exchange Act
applicable thereto. No representation is made by the Company with respect to
statements made in the Proxy Statement based on information supplied in writing
by Parent or Merger Sub specifically for inclusion therein.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent represents and warrants to the Company as follows:
SECTION 3.1 CORPORATE ORGANIZATION, STANDING AND POWER. Each of Parent and
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization. Each of Parent and
Merger Sub has the corporate power to own its properties and to carry on its
business as now being conducted and is duly qualified to do
27
business and is in good standing in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to so qualify would not reasonably be expected to have
a Parent Material Adverse Effect. Parent has furnished or made available to the
Company a true and correct copy of the certificate or articles of incorporation,
as amended, and bylaws, as amended, and any other charter or organizational
documents, each as amended, of Parent and Merger Sub. Neither Parent nor Merger
Sub is in violation of any of the provisions of its certificate or articles of
incorporation or bylaws or other charter or organizational documents, each as
amended.
SECTION 3.2 AUTHORITY; NO VIOLATION.
(a) Each of Parent and Merger Sub has full corporate power and
authority to execute and deliver this Agreement, to perform its obligations
under the Agreement, and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the Merger and
the transactions contemplated hereby have been duly and validly approved and
adopted by the Boards of Directors of Parent and Merger Sub. No other corporate
proceedings (including any required approvals of the holders of any class of
capital stock of Parent) on the part of Parent or Merger Sub are necessary to
approve this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Parent and
Merger Sub and, assuming due authorization, execution and delivery by the
Company, constitutes a valid and binding obligation of Parent and Merger Sub,
enforceable against Parent and Merger Sub in accordance with its terms, except
as the enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar Laws and
Regulations generally affecting the rights of creditors and subject to general
equity principles.
(b) Neither the execution and delivery of this Agreement by Parent nor
Merger Sub, nor the consummation by Parent or Merger Sub of the transactions
contemplated hereby, nor compliance by Parent or Merger Sub with any of the
terms or provisions hereof, will (i) violate any provision of the Certificate of
Incorporation or Bylaws (or comparable organizational documents) of Parent or
Merger Sub, (ii) assuming that the consents and approvals referred to in Section
3.3 are duly obtained, and except as set forth on Section 3.2 of the Parent
Disclosure Schedules, violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to Parent or Merger Sub
or either of their respective properties or assets or (iii) assuming that the
consents and approvals referred to in Section 3.3 are duly obtained, violate,
conflict with, result in a breach of any provision of or the loss of any benefit
under, constitute a default (or an event that, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of or a right
of termination or cancellation under, accelerate the performance required by or
rights or obligations under, or result in the creation of any Lien upon any of
the respective properties or assets of Parent or Merger Sub under, any of the
terms, conditions or provisions of any Contract or other instrument or
obligation to which Parent or Merger Sub is a party, or by which they or any of
their respective properties, assets or business activities may be bound or
affected, except (in the case of clauses (ii) and (iii) above) for such
violations, conflicts, breaches, defaults or the loss of benefits that, either
individually or in the aggregate, would not reasonably be expected to have a
Parent Material Adverse Effect.
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SECTION 3.3 CONSENTS AND APPROVALS. Except for (i) any approvals or filings
required by the HSR Act and the Competition Act, (ii) any approvals, notice
filings or applications for review required under the Investment Canada Act,
(iii) the filing by the Company with the SEC of the Proxy Statement, and (iv)
the consents, notices and approvals set forth in Section 3.3 of the Parent
Disclosure Schedules, no consents or approvals of or filings or registrations
with any Governmental Entity or third party on the part of Parent or Merger Sub
are necessary in connection with (A) the execution and delivery by Parent and
Merger Sub of this Agreement and (B) the consummation by Parent and Merger Sub
of the Merger and the other transactions contemplated hereby.
SECTION 3.4 DISCLOSURE DOCUMENTS. None of the information supplied or to be
supplied by Parent or Merger Sub in writing specifically for inclusion or
incorporation by reference in the Proxy Statement will, at the date it is first
mailed to stockholders of the Company or at the time of the Company
Stockholders' Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading; PROVIDED, HOWEVER, that this representation and
warranty shall not apply to any information so provided by Parent or Merger Sub
that subsequently changes or becomes incomplete or incorrect to the extent such
changes or failure to be complete or correct are promptly disclosed to the
Company, and Parent and Merger Sub reasonably cooperate with the Company in
preparing, filing or disseminating updated information to the extent required by
applicable Laws and Regulations.
SECTION 3.5 INTERIM OPERATIONS OF MERGER SUB. Merger Sub was formed solely
for the purpose of engaging in the transactions contemplated hereby, and as of
the date hereof, has engaged in no other business activities and has conducted
its operations only as contemplated hereby and is a duly incorporated, validly
existing direct, wholly-owned Delaware subsidiary of Parent. Except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement, including the
financing contemplated by Section 4.4 hereof, and except for this Agreement and
any other agreements or arrangements contemplated by this Agreement, including
the financing contemplated by Section 4.4 hereof, Merger Sub has not incurred,
directly or indirectly through any Subsidiary, any material obligations or
liabilities or entered into any agreement or arrangements with any Person.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
SECTION 4.1 CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE TIME. During the
period from the date of this Agreement to the Effective Time, except as
expressly contemplated or permitted by this Agreement, the Company shall, and
shall cause each of its Subsidiaries, to (a) conduct its business in the usual,
regular and ordinary course consistent with past practice, (b) use reasonable
best efforts to preserve intact its present business organizations, maintain its
rights and franchises, and maintain its relationships with and goodwill of
customers, suppliers, distributors, licensors, licensees, contractors and others
having significant business dealings with it, (c) use reasonable best efforts to
keep available to itself and Parent the present services of the
29
officers and employees of the Company and each such Subsidiary, (d) use its
reasonable best efforts to maintain and keep its properties and assets in as
good repair and condition as at present and (e) take no action that would
adversely affect or delay in any material respect the ability of either Parent
or the Company to obtain any necessary approvals of any Governmental Entity
required for the transactions contemplated hereby.
SECTION 4.2 CONDUCT OF BUSINESS OF THE COMPANY. Without limiting the
generality of Section 4.1, during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement and the
Effective Time, except as set forth in Section 4.2 of the Company Disclosure
Schedules or except as expressly contemplated by this Agreement, the Company
shall not do, cause or permit any of the following, or allow, cause or permit
any of its Subsidiaries to do, cause or permit any of the following:
(a) Amend, modify, alter or rescind its certificate or articles of
incorporation, bylaws or other charter or organizational or governing documents
or any Company Warrants;
(b) (i) Split, combine or reclassify any shares of its capital stock,
declare, set aside or pay or agree to pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) (except
dividends from wholly owned Subsidiaries of the Company) or (ii) redeem,
purchase or otherwise acquire any of its securities or any securities of its
Subsidiaries (except for (A) redemptions or acquisitions from current or former
employees, directors and consultants in accordance with agreements as in effect
on the date hereof and listed in Schedule 4.2(b) of the Company Disclosure
Schedules and (B) any transactions effected or facilitated by the Company or any
of its Subsidiaries in accordance with the terms of the Company's employee stock
purchase plan, as amended in accordance with Section 5.9 hereof);
(c) Except to the extent required by law or under any Company Benefit
Plan (as described on Section 4.2(c) of the Company Disclosure Schedules),
grant, accelerate, amend or change the period of exercisability or vesting of
any options, stock appreciation right, warrant, commitment, subscription, right
to purchase, or other right to acquire Company Common Stock or other equity or
voting securities of the Company or the equivalents of any of the foregoing
granted under any Company Benefit Plan or Company Stock Plan or otherwise
authorize cash payments in exchange for any of the foregoing granted under any
of such plans;
(d) Except to the extent required by law or under any Company Benefit
Plan or other existing contractual arrangements as in effect as of the date
hereof and, in either event, set forth on Section 4.2(d) of the Company
Disclosure Schedules, (i) pay, grant, issue, guarantee or accelerate vesting of
payments or benefits to any of its current or former directors, officers,
employees or consultants or otherwise pay any amounts or provide any benefits to
which any such individual is not entitled on the date hereof, (ii) hire any
officer, director, employee or consultant having a base rate of compensation in
excess of $150,000 annually or enter into any employment agreement with any
director, officer, employee or consultant, (iii) increase in any manner the
salary, fees, bonuses or other compensation or employee benefits (whether in
stock, cash or otherwise) of any director, officer, consultant or employee,
except (A) for increases in annual base salary in the ordinary course of
business consistent with past practice for employees other than executive
officers and directors of the Company that, in the aggregate, do not result in
an increase in salaries in the aggregate for all employees (other than executive
officers and
30
directors) of more than 3%, or (B) as required under existing agreements as in
effect on the date hereof and set forth on Section 4.2(d) of the Company
Disclosure Schedules, (iv) amend, modify or increase compensation or benefits
provided under or terminate any Company Benefit Plan or establish, adopt or
enter into any plan, agreement, program, policy, trust, fund or other
arrangement that would be a Company Benefit Plan if it were in existence as of
the date of this Agreement, except as may be required by law, (v) fund or make
any contribution to any Company Benefit Plan or any related trust or other
funding vehicle, other than regularly scheduled contributions to trusts funding
qualified plans, (vi) change the actuarial assumptions applicable to any Company
Benefit Plan or related trust, except as may be required by law or (vii)
increase the total number of employees of the Company and its Subsidiaries
except by DE MINIMIS amounts;
(e) Authorize for issuance, issue, sell, deliver, dispose of,
encumber, or pledge any stock of any class or any securities or any other equity
interests or voting securities of the Company or any Subsidiary, other than: (i)
the issuance of no more than 75,000 Company Options (having a fair market value
exercise price) and no more than 5,000 Restricted Stock Units, in each case in
connection with new hires or ordinary course promotions in amounts and
circumstances consistent with past practice, to persons that are neither
executive officers nor directors of the Company on the date hereof; (ii) the
issuance of shares of Company Common Stock upon the exercise of Company Options
outstanding or issued pursuant to clause (i) above, and pursuant to the terms of
the DCP, in each case, pursuant to the Company Stock Plans as in effect on the
date hereof; (iii) the issuance of shares of Company Common Stock upon the
exercise of Company Warrants outstanding as of the date hereof; (iv) the
requirements of the Restricted Stock Units outstanding as of the date hereof or
issued pursuant to clause (i) above; (v) the issuance of shares of Company
Common Stock pursuant to the Plan; and (vi) pursuant to any other agreements
existing on the date hereof and disclosed on Section 4.2(e) of the Company
Disclosure Schedules;
(f) Transfer to any person or entity any rights in or to its
Intellectual Property other than the transfer of non-exclusive rights to its
Intellectual Property in the ordinary course of business consistent with past
practice;
(g) Acquire, sell, transfer, lease (as lessee or lessor), encumber or
dispose of any assets (other than sales of inventory in the ordinary course
consistent with past practice) that, in the aggregate, are material to the
Company and its Subsidiaries taken as a whole, or enter into, extend or renew
any commitment or transaction which is likely to involve payments by the Company
during the first 12 months of such commitment or transaction in excess of
$150,000 or $750,000 in the aggregate over the full term of such commitment or
transaction, or that cannot be terminated by the Company or such Subsidiary
(without penalty) on less than 90 days' notice;
(h) (i) Incur any Indebtedness for borrowed money other than
borrowings pursuant to the Company's and its Subsidiaries' revolving credit
arrangements in effect on the date hereof in the ordinary course, consistent
with past practice, for working capital purposes, (ii) issue, sell or amend any
debt securities or other rights to acquire any debt securities of the Company or
any of its Subsidiaries, guarantee any debt securities of another person, enter
into any "keep well" or other agreement to maintain any financial statement
condition of another person or enter into any arrangement having the economic
effect of any of the foregoing, or (iii)
31
make any loans, advances or capital contributions to, or investment in, or repay
any Indebtedness owing to, any Person other than the Company or any of its
wholly owned Subsidiaries in an amount in excess of $1,000,000 other than the
repayment of Indebtedness existing as of the date hereof at maturity in
accordance with its terms or make any change in its existing borrowing or
lending arrangements for or on behalf of any such Person, whether pursuant to an
employee benefit plan or otherwise; (iv) pledge or otherwise encumber shares of
capital stock of the Company or any of its Subsidiaries; (v) mortgage, pledge or
otherwise encumber any of its material assets, tangible or intangible, or create
or suffer to exist any material Lien thereupon other than Permitted Liens in the
ordinary course of business, consistent with past practice; (vi) waive or
release any rights of material value; or (vii) amend any Hedging Agreement.
(i) Enter into, renew or amend any Real Property Lease or material
operating lease for personal property, in any case requiring total payments over
the course of such lease of more than $250,000;
(j) Pay, discharge, settle, compromise, commence or satisfy in an
amount individually or in the aggregate in excess of $750,000 any material
claims, actions, litigation, arbitration (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business consistent with past practice or
to the extent provided for in reserves specific to such claim, liability or
obligation and specifically reflected on the balance sheet as of December 31,
2005 included in the Company SEC Documents filed prior to the date hereof.
(k) (i) Acquire (by merger, consolidation, or acquisition of stock or
assets or any other means) any corporation, partnership or other business
organization or division thereof or any equity interest therein; (ii) enter into
any joint venture, partnership or other similar arrangement or form any other
new material arrangement for the conduct of business or amend or modify any such
joint venture, partnership or other arrangement; or (iii) other than as
specifically included in the Company's annual budget for the fiscal year ending
December 30, 2006, attached in Section 4.2(k)(iii)(a) of the Company Disclosure
Schedules, pursuant to and on the existing disclosed terms of the Company's open
authorizations for expenditures and other contracts or commitments set forth in
Section 4.2(k)(iii)(b) of the Company Disclosure Schedules, or (after
consultation with Parent) to the extent required by law, authorize any new
capital expenditure, additions, improvements or other expenditures which,
individually, is in excess of $150,000 or, in the aggregate, are in excess of
$750,000;
(l) (i) Permit any insurance policy or policies naming it as a
beneficiary or a loss payable payee, which policy or policies, individually or
in the aggregate, is/are material to the Company and its Subsidiaries taken as a
whole, to be canceled, terminated or the amount of coverage available therefrom
materially reduced without notice to Parent unless the Company or one of its
Subsidiaries shall have obtained a comparable replacement policy, or (ii) enter
into any insurance policy or policies naming it as a beneficiary or a loss
payable payee, which policy or policies, individually or in the aggregate,
is/are material to the Company and its Subsidiaries taken as a whole; PROVIDED
THAT, a reduction in the term of any of the Company's insurance policies upon
renewal shall not be deemed a material reduction in the amount of insurance
coverage;
32
(m) Adopt a plan of complete or partial liquidation or adopt
resolutions providing for the complete or partial liquidation, dissolution,
consolidation, merger, restructuring or recapitalization of the Company or any
of its Subsidiaries, except for any such transactions solely among wholly-owned
Subsidiaries of the Company that are not obligors or guarantors of third party
indebtedness;
(n) Make any material Tax election, change any material method of Tax
accounting or settle or compromise any material Tax liability of the Company or
any of its Subsidiaries, and, in any event, the Company shall consult with
Parent before filing or causing to be filed any material Tax return of the
Company or any of its Subsidiaries, except to the extent such Tax return is
filed in the ordinary course of business consistent with past practice, and
before executing or causing to be executed any agreement or waiver extending the
period for assessment or collection of any material Taxes of the Company or any
of its Subsidiaries;
(o) Except as may be required as a result of a change in law or in
GAAP, make any change to the financial accounting principles or practices used
by it, or to its credit practices or its methods of maintaining its books,
accounts or business records;
(p) Revalue in any material respect any of its assets, including
writing down the value of inventory beyond the current obsolescence reserve or
writing off notes or accounts receivable other than in the ordinary course of
business;
(q) (i) Except in the ordinary course of business consistent with past
practice, (i) terminate, amend or modify (in any material respect), or waive any
material provision of, any Material Contract, or (ii) enter into any Contract
that would have been a Material Contract had it been entered into prior to the
execution of this Agreement;
(r) Enter into any agreement containing any provision or covenant
limiting in any material respect the ability of the Company or any of its
Subsidiaries to (i) sell any products or services of or to any other Person,
(ii) engage in any line of business, or (iii) compete with or obtain products or
services from any Person or limiting the ability of any Person to provide
products or services to the Company or any of its Subsidiaries, in each case, in
any geographic area or during any period of time;
(s) Engage in the conduct of any new line of business;
(t) Close any facilities of the Company or any Subsidiary of the
Company or discontinue any line of business.
(u) Take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this Agreement
being or becoming untrue, or in any of the conditions to the Merger set forth in
Article VI not being satisfied, or in a violation of any provision of this
Agreement;
(v) Take, authorize, or agree in writing or otherwise to take or
authorize, any of the actions prohibited in Sections 4.2(a) through (u).
33
SECTION 4.3 NO SOLICITATION.
(a) The Company shall not, nor shall it permit or authorize any of its
Subsidiaries or any officer, director, employee, accountant, counsel, financial
advisor, agent or other representative of the Company or any of its Subsidiaries
(collectively, the "COMPANY REPRESENTATIVES") to, (i) directly or indirectly
solicit, initiate, or knowingly encourage any Takeover Proposal, (ii) directly
or indirectly participate in any discussions or negotiations with, or furnish
any non-public information or data relating to the Company or its Subsidiaries
to, any Third Party in connection with any Takeover Proposal or knowingly take
any other action to facilitate any other inquiries or the making of any proposal
that constitutes, or that reasonably may be expected to lead to, any Takeover
Proposal, or (iii) except as permitted by Section 4.3(b) below, enter into any
agreement with respect to any Takeover Proposal or approve or resolve to approve
any Takeover Proposal; provided, however, that, subject to compliance with
Section 4.3(b), nothing contained in this Section 4.3(a) shall prohibit the
Company or its Board of Directors from (A) taking and disclosing to the
Company's stockholders a position with respect to a tender or exchange offer by
a Third Party pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange
Act or (B) making such disclosure to the Company's stockholders as, in the good
faith judgment of the Company Board, after receiving advice from outside
counsel, is required under applicable Laws and Regulations. Upon execution of
this Agreement, the Company shall, and it shall cause the Company
Representatives to, immediately cease any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any Takeover
Proposal. Without limiting the foregoing, it is agreed that any violation of the
restrictions set forth in the preceding two sentences by any Company
Representative, whether or not such person is purporting to act on behalf of the
Company or any Company Subsidiary or otherwise, shall be deemed to be a breach
of this Section 4.3(a) by the Company. Notwithstanding the foregoing, prior to
the Approval Date, the Company may, in response to an unsolicited Takeover
Proposal received by the Company which did not result from a breach of Section
4.3 and which the Company Board determines in good faith, after consultation
with outside counsel and financial advisors, is or may reasonably lead to a
Superior Proposal, furnish information concerning its business, properties or
assets to any Third Party making such Takeover Proposal, and may negotiate and
participate in discussions and negotiations with such Third Party concerning a
Takeover Proposal if such Third Party has submitted a Superior Proposal that is
pending at the time the Company determines to take such action if, and only to
the extent that and so long as, (A) the Company and its Subsidiaries are
otherwise in compliance with Section 4.3 (including, prior to furnishing such
information to, or entering into discussions or negotiations with, such Third
Party, by providing written notice to Parent to the effect that it is furnishing
information to, or entering into discussions or negotiations with, such Third
Party), (B) prior to furnishing such information to such Third Party, the
Company receives from such Third Party an executed confidentiality agreement
with terms substantially similar to and no less favorable to the Company than
those contained in the Confidentiality Agreement, and (C) in accordance with the
following sentences, the Company keeps Parent informed, on a current basis, of
the status and details of any such discussions or negotiations as provided
above. The Company will promptly (and in any event within two Business Days)
notify Parent in writing, of the existence of any proposal, discussion,
negotiation or inquiry received by the Company with respect to any Takeover
Proposal, and the Company's response thereto, and the Company will promptly
communicate to Parent the material terms and conditions of any proposal,
discussion, negotiation or inquiry that it may receive and the identity of the
Third Party making such
34
proposal or inquiring or engaging in such discussions or negotiations. The
Company will keep Parent reasonably informed of the status and details of any
such Takeover Proposal and any amendments or revisions thereto. The Company
shall promptly provide to Parent any non-public information concerning the
Company or any Company Subsidiary that is provided to the Third Party making
such Takeover Proposal or its representatives which was not previously provided
to Parent.
As used in this Agreement, the following terms have the meanings set forth
below:
"SUPERIOR PROPOSAL" means an unsolicited bona fide written proposal by a
Third Party to acquire, directly or indirectly, more than 50% of the shares of
Company Common Stock then outstanding or assets that constitute 50% or more of
the consolidated revenues, net income or assets of the Company and its
Subsidiaries pursuant to a merger, consolidation or other business combination,
sale of shares of capital stock, sale of assets, tender offer, exchange offer or
similar transaction with respect to either the Company or any of its
Subsidiaries, (i) on terms that the Company Board determines in good faith
(after consultation with its independent financial advisors) to be more
favorable to the Company's stockholders from a financial point of view than the
Merger and (ii) that, in the good faith judgment of the Company Board, is
reasonably likely to be consummated, taking into consideration (with respect to
both subsections (i) and (ii) hereof) all financial, regulatory, legal and other
aspects of such proposal.
"TAKEOVER PROPOSAL" means any inquiry, proposal or offer, whether in
writing or otherwise, from a Third Party to acquire beneficial ownership (as
defined under Rule 13(d) of the Exchange Act) of assets that constitute (i) 20%
or more of the consolidated revenues, net income or assets of the Company and
its Subsidiaries, (ii) 20% or more of any class of equity securities of the
Company or any of its Subsidiaries or (iii) any part of Rose Hills (other than
immaterial assets that are not part of, or necessary to, the core business of
Rose Hills), in any case, pursuant to a merger, consolidation or other business
combination, sale of shares of capital stock, sale of assets, tender offer,
exchange offer or similar transaction with respect to the Company or any of its
Subsidiaries.
"THIRD PARTY" means any Person or group other than Parent, Merger Sub or
any Subsidiary thereof.
(b) Except as set forth in this Section 4.3(b), neither the Company
Board nor any committee thereof shall (i) approve or recommend, or propose to
approve or recommend, any Takeover Proposal, (ii) cause or permit the Company to
enter into any letter of intent, agreement in principle, acquisition agreement
or similar agreement with respect to any Takeover Proposal or (iii) withdraw or
modify in a manner adverse to Parent or Merger Sub, or publicly propose to
withdraw or modify in a manner adverse to Parent or Merger Sub, the Company
Board Recommendation. Notwithstanding the foregoing provisions of this Section
4.3, prior to the Approval Date, the Company Board may (A) approve or recommend
a Superior Proposal, or (B) enter into any letter of intent, agreement in
principle, acquisition agreement or similar agreement with respect to a Superior
Proposal, (x) in either case, if the Company shall have terminated this
Agreement and shall have paid any applicable fee required by Section 7.3 and (y)
in either case, if at least five Business Days shall have passed following
Parent's receipt of written notice from the Company advising Parent that the
Company Board has received such a
35
Superior Proposal that it intends to approve, recommend or accept, specifying
all material terms and conditions of such Superior Proposal (including the
identity of the Third Party making the Superior Proposal and a copy of any
proposed agreements with respect thereto), and Parent does not make an offer
that the Company Board shall have concluded in its good faith judgment, after
consultation with its financial advisors and outside counsel, is at least as
favorable to the Company's stockholders as such Superior Proposal. In addition,
notwithstanding the foregoing, if prior to the Approval Date the Company Board
determines in good faith, after consultation with outside counsel, that failure
to so withdraw or modify the Company Board Recommendation would be inconsistent
with the Company Board's exercise of its fiduciary duties, the Company Board may
withdraw or modify the Company Board Recommendation.
SECTION 4.4 FINANCING ASSISTANCE.
(a) From the date hereof until the Effective Time, the Company and its
Subsidiaries shall, and shall use their reasonable best efforts to cause each of
their respective officers, directors, employees and Representatives to, provide
all cooperation reasonably requested by Parent in connection with the
arrangement of Parent's financing of the Merger or other filings or financings
of Parent (the "FINANCING"), including (A) causing appropriate officers and
employees to be available, on a customary basis and on reasonable advance
notice, to meet with prospective lenders and investors in meetings, drafting
sessions, due diligence sessions, management presentations, road shows and
sessions with rating agencies, (B) assisting with the preparation of materials
for rating agency presentations, business projections and financial statements
(including those required by the SEC), and assisting Parent in preparing
offering memoranda, private placement memoranda, prospectuses and similar
documents, (C) causing its independent accountants to provide reasonable
assistance to Parent, including providing consent to Parent to prepare and use
their audit reports and SAS 100 reviews relating to the Company and its
Subsidiaries and to provide any necessary "comfort letters" and (D) causing its
attorneys to provide reasonable assistance to Parent, including to provide any
necessary and customary legal opinions, (E) obtaining any necessary rating
agencies' confirmations or approvals for the Financing and (F) executing and
delivering any commitment letters, underwriting or placement agreements,
registration statements, pledge and security documents, other definitive
financing documents, or other requested certificates or documents, including
allowing for a certificate of the chief financial officer of the Company with
respect to solvency or other matters. The Company will provide to Parent and its
financing sources as promptly as practicable any audited, unaudited and pro
forma and other financial information or data that are reasonably required in
connection with the Financing.
(b) Without limiting the foregoing, at the request of Parent, prior to
the Effective Time, Company shall use its reasonable best efforts to cooperate
with Parent and Merger Sub in obtaining any consents or waivers to, and giving
notices of redemption in respect of, any of its Indebtedness, provided that
Company shall not be required to permit any of the foregoing to become effective
prior to the Effective Time. At the request of Parent, the Company shall, and
shall cause its Subsidiaries to, use its reasonable best efforts to commence
consent solicitations or issuer tender or exchange offers with respect to their
respective Indebtedness as and at the times that Parent shall request
("CONSENT/TENDER OFFERS"), in each case with the cooperation of Parent and
Merger Sub and using agents chosen by Parent. All Consent/Tender Offers shall be
in accordance with applicable Laws and Regulations and shall be
36
on the terms and conditions reasonably specified by Parent; PROVIDED, THAT all
Consent/Tender Offers (and all obligations to make any payments to holders of
all or any portion of any Indebtedness in connection therewith or to modify the
terms or provisions of any Indebtedness) shall be conditioned upon the
consummation of the Merger, and shall terminate immediately upon the termination
of this Agreement prior to the Effective Time. In addition, at the request of
Parent, the Company shall arrange to repay any outstanding Indebtedness under
its credit agreement effective at the Effective Time.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 REGULATORY MATTERS.
(a) As promptly as practicable after the date hereof, the Company
shall prepare and file with the SEC the Proxy Statement and shall use its
reasonable best efforts to respond to any comments of the SEC or its staff and
to cause the Proxy Statement to be mailed to the Company's stockholders as
promptly as practicable. Notwithstanding the previous sentence, prior to
responding to any comments of the SEC or its staff, the Company shall (i) notify
Parent promptly of the receipt of any comments from the SEC or its staff and of
any request by the SEC or its staff for amendments or supplements to the Proxy
Statement or for additional information, (ii) provide Parent with the Company's
proposed responses to the comments of the SEC or its staff for Parent's review,
and (iii) reasonably respond to or incorporate Parent's comments. The Company
will supply Parent with copies of all correspondence between the Company or any
of its representatives, on the one hand, and the SEC, on the other hand, with
respect to the Proxy Statement or the Merger. If at any time prior to the
Company Stockholders' Meeting there shall occur any event that is required to be
set forth in an amendment or supplement to the Proxy Statement, the Company
shall as promptly as practicable prepare and mail to its stockholders such an
amendment or supplement. The Company shall consult with Parent (and reasonably
respond to or incorporate Parent's comments) prior to mailing any Proxy
Statement, or any amendment or supplement thereto. Parent shall cooperate with
the Company in the preparation of the Proxy Statement or any amendment or
supplement thereto.
(b) Subject to Section 5.1(d), each of the parties shall use its
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, the Merger, including (i) the taking of all reasonable steps to
obtain all necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations and filings
(including filings and applications with Governmental Entities, if any) and the
taking of all reasonable steps as may be necessary to obtain an approval or
waiver from, or to avoid an action or proceeding by, any Governmental Entity,
including filing as promptly as practicable after the date hereof a Notice of
Investment under Section 12 of the Investment Canada Act and if Parent
reasonably determines that it is required (after consultation with its and the
Company's counsel), as promptly as practicable after making such determination,
an application for review under the Investment Canada Act (it being understood
that the parties will use their reasonable best efforts to bring any such review
under the Investment Canada Act to a conclusion as promptly as reasonably
37
practicable), (ii) the taking of all reasonable steps to obtain all necessary
consents or waivers from third parties, (iii) the defending of any lawsuits or
other legal proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of the transactions contemplated by this
Agreement, including seeking to have vacated or reversed any decree, order or
judgment entered by any court or other Governmental Entity that would restrain,
prevent or delay the Closing and (iv) the execution and delivery of any
additional instruments necessary to consummate the Transactions and to fully
carry out the purposes of this Agreement. The parties hereto agree that they
will consult with each other with respect to the obtaining of all permits,
consents, approvals and authorizations of all third parties and Governmental
Entities necessary or advisable to consummate the transactions contemplated by
this Agreement and each party will keep the other apprised of the status of
matters relating to completion of the transactions contemplated herein. Subject
to applicable Laws and Regulations relating to the exchange of information, the
Company and Parent and their respective counsel shall (i) have the right to
review in advance, and to the extent practicable each shall consult the other
on, any filing made with, or written materials to be submitted to, any
Governmental Entity in connection with the Merger and the other transactions
contemplated by this Agreement, (ii) promptly inform each other of any
communication (or other correspondence or memoranda) received from, or given to,
the U.S. Department of Justice, the U.S. Federal Trade Commission, or any other
Governmental Antitrust Entity and (iii) furnish each other with copies of all
correspondence, filings and written communications between them or their
Subsidiaries or Affiliates, on the one hand, and any Governmental Entity or its
respective staff, on the other hand, with respect to this Agreement and the
Merger. Each party shall provide the other party and its counsel with advance
notice of and the opportunity to participate in any discussion, telephone call
or meeting with any Governmental Entity in respect of any filing, investigation
or other inquiry in connection with the Merger or the other transactions
contemplated by this Agreement and to participate in the preparation for such
discussion, telephone call or meeting. The Company and Parent may, as each deems
advisable and necessary, reasonably designate any competitively sensitive
material provided to the other under this Section 5.1 as "Antitrust Counsel Only
Material." Such materials and the information contained therein shall be given
only to the outside antitrust counsel of the recipient and will not be disclosed
by such outside counsel to employees, officers or directors of the recipient
unless express permission is obtained in advance from the source of the
materials (the Company or Parent as the case may be) or its legal counsel.
Notwithstanding anything to the contrary in this Section 5.1, materials provided
to the other party or its outside counsel may be redacted to remove references
concerning the valuation of the Company and its Subsidiaries or as regards
Parent's plans for conducting its business or that of the Company after the
transactions contemplated by this Agreement.
(c) Without limiting the generality of the undertakings pursuant to
this Section 5.1, but subject to Section 5.1(d), the parties hereto shall: (i)
provide or cause to be provided promptly to Governmental Entities with
regulatory jurisdiction over enforcement of any applicable federal, state, local
or foreign antitrust or competition law, regulation or order ("ANTITRUST LAWS"
and each such Governmental Entity, a "GOVERNMENTAL ANTITRUST ENTITY")
information and documents requested by any Governmental Antitrust Entity or
necessary, proper or advisable to permit consummation of the transactions
contemplated by this Agreement, including preparing and filing any notification
and report form and related material required under the HSR Act and any
additional consents and filings under any Antitrust Laws promptly following the
date of this Agreement and thereafter to respond promptly (and within the time
38
frame specified by Parent in accordance with Section 5.1(d)) to any request for
additional information, data or documentary material that may be made under the
HSR Act or the Competition Act and any additional consents and filings under any
Antitrust Laws; (ii) use their reasonable best efforts to take such actions as
are necessary or advisable to obtain prompt approval of consummation of the
transactions contemplated by this Agreement by any Governmental Antitrust
Entity; and (iii) use their reasonable best efforts to resolve any objections
and challenges, including by contest through litigation on the merits,
negotiation or other action, that may be asserted by any Governmental Antitrust
Entity with respect to the transactions contemplated by this Agreement under the
HSR Act and any Antitrust Laws.
(d) The parties shall take all actions necessary to avoid or eliminate
each and every impediment under any Antitrust Laws so as to enable the Closing
to occur as soon as reasonably possible (and in any event no later than the
Outside Date), including (x) proposing, negotiating, committing to and
effecting, by consent decree, hold separate order, or otherwise, the sale,
divestiture or disposition of such businesses, product lines or assets of the
Company, Parent and their respective Subsidiaries and (y) otherwise taking or
committing to take actions that after the Closing Date would limit Parent's or
its Subsidiaries' freedom of action (other than as would allow Parent to
terminate this Agreement under Section 7.1(i)) with respect to, or its or their
ability to retain, one or more of the businesses, product lines or assets of the
Company, Parent and their respective Subsidiaries, in each case as may be
required in order to avoid the entry of, or to effect the dissolution of, any
preliminary or permanent injunction, in any suit or proceeding under any
Antitrust Laws, which would otherwise have the effect of preventing the Closing,
and in that regard Parent and, if requested by Parent, the Company shall agree
to divest, sell, dispose of, hold separate, or otherwise take or commit to take
any action that limits its freedom of action (other than as would allow Parent
to terminate this Agreement under Section 7.1(i)) with respect to, or Parent or
Parent's Subsidiaries' ability to retain, any of the businesses, product lines
or assets of the Company, Parent or any of their respective Subsidiaries,
provided that any such action shall be conditioned upon the consummation of the
Merger. Notwithstanding anything in this Agreement to the contrary, in no event
will Parent or Merger Sub be obligated to propose or agree to accept any
undertaking or condition, to enter into any consent decree, to make any
divestiture, to accept any operational restriction, or take any other action
that, in the reasonable judgment of Parent, (i) could be expected to result in
divestiture of, or operational restrictions on, businesses, product lines or
assets (of the Company, Parent or Subsidiaries of either) having aggregate
revenues in the twelve months ending December 31, 2005 in excess of $200 million
(it being understood that such amount shall be reduced by the aggregate amount
of revenues in the year ended December 31, 2005 of all "affected facilities"
described in Section 6.2(a) hereof), (ii) could be expected to limit the right
of Parent or the Surviving Corporation to own or operate all or any portion of
Rose Hills, or (iii) could be expected to result in an Unacceptable Restriction
(as defined in Section 7.1(i)) (the circumstances described in any of clauses
(i), (ii) or (iii) above, an "UNACCEPTABLE CONDITION"). With regard to any
Governmental Antitrust Entity, neither the Company nor any of its Subsidiaries
(or any of their respective Affiliates) shall, without Parent's prior written
consent in Parent's sole discretion, discuss or commit to any divestiture
transaction, or discuss or commit to alter their businesses or commercial
practices in any way, or otherwise discuss, take or commit to take any action
that limits Parent's freedom of action with respect to, or Parent's ability to
retain any of the businesses, product lines or assets of, the Surviving
Corporation or otherwise receive the full benefits of this Agreement. In
furtherance and not in limitation of the foregoing,
39
the Company agrees that notwithstanding anything to the contrary in this
Agreement, Parent will take the lead in all meetings and communications with any
Governmental Entity in connection with any Antitrust Laws, including by
determining the appropriate timing of any such meeting or communication
(including (x) the timing of the submission of any filing with, or response to
any request by, a Governmental Entity, and (y) the timing of any action taken
pursuant to this Section). In each such instance, the Company shall respond
within the time frame reasonably specified by Parent. Parent's obligations set
forth in this Section 5.1(d) are subject to the Company's timely compliance with
all of its obligations set forth in this Section 5.1.
(e) Parent and the Company shall, upon request, furnish each other
with all information concerning themselves, their respective Subsidiaries,
directors, officers, employees and stockholders and such other matters as may be
reasonably necessary or advisable in connection with the Proxy Statement or any
other statement, filing, notice, application or other document made by or on
behalf of Parent, the Company or any of their respective Subsidiaries to any
Governmental Entity in connection with the Merger and the other transactions
contemplated by this Agreement.
(f) Parent and the Company shall promptly advise each other upon
receiving any communication from any Governmental Entity whose consent or
approval is required for consummation of the transactions contemplated by this
Agreement that causes such party to believe that there is a reasonable
likelihood that any such consent or approval will not be obtained or that the
receipt of any such approval will be materially delayed.
SECTION 5.2 ACCESS TO INFORMATION. Subject to the Confidentiality Agreement
and applicable Laws and Regulations relating to the sharing of information, the
Company agrees to provide Parent, and the officers, directors, employees,
accountants, counsel, financial advisors, agents and other representatives of
Parent (collectively, the "PARENT REPRESENTATIVES"), from time to time prior to
the Effective Time or the termination of this Agreement, such information as
Parent shall reasonably request with respect to the Company and its Subsidiaries
and their respective businesses, financial condition and operations. Except as
required by law, Parent on the one hand shall hold, and shall cause Parent's
Affiliates and the Parent Representatives to hold, and the Company on the other
hand shall hold, and shall cause the Company's Affiliates and the Company
Representatives to hold, any non-public information received from the other,
directly or indirectly, in accordance with the Confidentiality Agreement.
SECTION 5.3 STOCKHOLDER APPROVAL.
(a) As promptly as practicable after the date hereof, the Company
shall take all action necessary under all applicable Laws and Regulations to
call, give notice of and hold a meeting of the holders of the Company's capital
stock to vote on a proposal to adopt this Agreement (the "COMPANY STOCKHOLDERS'
MEETING"). The Company Stockholders' Meeting shall be held (on a date selected
by the Company in consultation with Parent) as promptly as practicable after the
mailing of the Proxy Statement. The Company shall use reasonable best efforts to
ensure that all proxies solicited in connection with the Company Stockholders'
Meeting are solicited in compliance with all applicable Laws and Regulations.
Subject to Section 4.3(b), the Company shall include the Company Board
Recommendation in the Proxy Statement and use its reasonable best efforts to
solicit from its stockholders entitled to vote
40
thereon proxies to be voted at the Company Stockholders' Meeting sufficient
under applicable Laws and Regulations to constitute the Company Stockholder
Approval. The Company agrees that its obligations pursuant to the first two
sentences of Section 5.3(a) shall not be affected by the commencement, public
proposal or communication to the Company of any Takeover Proposal or by the
withdrawal or modification by the Company Board of the Company Board
Recommendation unless this Agreement has been terminated in accordance with
Article VII, including payment by the Company of the Termination Fee.
(b) Parent agrees to cause all shares of Company Common Stock owned by
Parent or any Subsidiary of Parent to be voted in favor of the adoption of the
Agreement and consummation of the Merger at the Company Stockholders' Meeting.
SECTION 5.4 PUBLIC DISCLOSURE. Unless otherwise permitted by this
Agreement, Parent and the Company shall consult with each other before issuing
any press release or otherwise making any public statement or making any other
public (or non-confidential) disclosure (whether or not in response to an
inquiry) regarding the terms of this Agreement or any of the transactions
contemplated hereby, and neither shall issue any such press release or make any
such statement or disclosure without the prior approval of the other (which
approval shall not be unreasonably withheld or delayed), except as may be
required by law, including applicable rules and regulations promulgated by the
SEC, or by obligations pursuant to any listing agreement with any national
securities exchange or with the Nasdaq, in which case the party proposing to
issue such press release or make such public statement or disclosure shall use
reasonable best efforts to consult with the other party before issuing such
press release or making such public statement or disclosure.
SECTION 5.5 REASONABLE BEST EFFORTS AND FURTHER ASSURANCES. Subject to the
terms and conditions hereof, each of the parties to this Agreement shall use its
reasonable best efforts to effect the transactions contemplated hereby and to
fulfill and cause to be fulfilled the conditions to Closing under this
Agreement. Subject to the terms and conditions hereof, each party hereto, at the
reasonable request of another party hereto, shall execute and deliver such other
instruments and do and perform such other acts and things as may be necessary or
desirable for effecting the consummation of this Agreement and the transactions
contemplated hereby. Without limiting the foregoing, upon written notice from
Parent, the Company shall request, and use all reasonable efforts to obtain
prior to Closing: (A) an estoppel certificate in a form reasonably acceptable to
Parent, duly and properly executed by (1) any landlord or subtenant under a Real
Property Lease, or (2) any other party to a Material Contract; and (B) a
subordination, non-disturbance and attornment agreement ("SNDA"), in a form
reasonably acceptable to Parent, duly and properly executed by the holder of any
mortgage or deed of trust to which any Real Property Lease is or may be
subordinate, and by the landlord and the tenant under any such Real Property
Lease. Immediately prior to the Closing Date, the Company shall deliver to
Parent a schedule listing (i) all exercises, expirations and conversions of
Company Options and Company Warrants and issuances in satisfaction of Restricted
Stock Units since the date hereof and (ii) all shares of Company Common Stock
subject to each remaining Company Option, or into which each Company Warrant is
convertible or which may be issued in respect of Restricted Stock Units, the
date of grant, the exercise or vesting schedule, the exercise price per share
and the term of each such security.
41
SECTION 5.6 INDEMNIFICATION; DIRECTOR AND OFFICER INSURANCE.
(a) From and after the Effective Time, the Surviving Corporation
shall, and Parent shall cause the Surviving Corporation to, to the fullest
extent permitted under the Delaware Law, indemnify and hold harmless each
present and former director and officer of the Company and its Subsidiaries and
each such individual who served at the request of the Company or its
Subsidiaries as a director, officer, trustee, partner, fiduciary, employee or
agent of another corporation, partnership, joint venture, trust, pension or
other employee benefit plan or enterprise (collectively, the "INDEMNIFIED
PARTIES") against all costs and expenses (including attorneys' fees), judgments,
fines, losses, claims, damages, liabilities and settlement amounts paid in
connection with any claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), whether civil, administrative or
investigative, based on the fact that such individual is or was a director or
officer of the Company or any of its Subsidiaries and arising out of or
pertaining to any action or omission occurring at or before the Effective Time
(including the transactions contemplated hereby). The Surviving Corporation
shall be entitled to assume the defense of any such claim, action, suit,
investigation or proceeding with counsel reasonably satisfactory to the
Indemnified Party and the Surviving Corporation shall not be liable to any
Indemnified Party for any legal expenses of separate counsel or any other
expenses subsequently incurred by such Indemnified Party in connection with the
defense thereof, except that if the Surviving Corporation elects not to assume
such defense or counsel for the Indemnified Party advises that there are issues
that raise conflicts of interest between the Surviving Corporation and the
Indemnified Party or such Indemnified Party shall have legal defenses available
to it that are different from or in addition to those available to the Surviving
Corporation, the Indemnified Party may retain counsel reasonably satisfactory to
the Surviving Corporation, and the Surviving Corporation shall pay all
reasonable fees and expenses of such counsel for the Indemnified Party promptly
as statements therefor are received; PROVIDED, that the Surviving Corporation
shall not be liable for the fees of more than one counsel with respect to a
particular claim, action, suit, investigation or proceeding, for all Indemnified
Parties, other than local counsel, unless a conflict of interest shall be caused
thereby; PROVIDED, FURTHER, that the Surviving Corporation shall not be liable
for any settlement effected without its written consent (which consent shall not
be unreasonably withheld or delayed). This Section 5.6(a) shall be interpreted
so as not to revive, reinstate, expand or increase any obligations of the
Company or its Subsidiaries (or any applicable predecessor thereof) that were
limited, barred, discharged or otherwise modified by (i) the order of
confirmation, entered in the United States Bankruptcy Court for the District of
Delaware and dated as of December 5, 2001, confirming the Fourth Amended Joint
Plan of Reorganization of Xxxxxx Group International, Inc., Its Parent
Corporation and Certain of Their Debtor Subsidiaries, as modified, including
Sections III.D.10.h and III.D.10.i thereof) and (ii) and the Final Order (the
"Canadian Order"), entered in the Ontario Superior Court of Justice and dated as
of December 7, 2001, in connection with the Confirmation Order and the
Reorganization Plan.
(b) The Surviving Corporation shall, and Parent shall cause the
Surviving Corporation to, provide, for a period of not less than six years after
the Effective Time, the Company's current directors and officers (as defined to
mean those persons insured under such policy) with an insurance and
indemnification policy that provides coverage for events occurring at or prior
to the Effective Time (the "D&O INSURANCE") that is no less favorable than the
existing policy or, if substantially equivalent insurance coverage is
unavailable, the best available
42
coverage; PROVIDED, HOWEVER, that the Surviving Corporation shall not be
required to pay an annual premium for the D&O Insurance in excess of 200% of the
current annual premium currently paid by the Company for such insurance as set
forth in Section 5.6(b) of the Company Disclosure Schedules, but in such case
shall purchase as much of such coverage as possible for such amount; and
PROVIDED, FURTHER, HOWEVER, that at Parent's option in lieu of the foregoing
insurance coverage, the Company may purchase "tail" insurance coverage, at a
cost no greater than that set forth above, that provides coverage identical in
all material respects to the coverage described above.
(c) The Certificate of Incorporation and Bylaws of the Surviving
Corporation shall contain the provisions with respect to indemnification set
forth in the certificate of incorporation and bylaws, respectively, of the
Company, which provisions shall not be amended, modified or otherwise repealed
for a period of six years from the Effective Time in any manner that would
adversely affect the rights thereunder as of the Effective Time of individuals
who at the Effective Time were directors or officers of the Company, unless such
modification is required after the Effective Time by law and then only to the
minimum extent required by such law.
(d) The rights of each Indemnified Party under this Section 5.6 shall
be in addition to any rights such individual may have under the certificate of
incorporation or bylaws (or other governing documents) of the Company or any of
its Subsidiaries, under Delaware Law or any other applicable Laws and
Regulations or under any agreement of any Indemnified Party with the Company or
any of its Subsidiaries. These rights shall survive consummation of the Merger
and are intended to benefit, and shall be enforceable by, each Indemnified
Party.
(e) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other Person and
is not the continuing or surviving corporation or entity of such consolidation
or merger or (ii) transfers or conveys all or substantially all of its
properties and assets to any Person, then, and in each such case, proper
provision will be made so that the successors and assigns of the Surviving
Corporation assume the obligations set forth in this Section 5.6.
SECTION 5.7 ADVICE OF CHANGES. Subject to applicable Laws and Regulations,
the Company and Parent each shall keep the other apprised of the status of
matters relating to completion of the transactions contemplated hereby,
including promptly furnishing the other with copies of notices or other
communications between Parent or the Company, as the case may be, or any of
their respective Subsidiaries, and any third party and/or any Governmental
Entity with respect to such transactions. The Company shall give prompt notice
to Parent of any change, fact or condition, that would reasonably be expected to
result in a Company Material Adverse Effect or of any failure of any condition
to Parent's obligations to effect the Merger, and Parent shall give prompt
notice to the Company of any change, fact or condition, that is reasonably
likely to result in a Parent Material Adverse Effect or that is reasonably
likely to result in a failure of any condition to the Company's obligations to
effect the Merger.
SECTION 5.8 TAKEOVER STATUTES. If any Takeover Statute is or may become
applicable to the Merger or the other transactions contemplated by this
Agreement or the parties hereto, the Company and the Company Board shall grant
all approvals and take all actions as are necessary
43
so that such transactions may be consummated as promptly as practicable on the
terms contemplated by this Agreement and otherwise act to eliminate or minimize
the effects of such Takeover Statute on such transactions.
SECTION 5.9 ESPP. As soon as practicable following the date of this
Agreement, the Company Board (or, if appropriate, any committee of the Company
Board administering the ESPP) shall adopt such resolutions or take such other
actions as may be required to provide that with respect to the ESPP: (a) all
executive officers, all vice presidents of operations and the corporate
controller shall not be permitted to participate in the ESPP after the April 3,
2006 purchase date (it being understood that each such person is a highly
compensated employee under Section 414(q) of the Code), (b) all other employees
shall be permitted to participate in the ESPP to an extent no greater than such
employee's payroll deduction percentage in the ESPP as of the date hereof, and
(c) the ESPP shall terminate immediately prior to the Closing Date and all cash
amounts then in a participant's payroll deduction account shall be promptly
refunded.
SECTION 5.10 BENEFITS FOR COMPANY EMPLOYEES.
(a) BENEFITS. From and after the Effective Time and until the first
anniversary of the Effective Time, Parent shall, or shall cause the Surviving
Corporation or one of its other subsidiaries to, maintain in effect employee
benefit plans and arrangements which provide benefits which have a value
substantially comparable, in the aggregate, to the benefits provided by the
Company Benefit Plans (not taking into account the value of any benefits under
any such plans which are equity-based). At the request of Parent, the Company
shall, prior to the Effective Time, terminate the Company's 401(k) plan
effective immediately prior to the Effective Time. If the Company's 401(k) plan
is so terminated at the request of Parent prior to the Effective Time, any
employee who was a participant in the Company's 401(k) plan immediately prior to
the Effective Time shall be entitled to receive a lump sum distribution of his
or her benefits from the Company's 401(k) plan. Parent shall cause a comparable
defined contribution plan or plans sponsored by Parent or one of its
Subsidiaries, with equivalent Company contributions, to accept direct rollovers
(described in Section 402(c) of the Code) of distributions to which the
employees are entitled under the Company's 401(k) plan that are eligible for a
direct rollover.
(b) ELIGIBILITY. With respect to any Parent Benefit Plan in which any
employee of the Company or any of its Subsidiaries first becomes eligible to
participate on or after the Effective Time, Parent shall: (i) waive all
pre-existing conditions, exclusions and waiting periods with respect to
participation and coverage requirements applicable to each such employee and his
or her eligible dependents under such Parent Benefit Plan, except to the extent
such pre-existing conditions, exclusions or waiting periods applied immediately
prior thereto under the analogous Company Benefit Plan; (ii) provide such
employee and his or her eligible dependents with credit for any co-payments and
deductibles paid prior to becoming eligible to participate in such Parent
Benefit Plan under the analogous Company Benefit Plan (to the same extent that
such credit was given under such Company Benefit Plan) in satisfying any
applicable deductible or annual or lifetime maximum out-of-pocket requirements
under such Parent Benefit Plan; and (iii) recognize all service of such employee
with the Company and its Subsidiaries and predecessors (including recognition of
all prior service with any entity (including any such Subsidiary prior to its
becoming a Subsidiary of the Company) that was recognized by the
44
Company (or any such Subsidiary) prior to the date hereof in the ordinary course
of administering its (or such Subsidiary's) employee benefits), for purposes of
eligibility to participate in and vesting in benefits under such Parent Benefit
Plan, to the extent that such service was recognized for such purpose under the
analogous Company Benefit Plan; provided, that such crediting of service shall
not be required if it would result in a duplication of benefits or credited past
service or to the extent that it is not similarly granted to similarly situated
employees of Parent.
(c) Notwithstanding anything to the contrary herein, the provisions of
this Section 5.10 shall not apply with respect to the terms and conditions of
employment or compensation or employee benefits of any employees of the Company,
Parent and any of their Subsidiaries who are represented by labor unions or
similar collective bargaining entities, which will be governed by the applicable
collective bargaining agreements.
(d) NO THIRD PARTY BENEFICIARIES. This Section 5.10 is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGER.
The obligations of each of the Company, Parent and Merger Sub to effect the
Merger are subject to the satisfaction or waiver at or prior to the Closing of
each of the following conditions:
(a) STOCKHOLDER APPROVAL. The Company Stockholder Approval shall have
been obtained.
(b) REGULATORY CONSENTS. The waiting period applicable to the
consummation of the Merger under the HSR Act, the Competition Act and any
applicable Foreign Antitrust Laws shall have expired or been earlier terminated.
(c) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; nor shall there be any statute,
rule, regulation or order enacted, entered, or enforced that prevents or
prohibits the consummation of the Merger.
SECTION 6.2 CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB. The
obligations of each of Parent and Merger Sub to effect the Merger are also
subject to the satisfaction or waiver by Parent at or prior to the Closing of
the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company contained in this Agreement shall be true and correct at and as
of the Closing (without regard to any qualifications therein as to materiality
or Company Material Adverse Effect), as though made at and as of such time (or,
if made as of a specific date, at and as of such date), except for such failures
to be true and correct as would not reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect; PROVIDED, THAT
45
notwithstanding the proceeding, the representations and warranties of the
Company contained in Sections 2.2(a)-(d), 2.14(a)(vi), 2.21 and 2.22 shall be
true and correct in all but immaterial respects; PROVIDED further that for
purposes of this Section 6.2(a), a failure of the representation set forth in
Section 2.14(a)(vi) shall be deemed material only if such failure relates to the
existence of a Contract described in Section 2.14(a)(vi) that, following the
Closing, would prohibit Parent or any of its Subsidiaries from operating any
facility (regardless of the amount of revenue thereof, an "affected facility")
that (x) is operated by Parent or any of its Subsidiaries prior to the date that
a copy of such Contract is provided to Parent and (y) (1) is not otherwise
required to be disposed of by Parent pursuant to Section 5.1(d) or (2) generated
revenue in excess of $500,000 in the fiscal year ended December 31, 2005.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall have
performed in all material respects (or with respect to any obligation or
agreement qualified by materiality or Company Material Adverse Effect, in all
respects) all obligations and agreements, and complied in all material respects
(or with respect to any covenant qualified by materiality, in all respects) with
all covenants, contained in this Agreement to be performed or complied with by
it prior to or on the Closing Date. Notwithstanding the foregoing, none of the
following shall be conditions to the obligations of Parent and Merger Sub to
effect the Merger: (i) Parent's receipt of the Financing as contemplated by
Section 4.4(a); (ii) the completion of the Consent/Tender Offers as contemplated
by Section 4.4(b); or (iii) the receipt by Parent or the Company of the
consents, estoppel certificates, SNDAs and related documents from Third Parties
not affiliated with the Company as contemplated by Section 5.5.
(c) OFFICER'S CERTIFICATE. Parent shall have received a certificate of
the Company, dated as of the Closing Date, signed by the chief executive officer
and chief financial officer of the Company to evidence satisfaction of the
conditions set forth in Sections 6.2(a) and (b).
(d) GOVERNMENTAL CONSENTS. Any required approval pursuant to the
Investment Canada Act, and all other Governmental Consents, shall have been made
or obtained without the imposition of any term, condition or consequence that
could, individually or in the aggregate, in the reasonable judgment of Parent,
reasonably be expected to result in an Unacceptable Condition.
(e) NO COMPANY MATERIAL ADVERSE EFFECT; ABSENCE OF OTHER EVENTS.
(i) There shall not have occurred any event, change, circumstance or
effect that would be a Company Material Adverse Effect or that, in the
reasonable judgment of Parent, could result in an Unacceptable Condition.
(ii) As of the Closing Date, Rose Hills shall include at least 290
acres of developable or developed (in each case, for cemetery interment
purposes) but unsold land.
SECTION 6.3 CONDITIONS TO OBLIGATION OF THE COMPANY. The obligation of the
Company to effect the Merger is also subject to the satisfaction or waiver by
the Company at or prior to the Effective Time of the following conditions:
46
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Parent and Merger Sub contained in this Agreement shall be true and correct
at and as of the Closing (without regard to any qualifications therein as to
materiality or material adverse effect), as though made at and as of such time
(or, if made as of a specific date, at and as of such date), except for such
failures to be true and correct as would not reasonably be expected to have a
Parent Material Adverse Effect.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND MERGER SUB. Each of
Parent and Merger Sub shall have performed in all material respects (or with
respect to any obligation or agreement qualified by materiality or Parent
Material Adverse Effect, in all respects) all obligations and agreements, and
complied in all material respects with all covenants, contained in this
Agreement to be performed or complied with by it prior to or on the Closing
Date.
(c) OFFICER'S CERTIFICATE. The Company shall have received a
certificate of Parent, dated as of the Closing Date, signed by the chief
executive officer and chief financial officer of Parent to evidence satisfaction
of the conditions set forth in Sections 6.3(a) and (b).
ARTICLE VII
TERMINATION AND AMENDMENT
SECTION 7.1 TERMINATION. Whether before or (except as set forth below)
after receipt of the Company Stockholder Approval, this Agreement may be
terminated:
(a) by mutual written consent duly authorized by the Company Board and
the Board of Directors of Parent at any time prior to the Effective Time;
(b) by Parent or the Company if the Effective Time shall not have
occurred on or before the date that is the 8 month anniversary of the execution
of this Agreement, or such later date, if any, as Parent and the Company agree
upon in writing (as such date may be extended as described below, the "OUTSIDE
DATE"); PROVIDED, HOWEVER, that in the event that the conditions set forth in
Section 6.1(b) or Section 6.1(c) shall not have been satisfied by such date (and
Section 7.1(c) is not applicable) but all other conditions set forth in Article
VI have been satisfied or waived, or are capable of being satisfied, by such
date, then the Outside Date will automatically be extended until the date that
is the 12 month anniversary of the execution of this Agreement, in which case
the Outside Date shall be deemed to be that later date for all purposes; and
PROVIDED FURTHER, that a party that has materially breached a representation,
warranty or covenant of such party set forth in this Agreement and not cured
such breach by the Outside Date shall not be entitled to exercise its right to
terminate under this Section 7.1(b);
(c) by Parent or the Company, if any judgment, injunction, order,
decree or action by any Governmental Entity of competent authority preventing
the consummation of the Merger shall have become final and nonappealable,
provided that the terminating party has performed its obligations under this
Agreement;
(d) by Parent or the Company if, upon a vote at a duly held Company
Stockholders' Meeting, the Company Stockholder Approval shall not have been
obtained, as contemplated by Section 5.3;
47
(e) by Parent, upon (i) any breach of Section 4.3 hereof or any breach
(other than an immaterial breach) of Section 5.3(a) hereof or (ii) a breach of
any other representation, warranty, covenant or agreement on the part of the
Company set forth in this Agreement, or if any representation or warranty of the
Company shall have become untrue, in either case set forth in clause (ii) such
that the conditions set forth in Sections 6.1 or 6.2, as the case may be, would
be incapable of being (or are not) satisfied by the Outside Date;
(f) by Parent, if (i) prior to receipt of the Company Stockholder
Approval, the Company Board shall have withdrawn or modified the Company Board
Recommendation in any manner adverse to Parent, (ii) the Company shall have
entered into any agreement with respect to any Takeover Proposal, or (iii) the
Company Board shall have resolved to do any of the foregoing;
(g) by the Company, upon a breach of any representation, warranty,
covenant or agreement on the part of Parent or Merger Sub set forth in this
Agreement, or if any representation or warranty of Parent or Merger Sub shall
have become untrue, in either case such that the conditions set forth in
Sections 6.1 or 6.3, as the case may be, would be incapable of being (or are
not) satisfied by the Outside Date;
(h) by the Company, if the Company Board shall have (i) otherwise
fully complied with Section 4.3 (including without limitation the notice
required therein) and (other than in immaterial respects) with Section 5.3(a),
(ii) withdrawn, modified or qualified in any manner adverse to Parent the
Company Board Recommendation in connection with, or approved or recommended, a
Superior Proposal, and (iii) paid the Termination Fee to Parent.
(i) by Parent, if (i) an application for review is required under the
Investment Canada Act and Parent is unable to obtain approval of the
transactions contemplated by this Agreement under the Investment Canada Act
without offering or agreeing to a commitment or restriction that could
reasonably be expected (A) to limit or restrict the ability of Parent (following
the Closing) to terminate or otherwise reduce or change the employment of more
than 100 Administrative Employees of the Company (including its Subsidiaries),
or (B) to require investments or payments by, or result in costs to, Parent, the
Company or any of its Subsidiaries in excess of $5 million (any limitation,
restriction or requirement described in Clause (A) or (B), an "UNACCEPTABLE
RESTRICTION"); or (ii) any Law or Regulation is adopted or applied by Canada or
any jurisdiction within Canada that would reasonably be expected to result in an
Unacceptable Restriction; provided, however, that Parent may exercise this
termination right no later than, with respect to clause (i), the expiration of
ten Business Days following the conclusion of the period for the review of the
application referred to above under the Investment Canada Act and (ii) with
respect to clause (ii), for any particular Law or Regulation, no later than ten
Business Days following Parent's receipt of written notice from the Company that
such Law or Regulation has been adopted or is applicable.
A terminating party shall provide written notice of termination to the
other parties specifying with particularity the reason for such termination. If
more than one provision of this Section 7.1 is available to a terminating party
in connection with a termination, a terminating party may rely on any and all
available provisions in this Section 7.1 for any such termination.
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SECTION 7.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 7.1, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of Parent, Merger Sub
or the Company or their respective officers, directors, stockholders or
Affiliates; PROVIDED, HOWEVER, that (a) the provisions of Section 5.4 (Public
Disclosure), Section 7.3 (Expenses and Termination Fee), Section 8.1 (Certain
Defined Terms), Article IX (General Provisions) and this Section 7.2 shall
remain in full force and effect and survive any termination of this Agreement
and (b) nothing herein shall relieve any party from liability for fraud or
willful material breach in connection with this Agreement or the transactions
contemplated hereby.
SECTION 7.3 EXPENSES AND TERMINATION FEES.
(a) Subject to the remaining subsections of this Section 7.3, whether
or not the Merger is consummated, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby (including the fees
and expenses of its advisers, brokers, finders, agents, accountants and legal
counsel) shall be paid by the party incurring such expense.
(b) In the event that (i) the Company shall terminate this Agreement
pursuant to Section 7.1(h), (ii) Parent shall terminate this Agreement pursuant
to Section 7.1(e)(i) or (f), or (iii) Parent or the Company shall terminate this
Agreement pursuant to Section 7.1(d) at any time during which this Agreement was
terminable by Parent pursuant to Section 7.1(f), the Company shall pay the
Termination Fee to Parent.
(c) In the event that (i) Parent or the Company shall terminate this
Agreement pursuant to Section 7.1(b) (if at such time this Agreement was
terminable by Parent pursuant to Section 7.1(e)), (c) (if the relevant judgment,
injunction, order, decree or action is issued in connection with or is otherwise
related to the pendency of a Takeover Proposal), (d) or (e)(ii), (ii) there
shall have been disclosed at or prior to the time of such termination a bona
fide Takeover Proposal with respect to the Company (that shall not have been (A)
withdrawn prior to the time of such termination or (B) if so withdrawn,
reinstated or otherwise made (or another Takeover Proposal is made by the same
Person) within twelve months of such termination), and (iii) a definitive
agreement or letter of intent is entered into by the Company with respect to a
Takeover Proposal within twelve months of such termination of this Agreement and
is consummated, or a Takeover Proposal otherwise is consummated within twelve
months of such termination of this Agreement, the Company shall pay the
Termination Fee to Parent.
(d) In the event that a Termination Fee is payable to Parent, the
Company shall pay the Termination Fee to Parent (i) if this Agreement is
terminated pursuant to Section 7.3(b), on the date of termination (it being
understood that no termination under Section 7.1(h) shall be effective until
Parent shall have received the Termination Fee) and (ii) if this Agreement is
terminated pursuant to Section 7.3(c), at the time of consummation of the
Takeover Proposal.
(e) In the event that (i) this Agreement is terminated by either party
pursuant to Section 7.1(b) or pursuant to Section 7.1(c), (ii) as of the date of
such termination (A) the condition set forth in Section 6.1(b) of this Agreement
shall not have been satisfied (other than for a reason based on or related to
the Existing Cases) or (B) any decree, judgment, injunction or other order (in
each case that (x) is based on or related to Antitrust Laws but (y) is not based
on
49
or related to the Existing Cases) that prevents, prohibits or delays the
consummation of the Transactions exists or is in effect; and (iii) at the time
of any such termination the Company is not in material breach of any of its
representations, warranties, covenants or agreements contained in this Agreement
and all of the conditions set forth in Article VI have been satisfied or waived,
except for any of the conditions set forth in Section 6.1(b) or Section 6.1(c)
and such other conditions that are capable of being satisfied on the date of
termination but, by their terms, cannot be satisfied until the Closing Date,
then Parent shall pay the Termination Fee to the Company within two Business
Days after the date of such termination.
(f) In the event that either party fails to pay when due any amount
payable under this Section 7.3 and the other party commences a suit that results
in a judgment against such first party for the Termination Fee, then such
defaulting party shall reimburse such other party for all costs and expenses
(including disbursements and reasonable fees of counsel) incurred in connection
with such suit.
SECTION 7.4 AMENDMENT. The boards of directors of the parties hereto may
cause this Agreement to be amended at any time by execution of an instrument in
writing signed on behalf of each of the parties hereto; PROVIDED, that an
amendment made subsequent to adoption of the Agreement by the stockholders of
the Company shall not, without the further consent of such stockholders, (i)
alter or change the certificate of incorporation of the Surviving Corporation or
the amount or kind of consideration to be received by the holders of the Company
Common Stock, (ii) alter or change any of the terms and conditions of the
Agreement if such alteration or change would materially adversely affect the
holders of Company Common Stock, or (iii) effect any other amendment to this
Agreement that by Delaware Law or applicable stock exchange regulation would
require further approval by the Company's stockholders.
SECTION 7.5 EXTENSION; WAIVER. At any time prior to the Effective Time any
party hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE VIII
DEFINITIONS
SECTION 8.1 CERTAIN DEFINED TERMS. Unless the context otherwise requires,
the following terms, when used in this Agreement, shall have the respective
meanings specified below (such meanings to be equally applicable to the singular
and plural forms of the terms defined):
"ADMINISTRATIVE EMPLOYEES" shall mean employees in the areas of finance,
treasury, accounting, tax, trust administration, HMIS, information technology,
benefits, human resources,
50
support services, payroll, training, legal, corporate development, real estate
and marketing, and senior executives and directors in each case outside of the
United States.
"AFFILIATE" of a Person shall mean any Person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, such Person.
"AGREEMENT" shall have the meaning stated in the preamble to this
Agreement.
"ANTITRUST LAWS" shall have the meaning stated in Section 5.1(c).
"APPROVAL DATE" shall mean the date on which the Company Stockholder
Approval is obtained.
"AUTHORIZATIONS" shall have the meaning stated in Section 2.13(b).
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or day on
which banking institutions in New York, New York are authorized or required by
law to be closed.
"CERCLA" shall mean the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, 42 U.S.C. xx.xx. 9601 et seq., as amended.
"CERTIFICATE OF MERGER" shall mean the certificate of merger in the form
mutually agreed to by Parent and the Company, as required by and executed in
accordance with Section 251 of Delaware Law.
"CERTIFICATES" shall have the meaning stated in Section 1.13(a).
"CLOSING" shall mean the consummation of the Merger.
"CLOSING DATE" shall have the meaning stated in Section 1.2.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMPANY" shall have the meaning stated in the preamble to this Agreement.
"COMPANY BENEFIT PLANS" shall have the meaning stated in Section 2.11(a).
"COMPANY BOARD" shall have the meaning stated in Recital A to this
Agreement.
"COMPANY BOARD RECOMMENDATION" shall mean the recommendation of the Company
Board (or any committee thereof) that the stockholders of the Company approve
and adopt this Agreement and the Merger.
"COMPANY COMMON STOCK" shall mean the common stock, par value $.01 per
share, of the Company.
"COMPANY DISCLOSURE SCHEDULES" shall mean the document dated the date of
this Agreement delivered by the Company to Parent prior to the execution and
delivery of this
51
Agreement and referring to the representations and warranties of the Company in
this Agreement.
"COMPANY DISSENTING SHARES" shall have the meaning stated in Section
1.6(a).
"COMPANY ERISA AFFILIATE" shall have the meaning stated in Section 2.11(a).
"COMPANY FINANCIAL STATEMENTS" shall have the meaning stated in Section
2.5(b).
"COMPANY INTELLECTUAL PROPERTY" shall have the meaning stated in Section
2.17(a).
"COMPANY MATERIAL ADVERSE EFFECT" shall mean any event, change,
circumstance or effect that: (i) is materially adverse to the business,
operations, financial condition, assets, liabilities, or results of operations
of either (x) the Company and its Subsidiaries, taken as a whole, or (y) Rose
Hills, or (ii) prevents or materially delays the ability of the Company to
consummate the transactions contemplated hereby or to perform its obligations
hereunder; other than any such event, change, circumstance or effect to the
extent directly resulting from (1) any event, change, circumstance or effect
generally affecting the industries in which the Company or its Subsidiaries
operate, (2) general economic or political conditions in the United States, (3)
the announcement of the transactions contemplated by this Agreement (as opposed
to execution or delivery of this Agreement or consummation of the transactions
contemplated hereby), or (4) changes in GAAP or applicable Laws and Regulations
after the date hereof, except in each of cases (1), (2) and (4) to the extent
the Company or its Subsidiaries or Rose Hills, as the case may be, are affected
in a disproportionate manner as compared to other similar companies in the
industries in which the Company or its Subsidiaries operate, but this exception
shall not apply with respect to any event, change, circumstance or effect that
would, in the reasonable judgment of Parent, result in an Unacceptable
Condition; PROVIDED THAT no divestiture, sale, disposition of, commitment to
hold separate, or other action taken or commitment to take any action that
limits Parent's freedom of action (other than with respect to cost savings) with
respect to, or Parent or Parent's Subsidiaries' ability to retain, any of the
businesses, product lines or assets of the Company, Parent or any of their
respective Subsidiaries, that occurs pursuant to and in accordance with Section
5.1(d) hereof will be deemed to be a Company Material Adverse Effect.
"COMPANY MULTIEMPLOYER PLAN" shall have the meaning stated in Section
2.11(b).
"COMPANY OPTIONS" shall mean options for the purchase of any shares of
Company Common Stock or any securities representing the right to purchase or
otherwise receive any shares of Company Common Stock, in each case outstanding
under the Company Stock Plans; and for the avoidance of doubt, neither Company
Warrants nor Restricted Stock Units shall be considered to be Company Options.
"COMPANY REPRESENTATIVES" shall have the meaning stated in Section 4.3(a).
"COMPANY SEC DOCUMENTS" shall mean (i) the Annual Reports on Form 10-K, if
any, for each fiscal year of the Company beginning on or after December 29,
2002, (ii) the Quarterly Reports on Form 10-Q, if any, of the Company for each
of the first three fiscal quarters in the fiscal years of the Company beginning
on or after December 29, 2002, (iii) all proxy statements relating to the
Company's meetings of stockholders (whether annual or special) held, and all
52
information statements relating to stockholder consents, since December 29,
2002, (iv) all Current Reports on Form 8-K filed by the Company since December
29, 2002, and (v) all other forms, reports, registration statements, financial
statements and other documents (other than preliminary materials if the
corresponding definitive materials have been provided to Parent pursuant to this
definition), including all amendments to any of the foregoing, filed or
submitted or required to be filed or submitted by the Company with the SEC since
December 29, 2002.
"COMPANY STOCK PLANS" shall mean the employee and director stock plans of
the Company, any agreements evidencing the grant of any equity-based
compensatory awards under the employee and director stock plans of the Company
and other documents governing any equity-based compensatory awards.
"COMPANY STOCKHOLDER APPROVAL" shall mean the affirmative vote of the
holders of a majority of the outstanding shares of Company Common Stock, voting
as one class, to adopt this Agreement.
"COMPANY STOCKHOLDERS' MEETING" shall have the meaning described in Section
5.3(a).
"COMPANY WARRANTS" shall mean the warrants to purchase Company Common Stock
pursuant to that certain Warrant Agreement, dated as of January 2, 2002, between
the Company and Xxxxx Fargo Bank Minnesota, National Association.
"COMPETITION ACT" shall have the meaning set forth in Section 2.4.
"CONFIDENTIALITY AGREEMENT" shall mean the Confidentiality Agreement dated
as of December 9, 2005, between Parent and the Company, as it may be amended
from time to time.
"CONTRACT" shall mean any written or oral contract, agreement, indenture,
trust indenture, deed of trust, license or sublicense (in either case, inbound
or outbound), note, bond, debenture, mortgage, lease, commitment, guarantee,
undertaking, purchase order, memorandum of understanding, memorandum of
agreement and any similar understanding or arrangement.
"CONTROLLED GROUP LIABILITY" shall have the meaning stated in Section
2.11(c).
"D&O INSURANCE" shall have the meaning stated in Section 5.6(b).
"DCP" shall have the meaning set forth in Section 1.7(d).
"DEFERRED STOCK" shall have the meaning set forth in Section 1.7(d).
"DELAWARE LAW" shall mean the Delaware General Corporation Law.
"DOLLARS" or "$" shall mean United States dollars.
"EFFECTIVE TIME" shall mean the date and time when the Merger becomes
effective, as set forth in the Certificate of Merger.
"ENVIRONMENTAL CLAIM" shall have the meaning stated in Section 2.14(b).
53
"ENVIRONMENTAL LAWS" shall mean all applicable foreign, federal, state and
local laws, regulations, rules, ordinances, common law, agency requirement or
applicable judicial or administrative decision, order or decree relating to
pollution or protection of the environment, natural resources, or human health
and safety, including laws relating to the releases or threatened releases of
Hazardous Substances into the indoor or outdoor environment (including ambient
air, surface water, groundwater, land, surface and subsurface strata) or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, release, transport or handling of Hazardous Substances; all laws
relating to pollution, contamination or any injury or threat of injury to
persons or property relating to any Hazardous Substance; all laws and
regulations with regard to recordkeeping, notification, disclosure and reporting
requirements respecting Hazardous Substances; all laws relating to endangered or
threatened species of fish, wildlife and plants and the management or use of
natural resources; and common law to the extent it relates to or applies to
exposure to or impact of Hazardous Substances on persons or property.
"ENVIRONMENTAL PERMITS" shall mean all permits, licenses, exemptions,
registrations, and other authorizations required under applicable Environmental
Laws.
"ERISA" shall have the meaning stated in Section 2.11(a).
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"EXCHANGE AGENT" shall mean the Company's transfer agent, Xxxxx Fargo Bank,
or another bank or trust company mutually agreed to in writing by Parent and the
Company.
"EXCHANGE FUND" shall mean the cash deposited by Parent with the Exchange
Agent pursuant to Section 1.12.
"EXISTING CASES" shall mean Cause No. 4:05-CV-03394, FUNERAL CONSUMERS
ALLIANCE, INC., ET AL. V. SERVICE CORPORATION INTERNATIONAL, ET AL., In the
United States District Court for the Southern District of Texas - Houston
Division; Cause No. 4:05-CV-03399, PIONEER VALLEY CASKET CO., INC., ET AL. V.
SERVICE CORPORATION INTERNATIONAL, ET AL., In the United States District Court
for the Southern District of Texas - Houston Division; Cause No. 4:05-CV-04120,
XXXXX XXX XXXXXXX AND ESTATE OF XXXXXX X. XXXXXXX, ET AL. V. SERVICE CORPORATION
INTERNATIONAL, ET AL., In the United States District Court for the Southern
District of Texas - Houston Division, and any other case, action or proceeding
brought on similar theories or alleging similar facts.
"FINANCIAL ADVISOR" shall have the meaning stated in Section 2.3(b).
"FINANCING" shall have the meaning set forth in Section 4.4(a).
"FOREIGN ANTITRUST LAWS" shall mean Antitrust Laws of a foreign country.
"GAAP" shall mean United States generally accepted accounting principles.
"GOVERNMENTAL ANTITRUST ENTITY" shall have the meaning stated in Section
5.1(c).
54
"GOVERNMENTAL CONSENTS" shall mean all notices, reports, and other filings
required to be made prior to the Effective Time by the Company or Parent or any
of their respective Subsidiaries with, and all consents, registrations,
approvals, permits, clearances and authorizations required to be obtained prior
to the Effective Time by the Company or Parent or any of their respective
Subsidiaries from, any Governmental Entity in connection with the execution and
delivery of this Agreement and the consummation of the Merger and the other
transactions contemplated hereby.
"GOVERNMENTAL ENTITY" shall mean any foreign, federal, state or local
court, administrative agency, board or commission or other governmental,
prosecutorial or regulatory authority or instrumentality and any self-regulatory
authority.
"GOVERNMENTAL ORDER" shall mean any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Entity.
"HAZARDOUS SUBSTANCES" shall mean (a) any petrochemical or petroleum
products, including petroleum hydrocarbons, petroleum products, petroleum
substances, crude oil, natural gas, and any components, fractions, or
derivatives thereof; (b) radioactive materials, asbestos in any form that is or
could become friable, urea formaldehyde foam insulation, transformers or other
equipment that contain dielectric fluid containing polychlorinated biphenyls,
and radon gas; (c) any chemicals, materials or substances defined as or included
in the definition of "hazardous substances," "hazardous wastes" or "hazardous
materials" pursuant to any Environmental Law; or (d) any other chemical,
contaminant, pollutant, material or substance, exposure to which is prohibited,
limited, listed, classified, or regulated by any applicable Environmental Law.
"HEDGING AGREEMENT" shall mean any (i) interest rate swaps, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swaps, cross-currency rate swaps, currency
options, spot contracts or any other similar transactions or any combination of
any of the foregoing (including any options to enter into any of the foregoing),
whether or not any such transaction is governed by or subject to any master
agreement, and (ii) any and all transactions of any kind, and the related
confirmations, which are subject to the terms and conditions of, or governed by,
any form of master agreement published by the International Swaps and
Derivatives Association, Inc., the International Foreign Exchange Master
Agreement, or any other master agreement, including any such obligations or
liabilities under any such agreement.
"HSR ACT" shall have the meaning stated in Section 2.4.
"INDEBTEDNESS" shall mean with respect to any Person, without duplication
(a) all indebtedness of such Person for borrowed money, whether secured or
unsecured, (b) all obligations of such Person under such conditional sale or
other title retention agreement relating to property purchased by such Person,
(c) all lease obligations (capital or other) of such Person, (d) all obligations
of such Person under interest rate or currency hedging transactions (valued at
55
the termination value thereof), (e) all guarantees of such Person of any such
indebtedness of any other Person, and (f) any agreements to provide any of the
foregoing.
"INDEMNIFIED PARTIES" shall have the meaning stated in Section 5.6(a).
"INTELLECTUAL PROPERTY" shall mean patents, trademarks, trade names,
service marks, domain names, database rights, copyrights, and any applications
therefor, mask works, net lists, technology, know-how, trade secrets, inventory,
ideas, algorithms, processes, computer software programs or applications (in
both source code and object code form), and tangible or intangible proprietary
information or material.
"INVESTMENT CANADA ACT" shall have the meaning set forth in Section 2.4.
"INVESTMENTS" shall have the meaning stated in Section 2.19(b).
"IRS" shall mean the Internal Revenue Service.
"KNOWLEDGE," with respect to the Company or any of its Subsidiaries, shall
mean the actual knowledge of each of Xxxx X. Xxxxx, Xxxx X. Xxxxxxx, Xxxxxxx X.
Xxxxx and Xxxxx Xxxxxx, after due inquiry, and with respect to Parent, shall
mean the actual knowledge of any of the senior management of Parent, after due
inquiry.
"LAWS AND REGULATIONS" shall mean all federal, state, local and foreign
laws, rules, regulations and ordinances of any Governmental Entity and any rules
and regulations of any national stock exchange or the Nasdaq.
"LEASED REAL PROPERTY" shall have the meaning stated in Section 2.18(c).
"LIEN" shall mean any lien, claim, charge, option, encroachment, covenant,
condition, easement, right of way, equitable interest, encumbrance, mortgage,
deed of trust, pledge or security interest or other restrictions of any kind.
"MATERIAL CONTRACTS" shall have the meaning stated in Section 2.14(a).
"MERGER" shall mean the merger of Merger Sub into the Company as
contemplated by this Agreement.
"MERGER CONSIDERATION" shall have the meaning stated in Section 1.4(a).
"MERGER SUB" shall have the meaning stated in the preamble to this
Agreement.
"MOST RECENT FINANCIAL STATEMENTS" shall have the meaning stated in Section
2.10(a).
"MULTIPLE EMPLOYER PLAN" shall have the meaning stated in Section 2.11(b).
"NASDAQ" shall mean The Nasdaq Stock Market, Inc.
"OTHER COMPANY DOCUMENTS" shall have the meaning stated in Section 2.20(a).
56
"OUTSIDE DATE" shall have the meaning stated in Section 7.1(b).
"OWNED REAL PROPERTY" shall have the meaning stated in Section 2.18(b).
"PARENT" shall have the meaning stated in the preamble to this document.
"PARENT BENEFIT PLAN" shall mean any bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock purchase,
stock option, restricted stock, phantom stock, retirement, vacation, employment,
change in control, consulting, disability, death benefit, hospitalization,
medical insurance, life insurance, welfare, severance or other employee benefit
plan, agreement, arrangement or understanding maintained or contributed to by
Parent or any of its Subsidiaries (including the Surviving Corporation as of the
Effective Time).
"PARENT DISCLOSURE SCHEDULES" shall mean the disclosure schedule, dated the
date hereof, delivered by Parent to the Company with reference to the specific
Section of this Agreement to which each disclosure relates.
"PARENT MATERIAL ADVERSE EFFECT" shall mean any effect that does, or would
be reasonably likely to, prevent Parent from consummating, or delay beyond the
Outside Date, the Merger and the other transactions contemplated hereby, or to
impair the legality or validity of this Agreement.
"PARENT REPRESENTATIVES" shall have the meaning stated in Section 5.2.
"PARTICIPANT" shall have the meaning stated in Section 2.6(d).
"PERMITTED LIEN" shall mean any Lien consisting of: (i) carriers',
warehousemen's, mechanics', landlords', materialmen's, repairmen's or similar
common law or statutory liens or encumbrances arising in the ordinary course of
business that are not delinquent or remain payable without penalty and are not
material individually or in the aggregate; (ii) encumbrances for Taxes and other
assessments or governmental charges or levies not yet delinquent; and (iii) with
respect to the Real Property, (A) customary easements, encroachments, rights of
way and other non-monetary title defects and (B) zoning and other similar
restrictions; provided that none of the foregoing described in clause (ii) or
(iii) will, individually or in the aggregate, materially impede the continued
use and operation of the property to which they relate in the business of the
Company or its applicable Subsidiary as presently conducted.
"PERSON" shall mean any individual, entity or Governmental Entity.
"PLAN" shall mean the Fourth Amended Joint Plan of Reorganization of Xxxxxx
Group International, Inc., Its Parent Corporation and Certain of Their Debtor
Subsidiaries, confirmed by order of the United States Bankruptcy Court for the
District of Delaware dated as of December 5, 2001, as modified.
"PRENEED AGREEMENTS" shall have the meaning stated in Section 2.19(a).
57
"PROXY STATEMENT" shall mean a definitive proxy statement relating to the
Company Stockholders' Meeting.
"REAL PROPERTY" shall have the meaning stated in Section 2.18(d).
"REAL PROPERTY LEASE" shall mean any Contract to which the Company or any
of its Subsidiaries is a lessee or sublessee of real property used by the
Company or its Subsidiaries.
"RESTRICTED STOCK UNITS" shall have the meaning stated in Section 1.7(c).
"ROSE HILLS" shall mean, collectively, (i) Rose Hills Company, a Delaware
corporation, Rose Hills Holdings Corp., a Delaware corporation, RH Cemetery
Corp., a Delaware corporation, RH Mortuary Corporation, a Delaware corporation,
and RH Satellite Properties Corp., a Delaware corporation, and (ii) any property
or operations of the Company or any of its Subsidiaries not listed in clause (i)
that form a part or are used in the operation of the Rose Hills facility (as
described in the Company SEC Documents) or are managed or controlled by any of
the Company's Subsidiaries listed in clause (i).
"XXXXXXXX-XXXXX ACT" shall have the meaning stated in Section 2.5(c).
"SEC" shall mean the United States Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SUBSIDIARY" shall mean, with respect to any Person, any corporation,
partnership, limited liability company, joint venture or other entity in which
such Person or any Subsidiary of such Person owns, directly or indirectly, 50%
or more of the outstanding voting securities or equity interests or is a general
partner or managing member.
"SUPERIOR PROPOSAL" shall have the meaning stated in Section 4.3(a).
"SURVIVING CORPORATION" shall mean the entity into which Merger Sub has
merged, following the Effective Time.
"TAKEOVER PROPOSAL" shall have the meaning stated in Section 4.3(a).
"TAKEOVER STATUTE" shall have the meaning stated in Section 2.20.
"TAX" or "TAXES" shall mean all federal, state, local, and foreign income,
excise, gross receipts, gross income, ad valorem, profits, gains, property,
capital, sales, transfer, use, value-added, stamp, documentation, payroll,
employment, severance, withholding, duties, intangibles, franchise, backup
withholding, and other taxes (including estimated taxes), charges, levies or
like assessments together with all penalties and additions to tax and interest
thereon.
"TAXING AUTHORITY" shall mean any federal, state or local, domestic or
foreign, governmental body (including any subdivision, agency or commission
thereof), or any quasi-governmental body, in each case, exercising regulatory
authority in respect of Taxes.
58
"TERMINATION FEE" shall mean $25,000,000, paid by wire transfer of
immediately available funds to the account specified by Parent or the Company,
as the case may be, on Schedule 8.1 hereto, or another account specified in
writing by such applicable party.
"THIRD PARTY" shall have the meaning stated in Section 4.3(a).
"UNACCEPTABLE CONDITION" shall have the meaning set forth in Section
5.1(d).
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. The
representations and warranties set forth in this Agreement and in any instrument
delivered pursuant to this Agreement shall terminate at the Effective Time. This
Section 9.1 shall not affect any covenant or obligation of the parties that by
its terms contemplates performance after the Effective Time.
SECTION 9.2 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(with confirmation), mailed by registered or certified mail (return receipt
requested) or delivered to the parties by a nationally recognized overnight
courier service at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to Parent, to:
Service Corporation International
0000 Xxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Shelger, Esq.
Fax: (000) 000-0000
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx Xxxxx-Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Xxxxx X. Silk, Esq.
Fax: (000) 000-0000
and
59
(b) if to the Company, to:
Alderwoods Group, Inc.
000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxx Xxxxxx, Esq.
Fax: (000) 000-0000
with a copy to:
Xxxxx Day
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxxxx
Fax: (000) 000-0000
SECTION 9.3 INTERPRETATION. When a reference is made in this Agreement to
Exhibits, Company Disclosure Schedules or Parent Disclosure Schedules, such
reference shall be to an Exhibit, Company Disclosure Schedules or Parent
Disclosure Schedules to this Agreement unless otherwise indicated. The words
"include," "includes" and "including" when used herein shall be deemed in each
case to be followed by the words "without limitation." The phrases "the date of
this Agreement," "the date hereof," and terms of similar import, unless the
context otherwise requires, shall be deemed to refer to the date set forth in
the first paragraph of this Agreement. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
SECTION 9.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
SECTION 9.5 ENTIRE AGREEMENT. This Agreement and the documents, instruments
and other agreements delivered pursuant hereto, including the exhibits and the
schedules, including the Company Disclosure Schedules and Parent Disclosure
Schedules, constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, except for the Confidentiality Agreement, which shall continue in full
force and effect, and shall survive any termination of this Agreement or the
Closing, in accordance with its terms.
SECTION 9.6 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
parties; provided, however, that Parent may designate, by prior written notice
to the Company, another Subsidiary of Parent to be a constituent corporation in
lieu of Merger Sub, whereupon all references herein to Merger Sub shall be
deemed references to such other Subsidiary (except that all representations and
warranties with respect to Merger Sub as of the date of this Agreement shall be
deemed
60
representations and warranties with respect to such other Subsidiary as of the
date of such designation, so long as such substitution would not reasonably be
expected to have a Parent Material Adverse Effect). Any purported assignment in
violation of this Agreement will be void AB INITIO. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
SECTION 9.7 THIRD PARTY BENEFICIARIES. Except as set forth in Section 5.6
(Indemnification; Director and Officer Insurance), this Agreement (including the
documents and instruments referred to herein) is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
SECTION 9.8 GOVERNING LAW; JURISDICTION. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware without
reference to such state's principles of conflicts of law. Each of the parties
hereto irrevocably consents to the exclusive jurisdiction of the Chancery Court
of the State of Delaware and any federal court located within the State of
Delaware in connection with any matter based upon or arising out of this
Agreement or the matters contemplated herein, agrees that process may be served
upon them in any manner authorized by the laws of the State of Delaware for such
persons and waives and covenants not to assert or plead any objection that they
might otherwise have to such jurisdiction and such process.
SECTION 9.9 RULES OF CONSTRUCTION. The parties hereto agree that they have
been represented by counsel during the negotiation, preparation and execution of
this Agreement and, therefore, waive the application of any law, regulation,
holding or rule of construction providing that ambiguities in an agreement or
other document shall be construed against the party drafting such agreement or
document.
SECTION 9.10 WAIVER OF JURY TRIAL. THE PARTIES HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THAT ANY PARTY MAY HAVE TO TRIAL
BY JURY IN RESPECT OF ANY PROCEEDING, LITIGATION OR COUNTERCLAIM BASED ON, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. IF THE SUBJECT
MATTER OF ANY LAWSUIT IS ONE IN WHICH THE WAIVER OF JURY TRIAL IS PROHIBITED, NO
PARTY TO THIS AGREEMENT SHALL PRESENT AS A NON-COMPULSORY COUNTERCLAIM IN ANY
SUCH LAWSUIT ANY CLAIM BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT. FURTHERMORE, NO PARTY TO THIS AGREEMENT SHALL SEEK TO
CONSOLIDATE ANY SUCH ACTION IN WHICH A JURY TRIAL CANNOT BE WAIVED. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS
61
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.10.
SECTION 9.11 SEVERABILITY. In the event that any provision of this
Agreement, or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void, invalid or unenforceable, the
remainder of this Agreement shall continue in full force and effect and the
application of such provision to other persons or circumstances shall be
interpreted so as reasonably to effect the intent of the parties hereto. The
parties further agree to replace such illegal, void, invalid or unenforceable
provision of this Agreement with a legal, valid and enforceable provision that
shall achieve, to the extent possible, the economic, business and other purposes
of such illegal, void, invalid or unenforceable provision.
SECTION 9.12 SPECIFIC PERFORMANCE. The parties hereby acknowledge and agree
that the failure of any party to perform its agreements and covenants hereunder,
including its failure to take all actions as are necessary on its part to
consummate the Merger, will cause irreparable injury to the other parties, for
which damages, even if available, will not be an adequate remedy. Accordingly,
each party hereby consents to the issuance of injunctive relief by any court of
competent jurisdiction to compel performance of such party's obligations and to
the granting by any court of the remedy of specific performance of its
obligations hereunder, in addition to any other rights or remedies available
hereunder or at law or in equity.
[Signature page follows this page.]
62
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be duly executed by their respective officers as of the date first
above written.
SERVICE CORPORATION INTERNATIONAL ALDERWOODS GROUP, INC.
By: /s/ Xxxxxx X. Xxxx By: /s/Xxxx X. Xxxxxxx
---------------------------- -------------------------
Name: Xxxxxx X. Xxxx Name: Xxxx X. Xxxxxxx
Title: President and CEO Title: President and CEO
CORONADO ACQUISITION CORPORATION
By: /s/ Xxxxxx X. Xxxx
----------------------------
Name: Xxxxxx X. Xxxx
Title: President
