AGREEMENT AND PLAN OF MERGER BY AND AMONG THE FINISH LINE, INC., HEADWIND, INC. AND GENESCO INC DATED AS OF JUNE 17, 2007
Β
Exhibit 2.1
BY AND AMONG
THE
FINISH LINE, INC.,
HEADWIND, INC.
AND
DATED
AS OF JUNEΒ 17, 2007
Β
Β
TABLE OF CONTENTS
Β | Β | Β | Β | Β |
Β | Β | Page | ||
SectionΒ 1. The Merger |
Β | Β | 1 | Β |
SectionΒ 1.1 The Merger; Effects of the Merger |
Β | Β | 1 | Β |
SectionΒ 1.2 Closing |
Β | Β | 2 | Β |
SectionΒ 1.3 Effective Time |
Β | Β | 2 | Β |
SectionΒ 1.4 Directors and Officers of the Surviving Corporation |
Β | Β | 2 | Β |
Β |
Β | Β | Β | Β |
SectionΒ 2. Conversion of Securities |
Β | Β | 3 | Β |
SectionΒ 2.1 Conversion of Securities |
Β | Β | 3 | Β |
SectionΒ 2.2 Dissenting Shares |
Β | Β | 4 | Β |
SectionΒ 2.3 Company Options, Restricted Shares and ESPP |
Β | Β | 4 | Β |
SectionΒ 2.4 Exchange of Certificates and Book-Entry Shares |
Β | Β | 6 | Β |
SectionΒ 2.5 Withholding |
Β | Β | 7 | Β |
SectionΒ 2.6 Transfer Taxes |
Β | Β | 8 | Β |
Β |
Β | Β | Β | Β |
SectionΒ 3. Representations and Warranties of Company |
Β | Β | 8 | Β |
SectionΒ 3.1 Organization and Qualification |
Β | Β | 8 | Β |
SectionΒ 3.2 Authority |
Β | Β | 9 | Β |
SectionΒ 3.3 Capitalization |
Β | Β | 10 | Β |
SectionΒ 3.4 Company Subsidiaries |
Β | Β | 12 | Β |
SectionΒ 3.5 SEC Filings; Financial Statements; Undisclosed Liabilities |
Β | Β | 12 | Β |
SectionΒ 3.6 Absence of Certain Changes or Events |
Β | Β | 13 | Β |
SectionΒ 3.7 Compliance with Laws |
Β | Β | 14 | Β |
SectionΒ 3.8 Claims, Actions and Proceedings |
Β | Β | 14 | Β |
SectionΒ 3.9 Contracts and Other Agreements |
Β | Β | 15 | Β |
SectionΒ 3.10 Intellectual Property |
Β | Β | 16 | Β |
SectionΒ 3.11 Property |
Β | Β | 17 | Β |
SectionΒ 3.12 Insurance |
Β | Β | 18 | Β |
SectionΒ 3.13 Tax Matters |
Β | Β | 18 | Β |
SectionΒ 3.14 Employee Benefit Plans |
Β | Β | 21 | Β |
SectionΒ 3.15 Labor Matters |
Β | Β | 24 | Β |
SectionΒ 3.16 Environmental Matters |
Β | Β | 24 | Β |
SectionΒ 3.17 No Breach |
Β | Β | 25 | Β |
SectionΒ 3.18 Board Approvals; Anti-Takeover; Vote Required |
Β | Β | 26 | Β |
SectionΒ 3.19 Financial Advisor |
Β | Β | 27 | Β |
SectionΒ 3.20 Information in the Proxy Statement |
Β | Β | 28 | Β |
SectionΒ 3.21 Affiliate Transactions |
Β | Β | 28 | Β |
SectionΒ 3.22 Suppliers and Vendors |
Β | Β | 28 | Β |
SectionΒ 3.23 Inventory |
Β | Β | 29 | Β |
SectionΒ 3.24 No Other Representations or Warranties; Investigation by Parent |
Β | Β | 29 | Β |
Β |
Β | Β | Β | Β |
SectionΒ 4. Representations and Warranties of Parent |
Β | Β | 29 | Β |
SectionΒ 4.1 Organization |
Β | Β | 29 | Β |
i
Β
Table of Contents
(Continued)
(Continued)
Β | Β | Β | Β | Β |
Β | Β | Page | ||
SectionΒ 4.2 Authority to Execute and Perform Agreement |
Β | Β | 30 | Β |
SectionΒ 4.3 No Conflict; Required Filings and Consents |
Β | Β | 30 | Β |
SectionΒ 4.4 Information in the Proxy Statement |
Β | Β | 31 | Β |
SectionΒ 4.5 Litigation |
Β | Β | 31 | Β |
SectionΒ 4.6 Financing |
Β | Β | 31 | Β |
SectionΒ 4.7 Parent and Merger Sub |
Β | Β | 32 | Β |
SectionΒ 4.8 Brokers |
Β | Β | 32 | Β |
SectionΒ 4.9 Solvency |
Β | Β | 33 | Β |
SectionΒ 4.10 No Other Representations or Warranties |
Β | Β | 33 | Β |
Β |
Β | Β | Β | Β |
SectionΒ 5. Conduct of Business Pending the Merger; No Solicitation; Employee Matters |
Β | Β | 34 | Β |
SectionΒ 5.1 Conduct of Business |
Β | Β | 34 | Β |
SectionΒ 5.2 No Solicitation |
Β | Β | 38 | Β |
SectionΒ 5.3 Employee Matters |
Β | Β | 41 | Β |
SectionΒ 5.4 Employee Preferred Stock Tender Offer |
Β | Β | 43 | Β |
Β |
Β | Β | Β | Β |
SectionΒ 6. Additional Agreements |
Β | Β | 44 | Β |
SectionΒ 6.1 Proxy Statement |
Β | Β | 44 | Β |
SectionΒ 6.2 Company Shareholders Meeting |
Β | Β | 44 | Β |
SectionΒ 6.3 Access to Information, Confidentiality |
Β | Β | 45 | Β |
SectionΒ 6.4 Regulatory Filings; Reasonable Efforts |
Β | Β | 45 | Β |
SectionΒ 6.5 Directors and Officers Indemnification and Insurance |
Β | Β | 47 | Β |
SectionΒ 6.6 Director Resignations |
Β | Β | 49 | Β |
SectionΒ 6.7 Conduct of Business of Parent and Merger Sub Pending the Merger |
Β | Β | 49 | Β |
SectionΒ 6.8 Financing |
Β | Β | 50 | Β |
SectionΒ 6.9 Public Disclosure |
Β | Β | 51 | Β |
SectionΒ 6.10 Notification of Certain Matters |
Β | Β | 51 | Β |
SectionΒ 6.11 Non-USRPHC Certificate |
Β | Β | 52 | Β |
Β |
Β | Β | Β | Β |
SectionΒ 7. Conditions Precedent to the Obligation of the Parties to Consummate the Merger |
Β | Β | 52 | Β |
SectionΒ 7.1 Conditions to Obligations of Each Party to Effect the Merger |
Β | Β | 52 | Β |
SectionΒ 7.2 Additional Conditions to the Obligations of Parent and Merger Sub |
Β | Β | 52 | Β |
SectionΒ 7.3 Additional Conditions to the Obligations of the Company |
Β | Β | 53 | Β |
Β |
Β | Β | Β | Β |
SectionΒ 8. Termination, Amendment and Waiver |
Β | Β | 53 | Β |
SectionΒ 8.1 Termination |
Β | Β | 53 | Β |
SectionΒ 8.2 Effect of Termination |
Β | Β | 54 | Β |
SectionΒ 8.3 Fees and Expenses |
Β | Β | 56 | Β |
SectionΒ 8.4 Amendment |
Β | Β | 56 | Β |
SectionΒ 8.5 Waiver |
Β | Β | 56 | Β |
Β |
Β | Β | Β | Β |
SectionΒ 9. Miscellaneous |
Β | Β | 57 | Β |
ii
Β
Table of Contents
(Continued)
(Continued)
Β | Β | Β | Β | Β |
Β | Β | Page | ||
SectionΒ 9.1 Entire Agreement |
Β | Β | 57 | Β |
SectionΒ 9.2 No Survival |
Β | Β | 57 | Β |
SectionΒ 9.3 Parent Guarantee |
Β | Β | 57 | Β |
SectionΒ 9.4 Notices |
Β | Β | 57 | Β |
SectionΒ 9.5 Binding Effect; No Assignment; No Third-Party Beneficiaries |
Β | Β | 58 | Β |
SectionΒ 9.6 Severability |
Β | Β | 58 | Β |
SectionΒ 9.7 Governing Law |
Β | Β | 59 | Β |
SectionΒ 9.8 Submission to Jurisdiction; Waiver |
Β | Β | 59 | Β |
SectionΒ 9.9 Specific Enforcement |
Β | Β | 59 | Β |
SectionΒ 9.10 Interpretation |
Β | Β | 60 | Β |
SectionΒ 9.11 No Waiver of Rights |
Β | Β | 61 | Β |
SectionΒ 9.12 Counterparts; Facsimile Signatures |
Β | Β | 61 | Β |
Β | Β | Β |
Index of Defined Terms
|
Β | Annex A |
Exhibits:
ExhibitΒ A β Bylaws of Surviving Corporation
iii
Β
Β Β Β Β Β THIS
AGREEMENT AND PLAN OF MERGER (the βAgreementβ), dated
as of JuneΒ 17, 2007, is by and
among The Finish Line, Inc. (βParentβ), an Indiana corporation, Headwind, Inc. (βMerger Subβ),
a newly-formed Tennessee corporation and a direct wholly-owned
subsidiary of Parent, and Genesco Inc.
(the βCompanyβ), a Tennessee corporation.
Β Β Β Β Β WHEREAS, the Board of Directors of the Company (the βCompany Board of Directorsβ) has (i)
determined that it is in the best interests of the Company and the shareholders of the Company, and
has approved and declared it advisable for the Company, to enter into this Agreement with Parent
and Merger Sub providing for the merger of Merger Sub with and into the Company in accordance with
the Tennessee Business Corporation Act (the βTBCAβ), upon the terms and subject to the conditions
set forth herein, and (ii)Β resolved to recommend adoption of this Agreement by the shareholders of
the Company;
Β Β Β Β Β 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 Indiana
Business Corporation Law and the TBCA, upon the terms and conditions set forth herein;
Β Β Β Β Β WHEREAS, as a condition and material inducement to the Companyβs willingness to enter into
this Agreement, Parent and the Lender have delivered to the Company the Commitment Letter with
respect to the Financing; and
Β Β Β Β Β WHEREAS, the Company, Parent and Merger Sub desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and the other transactions
contemplated hereby and also to prescribe various conditions to the Merger.
Β Β Β Β Β NOW, THEREFORE, in consideration of the foregoing and the respective covenants, agreements,
representations and warranties herein contained, the parties hereto, intending to be legally bound,
hereby agree as follows:
Β Β Β Β Β SectionΒ 1. The Merger.
Β Β Β Β Β SectionΒ 1.1 The Merger; Effects of the Merger.
Β Β Β Β Β Β Β Β Β Β (a)Β 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 βMergerβ) 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 βSurviving Corporationβ).
Β Β Β Β Β Β Β Β Β Β (b)Β 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)Β 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
Β
Β
Tennessee;
(iii)Β 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)Β all
the property, rights, privileges, immunities, powers and franchises of the Company and Merger Sub
shall be vested in the Surviving Corporation, and all debts, liabilities and duties of the Company
and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation.
Β Β Β Β Β Β Β Β Β Β (c)Β The charter of the Company in effect at the Effective Time shall be the charter of the
Surviving Corporation until thereafter changed or amended as provided therein, by the TBCA or
pursuant to any amendment approved by the shareholders of the Company at the Company Shareholders
Meeting, consistent with the obligations set forth in SectionΒ 6.5.
Β Β Β Β Β Β Β Β Β Β (d)Β The bylaws of Merger Sub, as in effect immediately prior to the Effective Time and
substantially in the form attached hereto as ExhibitΒ A, 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 SectionΒ 6.5.
Β Β Β Β Β SectionΒ 1.2 Closing. The closing of the Merger (the βClosingβ) will take place at
11:00Β a.m. (New York time) on a date to be specified by the parties, such date to be no later than
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), at the offices of Bass, Xxxxx & Xxxx PLC, 000 Xxxxxxxxx Xxxxxx,
XxxxxΒ 0000, Xxxxxxxxx, Xxxxxxxxx 00000, 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 βClosing Date.β
Β Β Β Β Β SectionΒ 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 βArticles of
Mergerβ) 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 βEffective Time.β Parent, Merger
Sub and the Company shall make all other filings or recordings required under the TBCA or other
applicable Tennessee law in connection with the Merger.
Β Β Β Β Β SectionΒ 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 Corporationβs charter and bylaws.
2
Β
Β Β Β Β Β SectionΒ 2. Conversion of Securities.
Β Β Β Β Β SectionΒ 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 $1.00 per share (βCompany Common Stockβ), or the
other securities described below:
Β Β Β Β Β Β Β Β Β Β (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 SectionΒ 2.1(d)), together with the associated Company Rights, shall be cancelled and converted
into the right to receive $54.50 in cash, without interest (the βPer Share Priceβ), payable to
the holder thereof (the βMerger Considerationβ), upon the surrender in accordance with SectionΒ 2.4
of the certificate that formerly evidenced such shares, or as otherwise specified for Book-Entry
Shares. From and after the Effective Time, all such shares of Company Common Stock, including the
associated Company Rights, 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, including the associated Company Rights,
shall cease to have any rights with respect thereto, except the right, subject to SectionΒ 2.4 and
SectionΒ 2.5, to receive the applicable Merger Consideration therefor.
Β Β Β Β Β Β Β Β Β Β (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 1,000,000 validly issued, fully paid and nonassessable shares 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.
Β Β Β Β Β Β Β Β Β Β (c) Preferred Stock. Each issued and outstanding share of Company Preferred Stock
outstanding immediately prior to the Effective Time, including those subject to a Company
redemption notice with a redemption date after the Effective Time, shall remain issued and
outstanding with the same designation, rights, privileges and preferences as set forth in the
Surviving Corporationβs charter.
Β Β Β Β Β Β Β Β Β Β (d) Cancellation of Company and Parent-Owned Stock. All shares of Company Common
Stock and Company Preferred Stock that are owned by the Company or any
Company Subsidiary as treasury stock and any 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.
Β Β Β Β Β Β Β Β Β Β (e) Adjustments. So long as such transaction is otherwise permitted pursuant to the
terms of this Agreement, the Per Share Price shall be appropriately adjusted for any stock dividend
(other than the payment or accrual of regular quarterly cash dividends), stock split,
recapitalization, reclassification or like transaction affecting the Company Common Stock after the
date hereof and prior to the Effective Time.
3
Β
Β Β Β Β Β Β Β Β Β Β (f) Convertible Debentures. The 4.125% Convertible Subordinated Debentures due 2023
(the βConvertible Debenturesβ) issued by the Company and under that certain indenture dated as of
JuneΒ 24, 2003, between the Company and The Bank of New York (the βIndentureβ), and outstanding
immediately prior to the Effective Time, by virtue of the Merger and the terms of the Indenture and
a supplemental indenture required to be entered into upon the Merger under the terms of the
Indenture (the βSupplemental Indentureβ), will not be convertible at or after the Effective Time
into shares of Company Common Stock, and following the Effective Time, the Convertible Debentures
will be convertible, pursuant to the terms of the Indenture and the Supplemental Indenture, into
cash in an amount equal to the product of (i)Β the Per Share Price times (ii)Β the number of shares
of Company Common Stock into which the Convertible Debentures could have been converted as of the
Effective Time, including fractional shares. Parent shall, and shall cause the Surviving
Corporation to, at all times from and after the Effective Time maintain sufficient funds to satisfy
its obligations to holders of Convertible Debentures upon the conversion thereof as described in
this SectionΒ 2.1(f).
Β Β Β Β Β SectionΒ 2.2 Dissenting Shares.
Β Β Β Β Β Β Β Β Β Β (a)Β Notwithstanding anything in this Agreement to the contrary, shares of Company Preferred
Stock that are issued and outstanding immediately prior to the Effective Time and which are held by
holders of shares of Company Preferred Stock who are entitled to demand and who have properly
demanded and perfected their rights to be paid the βfair valueβ of such shares in accordance with
Title 48, ChapterΒ 23 of the TBCA (the βDissenting Sharesβ) shall be entitled to only such rights,
if any, as are granted by Title 48, ChapterΒ 23 of the TBCA; provided, however, that if any such
holder shall fail to perfect or shall effectively waive, withdraw or lose such holderβs rights
under Title 48, ChapterΒ 23 of the TBCA, such holderβs shares of Company Preferred Stock shall
thereupon cease to be Dissenting Shares.
Β Β Β Β Β Β Β Β Β Β (b)Β The Company shall give Parent (i)Β prompt notice of any appraisal demands received by the
Company, withdrawals thereof and any other instruments served pursuant to the applicable section of
the TBCA and received by the Company and (ii)Β the opportunity to participate in all negotiations
and proceedings with respect to the exercise of appraisal rights under the TBCA. The Company shall
not, except with the prior written consent of Parent or as otherwise required by applicable Law,
make any payment with respect to or settle or offer to settle any such demands.
Β Β Β Β Β Β Β Β Β Β (c)Β Dissentersβ rights under the TBCA are not available to the holders of Company Common Stock
for the transactions contemplated by this Agreement.
Β Β Β Β Β SectionΒ 2.3 Company Options, Restricted Shares and ESPP. Except to the extent
otherwise agreed in writing by the Company and Parent prior to the Effective Time:
Β Β Β Β Β Β Β Β Β Β (a)Β The Company shall take all action necessary to ensure that, (i)Β immediately prior to the
Effective Time, each outstanding option to acquire shares of Company Common Stock (βCompany
Optionsβ) granted under the Companyβs Amended and Restated 1996 Stock Incentive Plan and 2005
Equity Incentive Plan (collectively, the βEquity Incentive Plansβ), shall become fully vested and
exercisable (without regard to whether the Company Options are then vested or exercisable), (ii)Β at
the Effective Time, all Company Options not
4
Β
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)Β the excess, if any, of the Per Share Price
over the exercise price of each such Company Option and (y)Β 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 SectionΒ 2.5), and (iii)Β 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)Β without interest.
Β Β Β Β Β Β Β Β Β Β (b)Β The Company shall take all action necessary to ensure that, (i)Β 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, βRestricted Sharesβ) 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)Β at the Effective Time, the holder thereof shall be entitled to receive
the Per Share Price with respect to each such Restricted Share, less any applicable Taxes withheld
pursuant to SectionΒ 2.5.
Β Β Β Β Β Β Β Β Β Β (c)Β The Company shall take all action necessary to ensure that, (i)Β the Companyβs Amended and
Restated Employee Stock Purchase Plan (the βESPPβ and, together with the Equity Incentive Plans,
the βEquity Plansβ) is, and that all offering periods in progress under the ESPP are, terminated
immediately prior to the Effective Time (or another date prior to the Effective Time date
designated by the Company for administrative convenience), (ii)Β with respect to persons
participating in the ESPP on the date on which the offering periods cease and the ESPP terminates
(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 ESPPβs terms (treating the date of termination as the
last day of the relevant offering period), and each such share of Company Common Stock will be
deemed to 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 Taxes
withheld pursuant to SectionΒ 2.5, (A)Β a refund by the Company of all deferrals made to the ESPP by
the participant during the applicable existing salary deferral periods, to the extent such
deferrals have not been applied to the purchase of Company Common Stock in accordance with the
ESPPβs terms, and (B)Β an amount in cash equal to the excess of (1)Β the product of (x)Β the number of
shares of Company Common Stock that the participant is deemed to have acquired pursuant to the
terms of the ESPP and (y)Β the Per Share Price, over (2)Β the aggregate amount of the participantβs
purchase price deemed to have been paid in connection with the deemed purchase, and (iii)Β there are
no outstanding rights of participants under the ESPP following the Effective Time. The aggregate
amount specified in SectionsΒ 2.3(a), (b)Β and (c)Β with respect to the Company Options, Restricted
Shares and βOptionsβ pursuant to the ESPP (βESPP Optionsβ) is referred to herein as the βCash Out
Amount.β
Β Β Β Β Β Β Β Β Β Β (d)Β The Company shall take all action necessary to ensure that, as of the Effective Time, the
Equity Plans shall terminate and that no person shall have any right under the Equity Plans, except
as set forth herein.
5
Β
Β Β Β Β Β Β Β Β Β Β (e)Β 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 and ESPP Options, without interest and less any applicable
withholding Taxes. If for any reason the Surviving Corporation does not have adequate freely
available and unrestricted cash to pay the aggregate Cash Out Amount, (i)Β Parent shall promptly
fund the Surviving Corporation with additional cash sufficient to make all required payments to the
holders of Company Options, Restricted Shares and ESPP Options in respect of the Cash Out Amount
and (ii)Β Parent and the Surviving Corporation shall in any event be liable for payment thereof.
Parent shall, and shall cause the Surviving Corporation to, at all times from and after the
Effective Time maintain sufficient funds to satisfy its obligations to holders of Company Options,
Restricted Shares and ESPP Options in respect of the Cash Out Amount pursuant to this SectionΒ 2.3.
Β Β Β Β Β SectionΒ 2.4 Exchange of Certificates and Book-Entry Shares.
Β Β Β Β Β Β Β Β Β Β (a) Paying Agent. Prior to the Effective Time, Parent shall designate a bank or trust
company reasonably acceptable to Company to act as paying agent for the holders of shares of
Company Common Stock, including associated Company Rights, in connection with the Merger (the
βPaying Agentβ) and to receive the funds to which holders of shares of Company Common Stock will
become entitled pursuant to SectionΒ 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 βExchange Fundβ). 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
SectionΒ 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.
Β Β Β Β Β Β Β Β Β Β (b) Exchange Procedures. As soon as reasonably practicable after the Effective Time,
the Surviving Corporation shall cause to be mailed to each (i)Β 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 βCertificatesβ) or (ii)Β holder, as of the
Effective Time, of shares of Company Common Stock represented by book-entry (βBook-Entry Sharesβ),
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 SectionΒ 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
Shares shall be entitled to receive in exchange therefor the Merger Consideration for each share
formerly represented by such Certificate or Book-Entry Shares, as applicable, and such Certificate
or applicable book-entry shall then be canceled. 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.
6
Β
Until surrendered for cancellation as
contemplated by this SectionΒ 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 SectionΒ 2.
Β Β Β Β Β Β Β Β Β Β (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, the posting by
such person of a bond in such amount as the Surviving Corporation 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.
Β Β Β Β Β Β Β Β Β Β (d) Transfer Books; No Further Ownership Rights in Shares of Company Common Stock. At
the Effective Time, the stock transfer books of the Company with respect to the Company Common
Stock 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 Book-Entry Shares and 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 or Book-Entry Shares are presented to
the Surviving Corporation for any reason, they shall be cancelled against delivery of the Merger
Consideration as provided in this SectionΒ 2 without interest.
Β Β Β Β Β Β Β Β Β Β (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 Agentβs routine administrative procedures) to holders of Certificates or
Book-Entry Shares, 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
or Book-Entry Shares, without any interest thereon.
Β Β Β Β Β Β Β Β Β Β (f) No Liability. None of Parent, the Surviving Corporation or the Paying Agent shall
be liable to any holder of a Certificate or a Book-Entry Share for Merger Consideration delivered
to a public official pursuant to any applicable abandoned property, escheat or similar Law.
Β Β Β Β Β SectionΒ 2.5 Withholding. Each of Parent, 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 or ESPP Options such
amounts as are required to be deducted or withheld therefrom under the Internal Revenue Code of
1986, as amended (the βCodeβ), or any provision of state, local or foreign Tax Law or under any
other applicable legal requirement. To the extent such amounts
7
Β
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.
Β Β Β Β Β SectionΒ 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 or Book-Entry Share is registered, it
shall be a condition of payment that the Certificate or Book-Entry Share 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 or Book-Entry
Share surrendered (or shall have established to the reasonable satisfaction of Parent that such Tax
either has been paid or is not applicable).
Β Β Β Β Β SectionΒ 3. Representations and Warranties of Company. Except (i)Β as set forth in the
disclosure schedule delivered by the Company to Parent on the date hereof (the βCompany Disclosure
Scheduleβ) or (ii)Β as disclosed in reasonable detail in any form, report, schedule, registration,
statement, certification or other document filed with, or furnished to, the SEC prior to the date
hereof, the Company hereby makes the representations and warranties set forth in this SectionΒ 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 this Agreement to which its relevance is reasonably apparent.
Β Β Β Β Β SectionΒ 3.1 Organization and Qualification.
Β Β Β Β Β Β Β Β Β Β (a)Β Each of the Company and each subsidiary of the Company (all such Company subsidiaries
being, collectively, the βCompany Subsidiariesβ) 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, judgments, decrees, orders, writs and injunctions (collectively, βLawsβ) 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 (βGovernmental Entityβ) 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 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. βCompany Material
Adverse Effectβ shall mean any event, circumstance, change or effect that, individually or in the
aggregate, is materially adverse to the business, condition (financial or otherwise), assets,
liabilities or results of operations of the Company and the Company Subsidiaries, taken as a whole;
provided, however, that none of the following shall constitute, or shall be considered in
determining whether there has occurred, and no event,
8
Β
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 of the Company and the Company
Subsidiaries with customers, vendors, suppliers, distributors, landlords or employees (including
the threatened or actual termination, suspension, modification or reduction of such
relationships)); (B)Β changes in the national or world economy 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 changes or conditions do not adversely
affect the Company and the Company Subsidiaries, taken as a whole, in a materially disproportionate
manner relative to other similarly situated participants in the industries or markets in which they
operate; (C)Β 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 similarly
situated participants in the industries or markets in which they operate; (D)Β the failure, in and
of itself, of the Company to meet any published or internally prepared estimates of revenues,
earnings or other financial projections, performance measures or operating statistics; provided,
however, that the facts and circumstances underlying any such failure may, except as may be
provided in subsection (A), (B), (C), (E), (F)Β and (G)Β of this definition, be considered in
determining whether a Company Material Adverse Effect has occurred; (E)Β a decline in the price, or
a change in the trading volume, of the Company Common Stock on the New York Stock Exchange (βNYSEβ)
or the Chicago Stock Exchange (βCHXβ); (F)Β compliance with the terms of, and taking
any action required by, this Agreement, or taking or not taking any actions at the request of,
or with the consent of, Parent; and (G)Β acts or omissions of Parent or Merger Sub after the date of
this Agreement (other than actions or omissions specifically contemplated by this Agreement).
Β Β Β Β Β Β Β Β Β Β (b)Β 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 Subsidiary set forth
in SectionΒ 3.4(a) of the Company Disclosure Schedule as presently in effect. The Company is not in
violation of its charter or bylaws. The Company Subsidiaries are not in violation of their
respective articles of organization, charter, bylaws or other organizational documents.
Β Β Β Β Β SectionΒ 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
adoption of this Agreement by the requisite holders of Company Common Stock and the Company
Preferred 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 requisite holders of Company Common Stock and the Company Preferred Stock and the
filing with the Secretary of
9
Β
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).
Β Β Β Β Β SectionΒ 3.3 Capitalization.
Β Β Β Β Β Β Β Β Β Β (a)Β The authorized capital stock of the Company consists of (i)Β 80,000,000 shares of Company
Common Stock, of which, as of JuneΒ 2, 2007, 22,773,767 shares
(including an aggregate of 400,994
Restricted Shares for which the restrictions have not lapsed) were issued and outstanding, net of
any shares held in the treasury of the Company, and (ii)Β 13,503,315 shares of Company preferred
stock (collectively, βCompany Preferred Stockβ), of which,
as of JuneΒ 2, 2007, 147,896 shares were
issued and outstanding and no shares were held in the treasury of the Company. SectionΒ 3.3(a) of
the Company Disclosure Schedule sets forth, as of JuneΒ 2, 2007, the classes and series and number
of authorized shares of each class and series of Company Preferred Stock, the number of issued and
outstanding shares of each class and series of Company Preferred Stock, and, as of JuneΒ 2,
2007, the per share redemption amount and conversion ratio of each class and series of issued
and outstanding Company Preferred Stock. Except as set forth in SectionΒ 3.3(a) of the Company
Disclosure Schedule, all of the issued and outstanding shares of Company Common Stock and Company
Preferred Stock are duly authorized, validly issued, fully paid and nonassessable, and, other than
Company Rights, were issued free of any preemptive (or similar) rights. Except as set forth in
SectionΒ 3.3(a) of the Company Disclosure Schedule, as of the date of this Agreement, the Company
has no pending redemption notices in connection with any shares of the Company Preferred Stock.
Β Β Β Β Β Β Β Β Β Β (b)Β As of JuneΒ 2, 2007, there is $86,250,000 in aggregate principal amount of Convertible
Debentures outstanding (excluding those Convertible Debentures that are held by the Company). As
of JuneΒ 2, 2007, each $1,000 in aggregate principal amount of Convertible Debentures is entitled to
be converted to 45.2080 shares of Company Common Stock.
Β Β Β Β Β Β Β Β Β Β (c)Β As of JuneΒ 2, 2007, the Company has reserved 2,153,361 shares of Company Common Stock for
issuance pursuant to all of the Equity Incentive Plans, of which Company Options to purchase
1,147,916 shares of Company Common Stock were outstanding as of JuneΒ 2, 2007, and 394,199 shares
remain 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 JuneΒ 2, 2007, is 333,722 shares. All
shares of Company Common Stock reserved for issuance as specified above, upon issuance on the terms
and conditions specified in the instruments pursuant to which they are issuable, shall be duly
authorized, validly issued, fully paid and nonassessable and, other than Company Rights, will not
be issued subject to any preemptive (or similar) rights. To the extent any Company Options were
exercised after JuneΒ 2, 2007 and before the date of this Agreement, the Company has received the
exercise price (or other applicable consideration) for such exercised Company Options in accordance
with the terms of such Company Options.
10
Β
Β Β Β Β Β Β Β Β Β Β (d)Β At the Effective Time, there will not be any shares of Company Common Stock, Company
Preferred Stock or Restricted Shares issued and outstanding, except for (i)Β shares of Company
Common Stock, Company Preferred Stock and Restricted Shares indicated in SectionΒ 3.3(a) as issued
and outstanding as of JuneΒ 2, 2007, (ii)Β shares of Company Common Stock issued after JuneΒ 2, 2007
upon the exercise of Company Options or ESPP Options outstanding as of JuneΒ 2, 2007 and (iii)
shares of Company Common Stock issued after JuneΒ 2, 2007 upon the conversion of any shares of
Company Preferred Stock or any of the Convertible Debentures that were issued and outstanding as of
JuneΒ 2, 2007. Except as set forth on SectionΒ 3.3(d) of the Company Disclosure Schedule, since June
2, 2007, (x)Β no Company Options or Restricted Shares have been issued and (y)Β there has been no
change in the conversion ratios of any of the Company Preferred Stock or the Convertible
Debentures.
Β Β Β Β Β Β Β Β Β Β (e)Β No registration rights involving the Company Common Stock will survive consummation of the
Merger.
Β Β Β Β Β Β Β Β Β Β (f)Β 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)Β Company Options and ESPP Options outstanding
on JuneΒ 2, 2007, (ii)Β the rights (the βCompany Rightsβ) issued pursuant to the Amended and Restated
Rights Agreement, dated as of AugustΒ 28, 2000 (the βCompany Rights Agreementβ), between the Company
and Computershare Trust Company, N.A. as successor to First Chicago Trust Company of New York, as
rights agent, in respect of which no Distribution Date (as defined in the Company Rights Agreement)
has occurred, (iii)Β the Convertible Debentures outstanding on JuneΒ 2, 2007, and (iv)Β Company
Preferred Stock outstanding on JuneΒ 2, 2007 having the rights, privileges and preferences as set
forth in the Companyβs charter. There are no stockholder 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 stockholder agreements, voting trusts, proxies or other
agreements or instruments with respect to the voting of the capital stock of the Company.
Β Β Β Β Β Β Β Β Β Β (g)Β 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 stockholders may vote, other than the Convertible Debentures.
Β Β Β Β Β Β Β Β Β Β (h)Β The Company Common Stock, Employeesβ Subordinated Convertible Preferred Stock,
Subordinated Serial Preferred Stock, SeriesΒ 1 and the Company Rights constitute the only classes of
securities of the Company registered under the Securities Exchange Act of 1934, as amended
(together with the rules and regulations promulgated thereunder, the βExchange Actβ).
11
Β
Β Β Β Β Β SectionΒ 3.4 Company Subsidiaries.
Β Β Β Β Β Β Β Β Β Β (a)Β SectionΒ 3.4(a) of the Company Disclosure Schedule sets forth a complete list of the names
and jurisdictions of 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 (βLiensβ), except for (i)Β Liens for current taxes and assessments not yet past
due or that are being contested in good faith, (ii)Β Liens imposed by applicable Law that would not,
individually or in the aggregate, have a Company Material Adverse Effect, or (iii)Β Liens imposed or
granted pursuant to or in connection with the Companyβs existing credit facilities or other
indebtedness. None of the Company Subsidiaries owns any shares of Company Common Stock.
Β Β Β Β Β Β Β Β Β Β (b)Β 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.
Β Β Β Β Β SectionΒ 3.5 SEC Filings; Financial Statements; Undisclosed Liabilities.
Β Β Β Β Β Β Β Β Β Β (a)Β 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 United States
Securities and Exchange Commission (the βSECβ) for all periods beginning on or after JanuaryΒ 31,
2004 (the βCompany SEC Reportsβ). 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 βSecurities Actβ), 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 no outstanding or unresolved comments in comment letters received from
the SEC. As of the date hereof, to the Companyβs knowledge, 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.
Β Β Β Β Β Β Β Β Β Β (b)Β The consolidated financial statements contained in the Company SEC Reports (including the
related notes, where applicable) (the βFinancial Statementsβ) (i)Β 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
12
Β
financial statements, to the
qualifications stated therein), (ii)Β have been prepared in all material respects in accordance with
United States generally accepted accounting principles (βGAAPβ) 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)Β when filed complied
as to form in all material respects with the rules and regulations of the SEC with respect thereto.
Since FebruaryΒ 3, 2007, there has been no material change in the Companyβs accounting methods or
principles that would be required to be disclosed in the Companyβs financial statements in
accordance with GAAP, except as described in the notes to such financial statements. Except as
would not be material to the Company and its Subsidiaries, taken as a whole, (i)Β 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 (ii)Β the Companyβs
principal executive officer and principal financial officer have disclosed, based on their most
recent evaluation of internal control over financial reporting, to the Companyβs auditors and the
audit committee of the Company Board of
Directors (or persons performing the equivalent functions): (A)Β all significant deficiencies
and material weaknesses within their knowledge in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the Companyβs ability to
record, process, summarize and report financial information; and (B)Β any fraud that involves
management or other employees who have a significant role in the Companyβs internal control over
financial reporting. The Companyβs 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 except as disclosed in the Company SEC Reports filed
prior to the date hereof. As of the date hereof, neither the Company nor any of the Company
Subsidiaries has outstanding, or has arranged any outstanding, βextensions of creditβ to directors
or executive officers of the Company or any Company Subsidiaries within the meaning of SectionΒ 402
of the Xxxxxxxx-Xxxxx Act of 2002.
Β Β Β Β Β Β Β Β Β Β (c)Β Neither the Company nor any Company Subsidiary has any liabilities, whether accrued,
absolute, contingent or otherwise, other than liabilities and obligations (i)Β reflected or reserved
against on the Financial Statements in accordance with GAAP or reasonably apparent from the notes
or managementβs discussion and analysis related thereto, (ii)Β 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)Β discharged or
paid prior to the date of this Agreement, or (iv)Β that are not, individually or in the aggregate,
material to the Company and the Company Subsidiaries, taken as a whole.
Β Β Β Β Β SectionΒ 3.6 Absence of Certain Changes or Events. Since FebruaryΒ 3, 2007 through the
date hereof, except as specifically contemplated by this Agreement or set forth on SectionΒ 3.6 of
the Company Disclosure Schedule, (i)Β there have not been any changes, events or circumstances of
which the Company has knowledge that have had, individually or in the aggregate, a Company Material
Adverse Effect, and (ii)Β the Company and each Company Subsidiary has conducted its respective
business in the ordinary course of business, except for
13
Β
such actions as have not had, individually
or in the aggregate, a Company Material Adverse Effect.
Β Β Β Β Β SectionΒ 3.7 Compliance with Laws.
Β Β Β Β Β Β Β Β Β Β (a)Β The Company and the Company 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 Subsidiaries or the holding of any interest in any of its properties (collectively
referred to herein as, the βPermitsβ), 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)Β all of such Permits are valid and in full force and effect and neither the
Company nor any Company Subsidiary has violated the terms of such Permits,
and (ii)Β no proceeding is pending or, to the knowledge of the Company, threatened in writing
to revoke, suspend, cancel, terminate, or adversely modify any Permit.
Β Β Β Β Β Β Β Β Β Β (b)Β Except as has not had, individually or in the aggregate, a Company Material Adverse
Effect, the Company and the Company Subsidiaries are in compliance with, 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 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.
Β Β Β Β Β Β Β Β Β Β (c)Β 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 βoff balance sheet arrangementsβ (as defined in Item 303(a) of RegulationΒ 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 Companyβs published financial statements or other Company SEC Reports.
Β Β Β Β Β SectionΒ 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 respective securities, assets or properties that
would have, individually or in the aggregate, a Company Material Adverse Effect. There are no
actions, suits, claims, investigations, arbitrations, legal or administrative proceedings
(collectively, βActionsβ) or any governmental investigations or inquiries pending or, to the
knowledge of the Company, threatened, against the Company, the Company Subsidiaries or any of their
respective securities, assets or properties, except as would not have, 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 or transactions
contemplated hereby. As of the date hereof, there are no Actions pending or, to knowledge of the
Company, overtly threatened, against the Company or any Company
14
Β
Subsidiary challenging this
Agreement or the transactions contemplated hereby, or seeking to prohibit the Merger.
Β Β Β Β Β SectionΒ 3.9 Contracts and Other Agreements.
Β Β Β Β Β Β Β Β Β Β (a)Β Except for this Agreement, or as set forth in SectionΒ 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, or furnished to, the SEC, neither 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 βContractβ): (i)Β that
would be required to be filed by the Company as a βmaterial contractβ pursuant to ItemΒ 601(b)(10)
of RegulationΒ S-K under the Securities Act or disclosed on Form 8-K; (ii)Β 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)Β that relates to indebtedness for borrowed money, guarantees of indebtedness for borrowed
money, lines of credit (whether or not drawn), letters of credit, capitalized lease or surety bonds
that (x)Β have an outstanding principal amount in excess of $3,000,000 in the aggregate or (y)
impose any Lien on any shares of the Company Common Stock, Company Preferred Stock or Restricted
Shares; (iv)Β that involves acquisition or disposition, directly or indirectly, of assets of the
Company or any other Person for aggregate consideration in excess of $3,000,000 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)Β that
involves acquisition or disposition, directly or indirectly (by merger or otherwise), of capital
stock or other voting securities or equity interests of the Company or any other Person for
aggregate consideration in excess of $3,000,000 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; (vi)Β under which the Company or any
Company Subsidiary has advanced or loaned any funds in excess of $3,000,000 or has guaranteed any
obligations of another person in excess of $3,000,000, other than extensions of credit to customers
or vendors in the ordinary course of business consistent with past practice; (vii)Β that relates to
any single or series of related capital expenditures by the Company or any Company Subsidiary in
excess of $3,000,000 (other than purchase orders for the purchase of inventory or real property
leases); (viii)Β to which the Company or any Company Subsidiary is a party constituting a general or
limited partnership, a limited liability company or a joint venture (whether limited liability or
other organizational form) or material alliance or similar arrangement that is material to the
business of the Company and the Company Subsidiaries, taken as a whole; and (ix)Β except as set
forth on SectionΒ 3.14 of the Company Disclosure Schedule, that relates to the issuance, offering,
voting or pledge of any shares of the Company Common Stock, Company Preferred Stock or Restricted
Shares. Each such Contract described in clauses (i)Β through (ix)Β of this SectionΒ 3.9(a) is
referred to herein as a βMaterial Contract.β
Β Β Β Β Β Β Β Β Β Β (b)Β 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 that is a 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
15
Β
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).
Β Β Β Β Β Β Β Β Β Β (c)Β Except as has not had, individually or in the aggregate, a Company Material Adverse
Effect, (i)Β 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)Β to the Companyβs 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. 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.
Β Β Β Β Β SectionΒ 3.10 Intellectual Property.
Β Β Β Β Β Β Β Β Β Β (a) βIntellectual Propertyβ means all intellectual property rights arising from or associated
with the following, whether protected, created, or arising under the laws of the United States or
of any other jurisdiction: (i)Β trade names, trademarks and service marks (registered and
unregistered), logos, designs and other indicia of origin, domain names and other Internet
addresses or identifiers, trade dress and similar rights, and applications (including intent to use
applications) to register any of the foregoing (collectively, βTrademarksβ); (ii)Β patents and
patent applications, including continuation, divisional, continuation-in-part, reexamination and
reissue patent applications, and any patents issuing therefrom (collectively, βPatentsβ); (iii)
works of authorship (whether published or unpublished), copyrights and registrations and
applications therefor (collectively, βCopyrightsβ); (iv)Β know-how, inventions, discoveries,
improvements, concepts, ideas, methods, processes, designs, plans, schematics, technical data,
specifications, research and development information, technology and product roadmaps,
compilations, databases, and other proprietary or confidential information, including customer
lists, excluding any Patents or Copyrights that may cover or protect any of the foregoing
(collectively, βTrade Secretsβ); (v)Β software, computer programs, algorithms, and related
documentation; and (vi)Β moral rights, publicity rights, and any other proprietary, intellectual or
industrial property rights of any kind or nature.
Β Β Β Β Β Β Β Β Β Β (b)Β SectionΒ 3.10(b) of the Company Disclosure Schedule sets forth a complete and accurate list
of all registered Trademarks, Patents, and Copyrights, including any pending applications to
register any of the foregoing, owned (in whole or in part) by or exclusively licensed to the
Company, identifying for each whether it is owned by or exclusively licensed to the Company, and in
each case currently used or held for use and material to the operations of the Company
(collectively, βCompany Registered IPβ). Either the Company or a Company Subsidiary owns, or is
licensed or otherwise possesses adequate rights to use, all Intellectual Property, and all
applications and registrations, used or held for use in their respective businesses as currently
conducted. Except as set forth on SectionΒ 3.10(c) of the Company Disclosure Schedule, the Company
has not received any written notice or claim challenging the Companyβs ownership of any of the
Intellectual Property owned (in whole or in part) by the Company. The
16
Β
Company has not received any
written notice or claim challenging the validity or enforceability of any of the Company Registered
IP. As of the date of this Agreement, all necessary filing fees, maintenance fees, license fees
annuities and similar fees due in connection with the Company Registered IP have been paid.
Β Β Β Β Β Β Β Β Β Β (c)Β To the knowledge of the Company, as of the date of this Agreement, the development,
manufacture, sale, distribution and other commercial exploitations of products or services by or on
behalf of the Company or any of the Company Subsidiaries has not (except as to matters that have
been fixed, resolved or settled) or does not infringe, misappropriate, or otherwise violate any
intellectual property rights of any person that would be expected to result
in liability that is material to the Company and the Company Subsidiaries taken as a whole,
and, to the knowledge of the Company, there are no claims pending or threatened in writing, by any
person alleging such infringement or misappropriation. Except as set forth on SectionΒ 3.10(c) of
the Company Disclosure Schedule, neither the Company nor any of the Company Subsidiaries has made
any claim of a violation, misappropriation or infringement by others of its rights to or in
connection with the material Intellectual Property of the Company or any of the Company
Subsidiaries and, to the knowledge of the Company, no person is infringing, misappropriating or
otherwise violating any material Intellectual Property of the Company or any of the Company
Subsidiaries.
Β Β Β Β Β Β Β Β Β Β (d)Β The Company has taken commercially reasonable actions to protect the security of its
software, systems and networks, to protect its rights in its Intellectual Property and to maintain
the confidentiality of all information that constitutes or constituted a Trade Secret of the
Company. Except as set forth on SectionΒ 3.10(d) of the Company Disclosure Schedule, and except as
had not had a Company Material Adverse Effect, all current and former employees, consultants and
contractors of the Company who developed or created any material Intellectual Property for, on
behalf of, the Company have executed and delivered proprietary information, confidentiality and
invention assignment agreements substantially in the Companyβs standard form.
Β Β Β Β Β Β Β Β Β Β (e)Β The Intellectual Property owned by or licensed to the Company constitutes all of the
Intellectual Property rights necessary for the conduct of the business as currently conducted in
all material respects. To the knowledge of the Company, no loss or expiration of any of the
material Intellectual Property used by the Company or the Company Subsidiaries in the conduct of
the business, as presently conducted, is threatened or pending.
Β Β Β Β Β SectionΒ 3.11 Property. Except as has not, individually or in the aggregate, had 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 of 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 (other than (i)Β Liens for current
taxes and assessments not yet past due or being contested in good faith, (ii)Β inchoate Liens for
construction in progress, (iii)Β mechanicsβ, materialmenβs, workmenβs, repairmenβs, warehousemenβs
and carriersβ 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)Β Liens imposed or granted pursuant to or in connection with
the Companyβs existing credit facilities or other indebtedness, and (v)Β all
17
Β
Liens and other
imperfections of title (including matters of record) and encumbrances that do not materially
interfere individually or in the aggregate with the conduct of the business of the Company and the
Company Subsidiaries, taken as a whole, materially detract from the value or use of the real
property or have, individually or in the aggregate, a Company Material Adverse Effect
(collectively, βPermitted Liensβ)), 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, individually or in the aggregate, had a Company Material Adverse Effect, all
leases under which the Company or any of the Company Subsidiaries lease
any real or personal property (each a βLeaseβ and, collectively, the βLeasesβ) are valid and
in full force and effect against the Company or any of the Company Subsidiaries and, to the
Companyβs 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 which, with
notice or lapse of time or both, would become a default by the Company or any of the Company
Subsidiaries. SectionΒ 3.11 of the Company Disclosure Schedule sets forth a correct and complete
list, as of the date indicated on such schedule, of all of the Leases under which the Company or
any Company Subsidiary leases any real property used for commercial purposes.
Β Β Β Β Β SectionΒ 3.12 Insurance. Except as has not had, individually or in the aggregate, a
Company Material Adverse Effect, (a)Β the Company and the Company Subsidiaries maintain insurance in
such amounts and against such risks as is (i)Β customary in relation to the business, assets and
liabilities of the Company and the Company Subsidiaries, and (ii)Β sufficient to comply with
applicable Law, (b)Β all policies or binders of material fire, liability, product liability,
workersβ compensation, vehicular, directorsβ and officersβ and other material insurance held by or
on behalf of the Company and the Company Subsidiaries (collectively, the βCompany Insurance
Policiesβ) are (i)Β except for policies that have expired under their terms, in full force and
effect and, to the knowledge of the Company, valid and enforceable in accordance with their terms
and (ii)Β all premiums due thereon have been paid in full, (c)Β 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 (d)Β neither the Company nor any Company Subsidiary has (i)Β received notice of actual or
threatened modification or termination of any material Company Insurance Policy, or (ii)Β received
notice of cancellation or non-renewal of any such Company Insurance Policy, other than in
connection with ordinary renewals. SectionΒ 3.12 of the Company Disclosure Schedule contains a
complete and accurate list of all material Company Insurance Policies.
Β Β Β Β Β SectionΒ 3.13 Tax Matters.
Β Β Β Β Β Β Β Β Β Β (a)Β For purposes of this Agreement, the term βTaxβ (and, with correlative meaning, βTaxesβ and
βTaxableβ) means all United States federal, state and local, and all foreign, income, profits,
franchise, gross receipts, payroll, transfer, sales, employment, social security, unemployment
insurance, workersβ 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,
18
Β
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. βTax Returnβ (and, with correlative meaning, βTax Returnsβ) 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.
Β Β Β Β Β Β Β Β Β Β (b)Β Except as has not had a Company Material Adverse Effect or as set forth in SectionΒ 3.13(b)
of the Company Disclosure Schedule:
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (i)Β 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 of the Company
and all Company Subsidiaries are true, correct and complete in all respects, and all Taxes
owed by the Company or the Company Subsidiaries, whether or not shown on any Tax Return,
have been timely paid to the appropriate Tax authority or fully reserved for 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 Tax authority in any jurisdiction in which
any of the Company or the Company Subsidiaries does not file a Tax Return that any of the
Company or the Company Subsidiaries is or may be subject to taxation by that jurisdiction.
No adjustment relating to any Tax Return of the Company or any Company Subsidiary have been
proposed in writing by any Tax authority (insofar as such adjustment relates to the
activities or income of the Company or any Company Subsidiary).
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (ii)Β 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.
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (iii)Β 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 any of 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 any of 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 paid.
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (iv)Β 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
Subsidiaries for any taxable period. No power of attorney granted by or with respect to the
Company or the Company Subsidiaries relating to Taxes is currently in force.
19
Β
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (v)Β 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 material 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.
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (vi)Β 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 accrued.
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (vii)Β 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
RegulationΒ 1.1502-6 (or any similar provision of state, local or foreign Law) by contract or
as a transferee or successor, by contract, or otherwise. No person has any right to any
payment from the Company or any Company Subsidiary with respect to any Tax refunds received
or due to be received by the Company or any Company Subsidiary.
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (viii)Β The Company has delivered or made available to Parent complete copies of all Tax
Returns of the Company with respect to 2004 and 2005.
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (ix)Β Neither the Company nor any Company Subsidiary has participated in a βlisted
transactionβ within the meaning of SectionΒ 6707A(c)(2) of the Code.
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (x)Β Neither the Company nor any Company Subsidiary is a party to any material joint
venture, partnership, or other arrangement that the parties treat as a partnership for
federal or applicable state, local or foreign Tax purposes.
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (xi)Β Except as disclosed in its Tax Returns, neither the Company nor any Company
Subsidiary (x)Β has received approval to make or agreed to a change in any accounting method
or has any written application pending with any Tax authority requesting permission for any
such change, (y)Β has agreed to or is required to make any adjustment under SectionΒ 481 of
the Code that will require an adjustment to taxable income for any period following the
Closing Date, or (z)Β has received written notification that the Internal Revenue Service is
proposing any adjustment under SectionΒ 481 of the Code.
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (xii)Β Neither the Company nor any Company Subsidiary has been a βdistributing
corporationβ or a βcontrolled corporationβ (within the meaning of SectionΒ 355(a)(1)(A) of
the Code) (x)Β in a transaction occurring within the past five years or (y)Β in a distribution
which could otherwise constitute part of a βplanβ or βseries of related transactionsβ
(within the meaning of Section 355(e) of the Code) in conjunction with the Merger.
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (xiii)Β Neither the Company nor any Company Subsidiary is party to or bound by any
active and material closing agreement pursuant to SectionΒ 7121 of the Code
20
Β
(or any similar
provision of state, local or foreign Law) or offer in compromise with any Tax authority.
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (xiv)Β 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.
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (xv)Β Neither Company nor any Company Subsidiaries is, nor has been at any time during
the 5-year period ending with the Closing Date, a βUnited States Real Property Holding
Corporationβ within the meaning of SectionΒ 897(c)(2) of the Code.
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (xvi)Β Neither Company nor any of its Subsidiaries is, or has been, a member of an
affiliated group (within the meaning of Section 1504(a) of the Code) filing a consolidated
federal income Tax Return (other than a group the common parent of which was Company).
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (xvii)Β Neither Company nor any Company Subsidiaries (u)Β has participated in or
cooperated with an international boycott within the meaning of SectionΒ 999 of the Code, (v)
has an unrecaptured overall foreign loss within the meaning of Section 904(f) of the Code,
(w)Β will be required to include any amounts in income in the taxable year that includes the
Closing Date pursuant to SectionΒ 951 of the Code, (x)Β has had the amount of its Subpart F
income limited in any year pursuant to SectionΒ 952(c)(1)(a) of the Code, (y)Β has been a
passive foreign investment company within the meaning of SectionΒ 1297 of the Code, or (z)
has had any dual consolidated losses within the meaning of SectionΒ 1504 of the Code or has
entered into any agreement with any Tax authority regarding the use or availability of such
losses.
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (xviii) (i)Β All returns, declarations, and reports required to be filed by the Company
or any Company Subsidiary pursuant to any applicable abandoned property, escheat or similar
Law have been filed with the appropriate Governmental Entity within the time and in the
manner prescribed by Law and (ii)Β the Company and all Company Subsidiaries have properly
delivered to a public official or Governmental Entity all amounts so required to be
delivered pursuant to any applicable abandoned property, escheat or similar Law within the
time and in the manner prescribed by Law
Β Β Β Β Β SectionΒ 3.14 Employee Benefit Plans.
Β Β Β Β Β Β Β Β Β Β (a)Β With respect to each pension, savings, profit sharing, retirement, deferred compensation,
employment, 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 and arrangement for the benefit of any current or former employee, director
or consultant of the Company or any Company Subsidiary (collectively, the βCompany Employeesβ), or
their beneficiaries, including each βemployee benefit planβ (as that term is defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended (βERISAβ)) that is not a
Foreign Plan, and that is sponsored or maintained by Company and/or by one or more Company
Subsidiaries or to which the Company and/or one or more Company Subsidiaries has any present or
future liability (each, a βPlanβ), the Company has
21
Β
delivered or made available (or will make
available) to Parent current, accurate and complete copies of each of the following together with,
when applicable, all amendments: (i)Β the Plan, or, if the Plan has not been reduced to writing, a
written summary of its material terms, (ii)Β 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)Β 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 or any Company Subsidiary is entitled to rely) issued by the
Internal Revenue Service (βIRSβ), (iv)Β if the Plan is subject to the requirement that a FormΒ 5500
series annual report/return be filed, the three most recently filed annual reports/returns, (v)Β all
related trust agreements, group annuity contracts and administrative services agreements, (vi)Β for
each Plan that is funded, the three most recent financial statements and actuarial reports for each
such Plan, and (vii)Β since JanuaryΒ 1, 2005, any material communications received from or sent to
the IRS or the U.S. Department of Labor relating to an audit or similar process involving the Plan.
SectionΒ 3.14(a) of the Company Disclosure Schedule sets forth a list of all material Plans.
Β Β Β Β Β Β Β Β Β Β (b)Β There is no entity (other than the Company or any Company Subsidiary) that, together with
the Company or any Company Subsidiary, was, during the five years preceding the date of this
Agreement, or currently would be, treated as a single employer within the meaning of Section
414(b), (c), (m)Β or (o)Β of the Code or Section 4001(b) of ERISA (an βERISA Affiliateβ).
Β Β Β Β Β Β Β Β Β Β (c)Β 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). None of the Plans is currently under examination by the IRS or the
U.S. Department of Labor. 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 or any Company
Subsidiary 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
or reasonably would be expected to disqualify 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 SectionΒ 3.14(c) of the
Company Disclosure Schedule, no Plan is or has been subject to SectionΒ 302 of ERISA or SectionΒ 412
of the Code. To the knowledge of the Company, no event has occurred and 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 βControlled Groupβ (defined as any organization that is a
member of a controlled group of organizations within the meaning of SectionsΒ 414 (b), (c), (m)Β or
(o)Β 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.
Β Β Β Β Β Β Β Β Β Β (d)Β Except for continuation of health coverage described in SectionΒ 4980B of the Code or
SectionΒ 601 et seq. of ERISA (βCOBRAβ) and, except as provided on SectionΒ 3.14(d) 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.
22
Β
Β Β Β Β Β Β Β Β Β Β (e)Β No material 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 Entities).
Β Β Β Β Β Β Β Β Β Β (f)Β Except as set forth on SectionΒ 3.14(f) of the Company Disclosure Schedules, neither the
Company nor any of the Company Subsidiaries nor any ERISA Affiliate 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 SectionΒ 3(37) or SectionΒ 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(a) of ERISA.
Β Β Β Β Β Β Β Β Β Β (g)Β Neither the Company nor any Company Subsidiary, nor, to the knowledge of the Company, any
other βdisqualified personβ or βparty in interestβ (as defined in SectionΒ 4975(e)(2) of the Code
and SectionΒ 3(14) of ERISA, respectively) has engaged in any transactions in connection with any
Plan that would result in the imposition on the Company or any Company Subsidiary of a material
penalty pursuant to SectionΒ 502 of ERISA, damages pursuant to SectionΒ 409 of ERISA or a material
tax pursuant to SectionΒ 4975 of the Code.
Β Β Β Β Β Β Β Β Β Β (h)Β Each non-governmental plan maintained, or contributed to, by or on behalf of the Company
or any Company Subsidiary applicable to Company Employees located outside of the United States (a
βForeign Planβ) and each material non-governmental welfare benefit plan maintained or contributed
to by or on behalf of or applicable to the Company Employees located outside of the United States
(a βForeign Welfare Planβ), has been administered in material compliance with its terms and the
requirements of all applicable Laws and regulations, and all required contributions to each Foreign
Plan and Foreign Welfare Plan have been made. All Foreign Plans that are required to be funded are
funded to the extent required under applicable Law in all material respects. There are no Actions
(other than routine benefit claims) pending or, to the knowledge of the Company, threatened against
any Foreign Plan or Foreign Welfare Plan, or, to the Companyβs knowledge, no facts or circumstances
exist that could give rise to any such Actions, except in each case as has not resulted in
liability that is material to the Company and the Company Subsidiaries taken as a whole.
Β Β Β Β Β Β Β Β Β Β (i)Β Except as required by applicable Law or as set forth on SectionΒ 3.14(i) 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 consummation of the transactions contemplated by
this Agreement, would (i)Β result in severance pay or any increase in severance pay upon any
termination of employment after the date of this Agreement (except as required by the Code or
ERISA), (ii)Β except as contemplated by SectionΒ 2 with respect to Options, Restricted Shares and
ESPP Options, 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, or (iii)Β limit or
restrict the right of the Company to merge, amend or terminate any of the Plans.
23
Β
Β Β Β Β Β Β Β Β Β Β (j)Β No deduction for federal income tax purposes has been nor is any such deduction expected
by the Company to be disallowed for remuneration paid by the Company or
any Company Subsidiary by reason of Section 162(m) of the Code solely by reason of the
transactions contemplated hereby.
Β Β Β Β Β Β Β Β Β Β (k)Β To the Companyβs knowledge, each Plan that is a non-qualified deferred compensation plan
or arrangement subject to SectionΒ 409A of the Code has been operated and administered in good faith
compliance with SectionΒ 409A of the Code, IRS Notice 2005-1 and other applicable IRS guidance from
the period beginning JanuaryΒ 1, 2005 through the date hereof, except in each case as has not
resulted in liability that is material to the Company and the Company Subsidiaries taken as a
whole.
Β Β Β Β Β SectionΒ 3.15 Labor Matters. 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. Neither the Company nor any of the Company
Subsidiaries is subject to a dispute, strike or work stoppage except as has not, individually or in
the aggregate, had a Company Material Adverse Effect. 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 any Company Employees.
Β Β Β Β Β SectionΒ 3.16 Environmental Matters.
Β Β Β Β Β Β Β Β Β Β (a)Β Except as set forth on SectionΒ 3.16(a) of the Company Disclosure Schedule or has not had,
individually or in the aggregate, a Company Material Adverse Effect, (i)Β none of the Company or any
of the Company Subsidiaries is in violation of any Environmental Law or, except for any violation
that has been fully resolved, has violated in the past any Environmental Law; (ii)Β to the knowledge
of the Company, there is and has been no Release of Hazardous Substances, on or under any of the
properties currently owned, leased, occupied or operated by the Company or any of the Company
Subsidiaries or, during the period of the Companyβs or the Company Subsidiariesβ ownership, lease,
occupation or operation thereof, formerly owned, leased, occupied or operated by the Company or any
of the Company Subsidiaries that would reasonably be expected to result in a liability to the
Company or any of the Company Subsidiaries that would be material the Company and the Company
Subsidiaries taken as a whole; (iii)Β 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 permits; (iv)Β 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 or with respect to any matter concerning the protection of the environment or
pollution, including natural resources; and (v)Β the Company and any of the Company subsidiaries has
made (or will make) accessable to Parent and Merger Sub copies of all environmental assessments,
audits, studies, and other environmental reports in its possession related to the Company, any of
the Company subsidiaries, or any of its current or former properties or operations.
24
Β
Β Β Β Β Β Β Β Β Β Β (b)Β Parent and Merger Sub acknowledge that (i)Β the representations and warranties contained in
this SectionΒ 3.16 are the only representations and warranties being made with respect to compliance
with or liability under Environmental Laws related to the Company or to the Company Subsidiaries or
to this Agreement or to its subject matter and (ii)Β no other representation or warranty contained
in this Agreement (including pursuant to SectionΒ 3.7) shall apply to any such matters and no other
representation or warranty, express or implied, is being made with respect thereto.
Β Β Β Β Β Β Β Β Β Β (c)Β For purposes of this Agreement:
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (i) βEnvironmental Lawsβ 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)Β the presence, production, manufacture, handling, transport, use, treatment,
storage, emission, discharge, distribution, labeling, testing, processing, control, cleanup
or disposal of Hazardous Substances or materials containing Hazardous Substances; or (C)
pollution or protection of the environment, including natural resources, or of human health
as such is affected by Hazardous Substances or materials containing Hazardous Substances.
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (ii) βEnvironmental Permitsβ means any permit, consent, license, registration,
approval, notification or any other authorization pursuant to any Environmental Law.
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (iii) βHazardous Substancesβ means (A)Β those substances, materials or wastes defined as
toxic, hazardous, acutely hazardous, pollutants or contaminants, 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 and the Clean Air Act or any other
Environmental Law; (B)Β petroleum and petroleum products, including crude oil and any
fractions thereof; (C)Β natural gas, synthetic gas, and any mixtures thereof; and (D)
polychlorinated biphenyls, asbestos, radioactive materials, radon and molds that would
reasonably be expected to have an adverse effect on human health, and urea formaldehyde foam
insulation.
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (iv) βReleaseβ 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.
Β Β Β Β Β SectionΒ 3.17 No Breach.
Β Β Β Β Β Β Β Β Β Β (a)Β 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 a Company Subsidiary, (ii)Β violate, conflict with or
25
Β
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 consent, notice or other 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 (excluding Permits), (iii)Β assuming expiration of the applicable waiting period
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the βHSR Actβ), violate
any Law applicable to the Company or any of the Company Subsidiaries or by which any of the
Companyβs or the Company Subsidiariesβ assets or properties is bound, (iv)Β violate any material
Permit, (v)Β except for (a)Β filings with the SEC under the Exchange Act, (b)Β filings pursuant to the
TBCA as contemplated herein, (c)Β the filing of a pre-merger notification report under the HSR Act,
and any merger control, competition or fair trade Law filings in foreign jurisdictions if and to
the extent required, (d)Β filings required with, and approvals required by, the NYSE and the CHX
rules and regulations, and (e)Β the notifications and consents listed on SectionΒ 3.17(a) 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 a
Material Contract, or (vi)Β 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), (v)Β and (vi)Β 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. Notwithstanding the foregoing, for all purposes of
the Agreement, the Company does not make any representation or warranty (pursuant to this Section
3.17 or elsewhere in this Agreement) regarding the effect of the applicable antitrust, merger
control, competition or fair trade Laws on 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
with respect to the consummation of the Merger.
Β Β Β Β Β Β Β Β Β Β (b)Β As of the date of this Agreement, the Company does not have knowledge that any landlord or
licensor has notified the Company that it would withhold any consent required upon the consummation
of the Merger with respect to the agreements listed on SectionΒ 3.17(b) of the Company Disclosure
Schedule, except to the extent that the failure to obtain such consents would not have a Company
Material Adverse Effect.
Β Β Β Β Β SectionΒ 3.18 Board Approvals; Anti-Takeover; Vote Required.
Β Β Β Β Β Β Β Β Β Β (a)Β The Company Board of Directors has (i)Β duly and validly approved and adopted resolutions
addressing all corporate action required to be taken by the Company Board of Directors to authorize
and adopt this Agreement and the Merger and (ii)Β subject to the other terms and conditions of this
Agreement, resolved to submit this Agreement to the shareholders of
the Company and to recommend that the shareholders of the Company approve and adopt this
Agreement and the Merger.
Β Β Β Β Β Β Β Β Β Β (b)Β Except to the extent addressed in SectionΒ 3.18(e), assuming the accuracy of the
representations and warranties set forth in SectionΒ 4.7(c), the Company and the Company Board of
Directors has taken all action necessary such that no restrictions contained in any
βanti-
26
Β
takeover,β βfair price,β βmoratorium,β βcontrol share acquisition,β βbusiness combinationβ or
similar Law, including the Tennessee Business Combination Act or provision in the Companyβs charter
or bylaws will apply to or prohibit the execution, delivery or performance of or compliance with
this Agreement or the Merger.
Β Β Β Β Β Β Β Β Β Β (c)Β The Company Board of Directors has taken such action as is necessary to amend the Company
Rights Agreement such that the execution, delivery or performance of or compliance with this
Agreement and the Merger will not: (i)Β result in Parent becoming an βAcquiring Personβ under the
Company Rights Agreement or (ii)Β result in the grant of any rights to any person under the Company
Rights Agreement or enable, require or cause the Company Rights to become exercisable, be exercised
or deemed exercised, or be distributed or otherwise triggered.
Β Β Β Β Β Β Β Β Β Β (d)Β Assuming the accuracy of the representations and warranties set forth in SectionΒ 4.7(c),
the affirmative vote of the holders of a majority of the outstanding shares of Company Common Stock
and Company Preferred Stock voting together as a single group (the βCompany Shareholder Approvalβ)
is the only vote of the Companyβs shareholders necessary to approve or adopt this Agreement and the
Merger.
Β Β Β Β Β Β Β Β Β Β (e)Β Assuming the accuracy of the representations and warranties set forth in SectionΒ 4.7(c),
and further assuming that Parent conducts the Employee Preferred Stock Tender Offer in accordance
with the terms set forth in SectionΒ 5.4 and it otherwise meets the requirements of Section
48-103-102(10)(B)(v) of the Tennessee Investor Protection Act, the Company Board of Directors has
taken or will take (prior to the commencement of the Employee Preferred Stock Tender Offer) such
action as is necessary (including recommending in favor of the Employee Preferred Stock Tender
Offer to the holders of the Employee Preferred Stock) to assure that none of the transactions
contemplated by this Agreement, including the Merger and the Employee Preferred Stock Tender Offer,
will, to the Companyβs knowledge, be a βtakeover offerβ under the Tennessee Investor Protection
Act.
Β Β Β Β Β Β Β Β Β Β (f)Β As of the date of this Agreement, Dissentersβ rights under the TBCA are not available to
the holders of Company Common Stock for the transactions contemplated by this Agreement, including
the Merger.
Β Β Β Β Β SectionΒ 3.19 Financial Advisor.
Β Β Β Β Β Β Β Β Β Β (a)Β The Company Board of Directors has received the opinion of Xxxxxxx Xxxxx & Co.
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.
Β Β Β Β Β Β Β Β Β Β (b)Β Other than Xxxxxxx Sachs & Co., 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,
27
Β
and there are no other
brokerage commissions, findersβ fees, financial advisorβs 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 Companyβs engagement letter with Xxxxxxx Xxxxx & Co.
Β Β Β Β Β SectionΒ 3.20 Information in the Proxy Statement. The proxy statement to be provided
to the Companyβs shareholders in connection with the Company Shareholders Meeting (such proxy
statement, inclusive of any amendment thereof or supplement thereto, the βProxy Statementβ) on the
date mailed to the Companyβs shareholders and at the time of any meeting of the Companyβs
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 in writing by or related to, or the sufficiency of
disclosures related to, Parent or Merger Sub. 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.
Β Β Β Β Β SectionΒ 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
Companyβs knowledge, any affiliate or family member of any such officer, director or owner (an
βAffiliated Partyβ) 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
incentive arrangements) with the Company that is material to the Company within the last 12Β months,
in each case, of the type that would be required to be disclosed under ItemΒ 404 of RegulationΒ S-K
under the Securities Act.
Β Β Β Β Β SectionΒ 3.22 Suppliers and Vendors. Set forth in SectionΒ 3.22 of the Company
Disclosure Schedule is a list of the twenty largest merchandise vendors of the Company and the
Company Subsidiaries based on the dollar value of materials or products purchased by the Company
and the Company Subsidiaries for the fiscal year ended FebruaryΒ 3, 2007. As of the date of this
Agreement, the existing suppliers of
the Company are adequate for the operation of the business of the Company and the Company
Subsidiaries as presently conducted. Except as would not have a Company Material Adverse Effect,
since FebruaryΒ 3, 2007 and through the date hereof, (a)Β the Company has not received any written
notice or threat of any material change in relations with any of the major suppliers of the Company
or the Company Subsidiaries, the result of which would be material and adverse to the Company and
the Company Subsidiaries taken as a whole, and (b)Β the Company has not received from any of the
major suppliers of the Company or any Company Subsidiaries any written notices of termination or
material alteration of any Contract or business relationship governed thereby and, to the Companyβs
knowledge, no other party to any such Contract intends or has indicated in writing an intent to (i)
terminate, (ii)Β not renew or extend (if contemplated by the terms thereof and requested by the
Company), (iii)Β seek to amend or modify, or (iv)Β not fully perform its obligations under any
Contract.
28
Β
Β Β Β Β Β SectionΒ 3.23 Inventory. Except as would not have a Company Material Adverse Effect,
as of the date hereof, all inventory of the Company and the Company Subsidiaries, whether or not
reflected in the latest balance sheet included in the Company SEC Reports, consist of a quality and
quantity usable and saleable in the Companyβs and the Company Subsidiariesβ ordinary course of
business, except for obsolete items and items of below-standard quality, all of which have been or
will be written-off or written-down to net realizable value on the balance sheet included in the
Companyβs SEC Reports, and except for inventory items having an aggregate value not to exceed
$3,000,000.
Β Β Β Β Β SectionΒ 3.24 No Other Representations or Warranties; Investigation by Parent. Parent
and Merger Sub each acknowledges and agrees that (a)Β it has had an opportunity to discuss the
business of the Company and the Company Subsidiaries with the management of the Company, (b)Β it has
had reasonable access to (i)Β the books and records of the Company and the Company Subsidiaries and
(ii)Β the electronic dataroom maintained by the Company through Xxxxxxx Corporation for purposes of
the transactions contemplated by this Agreement, (c)Β it has been afforded the opportunity to ask
questions of and receive answers from officers of the Company and (d)Β except for the
representations and warranties contained in this SectionΒ 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 provided to or 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 Parentβs or Merger Subβs
use of, any such information, including any information, documents, projections, forecasts or other
material made available to Parent or Merger Sub 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 this SectionΒ 3 or in the
corresponding section of the Company Disclosure Schedule.
Β Β Β Β Β SectionΒ 4. Representations and Warranties of Parent.
Β Β Β Β Β Except as set forth in the disclosure schedule delivered by Parent to the Company on the date
hereof (the βParent Disclosure Scheduleβ), Parent and Merger Sub hereby jointly and severally make
the representations and warranties set forth in this SectionΒ 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 this Agreement to which its
relevance is reasonably apparent.
Β Β Β Β Β SectionΒ 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 otherwise authorized to transact
business as a foreign corporation or organization 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 authorization 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
29
Β
and
Merger Subβs ability to consummate the transactions contemplated hereby (a βParent Material Adverse
Effectβ). Parent has made available to the Company a complete and correct copy of the articles of
incorporation, charter, bylaws or other applicable governing instruments of Parent and Merger Sub.
Β Β Β Β Β SectionΒ 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 the due authorization, execution and delivery hereof by the
Company, constitutes a valid and binding obligation of Parent and Merger Sub, 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). No vote of holders of capital stock of Parent is necessary to approve this Agreement
and the Merger and other transactions contemplated hereby.
Β Β Β Β Β SectionΒ 4.3 No Conflict; Required Filings and Consents.
Β Β Β Β Β Β Β Β Β Β (a)Β 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)Β violate (A)Β any provision of the articles of incorporation, charter, bylaws or other
organizational documents of Parent or Merger Sub, (B)Β subject to the filings and
other matters referred to in SectionΒ 4.3(b), any Law applicable to Parent or Merger Sub or
their properties or assets, or (C)Β 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, or (ii)Β 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 clauses (i)(B), (i)(C) and (ii)Β above, for such violations, consents,
registrations, declarations and filings that, individually or in the aggregate, would not
reasonably be expected to have a Parent Material Adverse Effect.
Β Β Β Β Β Β Β Β Β Β (b)Β 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)Β filing of a pre-merger notification report
under the HSR Act, (ii)Β the filing with the SEC of such reports under SectionΒ 13 of the Exchange
Act as may be required in connection with this Agreement and the transactions contemplated hereby,
(iii)Β 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)Β compliance with and filings under the merger
control, competition or fair trade Laws of any foreign jurisdiction, if and to the extent required,
(v)Β as set forth in SectionΒ 4.3 of the Parent Disclosure
30
Β
Schedule and (vi)Β such items that have not
had and are not reasonably likely to have, individually or in the aggregate, a Parent Material
Adverse Effect.
Β Β Β Β Β SectionΒ 4.4 Information in the Proxy Statement. The information supplied in writing
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.
Β Β Β Β Β SectionΒ 4.5 Litigation. As of the date hereof, there is no Action pending or, to the
knowledge of Parent, threatened, against Parent or any of its affiliates before any Governmental
Entity that would or seeks to delay or prevent the consummation of the Merger. As of the date
hereof, neither Parent nor any of its affiliates 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 delay
or prevent the consummation of the Merger.
Β Β Β Β Β SectionΒ 4.6 Financing. Parent has delivered to the Company a true and complete copy
of the Debt Commitment Letter, dated as of the date hereof (the βCommitment Letterβ), made by UBS
Loan Finance LLC and UBS Securities LLC (together, the βLenderβ), and accepted by Parent, pursuant
to which the Lender has committed to provide the debt financing (the βFinancingβ) to Parent that is
necessary to consummate the transactions contemplated hereby. The Commitment Letter is, as of the
date of this Agreement, in full force and effect in the form so delivered. The Commitment Letter
has not been amended in any respect that could reasonably be expected to impair or delay the
availability of the financing contemplated thereby on the Closing Date. There are no conditions
precedent or other contingencies related to the funding of the full amount of the Financing, other
than as set forth in or contemplated by the Commitment Letter (the βDisclosed Conditionsβ), and no
Person (including, without limitation, the Lender) has any contractual right to impose (i)Β any
condition precedent to such funding other than the Disclosed Conditions or (ii)Β any reduction to
the aggregate amount available under the Commitment Letter on the Closing Date (or any term or
condition which would have the effect of reducing the aggregate amount under the Commitment Letter
on the Closing Date). Parent has fully paid all commitment fees required to be paid prior to the
Closing Date in connection with the Commitment Letter. The aggregate proceeds contemplated by the
Commitment Letter, together with other sources of capital available to Parent, will be sufficient
when funded for Parent and the Surviving Corporation to pay the aggregate Merger Consideration
(including any applicable Merger Consideration in consideration of the conversion of the Company
Preferred Stock and the Convertible Debentures) and the Cash Out Amount, to refinance any
outstanding indebtedness of the Company contemplated hereby to be so refinanced, to redeem the
Company Preferred Stock (if applicable), to consummate the Employee Preferred Stock Tender Offer
(if applicable), and to pay all fees and expenses payable by Parent in connection with 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
31
Β
Closing Date. For avoidance of doubt, it shall not be a condition to Closing for Parent or Merger
Sub to obtain the Financing or any alternative financing.
Β Β Β Β Β SectionΒ 4.7 Parent and Merger Sub.
Β Β Β Β Β Β Β Β Β Β (a)Β Merger Sub has been formed solely for the purpose of engaging in the transactions
contemplated hereby and prior to the Effective Time will have engaged in no other business
activities and will have incurred no liabilities or obligations other than as contemplated herein.
Β Β Β Β Β Β Β Β Β Β (b)Β As of the date hereof and through and including the Effective Time, Parent shall own all
of the equity securities of Merger Sub.
Β Β Β Β Β Β Β Β Β Β (c)Β Each of Parent, Merger Sub and their respective affiliates 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 Companyβs 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 hereby for purposes of the applicable provisions of the Tennessee
Business Combination Act, neither Parent nor Merger Sub, alone or acting together with any other
person as a group, was at any time, or became, an βinterested shareholderβ of the Company
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.
Β Β Β Β Β Β Β Β Β Β (d)Β Parent has filed all forms, reports, registrations, statements, certifications and other
documents required to be filed by it with, or furnished by Parent to, the SEC for all periods
beginning on or after JanuaryΒ 1, 2004, including each document required to be filed by Parent with
the SEC in connection with the Merger and the related transactions (the βParent SEC Reportsβ). The
Parent SEC Reports were prepared in accordance with the applicable requirements of the Exchange Act
and the Securities Act, 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 no outstanding or
unresolved comments in comment letters received from the SEC. To the knowledge of Parent, as of
the date hereof, none of the Parent SEC Reports is the subject of ongoing SEC review.
Β Β Β Β Β SectionΒ 4.8 Brokers. Other than UBS Investment Bank and Xxxxx X. Xxxxxxx Securities
Company, LLC, no broker, finder, agent or similar intermediary has acted on behalf of Parent or
Merger Sub in connection with this Agreement or the transactions contemplated hereby, and there are
no brokerage commissions, findersβ fees or similar fees or commissions payable in connection
herewith based on any agreement, arrangement or understanding with Parent or Merger Sub or any of
their respective affiliates, or any action taken by Parent or Merger Sub or any of their respective
affiliates.
32
Β
Β Β Β Β Β SectionΒ 4.9 Solvency. As of the Effective Time, immediately after giving effect to
all of the transactions contemplated by this Agreement, including the Financing, any alternative
financing and the payment of the aggregate Merger Consideration (including any applicable Merger
Consideration in consideration of the conversion of the Company Preferred Stock and the Convertible
Debentures) and the Cash Out Amount, the redemption of the Company Preferred Stock (or the funding
of a trust for such purpose), amounts required to consummate the Employee Preferred Stock Tender
Offer (if applicable), any other repayment or refinancing of debt that may be contemplated in the
Commitment Letter, and payment of all related fees and expenses, the Surviving Corporation and
Parent will be Solvent. For purposes of this SectionΒ 4.9, the term βSolventβ with respect to the
Surviving Corporation and Parent means that, as of any date of determination, (a)Β the amount of the
fair saleable value of the assets of Parent and the Surviving Corporation and their respective
Subsidiaries, taken as a whole, exceeds, as of such date, each of (i)Β the value of all liabilities
of Parent and the Surviving Corporation and their respective Subsidiaries, taken as a whole,
including contingent and other liabilities, as of such date, as such terms are generally determined
in accordance with the applicable Tennessee, Indiana and federal Laws governing determinations of
the solvency of
debtors, and (ii)Β the amount that will be required to pay the probable liabilities of Parent,
the Surviving Corporation and their respective Subsidiaries, taken as a whole, on their existing
debts (including contingent liabilities) as such debts become absolute and matured; (b)Β Parent and
the Surviving Corporation will not have, as of such date, an unreasonably small amount of capital
for the operation of the businesses in which they are engaged or proposed to be engaged following
such date; (c)Β Parent and the Surviving Corporation will be able to pay their respective
liabilities, including contingent and other liabilities, as they mature in the ordinary course of
business; and (d)Β the satisfaction of any other solvency requirement set forth in the TBCA or
pursuant to Indiana or federal Laws applicable to Parent or the Surviving Corporation. It is
agreed and understood that Parent will obtain an opinion or opinions of a firm experienced in
rendering such opinions as to the solvency of Parent following the transactions contemplated
hereby. Parent will make available to the Company (for the Companyβs reference but not reliance) a
true, complete and correct copy of the solvency opinions referred to in the immediately preceding
sentence promptly after delivery thereof to Parent.
Β Β Β Β Β SectionΒ 4.10 No Other Representations or Warranties. Except for the representations
and warranties contained in this SectionΒ 4, and any certificate delivered by Parent or Merger Sub
in connection with 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
otherwise 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 or made available to the
Company in connection with the transactions contemplated hereunder. Except as provided in Section
6.8, neither Parent, Merger Sub nor any other person will have or be subject to any liability or
indemnification obligation to the Company or any other person resulting from the distribution to
the Company, or the Companyβs use of, any such information, including any information, documents,
projections, forecasts or other material made available to the Company 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 this
SectionΒ 4 or in the corresponding section of the Parent Disclosure Schedule.
33
Β
Β Β Β Β Β SectionΒ 5. Conduct of Business Pending the Merger; No Solicitation; Employee Matters.
Β Β Β Β Β SectionΒ 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 contemplated by this
Agreement, as set forth on SectionΒ 5.1 of the Company Disclosure Schedule or to the extent that
Parent shall otherwise consent in writing (not to be unreasonably withheld, conditioned or
delayed), conduct their respective businesses in the ordinary course on a basis 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,
conditioned 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 contemplated by this Agreement or as set forth on SectionΒ 5.1 of the
Company Disclosure Schedule:
Β Β Β Β Β Β Β Β Β Β (a) Affirmative Covenants Pending Closing. The Company shall:
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (i) Preservation of the Business; Maintenance of Properties, Material
Contracts. Use reasonable best efforts, on a basis consistent with past practices, to
(A)Β preserve the business of the Company and the Company Subsidiaries, including without
limitation, keeping available the services of the current officers, employees and
consultants of the Company and the Company Subsidiaries and to preserve the present
relationships of the Company and the Company Subsidiaries with customers, suppliers and
other persons with which the Company or any Company Subsidiary has significant business
relations, (B)Β advertise, promote and market the Companyβs products, (C)Β keep the Companyβs
and the Company Subsidiariesβ material properties substantially intact, preserve their
goodwill and business, and maintain all physical properties in good repair and condition,
(D)Β perform and comply in all material respects with the terms of the Material Contracts,
and (E)Β maintain, and comply in all material respects with, all material Permits;
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (ii) Insurance. Use reasonable best efforts to keep in effect general
liability, casualty, product liability, workerβs compensation, directorsβ and officersβ
liability and other material insurance policies in coverage scope and amounts substantially
similar to those in effect at the date hereof;
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (iii) Convertible Debentures and Preferred Stock. Deliver or cause to be
timely delivered to the holders of Convertible Debentures and the Company Preferred Stock
all notices required pursuant to the terms of the Indenture and the Companyβs charter and
bylaws in connection with the Merger; and
Β Β Β Β Β Β Β Β Β Β (b) Negative Covenants Pending Closing. The Company shall not and shall cause the
Company Subsidiaries not to:
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (i) Compensation. (1)Β Change the compensation payable to any officer,
employee, agent or consultant or enter into or amend any employment, change in
34
Β
control,
bonus, severance, termination, retention or other agreement or arrangement with any officer,
employee, agent or consultant of the Company or a Company Subsidiary, or adopt, or increase
the benefits (including fringe benefits), severance or termination pay under, any employee
benefit plan or agreement or otherwise, except (A), in each case, as required by Law or in
accordance with existing agreements or Plans, (B)Β in the case of compensation for officers
(other than executive officers), employees, agents or consultants, in the ordinary course of
business consistent with past practice, and (C)Β other than any separation, retention or
incentive agreement entered into after the date hereof with any non-executive officer of
the Company or any Company Subsidiary pursuant to which the aggregate benefits (to the
extent additional to existing benefits of a similar nature) do not exceed $250,000 in the
aggregate or $25,000 for any person individually, provided the Company provides Parent at
least two (2)Β business days prior written notice, or (2)Β make any prohibited loans or
advances to any of its officers, employees, agents or
consultants, or make any material 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, subject to the remaining provisions of SectionΒ 5.1(b), the foregoing clauses
(1)Β and (2)Β 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, in each case in the ordinary
course of business, plans, agreements, benefits and compensation arrangements (including
incentive grants, but excluding any plans, Contracts, benefits or arrangements that could
result in the obligation on the part of the Surviving Corporation to make any material
payments in connection with the consummation of the Merger or the termination of such
personβs employment after the consummation of the Merger) 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;
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (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, 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)Β the
exercise of Company Options and ESPP Options outstanding as of the date hereof and the
Companyβs obligation to issue shares of Company Common Stock upon any such exercise, (2)Β the
repurchase or cancellation of Restricted Shares or other shares of Company Common Stock in
accordance with the terms of the applicable award agreements or similar arrangements to
satisfy withholding obligations upon the vesting of Restricted Shares or the exercise of
Company Options, or (3)Β the conversion or redemption of Company Preferred Stock in
accordance with the Companyβs charter, and the Companyβs obligation to issue shares of
Company Common Stock upon any such
35
Β
conversion, (4)Β the conversion of any of the Convertible
Debentures in accordance with the terms of such securities and the Indenture as of the date
hereof, the Companyβs obligation to issue shares of Company Common Stock upon any such
conversion and the Companyβs right to deliver, in lieu of shares of Company Common Stock,
cash or a combination of cash and shares of Company Common Stock upon such conversion or (5)
the payment of regular quarterly cash dividends with respect to the Company Preferred Stock
in accordance with the Companyβs charter;
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (iii) Charter, By Laws and Directors. Amend, or otherwise alter or modify in
any respect, the charter or bylaws of the Company or any Company Subsidiary;
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (iv) Disposition of Assets. Except as provided in the Company financial budget
and plans previously made available to Parent, sell or transfer, or mortgage, pledge, lease,
license, terminate any lease or license, or otherwise dispose of or encumber any tangible or
intangible asset or related assets of the Company with a value in excess of $3,000,000,
other than sales and non-exclusive licenses of products and services of the Company and the
Company Subsidiaries in the ordinary course of business consistent with past practice and
other than Permitted Liens;
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (v) Capital Expenditures. Except as provided in the Company financial budget
and plans previously made available to Parent, authorize any single capital expenditure, or
a series of related expenditures, in excess of $3,000,000;
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (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 the Company or by any Company Subsidiary;
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (vii) Writing Up or Down Assets. Except as provided in the Company financial
budget and plans previously made available to Parent, write up, write down or write off the
book value of any material assets of the Company and the Company Subsidiaries, other than
(i)Β in the ordinary course of business and consistent with past practice or (ii)Β as may be
required by GAAP or the Financial Accounting Standards Board;
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (viii) Legal. Settle or compromise any pending or threatened Action that (a)
is material to the Company and the Company Subsidiaries taken as a whole, (b)Β requires
payment to or by the Company or any Company Subsidiary (exclusive of attorneyβs fees,
including success fees) in excess of $3,000,000, (c)Β involves restrictions on the business
activities of the Company that would be material to the Company and the Company Subsidiaries
taken as a whole, or (d)Β would involve the issuance of Company securities;
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (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);
36
Β
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (x) Plans. Except as required by Law (including SectionΒ 409A of the Code) or
Contracts (including Plans) in existence on the date hereof or as set forth on Section
5.1(b)(x) of the Company Disclosure Schedule, establish, adopt, enter into or amend any
collective bargaining, bonus, profit sharing, thrift, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other plan, agreement, trust,
fund, policy or arrangement for the benefit of any current or former directors, officers or
employees of the Company or any Company Subsidiary, pay any discretionary bonuses to any
director, officer or employee of the Company or any Company Subsidiary, except for the
exercise of discretionary elements under existing Plans or arrangements, or 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;
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (xi) Taxes. Except in each case as required by Law or Treasury Regulation,
make, revoke or change any material Tax election, file any amended Tax Return with respect
to any material Tax, settle or compromise any material federal, state, local or foreign Tax
liability, surrender any right to claim a material Tax refund, waive any statute of
limitations in respect of a material amount of Taxes, agree to an extension of time with
respect to an assessment or deficiency for a material amount of Taxes or change any annual
Tax accounting period;
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (xii) Representations and Warranties. Purposefully and knowingly take any
action that would result in any representation or warranty of the Company and the Company
Subsidiaries becoming untrue in any material respect at the Closing, to the extent such
breach would reasonably be expected to cause any condition set forth in SectionΒ 7 not to be
satisfied at the Closing.
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (xiii) New Line of Business. Enter into any new line of business other than
the development and testing of concepts reasonably related to the current businesses of the
Company and the Company Subsidiaries, or discontinue any significant and material line of
business.
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (xiv) Other. (A)Β Acquire (by merger, consolidation, acquisition of stock or
assets, joint venture or otherwise or through a direct or indirect ownership interest or
investment) any Person or division thereof, except that the Company can engage in such
acquisition having a transaction price less than $3,000,000 without obtaining Parentβs prior
consent; (B)Β incur, assume or prepay any indebtedness for borrowed money for any
indebtedness in an aggregate amount in excess of $3,000,000, except to refund or refinance
commercial paper or in the ordinary course of business (including for purposes of funding
working capital in the ordinary course of business) consistent with past practice; (C)
incur, assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for any indebtedness for borrowed money of any other
Person in an aggregate amount in excess of $3,000,000, except the incurrence of, guarantee
with respect to or provision of credit support for, indebtedness of the Company or any of
Company Subsidiary for borrowed money under the Companyβs or Company Subsidiariesβ existing
credit facilities in the ordinary course of business; (D)Β make any loans, advances or
capital contributions to, or investments in, any other
37
Β
Person, except in the ordinary course
of business consistent with past practice; (E)Β pledge or otherwise encumber shares of
capital stock or other voting securities of any of the Companyβs Subsidiaries, other than
Permitted Liens; (F)Β mortgage or pledge any of its material assets, tangible or intangible,
or create any Lien thereupon (other than Permitted Liens or Liens arising under and created
by the Contracts without any breach thereof or hereof or default thereunder or hereunder);
(G)Β enter into any Material Contract other than in the ordinary course of business
consistent with past practice to the extent such Contract would be material to the Company
and the Company Subsidiaries, taken as a whole; (H)Β voluntarily terminate or modify in any
material adverse respect any Material Contract; (I)Β enter into material supply agreements
with suppliers, except in the ordinary course of business consistent with past practice; or
(J)Β enter into any foreign exchange contract or other hedging contract except in the
ordinary course of business consistent with past practice;
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (xv) Obligations. Obligate itself to do any of the foregoing.
Β Β Β Β Β Β Β Β Β Β (c) No Control of the Companyβs Business. Parent acknowledges and agrees that: (i)
nothing contained in this Agreement shall give Parent, directly or indirectly, the right to control
or direct the Companyβs or the Company Subsidiariesβ operations prior to the Effective Time, (ii)
prior to the Effective Time, each of the Company and Parent shall exercise, consistent with the
terms and conditions of this Agreement, complete control and supervision over its and its
Subsidiariesβ respective operations, and (iii)Β notwithstanding anything to the contrary set forth
in this Agreement, no consent of Parent shall be required with respect to any matter set forth in
SectionΒ 5.1 or elsewhere in this Agreement to the extent the requirement of such consent would be
inconsistent with applicable Law.
Β Β Β Β Β SectionΒ 5.2 No Solicitation.
Β Β Β Β Β Β Β Β Β Β (a)Β The Company has ceased and caused to be terminated all existing solicitations,
discussions, contacts and negotiations with any persons with respect to any inquiry, offer or
proposal 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)Β any direct or
indirect acquisition or purchase by any person or βgroupβ (as defined under Section 13(d) of the
Exchange Act) of a twenty percent (20%) interest or more in either the total outstanding shares of
equity or voting securities of the Company or any Company Subsidiary or the total outstanding
shares of any class of equity securities of the Company or any Company Subsidiary, or any tender
offer or exchange offer that if consummated would result in any person or βgroupβ beneficially
owning twenty percent (20%) or more of the total outstanding shares of equity or voting securities
of the Company or the total outstanding shares of any class of equity securities of the Company or
any Company Subsidiary, (B)Β 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 βgroupβ for consideration equal to fifteen percent (15%) 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 (any of the foregoing
inquiries, offers or proposals being an βAcquisition Proposalβ). Except as provided in Section
5.2(b), (c)Β or (d), from the date hereof, until the earlier of the
38
Β
termination of this Agreement or
the Effective Time, the Company shall not and shall not authorize or permit its officers,
directors, employees, investment bankers, attorneys, accountants, consultants, financial or other
advisors or other agents or those of any Company Subsidiary (collectively, βRepresentativesβ) to,
directly or indirectly, (i)Β solicit, initiate or knowingly encourage or take any other action to
knowingly facilitate the submission of an Acquisition Proposal, (ii)Β enter into any letter of
intent, memorandum of understanding, agreement, option agreement or any agreement or arrangement
with respect to any Acquisition Proposal, (iii)Β enter into, continue, participate, engage or
knowingly assist in any manner in contacts, negotiations or discussions with, or provide any
non-public information or data to, any person (other than Parent, Merger Sub or any of their
respective affiliates or Representatives) relating to any Acquisition Proposal, or grant any
waiver, amendment or release under any standstill, or (iv)Β take any action to, other than as
contemplated by this Agreement in connection with the Merger, render the Company Rights issued
pursuant to the terms of the Company Rights Agreement inapplicable to an Acquisition
Proposal or the transactions contemplated thereby, exempt or exclude any person from the
definition of an Acquiring Person (as defined in the Company Rights Agreement) under the terms of
the Company Rights Agreement or allow the Company Rights to expire prior to their expiration date
or otherwise amend the Company Rights Agreement. For purposes of this SectionΒ 5.2 only, βCompany
Subsidiaryβ means any Subsidiary of the Company whose business constitutes 25% or more of the net
revenues, net income or assets (based on fair market value) of the Company and the Company
Subsidiaries taken as a whole.
Β Β Β Β Β Β Β Β Β Β (b)Β Notwithstanding the foregoing, prior to obtaining the Company Shareholder Approval, the
Company (i)Β may (and may authorize and permit its Representatives to), pursuant to a
confidentiality agreement, which shall contain provisions no less favorable in any material respect
to the Company than the Confidentiality Agreement (except for such changes as are necessary to
allow the Company to comply with the terms of this Agreement), furnish information concerning, and
provide access to, its business, properties, employees and assets to any Person (and its
Representatives acting in such capacity) that has made an Acquisition Proposal, provided that any
such information must be provided to Parent prior to or substantially concurrent with the time of
its provision to such third party to the extent not previously made available to Parent, and (ii)
may participate, engage or assist in any manner in negotiations and discussions with any Person
(and its Representatives acting in such capacity) that has made an Acquisition Proposal with
respect to such Acquisition Proposal or inquiry if, but only if, in the case of both clause (i)Β and
(ii): (x)Β such Acquisition Proposal provides for any Person or group to acquire, directly or
indirectly, a majority of the issued and outstanding shares of Company Common Stock (or a majority
of the voting securities of any surviving corporation in a merger or consolidation with the
Company) or provides for the acquisition of all or substantially all of the consolidated assets of
the Company (a βTakeover Proposalβ); (y)Β such Takeover Proposal was not solicited or initiated in
violation of SectionΒ 5.2(a) by the Company or by any of its Representatives, and the Company Board
of Directors (or any committee thereof authorized to act in such capacity) determines in good
faith, after consultation with its financial advisor and outside counsel, that such Takeover
Proposal is more favorable than the Merger, from a financial point of view, to the Companyβs
shareholders taking into account all of the terms and conditions of such proposal and this
Agreement (including any binding written and complete proposal (including all schedules and
exhibits) to amend the terms of this Agreement) and for which financing, to the extent required,
is, or is reasonably likely to be, committed on
39
Β
terms and conditions that the Company Board of
Directors (or any committee thereof authorized to act in such capacity) determines, after
consultation with its financial advisor, are reasonably likely to result in disbursement sufficient
for consummation of the transactions contemplated by the Takeover Proposal; and (z)Β in the good
faith opinion of the Company Board of Directors (or any committee thereof authorized to act in such
capacity), after consultation with outside legal counsel, providing such information or access or
participating, engaging or assisting in such negotiations or discussions is or would be in the best
interests of the Company and its shareholders and that the failure to take such action is or would
be inconsistent with the Company Board of Directorsβ fiduciary duties to the Companyβs shareholders
under applicable Law (a Takeover Proposal which satisfies clauses (x), (y)Β and (z)Β being referred
to herein as a βSuperior Proposalβ). The Company shall promptly, and in any event within 48 hours
after receipt of any bona fide inquiries, proposals or offers received by, any request for
information from, or any negotiations sought to be initiated or continued with, either the Company
or its Representatives
concerning an Acquisition Proposal, notify Parent orally and in writing and disclose the
material terms of such inquiry, offer, proposal or request and, in the case of written materials
provided to the Company, provide Parent copies or written summaries of such materials as promptly
as reasonably practicable. The Company will keep Parent informed on a reasonably prompt basis of
the status and any discussions or negotiations (including amendments and proposed amendments)
relating to any Takeover Proposal or other bona fide inquiry, offer, proposal or request.
Β Β Β Β Β Β Β Β Β Β (c)Β Except as set forth in this subsection (c), neither the Company Board of Directors nor any
committee thereof shall (i)Β withdraw or modify, or publicly propose to withdraw or modify, in a
manner adverse to Parent or Merger Sub, the approval or recommendation of the Company Board of
Directors of this Agreement or the Merger or publicly announce that it has resolved to take such
action (any such action under this clause (i), a βChange in Recommendationβ), (ii)Β approve,
recommend or adopt or publicly propose to approve, recommend or adopt any Acquisition Proposal or
(iii)Β approve, recommend, adopt or allow the Company to enter into any letter of intent, memorandum
of understanding, option agreement or similar arrangement with respect to any Acquisition Proposal.
Notwithstanding the foregoing, in response to a Takeover Proposal that did not arise from a breach
by the Company of SectionΒ 5.2(a), prior to the Company Shareholder Approval (x)Β the Company Board
of Directors (or any committee thereof authorized to act in such capacity) shall be permitted to
make a Change in Recommendation if it determines in good faith, after consultation with its outside
legal counsel, that the failure to take such action would be inconsistent with the Company Board of
Directorsβ fiduciary duties to the Companyβs shareholders under applicable Law and (y)Β the Company
may enter into a definitive agreement with respect to such Takeover Proposal if the Company Board
of Directors (or a committee thereof authorized to act in such capacity) has made the determination
in clause (x), has determined in good faith, after consultation with its financial advisor and
outside legal counsel, that such Takeover Proposal constitutes a Superior Proposal and,
concurrently with entering into such definitive agreement, terminates this Agreement pursuant to
SectionΒ 8.1(g) and immediately pays the applicable termination fee as a condition to such
termination. The Company shall not be entitled to terminate pursuant to SectionΒ 8.1(g), effect a
Change in Recommendation or enter into an agreement with respect to a Superior Proposal unless and
until (A)Β after the third business day following Parentβs receipt of a written notice (a βNotice of
Superior Proposalβ) from the Company advising Parent that the Company intends to take such action
and specifying the reasons therefor, including the material terms and
40
Β
conditions of the Superior
Proposal that is the basis of such action in such Notice of Superior Proposal and stating that the
Company intends to terminate this Agreement pursuant to SectionΒ 8.1(g) or effect a Change in
Recommendation, as applicable (it being understood and agreed that (1)Β in determining whether to
cause or permit the Company to so terminate this Agreement, the Company Board of Directors (or a
committee thereof authorized to act in such capacity) shall take into account any changes to the
financial terms of this Agreement proposed by Parent to the Company in any binding written and
complete proposal (including all schedules and exhibits and any necessary amendments to the terms
of this Agreement) in response to a Notice of Superior Proposal or otherwise, and (2)Β any material
amendment to the financial terms of such Superior Proposal shall require a new Notice of Superior
Proposal and a new three business day period), (B)Β the Company has complied in all material
respects with this SectionΒ 5.2 and (C)Β in the case of a termination pursuant to SectionΒ 8.1(g) or
entrance into an agreement for a Superior Proposal,
the Company has paid, or caused to be paid to, Parent all amounts due Parent pursuant to
SectionΒ 8.2 of this Agreement as a result of a termination pursuant to SectionΒ 8.1(g).
Β Β Β Β Β Β Β Β Β Β (d)Β Nothing contained in this SectionΒ 5.2 or any other provision of this Agreement shall
prohibit the Company or the Company Board of Directors (or any committee thereof authorized to act
in such capacity) from making a Change in Recommendation, or from taking and disclosing to the
Companyβs shareholders a position with respect to any tender or exchange offer by a third party
pursuant to RulesΒ 14d-9 and 14e-2(a) promulgated under the Exchange Act or from making any similar
disclosure to the Companyβs shareholders with respect to any Takeover Proposal, if in any such case
the Companyβs Board of Directors (or any committee thereof authorized to act in such capacity)
determines in good faith (after consultation with its outside legal counsel) that it is required to
do so under applicable Law, provided that any such disclosure (other than a recommendation of
rejection of such tender or exchange offer or other Takeover Proposal or a βstop, look and listenβ
letter or similar communication of the type contemplated by RuleΒ 14d-9(f) under the Exchange Act)
shall be deemed to be a Change in Recommendation if it satisfies the definition thereof under
SectionΒ 5.2(c)(i), unless the Company Board of Directors expressly reaffirms its recommendation of
the Merger at least two business days prior to the Company Shareholders Meeting.
Β Β Β Β Β SectionΒ 5.3 Employee Matters.
Β Β Β Β Β Β Β Β Β Β (a)Β Except as provided in SectionΒ 5.3(a) of the Company Disclosure Schedule, from the
Effective Time to the date that is twelve (12)Β months after the Effective Time (the βBenefits
Continuation Periodβ), the Surviving Corporation shall pay or cause to be paid to each employee who
continues as an employee of the Company, the Company Subsidiaries or the Surviving Corporation
during the Benefits Continuation Period (the βContinuing Employeesβ) salary, wages, cash incentive
opportunities, severance, medical benefits and other welfare benefit plans programs and
arrangements which are at least comparable in the aggregate to those provided prior to the Closing
Date under the Plans or otherwise (including the bonus programs previously approved for fiscal
2008), excluding any equity-based plans; 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 βEmployment Agreementsβ), the Surviving Corporation shall
expressly assume such Employment Agreements and fulfill all obligations thereunder; provided,
further, that, except for those Continuing Employees that are party to the Employment Agreements,
neither this Section
41
Β
5.3(a) nor any other provision of this Agreement shall be deemed a guarantee
of employment for such Continuing Employees with the Company or any Company Subsidiary. The
Surviving Corporation shall expressly assume the Companyβs Deferred Income Plan dated as of JulyΒ 1,
2000, as amended, and fulfill all obligations thereunder. 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 Employeeβs Employment Agreement.
Β Β Β Β Β Β Β Β Β Β (b)Β The Surviving Corporation shall (i)Β 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 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)Β 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 deductible or out-of-pocket requirements and (iii)Β 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 or similar
plan) to the extent of such service. Parent will make arrangements with its insurance carriers
prior to Closing to ensure the results specified in this SectionΒ 5.3(b).
Β Β Β Β Β Β Β Β Β Β (c)Β Parent and Company acknowledge and agree that the provisions contained in this SectionΒ 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 SectionΒ 5.3(a) and (b)Β above) or to terminate the
employment of any Continuing Employee for any reason, subject to the terms of applicable Employment
Agreements.
Β Β Β Β Β Β Β Β Β Β (d)Β 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 SectionΒ 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 RuleΒ 16b-3 promulgated under the Exchange Act.
Β Β Β Β Β Β Β Β Β Β (e)Β Nothing in this SectionΒ 5.3 shall give any Company Employee any right under this
Agreement.
42
Β
Β Β Β Β Β SectionΒ 5.4 Employee Preferred Stock Tender Offer.
Β Β Β Β Β Β Β Β Β Β (a)Β The Company agrees to provide all reasonable cooperation reasonably requested by Parent,
at Parentβs sole expense, in connection with a tender offer and consent solicitation (the βEmployee
Preferred Stock Tender Offerβ) conducted by Parent in respect of the outstanding shares of the
Companyβs Employeesβ Subordinated Convertible Preferred Stock (the βEmployee Preferred Stockβ). If
this Agreement is terminated prior to the Effective Time, Parent shall (or shall cause Merger Sub
to), 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, the Company Subsidiaries and their
respective Representatives for and against any and all losses suffered or incurred by them in
connection with the Employee Preferred Stock Tender Offer.
Β Β Β Β Β Β Β Β Β Β (b)Β The Employee Preferred Stock Tender Offer shall provide for a per share offer at an amount
of cash equal to the Per Share Price and shall provide, as conditions, (i)Β the prior or
simultaneous consummation of the Merger and (ii)Β that the holders of Employee Preferred Stock grant
their proxies to vote in favor of approval of (A)Β this Agreement, (B)Β the transactions contemplated
hereby including the Merger, (C)Β an amendment to the Companyβs charter to allow for the redemption
of the Employee Preferred Stock following the consummation of the Merger at an amount of cash equal
to the Per Share Price, and (D)Β any other matters included by the Company in the Proxy Statement
for the Company Shareholders Meeting, (the βEmployee Preferred Stock Consentsβ). The Employee
Preferred Stock Tender Offer shall be made pursuant to an Offer to Purchase and Consent
Solicitation Statement and related letters of transmittal and similar ancillary agreements prepared
by Parent in connection with the Employee Preferred Stock Tender Offer in form and substance
reasonably satisfactory to the Company and in compliance as to form in all material respects with
applicable SEC requirements and in accordance with all requirements under the Tennessee Investor
Protection Act as applicable. The Company and its counsel shall be given a reasonable opportunity
to review and comment on any materials that are to be provided holders of Employee Preferred Stock
in connection with the Employee Preferred Stock Tender Offer, and Parent shall give due
consideration to all reasonable additions, deletions or changes suggested thereto by the Company
and its counsel. Parent will not waive the conditions regarding the prior or simultaneous
consummation of the Merger or the Employee Preferred Stock Consents to the Employee Preferred Stock
Tender Offer without the prior written consent of the Company.
Β Β Β Β Β Β Β Β Β Β (c)Β If at any time prior to the acceptance of Employee Preferred Stock pursuant to the
Employee Preferred Stock Tender Offer any event should occur that is required by applicable Law to
be set forth in an amendment of, or a supplement to, the Employee Preferred Stock Tender Offer
Documents, Parent will prepare and disseminate such amendment or supplement; provided, however,
that prior to such dissemination, Parent shall consult with Parent with respect to such amendment
or supplement and shall afford the Company and its counsel reasonable opportunity to comment
thereon. Parent will notify the Company at least 48 hours prior to the dissemination of the
Employee Preferred Stock Tender Offer documents, or 24
hours prior to the mailing of any amendment or supplement thereto, to the Employee Preferred
Stockholders.
43
Β
Β Β Β Β Β Β Β Β Β Β (d)Β For avoidance of doubt, neither the making nor consummation of the Employee Preferred
Stock Tender Offer, nor the approval of the Company shareholders of the amendment to the Companyβs
charter referred to in SectionΒ 5.4(b)(C), shall be a condition to Closing for the Company, Parent
or Merger Sub.
Β Β Β Β Β SectionΒ 6. Additional Agreements.
Β Β Β Β Β SectionΒ 6.1 Proxy Statement. The Company shall, as soon as practicable following the
date 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 Companyβs 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 Companyβs outside legal counsel, be set forth in an amendment or
supplement to the Proxy Statement so that the 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. At the request of Parent, the Company shall include in the Proxy
Statement a proposal to amend the Companyβs charter to allow for the redemption of the Employee
Preferred Stock following the consummation of the Merger at an amount of cash equal to the Per
Share Price.
Β Β Β Β Β SectionΒ 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 βCompany Shareholders Meetingβ) for the purpose of seeking the Company
Shareholder Approval. Subject to SectionΒ 5.2(c), the Companyβs Board of Directors (or any
committee thereof authorized to act in such capacity) 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. Unless such recommendation shall have been modified or
withdrawn in accordance with SectionΒ 5.2(c), the Company shall take all action that is both
reasonable and lawful to solicit from its shareholders proxies in favor of the proposal to adopt
and approve this Agreement and the Merger 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
NYSE or CHX rules or the TBCA. Notwithstanding anything to the contrary in the preceding sentence
and for avoidance of doubt, at any time prior to the Company Stockholder
44
Β
Approval, the Company may
adjourn, postpone or cancel the Company Stockholders Meeting following a Change in Recommendation
or in response to an Acquisition Proposal if the Company Board of Directors (or any committee
thereof authorized to act in such capacity) determines in good faith after consultation with its
outside legal counsel that there is a reasonable likelihood that such Acquisition Proposal could
lead to a Superior Proposal and that failure to take such action would be inconsistent with its
fiduciary duties under applicable Law or, in any event, if this Agreement is terminated before that
meeting is held.
Β Β Β Β Β SectionΒ 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, as would materially interfere with the conduct of the
business of the Company or any Company Subsidiary, 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), the Company shall, and shall cause the Company Subsidiaries
to, afford to Parent, Merger Sub and their directors, employees, representatives, financial
advisors, consultants, lenders, legal counsel, accountants and other advisors and representatives,
to have 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 and the Company Subsidiaries as is reasonably necessary or appropriate in
connection with Parentβs investigation of the Company and the Company Subsidiaries with respect to
the transactions contemplated hereby. Any such investigation and examination shall be conducted at
reasonable times upon reasonable advance notice and under reasonable circumstances so as to
minimize disruption to or impairment of the Companyβs 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 MayΒ 7, 2007 between Parent and the Company (the
βConfidentiality Agreementβ), or have otherwise agreed to be bound to the provisions of such
agreement applicable to representatives, the Company shall furnish the representatives of Parent
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 Agreement.
Β Β Β Β Β SectionΒ 6.4 Regulatory Filings; Reasonable Efforts.
Β Β Β Β Β Β Β Β Β Β (a)Β 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 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: (i)Β the filings identified on SectionΒ 3.17 of the Company Disclosure Schedule
that are required to be made with a Governmental Entity, (ii)Β pre-merger notification reports to be
filed with the United States Federal Trade Commission (the βFTCβ) and the Antitrust Division of the
United States Department of Justice (βDOJβ) as required by the HSR Act, (iii)Β 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)Β any filings required under the Securities Act, the Exchange
45
Β
Act, any applicable state
securities or βblue skyβ laws and the securities laws of any foreign country, or (v)Β any other
applicable Laws or rules and regulations of any Governmental Entity relating to, and material to
the consummation of, the Merger.
Β Β Β Β Β Β Β Β Β Β (b)Β 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 SectionΒ 6.4(a).
Β Β Β Β Β Β Β Β Β Β (c)Β 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)Β 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)Β 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 SectionΒ 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) 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 βoutside counsel only.β 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 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.
Β Β Β Β Β Β Β Β Β Β (d)Β 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 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 efforts
to accomplish the following: (i)Β the causing of all of the conditions set forth in SectionΒ 7 to the
other partiesβ obligations to consummate the Merger to be satisfied and to consummate and make
effective the Merger and the other transactions contemplated hereby, (ii)Β 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)Β the obtaining of
all necessary consents, approvals or waivers from third parties (provided, however, in no event
46
Β
shall obtaining any such consent, approval, or waivers be required as a condition to Closing
hereunder), (iv)Β 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)Β 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.
Β Β Β Β Β Β Β Β Β Β (e)Β If the Company Shareholders Meeting is held, Parent shall vote (or consent with respect
to) or cause to be voted (or a consent to be given with respect to) any shares of Company Common
Stock or Company Preferred Stock and any shares of common stock of Merger Sub beneficially owned by
it or any of its Subsidiaries or with respect to which it or any of its Subsidiaries has the power
(by agreement, proxy or otherwise) to cause to be voted (or to provide a consent), in favor of the
adoption and approval of this Agreement at any meeting of stockholders of the Company or Merger
Sub, respectively, at which this Agreement shall be submitted for adoption and approval and at all
adjournments or postponements thereof (or, if applicable, by any action of shareholders of either
the Company or Merger Sub by consent in lieu of a meeting). If the Company Shareholders Meeting is
held, Parent shall vote (or consent with respect to) or cause to be voted (or a consent to be given
with respect to) any shares of Company Preferred Stock to which it obtained a proxy in connection
with the Employee Preferred Tender Offer in favor of the adoption and approval of this Agreement at
any meeting of stockholders of the Company or Merger Sub, respectively, at which this Agreement
shall be submitted for adoption and approval and at all adjournments or postponements thereof (or,
if applicable, by any action of shareholders of either the Company or Merger Sub by consent in lieu
of a meeting).
Β Β Β Β Β SectionΒ 6.5 Directors and Officers Indemnification and Insurance.
Β Β Β Β Β Β Β Β Β Β (a)Β 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 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.
Β Β Β Β Β Β Β Β Β Β (b)Β For a period of six years after the Effective Time, the Company, to the fullest extent
permitted and not otherwise prohibited under applicable Law or under the Companyβs charter, bylaws
or any applicable indemnification agreements, and regardless of
47
Β
whether the Merger becomes
effective, shall indemnify, defend and hold harmless, and, after the Effective Time, the Surviving
Corporation shall and Parent shall cause the Surviving Corporation, to the extent indemnified as of
the date of this Agreement by the Company pursuant to the Companyβs charter, bylaws and/or
indemnification agreements in effect on the date hereof or under applicable Law, to indemnify,
defend and hold harmless, each present and former director or officer of the Company or any of the
Company Subsidiaries (collectively, the βIndemnified Partiesβ) against any costs or expenses
(including attorneysβ fees), judgments, fines, losses, claims, damages, liabilities and amounts
paid in settlement in connection with any Action, whether civil, criminal, administrative or
investigative, arising out of or pertaining to (x)Β the fact that the Indemnified Party is or was an
officer, director, employee, agent or other fiduciary of the Company or any Company Subsidiary
prior to the Effective Time or (y)Β 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 Action with respect to which such Indemnified Party is entitled to
indemnification pursuant to this SectionΒ 6.5 after the Effective Time, the Surviving Corporation
shall and Parent shall cause the Surviving Corporation to, to the fullest extent permitted as of
the date of this Agreement by the Company pursuant to the Companyβs charter, bylaws and/or
indemnification agreements in effect on the date hereof or under applicable Law, advance to such
Indemnified Party within twenty (20)Β days after receipt by the Surviving Corporation of a written
request for such advance, 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 SectionΒ 6.5 in advance of final judicial
determination, with respect to whether an Indemnified Partyβs conduct complied with the standards
set forth under Tennessee Law, the Companyβs charter, bylaws or indemnification agreements, as the
case may be, shall be made by independent counsel mutually acceptable to Parent and the Indemnified
Party.
Β Β Β Β Β Β Β Β Β Β (c)Β Parent shall and shall cause the Surviving Corporation to honor and fulfill in all
respects the obligations of the Company pursuant to indemnification agreements with the Companyβs
directors, officers, employees or agents existing at or prior to the Effective Time to the fullest
extent permitted by applicable Law or, subject to SectionΒ 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 could seek indemnification
hereunder.
Β Β Β Β Β Β Β Β Β Β (d)Β At or prior to the Effective Time, the Surviving Corporation shall obtain a βtailβ
insurance policy from an insurance carrier with the same or better credit rating as the Companyβs
current insurance carrier with respect to directorsβ and officersβ 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 Companyβs directors and officers
48
Β
insurance policy in
effect as of the Effective Time for the individuals who are or were directors and officers of the
Company for claims arising from facts or events occurring prior to the Effective Time, provided,
however, that in no event shall the Surviving Corporation be required to expend in excess of 200%
of the annual premium currently paid by the Company for such coverage. If the Surviving Corporation
is unable to obtain the βtailβ insurance described in the first sentence of this SectionΒ 6.5(d) for
an amount equal to or less than the maximum premium specified in the preceding sentence, the
Surviving Corporation shall obtain as much comparable βtailβ insurance as possible for an amount
equal to such maximum premium.
Β Β Β Β Β Β Β Β Β Β (e)Β Nothing in this Agreement is intended to, shall be construed to or shall release, waive or
impair any rights to directorsβ and officersβ insurance claims under any policy that is or has been
in existence with respect to the Company, the Company Subsidiaries or any of their respective
officers or directors, it being understood and agreed that the indemnification provided for in this
SectionΒ 6.5 is not prior to or in substitution for any such claims under such policies.
Β Β Β Β Β Β Β Β Β Β (f)Β 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)Β 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)Β 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 SectionΒ 6.5.
Β Β Β Β Β SectionΒ 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 ten (10)Β business days prior to the Closing.
Β Β Β Β Β SectionΒ 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
will not, directly or indirectly, take any action (a)Β to cause its representations and warranties
set forth in SectionΒ 4 to be untrue in any material respect or as would constitute a Parent
Material Adverse Effect; or (b)Β that would, or would reasonably be expected, individually or in the
aggregate, (i)Β to prevent, materially delay or impede the ability of Parent or Merger Sub to borrow
under the Commitment Letter in connection with the consummation of the Merger or the other
transactions contemplated by this Agreement, (ii)Β to prevent, materially delay or impede the
ability of Parent or Merger Sub to consummate the Merger or the other transactions contemplated by
this Agreement or (iii)Β to constitute a Parent Material Adverse Effect. Merger Sub agrees that,
between the date of this Agreement and the Effective Time, it shall not engage in any business
activities and will incur no liabilities or obligations other than as expressly contemplated by
this Agreement.
49
Β
Β Β Β Β Β SectionΒ 6.8 Financing.
Β Β Β Β Β Β Β Β Β Β (a)Β Parent shall use 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 Financing on the
terms and conditions described in the Commitment Letter, including using reasonable best efforts
to: (i)Β maintain in effect the Commitment Letter, (ii)Β satisfy, on a timely basis, all conditions
applicable to Parent and Merger Sub to obtaining the Financing set forth therein (including the
payment of any commitment, engagement or placement fees required as a condition to the Financing),
(iii)Β enter into definitive agreements with respect thereto on the terms and conditions
contemplated by the Commitment Letter (including the flex provisions related to the Financing) or
on other terms reasonably acceptable to Parent (to the extent the other terms would not adversely
affect the ability of Parent or Merger Sub to timely consummate the transactions contemplated
hereby), and (iv)Β consummate the Financing at or prior to Closing. In the event any portion of the
Financing becomes unavailable on the terms and conditions contemplated in the Commitment Letter,
Parent shall use its reasonable best efforts to arrange to obtain alternative financing from
alternative sources in an amount sufficient 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 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 Letter
of which Parent or Merger Sub becomes aware or any termination of the Commitment Letter. Parent
shall keep the Company informed on a reasonably current basis in reasonable detail of the status of
its efforts to arrange the Financing.
Β Β Β Β Β Β Β Β Β Β (b)Β The Company agrees to provide all reasonable cooperation in connection with the
arrangement of the Financing as is customary and may be reasonably requested by Parent (provided
that such requested cooperation does not unreasonably interfere with the ongoing operations of the
Company and the Company Subsidiaries), including (i)Β participation in meetings and marketing
presentations at times reasonably acceptable to the Company, (ii)Β furnishing customary information
(including financial statements) reasonably required to be included in the preparation of offering
memoranda, private placement memoranda, prospectuses and similar documents in connection with
financings similar in scope and nature to the Financing
contemplated by the Commitment Letter (provided such memoranda or documents need not be issued
by the Company or any Company Subsidiaries), (iii)Β cooperation in the preparation of any pledge and
security documents, other definitive financing documents, including customary comfort letters of
accountants and legal opinions as may be reasonably requested by Parent, and (iv)Β execution of a
customary representation letter in respect of information provided by the Company or the Company
Subsidiaries in writing expressly for use in connection with the Financing or the syndication
thereof, for the benefit of the arrangers of the Financing and lenders and proposed lenders to
Parent and Merger Sub in the Financing; provided that Parent and Merger Sub may not and hereby
disclaim any reliance by either of them upon such a representation letter; provided further 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 (other than in respect of such representation letter) in
connection with the 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
50
Β
incurred by the Company or the Company Subsidiaries in connection
with such cooperation. The Company and its counsel shall be given a reasonable opportunity to
review and comment on any materials that are to be presented during any road shows conducted in
connection with the Financing to the extent such materials include or are derived from information
provided by the Company or the Company Subsidiaries for use in connection with the Financing or the
syndication thereof, and Parent shall give due consideration to all reasonable additions, deletions
or changes suggested thereto by the Company and its counsel. 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, the Company Subsidiaries and their respective Representatives for and
against any and all losses suffered or incurred by them in connection with the arrangement of the
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
Subsidiariesβ logos in connection with the 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.
Β Β Β Β Β Β Β Β Β Β SectionΒ 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
National Market, NYSE or CHX, without the prior consent of each of the other parties hereto, which
consent shall not be unreasonably withheld; provided, however, that Parentβs 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 Change in Recommendation. Notwithstanding the foregoing, without prior consent of the other
parties, the Company and Parent (a)Β may communicate with customers, vendors, suppliers, financial
analysts, investors and media representatives in the ordinary course of business in a manner
consistent with its past practice and in compliance with applicable Law and (b)Β may
disseminate the information included in a press release or other document previously approved for
external distribution by the other parties hereto.
Β Β Β Β Β Β Β Β Β Β SectionΒ 6.10 Notification of Certain Matters. Each party shall give prompt notice to
the other parties of (i)Β 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 SectionΒ 7 not to be satisfied
in any material respect at the Closing, and (ii)Β any material failure of such party or any of its
representatives to comply with or satisfy 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.
51
Β
Β Β Β Β Β SectionΒ 6.11 Non-USRPHC Certificate. On or prior to the Closing, the Company will
provide Parent a statement pursuant to Treasury Regulations SectionsΒ 1.897-2(h)(1) and
1.1445.2(c)(3) certifying that as of the Closing Date an interest in the Company does not
constitute a U.S. real property interest (as that term is defined in Section 897(c) of the Code).
Β Β Β Β Β SectionΒ 7. Conditions Precedent to the Obligation of the Parties to Consummate the
Merger
Β Β Β Β Β SectionΒ 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:
Β Β Β Β Β Β Β Β Β Β (a) Shareholder Approval. The Company Shareholder Approval shall have been obtained.
Β Β Β Β Β Β Β Β Β Β (b) Statutes; Court Orders. No statute, rule, executive order or regulation shall
have been enacted, issued, entered or promulgated by any Governmental Entity which prohibits the
consummation of the Merger, and there shall be no order or preliminary or permanent injunction of a
court of competent jurisdiction, including any temporary restraining order, in effect preventing or
prohibiting consummation of the Merger.
Β Β Β Β Β Β Β Β Β Β (c) Regulatory Approvals. The waiting period (and any extension thereof) applicable
to the Merger under the HSR Act and applicable foreign competition or merger control Laws shall
have been terminated or shall have expired, and approvals under all foreign competition or merger
control Laws set forth in SectionΒ 7.1(c) of the Company Disclosure Schedule shall have been
obtained or expired, as the case may be.
Β Β Β Β Β SectionΒ 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:
Β Β Β Β Β Β Β Β Β Β (a) Representations, Warranties and Covenants. The representations and warranties of
the Company contained in this Agreement (other than the representations and warranties set forth in
SectionsΒ 3.2 and 3.3), disregarding all qualifications and exceptions contained therein relating to
materiality or Company Material Adverse Effect, shall be true and correct 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),
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 SectionsΒ 3.2 and 3.3 shall be true and
correct in all material respects 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). The Company shall have performed and
complied in all material respects with all material 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.
52
Β
Β Β Β Β Β Β Β Β Β Β (b) Material Adverse Effect. Since the date of this Agreement, there shall not have
occurred a Company Material Adverse Effect with respect to the Company and the Company
Subsidiaries, considered as a whole, that has not been cured prior to the Termination Date.
Β Β Β Β Β SectionΒ 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: (i) the representations and warranties of Parent and Merger Sub
contained in this Agreement, disregarding all qualifications and exceptions contained therein
relating to materiality or Parent Material Adverse Effect, shall be true and correct 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), except where the failure or failures of any such representations and warranties
to be so true and correct would not reasonably be expected to prevent or materially impede the
timely consummation of the Merger; (ii)Β Parent and Merger Sub 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; and (iii)Β Parent and Merger Sub shall each
have delivered to the Company a certificate from an officer of the Company, dated the Closing Date,
to the foregoing effect.
Β Β Β Β Β SectionΒ 8. Termination, Amendment and Waiver.
Β Β Β Β Β SectionΒ 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:
Β Β Β Β Β Β Β Β Β Β (a)Β By mutual written consent of Parent and the Company authorized by the Parentβs Board of
Directors and the Company Board of Directors;
Β Β Β Β Β Β Β Β Β Β (b)Β By either Parent or the Company, if the Merger has not been consummated by DecemberΒ 31,
2007 (the βTermination Dateβ); provided, however, that the right to terminate this Agreement
pursuant to this SectionΒ 8.1(b) shall not be available to any party whose action or failure to
fulfill any obligation under this Agreement or failure to act in good faith has been the principal
cause of, or resulted in, the failure of the Merger to be consummated by such date;
Β Β Β Β Β Β Β Β Β Β (c)Β 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 (collectively, βRestraintsβ) the consummation of the Merger or that otherwise
has the effect of making the Merger illegal; provided, however, that the party seeking to terminate
this Agreement pursuant to this SectionΒ 8.1(c) shall have used all reasonable efforts to prevent
the entry of and to remove such Restraints to the extent within their control or influence;
Β Β Β Β Β Β Β Β Β Β (d)Β By Parent (if neither it nor Merger Sub is in material breach of it representations,
warranties, covenants and obligations under this Agreement so as to cause any
53
Β
of the conditions set
forth in SectionΒ 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 SectionΒ 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)Β business days after the receipt of written notice thereof or such
breach or inaccuracy is not reasonably capable of being cured or such condition is not reasonably
capable of being satisfied prior to the Termination Date);
Β Β Β Β Β Β Β Β Β Β (e)Β By the Company (i) (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
SectionΒ 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 SectionΒ 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)Β business days after the receipt of written notice thereof or such
breach or inaccuracy is not reasonably capable of being cured or such condition is not reasonably
capable of being satisfied prior to the Termination Date);
Β Β Β Β Β Β Β Β Β Β (f)Β By Parent, if the Company Board of Directors shall have (i)Β made a Change in
Recommendation, (ii)Β recommended to the shareholders of the Company, or approved any, Acquisition
Proposal (as defined in SectionΒ 8.2(c) hereof) or (iii)Β failed to include in the Proxy Statement
its recommendation that the shareholders of the Company adopt and approve this Agreement and the
Merger;
Β Β Β Β Β Β Β Β Β Β (g)Β By the Company, at any time prior to the Company Shareholder Approval, if the Company
concurrently enters into a definitive agreement with respect to a Superior
Proposal in accordance with, and subject to the terms and conditions of, clause (y)Β of Section
5.2(c) and at least three (3)Β business days have passed since the last Notice of a Superior
Proposal; provided that, any such purported termination pursuant to this SectionΒ 8.1(g) shall be
void and of no force or effect unless the Company has paid the applicable termination fee in
accordance with SectionΒ 8.2; or
Β Β Β Β Β Β Β Β Β Β (h)Β 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.
Β Β Β Β Β SectionΒ 8.2 Effect of Termination.
Β Β Β Β Β Β Β Β Β Β (a)Β Any termination of this Agreement under SectionΒ 8.1 will be effective immediately upon the
delivery of a valid written notice of the terminating party to the other parties hereto and, if
then due, payment of the termination fee required pursuant to this SectionΒ 8.2. In the event of
termination of this Agreement as provided in SectionΒ 8.1, this Agreement shall forthwith become
null and void and be of no further force or effect, except as set forth in the penultimate sentence
of SectionΒ 6.3, the indemnification and reimbursement obligations set forth in SectionΒ 6.8(b),
SectionΒ 8, SectionΒ 9 and the Confidentiality Agreement, each of which shall remain in full force
and effect and survive any termination of this Agreement in accordance with the terms thereof,
provided, however, that, except as provided in SectionΒ 8.2(e), nothing
54
Β
herein shall relieve a party
from liability for any breach hereof occurring prior to such termination.
Β Β Β Β Β Β Β Β Β Β (b)Β If Parent or the Company terminates this Agreement pursuant to SectionΒ 8.1(f) or Section
8.1(g), respectively, the Company shall pay to Parent by wire transfer in immediately available
funds a termination fee of $46,000,000 concurrently with the termination of this Agreement
by the Company or no later than two business days after such termination by Parent, as applicable.
In addition, if this Agreement is terminated pursuant to SectionΒ 8.1(f) or SectionΒ 8.1(g), then,
concurrently with the payment of the termination fee specified in the immediately preceding
sentence, the Company shall pay to Parent by wire transfer in immediately available funds all of
Parentβs reasonable, actual and documented out-of-pocket expenses and fees (including reasonable
attorneysβ fees) incurred by Parent on or prior to the termination of this Agreement in connection
with the transactions contemplated by this Agreement in an amount not
to exceed $10,000,000.
Β Β Β Β Β Β Β Β Β Β (c)Β If Parent terminates this Agreement pursuant to SectionΒ 8.1(d) or if Parent or Company
terminates this Agreement pursuant to SectionΒ 8.1(b) or SectionΒ 8.1(h), and (i)Β if prior to the
date of such termination (but on or after the date hereof) a bona fide Acquisition Proposal is
publicly announced, and (ii)Β within twelve (12)Β months after the date of such termination, the
Company enters into a definitive agreement with respect to such Acquisition Proposal, the Company
shall pay to Parent a termination fee of $46,000,000 concurrently with the execution of such
definitive agreement; provided, that solely for purposes of this SectionΒ 8.2(c) and Section
8.1(f)(ii), the term Acquisition Proposal shall have the meaning ascribed thereto in Section
5.2(a), except that all references to twenty percent (20%) therein shall be changed to seventy-five
percent (75%). In addition, if Parent terminates this Agreement pursuant to SectionΒ 8.1(d) or
SectionΒ 8.1(h), and (i)Β if prior to the date of such termination (but on or after the date
hereof) a bona fide Acquisition Proposal is publicly announced, and (ii)Β within twelve (12)
months after the date of such termination, the Company enters into a definitive agreement with
respect to such Acquisition Proposal, then, concurrently with the payment of the termination fee
specified in the immediately preceding sentence, the Company shall pay to Parent by wire transfer
in immediately available funds all of Parentβs reasonable, actual and documented out-of-pocket
expenses and fees (including reasonable attorneysβ fees) incurred by Parent on or prior to the
termination of this Agreement in connection with the transactions contemplated by this Agreement in
an amount not to exceed $10,000,000. Furthermore, if Parent or Company terminates this
Agreement pursuant to SectionΒ 8.1(h), then, concurrently with such termination, the Company shall
pay to Parent by wire transfer in immediately available funds all of Parentβs reasonable, actual
and documented out-of-pocket expenses and fees (including reasonable attorneysβ fees) incurred by
Parent on or prior to the termination of this Agreement in connection with the transactions
contemplated by this Agreement in an amount not to exceed $10,000,000.
Β Β Β Β Β Β Β Β Β Β (d)Β The Company acknowledges that the agreements contained in this SectionΒ 8.2 are an integral
part of the transactions contemplated by this Agreement, and that, without these agreements, Parent
would not enter into this Agreement; accordingly, if the Company fails promptly to pay the amounts
due pursuant to SectionsΒ 8.2(b) or (c), respectively, and, in order to obtain such payment, Parent
commences a suit which results in a final non-appealable judgment against the Company, the Company
shall pay to Parent its reasonable attorneysβ fees and
55
Β
expenses actually incurred in connection
with such suit, together with interest on the amount of the fee from the date such payment was
required to be made until the date such payment is actually made.
Β Β Β Β Β Β Β Β Β Β (e)Β Parent hereby agrees, that, upon any termination of this Agreement under circumstances
where it is entitled to a termination fee pursuant to SectionΒ 8.2(b) or 8.2(c) and provided such
termination fee is paid in full, such payment shall be a sole and exclusive remedy and Parent and
its affiliates (including Merger Sub) shall be precluded from any other remedy against the Company
and its affiliates, at law or in equity or otherwise, and neither Parent nor any of its affiliates
(including Merger Sub) may seek (and Parent shall cause its affiliates (including Merger Sub) not
to seek) to obtain any recovery, judgment, or damages of any kind, including consequential,
indirect, or punitive damages, against the Company or any of its affiliates, directors, officers,
employees, shareholders or Representatives in connection with this Agreement or the transactions
contemplated hereby or the termination or breach of this Agreement (whether or not such damages
result from fraud or the willful and material breach of the Companyβs representations, warranties,
covenants or agreements set forth in this Agreement). Parent acknowledges that the agreements
contained in this SectionΒ 8.2(e) are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, the Company would not enter into this Agreement, and
Parent and the Company acknowledge and agree that the termination fees provided in SectionΒ 8.2(b)
and 8.2(c) are reasonable and constitute liquidated damages and not a penalty.
Β Β Β Β Β SectionΒ 8.3 Fees and Expenses. Except as otherwise expressly provided in Section
6.8(b) or in SectionsΒ 8.2(b) or (c), 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 Parentβs 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.
Β Β Β Β Β SectionΒ 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 Company Shareholder Approval,
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.
Β Β Β Β Β SectionΒ 8.5 Waiver. At any time prior to the Effective Time, each party hereto may
(a)Β extend the time for the performance of any of the obligations or other acts of any other party
hereto or (b)Β 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.
56
Β
Β Β Β Β Β SectionΒ 9. Miscellaneous.
Β Β Β Β Β SectionΒ 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 Agreement which shall
survive execution of this Agreement and shall terminate in accordance with the provisions thereof.
EACH PARTY HERETO AGREES THAT, EXCEPT FOR THE 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 AGREEMENT), WITH RESPECT TO THE
EXECUTION AND DELIVERY OF THIS AGREEMENT OR THE MERGER, NOTWITHSTANDING THE DELIVERY OR
DISCLOSURE TO THE OTHER OR THE OTHERβS REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER
INFORMATION WITH RESPECT TO ANY ONE OR MORE OF THE FOREGOING.
Β Β Β Β Β SectionΒ 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 SectionΒ 9, the agreements of
Parent and the Company in SectionsΒ 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.
Β Β Β Β Β SectionΒ 9.3 Parent Guarantee. Parent agrees to take all action necessary to cause
Merger Sub or the Surviving Corporation, as applicable, to perform all of its respective
agreements, covenants and obligations under this Agreement. Parent unconditionally guarantees to
the Company the full and complete performance by Merger Sub or the Surviving Corporation, as
applicable, of its respective obligations under this Agreement and shall be liable for any breach
of any representation, warranty, covenant or obligation of Merger Sub or the Surviving Corporation,
as applicable, under this Agreement. Parent hereby waives diligence, presentment, demand of
performance, filing of any claim, any right to require any proceeding first against Merger Sub or
the Surviving Corporation, as applicable, protest, notice and all demands whatsoever in connection
with the performance of its obligations set forth in this SectionΒ 9.3.
Β Β Β Β Β SectionΒ 9.4 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:
57
Β
Β | Β | Β |
If to Parent or Merger Sub:
|
Β | With copies (which shall not constitute notice) to: |
Β |
Β | Β |
The
Finish Line, Inc.
|
Β | Xxxxxxxx X. Xxxxx, Esq. |
Headwind,
Inc.
|
Β | Xxxxxx, Xxxx & Xxxxxxxx LLP |
c/o Xxxx X. Xxxxx
Β
|
Β | 0000 Xxxxxxx Xxxx Xxxx, 00xx Xxxxx |
0000 Xxxxx Xxxxxxxxxx Xxxx
|
Β | Xxx Xxxxxxx, XX 00000 |
Xxxxxxxxxxxx, Xxxxxxx 00000 |
Β | Telephone: (000)Β 000-0000 |
Telephone:
(000)Β 000-0000
|
Β | Facsimile: (000)Β 000-0000 |
Facsimile:
(000)Β 000-0000 |
Β | Β |
Β |
Β | Β |
If to the Company:
|
Β | With copies (which shall not constitute notice) to: |
Β |
Β | Β |
Β | Xxxxx X. Xxxxx, III, Esq. | |
c/o Xxx X. Xxxxxxxxxx
|
Β | Bass, Xxxxx & Xxxx, PLC |
Genesco
Park
|
Β | 000 Xxxxxxxxx Xxxxxx, XxxxxΒ 0000 |
0000 Xxxxxxxxxxxx Xxxx
|
Β | Xxxxxxxxx, XX 00000 |
Xxxxxxxxx, Xxxxxxxx 00000-0000 | Β | Telephone: (000)Β 000-0000 |
Telephone:
(000)Β 000-0000
|
Β | Facsimile: (000)Β 000-0000 |
Facsimile:
(000)Β 000-0000
|
Any party may by notice given in accordance with this
SectionΒ 9.4 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.
Β Β Β Β Β SectionΒ 9.5 Binding Effect; No Assignment; No Third-Party Beneficiaries.
Β Β Β Β Β Β Β Β
Β Β Β Β Β Β Β Β Β Β (a)Β 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. 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.
Β Β Β Β Β Β Β
Β Β Β Β Β Β Β Β Β Β Β (b)Β Other than SectionΒ 6.5 and the rights of the holders of Company Options, ESPP Options and
Restricted Shares to receive the Cash Out Amount, 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.
Β Β Β Β Β SectionΒ 9.6 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
58
Β
economic, business
and other purposes of such invalid or unenforceable provision or portion thereof.
Β Β Β Β Β SectionΒ 9.7 Governing Law. This Agreement, and all claims or causes of action
(whether at law, in equity, 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 Tennessee, without giving effect to any
choice or conflict of Law
provision or rule (whether of the State of Tennessee or any other jurisdiction) that would
cause the application of the Laws of any jurisdiction other than the State of Tennessee.
Β Β Β Β Β SectionΒ 9.8 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 Tennessee (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 the City of
Nashville in the State of Tennessee 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 with respect to
this Agreement, (a)Β 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)Β 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, execution of judgment or otherwise), and (c)Β to the
fullest extent permitted by applicable Law, that (i)Β the Action in any such court is brought in an
inconvenient forum, (ii)Β the venue of such Action is improper or (iii)Β 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.
Β Β Β Β Β SectionΒ 9.9 Specific Enforcement. The parties recognize and agree that if for any
reason any of the provisions of this Agreement are not performed 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 SectionΒ 8.1 under
circumstances where a fee or expenses are payable pursuant to SectionΒ 8.2, any other party shall be
entitled to an injunction (without posting a bond or other undertaking) restraining any violation
or threatened violation of the provisions of this Agreement. In the event that any action shall be
brought in equity to enforce the provisions of this Agreement, no party shall allege, and each
party hereby waives the defense, that there is an adequate remedy at law.
59
Β
Β Β Β Β Β SectionΒ 9.10 Interpretation.
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (a)Β 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.
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (b)Β 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.
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (c)Β 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
partyβs involvement in the drafting thereof.
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (d)Β 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 (or delivered or
provided such information or document) to any officer of Parent or any of its Representatives.
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (e)Β The term βaffiliateβ or βAffiliateβ 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.
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (f)Β The term βbusiness dayβ 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.
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (g)Β The words βinclude,β βincludesβ or βincludingβ shall be deemed to be followed by the words
βwithout limitation.β
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (h)Β The term βknowledgeβ of the Company shall mean the actual knowledge of the officers of the
Company or a Company Subsidiary listed on SectionΒ 9.10(h) of the Company Disclosure Schedule. The
term βknowledgeβ of Parent shall mean the actual knowledge of the officers of Parent listed on
SectionΒ 9.10(h) of the Parent Disclosure Schedule.
Β Β Β Β Β Β Β Β Β Β
Β Β Β Β Β Β Β Β (i)Β 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 βmaterial,β βmaterially,β βmateriality,β βCompany Material Adverse Effectβ or βParent
Material Adverse Effectβ 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.
60
Β
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (j)Β The term βpersonβ or βPersonβ 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.
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β (k)Β The term βsubsidiaryβ or βSubsidiary,β 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).
Β Β Β Β Β SectionΒ 9.11 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.
Β Β Β Β Β SectionΒ 9.12 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.]
61
Β
Β Β Β Β Β IN WITNESS WHEREOF, the parties have executed this Agreement and Plan of Merger as of the date
first stated above.
Β | Β | Β | Β | Β |
Β | Β | Genesco Inc. | ||
Β |
Β | Β | Β | Β |
Β
|
Β | By: | Β | /s/ Xxx X. Xxxxxxxxxx |
Β
|
Β | Β | Β | Β |
Β
|
Β | Name: | Β | Xxx X. XxxxxxxxxxΒ |
Β
|
Β | Title: | Β | Chairman and Chief Executive OfficerΒ |
Β |
Β | Β | Β | Β |
Β | Β | The Finish Line, Inc. | ||
Β |
Β | Β | Β | Β |
Β
|
Β | By: | Β | /s/ Xxxx X. Xxxxx |
Β
|
Β | Β | Β | Β |
Β
|
Β | Name: | Β | Xxxx X. XxxxxΒ |
Β
|
Β | Title: | Β | Chairman of the Board and Chief Executive OfficerΒ |
Β |
Β | Β | Β | Β |
Β | Β | Headwind, Inc. | ||
Β |
Β | Β | Β | Β |
Β
|
Β | By: | Β | /s/ Xxxx X. Xxxxx |
Β
|
Β | Β | Β | Β |
Β
|
Β | Name: | Β | Xxxx X. XxxxxΒ |
Β
|
Β | Title: | Β | President and Chief Executive OfficerΒ |
62
Β
ANNEX A
Index of Defined Terms
Β | Β | Β | Β | |
Β | Β | Section | ||
Acquiring Person |
Β | Β | 3.18(c) | |
Acquisition Proposal |
Β | Β | 5.2(a) | |
Actions |
Β | Β | 3.8 | |
affiliate or Affiliate |
Β | Β | 9.10 | |
Affiliated Party |
Β | Β | 3.21 | |
Agreement |
Β | Β | Preamble | |
Articles of Merger |
Β | Β | 1.3 | |
Benefits Continuation Period |
Β | Β | 5.3(a) | |
Book-Entry Shares |
Β | Β | 2.4(b) | |
business day |
Β | Β | 9.10 | |
Cash Out Amount |
Β | Β | 2.3(c) | |
Certificates |
Β | Β | 2.4(b) | |
Change in Recommendation |
Β | Β | 5.2(c) | |
CHX |
Β | Β | 3.1(a) | |
Closing |
Β | Β | 1.2 | |
Closing Date |
Β | Β | 1.2 | |
COBRA |
Β | Β | 3.14(d) | |
Code |
Β | Β | 2.5 | |
Commitment Letter |
Β | Β | 4.6 | |
Company |
Β | Β | Preamble | |
Company Board of Directors |
Β | Β | Recitals | |
Company Common Stock |
Β | Β | 2.1 | |
Company Disclosure Schedule |
Β | Β | 3 | |
Company Employees |
Β | Β | 3.14(a) | |
Company Insurance Policies |
Β | Β | 3.12 | |
Company Material Adverse Effect |
Β | Β | 3.1(a) | |
Company Options |
Β | Β | 2.3(a) | |
Company Preferred Stock |
Β | Β | 3.3(a) | |
Company Registered IP |
Β | Β | 3.10(b) | |
Company Rights |
Β | Β | 3.3(f) | |
Company Rights Agreement |
Β | Β | 3.3(f) | |
Company SEC Reports |
Β | Β | 3.5(a) | |
Company Shareholder Approval |
Β | Β | 3.18(d) | |
Company Shareholders Meeting |
Β | Β | 6.2 | |
Company Subsidiaries |
Β | Β | 3.1(a) | |
Confidentiality Agreement |
Β | Β | 6.3 | |
Continuing Employees |
Β | Β | 5.3(a) | |
Contract |
Β | Β | 3.9(a) | |
Controlled Group |
Β | Β | 3.14(c) | |
Convertible Debentures |
Β | Β | 2.1(f) |
A-1
Β
Β | Β | Β | Β | Β |
Β | Β | Section | ||
Copyrights |
Β | Β | 3.10(a) | |
Disclosed Conditions |
Β | Β | 4.6 | Β |
Dissenting Shares |
Β | Β | 2.2(a) | |
DOJ |
Β | Β | 6.4(a) | |
Effective Time |
Β | Β | 1.3 | |
Employee Preferred Stock |
Β | Β | 5.4(a) | |
Employee Preferred Stock Consents |
Β | Β | 5.4(a) | |
Employee Preferred Stock Tender Offer |
Β | Β | 5.4(a) | |
Employment Agreements |
Β | Β | 5.3(a) | |
Environmental Laws |
Β | Β | 3.16(c) | |
Environmental Permits |
Β | Β | 3.16(c) | |
Equity Incentive Plans |
Β | Β | 2.3(a) | |
Equity Plans |
Β | Β | 2.3(c) | |
ERISA |
Β | Β | 3.14(a) | |
ERISA Affiliate |
Β | Β | 3.14(b) | |
ESPP |
Β | Β | 2.3(c) | |
ESPP Options |
Β | Β | 2.3(c) | |
Exchange Act |
Β | Β | 3.3(h) | |
Exchange Fund |
Β | Β | 2.4(a) | |
Financial Statements |
Β | Β | 3.5(b) | |
Financing |
Β | Β | 4.6 | |
Foreign Plan |
Β | Β | 3.14(h) | |
Foreign Welfare Plan |
Β | Β | 3.14(h) | |
FTC |
Β | Β | 6.4(a) | |
GAAP |
Β | Β | 3.5(b) | |
Governmental Entity |
Β | Β | 3.1(a) | |
Hazardous Substances |
Β | Β | 3.16(c) | |
HSR Act |
Β | Β | 3.17 | Β |
Indemnified Parties |
Β | Β | 6.5(b) | |
Indenture |
Β | Β | 2.1(f) | |
Intellectual Property |
Β | Β | 3.10(a) | |
IRS |
Β | Β | 3.14(a) | |
knowledge |
Β | Β | 9.10 | |
Laws |
Β | Β | 3.1(a) | |
Lease |
Β | Β | 3.11 | |
Lender |
Β | Β | 4.6 | Β |
Liens |
Β | Β | 3.4(a) | |
Material Contract |
Β | Β | 3.9(a) | |
Merger |
Β | Β | 1.1(a) | |
Merger Consideration |
Β | Β | 2.1(a) | |
Merger Sub |
Β | Β | Preamble | |
Notice of Superior Proposal |
Β | Β | 5.2(c) | |
NYSE |
Β | Β | 3.1(a) | |
Parent |
Β | Β | Preamble | |
Parent Disclosure Schedule |
Β | Β | 4 | |
Parent Material Adverse Effect |
Β | Β | 4.1 | Β |
A-2
Β
Β | Β | Β | Β | Β |
Β | Β | Section | ||
Parent SEC Reports |
Β | Β | 4.7(d) | |
Patents |
Β | Β | 3.10(a) | |
Paying Agent |
Β | Β | 2.4(a) | |
Per Share Price |
Β | Β | 2.1(a) | |
Permits |
Β | Β | 3.7 | |
Permitted Liens |
Β | Β | 3.11 | Β |
person or Person |
Β | Β | 9.10 | |
Plan |
Β | Β | 3.14(a) | |
Proxy Statement |
Β | Β | 3.20 | |
Release |
Β | Β | 3.16(c) | |
Representatives |
Β | Β | 5.2(a) | |
Restraints |
Β | Β | 8.1(c) | |
Restricted Shares |
Β | Β | 2.3(b) | |
SEC |
Β | Β | 3.5(a) | |
Securities Act |
Β | Β | 3.5(a) | |
Solvent |
Β | Β | 4.9 | Β |
subsidiary or Subsidiary |
Β | Β | 9.10(k) | |
Superior Proposal |
Β | Β | 5.2(b) | |
Supplemental Indenture |
Β | Β | 2.1(f) | |
Surviving Corporation |
Β | Β | 1.1(a) | |
Takeover Proposal |
Β | Β | 5.2(b) | |
Tax |
Β | Β | 3.13(a) | |
Tax Return |
Β | Β | 3.13(a) | |
Taxes and Taxable |
Β | Β | 3.13(a) | |
TBCA |
Β | Β | Recitals | |
Termination Date |
Β | Β | 8.1(b) | |
Trademarks |
Β | Β | 3.10(a) |
A-3