AGREEMENT AND PLAN OF MERGER by and among THE DRESS BARN, INC., THAILAND ACQUISITION CORP. and TWEEN BRANDS, INC. June 24, 2009
EXECUTION
COPY
by and
among
THE
DRESS BARN, INC.,
THAILAND
ACQUISITION CORP.
and
TWEEN
BRANDS, INC.
June 24,
2009
TABLE OF
CONTENTS
Page
|
ARTICLE I
THE
MERGER
|
1
|
|
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1.1
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The Merger
|
1
|
|
1.2
|
Closing
|
1
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1.3
|
Effect of the Merger
|
2
|
|
1.4
|
Certificate of Incorporation and
Bylaws
|
2
|
|
1.5
|
Directors and Officers
|
2
|
|
1.6
|
Tax Consequences
|
2
|
|
ARTICLE II
EFFECT ON THE CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS
|
3
|
|
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2.1
|
Conversion of Securities
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3
|
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2.2
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Exchange of Certificates
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4
|
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2.3
|
Stock Transfer Books
|
6
|
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2.4
|
Company Options and Other Equity
Awards
|
7
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|
2.5
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Further Assurances
|
8
|
|
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
|
8
|
|
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3.1
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Organization and
Qualification
|
8
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|
3.2
|
Subsidiaries
|
8
|
|
3.3
|
Authorization; Valid and Binding
Agreement
|
9
|
|
3.4
|
Governmental Filings; No
Violations
|
10
|
|
3.5
|
Capital Stock
|
10
|
|
3.6
|
Company SEC Reports
|
11
|
|
3.7
|
Absence of Certain Changes or
Events
|
13
|
|
3.8
|
Properties
|
14
|
|
3.9
|
Tax Matters
|
15
|
|
3.10
|
Material Contracts
|
16
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3.11
|
Intellectual Property
|
17
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3.12
|
Litigation
|
18
|
|
3.13
|
Company Employee Benefit
Plans
|
19
|
|
3.14
|
Insurance
|
22
|
|
3.15
|
Compliance with Laws;
Permits
|
22
|
|
3.16
|
Environmental Matters
|
23
|
|
3.17
|
Affiliated Transactions
|
24
|
|
3.18
|
Labor and Employment
Matters
|
24
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|
3.19
|
Bank Accounts
|
25
|
|
3.20
|
Suppliers
|
26
|
|
3.21
|
Inventory
|
26
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3.22
|
Brokerage
|
26
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3.23
|
Fairness Opinion
|
26
|
|
3.24
|
Vote Required
|
26
|
|
3.25
|
Takeover Statutes
|
26
|
|
3.26
|
Company Rights Agreement
|
27
|
|
3.27
|
Article Eleventh of Charter
|
27
|
|
3.28
|
No Material Misstatement or
Omission
|
27
|
i
TABLE OF
CONTENTS
(continued)
Page
|
ARTICLE IV
REPRESENTATIONS AND
WARRANTIES OF PARENT AND MERGER SUB
|
27
|
|
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4.1
|
Organization and
Qualification
|
27
|
|
4.2
|
Subsidiaries
|
28
|
|
4.3
|
Authorization; Valid and Binding
Agreement
|
28
|
|
4.4
|
Governmental Filings; No
Violations
|
29
|
|
4.5
|
Capital Stock
|
29
|
|
4.6
|
Parent SEC Reports
|
30
|
|
4.7
|
Absence of Certain Changes or
Events
|
32
|
|
4.8
|
Title to Properties
|
32
|
|
4.9
|
Tax Matters
|
32
|
|
4.10
|
Material Contracts
|
33
|
|
4.11
|
Litigation
|
33
|
|
4.12
|
Benefit Plans
|
33
|
|
4.13
|
Compliance with Laws;
Permits
|
34
|
|
4.14
|
Environmental Matters
|
34
|
|
4.15
|
Brokerage
|
35
|
|
4.16
|
Sufficient Funds
|
35
|
|
4.17
|
Operations of Merger Sub
|
35
|
|
4.18
|
No Material Misstatement or
Omission
|
35
|
|
4.19
|
Ownership of Company Common
Stock
|
35
|
|
4.20
|
Affiliated Transactions
|
35
|
|
4.21
|
Labor and Employment
Matters
|
35
|
|
4.22
|
No Other Representations and
Warranties
|
35
|
|
ARTICLE V
CERTAIN PRE-CLOSING
COVENANTS
|
36
|
|
|
5.1
|
Conduct of the Business of the
Company
|
36
|
|
5.2
|
No Control of the Company’s
Business
|
38
|
|
5.3
|
Certificates
|
38
|
|
5.4
|
Certain Actions
|
38
|
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ARTICLE VI
ADDITIONAL
AGREEMENTS
|
38
|
|
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6.1
|
Registration Statement;
Proxy/Prospectus
|
38
|
|
6.2
|
Meeting of Company Stockholders; Board
Recommendation
|
40
|
|
6.3
|
Access to Information;
Confidentiality
|
41
|
|
6.4
|
No Solicitations of
Transactions
|
42
|
|
6.5
|
Reasonable Best Efforts
|
43
|
|
6.6
|
Regulatory Filings
|
44
|
|
6.7
|
Certain Notices
|
45
|
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6.8
|
Public Announcements
|
45
|
|
6.9
|
Indemnification of Directors and
Officers
|
46
|
ii
TABLE OF
CONTENTS
(continued)
Page
|
6.10
|
Company 401(k) Plans;
Benefits
|
47
|
|
6.11
|
Section 16 Matters
|
48
|
|
6.12
|
Further Assurances
|
48
|
|
6.13
|
Stockholder Litigation
|
49
|
|
6.14
|
NASDAQ Listing
|
49
|
|
6.15
|
Pay-Off Letter
|
49
|
|
6.16
|
Resignations
|
49
|
|
6.17
|
Board Appointment
|
50
|
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6.18
|
Certain Actions
|
50
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ARTICLE
VII CONDITIONS
|
50
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|
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7.1
|
Conditions to Obligations of Each Party under this
Agreement
|
50
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7.2
|
Conditions to Parent’s and Merger Sub’s
Obligations
|
51
|
|
7.3
|
Conditions to the Company’s
Obligations
|
52
|
|
ARTICLE VIII
TERMINATION, AMENDMENT AND
WAIVER
|
53
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|
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8.1
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Termination
|
53
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8.2
|
Effect of Termination
|
54
|
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8.3
|
Amendment
|
55
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8.4
|
Waiver
|
55
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8.5
|
Fees and Expenses
|
55
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ARTICLE IX
DEFINITIONS
|
56
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|
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9.1
|
Definitions
|
56
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9.2
|
Construction
|
65
|
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ARTICLE X
MISCELLANEOUS
|
66
|
|
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10.1
|
Non-Survival of Representations and
Warranties
|
66
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10.2
|
Notices
|
66
|
|
10.3
|
Severability
|
67
|
|
10.4
|
Entire Agreement
|
67
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10.5
|
Assignment
|
67
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|
10.6
|
Third-Party Beneficiaries
|
68
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|
10.7
|
No Strict Construction
|
68
|
|
10.8
|
Governing Law; Consent to Jurisdiction and
Venue.
|
68
|
|
10.9
|
Disclosure Letters
|
68
|
|
10.10
|
Time of the Essence
|
69
|
|
10.11
|
Specific Performance
|
69
|
|
10.12
|
WAIVER OF TRIAL BY JURY
|
69
|
|
10.13
|
Counterparts
|
69
|
iii
TABLE OF
CONTENTS
(continued)
Page
EXHIBITS
|
Exhibit
A
|
-
|
Form
of Amended and Restated Certificate of Incorporation of
the Surviving
Corporation
|
|
Exhibit
B
|
-
|
Form
of Bylaws of the Surviving Corporation
|
|
Exhibit
C
|
-
|
Form
of Tax Certificate of the Company
|
|
Exhibit
D
|
-
|
Form
of Tax Certificate of Parent and Merger Sub
|
|
Exhibit
E
|
-
|
Form
of Tax Opinion of Proskauer Rose LLP
|
|
Exhibit
F
|
-
|
Form
of Tax Opinion of O’Melveny & Xxxxx
LLP
|
iv
THIS
AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made
as of June 24, 2009, by and among The Dress Barn, Inc., a Connecticut
corporation (“Parent”), Thailand
Acquisition Corp., a Delaware corporation and a wholly owned Subsidiary of
Parent (“Merger
Sub”), and Tween Brands, Inc., a Delaware corporation (the “Company”). Capitalized
terms used and not otherwise defined in this Agreement have the meanings set
forth in Article IX.
RECITALS
WHEREAS,
the Board of Directors of each of the Company and Parent deems it advisable and
in the best interests of each such corporation and its stockholders that the
Company and Parent engage in a business combination;
WHEREAS,
the respective Boards of Directors of Parent, Merger Sub and the Company have
approved and declared advisable this Agreement, the merger of Merger Sub with
and into the Company (the “Merger”) and the
other transactions contemplated by this Agreement, upon the terms and subject to
the conditions set forth in this Agreement, and the respective Boards of
Directors of each of the Company and Merger Sub have unanimously determined to
recommend to their respective stockholders the adoption of this Agreement,
subject to the terms and conditions hereof and in accordance with the provisions
of the General Corporation Law of the State of Delaware (as amended, the “DGCL”);
and
WHEREAS,
the Merger is intended to qualify as a “reorganization” as described in
Section 368 of the Code, and this Agreement is intended to constitute a
“plan of reorganization” within the meaning of the Treasury Regulations
promulgated under Section 368 of the Code.
NOW,
THEREFORE, in consideration of the premises, representations and warranties and
mutual covenants contained in this Agreement and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, do hereby agree as
follows:
ARTICLE
I
THE
MERGER
1.1 The
Merger. Upon the terms and subject to satisfaction or waiver
of the conditions set forth in this Agreement, and in accordance with the DGCL,
at the Effective Time, Merger Sub shall be merged with and into the
Company. As a result of the Merger, the separate corporate existence
of Merger Sub shall cease and the Company shall continue as the surviving
corporation after the Merger (the “Surviving
Corporation”).
1.2 Closing. The
closing of the Merger (the “Closing”) shall take
place on the second Business Day after the satisfaction or waiver of the
conditions (excluding conditions that, by their nature, cannot be satisfied
until the Effective Time and will in fact be satisfied at the Effective Time)
set forth in Article VII, unless this Agreement has been theretofore terminated
pursuant to its terms or unless another time or date is agreed to in writing by
the parties hereto (the date and time of the Closing being referred to in this
Agreement as the “Closing
Date”). The Closing shall be held at the offices
of Proskauer Rose LLP, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
unless another place is agreed to in writing by the parties
hereto. As soon as practicable on the Closing Date, the Company shall
cause the Merger to be consummated by filing a certificate of merger relating to
the Merger (the “Certificate of
Merger”) with the Secretary of State of the State of Delaware, in such
form as required by, and executed in accordance with the relevant provisions of,
the DGCL (the date and time of such filing, or if a later date and time are
specified in such filing, such specified later date and time, being the “Effective
Time”).
1.3 Effect of the
Merger. At the Effective Time, the effect of the Merger shall
be as provided in the applicable provisions of the DGCL. Without
limiting the generality of the foregoing, at the Effective Time, except as
otherwise provided in this Agreement, all the property, rights, privileges,
powers and franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving
Corporation.
1.4 Certificate of Incorporation
and Bylaws. Subject to Section 6.9 hereof:
(a) At
the Effective Time, the Amended and Restated Certificate of Incorporation of the
Company shall be amended so as to read in its entirety as set forth in Exhibit A hereto and,
as so amended, shall be the Amended and Restated Certificate of Incorporation of
the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable Law.
(b) At
the Effective Time, the bylaws of Merger Sub, as in effect immediately prior to
the Effective Time, shall be the bylaws of the Surviving Corporation and shall
read in their entirety as set forth in Exhibit B hereto
until thereafter changed or amended as provided therein or by applicable
Law.
1.5 Directors and
Officers. The directors of Merger Sub immediately prior to the
Effective Time shall be the initial directors of the Surviving Corporation, each
to hold office in accordance with the certificate of incorporation and bylaws of
the Surviving Corporation. The officers of the Company immediately
prior to the Effective Time shall be the initial officers of the Surviving
Corporation, each to hold office in accordance with the certificate of
incorporation and bylaws of the Surviving Corporation.
1.6 Tax
Consequences. The parties hereto intend for the Merger to
qualify as a “reorganization” within the meaning of Section 368(a) of the
Code. The parties hereto adopt this Agreement as a plan of
reorganization within the meaning of Treasury Regulations Section
1.368-2(g). Neither Parent, the Company nor any other party to this
Agreement shall take a position on any Tax Return or other statement or report
to any government or taxing authority inconsistent with such intention unless
required to do so by applicable Tax Law.
-2-
ARTICLE
II
EFFECT ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS
2.1 Conversion of
Securities. At the Effective Time, by virtue of the Merger and
without any action on the part of Parent, Merger Sub, the Company or the holders
of any of the following securities:
(a) Conversion
Generally. Subject to Section 2.2(e), each share of common
stock, par value $.01 per share, of the Company (“Company Common
Stock”), issued and outstanding immediately prior to the Effective Time
(other than any shares of Company Common Stock to be cancelled pursuant to
Section 2.1(b) or Section 2.1(e)) shall be converted into the right to receive
0.47 (as may be adjusted pursuant to this Section 2.1, the “Exchange Ratio”)
validly issued, fully paid and nonassessable shares of Parent Common Stock
(unless the aggregate number of shares of Parent Common Stock to be issued in
the Merger pursuant to this Section 2.1 would exceed 19.99% of Parent’s issued
and outstanding shares of Parent Common Stock immediately prior to the Effective
Time (19.99% of such issued and outstanding shares rounded down to the nearest
whole share, the “Maximum Share
Number”), in which case the Exchange Ratio shall be reduced to the
minimum extent necessary such that the number of shares of Parent Common Stock
issuable in the Merger pursuant to this Section 2.1 equals the Maximum Share
Number) (the “Merger
Consideration”). Parent hereby covenants and agrees that
between the date of this Agreement and the Effective Time or the earlier
termination of this Agreement, it will not redeem, repurchase or otherwise
retire any previously outstanding shares of Parent Common Stock. All
such shares of Company Common Stock shall no longer be outstanding and shall
automatically be cancelled and shall cease to exist, and each certificate
previously representing any such shares shall thereafter represent the right to
receive the Merger Consideration payable in respect of such shares of Company
Common Stock.
(b) Parent-Owned
Shares. All shares of Company Common Stock owned by Parent or
Merger Sub or any of their respective wholly owned Subsidiaries, if any, shall
be cancelled and shall cease to exist and no Merger Consideration or other
consideration shall be delivered in exchange therefor.
(c) Merger
Sub. Each share of common stock, par value $.01 per share, of
Merger Sub issued and outstanding immediately prior to the Effective Time shall
continue as one share of common stock, par value $.01 per share, of the
Surviving Corporation, which shall constitute the only shares of common stock of
the Surviving Corporation.
(d) Change in
Shares. If, between the date of this Agreement and the
Effective Time, the outstanding shares of Company Common Stock or Parent Common
Stock shall have been changed into, or exchanged for, a different number of
shares or a different class, by reason of any stock dividend, subdivision,
reclassification, reorganization, recapitalization, split, combination,
contribution or exchange of shares, the Merger Consideration and any adjustments
or payments to be made under Section 2.4 and any other number or amount
contained herein that is based upon the price of Parent Common Stock, including
the Measurement Price, or the number of shares of Company Common Stock or Parent
Common Stock, as the case may be, shall be correspondingly adjusted to provide
the holders of Company Common Stock, Company Options and other awards under the
Company Equity Plans, the same economic effect as contemplated by this Agreement
prior to such event; provided that with respect to outstanding Company Options
and other awards made under the Company Equity Plans, any such adjustments shall
be made only to the extent required under the applicable Company Equity
Plan.
-3-
(e) Cancellation of Treasury
Shares. Each share of Company Common Stock held in the Company
treasury and each share of Company Common Stock, if any, owned by any wholly
owned Subsidiary of the Company immediately prior to the Effective Time shall be
cancelled and extinguished without any conversion thereof.
2.2 Exchange of
Certificates.
(a) Exchange
Agent. Parent and/or Merger Sub shall deposit, or shall cause
to be deposited, with American Stock Transfer & Trust Co. or another bank or
trust company designated by Parent and reasonably acceptable to the Company (the
“Exchange
Agent”), for the benefit of the holders of shares of Company Common
Stock, for exchange, in accordance with this Article II, through the Exchange
Agent, (i) at or prior to the Effective Time, the Merger Consideration,
including sufficient certificates representing shares of Parent Common Stock
pursuant to Section 2.1(a) and (ii) from time to time after the Effective Time,
cash sufficient to make payments in lieu of fractional shares in accordance with
Section 2.2(e), in respect of shares of Company Common Stock for which
Certificates have been properly delivered to the Exchange Agent. The
shares of Parent Common Stock and cash amounts so deposited with the Exchange
Agent, together with any dividends or distributions received by the Exchange
Agent with respect to such shares, are referred to collectively as the “Exchange
Fund.” Any portion of the Exchange Fund that remains unclaimed
by the former stockholders of the Company 180 days after the Effective Time
shall be returned to Parent and such security holders shall thereafter look only
to Parent for payment of the Merger Consideration, cash in lieu of fractional
shares of Parent Common Stock and any dividends or distributions with respect to
such shares of Parent Common Stock after the Effective Time, without any
interest thereon.
(b) Exchange
Procedures. Promptly (and in any event no more than five
Business Days) after the Effective Time, Parent shall instruct the Exchange
Agent to mail to each holder of record of a certificate or certificates, which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock (the “Certificates”) (i) a
letter of transmittal (which shall be in customary form and shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Exchange Agent) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration payable in respect of the shares of
Company Common Stock formerly represented by such Certificates. Upon
surrender of a Certificate for cancellation to the Exchange Agent together with
such letter of transmittal, properly completed and duly executed, and such other
documents as may be reasonably required pursuant to such instructions, (1) the
holder of such Certificate shall be entitled to receive in exchange therefor the
Merger Consideration payable in respect of the shares of Company Common Stock
formerly represented by such Certificate and cash in lieu of any fractional
share of Parent Common Stock, and (2) the Certificate so surrendered shall
forthwith be cancelled. In the event of a transfer of ownership of
shares of Company Common Stock that is not registered in the transfer records of
the Company, the Merger Consideration payable in respect of such shares of
Company Common Stock may be paid to a transferee if the Certificate formerly
representing such shares of Company Common Stock is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect such
transfer and by evidence that any applicable stock transfer Taxes have been
paid. Until surrendered as contemplated by this Section 2.2, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration payable
in respect of the shares of Company Common Stock formerly represented by such
Certificate, cash in lieu of any fractional shares of Parent Common Stock to
which such holder is entitled pursuant to Section 2.2(e) and any dividends or
other distributions to which such holder is entitled pursuant to Section 2.2(c),
in each case, without any interest thereon.
-4-
(c) Distributions with Respect
to Unexchanged Shares of Parent Common Stock. No dividends or
other distributions declared or made with respect to shares of Parent Common
Stock, with a record date after the Effective Time, shall be paid to the holder
of any unsurrendered Certificate, unless and until the holder of such
Certificate shall surrender such Certificate. Subject to the effect
of abandoned property, escheat or other applicable Laws, following surrender of
any such Certificate, there shall be paid to such holder of the certificates
representing whole shares of Parent Common Stock issuable in exchange therefor,
without interest, (i) promptly, the amount of dividends or other distributions
with a record date at or after the Effective Time theretofore paid with respect
to such whole shares of Parent Common Stock and (ii) at the appropriate payment
date, the amount of dividends or other distributions, with a record date at or
after the Effective Time but prior to such surrender and a payment date
subsequent to such surrender, payable with respect to such whole shares of
Parent Common Stock.
(d) Further Rights in Company
Common Stock. The Merger Consideration issued upon conversion
of a share of Company Common Stock in accordance with the terms of this
Agreement together with cash in lieu of any fractional shares of Parent Common
Stock and any dividends or other distributions with a record date at or after
the Effective Time to which each holder is entitled shall be deemed to have been
issued in full satisfaction of all rights pertaining to such share of Company
Common Stock.
(e) Fractional
Shares. No certificates or scrip representing fractional
shares of Parent Common Stock will be issued upon the surrender for exchange of
Certificates, but in lieu thereof each holder of Company Common Stock who would
otherwise be entitled to a fraction of a share of Parent Common Stock upon
surrender for exchange of Company Common Stock (after aggregating all fractional
shares of Parent Common Stock to be received by such holder) shall receive an
amount of cash (rounded down to the nearest whole cent), without interest, equal
to the product of such fraction multiplied by the Measurement
Price. Such payment shall occur as soon as practicable after the
determination of the amount of cash, if any, to be paid to each holder of
Company Common Stock with respect to any fractional shares and following
compliance by such holder with the exchange procedures set forth in Section
2.2(b) and in the letter of transmittal. No dividend or distribution
with respect to Parent Common Stock shall be payable on or with respect to any
fractional share and such fractional share interests shall not entitle the owner
thereof to any rights of a stockholder of Parent.
-5-
(f) No
Liability. None of Parent, the Surviving Corporation or the
Company shall be liable to any holder of shares of Company Common Stock for the
Merger Consideration (or dividends or distributions with respect thereto) or any
cash amounts from the Exchange Fund delivered to a public official pursuant to
any abandoned property, escheat or other applicable Law.
(g) Lost
Certificates. If any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Parent, the posting by such Person of a bond, in such reasonable amount as
Parent may direct, as indemnity against any claim that may be made against it
with respect to such Certificate, the Exchange Agent shall pay in exchange for
such lost, stolen or destroyed Certificate the Merger Consideration payable in
respect of the shares of Company Common Stock formerly represented by such
Certificate and any cash in lieu of fractional shares of Parent Common Stock to
which the holder thereof is entitled pursuant to Section 2.2(e) and any
dividends or other distributions to which such holder is entitled pursuant to
Section 2.2(c), in each case, without any interest thereon.
(h) Withholding. Parent,
the Surviving Corporation or the Exchange Agent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of Company Common Stock, any holder of a Company Option or any holder
of a Company Restricted Share such amounts as Parent, the Surviving Corporation
or the Exchange Agent are required to deduct and withhold under the Code, or any
Tax Law, with respect to the making of such payment. In accordance
with the terms of the Company Equity Plans, Parent, the Surviving Corporation or
the Exchange Agent shall permit holders of Company Restricted Shares to satisfy
applicable withholding amounts under the Code by having Parent, the Surviving
Corporation or the Exchange Agent withhold such amounts from the consideration
otherwise payable in respect of the Company Restricted Shares pursuant to this
Agreement. To the extent that amounts are so withheld by Parent, the
Surviving Corporation or the Exchange Agent, such withheld amounts (or the value
thereof) shall be promptly remitted to the applicable taxing authorities in
accordance with the Code or other applicable Tax Law and shall be treated for
all purposes of this Agreement as having been paid to the holder of Company
Common Stock, the holder of a Company Option or the holder of a Company
Restricted Share, as applicable, in respect of whom such deduction and
withholding was made by Parent, the Surviving Corporation or the Exchange
Agent.
2.3 Stock Transfer
Books. At the Effective Time, the stock transfer books of the
Company shall be closed and thereafter there shall be no further registration of
transfers of shares of Company Common Stock theretofore outstanding on the
records of the Company. From and after the Effective Time, the
holders of Certificates representing shares of Company Common Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such shares of Company Common Stock except as otherwise provided in
this Agreement or by Law. On or after the Effective Time, any
Certificates presented to the Exchange Agent or Parent for any reason shall
solely represent the right to receive the Merger Consideration payable in
respect of the shares of Company Common Stock formerly represented by such
Certificates, any cash in lieu of fractional shares of Parent Common Stock to
which the holders thereof are entitled pursuant to Section 2.2(e) and any
dividends or other distributions to which the holders thereof are entitled
pursuant to Section 2.2(c), in each case, without any interest
thereon.
-6-
2.4 Company Options and Other
Equity Awards.
(a) (i)
Each outstanding and unexercised employee and director option granted by the
Company to purchase shares of Company Common Stock (each, a “Company Option”)
shall be cancelled as of the Effective Time in exchange for the right of the
holder thereof to receive from Parent or the Surviving Corporation, in
accordance with this Section 2.4, a lump sum cash payment (without
interest) in the amount of the consideration described below, if any, with
respect to each such Company Option and shall no longer represent the right to
purchase Common Stock or any other equity securities of the Company, Merger Sub,
Parent, the Surviving Corporation or any other Person or to purchase any other
securities or assets, and (ii) as of the Effective Time, the Company Equity
Plans shall be terminated. As used in this Agreement, the term “Company Equity Plans”
means the plans set forth in Section 2.4(a) of the Company Disclosure
Letter. At the Effective Time, each Company Option issued by the
Company that is outstanding and remains unexercised at that time will be
cancelled and converted into the right to receive an amount in cash equal to
(A) the amount, if any, by which (x) the Exchange Ratio multiplied by the
Measurement Price (the “Measurement Value”)
exceeds (y) the per share exercise price of such Company Option, multiplied by (B) the
number of shares of Common Stock issuable upon exercise of such Company Option
in full (whether such Company Option is vested or unvested, but not to the
extent it has theretofore been exercised) (with the aggregate amount of such
payment rounded to the nearest cent). After the Effective Time, any
such cancelled Company Option shall no longer be exercisable by the former
holder thereof, but shall only entitle such holder to the payment described in
the preceding sentence. As of the Effective Time, any Company Option
with an exercise price equal to or greater than an amount equal to the
Measurement Value shall be cancelled without consideration and be of no further
force and effect. Parent and the Surviving Corporation shall use
their reasonable best efforts to provide the lump sum cash payments required
pursuant to this Section 2.4(a) within 10 Business Days following the
Effective Time.
(b) Each
share of Company Common Stock, or outstanding restricted share unit representing
the right to receive a share of Company Common Stock, subject to vesting or
other lapse restrictions pursuant to any of the Company Equity Plans (each, a
“Company Restricted
Share”) that is outstanding immediately prior to the Effective Time shall
vest in full and become free of such restrictions as of the Effective Time in
accordance with the terms of the Company Equity Plans and, at the Effective
Time, the holder thereof shall be entitled to receive the Merger Consideration
with respect to each such Company Restricted Share in accordance with Section
2.1, cash in lieu of fractional shares of Parent Common Stock to which such
holder is entitled pursuant to Section 2.2(e) and any dividend or other
distributions to which such holder is entitled. To the extent shares
of Company Common Stock have not previously been issued in respect of
outstanding restricted share unit awards that are Company Restricted Shares,
such shares of Company Common Stock shall be issued no later than immediately
prior to the Effective Time.
(c) Prior
to the Effective Time, the Company and its Subsidiaries, as applicable, shall
use their reasonable best efforts to take any and all actions necessary,
including obtaining necessary consents and/or amending and/or interpreting any
provisions of the Company Equity Plans or agreements governing the terms and
conditions of the Company Options, to effectuate the provisions of this Section
2.4 (including approval of the Board of Directors of the Company or an
authorized committee thereof).
-7-
2.5 Further
Assurances. After the Effective Time, the officers and
directors of the Surviving Corporation will be authorized to execute and
deliver, in the name and on behalf of the Company or Merger Sub, any deeds,
bills of sale, assignments or assurances and to take and do, in the name and on
behalf of the Company or Merger Sub, any other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the rights, properties or
assets acquired or to be acquired by the Surviving Corporation as a result of,
or in connection with, the Merger.
ARTICLE
III
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
Except as
set forth on the disclosure letter delivered to Parent and Merger Sub by the
Company on or prior to the date of the execution of this Agreement (the “Company Disclosure
Letter”) and except as disclosed in the Annual Report on Form 10-K of the
Company for the year ended January 31, 2009 (the “Company Form 10-K”)
and the Quarterly Reports on Form 10-Q and the Current Reports on Form 8-K, in
each case, filed from the date of the filing of the Company Form 10-K to the
date of this Agreement (other than disclosures in the “Risk Factors” or “Safe
Harbor Statement under the Private Securities Litigation Reform Act of 1995”
sections of such reports and except as expressly provided in Section 3.6 of the
Company Disclosure Letter), the Company hereby represents and warrants to Parent
and Merger Sub that:
3.1 Organization and
Qualification. The Company is a corporation duly organized,
validly existing and in good standing under the Laws of the State of Delaware,
and the Company has all requisite corporate power and authority and all
authorizations, licenses and Permits necessary to own and operate its properties
and to carry on its businesses as now conducted. Except as set forth
on Section 3.1 of the Company Disclosure Letter, the Company is qualified to do
business and in good standing in every jurisdiction in which its ownership of
property or the conduct of its businesses as now conducted requires it to
qualify, except where the failure to be so qualified as a foreign corporation
would not have, either individually or in the aggregate, a Company Material
Adverse Effect, and all such jurisdictions are set forth on Section 3.1 of the
Company Disclosure Letter. The Company has made available to Parent a
complete and correct copy of the certificate or articles of incorporation and
bylaws, each as amended to date, of the Company and each of its
Subsidiaries. Neither the Company nor any of its Subsidiaries is in
violation of any of the provisions of their respective certificate or articles
of incorporation or bylaws (or equivalent organizational
documents).
3.2 Subsidiaries. Neither
the Company nor any of its Subsidiaries owns or holds the right to acquire any
stock, partnership interest, joint venture interest or other equity ownership
interest in any other Person. There are no contractual obligations of
the Company or any of its Subsidiaries to make any loan to, or any investment
(in the form of a capital contribution or otherwise) in, any Subsidiary of the
Company or any other Person. Each Subsidiary of the Company is either
wholly owned by the Company or a Subsidiary or Subsidiaries of the Company as
indicated on Section 3.2 of the Company Disclosure Letter. Each
outstanding share of capital stock of or other equity interest in each of the
Company’s Subsidiaries is owned by the Company or a wholly owned Subsidiary of
the Company, free and clear of any Liens, except Permitted
Liens. Section 3.2 of the Company Disclosure Letter sets forth the
name, jurisdiction of incorporation or formation, jurisdictions of qualification
as a foreign corporation and the authorized and outstanding capital stock of
each Subsidiary of the Company. Except as set forth on Section 3.2 of
the Company Disclosure Letter, each Subsidiary of the Company is duly organized,
validly existing and in good standing under the Laws of the jurisdiction of its
incorporation or organization, has all requisite corporate power and authority
and all authorizations, licenses and Permits necessary to own its properties and
to carry on its businesses and is qualified to do business and in good standing
in every jurisdiction in which its ownership of property or the conduct of its
businesses requires it to qualify, except where the failure to be qualified as a
foreign corporation would not have, either individually or in the aggregate, a
Company Material Adverse Effect.
-8-
3.3 Authorization; Valid and
Binding Agreement.
(a) The
Company has all necessary corporate power and authority to execute and deliver
this Agreement and each other certificate, agreement, document and instrument to
be executed and delivered by the Company in connection with the transactions
contemplated by this Agreement (collectively, the “Company Transaction
Documents”) and to perform its obligations hereunder and thereunder and
to consummate, on the terms and subject to the conditions hereof and thereof,
the transactions contemplated hereby and thereby, subject in the case of the
consummation of the Merger to the adoption of this Agreement by the holders of a
majority of the outstanding shares of Company Common Stock on the record date
for the Stockholders’ Meeting (the “Company Stockholder
Approval”). All corporate action on the part of the Company,
its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement and each of the Company Transaction
Documents and the performance of all obligations of the Company hereunder and
thereunder has been taken, subject only to obtaining the Company Stockholder
Approval. This Agreement and each of the Company Transaction
Documents have been duly executed and delivered by the Company or, in the case
of any Company Transaction Document to be executed and delivered hereafter, each
such Company Transaction Document will have been duly executed and delivered as
of the Closing Date. This Agreement and each of the Company
Transaction Documents each constitute or, in the case of any Company Transaction
Documents to be executed hereafter, each such Company Transaction Document will
constitute a legal, valid and binding obligation of the Company and, assuming
due authorization, execution and delivery by Parent and Merger Sub, will be
enforceable against the Company in accordance with its terms, except as
enforceability may be limited by bankruptcy Laws, other similar Laws affecting
creditors’ rights and general principles of equity affecting the availability of
specific performance and other equitable remedies. As of the date of
this Agreement, the Board of Directors of the Company, subject to Section 6.2,
has unanimously approved and declared advisable this Agreement and recommended
that the Company’s stockholders adopt this Agreement (the “Board
Recommendation”).
-9-
(b) Except
as set forth on Section 3.3(b) of the Company Disclosure Letter, neither the
execution, delivery or performance of this Agreement and the Company Transaction
Documents by the Company nor the consummation of the Merger by the Company or
any of its Subsidiaries will, directly or indirectly (with or without the giving
of notice or the passage of time or both), (i) require any consent,
approval or other action of any Person under any Company Contract or any lease
governing any material Company Leased Real Property, (ii) (A) violate,
result in a breach of, conflict with or entitle any Governmental Entity or any
other Person to accelerate the maturity or performance under, amend, call a
default under, exercise any remedy under, modify, rescind, suspend or terminate
or (B) create any material obligation on the part of the Company or any of its
Subsidiaries that it was not obligated to perform immediately before such
Company Transaction Document was executed under, any term of any such Company
Contract or any Law (assuming, as to the Surviving Corporation, that it was a
party thereto immediately before this Agreement was executed), (iii) violate or
result in the material breach of any term of the certificate or articles of
incorporation or bylaws or other organizational documents or resolution of the
Board of Directors, any committee of the Board of Directors, stockholders or
comparable bodies of the Company or any of its Subsidiaries or (iv) result in
the amendment, creation, imposition or modification of any Lien other than a
Permitted Lien upon or with respect to any of the material properties or assets
that the Company or any of its Subsidiaries owns, uses or purports to own or
use.
3.4 Governmental
Filings; No Violations. Except for (a) the
applicable requirements, if any, of state securities or “blue sky” laws (“Blue Sky Laws”), (b)
the pre-merger notification requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder
(the “HSR
Act”), (c) filings under the Exchange Act and the Securities Act, (d) any
filings required under the rules and regulations of the NYSE and (e) the filing
of the Certificate of Merger pursuant to the DGCL, the execution and delivery of
this Agreement and each of the Company Transaction Documents by the Company and
the consummation of the transactions contemplated hereby and thereby do not (i)
require any material authorization, consent, approval, exemption or other action
by or notice to any court or Governmental Entity, (ii) conflict with or result
in a material breach of the provisions of the Company’s or any of its
Subsidiary’s certificate or articles of incorporation or bylaws or other
organizational documents, or (iii) conflict with or result in a material breach
of any Law to which the Company or any of its Subsidiaries is
subject.
3.5 Capital
Stock. The authorized capital stock of the Company consists of
(a) 50,000,000 shares of preferred stock, of which, as of the date of this
Agreement, no shares are issued and outstanding and (b) 100,000,000 shares of
Company Common Stock, of which, as of the date of this Agreement, 24,822,019
shares are issued and outstanding and there are outstanding restricted share
units representing 358,181 shares of Company Common
Stock, which shares shall be issued and outstanding immediately prior to the
Effective Time. As of the date of this Agreement, there are
outstanding Company Options to purchase an aggregate of 1,889,840 shares of
Company Common Stock. All issued shares of Company Common Stock have
been duly authorized and are validly issued, fully paid and
nonassessable. Other than pursuant to the Company Equity Plans, there
is no outstanding, and there has not been reserved for issuance any: (i) share
of capital stock or other voting securities of the Company or its Subsidiaries;
(ii) security of the Company or its Subsidiaries convertible into or
exchangeable for shares of capital stock or voting securities of the Company or
its Subsidiaries; (iii) Company Option or other right or option to acquire from
the Company or its Subsidiaries, or obligation of the Company or its
Subsidiaries to issue, any shares of capital stock, voting securities or
security convertible into or exchangeable for shares of capital stock or voting
securities of the Company or its Subsidiaries, as the case may be; or (iv)
equity equivalent interest in the ownership or earnings of the Company or its
Subsidiaries or other similar right (the items in clauses (i) through (iv)
collectively, “Company
Securities”). There is no outstanding obligation of the
Company or its Subsidiaries to repurchase, redeem or otherwise acquire any
Company Security. There is no stockholder agreement, voting trust or
other agreement or understanding to which the Company or any of its Subsidiaries
is a party or by which the Company or any of its Subsidiaries are bound relating
to the voting, purchase, transfer or registration of any shares of capital stock
of the Company or any of its Subsidiaries or preemptive rights with respect
thereto.
-10-
3.6 Company SEC
Reports.
(a) The
Company has timely filed with or otherwise furnished (as applicable) to the
Securities and Exchange Commission (the “SEC”) all forms,
reports, schedules, statements, certifications and other documents required to
be filed or furnished by it under the Securities Act or the Exchange Act since
February 2, 2008 (such documents, as supplemented or amended since the time of
filing, and together with all information incorporated by reference therein, the
“Company SEC
Reports”). No Subsidiary of the Company is required to make
any filings with the SEC. As of their respective dates, the Company
SEC Reports, including any financial statements or schedules included or
incorporated by reference therein, at the time filed (i) complied as to form in
all material respects with the applicable requirements of the Securities Act and
the Exchange Act, and the rules and regulations of the SEC promulgated
thereunder applicable to such Company SEC Reports, and (ii) did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) The
Company maintains a system of internal control over financial reporting (as
defined in Rule 13a-15 under the Exchange Act) that has been designed to provide
reasonable assurance that: (i) transactions are executed in
accordance with management’s general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management’s general or
specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(c) The
Company maintains a system of “disclosure controls and procedures” (as defined
in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) necessary in order for the
Chief Executive Officer and Chief Financial Officer of the Company to engage in
the review and evaluation process mandated by the Exchange Act and the rules
promulgated thereunder. The Company’s “disclosure controls and
procedures” are reasonably designed to ensure that all information (both
financial and non-financial) required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the rules and forms
of the SEC, and that all such information is accumulated and communicated to the
Company’s management as appropriate to allow timely decisions regarding required
disclosure and to make the certifications of the Chief Executive Officer and
Chief Financial Officer of the Company required under the Exchange Act with
respect to such reports.
-11-
(d) Since
February 2, 2008, the Company has not received any oral or written notification
of a (x) “significant deficiency” or (y) “material weakness” in the Company’s
internal controls over financial reporting. The terms “significant
deficiency” and “material weakness” shall have the meanings assigned to them in
the Statements of Auditing Standards 112, as in effect on the date
hereof.
(e) The
Company has provided or made available to Parent copies of all correspondence
sent to or received from the SEC by the Company or its Subsidiaries or their
respective counsel or accountants since February 2, 2008. As of the
date hereof, there are no outstanding or unresolved comments in comment letters
received from the SEC staff with respect to any Company SEC
Reports.
(f) The
audited consolidated financial statements included in the Company Form 10-K and
the unaudited consolidated interim financial statements included in the
Company’s quarterly report on Form 10-Q for the quarter ended May 2, 2009
(including any related notes and schedules) and the other financial statements
included in the Company SEC Reports fairly present, in all material respects,
the consolidated financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and the consolidated results of their
operations and their consolidated cash flows for the periods set forth therein,
and in each case were prepared in accordance with GAAP consistently applied
during the periods involved (except as otherwise disclosed in the notes thereto
and subject, in the case of financial statements for quarterly periods, to
normal year-end adjustments not material in amount). The books of
account and other financial records of the Company and each of its Subsidiaries
are true and complete in all material respects, reflect only actual transactions
and are maintained in accordance with GAAP.
(g) Since
February 2, 2008, no attorney representing the Company or any of its
Subsidiaries, whether or not employed by the Company or any Subsidiary of the
Company, has reported to the Company’s chief legal counsel or Chief Executive
Officer evidence of a material violation of securities Laws, breach of fiduciary
duty or similar violation by the Company or any of its officers, directors,
employees or agents pursuant to Section 307 of the Xxxxxxxx-Xxxxx
Act.
(h) Since
February 2, 2008, to the knowledge of the Company, no employee of the Company or
any of its Subsidiaries has provided or is providing information to any law
enforcement agency or Governmental Entity regarding the commission or possible
commission of any crime or the violation or possible violation of any applicable
legal requirements of the type described in Section 806 of the Xxxxxxxx-Xxxxx
Act by the Company or any of its Subsidiaries.
(i) There
is no liability or obligation of the Company or any of its Subsidiaries (whether
accrued, contingent, absolute, determined or determinable) other than: (i)
liabilities or obligations disclosed or provided for in the unaudited
consolidated balance sheet of the Company as of May 2, 2009 or disclosed in the
notes thereto (the “Company Current Balance
Sheet”); (ii) liabilities or obligations incurred after May 2, 2009 in
the ordinary course of the Company’s business; (iii) liabilities incurred in
connection with the transactions contemplated by this Agreement and the Company
Transaction Documents or disclosed on Section 3.6 of the Company Disclosure
Letter; (iv) liabilities under any agreement, lease, note, mortgage, indenture
or other obligation of the Company or any of its Subsidiaries, which is not in
violation of the terms of this Agreement and which is disclosed on the Company
Disclosure Letter if required hereby; and (v) other liabilities that are not,
either individually or in the aggregate, material to the Company and its
Subsidiaries, taken as a whole.
-12-
(j) The
consolidated financial statements of the Company for all periods commencing
after February 4, 2007 are in material compliance with the requirements of the
Financial Accounting Standards Board’s Interpretation 48 (Accounting for
Uncertainty in Income Taxes) (“FIN 48”) and the
Company and its Subsidiaries have provided or made available to Parent any and
all of their respective accounting work papers with respect to compliance with
the FIN 48 that Parent or its Representatives have reasonably
requested.
3.7 Absence of Certain Changes
or Events. Since January 31, 2009, the business of the Company
and its Subsidiaries has been conducted in all material respects in the ordinary
course consistent with past practice. From January 31, 2009 thru the
date of this Agreement, (a) there has not been any event, occurrence or
development that has had, either individually or in the aggregate, a Company
Material Adverse Effect and (b) none of the Company or any of its Subsidiaries
has taken any action that, if taken after the date of this Agreement, would
constitute a breach of any of the covenants set forth in Section
5.1.
-13-
3.8 Properties. The
Company or one of its Subsidiaries, as the case may be, (i) holds good and valid
fee simple title to all of the properties and assets reflected in the Company
Current Balance Sheet as being owned by the Company or one of its Subsidiaries
or acquired after the date thereof (collectively, with respect to real property,
the “Company Owned
Real Property”) (except for assets (other than Company Owned Real
Property) sold or otherwise disposed of since the date thereof in the ordinary
course of business), free and clear of all Liens, except for Permitted Liens,
(ii) holds the Company Owned Real Property, and each portion thereof or interest
therein, free of any outstanding options or rights of first refusal or any
offers to sell, purchase or lease or any Occupancy Agreements, except as set
forth on Section 3.8 of the Company Disclosure Letter, (iii) except as set forth
on Section 3.8 of the Company Disclosure Letter, is the lessee of all leasehold
estates reflected in the Company Current Balance Sheet or acquired after the
date thereof (except for leases that have expired by their terms since the date
thereof), each of which, by address and store number, is set forth on Section
3.8 of the Company Disclosure Letter (collectively, with respect to real
property, the “Company
Leased Real Property”) (including those stores that have been approved
for closing as noted therein) and (w) with respect to each Company Ground Leased
Property, holds good and valid leasehold interest therein, free and clear of all
Liens (except for Permitted Liens) and Occupancy Agreements, (x) is in
possession of the properties purported to be leased thereunder and none of such
properties is affected by any Occupancy Agreements, and each such lease is valid
and in full force and effect, constitutes a valid and binding obligation of the
Company or the applicable Subsidiary of the Company, and to the Company’s
knowledge, each other party thereto, enforceable against the Company or the
applicable Subsidiary of the Company and, to the Company’s knowledge, each other
party thereto, except as enforceability may be limited by bankruptcy Laws, other
similar Laws affecting creditors’ rights and general principles of equity
affecting the availability of specific performance and other equitable remedies,
(y) except as set forth on Section 3.8 of the Company Disclosure Letter, the
Company has not received any written notice of termination or cancellation of or
of a breach or default under any such lease, and (z) except as set forth on
Section 3.8 of the Company Disclosure Letter, neither the Company nor the
applicable Subsidiary of the Company, nor, to the Company’s knowledge, any other
party thereto, is or is alleged to be in material violation thereof or in
material default in respect thereof, nor has there occurred any event or
condition which (with or without notice or lapse of time or both) would
constitute a material violation thereof or a material default
thereunder. The Company has provided Parent with (or made available
to Parent on the Company’s Virtual Premises data site prior to the date hereof)
true, complete and correct copies of each of the leases for the Company Leased
Real Property, including all amendments and supplements thereto and all material
notices delivered or received by the Company or its Subsidiaries in connection
therewith. For purposes of the preceding sentence, each notice
delivered or received by the Company or a Subsidiary thereof in connection with
a lease of the Company Leased Real Property shall be deemed a material notice
unless such notice (i) does not affect the substantive rights and/or obligations
of the parties to the related lease, (ii) has been superseded by a subsequent
amendment, supplement or notice made available to Parent on the Company’s
Virtual Premises data site prior to the date hereof, (iii) is no longer in
effect by being either withdrawn or abandoned, or through the passage of time,
or relates to a default under the related lease that has been cured, (iv)
discloses a matter of public record otherwise disclosed in the Company
Disclosure Letter, or (v) is related to a matter otherwise disclosed in the
Company Disclosure Letter. Except as set forth on Section 3.8 of the
Company Disclosure Letter, none of the leases of the Company Leased Real
Property is guaranteed by any third party, none of the rights of the Company or
any of its Subsidiaries under any leases for Company Leased Real Property will
be subject to termination or modification as the result of the consummation of
the transactions contemplated by this Agreement and the Company Transaction
Documents, and upon consummation of the Merger, the Surviving Corporation will
have succeeded to all of the rights, title and interest of the Company or its
Subsidiaries either directly or indirectly by ownership of the Company’s
Subsidiaries under each of such leases. Section 3.8 of the Company
Disclosure Letter sets forth a true, correct and complete list of the Company
Owned Real Property and a true, correct and complete list of the most recent
title insurance policies or reports relating to the Company Owned Real Property
and the Company Ground Leased Property. The Company Leased Real
Property and Company Owned Real Property comprise all of the real property owned
or leased by the Company and/or its Subsidiaries and used in the business of the
Company and its Subsidiaries as currently operated. All material
personal property shown to be owned by the Company and its Subsidiaries on the
Company Current Balance Sheet have been maintained in accordance with the
Company’s and its Subsidiaries’ normal practices and are in usable condition for
the operation of the Company’s and its Subsidiaries’ businesses, ordinary wear
and tear excepted. To the Company’s knowledge, there are no tax
abatements or exemptions specifically affecting any Company Owned Real Property
or any Company Ground Leased Property and neither the Company nor any of its
Subsidiaries has received any written notice of any proposed increase in the
assessed valuation of any Company Owned Real Property or Company Ground Leased
Property or of any proposed public improvement assessments. The
Company has provided Parent with (or made available to Parent on the Company’s
Virtual Premises data site prior to the date hereof) true, complete and correct
copies of the most recent tax bills for each Company Owned Real Property and
each Company Ground Leased Property. No Company Owned Real Property
or Company Ground Leased Property is comprised of a tax lot that also
encompasses property that is not such Company Owned Real Property or Company
Ground Leased Property. There is no pending, or, to the Company’s
knowledge, threatened or contemplated condemnation, eminent domain or similar
Proceeding affecting any Company Owned Real Property or any portion thereof or
any Company Ground Leased Property or any portion thereof. To the
Company’s knowledge, there exists no fact or condition that is reasonably likely
to result in the termination of the existing access to any Company Owned Real
Property, Company Leased Real Property or Company Ground Leased
Property.
-14-
3.9 Tax
Matters. Each of the Company and its Subsidiaries has timely
filed all Tax Returns that it was required to file. All such Tax
Returns are true, correct and complete in all material
respects. Except as set forth on Section 3.9 of the Company
Disclosure Letter, all Taxes due and payable by the Company or any of its
Subsidiaries (whether or not shown on such Tax Returns) have been fully paid or
properly accrued in accordance with GAAP. The provision for Taxes on
the Company Current Balance Sheet is sufficient for all accrued and unpaid Taxes
as of the date thereof and all Taxes that the Company or any Subsidiary of the
Company is obligated to withhold from amounts owing to any employee, creditor or
third party have been fully and timely paid or properly
accrued. Since the date of the Company Current Balance Sheet, no
Taxes have accrued with respect to the Company or any of its Subsidiaries other
than Taxes arising in the ordinary course of business. There are no
Liens with respect to any Taxes upon any of the Company’s or its Subsidiaries’
assets, other than Permitted Liens. The Company and its Subsidiaries
have complied in all material respects with all Laws, rules and regulations
relating to the payment and withholding of Taxes, and are not liable for any
such Taxes or for failure to comply with such Laws, rules and
regulations. There are no audits, claims, deficiencies, assessments,
levies, administrative or judicial Proceedings pending, or to the Company’s
knowledge threatened, against the Company or any of its Subsidiaries by any
taxing authority. Neither the Company nor any of its Subsidiaries has
received written notice of any claim made by any Governmental Entity in a
jurisdiction where the Company or such Subsidiary does not file Tax Returns that
the Company or such Subsidiary is or may be subject to taxation by that
jurisdiction. There is no outstanding agreement, waiver or consent
providing for an extension of the statutory period of limitations with respect
to any Taxes or Tax Returns of the Company or any of its
Subsidiaries. Other than the Tax Separation Agreement, neither the
Company nor any of its Subsidiaries is a party to or is otherwise bound by any
agreement or understanding providing for the allocation or sharing of Taxes, or
has any obligation or liability under any such agreement or understanding to
which it was once a party or otherwise bound, that could affect their liability
for Taxes for any period after the Closing Date. Neither the Company
nor any of its Subsidiaries has any obligation or liability under the Tax
Separation Agreement that would affect their liability for Taxes for any period
after the Closing Date. Neither the Company nor any of its
Subsidiaries has been or is required to make any adjustment pursuant to Section
481(a) of the Code or any similar provision of state, local or foreign Tax law
by reason of any change in any accounting method, there is no application
pending with any taxing authority requesting permission for any change in any
accounting method for Tax purposes and no taxing authority has proposed any such
adjustment or change in accounting method, in any case, that could affect their
liability for Taxes for any period after the Closing Date. Neither
the Company nor any of its Subsidiaries (i) has been a member of an affiliated
or similar group filing a consolidated, combined, unitary or similar income Tax
Return, other than the affiliated groups of which the Company is the common
parent corporation and the affiliated group of which The Limited, Inc. is the
parent corporation, or (ii) has any liability for Taxes of any person (other
than the Company and its Subsidiaries) under Treasury Regulations Section
1.1502-6 (or any similar provision of state, local or foreign law), as a
transferee or successor, by agreement or otherwise. There are no Tax
rulings, requests for rulings or closing agreements relating to the Company or
any of its Subsidiaries that could affect their liability for Taxes for any
period after the Closing Date. The Company and each of its
Subsidiaries has fully complied with all statutes and regulations relating to
the accounting for and paying over of unclaimed or abandoned funds and other
property. The Company has furnished Parent with, or otherwise made
available to Parent, true and complete copies of all filed federal, state and
local income or franchise Tax Returns and state and local sales and use Tax
Returns for or including the Company and each of its Subsidiaries for all
periods after December 31, 2005. Neither the Company nor any of its
Subsidiaries has constituted either a “distributing corporation” or a
“controlled corporation” (within the meaning of Section 355(a)(1)(A) of the
Code) in a distribution of stock qualifying for tax-free treatment under Section
355 of the Code (i) in the two years prior to the date of this Agreement or (ii)
in a distribution which could otherwise constitute part of a “plan” or “series
of related transactions” (within the meaning of Section 355(e) of the Code) in
conjunction with the transactions contemplated by this Agreement. As
of the date hereof, neither the Company nor any of its Subsidiaries has taken or
agreed to take any action, nor does the Company have knowledge of any fact or
circumstance, that would prevent the Merger from qualifying as a
“reorganization” within the meaning of Section 368(a) of the
Code.
-15-
3.10 Material
Contracts.
(a) Section
3.10 of the Company Disclosure Letter contains a true, complete and correct list
of the Company Contracts as of the date hereof, copies of which have been made
available to Parent. All of the Company Contracts that are required
to be described in the Company SEC Reports or required to be filed as exhibits
thereto have been described or filed as required.
(b) Each
of the Company Contracts is a valid and binding obligation of the Company (or
the Subsidiaries of the Company party thereto), and to the Company’s knowledge,
the other parties thereto, enforceable against the Company and its Subsidiaries
and, to the Company’s knowledge, the other parties thereto in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency,
moratorium, reorganization, arrangement or similar Laws affecting creditors’
rights generally and by general principles of equity.
(c) Neither
the Company nor any of its Subsidiaries is, nor to the Company’s knowledge is
any other party, in breach, default or violation (and no event has occurred or
not occurred through the Company’s or any of its Subsidiaries’ action or
inaction or, to the Company’s knowledge, through the action or inaction of any
third party, that with notice or the lapse of time or both would constitute a
breach, default or violation) of any term, condition or provision of any Company
Contract to which the Company or any of its Subsidiaries is now a party, or by
which any of them or any of their respective properties or assets may be bound,
except for breaches, defaults or violations that would not have, either
individually or in the aggregate, a Company Material Adverse
Effect.
-16-
3.11 Intellectual
Property.
(a) Section
3.11(a) of the Company Disclosure Letter sets forth a true, correct, and
complete list of all registered Company-Owned Intellectual Property Rights, and
all applications for such registration. The Company or one of its
Subsidiaries is the sole and exclusive beneficial and record owner of all such
Company-Owned Intellectual Property Rights. All such Company-Owned Intellectual
Property Rights have been properly maintained by all requisite filings, renewals
and payments, except for any such failures to maintain that would not reasonably
be expected to have a Company Material Adverse Effect. All such
issued or registered Company-Owned Intellectual Property Rights are subsisting
and are valid and, to the Company’s knowledge, enforceable.
(b) To
the Company’s knowledge, the Company and each of its Subsidiaries owns, or is
licensed or has been granted covenants or otherwise possesses sufficient legally
enforceable rights to use all Company Intellectual Property Rights, free and
clear of all Liens, except for any such failures to own, be licensed, or
otherwise possess rights that would not have a Company Material Adverse
Effect.
(c) To
the Company’s knowledge, neither the use of any Company Intellectual Property
Rights by the Company or its Subsidiaries nor the conduct of the businesses of
the Company or its Subsidiaries conflicts with, infringes upon, violates or
interferes with, or constitutes a misappropriation of any right, title, interest
or goodwill associated with any patent, copyright, trademark, trade name,
service xxxx, trade secret or other intellectual property right of any other
Person, except for any such conflict, infringement, violation or interference
that would not have a Company Material Adverse Effect. Except as set
forth on Section 3.11(c) of the Company Disclosure Letter, there are no pending
or, to the knowledge of the Company, threatened proceedings or litigation or
other adverse claims or communications by any Person to or against Company or
any of its Subsidiaries alleging any such conflict, infringement, violation,
interference or misappropriation.
(d) There
are no Proceedings (including, without limitation, interference, reexamination,
opposition, nullity or cancellation proceedings) pending or, to the Company’s
knowledge, threatened (or any basis therefor known to the Company) against the
Company or any of its Subsidiaries challenging the ownership rights of the
Company or any of its Subsidiaries in, or the right of the Company or any of its
Subsidiaries to use, or the validity or enforceability of, any of the
Company-Owned Intellectual Property Rights.
(e) To
the Company’s knowledge, except as set forth on Schedule 3.11(e), no Person
materially conflicts with, infringes upon, violates or interferes with, or
otherwise misappropriates any Company-Owned Intellectual Property Rights, and
there is no Proceeding relating to any such conflict, infringement, violation or
interference threatened or pending by the Company or any of its
Subsidiaries.
-17-
(f) The
consummation of the transactions contemplated by this Agreement and the Company
Transaction Documents will not result in the loss or impairment of any
Company-Owned Intellectual Property Right or payment of any additional amounts
with respect to any Company Intellectual Property Right, nor will the
consummation of such transactions require the consent of any other Person in
respect of any Company-Owned Intellectual Property Right.
(g) Neither
the Company nor any of its Subsidiaries is subject to any settlement agreement,
covenant not to xxx, outstanding order, decree, judgment or stipulation limiting
or restricting in any manner the right of the Company or any of its Subsidiaries
to use, license, transfer or enforce any of the Company-Owned Intellectual
Property Rights.
(h) The
Company has taken commercially reasonable action to maintain and protect the
secrecy and confidentiality of all trade secrets and other confidential
information used in the Company’s and its Subsidiaries’ businesses, including
requiring all employees, consultants, contractors and other Persons with access
to trade secrets or other confidential information of the Company or its
Subsidiaries to execute binding confidentiality agreements and, to the knowledge
of the Company, no such employee, consultant, contractor or other Person is in
breach of any such confidentiality agreement. The Company and its
Subsidiaries have secured from all employees, consultants, contractors and other
Persons who have contributed to the creation or development of any material
Company-Owned Intellectual Property Rights valid and binding written assignments
of all rights to such contributions.
(i) Neither
the Company nor any of its Subsidiaries has granted to any Person an exclusive
license or equivalent exclusive right with respect to any of the Company-Owned
Intellectual Property Rights, or assigned or conveyed to any Person any
ownership interest (including joint ownership rights) therein, and no third
party owns or holds any such right, license or interest.
3.12 Litigation. Except
as set forth and summarized in Section 3.12 of the Company Disclosure Letter,
there is no action, suit, hearing, claim, investigation, arbitration, inquiry or
proceeding (“Proceeding”) pending
or, to the Company’s knowledge, threatened (or any basis therefor known to the
Company) against the Company or any of its Subsidiaries or any of their
respective assets or properties, or their respective officers and directors, in
their capacity as such, before or by any court, arbitrator or Governmental
Entity that, if settled or adversely determined, might reasonably be expected to
result in a settlement or judgment in an amount in excess (including reasonable
attorneys’ fees) of $250,000 or which challenges this Agreement or the Company
Transaction Documents or the transactions contemplated hereby or
thereby. There is no unsatisfied judgment or award, decision, decree,
injunction, rule or order of any Governmental Entity, court or arbitrator
outstanding against the Company or any of its Subsidiaries that might materially
and adversely affect the Company’s ability to consummate the transactions
contemplated by this Agreement and the Company Transaction
Documents. There is no Proceeding by the Company or any of its
Subsidiaries currently pending or which the Company or any of its Subsidiaries
intends to initiate.
-18-
3.13 Company Employee Benefit
Plans.
(a) Section
3.13(a) of the Company Disclosure Letter sets forth a true and complete list of
all “employee benefit plans” within the meaning of Section 3(3) of ERISA and all
other material medical, dental, life insurance, equity, bonus or other incentive
compensation, disability, salary continuation, severance, retention, retirement,
pension, deferred compensation, vacation, sick pay or paid time off plans or
policies, and any other material plans, agreements (including employment,
consulting and collective bargaining agreements), policies, trust funds or
arrangements (whether written or unwritten, insured or self-insured) (i)
established, maintained, sponsored or contributed to (or with respect to which
any obligation to contribute has been undertaken) by the Company, any of its
Subsidiaries or any of their respective current ERISA Affiliates on behalf of
any employee, officer, director, stockholder or other service provider of the
Company or its Subsidiaries (whether current, former or retired) or their
beneficiaries, or (ii) with respect to which the Company, its Subsidiaries or
any of their respective current ERISA Affiliates has any material liability
(whether contingent or actual) as to any such employee, officer, director,
stockholder or other service provider or beneficiary (each a “Company Plan,” and
collectively, the “Company
Plans”).
(b) The
Company has made available to Parent: (i) copies of all material
documents setting forth the terms of each Company Plan, including all amendments
thereto and all related trust documents; (ii) the three most recent annual
reports (Form Series 5500), if any, required under ERISA or the Code in
connection with each Company Plan; (iii) the most recent actuarial report (if
any) for all Company Plans; (iv) the most recent summary plan description, if
any, required under ERISA with respect to each Company Plan; (v) all material
written administrative service agreements and group insurance contracts (if any)
with respect to each Company Plan; (vi) the most recent IRS determination or
opinion letter (if any) issued with respect to each Company Plan intended to be
qualified under Section 401(a) of the Code; and (vii) any and all filings
pending or made within the past three years under the IRS’ Employee Plans
Compliance Resolution System Program or any of its predecessors or the
Department of Labor Delinquent Filer Program with respect to any Company
Plan.
(c) None
of the Company, its Subsidiaries, any of their respective ERISA Affiliates or
any of their respective predecessors currently, or at any time in the past six
years, contributed to, contributes to, has been required to contribute to,
participated in or participates in or in any way, directly or indirectly, has or
had any liability with respect to any plan subject to the minimum funding
standards of Section 412 of the Code or Section 302 of ERISA, or subject to
Title IV of ERISA, including any “multiemployer plan” (within the meaning of
Section 3(37) or 4001(a)(3) of ERISA or Section 414(f) of the Code) or any
“single-employer plan” (within the meaning of Section 4001(a)(15) of ERISA) that
is subject to Section 4063, 4064 or 4069 of ERISA.
-19-
(d) With
respect to each of the Company Plans: (i) each Company Plan intended
to qualify under Section 401(a) of the Code has received a determination letter
from the IRS regarding its qualified status under the Code for all statutory and
regulatory changes with respect to plan qualification requirements for which the
IRS will issue such a letter and nothing has occurred, whether by action or by
failure to act, that caused or could reasonably cause the loss of such
qualification; (ii) in all material respects, all payments required by each
Company Plan, any collective bargaining agreement or other agreement, or by Law
(including all contributions, insurance premiums or intercompany charges) with
respect to all prior periods have been made or provided for by the Company or
its Subsidiaries in accordance with the provisions of each of the Company Plans,
applicable Law and GAAP; (iii) no Proceeding has been asserted, instituted or,
to the Company’s knowledge, has been threatened or anticipated against any of
the Company Plans or any of the assets of any trust of any of the Company Plans
(other than routine claims for benefits and appeals of such claims), or, with
respect to their capacities in relation to the Company Plans only and other than
routine claims for benefits and appeals of such claims, against any trustee or
fiduciaries of the Company Plans thereof, any of the Company’s or its
Subsidiaries’ ERISA Affiliates, or any employee, officer, director, stockholder
or other service provider of the Company or its Subsidiaries (whether current,
former or retired); (iv) each Company Plan complies in form and has been
maintained and operated in all material respects in accordance with its terms
and applicable Law, including ERISA and the Code; (v) no non-exempt “prohibited
transaction,” within the meaning of Section 4975 of the Code and Section 406 of
ERISA, has occurred with respect to the Company Plans which could reasonably be
expected to give rise to a material liability; (vi) no Company Plan is under,
and neither the Company nor any of its Subsidiaries has received any notice of,
an audit or investigation by the IRS, Department of Labor or any other
Governmental Entity, and no such completed audit, if any, has resulted in the
imposition of any material Tax or penalty; (vii) with respect to each Company
Plan that is funded mostly or partially through an insurance policy, none of the
Company, its Subsidiaries or any of their respective ERISA Affiliates currently
has any material liability in the nature of retroactive rate adjustment, loss
sharing arrangement or other actual or contingent material liability arising
wholly or partially out of events occurring on or before the date of this
Agreement or is reasonably expected to have such liability with respect to
periods through the Effective Time; (viii) no Company Plan provides post-retirement health and welfare benefits to any current or former employee of
the Company or its Subsidiaries, except as disclosed on Section
3.13(d) of the Company Disclosure Letter or as required under Section 4980B of
the Code, Part 6 of Title I of ERISA or any other applicable Law; and (ix) there
are no loans by the Company or any of its Subsidiaries to any of their
respective executive officers or directors.
(e) The
consummation of the Merger alone, or in combination with any other event,
including, without limitation, a termination of any employee, officer, director,
stockholder or other service provider of the Company or its Subsidiaries
(whether current, former or retired) or their beneficiaries, will not give rise
to any liability under any Company Plan, including liability for severance pay,
unemployment compensation, termination pay or withdrawal liability, or
accelerate the time of payment or vesting or increase the amount of compensation
or benefits due to any employee, officer, director, stockholder or other service
provider of the Company or its Subsidiaries (whether current, former or retired)
or their beneficiaries. No amount that could be received (whether in
cash or property or the vesting of property) as a result of the consummation of
the Merger by any employee, officer, director, stockholder or other service
provider of the Company or its Subsidiaries under any Company Plan or otherwise
would not be deductible by reason of Section 162(m) or Section 280G of the Code
or would be subject to an excise tax under Section 4999 of the
Code. Neither the Company nor any of its Subsidiaries has any
indemnity obligation on or after the Effective Time for any Taxes imposed under
Section 4999 or 409A of the Code. The Company has provided materially
correct estimates (based on the assumptions stated in such estimates) of the
following to Parent: (i) the maximum amount that could be paid to
each individual who could reasonably be a “disqualified individual” (as such
term is defined in Treasury Regulations Section 1.280G–1) entitled to receive a
“parachute payment” (as such term is defined in Treasury Regulations Section
1.280G-1) in connection with the Merger under all employment, severance and
termination agreements currently in effect and under all other compensation
arrangements and Company Plans currently in effect, assuming that the
individual’s employment with the Company or its Subsidiaries is terminated
immediately following the Effective Time, (ii) the “base amount” (as defined in
Section 280G(b)(e) of the Code) for each such individual as of the date of this
Agreement, and (iii) the vesting schedule (including any acceleration provisions
with respect thereto) for each outstanding Company Option, Company Restricted
Share or other equity award held by each such individual as of the date of this
Agreement.
-20-
(f) Except
as provided in the Company Plans, neither the Company nor any of its
Subsidiaries has made any promises or commitments to create any additional
Company Plan or to modify or change in any material way any existing Company
Plan.
(g) Neither
the Company nor any of its Subsidiaries has unfunded liabilities pursuant to any
Company Plan that is not intended to be qualified under Section 401(a) of the
Code and is either an “account balance plan” or “nonaccount balance plan” within
the meaning of Section 409A of the Code and the plan aggregation rules
thereunder. Each Company Plan that is a “nonqualified deferred
compensation plan” (as defined under Section 409A(d)(1) of the Code) has been
operated and administered in good faith compliance with Section 409A of the Code
from the period beginning January 1, 2005 through December 31, 2008, and, if any
amendments were reasonably necessary, has been amended prior to January 1, 2009
to comply in all material respects with Section 409A of the Code.
(h) Except
as would not be expected to give rise to a material liability, individually or
in the aggregate, (i) any individual who performs services for the Company or
any of its Subsidiaries and who is not treated as an employee for federal income
Tax purposes by the Company or its Subsidiaries is not an employee under
applicable Law or for any purpose including for Tax withholding purposes or
Company Plan purposes; (ii) the Company and its Subsidiaries have no liability
by reason of an individual who performs or performed services for the Company or
its Subsidiaries in any capacity being improperly excluded from participating in
a Company Plan; and (iii) each employee of the Company and its Subsidiaries has
been properly classified as “exempt” or “non-exempt” under applicable
Law.
(i) Each
Company Option (i) has an exercise price at least equal to the fair market value
of Company Common Stock on a date no earlier than the date of the corporate
action authorizing the grant, (ii) no Company Option has had its exercise date
or grant date delayed or “back-dated” and (iii) all Company Options have been
issued in compliance with all applicable Laws and properly accounted for in all
material respects in accordance with GAAP. Section 3.13(i) of the
Company Disclosure Letter sets forth a complete and accurate list, as of the
date of this Agreement, of: (x) all Company Equity Plans, indicating
for each Company Equity Plan the number of shares of Company Common Stock issued
to date under such Company Equity Plans, the number of shares of Company Common
Stock subject to outstanding Company Options and other equity awards and the
number of shares of Company Common Stock reserved for future issuance under such
Company Equity Plan and (y) all holders of outstanding Company Options or other
equity awards, indicating with respect to each Company Option or other award the
Company Equity Plan under which it was granted, the number of shares of Company
Common Stock subject to such Company Option or other award, the exercise price
and the date of grant, as applicable. The Company has provided or
made available to Parent complete and accurate copies of all Company Equity
Plans and forms of all award agreements evidencing Company Options and other
equity awards.
-21-
(j) With
respect to each Company Plan that is mandated by a government other than the
United States or subject to the Laws of a jurisdiction outside of the United
States (a “Foreign
Company Plan”), the fair market value of the assets of each funded
Foreign Company Plan, the liability of each insurer for any Foreign Company Plan
funded through insurance or the book reserve established for any Foreign Company
Plan, together with any accrued contributions, is sufficient in all material
respects to procure or provide for the accrued benefit obligations, as of the
date of this Agreement, with respect to all current and former participants in
such Foreign Company Plan according to the actuarial assumptions and valuations
most recently used to determine employer contributions to such Foreign Company
Plan, and no transaction contemplated by this Agreement shall cause such assets
or insurance obligations to be less than such benefit obligations in any
material respect. Each Foreign Company Plan has been maintained and
operated in all material respects in accordance with the applicable plan
document and all applicable Laws and other requirements, and if intended to
qualify for special Tax treatment, satisfies all requirements for such treatment
in all material respects.
3.14 Insurance. Section
3.14 of the Company Disclosure Letter contains a true, complete and correct list
of all policies of insurance existing on the date hereof relating to the assets
of the Company and its Subsidiaries and the business and employees of the
Company and its Subsidiaries (except for any such policies maintained to provide
benefits to employees under a benefit plan or arrangement described in Section
3.13 hereof). All of such insurance policies are in full force and
effect, and neither the Company nor any of its Subsidiaries is in default with
respect to its material obligations under any of such insurance
policies. All premiums and other payments due from the Company and
its Subsidiaries prior to the date of this Agreement under or on account of any
such insurance policies have been paid as of the date hereof. Such
insurance policies are of the kinds, in the amounts and against the risks
maintained by the Company and its Subsidiaries consistent with past
practice.
3.15 Compliance with Laws;
Permits.
(a) Each
of the Company and its Subsidiaries is in compliance in all material respects
with all Laws applicable to the Company and its Subsidiaries or applicable to
any Company Owned Real Property or any Company Ground Leased
Property. To the Company’s knowledge, neither the Company nor any of
its Subsidiaries is under investigation with respect to, nor has the Company nor
any of its Subsidiaries been threatened to be charged with or been given notice
of any violation of, any applicable Law.
(b) (i)
Except as would not reasonably be expected to have, either individually or in
the aggregate, a Company Material Adverse Effect, each of the Company and its
Subsidiaries has and maintains in full force and effect, and is in compliance
with, all Permits necessary for each of the Company and its Subsidiaries to
carry on their respective businesses as currently conducted and (ii) neither the
Company nor any of its Subsidiaries has received notice that the Person issuing
or authorizing any such Permit intends to terminate, or will refuse to renew or
reissue, any such Permit upon its expiration.
-22-
(c) Since
January 31, 2009, each of the Company and its Subsidiaries has been and are in
compliance in all material respects with the applicable provisions of the
Xxxxxxxx-Xxxxx Act and the rules and regulations promulgated
thereunder.
3.16 Environmental
Matters.
(a) All
references in this Section 3.16 to the Company shall include each entity
comprising the Company, any Subsidiaries thereof and all predecessors thereto,
and any Person or entity to the liabilities of which, pursuant to the
Environmental Laws, contractually, by common law or by operation of law, the
Company or any of its Subsidiaries have succeeded.
(b) All
of the operations of the Company, its Subsidiaries and their respective assets,
including any operations at or from any Company Owned Real Property and any
Company Leased Real Property (collectively, the “Company Real
Property”) or any real property formerly owned, used, leased, occupied,
managed or operated by the Company or any of its Subsidiaries (the “Former Company Real
Property”), comply and have at all times been in material compliance with
all applicable Environmental Laws. Neither the Company nor any of its
Subsidiaries nor, to the knowledge of the Company, any other Person has engaged
in, authorized, allowed or suffered any operations or activities upon any of the
Company Real Property or Former Company Real Property for the purpose of or in
any way involving the handling, manufacture, treatment, processing, storage,
use, generation, release, discharge, emission, dumping or disposal of any
Hazardous Substances at, on or under the Company Real Property or the Former
Company Real Property, except in material compliance with all applicable
Environmental Laws.
(c) Neither
the Company Real Property nor, to the knowledge of the Company, the Former
Company Real Property contains any Hazardous Substances in, on, over, under or
at it in concentrations that would currently violate Environmental Laws or
impose liability or obligations on the Company or any Subsidiary under the
Environmental Laws for any investigation, corrective action, remediation or
monitoring of Hazardous Substances in, on, over, under or at such Company Real
Property or Former Company Real Property. None of such Company Real
Property nor, to the knowledge of the Company, any Former Company Real Property
is listed or proposed for listing on the National Priorities List pursuant to
the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. § 9601 et seq.,
or any similar inventory of sites requiring investigation or remediation
maintained by any state. Neither the Company nor any of the Company’s
Subsidiaries has received any notice, whether oral or written, from any
Governmental Entity or other Person of any actual or threatened material
Environmental Liabilities with respect to the Company, its Subsidiaries, the
Company Real Property or the conduct of the businesses of the Company or any of
its Subsidiaries.
(d) There
are no conditions existing at any Company Real Property that constitute, or
which with the giving of notice or the passage of time or both may constitute
material Environmental Liabilities requiring remedial or corrective action,
removal or closure pursuant to the Environmental Laws. To the
knowledge of the Company, there are no conditions existing at any Former Company
Real Property that constitute, or which with the giving of notice or the passage
of time or both may constitute material Environmental Liabilities requiring
remedial or corrective action, removal or closure pursuant to the Environmental
Laws for which the Company, any Subsidiary of the Company or the Surviving
Corporation could be liable.
-23-
(e) Each
of the Company and its Subsidiaries has all the material Permits necessary for
the conduct of its businesses and operations that are required under applicable
Environmental Laws and is in material compliance with the terms and conditions
of all such Permits.
(f) The
Company has provided to Parent all material environmental reports, assessments,
audits, studies, investigations, data and other written environmental
information in its custody, possession or control concerning the Company, its
Subsidiaries and their respective assets and the Company Real Property and
Former Company Real Property.
(g) Neither
the Company nor any of its Subsidiaries has contractually, by operation of law,
by the Environmental Laws, by common law or otherwise assumed or succeeded to
any material Environmental Liabilities of any predecessors or any other
Person.
(h) None
of the transactions contemplated by this Agreement or the Company Transaction
Documents will trigger any filing requirement or other action under any
applicable Environmental Law, including, without limitation, any environmental
transfer law, including, without limitation, the New Jersey Industrial Site
Recovery Act (N.J.S.A. §§13:1L-6 et seq.) and the Connecticut
Real Property Transfer Act (C.G.S.A. 22a-134 et seq.).
(i) The
Company, its Subsidiaries, their businesses and their products are and have been
in compliance with all applicable requirements under California’s Safe Drinking
Water and Toxic Enforcement Act of 1986 (Proposition 65).
(j) None
of the matters disclosed on the Company Disclosure Letter or in the Company SEC
Reports with respect to this Section 3.16, individually or in the aggregate, is
reasonably likely to have a Parent Material Adverse Effect or a Company Material
Adverse Effect.
3.17 Affiliated
Transactions. The Company has no knowledge that any current or
former officer, director, stockholder or Affiliate of the Company or any of its
Subsidiaries is a party to any material agreement, contract, commitment or
transaction with the Company or any of its Subsidiaries or has any material
interest in any material property used by the Company or any of its Subsidiaries
or in a Person that is a party to any material Company Contract.
3.18 Labor and Employment
Matters.
(a) Section
3.18(a) of the Company Disclosure Letter sets forth a true, complete and correct
list of the name, job position and current annual base rate of salary of all
employees of the Company and its Subsidiaries whose current annual base rate of
salary is in excess of $100,000. To the knowledge of the Company, no
such employee has indicated an intention to resign or retire. Except
for obligations set forth on Section 3.18(a) of the Company Disclosure Letter,
the Company has accrued by adequate reserves on the Company Current Balance
Sheet, in accordance with GAAP, all wages, salaries, bonuses, vacation pay and
other direct, indirect and deferred compensation earned by, or accrued for the
benefit of, all employees of the Company and its Subsidiaries. Parent
has been supplied with true, complete and correct copies of all currently in
effect written employment codes, procedures, policies and employee
manuals. Except as described on Section 3.18(a) of the Company
Disclosure Letter, there are no material non-written employee policies or
procedures that are binding on the Company or its Subsidiaries or that would be
binding on Parent, Merger Sub or the Surviving Corporation.
-24-
(b) Neither
the Company nor any of its Subsidiaries is a party to or bound by any collective
bargaining agreement and there are no labor unions, works councils or other
organizations representing, purporting to represent or, to the knowledge of the
Company, attempting to represent any employee of the Company or any of its
Subsidiaries. In the three years prior to the Closing Date, there has
not been any actual or threatened strike, slowdown, picketing or work stoppage
with respect to employees of the Company or any of its Subsidiaries and, to the
knowledge of the Company, no such activity is anticipated. There are
no labor disputes currently subject to any grievance procedure, arbitration or
litigation and there is no representation petition with any Governmental Entity
pending, threatened or, to the knowledge of the Company, anticipated with
respect to any employee of the Company or any of its Subsidiaries. In
the three years prior to the Closing Date, neither the Company nor any of its
Subsidiaries has engaged in any unfair labor practices for which a claim has
been made to the Company or any Governmental Entity and, to the knowledge of the
Company, no facts exist that could reasonably be expected to give rise to an
unfair labor practice charge within the meaning of the National Labor Relations
Act. The Company and its Subsidiaries are in compliance in all
material respects with the Worker Adjustment and Retraining Xxxxxxxxxxxx Xxx, 00
X.X.X. §0000 et seq. and the regulations promulgated thereunder (the “WARN Act”) and any
comparable state statute or regulation and, to the knowledge of the Company. the
Company and its Subsidiaries are in compliance in all material respects with all
applicable Laws relating to employment and employment practices, workers’
compensation, terms and conditions of employment, worker safety, wages and
hours, civil rights, discrimination, immigration, and collective
bargaining. There have been no material claims of harassment,
discrimination, retaliatory act or similar actions against any employee, officer
or director of the Company or any of its Subsidiaries at any time during the
past three years, no such claims are pending or threatened, and, to the
knowledge of the Company, no such claim is anticipated. The Company
and its Subsidiaries are not required to have, and do not have, any affirmative
action plans or programs. To the Company’s knowledge, no employees of
the Company or any of its Subsidiaries are in any material respect in violation
of any term of any employment contract, non-disclosure agreement,
non-competition agreement or any restrictive covenant to a former employer
relating to the right of any such employee to be employed by the Company or any
of its Subsidiaries because of the nature of the business conducted or presently
proposed to be conducted by the Company or any of its Subsidiaries or to the use
of trade secrets or proprietary information of others.
3.19 Bank
Accounts. Section 3.19 of the Company Disclosure Letter sets
forth a true, correct and complete list of the (a) name of each bank,
savings and loan or other financial institution in which the Company and its
Subsidiaries has an account, and the account numbers and names of all persons
authorized to draw thereon or having access thereto, and (b) locations of
all lock boxes and safe deposit boxes of the Company and its Subsidiaries and
the names of all persons authorized to draw thereon or having access
thereto.
-25-
3.20 Suppliers. Section
3.20 of the Company Disclosure Letter sets forth a true, correct and complete
list that (a) sets forth the names of the 20 largest suppliers by cost
dollar volume of merchandise inventory purchased by the Company and its
Subsidiaries during the most recent full fiscal year and (b) indicates the
cost dollar volume purchased by the Company and its Subsidiaries from each such
supplier during such fiscal year. Except for letters of credit for
outstanding purchase orders, neither the Company nor any of its Subsidiaries is
required to provide any bonding or other financial security arrangements in
connection with any transactions with any supplier in the ordinary course of its
respective business. Since December 31, 2008, there has been no
termination, cancellation or material curtailment of the business relationship
of the Company or any of its Subsidiaries with any such supplier, nor has any
such supplier provided the Company with written notice of an intent to so
terminate, cancel or materially curtail its business relationship with the
Company or any of its Subsidiaries.
3.21 Inventory. Section
3.21 of the Company Disclosure Letter sets forth true, complete and correct
lists of (i) all domestic and international stores operated by the Company or
any Affiliate or licensee thereof which, as of the date hereof, display the
Signage on the exterior or interior thereof, along with the anticipated date for
removal of the Signage from such store or closing of such store, (ii) all
sublicenses pursuant to which the Company licenses any licensed Intellectual
Property to any Person, (iii) all Inventory (A) on order from suppliers, (B) on
hand and available for sale in any store operated by a Company or any Affiliate
or licensee thereof, and (C) located at a distribution, storage or similar
facility, and in the case of (A), (B) and (C), the value of such
Inventory.
3.22 Brokerage. Except
for Xxxxx X. Xxxxxxx Company (the “Company Financial
Advisor”), no Person is entitled to any brokerage, finder’s or similar
compensation in connection with the transactions contemplated by this Agreement
based on any arrangement or agreement made by or on behalf of the Company for
which Parent or Company could become liable or obligated. A true and
complete copy of the agreement between the Company and the Company Financial
Advisor setting forth all of the fees payable to the Company Financial Advisor
and other terms of the retention of the Company Financial Advisor have been
provided or made available to Parent.
3.23 Fairness
Opinion. The Company’s Board of Directors has received an
opinion from the Company Financial Advisor to the effect that, as of the date of
such opinion, the Merger Consideration to be received by the holders of the
Company Common Stock pursuant to this Agreement is fair from a financial point
of view to the holders of the Company Common Stock.
3.24 Vote
Required. Based upon the accuracy of the representation in
Section 4.19 hereof, the Company Stockholder Approval is the only vote of any
class or series of the capital stock of the Company required to adopt this
Agreement and the transactions contemplated by this Agreement.
3.25 Takeover
Statutes. Based upon the accuracy of the representation in
Section 4.19 hereof, the Board of Directors of the Company has taken all actions
so that the restrictions contained in Section 203 of the DGCL (“Section 203”)
applicable to a “business combination” (as defined in such Section 203) or any
other similar Law will not apply to Parent in connection with the execution and
delivery of this Agreement, the consummation of the Merger or the other
transactions contemplated by this Agreement.
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3.26 Company Rights
Agreement. The Company has taken all actions necessary to (a)
render the Rights Agreement inapplicable to this Agreement, the Merger and the
other transactions contemplated by this Agreement, (b) ensure that neither
Parent nor Merger Sub is deemed to be a 15% Stockholder (as defined in the
Rights Agreement) for purposes of the Rights Agreement, (c) ensure that none of
a Distribution Date, a Section 13(a) Event, a 15% Ownership Date or a Section
11(a)(ii) Event (as such terms are defined in the Rights Agreement) will occur
solely by reason of the execution or delivery of this Agreement or the
consummation of the Merger and the other transactions contemplated by this
Agreement, and (d) provide that the Expiration Date (as defined in the Rights
Agreement) shall occur immediately prior to the Effective Time.
3.27 Article Eleventh of
Charter. Based upon the accuracy of the representation in
Section 4.19 hereof, the Board of Directors of the Company has taken all actions
so that the restrictions on “Business Combinations” contained in Article
Eleventh of the Amended and Restated Certificate of Incorporation of the Company
(“Article
Eleventh”) will not apply to Parent, this Agreement or any of the
transactions contemplated hereby, including by having a majority of the “Article
11 Continuing Directors” approve this Agreement and the transactions
contemplated hereby.
3.28 No Material Misstatement or
Omission. No representation or warranty by the Company in this
Agreement and no information contained in the Company Disclosure Letter contains
any untrue statement of a material fact or omits to state any material fact
necessary in order to make the statement made herein or therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE
IV
REPRESENTATIONS AND
WARRANTIES OF PARENT AND MERGER SUB
Except as
set forth on the disclosure letter delivered to the Company by Parent and Merger
Sub on or prior to the date of the execution of this Agreement (the “Parent Disclosure
Letter”) and except as disclosed in the Annual Report on Form 10-K of
Parent for the year ended July 26, 2008 (the “Parent Form 10-K”)
and the Quarterly Reports on Form 10-Q and the Current Reports on Form 8-K of
Parent, in each case, filed from the date of the filing of the Parent Form 10-K
to the date of this Agreement (other than disclosures in the “Risk Factors” or
“Forward Looking Statements” sections of such reports and except as expressly
provided in Section 4.6 of the Parent Disclosure Letter), Parent and Merger Sub
hereby jointly and severally represent and warrant to the Company
that:
4.1 Organization and
Qualification. Parent is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Connecticut and
Merger Sub is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Delaware, and each of Parent and Merger
Sub has all requisite corporate power and authority and all authorizations,
licenses and Permits necessary to own and operate its properties and to carry on
its businesses as now conducted. Each of Parent and Merger Sub is
qualified to do business in every jurisdiction in which its ownership of
property or the conduct of its businesses as now conducted requires it to
qualify, except where the failure to be so qualified as a foreign corporation
would not have, either individually or in the aggregate, a Parent Material
Adverse Effect. Parent has made available to the Company a complete
and correct copy of the certificate or articles of incorporation and bylaws,
each as amended to date, of Parent and Merger Sub. Neither Parent nor
Merger Sub is in violation of any of the provisions of its certificate or
articles of incorporation or bylaws.
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4.2 Subsidiaries. Except
as set forth in Section 4.2 of the Parent Disclosure Letter, neither Parent nor
any of its Subsidiaries owns or holds the right to acquire any stock,
partnership interest, joint venture interest or other equity ownership interest
in any other Person. Except as set forth in Section 4.2 of the Parent
Disclosure Letter, there are no contractual obligations of Parent or any of its
Subsidiaries to make any loan to, or any investment (in the form of a capital
contribution or otherwise) in, any Subsidiary of Parent or any other
Person. Each Subsidiary of Parent is either wholly owned by Parent or
a Subsidiary or Subsidiaries of Parent as indicated on Section 4.2 of the Parent
Disclosure Letter. Each outstanding share of capital stock of or
other equity interest in each of Parent’s Subsidiaries is owned by Parent or a
wholly owned Subsidiary of Parent, free and clear of any Liens, except Permitted
Liens. Each Subsidiary of Parent is validly existing and in good
standing under the Laws of the jurisdiction of its incorporation or
organization, has all requisite corporate power and authority and all
authorizations, licenses and Permits necessary to own its properties and to
carry on its businesses and is qualified to do business in every jurisdiction in
which its ownership of property or the conduct of its businesses requires it to
qualify, except where the failure to be qualified as a foreign corporation would
not have, either individually or in the aggregate, a Parent Material Adverse
Effect.
4.3 Authorization; Valid and
Binding Agreement.
(a) Each
of Parent and Merger Sub has all necessary corporate power and authority to
execute and deliver this Agreement and each other certificate, agreement,
document and instrument to be executed and delivered by the Parent or Merger Sub
in connection with the transactions contemplated by this Agreement
(collectively, the “Parent Transaction
Documents”) and to perform its obligations hereunder and thereunder and
to consummate, on the terms and subject to the conditions hereof and thereof,
the transactions contemplated hereby and thereby, subject in the case of the
consummation of the Merger to the adoption of this Agreement by Parent as the
sole stockholder of Merger Sub (which shall occur immediately after the
execution and delivery of this Agreement). All corporate action on
the part of Parent, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement and each of the Parent
Transactions Documents and the performance of all obligations of Parent
hereunder and thereunder has been taken, subject only to the adoption of this
Agreement by Parent as the sole stockholder of Merger Sub (which shall occur
immediately after the execution and delivery of this Agreement). This
Agreement and each of the Parent Transaction Documents have been duly executed
and delivered by Parent and Merger Sub or, in the case of the Parent Transaction
Document to be executed and delivered hereafter, each such Parent Transaction
Document will have been duly executed and delivered as of the Closing
Date. This Agreement and each of the Parent Transaction Documents
each constitute or, in the case of any Parent Transaction Documents to be
executed hereafter, each such Parent Transaction Document will constitute a
legal valid and binding obligation of Parent and Merger Sub and, assuming due
authorization, execution and delivery by the Company, will be enforceable
against Parent and Merger Sub in accordance with its terms, except as
enforceability may be limited by bankruptcy Laws, other similar Laws affecting
creditors’ rights and general principles of equity affecting the availability of
specific performance and other equitable remedies. As of the date of
this Agreement, the Board of Directors of each of Parent and Merger Sub has
approved, adopted and declared advisable the execution, delivery and performance
of this Agreement and consummation by each of Parent and Merger Sub of the
transactions contemplated by this Agreement.
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(b) Except
as set forth on Section 4.3(b) of the Parent Disclosure Letter, neither the
execution, delivery or performance of this Agreement and the Parent Transaction
Documents by Parent or Merger Sub nor the consummation of the Merger by Parent,
Merger Sub or any of their respective Subsidiaries will, directly or indirectly
(with or without the giving of notice or the passage of time or both),
(i) require any consent, approval or other action of any Person under
any Parent Contract, (ii) (A) violate, result in a breach of, conflict with
or entitle any Governmental Entity or any other Person to accelerate the
maturity or performance under, amend, call a default under, exercise any remedy
under, modify, rescind, suspend or terminate or (B) create any material
obligation on the part of Parent or Merger Sub that it was not obligated to
perform immediately before such Parent Transaction Document was executed under,
any term of any such Parent Contract or any Law, (iii) violate or result in the
material breach of any term of the certificate or articles of incorporation or
bylaws or other organizational documents or resolution of the Board of
Directors, any committee of the Board of Directors, stockholders or comparable
bodies of Parent, Merger Sub or any of their respective Subsidiaries or (iv)
result in the amendment, creation, imposition or modification of any Lien other
than a Permitted Lien upon or with respect to any of the material properties or
assets that Parent, Merger Sub or any of their respective Subsidiaries owns,
uses or purports to own or use.
4.4 Governmental
Filings; No Violations. Except for (a) the
applicable requirements, if any, of Blue Sky Laws, (b) the pre-merger
notification requirements of the HSR Act, (c) filings under the Exchange Act and
the Securities Act, (d) any filings required under the rules and regulations of
the NASDAQ and (e) the filing of the Certificate of Merger pursuant to the DGCL,
the execution and delivery of this Agreement and each of the Parent Transaction
Documents by Parent and Merger Sub and the consummation of the transactions
contemplated hereby and thereby do not (i) require any material authorization,
consent, approval, exemption or other action by or notice to any court or
Governmental Entity, (ii) conflict with or result in a material breach of the
provisions of Parent’s or any of its Subsidiary’s certificate or articles of
incorporation or bylaws or other organizational documents, or (iii) conflict
with or result in a material breach of any Law to which Parent or any of its
Subsidiaries is subject.
4.5 Capital
Stock. The authorized capital stock of Parent consists of (a)
100,000 shares of preferred stock, par value $.05 per share, of which, as of the
date of this Agreement, no shares are issued and outstanding and (b) 165,000,000
shares of Parent Common Stock, of which, as of the date of this Agreement,
60,191,619 shares are issued and outstanding. As of the date of this
Agreement, there are outstanding options to purchase an aggregate of 7,240,153
shares of Parent Common Stock. All outstanding shares of Parent
Common Stock and the shares of Parent Common Stock constituting the Merger
Consideration have been duly authorized and all outstanding shares of Parent
Common Stock are, and the shares of Parent Common Stock constituting the Merger
Consideration, upon issuance in accordance with the terms hereof, will be,
validly issued, fully paid and nonassessable. Except as set forth on
Section 4.5 of the Parent Disclosure Letter and other than pursuant to the
Parent’s equity compensation plans, there are no outstanding, and there have not
been reserved for issuance any: (i) shares of capital stock or other
voting securities of Parent or its Subsidiaries; (ii) securities of Parent or
its Subsidiaries convertible into or exchangeable for shares of capital stock or
voting securities of Parent or its Subsidiaries; (iii) options or other rights
to acquire from Parent or its Subsidiaries, or obligations of Parent or its
Subsidiaries to issue, any shares of capital stock, voting securities or
securities convertible into or exchangeable for shares of capital stock or
voting securities of Parent or its Subsidiaries, as the case may be; or (iv)
equity equivalent interests in the ownership or earnings of Parent or its
Subsidiaries or other similar rights (the items in clauses (i) through (iv)
collectively, “Parent
Securities”). There are no outstanding obligations of Parent
or its Subsidiaries to repurchase, redeem or otherwise acquire any Parent
Securities. There are no stockholder agreements, voting trusts or
other agreements or understandings to which Parent or any of its Subsidiaries is
a party or by which Parent or any of its Subsidiaries are bound relating to the
voting, purchase, transfer or registration of any shares of capital stock of
Parent or any of its Subsidiaries or preemptive rights with respect
thereto.
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4.6 Parent SEC
Reports.
(a) Parent
has timely filed with or otherwise furnished (as applicable) to the SEC all
forms, reports, schedules, statements, certifications and other documents
required to be filed or furnished by it under the Securities Act or the Exchange
Act since July 26, 2008 (such documents, as supplemented or amended since the
time of filing, and together with all information incorporated by reference
therein, the “Parent
SEC Reports”). No Subsidiary of Parent is required to make any
filings with the SEC. As of their respective dates, the Parent SEC
Reports, including any financial statements or schedules included or
incorporated by reference therein, at the time filed (i) complied as to form in
all material respects with the applicable requirements of the Securities Act and
the Exchange Act, and the rules and regulations of the SEC promulgated
thereunder applicable to such Parent SEC Reports, and (ii) did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) Parent
maintains a system of internal control over financial reporting (as defined in
Rule 13a-15 under the Exchange Act) that has been designed to provide reasonable
assurance that: (i) transactions are executed in accordance with
management’s general or specific authorizations; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset accountability; (iii) access to assets is permitted
only in accordance with management’s general or specific authorization; and (iv)
the recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
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(c) Parent
maintains a system of “disclosure controls and procedures” (as defined in Rules
13a-15(e) and 15d-15(e) of the Exchange Act) necessary in order for the Chief
Executive Officer and Chief Financial Officer of Parent to engage in the review
and evaluation process mandated by the Exchange Act and the rules promulgated
thereunder. Parent’s “disclosure controls and procedures” are
reasonably designed to ensure that all information (both financial and
non-financial) required to be disclosed by Parent in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the SEC,
and that all such information is accumulated and communicated to Parent’s
management as appropriate to allow timely decisions regarding required
disclosure and to make the certifications of the Chief Executive Officer and
Chief Financial Officer of Parent required under the Exchange Act with respect
to such reports.
(d) Since
July 26, 2008, Parent has not received any oral or written notification of a (x)
“significant deficiency” or (y) “material weakness” in Parent’s internal
controls over financial reporting. The terms “significant deficiency”
and “material weakness” shall have the meanings assigned to them in the
Statements of Auditing Standards 112, as in effect on the date
hereof.
(e) Parent
has provided or made available to the Company copies of all correspondence sent
to or received from the SEC by Parent or its Subsidiaries or their respective
counsel or accountants since July 26, 2008. As of the date hereof,
there are no outstanding or unresolved comments in comment letters received from
the SEC staff with respect to any Parent SEC Reports.
(f) The
audited consolidated financial statements included in the Parent Form 10-K and
the unaudited consolidated interim financial statements included in Parent’s
quarterly report on Form 10-Q for the quarter ended April 25, 2009 (including
any related notes and schedules) and the other financial statements included in
Parent SEC Reports fairly present, in all material respects, the consolidated
financial position of Parent and its consolidated Subsidiaries as of the dates
thereof and the consolidated results of their operations and their consolidated
cash flows for the periods set forth therein, and in each case were prepared in
accordance with GAAP consistently applied during the periods involved (except as
otherwise disclosed in the notes thereto and subject, in the case of financial
statements for quarterly periods, to normal year-end adjustments not material in
amount). The books of account and other financial records of Parent
and each of its Subsidiaries are true and complete in all material respects,
reflect only actual transactions and are maintained in accordance with
GAAP.
(g) Since
July 26, 2008, no attorney representing Parent or any of its Subsidiaries,
whether or not employed by Parent or any Subsidiary of Parent, has reported to
Parent’s chief legal counsel or Chief Executive Officer evidence of a material
violation of securities Laws, breach of fiduciary duty or similar violation by
Parent or any of its officers, directors, employees or agents pursuant to
Section 307 of the Xxxxxxxx-Xxxxx Act.
(h) Since
July 26, 2008, to the knowledge of Parent, no employee of Parent or any of its
Subsidiaries has provided or is providing information to any law enforcement
agency or Governmental Entity regarding the commission or possible commission of
any crime or the violation or possible violation of any applicable legal
requirements of the type described in Section 806 of the Xxxxxxxx-Xxxxx Act by
Parent or any of its Subsidiaries.
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(i) There
are no liabilities or obligations of Parent or any of its Subsidiaries (whether
accrued, contingent, absolute, determined or determinable) other than: (i)
liabilities or obligations disclosed or provided for in the unaudited
consolidated balance sheet of the Company as of April 25, 2009 or disclosed in
the notes thereto (the “Parent Current Balance
Sheet”); (ii) liabilities or obligations incurred after April 25, 2009 in
the ordinary course of Parent’s business that are not individually or in the
aggregate material to Parent and its Subsidiaries, taken as a
whole; (iii) liabilities incurred in connection with the transactions
contemplated by this Agreement or disclosed on Section 4.6 of the Parent
Disclosure Letter; (iv) liabilities under any agreement, lease, note, mortgage,
indenture or other obligation of Parent or any of its Subsidiaries, which is not
in violation of the terms of this Agreement; and (v) other liabilities that are
not, either individually or in the aggregate, material to Parent and its
Subsidiaries, taken as a whole.
(j) The
consolidated financial statements of Parent for all periods commencing after
February 4, 2007 are in material compliance with the requirements of the FIN 48
and Parent and its Subsidiaries have provided or made available to the Company
any and all of their respective accounting work papers with respect to
compliance with the FIN 48 that the Company or its Representatives have
reasonably requested.
4.7 Absence of Certain Changes
or Events. Since July 26, 2008, the business of Parent and its
Subsidiaries has been conducted in all material respects in the ordinary course
consistent with past practice. From July 26, 2008 thru the date of
this Agreement, there has not been any event, occurrence or development that has
had, either individually or in the aggregate, a Parent Material Adverse
Effect.
4.8 Title to
Properties. Parent or one of its Subsidiaries owns good and
marketable title to, or holds pursuant to valid and enforceable leases, all of
the material personal and real property shown to be owned by them on the Parent
Current Balance Sheet, free and clear of all Liens, except for Permitted Liens
or other imperfections of title, if any, that, individually or in the aggregate,
would not be reasonably expected to have a Parent Material Adverse
Effect. All material personal property shown to be owned by Parent
and its Subsidiaries on the Parent Current Balance Sheet have been maintained in
accordance with Parent’s and its Subsidiaries’ normal practices and are in
usable condition for the operation of Parent’s and its Subsidiaries’ businesses,
ordinary wear and tear excepted.
4.9 Tax
Matters. Parent has timely filed all Tax Returns that it was
required to file. All such Tax Returns are true, correct and complete
in all material respects. Except as set forth on Section 4.9 of the
Parent Disclosure Letter, all material Taxes due and payable by Parent (whether
or not shown on such Tax Returns) have been fully paid or properly accrued in
accordance with GAAP. There are no audits, claims, deficiencies,
assessments, levies, administrative or judicial Proceedings pending, or to
Parent’s knowledge threatened, against Parent by any taxing
authority. As of the date hereof, neither Parent nor any of its
Affiliates has taken or agreed to take any action, nor does Parent have
knowledge of any fact or circumstance, that would prevent the Merger from
qualifying as a “reorganization” within the meaning of Section 368(a) of
the Code.
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4.10 Material
Contracts.
(a) All
agreements, contracts and understandings that are required to be described in
the Parent SEC Reports or required to be filed as exhibits thereto (the “Parent Contracts”)
have been described or filed as required.
(b) Each
of the Parent Contracts is a valid and binding obligation of Parent (or the
Subsidiaries of Parent party thereto), and to Parent’s knowledge, the other
parties thereto, enforceable against Parent and its Subsidiaries and, to
Parent’s knowledge, the other parties thereto in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, moratorium,
reorganization, arrangement or similar Laws affecting creditors’ rights
generally and by general principles of equity.
(c) Neither
Parent nor any of its Subsidiaries is, nor to Parent’s knowledge is any other
party, in breach, default or violation (and no event has occurred or not
occurred through Parent’s or any of its Subsidiaries’ action or inaction or, to
Parent’s knowledge, through the action or inaction of any third party, that with
notice or the lapse of time or both would constitute a breach, default or
violation) of any term, condition or provision of any Parent Contract to which
Parent or any of its Subsidiaries is now a party, or by which any of them or any
of their respective properties or assets may be bound, except for breaches,
defaults or violations that would not have, either individually or in the
aggregate, a Parent Material Adverse Effect.
4.11 Litigation. There is
no Proceeding pending or, to Parent’s knowledge, threatened (or any basis
therefor known to Parent) against Parent or any of its Subsidiaries or their
respective assets or properties, or their respective officers and directors, in
their capacity as such, before or by any court, arbitrator or Governmental
Entity that, if settled or adversely determined, might reasonably be expected to
result in a settlement or judgment in an amount in excess (including reasonable
attorneys’ fees) of $500,000 or which challenges this Agreement or the Parent
Transaction Documents or the transactions contemplated hereby or
thereby. There is no unsatisfied judgment or award, decision, decree,
injunction, rule or order of any Governmental Entity, court or arbitrator
outstanding against Parent or any of its Subsidiaries that might materially and
adversely affect Parent’s or Merger Sub’s ability to consummate the transactions
contemplated by this Agreement and the Parent Transaction
Documents.
4.12 Benefit
Plans.
(a) None
of Parent, its Subsidiaries, any of their respective ERISA Affiliates or any of
their respective predecessors currently, or at any time in the past six years,
contributed to, contributes to, has been required to contribute to, participated
in or participates in or in any way, directly or indirectly, has or had any
liability with respect to any plan subject to the minimum funding standards of
Section 412 of the Code or Section 302 of ERISA, or subject to Title IV of
ERISA, including any “multiemployer plan” (within the meaning of Section 3(37)
or 4001(a)(3) of ERISA or Section 414(f) of the Code) or any “single-employer
plan” (within the meaning of Section 4001(a)(15) of ERISA) that is subject to
Section 4063, 4064 or 4069 of ERISA.
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(b) Each
stock option granted by Parent (i) has an exercise price at least equal to the
fair market value of Parent’s common stock on a date no earlier than the date of
the corporate action authorizing the grant, (ii) no such option has had its
exercise date or grant date delayed or “back-dated” and (iii) all such options
have been issued in compliance with all applicable Laws and properly accounted
for in all material respects in accordance with GAAP.
4.13 Compliance with Laws;
Permits.
(a) Parent
and each of its Subsidiaries are in compliance in all material respects with all
Laws applicable to Parent and its Subsidiaries. Except as would not
have, either individually or in the aggregate, a Parent Material Adverse Effect,
to Parent’s knowledge, neither Parent nor any of its Subsidiaries is under
investigation with respect to, nor has Parent nor any of its Subsidiaries been
threatened to be charged with or been given notice of any violation of, any
applicable Law.
(b) (i)
Except as would not reasonably be expected to have, either individually or in
the aggregate, a Parent Material Adverse Effect, each of Parent and its
Subsidiaries has and maintains in full force and effect, and is in compliance
with, all Permits necessary for Parent and each of its Subsidiaries to carry on
their respective businesses as currently conducted and (ii) neither Parent nor
any of its Subsidiaries has received notice that the Person issuing or
authorizing any such Permit intends to terminate or will refuse to renew or
reissue any such Permit upon its expiration.
(c) Since
July 26, 2008 , each of the Company and its Subsidiaries has been and are in
compliance in all material respects with the applicable provisions of the
Xxxxxxxx-Xxxxx Act and the rules and regulations promulgated
thereunder.
4.14 Environmental
Matters. Except as set forth on Section 4.14 of the Parent
Disclosure Letter or as would not have, either individually or in the aggregate,
a Parent Material Adverse Effect:
(a) Parent
and its Subsidiaries are in compliance with all applicable Environmental
Laws.
(b) Each
of Parent and its Subsidiaries has all Permits necessary for the conduct of its
business and operations which are required under applicable Environmental Laws
and each of Parent and its Subsidiaries is in full compliance with the terms and
conditions of all such Permits.
(c)
Neither Parent nor any of its Subsidiaries has received any written notice from
any Governmental Entity or other Person of any pending actual or threatened
Environmental Liabilities of Parent or any Subsidiary of Parent.
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(d) To
the knowledge of Parent, there are no conditions existing at any site formerly
or currently owned or occupied by Parent or its Subsidiaries, nor any site at
which Hazardous Substances may have been transported or disposed by Parent or
its Subsidiaries, that constitute, or which with the giving of notice or the
passage of time or both, may constitute material Environmental Liabilities
requiring remedial or corrective action, removal or closure pursuant to the
Environmental Laws for which Parent or any of its Subsidiaries could be
liable.
4.15 Brokerage. There
are no claims for brokerage commissions, finders’ fees or similar compensation
in connection with the transactions contemplated by this Agreement based on any
arrangement or agreement made by or on behalf of Parent or Merger Sub for which
the Company could become liable or obligated.
4.16 Sufficient
Funds. Parent’s available cash will be sufficient to
consummate the transactions contemplated by this Agreement and to pay all
related fees and expenses for which Parent and Merger Sub will be
responsible.
4.17 Operations of Merger
Sub. Merger Sub was formed solely for the purpose of engaging
in the transactions contemplated by this Agreement, has engaged in no other
business activities and has conducted and will conduct its operations prior to
the Effective Time only as contemplated by this Agreement. All shares
of capital stock of Merger Sub are owned directly by Parent.
4.18 No Material Misstatement or
Omission. No representation or warranty by Parent or Merger
Sub in this Agreement and no information contained in the Parent Disclosure
Letter contains any untrue statements of a material fact or omits to state any
material fact necessary in order to make the statement made herein or therein,
in light of the circumstances under which they were made, not
misleading.
4.19 Ownership of Company Common
Stock. For the period beginning three years prior to the date
hereof, neither Parent nor Merger Sub has “owned” (as defined in
Section 203) or “beneficially owned” (as defined in the Rights Agreement or
Article Eleventh) any shares of Company Common Stock.
4.20 Affiliated
Transactions. Parent has no knowledge that any current or
former officer, director, stockholder or Affiliate of Parent or any of its
Subsidiaries is a party to any material agreement, contract, commitment or
transaction with Parent or any of its Subsidiaries or has any material interest
in any material property used by Parent or any of its Subsidiaries or in a
Person that is a party to any material Parent Contract.
4.21 Labor and Employment
Matters. To the knowledge of Parent, Parent and its
Subsidiaries are in compliance in all material respects with all applicable Laws
relating to employment and employment practices, workers’ compensation, terms
and conditions of employment, worker safety, wages and hours, civil rights,
discrimination, immigration, collective bargaining and the WARN Act and any
comparable state statute or regulation.
4.22 No Other Representations and
Warranties. Except for the representations and warranties
contained in Article III of this Agreement, neither Parent nor Merger Sub has
relied upon or otherwise been induced by, any other express or implied
representation or warranty with respect to the Company or with respect to any
information provided to or made available to Parent or Merger Sub in connection
with the transactions contemplated hereunder.
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ARTICLE
V
CERTAIN PRE-CLOSING
COVENANTS
5.1 Conduct of the Business of
the Company. The Company covenants and agrees as to itself and
its Subsidiaries that, from the date of this Agreement and continuing until the
Effective Time, except (i) as expressly contemplated or permitted by this
Agreement, (ii) as required by Law, (iii) to the extent Parent shall otherwise
consent in writing (which consent shall not be unreasonably withheld, delayed or
conditioned), or (iv) as set forth on Section 5.1 of the Company Disclosure
Letter, the Company (A) shall conduct its business in all material respects only
in the ordinary course of business, consistent with past practice, and, to the
extent consistent therewith, it and its Subsidiaries shall use their respective
reasonable best efforts to (i) preserve their business organization intact,
preserve the Company Contracts in force and maintain existing relations and
goodwill with customers, suppliers, distributors, creditors, lessors, officers,
employees, business associates and consultants, (ii) maintain and keep material
properties and assets in good repair and condition, (iii) maintain in effect all
material governmental Permits pursuant to which the Company or any of its
Subsidiaries currently operates and (iv) maintain and enforce all Company
Intellectual Property Rights; provided, however, that no
action by the Company or its Subsidiaries with respect to matters specifically
addressed by any provision of Section 5.1 shall be deemed a breach of this
sentence unless such action would constitute a breach of such other provision,
and (B) shall not, and shall cause each Subsidiary not to, without Parent’s
prior written consent (which consent shall not be unreasonably withheld, delayed
or conditioned):
(i) (A)
issue, sell, purchase or redeem any shares of its or any Subsidiary’s capital
stock or any Company Security (other than pursuant to the terms of any Company
Plan or any awards made under the Company Equity Plans), (B) effect any
recapitalization, reclassification, stock dividend, stock split or like change
in its capitalization, (C) declare, set aside or pay any dividends on, or make
any other distributions (whether in cash, stock or property), in respect of, any
of its capital stock, other than dividends and distributions by a direct or
indirect wholly owned Subsidiary to its parent, (D) amend or otherwise change
its or any Subsidiary’s certificate or articles of incorporation or bylaws (or
equivalent organizational documents), (E) make any acquisition of, or investment
in, assets (other than the purchase of supplies or inventory in the ordinary
course of business, consistent with past practice) or stock (whether by way of
merger, consolidation, tender offer, share exchange or other activity) in any
transaction or any series of related transactions for an aggregate purchase
price or prices, in excess of $250,000, other than in the ordinary course of
business, consistent with past practice, or (F) enter into any agreement with
respect to the voting of the capital stock of the Company;
(ii) incur
any Indebtedness or sell, lease, sublease, license or permit to be subject to
any Lien, other than a Permitted Lien, or otherwise dispose of any of its
material properties or assets (including, without limitation, any Company Owned
Real Property or any Company Ground Leased Property);
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(iii) (A)
enter into any new line of business or make or agree to make any new capital
expenditure in excess of $250,000 or that, in the aggregate, are in excess of
$500,000, other than in the ordinary course of business, consistent with past
practice, (B) except in the ordinary course of business, consistent with past
practice, modify, amend or terminate any material contract to which the Company
or any of its Subsidiaries is a party or knowingly waive, release or assign any
material rights or claims thereunder, or (C) dispose of, grant or permit to
lapse any material Company Intellectual Property Rights or dispose of or
disclose to any Person, other than to Representatives of the Company or Parent,
any material trade secret;
(iv) discharge,
settle, compromise, assign or satisfy any claim, whether or not pending before a
Governmental Entity, (A) outside of the ordinary course of business, consistent
with past practice, or (B) except where such discharge, settlement, compromise
or satisfaction of any claim would result in payments (individually and not in
the aggregate), net of insurance, by the Company or any of its Subsidiaries of
less than $250,000;
(v) (A)
except (1) to the extent required by applicable Law or by written agreements or
Company Plans existing prior to the date of this Agreement that have been
disclosed or made available to Parent or (2) for ordinary course salary
increases, bonuses or other compensation granted to non-officer employees, grant
or announce any stock option, equity or incentive awards or the increase in the
salaries, bonuses or other compensation and benefits payable by the Company or
any of its Subsidiaries to any of the employees, officers, directors or
consultants of the Company or any of its Subsidiaries, (B) hire any new
employees, except in the ordinary course of business consistent with past
practice with respect to employees with an annual base salary not to exceed
$100,000, (C) except to the extent required by applicable Law or by any existing
Company Plan or written agreement existing on the date of this Agreement that
has been disclosed or made available to Parent or in the ordinary course of
business (other than in connection with a Company-instituted reduction in force)
consistent with past practice for non-officer employees, pay or agree to pay any
pension, retirement allowance, termination or severance pay, bonus or other
material employee benefit to any employee, officer, director or consultant of
the Company or any of its Subsidiaries, whether past or present, (D) except to
the extent required by applicable Law or by any existing Company Plan or written
agreement existing on the date of this Agreement that has been disclosed or made
available to Parent, enter into or amend any contract of employment or any
consulting, bonus, severance, retention, retirement or similar agreement, except
for agreements for newly hired employees in the ordinary course of business
consistent with past practice with an annual base rate of salary not to exceed
$100,000 or (E) enter into or adopt any new, or materially increase benefits
under or renew (other than automatic renewals pursuant to an existing Company
Plan or written agreement existing on the date of this Agreement), amend or
terminate any existing, Company Plan or benefit arrangement or any collective
bargaining agreement;
(vi) except
as required by GAAP or under applicable Law and as concurred with by the
Company’s independent auditors, make any material change in accounting methods,
principles or practices;
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(vii) enter
into any contract that limits or otherwise restricts the Company or any of its
Subsidiaries or any of their respective Affiliates or any successor thereto from
engaging or competing in any line of business or product line or in any
geographic area (excluding any marketing agreement relating
to cross-promotional campaigns with third parties made in the ordinary
course of business consistent with past practice);
(viii) make,
revoke or amend any Tax election, adopt or change any method of accounting,
extend or waive the application of any statute of limitation regarding the
assessment or collection of any Tax, settle or compromise any Tax liability or
refund or file any amended Tax Return; or
(ix) authorize
any of, or commit or agree to take any of, the foregoing actions other than as
provided for in this Section 5.1.
5.2 No Control of the Company’s
Business. Nothing contained in this Agreement shall give
Parent, directly or indirectly, the right to control or direct the Company’s or
its Subsidiaries’ operations prior to the Effective Time.
5.3 Certificates. The
Company, Parent and Merger Sub shall execute and deliver to each of O’Melveny
& Xxxxx LLP, counsel to the Company, and, Proskauer Rose LLP, counsel to
Parent and Merger Sub, certificates substantially in the forms attached hereto
as Exhibit C and
Exhibit D,
respectively, at such time or times as reasonably requested by each law firm in
connection with its delivery of the opinion referred to in Section 7.3(d)
or Section 7.2(c), as the case may be.
5.4 Certain
Actions. Prior to the Effective Time, neither the Company,
Parent, Merger Sub nor any of their respective Affiliates shall take or agree to
take any action that would reasonably be likely to prevent the Merger from
qualifying as a “reorganization” under Section 368(a) of the
Code.
ARTICLE
VI
ADDITIONAL
AGREEMENTS
6.1 Registration Statement;
Proxy/Prospectus.
(a) As
promptly as practicable after the execution of this Agreement, the Company shall
prepare and file with the SEC a proxy statement in preliminary form relating to
the Stockholders’ Meeting (together with any amendments thereof or supplements
thereto, the “Proxy
Statement”) and Parent shall prepare and file with the SEC a registration
statement on Form S-4 (together with all amendments thereto, the “Registration
Statement” and the prospectus contained in the Registration Statement
together with the Proxy Statement, the “Proxy/Prospectus”),
in which the Proxy Statement shall be included, in connection with the
registration under the Securities Act of the shares of Parent Common Stock to be
issued to the stockholders of the Company as the Merger
Consideration. Each of Parent and the Company shall use its
reasonable best efforts to cause the Registration Statement to become effective
and the Proxy Statement to be cleared by the SEC as promptly as practicable,
and, prior to the effective date of the Registration Statement, Parent shall
take all actions reasonably required under any applicable federal securities
Laws or Blue Sky Laws in connection with the issuance of shares of Parent Common
Stock pursuant to the Merger. Each of Parent and the Company shall
furnish all information concerning it and the holders of its capital stock as
the other may reasonably request in connection with such actions and the
preparation of the Registration Statement and the Proxy Statement. As
promptly as reasonably practicable after the Registration Statement shall have
become effective and the Proxy Statement shall have been cleared by the SEC, the
Company shall mail or cause to be mailed or otherwise make available in
accordance with the Securities Act and the Exchange Act the Proxy/Prospectus to
its stockholders; provided, however, that the
parties shall consult and cooperate with each other in determining the
appropriate time for mailing or otherwise making available to the Company’s
stockholders the Proxy/Prospectus in light of the date set for the Stockholders’
Meeting. No filing of, or amendment of or supplement to, the Proxy
Statement shall be made by the Company, and no filing of, or amendment or
supplement to, the Registration Statement shall be made by Parent, in each case,
without the prior written consent of the Company and Parent, such consent not to
be unreasonably withheld, conditioned or delayed. Each of Parent and
the Company shall advise the other, promptly after it receives notice thereof,
of the time when the Registration Statement has become effective or any
supplement or amendment has been filed, of the issuance of any stop order, the
suspension of the qualification of the Parent Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Proxy Statement or the Registration
Statement or comments thereon and responses thereto or requests by the SEC for
additional information.
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(b) The
Company and Parent represent that the information supplied by it for inclusion
in the Registration Statement and the Proxy Statement shall not, at (i) the time
the Registration Statement is declared effective, (ii) the time the
Proxy/Prospectus (or any amendment thereof or supplement thereto) is first
mailed or made available to the stockholders of the Company or (iii) the time of
the Stockholders’ Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading.
(c) If
at any time prior to the Effective Time any event or circumstance relating to
the Company or Parent, or any of their respective Subsidiaries, or their
respective officers or directors, or any of their holders of capital stock, is
discovered by a party which should be set forth in an amendment of or a
supplement to the Registration Statement or Proxy Statement so that such
document does not 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 statements therein, in light of the circumstances under which they are
made, not misleading, such party shall promptly inform the other party and
Parent and the Company shall promptly file with the SEC any such amendment or
supplement to the Registration Statement, respectively. Parent and
the Company shall use reasonable best efforts to have such amendment or
supplement cleared for mailing as soon as practicable and shall, as required
under applicable Law, disseminate the information contained in such amendment or
supplement to Company stockholders.
(d) Each
of Parent and the Company shall use reasonable best efforts to cause all
documents that it is responsible for filing with the SEC in connection with the
transactions contemplated herein to comply as to form and substance in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act.
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6.2 Meeting of Company
Stockholders; Board Recommendation.
(a) Meeting of Company
Stockholders. The Company shall take all action necessary in
accordance with the DGCL and its certificate of incorporation and bylaws to
call, hold and convene a meeting of its stockholders to consider the adoption of
this Agreement (the “Stockholders’
Meeting”) to be held as promptly as reasonably practicable following the
distribution of the definitive Proxy/Prospectus to its
stockholders. Subject to Section 6.2(c), the Company will use its
reasonable best efforts to solicit from its stockholders proxies in favor of the
adoption of this Agreement. The Company may adjourn or postpone the
Stockholders’ Meeting to the extent necessary to ensure that any necessary
supplement or amendment to the Proxy/Prospectus is provided to its stockholders
in advance of a vote on this Agreement or, if as of the time for which the
Stockholders’ Meeting is originally scheduled (as set forth in the
Proxy/Prospectus) there are insufficient shares of Company Common Stock voting
in favor of the adoption of this Agreement or represented (either in person or
by proxy) to constitute a quorum necessary to conduct the business of such
Stockholders’ Meeting; provided, however, that, unless
this Agreement shall be terminated in accordance with its terms, the Company
shall be obligated to call, give notice of, convene and hold the Stockholders’
Meeting, and submit this Agreement to its stockholders for adoption, regardless
of the commencement, disclosure, announcement or submission to it of any
Acquisition Proposal or of any Change of Recommendation.
(b) Board
Recommendation. Except to the extent expressly permitted by
Section 6.2(c): (i) the Board of Directors of the Company has and
shall recommend that its stockholders vote in favor of adoption of this
Agreement at the Stockholders’ Meeting, (ii) the Proxy/Prospectus shall include
a statement to the effect that the Board of Directors of the Company has
recommended that the Company’s stockholders vote in favor of adoption of this
Agreement at the Stockholders’ Meeting and (iii) neither the Board of Directors
of the Company nor any committee thereof shall withdraw, amend or modify, or
propose or resolve to withdraw, amend or modify, in a manner adverse to Parent,
the Board Recommendation, or approve or adopt or propose publicly to approve or
adopt any Acquisition Proposal.
(c) Change of Board
Recommendation. Prior to the adoption of this Agreement by the
Company’s stockholders and subject to compliance by the Company with Section
6.4, the Board of Directors of the Company may withhold, withdraw, qualify or
modify the Board Recommendation or approve, adopt, recommend or otherwise
declare advisable any Superior Proposal made after the date hereof and not
solicited, initiated or encouraged in breach of this Agreement (any of the
foregoing, a “Change
of Recommendation”), if, subject to compliance by the Company with this
Section 6.2 and Section 6.4, the Board of Directors of the Company determines in
good faith, after consultation with the Company’s outside legal counsel, that
failure to take such action would be reasonably likely to result in a breach of
the fiduciary duties of the Company’s Board of Directors under applicable Law;
provided, however, that (A) no
Change of Recommendation may be made in response to a Superior Proposal (i)
until after at least four Business Days following Parent’s receipt of written
notice from the Company advising that the Board of Directors of the Company
intends to take such action in response to the receipt by the Company of a
Superior Proposal, attaching the most current version of any proposed agreement
or a writing containing a summary of the material terms of any such proposal and
the identity of the offeror, and (ii) unless Parent or Merger Sub does not make,
within such four Business Day period, an offer that is at least as favorable to
the stockholders of the Company, as determined by the Board of Directors of the
Company in good faith (after consultation with its financial advisor), as such
Superior Proposal (it being understood that the Company shall not make a Change
of Recommendation during such four Business Day period, and that any amendment
to the economic terms or other material terms of such Superior Proposal shall
require a new written notification from the Company and an additional three
Business Day period) and (B) no Change of Recommendation may be made other than
in response to a Superior Proposal (i) until after at least four Business Days
following Parent’s receipt of written notice from the Company advising that the
Board of Directors of the Company intends to take such action, attaching a
written explanation of the reasons for such action, and (ii) unless Parent or
Merger Sub does not make, within such four Business Day period, a proposal to
change the terms of this Agreement that would permit the Board of Directors of
the Company not to make a Change of Recommendation (it being understood that the
Company shall not make a Change of Recommendation during such four Business Day
period).
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(d) Nothing
contained in this Section 6.2 or Section 6.4 shall prohibit the Company from
taking and disclosing to the Company’s stockholders a position contemplated by
Rules 14d-9 and 14e-2(a) under the Exchange Act or from making any related
disclosure to the Company’s stockholders if the Company’s Board of Directors
determines, after consultation with the Company’s outside legal counsel, that
failure to take such action would create a reasonable possibility of a violation
of applicable Law; provided, however, that the
Board of Directors of the Company shall not, except as expressly provided in
Section 6.2(c), effect a Change in Recommendation or approve or recommend or
propose publicly to approve or recommend an Acquisition Proposal.
6.3 Access to Information;
Confidentiality. Subject to applicable Law, each of Parent,
Merger Sub and the Company will provide and will cause their respective
Subsidiaries and its and their respective directors, officers, employees,
accountants, consultants, legal counsel, investment bankers, advisors, agents
and other representatives (collectively, “Representatives”) to
provide, as Parent, Merger Sub or the Company may reasonably request, during
normal business hours and upon reasonable advance notice, access to their
respective offices, employees, customers, suppliers, properties, books and
records (so long as such access does not unreasonably interfere with the
operations of Parent, Merger Sub or the Company, as applicable), cause a
violation of any agreement to which such party or any of their respective
Subsidiaries is a party, cause a risk of loss of privilege or trade secret
protection to which such party or any of its respective Subsidiaries or would
cause a violation of any applicable Law. With respect to any
information disclosed pursuant to this Section 6.3, each of the parties shall
comply with, and shall cause each of its Representatives to comply with, all of
its obligations under the confidentiality agreement, dated March 19, 2009,
previously executed by the Company and Parent (the “Confidentiality
Agreement”).
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6.4 No Solicitations of
Transactions. Neither the Company nor any of its Subsidiaries
nor any of the Representatives of the Company or its Subsidiaries shall, and the
Company shall instruct and use its reasonable best efforts to cause its
Representatives not to, directly or indirectly, (a) solicit, initiate, knowingly
induce or knowingly encourage or take any other action that would reasonably be
expected to lead to the submission of any Acquisition Proposal, (b) participate
in or knowingly encourage any discussion or negotiations regarding, or furnish
to any Person any information with respect to, or facilitate or take any other
action with respect to any inquiry or any proposal that constitutes or that
would reasonably be expected to lead to an Acquisition Proposal, (c) amend or
grant any waiver or release under, and use its commercially reasonable efforts
to enforce, any standstill or similar agreement with respect to any class of
equity securities of the Company or any of its Subsidiaries, unless failure to
take such action would be reasonably likely to result in a breach of the
fiduciary duties of the Company’s Board of Directors under applicable Law, as
determined in good faith by the Company’s Board of Directors after consultation
with the Company’s outside legal counsel, or (d) enter into any agreement in
principle, letter of intent, term sheet, acquisition agreement, merger
agreement, option agreement, joint venture agreement, partnership agreement or
other contract (other than a confidentiality agreement) relating to any
Acquisition Proposal; provided, however, that (i) the
Company may furnish information to, or enter into discussions or negotiations
with, any Person that makes an Acquisition Proposal that does not result from a
breach of this Section 6.4, if, prior to taking such action, the Company shall
have received from such Person an executed agreement relating to the
confidentiality of information to be provided to such Person (a copy of which
shall be provided to Parent promptly after its execution); and provided, further, that such
confidentiality agreement shall be no less favorable to the Company than the
provisions of the Confidentiality Agreement (excluding the standstill provisions
in the Confidentiality Agreement) and all information provided to such Person if
not previously provided or made available to Parent shall be promptly provided
or made available to Parent, and (ii) after having complied with the
requirements of Section 6.2 and this Section 6.4, the Board of Directors of the
Company may approve, adopt, recommend or otherwise declare advisable or propose
to approve, adopt, recommend or declare advisable (publicly or otherwise) an
Acquisition Proposal that does not result from a breach of Section 6.2 or this
Section 6.4, if and only to the extent that, (A) in such case referred to in
clause (i), if the Board of Directors of the Company has determined in good
faith after consultation with its financial advisor and the Company’s outside
legal counsel that such Acquisition Proposal either constitutes a Superior
Proposal or would reasonably be likely to result in a Superior Proposal; and (B)
in the case referred to in clause (ii) above, the Board of Directors of the
Company determines in good faith (after consultation with its financial advisor
and the Company’s outside legal counsel) that such Acquisition Proposal is a
Superior Proposal. The Company shall provide prompt (but in any event
within 36 hours) written notice to Parent of (y) the receipt of any such
Acquisition Proposal and any material modification or amendment to an
Acquisition Proposal and (z) the identity of the party making such Acquisition
Proposal and the material terms and conditions of such Acquisition Proposal
(including a copy thereof, including any draft agreements or term sheets
submitted to the Company or its Representatives in connection therewith), and
the Company shall continue to keep Parent reasonably informed on a reasonably
prompt basis of the status of any such Acquisition Proposal and shall provide
Parent with copies of all written inquiries and correspondence with respect to
such Acquisition Proposal submitted to the Company or its Representatives no
later than 36 hours following the receipt thereof. If the Board of
Directors of the Company determines that any such Acquisition Proposal
constitutes a Superior Proposal, the Company shall promptly (but in any event
within 36 hours) provide written notice thereof to Parent. For a
period of not less than four Business Days after receipt by Parent from the
Company of such notice, the Company shall, if requested by Parent, negotiate in
good faith with Parent to make such adjustments to the terms and conditions of
this Agreement so that the Company would be able to proceed with the Board
Recommendation to its stockholders without making a Change of Recommendation in
respect of such Superior Proposal. The Company and its Subsidiaries
and their Representatives shall, and the Company shall instruct and cause its
Representatives to, immediately cease and cause to be terminated immediately any
and all existing discussions or negotiations with any Persons conducted
heretofore with respect to any Acquisition Proposal. The Company
shall instruct any Person (other than Parent or Merger Sub) in possession of
non-public information with respect to the Company or any of its Subsidiaries
that was heretofore furnished by or on behalf of the Company or any of its
Subsidiaries with respect to any possible Acquisition Proposal or other possible
significant transaction, to return or destroy promptly after the date of this
Agreement (and ensure destruction of) all such information.
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6.5 Reasonable Best
Efforts.
(a) Subject
to the terms and conditions of this Agreement, each party will (and will cause
its Affiliates to) use reasonable best efforts to take, or cause to be taken,
all actions, to file, or cause to be filed, all documents and to do, or cause to
be done, all things necessary, proper or advisable to consummate the
transactions contemplated by this Agreement, including obtaining all necessary
consents, waivers, approvals, authorizations, Permits or orders from all
Governmental Entities or other Persons, including responding to additional
inquiries or requests for additional information from any Governmental Entity;
provided, however, that in no
event shall Parent, the Company or any of their respective Affiliates be
obligated to sell, transfer or otherwise divest any of its or any of its
Subsidiaries’ assets, properties or businesses (including assets, properties or
businesses which were assets, properties or businesses of the Company or any
Subsidiary thereof prior to the Effective Time) or enter into any agreements
providing for any such sale, transfer or other divesture or restricting or
limiting in any way or to any extent the Company or its Subsidiaries or
Affiliates from engaging in any business anywhere in the world. Each
party shall also (and will cause its Affiliates to) refrain from taking,
directly or indirectly, any action (including making acquisitions), that would
be reasonably likely to result in a failure of any of the conditions to the
Merger in this Agreement being satisfied or materially restrict such party’s
ability to consummate the Merger and the other transactions contemplated by this
Agreement.
(b) The
Company shall, and shall cause its Subsidiaries to, use its reasonable best
efforts to (at Parent’s sole expense) provide such cooperation as may be
reasonably requested by Parent in connection with satisfying any condition to
financing set out in Parent’s agreements with banks and other lenders, including
(in each case, at Parent’s sole expense) (i) upon reasonable advance notice by
Parent, participation in meetings, drafting sessions, due diligence sessions,
management presentation sessions, “road shows” and sessions with rating
agencies, (ii) using reasonable best efforts to prepare business projections and
financial statements (including audited consolidated and consolidating balance
sheets and related statements) for inclusion in offering memoranda, private
placement memoranda, prospectuses and similar documents and execute any such
documents, (iii) assisting Parent with its preparation and negotiation of (on
behalf of the Company and/or its Subsidiaries) mortgages, Liens and security
interests, granting such mortgages, Liens and security interests, assisting
Parent in obtaining preliminary title policies, resolving exceptions on such
title policies which are objected to by such banks or lenders, assisting Parent
with its preparation of, and negotiation related to, pledges in the interests
and assets of the Company and some or all of its Subsidiaries, and the granting
of such pledges, (iv) allowing Parent and its and its lender’s representatives
such access as may be reasonably necessary in connection with such financing;
provided, however, that the
Company shall not be required to provide any such assistance that would
interfere unreasonably with the business or operations of the Company and its
Subsidiaries and (v) assisting Parent with its preparation, negotiation and
delivery of any guarantees made by the Company and/or its Subsidiaries to be
effective as of the Effective Time. Notwithstanding anything to the
contrary in this Section 6.5(b), the Company shall not be obligated to enter
into any agreement or undertake any obligation or guarantee unless such
obligation, agreement or guarantee is only effective after the Effective
Time.
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6.6 Regulatory
Filings.
(a) Without
limiting the generality of the obligations of the parties pursuant to Section
6.5 and subject to the proviso in Section 6.5(a), Parent and the Company shall
collectively determine whether any action by or in respect of, or filing with,
any Governmental Entity by any party hereto or any Subsidiary thereof is
required, or any actions, consents, approvals or waivers are required to be
obtained from any parties to any contract, in connection with the consummation
of the transactions contemplated by this Agreement, and the parties hereto will
reasonably cooperate with each other in seeking and obtaining any such actions,
consents, approvals or waivers or making any such filings, furnishing
information required in connection therewith. To the extent
reasonably practicable, the parties or their Representatives shall have the
right to review in advance and each of the parties will consult the others on,
all the information relating to the other and each of their respective
Subsidiaries that appears in any filing made with, or written materials
submitted to, any Governmental Entity in connection with the Merger and the
other transactions contemplated by this Agreement, except that confidential
competitively sensitive business information may be redacted from such
exchanges. Each of the Company and Parent promptly shall notify and
provide a copy to the other party of any written communication received from any
Governmental Entity with respect to any filing or submission or with respect to
the Merger and the other transactions contemplated by this
Agreement. Each of the Company and Parent shall give the other
reasonable prior notice of any communication with, and any proposed
understanding, undertaking or agreement with, any Governmental Entity regarding
any such filing or any such transaction. To the extent reasonably
practicable, neither the Company nor Parent shall, nor shall they permit their
respective Representatives to, participate independently in any meeting or
engage in any substantive conversation with any Governmental Entity in respect
of any such filing, investigation or other inquiry without giving the other
party prior notice of such meeting or conversation and, to the extent permitted
by applicable Law, without giving the opportunity of the other party to attend
or participate. To the extent permitted by applicable Law, the
parties to this Agreement will consult and cooperate with one another in
connection with any analyses, appearance, presentations, memoranda, briefs,
arguments, opinions, and proposals made or submitted by or on behalf of any
party to this Agreement in connection with Proceedings under or related to the
HSR Act.
(b) The
parties (i) shall use their respective reasonable best efforts to take or cause
to be taken such actions as may be required to be taken under the Securities
Act, the Exchange Act and state securities or applicable Blue Sky Laws in
connection with the Merger and (ii) promptly shall prepare and file all
necessary documentation, effect all necessary applications, notices, petitions
and filings, and use all reasonable best efforts to obtain all necessary
consents from any Governmental Entities necessary to consummate the
Merger. The Company and Parent shall promptly provide the other with
copies of all filings made by such party with any Governmental Entity in
connection with this Agreement and the transactions contemplated hereby, other
than the portions of such filings that include confidential information not
directly related to the transactions contemplated by this
Agreement.
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(c) Subject
to the proviso in Section 6.5(a), Parent and the Company hereby further agree to
the prompt use of their respective reasonable best efforts to take, in the event
that any permanent, preliminary or temporary injunction, decision, order,
judgment, determination or decree is entered or issued, or becomes reasonably
foreseeable to be entered or issued, in any Proceeding or inquiry of any kind
that would make consummation of the Merger in accordance with the terms of this
Agreement unlawful or that would delay, restrain, prevent, enjoin or otherwise
prohibit consummation of the Merger or the other transactions contemplated by
this Agreement, any and all steps reasonably necessary to resist, vacate,
modify, reverse, suspend, prevent, eliminate or remove such actual, anticipated
or threatened injunction, decision, order, judgment, determination or decree so
as to permit such consummation on a schedule as close as possible to that
contemplated by this Agreement.
6.7 Certain
Notices. From and after the date of this Agreement until the
Effective Time, each of the Company and Parent shall promptly notify the other
party of (a) the occurrence, or non-occurrence, of any event that would be
likely to cause any condition to the obligations of the other party to effect
the Merger and the other transactions contemplated by this Agreement not to be
satisfied, or (b) the failure of the Company or Parent, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it pursuant to this Agreement that would reasonably be expected
to result in any condition to the obligations of the other party to effect the
Merger and the other transactions contemplated by this Agreement not to be
satisfied; provided, however, that the
delivery of any notice pursuant to this Section 6.7 shall not cure any breach of
any representation or warranty, the failure to comply with any covenant, the
failure to meet any condition or otherwise limit or affect the remedies
available hereunder to the party receiving such notice.
6.8 Public
Announcements. Except with respect to any Change of
Recommendation or other action taken by the Company pursuant to Sections 6.2(c)
and 6.4, Parent, Merger Sub and the Company shall consult with and obtain the
approval of the other party before issuing any press release or other public
announcement with respect to the Merger or this Agreement and shall not issue
any such press release prior to such consultation and approval, except as may be
required by applicable Law or any listing agreement related to the trading of
the shares of either party on any securities exchange, in which case, the party
proposing to issue such press release or make such public announcement shall use
reasonable best efforts to consult in good faith with the other party before
issuing any such press release or making any such public announcement; provided, however, that each of
Parent, Merger Sub and the Company may make any public statement in response to
specific questions by the press, analysts, investors or those attending industry
conferences or financial analyst conference calls, so long as any such
statements are not inconsistent with previous press releases, public disclosures
or public statements made jointly by Parent and the Company and do not reveal
material, non-public information regarding the other party.
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6.9 Indemnification of Directors
and Officers.
(a) From
and after the Effective Time, Parent shall indemnify and hold harmless, to the
fullest extent permitted under applicable Law (and Parent shall also advance
expenses as incurred to the fullest extent permitted under applicable Law,
provided the Person to whom expenses are advanced provides an undertaking to
repay such advances if it is ultimately determined that such Person is not
entitled to indemnification), each present and former director and officer of
the Company and its Subsidiaries (collectively, the “Indemnified Parties”)
against any costs or expenses (including reasonable attorneys’ fees), judgments,
fines, losses, claims, damages or liabilities incurred in connection with any
claim, action, suit, Proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to matters
existing or occurring at or prior to the Effective Time, including the
transactions contemplated by this Agreement.
(b) For
six years from the Effective Time, Parent shall cause the Surviving Corporation
to maintain in effect for the benefit of the Indemnified Parties an insurance
and indemnification policy with an insurer with the same or better credit rating
as the current carrier for the Company that provides coverage for acts or
omissions occurring on or prior to the Effective Time (the “D&O Insurance”)
covering each such person currently covered by the officers’ and directors’
liability insurance policies of the Company on terms with respect to coverage
and in amounts no less favorable than those of the Company’s directors’ and
officers’ insurance policy in effect on the date of this Agreement; provided, however, that the
Surviving Corporation shall not be required to maintain coverage in an amount in
excess of $40,000,000 or pay an annual premium for the D&O Insurance in
excess of 200% of the annual premium currently paid by the Company for such
coverage; and provided, further, that if any
annual premium for such insurance coverage exceeds 200% of such annual premium,
Parent shall obtain a policy the Surviving Corporation reasonably believes has
the greatest coverage available for a cost not exceeding such
amount. Parent may satisfy its obligations under this Section 6.9(b)
by purchasing a “tail” policy from an insurer with the same or better credit
rating as the current carrier for the Company’s existing directors’ and
officers’ insurance policy, which (i) has an effective term of six years from
the Effective Time, (ii) covers each person currently covered by the
Company’s directors’ and officers’ insurance policy in effect on the
date of this Agreement for actions and omissions occurring on or prior to the
Effective Time, and (iii) contains terms that are no less favorable than those
of the Company’s directors’ and officers’ insurance policy in effect on the date
of this Agreement.
(c) Parent
shall cause the Surviving Corporation to cause to be maintained in effect in the
Surviving Corporation’s (or any successor’s) certificate of incorporation and
bylaws provisions with respect to exculpation, indemnification and advancement
of expenses that are at least as favorable to the intended beneficiaries as
those contained in the Company’s certificate of incorporation and bylaws as in
effect on the date of this Agreement. The obligations of the
Surviving Corporation under this Section 6.9 shall not be terminated or modified
in such a manner as to adversely affect any Indemnified Party without the
express written consent of such affected indemnitee (it being expressly agreed
that the indemnitees to whom this Section 6.9 applies shall be third-party
beneficiaries of this Section 6.9 with full rights of enforcement as if a party
hereto).
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(d) The
provisions of this Section 6.9 (i) are intended to be for the benefit of, and
will be enforceable by, each Indemnified Party, his or her heirs and his or her
Representatives and (ii) are in addition to, and not in substitution for, any
other rights to indemnification or contribution that any such person may have by
contract or otherwise.
(e) If
Parent, the Surviving Corporation or any of their respective successors or
assigns (i) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity in such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any Person, then, and in each case, proper provision shall be made so that
the successors and assigns of Parent or the Surviving Corporation, as the case
may be, assume all of the obligations of Parent and the Surviving Corporation
set forth in this Section 6.9.
6.10 Company 401(k) Plans;
Benefits.
(a) If
requested by Parent at least five days prior to the Effective Time, the Company
shall terminate any and all Company Plans intended to qualify under Section
401(a) of the Code that include a cash or deferred arrangement intended to
satisfy the provisions of Section 401(k) of the Code, effective not later than
the day immediately preceding the Effective Time. If Parent requests
that such 401(k) plan(s) be terminated, the Company shall provide Parent with
evidence that such 401(k) plan(s) have been terminated pursuant to resolution of
the Board of Directors of the Company (the form and substance of which shall be
subject to review and approval, which will not be unreasonably withheld, by
Parent) not later than the day immediately preceding the Effective
Time.
(b) With
respect to each health or welfare benefit plan maintained by Parent, the
Surviving Corporation or the relevant Subsidiary for the benefit of any
Continuing Employees, in the event there is a change in the health or welfare
benefit plans in which any Continuing Employee is eligible to participate
following the Effective Time and subject only to any required approval of the
applicable insurance provider, if any, Parent shall (i) cause to be waived any
eligibility waiting periods, any evidence of insurability requirements and the
application of any pre-existing condition limitations under such plan, and (ii)
cause each Continuing Employee to be given credit under such plan for all
amounts paid by such Continuing Employee under any similar Company Plan for the
plan year in which the Closing Date occurs for purposes of applying deductibles,
co-payments and out-of-pocket maximums as though such amounts had been paid in
accordance with the terms and conditions of the applicable plan maintained by
Parent, the Surviving Corporation or the relevant Subsidiary, as applicable, for
the plan year in which the Closing Date occurs.
(c) Parent
shall ensure that, as of the Closing Date, each Continuing Employee receives
full credit (for all purposes, including eligibility to participate, vesting,
determination of level of vacation entitlement and severance benefits, but
excluding benefit accrual) for service with the Company (or predecessor
employers to the extent the Company provides such past service credit under its
employee benefit plans) under each of the comparable employee benefit plans,
programs and policies of Parent, the Surviving Corporation or the relevant
Subsidiary, as applicable, in which such Continuing Employee becomes a
participant; provided, however, that no such service recognition shall result in
any duplication of benefits or be required under a newly established plan for
which prior service is not taken into account for employees of Parent, the
Surviving Corporation or the relevant Subsidiary generally.
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(d) Notwithstanding
anything in this Section 6.10 to the contrary, nothing contained herein, whether
express or implied, shall be treated as an amendment or other modification of
any Parent Plan, or shall limit the right of Parent to amend, terminate or
otherwise modify any Parent Plan following the Effective Time. If (i)
a party other than the parties hereto makes a claim or takes other action to
enforce any provision in this Agreement as an amendment to any Parent Plan, and
(ii) such provision is deemed to be an amendment to such Parent Plan even though
not explicitly designated as such in this Agreement, then, solely with respect
to such Parent Plan, such provision shall lapse retroactively and shall have no
amendatory effect with respect thereto.
(e) The
parties hereto acknowledge and agree that all provisions contained in this
Section 6.10 are included for the sole benefit of the parties hereto, and that
nothing in this Agreement, whether express or implied, shall create any
third-party beneficiary or other rights (i) in any other Person, including any
employees or former employees of the Company or its Subsidiaries, any
participant in any Parent Plan or any dependent or beneficiary thereof or (ii)
to continued employment with Parent or any of its Affiliates.
6.11 Section 16
Matters. Prior to the Effective Time, the Board of Directors
of the Company or an appropriate committee of non-employee directors thereof (as
such term is defined for purposes of Rule 16b-3 of the Exchange Act) shall adopt
a resolution consistent with the interpretive guidance of the SEC so that the
receipt by any officer or director of the Company who is a covered person for
purposes of Section 16(a) of the Exchange Act of shares of Parent Common Stock
in exchange for shares of Company Common Stock or Company Options pursuant to
this Agreement and the Merger is intended to be an exempt transaction pursuant
to Section 16b-3 of the Exchange Act. Prior to the Effective Time,
the Board of Directors of Parent or an appropriate committee of non-employee
directors (as such term is defined for purposes of Rule 16b-3 of the Exchange
Act) shall adopt a resolution consistent with the interpretive guidance of the
SEC so that the receipt by any officer or director of the Company or Parent who
is a covered person for purposes of Section 16(a) of the Exchange Act of shares
of Parent Common Stock or options in exchange for shares of Company Common Stock
or Company Options pursuant to this Agreement and the Merger is intended to be
an exempt transaction for purposes of Section 16b-3 of the Exchange
Act.
6.12 Further
Assurances. Except as otherwise provided in this Agreement,
including, without limitation, Sections 6.2(c) and 6.4, prior to the Effective
Time, as and when requested by any party hereto and at the other party’s
expense, any other party shall use its reasonable best efforts to execute and
deliver, or cause to be executed and delivered, all such documents and
instruments (including any third-party consents) and shall take, or cause to be
taken, all such further or other actions as the requesting party may reasonably
deem necessary or desirable to evidence and effectuate the transactions
contemplated by this Agreement.
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6.13 Stockholder
Litigation. The Company shall give Parent the opportunity to
participate in the defense or settlement of any stockholder litigation against
the Company and/or its directors relating to the Merger and the other
transactions contemplated by this Agreement, and no such settlement shall be
agreed to without the prior written consent of Parent, which consent shall not
be unreasonably withheld, conditioned or delayed.
6.14 NASDAQ
Listing. Parent shall use reasonable best efforts to cause the
Parent Common Stock issuable to the Company’s stockholders pursuant to the
Merger to be approved for listing on the NASDAQ, subject to official notice of
issuance, prior to the Effective Time.
6.15 Pay-Off
Letter. The Company shall use its commercially reasonable
efforts to obtain, and shall cooperate with Parent in its efforts to obtain, no
later than three Business Days prior to the Closing Date, a pay-off letter from
the Agent (as defined below) under the Company’s Credit Agreement, dated as of
September 12, 2007, by and among the Company, each of the Guarantors (as defined
in the Credit Agreement), the Revolving Credit Lenders (as defined in the Credit
Agreement), the Term Loan Lenders (as defined in the Credit Agreement) and Bank
of America, N.A., in its capacity as administrative agent for the Revolving
Credit Lenders and the Term Loan Lenders (the “Agent”), National
City Bank, as Syndication Agent, Fifth Third Bank, as Documentation Agent,
Citicorp North America, Inc., as Managing Agent, Banc of America Securities LLC,
as sole book runner, and Banc of America Securities LLC and National City Bank,
as co-lead arrangers (as amended, modified or supplemented through the date
hereof, the “Credit
Agreement”), in form and substance reasonably satisfactory to Parent,
addressed to the Company and Parent and signed by the Agent, (i) setting forth
the amounts required to pay off in full at the Closing the Obligations (under
and as defined in the Credit Agreement) owing under the Credit Agreement
(including, without limitation, the outstanding principal, accrued and unpaid
interest and any prepayment or other penalties) and (ii) stating that, upon
payment of such amounts, the commitments of the lenders to make loans or other
extensions of credit under the Credit Agreement shall be terminated and the
Surviving Corporation shall be released from all of its obligations under the
Credit Agreement and all related documents, agreements and instruments and all
Liens and security interests under the Credit Agreement and each other document
and agreement related thereto shall be released, which pay-off letter shall be
updated, as necessary, on the Closing Date to specify the aggregate amount of
Obligations outstanding as of immediately prior to the Closing, and shall
specifically authorize the Company and Parent to file termination statements and
release and discharge documents (including, without limitation, termination
statements of any and all UCC financing statements filed by the Agent) with
respect to any Liens existing pursuant to the Credit Agreement and each
agreement, document and instrument related thereto. The Company shall
use its commercially reasonable efforts, and shall cooperate with Parent in its
efforts, to ensure such pay-off letter also indicates that (i) prior notice of
prepayment is waived and (ii) the Agent shall use commercially reasonable
efforts to cooperate with and assist Parent and the Company to file or cause to
be filed any UCC termination statements, releases or other documents required to
effect the release of any Liens under the Credit Agreement.
6.16 Resignations. The
Company shall use commercially reasonable efforts to cause each director of the
Company and each of its Subsidiaries to deliver to Parent written resignations
from such position as director, effective immediately prior to the Effective
Time.
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6.17 Board
Appointment. Prior to the Closing, but having effect
immediately following the Effective Time, the Board of Directors of Parent shall
adopt a resolution and take all other action necessary to appoint Xxxxxxx X.
Xxxxxx, the Chairman and Chief Executive Officer of the Company, to the Board of
Directors of Parent, to serve as a Director of Parent for a term expiring in
2010.
6.18 Certain
Actions. After the Effective Time, neither Parent, the
Surviving Corporation nor any of their respective Affiliates shall take or agree
to take any action that would reasonably be likely to prevent the Merger from
qualifying as a “reorganization” under Section 368(a) of the
Code.
ARTICLE
VII
CONDITIONS
7.1 Conditions to Obligations of
Each Party under this Agreement. The respective obligations of
each party to effect the Merger and the other transactions contemplated by this
Agreement shall be subject to the satisfaction at or prior to the Effective Time
of the following conditions, any or all of which may be waived, in whole or in
part, to the extent permitted by applicable Law:
(a) Stockholder
Approval. The Company Stockholder Approval shall have been
obtained.
(b) HSR Act; Foreign
Laws. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated and any required
approval shall have been obtained or the applicable waiting period shall have
expired under the antitrust laws of any applicable foreign
jurisdictions.
(c) No
Order. No Governmental Entity of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any Law or order that is
in effect and permanently enjoins or otherwise prohibits the consummation of the
Merger or the transactions contemplated hereby.
(d) No Governmental
Action. There shall be no pending Proceeding by any
Governmental Entity of competent jurisdiction that seeks to (i) make the Merger
illegal, (ii) require Parent, Merger Sub or the Company to divest any portion of
the business of Parent, any Parent Subsidiary, the Company or any Company
Subsidiary, (iii) impose any material limitation on the ability of Parent or
Merger Sub to exercise full rights of ownership with respect to the shares of
the Company, including the right to vote such shares on all matters properly
presented to the stockholders of the Company, or (iv) otherwise prohibit,
restrict or delay consummation of the Merger or impair the contemplated benefits
to Parent or to Merger Sub of any transactions contemplated by this
Agreement.
(e) Registration Statement;
Proxy Statement. The Registration Statement shall have been
declared effective by the SEC under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall have been
issued by the SEC and no Proceeding for that purpose shall have been initiated
or, to the knowledge of Parent or the Company, threatened by the SEC and not
concluded or withdrawn. No similar proceeding with respect to the
Proxy Statement shall have been initiated or, to the knowledge of Parent or the
Company, threatened by the SEC and not concluded or withdrawn.
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(f) Consents and
Approvals. Other than filing the Certificate of
Merger pursuant to Section 1.2, all consents, approvals and
authorizations of any Governmental Entity required of Parent, the Company or any
of their respective Subsidiaries to consummate the Merger, the failure of which
to be obtained or taken, individually or in the aggregate, would have a Company
Material Adverse Effect or Parent Material Adverse Effect (determined, for
purposes of this clause, after giving effect to the Merger), shall have been
obtained; provided, however, that the
provisions of this Section 7.1(f) shall not be available to any party whose
failure to fulfill its obligations pursuant to Section 6.6 shall have been
the cause of, or shall have resulted in, the failure to obtain such consent,
approval or authorization.
(g) NASDAQ
Listing. The shares of Parent Common Stock issuable to the
Company’s stockholders pursuant to the Merger shall have been approved for
listing on the NASDAQ, subject to official notice of issuance.
7.2 Conditions to Parent’s and
Merger Sub’s Obligations. The obligations of Parent and Merger
Sub to effect the Merger and the other transactions contemplated by this
Agreement are also subject to the following conditions, any or all of which may
be waived, in whole or in part, to the extent permitted by applicable
Law:
(a) Representations and
Warranties. The representations and warranties of the Company
set forth in Article III and Section 6.1(b) of this Agreement shall be true and
correct (without giving effect to any limitation as to “materiality” or “Company
Material Adverse Effect” set forth therein) as of the date hereof and as of the
Effective Time as if made at and as of such time (except to the extent expressly
made as of an earlier date, in which case, as of such earlier date), except
where the failure of such representations and warranties to be true and correct
(without giving effect to any limitation as to “materiality” or “Company
Material Adverse Effect” set forth therein) would not have, either individually
or in the aggregate, a Company Material Adverse Effect. Parent shall
have received a certificate signed by an executive officer of the Company to the
foregoing effect.
(b) Agreements and
Covenants. The Company shall have performed or complied in all
material respects with all material agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Effective
Time. Parent shall have received a certificate of an executive
officer of the Company to the foregoing effect.
(c) Tax
Opinion. Parent shall have received a written opinion,
substantially in the form attached hereto as Exhibit E, from
Proskauer Rose LLP, counsel to Parent, to the effect that the Merger will be
treated for federal income tax purposes as a “reorganization” within the meaning
of Section 368(a) of the Code, and the Company shall have received the
opinion referred to in Section 7.3(d). In rendering its opinion
pursuant to this Section 7.2(c), Proskauer Rose LLP may rely upon assumptions
and the representations and covenants contained in the certificates of the
Company, Parent and Merger Sub referred to in Section 5.3.
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(d) Company Material Adverse
Effect. No Company Material Adverse Effect shall have occurred
since the date of this Agreement. Parent shall have received a
certificate, dated the date of the Closing and signed by an executive officer of
the Company to the foregoing effect.
(e) Resignations. All
directors of the Company and each of its Subsidiaries shall have tendered
written resignations effective immediately prior to the Effective
Time.
7.3 Conditions to the Company’s
Obligations. The obligation of the Company to effect the
Merger and the other transactions contemplated by this Agreement is also subject
to the following conditions, any or all of which may be waived, in whole or in
part, to the extent permitted by applicable Law:
(a) Representations and
Warranties. The representations and warranties of Parent and
Merger Sub set forth in Article IV and Section 6.1(b) of this Agreement shall be
true and correct (without giving effect to any limitation as to “materiality” or
“Parent Material Adverse Effect” set forth therein) as of the date hereof and as
of the Effective Time as if made at and as of such time (except to the extent
expressly made as of an earlier date, in which case, as of such earlier date),
except where the failure of such representations and warranties to be true and
correct (without giving effect to any limitation as to “materiality” or “Parent
Material Adverse Effect” set forth therein) would not have, either individually
or in the aggregate, a Parent Material Adverse Effect. The Company
shall have received a certificate signed by an executive officer of Parent to
the foregoing effect.
(b) Agreements and
Covenants. Parent and Merger Sub shall have performed or
complied in all material respects with all material agreements and covenants
required by this Agreement to be performed or complied with by it on or prior to
the Effective Time. The Company shall have received a certificate of
an executive officer of Parent to the foregoing effect.
(c) Parent Material Adverse
Effect. No Parent Material Adverse Effect shall have occurred
since the date of this Agreement. The Company shall have received a
certificate, dated the date of the Closing and signed by an executive officer of
Parent to the foregoing effect.
(d) Tax
Opinion. The Company shall have received a written opinion,
substantially in the form attached hereto as Exhibit F, from
O’Melveny & Xxxxx LLP, counsel to the Company, to the effect that the Merger
will be treated for federal income tax purposes as a “reorganization” within the
meaning of Section 368(a) of the Code, and Parent shall have received the
opinion referred to in Section 7.2(c). In rendering its opinion
pursuant to this Section 7.3(d), O’Melveny & Xxxxx LLP may rely upon
assumptions and the representations and covenants contained in the certificates
of the Company, Parent and Merger Sub referred to in
Section 5.3.
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ARTICLE
VIII
TERMINATION,
AMENDMENT AND WAIVER
8.1 Termination. This
Agreement may be terminated and the Merger may be abandoned at any time prior to
the Effective Time, whether before or after receipt of Company Stockholder
Approval:
(a) by
mutual written consent of the Company and Parent, which consent shall have been
approved by action of their respective Boards of Directors;
(b) by
written notice of either the Company or Parent, if the Effective Time shall not
have occurred prior to December 31, 2009 (the “Outside Date”); provided, however, that the
right to terminate this Agreement under this Section 8.1(b) shall not be
available to any party (i) whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Effective
Time to occur on or before the Outside Date or (ii) that is in material breach
of this Agreement;
(c) by
written notice of either Parent or the Company if a Governmental Entity of
competent jurisdiction shall have issued a nonappealable final order, decree or
ruling or taken any other nonappealable final action, in each case having the
effect of permanently restraining, enjoining or otherwise prohibiting the
Merger;
(d) by
written notice of Parent (i) if a Change of Recommendation shall have occurred
(it being understood that publicly taking a neutral position or no position
other than as permitted by Section 6.2(d) with respect to an Acquisition
Proposal shall be deemed to be a Change of Recommendation) or if the Company
fails to publicly reconfirm the Board Recommendation if so requested by Parent
in writing within ten Business Days following such request (provided such
request may only be made in the event the Company has received a public
announcement of an Acquisition Proposal or any amendment to an Acquisition
Proposal), (ii) if the Company enters into an agreement in principle, letter of
intent, term sheet, acquisition agreement, merger agreement, option agreement,
joint venture agreement, partnership agreement or other contract (other than a
confidentiality agreement) with respect to an Acquisition Proposal, (iii) if the
Board of Directors of the Company fails to reject an Acquisition Proposal within
ten Business Days of receipt of a written proposal related thereto, (iv) if the
Board of Directors of the Company shall have approved or recommended any
Acquisition Proposal, (v) if there is a willful and material breach of Section
6.4, or (vi) if the Board of Directors of the Company shall have resolved to do
any of the foregoing or publicly announced its intention to do so;
(e) by
written notice of Parent (if Parent is not in material breach of its obligations
or its representations and warranties under this Agreement), if (i) there has
been a breach by the Company of any representation, warranty, covenant or
agreement contained in this Agreement that (A) would result in a failure of a
condition set forth in Section 7.2(a) or 7.2(b) and (B) has not been or cannot
be cured within 30 days after written notice to the Company of such breach and
the intention to terminate this Agreement pursuant to this Section 8.1(e) or
(ii) if facts exist which render impossible one or more of the conditions set
forth in Section 7.1 or Section 7.2 by the Outside Date;
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(f) by
written notice of the Company (if the Company is not in material breach of its
obligations or its representations and warranties under this Agreement), if (i)
there has been a breach by Parent of any representation, warranty, covenant or
agreement contained in this Agreement that (A) would result in a failure of a
condition set forth in Section 7.3(a) or 7.3(b) and (B) has not been or cannot
be cured within 30 days after written notice to Parent of such breach and the
intention to terminate this Agreement pursuant to this Section 8.1(f) or (ii) if
facts exist which render impossible one or more of the conditions set forth in
Section 7.1 or Section 7.3 by the Outside Date;
(g) by
written notice of either Parent or the Company if Company Stockholder Approval
shall not have been obtained at the Stockholders’ Meeting duly convened therefor
(or at any adjournment or postponement thereof permitted by this Agreement) at
which a quorum is present and the vote to adopt this Agreement is taken;
or
(h) by
written notice of the Company, if the Board of Directors of the Company shall
have made a Change of Recommendation in response to a Superior Proposal in
accordance with the terms and conditions of Section 6.2(c).
8.2 Effect of
Termination.
(a) Limitation on
Liability. In the event of the termination of this Agreement
by either the Company or Parent as provided in Section 8.1, this Agreement shall
forthwith become void and there shall be no liability or obligation on the part
of Parent, Merger Sub or the Company or their respective Subsidiaries, officers
or directors, provided that (i) any such termination shall not relieve any party
from liability for any willful breach of this Agreement or fraud, and (ii) the
Confidentiality Agreement (subject to the terms thereof, and to Section 6.3 to
the extent relating to the Confidentiality Agreement), this Section 8.2, Section
8.5 and Article X and with respect to any liabilities or damages incurred or
suffered by a party as a result of the failure for any reason of Parent or
Merger Sub to effect the Merger and pay the Merger Consideration upon the
satisfaction or waiver of the conditions set forth in Sections 7.1 and 7.2 shall
remain in full force and effect and survive any termination of this
Agreement.
(b) Termination
Fee. The Company shall pay to Parent a termination fee (the
“Company Termination
Fee”) of $5,150,000 plus, to the extent not previously paid pursuant to
Section 8.2(c), the Parent Expenses in immediately available funds in the event
that this Agreement is terminated solely as follows: (i) if Parent
shall terminate this Agreement pursuant to Section 8.1(d) or the Company shall
terminate the Agreement pursuant to Section 8.1(h), or (ii) if either party
shall terminate this Agreement pursuant to Section 8.1(g) and (A) at the time of
termination, an Acquisition Proposal with respect to the Company shall have been
publicly announced or made known to the Company or any of its Representatives
(and not subsequently withdrawn), and (B) the Company enters into an acquisition
agreement with respect to, or consummates, an Acquisition Proposal within 12
months following the date this Agreement is terminated; provided, however, that for
purposes of this Section 8.2(b), the references to “20%” in the definition of
“Acquisition Proposal” shall be deemed to be references to “100%.”
(c) Parent
Expenses. The Company shall pay to Parent the Parent Expenses
if this Agreement is terminated by either Parent or the Company pursuant to
Section 8.1(d).
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(d) Payments. Any
payment required to be made pursuant to Sections 8.2(b)(i) or 8.2(c) shall be
made within two Business Days after the termination of this
Agreement. Any payment required to be made pursuant to Section
8.2(b)(ii) shall be made concurrently with the consummation of the Acquisition
Proposal giving rise to such payment. In no event shall payment of
more than one Company Termination Fee be made. All payments under
this Section 8.2 shall be made by wire transfer of immediately available funds
to an account designated by Parent.
(e) Acknowledgement. The
parties acknowledge that the agreements contained in this Section 8.2 are an
integral part of the transactions contemplated by this Agreement, and that,
without these agreements, the parties would not enter into this
Agreement. Accordingly, if the Company fails to timely pay any amount
due pursuant to this Section 8.2, and in order to obtain the payment, Parent
commences a suit which results in a judgment against the Company for the
payments set forth in this Section 8.2, the Company shall pay to Parent its
reasonable costs and expenses (including reasonable attorneys’ fees and
expenses) in connection with such suit, together with interest on the amount due
from each date for payment until the date of the payment at the prime rate of
Citibank, N.A. in effect on the date the payment was required to be
made. Nothing contained in this Section 8.2 shall limit Parent’s
rights and remedies at law or in equity in connection with a breach of this
Agreement by the Company.
8.3 Amendment. This
Agreement may be amended by the mutual agreement of the parties hereto at any
time prior to the Effective Time only by an instrument in writing signed by the
parties hereto; provided, however, that after
the adoption of this Agreement by the stockholders of the Company, no amendment
to this Agreement shall be made that by Law or the rules of the NYSE requires
further approval by the stockholders of the Company without such further
approval by such stockholders.
8.4 Waiver. At
any time prior to the Effective Time, any party hereto may (a) extend the time
for the performance of any of the obligations or other acts of the other party
hereto, (b) waive any inaccuracies in the representations and warranties of the
other party contained herein or in any document delivered pursuant hereto, and
(c) waive compliance by the other party with any of the agreements or conditions
contained herein; provided, however, that after
the Company Stockholder Approval, there may not be, without further approval of
such stockholders, any extension or waiver of this Agreement or any portion
thereof that, by Law or in accordance with the rules of the NYSE, requires
further approval by such stockholders. Any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by the party
or parties to be bound thereby, but such extension or waiver or failure to
insist on strict compliance with an obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure.
8.5 Fees and
Expenses. Subject to Sections 6.5(b), 6.12, 8.2(b) and 8.2(c),
all expenses incurred by the parties hereto shall be borne solely and entirely
by the party which has incurred the same.
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ARTICLE
IX
DEFINITIONS
9.1 Definitions. For
purposes of this Agreement, the following terms, when used in this Agreement
with initial capital letters, shall have the respective meanings set forth in
this Agreement:
“Acquisition Proposal”
means, other than the transactions contemplated by this Agreement, any inquiry,
indication of interest, offer or proposal for a merger, consolidation, business
combination, share exchange, tender offer, reorganization, recapitalization,
liquidation, dissolution or similar transaction involving the Company in which a
Person acquires 20% or more of any class of voting securities of the Company, or
any direct or indirect purchase or other acquisition by a Person, together with
its Affiliates, of, or a series of transactions to purchase or acquire, 20% or
more of the consolidated assets or revenues of the Company and its Subsidiaries
or 20% or more of any class of voting securities of the Company or any of its
Subsidiaries or any resulting parent company of the Company or any combination
of the foregoing.
“Affiliate” of any
particular Person means any other Person controlling, controlled by or under
common control with such particular Person. For the purposes of this
definition, “control” means the possession, directly or indirectly, of the power
to direct the management and policies of a Person whether through the ownership
of voting securities, contract or otherwise.
“Agent” has the
meaning set forth in Section 6.15.
“Agreement” has the
meaning set forth in the preamble hereto.
“Alternative
Transaction” means any transaction involving an Acquisition Proposal from
a third party.
“Article Eleventh” has
the meaning set forth in Section 3.27.
“Blue Sky Laws” has
the meaning set forth in Section 3.4.
“Board Recommendation”
has the meaning set forth in Section 3.3(a).
“Business Day” means
any day on which the principal offices of the SEC in Washington, D.C. are open
to accept filings, or, in the case of determining a date when any payment is
due, any day on which banks are not required or authorized to close in The City
of New York in the United States of America.
“Certificate of
Merger” has the meaning set forth in Section 1.2.
“Certificates” has the
meaning set forth in Section 2.2(b).
“Change of
Recommendation” has the meaning set forth in Section 6.2(c).
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“Closing” has the
meaning set forth in Section 1.2.
“Closing Date” has the
meaning set forth in Section 1.2.
“Code” means the
Internal Revenue Code of 1986, as amended.
“Company” has the
meaning set forth in the preamble hereto.
“Company Common Stock”
has the meaning set forth in Section 2.1(a).
“Company Contract”
shall mean any: (i) contract that would be required to be filed by the Company
as a material contract pursuant to Item 601(b)(10) of Regulation S-K of the SEC;
(ii) contract containing covenants of the Company or any of its Subsidiaries not
to compete in any line of business or otherwise materially restricting the
business of the Company or any of its Subsidiaries, industry or geographical
area (other than agreements with respect to real property or any marketing
agreement relating to cross-promotional campaigns with third parties made in the
ordinary course of business consistent with past practice); (iii) contract that
creates a partnership or joint venture with respect to any business of the
Company; (iv) contracts with the Company’s top 20 suppliers based upon dollar
volume during the year ended January 31, 2009; (v) contract that, individually
or in the aggregate, would or would reasonably be expected to prevent,
materially delay or materially impede the Company’s or any of its Subsidiaries’
ability to consummate the transactions contemplated by this Agreement,
including, without limitation, any material contract with a “change of control”
provision; (vi) indenture, credit agreement, loan agreement, security agreement,
guarantee, note, mortgage or other evidence of Indebtedness, whether secured or
unsecured; (vii) contract for the sale of any of the Company’s assets after the
date hereof outside of the ordinary course of business, consistent with past
practice; (viii) collective bargaining agreement; (ix) settlement or
conciliation agreement or similar agreement with a Governmental Entity or order
or consent of a Governmental Entity to which the Company or any of its
Subsidiaries is a party involving future performance by the Company or any of
its Subsidiaries; (x) Company IP Contracts; (xi) leases for Company Leased Real
Property; (xii) broker, distributor, dealer, agency, promotion, market research,
consulting or advertising agreement which involves payments by the Company of
more than $250,000 singly and $500,000 in the aggregate; (xiii) agreement with
an independent contractor or consultant, which involves aggregate annual
payments of more than $250,000; (xiv) any employment contract, non-competition
agreement or similar contractual agreement with the Company’s present or former
officers, directors, employees or stockholders, or Persons related to one or
more of or Affiliated with any of the foregoing; (xv) agreement or commitment
for capital expenditures providing for payments in excess of $250,000 singly and
$500,000 in the aggregate; (xvi) agreement relating to the rental or use of
equipment, involving payment of fixed or contingent rentals or sums in excess of
$250,000 per annum; (xvii) agreement not made in the ordinary course of
business, consistent with past practice that is material to the Company; and
(xviii) other contract, agreement, commitment or understanding (other than this
Agreement, purchase orders for the purchase of inventory or real property
leases) under which the Company or any of its Subsidiaries has made, is
reasonably likely to make, has received or is reasonably likely to receive,
payments in excess of $250,000 or the termination or breach of which, or failure
to obtain consent in respect of, is reasonably likely to be material; provided, however, that a
Company Plan shall not be a Company Contract.
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“Company Current Balance
Sheet” has the meaning set forth in Section 3.6(i).
“Company Disclosure
Letter” has the meaning set forth in Article III.
“Company Equity Plans”
has the meaning set forth in Section 2.4(a).
“Company Financial
Advisor” has the meaning set forth in Section 3.22.
“Company Form 10-K”
has the meaning set forth in Article III.
“Company Ground Leased
Property” means a Company Leased Real Property that consists of one or
more parcels of land and the improvements thereon.
“Company Intellectual
Property Rights” means all Intellectual Property Rights that are
currently used in or held for use in the Company’s and/or any of its
Subsidiaries’ businesses.
“Company IP Contracts”
means all contracts, licenses and other agreements to which the Company or any
of its Subsidiaries is a party or otherwise bound (i) granting or obtaining any
right to use any intellectual property (other than contracts, licenses or other
agreements granting rights to use readily available commercial software having
an acquisition price of less than $100,000 in the aggregate for each related set
of such contracts, licenses, or other agreements) or (ii) restricting the
Company’s or its Subsidiaries’ rights, or permitting other Persons, to use or
register any Company-Owned Intellectual Property Rights.
“Company Leased Real
Property” has the meaning set forth in Section 3.8.
“Company Material Adverse
Effect” means any event, change, development, effect or occurrence that,
either individually or in the aggregate with all other events, changes,
developments, effects or occurrences, had, or would reasonably be expected to
have, a material adverse effect on: (i) the business, results of operations or
financial condition of the Company and its Subsidiaries, taken as a whole, but
excluding any such event, change, development or occurrence resulting from or
arising out of (A) any changes in the market price or trading volume of the
Company Common Stock (provided that the underlying causes of such changes shall
not be excluded), (B) any failure by the Company to meet any published
projections, analyst estimates, forecasts or revenue or earnings predictions
(provided that the underlying causes of such changes shall not be excluded), (C)
changes in Law, GAAP or the adoption or amendment of financial accounting
standards by the Financial Accounting Standards Board, (D) any stockholder
litigation brought or threatened against the Company, any Company officer or any
member of the Company’s board of directors in respect of this Agreement or the
transactions contemplated hereby, (E) changes in the financial markets generally
in the United States or that are the result of acts of war or terrorism that do
not have a disproportionate effect (relative to other industry participants) on
the Company and its Subsidiaries taken as a whole, (F) general national or
international economic, financial or business conditions affecting generally the
apparel industry that do not have a disproportionate effect (relative to other
industry participants) on the Company and its Subsidiaries taken as a whole and
(G) the execution, announcement and performance of this Agreement, or any
actions taken, delayed or omitted to be taken by the Company at the written
request of Parent or Merger Sub or that Parent or Merger Sub consents to in
writing; or (ii) the ability of the Company to consummate the Merger or perform
its obligations hereunder.
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“Company Options” has
the meaning set forth in Section 2.4(a).
“Company-Owned Intellectual
Property” means all Intellectual Property Rights owned by the Company
and/or any of its Subsidiaries.
“Company Owned Real
Property” has the meaning set forth in Section 3.8.
“Company Plan(s)” has
the meaning set forth in Section 3.13(a).
“Company Real
Property” has the meaning set forth in Section 3.16(b).
“Company Restricted
Share” has the meaning set forth in Section 2.4(b).
“Company SEC Reports”
has the meaning set forth in Section 3.6(a).
“Company Securities”
has the meaning set forth in Section 3.5.
“Company Stockholder
Approval” has the meaning set forth in Section 3.3(a).
“Company Termination
Fee” has the meaning set forth in Section 8.2(b).
“Company Transaction
Documents” has the meaning set forth in Section 3.3(a).
“Confidentiality
Agreement” has the meaning set forth in Section 6.3.
“Continuing Employee”
means each employee of the Company who continues employment with Parent, the
Surviving Corporation or any of their respective Subsidiaries after the Closing
Date.
“Credit Agreement” has
the meaning set forth in Section 6.15.
“D&O Insurance”
has the meaning set forth in Section 6.9(b).
“DGCL” has the meaning
set forth in the recitals.
“Effective Time” has
the meaning set forth in Section 1.2.
“Environment” means
any surface or subsurface physical medium or natural resource, including, air,
land, soil, surface waters, ground waters, stream and river sediments, and
biota.
“Environmental Laws”
means any federal, state, local or common law, rule, regulation, ordinance,
code, order or judgment (including any published judicial or administrative
guidance and directives) relating to the injury to, or the pollution or
protection of human health and safety or the Environment.
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“Environmental
Liabilities” means any claims, judgments, damages (including punitive
damages), losses, penalties, fines, liabilities, encumbrances, Liens,
violations, costs and expenses (including attorneys’ and consultants’ fees) of
investigation, remediation or defense of any matter relating to human health,
safety or the Environment of whatever kind or nature by any party, entity or
authority, (A) that are incurred as a result of (i) the existence of Hazardous
Substances in, on, under, at or emanating from any real property presently or
formerly owned, operated or managed by the Company or any of its past or present
Subsidiaries, (ii) the offsite transportation, treatment, storage or disposal of
Hazardous Substances generated by the Company or any of its past or present
Subsidiaries or (iii) the violation of any Environmental Laws or (B) that arise
under the Environmental Laws.
“ERISA” means the
Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate”
means any entity that would be deemed a “single employer” with another entity
under Section 414(b), (c), (m) or (o) of the Code or Section 4001 of
ERISA.
“Exchange Act” means
the Securities Exchange Act of 1934, as amended.
“Exchange Agent” has
the meaning set forth in Section 2.2(a).
“Exchange Fund” has
the meaning set forth in Section 2.2(a).
“Exchange Ratio” has
the meaning set forth in Section 2.1(a).
“FIN 48” has the
meaning set forth in Section 3.6(j).
“Foreign Company Plan”
has the meaning set forth in Section 3.13(j).
“Former Company Real
Property” has the meaning set forth in Section 3.16(b).
“GAAP” means United
States generally accepted accounting principles.
“Governmental Entity”
means any (a) nation, region, state, province, county, city, town, village,
district or other jurisdiction, (b) federal, state, local, municipal, foreign or
other government, (c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, court or tribunal, or
other entity), (d) multinational organization or body or (e) body entitled to
exercise any administrative, executive, judicial, legislative, police,
regulatory or taxing authority or power of any nature.
“Hazardous Substances”
means petroleum, petroleum products, petroleum-derived substances, radioactive
materials, hazardous wastes, polychlorinated biphenyls, lead based paint, radon,
urea formaldehyde, asbestos or any materials containing asbestos, and any
wastes, materials or substances regulated or defined as or included in the
definition of “hazardous substances,” “hazardous materials,” “hazardous
constituents,” “hazardous wastes,” “toxic substances,”
“pollutants,” “contaminants” or any similar denomination intended to
classify or regulate substances by reason of toxicity, carcinogenicity,
ignitability, corrosivity or reactivity, under any Environmental
Law.
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“HSR Act” has the
meaning set forth in Section 3.4.
“Indebtedness” shall
mean (i) indebtedness for borrowed money or guarantees for any indebtedness of
another Person, (ii) outstanding debt securities, warrants or other rights to
acquire any debt securities of the Company or any of its Subsidiaries or
guarantees of any debt securities of another Person, (iii) “keep well” or other
agreements to maintain any financial statement condition of another Person and
(iv) any arrangements having the economic effect of any of the
foregoing.
“Indemnified Parties”
has the meaning set forth in Section 6.9(a).
“Intellectual Property
Rights” means all intellectual property rights throughout the world,
including (i) all rights relating to the protection of inventions, including
patents, patent applications and invention disclosures, (ii) all rights related
to registered and unregistered trademarks, service marks, trade names, corporate
names, logos, trade dress, brand names, designs, packaging, domain names and
registrations and applications for registration thereof, together with all
goodwill associated therewith, (iii) all rights in works of authorship,
copyrightable works, registered and unregistered copyrights, any other rights
that may be known as or referred to as moral rights therein, and registrations
and applications for registration thereof, (iv) all rights relating to the
protection of trade secrets, know-how and proprietary information, (v) all
rights relating to the protection of computer software programs and databases,
(vi) all rights to obtain renewals, reissues, reexaminations, continuations,
continuations-in-part, divisions or other extensions of legal protections
pertaining thereto, (vii) all actions and rights to xxx at law or in equity for
past, present or future infringement or other impairment of any of the
foregoing, including the right to receive all proceeds and damages therefrom,
and (viii) any right analogous to those set forth herein.
“Inventory” has the
meaning set forth on Section 3.21 of the Company Disclosure Letter.
“IRS” means the United
States Internal Revenue Service.
“Law” means any
statutes, laws (including common law), rules, ordinances, regulations, codes,
orders, judgments, injunctions, writs, decrees, applicable to the Company or any
of its Subsidiaries or Parent or any of its Subsidiaries, as applicable, or
their respective properties or assets.
“Liens” means security
interests, liens, claims, pledges, options, rights of first refusal, charges,
other encumbrances and, with respect to any Company Owned Real Property or any
Company Leased Real Property, covenants, conditions, restrictions, easements and
other similar non-monetary matters of record affecting title
thereto.
“Maximum Share Number”
has the meaning set forth in Section 2.1(a).
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“Measurement Price”
means the volume weighted average price per share of Parent Common Stock
(rounded to the nearest cent) on the NASDAQ for the 20 consecutive trading days
ending on (and including) the third trading day immediately prior to the
Effective Time (as reported by Bloomberg LP for each such trading day, or, if
not reported by Bloomberg LP, any other authoritative source reasonably selected
by Parent).
“Measurement Value”
has the meaning set forth in Section 2.4(a).
“Merger” has the
meaning set forth in the recitals.
“Merger Consideration”
has the meaning set forth in Section 2.1(a).
“Merger Sub” has the
meaning set forth in the preamble hereto.
“NASDAQ” means the
NASDAQ Stock Market.
“NYSE” means the New
York Stock Exchange.
“Occupancy Agreements”
means leases, license agreements, occupancy agreements or other rights of
occupancy affecting or relating to a Company Owned Real Property or Company
Leased Real Property with respect to which the Company is the landlord or
licensor, either pursuant to the agreement or as successor to any prior landlord
or licensor (including all amendments, modifications, supplements, renewals,
extensions, guarantees and other documents and agreements with respect
thereto).
“Outside Date” has the
meaning set forth in Section 8.1(b).
“Parent” has the
meaning set forth in the preamble hereto.
“Parent Common Stock”
means common stock, par value $.05 per share, of Parent.
“Parent Contracts” has
the meaning set forth in the Section 4.10(a).
“Parent Current Balance
Sheet” has the meaning set forth in Section 4.6(i).
“Parent Disclosure
Letter” has the meaning set forth in Article IV.
“Parent Expenses”
means Parent’s out-of-pocket expenses incurred in connection with this Agreement
and the transactions contemplated hereby, including the fees and expenses of its
Representatives and the fees and expenses of any proposed financing for the
transactions contemplated by this Agreement; provided, however, that in no
event shall the Parent Expenses exceed $1,000,000.
“Parent Form 10-K” has
the meaning set forth in Article IV.
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“Parent Material Adverse
Effect” means any event, change, development, effect or occurrence that,
either individually or in the aggregate with all other events, changes,
developments, effects or occurrences, had, or would reasonably be expected to
have, a material adverse effect on: (i) the business, results of operations or
financial condition of Parent and its Subsidiaries, taken as a whole, but
excluding any such event, change, development or occurrence resulting from or
arising out of (A) any changes in the market price or trading volume of the
Parent Common Stock (provided that the underlying causes of such changes shall
not be excluded), (B) any failure by Parent to meet any published projections,
analyst estimates, forecasts or revenue or earnings predictions (provided that
the underlying causes of such changes shall not be excluded), (C) changes in
Law, GAAP or the adoption or amendment of financial accounting standards by the
Financial Accounting Standards Board, (D) any stockholder litigation brought or
threatened against Parent, any Parent officer or any member of Parent’s board of
directors in respect of this Agreement or the transactions contemplated hereby,
(E) changes in the financial markets generally in the United States or that are
the result of acts of war or terrorism that do not have a disproportionate
effect (relative to other industry participants) on Parent and its Subsidiaries
taken as a whole, (F) general national or international economic, financial or
business conditions affecting generally the apparel industry that do not have a
disproportionate effect (relative to other industry participants) on Parent and
its Subsidiaries taken as a whole and (G) the execution, announcement and
performance of this Agreement, or any actions taken, delayed or omitted to be
taken by Parent at the written request of the Company or that the Company
consents to in writing; or (ii) the ability of Parent to consummate the Merger
or perform its obligations hereunder.
“Parent SEC Reports”
has the meaning set forth in Section 4.6(a).
“Parent Securities”
has the meaning set forth in Section 4.5.
“Parent Transaction
Documents” has the meaning set forth in Section 4.3(a).
“Permits” means any
material governmental licenses, franchises, permits, certificates, consents,
orders, approvals, filings or other similar authorizations or notifications
required under applicable Law.
“Permitted Liens”
means (i) statutory Liens for current Taxes or other governmental charges not
yet due and payable or the amount or validity of which is being contested in
good faith by appropriate Proceedings and are adequately reserved in accordance
with GAAP as shown on the Company Current Balance Sheet or Parent Current
Balance Sheet, as applicable; (ii) mechanics’, carriers’, workers’, repairers’
and similar statutory Liens arising or incurred in the ordinary course of
business for amounts which are not delinquent or which are being contested by
appropriate Proceedings; (iii) zoning, entitlement, building and other land use
regulations imposed by governmental agencies having jurisdiction over the
Company Leased Real Property or Company Owned Real Property that are not
violated by the current use and operation of the Company Leased Real Property or
Company Owned Real Property, as applicable; (iv) covenants, conditions,
restrictions, easements and other similar non-monetary matters of record
affecting title to the Company Leased Real Property or the Company Owned Real
Property, which do not materially impair the occupancy or use of the Company
Leased Real Property or the Company Owned Real Property, as applicable, for the
purposes for which it is currently used in connection with the Company’s and its
Subsidiaries’ businesses; (v) public roads and highways; (vi) Liens arising
under worker’s compensation, unemployment insurance, social security, retirement
and similar legislation; (vii) Liens on goods in transit incurred pursuant to
documentary letters of credit; (viii) purchase money Liens and Liens securing
rental payments under capital lease arrangements; and (ix) licenses of
Intellectual Property Rights.
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“Person” means an
individual, a group (including a “group” under Section 13(d) of the Exchange
Act), a partnership, a corporation, a limited liability company, an association,
a joint stock company, a trust, a joint venture, an unincorporated organization
or other entity and a Governmental Entity or any department, agency or political
subdivision thereof.
“Proceeding” has the
meaning set forth in Section 3.12.
“Proxy/Prospectus” has
the meaning set forth in Section 6.1(a).
“Proxy Statement” has
the meaning set forth in Section 6.1(a).
“Registration
Statement” has the meaning set forth in Section 6.1(a).
“Representatives” has
the meaning set forth in Section 6.3.
“Rights Agreement”
means the Rights Agreement dated as of August 14, 2001, by and between the
Company and Equiserve Trust Company, N.A., as amended by the Agreement of
Substitution and Amendment of Rights Agreement dated as of November 11, 2003, by
and between the Company and American Stock Transfer & Trust Company, as the
successor Rights Agent.
“Xxxxxxxx-Xxxxx Act”
means the Xxxxxxxx-Xxxxx Act of 2002.
“SEC” has the meaning
set forth in Section 3.6(a).
“Securities Act” means
the Securities Act of 1933, as amended.
“Section 203” has the
meaning set forth in Section 3.25.
“Signage” has the
meaning set forth on Section 3.21 of the Company Disclosure Letter.
“Stockholders’
Meeting” has the meaning set forth in Section 6.2(a).
“Subsidiary” means any
corporation, company, partnership, organization or other entity of which the
securities or other ownership interests having 50% or more of the ordinary
voting power in electing the board of directors or other governing body are, at
the time of such determination, owned by an entity or another Subsidiary of such
entity.
“Superior Proposal”
means a bona fide written Acquisition Proposal (on its most recently amended or
modified terms, if amended or modified) (except that references in the
definition of “Acquisition Proposal” to “20%” shall be replaced by 100%) made by
a third party to enter into an Alternative Transaction that the Board of
Directors of the Company determines in its good faith business judgment (after
consultation with its financial advisor and the Company’s outside legal counsel)
to be (i) more favorable to the Company’s stockholders than the Merger from a
financial point of view and (ii) reasonably capable of being consummated, taking
into account all financial, legal, regulatory and other aspects of such proposal
that the Board of Directors of the Company determines in its good faith business
judgment to be relevant.
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“Surviving
Corporation” has the meaning set forth in Section 1.1.
“Tax” or “Taxes” means any
federal, state, local or foreign income, gross receipts, franchise, estimated,
alternative minimum, add on minimum, sales, use, transfer, real property gains,
registration, value added, excise, natural resources, severance, stamp,
occupation, premium, windfall profit, environmental, customs, duties, real
property, special assessment, personal property, capital stock, social security,
unemployment, disability, payroll, license, employee or other withholding, or
other tax, of any kind whatsoever, including any interest, penalties or
additions to tax or additional amounts in respect of the foregoing.
“Tax Returns” means
any return, report, information return, form, declaration, statement or other
document (including schedules or any related or supporting information) filed or
required to be filed with any Governmental Entity or other authority in
connection with the determination, assessment or collection of any Tax or the
administration of any Laws, regulations or administrative requirements relating
to any Tax, including any attachments, amendment; or supplements
thereto.
“Tax Separation
Agreement” has the meaning set forth on Section 3.9 of the Company
Disclosure Letter.
“Treasury Regulations”
means the regulations promulgated by the U.S. Treasury Department pursuant to
the Code.
“WARN Act” has the
meaning set forth in Section 3.18(b).
9.2 Construction.
(a) Unless
the context otherwise requires, as used in this Agreement: (i) an
accounting term not otherwise defined in this Agreement has the meaning ascribed
to it in accordance with GAAP; (ii) “or” is not exclusive; (iii) “including” and
its variants mean “including, without limitation,” and its variants; (iv) words
defined in the singular have the parallel meaning in the plural and vice versa;
(v) references to “written” or “in writing” include in visual electronic form;
(vi) words of one gender shall be construed to apply to each gender; and (vii)
the terms “Article,” “Section” and “Schedule” refer to the specified Article,
Section or Schedule of or to this Agreement.
(b) A
reference to any Person includes such Person’s successors and permitted
assigns.
(c) Any
references to “dollars” or “$” means dollars of the United States of
America.
(d) For
purposes of this Agreement, “knowledge” of a
party, or words or phrases of similar import or meaning as used in this
Agreement shall mean the knowledge of any of the directors or executive officers
of the Company or its Subsidiaries or of Parent or its Subsidiaries, as
applicable, and all knowledge that was or would reasonably be expected to have
been obtained upon reasonable inquiry by such persons of those management level
employees of the Company or its Subsidiaries or Parent or its Subsidiaries, as
applicable, whose duties would, in the normal course of the Company’s or any of
its Subsidiaries’ affairs or Parent’s or any of its Subsidiaries’ affairs, as
applicable, result in such management level employees having knowledge
concerning such subject, area or state of affairs.
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(e) For
purposes of this Agreement, only information that was posted on the Company’s
“Project Thailand” electronic datasite hosted by Intralinks prior to the date
hereof will be deemed to have been “made available” by the Company to
Parent.
ARTICLE
X
MISCELLANEOUS
10.1 Non-Survival of
Representations and Warranties. None of the representations
and warranties in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Effective Time or the termination of this Agreement
in accordance with Section 8.1. This Section 10.1 shall not limit any
covenant or agreement of the parties which by its terms contemplates performance
after the Effective Time.
10.2 Notices. Any
notices or other communications required or permitted under, or otherwise in
connection with this Agreement shall be in writing and shall be deemed to have
been duly given when delivered in person or upon confirmation of receipt when
transmitted by facsimile transmission (or, if mailed, three days after mailing
(or one Business Day if transmitted by national overnight courier), in each case
as follows:
Notices
to Parent or Merger Sub:
00
Xxxxxxxx Xxxxx
Xxxxxxx,
Xxx Xxxx 00000
Attn: Xxxxx
X. Xxxxx, President and Chief Executive Officer
Facsimile
No.: (000) 000-0000
with a
copy to:
00
Xxxxxxxx Xxxxx
Xxxxxxx,
Xxx Xxxx 00000
Attn: Xxxx
X. Xxxxxx, Esq., Senior Vice President & General Counsel
Facsimile
No.: (000) 000-0000
and
Proskauer
Rose LLP
0000
Xxxxxxxx
Xxx Xxxx,
XX 00000
Attn: Xxxxxx
X. Xxxxxxxxxxx, Esq.
Facsimile
No.: (000) 000-0000
Notices
to the Company:
0000
Xxxxxx Xxxxxxx
Xxx
Xxxxxx, Xxxx 00000
Attn: Xxxxxxx
X. Xxxxxx, Chairman & Chief Executive Officer
Facsimile
No.: (000) 000-0000
with a
copy to:
0000
Xxxxxx Xxxxxxx
Xxx
Xxxxxx, Xxxx 00000
Attn: Xxxxxxx
X. Xxxxxxx, Senior Vice President & General Counsel
Facsimile
No.: (000) 000-0000
and
O’Melveny
& Xxxxx LLP
000
Xxxxxxx Xxxxxx Xxxxx
Xxxxx
0000
Xxxxxxx
Xxxxx, XX 00000
Attn: Xxxxx
X. Xxxxxxx, Esq. and Xxxxx X. Xxxxxx, Esq.
Facsimile
No.: (000) 000-0000
-66-
10.3 Severability. If
any term or other provision of this Agreement is invalid, illegal or incapable
of being enforced by any rule of Law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated by
this Agreement is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the Merger and other transactions contemplated by this Agreement are
fulfilled to the extent possible.
10.4 Entire
Agreement. This Agreement, the Company Disclosure Letter, the
Parent Disclosure Letter and the other documents delivered pursuant hereto and
the Confidentiality Agreement constitute the entire agreement of the parties and
supersede all prior agreements and undertakings, both written and oral, between
the parties, or any of them, with respect to the subject matter of this
Agreement.
10.5 Assignment. Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto, in whole or in part (whether by
operation of Law or otherwise), without the prior written consent of the other
parties, and any attempt to make any such assignment without such consent shall
be null and void, except that Merger Sub may assign, in its sole discretion, any
or all of its rights, interests and obligations under this Agreement to any
direct wholly owned Subsidiary of Parent without the consent of the Company;
provided that Merger Sub shall remain liable for all of its obligations
hereunder notwithstanding any such assignment.
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10.6 Third-Party
Beneficiaries. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto and their respective successors and
assigns, and nothing in this Agreement, express or implied, other than pursuant
to Article II and Section 6.9, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.
10.7 No Strict
Construction. Each party hereto has participated in the
drafting of this Agreement, which each party acknowledges is the result of
extensive negotiations between the parties.
10.8 Governing Law; Consent to
Jurisdiction and Venue.
(a) This
Agreement and the transactions contemplated by this Agreement, and all disputes
between the parties under or related to this Agreement or the facts and
circumstances leading to its execution, whether in contract, tort or otherwise,
shall be governed by and construed in accordance with the Laws of the State of
Delaware, applicable to contracts executed in and to be performed entirely
within that State and without reference to conflict of laws
principles.
(b) Each
of the parties hereto hereby irrevocably and unconditionally submits, for itself
and its property, to the exclusive jurisdiction of the Delaware Court of
Chancery, or any Federal Court of the United States of America sitting in
Wilmington, Delaware, and any appellate court from any thereof, in any action or
Proceeding arising out of or relating to this Agreement or the agreements
delivered in connection herewith or the transactions contemplated by this
Agreement or thereby, and each of the parties hereby irrevocably and
unconditionally (i) agrees not to commence any such action or Proceeding except
in such courts, (ii) agrees that any claim in respect of any such action or
Proceeding may be heard and determined in such court, (iii) waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any such action or Proceeding in
any such court, and (iv) waives, to the fullest extent permitted by Law, the
defense of an inconvenient forum to the maintenance of such action or Proceeding
in any such court. Each of the parties hereto agrees that a final
judgment in any such action or Proceeding shall be conclusive and may be
enforced in any other place of competent jurisdiction by suit on the judgment or
in any other manner provided by Law. Each party to this Agreement
irrevocably consents to service of process in the manner provided for notices in
Section 10.2. Nothing in this Agreement shall affect the right of any
party to this Agreement to serve process in any other manner permitted by
Law.
10.9 Disclosure
Letters. A statement in the body of this Agreement shall
control if there is an inconsistency between a statement in the body of this
Agreement on the one hand or in the Company Disclosure Letter or the Parent
Disclosure Letter on the other hand. Notwithstanding the foregoing
sentence, an exception expressly set forth in the Company Disclosure Letter or
the Parent Disclosure Letter with respect to a specifically identified
representation, warranty, covenant or agreement or a description of assets,
liabilities or other matters shall control over a statement in the body of this
Agreement. The statements in the Company Disclosure Letter and the
Parent Disclosure Letter relate (i) to the provisions in the section of this
Agreement to which they expressly relate and (ii) to the provisions in the
Agreement to which the relevance of such statement is readily apparent on its
face. In the Company Disclosure Letter and the Parent Disclosure
Letter, (a) all capitalized terms used but not defined therein shall have the
meanings assigned to them in this Agreement, (b) the section numbers correspond
to the section numbers in this Agreement and (c) inclusion of any item in a
disclosure letter (i) does not represent a determination that such item is
material or establish a standard of materiality, (ii) does not represent a
determination that such item did not arise in the ordinary course of business,
(iii) does not represent a determination that the Merger requires the consent of
third parties and (iv) shall not constitute, or be deemed to be, an admission to
any third party concerning such item.
-68-
10.10 Time of the
Essence. Time is of the essence regarding all dates and time
periods set forth or referred to in this Agreement or any document contemplated
by this Agreement.
10.11 Specific
Performance. The parties hereby acknowledge and agree that the
failure of any party to perform its agreements and covenants hereunder,
including its failure to take all actions as are necessary on its part to
consummate the Merger, will cause irreparable injury to the other parties, for
which damages, even if available, will not be a complete and adequate
remedy. Accordingly, each party hereby consents to the issuance of
injunctive relief by any court of competent jurisdiction to compel performance
of such party’s obligations and to the granting by any court of the remedy of
specific performance of its obligations hereunder, in addition to any other
rights or remedies available hereunder or at law or in equity.
10.12 WAIVER OF TRIAL BY
JURY. THE PARTIES HERETO WAIVE THE RIGHT TO A TRIAL BY JURY IN
ANY ACTION OR PROCEEDING ARISING UNDER OR CONCERNING THIS AGREEMENT OR ANY
ACTION OR PROCEEDING ARISING OUT OF OR CONCERNING THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT, REGARDLESS OF WHICH PARTY INITIATES SUCH ACTION OR
PROCEEDING.
10.13 Counterparts. This
Agreement may be executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when executed shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement.
* * * *
-69-
IN
WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Agreement and Plan of Merger on the day and year first above
written.
| THE DRESS BARN, INC. | |||
|
By:
|
/s/ Xxxxx X. Xxxxx | ||
| Name: | Xxxxx X. Xxxxx | ||
| Title: | President and Chief Executive Officer | ||
| THAILAND ACQUISITION CORP. | |||
|
By:
|
/s/ Xxxxx X. Xxxxx | ||
| Name: | Xxxxx X. Xxxxx | ||
| Title: | President and Chief Executive Officer | ||
| TWEEN BRANDS, INC. | |||
|
By:
|
/s/ Xxxxxxx X. Xxxxxx | ||
| Name: | Xxxxxxx X. Xxxxxx | ||
| Title: | Chairman and Chief Executive Officer | ||
EXHIBIT
A
AMENDED
AND RESTATED
CERTIFICATE
OF INCORPORATION
OF
TWEEN
BRANDS, INC.
FIRST: The name of
the corporation is:
TWEEN
BRANDS, INC.
SECOND: The
registered office of the corporation is to be located at 0000 Xxxxxxxxxxx Xxxx
Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx, 00000, New Castle County. The name
of its registered agent at that address is Corporation Service
Company.
THIRD: The purpose
of the corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.
FOURTH: The
corporation shall have the authority to issue 100 shares of common stock, par
value $.01 per share.
FIFTH: Whenever a
compromise or arrangement is proposed between the corporation and its creditors
or any class of them and/or between the corporation and its stock holders or any
class of them, any court of equitable jurisdiction within the State of Delaware
may, on the application in a summary way of the corporation or of any creditor
or stockholder thereof or on the application of any receiver or receivers
appointed for the corporation under the provisions of §291 of Title 8 of the
Delaware Code or on the application of trustees in dissolution or of any
receiver or receivers appointed for the corporation under the provisions of §279
of Title 8 of the Delaware Code order a meeting of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of the
corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing
three fourths in value of the creditors or class of creditors, and/or
of the stockholders or class of stockholders of the corporation, as the case may
be, agree to any compromise or arrangement and to any reorganization of the
corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the corporation, as the case may be, and also on the
corporation.
SIXTH: A director
of this corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for the breach of any fiduciary duty as a
director, except in the case of (a) any breach of the director’s duty of loyalty
to the corporation or its stockholders, (b) acts or omissions not in good faith
or that involve intentional misconduct or a knowing violation of law, (c) under
section 174 of the General Corporation Law of the State of Delaware or (d) for
any transaction from which the director derives an improper personal
benefit. Any repeal or modification of this Article by the
stockholders of the corporation shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification with respect to acts or omissions occurring prior to such repeal
or modification.
SEVENTH: The
corporation shall, to the fullest extent permitted by law, as the same is now or
may hereafter be in effect, indemnify each person (including the heirs,
executors, administrators and other personal representatives of such person)
against expenses including attorneys’ fees, judgments, fines and amounts paid in
settlement, actually and reasonably incurred by such person in connection with
any threatened, pending or completed suit, action or proceeding (whether civil,
criminal, administrative or investigative in nature or otherwise) in which such
person may be involved by reason of the fact that he or she is or was a director
or officer of the corporation or is or was serving any other incorporated or
unincorporated enterprise in such capacity at the request of the
corporation.
EIGHTH: Unless, and
except to the extent that, the by-laws of the corporation shall so require, the
election of directors of the corporation need not be by written
ballot.
NINTH: The
corporation hereby confers the power to adopt, amend or repeal by-laws of the
corporation upon the directors.
EXHIBIT
B
BY-LAWS
OF
TWEEN
BRANDS, INC.
1. MEETINGS OF
STOCKHOLDERS.
1.1 Annual
Meeting. The annual meeting of stockholders for the purpose of
electing directors and of transaction such other business as may come before
it shall be held each year at such date, time and place, either
within or without the State of Delaware, as may be determined by the board of
directors (the “Board”).
1.2 Special
Meetings. Special meetings of the stockholders may be called at any
time by the Chairman of the Board, by resolution of the Board, by the President
or Secretary upon the written request stating the purpose or purposes of the
meeting of a majority of the directors then in office or of the holders of a
majority of the outstanding shares entitled to vote. Only business
related to the purposes set forth in the notice of the meeting may be transacted
at a special meeting.
1.3 Place
and Time of Meetings. Meetings of the stockholders may be held in or
outside Delaware at the place and time specified by the Board or the officers or
stockholders requesting the meeting.
1.4 Notice
of Meetings; Waiver of Notice. Written notice of each meeting of
stockholders shall be given to each stockholder entitled to vote at the meeting,
except that (a) it shall not be necessary to give notice to any stockholder who
submits a signed waiver of notice before or after the meeting, and (b) no notice
of an adjourned meeting need be given, except when required under Section 1.5
below or by law. Each notice of a meeting shall be given, personally
or by mail, not fewer than 10 nor more than 60 days before the meeting and shall
state the time and place of the meeting, and, unless it is the annual meeting,
shall state at whose direction or request the meeting is called and the purposes
for which it is called. If mailed, notice shall be considered given
when mailed to a stockholder at his address on the corporation’s
records. The attendance of any stockholder at a meeting, without
protesting at the beginning of the meeting that the meeting is not lawfully
called or convened, shall constitute a waiver of notice by him.
1.5 Quorum. At
any meeting of stockholders, the presence in person or by proxy of the holders
of a majority of the shares entitled to vote shall constitute a quorum for the
transaction of any business. In the absence of a quorum, a majority
in voting interest of those present or, if no stockholders are present, any
officer entitled to preside at or to act as secretary of the meeting, may
adjourn the meeting until a quorum is present. At any adjourned
meeting at which a quorum is present, any action may be taken that might have
been taken at the meeting as originally called. No notice of an
adjourned meeting need be given, if the time and place are announced
at the meeting at which the adjournment is taken, except that, if adjournment is
for more than 30 days or if, after the adjournment, a new record date is fixed
for the meeting, notice of the adjourned meeting shall be given pursuant to
Section 1.4.
1.6 Voting;
Proxies. Each stockholder of record shall be entitled to one vote for
each share registered in his name. Corporate action to be taken by
stockholder vote, other than the election of directors, shall be authorized by a
majority of the votes cast at a meeting of stockholders, except as otherwise
provided by law or by Section 1.8. Directors shall be elected in the
manner provided in Section 2.1. Voting need not be by ballot, unless
requested by a majority of the stockholders entitled to vote at the meeting or
ordered by the chairman of the meeting. Each stockholder entitled to
vote at any meeting of stockholders or to express consent to or dissent from
corporate action in writing without a meeting may authorize another person to
act for him by proxy. No proxy shall be valid after three years from
its date, unless it provides otherwise.
1.7 List
of Stockholders. Not fewer than 10 days prior to the date of any
meeting of stockholders, the secretary of the corporation shall prepare a
complete list of stockholders entitled to vote at the meeting, arranged in
alphabetical order and showing the address of each stockholder and the number of
shares registered in his name. For a period of not fewer than 10 days
prior to the meeting, the list shall be available during ordinary business hours
for inspection by any stockholder for any purpose germane to the
meeting. During this period, the list shall be kept either (a) at a
place within the city where the meeting is to be held, if that place shall have
been specified in the notice of the meeting, or (b) if not so specified, at the
place where the meeting is to be held. The list shall also be
available for inspection by stockholders at the time and place of the
meeting.
1.8 Action
by Consent Without a Meeting. Any action required or permitted to be
taken at any meeting of stockholders may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having not
fewer than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voting. Prompt notice of the taking of any such action
shall be given to those stockholders who did not consent in
writing.
2. BOARD OF
DIRECTORS.
2.1 Number,
Qualification, Election and Term of Directors. The business of the
corporation shall be managed by or under the direction of a Board of three
directors. The number of directors may be changed by resolution of a
majority of the Board or by the holders of a majority of the shares entitled to
vote, but no decrease may shorten the term of any incumbent
director. Directors shall be elected at each annual meeting of
stockholders by a plurality of the votes cast and shall hold office until the
next annual meeting of stockholders and until the election and qualification of
their respective successors, subject to the provisions of Section
2.9. As used in these By-laws, the term “entire Board” means the
total number of directors the corporation would have, if there were no vacancies
on the Board.
2
2.2 Quorum
and Manner of Acting. A majority of the entire Board shall constitute
a quorum for the transaction of business at any meeting, except as provided in
Section 2.10. Action of the Board shall be authorized by the vote of
the majority of the directors present at the time of the vote, if there is a
quorum, unless otherwise provided by law or these By-laws. In the
absence of a quorum, a majority of the directors present may adjourn any meeting
from time to time until a quorum is present.
2.3 Place
of Meetings. Meetings of the Board may be held in or outside
Delaware.
2.4 Annual
and Regular Meetings. Annual meetings of the Board, for the election
of officers and consideration of other matters, shall be held either (a) without
notice immediately after the annual meeting of stockholders and at the same
place, or (b) as soon as practicable after the annual meeting of stockholders,
on notice as provided in Section 2.6. Regular meetings of the Board
may be held without notice at such times and places as the Board
determines. If the day fixed for a regular meeting is a legal
holiday, the meeting shall be held on the next business day.
2.5 Special
Meetings. Special meetings of the Board may be called by the chairman
or by a majority of the directors.
2.6 Notice
of Meetings; Waiver of Notice. Notice of the time and place of each
special meeting of the Board, and of each annual meeting not held immediately
after the annual meeting of stockholders and at the same place, shall be given
to each director by mailing it to him at his residence or usual place of
business at least three days before the meeting, or by delivering or telephoning
or telegraphing it to him at least two days before the
meeting. Notice of a special meeting also shall state the purpose or
purposes for which the meeting is called. Notice need not be given to
any director who submits a signed waiver of notice before or after the meeting
or who attends the meeting without protesting at the beginning of the meeting
the transaction of any business because the meeting was not lawfully called or
convened. Notice of any adjourned meeting need not be given, other
than by announcement at the meeting at which the adjournment is
taken.
2.7 Board
or Committee Action Without a Meeting. Any action required or
permitted to be taken by the Board or by any committee of the Board may be taken
without a meeting, if all the members of the Board or the committee consent in
writing to the adoption of a resolution authorizing the action. The
resolution and the written consents by the members of the Board or the committee
shall be filed with the minutes of the proceedings of the Board or the
committee.
2.8 Participation
in Board or Committee Meetings by Conference Telephone. Any or all
members of the Board or any committee of the Board may participate in a meeting
of the Board or the committee by means of a conference telephone or similar
communications equipment allowing all persons participating in the meeting to
hear each other at the same time. Participation by such means shall
constitute presence in person at the meeting.
3
2.9 Resignation
and Removal of Directors. Any director may resign at any time by
delivering his resignation in writing to the chairman, president or secretary of
the corporation, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by its terms, shall not be
necessary to make it effective. Any or all of the directors may be
removed at any time, either with or without cause, by vote of the
stockholders.
2.10 Vacancies. Any
vacancy in the Board, including one created by an increase in the number of
directors, may be filled for the unexpired term by a majority vote of the
remaining directors, though less than a quorum.
2.11 Compensation. Directors
shall receive such compensation as the Board determines, together with
reimbursement of their reasonable expenses in connection with the performance of
their duties. A director also may be paid for serving the corporation
or its affiliates or subsidiaries in other capacities.
3. COMMITTEES.
3.1 Executive
Committee. The Board, by resolution adopted by a majority of the
entire Board, may designate an executive committee of one or more directors,
which shall have all the powers and authority of the Board, except as otherwise
provided in the resolution, Section 141(c) of the Delaware General Corporation
Law or any other applicable law. The members of the executive
committee shall serve at the pleasure of the Board. All action of the
executive committee shall be reported to the Board at its next
meeting.
3.2 Other
Committees. The Board, by resolution adopted by a majority of the
entire Board, may designate other committees of one or more directors, which
shall serve at the Board’s pleasure and have such powers and duties as the Board
determines.
3.3 Rules
Applicable to Committees. The Board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In case of the
absence or disqualification of any member of a committee, the member or members
present at a meeting of the committee and not disqualified, whether or not a
quorum, may unanimously appoint another director to act at the meeting in place
of the absent or disqualified member. All action of a committee shall
be reported to the Board at its next meeting. Each committee shall
adopt rules of procedure and shall meet as provided by those rules or by
resolutions of the Board.
4. OFFICERS.
4.1 Number;
Security. The executive officers of the corporation shall be the
chairman, a chief executive officer, a president, one or more vice presidents
(including an executive vice president, if the Board so determines), a secretary
and a treasurer. Any two or more offices may be held by the same
person. The board may require any officer, agent or employee to give
security for the faithful performance of his duties.
4
4.2 Election;
Term of Office. The executive officers of the corporation shall be
elected annually by the Board, and each such officer shall hold office until the
next annual meeting of the Board and until the election of his successor,
subject to the provisions of Section 4.4.
4.3 Subordinate
Officers. The Board may appoint subordinate officers (including
assistant secretaries and assistant treasurers), agents or employees, each of
whom shall hold office for such period and have such powers and duties as the
Board determines. The Board may delegate to any executive officer or
committee the power to appoint and define the powers and duties of any
subordinate officers, agents or employees.
4.4 Resignation
and Removal of Officers. Any officer may resign at any time by
delivering his resignation in writing to the chairman, president or secretary of
the corporation, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by its terms, shall not be
necessary to make it effective. Any officer elected or appointed by
the Board or appointed by an executive officer or by a committee may be removed
by the Board either with or without cause, and in the case of an officer
appointed by an executive officer or by a committee, by the officer or committee
that appointed him or by the chairman.
4.5 Vacancies. A
vacancy in any office may be filled for the unexpired term in the manner
prescribed in Sections 4.2 and 4.3 for election or appointment to the
office.
4.6 The
Chairman. The Chairman of the Board shall preside over all meetings
of the board at which he is present, and shall have such other powers and duties
as chairmen of the boards of corporations usually have or the Board assigns to
him.
4.7 The
Chief Executive Officer. Subject to the control of the Board, the
chief executive officer of the corporation shall manage and direct the daily
business and affairs of the corporation and shall communicate to the Board and
any Committee thereof reports, proposals and recommendations for their
respective consideration or action. He may do and perform all acts on
behalf of the Corporation and shall preside at all meetings of the stockholders
if present thereat, and in the absence of the Chairman of the Board of Directors
have such powers and perform such duties as the Board or the chairman may from
time to time prescribe or as may be prescribed in these By-laws, and in the
event of the absence, incapacity or inability to act of the chairman, then the
chief executive officer shall perform the duties and exercise the powers of the
chairman.
4.8 President. The
president shall have such powers and perform such duties as the Board or the
chairman may from time to time prescribe or as may be prescribed in these
By-laws.
4.9 Vice
President. Each vice president shall have such powers and duties as
the Board or the chairman assigns to him.
4.10 The
Treasurer. The treasurer shall be the chief financial officer of the
corporation and shall be in charge of the corporation’s books and
accounts. Subject to the control of the Board, he shall have such
other powers and duties as the Board or the president assigns to
him.
5
4.11 The
Secretary. The secretary shall be the secretary of, and keep the
minutes of, all meetings of the Board and the stockholders, shall be responsible
for giving notice of all meetings of stockholders and the Board, and shall keep
the seal and, when authorized by the Board, apply it to any instrument requiring
it. Subject to the control of the Board, he shall have such powers
and duties as the Board or the president assigns to him. In the
absence of the secretary from any meeting, the minutes shall be kept by the
person appointed for that purpose by the presiding officer.
4.12 Salaries. The
Board may fix the officers salaries, if any, or it may authorize the chairman to
fix the salary of any other officer.
5. SHARES.
5.1 Certificates. The
corporation’s shares shall be represented by certificates in the form approved
by the Board. Each certificate shall be signed by the chairman, chief
executive officer, president or a vice president, and by the secretary or an
assistant secretary or the treasurer or an assistant treasurer, and shall be
sealed with the corporation’s seal or a facsimile of the seal. Any or
all of the signatures on the certificate may be a facsimile.
5.2 Transfers. Shares
shall be transferable only on the corporation’s books, upon surrender of the
certificate for the shares, properly endorsed. The Board may require
satisfactory surety before issuing a new certificate to replace a certificate
claimed to have been lost or destroyed.
5.3 Determination
of Stockholders of Record. The Board may fix, in advance, a date as
the record date for the determination of stockholders entitled to notice of or
to vote at any meeting of the stockholders, or to express consent to or dissent
from any proposal without a meeting, or to receive payment of any dividend or
the allotment of any rights, or for the purpose of any other
action. The record date may not be more than 60 or fewer than 10 days
before the date of the meeting or more than 60 days before any other
action.
6. INDEMNIFICATION AND
INSURANCE.
6.1 The
corporation shall indemnify and hold harmless any person (and the heirs,
executors or administrators of such person) who was or is a party or is
threatened to be made a party to, or is involved in, any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that he, his testator, or intestate is
or was a director or officer of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust or other enterprise, or as a
member of any committee or similar body, to the fullest extent permitted by the
laws of Delaware as they may exist from time to time. The right to
indemnification conferred in this Article 6 shall also include the right to be
paid by the corporation the expenses incurred in connection with any such
proceeding in advance of its final disposition to the fullest extent permitted
by the laws of Delaware as they may exist from time to time.
6
6.2 The
corporation may, by action of its Board of Directors, provide indemnification to
such of the employees and agents of the corporation to such extent and to such
effect as the Board of Directors shall determine to be appropriate and
authorized by the laws of Delaware as they may exist from time to
time.
6.3 The
proper officers of the corporation, without further authorization by the Board
of Directors, may in their discretion purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent for another corporation, partnership, joint
venture, trust or other enterprise, against any liability.
6.4 To
assure indemnification under this Article of all such persons who are or were
“fiduciaries” of an employee benefit plan governed by the Act of Congress
entitled “Employee Retirement Income Security Act of 1974”, as amended from time
to time, the provisions of this Article 6 shall, for the purposes hereof, be
interpreted as follows: an “other enterprise” shall be deemed to include an
employee benefit plan; the corporation shall be deemed to have requested a
person to serve as an employee of an employee benefit plan where the performance
by such person of his duties to the corporation also imposes duties on, or
otherwise involves services by, such person to the plan or participants or
beneficiaries of the plan; excise taxes assessed on a person with respect to an
employee benefit plan pursuant to said Act of Congress shall be deemed “fines”;
and action taken or omitted by a person with respect to an employee benefit plan
in the performance of such person’s duties for a purpose reasonably believed by
such person to be in the interest of the participants and beneficiaries of the
plan shall be deemed to be for a purpose which is not opposed to the best
interests of the corporation.
6.5 The
foregoing provisions of this Article 6 shall be deemed to be a contract between
the corporation and each director and officer who serves in such capacity at any
time while this Article is in effect. Neither any repeal or
modification of this Article or, to the fullest extent permitted by the laws of
Delaware, any repeal or modification of laws, shall affect any rights or
obligations then existing with respect to any state of facts then or theretofore
existing or any action, suit or proceeding theretofore or thereafter brought
based in whole or in part upon any such state of facts.
6.6 For
the purposes of this Article 6, references to “the corporation” include in
addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had power and authority to
indemnify its directors, officers and employees or agents, so that any person
who is or was a director or officer of such constituent corporation or is or was
serving at the request of such constituent corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise or as a member of any committee or similar body shall stand in
the same position under the provisions of this Article with respect to the
resulting or surviving corporation as such person would have with respect to
such constituent corporation if its separate existence had
continued.
7
7. MISCELLANEOUS.
7.1 Seal. The
Board shall adopt a corporate seal, which shall be in the form of a circle and
shall bear the corporation’s name and the year and state in which it was
incorporated.
7.2 Fiscal
Year. The Board may determine the corporation’s fiscal
year. Until changed by the Board, the last day of the corporation’s
fiscal year shall be December 31.
7.3 Voting
of Shares in Other Corporations. Shares in other corporations held by
the corporation may be represented and voted by an officer of this corporation
or by a proxy or proxies appointed by one of them. The Board may,
however, appoint some other person to vote the shares.
7.4 Amendments. These By-laws may be amended,
repealed or adopted by the stockholders.
8
EXHIBIT
C
FORM
OF
TWEEN
BRANDS, INC.
CERTIFICATE
In
connection with the merger (the “Merger”) of Thailand Acquisition Corp. (“Merger
Sub”), a Delaware Corporation and a direct wholly-owned subsidiary of The Dress
Barn, Inc. (“Parent”), a Connecticut corporation, with and into Tween Brands,
Inc., a Delaware Corporation (the “Company”), pursuant to the Agreement and Plan
of Merger dated as of June 24, 2009 (the “Merger Agreement”), among Parent,
Merger Sub and the Company, the Company hereby certifies the following are now
true and will continue to be true as of the Effective Time and thereafter where
relevant (any capitalized term used but not defined herein having the meaning
given to such term in the Merger Agreement):
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1.
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The consideration to
be issued in the Merger to the shareholders of the Company was the result
of arm’s-length negotiations between the managements of Parent and the
Company. The fair market value of the common stock of Parent
(“Parent Common Stock”) to be received by each shareholder of the Company
is intended to approximately equal the fair market value of the common
stock of the Company (“Company Common Stock”) surrendered in the
Merger. Pursuant to the Agreement, the Company Common Stock
will be converted into such number of Parent Common Shares based on the
Exchange Ratio as determined in the Agreement. It is
understood, however, that there may be fluctuations in either the Company
Common Stock’s price or the Parent Common Stock’s price, as reported on
the NYSE or the NASDAQ respectively, between the time the Agreement was
signed and the Effective Time.
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2.
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Prior to and in connection with
the Merger, no outstanding stock of the Company has been or will be (i)
redeemed by the Company, (ii) acquired by a person related to the Company
(within the meaning of Treasury Regulation Section 1.368-1(e)(3)), or
(iii) the subject of any distribution by the
Company.
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3.
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In
the Merger, all of the outstanding Company Common Stock will be exchanged
solely for Parent Common Stock and cash in lieu of fractional share
interests. In connection with the Merger, no Company Common
Stock will be exchanged for cash or other property originating with Parent
or any person related to Parent (within the meaning of Treasury Regulation
Section 1.368-1(e)(3)) except for cash received by holders of the Company
Common Stock in lieu of fractional shares of Parent Common Stock. Further,
no liabilities of the Company or of holders of the Company Common Stock
will be assumed by Parent, nor to the best knowledge of the management of
the Company will any of the Company Common Stock be subject to any
liabilities.
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4.
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At
the Effective Time, the Company will hold at least 90% of the fair market
value of its net assets and at least 70% of the fair market value of its
gross assets held immediately prior to the Merger. For purposes
of this representation, assets disposed of by the Company prior to or
subsequent to the Merger and in contemplation thereof (including without
limitation any asset disposed of by the Company, other than in the
ordinary course of business, pursuant to a plan or intent existing during
the period ending at the Effective Time and beginning with the
commencement of negotiations or transactions (whether formal or informal)
with Parent in contemplation of the Merger), amounts used by the Company
to pay its reorganization expenses and those of its shareholders incurred
in connection with the Merger, amounts used by the Company to pay
shareholders receiving cash in lieu of fractional shares, and all
redemptions, distributions (except for regular, normal dividends), or
other payments in respect of the Company Common Stock or rights to acquire
such shares of stock (including payments treated as such for tax purposes)
that are made by the Company in contemplation of the Merger or related
thereto will be included as assets of the Company immediately prior but
not subsequent to the Merger.
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5.
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In connection with the Merger, the
Company has not sold, transferred or otherwise disposed of any of its
assets as would prevent Parent or members of its qualified group (within
the meaning of Treasury Regulation 1.368-1(d)(4)(ii)) from causing the
Company after the Merger to continue the historic business of the Company
or to use a significant portion of the Company’s historic business assets
in a business.
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6.
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There is no plan or intention on
the part of any shareholder of the Company who owns five percent or more
of the Company Common Stock as of the Effective Time, or to the best
knowledge of the Company on the part of any of the other shareholders of
the Company, to sell, exchange or otherwise dispose of Parent Common Stock
to be received in the Merger by such holder of the Company Common Stock
directly or indirectly to Parent, to a person related to Parent (within
the meaning of Treasury Regulation Section 1.368-1(e)(3)) or to any person
acting as agent for any of them for consideration other than Parent Common
Stock.
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2
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7.
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The Company has no outstanding
equity interests other than as described in Section 3.5 of the Merger
Agreement. At the Effective Time and following the Merger, the
Company will not have outstanding any warrants, options, convertible
securities, or any other type of right pursuant to which any person could
acquire stock in the Company that, if exercised or converted, would affect
Parent’s acquisition or retention of “Control” of the
Company. As used in this letter, “Control” shall consist of
direct ownership of stock possessing at least eighty percent (80%) of the
total combined voting power of all classes of stock entitled to vote and
at least eighty percent (80%) of the total number of shares of all other
classes of stock of the Company. For purposes of determining
Control, a person shall not be considered to own voting stock if rights to
vote such stock (or to restrict or otherwise control the voting of such
stock) are held by a third party (including a voting trust) other than an
agent of such person.
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8.
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The shareholders of the Company
will not be entitled to any dissenters’ or similar rights in connection
with the Merger.
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9.
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The Company and its shareholders
will pay their respective expenses, if any, incurred in connection with
the Merger.
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10.
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At the Effective Time, the fair
market value of the assets of the Company will exceed the sum of its
liabilities, plus the amount of liabilities, if any, to which the assets
are subject.
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11.
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The Company is neither an
investment company as defined in Section 368(a)(2)(F)(iii) and (iv) of the
Code nor under the jurisdiction of a court in a title 11 or similar case
within the meaning of Section 368(a)(3)(A) of the
Code.
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12.
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The Company has no plan or
intention to alter the terms of the Company Common Stock, to issue
additional shares of its stock or to grant any warrants, options,
convertible securities or any other type of right pursuant to which any
person could acquire stock of the Company that, if exercised or converted,
would result in Parent losing “Control” of the
Company.
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13.
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There is no intercorporate
indebtedness existing between Parent and the Company or between Merger Sub
and the Company that was issued, acquired or will be settled at a
discount.
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14.
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None of the compensation to be
received by any shareholder-employee of the Company in the Merger will be
separate consideration for, or allocable to, any of their shares of the
Company Common Stock; none of the shares of Parent Common Stock to be
received by any shareholder-employee of the Company in the Merger will be
separate consideration for, or allocable to, any employment or consulting
agreement; and the compensation to be paid to any shareholder-employee
after the Merger pursuant to arrangements entered into in connection with
the Merger will be for services actually rendered and will be commensurate
with amounts paid to third parties bargaining at arm’s-length for similar
services.
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3
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15.
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Parent Common Stock entitles the
holder thereof to vote in the election of the members of the board of
directors of Parent.
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16.
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All options, warrants or rights to
acquire shares of the Company Common Stock were issued with an exercise
price no less than fair market value at the time of
issuance.
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17.
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At the Effective Time there will
be no declared but unpaid dividends on the Company Common
Stock.
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18.
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The Merger is being effected for
bona fide business reasons and not for the purpose of tax avoidance, as
described in the Proxy/Prospectus and, if applicable, the Form
S-4.
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19.
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The information relating to the
Merger and all related transactions (including, but not limited to, all
representations, warranties, covenants and undertakings) set forth in the
Merger Agreement and the Proxy/Prospectus and, if applicable, the Form
S-4, insofar as such information relates to the Company, or the plans or
intentions of the Company set forth in the Merger Agreement or the
Proxy/Prospectus and, if applicable, the Form S-4, are true, correct and
complete in all material
respects.
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20.
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The Merger Agreement (including
all exhibits and attachments thereto) represents the full and complete
agreement between Parent, Merger Sub, and the Company regarding the
Merger, and there are no other written or oral agreements regarding the
Merger. The Merger will be consummated pursuant to the terms of
the Merger Agreement, and none of the material terms and conditions
thereof has been or will be waived or
modified.
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21.
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The payment of cash in lieu of
fractional shares of Parent Common Stock in the Merger is solely for the
purpose of avoiding the expense and inconvenience to Parent of issuing
fractional shares, if any, and does not represent separately bargained-for
consideration. The total cash consideration that will be paid
in the Merger to holders of the Company Common Stock in lieu of issuing
fractional shares of Parent Common Stock will not exceed one percent (1%)
of the total consideration that will be issued in the Merger to holders of
the Company Common Stock in exchange for their Company Common
Stock. The fractional shares of each holder of the Company
Common Stock will be aggregated, and no holder of the Company Common Stock
will receive cash in an amount equal to or greater than the value of one
full share of Parent Common
Stock.
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4
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22.
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Following the Merger, the Company
will comply with the record-keeping and information filing requirements of
Treasury Regulation Section
1.368-3.
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23.
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The
Merger
is effected pursuant to Delaware
statutes as a result of which the following events will occur
simultaneously at the Effective Time: (i) all of the assets and
liabilities of Merger Sub become the assets and liabilities of the Company
and (ii) Merger Sub’s separate legal existence ceases for all legal
purposes.
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24.
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The individual executing this
letter is authorized to make all of the representations set forth
herein.
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The undersigned recognizes that opinions
issued by counsel of Parent and the Company regarding certain United States federal income tax consequences of the
Merger (“Tax Opinions”) will be based on the representations set forth herein
and on the statements contained in the Merger Agreement and documents related
thereto. The Tax Opinions will be subject to certain limitations and
qualifications including that they may not be relied upon if any such
representations are not accurate in all respects.
5
IN WITNESS WHEREOF, the Company has
executed this Certificate on this ___ day of ____, 2009.
| TWEEN BRANDS, INC. | |||
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By:
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| Name | |||
| Title | |||
6
EXHIBIT
D
THE
DRESS BARN, INC. AND THAILAND ACQUISITION CORP.
CERTIFICATE
In
connection with the merger (the “Merger”) of Thailand Acquisition Corp. (“Merger
Sub”), a Delaware Corporation and a direct wholly-owned Tween Brands, Inc., a
Delaware Corporation (the “Company”), pursuant to the Agreement and Plan of
Merger dated as of June 24, 2009 (the “Merger Agreement”), among Parent, Merger
Sub and the Company, Parent hereby certifies, on behalf of Parent and Merger
Sub, the following are now true and will continue to be true as of the Effective
Time and thereafter where relevant (any capitalized term used but not defined
herein having the meaning given to such term in the Merger
Agreement):
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1
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The
consideration to be issued in the Merger to the shareholders of the
Company was the result of arm’s-length negotiations between the
managements of Parent and the Company. The fair market value of
the common stock of Parent (“Parent Common Stock”) to be received by each
shareholder of the Company is intended to approximately equal the fair market value of the common stock of the Company (“Company Common Stock”) surrendered in the
Merger. Pursuant to the Agreement, the Company Common Stock will be converted into such number of Parent Common Shares based
on the Exchange Ratio as determined in the Agreement. It is
understood, however, that there may be fluctuations in either the
Company Common Stock’s price or the Parent Common Stock’s price, as reported on
the NYSE or the NASDAQ respectively, between the time the Agreement was signed and the Effective
Time.
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2
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In connection with the Merger, no
outstanding stock of the Company has been or will be acquired by Parent,
any person related to Parent (within the meaning of Treasury Regulation
Section 1.368-1(e)(3)) or any Person acting as agent or intermediary for
any of them for any consideration other than shares of Parent Common Stock
and cash in lieu of fractional share
interests.
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3
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In the Merger, all
of the outstanding Company Common Stock will be exchanged solely for
Parent Common Stock and cash in
lieu of fractional share interests. Further, no
liabilities of the Company or of the holders of the Company Common Stock
will be assumed by Parent, nor to the best knowledge of the management of
Parent will any of the Company Common Stock be subject to any
liabilities.
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4
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Assuming the
accuracy of the Company’s representation in section 4 of the
Company’s representations certificate, following the Merger,
Parent will cause the Company to hold at least 90% of the fair market
value of its net assets and at least 70% of the fair market value of its
gross assets held immediately prior to the Merger and at least 90% of the
fair market value of the net assets and at least 70% of the fair market
value of the gross assets of Merger Sub held immediately before the
Merger. For purposes of this representation, assets disposed of
by the Company prior to or subsequent to the Merger and in contemplation
thereof (including without limitation any asset disposed of by the
Company, other than in the ordinary course of business, pursuant to a plan
or intent existing during the period ending at the Effective Time and
beginning with the commencement of negotiations or transactions (whether
formal or informal) with Parent in contemplation of the Merger), amounts
used by the Company to pay its reorganization expenses and those of its
shareholders incurred in connection with the Merger, amounts used by the
Company to pay shareholders receiving cash in lieu of fractional shares,
and all redemptions, distributions (except for regular, normal dividends),
or other payments in respect of the Company Common Stock or rights to
acquire such shares of stock (including payments treated as such for tax
purposes) that are made by the Company in contemplation of the Merger or
related thereto will be included as assets of the Company immediately
prior but not subsequent to the Merger. For purposes of this
representation, assets transferred from Parent to Merger Sub are not
included as assets of Merger Sub immediately before the Merger where such
assets are used to pay reorganization expenses or to enable Merger Sub to
satisfy state minimum capitalization
requirements.
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5
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Assuming the
accuracy of the Company’s representation in section 5 of the
Company’s representations certificate, following the Merger,
the historic business of the Company will be continued by, or a
significant portion of the Company’s historic business assets will be used
in a business of, Parent or a corporation within Parent’s qualified group
(within the meaning of Treasury Regulation Section
1.368-1(d)(4)).
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6
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Parent has no plan or intention to
liquidate the Company; to merge the Company with or into another
corporation; to sell, distribute or otherwise dispose of the Company
Common Stock acquired in the Merger except for transfers or successive
transfers of the Company Common Stock to one or more corporations
“Controlled” in each case by the transferor; or to cause the Company to
sell or otherwise dispose of any of its assets or of any of the assets
acquired from Merger Sub except for dispositions made in the ordinary course of
business or transfers or successive transfers of assets to one or more
corporations Controlled in each case by the
transferor corporation. As used in this letter, “Control” shall
consist of direct ownership of stock possessing at least eighty percent
(80%) of the total combined voting power of all classes of stock entitled
to vote and at least eighty percent (80%) of the total number of shares of
all other classes of stock of the Company. For purposes of
determining Control, a person shall not be considered to own voting stock
if rights to vote such stock (or to restrict or otherwise control the
voting of such stock) are held by a third party (including a voting trust)
other than an agent of such
person.
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7
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In connection with the
Merger, neither
Parent, any person related to Parent (within the meaning of Treasury
Regulation Section 1.368-1(e)(3)) nor any Person acting as agent or
intermediary for any of them will purchase, exchange, redeem or otherwise
acquire (directly or indirectly) any Parent Common Stock issued to holders
of the Company Common Stock in the
Merger.
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8
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The shareholders of the Company
will not be entitled to any dissenters’ or similar rights in connection
with the Merger.
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9
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Parent and Merger Sub will pay
their respective expenses, if any, incurred in connection with the Merger,
and will not pay any of the expenses of the holders of the Company Common
Stock.
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10
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Neither Parent nor any person
related to Parent (within the meaning of Treasury Regulation Section
1.368-1(e)(3)) has owned directly or indirectly during the past five (5)
years any stock or other equity interests of the
Company.
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11
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Neither Parent nor Merger Sub is either an investment
company as defined in Section 368(a)(2)(F)(iii) and (iv) of the
Code or under the jurisdiction of a
court in a title 11 or similar case within the meaning of Section
368(a)(3)(A) of the
Code.
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12
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Before the Merger
and immediately prior
to the Effective
Time, Parent will be in “Control” of Merger
Sub.
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13
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Parent has no plan or intention to
cause the Company to alter the terms of the Company Common Stock, to issue
additional shares of the Company Common Stock or to grant any warrants,
options, convertible securities or any other type of right pursuant to
which any person could acquire stock of the Company that, if exercised or
converted, would result in Parent losing “Control” of the
Company.
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3
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14
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There is no intercorporate
indebtedness existing between Parent and the Company or between Merger Sub
and the Company that was issued, acquired or will be settled at a
discount.
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15
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Merger Sub will have no
liabilities assumed by the Company, and will not transfer to the Company
any assets subject to liabilities, in the
Merger.
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16
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None of the compensation to be
received by any shareholder-employee of the Company in the Merger will be
separate consideration for, or allocable to, any of such person’s shares
of the Company Common Stock; none of the shares of Parent Common Stock to
be received by any shareholder-employee of the Company in the Merger will
be separate consideration for, or allocable to, any past or future
services; and the compensation to be paid to any shareholder-employee
after the Merger will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at arm’s-length
for similar services.
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17
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Parent Common Stock entitles the
holder thereof to vote in the election of the members of the board of
directors of Parent.
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18
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The Merger is being effected for
bona fide business reasons and not for the purpose of tax avoidance, as
described in the Proxy/Prospectus and, if applicable, the Form
S-4.
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19
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The information relating to the
Merger and all related transactions (including, but not limited to, all
representations, warranties, covenants and undertakings) set forth in the
Merger Agreement and the Proxy/Prospectus and, if applicable, the Form
S-4, insofar as such information relates to Parent or Merger Sub, or the
plans or intentions of Parent or Merger Sub set forth in the Merger
Agreement or the Proxy/Prospectus and, if applicable, the Form S-4, are
true, correct and complete in all material
respects.
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20
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The Merger Agreement (including
all exhibits and attachments thereto) represents the full and complete
agreement between Parent, Merger Sub and the Company regarding the Merger,
and there are no other written or oral agreements regarding the
Merger. The Merger will be consummated pursuant to the terms of
the Merger Agreement, and none of the material terms and conditions
thereof has been or will be waived or
modified.
|
|
|
21
|
The payment of cash in lieu of
fractional shares of Parent Common Stock in the Merger is solely for the
purpose of avoiding the expense and inconvenience to Parent of issuing
fractional shares, if any, and does not represent separately bargained-for
consideration. The total cash consideration that will be paid
in the Merger to holders of the Company Common Stock in lieu of issuing
fractional shares of Parent Common Stock will not exceed one percent (1%)
of the total consideration that will be issued in the Merger to holders of
the Company Common Stock in exchange for their Company Common
Stock. The fractional shares of each
holder of the
Company Common Stock
will be aggregated, and no holder of Company Common Stock will receive
cash in an amount equal to or greater than the value of one full share of
Parent Common Stock.
|
4
|
|
22
|
No holder of the Company Common
Stock is acting as agent for Parent in connection with the Merger or
approval thereof, and neither Parent nor Merger Sub will reimburse any
holder of the Company Common Stock for the Company Common Stock such
holder may have purchased, or for other obligations such holder may have
incurred, as agent for Parent or Merger
Sub.
|
|
|
23
|
Neither Parent not
Merger Sub nor any person related to Parent or Merger Sub nor any person
acting as agent or intermediary for any of them has agreed to pay, will
pay, or will cause to be paid any consideration (whether material or not)
for shares of the Company Common Stock other than Parent Common Stock
issued pursuant to the Merger Agreement and cash in
lieu of fractional share interests.
|
|
|
24
|
Parent
will not take, and will not cause the Company following the Merger to
take, any position on any federal, state or local income or franchise Tax
Return or take any
other tax reporting position, that is inconsistent with the treatment of
the Merger as a reorganization within the meaning of Section 368(a) of the
Code, unless otherwise
required by a “determination” (as defined in Section 1313(a)(1) of the
Code).
|
|
|
25
|
Following the Merger, Parent will
comply, and will cause the Company to comply, with the record-keeping and
information filing requirements of Treasury Regulation Section
1.368-3.
|
|
|
26
|
The
Merger
is effected pursuant to Delaware
statutes as a result of which the following events will occur
simultaneously at the Effective Time: (i) all of the assets and
liabilities of Merger Sub become the assets and liabilities of the Company
and (ii) Merger Sub’s separate legal existence ceases for all legal
purposes.
|
|
|
27
|
The individual executing this
letter is authorized to make all of the representations set forth
herein.
|
The undersigned recognizes that opinions
issued by counsel of Parent and the Company regarding certain United States federal income tax consequences of the
Merger (“Tax Opinions”) will be based on the representations set forth herein
and on the statements contained in the Merger Agreement and documents related
thereto. The Tax Opinions will be subject to certain limitations and
qualifications including that they may not be relied upon if any such
representations are not accurate in all respects.
5
IN WITNESS WHEREOF, Parent, on behalf of
Parent and Merger Sub, has executed this Certificate on this day of , 2009.
| THE DRESS BARN, INC. | |||
|
|
By:
|
||
| Name | |||
| Title | |||
6
EXHIBIT
E
[____
__], 2009
The Dress
Barn, Inc.
00
Xxxxxxxx Xxxxx
Xxxxxxx,
Xxx Xxxx 00000
|
|
Re:
|
Merger of Tween
Brands, Inc.
|
Ladies
and Gentlemen:
You have requested our opinion
regarding the material United States federal income tax consequences of the
proposed reorganization involving the exchange of stock of Tween Brands, Inc., a
Delaware Corporation (the “Company”), for stock of The Dress Barn, Inc., a
Connecticut corporation (“Parent”), in a merger (the “Merger”) of Thailand
Acquisition Corp., a Delaware Corporation and a wholly owned subsidiary of
Parent (“Merger Sub”), with and into the Company with the Company as the
surviving entity, pursuant to the Agreement and Plan of Merger dated as of June
24, 2009 (the “Merger Agreement”), in a transaction (the “Merger”) intended to
qualify as a reorganization under Section 368(a) of the Internal Revenue Code of
1986, as amended (the “Code”). Any capitalized terms used but not
defined herein shall have the meaning given to such terms in the Merger
Agreement.
In connection with this opinion, we
have examined such documents and matters of law and fact as we have considered
appropriate, including the Merger Agreement and the certificates to be provided
by the Company, Parent and Merger Sub to the undersigned (the
“Certificates”). In rendering this opinion, we are assuming that the
representations made by the Company, Parent and Merger Sub in the Certificates
are true and correct as of the Effective Time of the Merger, that any
representations made in such Certificates which are qualified by knowledge or
qualifications of like import are accurate without such qualifications, and we
are relying on each of such representations. In addition, our opinion set forth below assumes (1)
the accuracy of the statements and facts concerning the Merger set forth in the
Merger Agreement, and (2) the consummation of the Merger in the manner
contemplated by, and in accordance with the terms of the Merger
Agreement. In addition, with your consent, we have assumed or
obtained representations (and are relying thereon, without any independent
investigation or review thereof) that (a) original documents (including
signatures) are authentic, documents submitted to us as copies conform to the
original documents, and there has been (or will be by the Effective Time of the
Merger) due execution and delivery of all documents where due execution and
delivery are prerequisites to effectiveness thereof, and (b) the Merger
will be effected pursuant to Delaware statutes and as a result of which the
following events will occur simultaneously at the Effective Time: (i) all of the
assets and liabilities of Merger Sub become the assets and liabilities of the
Company, and (ii) Merger Sub’s separate legal existence ceases for all legal
purposes.
Opinion
Based on the foregoing, and our review
and analysis of the current state of the law, it is our opinion that the Merger
will be treated for United States federal income tax purposes as a
reorganization within the meaning of Section 368(a)(1)(A) of the Code by
reason of Section 368(a)(2)(E) of the Code and that the Company, Parent and
Merger Sub will each be a party to such reorganization within the meaning of
Section 368(b) of the Code.
This opinion is limited to the tax
matters specifically covered herein, and we have not been asked to address, nor
have we addressed, any other tax consequences of the Merger. The
opinion herein is based on current authorities and upon facts and assumptions as
of the date of this opinion, including, but not limited to, the assumption that
representations made by the Company, Parent and Merger Sub in the Certificates
are true and correct as of the Effective Time of the Merger. The
opinion is subject to change in the event of a change in the applicable law or
change in the interpretation of such law by the courts or by the Internal
Revenue Service, or a change in any of the facts and assumptions upon which it
is based. There is no assurance that legislative or administrative
changes or court decisions may not be forthcoming that would significantly
modify the statements and opinions expressed herein. Any such changes
may or may not be retroactive with respect to transactions prior to the date of
such changes. This opinion represents only counsel’s best legal
judgment, and has no binding effect or official status of any kind, so that no
assurance can be given that the positions set forth above will be sustained by a
court, if contested.
Respectfully
yours,
EXHIBIT
F
[____
__], 2009
Tween
Brands, Inc.
0000
Xxxxxx Xxxxxxx
Xxx
Xxxxxx, Xxxx 00000
|
|
Re:
|
Merger of Tween
Brands, Inc.
|
Ladies
and Gentlemen:
You have requested our opinion
regarding the material United States federal income tax consequences of the
proposed reorganization involving the exchange of stock of Tween Brands, Inc., a
Delaware Corporation (the “Company”), for stock of The Dress Bran, Inc., a
Connecticut corporation (“Parent”), in a merger (the “Merger”) of Thailand
Acquisition Corp., a Delaware Corporation and a wholly owned subsidiary of
Parent (“Merger Sub”), with and into the Company with the Company as the
surviving entity, pursuant to the Agreement and Plan of Merger dated as of June
24, 2009 (the “Merger Agreement”), in a transaction (the “Merger”) intended to
qualify as a reorganization under Section 368(a) of the Internal Revenue Code of
1986, as amended (the “Code”). Any capitalized terms used but not
defined herein shall have the meaning given to such terms in the Merger
Agreement.
In connection with this opinion, we
have examined such documents and matters of law and fact as we have considered
appropriate, including the Merger Agreement and the certificates to be provided
by the Company, Parent and Merger Sub to the undersigned (the
“Certificates”). In rendering this opinion, we are assuming that the
representations made by the Company, Parent and Merger Sub in the Certificates
are true and correct as of the Effective Time of the Merger, that any
representations made in such Certificates which are qualified by knowledge or
qualifications of like import are accurate without such qualifications, and we
are relying on each of such representations. In addition, our opinion set forth below assumes (1)
the accuracy of the statements and facts concerning the Merger set forth in the
Merger Agreement, and (2) the consummation of the Merger in the manner
contemplated by, and in accordance with the terms of the Merger
Agreement. In addition, with your consent, we have assumed or
obtained representations (and are relying thereon, without any independent
investigation or review thereof) that (a) original documents (including
signatures) are authentic, documents submitted to us as copies conform to the
original documents, and there has been (or will be by the Effective Time of the
Merger) due execution and delivery of all documents where due execution and
delivery are prerequisites to effectiveness thereof, and (b) the Merger
will be effected pursuant to Delaware statutes and as a result of which the
following events will occur simultaneously at the Effective Time: (i) all of the
assets and liabilities of Merger Sub become the assets and liabilities of the
Company, and (ii) Merger Sub’s separate legal existence ceases for all legal
purposes.
Opinion
Based on the foregoing, and our review
and analysis of the current state of the law, it is our opinion that the Merger
will be treated for United States federal income tax purposes as a
reorganization within the meaning of Section 368(a)(1)(A) of the Code by
reason of Section 368(a)(2)(E) of the Code and that the Company, Parent and
Merger Sub will each be a party to such reorganization within the meaning of
Section 368(b) of the Code.
This opinion is limited to the tax
matters specifically covered herein, and we have not been asked to address, nor
have we addressed, any other tax consequences of the Merger. The
opinion herein is based on current authorities and upon facts and assumptions as
of the date of this opinion, including, but not limited to, the assumption that
representations made by the Company, Parent and Merger Sub in the Certificates
are true and correct as of the Effective Time of the Merger. The
opinion is subject to change in the event of a change in the applicable law or
change in the interpretation of such law by the courts or by the Internal
Revenue Service, or a change in any of the facts and assumptions upon which it
is based. There is no assurance that legislative or administrative
changes or court decisions may not be forthcoming that would significantly
modify the statements and opinions expressed herein. Any such changes
may or may not be retroactive with respect to transactions prior to the date of
such changes. This opinion represents only counsel’s best legal
judgment, and has no binding effect or official status of any kind, so that no
assurance can be given that the positions set forth above will be sustained by a
court, if contested.
Respectfully
yours,
