EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
by and between
WESTERBEKE CORPORATION
and
WESTERBEKE ACQUISITION CORPORATION
dated as of May 2, 2003
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TABLE OF CONTENTS
Page
AGREEMENT AND PLAN OF MERGER 1
ARTICLE I. THE MERGER 2
SECTION 1.01 The Merger 2
SECTION 1.02 Effective Time; Closing 2
SECTION 1.03 Effect Of The Merger 2
SECTION 1.04 Certificate Of Incorporation; Bylaws 3
SECTION 1.05 Directors And Officers 3
ARTICLE II. CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES;
DEPOSIT 3
SECTION 2.01 Effect On Capital Stock 3
SECTION 2.02 Payment Procedures 4
SECTION 2.03 Company Stock Options 6
SECTION 2.04 Shares Of Dissenting Stockholders 6
SECTION 2.05 Adjustment Of Merger Consideration 7
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 7
SECTION 3.01 Organization 7
SECTION 3.02 Capitalization 7
SECTION 3.03 Subsidiaries 8
SECTION 3.04 Authority Relative To This Agreement 8
SECTION 3.05 Consents And Approvals; No Violation 8
SECTION 3.06 Proxy Statement; Transaction Statement 9
SECTION 3.07 SEC Documents 9
SECTION 3.08 Compliance With Laws 10
SECTION 3.09 Litigation And Claims 10
SECTION 3.10 Employees And Employee Plans 10
SECTION 3.11 No Brokers 10
SECTION 3.12 Absence Of Certain Changes 11
SECTION 3.13 Absence Of Undisclosed Liabilities 11
SECTION 3.14 Title To Properties And Related Matters 11
SECTION 3.15 Fairness Opinion 11
SECTION 3.16 State Takeover Statutes 11
SECTION 3.17 Compliance with Certificate of Incorporation 12
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF ACQUISITION 12
SECTION 4.01 Organization 12
SECTION 4.02 Capitalization 12
SECTION 4.03 Authority Relative To This Agreement 12
SECTION 4.04 Consents And Approvals; No Violation 13
SECTION 4.05 Proxy Statement 13
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SECTION 4.06 Financing 13
SECTION 4.07 Acquisition's Operations 14
SECTION 4.08 Investigation by Acquisition 14
SECTION 4.09 No Knowledge Of Breach Or Inaccuracy 14
ARTICLE V. COVENANTS 15
SECTION 5.01 Certain Actions Pending Merger 15
SECTION 5.02 Proxy Statement 16
SECTION 5.03 Stockholders' Meeting 17
SECTION 5.04 Reasonable Efforts 18
SECTION 5.05 Inspection Of Records 18
SECTION 5.06 Notification Of Certain Matters 19
SECTION 5.07 Public Announcements 19
SECTION 5.08 Indemnification By Surviving Corporation 20
SECTION 5.09 Acquisition Proposals 21
SECTION 5.10 Other Actions 23
SECTION 5.11 Acquisitions 23
ARTICLE VI. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT
THE MERGER 23
SECTION 6.01 Stockholder Approval Of Agreement 24
SECTION 6.02 Certain Proceedings 24
ARTICLE VII. CONDITIONS TO OBLIGATIONS OF ACQUISITION 24
SECTION 7.01 Representations And Warranties True 24
SECTION 7.02 Performance Of Obligations 24
SECTION 7.03 Limit on Dissenting Shares 25
SECTION 7.04 Financing of Transaction 25
SECTION 7.05 Necessary Consents 25
SECTION 7.06 Resignation of Directors 25
ARTICLE VIII. CONDITIONS TO OBLIGATIONS OF THE COMPANY 25
SECTION 8.01 Representations And Warranties True 25
SECTION 8.02 Performance Of Obligations 25
SECTION 8.03 Necessary Consents 25
ARTICLE IX. TERMINATION, AMENDMENT AND WAIVER 26
SECTION 9.01 Termination 26
SECTION 9.02 Effect Of Termination 27
SECTION 9.03 Amendment 27
SECTION 9.04 Extension; Waiver 27
ARTICLE X. GENERAL PROVISIONS 28
SECTION 10.01 Non-Survival Of Representations, Warranties
And Agreements 28
SECTION 10.02 Expenses 28
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SECTION 10.03 Notices 29
SECTION 10.04 Definitions And Usage 30
SECTION 10.05 Accounting Terms 32
SECTION 10.06 Disclosure Schedules 32
SECTION 10.07 Severability 32
SECTION 10.08 Entire Agreement; Assignment 33
SECTION 10.09 Parties In Interest 33
SECTION 10.10 Specific Performance 33
SECTION 10.11 Governing Law 33
SECTION 10.12 Jurisdiction 33
SECTION 10.13 Headings 34
SECTION 10.14 Counterparts 34
SECTION 10.15 Construction 34
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 2, 2003 (this
"Agreement"), by and between Westerbeke Corporation, a Delaware corporation
(the "Company"), and Westerbeke Acquisition Corporation, a Delaware
corporation ("Acquisition").
RECITALS
WHEREAS, the Company has authority to issue (i) 5,000,000 shares of
Common Stock, par value $0.01 per share (the "Company Common Stock"),
1,954,809 of which are outstanding as of the date hereof, and (ii)
1,000,000 shares of preferred stock, par value $1.00 per share, none of
which are outstanding as of the date hereof;
WHEREAS, Acquisition is a Delaware corporation formed for the purpose
of entering into this Agreement and consummating the transactions
contemplated hereby;
WHEREAS, Acquisition has authority to issue (i) 200,000 shares of
common stock, par value $0.0001 per share (the "Acquisition Common Stock"),
7,500 of which are outstanding as of the date hereof, and (ii) 1,300,000
shares of preferred stock, par value $0.0001 per share (the "Acquisition
Preferred Stock" and together with the Acquisition Common Stock, the
"Acquisition Stock"), 1,090,850 of which are outstanding as of the date
hereof;
WHEREAS, Acquisition is the beneficial holder of 1,098,250 shares of
Company Common Stock, representing approximately 56.2% of the outstanding
shares of the Company Common Stock;
WHEREAS, Xxxx X. Xxxxxxxxxx ("Xx. Xxxxxxxxxx") is the "beneficial
owner" (as defined in Section 10.04) of (i) all the outstanding shares of
Acquisition Common Stock and (ii) all the outstanding shares of Acquisition
Preferred Stock;
WHEREAS, Xx. Xxxxxxxxxx has proposed to the Board of Directors of the
Company that Acquisition be merged with and into the Company in a
transaction in which shares of Company Common Stock beneficially owned by
persons other than Acquisition at the time of the Merger (as defined below)
will be converted into the right to receive three dollars ($3.00) per share
in cash;
WHEREAS, a special committee (the "Special Committee") of the Board
of Directors of the Company and the Board of Directors of the Company (with
Xx. Xxxxxxxxxx abstaining) have each approved and have each determined that
it is advisable, fair to, and in the best interests of, the Company and the
holders of Company Common Stock (other than Acquisition) to consummate the
merger (the "Merger") of Acquisition with and into the Company upon the
terms and subject to the conditions set forth in this Agreement and in
accordance with the General Corporation Law of the State of Delaware (the
"DGCL"); and
WHEREAS, the Board of Directors of Acquisition has approved the
Merger and this Agreement and determined that it is advisable, fair to, and
in the best interests of, Acquisition and the holders of Acquisition Stock
to consummate the Merger upon the terms and subject to the conditions set
forth in this Agreement and in accordance with the DGCL;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained and intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE I.
THE MERGER
SECTION 1.01 The Merger. Upon the terms and subject to the
conditions set forth in Articles VI, VII and VIII, and in accordance with
the provisions of the DGCL, at the Effective Time (as defined in Section
1.02), Acquisition shall be merged with and into the Company. As a result
of the Merger, the separate existence of Acquisition shall cease, and the
Company shall continue as the surviving corporation (the "Surviving
Corporation").
SECTION 1.02 Effective Time; Closing. The closing of the Merger
(the "Closing") shall take place (i) at the offices of Torys LLP, 000 Xxxx
Xxxxxx, Xxx Xxxx, XX 00000, at 9:00 a.m. New York City time on the next
business day (as defined in Section 10.04) after all of the conditions set
forth in Articles VI, VII and VIII have been satisfied or, subject to
applicable law, waived (other than those conditions that by their nature
are to be satisfied at the Closing, but subject to the satisfaction or
waiver of those conditions) in accordance with this Agreement or (ii) at
such other place and time and/or on such other date as Acquisition and the
Company may agree in writing (the "Closing Date"). Subject to the
provisions of this Agreement, as soon as practicable on the Closing Date,
the parties hereto shall file a certificate of merger (the "Certificate of
Merger") with the Secretary of State of the State of Delaware, in such form
as is required by, and executed in accordance with, the DGCL. The term
"Effective Time" means the date and time that the Merger shall become
effective, which shall be the date and time of the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware
(or such later time as may be agreed by the parties hereto and specified in
the Certificate of Merger).
SECTION 1.03. Effect Of The Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of
the DGCL. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, without further act or deed, all the
property, rights, privileges, powers and franchises of the Company and
Acquisition shall vest in the Surviving Corporation and all debts,
liabilities and duties of each of the Company and Acquisition shall become
the debts, liabilities and duties of the Surviving Corporation.
SECTION 1.04. Certificate Of Incorporation; Bylaws. At the
Effective Time, the Certificate of Incorporation and Bylaws of the Company
will be amended to be identical to the Certificate of Incorporation and
Bylaws, respectively, of Acquisition as in effect immediately
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prior to the Effective Time (except (i) that the name of the Surviving
Corporation will remain Westerbeke Corporation, (ii) that the incorporator
of the Surviving Corporation will not change in the Merger and (iii) as
otherwise provided in Section 5.08).
SECTION 1.05. Directors And Officers. The Company shall use its
best efforts to cause the directors of the Company immediately prior to the
Effective Time to submit their resignations to be effective as of the
Effective Time. The directors of Acquisition immediately prior to the
Effective Time shall be the initial directors of the Surviving Corporation,
each to hold office in accordance with the Certificate of Incorporation and
Bylaws of the Surviving Corporation, and the officers of Acquisition
immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until the earlier of their
resignation or removal or their respective successors are duly elected or
appointed (as the case may be) and qualified.
ARTICLE II.
CONVERSION OF SECURITIES;
EXCHANGE OF CERTIFICATES; DEPOSIT
SECTION 2.01. Effect On Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of
any Company Common Stock or any shares of Acquisition Stock:
(a) Conversion Of Company Common Stock. Each share of
Company Common Stock issued and outstanding immediately prior to the
Effective Time (other than (i) Dissenting Shares (as defined in Section
2.04), (ii) shares of Company Common Stock that are held in the treasury of
the Company or by any Subsidiary (as defined in Section 10.04) of the
Company and (iii) shares of Company Common Stock owned by Acquisition
(collectively, the "Excluded Shares")) shall be converted into the right to
receive from the Surviving Corporation three dollars ($3.00) in cash (the
"Merger Consideration") payable to the holder thereof, without interest
thereon, upon surrender of the certificate previously representing such
share of Company Common Stock as provided in Section 2.02(c). As of the
Effective Time, all shares of Company Common Stock shall cease to be
outstanding and shall automatically be canceled and retired and shall cease
to exist, and each certificate (a "Certificate") which immediately prior to
the Effective Time represented any such share of Company Common Stock
(except Excluded Shares) shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration and any
dividends or other distributions to which holders become entitled in
accordance with this Article II upon the surrender of such Certificate.
(b) Cancellation Of Excluded Shares. At the Effective Time,
the Excluded Shares issued and outstanding immediately prior to the
Effective Time shall be canceled and shall cease to exist without any
consideration payable therefor (subject, in the case of any Dissenting
Shares, to such rights as exist pursuant to the DGCL and Section 2.04).
(c) Conversion Of Acquisition Stock. Each share of
Acquisition Common Stock (or a fraction thereof) issued and outstanding
immediately prior to the Effective Time
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shall be converted into one share of Common Stock, par value $0.0001 per
share (or a fraction thereof), of the Surviving Corporation. Each share of
Acquisition Preferred Stock (or a fraction thereof) issued and outstanding
immediately prior to the Effective Time shall be converted into one share
of Preferred Stock, par value $0.0001 per share (or a fraction thereof), of
the Surviving Corporation.
SECTION 2.02. Payment Procedures.
(a) At and after the Effective Time, each Certificate
formerly representing shares of Company Common Stock (other than Excluded
Shares) shall represent only the right to receive the Merger Consideration,
without interest.
(b) Paying Agent. At the Effective Time, the Surviving
Corporation shall designate a bank or trust company to act as agent for the
holders of Certificates in connection with the Merger (the "Paying Agent")
to receive in trust the funds to which holders of Certificates shall become
entitled pursuant to Section 2.01(a) (the "Exchange Fund"). At the
Effective Time, the Surviving Corporation shall deposit or cause to be
deposited with the Paying Agent, for the benefit of the holders of
Certificates, the Exchange Fund in the amount of the aggregate
consideration to which such holders of Certificates (other than
Certificates formerly representing Excluded Shares) shall be entitled at
the Effective Time (or thereafter) pursuant to Section 2.01(a). All of the
fees and expenses of the Paying Agent shall be borne by the Surviving
Corporation. The Exchange Fund shall be invested by the Paying Agent in
obligations of, or guaranteed by, the United States of America, or any
agency thereof, and backed by the full faith and credit of the United
States of America, in commercial paper obligations rated A-1 or P-1 or
better by Xxxxx'x Investor Services, Inc. or Standard & Poors Corporation,
respectively, or in deposit accounts, certificates of deposit or bankers'
acceptances of, repurchase or reverse repurchase agreements with, or
Eurodollar time deposits purchased from commercial banks with capital,
surplus and undivided profits aggregating in excess of $1,000,000,000
(based on the most recent financial statements of such bank which are then
publicly available at the SEC or otherwise).
(c) Exchange Procedures. As promptly as practicable after
the Effective Time, the Surviving Corporation shall send or cause to be
sent to each holder of record of shares of Company Common Stock (other than
Excluded Shares) transmittal materials for use in exchanging Certificates
for the Merger Consideration. The Surviving Corporation shall cause any
check in respect of the Merger Consideration (together with any dividends
or other distributions to which holders become entitled in accordance with
this Article II upon surrender of such Certificate) which such person shall
be entitled to receive to be delivered to such person upon delivery to the
Paying Agent of Certificates formerly representing such shares of Company
Common Stock owned by such person. In the event of a transfer of ownership
of the shares of Company Common Stock that is not registered in the
transfer records of the Company, payment may be made to a person other than
the person in whose name the Certificate so surrendered is registered, if
such Certificate shall be properly endorsed or otherwise be in proper form
for transfer and the person requesting such payment shall pay any transfer
or other taxes required by reason of the payment to a person other than the
registered holder of such Certificate or establish to the satisfaction of
the Surviving Corporation that such
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tax has been paid or is not applicable. No interest will be paid on any
such cash to be paid pursuant to this Article II upon such delivery. The
Surviving Corporation shall be entitled to deduct and withhold from the
Merger Consideration otherwise payable to any holder of Certificates such
amounts (if any) as the Surviving Corporation determines are required to be
deducted or withheld under the Code (as defined in Section 10.04), or any
provision of United States, state or local tax law or any foreign tax law
applicable as a result of the residence, location, domicile or other facts
relating to such holder. To the extent that amounts are so withheld by the
Surviving Corporation, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of such
Certificates.
(d) Transfer Books, No Further Rights in Company Common
Stock. Subject to Section 2.04, at the Effective Time, holders of Company
Common Stock shall cease to be, and shall have no rights as, stockholders
of the Company, other than to receive any dividend or other distribution
with respect to the Company Common Stock with a record date occurring prior
to the Effective Time and payment of the Merger Consideration. From and
after the Effective Time, there shall be no transfers on the stock transfer
records of the Company of any shares of the Company Common Stock that were
outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation or
the Paying Agent for transfer, they shall be canceled and exchanged for the
Merger Consideration deliverable in respect thereof pursuant to this
Agreement in accordance with the procedures set forth in this Section 2.02
together with any dividends or other distributions to which the holder
becomes entitled in accordance with this Article II upon the surrender of
such Certificates.
(e) Lost, Stolen or Destroyed Certificates. 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 required by the Paying Agent or the
Surviving Corporation, the posting by such person of a bond in such amount
as the Paying Agent or the Surviving Corporation may reasonably direct as
indemnity against any claim that may be made against it with respect to
such Certificate, the Paying Agent or the Surviving Corporation, as the
case may be, shall issue in exchange for such lost, stolen or destroyed
Certificate the applicable Merger Consideration deliverable in respect
thereof pursuant to this Agreement and any dividends or other distributions
to which holders become entitled in accordance with this Article II upon
the surrender of such Certificate.
(f) Termination of Exchange Fund; No Liability. At any time
following six (6) months after the Effective Time, the Surviving
Corporation shall be entitled to require the Paying Agent to deliver to it
any funds (including any earnings received with respect thereto) which had
been made available to the Paying Agent and which have not been disbursed
to holders of Certificates, and thereafter such holders shall be entitled
to look to the Surviving Corporation (subject to abandoned property,
escheat or other similar laws) only as general creditors thereof with
respect to the payment of any Merger Consideration that may be payable upon
surrender of any Certificates such holder holds, as determined pursuant to
this Agreement, without any interest thereon. Notwithstanding the
foregoing, neither the Surviving Corporation nor the Paying Agent shall be
liable to any person or entity in respect of any Merger
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Consideration from the Exchange Fund delivered, in good faith, to a public
official pursuant to any applicable abandoned property, escheat or similar
law.
SECTION 2.03. Company Stock Options.
(a) The Company shall take all actions necessary to provide
that, at the Effective Time, each option to purchase a share of Company
Common Stock (an "Option" and, collectively, the "Options") outstanding and
unexercised as of the Effective Time granted pursuant to the 1986 Stock
Option Plan, the Supplemental Stock Option Plan and the 1996 Stock Option
Plan and any other equity-based plans or agreements of or with the Company
or any of its Subsidiaries providing for the granting of Options
(collectively, the "Company Stock Option Plans") is canceled, whether or
not then exercisable or vested and in consideration of such cancellation,
the Surviving Corporation shall pay to the Eligible Holder (as defined in
Section 10.04) of any such Option the excess (rounded to the nearest
$0.01), if any, of the Merger Consideration over such Option's exercise
price (the "Option Spread") multiplied by the number of shares of Company
Common Stock subject to such Option immediately prior to the Effective
Time. All payments made pursuant to this Section 2.03(a) shall be made as
soon as commercially practicable following the Effective Time, as reduced
by any applicable withholding taxes and other similar charges.
(b) As of the Effective Time, the Company shall terminate the
Company Stock Option Plans, and remove, or cause to be removed from each
and every other plan, program, agreement or arrangement of the Company any
right of any participant thereunder to invest in, or receive a distribution
in, Company Common Stock.
SECTION 2.04. Shares Of Dissenting Stockholders.
(a) Notwithstanding anything in this Agreement to the
contrary, any shares of Company Common Stock that are issued and
outstanding as of the Effective Time and that are held by a holder who has
not voted in favor of the Merger or consented thereto in writing and who
properly demands appraisal of such shares pursuant to, and who complies in
all respects with, Section 262 of the DGCL (the "Dissenting Shares"), shall
not be converted into the right to receive the Merger Consideration as
provided in Section 2.01(a), unless and until such holder shall have failed
to perfect, or shall have effectively withdrawn or lost, his or her right
to appraisal under the DGCL and instead shall be entitled to receive such
consideration as may be determined to be due with respect to such
Dissenting Shares pursuant to and subject to the requirements of Section
262 of the DGCL. If, after the Effective Time, any such holder shall have
failed to perfect or shall have effectively withdrawn or lost such right,
each share of such holder's Company Common Stock shall thereupon be deemed
to have been converted into and to have become, as of the Effective Time,
the right to receive, without interest, the Merger Consideration, in
accordance with Section 2.01(a) (together with any dividends or other
distributions to which holders of Certificates become entitled in
accordance with this Article II upon the surrender of such Certificates).
(b) Prior to the Effective Time, the Company shall give
Acquisition (i) prompt notice of any notices or demands (or withdrawals of
notices or demands) for appraisal
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or payment for shares of Company Common Stock received by the Company and
(ii) the opportunity to participate in all negotiations and proceedings
with respect to any such demands or notices. Prior to the Effective Time,
the Company shall not, without prior written consent of Acquisition, make
any payments, or settle, offer to settle or otherwise negotiate, with
respect to any such demands.
(c) Dissenting Shares, if any, after payments of fair value
in respect thereof have been made to the holders thereof pursuant to the
DGCL, shall, to the extent not canceled at the Effective Time, be canceled.
SECTION 2.05. Adjustment Of Merger Consideration. In the event
that, subsequent to the date of this Agreement but prior to the Effective
Time, the outstanding shares of Company Common Stock shall have been
changed into a different number of shares of a different class as a result
of a stock split, reverse stock split, stock dividend, subdivision,
reclassification, split, combination, exchange, recapitalization or other
similar transaction, the Merger Consideration and any other number or
amount which is based upon the number of shares of Company Common Stock
shall be appropriately adjusted.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Acquisition, except as
set forth in the Company Disclosure Schedule (as defined in Section 10.06)
and/or the Company Reports (as defined in Section 3.07), as follows:
SECTION 3.01. Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware, and, except where such failure would not reasonably be
expected to, either individually or in the aggregate, have a Material
Adverse Effect (as defined in Section 10.04) on the Company or, following
the Merger, the Surviving Corporation, has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Each of the Company's Subsidiaries is a
legal entity duly organized or formed, validly existing and in good
standing under the laws of its jurisdiction of incorporation or
organization, and, except where such failure would not reasonably be
expected to, either individually or in the aggregate, have a Material
Adverse Effect on the Company or, following the Merger, the Surviving
Corporation, has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being
conducted. The Company has heretofore made available to Acquisition
accurate and complete copies of the Certificate of Incorporation and Bylaws
(or other similar organizational and governing documents), as currently in
effect, of the Company and each of its Subsidiaries.
SECTION 3.02. Capitalization. The capitalization of the Company
appearing in the recitals of this Agreement is true and correct as of the
date hereof. All the issued and outstanding shares of Company Common Stock
are validly issued, fully paid and non-assessable and free from preemptive
rights. All outstanding Options have been issued pursuant
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to registration under or valid exemptions from the Securities Act (as
defined in Section 3.07) and all applicable state securities laws. Except
as set forth above, in the Company Disclosure Schedule and with respect to
the transactions contemplated by this Agreement, as of the date hereof, (x)
there are no shares of capital stock of the Company authorized, issued,
reserved for issuance or outstanding, (y) the Company and its Subsidiaries
have not issued or agreed to issue any warrants, options, equity
equivalents, interests in ownership or earnings of the Company or other
similar equity rights (including phantom stock or stock appreciation
rights), pre-emptive rights, agreements, arrangements or commitments of any
character obligating the Company or any of its Subsidiaries to issue,
transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or voting debt of, or other equity interest in, the Company
or any of its Subsidiaries or securities convertible into or exchangeable
for such shares or equity interests and (z) there are no outstanding
contractual obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any Company Common Stock, or
capital stock of the Company or any Subsidiary or affiliate of the Company.
SECTION 3.03. Subsidiaries. The Company Reports include a list of
all persons deemed to be a material Subsidiary of the Company or of any of
its Subsidiaries together with each such entity's jurisdiction of
organization. All of the outstanding shares of capital stock or other
securities evidencing ownership of the Company's Subsidiaries are validly
issued, fully paid and non-assessable and are owned by the Company or its
wholly-owned Subsidiaries free and clear of all pledges, claims, liens,
charges, options, encumbrances, mortgages, pledges or security interests of
any kind or nature whatsoever (collectively, "Liens") with respect thereto.
SECTION 3.04. Authority Relative To This Agreement. The Company has
the requisite corporate power to enter into this Agreement and to carry out
its obligations hereunder. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by the Board of Directors of the Company and the Special
Committee and, except for the adoption of this Agreement in accordance with
the DGCL and this Agreement by the stockholders of the Company, no other
corporate proceeding on the part of the Company is necessary to authorize
this Agreement and the transactions contemplated hereby. This Agreement
has been duly executed and delivered by the Company and constitutes a valid
and binding obligation of the Company enforceable against it in accordance
with its terms, subject to (i) adoption of this Agreement in accordance
with the DGCL and this Agreement by the stockholders of the Company and
(ii) applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles
of equity, including principles of commercial reasonableness, good faith
and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
SECTION 3.05. Consents And Approvals; No Violation. Except for (a)
applicable requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), (b) filings with various state blue sky authorities
and (c) filing and recordation of appropriate merger documents as required
by the DGCL and the corporate law of the other states in which the Company
and Acquisition are qualified to do business, no filing with or notice to,
and no permit, authorization, consent or approval of, any public body or
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Governmental Entity or any other person, the absence of which would
reasonably be expected to, either individually or in the aggregate, have a
Material Adverse Effect on the Company or, following the Merger, the
Surviving Corporation, is necessary for the execution and delivery by the
Company of this Agreement or the consummation by the Company of the
transactions contemplated by this Agreement. None of the execution,
delivery and performance by the Company of this Agreement nor the
consummation by the Company of the transactions contemplated hereby nor
compliance by the Company with any of the provisions hereof will (i)
conflict with or result in any breach of any provision of the Certificate
of Incorporation or Bylaws of the Company or similar governance or
organizational documents of any of the Company's Subsidiaries, (ii) result
in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
lease agreement or other instrument or obligation to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any of their respective properties or assets may be bound
or (iii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Company or any of its Subsidiaries or any of
their respective properties or assets, except, with respect to clauses (ii)
and (iii), for such violations, breaches or defaults which, either
individually or in the aggregate, would not be reasonably expected to have
a Material Adverse Effect on the Company or, following the Merger, the
Surviving Corporation.
SECTION 3.06. Proxy Statement; Transaction Statement. None of the
information supplied by the Company for inclusion or incorporation by
reference in (i) the Proxy Statement (as defined in Section 5.02), (ii) the
Transaction Statement (as defined in Section 5.02) or (iii) any other
document required to be filed with the Securities and Exchange Commission
(the "SEC") or any other regulatory authority in connection with the
transactions contemplated by this Agreement will, at the respective times
filed with the SEC or any other regulatory authority and, in addition, in
the case of the Proxy Statement, the mailing of the Proxy Statement or any
amendment or supplement thereto, at the time of the meeting of the
stockholders to which the Proxy Statement relates and at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are
made, not misleading. The Proxy Statement, the Transaction Statement and
any other SEC filing in connection with the Merger will comply (with
respect to the Company) in all material respects with the applicable
requirements of the Exchange Act and the rules and regulations thereunder.
No representation is made with respect to any information supplied by
Acquisition (or any affiliate or associate thereof) for inclusion or for
incorporation by reference in any filing by the Company with the SEC.
SECTION 3.07. SEC Documents. Each of the Company and its
Subsidiaries has filed all forms, reports, registration statements, proxy
statements, schedules and documents required to be filed by it with the SEC
since December 31, 1997 through the date hereof (collectively, the "Company
Reports"). As of their respective dates, the Company Reports (i) complied
as to form in all material respects with the applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act"), the Exchange Act
and the rules and
9
regulations thereunder, and (ii) did not contain any untrue statement of
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. The most recent consolidated balance sheet (the
"Balance Sheet") of the Company and its consolidated Subsidiaries included
in or incorporated by reference into the Company Reports (including the
related notes and schedules) fairly presents the consolidated financial
position of the Company and its consolidated Subsidiaries as of its date,
and each of the consolidated statements of income, retained earnings and
cash flows of the Company and its consolidated Subsidiaries included in or
incorporated by reference into the Company Reports (including any related
notes and schedules) fairly presents the consolidated results of
operations, retained earnings or cash flows, as the case may be, of the
Company and its consolidated Subsidiaries for the periods set forth
therein, in each case in accordance with generally accepted accounting
principles ("GAAP") consistently applied during the periods involved,
except as may be noted therein (subject, in the case of unaudited interim
statements, to normal and recurring year-end adjustments and exceptions
permitted by Form 10-Q).
SECTION 3.08. Compliance With Laws. Each of the Company and its
Subsidiaries has complied and is in compliance with all applicable
statutes, regulations, rules, orders, ordinances, judgments, decrees,
permits, franchises, licenses and other laws of the United States of
America, all state, local and foreign governments and other governmental
bodies and authorities, and agencies of any of the foregoing ("Governmental
Entity") to which it is subject, except to the extent non-compliance would
not reasonably be expected, either individually or in the aggregate, to
have a Material Adverse Effect on the Company or, following the Merger, the
Surviving Corporation.
SECTION 3.09. Litigation And Claims. None of the Company or its
Subsidiaries is subject to any continuing order of, or written agreement or
memorandum of understanding with, or continuing material investigation by,
any Governmental Entity or any judgment, order, writ, injunction, decree,
or award of any Governmental Entity or any court or arbitrator, and there
is no claim, action, suit, litigation, proceeding, arbitration,
investigation or controversy affecting the Company or its Subsidiaries or,
to the "knowledge" (as defined in Section 10.04) of the Company,
threatened, nor is there any valid basis known to the Company or its
Subsidiaries for any such claim, action, suit, litigation, proceeding,
arbitration, investigation or controversy except for matters which would
not reasonably be expected, either individually or in the aggregate, to
have a Material Adverse Effect on the Company or, following the Merger, the
Surviving Corporation.
SECTION 3.10. Employees And Employee Plans.
(a) Each "employee benefit plan" (within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), and all severance, change in control or employment
plans, programs or agreements, and vacation, incentive, bonus, stock
option, stock purchase, and restricted stock plans, programs or policies
and all other employee benefit plans, agreements, programs or other
arrangements sponsored or maintained by any of the Company or its
Subsidiaries, in which present or former
10
employees thereof participate or any of the Company or its Subsidiaries has
any present or future liability (collectively, the "Company Plans") that is
intended to be qualified within the meaning of Section 401 of the Code has
received a favorable determination letter as to its qualification, and
nothing has occurred that could reasonably be expected to affect such
qualification.
(b) No Company Plan exists that could result in the payment
to any present or former employee of any of the Company or its Subsidiaries
of any money or other property or accelerate or provide any other rights or
benefits to any present or former employee of any of the Company or its
Subsidiaries as a result of the transaction contemplated by this Agreement.
SECTION 3.11. No Brokers. Except pursuant to the engagement letter
(a copy of which has been delivered to Acquisition) among the Company, the
Special Committee and Xxxxx Xxxxxx Xxxx, Inc., financial advisor to the
Special Committee (the "Special Committee Financial Advisor"), no broker,
finder or investment banker is entitled to any brokerage, finder's or other
similar fee or commission in connection with the Merger based upon
arrangements made by or on behalf of any of the Company or its
Subsidiaries.
SECTION 3.12. Absence Of Certain Changes. Since October 26, 2002,
each of the Company and its Subsidiaries, as applicable, has conducted its
business only in the ordinary course of such business, and there has not
been any change in or effect on the business, earnings, assets,
liabilities, financial or other condition or results of operations of any
of the Company and its Subsidiaries that has had or would reasonably be
expected, either individually or in the aggregate, to have a Material
Adverse Effect on the Company or, following the Merger, the Surviving
Corporation.
SECTION 3.13. Absence Of Undisclosed Liabilities. None of the
Company or its Subsidiaries has any liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, whether due or to
become due, except (a) liabilities or obligations reflected or reserved
against or disclosed in the Company Reports filed prior to the date hereof
and (b) liabilities or obligations which would not reasonably be expected
to, either individually or in the aggregate, have a Material Adverse Effect
on the Company or, following the Merger, the Surviving Corporation.
SECTION 3.14. Title To Properties And Related Matters. The Company
or one of its Subsidiaries (i) has good and marketable title to all the
properties and assets reflected in the Balance Sheet as being owned by the
Company or one of its Subsidiaries or acquired after the date thereof which
are material to the Company's business on a consolidated basis (except
properties sold or otherwise disposed of since the date thereof in the
ordinary course of business), free and clear of all Liens, except (A)
statutory Liens securing payments not yet due and (B) such imperfections or
irregularities of title and Liens as do not materially affect the use of
the properties or assets subject thereto or affected thereby or otherwise
materially impair business operations at such, and (ii) is the lessee of
all leasehold estates reflected in the Company Reports or acquired after
the date thereof which are material to the Company's
11
business on a consolidated basis (except for leases that have expired by
their terms since the date thereof) and is in possession of the properties
purported to be leased thereunder, and each such lease is valid without
default thereunder by the lessee or, to the knowledge of the Company, the
lessor, except in the case of clauses (i) and (ii) above as would not
reasonably be expected, either individually or in the aggregate, to have a
Material Adverse Effect on the Company or, following the Merger, the
Surviving Corporation.
SECTION 3.15. Fairness Opinion. The Special Committee has received
an opinion of the Special Committee Financial Advisor that the Merger
Consideration is fair, from a financial point of view, to the Company's
stockholders (other than Acquisition).
SECTION 3.16. State Takeover Statutes. The Board of Directors of
the Company and the Special Committee have approved this Agreement and the
consummation of the transactions contemplated hereby and such approval
constitutes approval of the Merger and the other transactions contemplated
hereby by the Board of Directors of the Company under the provisions of
Section 203 of the DGCL such that the restrictions on business combinations
set forth in Section 203 do not apply to the Merger and the other
transactions contemplated hereby or thereby.
SECTION 3.17. Compliance with Certificate of Incorporation. The
Board of Directors of the Company and the Special Committee have approved
this Agreement and the consummation of the transactions contemplated
hereby, and such approval constitutes approval of the Merger and the other
transactions contemplated thereby by the Board of Directors of the Company
for purposes of the provisions regarding business combinations contained in
the Certificate of Incorporation of the Company such that such provisions
do not apply to the Merger and the other transactions contemplated hereby
or thereby.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF ACQUISITION
Acquisition hereby represents and warrants to the Company, except as
set forth in the Acquisition Disclosure Schedule (as defined in Section
10.06), as follows:
SECTION 4.01. Organization. Acquisition is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now
being conducted. Acquisition has heretofore delivered to the Company
accurate and complete copies of the certificate of incorporation and bylaws
(or other similar organizational and governing documents), as currently in
effect, of Acquisition. Acquisition is the holder of record of 1,098,250
shares of Company Common Stock, and such shares are held by it free and
clear of any lien or encumbrance.
SECTION 4.02. Capitalization. The capitalization of Acquisition
appearing in the recitals to this Agreement is true and correct as of the
date hereof. All of the issued and outstanding shares of Acquisition Stock
are validly issued, fully paid and non-assessable and
12
free from preemptive rights. Xx. Xxxxxxxxxx is the owner of (i) all of the
outstanding shares of Acquisition Common Stock and (ii) all of the
outstanding shares of Acquisition Preferred Stock.
SECTION 4.03. Authority Relative To This Agreement. Acquisition has
the requisite corporate power to enter into this Agreement and to carry out
its obligations hereunder. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by the Board of Directors of Acquisition and the stockholders of
Acquisition, no other corporate proceeding on the part of Acquisition is
necessary to authorize this Agreement and the transactions contemplated
hereby. This Agreement has been duly executed and delivered by Acquisition
and constitutes a valid and binding obligation of Acquisition enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar
laws affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in a proceeding at law or in equity).
SECTION 4.04. Consents And Approvals; No Violation. Except for (a)
applicable requirements of the Exchange Act, (b) filings with various state
blue sky authorities and (c) filing and recordation of appropriate merger
documents as required by the DGCL and the corporate law of the other states
in which the Company and Acquisition are qualified to do business, no
filing with or notice to, and no permit, authorization, consent or approval
of, any public body or Governmental Entity, the absence of which would be
reasonably expected to, either individually or in the aggregate, have a
Material Adverse Effect on Acquisition or, following the Merger, the
Surviving Corporation, is necessary for the execution and delivery by
Acquisition of this Agreement or the consummation by Acquisition of the
transactions contemplated by this Agreement. None of the execution,
delivery and performance by Acquisition of this Agreement, the consummation
by Acquisition of the transactions contemplated hereby, or compliance by
Acquisition with any of the provisions hereof will (i) conflict with or
result in any breach of any provision of the Certificate of Incorporation
or Bylaws of Acquisition, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, lease agreement or other
instrument or obligation to which Acquisition is a party or by which
Acquisition or any of its properties or assets may be bound or (iii)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Acquisition or any of its properties or assets, except, with
respect to clauses (ii) and (iii), for such violations, breaches or
defaults which, either individually or in the aggregate, would not be
reasonably expected to have a Material Adverse Effect on Acquisition or,
following the Merger, the Surviving Corporation.
SECTION 4.05. Proxy Statement. None of the information supplied or
to be supplied by Acquisition for inclusion in (i) the Proxy Statement,
(ii) the Transaction Statement or (iii) any other document required to be
filed with the SEC or any other regulatory authority
13
in connection with the transactions contemplated by this Agreement, will at
the respective times filed with the SEC or any other regulatory authority
and, in addition, in the case of the Proxy Statement, at the time of the
mailing of the Proxy Statement or any amendment or supplement thereto, at
the time of the meeting of the stockholders to which the Proxy Statement
relates and at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Proxy
Statement, the Transaction Statement and any other SEC filing in connection
with the Merger will comply (with respect to Acquisition and Xx.
Xxxxxxxxxx) in all material respects, as to form, with the applicable
requirements of the Exchange Act, and the rules and regulations thereunder.
SECTION 4.06. Financing. (a) Third-Party Commitment Letter.
Acquisition has delivered to the Company a true and complete executed
commitment letter dated as of March 6, 2003 from Xxxxx Brothers Xxxxxxxx &
Co. (the "Lender"), pursuant to which the Lender has committed to provide
debt financing (the "Financing") to the Surviving Corporation at the
Effective Time on the terms and subject to the conditions set forth in such
commitment letter (the "Commitment Letter").
(b) Financing Generally. The obligations of the Lender to
consummate the Financing is not subject to any condition other than set
forth in the Commitment Letter. Acquisition is not aware of any facts or
circumstances that would cause Acquisition or the Lender to be unable to
consummate the Financing in accordance with the terms of the Commitment
Letter. Acquisition agrees to notify promptly the Company if at any time
prior to the Effective Time Acquisition no longer believes in good faith
that it will be able to consummate the Financing on substantially the terms
described in the Commitment Letter. As of the date hereof, the Commitment
Letter is in full force and effect and has not been amended in any material
respect. To the knowledge of Acquisition, the Financing will be sufficient
to enable the Surviving Corporation to pay the Merger Consideration and to
pay all fees and expenses related to the Merger. The financing fee and
other fees that are due and payable on or prior to the date hereof under
the Commitment Letter have been paid in full.
SECTION 4.07. Acquisition's Operations. Acquisition was formed
solely for the purpose of engaging in the transactions contemplated hereby
and has not engaged in any business activities or conducted any operations
other than in connection with the transactions contemplated hereby.
SECTION 4.08. Investigation by Acquisition. Acquisition has
conducted its own independent review and analysis of the businesses,
assets, condition, operations and prospects of the Company and its
Subsidiaries. In entering into this Agreement, Acquisition has relied
solely upon its own investigation and analysis and upon the
representations, warranties, covenants and agreements of the Company set
forth in this Agreement, and Acquisition:
(a) acknowledges that, other than as set forth in this
Agreement, none of the Company, its Subsidiaries or any of their respective
directors, officers, employees, affiliates, agents or representatives makes
any representation or warranty, either express or implied, as to
14
the accuracy or completeness of any of the information provided or made
available to Acquisition or its agents or representatives; and
(b) agrees, to the fullest extent permitted by law that,
except for the liability of the Company in accordance with the terms of
this Agreement for the representations and warranties of the Company
included in this Agreement and except with respect to fraud, none of the
Company, its Subsidiaries or any of their respective directors, officers,
employees, stockholders, affiliates, agents or representatives shall have
any liability or responsibility whatsoever to Acquisition on any basis
(including without limitation in contract, tort or otherwise) based upon
any information provided or made available, or statements made, to
Acquisition.
SECTION 4.09. No Knowledge Of Breach Or Inaccuracy. Neither
Acquisition nor any director, officer, shareholder, employee or agent of
Acquisition has knowledge of any breach of, or inaccuracy in, any of the
representations or warranties of the Company contained in this Agreement,
except such breaches and inaccuracies as would not reasonably be expected,
either individually or in the aggregate, to have a Material Adverse Effect
on Acquisition or, following the Merger, the Surviving Corporation.
ARTICLE V.
COVENANTS
SECTION 5.01. Certain Actions Pending Merger. Prior to the
Effective Time, neither the Board of Directors of the Company nor any
committee thereof shall approve any action that would result in the Company
or any of its Subsidiaries taking any of the following actions, except with
the prior written consent of Acquisition:
(a) a split, combination or reclassification of the
outstanding shares of Company Common Stock, or a declaration, set-aside or
payment of any dividend payable in cash, stock or property or any
distribution with respect to the outstanding shares of Company Common
Stock, or a redemption, purchase or other acquisition (or agreement to
redeem, purchase or otherwise acquire), directly or indirectly, of any
shares of Company Common Stock;
(b) an issuance, grant or agreement to issue or grant any
additional capital stock of the Company or any of its Subsidiaries or any
options, warrants or rights of any kind to acquire any shares of any such
capital stock or any securities convertible into or exchangeable for such
capital stock or any right or security the value of which is based on the
value of any such capital stock, or an amendment, waiver or change in the
terms of any Option;
(c) the entering into any agreement, understanding or
arrangement with respect to the voting of capital stock of the Company;
15
(d) the incurrence of (i) any indebtedness for borrowed money
or the assumption, guarantee, endorsement or any other accommodation to
become responsible for the long-term indebtedness of any other person
(other than deposits and similar liabilities, indebtedness of the Company's
Subsidiaries to the Company and indebtedness under existing lines of credit
and renewals or extensions thereof), other than in the ordinary course of
business consistent with past practice, or (ii) any capital expenditures,
obligations or liabilities, other than those budgeted as of the date hereof
or in the ordinary course of business consistent with past practice;
(e) the sale, transfer, mortgage, encumbrance or other
disposition of any of its material properties or assets, including capital
stock in any Subsidiary of the Company, to any person other than a direct
or indirect wholly-owned Subsidiary, or the cancellation or release of any
indebtedness to any such person or any claims held by any such person,
except (i) sales of inventory or immaterial assets in the ordinary course
of business consistent with past practice or (ii) pursuant to contracts or
agreements in force at the date of this Agreement;
(f) except for transactions in the ordinary course of
business consistent with past practice, the making of any material
investment either by purchase of stock or securities, contributions to
capital, property transfers, or purchase of any property or assets of any
other person other than a wholly-owned Subsidiary;
(g) except for transactions in the ordinary course of
business consistent with past practice, the entering into, or termination
of, any material lease, contract or agreement, or making of any material
change in any of its material leases, contracts or agreements, other than
renewals of leases, contracts or agreements without material changes of
terms;
(h) other than in the ordinary course of business consistent
with past practice or as required by law or contracts in effect as of the
date hereof set forth in the Company Disclosure Schedule, an increase in
any manner of the wages, salaries, compensation, pension or other fringe
benefits or perquisites of any current or former employees, consultants or
directors of the Company or any of its Subsidiaries, or the vesting,
funding or payment of any pension or retirement allowance other than as
required by any existing Company Plans to any such current or former
employees, consultants or directors or the entering into, amendment,
termination or commitment to any pension, retirement, profit-sharing or
welfare benefit plan or agreement or employment, severance, consulting,
retention, change in control, termination, deferred compensation or
incentive pay agreement with or for the benefit of any current or former
employee, consultant or director or, except as expressly contemplated by
this Agreement, the acceleration of the vesting, funding or payment of any
compensation payment or benefit (except as contemplated in existing Company
Plans);
(i) the settlement of any material claim, action or
proceeding involving money damages or a waiver or release of any material
rights or claims;
(j) the change in its methods of accounting in effect at
October 26, 2002, except as required by changes in GAAP, or a change in any
of its methods of reporting material items of income and deductions for tax
purposes from those employed in the
16
preparation of the tax returns of the Company for the taxable years ending
October 26, 2002 and October 27, 2001, except as required by changes in law
or regulation or as set forth in the Company Disclosure Schedule;
(k) the adoption or implementation of any amendment to its
Certificate of Incorporation or Bylaws (or similar documents) or any plan
of consolidation, merger or reorganization (other than as contemplated in
Section 1.04);
(l) the taking of any action that would, or would be
reasonably likely to, result in any of the representations or warranties of
the Company set forth in this Agreement not being true in all material
respects or in any of the conditions to the Merger set forth in Articles
VI, VII and VIII not being satisfied, except, in every case, as may be
required by applicable law; or
(m) the entering into any agreement to, or the making of any
commitment to, take any of the actions prohibited by this Section 5.01.
SECTION 5.02. Proxy Statement.
(a) Acquisition and the Company shall cooperate in preparing
and the Company shall, as soon as practicable, file with the SEC (after
providing Acquisition with a reasonable opportunity to review and comment
thereon) (i) preliminary proxy materials relating to the Company Meeting
(as defined in Section 5.03) (together with any amendments thereof or
supplements thereto, the "Proxy Statement"), (ii) the transaction statement
on Schedule 13E-3 required by the Exchange Act (together with any
amendments thereof or supplements thereto, the "Transaction Statement") and
(iii) any other document required to be filed with the SEC or any other
regulatory authority in connection with the transactions contemplated by
this Agreement and shall use its reasonable best efforts to respond to any
comments of the SEC (after providing Acquisition with a reasonable
opportunity to review and comment thereon) and to cause the Proxy Statement
and the Transaction Statement to be mailed to the Company's stockholders as
promptly as practicable after responding to all such comments to the
satisfaction of the SEC staff. The Company and Acquisition shall promptly
notify one another of the receipt of any comments from the SEC and of any
request by the SEC for amendments or supplements to the Proxy Statement or
the Transaction Statement or for additional information and shall supply
one another with copies of all correspondence between it and any of its
representatives, on the one hand, and the SEC on the other hand, with
respect to the Proxy Statement, the Transaction Statement or the
transactions contemplated hereby. If at any time prior to the Company
Meeting there shall occur any event that should be set forth in an
amendment or supplement to the Proxy Statement or the Transaction
Statement, the Company shall promptly prepare and (if appropriate) mail to
its stockholders such an amendment or supplement; provided that no such
amendment or supplement will be made by the Company without providing
Acquisition a reasonable opportunity to review and comment thereon.
(b) Subject to and except under the circumstances described
in Section 5.03(b), the Company shall include in the Proxy Statement and
the Transaction Statement the
17
recommendation of the Company's Board of Directors (acting subsequent to
the recommendation of the Special Committee) that approval of this
Agreement by the stockholders of the Company is advisable and that the
stockholders of the Company (other than Acquisition) vote in favor of
adoption of this Agreement.
SECTION 5.03. Stockholders' Meeting.
(a) The Company shall, consistent with applicable law, call,
give notice of, convene and hold a meeting of its stockholders (the
"Company Meeting") as promptly as practicable following the date hereof for
the purpose of voting upon the adoption of this Agreement. The Company,
through its Board of Directors (acting subsequent to the recommendation of
the Special Committee), shall (subject to the provisions of Section
5.03(b)) recommend to its stockholders that they vote in favor of adoption
of this Agreement, which recommendation shall, except under the
circumstances described in Section 5.03(b), be contained in the Proxy
Statement and the Transaction Statement.
(b) Neither the Board of Directors of the Company nor any
committee thereof (including the Special Committee) shall, except as
expressly permitted by this Section 5.03(b) or Section 5.09, (i) withdraw,
qualify or modify, or propose publicly to withdraw, qualify or modify, its
approval or recommendation of the approval of this Agreement and the
transactions contemplated hereby or (ii) take any other action or make any
other statement in connection with the Company Meeting inconsistent with
such recommendation (collectively, an "Adverse Company Board
Recommendation"). Notwithstanding the foregoing, in the event that prior
to the satisfaction of the conditions set forth in Section 6.01, the
Special Committee determines in good faith, after consultation with outside
counsel, that the failure to do so would be inconsistent with its fiduciary
duties to stockholders of the Company (other than Acquisition) under
applicable law, then the Board of Directors of the Company (acting
subsequent to the recommendation of the Special Committee) or the Special
Committee may make an Adverse Company Board Recommendation.
(c) Notwithstanding any Adverse Company Board Recommendation,
this Agreement shall be submitted to the stockholders of the Company at the
Company Meeting for the purpose of voting upon this Agreement and nothing
contained herein shall be deemed to relieve the Company of such obligation.
(d) Acquisition agrees to vote all shares of Company Common
Stock owned by it in favor of approval of the Merger and adoption of this
Agreement at the Company Meeting and to take such other actions as shall be
necessary or appropriate to effectuate as promptly as practicable the
Merger in accordance with Section 251 of the DGCL, on the terms and subject
to the conditions set forth in this Agreement.
SECTION 5.04. Reasonable Efforts. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to (i) use
its reasonable efforts to take, or cause to be taken, all action, and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations or required to be taken by any Governmental
Entity or otherwise to consummate and make effective the transactions
contemplated by this
18
Agreement as promptly as practicable, (ii) obtain from any Governmental
Entity any consents, licenses, permits, waivers, approvals, authorizations
or orders required to be obtained or made by Acquisition, the Company or
any of the Company's Subsidiaries in connection with the authorization,
execution and delivery of this Agreement and the consummation of the
Merger, and (iii) as promptly as practicable, make all necessary filings,
and thereafter make any other required submissions, with respect to this
Agreement and the Merger required under (A) the Exchange Act, and any other
applicable federal or state securities laws, and (B) any other applicable
law; provided, however, that Acquisition and the Company shall cooperate
with each other in connection with the making of all such filings,
including providing copies of all such documents to the non-filing party
and its advisors prior to filing and, if requested, to accept all
reasonable additions, deletions or changes suggested in connection
therewith. The Company and Acquisition shall use reasonable best efforts
to furnish to each other all information required for any application or
other filing to be made pursuant to the rules and regulations of any
applicable law (including all information required to be included in the
Proxy Statement and the Transaction Statement) in connection with the
transactions contemplated by this Agreement. Acquisition shall use its
reasonable efforts to obtain the debt financing referred to in Section
7.04. In case at any time after the Effective Time, any further action is
necessary or desirable to carry out the purposes of this Agreement, the
proper officers and directors of each corporation party to this Agreement
shall take all such necessary or desirable action.
SECTION 5.05. Inspection Of Records. From the date hereof to the
Effective Time, the Company shall (i) allow all designated officers,
stockholders, attorneys, financial advisors, accountants and other
representatives of Acquisition reasonable access at all reasonable times to
the offices, records and files, correspondence, audits and properties, as
well as to all information relating to commitments, contracts, titles and
financial position, or otherwise pertaining to the business and affairs, of
the Company and its Subsidiaries, (ii) furnish to Acquisition and its
stockholders, counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other information as
such persons may reasonably request and (iii) instruct the employees,
counsel and financial advisors of the Company and its Subsidiaries to
cooperate with Acquisition in its investigation of the business of the
Company and its Subsidiaries. No investigation by any party, whether prior
to the execution of this Agreement or pursuant to this Section 5.05, shall
affect any representation or warranty in this Agreement of any party hereto
or any condition to the obligations of the parties hereto.
SECTION 5.06. Notification Of Certain Matters. From and after the
date of this Agreement until the Effective Time, each party hereto shall
promptly notify the other party hereto of:
(a) any change or event, or series of changes or events,
having, or which would reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on such party or, following the
Merger, the Surviving Corporation, or would be reasonably likely to cause
any of the conditions in Articles VI, VII and VIII not to be satisfied or
to cause the satisfaction thereof to be materially delayed;
19
(b) the receipt of any material notice or other material
communication from any person alleging that the consent of such person is
or may be required in connection with the transactions contemplated hereby;
(c) the receipt of any material notice or other material
communication from any Governmental Entity in connection with the
transactions contemplated hereby; and
(d) any actions, suits, claims, investigations or proceedings
commenced or, to the knowledge of the party, threatened against Acquisition
or the Company which seeks to prohibit or prevent consummation of the
transactions contemplated hereby;
in each case, to the extent such event or circumstance is or becomes known
to the party required to give such notice; provided, however, that the
delivery of any notice pursuant to this Section 5.06 shall not be deemed to
be an amendment of this Agreement or the Company Disclosure Schedule, as
the case may be, and shall not cure any breach of any representation or
warranty requiring disclosure of such matter prior to the date of this
Agreement.
SECTION 5.07. Public Announcements. Acquisition and the Company
shall use their reasonable efforts to consult with each other before
issuing any press release or otherwise making any public statements with
respect to this Agreement or any of the transactions contemplated hereby.
Prior to the Closing, Acquisition and the Company shall not issue any such
press release or make any such public statement without the prior consent
of the other party (which consent shall not be unreasonably withheld or
delayed), except as may be required by law or regulation or any listing
agreement with the Nasdaq National Market or any other securities exchange
to which the Company is a party and, in such case, shall use their
reasonable efforts to consult with the other party hereto prior to such
release or statement being issued. The parties shall agree on the text of
a joint press release by which the parties will announce the execution of
this Agreement, and the Company shall file promptly a copy of this
Agreement with the SEC as an exhibit to a Current Report on Form 8-K.
SECTION 5.08. Indemnification By Surviving Corporation.
(a) From and after the Effective Time, the Surviving
Corporation shall indemnify, defend and hold harmless each person who is
now an officer or director of the Company or a Subsidiary of the Company
against all losses, claims, damages, costs, expenses or liabilities or in
connection with any claim, action, suit, proceeding or investigation
arising out of the fact that such person is or was an officer or director
of the Company or a Subsidiary of the Company (or out of any action taken
by any such person on behalf of the Company or a Subsidiary of the
Company), pertaining to any matter existing or occurring on or prior to the
Effective Time (including the transactions contemplated by this Agreement),
whether asserted or claimed prior to, or on or after, the Effective Time.
In each case such indemnification shall be to the full extent permitted
under applicable law (and the Surviving Corporation will pay expenses in
advance of the final disposition of any such action or proceeding to each
such director or officer of the Company or a Subsidiary of the Company
seeking indemnification hereunder to the full extent permitted by law).
20
(b) For a period of six years after the Effective Time, the
Surviving Corporation shall maintain officers' and directors' liability
insurance for all persons currently covered under the Company's officers'
and directors' liability insurance policies, in their capacities as
officers and directors, on terms substantially no less advantageous to the
covered persons than such existing insurance, pertaining to any matter
existing or occurring on or prior to the Effective Time (including the
transactions contemplated by this Agreement), whether asserted or claimed
prior to, or on or after the Effective Time; provided, however, that the
Surviving Corporation shall not be required to maintain or procure such
coverage to pay an annual premium in excess of 200% (the "Cap") of the
current annual premium paid by the Company for its existing coverage; and
provided, further, that if equivalent coverage cannot be obtained, or can
be obtained only by paying an annual premium in excess of the Cap, the
Surviving Corporation shall only be required to obtain as much coverage as
can be obtained by paying an annual premium equal to the Cap.
(c) The Indemnification Agreements among the Company and each
of the directors of the Company (the "Indemnification Arrangements") shall
not in any way be limited by or be affected by the rights and obligations
of the Company or of the directors and officers under this Agreement except
as expressly provided herein, and the execution and delivery of this
Agreement shall not in any way limit or affect the rights and obligations
of the Company or the other party or parties thereto under any such
Indemnification Arrangement.
(d) This Section 5.08 shall survive the consummation of the
Merger. The provisions of this Section 5.08 are intended to be for the
benefit of, and shall be enforceable by the present and former directors or
officers of the Company and its Subsidiaries, as the case may be. The
rights provided under this Section 5.08 shall be in addition to, and not in
lieu of, any rights to indemnity which any party may have under the
Certificate of Incorporation or Bylaws of the Company or the Surviving
Corporation or any other agreements. If the Surviving Corporation or any
of its successors or assigns (i) consolidates with or merges into any other
corporation or entity and is not the continuing or surviving corporation or
entity of such consolidation or merger or (ii) transfers all or
substantially all of its properties or assets to any individual,
corporation or any other entity, in each such case, proper provision shall
be made so that the successors and assigns of the Surviving Corporation
shall assume the obligations set forth in this Section 5.08.
(e) In the event that any action, suit, proceeding or
investigation relating to this Agreement or the transactions contemplated
hereby is commenced, whether before or after the Effective Time, the
parties hereto agree to cooperate and use their respective reasonable
efforts to vigorously defend against and respond thereto.
SECTION 5.09. Acquisition Proposals.
(a) The Company, the Board of Directors of the Company, the
Special Committee and the Company's officers, employees, agents and
representatives (including, without limitation, its attorneys and the
Special Committee Financial Advisor) may, until June 12, 2003, (i)
initiate, solicit, encourage and facilitate the making of any Acquisition
Proposal (as
21
defined below) or furnish information with respect to the Company to any
person for purposes of soliciting an Acquisition Proposal from such person
pursuant to a confidentiality agreement entered into between such person
and the Company in form and substance reasonably satisfactory to the
Company and (ii) participate in discussions and negotiations regarding, and
supply information relating to, an Acquisition Proposal that could, in the
Special Committee's sole discretion, lead to a Superior Acquisition
Proposal. After June 12, 2003 and until the date of the mailing by the
Company to its stockholders of the definitive Proxy Statement relating to
the Merger, the Company, the Board of Directors of the Company, the Special
Committee and the Company's officers, employees, agents and representatives
(including, without limitation, its attorneys and the Special Committee
Financial Advisor) may no longer initiate or solicit discussions and may
only engage in the other conduct described in clauses (i) and (ii) above
with those persons who were contacted on or prior to June 12, 2003 and who
indicate, in the Special Committee's sole discretion, substantial interest
in making an Acquisition Proposal that the Special Committee reasonably
believes could constitute a Superior Acquisition Proposal. From and after
the date of mailing of the definitive Proxy Statement, the Company, the
Board of Directors of the Company, the Special Committee and the Company's
officers, employees, agents and representatives (including, without
limitation, its attorneys and the Special Committee Financial Advisor)
shall not be permitted to take any action or engage in any activities
described in clauses (i) and (ii) above and shall, and shall direct or
cause the Board of Directors of the Company, the Special Committee and the
Company's officers, employees, agents and representatives (including,
without limitation, its attorneys and the Special Committee Financial
Advisor) to, immediately cease and cause to be terminated any discussions
or negotiations with any parties that may be ongoing with respect to any
Acquisition Proposal, except for discussions and negotiations regarding,
and supplying information relating to, an Acquisition Proposal by any
person who indicates, in the Special Committee's sole discretion,
substantial interest in making a Superior Acquisition Proposal.
(b) Notwithstanding the foregoing, in response to an
indication of interest that is not solicited in violation of this Section
5.09, the Company, the Board of Directors of the Company, the Special
Committee and the Company's officers, employees, agents and representatives
(including, without limitation, its attorneys and the Special Committee
Financial Advisor) may, at any and all times prior to the Effective Time,
participate in discussions or negotiations regarding, and supply
information relating to, an Acquisition Proposal that may, in the Special
Committee's sole discretion, lead to a Superior Acquisition Proposal.
(c) For purposes of this Agreement, an "Acquisition Proposal"
means any inquiry, proposal or offer from any person relating to:
(i) any direct or indirect acquisition (by purchase,
merger, consolidation, business combination, recapitalization,
distribution, liquidation, dissolution or otherwise) of (x) a business that
constitutes 15% or more of the net revenues, net income or the assets of
the Company or any Subsidiary of the Company, or (y) 15% or more of any
class of equity securities of the Company or any Subsidiary of the Company;
or
(ii) any tender offer or exchange offer that if
consummated would result in any person beneficially owning 15% or more of
any class of equity securities of the Company
22
or any Subsidiary of the Company, in each case, other than the transactions
contemplated by this Agreement.
(d) For purposes of this Agreement, a "Superior Acquisition
Proposal" means any proposal to acquire, directly or indirectly, at least a
majority of any class of equity securities of the Company which (i) the
Company's Board of Directors (acting subsequent to the recommendation of
the Special Committee), determines in good faith is reasonably likely to be
consummated, taking into account the person making the proposal and all
legal, financial, regulatory and other aspects of the Acquisition Proposal,
and (ii) the Company's Board of Directors (acting subsequent to the
recommendation of the Special Committee) or the Special Committee believes
in good faith (after consultation with and receipt of advice of the Special
Committee Financial Advisor) would, if consummated, provide greater value
to the Company's stockholders than the transaction contemplated by this
Agreement (taking into account any payment pursuant to Section 10.02(c)
that may result).
(e) Except as expressly permitted by this Agreement, the
Company's Board of Directors shall not (i) approve or recommend, or propose
publicly to approve or recommend, any Acquisition Proposal, or (ii) cause
the Company to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement (each, a "Company
Acquisition Agreement") related to any Acquisition Proposal, other than any
such agreement entered into concurrently with a termination pursuant to
Section 9.01(g). Notwithstanding any other provision contained in this
Agreement to the contrary, nothing contained in this Agreement shall
prevent the Company, the Company's Board of Directors or the Special
Committee from complying with Rule 13e-3, Rule 14a-9, Rule 14d-9, Rule 14e-
2 and any other applicable rules promulgated under the Exchange Act.
Subject to compliance with Section 5.09(f), the Company's Board of
Directors may, upon receipt of a Superior Acquisition Proposal, enter into
a Company Acquisition Agreement with respect to such Superior Acquisition
Proposal and terminate this Agreement in accordance with Section 9.01(g)
hereof.
(f) In addition to the obligations of the Company set forth
in this Section 5.09, the Company shall advise Acquisition in writing
within two business days of any Superior Acquisition Proposal in response
to which the Company has commenced negotiations with the proponent thereof.
During the three business day period following delivery of such notice to
Acquisition, the Company shall engage in good faith negotiations with
Acquisition with respect to such changes as the Company may propose to the
terms of this Agreement and the transactions contemplated by this
Agreement. It is understood that neither the delivery of a notice of a
Superior Acquisition Proposal in accordance with this Section 5.09(f) nor
any subsequent public announcement thereof shall in and of themselves
constitute an Adverse Company Board Recommendation or a breach of Section
5.03(b).
SECTION 5.10. Other Actions. Neither the Company, on the one hand,
nor Acquisition, on the other hand, shall, or shall permit any of their
respective Subsidiaries to, take any action that would, or that could
reasonably be expected to, result in (i) any of the representations and
warranties of such party set forth in this Agreement that is qualified as
to
23
materiality becoming untrue, (ii) any of such representations and
warranties that is not so qualified becoming untrue in any material respect
or (iii) any condition to the Merger set forth in Article VII, not being
satisfied. Neither Acquisition nor any affiliate or associate of
Acquisition shall take any action that could reasonably be expected to
delay, hinder or otherwise adversely affect the ability of Lender to fund
the amounts contemplated in the Commitment Letter. Acquisition shall
promptly notify the Company if at any time there is a reasonable likelihood
that the Financing contemplated by the Commitment Letter will not be
available. Except with respect to any person who has made a Superior
Acquisition Proposal, the Company agrees not to release or permit the
release of any person from, or to waive or permit the waiver of any
provision of, any confidentiality, "standstill" or similar agreement to
which the Company or any of its Subsidiaries is a party, with respect to
any acquisition of Common Stock or assets of the Company, and will use its
reasonable best efforts to enforce or cause to be enforced each such
agreement. Acquisition hereby agrees that, except as contemplated by this
Agreement, Acquisition shall not (i) sell, transfer, tender, assign,
contribute to the capital of any entity, hypothecate, give or otherwise
dispose of, grant a proxy or power of attorney (other than a proxy to vote
such shares in favor of the Merger) with respect to, deposit into any
voting trust, or create or permit to exist any security interest, lien,
claim, pledge, option, right of first refusal, agreement, limitation on
Acquisition's voting rights, charge or other encumbrance of any nature
whatsoever with respect to, any of the shares of Company Common Stock owned
by Acquisition (or agree or consent to, or offer to do, any of the
foregoing), (ii) take any action that would make any representation or
warranty of Acquisition herein untrue or incorrect in any material respect
or have the effect of preventing or disabling Acquisition from performing
its obligations or, (iii) directly or indirectly, initiate, solicit or
encourage any person to take actions that could reasonably be expected to
lead to the occurrence of any of the foregoing.
SECTION 5.11. Acquisitions. Neither Acquisition nor any affiliate
or associate thereof shall acquire any additional shares of Company Common
Stock.
ARTICLE VI.
CONDITIONS TO EACH PARTY'S
OBLIGATION TO EFFECT THE MERGER
The respective obligations of each party to effect the Merger shall
be subject to the fulfillment on or prior to the Effective Time of the
following conditions:
SECTION 6.01. Stockholder Approval Of Agreement. This Agreement and
the transactions contemplated hereby shall have been adopted by the
affirmative vote of (a) the holders of at least a majority of the
outstanding shares of Company Common Stock and (b) the holders of at least
a majority of the outstanding shares of Company Common Stock not held by
either (i) Acquisition or any affiliates or associates thereof (or any
member of the immediate family thereof), or (ii) any officers or directors
of the Company (the affirmative vote described in this clause (b), the
"Majority-of-Minority Condition").
SECTION 6.02. Certain Proceedings. No preliminary or permanent
injunction or restraining order or other order, decree or ruling issued by
any court of competent jurisdiction nor any statute, rule, regulation or
order entered, promulgated or enacted by any
25
SECTION 7.06. Resignation of Directors. The directors of the Company
shall have submitted their resignations pursuant to Section 1.05 hereof.
ARTICLE VIII.
CONDITIONS TO OBLIGATIONS OF THE COMPANY
The obligation of the Company under this Agreement to effect the
Merger shall be subject to the satisfaction or waiver, on or before the
Closing Date, of the following conditions:
SECTION 8.01. Representations And Warranties True. The
representations and warranties of Acquisition contained herein shall be
true and correct as of the date of this Agreement and, without giving
effect to any materiality qualifications or limitations therein, on and as
of the Closing Date as though made on and as of the Closing Date (except to
the extent such representations and warranties expressly speak as of a
specified earlier date, in which case such representations and warranties
shall be true and correct as of such earlier date), except such failures to
be true and correct that in the aggregate would not reasonably be expected
to have a Material Adverse Effect on Acquisition or, following the Merger,
the Surviving Corporation; and the Company shall have received a
certificate signed on behalf of Acquisition by the chief executive officer
and chief financial officer of Acquisition to such effect.
SECTION 8.02. Performance Of Obligations. Acquisition shall have
performed in all material respects its agreements contained in this
Agreement required to be performed by it on or prior to the Closing Date,
and the Company shall have received a certificate signed on behalf of
Acquisition by the chief executive officer and chief financial officer of
Acquisition to such effect.
SECTION 8.03. Necessary Consents. Acquisition shall have received
the consents, in form and substance reasonably satisfactory to the Company,
which are specified in the Acquisition Disclosure Schedule.
ARTICLE IX.
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time,
notwithstanding any requisite adoption of this Agreement by the
stockholders of the Company:
(a) by mutual written consent of the Company (provided that
such termination has first been approved by the Special Committee) and
Acquisition;
(b) by either the Company (provided that such termination has
been approved by the Special Committee) or Acquisition if any Governmental
Entity of competent
26
jurisdiction shall have issued a final non-appealable injunction, order,
decree, judgment or ruling, permanently enjoining or otherwise prohibiting
the consummation of the transactions contemplated by this Agreement;
(c) by either the Company (provided that such termination has
first been approved by the Special Committee) or Acquisition if the Merger
shall not have been consummated on or before October 31, 2003, unless the
failure of the Closing to occur by such date shall be due to the failure of
the party seeking to terminate this Agreement to perform or observe the
covenants and agreements of such party set forth herein in any material
respect;
(d) by either the Company (provided that such termination has
first been approved by the Special Committee) or Acquisition if there shall
have been a material breach of any of the covenants or agreements or any of
the representations or warranties set forth in this Agreement on the part
of the Company (in the case of a termination by Acquisition) or Acquisition
(in the case of a termination by the Company), which breach is not cured
within 30 days following written notice to the party committing such
breach, or which breach, by its nature or timing, cannot be cured prior to
the date referred to in Section 9.01(c); provided, however, that such
breach, if occurring or continuing on the Closing Date, would constitute,
individually or in the aggregate with other such breaches occurring prior
to such time and then continuing, the failure of the conditions set forth
in Sections 7.01, 7.02, 8.01 or 8.02, as applicable;
(e) by either the Company (provided that such termination has
first been approved by the Special Committee) or Acquisition, if the
Company Meeting shall have been held and the holders of Company Common
Stock shall have failed to adopt this Agreement by the vote specified in
Section 6.01 at such meeting (including any adjournment or postponement
thereof in accordance with applicable law);
(f) by Acquisition if the Special Committee or the Board of
Directors of the Company (acting subsequent to the recommendation of the
Special Committee) shall have made an Adverse Company Board Recommendation;
(g) by the Company, pursuant to Section 5.09, in the event
the Company has complied with the provisions of Section 5.09 and (i) the
Company has determined to enter into a Company Acquisition Agreement or
(ii) the Board of Directors of the Company (acting subsequent to the
recommendation of the Special Committee) or the Special Committee shall
have approved or recommended or proposed publicly to approve or recommend a
Superior Acquisition Proposal (provided, however, that the Company shall
not terminate this Agreement pursuant to Section 5.09 if the Board of
Directors of the Company (acting subsequent to the recommendation of the
Special Committee) or the Special Committee believes in good faith (after
consultation with and receipt of the advice of the Special Committee
Financial Advisor) that Acquisition has made, prior to such termination, a
definitive and binding offer to enter into a definitive agreement that
would, if consummated, provide greater value to the Company's stockholders
than the Superior Acquisition Proposal (taking into account any payment
pursuant to Section 10.02(c) that may result); or
27
(h) by Acquisition, (i) if the Board of Directors of the
Company (acting subsequent to the recommendation of the Special Committee)
shall have approved or recommended or proposed publicly to approve or
recommend a Superior Acquisition Proposal by a third party pursuant to
Section 5.09, (ii) if the Board of Directors of the Company (acting
subsequent to the recommendation of the Special Committee) or the Special
Committee shall have withdrawn or modified in a manner adverse to
Acquisition its approval or recommendation of this Agreement or the
transactions contemplated hereby, (iii) if the Board of Directors of the
Company (acting subsequent to the recommendation of the Special Committee)
or the Special Committee shall have failed to include in the Proxy
Statement and the Transaction Statement such recommendation (including the
recommendation that the stockholders of the Company vote in favor of the
Merger) or publicly announced an intention to do any of the foregoing, or
(iv) if the Company enters into a Company Acquisition Agreement.
SECTION 9.02. Effect Of Termination. In the event of termination of
this Agreement by either Acquisition or the Company as provided in Section
9.01, this Agreement shall forthwith become void and have no effect, and
none of Acquisition, the Company, any of their respective Subsidiaries or
any of the officers or directors of any of them, as the case may be, shall
have any liability of any nature whatsoever hereunder, or in connection
with the transactions contemplated hereby, except that Sections 9.02, 9.04
and Article X shall survive any termination of this Agreement, and
notwithstanding anything to the contrary contained in this Agreement,
neither Acquisition nor the Company shall be relieved or released from any
liabilities or damages arising out of its willful breach of any provision
of this Agreement; provided, however, that in no event shall any party
hereto be liable for any punitive damages.
SECTION 9.03. Amendment. Subject to compliance with applicable law,
this Agreement may be amended by the parties hereto by action taken by or
on behalf of their respective Boards of Directors (and, in the case of the
Company, acting subsequent to approval by the Special Committee) at any
time before or after adoption of this Agreement by the stockholders of the
Company; provided, however, that after any adoption of this Agreement by
the stockholders of the Company, no amendment shall be made which by law
requires further approval by such stockholders without such further
approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
SECTION 9.04. Extension; Waiver. At any time prior to the Effective
Time, subject to compliance with applicable law, Acquisition and the
Company (acting subsequent to approval by the Special Committee) may, to
the extent legally allowed, (a) extend the time for the performance of any
of the obligations or other acts of the other parties hereto for its
benefit, (b) waive any inaccuracies in the representations and warranties
of the other parties for its benefit contained herein or in any document
delivered pursuant hereto, (c) waive any rights contained herein for the
waiving party's benefit and (d) waive compliance with any of the agreements
or conditions contained herein for the waiving party's benefit. Any
agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in a written instrument signed on behalf
of such party, but such extension or waiver or failure to insist on strict
compliance with an obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or
other failure.
28
ARTICLE X.
GENERAL PROVISIONS
SECTION 10.01. Non-Survival Of Representations, Warranties And
Agreements. The representations, warranties and agreements in this
Agreement and any certificate delivered pursuant hereto by any person shall
terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 9.01, as the case may be, except that the agreements
set forth in Articles I and II and Section 5.08 shall survive the Effective
Time indefinitely, and those set forth in Section 9.02 and 9.04 and this
Article X shall survive termination indefinitely.
SECTION 10.02. Expenses.
(a) Except as otherwise provided in this Section 10.02, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expense.
(b) The cost of preparing, printing and mailing the Proxy
Statement and the Transaction Statement shall be borne by the Company.
(c) In the event that (i) the Company terminates this
Agreement pursuant to Section 9.01(g), (ii) Acquisition terminates this
Agreement pursuant to Section 9.01(h)(i) or Section 9.01(h)(iv), or (iii)
Acquisition has the right to terminate this Agreement pursuant to Section
9.01(h)(ii) or Section 9.01(h)(iii) but does not so terminate and the vote
specified in Section 6.01 has not been obtained in favor of this Agreement
and the transactions contemplated hereby, and within 12 months after such
failure to obtain such vote, the Company consummates a transaction or
series of transactions that results in any direct or indirect acquisition
(by purchase, merger, consolidation, business combination,
recapitalization, distribution, liquidation, dissolution or otherwise) by
one or more third parties of (I) a business segment or aggregate assets of
the Company constituting 50% or more of the net revenues, net income or
assets of the Company or any Subsidiary of the Company, or (II) 50% or more
of any class of equity securities of the Company or any Subsidiary of the
Company, in each case, other than the transactions involving Acquisition
contemplated by this Agreement (any such transaction being referred to
herein as an "Alternative Transaction"), then the Company shall pay
Acquisition a termination fee in an amount equal to all costs and expenses
incurred by Acquisition in connection with this Agreement and the
transactions contemplated hereby, not to exceed $75,000 in the aggregate;
provided, however, that in no event shall the Company be required to pay
such fee if, immediately prior to the termination of this Agreement,
Acquisition was in material breach of this Agreement. Any such payment
shall be made within five (5) business days after (i) termination of this
Agreement, if this Agreement is terminated by Acquisition pursuant to
Section 9.01(h)(i) or Section 9.01(h)(iv), (ii) consummation of an
Alternative Transaction, if Acquisition terminates or has the right to
29
terminate this Agreement pursuant to Section 9.01(h)(ii) or Section
9.01(h)(iii) and the vote required by Section 6.01 is not obtained in favor
of this Agreement and the transactions contemplated hereby, and (iii)
termination of this Agreement by the Company pursuant to Section 9.01(g).
SECTION 10.03. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in
person, by facsimile or by registered or certified mail (postage prepaid,
return receipt requested) or by a nationally recognized overnight courier
service to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in
accordance with this Section 10.03) to:
if to Acquisition:
Westerbeke Acquisition Corporation
Xxxxx Xxxxxxxx Industrial Park
000 Xxxx Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxxx, Xx.
if to the Company:
Westerbeke Corporation
Xxxxx Xxxxxxxx Industrial Park
000 Xxxx Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxxx
and, in each case, with copies to:
The Special Committee of the Board of Directors of the Company:
Xxxxx X. Xxxxxx
x/x Xxxxxxxxxx Xxxxxxxxxxx
Xxxxx Xxxxxxxx Xxxxxxxxxx Xxxx
000 Xxxx Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxxx
Xxxxxx Bench
c/o Westerbeke Corporation
Xxxxx Xxxxxxxx Industrial Park
000 Xxxx Xxxxxxx Xxxx
00
Xxxxxxx, Xxxxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxxx
Xxxx & Hazard LLP
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Xxxxxxxx, Xxxxxx & Finger, P.A.
Xxx Xxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
Xxxxxx X. Xxxxxx, Esq
Law Offices of Xxxxxx X. Xxxxxx
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Torys LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
SECTION 10.04. Definitions And Usage.
(a) For purposes of this Agreement, the term:
(i) "beneficial owner" with respect to any shares means
a person who shall be deemed to be the beneficial owner of such shares, as
determined pursuant to Rule 13d-3 under the Exchange Act, except that, for
purposes of this Agreement, the term shall exclude shares which are deemed
beneficially owned pursuant to Rule 13d-3 solely because of the operation
of Rule 13d-3(d)(1)(i)(A);
(ii) "business day" means any day other than a Saturday,
Sunday or one on which banks are authorized by law to close in New York,
New York;
(iii) "Code" means the Internal Revenue Code of 1986, as
amended. All citations to provisions of the Code, or to the Treasury
Regulations promulgated thereunder, shall include any amendments thereto
and any substitute or successor provisions thereto;
31
(iv) "immediate family" means any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-
law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-
in-law, and shall include adoptive relationships;
(v) "including" means including, without limitation;
(vi) "Material Adverse Effect" means,
(A) with respect to the Company or the Surviving
Corporation, any changes or effects that individually or in the aggregate
are or could reasonably be expected to be material and adverse to the
condition (financial or otherwise), business, assets, liabilities or
results of operations of the Company and its Subsidiaries, taken as a
whole, or (2) could reasonably be expected to prevent or materially impair
the ability of the Company to perform its obligations under this Agreement
or to consummate the transactions contemplated hereby; and
(B) with respect to Acquisition, any effect that
would prevent or materially impair or delay the ability of Acquisition to
perform its obligations under this Agreement or to consummate the
transactions contemplated hereby.
(vii) "person" means an individual, corporation, limited
liability company, partnership, limited partnership, syndicate, person
(including a "person" as defined in Section 13(d)(3) of the Exchange Act),
trust, association or entity or government, political subdivision, agency
or instrumentality of a government;
(viii) "Subsidiary" shall have the meaning ascribed to it
in Rule 1-02 of Regulation S-X of the SEC. Notwithstanding the foregoing,
for purposes of this Agreement, the Company shall not be deemed a
Subsidiary of Acquisition; and
(ix) "Eligible Holder" means any holder of one or more
Options other than Xx. Xxxxxxxxxx.
A reference in this Agreement to any statute shall be to such statute
as amended from time to time, and to the rules and regulations promulgated
thereunder.
Whenever required by the context of this Agreement, a reference to a
term in the singular shall include the plural, and vice versa.
(b) A fact, event, circumstance or occurrence shall be within
a person's "knowledge" if, with respect to the Company or its Subsidiary,
such fact, event, circumstance or occurrence is or was actually known by
any of the Company's or the Subsidiary's executive officers or directors,
or, with respect to Acquisition, such fact, event, circumstance or
occurrence is or was actually known by any of Acquisition's executive
officers or directors.
(c) The symbol "$" and the word "dollar" or "dollars" shall
refer to the lawful currency of the United States of America.
32
SECTION 10.05. Accounting Terms. All accounting terms used herein
which are not expressly defined in this Agreement shall have the respective
meanings given to them in accordance with GAAP.
SECTION 10.06. Disclosure Schedules.
(a) Prior to the execution and delivery of this Agreement,
the Company has delivered to Acquisition a schedule (the "Company
Disclosure Schedule") setting forth, among other things, in each case with
respect to specified sections of this Agreement, items the disclosure of
which is necessary or appropriate either in response to an express
disclosure requirement contained in a provision hereof or as an exception
to one or more of the Company's representations or warranties contained in
Article III or to one or more of the Company's covenants contained in
Section 5.01; provided, however, that notwithstanding anything in this
Agreement to the contrary, the mere inclusion of an item in the Company
Disclosure Schedule as an exception to a representation or warranty shall
not be deemed an admission by a party that such item represents a material
exception or material fact, event or circumstance or that such item has had
or would reasonably be expected to have a Material Adverse Effect with
respect to the Company or the Surviving Corporation. Matters disclosed in
any particular section of the Company Disclosure Schedule shall be deemed
to have been disclosed in any other section with respect to which such
matter is relevant so long as the relevance of such disclosure is readily
apparent.
(b) Prior to the execution and delivery of this Agreement,
Acquisition has delivered to the Company a schedule (the "Acquisition
Disclosure Schedule") setting forth, among other things, in each case with
respect to specified sections of this Agreement, items the disclosure of
which is necessary or appropriate either in response to an express
disclosure requirement contained in a provision hereof or as an exception
to one or more of Acquisition's representations or warranties contained in
Article IV; provided, however, that notwithstanding anything in this
Agreement to the contrary, the mere inclusion of an item in the Acquisition
Disclosure Schedule as an exception to a representation or warranty shall
not be deemed an admission by a party that such item represents a material
exception or material fact, event or circumstance or that such item has had
or would reasonably be expected to have a Material Adverse Effect with
respect to Acquisition or the Surviving Corporation. Matters disclosed in
any particular section of the Acquisition Disclosure Schedule shall be
deemed to have been disclosed in any other section with respect to which
such matter is relevant so long as the relevance of such disclosure is
readily apparent.
SECTION 10.07. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
major economic or legal substance of the Merger is not affected in any
manner materially adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement
so as to effect the original intent of the parties
33
as closely as possible in a mutually acceptable manner in order that the
Merger be consummated as originally contemplated to the fullest extent
possible.
SECTION 10.08. Entire Agreement; Assignment. This Agreement
constitutes the entire agreement among the parties with respect to the
subject matter hereof and supersedes all prior agreements and undertakings,
both written and oral, among the parties, or any of them, with respect to
the subject matter hereof. This Agreement shall not be assigned, by
operation of law or otherwise, without the prior written consent of the
other party, which shall not be unreasonably withheld, except that
Acquisition may assign all or any of its rights and obligations hereunder
to any wholly-owned Subsidiary of Acquisition or entity controlled by Xx.
Xxxxxxxxxx.
SECTION 10.09. Parties In Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in
this Agreement, express or implied, is intended to or shall confer upon any
other person any right, benefit or remedy of any nature whatsoever under or
by reason of this Agreement, other than the provisions of Article II and
Section 5.08 (which are intended to be for the benefit of the persons
covered thereby and may be enforced by such persons).
SECTION 10.10. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties
shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to specific performance of the terms hereof, in addition
to any other remedy at law or in equity.
SECTION 10.11. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed entirely in such State.
Each of the parties irrevocably and unconditionally waives, to the fullest
extent permitted by applicable law, any and all rights to trial by jury in
connection with any litigation arising out of or relating to this Agreement
or the transactions contemplated hereby.
SECTION 10.12. Jurisdiction. (a) Any legal action or proceeding
with respect to this Agreement or any matters arising out of or in
connection with this Agreement or otherwise, and any action for enforcement
of any judgment in respect thereof shall be brought exclusively in the
United States federal courts in the State of Delaware or in any Delaware
state court and, by execution and delivery of this Agreement, the Company
and Acquisition each hereby accepts for itself and in respect of its
property, generally and unconditionally, the exclusive jurisdiction of the
aforesaid courts and appellate courts thereof. The Company and Acquisition
each irrevocably consent to service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, or by
recognized international express courier or delivery service, to the
Company or Acquisition at their respective addresses referred to in Section
10.03 hereof.
(b) The Company and Acquisition each hereby irrevocably
waives any objection which it may now or hereafter have to the laying of
venue of any of the aforesaid
34
actions or proceedings arising out of or in connection with this Agreement
or otherwise brought in the courts referred to above and hereby further
irrevocably waives and agrees, to the extent permitted by applicable law,
not to plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum.
Nothing herein shall affect the right of any party hereto to serve process
in any other manner permitted by law.
SECTION 10.13. Headings. The descriptive headings contained in
this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 10.14. Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed and delivered shall be deemed to be an original
but all of which taken together shall constitute one and the same
agreement.
SECTION 10.15. Construction. This Agreement and any documents or
instruments delivered pursuant hereto or in connection herewith shall be
construed without regard to the identity of the person who drafted the
various provisions of the same. Each and every provision of this Agreement
and such other documents and instruments shall be construed as though all
of the parties participated equally in the drafting of the same.
Consequently, the parties acknowledge and agree that any rule of
construction that a document is to be construed against the drafting party
shall not be applicable either to this Agreement or such other documents
and instruments.
* * * * *
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35
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year
first above written.
WESTERBEKE CORPORATION
By: /s/ Xxxxxxx Xxxxxxxxxx
--------------------------------
Name: Xxxxxxx Xxxxxxxxxx
Title: Treasurer
WESTERBEKE ACQUISITION CORPORATION
By: /s/ Xxxx X. Xxxxxxxxxx, Xx.
--------------------------------
Name: Xxxx X. Xxxxxxxxxx, Xx.
Title: President
36
