AGREEMENT AND PLAN OF MERGER by and among VISTAR CORPORATION, PANDA ACQUISITION, INC. and PERFORMANCE FOOD GROUP COMPANY Dated as of January 18, 2008
Exhibit 2.1
[EXECUTION COPY]
AGREEMENT AND PLAN OF MERGER
by and among
VISTAR CORPORATION,
PANDA ACQUISITION, INC.
and
Dated as of January 18, 2008
Table of Contents
Page | ||||
Section 1. The Merger |
1 | |||
Section 1.1 The Merger; Effects of the Merger. |
1 | |||
Section 1.2 Closing |
2 | |||
Section 1.3 Effective Time |
2 | |||
Section 1.4 Directors and Officers of the Surviving Corporation |
2 | |||
Section 2. Conversion of Securities |
3 | |||
Section 2.1 Conversion of Securities |
3 | |||
Section 2.2 Dissenting Shares |
3 | |||
Section 2.3 Company Options, Restricted Shares, Stock Appreciation Rights and ESPP3 |
||||
Section 2.4 Exchange of Certificates |
5 | |||
Section 2.5 Withholding |
6 | |||
Section 2.6 Transfer Taxes |
7 | |||
Section 3. Representations and Warranties of Company |
7 | |||
Section 3.1 Organization and Qualification |
7 | |||
Section 3.2 Authority |
9 | |||
Section 3.3 Capitalization |
9 | |||
Section 3.4 Company Subsidiaries |
10 | |||
Section 3.5 SEC Filings; Financial Statements; Undisclosed Liabilities |
11 | |||
Section 3.6 Absence of Certain Changes or Events |
12 | |||
Section 3.7 Compliance with Laws |
12 | |||
Section 3.8 Claims, Actions and Proceedings |
13 | |||
Section 3.9 Contracts and Other Agreements |
13 | |||
Section 3.10 Intellectual Property |
14 | |||
Section 3.11 Property |
15 | |||
Section 3.12 Insurance |
16 | |||
Section 3.13 Tax Matters |
16 | |||
Section 3.14 Employee Benefit Plans |
18 | |||
Section 3.15 Labor Matters |
21 | |||
Section 3.16 Environmental Matters |
21 | |||
Section 3.17 No Breach |
23 | |||
Section 3.18 Board Approvals; Anti-Takeover; Vote Required |
23 | |||
Section 3.19 Financial Advisor |
24 | |||
Section 3.20 Information in the Proxy Statement |
24 | |||
Section 3.21 Affiliate Transactions |
24 | |||
Section 3.22 No Other Representations or Warranties |
25 | |||
Section 4. Representations and Warranties of Parent and Merger Sub |
25 | |||
Section 4.1 Organization |
25 | |||
Section 4.2 Authority to Execute and Perform Agreement |
25 | |||
Section 4.3 No Conflict; Required Filings and Consents |
26 | |||
Section 4.4 Information in the Proxy Statement |
26 | |||
Section 4.5 Litigation |
26 |
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Page | ||||
Section 4.6 Financing |
27 | |||
Section 4.7 Guarantee |
27 | |||
Section 4.8 Parent and Merger Sub |
28 | |||
Section 4.9 Brokers |
28 | |||
Section 4.10 Solvency |
28 | |||
Section 4.11 No Other Representations or Warranties; Investigation by Parent |
29 | |||
Section 5. Conduct of Business Pending the Merger; Solicitation; Change in Recommendation; Employee Matters |
30 | |||
Section 5.1 Conduct of Business |
30 | |||
Section 5.2 Solicitation; Change in Recommendation |
34 | |||
Section 5.3 Employee Matters |
39 | |||
Section 6. Additional Agreements |
40 | |||
Section 6.1 Proxy Statement |
40 | |||
Section 6.2 Company Shareholders’ Meeting |
41 | |||
Section 6.3 Access to Information; Confidentiality |
41 | |||
Section 6.4 Regulatory Filings; Reasonable Best Efforts; Cooperation |
42 | |||
Section 6.5 Directors and Officers Indemnification and Insurance |
43 | |||
Section 6.6 Director Resignations |
45 | |||
Section 6.7 Conduct of Business of Parent and Merger Sub Pending the Merger |
45 | |||
Section 6.8 Financing |
45 | |||
Section 6.9 Public Disclosure |
47 | |||
Section 6.10 Notification of Certain Matters |
47 | |||
Section 6.11 Agreements with Respect to Existing Debt |
47 | |||
Section 6.12 Takeover Statute |
48 | |||
Section 7. Conditions Precedent to the Obligation of the Parties to Consummate the Merger |
48 | |||
Section 7.1 Conditions to Obligations of Each Party to Effect the Merger |
48 | |||
Section 7.2 Additional Conditions to the Obligations of Parent and Merger Sub |
48 | |||
Section 7.3 Additional Conditions to the Obligations of the Company |
49 | |||
Section 8. Termination; Amendment and Waiver |
49 | |||
Section 8.1 Termination |
49 | |||
Section 8.2 Termination Fees; Certain Limitations |
51 | |||
Section 8.3 Fees and Expenses |
53 | |||
Section 8.4 Amendment |
53 | |||
Section 8.5 Waiver |
53 | |||
Section 9. Miscellaneous |
53 | |||
Section 9.1 Entire Agreement |
53 | |||
Section 9.2 No Survival |
54 | |||
Section 9.3 Notices |
54 | |||
Section 9.4 Binding Effect; No Assignment; No Third-Party Beneficiaries |
55 | |||
Section 9.5 Severability |
55 | |||
Section 9.6 Governing Law |
55 | |||
Section 9.7 Submission to Jurisdiction; Waiver |
55 | |||
Section 9.8 Specific Enforcement |
56 |
ii
Page | ||||
Section 9.9 Interpretation |
56 | |||
Section 9.10 No Waiver of Rights |
57 | |||
Section 9.11 Counterparts; Facsimile Signatures |
57 | |||
Index of Defined Terms |
Annex A | |||
Certain Information |
Annex B |
iii
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the “Agreement”), dated as of January 18, 2008, is by and
among VISTAR Corporation (“Parent”), a Colorado corporation, Panda Acquisition, Inc. (“Merger
Sub”), a newly-formed Delaware corporation and a direct wholly-owned subsidiary of Parent, and
Performance Food Group Company (the “Company”), a Tennessee corporation.
WHEREAS, the Boards of Directors of Parent and Merger Sub have each approved and declared it
advisable to enter into this Agreement providing for the Merger in accordance with the Delaware
General Corporation Law and the TBCA, upon the terms and conditions set forth herein;
Section 1.
The Merger.
Section 1.1 The Merger; Effects of the Merger.
(a) At the Effective Time, upon the terms and subject to the conditions of this
Agreement, and in accordance with the TBCA and other applicable Tennessee law, the Company and
Merger Sub shall consummate a merger (the “Merger”) pursuant to which Merger Sub shall be merged
with and into the Company, and the Company shall continue as the surviving corporation of the
Merger (sometimes hereinafter referred to as, the “Surviving Corporation”).
(b) The Merger shall have the effects set forth in the Articles of Merger and in
the applicable provisions of the TBCA and this Agreement. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time: (i) Merger Sub shall be merged with and
into the Company, and the separate corporate existence of Merger Sub shall thereupon cease; (ii)
the Surviving Corporation shall continue to be governed by the laws of the State of Tennessee;
(iii) the
corporate existence of the Surviving Corporation with all its property, rights, privileges,
immunities, powers and franchises shall continue unaffected by the Merger; and (iv) all the
property, rights, privileges, immunities, powers and franchises of Company and Merger Sub shall be
vested in the Surviving Corporation, and all debts, liabilities and duties of Company and Merger
Sub shall become the debts, liabilities and duties of the Surviving Corporation.
(c) The charter of the Surviving Corporation shall be amended and restated at the
Effective Time in form and substance reasonably acceptable to the parties, and, as so amended, such
charter shall be the charter of the Surviving Corporation until thereafter changed or amended as
provided therein or by the TBCA, consistent with the obligations set forth in Section 6.5.
(d) The bylaws of Merger Sub, as in effect immediately prior to the Effective Time
and in form and substance reasonably acceptable to the parties, shall be the bylaws of the
Surviving Corporation, except as to the name of the Surviving Corporation, until thereafter amended
as provided by the TBCA, the charter of the Surviving Corporation and such bylaws, consistent with
the obligations set forth in Section 6.5.
Section 1.2 Closing. The closing of the Merger (the “Closing”) will take
place at 11:00 a.m. (New York time) at the offices of Bass, Xxxxx & Xxxx PLC, 000 Xxxxxxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxxxx, Xxxxxxxxx 00000 on a date to be specified by the parties, such date to be no
later than the later of (a) the second business day after satisfaction or waiver of all of the
conditions set forth in Section 7 capable of satisfaction prior to the Closing (it being understood
that the occurrence of the Closing shall remain subject to the satisfaction or waiver of the
conditions that by their terms are to be satisfied at Closing), and (b) the earlier of (x) a date
during the Marketing Period to be specified by Parent on no less than two business days’ notice to
the Company (it being understood that such date may be conditioned upon the simultaneous completion
of Parent’s financing) and (y) the final day of the Marketing Period, unless another time, date
and/or place is agreed to in writing by the parties hereto. The date on which the Closing occurs
is referred to in this Agreement as the “Closing Date.”
Section 1.3 Effective Time. At the Closing, Parent, Merger Sub and the
Company shall cause the Merger to be consummated by executing and filing articles of merger (the
“Articles of Merger”) with the Secretary of State of the State of Tennessee as provided in the
TBCA. The Merger shall become effective at the time and date on which the Articles of Merger have
been duly filed with the Secretary of State of the State of Tennessee or such later time and date
as is specified in the Articles of Merger, such time referred to herein as the “Effective Time.”
Parent, Merger Sub and the Company shall make all other filings or recordings required under the
TBCA or other applicable Laws in connection with the Merger.
Section 1.4 Directors and Officers of the Surviving Corporation. The
directors of Merger Sub immediately prior to the Effective Time shall, from and after the Effective
Time, be the directors of the Surviving Corporation, and the officers of the Company immediately
prior to the Effective Time shall, from and after the Effective Time, be the officers of the
Surviving Corporation, in each case until their respective successors shall have been duly elected,
designated or qualified, or until their earlier death, resignation or removal in accordance with
the Surviving Corporation’s charter and bylaws.
2
Section 2. Conversion of Securities.
Section 2.1 Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of the Company, Merger Sub or the holders of any
shares of outstanding common stock of the Company, par value $0.01 per share (“Company Common
Stock”), or the other securities described below:
(a) Conversion of Shares of Company Common Stock. Each issued and
outstanding share of Company Common Stock (other than shares of Company Common Stock to be
cancelled in accordance with Section 2.1(c) or shares of the Company Common Stock owned by any of
the Company Subsidiaries which shall remain outstanding) and Restricted Shares to be cancelled in
accordance with Section 2.3(b), shall be cancelled and converted into the right to receive $34.50
in cash, without interest (the “Per Share Price”), payable to the holder thereof (the “Merger
Consideration”), upon the surrender in accordance with Section 2.4 of the certificate that formerly
evidenced such shares, or as otherwise specified for Book-Entry Shares (as defined below), with
this provision being for the benefit of the holders of the Company Common Stock. From and after
the Effective Time, all such shares of Company Common Stock shall no longer be outstanding and
shall automatically be cancelled and retired and shall cease to exist, and each holder of Book
Entry Shares or a certificate representing any such shares of Company Common Stock shall cease to
have any rights with respect thereto, except the right, subject to Section 2.5 and Section 2.6, to
receive the applicable Merger Consideration therefor.
(b) Merger Sub Common Stock. Each issued and outstanding share of common
stock of Merger Sub outstanding immediately prior to the Effective Time shall be converted into, be
exchanged for and become one validly issued, fully paid and nonassessable share of common stock of
the Surviving Corporation. From and after the Effective Time, all certificates representing the
common stock of Merger Sub shall be deemed for all purposes to represent the number of shares of
common stock of the Surviving Corporation into which they were converted in accordance with the
immediately preceding sentence.
(c) Cancellation of Parent-Owned Stock. All shares of Company Common
Stock owned by Parent or Merger Sub immediately prior to the Effective Time shall automatically be
cancelled and retired and shall cease to exist, and no consideration shall be delivered in exchange
therefor.
(d) Adjustments. The Per Share Price shall be appropriately adjusted for
any stock dividend, stock split, recapitalization, reclassification or like transaction affecting
the Company Common Stock after the date hereof and prior to the Effective Time.
Section 2.2 Dissenting Shares.
(a) Dissenters’ rights under the TBCA are not available to the holders of Company
Common Stock for the transactions contemplated by this Agreement, unless the Company Common Stock
is delisted from the Nasdaq Global Select Market (including any successor exchange, “NASDAQ”) prior
to the Effective Time.
Section 2.3 Company Options, Restricted Shares, Stock Appreciation Rights and
ESPP. Except to the extent otherwise agreed in writing by the Company and Parent prior to the
Effective Time:
3
(a) The Company shall ensure that, (i) immediately prior to the Effective Time,
each outstanding option to acquire shares of Company Common Stock (“Company Options”) granted under
the Company’s 1993 Outside Directors’ Stock Option Plan, as amended, 1993 Employee Stock Incentive
Plan, as amended and 2003 Equity Incentive Plan, as amended (collectively, the “Equity Incentive
Plans”), shall become fully vested and exercisable (without regard to whether the Company Options
are then vested or exercisable), (ii) at the Effective Time, all Company Options not theretofore
exercised shall be cancelled and, in exchange therefor, converted into the right to receive a cash
payment from the Surviving Corporation in an amount equal to the product of (x) the excess, if any,
of the Per Share Price over the exercise price of each such Company Option and (y) the number of
shares of Company Common Stock subject to such option to the extent not previously exercised (such
payment, if any, to be net of applicable Taxes withheld pursuant to Section 2.5), and (iii) 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 subsection (ii)
without interest. In the event the exercise price per share of Company Common Stock subject to a
Company Option is equal to or greater than the Per Share Price, the Company shall use its
reasonable best efforts to ensure that such Company Option shall be cancelled without consideration
and have no further force or effect.
(b) The Company shall ensure that, (i) immediately prior to the Effective Time,
each share of Company Common Stock granted subject to vesting or other lapse restrictions pursuant
to any Equity Incentive Plan (collectively, “Restricted Shares”) which is outstanding immediately
prior to the Effective Time shall vest and become free of such restrictions (without regard to
whether the Restricted Shares are then vested or the applicable restrictions have then lapsed) and
(ii) at the Effective Time, the holder thereof shall be entitled to receive the Per Share Price
with respect to each such Restricted Share in accordance with Section 2.1, less any required
withholding Taxes pursuant to Section 2.5.
(c) The Company shall ensure that, (i) immediately prior to the Effective Time,
each award of a right under any Equity Incentive Plan (other than Company Options) entitling the
holder thereof to shares of Company Common Stock based on the value of Company Common Stock
(collectively, “SARs”) which, in each case, is outstanding as of the Effective Time, shall vest and
become free of any lapse restrictions (without regard to whether the SARs are then vested or
exercisable) and, as of the Effective Time be cancelled, and (ii) at the Effective Time, the holder
thereof shall be entitled to receive a cash payment, subject to any appreciation cap set forth in
such SAR, from the Surviving Corporation in consideration for such cancellation, in an amount equal
to the product of (1) the number of SARs and (2) the excess, if any, of the Per Share Price over
the xxxxx xxxxx of each such SAR, less any required withholding Taxes pursuant to Section 2.5.
(d) The provisions of Section 2.3(a) shall not apply to the ESPP (as defined
below). The Company shall use its reasonable best efforts to ensure that (i) all offering periods
in progress under the Company’s Amended and Restated Employee Stock Purchase Plan(the “ESPP” and,
together with the Equity Incentive Plans, the “Equity Plans”) are terminated immediately following
the date hereof, (ii) there will be no increase in the amount of payroll deductions to be made by
participants after the date hereof, (iii) with respect to persons participating in the ESPP on the
date on which the offering periods cease (and who have not withdrawn from or otherwise ceased
participation in the ESPP prior to such date), accumulated contributions will be deemed to have
been applied on such date to the purchase of Company Common Stock in accordance with the ESPP’s
terms (treating the date of termination as the last day of the relevant offering period), (iv) at
the Effective Time, each share of Company Common Stock issuable under the ESPP will be deemed to
4
have been cancelled and converted into the right to receive the Merger Consideration, such
that, as of the Effective Time, on a net basis, each participant shall be entitled to receive,
without interest and less any applicable withholding Taxes, an amount in cash equal to the excess
of (1) the product of (x) the number of Shares that the participant is deemed to have acquired
pursuant to the terms of the ESPP and (y) the Per Share Price, over (2) the aggregate amount of the
participant’s purchase price deemed to have been paid in connection with the deemed purchase, and
(v) there are no outstanding rights of participants under the ESPP following the Effective Time.
The aggregate amount specified in Sections 2.3(a), (b), (c) and (d) with respect to the Company
Options, Restricted Shares, SARs and ESPP “Options” is referred to herein as the “Cash Out Amount.”
(e) The Company shall use its reasonable best efforts to ensure that, as of the
Effective Time, the Equity Incentive Plans shall terminate and that no person shall have any right
under the Equity Incentive Plans, except as set forth herein (including, to the extent necessary,
using reasonable best efforts to obtain any necessary consents of the holders of Company Options
and SARs in order to give effect to this Section 2.3).
(f) At or promptly after the Effective Time, the Surviving Corporation shall, and
Parent shall cause the Surviving Corporation to, deliver the applicable Cash Out Amount to the
holders of Company Options, Restricted Shares, SARs and ESPP “Options,” without interest and less
any applicable withholding Taxes.
Section 2.4 Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall designate a
bank or trust company reasonably acceptable to the Company to act as paying agent for the holders
of shares of Company Common Stock, in connection with the Merger (the “Paying Agent”) and to
receive the funds to which holders of shares of Company Common Stock will become entitled pursuant
to Section 2.1. At or prior to the Effective Time, Parent shall provide, or shall cause to be
provided, to the Paying Agent cash necessary to pay for the shares of Company Common Stock to be
converted into the right to receive the Merger Consideration (such cash being hereinafter referred
to as the “Exchange Fund”). If for any reason the Exchange Fund is inadequate to pay the amounts
to which holders of shares of Company Common Stock shall be entitled under Section 2.1, Parent
shall, or shall cause the Surviving Corporation to, promptly deposit additional cash with the
Paying Agent sufficient to make all payments of Merger Consideration, and Parent and the Surviving
Corporation shall in any event be liable for payment thereof.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Surviving Corporation shall cause to be mailed to each (i) record holder, as of
the Effective Time, of an outstanding certificate or certificates which immediately prior to the
Effective Time represented shares of the Company Common Stock (the “Certificates”) or (ii) holder,
as of the Effective Time, of shares of Company Common Stock represented by book-entry (“Book-Entry
Shares”), a form of 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 held by such person
shall pass, only, subject to Section 2.4(c), upon delivery of the Certificates to the Paying Agent)
and/or instructions for use in effecting the surrender of the Certificates or Book-Entry Shares for
payment of the Merger Consideration therefor. Upon surrender to the Paying Agent of a Certificate
or Book Entry Shares for cancellation, together with such letter of transmittal, duly completed and
validly executed in accordance with the instructions thereto, and/or such other documents as may be
reasonably required pursuant to such instructions, the holder of such Certificate or Book-Entry
5
Shares shall be entitled to receive in exchange therefor the Merger Consideration for each
share of Company Common Stock formerly represented by such Certificate or Book-Entry Shares and
such Certificate or applicable book-entry shall then be cancelled. No interest shall be paid or
accrued for the benefit of holders of the Certificates or Book-Entry Shares on the Merger
Consideration payable in respect of the Certificates or Book-Entry Shares. Until surrendered for
cancellation as contemplated by this Section 2.4(b), each Certificate and each Book-Entry Share
shall be deemed at any time after the Effective Time to represent only the right to receive upon
such surrender the applicable Merger Consideration as contemplated by this Section 2.
(c) Lost Certificates. If any Certificate has been lost, stolen, defaced
or destroyed, upon the making of an affidavit of that fact by the person claiming such Certificate
to be lost, stolen, defaced or destroyed and, if required by the Surviving Corporation or the
Paying Agent, the posting by such person of a bond in such amount as the Surviving Corporation or
the Paying Agent may reasonably direct as indemnity against any claim that may be made against it
or Parent with respect to such Certificate, the Paying Agent shall issue in exchange for such lost,
stolen or destroyed Certificate the applicable Merger Consideration with respect thereto without
interest.
(d) Transfer Books; No Further Ownership Rights in Shares of Company Common
Stock. At the Effective Time, the stock transfer books of the Company will be closed and
thereafter there will be no further registration of transfers of shares of Company Common Stock on
the records of the Company. From and after the Effective Time, the holders of Certificates
evidencing ownership of 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 for herein or by applicable Law. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they shall be cancelled
against delivery of the Merger Consideration as provided in this Section 2 without interest.
(e) Termination of Exchange Fund. At any time following the date that is
one year after the Effective Time, the Surviving Corporation shall be entitled to require the
Paying Agent to deliver to it any funds (including any interest received with respect thereto) made
available to the Paying Agent and not disbursed (or for which disbursement is pending subject only
to the Paying Agent’s routine administrative procedures) to holders of Certificates, and thereafter
such holders shall be entitled to look only to the Surviving Corporation (subject to abandoned
property, escheat or similar Laws) only as general creditors thereof with respect to the Merger
Consideration payable upon due surrender of their Certificates, without any interest thereon.
(f) No Liability. None of Parent, the Surviving Corporation or the Paying
Agent shall be liable to any holder of a Certificate for Merger Consideration delivered to a public
official pursuant to any applicable abandoned property, escheat or similar Law.
Section 2.5 Withholding. Each of Parent, the Company and the Surviving
Corporation is entitled to deduct and withhold, or cause the Paying Agent to deduct and withhold,
from any amounts payable or otherwise deliverable pursuant to this Agreement to any holder or
former holder of shares of Company Common Stock (including Restricted Shares), Company Options,
SARs or ESPP “Options” such amounts as are required to be deducted or withheld therefrom under the
Internal Revenue Code of 1986, as amended (the “Code”), or any provision of state, local or foreign
Tax Law or under any other applicable legal requirement. To the extent such amounts are so
deducted or withheld, such amounts shall be treated for all purposes under this Agreement as having
been paid to the person to whom such amounts would otherwise have been paid.
6
Section 2.6 Transfer Taxes. If payment of the Merger Consideration
payable to a holder of shares of Company Common Stock pursuant to the Merger is to be made to a
person other than the person in whose name the surrendered Certificate is registered, it shall be a
condition of payment that the Certificate so surrendered shall be properly endorsed or shall be
otherwise in proper form for transfer and that the person requesting such payment shall have paid
all transfer and other Taxes required by reason of the payment of the Merger Consideration to a
person other than the registered holder of the Certificate surrendered (or shall have established
to the reasonable satisfaction of Parent that such Tax either has been paid or is not applicable).
Section 3. Representations and Warranties of Company.
Except (i) as set forth in the disclosure schedule delivered by Company to Parent on the date
hereof (the “Company Disclosure Schedule”) or (ii) as disclosed in, or incorporated by reference
into, the Company SEC Reports (as hereinafter defined) filed prior to the date hereof (other than
disclosures in the “Risk Factors” sections thereof or any such disclosures included in such filings
that are forward-looking in nature), the Company hereby makes the representations and warranties
set forth in this Section 3 to Parent and Merger Sub. The section numbers of the Company
Disclosure Schedule are numbered to correspond to the section numbers of this Agreement to which
they refer. Any information set forth in one section of the Company Disclosure Schedule will be
deemed to apply to each other section or subsection of the Company Disclosure Schedule to which its
relevance is reasonably apparent on the face of such disclosure; provided that no matter disclosed
in any other section of the Company Disclosure Schedule shall be deemed to be disclosed for
purposes of Section 5.1 of this Agreement unless such disclosure is expressly incorporated by
reference into Section 5.1 of the Company Disclosure Schedule.
Section 3.1 Organization and Qualification.
(a) The Company and each of the Company subsidiaries (the “Company Subsidiaries”)
is a corporation or other legal entity duly organized, validly existing and in good standing (with
respect to jurisdictions that recognize the concept of good standing) under the federal, state,
local or foreign laws, statutes, regulations, rules, ordinances and judgments, decrees, orders
(including any cease and desist orders), writs and injunctions (collectively, “Laws”) of any court
or any nation, government, state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of, or pertaining to,
government (“Governmental Entity”) of its jurisdiction of organization and has the requisite
corporate or similar power and authority to own, lease and operate its properties and assets it
purports to own and to carry on its business as now being conducted, except as has not had,
individually or in the aggregate, a Company Material Adverse Effect. The Company and each Company
Subsidiary that is a significant subsidiary as determined under Rule 1-02 of Regulation S-X of the
United States Securities and Exchange Commission (the “SEC”) and as set forth on Section 3.4(a) of
the Company Disclosure Schedule (each a “Company Significant Subsidiary”) is qualified or otherwise
authorized to transact business as a foreign corporation or other organization in all jurisdictions
where the nature of their business or the ownership, leasing or operation of their properties make
such qualification or authorization necessary, except for jurisdictions in which the failure to be
so qualified or authorized has not had, individually or in the aggregate, a Company Material
Adverse Effect. “Company Material Adverse Effect” shall mean for purposes of this Agreement any
event, circumstance, change or effect that is, or would reasonably be expected to be, individually
or in the aggregate, materially adverse to the business, assets, financial condition or results of
operations of the Company and the Company Subsidiaries, taken as a whole; provided, however, that
none of the following shall
7
constitute, or shall be considered in determining whether there has occurred, and no event,
circumstance, change or effect resulting from or arising out of any of the following shall
constitute, a Company Material Adverse Effect: (A) the announcement of the execution of this
Agreement or the pendency of consummation of the Merger (including the threatened or actual impact
on relationships with customers, vendors, suppliers, distributors, landlords or employees
(including, without limitation, the threatened or actual loss, termination, suspension,
modification or reduction of, or adverse change in, such relationships)), (B) changes in the
national or world economy or national or foreign securities, credit or financial markets as a whole
or changes in general economic conditions that affect the industries in which the Company and the
Company Subsidiaries conduct their business, so long as such conditions do not adversely affect the
Company and the Company Subsidiaries, taken as a whole, in a materially disproportionate manner
relative to other participants in the industries or markets in which they operate, (C) any change
or development in the foodservice distribution industry generally or change or development in the
restaurant industry generally or in any segment of the restaurant industry generally in which the
Company or any of the Company Subsidiaries’ customers operate, including, but not limited to, quick
service and casual and family dining, so long as such changes or developments do not adversely
affect the Company and the Company Subsidiaries, taken as a whole, in a materially disproportionate
manner relative to other participants in the industries or markets in which they operate, (D) the
announcement or completion of the closing of the Company’s facility in Magee, Mississippi, (E) any
change in applicable Law, rule or regulation or GAAP or interpretation thereof after the date
hereof, so long as such changes do not adversely affect the Company and the Company Subsidiaries,
taken as a whole, in a materially disproportionate manner relative to other participants in the
industries or markets in which they operate, (F) any failure by the Company to meet any internal or
public projections or forecasts or estimates of revenues or earnings for any period ending on or
after the date of this Agreement, (it being understood, however, that any event, circumstance,
change or effect underlying such failure not otherwise excluded in the other exceptions (A) through
(J) of this definition shall be taken into account in determining whether a Company Material
Adverse Effect has occurred), (G) any outbreak or escalation of war or hostilities, any occurrence
or threats of terrorist acts or any armed hostilities associated therewith and any national or
international calamity, disaster or emergency or any escalation thereof, so long as each of the
foregoing do not adversely affect the Company and the Company Subsidiaries, taken as a whole, in a
materially disproportionate manner relative to other participants in the industries or markets in
which they operate, (H) any earthquake, hurricane or other natural disaster, so long as each of the
foregoing do not adversely affect the Company and the Company Subsidiaries, taken as a whole, in a
materially disproportionate manner relative to other participants in the industries or markets in
which they operate, (I) a decline in the price, or a change in the trading volume, of the Company
Common Stock on the NASDAQ (it being understood, however, that any event, circumstance, change or
effect causing or contributing to such decline or change not otherwise excluded in the other
exceptions (A) through (J) of this definition shall be taken into account in determining whether a
Company Material Adverse Effect has occurred) or (J) taking any action expressly required by this
Agreement, or taking or not taking any actions at the requ
est of, or with the express consent of,
Parent (other than any obligation to operate the business of the Company in the ordinary course).
(b) The Company has made available to Parent true, correct and complete copies of
the charter and bylaws, or other organizational documents, of the Company and each Company
Significant Subsidiary as presently in effect. The Company is not in violation of its charter or
bylaws. To the knowledge of the Company, the Company Subsidiaries are not in violation of their
respective charter or bylaws or other organizational documents.
8
Section 3.2 Authority. The Company has all necessary corporate power and
authority to enter into, execute and deliver this Agreement and each instrument required hereby to
be executed and delivered by it at the Closing and, subject in the case of consummation of the
Merger to the approval of this Agreement by the requisite holders of Company Common Stock, to
perform its obligations hereunder and thereunder and consummate the Merger and the other
transactions contemplated hereby. The execution, delivery and performance of this Agreement and
each instrument required hereby to be executed and delivered at the Closing by the Company and the
consummation by the Company of the Merger and the other transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action and no other corporate proceedings on
the part of the Company are necessary to authorize this Agreement or to consummate the Merger and
the other transactions contemplated hereby (other than approval of this Agreement by the holders of
Company Common Stock and the filing with the Secretary of State of the State of Tennessee of the
Articles of Merger as required by the TBCA). This Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization, execution and delivery hereof by
Parent and Merger Sub, constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except to the extent that enforcement of the
rights and remedies created hereby is subject to bankruptcy, insolvency, reorganization, moratorium
and other similar Laws of general application affecting the rights and remedies of creditors and to
general principles of equity (regardless of whether enforceability is considered in a proceeding in
equity or at Law).
Section 3.3 Capitalization.
(a) The authorized capital stock of the Company consists of (i) 100,000,000 shares
of Company Common Stock, of which, as of January 15, 2008 (the “Capitalization Date”), 35,505,683
shares (including an aggregate of 633,995 Restricted Shares for which the restrictions have not
lapsed) were issued and outstanding and (ii) 5,000,000 shares of Company preferred stock (“Company
Preferred Stock”), 1,000,000 of which have been designated Series A Preferred Stock, and none of
which were issued and outstanding as of the Capitalization Date.
(b) As of the Capitalization Date, the Company has reserved 4,332,143 shares of
Company Common Stock for issuance pursuant to all of the Equity Incentive Plans, of which Company
Options to purchase 2,488,949 shares of Company Common Stock were outstanding as of the
Capitalization Date (with a weighted average exercise price equal to $29.08), 219,771 SARs were
outstanding as of the Capitalization Date (with a weighted average xxxxx xxxxx equal to $29.46),
and 1,623,423 shares remained available for grant as of such date. The maximum remaining number of
shares of Company Common Stock authorized for purchase under the ESPP, as of the Capitalization
Date, is 309,997 shares. All shares of Company Common Stock reserved for issuance as specified
above, shall be, upon issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, duly authorized, validly issued, fully paid and nonassessable and will not
be issued subject to any preemptive (or similar) rights.
(c) Except for (i) shares of Company Common Stock indicated in Section 3.3(a) as
issued and outstanding as of the Capitalization Date and (ii) shares issued after the
Capitalization Date as Restricted Shares or upon the exercise of Company Options, SARs, or
“Options” under the ESPP in accordance with the terms of the applicable Equity Incentive Plan or
ESPP, which awards were granted prior to the date hereof, at the Effective Time there will not be
any shares of Company Common Stock issued and outstanding. Except as set forth on Section 3.3(c)
of the Company
9
Disclosure Schedule, no Company Options, Restricted Shares, or SARs have been issued since the
Capitalization Date.
(d) No registration rights involving the Company securities will survive
consummation of the Merger.
(e) Except as set forth on Section 3.3(e) of the Company Disclosure Schedule,
there are not authorized or outstanding any subscriptions, options, conversion or exchange rights,
warrants, calls, repurchase or redemption agreements, or other agreements, instruments, contracts,
claims or commitments of any nature whatsoever obligating the Company or any Company Subsidiary to
issue, transfer, deliver, sell, repurchase or redeem, or cause to be issued, transferred,
delivered, sold, repurchased or redeemed, additional shares of the Company Common Stock or other
securities of the Company or to make payments with respect to the value of any of the foregoing or
obligating the Company to grant, extend or enter into any such agreement or commitment, other than
(i) Company Options, Restricted Shares and SARs outstanding on the date hereof, (ii) “Options”
issued pursuant to the ESPP, and (iii) shares issued pursuant to the Company’s Amended and Restated
Employee Savings and Stock Ownership Plan, as amended, after the date hereof. There are no
shareholder agreements, voting trusts, proxies or other agreements or instruments with respect to
the voting of the capital stock of the Company to which the Company or any of its officers or
directors are a party and, to the knowledge of the Company, no other party is a party to any
shareholder agreements, voting trusts, proxies or other agreements or instruments with respect to
the voting of the capital stock of the Company. The exercise price per share under each Company
Option and each SAR on the date of grant was no less than the fair market value of a share of
Company Common Stock (as fair market value is defined in the Equity Incentive Plan pursuant to
which such Company Option or SAR was granted).
(f) The Company has no outstanding bonds, debentures, notes or other indebtedness
that have the right to vote (or which is convertible into, or exchangeable for, securities having
the right to vote) on any matters on which shareholders may vote.
(g) The Company Common Stock constitutes the only outstanding class of securities
of the Company registered under the Securities Exchange Act of 1934, as amended (together with the
rules and regulations promulgated thereunder, the “Exchange Act”).
Section 3.4 Company Subsidiaries.
(a) Section 3.4(a) of the Company Disclosure Schedule sets forth a complete list
of the names and jurisdictions of incorporation or organization of each Company Subsidiary. All
issued and outstanding shares or other equity interests of each Company Subsidiary have been duly
authorized, validly issued, are fully paid and nonassessable and are owned directly or indirectly
by the Company free and clear of any pledges, charges, liens, encumbrances, restrictions on the
transfer, voting or dividend rights, rights of first offer or first refusal, security interests or
adverse rights or claims of any nature whatsoever (“Liens”), except for (i) Liens for current taxes
and assessments not yet past due or that are being contested in good faith, (ii) Liens imposed by
applicable Law, (iii) Liens imposed or granted pursuant to or in connection with the Company’s
existing credit facilities or the Company’s receivables facility, and (iv) any other Liens that do
not secure a liquidated amount, that have been incurred or suffered in the ordinary course of
business. None of the Company Subsidiaries own any shares of Company Common Stock. Except for the
capital stock and other ownership interests in the Company Subsidiaries, the Company does not own,
directly or
10
indirectly, capital stock or other voting or equity securities or interests in any Person, or
any options, warrants, rights or securities convertible, exchangeable or exercisable therefore and
is not a party to any joint ventures or similar arrangements.
(b) There are not any authorized or outstanding subscriptions, options, conversion
or exchange rights, warrants, calls, repurchase or redemption agreements, or other agreements,
claims, contracts or commitments of any nature whatsoever obligating any Company Subsidiary to
issue, transfer, deliver, sell, register, repurchase or redeem, or cause to be issued, transferred,
delivered, sold, repurchased or redeemed, additional shares of the capital stock or other
securities of the Company Subsidiary or to make payments with respect to the value of any foregoing
or obligating the Company Subsidiary to grant, extend or enter into any such agreement.
(a) The Company has filed all forms, reports, registrations, statements,
certifications and other documents required to be filed by it with, or furnished by the Company to,
the SEC for all periods beginning on or after January 1, 2004 (the “Company SEC Reports”). The
Company SEC Reports were prepared in accordance with the applicable requirements of the Exchange
Act and the Securities Act of 1933, as amended (together with the rules and regulations promulgated
thereunder, the “Securities Act”), as applicable, and did not, as of their respective dates,
contain any untrue statement of a material fact or omit to state a material fact required to be
stated or incorporated by reference therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading. As of the date of this Agreement,
there are not outstanding or unresolved comments in comment letters received from the SEC. To the
knowledge of the Company, as of the date hereof, none of the Company SEC Reports is the subject of
ongoing SEC review. No Company Subsidiary is required to file any form, report, registration,
statement or other document with the SEC.
(b) The consolidated financial statements contained in the Company SEC Reports
(including the related notes, where applicable) (the “Financial Statements”) (i) present fairly, in
all material respects, the consolidated financial condition and results of operations and cash
flows and statements of shareholders equity of the Company and its consolidated subsidiaries as of
and for the periods presented therein (subject, in the case of unaudited quarterly financial
statements, to normal year-end adjustments and, with respect to pro forma financial statements, to
the qualifications stated therein), (ii) have been prepared in all material respects in accordance
with United States generally accepted accounting principles (“GAAP”) applied on a consistent basis
throughout the periods involved, except as otherwise indicated therein or, in the case of the
unaudited quarterly financial statements as permitted by Form 10-Q, and (iii) when filed complied
as to form in all material respects with the rules and regulations of the SEC with respect thereto.
Since December 30, 2006, there has been no material change in the Company’s accounting methods or
principles that would be required to be disclosed in the Financial Statements in accordance with
GAAP, except as described in the notes to such Financial Statements. The management of the Company
has implemented and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of
the Exchange Act) to ensure that material information relating to the Company, including the
consolidated Company Subsidiaries, is made known to the chief executive officer and the chief
financial officer of the Company by others within those entities, and the Company’s principal
executive officer and principal financial officer have disclosed, based on their most recent
evaluation of internal control over financial reporting, to the Company’s auditors and the audit
committee of the Company Board of Directors (or persons performing the equivalent functions): (A)
all significant deficiencies and
11
material weaknesses within their knowledge in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the Company’s ability to
record, process, summarize and report financial information; and (B) any fraud that involves
management or other employees who have a significant role in the Company’s internal control over
financial reporting. The Company’s principal executive officer and principal financial officer
have made, with respect to the Company SEC Reports, all certifications required by the
Xxxxxxxx-Xxxxx Act of 2002 and any related rules and regulations promulgated by the SEC. As of the
date hereof, the Company has not identified any material weaknesses in the design or operation of
the internal controls over financial reporting. As of the date hereof, neither the Company nor any
of the Company Subsidiaries has outstanding, or has arranged any outstanding, “extensions of
credit” to directors or executive officers of the Company within the meaning of Section 402 of the
Xxxxxxxx-Xxxxx Act of 2002.
(c) Neither the Company nor any Company Subsidiary has any liabilities, whether
accrued, absolute, contingent or otherwise, other than liabilities and obligations (i) reflected or
reserved against on the Financial Statements in accordance with GAAP or reasonably apparent from
the notes or management’s discussion and analysis related thereto, (ii) incurred in connection with
the transactions contemplated herein or since the date of the most recently audited Financial
Statements in the ordinary course of business consistent with past practice, (iii) discharged or
paid prior to the date of this Agreement, or (iv) that have not had, individually or in the
aggregate, a Company Material Adverse Effect.
Section 3.6 Absence of Certain Changes or Events. Since December 30,
2006, there have not been any changes, events or circumstances that have had, individually or in
the aggregate, a Company Material Adverse Effect. Since December 30, 2006 through the date hereof,
except as contemplated by this Agreement, the Company and each Company Subsidiary has conducted its
respective business in the ordinary course of business consistent with past practice.
Section 3.7 Compliance with Laws.
(a) The Company and the Company Significant Subsidiaries have obtained each
federal, state, county, local or foreign governmental consent, license, permit, registration,
order, grant or other authorization of a Governmental Entity that is required for the operation of
the business of the Company or any of the Company Significant Subsidiaries or the holding of any
interest in any of its properties (collectively referred to herein as, the “Permits”), except where
the failure to have, or the suspension or cancellation of, any Permit has not had, individually or
in the aggregate, a Company Material Adverse Effect. Except as has not had, individually or in the
aggregate, a Company Material Adverse Effect, (i) all of such Permits are valid and in full force
and effect and neither the Company nor any Company Significant Subsidiary has violated the terms of
such Permits, and (ii) no proceeding is pending or, to the knowledge of the Company, threatened in
writing to revoke, suspend, cancel, terminate, or adversely modify any Permit.
(b) Except as has not had, individually or in the aggregate, a Company Material
Adverse Effect, at all times since January 1, 2006, the Company and the Company Subsidiaries have
been, and currently are, in compliance with, have not been, and currently are not, in default or
violation of, and have not, to the knowledge of the Company, received any notice of non-compliance,
default or violation (which remains uncured) with respect to, any Laws applicable to the business
of the Company and the Company Subsidiaries or to which any of its or their properties are bound.
12
(c) Neither the Company nor any Company Subsidiary is a party to, or has a legally
binding commitment to enter into, any joint venture, off balance sheet partnership or any similar
contract (including any contract or arrangement relating to any transaction or relationship between
or among the Company or the Company Subsidiary, on the one hand, and any unconsolidated affiliate,
including any structured finance, special purpose or limited purpose entity or person, on the other
hand or any “off balance sheet arrangements” (as defined in Item 303(a) of Regulation S-K under the
Exchange Act)), where the purpose or intended effect of such contract or arrangement is to avoid
disclosure of any material transaction involving, or material liabilities of, the Company or any
Company Subsidiary in the Company’s published financial statements or other Company SEC Reports.
Section 3.8 Claims, Actions and Proceedings. There are no outstanding
orders, writs, judgments, injunctions, decrees or other requirements of any court or arbitrator
against the Company, any Company Subsidiary or any of their securities, rights, assets or
properties that has had, individually or in the aggregate, a Company Material Adverse Effect.
There are no actions, suits, claims, investigations (including governmental investigations or
inquiries), arbitrations, legal or administrative proceedings or inquiries (collectively,
“Actions”) or, to the knowledge of the Company, threatened in writing, against the Company or any
Company Subsidiary or any of their securities, rights, assets or properties, except as has not had,
individually or in the aggregate, a Company Material Adverse Effect and other than Actions
challenging this Agreement or the transactions contemplated hereby, or seeking to prohibit the
Merger. As of the date hereof, there are no Actions pending or, to knowledge of the Company,
threatened in writing, against the Company or any Company Subsidiary challenging this Agreement or
the transactions contemplated hereby, or seeking to prohibit the Merger.
Section 3.9 Contracts and Other Agreements.
(a) Except for this Agreement, or as set forth in Section 3.9(a) of the Company
Disclosure Schedule or in the exhibit lists of any form, report, schedule, registration, statement,
certification or other document filed with the SEC, prior to the date hereof, none of the Company
nor any Company Subsidiary is a party to or bound by any note, bond, mortgage, indenture, contract,
agreement, lease, license, Permit or other instrument or obligation (each, a “Contract”): (i) that
would be required to be filed by the Company as a “material contract” pursuant to Item 601(b)(10)
of Regulation S-K under the Securities Act or disclosed on Form 8-K; (ii) that would obligate the
Company or any Company Subsidiary to file a registration statement under the Securities Act, which
filing has not yet been made; (iii) relating to indebtedness for borrowed money, guarantees of
indebtedness for borrowed money, lines of credit (whether or not drawn), letters of credit, sale
and leaseback transactions, operating leases for rolling stock, capitalized lease or surety bonds
having, in each case, an outstanding principal amount or involving continuing or contingent
obligations of the Company in excess of $5,000,000; (iv) that involves, other than sales or
repurchases of inventory in the ordinary course of business, acquisition or disposition, directly
or indirectly (by merger or otherwise), of assets or capital stock or other voting securities or
equity interests of another person or the Company for aggregate consideration in excess of
$5,000,000 and that involves continuing or contingent obligations of the Company or the Company
Subsidiaries that are material to the Company and the Company Subsidiaries taken as a whole or is
not yet consummated; (v) under which the Company or any Company Subsidiary has advanced or loaned
any funds in excess of $1,000,000 or in any one case has guaranteed any obligations of another
person in excess of $2,000,000, other than extensions of credit to the Company or the Company
Subsidiaries pursuant to the Company’s intercompany relationships, or to customers or vendors in
the ordinary course of
13
business consistent with past practice; (vi) that relates to any single or series of related
capital expenditures by the Company pursuant to which the Company or any Company Subsidiary has
future financial obligations in excess of $3,000,000 (other than purchase orders for the purchase
of inventory or real property leases); (vii) to which the Company or any Company Subsidiary is a
party along with any other person that is not the Company or a Company Subsidiary, constituting a
material general or limited partnership, limited liability company or joint venture (whether
limited liability or other organizational form) or material alliance or similar arrangement; (viii)
any contract containing any covenant materially limiting the right of the Company or any of the
Company Subsidiaries to engage in any line of business or compete with any person in any line of
business or in any geographic area, grant any exclusive rights to make, sell or distribute the
Company’s products and services; (ix) that would constitute one of the Company’s top seven
contracts in terms of revenues received from the sale of products or services (as measured by the
revenue derived therefrom during the twelve (12) month period ended September 30, 2007); (x) that
was not entered into in the ordinary course of business and requires the payment by the Company or
any of the Company Subsidiaries of more than $10,000,000 annually; and (xi) that relates to any
material settlement agreement, other than (A) releases immaterial in nature or amount entered into
with former employees or independent contractors of the Company in the ordinary course of business
in connection with the routine cessation of such employee’s or independent contractor’s employment
with the Company, (B) settlement agreements for cash only (which has been paid) and does not exceed
$1,000,000 as to such settlement or (C) settlement agreements entered into more than one year prior
to the date of this Agreement under which none of the Company or the Company Subsidiaries have any
continuing material financial obligations, liabilities or rights (excluding releases). Each such
Contract described in clauses (i) through (xi) is referred to herein as a “Material Contract.”
(b) Except as has not had, individually or in the aggregate, a Company Material
Adverse Effect, each of the Material Contracts is in full force and effect and is valid and binding
on the Company and each Company Subsidiary party thereto and, to the knowledge of the Company, each
other party thereto, enforceable against such parties in accordance with their terms, except to the
extent that enforcement of the rights and remedies created thereby is subject to bankruptcy,
insolvency, reorganization, moratorium and other similar laws of general application affecting the
rights and remedies of creditors and to general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at Law).
(c) Except as has not had, individually or in the aggregate, a Company Material
Adverse Effect, (i) neither the Company nor any Company Subsidiary has breached, is in default
under, or has received written notice of any breach of or default under, any Material Contract, and
no event has occurred that with the lapse of time or the giving of notice or both would constitute
a default thereunder by the Company or any Company Subsidiary, and (ii) to the Company’s knowledge,
no other party to any Material Contract to which the Company or any Company Subsidiary is a party
is in breach or violation of, or default under, such Material Contract or has terminated or
notified the Company or any Company Significant Subsidiary in writing of its intention to terminate
or not renew such Material Contract. A complete and correct copy, subject to redaction if required
pursuant to the terms thereof or if required by applicable Law, of each Material Contract has
previously been made available by the Company to Parent or filed by the Company with the SEC.
Section 3.10 Intellectual Property. Except as has not had, individually
or in the aggregate, a Company Material Adverse Effect, either the Company or a Company Subsidiary
owns, or is
14
licensed or otherwise possesses adequate rights to use, all trademarks, trade names, service
marks, service names, xxxx registrations, logos, assumed names and other source indicators, domain
names, registered and unregistered copyrights, software, patents, trade secrets, know-how or
proprietary information or other intellectual property and all applications and registrations used
in their respective businesses as currently conducted (collectively, the “Intellectual Property”),
free and clear of all Liens other than Permitted Liens. Except as has not had, individually or in
the aggregate, a Company Material Adverse Effect, (i) the owned Company Intellectual Property has
not expired or lapsed and, to the Company’s knowledge, is valid and enforceable, (ii) there are no
Actions pending or, to the knowledge of the Company, threatened in writing by any person (x)
alleging infringement or violation of its Intellectual Property by the Company or any of the
Company Subsidiaries for their conduct of their businesses or their use of the Intellectual
Property, or (y) otherwise challenging the Company Intellectual Property, (iii) the conduct of the
business of the Company and the Company Subsidiaries does not infringe or violate any Intellectual
Property rights of any person, (iv) neither the Company nor any of the Company Subsidiaries has
made any claim of a violation or infringement by others of its rights to or in connection with the
Intellectual Property of the Company or any of the Company Subsidiaries, (v) to the knowledge of
the Company, no person is infringing or violating any Intellectual Property of the Company or any
of the Company Subsidiaries, (vi) the Company and the Company Subsidiaries take reasonable actions
to protect their trade secrets and confidential information and the security of their software,
systems and networks.
Section 3.11 Property. Except as has not had, individually or in the
aggregate, a Company Material Adverse Effect, the Company or a Company Subsidiary owns and has good
and valid title to all of its owned real property and good title to all its personal property and
has valid leasehold interests in all of its leased properties, sufficient to conduct their
respective businesses as currently conducted, free and clear of all Liens on the Company’s or any
Company Subsidiaries’ ownership or leasehold interest (other than (i) Liens for current taxes and
assessments not yet past due or being contested in good faith, (ii) inchoate Liens for construction
in progress, (iii) mechanics’, materialmen’s, workmen’s, repairmen’s, warehousemen’s and carriers’
Liens arising in the ordinary course of business of the Company or such Company Subsidiary
consistent with past practice for sums not yet delinquent or being contested in good faith by
appropriate proceedings, (iv) Liens imposed or granted pursuant to or in connection with the
Company’s existing credit facilities, accounts receivable facility or other indebtedness, (v) Liens
with respect to tenant personal property, fixtures and/or leasehold improvements at the subject
premises arising under state statutes and/or principles of common law, (vi) all Liens and other
imperfections of title (including matters of record) and encumbrances that do not (x) materially
interfere individually or in the aggregate with the conduct of the business of the Company and the
Company Subsidiaries, taken as a whole, (y) materially detract from the value or use of the real
property or (z) have, individually or in the aggregate, a Company Material Adverse Effect
(collectively, “Permitted Liens”)), assuming the timely discharge of all obligations owing under or
related to the owned real property, the personal property and the leased property. Except in each
case as has not had, individually or in the aggregate, a Company Material Adverse Effect, all
leases under which the Company or any of the Company Subsidiaries lease any material real or
personal property (each a “Lease” and, collectively, the “Leases”) are valid and binding against
the Company or any of the Company Subsidiaries a party thereto and, to the Company’s knowledge, the
counterparties thereto, in accordance with their respective terms (except to the extent that
enforcement of the rights and remedies under the Leases are subject to bankruptcy, insolvency,
reorganization, moratorium and other similar Laws of general application affecting the rights and
remedies of creditors and to general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at Law)), and there is not, under any of such Leases, any
existing default by the Company or any Company Subsidiaries
15
which, with notice or lapse of time or both, would become a default by the Company or any of
the Company Subsidiaries.
Section 3.12 Insurance. Except as has not had, individually or in the
aggregate, a Company Material Adverse Effect, (i) the Company and the Company Subsidiaries maintain
insurance in such amounts and against such risks as is sufficient to comply with applicable Law,
(ii) all policies or binders of material fire, liability, product liability, workers’ compensation,
vehicular, directors’ and officers’ and other material insurance held by or on behalf of the
Company and the Company Subsidiaries (collectively, the “Company Insurance Policies”) are (a)
except for policies that have expired under their terms, in full force and effect, and (b) to the
knowledge of the Company, valid and enforceable in accordance with their terms, (iii) neither the
Company nor any Company Subsidiary is in breach or default with respect to any provision contained
in any such policy or binder and (iv) neither the Company nor any Company Subsidiary has (a)
received notice of actual or threatened modification or termination of any material Company
Insurance Policy, or (b) received notice of cancellation or non-renewal of any such Company
Insurance Policy, other than in connection with ordinary renewals.
Section 3.13 Tax Matters.
(a) For purposes of this Agreement, the term “Tax” (and, with correlative meaning,
“Taxes” and “Taxable”) means all United States federal, state and local, and all foreign, income,
profits, franchise, gross receipts, payroll, transfer, sales, employment, social security,
unemployment insurance, workers’ compensation, use, property, excise, value added, ad valorem,
estimated, stamp, alternative or add-on minimum, recapture, environmental, capital gain,
withholding taxes, any other taxes, and any fees, assessments, liabilities, levies, charges,
customs, duties, tariffs, impositions or assessments in the nature of taxes, together with all
interest, penalties, fines and additions imposed on or with respect to such amounts, whether
disputed or not, including any liability for taxes of a predecessor entity. “Tax Return” (and,
with correlative meaning, “Tax Returns”) means any return, declaration, report, claim for refund or
information return or similar statement filed or required to be filed with any taxing authority or
any other Governmental Entity in connection with Taxes, including any attachments thereto and any
amendments thereof.
(b) Except as has not had, individually or in the aggregate, a Company Material
Adverse Effect:
(i) All Tax Returns required to be filed by or with respect to the
Company and the Company Subsidiaries have been filed or will be filed with the
appropriate tax authority within the time and in the manner prescribed by Law. All
such Tax Returns are true, correct and complete and all Taxes owed by the Company or
the Company Subsidiaries, whether or not shown on any Tax Return, have been timely
paid except for Taxes being contested in good faith and for which adequate reserves
have been established on the Financial Statements, in accordance with GAAP. No
claim (which has not been settled and paid or accrued) has ever been made in writing
by any taxing authority in any jurisdiction in which any of the Company or the
Company Subsidiaries does not file a Tax Return that the Company or the Company
Subsidiaries are or may be subject to taxation by that jurisdiction. Since January
1, 2004, no adjustment relating to any Tax Return of the Company or any Company
Subsidiary has been proposed in writing by any Tax Authority (insofar
16
as such adjustment relates to the activities or income of the Company or any
Company Significant Subsidiary).
(ii) There are no Liens with respect to Taxes upon any of the
assets or properties of the Company or the Company Subsidiaries, other than with
respect to Taxes not yet due and payable.
(iii) No audit, assessment, examination, dispute, investigation or
judicial or administrative proceeding is currently pending with respect to any Tax
Return or Taxes of the Company or the Company Subsidiaries with respect to which the
Company or a Company Subsidiary has been notified in writing. No deficiency for any
Taxes has been proposed or assessed in writing against the Company or the Company
Subsidiaries, which deficiency has not been paid or accrued in full. All Tax
deficiencies determined as a result of any past completed audit with respect to
Taxes of the Company and the Company Subsidiaries have been satisfied.
(iv) There are no outstanding requests, agreements, waivers or
arrangements extending the statutory period of limitation applicable to any claim
for, or the period for the collection or assessment of, Taxes due from or with
respect to the Company or the Company Significant Subsidiaries for any taxable
period.
(v) With respect to any period ending on or before the date of the
latest balance sheet included in the Financial Statements for which Tax Returns have
not yet been filed, or for which Taxes are not yet due or owing, the Company and the
Company Subsidiaries have, in accordance with and to the extent required by GAAP,
made accruals for such Taxes in their Financial Statements.
(vi) All withholding and payroll Tax requirements required to be
complied with by the Company and the Company Subsidiaries (including requirements to
deduct, withhold and pay over amounts to any Governmental Entity and to comply with
associated reporting and record keeping requirements) have been satisfied or
adequate reserves have been established on the Financial Statements in accordance
with GAAP.
(vii) Neither the Company nor any Company Subsidiary has any
liability for the Taxes of any other person (other than the Company and the Company
Subsidiaries) under Treasury Regulation 1.1502-6 (or any similar provision of state,
local or foreign Law) by contract or as a transferee or successor.
(viii) The Company has delivered or made available to Parent
complete copies of all consolidated federal income Tax Returns of the Company with
respect to 2004, 2005 and 2006.
(ix) Neither the Company nor any Company Subsidiary has
participated in a “reportable transaction” that has given rise to a disclosure
obligation under Section 6011 of the Code and Treasury Regulations promulgated
thereunder and that has not been disclosed in the relevant Tax Return of the company
or relevant Company Subsidiary.
17
(x) Neither the Company nor any Company Subsidiary is a party to
any joint venture, partnership, or other arrangement (other than an arrangement
related to royalties) with unrelated third parties that the parties treat as a
partnership for federal or applicable state, local or foreign Tax purposes.
(xi) The Company has not been a “distributing corporation” or a
“controlled corporation” within the meaning of Code section 355(a)(1)(A) in a
transaction occurring within the past five years.
(xii) Neither the Company nor any of the Company Subsidiaries is a
party to any indemnification, allocation, sharing or similar agreement, with respect
to Taxes that would give rise to a payment or indemnification obligation (other than
agreements among the Company and the Company Subsidiaries).
(xiii) No closing agreement pursuant to Section 7121 of the Code
(or any similar provision of state, local or foreign law) has been entered into by
or with respect to the Company or any of the Company Subsidiaries.
(xiv) The Company will not be required to include amounts in
income, or exclude items of deduction, in a taxable period beginning after the
Closing Date as a result of (i) a change in method of accounting occurring prior to
the Closing Date, (ii) an installment sale or open transaction arising in a taxable
period (or portion thereof) ending on or before the Closing Date, or (iii) a prepaid
amount received, or paid, prior to the Closing Date.
(xv) Neither the Company nor any Subsidiary has been a United
States real property holding corporation within the meaning of Section 897(c)(2) of
the Code during the applicable period specified in Section 897(c)(l)(A)(ii) of the
Code.
(xvi) There is no Contract by the Company or any of the Company
Subsidiaries covering any Person that, individually or collectively, could give rise
to the payment of any amount that would not be deductible by the Company by reason
of Section 162(m) of the Code with respect to any tax period ending on or before the
Effective Time.
(c) The representations and warranties contained in Section 3.5(b), Section 3.13
and Section 3.14 are the only representations and warranties being made by the Company with respect
to Taxes related to the Company, any Company Subsidiary, this Agreement or its subject matter, and
no other representation and warranty contained in any other section of this Agreement shall apply
to any such Tax matters and no other representation or warranty, express or implied, is being made
with respect thereto.
Section 3.14 Employee Benefit Plans.
(a) With respect to each material pension, savings, profit sharing, retirement,
deferred compensation, employment, change in control, retention, transaction bonus, employee loan,
collective bargaining, welfare, fringe benefit, insurance, short and long term disability, medical,
death benefit, incentive, bonus, stock, other equity-based, vacation pay, severance pay, cafeteria
plan and other plan, program, policy, agreement and arrangement for the benefit of any current or
former
18
employee, director or consultant of the Company or any Company Subsidiary (collectively, the
“Company Employees”), or their beneficiaries, including each “employee benefit plan” (as that term
is defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”)), and that is contributed to, sponsored or maintained by the Company and/or by one or
more Company Subsidiaries or to which the Company and/or one or more Company Subsidiaries would
reasonably be expected to have any present or future liability (each, whether or not material, a
“Plan”), the Company has delivered or made available to Parent current, accurate and complete
copies of each of the following together with, when applicable, all amendments: (i) the Plan, or,
if the Plan has not been reduced to writing, a written summary of its material terms, (ii) if the
Plan is subject to the disclosure requirement of Title I of ERISA, the summary plan description,
and in the case of each other Plan, any similar employee summary, (iii) if the Plan is intended to
be qualified under Section 401(a) of the Code, the most recent determination letter (or opinion
letter upon which the Company is entitled to rely) issued by the Internal Revenue Service (“IRS”),
(iv) if the Plan is subject to the requirement that a Form 5500 series annual report/return be
filed, the three most recently filed annual reports/returns and all exhibits and attachments
thereto, (v) all related trust agreements, group annuity contracts and administrative services
agreements, and (vi) for each Plan that is funded, the three most recent financial statements and
actuarial reports for each such Plan. Section 3.14(a) of the Company Disclosure Schedule sets
forth a true and complete list of all material Plans.
(b) Except as set forth on Section 3.14(b) of the Company Disclosure Schedule,
each Plan has been established and administered in all material respects in accordance with its
terms and the provisions of applicable Law, including ERISA and the Code (and the rules and
regulations thereunder). Except as set forth on Section 3.14(b) of the Company Disclosure
Schedule, none of the Plans is currently under examination by the IRS or the U.S. Department of
Labor. Except as has not had, individually or in the aggregate, a Company Material Adverse Effect,
all contributions, premiums and expenses, if any, due under each Plan have been timely made. Each
Plan intended to be qualified under Section 401(a) of the Code has received a favorable
determination letter (or opinion letter upon which the Company may rely) from the IRS that it is so
qualified, and to the knowledge of the Company nothing has occurred since the date of such letter
that adversely affected the qualified status of such Plan. Each trust created under any such Plan
is exempt from tax under Section 501(a) of the Code. Except as set forth on Section 3.14(b) of the
Company Disclosure Schedule, no Plan is or has been subject to Section 302 of ERISA or Section 412
of the Code. No event has occurred and to the knowledge of the Company, no condition exists that
would subject the Company or any Company Subsidiary either directly or by reason of their
affiliation with any member of their “Controlled Group” (defined as any organization that is a
member of a controlled group of organizations within the meaning of Sections 414 (b), (c), (m) or
(o) of the Code), to any tax, fine, lien, penalty or other liability imposed by ERISA, the Code or
other applicable laws, rules or regulations which could result in any material liability on the
part of the Company or any Company Subsidiary.
(c) Except for continuation of health coverage described in Section 4980B of the
Code or Section 601 et seq. of ERISA (“COBRA”) and, except as provided on Section 3.14(c) of the
Company Disclosure Schedule, no Plan provides for medical, dental, life insurance coverage or any
other welfare benefits after termination of employment or for other post-employment welfare
benefits. To the knowledge of the Company, the information set forth in Section 3.14(c) of the
Company Disclosure Schedule was, as of the date such information was prepared, accurate in all
material respects; provided, however, that the portion of such information which constitutes
estimates was prepared on a reasonable basis at the time of such estimate; and provided further
that
19
the Company makes no representation with respect to the applicability of or calculations under
Section 280G of the Code, with respect to the representation made in this sentence.
(d) Except as set forth on Section 3.14(d) of the Company Disclosure Schedule, no
Action (other than routine claims for benefits in the ordinary course) is pending or, to the
knowledge of the Company, threatened against any Plan (including any audit or other administrative
proceeding by the U.S. Department of Labor, the IRS or other governmental agencies).
(e) Except as set forth on Section 3.14(e) of the Company Disclosure Schedule,
neither the Company nor any of the Company Subsidiaries has ever maintained, sponsored, contributed
to, been required to contribute to, or incurred any liability under any defined benefit pension
plan subject to Title IV of ERISA, including without limitation any multi-employer plan as defined
in Section 3(37) or Section 4001(a)(3) of ERISA or any multiple employer plan as defined in Section
413(c) of the Code, or any plan that has two or more contributing sponsors at least two of whom are
not under common control, within the meaning of Section 4063 or 4064 of ERISA.
(f) Neither the Company nor any Company Subsidiary, nor, to the knowledge of the
Company, any other “disqualified person” or “party in interest” (as defined in Section 4975(e)(2)
of the Code and Section 3(14) of ERISA, respectively) has engaged in any transactions in connection
with any Plan that would result in the imposition on the Company of a material penalty pursuant to
Section 502 of ERISA, material damages pursuant to Section 409 of ERISA or a material tax pursuant
to Section 4975 of the Code.
(g) Except as required by applicable Law or as set forth on Section 3.14(g) of the
Company Disclosure Schedule, no Plan exists that, as a result of the execution of this Agreement,
shareholder approval of this Agreement, or the transactions contemplated by this Agreement (whether
alone or in connection with any subsequent event(s)), could (i) result in severance pay or any
increase in severance pay upon any termination of employment after the date of this Agreement, (ii)
except as contemplated by Section 2.3 with respect to Options, Restricted Shares, SARs and
“Options” under the ESPP, accelerate the time of payment or vesting or result in any payment or
funding (through a grantor trust or otherwise) of compensation or benefits under, increase the
amount payable or result in any other material obligation pursuant to, any Plan, (iii) limit or
restrict the right of the Company or any Company Subsidiary to merge, amend or terminate any of the
Plans, or (iv) result in payments under any of the Plans which would not be deductible under
Section 280G of the Code.
(h) With respect to any multiemployer plan (within the meaning of Section
4001(a)(3) of ERISA) to which the Company, any Company Subsidiary or any member of their respective
Controlled Groups has any liability or contributes (or has at any time contributed or had an
obligation to contribute), except as has not had a Company Material Adverse Effect, none of the
Company, any Company Subsidiary or any member of their respective Controlled Groups has incurred
any withdrawal liability under Title IV of ERISA which remains unsatisfied or, except as set forth
on Section 3.14(h) of the Company Disclosure Schedule, would be subject to such liability if, as of
the Closing Date, the Company, any Company Subsidiary or any member of their respective Controlled
Groups were to engage in a complete withdrawal (as defined in Section 4203 of ERISA) or partial
withdrawal (as defined in Section 4205 of ERISA) from any such multiemployer plan.
(i) Except as set forth on Section 3.14(i) on the Company Disclosure Schedule, no
Plan is maintained outside the jurisdiction of the United States, or covers any employee residing
20
or working outside the United States (any such Plan set forth in Schedule 3.14(i), “Foreign
Plans”). With respect to any Foreign Plans, (i) all Foreign Plans have been established,
maintained and administered in compliance with their terms and all applicable Laws of any
controlling Governmental Entity except as has not had a Company Material Adverse Effect; (ii) all
Foreign Plans that are required to be funded are fully funded, and with respect to all other
Foreign Plans, adequate reserves therefore have been established on the accounting statements of
the Company or a Company Subsidiary; and (iii) no material liability or obligation of the Company
or any Company Subsidiary exists with respect to such Foreign Plans that has not been disclosed on
Schedule 3.14(i).
Section 3.15 Labor Matters. Except as set forth on Section 3.15 of the
Company Disclosure Schedule, neither the Company nor any of the Company Subsidiaries is a party to,
or bound by, any collective bargaining agreement, contract or other agreement or understanding with
a labor union or labor organization, and neither the Company nor any of the Company Subsidiaries is
negotiating any collective bargaining agreement or other contracts or agreements in respect of
employees of the Company or the Company Subsidiaries. Except as has not had a Company Material
Adverse Effect, neither the Company nor any of the Company Subsidiaries is subject to, or has
experienced within the past three years, a material labor dispute, strike or work slowdown or
stoppage, lockout or claim of unfair labor practices. To the knowledge of the Company, there are
no organizational efforts with respect to the formation of a collective bargaining unit presently
being made or threatened involving employees of the Company or any of the Company Subsidiaries.
Except as set forth on Section 3.15(h) of the Company Disclosure Schedule or has not had a Company
Material Adverse Effect, the Company and the Company Subsidiaries are in material compliance with
all applicable Laws and Contracts relating to employment, employment practices, compensation,
benefits, hours, terms and conditions of employment, and the termination of employment, including
but not limited to any obligations pursuant to the Worker Adjustment and Retraining Notification
Act of 1988 and any similar state or local laws, rules or regulations (“WARN”). Neither the
Company nor any Company Subsidiary is a party to, or otherwise bound by, any consent decree with,
or citation by, any Governmental Entity relating to employees or employment practices. Neither the
Company nor any Company Subsidiary is liable for any severance pay or other payments to any
employee or former employee arising from the termination of employment except in accordance with
the Plans. Except as set forth on Section 3.15 of the Company Disclosure Schedule, neither the
Company nor any Company Subsidiary has, since January 1, 2007, closed any plant or facility,
effectuated any “mass layoffs” as defined under WARN of employees or implemented any early
retirement or separation programs, nor has any such action or program been planned or announced for
the future.
Section 3.16 Environmental Matters.
(a) Except as set forth on Section 3.16(a) of the Company Disclosure Schedule or
as has not had, individually or in the aggregate, a Company Material Adverse Effect, (i) none of
the Company or any of the Company Subsidiaries is in violation of, or to the knowledge of the
Company has violated, any Environmental Law and to the knowledge of the Company, there is no event,
condition or development that will materially interfere with, or add material cost to, maintaining
compliance with all applicable Environmental Laws in the future; (ii) there is and has been no
Release or threatened Release of Hazardous Substances that requires response action under
applicable Environmental Law or that has resulted in liability under any Environmental Law at, on,
under or from any of the properties or facilities currently or, to the knowledge of the Company
formerly, owned, leased or operated by the Company or any of the Company Subsidiaries and none of
the Company and the Company Subsidiaries has been notified that it has Released, or arranged for
the disposal of, any Hazardous Substance in a manner, or to a location, that could reasonably be
21
expected to result in liability under or relating to any Environmental Law; (iii) the Company
and the Company Subsidiaries have obtained and are in compliance with all required Environmental
Permits and, except for any noncompliance that has been fully resolved, have been in the past in
compliance with such Environmental Permits and to the knowledge of the Company there is no Action
pending or threatened, to revoke, suspend, cancel, terminate, or adversely modify any Environmental
Permit; (iv) there are no Actions, orders, written claims or written notices pending or, to the
knowledge of the Company, issued to or threatened against the Company or any of the Company
Subsidiaries alleging violations of or liability under any Environmental Law or otherwise
concerning the Release or management of Hazardous Substances; (v) to the knowledge of the Company
the execution of this Agreement and the consummation of the transactions contemplated hereby do not
require any submission to, or any consent or approval of, any Governmental Entity under or relating
to any Environmental Law; and (vi) other than in the ordinary course of business none of the
Company and the Company Subsidiaries has contractually assumed or provided indemnity against any
liability under or relating to any Environmental Law.
(b) Parent and Merger Sub acknowledge that (i) the representations and warranties
contained in this Section 3.16 of this Agreement are the only representations and warranties being
made with respect to compliance with or liability under Environmental Laws related in any way to
the Company or to the Company Subsidiaries or to this Agreement or to its subject matter and (ii)
no other representation or warranty contained in this Agreement (including pursuant to Section 3.7)
shall apply to any such matters and no other representation or warranty, express or implied, is
being made with respect thereto.
(c) For purposes of this Agreement:
(i) “Environmental Laws” means any Laws (including common law) of
the United States federal, state, local, non-United States, or any other
Governmental Entity, relating to (A) Releases or threatened Releases of Hazardous
Substances or materials containing Hazardous Substances; (B) the manufacture,
handling, transport, use, treatment, storage, emission, discharge, or disposal of
Hazardous Substances or materials containing Hazardous Substances; or (C) pollution
or protection of the environment or natural resources or to the protection of human
health and safety as such health and safety is affected by Hazardous Substances or
materials containing Hazardous Substances.
(ii) “Environmental Permits ” means any permit, consent, license,
registration, approval, notification or any other authorization pursuant to
Environmental Law.
(iii) “Hazardous Substances” means (A) those substances, materials
or wastes defined as toxic, hazardous, acutely hazardous, pollutants, contaminants
or solid wastes or any other term of similar import, in, or regulated under, the
following United States federal statutes and any analogous foreign or state
statutes, and all regulations thereunder: the Hazardous Materials Transportation
Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act, the Clean Water Act, the Safe Drinking
Water Act, the Atomic Energy Act, the Federal Insecticide, Fungicide, and
Rodenticide Act, the Toxic Substances Control Act and the Clean Air Act; (B)
petroleum and petroleum products, including crude oil and any fractions thereof; (C)
natural gas, synthetic gas,
22
and any mixtures thereof; and (D) polychlorinated biphenyls, asbestos, molds
that would reasonably be expected to have an adverse effect on human health, urea
formaldehyde foam insulation, radon, ammonia, pesticides and any other material that
could result in the imposition of liability under any applicable Environmental Law.
(iv) “Release” means any release, spilling, leaking, pumping,
pouring, discharging, emitting, emptying, escaping, leaching, injecting, dumping,
disposing or migrating into or through the indoor or outdoor environment.
Section 3.17 No Breach. The execution, delivery and performance of this
Agreement do not and the consummation by the Company of the Merger and the other transactions
contemplated by this Agreement will not (i) violate any provision of the charter or bylaws of the
Company or the comparable organizational documents of any Company Subsidiary, (ii) violate,
conflict with or result in the breach of any of the terms or conditions of, result in modification
of or the cancellation or loss of a benefit under, require any notice or action under, or otherwise
give any other contracting party the right to terminate, accelerate obligations under or receive
payment or additional rights under or constitute (or with notice or lapse of time, or both,
constitute) a default under, any Material Contract, (iii) violate any Law applicable to the Company
or the Company Subsidiaries or by which any of the Company’s or the Company Subsidiaries’ assets or
properties is bound, (iv) except for (a) filings with the SEC under the Exchange Act, (b) filings
pursuant to the TBCA as contemplated herein, (c) the filing of a pre-merger notification report
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and any
merger control, competition or fair trade Law filings in foreign jurisdictions if and to the extent
required, (d) filings required with, and approvals required by, the NASDAQ rules and regulations,
and (e) the notifications and consents listed on Section 3.17 of the Company Disclosure Schedule,
require any registration or filing with, notice to, or Permit, order, authorization, consent or
approval of, any Governmental Entity or any third party pursuant to any Material Contract, or (v)
result in the creation of any Lien on the assets or properties of the Company or a Company
Subsidiary (other than Permitted Liens), excluding from the foregoing clauses (ii), (iii), (iv) and
(v) violations, conflicts, breaches, accelerations, rights or entitlements, defaults and Liens
which, and filings, registrations, notices, Permits, orders, authorizations, consents and approvals
the absence of which has not had, individually or in the aggregate, a Company Material Adverse
Effect (excluding, for this purpose, exception (A) in the definition of Material Adverse Effect).
Notwithstanding the foregoing, for purposes of this Section 3.17, the Company does not make any
representation or warranty regarding the effect of the applicable antitrust, merger control,
competition or fair trade Laws or its ability to execute, deliver or perform its obligations under
this Agreement or to consummate the Merger as a result of the enactment, promulgation, application
or threatened or actual judicial or administrative investigation or litigation under, or
enforcement of, any antitrust, merger control, competition or fair trade Law existing as of the
date hereof with respect to the consummation of the Merger.
Section 3.18 Board Approvals; Anti-Takeover; Vote Required.
(a) The Company Board of Directors has (i) duly and validly approved and adopted
resolutions approving all corporate action required to be taken by the Company Board of Directors
to authorize this Agreement and the Merger, and (ii) subject to Section 5.2, resolved to submit
this Agreement to the shareholders of the Company and to recommend that the shareholders of the
Company approve this Agreement.
23
(b) Assuming the accuracy of the representations and warranties set forth in
Section 4.8(b), the Company and the Company Board of Directors has taken all action necessary such
that no restrictions contained in any “fair price,” “moratorium,” “control share acquisition,”
“business combination” or similar statute or regulation or provision in the Company’s charter or
bylaws will apply to the execution, delivery or performance of or compliance with this Agreement or
the Merger.
(c) Assuming the accuracy of the representations and warranties set forth in
Section 4.8(b), the affirmative vote of the holders of a majority of the outstanding shares of
Company Common Stock (the “Company Shareholder Approval”) is the only vote of the Company’s
shareholders necessary to approve this Agreement and the transactions contemplated hereby.
Section 3.19 Financial Advisor.
(a) The Company Board of Directors has received the opinion of Evercore Group
L.L.C. substantially to the effect that, as of the date hereof, and based upon and subject to the
factors and assumptions set forth therein, the Per Share Price to be received by the holders of
shares of Company Common Stock pursuant to this Agreement is fair from a financial point of view to
such holders, a signed copy of which will be shown to Parent promptly after it is available
following the date hereof. It is agreed and understood that such opinion is for the benefit of the
Company Board of Directors and may not be relied on by Parent or Merger Sub.
(b) Other than Evercore Group L.L.C., no broker, investment banker, financial
advisor, finder, agent or similar intermediary has acted on behalf of the Company or any Company
Subsidiary in connection with this Agreement or the transactions contemplated hereby, and there are
no other brokerage commissions, finders’ fees, financial advisors’ fees or similar fees or
commissions payable in connection herewith based on any agreement, arrangement, commitment or
understanding with the Company or any Company Subsidiary, or any action taken by or on behalf of
the Company or any Company Subsidiary. The Company has made available to Parent a true, complete
and correct copy of the Company’s engagement letter with Evercore Group L.L.C.
Section 3.20 Information in the Proxy Statement. The proxy statement to
be provided to the Company’s shareholders in connection with the Company Shareholders’ Meeting
(such proxy statement, inclusive of any amendment thereof or supplement thereto, the “Proxy
Statement”) on the date mailed to the Company’s shareholders and at the time of any meeting of the
Company’s shareholders to be held in connection with the Merger, will 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 the statements therein, in light of the circumstances under which they
are made, not misleading, except that no representation is made by the Company with respect to
statements made therein based on information supplied by or related to, or the sufficiency of
disclosures related to, Parent, Merger Sub or Sponsors. The Proxy Statement will comply as to form
in all material respects with the provisions of the Exchange Act and the rules and regulations
thereunder.
Section 3.21 Affiliate Transactions. No executive officer or director of
the Company or any Company Subsidiary or any person owning 5% or more of the Company Common Stock
or, to the Company’s knowledge, any affiliate or family member of any such officer, director or
owner (an “Affiliated Party”) is a party to any Contract with or binding upon the Company or any
Company Subsidiary or has any material interest in any property or assets owned by the Company or
any Company Subsidiary or has engaged in any transaction (other than those related to employment or
24
incentive arrangements) with the Company that is material to the Company within the last 12
months, in each case, of the type that would be required to be disclosed under Item 404 of
Regulation S-K under the Securities Act.
Section 3.22 No Other Representations or Warranties. Except for the
representations and warranties contained in Section 4 and any certificate delivered by Parent or
Merger Sub in connection with the Closing, the Company acknowledges and agrees that none of Parent,
Merger Sub or any other person on behalf of Parent or Merger Sub makes, nor has the Company relied
upon or been induced by, any other express or implied representation or warranty with respect to
Parent or Merger Sub or with respect to any other information provided to the Company in connection
with the transactions contemplated hereunder.
Except as set forth on the disclosure schedule delivered by Parent to the Company on the date
hereof (the “Parent Disclosure Schedule”), Parent and Merger Sub hereby jointly and severally make
the representations and warranties set forth in this Section 4 to the Company. The section numbers
of the Parent Disclosure Schedule are numbered to correspond to the section numbers of this
Agreement to which they refer. Any information set forth in one section of the Parent Disclosure
Schedule will be deemed to apply to each other section or subsection of the Parent Disclosure
Schedule to which its relevance is reasonably apparent on its face.
Section 4.1 Organization. Each of Parent and Merger Sub is a corporation
duly organized, validly existing and in good standing under the laws of the jurisdiction of its
organization. Parent and Merger Sub are duly qualified or licensed as a foreign corporation or
organization to do business, and are in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by them or the nature of their business makes such
qualification or licensing necessary, except for such failures to be so qualified or licensed and
in good standing that would not reasonably be likely to prevent or materially delay Parent’s and
Merger Sub’s ability to consummate the transactions contemplated hereby (a “Parent Material Adverse
Effect”). Parent has made available to the Company a complete and correct copy of the articles of
organization and bylaws or other applicable governing instruments of Parent and Merger Sub.
Section 4.2 Authority to Execute and Perform Agreement. Parent and Merger
Sub have the necessary corporate power and authority to enter into, execute and deliver this
Agreement and to perform fully their obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Parent and Merger Sub and the
consummation of the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent and Merger Sub. This Agreement has been duly executed and
delivered by Parent and Merger Sub and, assuming this Agreement constitutes the valid and binding
obligation of the other parties hereto, constitutes a valid and binding obligation, enforceable
against them in accordance with its terms, except to the extent that enforcement of the rights and
remedies created hereby is subject to bankruptcy, insolvency, reorganization, moratorium and other
similar laws of general application affecting the rights and remedies of creditors and to general
principles of equity (regardless of whether enforceability is considered in a proceeding in equity
or at Law).
25
Section 4.3 No Conflict; Required Filings and Consents.
(a) The execution and delivery by Parent and Merger Sub of this Agreement do not,
and the consummation of the transactions contemplated hereby and compliance with the terms hereof
will not, (i) violate (A) any provision of the certificate of incorporation, bylaws or other
organizational documents of Parent or Merger Sub, (B) subject to the filings and other matters
referred to in Section 4.3(b), any Law applicable to Parent or Merger Sub or their properties or
assets, or (C) any Contract to which Parent or Merger Sub is a party or by which their respective
assets or properties are bound in any material respect (other than the Credit Agreement, dated as
of July 20, 2007, among Parent, VISTAR Management, Inc., a Delaware corporation, Wellspring
Distribution Corp., a Delaware corporation, Wachovia Capital Markets, LLC as Joint Lead Arranger
and Joint Bookrunner, Credit Suisse Securities (USA) LLC, as Joint Lead Arranger, Joint Bookrunner
and Documentation Agent, Wachovia Bank, National Association, as Administrative Agent and
Collateral Agent, GE Capital Markets, Inc., as Joint Bookrunner and Syndication Agent, and the
lenders party thereto, which Parent intends to refinance in connection with the transactions
contemplated hereby), or (ii) require the consent of, or registration, declaration or filing with,
any third party under any Contract to which Parent or Merger Sub is a party or by which their
respective assets or properties are bound, except in the case of clause (i)(B), clause (i)(C) and
clause (ii), any such violations, consents, registrations, declarations or filings that would not
have a Parent Material Adverse Effect.
(b) No consent of, or registration, declaration or filing with, any third party or
Governmental Entity is required to be obtained or made by or with respect to Parent or Merger Sub
in connection with the execution, delivery and performance of this Agreement or the consummation of
the transactions contemplated hereby, other than (i) filing of a pre-merger notification report
under the HSR Act, (ii) the filing with the SEC of such reports under Section 13 of the Exchange
Act as may be required in connection with this Agreement and the transactions contemplated hereby,
(iii) the filing of the Articles of Merger with the Secretary of State of the State of Tennessee
and any appropriate documents with the relevant authorities of the other jurisdictions in which
Parent or Merger Sub is qualified to do business, (iv) compliance with and filings under the merger
control, competition or fair trade Laws of any foreign jurisdiction, if and to the extent required,
(v) as set forth in Section 3.17 of the Company Disclosure Schedule and (vi) such items that have
not had, individually or in the aggregate, a Parent Material Adverse Effect.
Section 4.4 Information in the Proxy Statement. The information supplied
by Parent and Merger Sub expressly for inclusion in the Proxy Statement will not contain at the
time it is first mailed to the shareholders of the Company or at the time of the Company
Shareholders’ Meeting, any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.
Section 4.5 Litigation. As of the date of this Agreement, there is no
Action pending or, to the knowledge of Parent, threatened, against Parent or Merger Sub before any
Governmental Entity that would or seeks to delay or prevent the consummation of the Merger. As of
the date of this Agreement, neither Parent nor Merger Sub is subject to any continuing order of,
consent decree, settlement agreement or other similar written agreement with, or, to the knowledge
of Parent, continuing investigation by, any Governmental Entity, or any order, writ, judgment,
injunction, decree, determination or award of any Governmental Entity that would or seeks to
materially delay or prevent the consummation of the Merger.
26
Section 4.6 Financing. Parent has delivered to the Company true and
complete copies of (i) the Equity Commitment Letters, dated as of the date hereof (collectively,
the “Equity Commitment Letters”), by and between Parent and each of Blackstone Capital Partners V
L.P. and Wellspring Capital Partners IV, L.P. (each, a “Sponsor” and collectively, the “Sponsors”),
respectively, pursuant to which each Sponsor has committed to provide certain of the cash equity
financing to Parent in connection with the transactions contemplated hereby, and (ii) the executed
debt commitment letters, dated as of the date hereof, among (A) Parent, Wellspring Distribution
Corp. (“WDC”), Wachovia Capital Markets, LLC, Wachovia Bank, National Association, Credit Suisse
Securities (USA) LLC, Credit Suisse, Cayman Islands Branch, GE Capital Markets, Inc. and General
Electric Capital Corporation (the “Senior Debt Commitment Letter”) and (B) Parent, WDC,Wachovia
Capital Markets, LLC and Wachovia Investment Holdings, LLC, DLJ Investment Partners, Inc.,
Blackstone Mezzanine Partners II L.P., Blackstone VPS Capital Partners V L.P., Blackstone VPS
Capital Partners V-AC L.P., Blackstone Participation Partnership V VPS L.P., Blackstone Family
Investment Partnership V VPS L.P., Blackstone Family Investment Partnership V-SMD L.P. and
Wellspring Capital Partners IV, L.P. (the “Subordinated Debt Commitment Letter”, and together with
the Senior Debt Commitment Letter, the “Debt Commitment Letters”), pursuant to which the Lenders
have committed to provide the debt financing (the “Debt Financing”) to Parent that is necessary to
consummate the transactions contemplated hereby. The Equity Commitment Letters, together with the
Debt Commitment Letter, are sometimes referred to collectively herein as, the “Commitment Letters,”
and the amounts committed pursuant to the Commitment Letters being, the “Financing.” As of the
date hereof, the commitments contained in the Commitment Letters have not been withdrawn or
rescinded in any respect and the Commitment Letters have not been amended or modified. As of the
date hereof, the Commitment Letters are in full force and effect in the form so delivered and the
Commitment Letters constitute the valid and binding obligations of the Parent, and to the knowledge
of the Parent, the other parties thereto. There are no conditions precedent or other
contingencies, side agreements or other arrangements or understandings related to the funding of
the full amount of the Financing or the terms thereof, other than as set forth in or contemplated
by the Commitment Letters (the “Disclosed Conditions”), and no Person has any right to impose, and
neither the Lenders nor Parent has any obligation to accept (i) any condition precedent to such
funding other than the Disclosed Conditions nor (ii) any reduction to the aggregate amount
available under the Debt Commitment Letters on the Closing Date (nor any term or condition which
would have the effect of reducing the aggregate amount under the Debt Commitment Letters on the
Closing Date). Parent has fully paid all commitment fees required in connection with the Debt
Commitment Letters. Assuming the accuracy of the representations and warranties set forth in
Section 3.3, the aggregate proceeds contemplated by the Commitment Letters will be sufficient when
funded for Parent and the Surviving Corporation to pay the aggregate Merger Consideration, the Cash
Out Amount and any other payments contemplated in this Agreement (including the refinancing of any
outstanding indebtedness of the Company) and to pay all fees and expenses related to the Financing,
the Merger or any other transactions contemplated by this Agreement. As of the date of this
Agreement, Parent does not have any reason to believe that any of the conditions to the Financing
will not be satisfied or that the Financing will not be available to Merger Sub on the Closing
Date. For the avoidance
of doubt, it is not a condition to Closing under this Agreement for Parent
or Merger Sub to obtain the Financing or any alternative financing.
Section 4.7 Guarantee. Concurrently with the execution of this Agreement,
Parent and Merger Sub have delivered to the Company limited guarantees in favor of the Company,
dated the date hereof, of each Sponsor with respect to certain matters on the terms specified
therein (the “Limited Guarantees” ). Each Limited Guarantee is in full force and effect and
constitutes the legal, valid and
27
binding obligations of its respective guarantor, enforceable in accordance with its terms, and has
not been amended, withdrawn or rescinded in any respect.
Section 4.8 Parent and Merger Sub.
(a) Merger Sub has been formed solely for the purpose of engaging in the
transactions contemplated hereby and prior to the Effective Time has engaged in no other business
activities and has incurred no liabilities or obligations other than as contemplated herein. The
authorized capital stock of Merger Sub consists solely of 1,000 shares of common stock, par value
$.01 per share, all of which are validly issued and outstanding. All of the outstanding capital
stock of Merger Sub is, and at the Effective Time will be, directly or indirectly, owned by Parent.
Merger Sub has outstanding no options, warrants, rights or other agreements pursuant to which any
person other than Parent may acquire any equity security of Merger Sub.
(b) Each of Parent and Merger Sub do not own (directly or indirectly, beneficially
or of record) and is not a party to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of, in each case, any shares of capital stock of the
Company (other than as contemplated by this Agreement). There are no Contracts between Parent,
Merger Sub or any affiliate thereof, on the one hand, and any member of the Company’s management or
directors, on the other hand, as of the date hereof that relate in any way to the Company or the
transactions contemplated by this Agreement. Prior to the Company Board of Directors approving
this Agreement, the Merger and the other transactions contemplated thereby for purposes of the
applicable provisions of the Tennessee Business Combination Act, neither Parent nor Merger Sub,
alone or together with any other person, was at any time, or became, an “interested shareholder”
thereunder or has taken any action that would cause any anti-takeover statute under the Tennessee
Business Combination Act to be applicable to this Agreement.
(c) No vote of the stockholders of Parent or the holders of any other securities
of Parent (equity or otherwise) is required by any applicable Law, the certificate of incorporation
or bylaws or other equivalent organizational documents of Parent in order for Parent to consummate
the transactions contemplated by this Agreement.
Section 4.9 Brokers. Other than Wachovia Capital Markets, LLC, Xxxxxxx,
Xxxxx & Co., and Credit Suisse Securities (USA) LLC, no broker, finder, agent or similar
intermediary has acted on behalf of Sponsors, Parent or Merger Sub in connection with this
Agreement or the transactions contemplated hereby, and there are no brokerage commissions, finders’
fees or similar fees or commissions payable in connection herewith based on any agreement,
arrangement or understanding with Sponsors, Parent or Merger Sub or any of their respective
affiliates, or any action taken by Sponsors, Parent or Merger Sub or any of their respective
affiliates.
Section 4.10 Solvency. As of the Effective Time, assuming (i)
satisfaction of the conditions to Parent’s and Merger Sub’s obligation to consummate the merger, or
waiver of such conditions, (ii) the accuracy of the representations and warranties in Section 3
hereof (without giving effect to any materiality or Company Material Adverse Effect qualifiers) and
(iii) solely for the purposes of this Section 4.10, the projections or forecasts provided by the
Company to Parent prior to the date hereof have been prepared in good faith on reasonable
assumptions, immediately after giving effect to all of the transactions contemplated by this
Agreement, including, without limitation, the Financing, any alternative financing and the payment
of the aggregate Merger Consideration and the consideration in respect of the Cash Out Amount, any
other repayment or refinancing of debt that may be
28
contemplated in the Debt Commitment Letters, and payment of all related fees and expenses,
each of Parent and the Surviving Corporation will be Solvent. For purposes of this Section 4.10,
the term “Solvent” with respect to each of Parent and the Surviving Corporation means that, as of
any date of determination, (a) the amount of the fair saleable value of the assets of Parent and
its Subsidiaries taken as a whole and the Surviving Corporation and its Subsidiaries, taken as a
whole, respectively exceeds, as of such date, the sum of (i) the value of all liabilities of Parent
and its Subsidiaries taken as a whole and the Surviving Corporation and its Subsidiaries taken as a
whole, respectively, including contingent and other liabilities, as of such date, as such terms are
generally determined in accordance with the applicable Tennessee (in the case of the Surviving
Corporation), Colorado (in the case of Parent) and federal (in the case of each of the Surviving
Corporation and Parent) Laws governing determinations of the solvency of debtors, and (ii) the
amount that will be required to pay the probable liabilities of Parent and its Subsidiaries taken
as a whole and the Surviving Corporation and its Subsidiaries taken as a whole, on its existing
debts (including contingent liabilities) as such debts become absolute and matured; (b) each of
Parent and the Surviving Corporation, as applicable, will not have, as of such date, an
unreasonably small amount of capital for the operation of the business in which it is engaged or
proposed to be engaged by Parent or the Surviving Corporation following such date; (c) each of
Parent and the Surviving Corporation, as applicable, will be able to pay its liabilities, including
contingent and other liabilities, as they mature in the ordinary course of business; and (d) the
satisfaction of any other solvency requirement set forth in the TBCA or pursuant to the Colorado
Business Corporation Act, or federal Laws applicable to Parent or the Surviving Corporation. For
the purposes of this definition, “not have an unreasonably small amount of capital for the
operation of the businesses for which it is engaged or proposed to be engaged” means that Parent or
the Surviving Corporation, as applicable, will be able to generate enough cash from operations,
asset dispositions or refinancing, or a combination thereof, to meet its obligations as they become
due.
Section 4.11 No Other Representations or Warranties; Investigation by
Parent. Parent and Merger Sub each acknowledges and agrees that (a) it has had an opportunity
to discuss the business of the Company and the Company Subsidiaries with the management of the
Company, (b) it has had reasonable access to (i) the books and records of the Company and the
Company Subsidiaries and (ii) the electronic dataroom maintained by the Company through Intralinks,
Inc. for purposes of the transactions contemplated by this Agreement, (c) it has been afforded the
opportunity to ask questions of and receive answers from executive officers of the Company and (d)
except for the representations and warranties contained in this Section 3, and any certificates
delivered by the Company in connection with Closing, neither Parent nor Merger Sub have 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 made available to Parent or Merger Sub in
connection with the transaction contemplated hereunder. Neither the Company nor any other person
will have or be subject to any liability or indemnification obligation to Parent, Merger Sub or any
other person resulting from the distribution to Parent or Merger Sub, or Parent’s or Merger Sub’s
use of, any such information, including any information, documents, projections, forecasts or other
material made available to Parent or Merger Sub or their respective representatives in certain data
rooms or management presentations in expectation of the transactions contemplated by this
Agreement, unless any such information is expressly included in a representation or warranty
contained in Section 3 or in the corresponding section of the Company Disclosure Schedule.
29
Section 5. Conduct of Business Pending the Merger; Solicitation; Change in
Recommendation; Employee Matters.
Section 5.1 Conduct of Business. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement or the Effective
Time, the Company and each Company Subsidiary shall, except as required by Law, as expressly
required by this Agreement, as set forth on Section 5.1 of the Company Disclosure Schedule or to
the extent that Parent shall otherwise consent in writing (not to be unreasonably withheld or
delayed), conduct its business in the ordinary course consistent with past practice. Without
limiting the generality of the foregoing, and to the extent consistent therewith, without the prior
written consent of Parent (not to be unreasonably withheld or delayed), during the period from the
date hereof and continuing until the earlier of the termination of this Agreement or the Effective
Time, the Company shall observe the following covenants, in each case except as required by Law or
as expressly required by this Agreement or as set forth on Section 5.1 of the Company Disclosure
Schedule:
(i) Preservation of the Business; Maintenance of Properties,
Material Contracts. Use commercially reasonable efforts to, on a basis
consistent with past practices, (A) preserve the business of the Company and the
Company Significant Subsidiaries, including without limitation, keeping available
the services of the current officers, employees and consultants of the Company and
the Company Significant Subsidiaries and to preserve the present relationships of
the Company and the Company Significant Subsidiaries with its employees, customers,
suppliers and other persons with which the Company or any Company Significant
Subsidiary has significant business relations, (B) advertise, promote and market the
Company’s products in a manner consistent with past practice, (C) keep the Company’s
material properties substantially intact, to preserve its goodwill and business, to
maintain all physical properties in the current condition, reasonable wear and tear
excepted, (D) perform and comply in all material respects with the terms of its
Material Contracts, (E) maintain, and comply in all material respects with, all
material Permits, and (F) not solicit, or take or permit to be taken any action to
cause, any employee, material customer or material supplier to terminate or
materially and adversely alter its relationship with the Company, other than in the
ordinary course of business;
(ii) Notice to Labor Organizations. Engage in all
notifications to and communications to and with any labor organization representing
employees of the Company or the Company Subsidiaries as may be required by law or
any collective bargaining agreement, in connection with the transactions
contemplated by this Agreement;
(iii) WARN. Between the date hereof and the Closing Date,
cause the Company and the Company Subsidiaries to not effect or permit a “plant
closing” or “mass layoff” as those terms are defined in WARN without complying in
all material respects with the notice requirements and all other provisions of WARN;
and
(iv) Insurance. Use commercially reasonable efforts to
keep in effect general liability, casualty, product liability, workers compensation,
directors’ and
30
officers’ liability and other material insurance policies or self-insurance
programs in coverage, scope and amounts substantially similar to those in effect at
the date hereof.
(i) Compensation. (1) Except as permitted by Section
5.1(b)(ii), change the compensation payable to any Company Employee or enter into or
amend any employment, change in control, bonus, severance, termination, retention or
other agreement or arrangement with any Company Employee, or adopt, or increase the
benefits (including fringe benefits), severance or termination pay under, any Plan
or any employee benefit plan, program, policy, arrangement or agreement that would
be a Plan if it were in existence on the date of this Agreement or otherwise, except
(A), in each case, as required by Law or in accordance with existing agreements or
Plans disclosed under Section 3.14(a) of the Company Disclosure Schedule, and (B) in
the case of compensation for employees, agents or consultants, in the ordinary
course of business, reasonably consistent with past practice (but expressly
excluding officers, directors and any Company Employee who is a party to a change in
control agreement (collectively, “Company Managers”), or (2) make any loans or
advances to any Company Employee or make any change in its existing borrowing or
lending arrangements for or on behalf of any such persons pursuant to a Plan or
otherwise; provided, however, that the foregoing clauses (1) and (2) shall not
restrict the Company or any of the Company Subsidiaries from entering into or making
available to newly hired employees or to employees in the context of promotions
based on job performance or workplace requirements (excluding in each case any
person who is a Company Manager or whose total annual compensation is expected to
exceed $200,000), in each case in the ordinary course of business, plans,
agreements, benefits and compensation arrangements (including incentive grants) that
have a value that is consistent with the past practice of making compensation and
benefits available to newly hired or promoted employees in similar positions (except
that the Company and the Company Subsidiaries may not enter into any new severance
or change in control agreements, other than ordinary course severance agreements
required under the Company’s severance plans);
(ii) Capital Stock. Split, combine or reclassify any of
its capital stock or make any change in the number of shares of its capital stock
authorized, issued or outstanding or grant, sell or otherwise issue or authorize the
issuance of any share of capital stock, any other voting security or any security
convertible into, or any option, warrant or other right to purchase (including any
equity-based award), or convert any obligation into, shares of its capital stock or
any other voting security, declare, set aside, make or pay any dividend or other
distribution with respect to any shares of its capital stock (whether in cash,
assets, stock or other securities of the Company or the Company Subsidiaries), sell
or transfer any shares of its capital stock, or acquire, redeem or otherwise
repurchase any shares of its capital stock or any rights, warrants or options to
purchase any of its capital stock, or any securities convertible into or
exchangeable for any such shares; provided, however, that the foregoing clause shall
not restrict: (1) the exercise of Company Options or SARs after the date hereof, (2)
the exercise of “Options” under the ESPP, (3) the repurchase or cancellation of
Restricted Shares or other shares of Company Common Stock in accordance with the
31
terms of the applicable award agreements or similar arrangements to satisfy
withholding obligations upon the vesting of Restricted Shares, SARs or the exercise
of Company Options, or (4) the acceptance of shares of Company Common Stock as
payment of the exercise price of Company Options or for withholding taxes incurred
in connection with the exercise of Company Options in accordance with the terms of
the applicable award agreements;
(iii) Charter, By Laws and Directors. Amend, or otherwise
alter or modify in any respect, the charter or bylaws or similar organizational
document of the Company or, in any manner adverse to Parent, any Company Significant
Subsidiary;
(iv) Acquisition or Disposition of Assets. (1) Acquire or
license (as licensor) (including by merger, consolidation or acquisition of stock or
assets or any other business combination), or enter into any binding memorandum of
understanding, letter of intent or other agreement or other agreement, arrangement
or understanding to acquire or license (as licensor) (x) any corporation,
partnership, other business organization or any division thereof or equity interests
therein or (y) assets thereof, except in the case of clause (y) for an amount less
than $1,000,000 individually or $2,500,000 in the aggregate or for purchases of
inventory in the ordinary course consistent with past practice, (2) enter into a new
line of business, (3) sell or transfer, or mortgage, allow to expire, be cancelled
or lapse, pledge, lease (as lessor), license (as licensor), terminate any lease (as
lessor) or license (as licensor), or otherwise dispose of or encumber, in whole or
in part, or subject to any Liens (other than Permitted Liens) any tangible or
intangible asset, right or property, or related assets, rights or properties of the
Company with a value in excess of $2,500,000, other than sales of inventory in the
ordinary course of business consistent with past practice or (4) close down or
otherwise cease operations at any distribution facilities utilized by the Company or
the Company Subsidiaries;
(v) Capital Expenditures. Make any capital expenditures in
excess of the amount permitted in Section 5.2(b)(v) of the Company Disclosure
Schedule;
(vi) Accounting Policies. Except as may be required as a
result of a change in Law or GAAP (or any interpretation thereof), change any of the
accounting practices or principles used by it;
(vii) Writing Up or Down Assets. Write up, write down or
write off the book value of any material assets of the Company and the Company
Subsidiaries, other than (i) in the ordinary course of business and consistent with
past practice or (ii) as may be required by GAAP or the Financial Accounting
Standards Board;
(viii) Legal. Settle or compromise any Action which (a) is
material to the Company and the Company Subsidiaries, taken as a whole, (b) together
with other Actions settled or compromised after the date hereof, requires payment to
or by the Company or any Company Subsidiary (exclusive of attorney’s fees, including
success fees) in excess of $1,500,000, individually or in the aggregate, (c)
involves injunctive or equitable relief or restrictions on the business activities
of the Company or the Company Subsidiaries, (d) would involve the issuance of
Company securities or (e) relates to the transactions contemplated hereby;
32
(ix) Extraordinary Transactions. Adopt a plan of complete
or partial liquidation, dissolution, merger, consolidation, or recapitalization of
the Company or any of the Company Subsidiaries (other than this Agreement and the
Merger);
(x) Incurrence of Indebtedness. (1) Incur, assume,
guarantee, prepay or otherwise become liable for any indebtedness for borrowed money
(directly, contingently or otherwise) (other than letters of credit or similar
arrangements issued to or for the benefit of suppliers in the ordinary course of
business and borrowings in the ordinary course of business under the Company’s
existing revolving credit facility), (2) issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or any of the
Company Subsidiaries, guarantee any debt securities of another Person, enter into
any “keep well” or other agreement to maintain any financial statement condition of
another Person or enter into any arrangement having the economic effect of any of
the foregoing, (3) make any loans, advances or capital contributions to, or
investment in, any other Person, other than the Company or any of its direct or
indirect wholly owned Company Subsidiaries or (4) become a party to any hedging,
derivatives or similar contract or arrangement;
(xi) Material Contracts. (1) Modify, amend, terminate or
waive any rights under any Material Contract in any material respect, or (2) enter
into, or modify, amend, terminate or waive any rights under, any new Contract (A)
that would be a Material Contract if entered into prior to the date hereof unless
such contract is both (x) entered into, modified, amended or terminated in the
ordinary course of business consistent with past practice and (y) not included
within clauses (ii), (iii), (vii), (viii) or (ix) of the definition of Material
Contract or (B) that contains a change-in-control provision in favor of the other
party or parties thereto or would otherwise require a payment to or give rise to any
rights to such other party or parties in connection with the transactions
contemplated hereby;
(xii) Parent’s Financing. Enter into any transaction,
including any merger, acquisition, joint venture, disposition, lease, contract or
debt or equity financing that would reasonably be expected to impair, delay or
prevent Parent’s obtaining the financing contemplated by the Commitment Letters;
(xiii) Plans. Except (i) as required by Law (including
Section 409A of the Code), (ii) Plans set forth on Section 3.14(a) of the Company
Disclosure Schedule, as in existence on the date hereof, or (iii) as permitted under
this Agreement, establish, adopt, enter into, amend or terminate any Plan or any
plan, agreement, program, policy or other arrangement that would be a plan if it
were in existence on the date of this Agreement, pay any discretionary cash bonuses
to any Company Employee, change in any material respect the manner in which
contributions to any such Plan or arrangement are made or the basis on which such
contributions are determined or allow for the commencement of any new offering
periods under the ESPP;
(xiv) Collective Bargaining. Enter into, establish, adopt
or amend any collective bargaining agreement or other agreement involving unions,
except as in the course of ordinary business, in accordance with applicable Law and
with advance notice to Parent and good faith consultation concerning the terms and
the status of
33
negotiations, with the final decision as to the terms and time of execution to
be made solely by the Company;
(xv) Intellectual Property. Sell, lease (as lessor),
license (as licensor), allow to lapse, abandon, invalidate, transfer or otherwise
dispose of any material Intellectual Property, in whole or in part, other than
non-exclusive licenses or similar dispositions in the ordinary course of business;
(xvi) Leases. Enter into any lease for any real property
requiring payments in excess of $150,000 annually by the Company or any Company
Subsidiary;
(xvii) Customers and Suppliers. (1) Enter into or
terminate any Contract with a customer of the Company or any Company Subsidiary that
would provide or provides in excess of $40 million in annual revenues to the Company
and the Company Subsidiaries; provided, that, no consent of Parent shall be required
to enter into such Contract pursuant to this Section 5.2(b)(xvii)(1) to the extent
that Parent is also competing for such Contract or (2) enter into any Contract with
a supplier for a term of three (3) years or more;
(xviii) Tax Matters. Change any method of Tax accounting,
make or change any Tax election, file any amended Tax Return, settle or compromise
any Tax liability, agree to an extension or waiver of the statute of limitations
with respect to the assessment or determination of Taxes, enter into any closing
agreement with respect to any Tax or surrender any right to claim a Tax refund; or
(xix) Obligations. Obligate itself to do any of the
foregoing.
Section 5.2 Solicitation; Change in Recommendation.
(a) During the period beginning on the date of this Agreement and continuing until
12:01 a.m. (New York City time) on the 51st day following the date of this Agreement
(the “No-Shop Period Start Date”), the Company and the Company Subsidiaries and their respective
officers, directors, employees, agents, advisors and other representatives (such persons, together
with the Company Subsidiaries, collectively, the “Representatives”) shall have the right to: (i)
initiate, solicit, facilitate and encourage Acquisition Proposals, including by way of providing
access to non-public information to any other person or group pursuant to, and only pursuant to, an
Acceptable Confidentiality Agreement; provided that the Company shall promptly make available to
Parent and Merger Sub any non-public information concerning the Company or the Company Subsidiaries
that is made available to any person given such access which was not previously made available to
Parent
34
and Merger Sub; provided, further, that the Company shall not provide certain competitively
sensitive information set forth on Annex B hereto to any Person engaged in the marketing and
distribution of food and non-food products to independent restaurants, hotels, cafeterias, schools,
healthcare facilities and other institutional customers, franchises and corporate-owned units of
casual and family dining and quick-service restaurants (collectively, “Food Distribution
Providers”) with annual revenues in excess of $5 billion or any Affiliate thereof unless such Food
Distribution Provider has made a Superior Proposal at a higher price than the Per Share Price and
(x) completed legal, financial and accounting due diligence (other than with respect to the
withheld information), (y) provided firm financing commitments to the Company, and (z) agreed to
contract terms and conditions in each case (including with respect to any regulatory filings and
approvals) no less favorable in the aggregate to the Company than those contained in this
Agreement; and (ii) enter into and maintain or continue discussions or negotiations with respect to
Acquisition Proposals or otherwise cooperate with or assist or participate in, or facilitate any
inquiries, proposals, discussions or negotiations regarding an Acquisition Proposal. For purposes
of this Agreement, “Acceptable Confidentiality Agreement” means a confidentiality agreement that
contains provisions that are no less favorable in the aggregate to the Company than those contained
in the Confidentiality Agreements (it being understood and agreed that such confidentiality
agreement need not prohibit the making or amendment of any Acquisition Proposal). From the date of
this Agreement until the Effective Time or, if earlier, the termination of this Agreement in
accordance with Section 8, the Company shall use commercially reasonable efforts (it being
understood such efforts do not include an obligation to commence litigation) to enforce the
employee non-solicit/no-hire provisions of any confidentiality agreement entered into with any
person whether prior to, on or after the date of this Agreement and the provision thereof requiring
the other party thereto to keep confidential any proprietary, confidential information about the
Company obtained by such person pursuant to such confidentiality agreement (it being understood
that the Company may provide any consent and grant any approval contemplated by any such
confidentiality agreement including, without limitation, any consent or approval necessary to
permit such other party to make an Acquisition Proposal; provided, however, that if the Company
waives the standstill provision in any such confidentiality agreement, it will waive the standstill
provision in the Confidentiality Agreements).
(b) Except as permitted by this Section 5.2 and except as may relate to any
Excluded Party, the Company and the Company Subsidiaries and their respective directors and
officers shall, and the Company shall cause the other Representatives, to (i) on the No-Shop Period
Start Date, immediately cease any discussions or negotiations with any persons that may be ongoing
with respect to an Acquisition Proposal; and (ii) from the No-Shop Period Start Date until the
Effective Time or, if earlier, the termination of this Agreement in accordance with Section 8, not
(A) solicit, initiate or knowingly facilitate or encourage (including by way of furnishing
non-public information) any inquiries regarding, or the making of any proposal or offer that
constitutes, or could reasonably be expected to result in, an Acquisition Proposal or (B) engage
in, continue or otherwise participate in any discussions or negotiations regarding an Acquisition
Proposal. No later than 48 hours after the No-Shop Period Start Date, the Company shall notify
Parent in writing of the number of Excluded Parties, the identity of each such Excluded Party, and
the Company shall furnish to Parent (within such 48 hour period) a copy of the Acquisition Proposal
made by each such Excluded Party.
(c) Notwithstanding anything to the contrary contained in Section 5.2(b) but
subject to the last sentence of this Section 5.2(c), if, at any time on or after the No-Shop Period
Start Date and prior to obtaining the Company Shareholder Approval, the Company or any of the
Representatives receives an Acquisition Proposal by any person or group, which Acquisition
35
Proposal was made on or after the No-Shop Period Start Date and which did not arise from or in
connection with a breach of this Section 5.2, (i) the Company and the Representatives may contact
such person or group to clarify the terms and conditions thereof and (ii) if the Company Board of
Directors determines in good faith (A) after consultation with its financial advisor and outside
legal counsel, that such Acquisition Proposal constitutes or could reasonably be expected to lead
to a Superior Proposal and (B) after consultation with outside legal counsel, that failure to take
such action could reasonably be expected to result in a breach of its fiduciary duties under
applicable Law, the Company and Representatives may (x) furnish, pursuant to an Acceptable
Confidentiality Agreement, information (including non-public information) with respect to the
Company and the Company Subsidiaries to the person or group who has made such Acquisition Proposal
(provided that the Company shall promptly make available to Parent and Merger Sub any non-public
information concerning the Company or the Company Subsidiaries that is made available to any person
given such access which was not previously made available to Parent and Merger Sub), and (y) engage
in or otherwise participate in discussions and negotiations regarding such Acquisition Proposal.
From and after the No-Shop Period Start Date, the Company shall promptly advise Parent of the
receipt by the Company of any Acquisition Proposal made on or after the No-Shop Period Start Date
or any request for non-public information made by any person or group that has informed the Company
it is considering making an Acquisition Proposal or any request for discussions or negotiations
with the Company or the Representatives relating to an Acquisition Proposal (in each case within 24
hours of receipt thereof), and the Company shall provide to Parent (within such 24 hour time frame)
the number of persons or group making such Acquisition Proposals and a written summary of the
material terms of such Acquisition Proposal (including the identity of the person or group making
the Acquisition Proposal). Without limiting the foregoing, from and after the No-Shop Period Start
Date, the Company will also promptly notify Parent orally and in writing if it determines to begin
providing information or to engage in discussions regarding an Acquisition Proposal. Following the
No-Shop Period Start Date, the Company shall keep Parent informed on a reasonably current basis of
any material change to the terms and conditions of any Acquisition Proposal (which, for the
avoidance of doubt, includes any amendment or modification to any Acquisition Proposal made by an
Excluded Party). The Company agrees that it and the Company Subsidiaries will not enter into any
confidentiality agreement with any person subsequent to the date hereof which prohibits the Company
from providing such information to Parent. Notwithstanding the foregoing, the parties agree that,
notwithstanding the commencement of the obligations of the Company under Section 5.2(b) on the
No-Shop Period Start Date, the Company may, prior to obtaining the Company Shareholder Approval,
continue to engage in the activities described in clause (i) and/or (ii) of Section 5.2(a) with
respect to any Excluded Parties on and after the No-Shop Period Start Date, including with respect
to any amended or revised proposal submitted by such Excluded Parties on or after the No-Shop
Period Start Date, and this Section 5.2(c) shall not apply with respect thereto.
(d) For purposes of this Agreement, “Excluded Party” means any person, group of
persons or group that includes any person (so long as such person and the other members of such
group, if any, who were members of such group immediately prior to the No-Shop Period Start Date
constitute at least 50% of the equity financing of such group at all times following the No-Shop
Period Start Date and prior to the termination of this Agreement) from whom the Company or any of
the Representatives has received a written Acquisition Proposal after the execution of this
Agreement and prior to the No-Shop Period Start Date that the Company Board of Directors believes
in good faith is bona fide and constitutes or could reasonably be expected to result in a Superior
Proposal; provided that any Excluded Party shall cease to be an Excluded Party for all purposes
under this Agreement at such time as the Acquisition Proposal (as such Acquisition Proposal may be
revised during the course of ongoing negotiations, in which event it may temporarily cease to be a
Superior
36
Proposal or an Acquisition Proposal that could reasonably be expected to result in a Superior
Proposal, so long as such negotiations are ongoing and, the Company Board of Directors in good
faith determines that, it subsequently constitutes a Superior Proposal or could reasonably be
expected to result in a Superior Proposal) made by such person fails to constitute either a
Superior Proposal or, in the good faith judgment of the Company Board of Directors, an Acquisition
Proposal that could reasonably be expected to result in a Superior Proposal.
(e) For purposes of this Agreement, “Acquisition Proposal” means any inquiry,
offer or proposal, on its most recently amended and modified terms, from any person or group other
than Parent or any of its affiliates relating to any transaction or proposed transaction or series
of related transactions involving: (A) any direct or indirect acquisition or purchase by any person
or “group” (as defined under Section 13(d) of the Exchange Act) of a twenty percent (20%) interest
or more in the total outstanding shares of equity or voting securities of the Company or any
Company Significant Subsidiary, or any tender offer or exchange offer that if consummated would
result in any person or “group” beneficially owning twenty percent (20%) or more of the total
outstanding shares of equity or voting securities of the Company, (B) any sale or disposition of
consolidated assets of the Company (including for this purpose the outstanding assets, rights and
equity securities of the Company Subsidiaries) to any person or “group” for consideration equal to
twenty percent (20%) or more of the aggregate fair market value of all of the outstanding shares of
Company Common Stock, or (C) any consolidation, merger, business combination, recapitalization,
liquidation, dissolution or similar transaction with respect to the Company or any Company
Subsidiary whose business constitutes 20% percent or more of the net revenues, net income or assets
of the Company and the Company Subsidiaries, taken as a whole. For purposes of this Agreement, a
“Superior Proposal” means an Acquisition Proposal made in writing and not solicited in violation of
Section 5.2(b), on its most recently amended and modified terms (with all percentages in the
definition of Acquisition Proposal changed to 50%), that is on terms that the Company Board of
Directors determines in its good faith judgment (after consultation with its financial advisor and
outside legal counsel) would, if consummated, be more favorable to the Company’s shareholders from
a financial point of view than the transactions contemplated hereby (x) after taking into account
the likelihood of consummation (as compared to the transactions contemplated hereby) and (y) after
taking into account all material legal, financial (including the financing terms of any such
Acquisition Proposal), regulatory or other aspects of such Acquisition Proposal.
(f) Except as set forth in this Section 5.2, neither the Company Board of
Directors nor any committee thereof shall (i) withdraw, qualify or modify, or propose publicly to
withdraw, qualify or modify in a manner adverse to Parent, the Company Recommendation (as defined
in Section 6.2 below); (ii) approve or recommend, or propose publicly to approve or recommend, any
Acquisition Proposal (any of the actions referred to in the foregoing clauses (i) and (ii), whether
taken by the Company Board of Directors or a committee thereof, an “Adverse Recommendation
Change”); or (iii) cause or allow the Company or any of the Company Subsidiaries to enter into any
letter of intent, acquisition agreement or any similar agreement or understanding (other than an
Acceptable Confidentiality Agreement) relating to an Acquisition Proposal.
(g) (i) Notwithstanding anything to the contrary in this Agreement, at any time
prior to obtaining the Company Shareholder Approval, if (1) the Company has received a written
Acquisition Proposal that has not been withdrawn or abandoned and that the Company Board of
Directors concludes in good faith constitutes a Superior Proposal after giving effect to all of the
adjustments which may be offered by Parent pursuant to clause (B) below or (2) there has occurred a
material development or change in circumstances occurring or arising after the date hereof that was
37
not known to the Company or the Company Board of Directors as of or prior to the date hereof
(and not relating to any Acquisition Proposal) (such material development or change in
circumstances an “Intervening Event”), and the Company Board of Directors determines in good faith
after consultation with outside legal counsel that, in light of such Intervening Event, the failure
to effect an Adverse Recommendation Change would be a breach of its fiduciary duties under
applicable Law, the Company Board of Directors may (x) make an Adverse Recommendation Change and/or
(y) in the case of clause (1) above only, terminate this Agreement to enter into a definitive
agreement with respect to such Superior Proposal if the Company Board of Directors determines in
good faith, after consultation with outside legal counsel, that failure to do so could reasonably
be expected to result in a breach of its fiduciary duties under applicable Laws; provided, however,
the Company Board of Directors may not effect an Adverse Recommendation Change pursuant to the
foregoing clause (x) and/or terminate this Agreement pursuant to the foregoing clause (y) unless:
(A) the Company has complied in all material respects with this Section
5.2;
(B) the Company shall have provided prior written notice to Parent and
Merger Sub, at least 48 hours in advance (the “Notice Period”), of its intention to
effect an Adverse Recommendation Change in response to such Superior Proposal and/or
to terminate this Agreement to enter into a definitive agreement with respect to
such Superior Proposal, or otherwise make an Adverse Recommendation Change in the
circumstance referred to above, which notice shall specify the material terms and
conditions of any such Superior Proposal (including the identity of the person or
group making the Superior Proposal) or the reasons for such Adverse Recommendation
Change in the absence of an Acquisition Proposal, and contemporaneously with
providing such notice, as applicable, shall have provided a copy of the relevant
proposed transaction agreements with the party making such Superior Proposal and
other material documents, if any; and
(C) prior to effecting such Adverse Recommendation Change in response to
a Superior Proposal or otherwise in the circumstance referred to above and/or
terminating this Agreement to enter into a definitive agreement with respect to such
Superior Proposal, the Company shall, and shall cause its legal and financial
advisors to, during the Notice Period, negotiate with Parent and Merger Sub in good
faith (to the extent Parent and Merger Sub desire to negotiate) to make such
adjustments to the terms and conditions of this Agreement so that such Acquisition
Proposal ceases to constitute a Superior Proposal or such Adverse Recommendation
Change is no longer required. In the event that during the Notice Period any
revisions are made to the Superior Proposal and the Company Board of Directors in
its good faith judgment determines such revisions are material (it being agreed that
any change in the purchase price in such Superior Proposal shall be deemed a
material revision), the Company shall be required to deliver a new written notice to
Parent and Merger Sub and to comply with the requirements of this Section 5.2(g)(i)
with respect to such new written notice, except that the Notice Period shall be
reduced to 24 hours.
(ii) Notwithstanding anything to the contrary herein, the Company shall not be entitled to
enter into any agreement (other than an Acceptable Confidentiality Agreement) with respect to a
Superior Proposal unless this Agreement is concurrently terminated by its terms pursuant to Section
8.1(g) and the Company has paid concurrently to Parent the termination fee payable pursuant to
Section 8.2(a)(ii). With respect to persons with whom discussions or
38
negotiations have been terminated, the Company shall use its commercially reasonable efforts
to require such persons to promptly return or destroy in accordance with the terms of the
applicable confidentiality agreement any confidential information furnished by the Company. No
Adverse Recommendation Change shall change the approval of the Company Board of Directors for
purposes of causing any state takeover statute or other state Law to be inapplicable to the
transactions contemplated by this Agreement. Subject to the restrictions on the Company’s ability
to make an Adverse Recommendation Change as set forth in Section 5.2(g)(i), nothing contained in
this Agreement shall prohibit the Company or the Company Board of Directors from complying with
Rules 14d-9 or 14e-2(a) promulgated under the Exchange Act or from making any disclosure to the
Company’s shareholders if, in the good faith judgment of the Company Board of Directors, after
consultation with outside counsel, the failure to do so would reasonably be expected to violate its
obligations under applicable Law or is otherwise required under applicable Law; provided, however,
that neither the Company nor the Company Board of Directors (or any committee thereof) shall be
permitted to recommend that the Company shareholders tender any securities in connection with any
tender or exchange offer (or otherwise approve, endorse or recommend any Acquisition Proposal),
unless in each case, in connection therewith, the Company Board of Directors effects an Adverse
Recommendation Change; provided further that any such disclosure (other than a “stop, look and
listen” communication or similar communication of the type contemplated by Rule 14d-9(f) under the
Exchange Act) shall be deemed to be an Adverse Recommendation Change unless the Company Board of
Directors expressly reaffirms the Company Recommendation at least two business days prior to the
Company Shareholders’ Meeting if Parent has delivered to the Company a written request to so
reaffirm at least 48 hours (or if 48 hours is impracticable, as far in advance as is practicable)
prior to the time such reaffirmation is to be made.
Section 5.3 Employee Matters.
(a) Without limiting any additional rights that any Continuing Employee may have
under any Plans, until the first anniversary of the Effective Time (the “Benefits Continuation
Period”), the Surviving Corporation shall pay or cause to be paid to each employee who is a
continuing employee of the Company, the Company Subsidiaries or the Surviving Corporation as of the
Effective Time (the “Continuing Employees”) salary, wages, cash incentive opportunities, severance,
medical and other welfare benefit plans, programs and arrangements and benefits which are at least
comparable in the aggregate to those provided prior to the Closing Date under the Plans or
otherwise; provided, that with respect to Continuing Employees who are subject to employment and/or
change in control agreements or arrangements that have not been superseded by agreements with
Parent (the “Employment Agreements”), the Surviving Corporation shall expressly assume such
Employment Agreements and fulfill all obligations thereunder in lieu of the foregoing. During the
Benefits Continuation Period, the Surviving Corporation shall pay, subject to such terms and
conditions as it shall establish and the terms of applicable Employment Agreements, any such
Continuing Employee whose employment is involuntarily terminated by Parent, the Surviving
Corporation or any of their Subsidiaries without cause an amount of severance pay in cash equal to
the amount of cash severance pay that would have been payable to such Continuing Employee under the
terms of the severance policy maintained by the Company and applicable to such Continuing Employee
immediately prior to the date of this Agreement or, if applicable, such Continuing Employee’s
Employment Agreement.
(b) The Surviving Corporation shall (i) waive any applicable pre-existing
condition exclusions and waiting periods with respect to participation and coverage requirements in
any replacement or successor welfare benefit plan of the Surviving Corporation that a Continuing
39
Employee is eligible to participate in following the Effective Time to the extent such
exclusions or waiting periods were inapplicable to, or had been satisfied by, such Continuing
Employee immediately prior to the Effective Time under the relevant Plan in which such Continuing
Employee participated, (ii) provide each such Continuing Employee with credit for any co-payments
and deductible paid prior to the Effective Time (to the same extent such credit was given under the
analogous Plan prior to the Effective Time) in satisfying any applicable deductibles or
out-of-pocket requirements and (iii) to the extent that any Continuing Employee is allowed to
participate in any employee benefit plan of Parent, the Surviving Corporation or any of their
subsidiaries following the Effective Time, cause such plan to recognize the service of such
Continuing Employee with the Company and the Company Subsidiaries prior to the Effective Time for
purposes of eligibility to participate, vesting and benefit accrual (but not for benefit accrual
under any defined benefit, retiree welfare, qualified or similar plan) to the extent of such
service.
(c) Parent and Company acknowledge and agree that the provisions contained in this
Section 5.3 shall not interfere with the right of Parent or the Surviving Corporation to amend,
modify or terminate any Plan (subject to the provisions of Section 5.3(a) and (b) above) or to
terminate the employment of any Continuing Employee for any reason, subject to the terms of
applicable Employment Agreements. The provisions of this Section 5.3 are for the sole benefit of
the parties to this Agreement and nothing herein, expressed or implied, is intended or shall be
construed to confer upon or give to any person (including for the avoidance of doubt any current or
former employees, directors, or independent contractors of any of the Company or any Company
Subsidiary, Parent or any of its Subsidiaries, or on or after the Effective Time, the Surviving
Company or any of its Subsidiaries), other than the parties hereto and their respective permitted
successors and assigns, any legal or equitable or other rights or remedies (with respect to the
matters provided for in this Section 5.3) under or by reason of any provision of this Agreement.
(d) Prior to the Effective Time, the Company shall take all such steps as may be
reasonably necessary (to the extent permitted under applicable Law) to cause any dispositions of
the Company Common Stock (including derivative securities with respect to the Company Common Stock)
resulting from the Merger or the other transactions contemplated by Section 2 of this Agreement by
each individual who is subject to the reporting requirements of Section 16(a) of the Exchange Act
with respect to the Company to be exempt under Rule 16b-3 promulgated under the Exchange Act.
Section 6. Additional Agreements.
Section 6.1 Proxy Statement. The Company shall, as soon as practicable
following the date hereof but in any event within twenty (20) business days hereof, prepare and
file with the SEC the Proxy Statement in preliminary form, and each of the Company, Parent and
Merger Sub shall use their reasonable efforts to respond as promptly as practicable to any comments
of the SEC or its staff with respect thereto. The Company shall notify Parent promptly of the
receipt of any comments from the SEC or its staff and of any request by the SEC or its staff for
amendments or supplements to the Proxy Statement or for additional information and shall supply
Parent with copies of all correspondence between the Company or any of its Representatives, on the
one hand, and the SEC or its staff, on the other hand, with respect to the Proxy Statement. The
Company shall use its reasonable best efforts to cause the Proxy Statement to be mailed to the
Company’s shareholders as promptly as practicable after filing with the SEC. If at any time prior
to receipt of the Company Shareholder Approval there shall occur any event that should, upon the
advice of the Company’s outside legal counsel, be set forth in an amendment or supplement to the
Proxy Statement so that the
40
Proxy Statement shall 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 the statements therein,
in light of the circumstances under which they are made, not misleading, the Company shall promptly
prepare, file with the SEC and mail to its shareholders such an amendment or supplement.
Notwithstanding anything to the contrary stated above, prior to filing or mailing the Proxy
Statement or any other SEC filing required in connection with the transactions contemplated hereby
(or, in each case, any amendment or supplement thereto) or responding to any comments of the SEC
with respect thereto, the party responsible for filing or mailing such document shall provide the
other party an opportunity to review and comment on such document or response and shall include in
such document or response comments reasonably proposed by the other party.
Section 6.2 Company Shareholders’ Meeting. The Company shall, as soon as
practicable following the date hereof, duly call, give notice of, convene and hold a meeting of its
shareholders (the “Company Shareholders’ Meeting”) for the purpose of seeking the Company
Shareholder Approval. Subject to Section 5.2, the Company’s Board of Directors (or any committee
thereof) shall recommend adoption and approval of this Agreement and the Merger by the shareholders
of the Company and include such recommendation in the Proxy Statement (the “Company
Recommendation”). Unless such recommendation shall have been modified or withdrawn in accordance
with Section 5.2, the Company shall take all action that is both reasonable and lawful to solicit
from its shareholders proxies in favor of the proposal to approve this Agreement and shall take all
other reasonable actions necessary or advisable to secure the vote or consent of the shareholders
of the Company that are required by the NASDAQ rules or the TBCA. The obligation of the Company to
duly call, give notice of, convene and hold the Company Shareholders’ Meeting shall not be affected
by an Adverse Recommendation Change unless this Agreement has been terminated in accordance with
Section 8.1(g). Without the prior written consent of Parent, adoption of this Agreement is the
only matter (other than procedural matters) which the Company shall propose to be acted upon by its
shareholders at the Company Shareholders’ Meeting.
Section 6.3 Access to Information; Confidentiality. Prior to the
Effective Time, except as otherwise prohibited by applicable Law or the terms of any Contract to
which the Company or any Company Subsidiary is a party prior to the date hereof, or as would be
reasonably expected to violate the attorney-client privilege of the Company or a Company Subsidiary
(it being agreed that the parties shall use their reasonable efforts to cause such information to
be provided in a manner that does not cause such violation, including entering into customary joint
defense agreements), the Company shall, and shall cause the Company Subsidiaries to, afford to
Parent and its directors, employees, representatives, financial advisors, lenders, legal counsel,
accountants and other advisors and representatives, such access to the books and records,
financial, operating and other data, assets, properties, facilities, plants, offices, auditors,
authorized representatives, business and operations of the Company as is reasonably necessary or
appropriate in connection with Parent’s review of the Company with respect to the transactions
contemplated hereby. Any such review shall be conducted at reasonable times upon reasonable
advance notice and under reasonable circumstances so as to minimize disruption to or impairment of
the Company’s business. In order that Parent may have a full opportunity to make such
investigation and, provided such persons are bound by the confidentiality agreement dated as of
June 4, 2007 between Blackstone Management Partners V L.L.C. and the Company or the confidentiality
agreement dated as of August 2, 2007 between Wellspring Capital Management and the Company (the
“Existing Confidentiality Agreement”, and together with any confidentiality agreement executed
prior to the date hereof between the Company and Parent, the “Confidentiality Agreements”), or have
otherwise agreed to be bound to the provisions of such agreement applicable to representatives, the
Company shall furnish the
41
representatives of Parent or Sponsors during such period with all such information and copies
of such documents concerning the affairs of the Company as such representatives may reasonably
request. The information and documents so provided shall be subject to the terms of the
Confidentiality Agreements. No information or knowledge obtained by Parent in any investigation
conducted pursuant to the access contemplated by this Section 6.3 shall affect or be deemed to
modify any representation or warranty made by the Company set forth in this Agreement, or otherwise
impair the rights and remedies available to Parent and Merger Sub hereunder.
(a) As promptly as practicable after the date hereof, each of Parent, Merger Sub
and the Company shall use reasonable best efforts to make and shall cause their affiliates or
owners to use reasonable best efforts to make all filings, notices, petitions, statements,
registrations, submissions of information, application or submission of other documents required by
any Governmental Entity or any foreign labor organization or works council in connection with the
Merger, including, without limitation: (i) the filings identified on Section 3.17 of the Company
Disclosure Schedule that are required to be made with a Governmental Entity, (ii) pre-merger
notification reports to be filed with the United States Federal Trade Commission (the “FTC”) and
the Antitrust Division of the United States Department of Justice (“DOJ”) as required by the HSR
Act, (iii) filings required by the merger notification or control Laws, and any other applicable
antitrust or fair trade Law, of any applicable foreign jurisdiction or filings required by any
foreign labor organization or works council, (iv) any filings required under the Securities Act,
the Exchange Act, any applicable state or securities or “blue sky” laws and the securities laws of
any foreign country, or (v) any other applicable Laws or rules and regulations of any Governmental
Entity relating to, and material to the consummation of, the Merger.
(b) Subject to restrictions required by Law, each of Parent, Merger Sub, and the
Company shall promptly supply, and shall cause their affiliates or owners promptly to supply, the
others with any information which may be reasonably required in order to make any filings or
applications pursuant to Section 6.4(a).
(c) Subject to applicable confidentiality restrictions or restrictions required by
Law, each of Parent, Merger Sub and the Company will notify the others promptly upon the receipt
of: (i) any comments or questions from any officials of any Governmental Entity in connection with
any filings made pursuant hereto or the Merger itself and (ii) any request by any officials of any
Governmental Entity for amendments or supplements to any filings made pursuant to any applicable
Laws and rules and regulations of any Governmental Entity or answers to any questions, or the
production of any documents, relating to an investigation of the Merger by any Governmental Entity.
Whenever any event occurs that is required to be set forth in an amendment or supplement to any
filing made pursuant to Section 6.4(a), Parent, Merger Sub or the Company, as the case may be, will
promptly inform the others of such occurrence and cooperate in filing with the applicable
Governmental Entity such amendment or supplement. Without limiting the generality of the
foregoing, each party shall provide to the other parties (or their respective advisors) upon
request copies of all correspondence between such party and any Governmental Entity relating to the
Merger. The parties may, as they deem advisable and necessary, designate any competitively
sensitive materials provided to the other under this Section as “outside counsel only.” Such
materials and the information contained therein shall be given only to outside counsel of the
recipient and will not be disclosed by such outside counsel to employees, officers, or directors of
the recipient without the advance written consent of the party providing such materials. In
addition, to the extent reasonably
42
practicable, all discussions, telephone calls, and meetings with a Governmental Entity
regarding the Merger shall include representatives of Parent, Merger Sub, and the Company. Subject
to applicable Law, the parties will consult and cooperate with each other in connection with any
analyses, appearances, presentations, memoranda, briefs, arguments, and proposals made or submitted
to any Governmental Entity regarding the Merger by or on behalf of any party.
(d) Upon the terms and subject to the conditions set forth in this Agreement, each
of the Company, on the one hand, and Parent and Merger Sub, on the other hand, agrees to use its
reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done,
and to assist and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective the Merger, including using its reasonable best efforts
to accomplish the following: (i) the causing of all of the conditions set forth in Section 7 to the
other parties’ obligations to consummate the Merger to be satisfied and to consummate and make
effective the Merger and the other transactions contemplated hereby, (ii) the obtaining of all
necessary actions or non-actions, expirations of all necessary waiting periods, waivers, consents,
clearances, approvals, orders and authorizations from Governmental Entities required by it and the
making of all necessary registrations, declarations and filings (including registrations,
declarations and filings with Governmental Entities, if any) required by it, (iii) the obtaining of
all necessary consents, approvals or waivers from third parties (provided, however, in no event
shall obtaining any such consent, approval or waivers be required as a condition to Closing
hereunder), (iv) the defending of any suits, claims, actions, investigations or proceedings,
whether judicial or administrative, challenging this Agreement or the consummation of the
Merger to which it is a party, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity vacated or reversed, and (v) the execution or
delivery of any additional instruments necessary to consummate the Merger, and to carry out fully
the purposes of, this Agreement. In case at any time after the Effective Time any further action
is necessary or desirable to carry out the purposes of this Agreement, the proper officers and
directors of the Surviving Corporation and Parent shall use all reasonable efforts to take, or
cause to be taken, all such necessary actions. Without limiting the foregoing, the parties shall
request and shall use reasonable efforts to obtain early termination of the waiting period provided
for in the HSR Act. Notwithstanding anything herein to the contrary, Parent agrees to take, and to
cause its affiliates and owners to take, whatever action may be necessary to resolve as promptly as
possible any objections relating to the consummation of the Merger as may be asserted under the HSR
Act or any other applicable merger control, antitrust, competition or fair trade Laws with respect
to the Merger.
(e) Prior to the Effective Time, upon Parent’s request, the Company shall take all
reasonable actions and cooperate with Parent in restructuring the Company and the Company
Subsidiaries or similar organizational transactions (the “Parent Restructuring”), it being
understood that the Parent Restructuring shall become effective only on and as of the Effective
Time; provided that none of the Company or any Company Subsidiary shall be required to pay any
out-of-pocket costs or incur any other liability in connection with the Parent Restructuring prior
to the Effective Time except for any liabilities that are conditioned on the Effective Time having
occurred.
Section 6.5 Directors and Officers Indemnification and Insurance.
(a) The charter and/or bylaws of the Surviving Corporation shall contain
provisions with respect to indemnification not less favorable than those set forth in the charter
and bylaws of the Company as of the date hereof, which provisions shall not, except as necessary to
comply with applicable Law, be amended, repealed or otherwise modified for a period of six years
from the Effective Time in any manner that would adversely affect the rights thereunder of
individuals who at, or prior to, the Effective Time were directors or officers of the Company.
43
(b) The Company shall, to the fullest extent permitted under applicable Law or
under the Company’s charter, bylaws or any applicable indemnification agreements, and regardless of
whether the Merger becomes effective, indemnify, defend and hold harmless, and, after the Effective
Time, the Surviving Corporation shall, to the fullest extent permitted under applicable Law,
indemnify, defend and hold harmless, each present and former director or officer of the Company or
any of the Company Subsidiaries (collectively, the “Indemnified Parties”) against any costs or
expenses (including attorneys’ fees), judgments, fines, losses, claims, damages, liabilities and
amounts paid in settlement in connection with any claim, action, suit, proceeding or investigation,
whether civil, criminal, administrative or investigative, arising out of or pertaining to the fact
that the Indemnified Party is or was an officer, director, employee, agent or other fiduciary of
the Company or any Company Subsidiary (including in connection with this Agreement or with respect
to the transactions contemplated by this Agreement), whether in any case asserted or arising before
or after the Effective Time. Without limiting the generality of the foregoing, if any Indemnified
Party becomes involved in any actual or threatened suit, action, claim, proceeding or investigation
with respect to which such Indemnified Party is entitled to indemnification pursuant to this
Section 6.5 after the Effective Time, the Surviving Corporation shall and Parent shall cause the
Surviving Corporation to, to the fullest extent permitted by Law, promptly advance to such
Indemnified Party his or her legal expenses (including the cost of any investigation and
preparation incurred in connection therewith); provided that any person to whom expenses are
advanced provides an undertaking, to the extent then required by the TBCA, to repay such advances
if it is finally judicially determined that such person is not entitled to indemnification. Any
determination required to be made, for purpose of this Section 6.5 in advance of final judicial
determination, with respect to whether an Indemnified Party’s conduct complied with the standards
set forth under Tennessee law, the Company’s charter, bylaws or indemnification agreements, as the
case may be, shall be made by independent counsel mutually acceptable to Parent and the Indemnified
Party.
(c) The Surviving Corporation shall honor and fulfill in all respects the
obligations of the Company pursuant to indemnification agreements with the Company’s directors,
officers, employees or agents existing at or prior to the Effective Time to the fullest extent
permitted by applicable Law or, subject to Section 6.5(a), under the relevant charter or bylaws.
Neither Parent nor the Surviving Corporation shall settle, compromise or consent to the entry of
any judgment in any threatened or actual claim for which indemnification could be sought by an
Indemnified Party hereunder, unless such settlement, compromise or consent includes an
unconditional release of such Indemnified Party from all liability arising out of such claim or
such Indemnified Party otherwise consents in writing to such settlement, compromise or consent.
The Surviving Corporation shall cooperate with an Indemnified Party in the defense of any matter
for which such Indemnified Party is entitled to seek indemnification hereunder.
(d) At or prior to the Effective Time, the Surviving Corporation shall obtain a
“tail” insurance policy from an insurance carrier with the same or better credit rating as the
Company’s current insurance carrier with respect to directors’ and officers’ liability insurance
that provides coverage for the six years following the Effective Time at least comparable in amount
and scope to the coverage provided under the Company’s directors and officers insurance policy in
effect as of the Effective Time for the individuals who are or were directors and officers of the
Company and the Company Subsidiaries for claims arising from facts or events occurring prior to the
Effective Time; provided, that the Surviving Corporation shall not be required to pay in excess of
200% of the last annual premium paid by the Company for such directors’ and officers’ insurance
policy (such amount, the “Premium Cap”); provided further, that if the cost of such “tail”
insurance policy would
44
exceed the Premium Cap, the Surviving Corporation shall obtain the maximum amount of “tail”
insurance coverage that is available for a premium equal to the Premium Cap.
(e) Nothing in this Agreement is intended to, shall be construed to or shall
release, waive or impair any rights to directors’ and officers’ insurance claims under any policy
that is or has been in existence with respect to the Company or the Company Subsidiaries or any of
their officers or directors, it being understood and agreed that the indemnification provided for
in this Section 6.5 is not prior to or in substitution for any such claims under such policies.
(f) This Section shall survive the consummation of the Merger at the Effective
Time, is intended to benefit the Company, the Surviving Corporation and the Indemnified Parties,
shall be binding on all successors and assigns of Parent and the Surviving Corporation and shall be
enforceable by the Indemnified Parties. In the event Parent or 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 of such consolidation or merger, or
(ii) transfers all or substantially all of its properties and assets to any person, then, and in
each such case, proper provision shall be made so that the successors and assigns of Parent or the
Surviving Corporation, as the case may be, shall expressly assume and succeed to the obligations
set forth in this Section 6.5.
Section 6.6 Director Resignations. The Company shall obtain and deliver
to Parent at the Closing evidence reasonably satisfactory to Parent of the resignation, effective
as of the Effective Time, of those directors of the Company or any Company Subsidiary designated by
Parent to the Company in writing at least fifteen (15) business days prior to the Closing.
Section 6.7 Conduct of Business of Parent and Merger Sub Pending the
Merger. Each of Parent and Merger Sub agrees that, between the date of this Agreement and the
Effective Time, it shall not, directly or indirectly, take any action that would, or would
reasonably be expected to, individually or in the aggregate, prevent or materially delay the
ability of Parent or Merger Sub to consummate the Merger or the other transactions contemplated by
this Agreement.
Section 6.8 Financing.
(a) Parent shall use its reasonable best efforts to take, or cause to be taken,
all actions and do, or cause to be done, all things necessary, proper or advisable to arrange the
Debt Financing on the terms and conditions described in the Debt Commitment Letters (provided,
that, Parent and Merger Sub may replace or amend the Debt Financing Commitment to add lenders, lead
arrangers, bookrunners, syndication agents or similar entities which had not executed the Debt
Financing Commitment as of the date hereof, or otherwise so long as the terms would not adversely
impact the ability of Parent and Merger Sub to timely consummate the transactions contemplated
hereby or the likelihood of the consummation of the transactions contemplated hereby), including
using reasonable best efforts to: (i) maintain in effect the Commitment Letters, (ii) satisfy, on a
timely basis, all conditions within its control applicable to Parent and Merger Sub to obtaining
the Debt Financing set forth therein, (iii) enter into definitive agreements with respect thereto
on the terms and conditions contemplated by the Debt Commitment Letters (including the flex
provisions related to the Debt Financing) or on other terms reasonably acceptable to Parent (to the
extent no less favorable in the aggregate than those provided in the Debt Commitment Letters), and
(iv) consummate the Debt Financing at or prior to Closing. In the event any portion of the Debt
Financing becomes unavailable on the terms and conditions contemplated in the Debt Commitment
45
Letters, Parent shall promptly notify the Company and shall use its reasonable best efforts to
arrange to obtain alternative financing from alternative sources in an amount sufficient, when
combined with the funds under the Equity Commitment Letters, to consummate the transactions
contemplated by this Agreement on terms and conditions not materially less favorable to Parent in
the aggregate (as determined in the good faith reasonable judgment of Parent) than the Debt
Financing (including the flex provisions related to the Debt Financing) as promptly as practicable
following the occurrence of such event but in all cases at or prior to Closing. Parent shall give
the Company prompt notice of any material breach by any party to the Commitment Letters of which
Parent or Merger Sub becomes aware or any termination of the Commitment Letters. Parent shall keep
the Company informed on a reasonably current basis in reasonable detail of the status of its
efforts to arrange the Financing and provide to the Company copies of executed copies of the
definitive documents related to the Debt Financing. For purposes of this Agreement, “Marketing
Period” shall mean the first period of 20 consecutive business days throughout which (1) Parent
shall have the Required Financial Information that the Company is required to provide to Parent
pursuant to Section 6.8(b)(iv) and (2) the conditions set forth in Section 7.1 shall be satisfied
and nothing has occurred and no condition exists that would cause any of the conditions set forth
in Section 7.3 to fail to be satisfied assuming the Closing were to be scheduled for any time
during such 20 consecutive business day period; provided, that the Marketing Period shall not be
deemed to have commenced if, prior to the completion of the Marketing Period, KPMG LLP shall have
withdrawn its audit opinion with respect to any financial statements contained in the Company SEC
Reports.
(b) Prior to the Effective Time, the Company shall provide, and shall cause the
Company Subsidiaries to, and shall use its commercially reasonable efforts to cause their
respective Representatives, including legal and accounting advisors, to provide all cooperation
reasonably requested by Parent in connection with the Debt Financing and the other transactions
contemplated by this Agreement, including (i) assisting in the preparation for, and participating
in, meetings, presentations, road shows, due diligence sessions and similar presentations to and
with, among others, prospective lenders, investors and rating agencies, (ii) assisting with the
preparation of materials for rating agency presentations, offering documents, private placement
memoranda, bank information memoranda (including the delivery of one or more customary
representation letters), prospectuses and similar documents required in connection with the
Financing, (iii) executing and delivering any pledge and security documents, other definitive
financing documents, or other certificates, opinions or documents as may be reasonably requested by
Parent (including a certificate of the chief financial officer of the Company or any Subsidiary
with respect to solvency matters (but only as they relate to the Company) and consents of
accountants for use of their reports in any materials relating to the Debt Financing) and otherwise
reasonably facilitating the pledging of collateral, (iv) furnishing Parent and its Financing
sources with the financial statements and financial data of the Company required by (A) paragraph
(d) of Exhibit D of the Senior Debt Commitment Letter and (B) paragraph (d) of Exhibit C of the
Subordinated Debt Commitment Letter (in each case, within the time frames described therein) (the
“Required Financial Information”), (v) using commercially reasonable efforts to obtain accountants’
comfort letters, legal opinions, surveys, appraisals, environmental reports and title insurance as
reasonably requested by Parent, (vi) taking all actions reasonably necessary to (A) permit the
prospective lenders involved in the Financing to evaluate the Company’s inventory, properties,
current assets, cash management and accounting systems, policies and procedures relating thereto,
and to assist the prospective lenders with field audits and collateral and asset examinations, in
each case for the purpose of establishing collateral eligibility and values and (B) establish bank
and other accounts and blocked account agreements and lock box arrangements in connection with the
foregoing, (vii) obtaining any necessary rating agencies’ confirmation or approvals for the Debt
Financing, and (viii) taking all corporate actions
46
necessary to permit the consummation of the Debt Financing and to permit the proceeds thereof
to be made available to the Company, including the entering into one or more credit agreements or
other instruments on terms satisfactory to Parent in connection with the Debt Financing immediately
prior to the Effective Time to the extent direct borrowings or debt incurrence by the Company is
contemplated in the Debt Commitment Letters; provided that none of the Company or any Company
Subsidiary shall be required to pay any commitment or other similar fee or incur any other
liability in connection with the Debt Financing prior to the Effective Time except for any
liabilities that are conditioned on the Effective Time having occurred. If this Agreement is
terminated prior to the Effective Time, Parent shall, promptly upon request by the Company,
reimburse the Company for all reasonable out-of-pocket costs incurred by the Company or the Company
Subsidiaries in connection with such cooperation. If this Agreement is terminated prior to the
Effective Time, Parent and Merger Sub shall, on a joint and several basis, indemnify and hold
harmless the Company and the Company Subsidiaries for and against any and all losses suffered or
incurred by them in connection with the arrangement of Debt Financing or any alternative financing
and any information utilized in connection therewith (other than information provided by the
Company or the Company Subsidiaries expressly for use in connection therewith). The Company hereby
consents to the reasonable use of its and the Company Subsidiaries’ logos in connection with the
Debt Financing, provided that such logos are used solely in a manner that is not intended to nor
reasonably likely to harm or disparage the Company or any of the Company Subsidiaries or the
reputation or goodwill of the Company or any of the Company Subsidiaries and its or their marks.
Section 6.9 Public Disclosure. The initial press release concerning the
Merger shall be a joint press release and, thereafter, so long as this Agreement is in effect,
neither Parent, Merger Sub nor the Company will disseminate any press release or other public
announcement concerning the Merger or this Agreement or the other transactions contemplated by this
Agreement to any third party, except as may be required by Law or by any listing agreement with the
NASDAQ, without the prior consent of each of the other parties hereto, which consent shall not be
unreasonably withheld; provided, however, that Parent’s consent will not be required, and the
Company need not consult with Parent, in connection with any press release or public statement to
be issued or made with respect to any Acquisition Proposal or with respect to any Adverse
Recommendation Change. Notwithstanding the foregoing, without prior consent of the other parties,
the Company (a) may communicate with customers, vendors, suppliers, financial analysts, investors
and media representatives in a manner consistent with its past practice in compliance with
applicable Law and (b) may disseminate the information included in a press release or other
document previously approved for external distribution by Parent.
Section 6.10 Notification of Certain Matters. Each party shall give
prompt notice to the other parties of (i) the occurrence or non-occurrence of any event the
occurrence or non-occurrence of which would reasonably be expected to cause any representation or
warranty made by such party in this Agreement to be untrue or inaccurate in any material respect at
the Closing, or would reasonably be expected to cause any condition set forth in Section 7 not to
be satisfied in any material respect at the Closing, and (ii) any failure of such party or any of
its representatives to comply with or satisfy in all material respects any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided however that no such
notification shall affect the representations, warranties, covenants or agreements of the parties
(or the remedies with respect thereto) or the conditions to the obligations of the parties under
this Agreement.
Section 6.11 Agreements with Respect to Existing Debt. On or prior to the
second business day prior to the Effective Time, the Company shall deliver to Parent copies of
payoff letters (subject to
47
delivery of funds as arranged by Parent and Merger Sub) in commercially reasonable form, from
Wachovia Bank, National Association as administrative agent under that certain Second Amended and
Restated Credit Agreement dated as of October 7, 2005 by and among the Company and the Lenders
party thereto and shall make arrangements for the release of all mortgages, liens and other
security over the Company’s and the Company Subsidiaries’ properties and assets securing such
obligations.
Section 6.12 Takeover Statute. If any “fair price,” “moratorium,” “control
share acquisition” or other form of anti-takeover statute or regulation shall become applicable to
the transactions contemplated by this Agreement, each of the Company and Parent and the members of
their respective Boards of Directors shall grant such approvals and take such actions as are
reasonably necessary so that the transactions contemplated by this Agreement may be consummated as
promptly as practicable on the terms contemplated by this Agreement and otherwise act to eliminate
or minimize the effects of such statute or regulation on the transactions contemplated by this
Agreement.
Section 7.1 Conditions to Obligations of Each Party to Effect the Merger.
The respective obligations of each party to this Agreement to effect the Merger shall be subject to
the satisfaction or written waiver at or prior to the Closing Date of the following conditions:
Section 7.2 Additional Conditions to the Obligations of Parent and Merger
Sub. The obligations of Parent and Merger Sub to consummate and effect the Merger shall be
subject to the additional conditions, which may be waived in writing in whole or in part by Parent
or Merger Sub to the extent permitted by applicable Law, that:
48
except where the failure or failures of any such representations and warranties to be so true
and correct have not had, individually or in the aggregate, a Company Material Adverse Effect. The
representations and warranties of the Company contained in (i) Sections 3.2 and 3.3 shall be true
and correct in all material respects at and as of the date of this Agreement and at and as of the
Closing Date as if made on and as of the Closing Date (or, if given as of a specific date, at and
as of such date) and (ii) the first sentence of Section 3.6 shall be true and correct as of the
date of this Agreement and as of the Closing Date as though made on the Closing Date. The Company
shall have performed and complied in all material respects with all covenants and agreements
required by this Agreement to be performed or complied with by it on or prior to the Closing Date.
The Company shall have delivered to Parent a certificate from an officer of the Company, dated the
Closing Date, to the foregoing effect.
Section 7.3 Additional Conditions to the Obligations of the Company. The
obligations of the Company to consummate and effect the Merger shall be subject to the additional
conditions, which may be waived in writing in whole or in part by the Company to the extent
permitted by applicable Law, that:
Section 8. Termination; Amendment and Waiver.
Section 8.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time before the Effective Time, whether
before or after the Company Shareholder Approval:
(a) By mutual written consent of Parent and the Company authorized by the Parent
Board of Directors and the Company Board of Directors;
(b) By either Parent or the Company, if the Merger has not been consummated by
11:59 p.m. New York City time, on July 31, 2008 (the “Termination Date”); provided, however, that
the right to terminate this Agreement pursuant to this Section 8.1(b) shall not be available to any
party whose breach in any material respect of its obligations under this Agreement has been the
proximate cause of the failure of the Merger to be consummated by such date;
(c) By either Parent or the Company, if a court of competent jurisdiction or other
Governmental Entity shall have issued a final, non-appealable order, decree or ruling or taken any
other action, or there shall exist any statute, rule or regulation, in each case preventing or
otherwise prohibiting the consummation of the Merger or that otherwise has the effect of making the
Merger illegal (collectively, “Restraints”); provided, however, that the right to terminate this
Agreement
49
pursuant to this Section 8.1(c) shall not be available to any party whose breach in any
material respect of its obligations under this Agreement has been the proximate cause of such
Restraint;
(d) By Parent (if neither it nor Merger Sub is in material breach of its
representations, warranties, covenants and obligations under this Agreement so as to cause any of
the conditions set forth in Section 7.1 or 7.3 not to be satisfied) if there has been a breach of,
or inaccuracy in, any representation, warranty, covenant or agreement of the Company set forth in
this Agreement, which breach or inaccuracy would cause any condition set forth in Section 7.1 or
7.2 not to be satisfied (and such breach or inaccuracy has not been cured or such condition has not
been satisfied within twenty (20) business days after the receipt of written notice thereof or such
breach or inaccuracy is not reasonably capable of being cured prior to the Termination Date or such
condition is not reasonably capable of being satisfied prior to the Termination Date);
(e) By the Company (if it is not in material breach of its representations,
warranties, covenants and obligations under this Agreement so as to cause any of the conditions set
forth in Section 7.1 or 7.2 not to be satisfied) if there has been a breach of, or inaccuracy in,
any representation, warranty, covenant or agreement of Parent or Merger Sub set forth in this
Agreement, which breach or inaccuracy would cause any condition set forth in Section 7.1 or 7.3 not
to be satisfied (and such breach or inaccuracy has not been cured or such condition has not been
satisfied within twenty (20) business days after the receipt of written notice thereof or such
breach or inaccuracy is not reasonably capable of being cured prior to the Termination Date or such
condition is not reasonably capable of being satisfied prior to the Termination Date);
(f) By Parent, if the Company Board of Directors shall have (A) made an Adverse
Recommendation Change, (B) recommended to the shareholders of the Company, or approved any,
Acquisition Proposal, or (C) failed to include in the Proxy Statement its recommendation that the
shareholders adopt and approve this Agreement and the Merger;
(g) By the Company, at any time prior to the Company Shareholder Approval,
pursuant to Section 5.2(g)(i); provided that, any such purported termination pursuant to this
Section 8.1(g) shall be void and of no force or effect unless the Company has paid the applicable
Termination Fee in accordance with Section 8.2;
(h) By either Parent or the Company, if upon a vote at a duly held meeting to
obtain the Company Shareholder Approval at which a quorum is present, the Company Shareholder
Approval is not obtained; or
(i) By the Company, if the Merger shall not have been consummated on the second
Business Day after the Termination Date, and all of the conditions set forth in Section 7.1 and
Section 7.2 have been satisfied (other than the delivery of the officer certificate referred to in
Section 7.2(a)) and at the time of such termination such conditions continue to be satisfied.
In the event of termination of this Agreement pursuant to this Section 8.1, this Agreement shall
terminate (except for the Confidentiality Agreements, the provisions of Section 8.2 and Section 9),
and there shall be no other liability on the part of the Company, on the one hand, and Parent and
Merger Sub, on the other hand, to each other except that nothing, other than the provisions of
Section 8.2(e) and Section 8.2(f) hereof, shall relieve any party hereto from liability arising out
of the willful breach of this Agreement or fraud, or as provided for in the Confidentiality
Agreements, in which
50
case the aggrieved party shall, subject to Section 8.2(e) and Section 8.2(f) hereof, be entitled to
all rights and remedies available at law, and, subject to Section 9.8 hereof, in equity.
Section 8.2 Termination Fees; Certain Limitations.
(a) In the event that:
(i) (A) a bona fide Acquisition Proposal shall have been made
directly to its shareholders or any Person shall have publicly announced an
intention to make an Acquisition Proposal, or an Acquisition Proposal shall have
otherwise become publicly known and (B) following the occurrence of an event
described in the preceding clause (A), this Agreement is terminated by the Company
or Parent pursuant to Section 8.1(b) or Section 8.1(h) or by Parent pursuant to
Section 8.1(d) and (C) the Company enters into, or submits to the stockholders of
the Company for adoption, a definitive agreement with respect to any Acquisition
Proposal, or consummates any Acquisition Proposal, within twelve (12) months of the
date this Agreement is terminated, which in each case, need not be the same
Acquisition Proposal that shall have been publicly announced or made known at or
prior to termination of this Agreement (provided that for purposes of clause (C) of
this Section 8.2(a), the references to “20%” in the definition of Acquisition
Proposal shall be deemed to be references to “50%”); or
(ii) this Agreement is terminated by the Company pursuant to
Section 8.1(g); or
(iii) this Agreement is terminated by Parent pursuant to Section
8.1(f);
then in any such event under clause (i), (ii) or (iii) of this Section 8.2(a), the Company shall
pay as directed by Parent the Termination Fee (as defined below), less the amount of any Parent
Expenses previously paid to Parent by the Company (if any), by wire transfer of same day funds, it
being understood that in no event shall the Company be required to pay the Termination Fee on more
than one occasion. “Termination Fee” shall mean an amount equal to $40 million, except (x) in the
event that this Agreement is terminated prior to the No-Shop Period Start Date by the Company
pursuant to Section 8.1(g) in order to enter into a definitive agreement with respect to a Company
Acquisition Proposal with an Excluded Party, or (y) in the event that this Agreement is terminated
prior to the No-Shop Period Start Date by Parent pursuant to Section 8.1(f) in a circumstance in
which the event giving rise to the right of termination is based on the submission of an
Acquisition Proposal by an Excluded Party, in which cases the Termination Fee shall mean an amount
equal to $20 million.
(b) In the event that this Agreement is terminated by Parent or Merger Sub, on the
one hand, or the Company, on the other hand, pursuant to Section 8.1(h) (or is terminated by the
Company pursuant to a different section of Section 8.1 at a time when this Agreement was terminable
pursuant to Section 8.1(h)) under circumstances in which the Termination Fee is not payable
pursuant to Section 8.2(a), then the Company shall pay as promptly as possible (but in any event
within two Business Days after a request therefor) all of Parent’s and its Affiliates’ reasonably
documented out-of-pocket fees and expenses (including reasonable legal and accounting fees and
expenses) incurred in connection with the transactions contemplated by this Agreement up to a
maximum amount of $7.5 million (“Parent Expenses”) by wire transfer of immediately available funds
to an account or accounts designated by Parent; provided, however, that the existence of
51
circumstances which could require the Termination Fee to become subsequently payable by the
Company pursuant to Section 8.2(a) shall not relieve the Company of its obligations to pay Parent
Expenses pursuant to this Section 8.2(b); provided, further that the payment by the Company of
Parent Expenses pursuant to this Section 8.2(b) shall not relieve the Company of any subsequent
obligation to pay the Termination Fee pursuant to Section 8.2(a).
(c) In the event that:
(i) the Company shall terminate this Agreement pursuant to Section
8.1(e), or
(ii) the Company shall terminate this Agreement pursuant to Section
8.1(i);
then in any such event under clause (i) or (ii) of this Section 8.2(c), Parent shall pay to the
Company a termination fee of $40 million in cash (the “Parent Termination Fee”), it being
understood that in no event shall Parent be required to pay the Parent Termination Fee on more than
one occasion.
(d) Any payment required to be made pursuant to clause (i) of Section 8.2(a) shall
be made at the direction of Parent, promptly following the earliest of the execution of a
definitive agreement with respect to, submission to the stockholders of, or the consummation of,
any transaction contemplated by an Acquisition Proposal (and in any event not later than two
business days after delivery to the Company of notice of demand for payment); any payment required
to be made pursuant to clause (ii) of Section 8.2(a) shall be made at the direction of Parent,
concurrently with, and as a condition to the effectiveness of, the termination of this Agreement by
the Company pursuant to Section 8.1(g); any payment required to be made pursuant to clause (iii) of
Section 8.2(a) shall be made at the direction of Parent, promptly following termination of this
Agreement by Parent pursuant to Section 8.1(f) (and in any event not later than two business days
after delivery to the Company of notice of demand for payment), and such payment shall be made by
wire transfer of immediately available funds to an account to be designated by Parent. Any payment
required to be made pursuant to Section 8.2(c) shall be made to the Company promptly following
termination of this Agreement by the Company (and in any event not later than two business days
after delivery to Parent of notice of demand for payment), and such payment shall be made by wire
transfer of immediately available funds to an account to be designated by the Company.
(e) In the event of a termination of this Agreement in connection with which the
Company is entitled to receive the Parent Termination Fee, the Company’s right to receive payment
of the Parent Termination Fee from Parent pursuant to this Section 8.2 shall be the sole and
exclusive remedy of the Company and the Company Subsidiaries against Parent, Merger Sub and any of
their respective current, former or future representatives, Affiliates, directors, officers,
employees, partners, managers, members, or stockholders (each, a “Parent Party”) for any loss or
damage suffered as a result of the breach of this Agreement or any representation, warranty,
covenant or agreement contained herein by Parent or Merger Sub or the failure of the Merger to be
consummated.
(f) Notwithstanding anything to the contrary in this Agreement, the Company agrees
that to the extent it has incurred any losses or damages in connection with this Agreement or the
transactions contemplated hereby (“Company Damages”), (i) the maximum aggregate liability of Parent
and Merger Sub in the aggregate for all such Company Damages shall be limited to $40 million (the
“Parent Liability Limitation”), inclusive of the Parent Termination Fee, (ii) the
52
maximum liability of the Sponsors, directly or indirectly, shall be limited to the express
obligations of the Sponsors under their respective Limited Guarantees, (iii) in no event shall the
Company, the Company Subsidiaries or any of their Affiliates seek (and the Company shall cause its
controlled Affiliates not to seek) any (x) equitable relief or equitable remedies of any kind
whatsoever or (y) money damages or any other recovery, judgment, or damages of any kind, including
consequential, indirect, or punitive damages in excess of the Parent Liability Limitation, in each
case against or from Parent, Merger Sub or the Sponsors, and (iv) in no event shall any other
Parent Party have any liability or obligation relating to or arising out of this Agreement and the
transactions contemplated hereby, and neither the Company, the Company Subsidiaries or any of their
Affiliates shall seek (and the Company shall cause its controlled Affiliates not to seek) any money
damages or any other recovery, judgment, or damages of any kind, including consequential, indirect,
or punitive damages against any other Parent Party, and the Company, the Company Subsidiaries and
their Affiliates shall be precluded from any remedy against any other Parent Party at law or in
equity or otherwise.
Section 8.3 Fees and Expenses. Except as otherwise expressly provided in
Section 8.2 and 6.8(b), all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such expenses whether or not
the Merger is consummated, including all out-of-pocket expenses (including all fees and expenses of
counsel, accountants, investment bankers, financing sources, hedging counterparties, experts and
consultants to a party hereto and its affiliates) incurred by a party or on its behalf (or, with
respect to Parent, incurred by Sponsors, Parent’s stockholders or on their behalf) in connection
with or related to the authorization, preparation, negotiation, execution and performance of this
Agreement, the preparation, printing, filing and mailing of the Proxy Statement, the solicitation
of the Company Shareholder Approval, regulatory filings and notices, the Financing and all other
matters related to the closing of the Merger.
Section 8.4 Amendment. Subject to applicable Law, this Agreement may be
amended, modified and supplemented in any and all respects, whether before or after any vote of the
shareholders of the Company contemplated hereby, by written agreement of the parties hereto, by
action taken by their respective Boards of Directors, but after the approval of this Agreement by
the shareholders of the Company, no amendment shall be made which by Law requires further approval
by such shareholders without obtaining such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties hereto.
Section 8.5 Waiver. At any time prior to the Effective Time, each party
hereto may (a) extend the time for the performance of any of the obligations or other acts of any
other party hereto or (b) waive compliance with any of the agreements of any other party or any
conditions to its own obligations; provided, that any such extension or waiver shall be binding
upon a party only if such extension or waiver is set forth in a writing executed by such party.
Section 9. Miscellaneous.
Section 9.1 Entire Agreement. This Agreement, together with the Company
Disclosure Schedule and the Parent Disclosure Schedule and the documents and instruments referred
to herein that are to be delivered at the Closing, contains the entire agreement among the parties
with respect to the Merger and related transactions, and supersedes all prior agreements, written
or oral, among the parties with respect thereto, other than the Confidentiality Agreements and the
Limited Guarantees which shall survive execution of this Agreement and shall terminate in
accordance with the provisions thereof. EACH PARTY HERETO AGREES THAT, EXCEPT FOR THE
53
REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, NEITHER PARENT, MERGER SUB NOR THE
COMPANY MAKES ANY OTHER REPRESENTATIONS OR WARRANTIES, AND EACH HEREBY DISCLAIMS ANY OTHER
REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR ANY OF ITS RESPECTIVE OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, FINANCIAL AND LEGAL ADVISORS OR OTHER REPRESENTATIVES (OTHER THAN AS SET FORTH
IN THE CONFIDENTIALITY AGREEMENTS OR THE LIMITED GUARANTEES), WITH RESPECT TO THE EXECUTION AND
DELIVERY OF THIS AGREEMENT OR THE MERGER, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE OTHER
OR THE OTHER’S REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION WITH RESPECT TO ANY ONE OR
MORE OF THE FOREGOING.
Section 9.2 No Survival. None of the representations, warranties and,
except as provided in the following sentence, covenants contained herein or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This Section 9, the
agreements of Parent and the Company in Sections 5.3, 6.5 and 8.3 and those other covenants and
agreements contained herein that by their terms apply, or that are to be performed in whole or in
part, after the Effective Time shall survive the consummation of the Merger.
Section 9.3 Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be deemed given when delivered in person, by
overnight courier, by facsimile transmission (with receipt confirmed by telephone or by automatic
transmission report) or two business days after being sent by registered or certified mail (postage
prepaid, return receipt requested), as follows:
If to Parent or Merger Sub:
|
With copies (which shall not constitute notice) to: | |
c/o Blackstone Capital Partners V. L.P.
|
Xxxxxx Xxxxxxx, Esq. | |
000 Xxxx Xxxxxx
|
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP | |
Xxx Xxxx, Xxx Xxxx 00000
|
0000 Xxxxxx xx xxx Xxxxx, 00xx Xx | |
Telephone: (000) 000-0000
|
Xxx Xxxxxxx, Xxxxxxxxxx 00000 | |
Facsimile: (000) 000-0000
|
Telephone: (000) 000-0000 | |
Attn.: Xxxxxxx X. Xxxxxxx
|
Facsimile: (000) 000-0000 | |
If to the Company:
|
With copies (which shall not constitute notice) to: | |
F. Xxxxxxxx Xxxxxx, Xx., Esq. | ||
00000 Xxxx Xxxxx Xxxxxxx
|
Bass, Xxxxx & Xxxx, PLC | |
Xxxxxxxx, XX 00000
|
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000 | |
Telephone: (000) 000-0000
|
Xxxxxxxxx, XX 00000 | |
Telephone: (000) 000-0000
|
Telephone: (000) 000-0000 | |
Attn.: Xxxxxx X. Xxxxxxxxxx
|
Facsimile: (000) 000-0000 | |
Senior Vice President and |
||
General Counsel |
54
Any party may by notice given in accordance with this Section 9.3 to the other parties designate
another address or person for receipt of notices hereunder. Rejection or other refusal to accept
or the inability to deliver because of changed address or facsimile of which no notice was given
shall be deemed to be receipt of the notice as of the date of such rejection, refusal or inability
to deliver.
(a) This Agreement shall not be assigned by any of the parties hereto (whether by
operation of Law or otherwise) without the prior written consent of the other parties; provided,
that Parent may assign this Agreement to any of its Affiliates without the consent of the Company;
provided, further, that no such assignment will relieve Parent of its obligations hereunder.
Subject to the preceding sentence, but without relieving any party (including any assignor) hereto
of any obligation hereunder, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
(b) Except for the provisions of Section 6.5 (which shall be for the benefit of
the Indemnified Parties), nothing in this Agreement, express or implied, is intended to or shall
confer upon any person other than Parent, Merger Sub and the Company and their respective
successors and permitted assigns any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
Section 9.5 Severability. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other provisions of this
Agreement shall remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree shall remain in full force and effect to the extent not held
invalid or unenforceable. The parties further agree to negotiate in good faith to replace such
invalid or unenforceable provision of this Agreement, or invalid or unenforceable portion thereof,
with a valid and enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such invalid or unenforceable provision or portion thereof.
Section 9.6 Governing Law. This Agreement, and all claims or causes of
action (whether at Law, in contract or in tort) that may be based upon, arise out of or relate to
this Agreement or the negotiation, execution or performance hereof, shall be governed by and
construed in accordance with the Laws of the State of Delaware, except to the extent the Laws of
the State of Tennessee are mandatorily applicable in connection with the Merger provisions
contained in Sections 1 and 2 hereof.
Section 9.7 Submission to Jurisdiction; Waiver. Each of the Company,
Parent and Merger Sub irrevocably submits to the exclusive jurisdiction and venue of the courts of
the State of Delaware (or, in the case of any claim as to which the federal courts have exclusive
subject matter jurisdiction, the Federal court of the United States of America) sitting in New
Castle County in the State of Delaware in any action arising out of or relating to this Agreement,
and hereby irrevocably agrees that all claims in respect of such action may be heard and determined
in such court. Each of the Company, Parent and Merger Sub hereby irrevocably waives, and agrees
not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or
proceeding with respect to this Agreement, (a) any claim that it is not personally subject to the
jurisdiction of the above-named courts for any reason other than the failure to lawfully serve
process, (b) that it or its property is exempt or immune from jurisdiction of any such court or
from any legal process commenced in such courts (whether through service of notice, attachment
prior to judgment, attachment in aid of execution of judgment,
55
execution of judgment or otherwise), and (c) to the fullest extent permitted by applicable
Law, that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum,
(ii) the venue of such suit, action or proceeding is improper or (iii) this Agreement, or the
subject matter hereof, may not be enforced in or by such courts. EACH OF THE COMPANY, PARENT AND
MERGER SUB WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAWS, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT.
Section 9.8 Specific Enforcement. The parties recognize and agree that if
for any reason any of the provisions of this Agreement are not performed by the Company in
accordance with their specific terms or are otherwise breached, immediate and irreparable harm or
injury would be caused for which money damages would not be an adequate remedy. Accordingly, each
party agrees that, in addition to other remedies, prior to any termination of this Agreement
pursuant to Section 8.1, Parent and Merger Sub shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or equity. In the event that any action shall
be brought in equity to enforce the provisions of the Agreement, the Company shall not allege, and
hereby waives the defense, that there is an adequate remedy at Law. The parties further
acknowledge that the Company shall not be entitled to an injunction or injunctions to prevent
breaches of this Agreement by Parent or Merger Sub or to enforce specifically the terms and
provisions of this Agreement and that the Company’s sole and exclusive remedy with respect to any
such breach shall be the remedy available to the Company set forth in Section 8.2.
Section 9.9 Interpretation.
(a) When a reference is made in this Agreement to a Section, subsection or clause,
such reference shall be to a Section, subsection or clause of this Agreement unless otherwise
indicated.
(b) The table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or interpretation of this
Agreement.
(c) This Agreement is the result of the joint efforts of Parent and the Company,
and each provision hereof has been subject to the mutual consultation, negotiation and agreement of
the parties and there shall be no construction against any party based on any presumption of that
party’s involvement in the drafting thereof.
(d) To the extent this Agreement refers to information or documents having been
made available (or delivered or provided) to Parent, the Company shall be deemed to have satisfied
such obligation if the Company or its Representatives made such information or document available
on or prior to the date hereof (or delivered or provided such information or document on or prior
to the date hereof), including through the Intralinks online dataroom, to any officer or partner of
Parent or Sponsors or any of their respective Representatives.
(e) The term “affiliate” or “Affiliate” means a person that directly, or
indirectly, through one or more intermediaries, controls, is controlled by, or is under common
control with, the first-mentioned person.
56
(f) The term “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.
(g) The words “include,” “includes” or “including” shall be deemed to be followed
by the words “without limitation.”
(h) The term “knowledge” of the Company shall mean the actual knowledge of the
officers of the Company listed on Section 9.10(h) of the Company Disclosure Schedule.
(i) The disclosure of any matter or item in the Company Disclosure Schedule or the
Parent Disclosure Schedule shall not be deemed to constitute an acknowledgement that such matter or
item is required to be disclosed therein or is a material exception to a representation, warranty,
covenant or condition set forth in this Agreement and shall not be used as a basis for interpreting
the terms “material,” “materially,” “materiality,” “Company Material Adverse Effect” or “Parent
Material Adverse Effect” or any word or phrase of similar import and does not mean that such matter
or item would, with any other matter or item, have or be reasonably expected, individually or in
the aggregate, to have a Company Material Adverse Effect or a Parent Material Adverse Effect.
Certain matters have been disclosed in the Company Disclosure Schedule for informational purposes
only.
(j) The term “person” or “Person” shall mean any individual, corporation
(including any non-profit corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited liability company or
joint stock company), firm or other enterprise, association, organization, entity or Governmental
Entity.
(k) The term “subsidiary” or “Subsidiary, ” with respect to any Person, means any
other Person of which the first Person owns, directly or indirectly, securities or other ownership
interests having voting power to elect a majority of the board of directors or other persons
performing similar functions (or, if there are no such voting interests, more than 50% of the
equity interests of the second Person).
Section 9.10 No Waiver of Rights. No failure or delay on the part of any
party hereto in the exercise of any right hereunder will impair such right or be construed to be a
waiver of, or acquiescence in, any breach of any representation, warranty or agreement herein, nor
will any single or partial exercise of any such right preclude other or further exercise thereof or
of any other right.
Section 9.11 Counterparts; Facsimile Signatures. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument. Facsimile signatures shall be acceptable
and binding.
[Remainder of page intentionally left blank.]
57
PERFORMANCE FOOD GROUP COMPANY |
||||
By: | /s/ Xxxxxx Xxxxxxx | |||
Name: | Xxxxxx Xxxxxxx | |||
Title: | President and Chief Executive Officer | |||
VISTAR CORPORATION |
||||
By: | /s/ Xxxxxx Xxxx | |||
Name: | Xxxxxx Xxxx | |||
Title: | President and Chief Executive Officer | |||
PANDA ACQUISITION, INC. |
||||
By: | /s/ Xxxxxxx Xxxxxxx | |||
Name: | Xxxxxxx Xxxxxxx | |||
Title: | President of Panda Acquisition, Inc. |
58
ANNEX A
Index of Defined Terms
Section | ||||
Acceptable Confidentiality Agreement
|
5.2(a) | |||
Acquisition Proposal
|
5.2(e) | |||
Actions
|
3.8 | |||
Adverse Recommendation Change
|
5.2(f) | |||
Affiliate
|
9.9(e) | |||
Affiliated Party
|
3.21 | |||
Agreement
|
Preamble | |||
Articles of Merger
|
1.3 | |||
Benefits Continuation Period
|
5.3(a) | |||
Book-Entry Shares
|
2.4(b) | |||
Business day
|
9.9(f) | |||
Capitalization Date
|
3.3(a) | |||
Cash Out Amount
|
2.3(d) | |||
Certificates
|
2.4(b) | |||
Closing
|
1.2 | |||
Closing Date
|
1.2 | |||
COBRA
|
3.14(c) | |||
Code
|
2.5 | |||
Commitment Letters
|
4.6 | |||
Company
|
Preamble | |||
Company Board of Directors
|
Recitals | |||
Company Common Stock
|
2.1 | |||
Company Damages
|
8.2(f) | |||
Company Disclosure Schedule
|
3 | |||
Company Employees
|
3.14(a) | |||
Company Insurance Policies
|
3.12 | |||
Company Managers
|
5.1(b)(i) | |||
Company Material Adverse Effect
|
3.1(a) | |||
Company Options
|
2.3(a) | |||
Company Preferred Stock
|
3.3(a) | |||
Company Recommendation
|
6.2 | |||
Company SEC Reports
|
3.5(a) | |||
Company Shareholder Approval
|
3.18(c) | |||
Company Shareholders’ Meeting
|
6.2 | |||
Company Significant Subsidiary
|
3.1(a) | |||
Company Subsidiaries
|
3.1(a) | |||
Confidentiality Agreements
|
6.3 | |||
Continuing Employees
|
5.3(a) | |||
Contract
|
3.9(a) | |||
Controlled Group
|
3.14(b) | |||
Debt Financing
|
4.6 | |||
Disclosed Conditions
|
4.6 | |||
DOJ
|
6.4(a) | |||
Effective Time
|
1.3 | |||
Employment Agreements
|
5.3(a) | |||
Environmental Laws
|
3.16(c)(i) | |||
Environmental Permits
|
3.16(c)(ii) | |||
Equity Commitment Letters
|
4.6 |
A-1
Section | ||||
Equity Incentive Plans
|
2.3(a) | |||
Equity Plans
|
2.3(d) | |||
ERISA
|
3.14(a) | |||
ESPP
|
2.3(d) | |||
Exchange Act
|
3.3(g) | |||
Exchange Fund
|
2.4(a) | |||
Excluded Party
|
5.2(d) | |||
Existing Confidentiality Agreement
|
6.3 | |||
Financial Statements
|
3.5(b) | |||
Financing
|
4.6 | |||
Food Distribution Providers
|
5.2(a) | |||
Foreign Plans
|
3.14(i) | |||
FTC
|
6.4(a) | |||
GAAP
|
3.5(b) | |||
Governmental Entity
|
3.1(a) | |||
Hazardous Substances
|
3.16(c)(iii) | |||
HSR Act
|
3.17 | |||
Indemnified Parties
|
6.5(b) | |||
Intellectual Property
|
3.10 | |||
Intervening Event
|
5.2(g) | |||
IRS
|
3.14(a) | |||
Knowledge
|
9.9(h) | |||
Laws
|
3.1(a) | |||
Lease
|
3.11 | |||
Liens
|
3.4(a) | |||
Limited Guarantees
|
4.7 | |||
Marketing Period
|
6.8(a) | |||
Material Contract
|
3.9(a) | |||
Merger
|
1.1(a) | |||
Merger Consideration
|
2.1(a) | |||
Merger Sub
|
Preamble | |||
NASDAQ
|
2.2(a) | |||
No-Shop Period Start Date
|
5.2(a) | |||
Notice Period
|
5.2(g)(B) | |||
Options
|
2.3(d) | |||
Parent
|
Preamble | |||
Parent Disclosure Schedule
|
4 | |||
Parent Expenses
|
8.2(b) | |||
Parent Liability Limitation
|
8.2(f) | |||
Parent Material Adverse Effect
|
4.1 | |||
Parent Party
|
8.2(e) | |||
Parent Restructuring
|
6.4(e) | |||
Parent Termination Fee
|
8.2(c) | |||
Paying Agent
|
2.4(a) | |||
Per Share Price
|
2.1(a) | |||
Permits
|
3.7(a) | |||
Permitted Liens
|
3.11 | |||
Person
|
9.9(j) | |||
Plan
|
3.14(a) | |||
Premium Cap
|
6.5(d) | |||
Proxy Statement
|
3.20 | |||
Release
|
3.16(c)(iv) | |||
Representatives
|
5.2(a) |
A-2
Section | ||||
Required Financial Information
|
6.8(b) | |||
Restraints
|
8.1(c) | |||
Restricted Shares
|
2.3(b) | |||
SARs
|
2.3(c) | |||
SEC
|
3.1(a) | |||
Securities Act
|
3.5(a) | |||
Solvent
|
4.10 | |||
Sponsor
|
4.6 | |||
Subsidiary
|
9.9(k) | |||
Superior Proposal
|
5.2(e) | |||
Surviving Corporation
|
1.1(a) | |||
Tax
|
3.13(a) | |||
Tax Return
|
3.13(a) | |||
TBCA
|
Recitals | |||
Termination Date
|
8.1(b) | |||
Termination Fee
|
8.2(a)(iii) | |||
WARN
|
3.15 |
A-3
ANNEX B
1. | Information relating to sales by the Company or any of the Company Subsidiaries to any of their respective individual customers or subset of customers to the extent the sales of individual customers would be reasonably approximated therefrom. |
2. | Information relating to customer profitability, by customer, of the respective customers of the Company and the Company Subsidiaries; or any subset of customers of the Company and the Company Subsidiaries to the extent the profitability of individual customers would be reasonably approximated therefrom. |
4. | The unredacted economic and similarly competitively sensitive terms of agreements between the Company or any of the Company Subsidiaries and any of their respective suppliers. |
5. | The unredacted economic and similarly competitively sensitive terms of agreements between the Company or any of the Company Subsidiaries and any of their respective customers. |
6. | Any Material Contracts not made available to Parent in unredacted form prior to the date hereof. |
B-1