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EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
by and among
ODWALLA, INC.
a California corporation
FRESH SAMANTHA, INC.
a Maine corporation
and
ORANGE ACQUISITION SUB, INC.
a Maine corporation
Dated as of February 2, 2000
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TABLE OF CONTENTS
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1. The Merger; Effective Time...........................................................1
1.1 The Merger....................................................................1
1.2 Effective Time of the Merger..................................................1
1.3 The Merger Consideration......................................................1
1.4 Working Capital Adjustment....................................................2
1.5 Escrow........................................................................3
2. Purchaser and the Surviving Corporation..............................................3
2.1 The Surviving Corporation.....................................................3
3. Treatment of Shares..................................................................3
3.1 Exchange of Shares............................................................3
3.2 Mechanics of Exchange.........................................................4
3.3 No Further Rights in Stock....................................................5
3.4 Closing.......................................................................5
3.5 Supplementary Action..........................................................5
3.6 Termination of Stockholders Agreement.........................................5
4. Closing Conditions...................................................................5
4.1 Conditions Precedent to Obligations of the Purchaser
and Merger Sub................................................................5
4.2 Conditions Precedent to Obligations of the Company and
the Selling Shareholders......................................................7
5. Representations and Warranties of the Company and the Selling
Shareholders.........................................................................9
5.1 Organization; Good Standing; Qualification....................................9
5.2 Articles of Incorporation and Bylaws; Records.................................9
5.3 Capitalization...............................................................10
5.4 Authority; Binding Nature of Agreements......................................10
5.5 Non-Contravention; Consents..................................................11
5.6 Intellectual Property........................................................12
5.7 Proceedings; Orders..........................................................13
5.8 Financial Statements.........................................................13
5.9 Title to Assets..............................................................13
5.10 Contracts....................................................................14
5.11 Employees....................................................................15
5.12 Compliance with Legal Requirements...........................................15
5.13 Governmental Authorizations..................................................15
5.14 Tax Matters..................................................................16
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5.15 Securities Laws Compliance; Registration Rights..............................17
5.16 Finders and Brokers; Fees....................................................17
5.17 Environmental Compliance.....................................................17
5.18 Insurance....................................................................17
5.19 Related Party Transactions...................................................18
5.20 Absence of Changes...........................................................18
5.21 Powers of Attorney...........................................................19
5.22 Benefit Plans; ERISA.........................................................19
5.23 Major Suppliers..............................................................21
5.24 Customers....................................................................21
5.25 Full Disclosure..............................................................21
5.26 Due Diligence Information....................................................21
5.27 Proxy Statement..............................................................21
5.28 The Selling Shareholders; Investment Intent and
Restrictions.................................................................21
6. Representations and Warranties of the Purchaser and Merger Sub......................23
6.1 Organization; Good Standing; Qualification...................................23
6.2 Capitalization...............................................................24
6.3 Subsidiaries.................................................................24
6.4 Authorization................................................................24
6.5 Valid Issuance of the Stock..................................................25
6.6 Governmental and Third-Party Consents........................................25
6.7 SEC Filings; Financial Statements............................................25
6.8 No Changes...................................................................26
6.9 Compliance with Laws.........................................................26
6.10 Compliance with Other Instruments; No Conflict...............................26
6.11 Litigation...................................................................26
6.12 Tax Returns and Payments.....................................................27
6.13 Finders and Brokers; Fees....................................................27
6.14 Rights of Registration.......................................................27
6.15 Voting Rights................................................................27
6.16 Labor Relations and Employee Matters.........................................27
6.17 No Other Agreements to Sell the Assets or Capital Stock
of the Purchaser.............................................................28
6.18 Investment Representations...................................................28
6.19 Proxy Statement..............................................................28
7. Pre-Closing Covenants of the Company and the Selling
Shareholders........................................................................28
7.1 Access and Investigation.....................................................28
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7.2 Operation of Company Business................................................29
7.3 Representing Party Actions...................................................30
7.4 Filings and Consents.........................................................31
7.5 Notification; Updates to Company Disclosure Schedule.........................31
7.6 No Negotiation...............................................................31
7.7 Best Efforts.................................................................32
8. Pre-Closing Covenants of the Purchaser..............................................32
8.1 Access and Investigation.....................................................32
8.2 Filings and Consents.........................................................32
8.3 Operation of Purchaser Business..............................................33
8.4 Notification; Updates to Purchaser Disclosure Schedule.......................34
8.5 Best Efforts.................................................................34
8.6 Grant of Purchaser Options...................................................34
8.7 Repayment of Indebtedness....................................................34
8.8 Board of Directors...........................................................35
9. Other Agreements....................................................................35
9.1 Increase of Purchaser Credit Facility........................................35
9.2 Proxy Statement; Other Filings...............................................35
9.3 Meeting of Purchaser Shareholders............................................36
9.4 Confidentiality..............................................................36
9.5 Public Disclosure............................................................36
9.6 No Inconsistent Action.......................................................37
9.7 Covenant Not To Compete; Non-Solicitation....................................37
9.8 The LLC......................................................................37
9.9 Transfer of LLC Interests and Purchaser Stock................................38
9.10 Antitrust Laws...............................................................38
10. Termination.........................................................................38
10.1 Termination Events...........................................................38
10.2 Termination Procedures.......................................................38
10.3 Effect of Termination........................................................39
10.4 Exclusivity of Termination Rights............................................39
11. Indemnification, etc................................................................39
11.1 Survival of Representations and Covenants....................................39
11.2 Indemnification of the Purchaser; Limits on Purchaser
Obligations..................................................................39
11.3 No Contribution..............................................................40
11.4 Defense of Third Party Claims................................................40
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11.5 Sole Remedy..................................................................41
11.6 Indemnification of Persons Other than the Indemnitees........................41
12. Miscellaneous.......................................................................41
12.1 Further Assurances...........................................................41
12.2 Fees and Expenses............................................................41
12.3 Attorneys' Fees..............................................................42
12.4 Transfer Taxes...............................................................42
12.5 Governing Law; Arbitration...................................................42
12.6 Successors and Assigns.......................................................42
12.7 Entire Agreement.............................................................42
12.8 Separability.................................................................42
12.9 Amendments...................................................................43
12.10 Notices......................................................................43
12.11 Publicity and Use of Confidential Information................................46
12.12 Counterparts.................................................................46
12.13 Delays or Omissions; Waivers.................................................46
12.14 Remedies Cumulative; Specific Performance....................................46
12.15 Headings.....................................................................47
12.16 Construction.................................................................47
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is entered into as
of February 2, 2000, by and among ODWALLA, INC., a California corporation (the
"Purchaser"), FRESH SAMANTHA, INC., a Maine corporation (the "Company"), ORANGE
ACQUISITION SUB, INC., a Maine corporation and a wholly-owned subsidiary of
Purchaser (the "Merger Sub"), the Company and Merger Sub sometimes being
hereinafter collectively referred to as the "Constituent Corporations," SAMANTHA
INVESTORS, LLC, a Massachusetts limited liability company (the "LLC"), and the
individuals and Entities listed on Schedule I attached hereto. Certain
capitalized terms in this Agreement are defined in Exhibit A.
RECITALS
A. The Board of Directors of Purchaser, Merger Sub and the Company each
have determined that it is in the best interests of their respective
shareholders for the Purchaser to acquire the Company by the merger of
the Merger Sub with and into the Company upon the terms, and subject to
the conditions, set forth herein (the "Merger").
B. For federal income tax purposes, it is intended that the Merger
constitute a reorganization under the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code") and that this
Agreement shall constitute a plan of reorganization for purposes of
Section 368 of the Code.
AGREEMENT
The Purchaser, the Company, the Merger Sub and the Selling Shareholders,
intending to be legally bound, agree as follows:
1. THE MERGER; EFFECTIVE TIME.
1.1 THE MERGER.
Subject to the terms and conditions of this Agreement, at the Effective
Time (as defined in Section 1.2 hereof), Merger Sub shall be merged with and
into the Company, the Company shall be the surviving corporation in such Merger
(the "Surviving Corporation"), and the separate existence of Merger Sub shall
thereupon cease. The Merger shall have the effects set forth in Sections 902
through 910 of the Maine Code. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time all property, rights, powers,
privileges and franchises of Merger Sub shall vest in the Company as the
Surviving Corporation, and all debts, liabilities and duties of Merger Sub shall
become the debts, liabilities and duties of the Surviving Corporation.
Immediately following the Effective Time, the Surviving Corporation shall be a
wholly-owned subsidiary of Purchaser.
1.2 EFFECTIVE TIME OF THE MERGER.
The Merger shall become effective upon the completion of the filing of
properly executed Articles of Merger with the Secretary of State of the State of
Maine, which filing shall be made as soon as practicable on the Closing Date
upon satisfaction or waiver of the conditions set forth in Section 4. When used
in this Agreement, the term "Effective Time" with respect to the Merger shall
mean the date and time at which such Articles of Merger have been accepted for
filing by the Secretary of State of the State of Maine.
1.3 THE MERGER CONSIDERATION.
(a) Each Holder shall receive a portion of the Merger
Consideration in consideration of the shares of Company Stock held by such
Holder as more fully set forth in Section 3.1.
(b) For purposes of this Agreement, "Aggregate Merger
Consideration" shall be equal to the number of shares of Purchaser Stock
determined by dividing (i) the number of shares of Purchaser Stock which, as
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of immediately prior to the Effective Time, are either (A) issued and
outstanding (excluding any shares of Purchaser Stock actually issued by the
Purchaser as contemplated in the last paragraph of Section 8.3) or (B) issuable
upon the exercise, exchange or conversion of any outstanding warrants, options,
convertible or exchangeable securities or other rights to acquire Purchaser
Stock other than options issued under the Purchaser's 1997 Stock Option Plan, in
each case, whether or not currently exercisable, by (ii) 1.7027. By way of
example and for the avoidance of doubt, if (i) the Effective Time were 9:00 a.m.
San Francisco time on January 27, 2000, (ii) 258,667 additional shares of
Purchaser Stock had been issued, and (iii) the Xxxxxxxxx Warrant had been
cancelled, then the Aggregate Merger Consideration would be 3,812,122 shares of
Purchaser Stock.
1.4 WORKING CAPITAL ADJUSTMENT.
(a) Not later than seven (7) business days prior to the
anticipated Closing Date:
(i) the Purchaser shall provide the Company with (A) a
statement of Pre-Closing Working Capital prepared by the Purchaser, together
with all supporting work papers therefor, and (B) a good faith estimate of the
Purchaser's Working Capital as of the anticipated Closing Date prepared by the
Purchaser, together with all supporting work papers therefor; and
(ii) the Company shall provide the Purchaser with (A) a
statement of Pre-Closing Working Capital prepared by the Company, together with
all supporting work papers therefor, and (B) a good faith estimate of the
Company's Working Capital as of the anticipated Closing Date prepared by the
Company, together with all supporting work papers therefor.
Upon receipt of a statement of the other party's Pre-Closing Working
Capital and estimate of Working Capital as of the anticipated Closing Date, the
Company together with the Company's advisors and the Purchaser together with the
Purchaser's advisors shall promptly review the information provided by the other
party. Each of the Company and the Purchaser and their respective advisors shall
provide written notice to the other at least two (2) business days prior to the
anticipated Closing Date if they dispute the information provided by the other
party. If either or both parties provide notice of a dispute, the parties shall
confer promptly and cooperate in good faith to resolve any such dispute.
(b) If a party does not provide timely notice of a dispute, such
party will be deemed to have accepted and approved the other party's estimate.
If either or both parties provide notice of a dispute, the parties shall confer
promptly and cooperate in good faith to resolve any such dispute. The estimate
provided by the Purchaser (as adjusted if necessary to resolve any
aforementioned dispute) shall be referred to as the Purchaser's "Actual Working
Capital." The estimate provided by the Company (as adjusted if necessary to
resolve any aforementioned dispute) shall be referred to as the Company's
"Actual Working Capital."
(c) If the Actual Working Capital of Purchaser and/or the
Company exceeds its respective Working Capital Target, then the "Working Capital
Excess" of Purchaser and/or the Company, as the case may be, shall be equal to
the amount, if any, by which (i) the applicable Actual Working Capital minus the
net proceeds of any Equity Sale of the applicable party exceeds (ii) the Working
Capital Target of the applicable party plus One Million Dollars ($1,000,000).
(d) If the Working Capital Target of Purchaser and/or the
Company exceeds its respective Actual Working Capital, then the "Working Capital
Shortfall" of Purchaser and/or the Company, as applicable, shall be equal to the
amount, if any, by which the Working Capital Target of the applicable party
exceeds the Actual Working Capital of the applicable party.
(e) The Aggregate Merger Consideration shall be (i) increased by
a number of shares of Purchaser Stock equal to (A) the sum of the Purchaser
Working Capital Shortfall and the Company Working Capital Excess, if any,
divided by (B) the Average Purchaser Stock Price on the Closing Date, and (ii)
decreased by a number of shares of Purchaser Stock equal to (A) the sum of the
Purchaser Working Capital Excess and the Company Working Capital Shortfall, if
any, divided by (B) the Average Purchaser Stock Price on the Closing Date.
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The Aggregate Merger Consideration, as adjusted pursuant to this clause (e),
shall be referred to as the "Merger Consideration."
1.5 ESCROW.
(a) As the sole source for the payment of each Representing
Party's indemnification obligations set forth herein (except as provided
otherwise in the last sentence of Section 11.2(a)), the Purchaser will deliver
to the Escrow Agent under an escrow agreement (the "Escrow Agreement") in
substantially the form attached hereto as Exhibit B, a number of shares equal to
fifteen percent (15%) of each Holder's allocable portion of the Merger
Consideration determined in accordance with Section 3.1(b) (in the aggregate,
the "Holdback Amount").
(b) Each Selling Shareholder's Pro Rata Share of the Holdback
Amount shall provide the sole source for the payment of such Selling
Shareholder's indemnification obligations set forth herein (except as provided
otherwise in the last sentence of Section 11.2(a)).
2. PURCHASER AND THE SURVIVING CORPORATION.
2.1 THE SURVIVING CORPORATION.
The initial Articles of Incorporation, Bylaws, directors and officers of
the Surviving Corporation shall be as set forth in the Plan of Merger attached
hereto as Exhibit C.
3. TREATMENT OF SHARES.
3.1 EXCHANGE OF SHARES.
(a) At the Effective Time, by virtue of the Merger and without
any action on the part of the holders thereof, the shares of Merger Sub common
stock, $.001 par value, which shall be outstanding immediately prior to the
Effective Time of the Merger, shall be converted into the number of shares of
common stock of the Surviving Corporation equal to the number of shares of
common stock of Merger Sub then outstanding.
(b) Subject to Section 1.5, each share of:
(i) Company Class A Stock outstanding immediately prior
to the Effective Time (other than Treasury Shares as set forth below) shall, at
the Effective Time, by virtue of the Merger and without any action on the part
of the Holder thereof, be converted into the right to receive a portion of the
Merger Consideration equal to the number of shares of Purchaser Stock derived by
obtaining the quotient of (A) ten percent (10%) of the Merger Consideration
divided by (B) the number of shares of Company Class A Stock; and
(ii) Company Class L Stock and Company Preferred Stock
outstanding immediately prior to the Effective Time (other than Treasury Shares
as set forth below) shall, at the Effective Time, by virtue of the Merger and
without any action on the part of the Holder thereof, be converted into the
right to receive a portion of the Merger Consideration equal to the number of
shares of Purchaser Stock derived by obtaining the quotient of (A) ninety
percent (90%) of the Merger Consideration multiplied by the Preference Amount of
such share divided by (B) the aggregate Preference Amount of all such
outstanding shares;
provided, that, in no event shall the aggregate number of shares of Purchaser
Stock issued as the Merger Consideration be increased by the operation of this
Section 3.1(b).
(c) At the Effective Time, by virtue of the Merger and
without any action on the part of the Holder thereof, each share of Company
Common Stock and Company Preferred Stock held in the treasury of the Company
(the "Treasury Shares"), and each such share of Company Common Stock and Company
Preferred Stock held by the Purchaser or any subsidiary of the Purchaser
immediately prior to the Effective Time, shall be canceled and retired and cease
to exist, and no consideration shall be given in exchange therefor.
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(d) At the Effective Time, eighty five percent (85%) of the
portion of the Merger Consideration determined in accordance with Section 3.1(b)
shall be delivered to each Holder upon the surrender of the certificates
formerly representing the Stock in accordance with Section 3.2 of this
Agreement.
(e) No fraction of a share of Purchaser Stock shall be issued in
the Merger. Any such fractional shares shall be rounded to the nearest whole
number.
(f) The issuance of shares of Purchaser Stock in connection with
the Transactions will not be registered under the Securities Act. Such shares
may not be transferred or resold thereafter, except in compliance with the terms
of this Agreement and the other Transactional Agreements and following
registration under the Securities Act or in reliance on an exemption from
registration under the Securities Act.
3.2 MECHANICS OF EXCHANGE.
(a) As of the Effective Time, each Holder shall be entitled to
surrender the certificate or certificates, which immediately prior to the
Effective Time represented the Stock (the "Certificates"), to the Purchaser on
behalf of the Surviving Corporation for cancellation in exchange for such
Holder's allocable portion of the Merger Consideration, fifteen percent (15%) of
which Merger Consideration shall be deposited with the Escrow Agent as provided
in Section 1.5. It shall be a condition of delivery of the Merger Consideration
that (i) the Certificates surrendered by the Holders shall be in proper form for
cancellation by the Purchaser and (ii) the Holders shall have provided the
Purchaser with evidence that all transfer or similar Taxes required by reason of
the surrender of such Holder's Certificates, if any, have been paid by such
Holders.
(b) From and after the Effective Time, there shall be no
transfers of the Stock on the stock transfer books of the Company. If, after the
Effective Time, Certificates formerly representing the Stock are presented to
the Purchaser for payment, they shall be cancelled and exchanged for the
applicable portion of the Merger Consideration in accordance with the procedures
set forth in this Section.
(c) At or prior to the Effective Time of the Merger, Purchaser
shall deliver to the Escrow Agent shares of Purchaser Stock in an aggregate
amount equal to the Holdback Amount.
(d) If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Holder thereof
claiming such Certificate to be lost, stolen or destroyed, the Purchaser will
issue or cause to be issued in exchange for such lost, stolen or destroyed
Certificate the portion of the Merger Consideration for which the shares of
Stock represented by the Certificate are exchangeable in accordance with this
Section 3. When authorizing such issuance in exchange therefor, the Purchaser
may, in its discretion and as a condition precedent to the issuance thereof,
require the Holder to give the Purchaser a bond in such sum as it may direct as
indemnity, or such other form of indemnity, as it shall direct, against any
claim that may be made against the Purchaser with respect to the Certificate
alleged to have been lost, stolen or destroyed.
(e) The Purchaser and the Surviving Corporation may, at their
option, appoint a bank or trust company selected by the Purchaser to act as
exchange agent in connection with the Transactions.
(f) If any certificate for Purchaser Stock is to be issued in a
name other than that in which the Certificate surrendered in exchange therefor
is registered, it shall be a condition of such exchange that the person
requesting such exchange shall (i) pay to the Purchaser any transfer or other
Taxes required by reason of the issuance of certificates for such securities in
a name other than that of the registered holder of the Certificate surrendered,
or (ii) establish to the satisfaction of the Purchaser that such Tax has been
paid or is not applicable.
(g) Notwithstanding anything in this Agreement to the contrary,
neither the Purchaser nor any other party hereto shall be liable to a holder of
shares of Stock for any portion of the Merger Consideration, or dividend on
shares of Purchaser Stock issued as part of the Merger Consideration, delivered
to a public official pursuant to applicable escheat laws following the passage
of time specified therein.
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3.3 NO FURTHER RIGHTS IN STOCK.
All securities received by each Holder pursuant to this Agreement and
the Escrow Agreement shall be deemed to have been delivered and received in full
satisfaction of all rights pertaining to such Holder's shares of Stock. Except
as otherwise provided by law, at the Effective Time, the Holders shall cease to
have any rights with respect to shares of Stock, and their sole right shall be
to receive the Merger Consideration.
3.4 CLOSING.
The closing of the Transactions (the "Closing") shall take place at the
offices of Xxxxxxxx & Xxxxxxxx LLP, 000 Xxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx
00000-0000 at 9:00 a.m., local time, on the later of (x) April 26, 2000 or (y)
the fifth (5th) business day after the day on which all of the conditions set
forth in Sections 4.1 and 4.2 hereof are satisfied or waived (or the applicable
party receives reasonable assurances that such conditions will have been
satisfied by such fifth (5th) business day), or at such other date, time and
place as the parties shall otherwise agree (the date of such Closing, the
"Closing Date").
3.5 SUPPLEMENTARY ACTION.
If at any time after the Effective Time, any further assignments or
assurances in law or any other things are necessary or desirable to vest or to
perfect or confirm of record in the Surviving Corporation the title to any
property or rights of either Constituent Corporation, or otherwise to carry out
the provisions of this Agreement, the officers and directors of the Surviving
Corporation are hereby authorized and empowered on behalf of the Constituent
Corporations, in the name of and on behalf of either Constituent Corporation as
appropriate, to execute and deliver any and all things necessary or proper to
vest or to perfect or confirm title to such property or rights in the Surviving
Corporation, and otherwise to carry out the purposes and provisions of this
Agreement.
3.6 TERMINATION OF STOCKHOLDERS AGREEMENT.
By executing this Agreement, each of the Company and each Selling
Shareholder hereby agrees that from and after the Effective Time, the Amended
and Restated Stockholders Agreement, dated as of September 10, 1999, by and
among the Company and the Selling Shareholders (as it may be amended, restated
or otherwise modified from time to time, the "Company Stockholders Agreement")
shall terminate and be of no further force and effect and that no party thereto
shall have any further rights or obligations thereunder.
4. CLOSING CONDITIONS.
4.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PURCHASER AND MERGER SUB.
The Purchaser's and Merger Sub's obligations to consummate the Merger
and to take the other actions required to be taken by the Purchaser and Merger
Sub at the Closing are subject to the satisfaction, at or prior to the Closing,
of each of the following conditions (any of which may be waived by the
Purchaser, in whole or in part, in accordance with Section 12.13):
(a) the representations and warranties made by (i) the Company
in Section 5 hereof and in each other Transactional Agreement and (ii) the
Representing Parties in Section 5.28 hereof, in each other Transactional
Agreement and in the Rights Agreement shall be true and accurate in all respects
as of the Closing Date as though made on and as of the Closing Date, except for
the breach or inaccuracy of any such representations or warranties that is not
reasonably likely to have a Material Adverse Effect on the Company;
(b) all covenants and agreements contained in this Agreement, in
any other Transactional Agreement or in the Rights Agreement to be observed by
the LLC, Selling Shareholders and/or the Company on or prior to the Closing
shall have been performed or complied with in all material respects;
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(c) the Selling Shareholders, the LLC or the Company, as
applicable, shall have delivered the following documents to the Purchaser:
(i) the Escrow Agreement, duly executed by the Selling
Shareholders and the LLC;
(ii) a shareholders' rights agreement, duly executed by
the Representing Parties who shall be parties thereto and substantially in the
form of Exhibit D attached hereto (the "Rights Agreement");
(iii) the legal opinion of Ropes & Xxxx, counsel to
certain of the Selling Shareholders, dated the Closing Date, in substantially
the form of Exhibit E;
(iv) the legal opinion of Xxxxxxx & Xxxx, LLP, counsel
to the Company, dated the Closing Date, in substantially the form of Exhibit F;
(v) the legal opinion of Xxxxxxxx Xxxxxxx & XxxXxxxx,
counsel to certain of the Selling Shareholders, dated the Closing Date, in
substantially the form of Exhibit G;
(vi) a certificate (the "Company Closing Certificate")
executed on behalf of the Company by a senior executive officer of the Company,
dated as of the Closing Date, (A) certifying to the satisfaction of the
conditions specified in Sections 4.1(a) and (b) with respect to the Company, (B)
certifying that the Stock is not a United States real property interest within
the meaning of Section 897 of the Code, and has not been a United States real
property interest for the five-year period ending as of the Closing Date, and
(C) setting forth the capitalization of the Company as of immediately prior to
the Effective Time in the manner set forth in Section 5.3;
(vii) a certificate (the "Selling Shareholders Closing
Certificate") of each Selling Shareholder and the LLC, where applicable, dated
as of the Closing Date, and certifying to the satisfaction of the conditions
specified in Sections 4.1(a) and (b) with respect to such Selling Shareholder or
the LLC, where applicable;
(viii) the written resignations of the members of the
Company Board;
(ix) written evidence reasonably satisfactory to
Purchaser of the cancellation of the Company Warrants;
(x) written evidence reasonably satisfactory to the
Purchaser that any Person who shall become a party to the Company Stockholders
Agreement after the date of this Agreement shall have agreed to the termination
of the Company Stockholders Agreement as of the Effective Time; and
(xi) written evidence reasonably satisfactory to the
Purchaser of (A) the termination of the Company's 1999 Stock Option Plan, and
(B) the cancellation of all option agreements and other rights to purchase the
capital stock of the Company issued thereunder (other than Company Options which
shall have been exercised);
(d) the Purchaser shall have approved the Company's Working
Capital estimate as contemplated in Section 1.4(b) (which approval shall not be
unreasonably withheld) and the Company's Actual Working Capital shall be not
less than negative Five Million Two Hundred Fifty Dollars (-$5,250,000);
(e) to the reasonable satisfaction of Purchaser and its counsel,
the offer and sale of the Purchaser Stock pursuant to the terms of this
Agreement shall comply with an exemption from registration under the Securities
Act and/or any applicable federal or state securities laws and regulations;
(f) all corporate and other proceedings required to be taken on
the part of the Company, the LLC and the Selling Shareholders in connection with
this Agreement, the Transactional Agreements and the Transactions, and all
documents incident thereto, shall be reasonably satisfactory in form and in
substance to the Purchaser and its counsel;
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(g) not more than one percent (1%) of the shares of Stock shall
dissent from the Merger;
(h) each of the Consents identified or required to be identified
in Part 5.5(b) of the Company Disclosure Schedule shall have been obtained and
shall be in full force and effect;
(i) there shall have been no event or circumstance after the
date of this Agreement that is reasonably likely to have a Material Adverse
Effect on the Company;
(j) there shall not have been commenced or expressly threatened
by any Person other than the Purchaser, the Company, the Selling Shareholders or
their respective Affiliates any Proceeding which is reasonably likely to result
in the issuance of any judgment, Order, decree or injunction by a court of
competent jurisdiction that would prevent consummation of the Transactions or
cause the Transactions to be rescinded following consummation;
(k) no Person other than a holder of Company Stock or Company
Options shall have made or expressly threatened any material claim asserting
that such Person (i) may be the holder or the beneficial owner of, or may have
the right to acquire or to obtain beneficial ownership of, any capital stock or
other securities of the Company, and (ii) may be entitled to all or any material
portion of the Merger Consideration;
(l) neither the consummation nor the performance of any of the
Transactions will, directly or indirectly (with or without notice or lapse of
time), contravene or conflict with or result in a violation of, or cause the
Purchaser to suffer a Material Adverse Effect as a result of (i) a change in any
applicable legal requirement after the date of this Agreement or any Order
issued after the date of this Agreement, or (ii) any legal requirement or Order
that is proposed after the date of this Agreement by or before any Governmental
Body;
(m) the Purchaser shall have received a written opinion from
Xxxxxxxx & Xxxxxxxx, LLP, in substantially the form attached hereto as Exhibit
H, to the effect that the Merger will constitute a reorganization within the
meaning of Section 368(a) of the Code. In rendering such opinion, Xxxxxxxx &
Xxxxxxxx, LLP shall be entitled to receive and rely upon representations of
officers of the Purchaser and the Company as to such matters as they may
reasonably request;
(n) the Purchaser shall have received reasonable assurances that
debt financing on terms at least as favorable or more favorable to Purchaser
than those terms in the Bank Term Sheet shall be available to the Purchaser at
the Effective Time;
(o) Concurrently with the Closing or immediately thereafter, the
Purchaser shall have sold not less than six million dollars ($6,000,000) of
Purchaser Stock upon terms and conditions at least as favorable or more
favorable to Purchaser than those set forth in Exhibits L-1 and L-2;
(p) the issuance by Purchaser of the Merger Consideration and
(unless the Purchaser and the Company mutually agree not to submit this
Agreement and the Merger to the shareholders of Purchaser for approval) this
Agreement and the Merger shall have been duly approved and adopted by the
requisite vote under applicable law of the shareholders of the Purchaser and
Merger Sub;
(q) any waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated; and
(r) not more than five percent (5%) of the shares of Purchaser
Stock outstanding on the record date for the Purchaser Shareholders' Meeting
shall be "dissenting shares" under California law in connection with any vote of
the shareholders of Purchaser in connection with the Transactions.
4.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY AND THE SELLING
SHAREHOLDERS.
The Company's and the Selling Shareholders' obligations to consummate
the Merger and to take the other actions required to be taken by the Company and
the Selling Shareholders at the Closing, are subject to the
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satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by the Company in the determination of the Company
on behalf of the Company and the Selling Shareholders, in whole or in part, in
accordance with Section 12.13):
(a) the representations and warranties made by the Purchaser and
Merger Sub in Section 6 hereof and in each other Transactional Agreement, and
the representations and warranties made by the Purchaser and each shareholder of
Purchaser who is a party thereto in the Rights Agreement, shall be true and
accurate in all respects as of the Closing Date as though made on and as of the
Closing Date, except for the breach or inaccuracy of any such representations or
warranties that is not reasonably likely to have a Material Adverse Effect on
the Purchaser;
(b) all covenants and agreements contained in this Agreement, in
any other Transactional Agreement or in the Rights Agreement to be observed by
the Purchaser, Merger Sub and/or any shareholder of the Purchaser on or prior to
the Closing shall have been performed or complied with in all material respects;
(c) the Purchaser shall have delivered the following documents
to the Selling Shareholders and/or the Company, as the case may be:
(i) the Escrow Agreement, duly executed by the
Purchaser;
(ii) the Rights Agreement, duly executed by the
Purchaser and each shareholder of the Purchaser who shall be a party thereto;
(iii) a certificate (the "Purchaser Closing
Certificate") executed on behalf of the Purchaser by a senior executive officer
of the Purchaser, dated as of the Closing Date, (A) certifying to the
satisfaction of the conditions specified in Sections 4.2(a) and (b), and (B)
setting forth the capitalization of the Purchaser as of immediately prior to the
Effective Time in the manner set forth Section 6.2;
(iv) the legal opinion of Xxxxxxxx & Xxxxxxxx, LLP,
counsel to the Purchaser and Merger Sub, dated the Closing Date, in
substantially the form of Exhibit I;
(d) the Company shall have approved the Purchaser's Working
Capital estimate as contemplated in Section 1.4(b) (which approval shall not be
unreasonably withheld) and the Purchaser's Actual Working Capital shall be not
less than Four Million Two Hundred Fifty Thousand Dollars ($4,250,000);
(e) all shares of Purchaser Preferred Stock shall have converted
into shares of Purchaser Stock;
(f) written evidence reasonably satisfactory to the Company of
the cancellation of the Xxxxxxxxx Warrant;
(g) neither the consummation nor the performance of any of the
Transactions will, directly or indirectly (with or without notice or lapse of
time), contravene or conflict with or result in a violation of, or cause the
Company or the Selling Shareholders to suffer a Material Adverse Effect as a
result of (i) a change in any applicable legal requirement after the date of
this Agreement or any Order issued after the date of this Agreement, or (ii) any
legal requirement or Order that is proposed after the date of this Agreement by
or before any Governmental Body;
(h) there shall have been no event or circumstance after the
date of this Agreement that is reasonably likely to have a Material Adverse
Effect on the Purchaser;
(i) there shall not have been commenced or expressly threatened
by any Person other than the Purchaser, the Company, the Selling Shareholders or
their respective Affiliates any Proceeding which is reasonably likely to result
in the issuance of any judgment, Order, decree or injunction by a court of
competent jurisdiction which would prevent consummation of the Transactions or
cause the Transactions to be rescinded following consummation;
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(j) the Company shall have received a written opinion from Ropes
& Xxxx in substantially the form attached hereto as Exhibit J, to the effect
that the Merger will constitute a reorganization within the meaning of Section
368(a) of the Code. In rendering such opinion, Ropes & Xxxx shall be entitled to
receive and rely upon representations of officers of the Purchaser and the
Company as to such matters as they may reasonably request;
(k) the issuance by Purchaser of the Merger Consideration and
(unless the Purchaser and the Company mutually agree not to submit this
Agreement and the Merger to the shareholders of Purchaser for approval) this
Agreement and the Merger shall have been duly approved and adopted by the
requisite vote under applicable law of the shareholders of the Purchaser and
Merger Sub;
(l) each consent and other item identified or required to be
identified in Part 6.6 of the Purchaser Disclosure Schedule shall have been
obtained and shall be in full force and effect;
(m) the Purchaser shall have received reasonable assurances that
debt financing on terms at least as favorable or more favorable to Purchaser
than those terms in the Bank Term Sheet shall be available to the Purchaser at
the Effective Time;
(n) concurrently with the Closing or immediately thereafter, the
Purchaser shall have sold not less than six million dollars ($6,000,000) of
Purchaser Stock upon terms and conditions at least as favorable or more
favorable to Purchaser than those set forth in Exhibits L-1 and L-2;
(o) any waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated; and
(p) not more than five percent (5%) of the shares of Purchaser
Stock outstanding on the record date for the Purchaser Shareholders' Meeting
shall be "dissenting shares" under California law in connection with any vote of
the shareholders of Purchaser in connection with the Transactions.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
SHAREHOLDERS.
Except as specifically set forth in the disclosure schedule provided by
the Company and attached hereto as Schedule II (the "Company Disclosure
Schedule"), the parts of which are numbered to correspond to the Section numbers
of this Agreement, the Company hereby represents and warrants to the Purchaser
(and only with respect to Section 5.28, each Selling Shareholder or, if
applicable, the LLC, represents and warrants, solely as to itself, to the
Purchaser) as follows:
5.1 ORGANIZATION; GOOD STANDING; QUALIFICATION.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Maine, is duly
qualified to conduct business and is in good standing under the laws of each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties requires such qualification. The Company has the requisite
corporate power and authority to own and operate its properties and assets, and
to carry out the provisions hereof and thereof, and to carry on its business as
currently conducted.
(b) The Company has no subsidiaries and does not own,
beneficially or otherwise, any shares or other securities of, or any other
direct or any other indirect interest of any nature in, any Entity.
5.2 ARTICLES OF INCORPORATION AND BYLAWS; RECORDS.
(a) The Company has made available to the Purchaser accurate and
complete copies of:
(i) the Company's Articles of Incorporation and Bylaws,
including all amendments thereto, as presently in effect;
(ii) the stock records of the Company; and
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(iii) the minutes and other records of the meetings and
other proceedings (including any actions taken by written consent or otherwise
without a meeting) of the shareholders of the Company, the Company Board and all
committees of the Company Board.
There have been no meetings or other proceedings of the shareholders of the
Company, the Company Board or any committee of the Company Board that are not
memorialized in such minutes or other records, the absence of which would have a
Material Adverse Effect on the Company.
(b) The Company has never conducted any business under or
otherwise used, for any purpose or in any jurisdiction, any fictitious name,
assumed name, trade name or other name, other than the names listed on Part 5.2
of the Company Disclosure Schedule.
(c) There has not been any material violation of the Company's
Articles of Incorporation or Bylaws or of any resolution adopted by the
Company's shareholders, the Company Board or any committee of the Company Board.
5.3 CAPITALIZATION.
(a) As of the date of this Agreement, the authorized capital
stock of the Company consists of four million (4,000,0000) shares of Class A-1
Common Stock, par value $0.01 per share, none of which are issued and
outstanding, one million one hundred twenty five thousand (1,125,000) shares of
Class A-2 Common Stock, par value $0.01 per share, none of which are issued and
outstanding, one million one hundred twenty five thousand (1,125,000) shares of
Class A-3 Common Stock, par value $0.01 per share, of which two hundred
seventy-seven thousand seven hundred seventy (277,770) are issued and
outstanding, fifty thousand (50,000) shares of Class L-1 Common Stock, par value
$0.01 per share, of which twenty one thousand seven hundred thirteen (21,713)
shares are issued and outstanding, fifty thousand (50,000) shares of Class L-2
Common Stock, par value $0.01 per share, of which nine thousand one hundred
fifty one (9,151) shares are issued and outstanding, one hundred sixty thousand
(160,000) shares of Class N-1 Preferred Stock, par value $0.01 per share, of
which one hundred forty thousand seven hundred and two (140,702) shares are
issued and outstanding, and eighty thousand (80,000) shares of Class N-2
Preferred Stock, par value $0.01 per share, of which seventy seven thousand four
hundred eighty (77,480) shares are issued and outstanding. No other shares of
capital stock are issued or outstanding. All issued and outstanding shares of
the Company's capital stock have been duly authorized and validly issued, are
fully paid and nonassessable, and have been issued in full compliance with all
applicable securities laws and other applicable legal requirements. Part 5.3(a)
of the Company Disclosure Schedule accurately sets forth (i) the names of the
employees/consultants who have been granted Company Options and the names of the
individuals who have been issued Company Warrants; (ii) the number of Company
Options held by such employee/consultant as of the date of this Agreement, if
any; and (iii) the number of the Company Warrants issued to such individual.
(b) There is no:
(i) outstanding subscription, option, call, warrant or
right (whether or not currently exercisable) to acquire any shares of the
capital stock or other securities of the Company;
(ii) outstanding security, instrument or obligation that
is or may become convertible into or exchangeable for any shares of the capital
stock or other securities of the Company; or
(iii) to the Knowledge of the Company, condition or
circumstance that may directly or indirectly give rise to or provide a basis for
a claim by any Person to the effect that such Person is entitled to acquire or
receive any shares of capital stock or other securities of the Company.
5.4 AUTHORITY; BINDING NATURE OF AGREEMENTS.
The Company has the corporate power and authority to enter into and to
perform its obligations under this Agreement and the other Transactional
Agreements to which it is or is contemplated to be a party, and the execution,
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delivery and performance by the Company of this Agreement and such Transactional
Agreements have been duly authorized by all necessary action on the part of the
Company Board and its shareholders. This Agreement and the other Transactional
Agreements constitute, or upon execution and delivery will constitute, the
legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms, except to the extent that
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting the enforcement of creditor's
rights generally and by general principles of equity regardless of whether such
enforceability is considered in a proceeding in law or equity.
5.5 NON-CONTRAVENTION; CONSENTS.
(a) The execution and delivery of this Agreement and the other
Transactional Agreements, and the consummation of the Transactions, by the
Company will not, directly or indirectly (with or without notice or lapse of
time):
(i) contravene, conflict with or result in a material
violation of (A) the Company's Articles of Incorporation or Bylaws, or (B) any
resolution adopted by the Company Board or any committee thereof or the
shareholders of the Company;
(ii) to the Knowledge of the Company, contravene,
conflict with or result in a violation of, or give any Governmental Body or
other Person the right to challenge any of the Transactions or to exercise any
remedy or obtain any relief under, any legal requirement or any Order to which
the Company or any assets owned or used by it are subject, in each case where
such conflict or remedy would be reasonably likely to have a Material Adverse
Effect on the Company;
(iii) to the Knowledge of the Company, contravene,
conflict with or result in a material violation of any of the terms or
requirements of, or give any Governmental Body the right to revoke, withdraw,
suspend, cancel, terminate or modify, any Governmental Authorization that is
held by the Company or any of its employees or that would otherwise be
reasonably likely to have a Material Adverse Effect on the Company;
(iv) contravene, conflict with or result in a material
violation or material breach of, or material default under, any Material Company
Contract;
(v) give any Person the right to any payment by the
Company or give rise to any acceleration or change in the award, grant, vesting
or determination of options, warrants, rights, severance payments or other
contingent obligations of any nature whatsoever of the Company in favor of any
Person, in any such case as a result of the change in control of the Company or
otherwise resulting from the Transactions;
(vi) result in the imposition or creation of any
material encumbrance upon or with respect to any asset owned or used by the
Company; or
(vii) require the Company to make any filing with or
give any notice to, or obtain any Consent from, any Person in connection with
the execution and delivery of this Agreement and the other Transactional
Agreements or the consummation or performance of any of the Transactions.
(b) Other than the filings and submissions that the Company
shall make under the HSR Act in connection with the Transactions, the Company
will not be required to make any filing with or give any notice to, or obtain
any Consent from, any Person in connection with the execution and delivery of
this Agreement or the consummation or performance of any of the Transactions,
except for filings, the failure of which to make, and Consents, the failure of
which to obtain, are not reasonably likely to have a Material Adverse Effect on
the Company.
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5.6 INTELLECTUAL PROPERTY.
(a) Part 5.6 of the Company Disclosure Schedule sets forth a
complete list of all patents, registered and material unregistered trademarks,
registered copyrights, registered maskworks, registered and material
unregistered trade names and registered and material unregistered service marks,
and any applications therefor in respect of any of the foregoing, included in
the Company's Proprietary Assets, and specifies, where applicable, the
jurisdictions in which each such Proprietary Asset has been issued or registered
or for which an application for such issuance and registration has been filed,
including the respective registration or application numbers and the names of
all registered owners. Part 5.6 of the Company Disclosure Schedule also sets
forth a complete list of all material licenses, sublicenses and other agreements
as to which the Company is a party and pursuant to which the Company or any
other Person is authorized to use any of the Company's Proprietary Assets
(excluding end-user licenses granted to end-users in the ordinary course of
business that permit use of software products without a right to modify,
distribute or sublicense the same), and includes the identity of all parties
thereto, a description of the nature and subject matter thereof, the applicable
royalty and the term thereof. The Company is not in violation of any license,
sublicense or agreement described on such list except such violations as do not
materially impair the Company's rights under such license, sublicense or
agreement, and except for such violations as would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect on the
Company. Except for any consents to transfer required under any Material Company
Contract, the execution and delivery of this Agreement by the Company, and the
consummation of the transactions contemplated hereby, (i) will not cause the
Company to be in material violation or default under any such license,
sublicense or agreement, (ii) will not entitle any other party to any such
license, sublicense or agreement to terminate or modify such license, sublicense
or agreement or (iii) will not require the Company to repay any funds already
received by it from a third party, except, in each case or in the aggregate,
where such action(s) would not be reasonably likely to have a Material Adverse
Effect on the Company.
(b) The Company has all right, title and interest in and to and
is (i) the sole and exclusive owner or (ii) the licensee of (free and clear of
any liens or encumbrances), the Company's Proprietary Assets, and has sole and
exclusive rights (and is not contractually obligated to pay any compensation to
any third party in respect thereof) to the use thereof or the material covered
thereby.
(c) No claims with respect to the Company's Proprietary Assets
have been asserted or, to the Knowledge of the Company, are threatened by any
Person for any bona fide claims: (i) to the effect that the manufacture, sale,
licensing or use of any of the products of the Company as now manufactured,
sold, licensed or used or proposed for manufacture, sale, licensing or use by
the Company infringes on any third party's Proprietary Assets; (ii) against the
use by the Company of its Proprietary Assets in its business as currently
conducted; or (iii) challenging the ownership by the Company, validity or
enforceability of any of the Company's Proprietary Assets, except in each case
or in the aggregate, where such claims which would not be reasonably likely to
have a Material Adverse Effect on the Company. To the Company's Knowledge, all
registered patents, trademarks, service marks and copyrights held by the
Company, if any, are valid and subsisting.
(d) To the Knowledge of the Company, there is no material
unauthorized use, infringement or misappropriation of any of the Company's
Proprietary Assets by any third party, including any employee or former employee
of the Company, except where such action would not be reasonably likely to have
a Material Adverse Effect on the Company.
(e) None of the Company's Proprietary Assets are subject to any
outstanding decree, order, judgment, or stipulation restricting in any manner
the licensing thereof by the Company.
(f) The Company has not entered into any agreement under which
the Company is restricted from selling, licensing or otherwise distributing any
of its products to any class of customers, in any geographic area, during any
period of time or in any segment of the market.
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5.7 PROCEEDINGS; ORDERS.
(a) There is no pending Proceeding, and, to the Company's
Knowledge, no Person has threatened to commence any Proceeding:
(i) to which the Company is a party and that is
reasonably likely to have a Material Adverse Effect on the Company; or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering with, any of the
Transactions or the Company's ability to comply with or perform its obligations
and covenants under the Transactional Agreements, and, to the Knowledge of the
Company, no event has occurred, and no claim, dispute or other condition or
circumstance exists, that might directly or indirectly give rise to or serve as
a basis for the commencement of any such Proceeding.
(b) The Company has made available to the Purchaser accurate and
complete copies of all pleadings, correspondence and other written materials to
which the Company has access that relate to the Proceedings identified in Part
5.7(a) of the Company Disclosure Schedule, if any.
(c) There is no Order to which the Company, or any of the assets
owned or used by the Company, is subject, except where such Order would not be
reasonably likely to have a Material Adverse Effect on the Company.
(d) To the Company's Knowledge, no officer or employee of the
Company is subject to any Order that prohibits such officer or employee from
engaging in or continuing any conduct, activity or practice relating to the
Company's business.
5.8 FINANCIAL STATEMENTS.
(a) The Company has delivered to the Purchaser the audited
balance sheet of the Company as of October 30, 1999, and the related audited
statements of operations, changes in shareholders' equity and cash flows of the
Company for the period ended October 30, 1999, together with the notes thereto
(collectively, the "Financial Statements"), which are attached as Exhibit K.
(b) The Financial Statements (i) were prepared from the books
and records of the Company, (ii) present fairly the financial position of the
Company as of the date thereof and the results of operations and cash flows for
the period then ended, and (iii) were prepared in accordance with GAAP applied
on a consistent basis (except as may be indicated therein or in the notes or
schedules thereto) and in all material respects with the published rules and
regulations of the SEC.
(c) As of the date of this Agreement, the Company has and as of
the Closing Date will have no Liabilities in excess of Fifty Thousand Dollars
($50,000), individually or in the aggregate, not reflected in the Financial
Statements.
5.9 TITLE TO ASSETS.
(a) The Company owns, and has good and valid title to, all
assets purported to be owned by it, free and clear of any material encumbrances,
except for Permitted Liens.
(b) Part 5.9(b) of the Company Disclosure Schedule identifies
all equipment, furniture, fixtures, improvements and other tangible assets owned
by the Company with a book value over Twenty-Five Thousand Dollars ($25,000),
and sets forth the original cost and book value of each of said assets.
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(c) Except as would not be reasonably likely to have a Material
Adverse Effect on the Company, each asset identified in Part 5.9(b) of the
Company Disclosure Schedule:
(i) is free of material defects and deficiencies and in
good condition and repair, consistent with its age and intended use (ordinary
wear and tear excepted); and
(ii) is adequate for its current use.
(d) The Company does not own any real property or any interest
in real property, except for the interests created under the real property
leases identified in Part 5.9(d) of the Company Disclosure Schedule (the "Leased
Premises"). Part 5.9(d) of the Company Disclosure Schedule lists the premises
covered by said leases.
(e) All leases pursuant to which the Company leases real or
personal property are in good standing and are valid and effective in accordance
with their respective terms and, to the Knowledge of the Company, there exists
no default thereunder.
5.10 CONTRACTS.
(a) Part 5.10 of the Company Disclosure Schedule identifies each
Material Company Contract. The Company has made available to the Purchaser
accurate and complete copies of all Material Company Contracts, including all
amendments thereto.
(b) Each Material Company Contract is currently valid and in
full force and effect, and is enforceable by the Company in accordance with its
terms, except to the extent that (i) enforceability may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium or other laws affecting the
enforcement of creditor's rights generally and by general principles of equity
regardless of whether such enforceability is considered in a proceeding in law
or equity, or (ii) the failure of any such Material Company Contract to be valid
and in full force and effect is not reasonably likely to have a Material Adverse
Effect on the Company.
(c) (i) The Company is not in material default under any
Material Company Contract, (ii) to the Knowledge of the Company, no Person has
violated or breached, or declared or committed any material default under, any
Material Company Contract; and (iii) the Company has not waived any of its
rights under any Material Company Contract.
(d) (i) The Company is not party to any Contract pursuant to
which it has guaranteed, insured or may otherwise become liable for, and none of
its assets are pledged to secure, the performance or payment of any obligation
or other Liability of any other Person; and (ii) the Company is not a party to
or bound by any material joint venture agreement, partnership agreement,
profit-sharing agreement, cost-sharing agreement, loss-sharing agreement or
similar Contract.
(e) No Person is renegotiating any material amount paid or
payable to the Company under any Material Company Contract (individually or in
the aggregate) or any other material term or provision of any Material Company
Contract.
(f) Part 5.10(f) of the Company Disclosure Schedule identifies
and provides an accurate and complete description of each proposed Material
Company Contract (i) as to which any bid, offer, written proposal, term sheet or
similar document has been submitted to or received by the Company and is
outstanding, and (ii) that involves obligations in excess of Twenty-Five
Thousand Dollars ($25,000).
(g) No party to any Material Company Contract has notified the
Company to the effect that the Company has failed to perform a material
obligation thereunder.
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5.11 EMPLOYEES.
(a) Part 5.11(a) of the Company Disclosure Schedule contains a
list of all employees of the Company as of January 25, 2000 and their respective
titles and annualized compensation.
(b) Part 5.11(b) of the Company Disclosure Schedule contains a
list of individuals who were performing services for the Company business as of
November 30, 1999 and were classified as "consultants" or "independent
contractors," and the respective compensation of each such "consultant" or
"independent contractor."
(c) The Company has no collective bargaining agreements or union
contracts with any of its employees, nor has the Company ever been party to any
collective bargaining agreement. To the Knowledge of the Company, there is no
labor union organizing activity pending or threatened with respect to the
Company.
(d) The Company has not received any written notice that any of
its employees or consultants with whom the Company has contracted is in
violation of any term of any employment contract, proprietary information
agreement or any other agreement relating to the right of any such individual to
be employed by, or to contract with, the Company because of the nature of the
business to be conducted by the Company. To the Knowledge of the Company, no
employee, or any group of employees, key to the operation of the Company's
business after the Closing Date has given notice of his, her or its intent to
terminate his, her or its employment with the Company.
(e) Except for the Company Employment Agreements, the employment
of each of the Company's employees is terminable at will and the Company has not
granted to any employee, in writing or verbally, the right to any material
compensation or other severance payments following termination of employment
with the Company or (except in the Ordinary Course of Business) under any other
circumstances.
5.12 COMPLIANCE WITH LEGAL REQUIREMENTS.
Except for legal requirements relating to Taxes, securities regulations,
environmental protection, and employee benefits plans (which are addressed in
Sections 5.14, 5.15, 5.17, and 5.22, respectively):
(a) The Company is in full compliance with each legal
requirement that is applicable to it or to the conduct of its business or the
ownership or use of any of its assets.
(b) The Company has not received any written notice from any
Governmental Body or any other Person regarding (i) any actual, alleged,
possible or potential violation of, or failure to comply with, any legal
requirement by the Company, or (ii) any actual, alleged, possible or potential
obligation on the part of the Company to undertake, or to bear all or any
portion of the cost of, any cleanup or any remedial, corrective or response
action of any nature, except, in each case, to the extent any such noncompliance
or obligation is not reasonably likely to result in a Material Adverse Effect on
the Company.
5.13 GOVERNMENTAL AUTHORIZATIONS.
(a) Part 5.13 of the Company Disclosure Schedule identifies each
Governmental Authorization held by the Company. The Company has made available
to the Purchaser accurate and complete copies of all such Governmental
Authorizations, including all renewals thereof and all amendments thereto. Each
Governmental Authorization identified or required to be identified in Part 5.13
of the Company Disclosure Schedule is valid and in full force and effect, except
to the extent the failure of such Governmental Authorization(s), either
individually or in the aggregate, to be in full force and effect is not
reasonably likely to have a Material Adverse Effect on the Company.
(b) The Governmental Authorizations identified in Part 5.13 of
the Company Disclosure Schedule constitute all the Governmental Authorizations
necessary (i) to enable the Company to conduct its business in the manner in
which its business is currently being conducted, and (ii) to permit the Company
to own and use its
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assets in the manner in which they are currently owned and used, except, in
either case, where the failure to obtain such Government Authorizations would
not be reasonably likely to have a Material Adverse Effect on the Company.
5.14 TAX MATTERS.
(a) Each Tax required to have been paid by the Company (whether
pursuant to any Tax Return or otherwise) has been duly paid in full on a timely
basis. Any Tax required to have been withheld or collected by the Company has
been duly withheld and collected, and (to the extent required) each such Tax has
been paid to the appropriate Governmental Body. The Company has complied in all
material respects with all information reporting and backup withholding
requirements, including maintenance of required records with respect thereto, in
connection with amounts paid or owing to any employee, creditor, independent
contractor or other third party.
(b) All Tax Returns required to be filed by or on behalf of the
Company with any Governmental Body with respect to any taxable period ending
after December 31, 1996 and on or before the Closing Date ("Company Returns")
have been or will be filed when due. The Company has made available to the
Purchaser copies of all Company Returns filed by or on behalf of the Company
prior to the Closing Date.
(c) The Company's liability for unpaid Taxes for all periods
ending on or before the date of the Financial Statements does not, in the
aggregate, exceed the amount of the current liability accruals for Taxes
(excluding reserves for deferred taxes) reported in the Financial Statements.
The Company has established, in the Ordinary Course of Business, reserves
adequate for the payment of all Taxes for the period from October 30, 1999
through the Closing Date, and the Company shall have disclosed the estimated
dollar amount of such reserves to the Purchaser on or prior to the Closing Date.
(d) To the Knowledge of the Company, Part 5.14 of the Company
Disclosure Schedule identifies each examination or audit of any Company Return
that has been conducted by any Governmental Body since January 1, 1997. The
Company has made available to the Purchaser copies of all audit reports and
similar documents (to which the Company has access) relating to Company Returns.
No extension or waiver of the limitation period applicable to any of the Company
Returns has been granted by the Company.
(e) No claim or other Proceeding has been asserted in writing
against or with respect to the Company in respect of any Tax. The Company has
not entered into or become bound by any agreement or consent pursuant to Section
341(f) of the Code. The Company has never been in a "consolidated group" within
the meaning of Treasury Regulations Section 1.1502-1(h) other than a group, the
common parent of which was the Company, and is not liable for Taxes incurred by
any individual, trust, other corporation, partnership or any other Entity either
as a transferee or successor or pursuant to Treasury Regulations Section
1.1502-6, or pursuant to any other provision of federal, territorial, state,
local or foreign law or regulations other than a group, the common parent of
which was the Company. Except as set forth in Part 5.14 of the Company
Disclosure Schedule, the Company is not a party to any joint venture,
partnership or other arrangement or contract which could be treated as a
partnership for United States federal income tax purposes. None of the assets of
the Company (i) directly or indirectly secures any debt the interest on which is
tax exempt under Section 103(a) of the Code or (ii) is "tax exempt use property"
within the meaning of Section 168(h) of the Code. The Company has not
participated in an international boycott as defined in Code Section 999. The
Company does not have a "permanent establishment," as defined in any applicable
Tax treaty or convention of the United States of America, or fixed place of
business in any foreign country.
(f) The Company is not party to any agreement, plan, arrangement
or other Contract covering any employee or independent contractor or former
employee or independent contractor of the Company that, individually or
collectively, could give rise directly or indirectly to the payment of any
amount that would not be deductible pursuant to Section 280G of the Code by
reason of the Transactions. The Company is not, and has never been, a party to
or bound by any tax indemnity agreement, tax-sharing agreement, tax allocation
agreement or similar Contract, and has not otherwise assumed the tax liability
of any other Person under contract.
(g) As of the date of this Agreement, to the Knowledge of the
Company, the Company has no net operating losses or other tax attributes
presently subject to limitation under Code Section 382, 383 or 384, or the
federal consolidated return regulations, other than any limitations arising from
the Transactions.
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5.15 SECURITIES LAWS COMPLIANCE; REGISTRATION RIGHTS.
The Company has complied with all federal and state securities laws in
connection with all offers and sales of securities issued by the Company prior
to the date of this Agreement. The Company has not heretofore granted any other
purchaser of its securities the right to require the Company to register any
securities under the Securities Act.
5.16 FINDERS AND BROKERS; FEES.
(a) Neither the Company nor any person acting on behalf of the
Company has engaged any finder, broker, intermediary or any similar person in
connection with the Transactions.
(b) The Company has not entered into a contract or other
agreement that provides that a fee shall be paid to any Person or Entity if the
Transactions are consummated.
5.17 ENVIRONMENTAL COMPLIANCE.
The Company is and, to the Knowledge of the Company, has been at all
times in compliance in all material respects with all Environmental Laws.
5.18 INSURANCE.
(a) Part 5.18 of the Company Disclosure Schedule sets forth each
insurance policy maintained by or at the expense of, or for the direct or, to
the Knowledge of the Company, indirect benefit of, the Company.
(b) To the extent available to the Company, the Company has made
available to the Purchaser copies of all of the insurance policies identified in
Part 5.18 of the Company Disclosure Schedule (including all renewals thereof and
endorsements thereto) and binders relating thereto.
(c) As of the date of this Agreement, each of the policies
identified in Part 5.18 of the Company Disclosure Schedule is in full force and
effect. All of the information contained in the applications submitted in
connection with said policies was (at the times said applications were
submitted) accurate and complete in all material respects. The consummation of
the Transactions will not cause any of such policies, or any renewals or
replacements thereof to terminate, and the Company has paid all premiums due,
and has otherwise performed all of its obligations, under each policy to which
it is a party or that provides coverage to it or any of its directors or
officers in connection with their performance of services to the Company, except
where the failure to perform such obligations or pay premiums is not reasonably
likely to have a Material Adverse Effect on the Company.
(d) There is no pending claim under or based upon any of the
policies identified in Part 5.18 of the Company Disclosure Schedule, and no
event has occurred, and, to the Knowledge of the Company, no condition or
circumstance exists, that might (with or without notice or lapse of time)
directly or indirectly give rise to or serve as a basis for any such claim.
(e) The Company has not received:
(i) any written notice regarding the cancellation or
invalidation of any of the policies identified in Part 5.18 of the Company
Disclosure Schedule or regarding any adjustment in the amount of the premiums
payable with respect to any of said policies; or
(ii) any written notice regarding any refusal of
coverage under, or any rejection of any claim under, any of the policies
identified in Part 5.18 of the Company Disclosure Schedule.
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5.19 RELATED PARTY TRANSACTIONS.
(a) No Related Party has, and no Related Party has at any time
since October 30, 1999, had any direct or indirect material interest of any
nature in any material asset of the Company (other than through ownership of
shares of Stock) or any Company Contract.
(b) No Related Party is, or has at any time since October 30,
1999, been, indebted to the Company for any amount.
(c) Since October 30, 1999, no Related Party has entered into,
or has had any direct or indirect material financial interest in, any Company
Contract, transaction or business dealing of any nature involving the Company.
(d) No Related Party is competing or has threatened to compete
in any manner, or has at any time since October 30, 1999, competed or threatened
to compete in any manner, directly or indirectly, with the Company in any market
served by the Company.
5.20 ABSENCE OF CHANGES.
From the date of the Financial Statements:
(a) there has not been any change in the business, assets,
liabilities, financial condition, prospects or operating results of the Company,
from that reflected in the Financial Statements, except changes in the Ordinary
Course of Business and such other changes that individually or collectively have
not had a Material Adverse Effect on the Company;
(b) the Company has not declared, accrued, set aside or paid any
dividend or made any other distribution in respect of any shares of capital
stock (except during the Pre-Closing Period to the extent permitted under
Section 7.2(g));
(c) the Company has not amended its Articles of Incorporation or
Bylaws and has not effected or been a party to any merger, consolidation, or
sale of all or substantially all of its assets or similar transaction;
(d) the Company has not made or committed to make any individual
capital expenditure in excess of Fifty Thousand Dollars ($50,000) other than as
set forth on Schedule IV;
(e) the Company has not pledged or hypothecated any of its
material assets or otherwise permitted any of its material assets to become
subject to any encumbrance other than Permitted Liens;
(f) the Company has not made any loan or advance to any Person,
other than for expense reimbursement purposes or in the Ordinary Course of
Business;
(g) the Company has not paid any bonus or made any
profit-sharing or similar payment to, or increased the amount of the wages,
salary, commissions, fringe benefits or other compensation or remuneration
payable to, any of its directors, officers or employees other than in the
Ordinary Course of Business;
(h) there has been no resignation or termination of employment
of any officer or key employee of the Company;
(i) there has been no borrowing or agreement to borrow by the
Company or material change in the contingent obligations of the Company by way
of guaranty, endorsement, indemnity, warranty or otherwise or grant of a
mortgage or security interest in any property of the Company;
(j) the Company has not discharged any encumbrance or
discharged, paid or forgiven any indebtedness or other Liability in excess of
Twenty Five Thousand Dollars ($25,000), individually or in the
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aggregate, except for (i) accounts payable that have been discharged or paid in
the Ordinary Course of Business, and (ii) indebtedness to Citizens Bank of
Massachusetts;
(k) the Company has not changed any of its methods of accounting
or accounting practices in any respect except as required under GAAP;
(l) the Company has not received notice that there has been a
loss or cancellation of any order by any customer of the Company that would be
reasonably likely to have a Material Adverse Effect on the Company; and
(m) the Company has not agreed, committed or offered (in writing
or otherwise), to take any of the actions referred to in clauses (b) through (l)
above.
5.21 POWERS OF ATTORNEY.
The Company has not given a power of attorney to any Person.
5.22 BENEFIT PLANS; ERISA.
(a) Except for such Plans as would not be reasonably likely to
have a Material Adverse Effect on the Company, Part 5.22 of the Company
Disclosure Schedule lists (i) all "employee benefit plans" within the meaning of
Section 3(3) of ERISA, (ii) all employment agreements, including any individual
benefit arrangement, policy or practice with respect to any current or former
employee or director of the Company or Member of the Controlled Group or any of
their dependents, and (iii) all other employee benefit, bonus or other incentive
compensation, stock option, stock purchase, stock appreciation, severance pay,
lay-off or reduction in force, change in control, sick pay, vacation pay, salary
continuation, retainer, leave of absence, educational assistance, service award,
employee discount, fringe benefit plans, arrangements, policies or practices,
which the Company or any Member of the Controlled Group maintains, contributes
to or has any obligation to or liability for (collectively, the "Plans").
(b) None of the Plans is a Defined Benefit Plan, and neither the
Company nor any Member of the Controlled Group has ever sponsored, maintained or
contributed to, or ever been obligated to contribute to, a Defined Benefit Plan
that could reasonably be expected to result in a material amount of liability
under Title IV of ERISA.
(c) None of the Plans is a Multiemployer Plan, and neither the
Company nor any Member of the Controlled Group has ever contributed to, or ever
been obligated to contribute to, a Multiemployer Plan that could reasonably be
expected to result in a material amount of liability under Title IV of ERISA.
(d) The Company does not maintain or contribute to any welfare
benefit plan that provides health benefits to an employee after the employee's
termination of employment or retirement except as required under Section 4980B
of the Code and Sections 601 through 608 of ERISA.
(e) Each Plan that is an "employee benefit plan," as defined in
Section 3(3) of ERISA, complies by its terms and in operation with the
requirements provided by any and all statutes, orders or governmental rules or
regulations currently in effect and applicable to the Plan, including ERISA and
the Code, except where the failure to comply would not be reasonably likely to
have a Material Adverse Effect on the Company.
(f) All reports, forms and other documents required to be filed
with any government entity with respect to any Plan (including summary plan
descriptions, Forms 5500 and summary annual reports) have been timely filed and
are accurate, except where the failure to file timely or where an inaccuracy
would not be reasonably likely to have a Material Adverse Effect on the Company.
(g) Each Plan intended to qualify under Section 401(a) of the
Code is the subject of a favorable determination letter issued by the Internal
Revenue Service or, in the case of a prototype Plan, a favorable opinion
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letter issued by the Internal Revenue Service with respect to the prototype Plan
upon which the Company may rely. To the Company's Knowledge, nothing has
occurred since the date of the Internal Revenue Service's favorable
determination letter that could adversely affect the qualification of the Plan
and its related trust, except for such occurrences, either individually or in
the aggregate, that would not be reasonably likely to have a Material Adverse
Effect on the Company.
(h) All contributions owed for all periods ending prior to the
Closing Date (including periods from the first day of the current plan year to
the Closing Date) under any Plan have been or will be made prior to the Closing
Date by the Company in accordance with past practice and the recommended
contribution in any applicable actuarial report, except where the failure to
make such payments would not be reasonably likely to have a Material Adverse
Effect on the Company.
(i) All insurance premiums have been paid in full, subject only
to normal retrospective adjustments in the ordinary course, with regard to the
Plans for plan years ending on or before the Closing Date, except where the
failure to make such payments would not be reasonably likely to have a Material
Adverse Effect on the Company.
(j) With respect to each Plan:
(i) no prohibited transactions (as defined in Section
406 or 407 of ERISA or Section 4975 of the Code) have occurred for which an
exemption is not available that could reasonably be expected to result in a
material amount of liability to the Company;
(ii) to the Knowledge of the Company, no actions or
claims (other than routine claims for benefits made in the ordinary course of
Plan administration for which Plan administrative review procedures have not
been exhausted) are pending, or, to the Knowledge of the Company, threatened or
imminent against or with respect to the Plan, any employer who is participating
(or who has participated) in the Plan or any fiduciary (as defined in Section
3(21) of ERISA) of the Plan that could reasonably be expected to result in a
material amount of liability to the Company;
(iii) to the Knowledge of the Company, no facts exist
which could give rise to any such action or claim; and
(iv) the Plan provides that it may be amended or
terminated at any time.
(k) Neither the Company nor any Member of the Controlled Group
has any Plan-related liability or is threatened with any liability (whether
joint or several) (i) for any excise tax imposed by Section 4971, 4975, 4976,
4977 or 4979 of the Code, or (ii) for a fine under Section 502 of ERISA that
could reasonably be expected to result in a material amount of liability to the
Company.
(l) All the "group health plans" (as defined in Section 607(1)
or 733(a)(1) of ERISA or Section 4980B(g)(2) of the Code) that are part of the
Plans listed in the Company Disclosure Schedule are in material compliance with
the continuation of group health coverage provisions contained in Section 4980B
of the Code and Sections 601 through 608 of ERISA.
(m) Copies of all documents creating or evidencing any Plan
listed in the Company Disclosure Schedule, and all reports, forms and other
documents required to be filed with any governmental entity (including summary
plan descriptions, Forms 5500 and summary annual reports for all plans subject
to ERISA), have been delivered or made available to Purchaser. There are no
negotiations, demands or proposals that are pending or have been made which
concern matters now covered, or that would be covered, by any Plan listed in the
Company Disclosure Schedule.
(n) All expenses and liabilities relating to contributions
required by law and the terms of the Plans described in the Company Disclosure
Schedule have been, and on the Closing Date will be, fully and properly
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accrued on the Company's books and records and disclosed in accordance with GAAP
and in Plan financial statements.
5.23 MAJOR SUPPLIERS.
Part 5.23 of the Company Disclosure Schedule lists the ten (10) largest
suppliers of the Company on the basis of cost of goods or services purchased for
the most recent fiscal year. No such supplier has ceased or materially reduced
its sales or provision of services to the Company since the beginning of the
fiscal year ended October 30, 1999 or, to the Knowledge of the Company, has
threatened to cease or materially reduce such sales or provision of services
after the date hereof.
5.24 CUSTOMERS.
Part 5.24 of the Company Disclosure Schedule accurately identifies, and
provides an accurate and complete list of the revenues received from, each
customer or other Person that accounted for more than Two Hundred Thousand
Dollars ($200,000) of the gross revenues of the Company for the fiscal year
ended October 30, 1999. The Company has not received any notice or other
communication from any customer or other Person indicating that such customer or
such other Person identified in Part 5.24 of the Company Disclosure Schedule may
cease dealing with the Company or may otherwise reduce the volume of business
transacted by such Person with the Company below historical levels.
5.25 FULL DISCLOSURE.
Neither this Agreement (including the Company Disclosure Schedule,
Schedule IV and Schedule VI-A), the Rights Agreement nor any of the other
Transactional Agreements, contains any untrue statement of material fact; and
such documents, taken as a whole, do not omit any material fact Known to the
Company necessary to make any of the representations, warranties or other
statements or information contained therein when read collectively not
misleading.
5.26 DUE DILIGENCE INFORMATION.
The Company has made available to the Purchaser and the Purchaser's
representatives full and complete access to all of the Company's records and
other documents and data, and has produced all documents and related materials
in response to the reasonable requests of Purchaser.
5.27 PROXY STATEMENT.
None of the information heretofore or hereafter supplied by the Company
or the Selling Shareholders for inclusion or incorporation by reference in the
Proxy Statement (as defined in Section 9.2 hereof) will, at the date the Proxy
Statement is mailed to the shareholders of the Purchaser, at the time of the
shareholders meeting of the Purchaser (the "Purchaser Shareholders' Meeting") in
connection with the transactions contemplated hereby or as of the Effective
Time, contain any untrue statement of a material fact or omit 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. Notwithstanding the foregoing, neither the Company nor any Selling
Shareholder makes any representation or warranty with respect to any information
supplied by any Person other than the Company or such Selling Shareholder, as
applicable, that is contained in the foregoing document.
5.28 THE SELLING SHAREHOLDERS; INVESTMENT INTENT AND RESTRICTIONS.
Each Selling Shareholder and the LLC (each, a "Representing Party")
severally represents and warrants, solely as to itself, as follows:
(a) Such Selling Shareholder owns, and, after the transfer of
the Stock to the LLC by the Selling Shareholders prior to the Effective Time,
the LLC will own, beneficially and of record, that number of shares of Company
Class A Stock, Company Class L Stock and/or Company Preferred Stock specified
opposite such Selling
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Shareholder's name on Schedule I attached hereto, free and clear of any
encumbrances. Such Selling Shareholder has delivered to the Purchaser copies of
the stock certificate(s) evidencing the Stock.
(b) Such Representing Party has the absolute and unrestricted
right, power and authority to enter into and to perform his, her or its
respective obligations under this Agreement, the other Transactional Agreements
and the Rights Agreement to which he is contemplated to be a party. This
Agreement, the other Transactional Agreements and the Rights Agreement
constitute, or upon execution and delivery will constitute, the legal, valid and
binding obligations of such Representing Party, enforceable against him in
accordance with their respective terms, except to the extent that enforceability
may be limited by applicable bankruptcy, reorganization, insolvency, moratorium
or other laws affecting the enforcement of creditor's rights generally and by
general principles of equity regardless of whether such enforceability is
considered in a proceeding in law or equity.
(c) To the Knowledge of such Representing Party, the execution
and delivery of this Agreement, the other Transactional Agreements and the
Rights Agreement, and the consummation of the Transactions, by such Representing
Party will not, directly or indirectly (with or without notice or lapse of
time), contravene, conflict with or result in a violation of, or give any
Governmental Body or other Person the right to challenge any of the Transactions
or to exercise any remedy or obtain any relief under, any legal requirement or
any Order to which such Representing Party is subject.
(d) There is no pending Proceeding to which such Representing
Party is a party, and, to the Knowledge of such Representing Party, no Person
has threatened to commence any such Proceeding, that challenges, or that may
have the effect of preventing, delaying or making illegal, any of the
Transactions or such Representing Party's ability to comply with or perform his
obligations and covenants under the Transactional Agreements.
(e) To the Knowledge of such Representing Party, there is no
proposed Order that, if issued or otherwise put into effect, may have a Material
Adverse Effect on the ability of such Representing Party to comply with or
perform any covenant or obligation under this Agreement and the other
Transactional Agreements.
(f) Neither such Representing Party nor any Person acting on his
behalf has negotiated with any finder, broker, intermediary or any similar
person in connection with the Transactions.
(g) All information regarding such Representing Party that such
Representing Party has furnished to the Purchaser or any of its representatives
is accurate and complete in all material respects.
(h) The Selling Shareholders are the only Members of the LLC.
(i) Such Representing Party has the capacity and financial
capability to comply with and perform all his covenants and obligations under
this Agreement, and each of the other Transactional Agreements. The Merger
Consideration allocable to such Representing Party represents reasonably
equivalent value for such Representing Party's Stock.
With respect to the Purchaser Stock, each Representing Party further
represents and warrants as follows:
(j) Such Representing Party is an "accredited investor" as that
term is defined in Rule 501(a) of Regulation D of the Securities Act.
(k) Such Representing Party, by reason of his business and
financial experience has such Knowledge, sophistication and experience in
financial and business matters and in making investment decisions of this type
that he is capable of (i) evaluating the merits and risks of an investment in
the Purchaser Stock and making an informed investment decision, (ii) protecting
his own interest and (iii) bearing the economic risk of such investment. If such
Representing Party retained a purchaser's representative with respect to the
investment in Purchaser Stock that may be made hereby then such Representing
Party shall, prior to or at the Closing, (i) acknowledge in writing such
representation and (ii) cause such representative to deliver a certificate to
Purchaser containing such representations as are reasonably requested by
Purchaser.
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(l) Such Representing Party, to the extent it is acquiring the
Purchaser Stock, is doing so for investment for such Representing Party's own
account, not as a nominee or agent and not with the view to, or any intention
of, a resale or distribution thereof, in whole or in part, or the grant of any
participation therein. Such Representing Party understands that the Purchaser
Stock has not been registered under the Securities Act or state securities laws
by reason of a specific exemption from the registration provisions of the
Securities Act and applicable state securities laws that depends upon, among
other things, the bona fide nature of the investment intent and the accuracy of
such Representing Party's representations as expressed in this Agreement.
(m) In addition to the restrictions contained in this Agreement
and the Rights Agreement, such Representing Party will observe and comply with
the Securities Act and the rules and regulations promulgated thereunder, as now
in effect and as from time to time amended, in connection with any offer, sale,
pledge, transfer or other disposition of Purchaser Stock. In furtherance of the
foregoing, and in addition to any restrictions contained in this Agreement or
the other Transactional Agreements, such Representing Party will not offer to
sell, exchange, transfer, pledge, or otherwise dispose of any of the Purchaser
Stock unless at such time at least one of the following is satisfied:
(i) a registration statement under the Securities Act
covering the Purchaser Stock proposed to be sold, transferred or otherwise
disposed of, describing the manner and terms of the proposed sale, transfer or
other disposition, and containing a current prospectus, shall have been filed
with the SEC and made effective under the Securities Act;
(ii) such transaction shall be permitted pursuant to the
provisions of Rule 144 promulgated under the Securities Act;
(iii) counsel representing such Representing Party,
satisfactory to Purchaser, shall have advised Purchaser in a written opinion
letter reasonably satisfactory to Purchaser and its counsel, and upon which
Purchaser and its counsel may rely, that no registration under the Securities
Act would be required in connection with the proposed sale, transfer or other
disposition; or
(iv) an authorized representative of the SEC shall have
rendered written advice to such Representing Party (sought by such Representing
Party or counsel to such Representing Party, with a copy thereof and of all
other related communications delivered to Purchaser) to the effect that the SEC
would take no action, or that the staff of the SEC would not recommend that the
SEC take action, with respect to the proposed sale, transfer or other
disposition if consummated.
(n) Such Representing Party understands that an investment in
the Purchaser Stock involves substantial risks. Such Representing Party has had
an opportunity to ask questions of and receive answers from the Purchaser, or
from a person or persons acting on the Purchaser's behalf, concerning the terms
and conditions of this investment.
6. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND MERGER SUB.
Except as specifically set forth in the disclosure schedule provided by
the Purchaser and the Merger Sub and attached hereto as Schedule III (the
"Purchaser Disclosure Schedule"), the parts of which are numbered to correspond
to the Section numbers of this Agreement, the Purchaser and Merger Sub, jointly
and severally, hereby represent and warrant to the Selling Shareholders as
follows:
6.1 ORGANIZATION; GOOD STANDING; QUALIFICATION.
(a) The Purchaser is a corporation duly organized, validly
existing, and in good standing under the laws of the State of California, has
all requisite corporate power and authority to own and operate its properties
and assets, to lease the property or assets it operates as lessee and to carry
on its business as described in the Purchaser SEC Reports filed on or prior to
the date of this Agreement (the "Existing Purchaser SEC Reports"), to execute
and deliver this Agreement and the other Transactional Agreements, to issue and
sell the Purchaser Stock in or as a result of the Merger, and to carry out the
provisions of this Agreement and the other Transactional
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Agreements. The Purchaser is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which the character of
the property owned or leased or the nature of the business transacted by it
makes qualification necessary, except where the failure to be so qualified would
not have or could not reasonably be expected to have a Material Adverse Effect
on the Purchaser.
(b) The Merger Sub is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Maine, has all
requisite corporate power and authority to own and operate its properties and
assets, to lease the property or assets it operates as lessee and to carry on
its business as currently conducted, to execute and deliver this Agreement and
the other Transactional Agreements, and to carry out the provisions of this
Agreement and the other Transactional Agreements.
6.2 CAPITALIZATION.
As of January 27, 2000, the authorized capital stock of the Purchaser
consisted of (i) 15,000,000 shares of Purchaser Stock, of which: (A) 5,125,761
shares were issued and outstanding, (B) 1,351,865 shares were reserved for
issuance upon the exercise of outstanding options under the Purchaser's stock
option plans, (C) 106,806 were reserved for issuance pursuant to the exercise of
the Warrants (as defined below), and (D) 1,265,319 shares were reserved for
issuance upon conversion of the Series A Preferred Stock; and (ii) 5,000,000
shares of Purchaser Preferred Stock, of which 1,265,319 had been designated
Series A Preferred Stock, of which 1,074,666 shares were issued and outstanding.
The outstanding shares of Purchaser Preferred Stock and Purchaser Stock have
been duly authorized and validly issued in compliance with applicable federal
and state securities laws, are fully paid and nonassessable, conform to the
descriptions thereof in the Existing Purchaser SEC Reports, and were not issued
in violation of or subject to (i) any preemptive rights or other rights to
subscribe for or to purchase securities or (ii) any liens, preferential rights,
priorities, claims, options, charges or other encumbrances or restrictions,
other than those created by (A) the Certificate of Determination filed in
connection with the issuance of the Purchaser Preferred Stock, (B) the
Investors' Rights Agreement (the "Original Rights Agreement"), dated as of
January 29, 1999, by and between the Purchaser and Xxxxxxxxx-Xxxxx Partners III,
L.P. ("Xxxxxxxxx"), (C) the Warrant dated January 29, 1999 issued to Xxxxxxxxx
to purchase 75,000 shares of Purchaser Common Stock (the "Xxxxxxxxx Warrant"),
(D) the Warrant dated February 9, 1999 issued to Xxxxxxxxx & Xxxxx LLC to
purchase 24,806 shares of Purchaser Stock (the "H&Q Warrant"), and (E) the
Warrant dated May 21, 1997 issued to Sand Hill Capital LLC to purchase 7,000
shares of Purchaser Stock (the "Sand Hill Warrant" and collectively with the
Xxxxxxxxx Warrant and the H&Q Warrant, the "Warrants"). Except for (i) the
rights and conversion of the Purchaser Preferred Stock, (ii) the options to
purchase 1,351,865 shares of Purchaser Stock granted under the Purchaser's stock
option plans, (iii) the Warrants, and (iv) the rights granted pursuant to the
Original Rights Agreement, there are no outstanding securities convertible into
or exchangeable for capital stock of the Purchaser or any options, warrants,
rights (including conversion or preemptive rights, rights of first refusal, "tag
along" rights, rights of co-sale or any similar right), agreements or contracts
for the purchase, subscription to or acquisition of any shares of its capital
stock from the Purchaser, or contracts, commitments, agreements, understandings
or arrangements of any kind to which the Purchaser or any such holder of capital
stock is a party relating to the issuance of any capital stock of the Purchaser,
any such convertible or exchangeable securities or any such options, warrants or
rights. The issuance of Purchaser Stock in the Transactions will not result in
any adjustment to the number of shares issuable or the purchase price,
conversion or exchange rate applicable to any option, warrant, convertible or
exchangeable security or similar right of the Purchaser.
6.3 SUBSIDIARIES.
Except for the Merger Sub, the Purchaser does not currently own or
control, directly or indirectly, any interest in any other corporation,
association, or other business entity. The Purchaser is not a participant in any
joint venture, partnership or similar arrangement.
6.4 AUTHORIZATION.
The Purchaser and Merger Sub each have the requisite corporate power and
authority to enter into this Agreement and the other Transactional Agreements
and to perform their respective obligations hereunder and thereunder. The
execution and delivery of this Agreement and the other Transactional Agreements
and the consummation by the Purchaser and the Merger Sub of the transactions
contemplated hereby and thereby, including
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the issuance of the Purchaser Stock have been duly authorized by all necessary
corporate action on the part of the Purchaser and Merger Sub, as the case may be
(other than approval of the Transactions by the shareholders of Purchaser). All
corporate action necessary for the authorization, execution and delivery of this
Agreement and the other Transactional Agreements, the performance of all
obligations of the Purchaser and Merger Sub hereunder and thereunder at the
Closing and the authorization, and issuance of the Purchaser Stock being issued
pursuant to the Merger has been taken or will be taken prior to the Closing
Date. This Agreement and the other Transactional Agreements constitute or will
constitute as of the Closing Date valid and legally binding obligations of the
Purchaser and Merger Sub, enforceable against the Purchaser and Merger Sub in
accordance with their respective terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally, and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies.
6.5 VALID ISSUANCE OF THE STOCK.
The Purchaser Stock to be issued to the Selling Shareholders in
connection with the Merger, when issued and delivered in accordance with the
terms of this Agreement and the other Transactional Agreements for the
consideration expressed herein, will be duly and validly issued, fully paid, and
nonassessable, and will be free of restrictions on transfer other than
restrictions on transfer under this Agreement, the other Transactional
Agreements and the Rights Agreement.
6.6 GOVERNMENTAL AND THIRD-PARTY CONSENTS.
No consent, approval, qualification, order or authorization of, or
filing with, any local, state, or federal governmental authority or approval or
consent of any third-party is required on the part of the Purchaser in
connection with the Purchaser's execution, delivery, or performance of this
Agreement and the other Transactional Agreements, and the offer, sale or
issuance of the Purchaser Stock, except for (i) the approval by the shareholders
of Purchaser of the matters set forth in Section 9.3, and (ii) the filings and
submissions that the Purchaser shall make under the HSR Act.
6.7 SEC FILINGS; FINANCIAL STATEMENTS.
The Purchaser has timely filed with the SEC and made available to each
Selling Shareholder or its representatives all forms (other than Forms 3, 4 or 5
filed on behalf of Affiliates of the Purchaser), reports and documents required
to be filed by the Purchaser with the SEC since January 1, 1997 (collectively,
the "Purchaser SEC Reports"). The Purchaser SEC Reports (i) at the time filed,
complied with the applicable requirements of the Securities Act, and the rules
thereunder, and the Exchange Act, and the rules thereunder, as the case may be,
and (ii) did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. To the Knowledge of the Purchaser, the SEC has not issued an order
preventing or suspending the use of any Purchaser SEC Report, nor instituted
proceedings for that purpose. The Purchaser meets the eligibility requirements
set forth in Section I.A. of the General Instructions for the Use of Form S-3
under the Securities Act.
Each of the financial statements (including, in each case, any related
notes and schedules) contained in the Purchaser SEC Reports, including any such
Purchaser SEC Report filed Pre-Closing Period, complied with the applicable
published rules and regulations of the SEC with respect thereto, was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes to such financial statements
or, in the case of unaudited statements, as permitted by Form 10-Q under the
Exchange Act) and fairly presented the financial position of the Purchaser at
the respective dates and the results of operations and cash flows of the
Purchaser for the periods indicated, and all adjustments necessary for a fair
presentation of results for such periods have been made, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be material
in amount.
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6.8 NO CHANGES.
Since August 28, 1999:
(a) there has not been any change in the business, assets,
liabilities, financial condition, prospects or operating results of the
Purchaser, from that reflected in the Purchaser's financial statements contained
in the Purchaser's Annual Report on Form 10-K for the fiscal year ended August
28, 1999, except changes in the Ordinary Course of Business that individually or
collectively have not had a Material Adverse Effect on the Purchaser;
(b) there has not been any damage, destruction or loss, whether
or not covered by insurance having a Material Adverse Effect on the Purchaser;
(c) the Purchaser has not entered into any material transaction
(other than the Transactions) not referred to in the Existing Purchaser SEC
Reports; and
(d) the Purchaser has no Liabilities except for Liabilities
reflected in the Existing Purchaser SEC Reports or incurred in the Ordinary
Course of Business consistent with past practices.
6.9 COMPLIANCE WITH LAWS.
The Purchaser now holds all Governmental Authorizations that are
necessary for the conduct of its business, other than where the failure to hold
such Governmental Authorization is not reasonably likely to have a Material
Adverse Effect on the Purchaser. Other than as set forth in the Existing
Purchaser SEC Reports, the Purchaser has complied with, is not in violation of
and has not received any notices of violation or noncompliance and, to the
Knowledge of the Purchaser, has no reason to believe that any presently existing
circumstances would result in any violation with respect to, any federal, state
or local statute, law, ordinance, governmental rule or regulation or court
decree to which the Purchaser may be subject, including any Environmental Laws,
nor has the Purchaser failed to obtain any Governmental Authorization necessary
to the ownership, leasing or operation of its property or to the conduct of its
business as it is presently being carried on and as described in the Existing
Purchaser SEC Reports, except for such noncompliance, violations or failures to
obtain such Governmental Authorization as would not have a Material Adverse
Effect on the Purchaser.
6.10 COMPLIANCE WITH OTHER INSTRUMENTS; NO CONFLICT.
The Purchaser is not in violation of any provision of its Articles of
Incorporation or Bylaws or in default of the performance or observance of or
breach under or with respect to any provision of any Purchaser Contract or, to
its Knowledge, of any federal or state Order applicable to the Purchaser, except
for such violations, defaults or breaches as would not have a Material Adverse
Effect on the Purchaser. The Purchaser has not received notice that any party to
any such Purchaser Contract intends to cancel, amend or terminate any such
agreement. The execution, delivery and performance by the Purchaser of this
Agreement or the other Transactional Agreements, the consummation of the
Transactions and the fulfillment of the terms hereof and thereof does not and
will not (i) violate, conflict with or contravene the terms of the Articles of
Incorporation or the Bylaws of the Purchaser, or any amendment thereof; (ii)
violate, conflict with or result in any material breach or contravention or
constitute a default under (a) any Purchaser Contract or (b) any Order or (iii)
constitute, with or without the passage of time or giving of notice, an event
that results in the creation of any lien, charge or encumbrance upon any assets
of the Purchaser or the suspension, revocation, impairment, forfeiture, or
nonrenewal of any permit, license, authorization, or approval applicable to the
Purchaser, its business or operations, or any of its assets or properties.
6.11 LITIGATION.
There is no private or governmental Proceeding pending or, to the
Knowledge of the Purchaser, threatened against the Purchaser or any of its
properties before any agency, court or tribunal, foreign or domestic (A)
affecting the Transactions or (B) which, if determined adversely to the
Purchaser, would have a Material Adverse Effect on the Purchaser. The Purchaser
is not a party, subject to the provisions of, or in default with respect to, any
Order, and there are no unsatisfied judgments against the Purchaser. The
Purchaser has made available to the Company
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accurate and complete copies of all pleadings, correspondence and other written
materials to which the Purchaser has access that relate to Proceedings (i) to
which the Purchaser is currently a party or (ii) which have been threatened in
writing.
6.12 TAX RETURNS AND PAYMENTS.
The Purchaser has timely filed all Tax Returns as required by law. These
Tax Returns are true, complete and correct in all material respects. The
Purchaser has paid all Taxes for all taxable periods ended on or prior to the
Closing Date, except where the failure to make such payment would not have a
Material Adverse Effect on the Purchaser. The Purchaser has not been advised (a)
that any of its returns, federal, state or other, have been or are being audited
as of the date hereof or (b) of any deficiency in assessment or proposed
judgment to its state or other Taxes. The Purchaser is not aware of any tax
liability to be imposed upon its properties or assets as of the date of this
Agreement that would have a Material Adverse Effect upon the Purchaser. There
are no matters under discussion with any governmental authorities with respect
to taxes that in the reasonable judgment of the Purchaser are likely to result
in a material additional liability to the Purchaser for Taxes.
6.13 FINDERS AND BROKERS; FEES.
(a) Neither the Purchaser nor any person acting on behalf of the
Purchaser has engaged any finder, broker, intermediary or any similar person in
connection with the Transactions.
(b) The Purchaser has not entered into a contract or other
agreement that provides that a fee shall be paid to any Person or Entity if the
Transactions are consummated.
Notwithstanding the foregoing, the Purchaser has engaged X.X. Xxxxxxxxx
& Co., LLC ("WRH") to act as its financial advisor for this transaction pursuant
to that certain Engagement Letter between the Purchaser and WRH dated December
17, 1999 and is obligated to pay WRH for certain fees and expenses as disclosed
on Part 6.13 of the Purchaser Disclosure Schedule.
6.14 RIGHTS OF REGISTRATION.
Except as set forth in the Original Rights Agreement or as contemplated
in the Rights Agreement, the Purchaser has not granted or agreed to grant any
registration rights, including piggyback rights, or other material rights to any
person or entity, (i) the provision or performance of which would render the
provision or performance (including the issuance of the Purchaser Stock) of the
material rights to be granted to the Selling Shareholders by the Purchaser in
this Agreement and the other Transactional Agreements, impracticable or (ii) for
or relating to the registration of any shares of capital stock of the Purchaser
that are currently outstanding.
6.15 VOTING RIGHTS.
Except as set forth in the Original Rights Agreement or as contemplated
in the Rights Agreement, neither the Purchaser, nor to the Purchaser's
Knowledge, the shareholders of the Purchaser, has entered into any agreement
with respect to the voting of capital shares of the Purchaser for the election
of Directors of the Purchaser or otherwise.
6.16 LABOR RELATIONS AND EMPLOYEE MATTERS.
(a) The Purchaser is not engaged in any unfair labor practice.
There is (i) no unfair labor practice complaint pending or, to the Knowledge of
the Purchaser, threatened against the Purchaser before the National Labor
Relations Board, and no grievance or arbitration proceeding arising out of or
under collective bargaining agreements is so pending or, to the Knowledge of the
Purchaser, threatened against the Purchaser, (ii) no strike, labor dispute,
slowdown or stoppage pending or, to the Knowledge of the Purchaser, threatened
against the Purchaser, and (iii) no union representation question existing with
respect to the employees of the Purchaser and, to the Knowledge of the
Purchaser, no union organizing activities are taking place.
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(b) Except as disclosed in the Existing Purchaser SEC Reports,
the Purchaser is not a party to any employment agreement (other than "at will"
employment relationships), collective bargaining agreement or covenant not to
compete, nor has the Purchaser ever been party to any collective bargaining
agreement.
6.17 NO OTHER AGREEMENTS TO SELL THE ASSETS OR CAPITAL STOCK OF THE
PURCHASER.
The Purchaser does not have any legal obligation, absolute or
contingent, other than the obligations of the Purchaser under this Agreement or
the other Transactional Agreements, including pursuant Exhibits L-1 and L-2, to
any person or firm to (i) sell assets other than in the Ordinary Course of
Business consistent with past practices, (ii) sell any capital stock of the
Purchaser or effect any merger, consolidation or other reorganization of the
Purchaser or (iii) enter into any agreement with respect any of the foregoing.
6.18 INVESTMENT REPRESENTATIONS.
(a) Each of the Purchaser and Merger Sub understands that the
Stock has not been registered under the Securities Act. The Purchaser also
understands that the Stock is being offered and sold pursuant to an exemption
from registration contained in the Securities Act based in part upon the
Purchaser's representations contained in this Section 6.18.
(b) The Purchaser is acquiring the Stock for the Purchaser's own
account for investment only, and not with the current intention of making a
public distribution thereof.
(c) The Purchaser represents that by reason of its, or of its
management's business or financial experience, the Purchaser has the capacity to
protect its own interests in connection with the Transactions contemplated in
this Agreement and the other Transactional Agreements. The Purchaser is able to
bear the loss of its entire investment in the Company. The Purchaser is not a
corporation, partnership or other entity specifically formed for the purpose of
consummating this transaction.
(d) The Purchaser is an accredited investor as that term is
defined in Rule 501(a) of Regulation D, promulgated pursuant to the Securities
Act.
6.19 PROXY STATEMENT.
None of the information supplied or to be supplied by the Purchaser for
inclusion or incorporation by reference in the Proxy Statement (as defined in
Section 9.2 hereof) will, at the date the Proxy Statement is mailed to the
shareholders of the Purchaser, at the time of the Purchaser Shareholders'
Meeting or as of 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. Notwithstanding the foregoing, the
Purchaser makes no representation or warranty with respect to any information
supplied by the Company or the Selling Shareholders that is contained in the
foregoing document.
7. PRE-CLOSING COVENANTS OF THE COMPANY AND THE SELLING SHAREHOLDERS.
7.1 ACCESS AND INVESTIGATION.
The Company shall ensure that, at all times during the Pre-Closing
Period:
(a) the Company and its representatives provide the Purchaser
and its representatives with free and complete access at reasonable times to the
Company's premises and assets and to all existing books, records, Tax Returns,
the Company's work papers and other documents and information relating to the
Company;
(b) the Company and its representatives provide the Purchaser
and its representatives with such copies of existing books, records, Tax
Returns, the Company's work papers and other documents and information relating
to the Company as the Purchaser may reasonably request in good faith; and
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(c) the Company and its representatives compile and provide the
Purchaser and its representatives with such additional financial, operating and
other data and information regarding the Company as the Purchaser may reasonably
request in good faith.
7.2 OPERATION OF COMPANY BUSINESS.
The Company shall, during the Pre-Closing Period:
(a) conduct its operations in the Ordinary Course of Business
and in the same manner as such operations have been conducted by the Company
prior to the date of this Agreement; provided, however, that notwithstanding the
foregoing, the Company shall be permitted to sell or otherwise issue (including
the sale or grant of warrants, options or other rights to purchase) any shares
of capital stock or any other equity securities to the extent the recipient of
such capital stock or equity security executes a counterpart signature page to
this Agreement; provided, further, however, that the Company shall not grant any
options to purchase capital stock to any director, officer, employee of, or
consultant to, the Company as part of a compensation plan;
(b) not incur any debt that will not be included as a liability
for purposes of the Working Capital calculation set forth in Section 1.4(a);
(c) use Best Efforts to preserve intact its current business
organization, keep available the services of its current officers and employees
and maintain its relations and goodwill with all suppliers, customers,
landlords, creditors, licensors, licensees, employees and other Persons having
business relationships with the Company;
(d) keep in full force all insurance policies identified in Part
5.18 of the Company Disclosure Schedule or renewals or replacements thereof;
(e) confer regularly with the Purchaser concerning operational
matters and any change that would be reasonably likely to have a Material
Adverse Effect on the Company;
(f) immediately notify the Purchaser of any proposal or offer
from any Person relating to any acquisition of the Company by sale of stock,
merger or otherwise or a sale of all or substantially all of the assets of the
Company;
(g) not declare, accrue, set aside or pay any dividend or make
any other distribution in respect of shares of capital stock or repurchase,
redeem or otherwise reacquire any shares of capital stock or other securities
(other than (i) as may be necessary to convert the Company Class L Stock and the
Company Preferred Stock to Company Class A Stock pursuant to the Articles of
Incorporation of the Company, or (ii) a cash distribution, repurchase,
redemption or reacquisition by the Company in the event the Company's Working
Capital (as determined in accordance with Section 1.4) is in excess of negative
Two Million Two Hundred Fifty Dollars (-$2,250,000), and then only in the amount
of such excess);
(h) not incur or assume any Liability as a result of any action
or failure to act on the part of the Company, except (i) for current Liabilities
in the Ordinary Course of Business, and (ii) as may be approved by the
Purchaser, it being understood and agreed that from and after the Closing Date,
the Purchaser shall be deemed to have approved of the incurrence or assumption
of all Liabilities set forth on the Company Disclosure Schedule as amended or
supplemented by the Company Disclosure Schedule Updates;
(i) not make any Tax election without obtaining prior consent
from the Purchaser, which consent shall not be unreasonably withheld or delayed;
(j) not amend its Articles of Incorporation or Bylaws (other
than to amend and restate its Articles of Incorporation in the form attached
hereto as Exhibit M), and not effect or become a party to any transaction
involving the merger or consolidation of the Company with any other Entity
(other than in connection with the
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Transactions) or a sale of all or substantially all of the assets of the
Company, or similar transaction, or enter into any transaction or take any other
action of the type referred to in Section 5.20(e) or (f);
(k) not form any subsidiary or acquire any equity interest or
other interest in any other Entity;
(l) not enter into any joint venture or similar arrangements
with any other Entity;
(m) not make more than Fifty Thousand Dollars ($50,000) of
capital expenditures, in addition to capital expenditures made in the Ordinary
Course of Business and as set forth in Schedule IV;
(n) (i) not establish or adopt any Employee Benefit Plan, and
not pay any bonus or make any profit-sharing or similar payment to, or increase
the amount of the wages, salary, commissions, fringe benefits or other
compensation or remuneration payable to, any of its directors, officers or
employees, other than adjustments in the Ordinary Course of Business made after
consultation with the Purchaser, and (ii) without limiting the generality of the
foregoing clause (i), not (A) make any payments under its "Stay Bonus Plan" in
excess of Forty Thousand Dollars ($40,000) in the aggregate, or (B) enter into a
severance contract or other similar agreement with any Person other than Xx.
Xxxx Xxxxxxxxxxx;
(o) not change any of its methods of accounting or accounting
practices in any respect except as required by GAAP; or
(p) not agree, commit or offer (in writing or otherwise) to take
any of the actions described in the preceding clauses of this Section 7.2.
7.3 REPRESENTING PARTY ACTIONS.
During the Pre-Closing Period, each Representing Party shall:
(a) not directly or indirectly sell or otherwise transfer, or
offer, agree or commit (in writing or otherwise) to sell or otherwise transfer,
any of its Stock or any interest in or right relating to any of its Stock except
for the contribution of such Stock to the LLC;
(b) not permit, or offer, agree or commit (in writing or
otherwise) to permit, any of its Stock to become subject, directly or
indirectly, to any encumbrance;
(c) not take any action which would cause the Company to violate
its agreements in Section 7.2 or Section 7.6; provided that the recourse of the
Purchaser and any Indemnitee for violation of Section 7.2 shall be solely
against the Company and not against any Representing Parties;
(d) ensure that each Consent required to be obtained (pursuant
to any applicable legal requirement, Order or Contract, or otherwise) by such
Representing Party in connection with its execution and delivery of any of the
Transactional Agreements and the Rights Agreement or in connection with the
consummation or performance of any of the Transactions is obtained as promptly
as practicable after the date of this Agreement and remains in full force and
effect through the Closing Date; provided, however, that such Representing Party
shall have no obligations under this Section 7.3(d) relating to or in connection
with the HSR Act, which obligations are set forth in Section 9.10; and
(e) deliver to the Purchaser a copy of each filing made, each
notice given and each Consent obtained by such Representing Party during the
Pre-Closing Period.
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7.4 FILINGS AND CONSENTS.
The Company shall ensure that:
(a) each filing or notice required to be made or given (pursuant
to any applicable legal requirement, Order or Contract, or otherwise) by the
Company in connection with the execution and delivery of any of the
Transactional Agreements or in connection with the consummation or performance
of any of the Transactions (including each of the filings and notices identified
in Part 5.5 of the Company Disclosure Schedule) is made or given as promptly as
practicable after the date of this Agreement;
(b) each Consent required to be obtained (pursuant to any
applicable legal requirement, Order or Contract, or otherwise) by the Company in
connection with the execution and delivery of any of the Transactional
Agreements or in connection with the consummation or performance of any of the
Transactions (including each of the Consents identified in Part 5.5 of the
Company Disclosure Schedule) is obtained as promptly as practicable after the
date of this Agreement and remains in full force and effect through the Closing
Date; provided, however, that the Company shall have no obligations under this
Section 7.4(b) relating to or in connection with the HSR Act, which obligations
are set forth in Section 9.10;
(c) the Company promptly delivers to the Purchaser a copy of
each filing made, each notice given and each Consent obtained by the Company
during the Pre-Closing Period; and
(d) during the Pre-Closing Period, the Company and its
representatives cooperate with the Purchaser and with the Purchaser's
representatives, and prepare and make available such documents and take such
other actions as the Purchaser may request in good faith, in connection with any
filing, notice or Consent that the Purchaser or Merger Sub is required or elects
to make, give or obtain.
7.5 NOTIFICATION; UPDATES TO COMPANY DISCLOSURE SCHEDULE.
(a) During the Pre-Closing Period, the Company and/or the
Representing Party, as applicable, shall promptly notify the Purchaser in
writing of:
(i) the discovery by the Company or the Representing
Party of any event, condition, fact or circumstance that constitutes a material
breach of any representation or warranty made by the Company or the Representing
Parties in this Agreement; and
(ii) any event, condition, fact or circumstance that
would make the timely satisfaction of any of the conditions set forth in Section
4.1 impossible or unlikely.
(b) If any event, condition, fact or circumstance that is
required to be disclosed pursuant to Section 7.5(a) requires any change in the
Company Disclosure Schedule, or if any such event, condition, fact or
circumstance would require such a change assuming the Company Disclosure
Schedule were dated as of the date of the occurrence, existence or discovery of
such event, condition, fact or circumstance, then the Company and/or the
Representing Parties, as applicable, shall promptly deliver to the Purchaser an
update to the Company Disclosure Schedule (a "Company Disclosure Schedule
Update") specifying such change. Each such Company Disclosure Schedule Update
shall be deemed to supplement or amend the Company Disclosure Schedule for (i)
the purpose of determining whether the conditions set forth in Section 4.1 have
been satisfied, unless objected to in writing by Purchaser on or before the
Closing, and (ii) all other purposes of this Agreement from and after the
Closing.
7.6 NO NEGOTIATION.
Neither the Company nor a Representing Party nor any of their respective
representatives, nor any of their employees, directors, representatives,
Affiliates or advisors (including legal, accounting, financial and investment
banking advisors) will directly or indirectly on behalf of the Company or the
Representing Parties:
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(a) enter into any agreement (or grant any option or right) to
sell, transfer or otherwise dispose of the shares of capital stock or the assets
of the Company or issue any controlling interest in shares of capital stock of
the Company, directly or indirectly, to any person;
(b) hold any discussion with, or provide any information to, any
person concerning the Company in connection therewith or provide any information
to, any person concerning the Company in connection therewith; or
(c) respond to any inquiry made by any person concerning a
proposed acquisition of any assets or capital stock of the Company, except to
advise such person that the Company has entered into this Agreement. The Company
and the Representing Parties further agree to advise the Purchaser immediately
upon receiving any inquiry from any such person. If the Company or a
Representing Party receives a bona fide offer concerning a proposed acquisition
of any assets or capital stock of the Company, the Company or such Representing
Party shall, in addition to notifying the Purchaser of the receipt of such
offer, identify the proposed buyer.
7.7 BEST EFFORTS.
During the Pre-Closing Period, the Company shall use its Best Efforts to
cause the conditions set forth in Section 4.1 to be satisfied on a timely basis,
and shall not take any action or omit to take any action, the taking or omission
of which would or could reasonably be expected to result in any of the
conditions to Closing set forth in Section 4.1 not being satisfied.
8. PRE-CLOSING COVENANTS OF THE PURCHASER.
8.1 ACCESS AND INVESTIGATION.
The Purchaser shall ensure that, at all times during the Pre-Closing
Period:
(a) the Purchaser and its representatives provide the Company
and its representatives and the Selling Shareholders with free and complete
access at reasonable times to the Purchaser's premises and assets and to all
existing books, records, Tax Returns, the Purchaser's work papers and other
documents and information relating to the Purchaser;
(b) the Purchaser and its representatives provide the Company
and its representatives with such copies of existing books, records, Tax
Returns, the Purchaser's work papers and other documents and information
relating to the Purchaser as the Company may request in good faith; and
(c) the Purchaser and its representatives compile and provide
the Company and its representatives with such additional financial, operating
and other data and information regarding the Purchaser as the Company may
request in good faith.
8.2 FILINGS AND CONSENTS.
The Purchaser shall ensure that:
(a) each filing or notice required to be made or given (pursuant
to any applicable legal requirement, Order or Contract, or otherwise) by the
Purchaser or Merger Sub in connection with the execution and delivery of any of
the Transactional Agreements or in connection with the consummation or
performance of any of the Transactions is made or given as promptly as
practicable after the date of this Agreement;
(b) each Consent required to be obtained (pursuant to any
applicable legal requirement, Order or Contract, or otherwise) by the Purchaser
or Merger Sub in connection with the execution and delivery of any of the
Transactional Agreements or in connection with the consummation or performance
of any of the Transactions is obtained as promptly as practicable after the date
of this Agreement and remains in full force and effect through the
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Closing Date; provided, however, that the Purchaser shall have no obligations
under this Section 8.2(b) relating to or in connection with the HSR Act, which
obligations are set forth in Section 9.10;
(c) the Purchaser promptly delivers to the Company a copy of
each filing made, each material notice given and each material Consent obtained
by the Purchaser or Merger Sub during the Pre-Closing Period; and
(d) during the Pre-Closing Period, the Purchaser or Merger Sub
and the representatives of either cooperate with the Company and its
representatives, and prepare and make available such documents and take such
other actions as the Company may request in good faith, in connection with any
filing, notice or Consent that the Company is required or elects to make, give
or obtain.
8.3 OPERATION OF PURCHASER BUSINESS
The Purchaser shall, during the Pre-Closing Period:
(a) not incur any debt that will not be included as a liability
for purposes of the Working Capital calculation set forth in Section 1.4;
(b) confer with the Company concerning operational matters and
any change that would reasonably be expected to have a Material Adverse Effect
on the Purchaser;
(c) not amend its Articles of Incorporation or Bylaws (other
than to increase the number of authorized shares of Purchaser Stock in
connection with the Transactions, including as set forth in the last paragraph
of this Section 8.3, and as may be necessary to convert the Purchaser Preferred
Stock to Purchaser Stock as contemplated by this Agreement), and not effect or
become a party to any transaction involving the recapitalization, merger or
consolidation of the Purchaser or any of its subsidiaries with any other Entity
(other than in connection with the Transactions) or sell all or substantially
all of the assets of the Purchaser;
(d) not acquire any equity interest or other interest in any
other Entity;
(e) not declare, accrue, set aside or pay any dividend or make
any other distribution in respect of shares of capital stock, or repurchase,
redeem or otherwise reacquire any shares of capital stock or other securities
(other than (i) as may be necessary to convert the Purchaser Preferred Stock to
Purchaser Stock as contemplated by this Agreement or (ii) at Purchaser's option,
a cash distribution, repurchase, redemption or reacquisition by the Purchaser in
the event the Purchaser's Working Capital (as determined in accordance with
Section 1.4) is in excess of Seven Million Two Hundred Fifty Thousand Dollars
($7,250,000), and then only in the amount of such excess);
(f) not enter into any joint venture or similar arrangements
with any other Entity;
(g) other than the issuance of compensatory options to existing
employees (not officers or directors) and to newly-hired employees (including
officers), not sell or otherwise issue (or grant any warrants, options or other
rights to purchase) any shares of capital stock or any other securities, unless
approved in advance in writing by the Company (which such approval shall not be
unreasonably withheld);
(h) not (i) pay any bonus or make any profit-sharing or similar
payment to, or increase the amount of the wages, salary, commissions, fringe
benefits or other compensation or remuneration payable to, any of its directors
or officers, or (ii) other than in connection with the employment of new
officers who are not employees of the Purchaser as of the date of this
Agreement, enter into, amend, supplement or otherwise modify, any Contract
relating to the employment of any Person; and
(i) not agree, commit or offer (in writing or otherwise) to take
any of the actions described in the preceding clauses of this Section 8.3.
The parties agree that the Purchaser may during the Pre-Closing Period,
notwithstanding the foregoing (i) clause (g) of this Section 8.3, enter into an
agreement or agreements and on or before the Closing Date
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consummate a transaction pursuant to which the Purchaser will issue and sell up
to Six Million Dollars ($6,000,000) of Purchaser Stock on terms substantially
similar to the terms set forth in the letter agreement attached hereto as
Exhibit L-1 and the term sheet attached hereto as Exhibit L-2, (ii) clause (h)
of this Section 8.3, accelerate the vesting schedule and extend the exercise
period of those options to purchase Purchaser Stock held by those members of the
Purchaser Board who, in connection with the consummation of the Transactions,
shall resign from the Purchaser Board effective as of the Effective Time, and
(iii) clauses (e) or (g) of this Section 8.3, issue 258,667 shares of Purchaser
Stock to Xxxxxxxxx in consideration of the cancellation of the Xxxxxxxxx Warrant
and the election to convert the Purchaser Preferred Stock held by Xxxxxxxxx into
Purchaser Stock in connection with the Transactions.
8.4 NOTIFICATION; UPDATES TO PURCHASER DISCLOSURE SCHEDULE.
(a) During the Pre-Closing Period, the Purchaser shall promptly
notify the Company in writing of:
(i) the discovery by the Purchaser of any event,
condition, fact or circumstance that constitutes a material breach of any
representation or warranty made by the Purchaser in this Agreement or in any of
the other Transactional Agreements; and
(ii) any event, condition, fact or circumstance that
would make the timely satisfaction of any of the conditions set forth in Section
4.2 impossible or unlikely.
(b) If any event, condition, fact or circumstance that is
required to be disclosed pursuant to Section 8.4(a) requires any change in the
Purchaser Disclosure Schedule, or if any such event, condition, fact or
circumstance would require such a change assuming the Purchaser Disclosure
Schedule were dated as of the date of the occurrence, existence or discovery of
such event, condition, fact or circumstance, then the Purchaser shall promptly
deliver to the Company an update to the Purchaser Disclosure Schedule (a
"Purchaser Disclosure Schedule Update") specifying such change. Each such
Purchaser Disclosure Schedule Update shall be deemed to supplement or amend the
Purchaser Disclosure Schedule for (i) the purpose of determining whether the
conditions set forth in Section 4.2 have been satisfied, unless objected to in
writing by Company on or before the Closing, and (ii) all other purposes of this
Agreement from and after the Closing.
8.5 BEST EFFORTS.
During the Pre-Closing Period, each of the Purchaser and Merger Sub
shall use its Best Efforts to cause the conditions set forth in Section 4.2 to
be satisfied on a timely basis, and shall not take any action or omit to take
any action, the taking or omission of which would or could reasonably be
expected to result in any of conditions to Closing set forth in Section 4.2 not
being satisfied.
8.6 GRANT OF PURCHASER OPTIONS.
At the Effective Time, subject to shareholder approval of the increase
in shares authorized under the Purchaser's 1997 Stock Option Plan, the Purchaser
shall issue options to purchase Purchaser Stock with an exercise price equal to
the fair market value of such Purchaser Stock as of the Effective Time, pursuant
to the standard terms of the Purchaser's 1997 Stock Option Plan, to those
employees of the Company in the amounts listed next to each such employee's
named on Schedule V attached hereto; provided that such employee is an employee
of the Purchaser or the Surviving Corporation at the Effective Time; provided,
further, that such employees shall not have exercised such Company Options
during the Pre-Closing Period.
8.7 REPAYMENT OF INDEBTEDNESS.
On the Closing Date, immediately after the Effective Time, the Purchaser
shall cause the Surviving Corporation to satisfy in full (i) all "Obligations"
under the Second Amended and Restated Revolving Credit And Loan Agreement, dated
as of January 10, 2000, by and among the Company, Fresh Samantha Juice Bars,
Inc., a Maine corporation, and Citizens Bank of Massachusetts as amended,
restated or otherwise modified from time to time and (ii) all obligations of the
Company to certain Selling Shareholders under the Reimbursement Agreement,
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dated as of January 10, 2000, by and among the Company and certain of the
Selling Shareholders solely to the extent of any amounts drawn under the
irrevocable standby letter of credit in the amount of $3,000,000 (Letter of
Credit No. D-8119) issued by Xxxxx Brothers Xxxxxxxx & Co. in favor of Citizens
Bank of Massachusetts, which amounts shall have been applied to reduce the
"Obligations" to which reference is made in clause (i) above.
8.8 BOARD OF DIRECTORS.
The Purchaser Board shall decrease the size of the Purchaser Board from
six (6) to five (5) members, and elect as members of the Purchaser Board such
Persons as are nominated pursuant to the terms of the Rights Agreement, in each
case, effective as of the Effective Time.
9. OTHER AGREEMENTS.
9.1 INCREASE OF PURCHASER CREDIT FACILITY.
The Purchaser shall use its Best Efforts to (i) obtain a commitment
letter upon such terms and conditions as are at least as favorable or more
favorable than those set forth on the term sheet attached hereto as Exhibit N
(the "Bank Term Sheet") (which letter may be subject to customary
qualifications) from Imperial Bank or another financial institution (the
"Bank"), under which the Bank commits to provide the Purchaser with not less
than $10,000,000 of debt financing on terms in the Bank Term Sheet and other
terms and conditions reasonably acceptable to the Purchaser (the "Commitment
Letter") and (ii) consummate the financing described in the Commitment Letter.
9.2 PROXY STATEMENT; OTHER FILINGS.
As promptly as practicable after the execution of this Agreement, the
Purchaser shall prepare a document (the "Proxy Statement") with respect to the
solicitation by the Purchaser Board of the affirmative vote of a majority of the
outstanding shares of Purchaser capital stock with respect to the issuance of
the shares of Purchaser Stock in connection with the Merger, the increase in the
number of shares authorized to be issued under the Purchaser's 1997 Stock Option
Plan and, unless the Purchaser and the Company mutually agree otherwise, this
Agreement and the Merger. Each of the Purchaser, the Company and the
Representing Parties shall provide promptly to the other such information
concerning its business and financial statements and affairs as, in the
reasonable judgment of the providing party or its counsel, may be required or
appropriate for inclusion in the Proxy Statement, or in any amendments or
supplements thereto, and to cause its counsel and auditors to cooperate with the
other's counsel and auditors in the preparation of the Proxy Statement. The
Purchaser will respond (with the assistance of the Company and the Representing
Parties, if reasonably necessary) to any comments of the SEC, and the Purchaser
will cause the Proxy Statement to be mailed to its shareholders at the earliest
practicable time after the date of this Agreement. As promptly as practicable
after the date of this Agreement, the Purchaser will prepare and file (with the
assistance of the Company and the Representing Parties, if reasonably necessary)
any other filings required to be filed by it under the Exchange Act, the
Securities Act, or any other Federal, foreign, or Blue Sky or related laws
relating to the Merger and the transactions contemplated by this Agreement (the
"Other Filings"). The Purchaser will notify the Company promptly upon the
receipt of any comments from the SEC or its staff or any other government
officials and of any request by the SEC or its staff or any other government
officials for amendments or supplements to the Proxy Statement or any Other
Filing or for additional information and will supply the Company with copies of
all correspondence between the Purchaser or any of its representatives, on the
one hand, and the SEC or its staff or any other government officials, on the
other hand, with respect to the Proxy Statement or any Other Filing. The
Purchaser (with the assistance of the Company and the Representing Parties, if
reasonably necessary) will cause all documents that it is responsible for filing
with the SEC or other regulatory authorities under this Section 9.2 to comply in
all material respects with all applicable requirements of law and the rules and
regulations promulgated thereunder. Whenever any event occurs that is required
to be set forth in an amendment or supplement to the Proxy Statement or any
Other Filing, the Purchaser will promptly inform the Company of such occurrence
and cooperate in filing with the SEC or its staff or any other government
official, and/or mailing to shareholders of the Purchaser, such amendment or
supplement.
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9.3 MEETING OF PURCHASER SHAREHOLDERS.
(a) The Purchaser will take all action necessary in accordance
with California law and the Purchaser's corporate documents to convene the
Purchaser Shareholders' Meeting to be held as promptly as practicable for the
purpose of voting upon the issuance of the shares of Purchaser Stock in
connection with the Merger, the increase in the number of shares authorized to
be issued under the Purchaser's 1997 Stock Option Plan and, unless the Purchaser
and the Company mutually agree otherwise, this Agreement and the Merger. The
Purchaser will use its commercially reasonable efforts to solicit from its
shareholders proxies in favor of the approval of the issuance of the shares of
Purchaser Stock in connection with the Merger, the increase in the number of
shares authorized to be issued under the Purchaser's 1997 Stock Option Plan and,
unless the Purchaser and the Company mutually agree otherwise, this Agreement
and the Merger, and will take all other action necessary or advisable to secure
the vote or consent of its shareholders required by the rules of NASD or
California law to obtain such approvals. Notwithstanding anything to the
contrary contained in this Agreement, the Purchaser may adjourn or postpone the
Purchaser Shareholders' Meeting to the extent necessary to ensure that any
necessary supplement or amendment to the Proxy Statement is provided to the
Purchaser's shareholders in advance of a vote on the issuance of the shares of
Purchaser Stock in connection with the Merger, the increase in the number of
shares authorized to be issued under the Purchaser's 1997 Stock Option Plan and,
unless the Purchaser and the Company mutually agree otherwise, this Agreement
and the Merger, or, if as of the time for which the Purchaser Shareholders'
Meeting is originally scheduled (as set forth in the Proxy Statement) there are
insufficient shares of Purchaser Stock represented (either in person or by
proxy) to constitute a quorum necessary to conduct the business of the Purchaser
Shareholder Meeting. The Purchaser shall ensure that the Purchaser Shareholders'
Meeting is called, noticed, convened, held and conducted, and that all proxies
solicited by the Purchaser in connection with the Purchaser Shareholders'
Meeting are solicited, in compliance with California law, the Purchaser's
corporate documents, the rules of the NASD and all other applicable legal
requirements. The Purchaser's obligation to call, give notice of, convene and
hold the Purchaser Shareholders' Meeting in accordance with this Section 9.3
shall not be limited to or otherwise affected by the commencement, disclosure,
announcement or submission to the Purchaser of any proposed acquisition of the
Purchaser or any change in the Purchaser Board's recommendation regarding the
Merger.
(b) (i) The Purchaser Board shall recommend that the Purchaser's
shareholders vote in favor of the issuance of the shares of Purchaser Stock in
connection with the Merger, the increase in the number of shares authorized to
be issued under the Purchaser's 1997 Stock Option Plan and, unless the Purchaser
and the Company mutually agree not to submit to a vote of the shareholders, this
Agreement and the Merger, at the Purchaser Shareholders' Meeting; (ii) the Proxy
Statement shall include a statement to the effect that the Purchaser Board has
recommended that the Purchaser's shareholders vote in favor of the issuance of
the shares of Purchaser Stock in connection with the Merger, the increase in the
number of shares authorized to be issued under the Purchaser's 1997 Stock Option
Plan and, unless the Purchaser and the Company mutually agree not to a vote of
the shareholders, this Agreement and the Merger, at the Purchaser Shareholders'
Meeting; and (iii) neither the Purchaser Board nor any committee thereof shall
withdraw, amend or modify, or propose or resolve to withdraw, amend or modify in
a manner adverse to the Company, the recommendation of the Purchaser Board that
the Purchaser's shareholders vote in favor of the issuance of the shares of
Purchaser Stock in connection with the Merger, the increase in the number of
shares authorized to be issued under the Purchaser's 1997 Stock Option Plan and,
unless the Purchaser and the Company mutually agree not to submit to a vote of
the shareholders, this Agreement and the Merger.
9.4 CONFIDENTIALITY.
Each of the parties hereto hereby agrees to and reaffirms the terms and
provisions of the Mutual Nondisclosure Agreement by and between the Purchaser
and the Company, dated as of May 7, 1999.
9.5 PUBLIC DISCLOSURE.
Unless otherwise required by law (including securities laws) or, as to
the Purchaser, by the rules and regulations of the NASD, prior to the Effective
Time, no disclosure (whether or not in response to an inquiry) of the subject
matter of this Agreement or any Transactional Agreement shall be made by any
party hereto unless approved in writing by the Purchaser and the Company prior
to release (which approval shall not be unreasonably withheld); provided, that
on the date of this Agreement, the parties shall jointly release a statement to
the public substantially in the form attached hereto as Exhibit O; and provided,
further, that the parties agree and understand that certain
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disclosures regarding the Transactions may be made to (i) employees of the
Purchaser and the Company, (ii) third parties whose consent or approval may be
required in connection with the Transactions and (iii) the professional advisors
of the Purchaser, the Company and/or the Selling Shareholders, in each case
without any prior written consent.
9.6 NO INCONSISTENT ACTION.
Each of the Purchaser, the Company and the Representing Parties shall
use Best Efforts to cause the Merger to qualify as, and will not take any action
inconsistent with the treatment of the Merger as, a reorganization under Section
368(a)(2)(E) of the Code.
9.7 COVENANT NOT TO COMPETE; NON-SOLICITATION.
Each of Messrs. Xxxxxxx Xxxxx and Xxxxxxx Xxxxxx (each a Selling
Shareholder and for purposes of this Section 9.7, a "Principal Shareholder")
agrees that for the period specified in this Section 9.7, he will not directly
or indirectly:
(a) invest in, own, finance or participate in the ownership of
any Entity (other than the Purchaser and its Affiliates) engaged in the
manufacture, sale and distribution of either fruit juice beverages, all natural
food bars or spring water (collectively, the "Business"); provided, however,
that each Principal Shareholder may purchase or otherwise acquire up to (but not
more than) three percent (3%) of the equity securities of any enterprise (but
without otherwise participating in the activities of such enterprise) if such
securities are listed on any national securities exchange or have been
registered under Section 12(g) of the Exchange Act;
(b) engage in, manage, operate, control or participate in the
management, operation or control of, or render services to, any Entity (other
than the Purchaser and its Affiliates) in connection with such Entity's
operation of the Business; or
(c) except in the Ordinary Course of Business, either for
himself or any other Person, (i) induce or attempt to induce any employee to
leave the employ of the Company or the Purchaser or any Entity under common
control with the Company or the Purchaser, (ii) in any way interfere with the
relationship between (A) the Purchaser and the Company (or any Entity under
common control with the Company) and (B) any employee of the Purchaser and the
Company (or such Entity), (iii) induce or attempt to induce any customer,
supplier, licensee or business relation of the Purchaser, the Company or any
Entity under common control with the Company to cease doing business with the
Purchaser, the Company or such Entity, or in any way interfere with the
relationship between any customer, supplier, licensee or business relation of
the Company or such Entity or (iv) solicit services related to the Business of
any Person that has received such services from the Company prior to the Closing
Date or that otherwise is a customer of the Purchaser, the Company or any Entity
under common control with the Purchaser or the Company.
The foregoing agreements of noncompetition and nonsolicitation shall be
effective from the Closing Date to and including the date two (2) years from the
Closing Date and, for the avoidance of doubt, shall not apply in the event the
Closing does not occur. It is the intent of the Purchaser, the Company and the
Principal Shareholders that the foregoing agreements of noncompetition and
nonsolicitation amend and supercede the agreements set forth in Section 6(d) of
the Recapitalization Agreement dated as of September 17, 1998 by and among the
Company, the stockholders of the Company and the investors named therein. (the
"Company Recapitalization Agreement"). In the event, however, that the foregoing
agreements of noncompetition and nonsolicitation are held invalid, illegal or
unenforceable, it is the intent of the Purchaser, the Company and the Principal
Shareholders that the agreements set forth in Section 6(d) of the Company
Recapitalization Agreement shall remain in full force and effect.
9.8 THE LLC.
Upon dissolution of the LLC in accordance with the LLC Agreement, and
upon notice to the Purchaser of such dissolution in accordance with Section
12.10, all references to the LLC in Section 11 of this Agreement and in the
Escrow Agreement shall be deemed to be references to the Selling Shareholders.
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9.9 TRANSFER OF LLC INTERESTS AND PURCHASER STOCK.
As a Member, each Selling Shareholder shall not (i) directly or
indirectly sell or otherwise transfer, or offer, agree or commit (in writing or
otherwise) to sell or otherwise transfer, any interests in the LLC, except as
permitted under Section 5.2 of the LLC Agreement, or (ii) allow the LLC to
directly or indirectly sell or otherwise transfer, or offer, agree or commit (in
writing or otherwise) to sell or otherwise transfer, any share of Purchaser
Stock or any interest in or right relating to any shares of Purchaser Stock,
except as permitted under the Rights Agreement.
9.10 ANTITRUST LAWS.
As promptly as practicable, the Company, the Representing Parties and
the Purchaser shall make all filings and submissions under the HSR Act as are
required to be made in connection with this Agreement and the Transactions.
Subject to Section 9.4 hereof, the Company and the Representing Parties will
furnish to the Purchaser, and the Purchaser will furnish to the Company and the
Representing Parties, such information and assistance as the other may
reasonably request in connection with the preparation of any such filings or
submissions. Subject to Section 9.4 hereof, the Company and the Representing
Parties will provide to the Purchaser, and the Purchaser will to provide the
Company and the Representing Parties, copies of all correspondence, filings or
communications (or memoranda setting forth the substance thereof) between such
party or any of its representatives, on the one hand, and any Governmental Body
or members of their respective staffs, on the other hand, with respect to this
Agreement and the Transactions, except to the extent that the Purchaser or the
Company is advised by independent counsel that the provision of such information
would be inadvisable under applicable antitrust laws.
10. TERMINATION.
10.1 TERMINATION EVENTS.
This Agreement may be terminated prior to Closing:
(a) by Purchaser if there is a breach or inaccuracy in any
representation, warranty, covenant or obligation of the Company or the
Representing Party after the date of this Agreement and prior to the Closing and
such breach or inaccuracy (i) shall be reasonably likely to have a Material
Adverse Effect on the Company, and (ii) has not been cured within ten (10)
business days after written notice of such breach is given to the Company;
(b) by the Company if there is a breach or inaccuracy in any
representation, warranty, covenant or obligation of the Purchaser after the date
of this Agreement and prior to the Closing and such breach or inaccuracy (i)
shall be reasonably likely to have a Material Adverse Effect on the Purchaser,
and (ii) has not been cured within ten (10) business days after written notice
of such breach is given to the Purchaser;
(c) by the Company if the Purchaser shall not have obtained the
Commitment Letter on or prior to the date that is two weeks after the date of
this Agreement; or
(d) by the mutual consent of the Purchaser and the Company.
10.2 TERMINATION PROCEDURES.
If the Purchaser wishes to terminate this Agreement pursuant to Section
10.1(a), the Purchaser shall deliver to the Representing Parties a written
notice stating that the Purchaser is terminating this Agreement and setting
forth a brief description of the basis on which the Purchaser is terminating
this Agreement. If the Company wishes to terminate this Agreement pursuant to
Section 10.1(b) or 10.1(c), the Company shall deliver to the Purchaser a written
notice stating that the Company is terminating this Agreement and setting forth
a brief description of the basis on which the Company is terminating this
Agreement.
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10.3 EFFECT OF TERMINATION.
If this Agreement is terminated pursuant to Section 10.1, all further
obligations of the parties under this Agreement shall terminate; provided, that
each party shall remain liable for any breaches of this Agreement prior to its
termination and provided, further, that Sections 9.4, 9.5, 12.2, 12.3 and 12.11
shall survive the termination of this Agreement.
10.4 EXCLUSIVITY OF TERMINATION RIGHTS.
Except to the extent termination occurs due to the bad faith of the
other party, the termination rights and obligations provided in this Section 10
shall be deemed to be exclusive. Subject to the provisions of Section 10.3, the
parties shall not have any other or further Liabilities to or with respect to
one another by reason of this Agreement or its termination.
11. INDEMNIFICATION, ETC.
11.1 SURVIVAL OF REPRESENTATIONS AND COVENANTS.
(a) The representations, warranties, covenants and obligations
of each party set forth in this Agreement or any other Transactional Agreement
shall survive the Closing Date to the extent provided in this Section 11.1(a).
Section 5.28(a) and any covenants or obligations of the Representing Parties and
the Purchaser set forth in Sections 1, 2, 3, 9.6, 9.7, 9.8, 10, 11 and 12 of
this Agreement to be performed after the Closing shall survive the Closing and
continue until the expiration of the statute of limitation period or periods
applicable to them. All other representations and warranties (as well as
covenants and obligations to be performed prior to the Closing Date) of the
parties in this Agreement or any other Transactional Agreement shall survive
until the first anniversary of the Closing Date. Notwithstanding the foregoing,
the fraudulent breach of any representation or warranty shall survive the
Closing Date and continue until the expiration of the statute of limitations
governing fraud.
(b) The representations, warranties, covenants and obligations
of the respective parties, and the rights and remedies that may be exercised by
any of them, shall not be limited or otherwise affected by or as a result of any
information furnished to, or any investigation made by, or the Knowledge of, any
of the parties or any of their respective representatives.
(c) For purposes of this Agreement, although each statement or
other item of information set forth in the Company Disclosure Schedule or the
Purchaser Disclosure Schedule qualifies the specific representation and warranty
to which such information refers, all such statements and other items of
information set forth in the Company Disclosure Schedule or the Purchaser
Disclosure Schedule shall be deemed to be a representation and warranty made by
the Company, the Representing Party or the Purchaser, as applicable, in this
Agreement.
11.2 INDEMNIFICATION OF THE PURCHASER; LIMITS ON PURCHASER OBLIGATIONS.
(a) Subject to the remainder of this Section 11.2 and Section
11.5, each Representing Party severally covenants and agrees that from and after
the Closing Date, it shall defend, indemnify and hold harmless the Purchaser and
each of its officers, directors, employees, agents and representatives (other
than a Representing Party) (collectively, the "Indemnitees" and individually
each an "Indemnitee") from and against, and shall compensate and reimburse each
of the Indemnitees for, any Damages which are suffered or incurred by any of the
Indemnitees (regardless of whether or not such Damages relate to any third party
claim) directly or indirectly resulting from any breach of any representation or
warranty made by the Company or such Representing Party in this Agreement or the
failure of the Company or such Representing Party to perform any covenant or
obligation hereof; provided, that, notwithstanding the foregoing, from and after
the Closing Date no Selling Shareholder shall be liable for Damages resulting
from any breach of any representation or warranty contained in the second
sentence of Section 5.14(c). The aggregate post-Closing Liability of any Selling
Shareholder under this Section 11 shall (i) in no event exceed such Selling
Shareholder's Pro Rata Share of the Holdback Amount, and (ii) be reduced by such
Selling Shareholder's Pro Rata Share of the aggregate distributions of the
Escrow Fund (as defined in the Escrow
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Agreement) in satisfaction of claims for indemnification against the LLC, except
to the extent such Liability results from the intentional fraud of such Selling
Shareholder.
(b) After the Closing, no Person shall be required to indemnify
any Indemnitee pursuant to this Section 11 unless and until the aggregate amount
of indemnifiable Damages suffered by all Indemnitees with respect to which
Indemnitees are entitled to indemnification pursuant to this Section 11 exceeds
One Hundred Seventy Five Thousand Dollars ($175,000) (the "Threshold"), at which
point Indemnitees shall be entitled to recover the full amount of all such
Damages (including, for the avoidance of doubt, the initial One Hundred Seventy
Five Thousand Dollars ($175,000)) and all other indemnifiable Damages thereafter
suffered or incurred by the Indemnitees, subject, in each case, to any other
applicable limitations in this Section 11 on the indemnifying Person's
indemnification obligations.
(c) The number of shares of Purchaser Stock to be released to
any Indemnitee from the Holdback Amount pursuant to the terms of the Escrow
Agreement to satisfy the obligations of the Representing Parties to indemnify
such Indemnitee for Damages suffered or incurred shall be calculated by dividing
the dollar amount of such Damages by the Average Purchaser Stock Price on the
Closing Date.
(d) The aggregate amount of Damages recoverable by the
Representing Parties resulting from any breach of any representation or warranty
made by the Purchaser in this Agreement or the failure of the Purchaser to
perform any of its covenants or obligations hereunder shall in no event exceed
the product of (i) the total number of shares of Purchaser Stock which comprise
the Holdback Amount as of the Effective Time and (ii) the Average Purchaser
Stock Price on the Closing Date, except to the extent that such Damages result
from the intentional fraud of the Purchaser. After the Closing, neither the
Representing Parties nor the Company shall commence any Proceeding against the
Purchaser to recover Damages resulting from any breach of any representation or
warranty made by the Purchaser in this Agreement or the failure of the Purchaser
to perform any of its covenants or obligations hereunder unless and until the
aggregate amount of Damages recoverable by the Representing Parties and/or the
Company resulting from any such breach or failure of the Purchaser to perform
exceeds the Threshold, at which point the Representing Parties and/or the
Company shall be entitled to recover the full amount of such Damages and all
other Damages (including, for the avoidance of doubt, the initial One Hundred
Seventy-Five Thousand ($175,000)) resulting from any such breach or failure of
the Purchaser to perform thereafter suffered or incurred by the Representing
Parties and/or the Company.
(e) No party shall have any Liability hereunder for any Damages
suffered or incurred by any other party or any Indemnitee resulting from any
breach of any representation or warranty made by any party in this Agreement or
the failure of any party to perform any of its covenants or obligations
hereunder unless a Proceeding to recover such Damages is initiated prior to
expiration of the applicable survival period set forth in Section 11.1(a).
11.3 NO CONTRIBUTION.
The Representing Parties hereby waive and acknowledge and agree that
they shall not have and shall not exercise or assert, against the Purchaser or
any Indemnitee, or attempt to exercise or assert, any right of contribution or
right of indemnity or any other right or remedy against the Purchaser to seek
reimbursement or recovery of any amount paid to any Indemnitee as
indemnification for Damages pursuant to this Section 11. It is the intention of
the parties that after the Closing the remedy for the Purchaser or any
Indemnitee seeking indemnification from the Representing Parties hereunder be a
remedy solely against the Representing Parties and not against the Company;
accordingly, the Representing Parties agree to the waivers contained in this
Section 11.3. The Representing Parties further acknowledge that the waivers,
acknowledgments and agreements of such Representing Parties contained in this
Section are an essential inducement to the Purchaser in entering into this
Agreement and agreeing to consummate the Transactions.
11.4 DEFENSE OF THIRD PARTY CLAIMS.
In the event of the commencement by any Person of any Proceeding
(whether against the Purchaser, any other Indemnitee or any other Person) with
respect to which the Representing Parties may become obligated hereunder to
indemnify, hold harmless, compensate or reimburse any Indemnitee pursuant to
this Section 11, the party to be indemnified (the "Indemnified Party") shall
reasonably promptly, but in any event within thirty (30) days
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following the Indemnified Party's actual knowledge thereof, notify the Person
who may become obligated to indemnify the Indemnified Party pursuant to this
Section 11 (the "Indemnifying Party") of such Proceeding by providing written
notice to the Representing Parties. In any such event, the Indemnified
Party(ies) shall proceed with the defense of such Proceeding and shall bear and
pay all costs and expenses (including attorneys fees and costs) in connection
with the Indemnified Party's(ies') defense of any such Proceeding (whether or
not incurred by the Indemnified Party(ies)).
In connection with the defense of any such Proceeding:
(a) the Indemnified Party(ies) shall be entitled to
indemnification for all expenses reasonably incurred and relating to the defense
of such claim or Proceeding to the extent such expenses are indemnifiable
Damages under the terms of this Section 11;
(b) the Indemnified Party(ies) shall keep the Representing
Parties informed of all material developments and events relating to such claim
or Proceeding;
(c) the Indemnifying Party(ies) shall have the right to
participate in the defense of such claim or Proceeding at his own expense; and
(d) the Indemnified Party(ies) shall not consent to the entry of
any judgement or settle, adjust or compromise such Proceeding without the prior
written consent of the Representing Parties, which consent shall not be
unreasonably withheld.
11.5 SOLE REMEDY.
Other than rights to equitable relief, the sole remedy available to any
Indemnitee for any breach, as of the Closing Date (or if this Agreement shall
have been terminated pursuant to Section 10 prior to the Closing Date, as of the
date of this Agreement), of any representation or warranty made by any party to
this Agreement or the failure of any party to this Agreement to perform any of
its covenants or obligations hereunder shall be limited to the rights set forth
in this Section 11.
11.6 INDEMNIFICATION OF PERSONS OTHER THAN THE INDEMNITEES.
No Person other than an Indemnitee (or any successor or assignee
thereof) shall be permitted to assert any indemnification claim under this
Agreement unless the Purchaser, the Company and the LLC shall have consented to
the assertion of such indemnification claim.
12. MISCELLANEOUS.
12.1 FURTHER ASSURANCES.
Each party hereto shall execute and/or cause to be delivered to each
other party hereto such instruments and other documents, and shall take such
other actions, as such other party may reasonably request (prior to, at or after
the Closing) for the purpose of carrying out or evidencing any of the
Transactions.
12.2 FEES AND EXPENSES.
The Company shall bear and pay all legal and accounting fees and
reasonable costs and expenses that have been incurred or that are in the future
incurred by or on behalf of the Selling Shareholders and the Company in
connection with the Transactions. The Purchaser shall bear and pay all legal and
accounting fees and reasonable costs and expenses that have been incurred or
that are in the future incurred by or on behalf of the Purchaser in connection
with the Transactions.
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12.3 ATTORNEYS' FEES.
If any legal action or other legal proceeding (including arbitration)
relating to the Transactions or the enforcement of any provision of any of the
Transactional Agreements is brought against any party hereto, the Person
presiding over such action or other proceeding may award reasonable attorneys'
fees, costs and disbursements to the prevailing party (in addition to any other
relief to which the prevailing party may be entitled).
12.4 TRANSFER TAXES.
The Company shall be responsible for sales, use and transfer taxes,
including any value added, gross receipts, stamp duty and real, personal or
intangible property transfer taxes, due by reason of the consummation of the
Transactions, including any interest or penalties in respect thereof, other than
transfer taxes imposed upon the exchange of any Company Stock for Purchaser
Stock in connection with this Agreement and the Merger.
12.5 GOVERNING LAW; ARBITRATION.
(a) This Agreement is to be construed in accordance with and
governed by the laws of the State of California (as permitted by Section 1646.5
of the California Civil Code or any similar successor provision), without giving
effect to any choice of law rule that would cause the application of the laws of
any jurisdiction other than the State of California to the rights and duties of
the parties.
(b) Any controversy or claim arising out of or relating to this
Agreement, or breach thereof, shall be settled by arbitration administered by
the American Arbitration Association in accordance with its then existing
Commercial Arbitration rules and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. The
arbitrator shall be appointed by mutual agreement of Purchaser and Representing
Parties involved in such controversy or claim, but, if the Purchaser and such
Representing Parties fail to agree, the arbitrator shall be appointed by the
American Arbitration Association in accordance with its then existing rules. The
place of the arbitration shall be San Francisco, California and the governing
law shall be the laws of the State of California in accordance with Section
12.5(a) of this Agreement.
12.6 SUCCESSORS AND ASSIGNS.
Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon, the successors, assigns,
heirs, executors and administrators of the parties hereto and the Indemnitees
and shall inure to the benefit of and be enforceable by each person who shall be
a holder of the Stock from time to time. None of the parties hereto may assign
any of its or their rights or obligations hereunder to any other party (by
contract, operation of law or otherwise) without the prior written consent of
the other, which consent shall not be unreasonably withheld, and any attempted
assignment in violation thereof shall be void and of no effect.
12.7 ENTIRE AGREEMENT.
This Agreement, the Schedules and the Exhibits hereto, the other
Transactional Agreements, the Rights Agreement and the other documents
contemplated expressly hereby and thereby constitute the full and entire
understanding and agreement among the parties thereto with regard to the
subjects hereof and thereof and supersede all prior agreements and
understandings among or between any of the Parties relating to the subject
matter hereof and thereof.
12.8 SEPARABILITY.
In case any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby, unless such
provision is material to the terms of this Agreement, in which case the
Purchaser, the Company each Representing Party shall in good faith agree upon
such amendments as are necessary to restore the original intent and arrangement
between the parties.
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12.9 AMENDMENTS.
This Agreement may be amended or modified only upon the written consent
of (i) Bain, (ii) a majority in number of the other Selling Shareholders, (iii)
at all times prior to its dissolution, the LLC, (iv) the Company, and (v) the
Purchaser. Any amendment or modification effected pursuant to this Section 12.9
shall be binding upon each Holder, the Company, the Purchaser and Merger Sub.
12.10 NOTICES.
Any notice or other communication required or permitted to be delivered
to any party under this Agreement shall be in writing and shall be deemed
properly delivered and given (a) on the date delivered or given, when delivered
or given by hand or by telecopier during business hours, (b) one business day
after being delivered or given by courier or next-day express delivery service,
or (c) two business days after being delivered or give by registered mail to the
address set forth beneath the name of such party below (or to such other address
or telecopier number as such party shall have specified in a written notice
given to the other parties hereto):
if to the Company:
Fresh Samantha, Inc.
00 Xxxxxxxxxx Xxxx Xxxx
Xxxx, XX 00000
Attention: Xxxxxxx Xxxxx
Telecopier: (000) 000-0000
with copies to:
Verrill & Xxxx, LLP
Xxx Xxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxx, XX 00000-0000
Attention: Xxxx Xxxxxxx
Telecopier: (000) 000-0000
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxx
Telecopier: (000) 000-0000
Xxxxxxxx Xxxxxxx & XxxXxxxx
000 Xxxxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxx, XX 00000-0000
Attention: Xxxxxxx High
Telecopier: (000) 000-0000
if to the LLC:
c/o Fresh Samantha, Inc.
00 Xxxxxxxxxx Xxxx Xxxx
Xxxx, XX 00000
Attention: Xxxxxxx Xxxxx
Telecopier: (000) 000-0000
X-00
00
xxx
x/x Xxxx Xxxxxxx, Xxx.
Two Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Telecopier: (000) 000-0000
with copies to:
Verrill & Xxxx, LLP
Xxx Xxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxx, XX 00000-0000
Attention: Xxxx Xxxxxxx
Telecopier: (000) 000-0000
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxx
Telecopier: (000) 000-0000
Xxxxxxxx Xxxxxxx & XxxXxxxx
000 Xxxxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxx, XX 00000-0000
Attention: Xxxxxxx High
Telecopier: (000) 000-0000
if to Bain:
c/o Bain Capital, Inc.
Two Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Telecopier: (000) 000-0000
with a copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxx
Telecopier: (000) 000-0000
if to RGIP, LLC:
c/o Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxx Xxxxx
Telecopier: (000) 000-0000
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with a copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxx
Telecopier: (000) 000-0000
if to JIP Enterprises, Inc.
x/x XXX Xxxxxxxx XXX Xxx.
Xxxxxx Xxxxxxxx, 0xx Floor
Box 933
Road Town, Tortola, BVI
Telecopier:
if to any other Selling Shareholder:
c/o Fresh Samantha, Inc.
00 Xxxxxxxxxx Xxxx Xxxx
Xxxx, XX 00000
Attention: Xxxxxxx Xxxxx
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxxx Xxxxxxx & XxxXxxxx
000 Xxxxxxxxxx Xxxxxx
P.O. Box 9781
Portland, ME 04104-5081
Attention: Xxxxxxx High
Telecopier: (000) 000-0000
if to the Purchaser:
Odwalla, Inc.
000 Xxxxx Xxxx Xxxx
Xxxx Xxxx Xxx, XX 00000
Attention: D. Xxxxxxx X. Xxxxxxxxxx
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx, Esq.
Telecopier: 000-000-0000
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12.11 PUBLICITY AND USE OF CONFIDENTIAL INFORMATION.
(a) Notwithstanding anything to the contrary contained in any
agreement among the parties hereto, the Purchaser shall have the right to
disclose the information provided to the Purchaser by the Company and the Sel
ling Shareholders in accordance with Section 9.2, the terms of this Agreement
and the identity of the Company in the Proxy Statement, through the use of
printed offering materials or otherwise or as otherwise required by applicable
legal requirements.
(b) The Company and the Representing Party, on the one hand, and
Purchaser, on the other hand, shall keep strictly confidential, and shall not
use, or disclose to any other Person, any non-public document or other
information in the Representing Party's possession, on the one hand, and in
Purchaser's possession, on the other hand, that relates directly or indirectly
to the business of the Company or any Affiliate of the Company, on the one hand,
or the Purchaser or any Affiliate of the Purchaser, on the other hand; provided,
however, that the Purchaser, the Company and the Representing Party may disclose
such non-public information as required by any applicable law or rule to which
Purchaser, the Company or the Representing Party is subject, including the
Exchange Act and the rules of the NASD.
(c) Except as set forth in Section 9.5, neither the Representing
Parties, the Company and the LLC, on the one hand, nor the Purchaser, on the
other hand, shall issue or disseminate any press release or other publicity
concerning any of the Transactions, or permit any press release or other
publicity concerning any of the Transactions to be issued or otherwise
disseminated on its behalf without the prior written consent of the Purchaser,
in the case of the Representing Parties and the Company, or the Company, in the
case of the Purchaser; provided, however, that the Purchaser, the Company and
the Representing Party may disclose or disseminate such information as required
by any applicable law or rule to which Purchaser, the Company or the
Representing Parties is subject, including the Exchange Act and the rules of the
NASD.
12.12 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.
12.13 DELAYS OR OMISSIONS; WAIVERS.
(a) No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise or waiver of any such power, right, privilege or
remedy shall preclude any other or further exercise thereof or of any other
power, right, privilege or remedy.
(b) No Person shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
12.14 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE.
(a) All remedies, either under this Agreement or by law or
otherwise afforded to the parties hereto, shall be cumulative and not
alternative.
(b) Each of the parties hereto agrees that if the conditions to
such party's obligation to consummate the Merger have been satisfied as set
forth in Sections 4.1 or 4.2, as the case may be, and such party nonetheless
refuses to consummate the Merger, then the other party shall be entitled (in
addition to any other remedy that may be available to it) to (i) a decree or
order of specific performance or mandamus to enforce the observance and
performance of such obligation to consummate the Merger, and (ii) an injunction
restraining such non-performance.
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12.15 HEADINGS.
The headings contained in this Agreement are for convenience of
reference only, shall not be deemed to be a part of this Agreement and shall not
be referred to in connection with the construction or interpretation of this
Agreement.
12.16 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall
not be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise specified, all references in this
Agreement to "Sections," "Exhibits" and "Schedules" are intended to refer to
Sections of this Agreement and Exhibits and Schedules to this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this AGREEMENT AND
PLAN OF MERGER as of the date set forth in the first paragraph hereof.
COMPANY: FRESH SAMANTHA, INC.,
a Maine corporation
By: /s/ Xxxxxxx Xxxxx
---------------------------------
Name: Xxxxxxx Xxxxx
Title: Chief Executive Officer
PURCHASER: ODWALLA, INC.,
a California corporation
By: /s/ D. Xxxxxxx X. Xxxxxxxxxx
---------------------------------
Name: D. Xxxxxxx X. Xxxxxxxxxx
Title: Chief Executive Officer
MERGER SUB: ORANGE ACQUISITION SUB, INC.,
a Maine corporation
By: /s/ D. Xxxxxxx X. Xxxxxxxxxx
---------------------------------
Name: D. Xxxxxxx X. Xxxxxxxxxx
Title: Chief Executive Officer
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LLC: SAMANTHA INVESTORS, LLC
a Massachusetts limited liability
company
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Authorized Person
SELLING SHAREHOLDERS: XXXX CAPITAL FUND VI, L.P.,
By: Xxxx Capital Partners VI, L.P.,
its general partner
By: Xxxx Capital Investors VI,
Inc., its general partner
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Managing Director
BCIP ASSOCIATES II
BCIP TRUST ASSOCIATES II
BCIP ASSOCIATES II-B
BCIP TRUST ASSOCIATES II-B
BCIP ASSOCIATES II-C,
By: Xxxx Capital, Inc.,
their Managing Partner
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Managing Director
PEP INVESTMENTS PTY LTD.,
By: Xxxx Capital, Inc.
its Attorney-in-Fact
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Managing Director
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RGIP, LLC,
a Delaware limited liability company
By: /s/ X. Xxxxxxxx Malt
---------------------------------
Name: X. Xxxxxxxx Malt
Title: Authorized Person
JIP ENTERPRISES, INC.,
a British Virgin Islands corporation
By: /s/ Xxxx Xxxxx
---------------------------------
Name: Xxxx Xxxxx
Title: Authorized Person
/s/ Xxxxxx Xxxxxx, Jr.
------------------------------------
Xxxxxx Xxxxxx, Jr.,
an individual
/s/ Xxxxx Xxxxxx
------------------------------------
Xxxxx Xxxxxx,
an individual
/s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx,
an individual
/s/ Xxxxxxx Xxxxx
------------------------------------
Xxxxxxx Xxxxx,
an individual
/s/ Xxxxxx Xxxxxx
------------------------------------
Xxxxxx Xxxxxx,
an individual
/s/ Xxxx Xxxxxx
------------------------------------
Xxxx Xxxxxx,
an individual
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