Exhibit 3
PLAN AND AGREEMENT OF MERGER
THIS PLAN AND AGREEMENT OF MERGER dated as of April 27, 2001, is made by and
among FRONTIER ADJUSTERS OF AMERICA, INC., an Arizona corporation ("FAJ"),
MERRYMEETING, INC., a Delaware corporation ("MMI"), and MM MERGER CORPORATION, a
Delaware corporation ("ACQUISITION").
RECITALS
A. MMI is the holder of approximately 58.7% of the issued and outstanding
capital stock of FAJ.
B. MMI is also the holder of 100% of the issued and outstanding capital
stock of Acquisition.
C. The parties hereto desire that Acquisition be merged with and into FAJ
upon the terms and conditions of this Agreement.
AGREEMENT
NOW, THEREFORE, the parties hereto hereby approve and adopt this Agreement as a
Plan of Merger and do mutually covenant and agree as follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement, the following terms have the following respective
meanings:
"ACQUISITION" means MM Merger Corporation, a Delaware corporation.
"ACTION" means any actual or, to a Person's knowledge, threatened action, claim,
suit, litigation, arbitration, inquiry, proceeding or investigation by or before
any Government Authority.
"ADDITIONAL DOCUMENTS" has the meaning set forth in SECTION 11.1.
"AFFILIATE" has the meaning ascribed thereto in Rule 12b-2 promulgated under the
Exchange Act, as in effect on the date hereof.
"AGREEMENT" means this Plan and Agreement of Merger.
"AMEX" means the American Stock Exchange, Inc.
"BENEFICIAL OWNERSHIP" has the meaning set forth in Rule 13d-3 promulgated under
the Exchange Act.
"BLUE SKY LAWS" has the meaning set forth in SECTION 4.5(E).
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"BUSINESS DAY" means any day other than a Saturday, a Sunday or a bank holiday
in Cleveland, Ohio or Phoenix, Arizona.
"CERCLA" means the federal Comprehensive, Environmental Response, Compensation,
and Liability Act, 42 X.X.X.xx. 9601 ET SEQ., as amended.
"CERTIFICATE OF MERGER" has the meaning as set forth in SECTION 2.1.
"CLOSING" AND "CLOSING DATE" have the meanings set forth in SECTION 8.1.
"CODE" means the Internal Revenue Code of 1986, as amended, and any successor
thereto, including all of the rules and regulations promulgated thereunder.
"COMMITMENT" means any commitment, contractual obligation, agreement, borrowing,
capital expenditure or material transaction entered into by a party or any of
its Subsidiaries.
"CURRENT REPORTS" has the meaning set forth in SECTION 4.6(B).
"EFFECTIVE DATE" has the meaning set forth in SECTION 2.7.
"EMPLOYEES" means all current, former and retired employees, officers and
directors of a Person or any of its Subsidiaries, including current, former and
retired employees, officers and directors on disability, layoff or leave status.
"ENVIRONMENTAL CLAIM" means any claim, investigation or written notice by any
Person alleging potential liability (including potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries or fatalities, or
penalties) arising out of, based on or resulting from (A) the presence,
generation, transportation, treatment, use, storage, disposal or release of
Materials of Environment Concern or the threatened release of Materials of
Environmental Concern at any location, or (B) activities or conditions forming
the basis of any violation, or alleged violation of, or liability or alleged
liability under, any Environmental Law.
"ENVIRONMENTAL LAWS" means any federal, state, or local statute, law, ordinance,
code, order, injunction, decree or ruling, and any regulation promulgated
thereunder, which regulates or controls (i) pollution, contamination, or the
condition of groundwater, surface water, soil, sediment or air, or (ii) a spill,
leak, emission, discharge, release or disposal into groundwater, surface water,
soil, sediment or air, including without limitation CERCLA; the Federal Resource
Conservation and Recovery Act, 42 U.S.C.ss.6901 ET SEQ., as amended; the
Hazardous Materials Transportation Act, 49 U.S.C.ss.1801 ET SEQ., as amended;
the Toxic Substances Control Act, 15 U.S.C.ss.2601 ET SEQ., as amended; the
Clean Air Act, 42 U.S.C.ss.7401 ET SEQ., as amended; the Clean Water Act, 33
U.S.C.ss.1251 ET SEQ., as amended; the Safe Drinking Water Act, 42 U.S.C.ss.300f
ET SEQ., as amended; the Emergency Planning and Community Right to Know Act, 42
U.S.C.ss.11001 ET SEQ., as amended; the Federal Insecticide, Fungicide and
Rodenticide Act, 7 U.S.C.ss.136 ET SEQ., as amended; the National Environmental
Policy Act, 42 U.S.C.ss.4321 ET SEQ., as amended; any similar state or local
statutes or ordinances, and the regulations promulgated thereunder.
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"ERISA" means the Employee Income Security Act of 1974, as amended, and any
successor thereto, including all of the rules and regulations promulgated
thereunder.
"ERISA AFFILIATE" means, with respect to any entity, trade or business, any
other entity, trade or business that is a member of a group described in Section
414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes
the first entity, trade or business, or that is a member of the same "controlled
group" as the first entity, trade or business within the meaning of Section
4001(a)(14) of ERISA.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FAJ" means Frontier Adjusters of America, Inc., an Arizona corporation.
"FAJ COMMON STOCK" has the meaning set forth in SECTION 2.5(A).
"FAJ PERMITS" has the meaning set forth in SECTION 4.19(A).
"FAJ PLANS" means, collectively, each of FAJ's or any of the FAJ Subsidiaries'
benefit, bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom stock,
retirement, vacation, severance, disability, death benefit, hospitalization,
medical or other employee benefit arrangements, understandings or plans (whether
under Section 414(b), (c), (m) or (o) of the Code or otherwise) applicable to
any Employee or any Person affiliated with FAJ or any of the FAJ Subsidiaries.
"FAJ PROPRIETARY RIGHTS" has the meaning set forth in SECTION 4.16.
"FAJ AND SUBSIDIARIES' PROPERTIES" has the meaning set forth in SECTION 4.12.
"FAJ REPORTS" has the meaning set forth in SECTION 4.6(A).
"FAJ SHARES" has the meaning set forth in SECTION 2.5.
"FAJ SUBSIDIARIES" means Frontier Adjusters of Arizona, Inc., an Arizona
corporation, Frontier Adjusters, Inc., a Colorado corporation, and Frontier
Adjusters Co., Ltd., an Alberta, Canada corporation.
"FINANCIAL STATEMENTS" has the meaning set forth in SECTION 5.5(A).
"FORM 10-K" has the meaning set forth in SECTION 4.6(A).
"GAAP" means United States generally accepted accounting principles.
"GOVERNMENT AUTHORITY" means any government or state (or any subdivision
thereof) of or in the United States or Canada, or any agency, authority, bureau,
commission, department or similar body or instrumentality thereof, or any
governmental court or tribunal.
"INDEMNIFIED PARTY" has the meaning set forth in SECTION 11.3.
"INDEMNIFYING PARTY" has the meaning set forth in SECTION 11.3.
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"INDEMNITY THRESHOLD" has the meaning set forth in SECTION 11.4(A).
"IRS" means the Internal Revenue Service or any successor thereto.
"LIABILITIES" means, as to any Person, all debts, adverse claims, liabilities,
direct, indirect, absolute or contingent of such Person, whether accrued, vested
or otherwise.
"LIENS" means all liens, mortgages, deeds of a Person, title retention
arrangements, security interests, pledges, claims, charges, easements and other
encumbrances of any nature whatsoever.
"LOSS AND EXPENSE" has the meaning set forth in SECTION 11.2(A).
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the financial
condition, results of operations or business of a Person or any of its
Subsidiaries.
"MATERIALS OF ENVIRONMENTAL CONCERN" means all chemicals, pollutants,
contaminants, wastes, toxic substances, petroleum or any fraction thereof,
petroleum products hazardous substances (as defined in Section 101(14) of
CERCLA, 42 U.S.C. ss. 6601(14)), or solid or hazardous wastes as now defined and
regulated under any Environmental Laws.
"MATERIAL TRANSACTION" means any transaction between a Person and its
Affiliates, that would be required to be disclosed in such Person's reports or
proxy materials filed under the Exchange Act by Item 404 of Regulation S-K.
"MERGER" has the meaning set forth in SECTION 2.1.
"MERGER CONSIDERATION" has the meaning set forth in SECTION 2.5(A).
"MMI" means Merrymeeting, Inc., a Delaware corporation.
"MMI PLANS" means, collectively, each of MMI's or any of the MMI Subsidiaries'
benefit, bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom stock,
retirement, vacation, severance, disability, death benefit, hospitalization,
medical or other employee benefit arrangements, understandings or plans (whether
under Section 414(b), (c), (m) or (o) of the Code or otherwise) applicable to
any Employee or any Person affiliated with MMI or any of the MMI Subsidiaries.
"MMI SUBSIDIARIES" means Acquisition.
"MMI PERMITS" has the meaning set forth in SECTION 5.19(A).
"MMI PROPRIETARY RIGHTS" has the meaning set forth in SECTION 5.15.
"MMI AND SUBSIDIARIES' PROPERTIES" has the meaning set forth in SECTION 5.11.
"OTHER FILINGS" has the meaning set forth in SECTION 3.2.
"PAYING AGENT" has the meaning set forth in SECTION 2.5(C)(I).
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"PAYMENT FUND" has the meaning set forth in SECTION 2.5(C)(I).
"PERSON" means any individual, corporation, partnership, limited liability
company, joint venture, trust, unincorporated organization, other form of
business or legal entity or Government Authority.
"PERMITTED LIENS" means: (A) statutory liens for obligations which are not
overdue, or are being contested in good faith; (B) rights of way disclosed on an
ALTA survey of any property; and (C) items listed on SCHEDULES 4.12 and 5.11, as
applicable.
"PROXY STATEMENT" has the meaning set forth in SECTION 3.2.
"SEC" means United States Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES LAWS" has the meaning set forth in SECTION 4.6(A).
"SUBSIDIARY" means each entity of which a Person, directly or through one or
more intermediary entities (i) has the right to elect a majority of the board of
directors or other governing body, (ii) owns a majority of the issued and
outstanding common stock, or (iii) has the right to receive 50% or more of the
economic value of any business or activity in which such entity is engaged;
PROVIDED, HOWEVER, that FAJ shall not be deemed a Subsidiary of MMI for any
purposes hereof.
"TAX" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Section 54A),
customs duties, capital stock, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not. The term "Tax" also includes any
amount payable pursuant to any tax sharing agreement to which any relevant party
is liable and any amount payable pursuant to any similar contract.
"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
ARTICLE 2
MERGER
2.1 MERGER. On the Effective Date, Acquisition shall be merged with and
into FAJ, which shall be the surviving corporation, pursuant to the terms hereof
and the Certificate and Articles of Merger (the "CERTIFICATE OF MERGER"),
attached as EXHIBIT 1 hereto (the "MERGER").
2.2 EFFECT OF THE MERGER. On the Effective Date, the separate existence of
Acquisition shall cease, and FAJ shall succeed to and possess all the
properties, rights, privileges, powers, franchises and immunities, of a public
as well as of a private nature, and be subject to all the debts, liabilities,
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obligations, restrictions, disabilities and duties of Acquisition, all without
further act or deed, as provided in the Arizona Business Corporation Act and the
Delaware General Corporation Law.
2.3 OFFICERS AND DIRECTORS OF FAJ. On the Effective Date, the name of the
surviving corporation shall be unchanged and the directors and executive
officers of FAJ shall be as listed on SCHEDULE A.
2.4 ARTICLES OF INCORPORATION AND BYLAWS. The Articles of Incorporation of
FAJ and the Bylaws of FAJ immediately prior to the Effective Date shall remain
the Articles of Incorporation and Bylaws of FAJ.
2.5 STATUS AND CONVERSION OF SECURITIES.
(a) CONVERSION OF FAJ COMMON STOCK. Upon the merger becoming
effective, each share of Common Stock, par value $.01 per share, of FAJ ("FAJ
COMMON STOCK") issued and outstanding on the Effective Date, other than shares
to be cancelled pursuant to SECTION 2.5(B) (such shares of FAJ Common Stock
other than those to be cancelled are collectively called the "FAJ SHARES"), by
reason of the Merger and without any action on the part of the holders thereof,
shall be converted into the right to receive an amount equal to $1.58 in cash
(the "MERGER Consideration"). Provided, however, that the Merger Consideration
shall be subject to equitable adjustment in the event of any stock split, stock
dividend, reverse stock split, or other change in the number of shares of FAJ
Common Stock outstanding prior to the Effective Date. No shares of FAJ Common
Stock shall be deemed to be outstanding or to have any rights other than those
set forth in this Section after the Effective Date, except that any shares of
FAJ Common Stock held in the treasury of FAJ shall be cancelled and all rights
in respect thereof shall cease to exist and no cash or securities or other
property shall be issued in respect thereof.
(b) CANCELLATION OF FAJ COMMON STOCK HELD BY MMI. All shares of FAJ
Common Stock previously held by MMI will be cancelled as of the Effective Date.
(c) CONVERSION OF CAPITAL STOCK OF ACQUISITION. On the Effective Date,
each share of common stock, $.01 par value per share, of Acquisition shall be
converted into one share of FAJ Common Stock.
(d) PROCEDURE FOR PAYMENT.
(i) On the Effective Date and as a condition precedent to the
effectiveness of the Merger, (A) MMI will furnish to U. S. Stock Transfer
Company, or such other stock transfer company as may be mutually acceptable to
the parties (the "PAYING AGENT") a corpus (the "PAYMENT FUND") consisting of
cash sufficient in the aggregate for the Paying Agent to make full payment of
the Merger Consideration to the holders of all of the outstanding FAJ Shares and
(B) MMI will cause the Paying Agent to mail a letter of transmittal (with
instructions for its use) in the form attached hereto as EXHIBIT 2 to each
record holder of outstanding FAJ Shares for the holder to use in surrendering
the certificates which represented its shares of FAJ Shares against payment of
the Merger Consideration. No interest will accrue or be paid to the holder of
any outstanding FAJ Common Stock.
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(ii) MMI may cause the Paying Agent to invest the cash included
in the Payment Fund in one or more of the permitted investments set forth on
EXHIBIT 3 attached hereto; provided, however, that the terms and conditions of
the investments shall be such as to permit the Paying Agent to make prompt
payment of the Merger Consideration as necessary. MMI may cause the Paying Agent
to pay over to MMI or FAJ any net earnings with respect to the investments, and
MMI will replace promptly any portion of the Payment Fund that the Paying Agent
losses through such investments.
(iii) MMI may cause the Paying Agent to pay over to MMI any
portion of the Payment Fund (including any earnings thereon) remaining 180 days
after the Effective Date, and thereafter all former stockholders shall be
entitled to look to MMI (subject to abandoned property, escheat, and other
similar laws) as general creditors thereof with respect to the cash payable upon
surrender of their certificates.
(iv) MMI shall pay all charges and expenses of the Paying Agent.
(e) CLOSING OF TRANSFER RECORDS. After the close of business on the
Effective Date, transfers of FAJ Common Stock outstanding prior to the Effective
Date shall not be made on the stock transfer books of FAJ.
(f) NO OTHER CAPITAL STOCK OR OPTIONS TO PURCHASE FAJ COMMON STOCK. On
the Effective Date, there shall be no outstanding shares of capital stock of FAJ
other than shares of FAJ Common Stock. In addition, on the Effective Date, there
shall be no outstanding options, warrants, or rights to purchase shares of FAJ
Capital Stock.
2.6 FURTHER DOCUMENTS. From time to time, on and after the Effective Date,
as and when requested by FAJ or MMI or their successors or assigns, the
appropriate officers and directors of Acquisition as of the Effective Date
shall, for and on behalf and in the name of Acquisition or otherwise, execute
and deliver all such deeds, bills of sale, assignments and other instruments,
and shall take or cause to be taken such further or other actions as FAJ or MMI
or their successors or assigns may deem necessary or desirable in order to
confirm of record or otherwise to FAJ title to and possession of all of the
properties, rights, privileges, powers, franchises and immunities of Acquisition
and otherwise to carry out fully the provisions and purposes of this Agreement.
2.7 EFFECTIVE DATE. The Merger shall become effective on such date (the
"EFFECTIVE DATE") as of which all applicable legal requirements have been
fulfilled to consummate the Merger, including the filing and effectiveness of
the Certificate of Merger with the applicable authorities in the states of
Arizona and Delaware. The parties shall use their best efforts to consummate the
Merger at the earliest practicable date following the Closing.
2.8 APPROVAL OF MERGER. The parties shall take all necessary actions to
file the Certificate of Merger with, and obtain the approval for such filing by,
the Arizona Corporation Commission, and the Secretary of State of the State of
Delaware.
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ARTICLE 3
SHAREHOLDER APPROVALS; PROXY FILINGS
3.1 SHAREHOLDER APPROVALS. Meetings of the shareholders of FAJ and
Acquisition shall be held in accordance with the laws of their respective states
of incorporation, on or before the Closing Date, in each case, among other
things, to consider and act upon the adoption of this Agreement and the Merger.
3.2 PROXY STATEMENT. As promptly as practicable after the execution of this
Agreement, FAJ shall prepare and file with the SEC a preliminary proxy statement
by which the shareholders of FAJ will be asked to approve, in accordance with
the rules of the AMEX and any applicable laws, the Merger, and such other items
as the FAJ Board of Directors deems appropriate. The preliminary proxy
statement, as initially filed with the SEC, as it may be amended and refiled
with the SEC, and the definitive proxy statement filed with the SEC and mailed
to the FAJ shareholders (such definitive proxy statement, the "PROXY
STATEMENT"), shall be in form and substance reasonably satisfactory to MMI. FAJ
shall respond to any comments of the SEC, shall mail the Proxy Statement to the
FAJ shareholders, and shall cause any meeting of the FAJ Board of Directors or
the FAJ shareholders required to be held to consider the Merger and the
transactions contemplated hereby at the earliest practicable time. As promptly
as practicable after the date hereof, FAJ shall prepare and file any other
filings required under the Exchange Act, the Securities Act or any other
federal, state or local laws relating to this Agreement and the transactions
contemplated hereby, including any state takeover laws (the "OTHER FILINGS").
FAJ will notify MMI promptly of the receipt of any comments from the SEC or its
staff or any other governmental official and of any request by the SEC or its
staff or any other government official for amendments or supplements to the
Proxy Statement or any Other Filing or for additional information and will
supply MMI with copies of all correspondence between FAJ or any of its
representatives, on the one hand, and the SEC or its staff or any other
government official, on the other hand, with respect to the Proxy Statement or
any Other Filing. FAJ shall cause the Proxy Statement and any Other Filing to
comply in all material respects with all applicable requirements of law. MMI
shall provide FAJ all information about MMI and the MMI Subsidiaries required to
be included or incorporated by reference in the Proxy Statement or any Other
Filing and shall otherwise cooperate with FAJ in taking the actions described in
this Section. Whenever any event occurs that is required to be set forth in an
amendment or supplement to the Proxy Statement or any Other Filing, each party,
as applicable, shall promptly inform the other party of such occurrence and
cooperate in the preparation and filing with the SEC or its staff or any other
government officials, or mailing to the FAJ shareholders, as required, such
amendment or supplement.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF FAJ
FAJ represents and warrants to MMI and Acquisition as follows:
4.1 ORGANIZATION AND QUALIFICATION, SUBSIDIARIES.
(a) Each of FAJ and the FAJ Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation. Each of FAJ and the FAJ Subsidiaries has all requisite
corporate power and authority to own, operate, lease and encumber its properties
and carry on its business as now conducted.
(b) Each of FAJ and the FAJ Subsidiaries is duly qualified to do
business and is in good standing in each jurisdiction in which the ownership or
lease of its properties or the conduct of its business requires such
qualification, except for any such failures to so qualify that would not have a
Material Adverse Effect with respect to FAJ or any FAJ Subsidiary.
(c) All of the outstanding shares of capital stock of, or other equity
interests in, each of the FAJ Subsidiaries are owned, directly or indirectly, by
FAJ in compliance with all applicable securities laws, free and clear of all
Liens.
(d) The issued and outstanding shares of each of FAJ and the FAJ
Subsidiaries have been duly authorized and are validly issued, fully paid and
nonassessable and free of preemptive rights. On the Effective Date, FAJ will
have good and marketable title to the FAJ Subsidiaries' shares, free and clear
of all Liens.
4.2 DUE AUTHORIZATION. The execution, delivery and performance of this
Agreement and of all of the documents and instruments delivered in connection
herewith by FAJ has been duly and validly authorized by all necessary corporate
action on the part of FAJ. This Agreement has been duly executed and delivered
on behalf of FAJ. This Agreement is, and the other documents and instruments
required hereby will be, when executed and delivered by FAJ, the valid and
binding obligations of FAJ, enforceable against FAJ in accordance with their
respective terms, subject only to bankruptcy, insolvency, reorganization,
moratorium or similar laws at the time in effect affecting the enforceability or
right of creditors generally and to general equitable principles which may limit
the right to obtain equitable remedies.
4.3 CAPITALIZATION.
(a) As of the date hereof, FAJ has 100,000,000 shares of common stock
authorized, and 8,957,660 shares of common stock issued and outstanding, and
100,000,000 shares of preferred stock authorized, and no shares of preferred
stock issued or outstanding. Neither FAJ nor any of the FAJ Subsidiaries has any
outstanding securities or bonds, debentures, notes or other obligations, the
holders of which have the right to vote (or that are convertible into or
exercisable for securities the holders of which have the right to vote) with
respect to the transactions contemplated hereby. All issued and outstanding
shares of FAJ and the FAJ Subsidiaries were issued in compliance with all
applicable state and federal securities laws. Except as set forth on SCHEDULE
4.3(A), there are no existing options, warrants, calls, subscriptions,
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convertible securities, or other rights, agreements or commitments that obligate
FAJ or any FAJ Subsidiary to issue, transfer or sell any shares of capital stock
or other equity interests in FAJ or any FAJ Subsidiary.
(b) Neither FAJ nor any of the FAJ Subsidiaries has issued or granted
securities convertible into or exchangeable for interests in FAJ or any FAJ
Subsidiary, and, except as set forth on SCHEDULE 4.3(A), neither FAJ nor any FAJ
Subsidiary is a party to any outstanding commitment of any kind relating to, or
any presently effective agreement or understanding with respect to, interests in
FAJ or any FAJ Subsidiary, whether issued or unissued.
(c) Neither FAJ nor any of the FAJ Subsidiaries owns directly or
indirectly any material interest or investment (whether equity or debt) in any
corporation, partnership, joint business venture, trust or other legal entity
(other than the list set forth on SCHEDULE 4.3(C), which is a list of all of the
investments of FAJ and the FAJ Subsidiaries).
4.4 APPROVAL; STOCK.
(a) The Board of Directors of FAJ and a committee of "disinterested
directors" (as defined in Section 10-2741(D) of the Arizona Business Corporation
Act) have approved the Merger, and this Agreement, and the transactions
contemplated hereby and have determined to recommend that the shareholders of
FAJ vote in favor of and approve this Agreement and the Merger.
(b) The Merger and the payment of the Merger Consideration will not
give any shareholder of FAJ or any other Person the right to demand payment for
that shareholder's shares under the laws of the State of Arizona; any appraisal
or similar rights under the laws of the State of Arizona; any dissenters' or
similar rights under the laws of the State of Arizona; any preemptive or similar
right to purchase additional shares of FAJ's capital stock; or any rights under
any shareholders' rights, "poison pill" or similar plan adopted by the FAJ Board
of Directors or the FAJ shareholders or contained in FAJ's Articles of
Incorporation or other organizational documents.
4.5 NO CONFLICTS; NO DEFAULTS; REQUIRED FILINGS AND CONSENTS. Neither the
execution and delivery by FAJ of this Agreement, nor the consummation by FAJ of
the transactions contemplated hereby in accordance with the terms hereof, will:
(a) conflict with or result in a breach of any provisions of the
organizational documents of FAJ;
(b) result in a breach or violation of, a default under, or the
triggering of any payment or other obligation pursuant to, or accelerate vesting
or have any other consequence under, any stock option plan, option plan or
similar compensation plan of FAJ or any grant or award made under any of the
foregoing;
(c) violate or conflict with any statute, regulation, judgment, order,
writ, decree or injunction applicable to FAJ;
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(d) violate or conflict with or result in a breach of any provision of,
or constitute a default (or any event that, with notice or lapse of time or
both, would constitute a default) under, or result in the termination or in a
right of termination or cancellation of, or accelerate the performance required
by, or result in the creation of any Lien upon any of the properties of FAJ
under, or result in being declared void, voidable or without further binding
effect, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed or any franchise, license, permit, lease, contract, agreement or
other instrument, commitment or obligation to which FAJ is a party, or by which
FAJ or any of its properties is bound or affected; or
(e) require any consent, approval or authorization of, or declaration,
filing or registration with, any Government Authority or private organization,
other than any filings required under the Securities Act, the Exchange Act, any
state franchise laws or state securities laws ("BLUE SKY LAWS").
4.6 SEC MATTERS AND ABSENCE OF UNDISCLOSED LIABILITIES.
(a) FAJ has delivered or made available to MMI, FAJ's Annual Report on
Form 10-K for the fiscal year ended June 30, 2000 filed by FAJ with the SEC and
all exhibits, amendments and supplements thereto, including all documents
incorporated by reference therein (collectively, the "FORM 10-K"), and each
registration statement, report, proxy statement or information statement and all
exhibits thereto prepared by or relating to FAJ for the three years prior to the
date of this Agreement, each in the form (including exhibits and any amendments
thereto) filed with the SEC (collectively the "FAJ REPORTS"). The FAJ Reports
were filed with the SEC in a timely manner and constitute all forms, reports and
documents required to be filed by FAJ under the Securities Act and the Exchange
Act and the rules and regulations promulgated thereunder (the "SECURITIES
LAWS"). As of their respective dates, the FAJ Reports: (i) complied as to form
in all material respects with the applicable requirements of the Securities
Laws; and (ii) did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. There has been no violation asserted by any Government
Authority with respect to any of the FAJ Reports that has not been resolved and,
to FAJ's knowledge, there have been no threatened assertions of violations.
(b) Each of the balance sheets (including the related notes and
schedules) included in or incorporated by reference into the Form 10-K and each
Exchange Act report filed between the date such annual report was filed with the
SEC and the Closing Date (the Form 10-K and such reports collectively, the
"CURRENT REPORTS") fairly present the consolidated financial position of FAJ and
its Subsidiaries as of its date and each of the statements of operations,
shareholders' equity (deficit) and cash flows included in or incorporated by
reference into the Current Reports (including any related notes and schedules)
fairly present the consolidated results of operations, retained earnings or cash
flows, as the case may be, of FAJ and its Subsidiaries for the period covered
thereby, in each case in accordance with GAAP and in accordance with Regulation
S-X promulgated by the SEC, except as may be noted therein and except, in the
case of the unaudited statements, for normal recurring year-end adjustments
which would not, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect. All such balance sheets and statements are
free of errors, omissions and misstatements, except for such errors, omissions
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and misstatements that would not, individually or in the aggregate, have, or
reasonably be expected to have, a Material Adverse Effect. None of the
receivables of FAJ and its Subsidiaries are materially overstated, and no
payables and other liabilities of FAJ and its Subsidiaries are materially
understated, on any such balance sheet or statement.
(c) Except as and to the extent set forth in the Current Reports or in
any Schedule hereto, to FAJ's knowledge, none of FAJ or any of its Subsidiaries
has any material Liabilities, nor do there exist any circumstances that would,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.
4.7 LITIGATION; COMPLIANCE WITH LAW.
(a) SCHEDULE 4.7 sets forth a list and a brief description of all
pending Actions against FAJ and any of the FAJ Subsidiaries of which FAJ has
notice, in which the amount of damages prayed for in any complaint or pleading
exceeds $150,000 or that is reasonably likely to result in damages of $150,000
or more.
(b) Except as set forth on SCHEDULE 4.7, there are no Actions pending
or, to the knowledge of FAJ threatened, against FAJ or any of the FAJ
Subsidiaries, or any property (including proprietary rights) of FAJ or any of
the FAJ Subsidiaries in any court or other forum or before any arbitrator of any
kind or before or by any Governmental Authority of which or FAJ has notice, in
which the amount of damages prayed for in any complaint or pleading exceeds
$150,000 or that is reasonably likely to result in damages of $150,000 or more.
(c) To the knowledge of FAJ, neither FAJ nor any of the FAJ
Subsidiaries is in violation of any statute, rule, regulation, order, writ,
decree or injunction of any Government Authority or any body having jurisdiction
over them or any of their respective properties. SCHEDULE 4.7 sets forth all
such violations known to FAJ except for violations that would not, individually
or in the aggregate, have, or reasonably be expected to have, a Material Adverse
Effect.
4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in SCHEDULE
4.8 or in any other Schedule hereto, since December 31, 2000, FAJ and each of
the FAJ Subsidiaries has conducted its business only in the ordinary course of
business, and there has not been (a) any change, circumstance or event that had
or that could reasonably be expected to have a Material Adverse Effect or (b)
any change in any accounting principles, practices or methods, except as
required by changes in GAAP.
4.9 TAX MATTERS.
(a) FAJ and each of the FAJ Subsidiaries has timely filed with the
appropriate taxing authority all Tax Returns required to be filed by it or has
timely requested extensions and any such request has been granted and has not
expired. Each such Tax Return is complete and accurate in all material respects
and all information shown thereon is correct in all material respects. All Taxes
required to have been paid by FAJ or any of the FAJ Subsidiaries have been paid
when due, except for Taxes contested in good faith and for which adequate
reserves as required by GAAP have been taken and which are listed on SCHEDULE
4.9. FAJ and each of the FAJ Subsidiaries have properly accrued their liability
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for all Taxes for periods subsequent to the periods covered by such Tax Returns
as required by GAAP. Neither FAJ nor any of the FAJ Subsidiaries has executed or
filed with the IRS or any other taxing authority any agreement now in effect
extending the period for assessment or collection of any Tax. Except as set
forth on SCHEDULE 4.9, neither FAJ nor any of the FAJ Subsidiaries is a party to
any pending action or proceeding by any taxing authority for assessment or
collection of any Tax, and no claim for assessment or collection of any Tax has
been asserted against any of them. Except as set forth on SCHEDULE 4.9, no claim
has been made by any authority in a jurisdiction where FAJ or any of the FAJ
Subsidiaries does not file Tax Returns that it is or may be subject to taxation
or reporting in that jurisdiction. There is no dispute or claim concerning any
information, reporting or tax liability of FAJ or any of the FAJ Subsidiaries,
(i) claimed or raised by any taxing authority in writing or (ii) as to which FAJ
has knowledge. Except as set forth on SCHEDULE 4.9, neither FAJ nor any of the
FAJ Subsidiaries has had its tax returns audited by any Government Authority
within the last four years.
(b) No amount or other entitlement that could be received (whether in
cash or property or the vesting of property) as a result of any of the
transactions contemplated hereby by any Employee of FAJ or any of the FAJ
Subsidiaries or of any of their Affiliates who is a "disqualified individual"
(as such term is defined in proposed Treasury Regulation Section 1.280G-1) under
any employment, severance or termination agreement, other compensation
arrangement or plan currently in effect would be characterized as an "excess
parachute payment" (as such term is defined in Section 280G(b)(2) of the Code).
4.10 COMPLIANCE WITH AGREEMENTS.
(a) Neither FAJ nor any of the FAJ Subsidiaries is in default under or
in violation of any provision of its articles of incorporation or organization,
or bylaws or operating agreement or any similar organizational document.
(b) FAJ and each of the FAJ Subsidiaries has filed all material
reports, registrations, documents and statements, together with any amendments
and supporting materials required with respect thereto, that it was required to
file with any Government Authority and all other material reports, documents,
materials and statements required to be filed by it, and has paid all fees or
assessments due and payable in connection therewith. There is no unresolved
violation asserted by any Government Authority against FAJ or any of the FAJ
Subsidiaries of which FAJ or Acquisition has received notice.
(c) Neither FAJ nor any of the FAJ Subsidiaries is in default, and, to
FAJ's knowledge, no event has occurred that, with the giving of notice or the
lapse of time or both, would constitute a default, under any Commitment to which
FAJ or any of the FAJ Subsidiaries are bound, whether as a party or otherwise or
in respect of any payment obligations thereunder except for defaults that would
not, individually or in the aggregate, have, or reasonably be expected to have,
a Material Adverse Effect with respect to FAJ or any FAJ Subsidiary. Except as
set forth in SCHEDULE 4.10(C), neither FAJ nor any of the FAJ Subsidiaries is a
party to any joint venture or partnership agreements. To FAJ's knowledge, there
is no condition with respect to FAJ or the FAJ Subsidiaries that, individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect with respect to FAJ or any FAJ Subsidiary.
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(d) SCHEDULE 4.10(D) sets forth a complete and accurate list of all
material agreements of FAJ and each of the FAJ Subsidiaries in effect on the
date hereof. Each agreement or policy listed on SCHEDULE 4.10(D) is in full
force and effect, and FAJ and each of the FAJ Subsidiaries and, to FAJ's
knowledge, the other parties thereto, are in compliance with such agreements or
policies. Solely for purposes of this Section, material agreements shall mean
agreements that involve an expense to FAJ or any of the FAJ's Subsidiaries or
annual revenue over $500,000.
4.11 FINANCIAL RECORDS; ARTICLES AND BYLAWS, CORPORATE RECORDS.
(a) The books of account and other financial records of FAJ and the FAJ
Subsidiaries are true and complete in all material respects, and have been
maintained in accordance with GAAP.
(b) FAJ has delivered or made available to FAJ true and complete copies
of the Articles and the Bylaws of FAJ and each of the FAJ Subsidiaries, as
amended to date, and the Articles of Organization, organizational documents and
joint venture agreements of FAJ and each of the FAJ Subsidiaries, and all
amendments thereto.
(c) The corporate minute books and other records of proceedings of FAJ
and the FAJ Subsidiaries contain accurate records of all meetings and consents
of the equity holders, directors and other governing bodies thereof and
accurately reflect in all material respects all other corporate action of the
directors and shareholders and any committees of the board of directors of FAJ
and the FAJ Subsidiaries.
4.12 TITLE TO ASSETS; LIENS. FAJ and each FAJ Subsidiary has good and
marketable title (insurable and indefeasible fee simple title in the case of
owned real property), to all of the respective property, equipment and other
assets owned by it (the "FAJ AND SUBSIDIARIES' PROPERTIES"), and, except as set
forth on SCHEDULE 4.12, such assets are free and clear of any and all mortgages,
liens, security interests, charges, encumbrances or title defects of any nature
whatsoever other than Permitted Liens and liens that would not, individually or
in the aggregate, materially impair the use of such FAJ and Subsidiaries'
Properties. SCHEDULE 4.12 contains a complete and accurate list of each parcel
of real property owned, leased or used by FAJ and any FAJ Subsidiary in the
conduct of its business. There are no pending or, to the best knowledge of FAJ,
threatened zoning, condemnation or eminent domain proceedings, building, utility
or other moratoria, or injunctions or court orders which would materially
adversely affect such real property. To the knowledge of FAJ, the current use of
the owned real property by FAJ and the FAJ Subsidiaries is permissible and in
material compliance with all applicable zoning ordinances and other regulations
of any Government Authority.
4.13 ENVIRONMENTAL MATTERS.
(a) FAJ and each of the FAJ Subsidiaries' ownership, operation and use
of its respective property have been and currently are in compliance in all
material respects with all applicable Environmental Laws.
(b) No Environmental Claim with respect to the operations or the
businesses of FAJ or the FAJ Subsidiaries, or with respect to any real property
owned by FAJ or the FAJ Subsidiaries, has been asserted or, to FAJ's knowledge,
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threatened, and, to FAJ's knowledge, no circumstances exist with respect to FAJ
or any of the FAJ Subsidiaries or any such real property that would reasonably
be expected to result in any Environmental Claim being asserted, in any such
case, against (i) FAJ or any of the FAJ Subsidiaries, or (ii) any Person whose
liability for any Environmental Claims FAJ or any of the FAJ Subsidiaries has or
may have retained or assumed either contractually or by operation of law.
(c) (i) Neither FAJ nor any of the FAJ Subsidiaries has been notified,
or has reason to anticipate being notified, of potential responsibility in
connection with any site that has been placed on, or proposed to be placed on,
the National Priorities List or its state or foreign equivalent pursuant CERCLA,
or analogous state or foreign laws, (ii) no Materials of Environmental Concern
are present on, in or under any real property owned by FAJ or the FAJ
Subsidiaries, (iii) neither FAJ nor any FAJ Subsidiary nor, to the knowledge of
FAJ, any tenant of any such real property has released or arranged for the
release of any Materials of Environmental Concern at or on any such real
property, (iv) no underground storage tanks, surface disposal areas, pits,
ponds, lagoons or open trenches are present at any such real property, (v) no
transformers, capacitors or other equipment containing fluid with more than 50
parts per million polychlorinated biphenyls are present at, on or under any such
real property, except for any such transformers, capacitors or other equipment
owned by any utility company, and (vi) to FAJ's knowledge, no employee, agent,
contractor, subcontractor or tenant of FAJ or any of the FAJ Subsidiaries is now
or has in the past been exposed to friable asbestos or asbestos-containing
material at any such real property whether now or previously owned or occupied
by FAJ or any of the FAJ Subsidiaries.
4.14 EMPLOYEES AND BENEFIT PLANS.
(a) SCHEDULE 4.14(A) sets forth a complete and accurate list of all
employment agreements with Employees of FAJ and each of the FAJ Subsidiaries.
Except for the Employees who are parties to such employment agreements, all of
the Employees of FAJ and the FAJ Subsidiaries are employed in an at-will status
(except for restrictions or limitations on the at-will status of such employees
imposed by general principles of law or equity).
(b) SCHEDULE 4.14(B) sets forth a complete and accurate list of each of
the FAJ Plans. Since December 31, 2000, there has been no adoption,
modification, amendment or alteration of any FAJ Plan by FAJ or any of the FAJ
Subsidiaries. All FAJ Plans, including any such plan that is an "employee
benefit plan" as defined in Section 3(3) of ERISA, are in compliance, in all
material respects, with all applicable requirements of law, including ERISA and
the Code, and neither FAJ nor any of the FAJ Subsidiaries has any liabilities or
obligations with respect to any FAJ Plan, whether accrued, contingent or
otherwise.
4.15 LABOR MATTERS. Except as disclosed in SCHEDULE 4.14, there are no
pending or, to the knowledge of FAJ, threatened Actions or work stoppages
relating to any Employee of FAJ or any FAJ Subsidiary. Neither FAJ nor any of
the FAJ Subsidiaries is a party to any collective bargaining agreement with
respect to Employees, and, to the knowledge of FAJ, there are no activities of
any labor union seeking to represent or organize the employees of FAJ or any of
the FAJ Subsidiaries. No unfair labor practice or labor arbitration, or race,
sex, age, disability or other discrimination complaint is pending, nor is any
such complaint, to the knowledge of FAJ, threatened against FAJ or any of the
15
FAJ Subsidiaries before the National Labor Relations Board, Equal Employment
Opportunity Commission, Department of Labor or any other Governmental Authority,
and no grievance is pending, nor is any grievance, to the knowledge of FAJ,
threatened against FAJ or any of the FAJ Subsidiaries. FAJ and each of the FAJ
Subsidiaries is in compliance in all material respects with all applicable
federal, state and local laws relating to employment, including without
limitation, the provisions thereof relating to wages, non-discriminatory hiring
and employment practices, collective bargaining, and payment of Social Security
and Unemployment Compensation taxes or similar taxes, and neither FAJ nor any of
the FAJ Subsidiaries is liable for any arrears of wages or subject to any
liabilities or penalties for failure to comply with any of the foregoing laws.
4.16 PROPRIETARY RIGHTS. Attached as SCHEDULE 4.16 is a list of (a) all
trademark, service xxxx or trade name registrations and all pending applications
for any such registration; (b) all patent and copyright registrations and all
pending applications therefor; (c) all other trademarks, service marks, domain
names, or trade names, whether or not registered; and (d) all licenses with
respect thereto as well as rights or licenses to use any proprietary rights
(including software licenses) of any other entities (the items in clauses (a),
(b), (c) and (d) collectively, the "FAJ PROPRIETARY RIGHTS"), that are owned or
used by FAJ or any of the FAJ Subsidiaries. To the knowledge of FAJ, the use of
any of the Proprietary Rights by FAJ or any of the FAJ Subsidiaries has not
infringed, is not infringing upon, and is not otherwise violating the rights of
any Person or other entity in or to such FAJ Proprietary Rights or the asserted
FAJ Proprietary Rights of others. No notices have been received by FAJ or any of
the FAJ Subsidiaries that the use of the FAJ Proprietary Rights by FAJ or any of
the FAJ Subsidiaries infringes upon or otherwise materially violates any rights
of a person or other entity in or to such FAJ Proprietary Rights or the
proprietary rights of others. To the knowledge of FAJ, no person or other entity
is infringing on the FAJ Proprietary Rights owned by FAJ or any of the FAJ
Subsidiaries. The FAJ Proprietary Rights include all FAJ Proprietary Rights used
in, or necessary to, the conduct of the business of FAJ and each of the FAJ
Subsidiaries.
4.17 INSURANCE. FAJ and each of the FAJ Subsidiaries maintains insurance
policies covering the assets, business, equipment, properties, operations and
Employees of it, each of which insurance policies are of a type and in amounts
customarily carried by Persons similar in size to FAJ or the FAJ Subsidiaries
conducting businesses similar to those of FAJ or the FAJ Subsidiaries. SCHEDULE
4.17 sets forth a list of all insurance coverage or policies currently
maintained by FAJ and the FAJ Subsidiaries. All such coverage or policies shall
be maintained in full force and effect until the Closing. There is no material
claim by FAJ or any of the FAJ Subsidiaries pending under any of their insurance
policies as to which coverage has been questioned, denied or disputed by the
underwriters of such policies.
4.18 BROKERS OR FINDERS. No agent, broker, investment banker or other firm
or Person, including any of the foregoing that is an Affiliate of FAJ, is or
will be entitled to any broker's or finder's fee or any other commission or
similar fee agreed to or arranged by FAJ in connection with this Agreement or
any of the transactions contemplated hereby.
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4.19 GOVERNMENT APPROVALS; COMPLIANCE WITH LAWS AND ORDERS.
(a) FAJ and the FAJ Subsidiaries have obtained from the appropriate
Government Authorities that are charged with regulating or supervising any
business conducted by FAJ and the FAJ Subsidiaries all permits, variances,
exemptions, orders, approvals, certificates of authority and licenses necessary
for the conduct of their business and operations as and to the extent currently
conducted (the "FAJ PERMITS"), which FAJ Permits are valid and remain in full
force and effect. FAJ and each of the FAJ Subsidiaries is in compliance in all
material respects with the terms of all such FAJ Permits.
(b) Neither FAJ nor any of the FAJ Subsidiaries has received notice of
or, to the knowledge of FAJ, is not subject to any Action, order or any
complaint, proceeding or investigation of any Government Authority which is
charged with regulating or supervising any business conducted by FAJ or any of
the FAJ Subsidiaries, that is pending or threatened, that affects or which could
affect the effectiveness or validity of any such FAJ Permit or that could impair
the renewal thereof or that is likely to result in any such Action, agreement,
consent decree or order or in any fine, penalty or other liability in excess of
$20,000 or the forfeiture of the certificate of authority of FAJ or any of the
FAJ Subsidiaries. As of the date hereof, neither FAJ nor any of the FAJ
Subsidiaries is a party or subject to any Action, agreement, consent decree or
order, or other understanding or arrangement with, or any directive of, any
Government Authority that is charged with regulating or supervising any business
conducted by FAJ or any of the FAJ Subsidiaries that imposes any material
restrictions on or otherwise affects in any material way the conduct of the
business of FAJ.
4.20 KNOWLEDGE DEFINED. As used herein, the phrase "to FAJ's knowledge" (or
words of similar import) means the actual knowledge, after reasonable inquiry,
of any of the chief executive officers, chief financial officers or directors of
each of FAJ and the FAJ Subsidiaries.
4.21 PROXY STATEMENT. The Proxy Statement, at the date mailed to the
shareholders of FAJ and at the time of their meeting to consider the same, (i)
will comply in all material respects with the applicable requirements of the
Exchange Act and the rules and regulations thereunder and (ii) 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 the light of the circumstances under which they were made, not
misleading (except with respect to information that has been supplied to FAJ
from MMI for inclusion in the Proxy Statement).
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF MMI AND ACQUISITION
MMI and Acquisition each hereby represents and warrants to FAJ as follows:
5.1 ORGANIZATION AND QUALIFICATION, SUBSIDIARIES.
(a) Each of MMI and the MMI Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation. Each of MMI and the MMI Subsidiaries has all requisite
corporate power and authority to own, operate, lease and encumber its properties
and carry on its business as now conducted.
17
(b) Each of MMI and the MMI Subsidiaries is duly qualified to do
business and is in good standing in each jurisdiction in which the ownership or
lease of its properties or the conduct of its business requires such
qualification, except for any such failures to so qualify that would not have a
Material Adverse Effect with respect to MMI or any MMI Subsidiary.
(c) All of the outstanding shares of capital stock of, or other equity
interests in, each of the MMI Subsidiaries are owned, directly or indirectly, by
MMI in compliance with all applicable securities laws, free and clear of all
Liens.
(d) The issued and outstanding shares of each of MMI and the MMI
Subsidiaries have been duly authorized and are validly issued, fully paid and
nonassessable and free of preemptive rights. On the Effective Date, MMI will
have good and marketable title to the MMI Subsidiaries' shares, free and clear
of all Liens.
(e) The Merger will not give any Person any dissenters, appraisal or
similar rights or any preemptive or similar right to purchase additional shares
of capital stock of MMI or any of the MMI Subsidiaries, or any rights under any
shareholders' rights, "poison pill" or similar plan.
5.2 DUE AUTHORIZATION. The execution, delivery and performance of this
Agreement and of all of the documents and instruments delivered in connection
herewith by MMI and Acquisition has been duly and validly authorized by all
necessary corporate action on the part of MMI and Acquisition. This Agreement
has been duly executed and delivered on behalf of MMI and Acquisition. This
Agreement is, and the other documents and instruments required hereby will be,
when executed and delivered by MMI and Acquisition, the valid and binding
obligation of MMI and Acquisition, enforceable against MMI and Acquisition in
accordance with their respective terms, subject only to bankruptcy, insolvency,
reorganization, moratorium or similar laws at the time in effect affecting the
enforceability or right of creditors generally and to general equitable
principles which may limit the right to obtain equitable remedies.
5.3 NO CONFLICTS; NO DEFAULTS; REQUIRED FILINGS AND CONSENTS. Neither the
execution and delivery by MMI or Acquisition of this Agreement, nor the
consummation by MMI or Acquisition of the transactions contemplated hereby in
accordance with the terms hereof, will:
(a) conflict with or result in a breach of any provisions of the
organizational documents of Acquisition or MMI;
(b) result in a breach or violation of, a default under, or the
triggering of any payment or other obligation pursuant to, or accelerate vesting
or have any other consequence under, any stock option plan, option plan or
similar compensation plan of Acquisition or MMI or any grant or award made under
any of the foregoing;
(c) violate or conflict with any statute, regulation, judgment, order,
writ, decree or injunction applicable to Acquisition or MMI;
(d) violate or conflict with or result in a breach of any provision of,
or constitute a default (or any event that, with notice or lapse of time or
both, would constitute a default) under, or result in the termination or in a
18
right of termination or cancellation of, or accelerate the performance required
by, or result in the creation of any Lien upon any of the properties of
Acquisition or MMI under, or result in being declared void, voidable or without
further binding effect, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed or any franchise, license, permit, lease,
contract, agreement or other instrument, commitment or obligation to which
Acquisition or MMI is a party, or by which Acquisition or MMI or any of their
properties is bound or affected; or
(e) require any consent, approval or authorization of, or declaration,
filing or registration with, any Government Authority or private organization,
other than any filings required under the Securities Act, the Exchange Act, or
Blue Sky Laws.
5.4 CAPITAL STOCK.
(a) As of the date hereof, there are 3,000 and 10,000,000 shares of
common stock authorized and 2,000 and 3,699,147 shares of common stock issued
and outstanding of each of MMI and Aquisition, respectively, and no and
1,000,000 shares of preferred stock authorized, and no shares of preferred stock
issued and outstanding of MMI and Acquisition. Neither MMI nor any of the MMI
Subsidiaries has any outstanding securities or bonds, debentures, notes or other
obligations, the holders of which have the right to vote (or that are
convertible into or exercisable for securities the holders of which have the
right to vote) with respect to the transactions contemplated hereby. All issued
and outstanding shares of MMI and the MMI Subsidiaries were issued in compliance
with all applicable state and federal securities laws. There are no existing
options, warrants, calls, subscriptions, convertible securities, or other
rights, agreements or commitments that obligate MMI or any MMI Subsidiary to
issue, transfer or sell any shares of capital stock or other equity interests in
MMI or any MMI Subsidiary.
(b) Neither MMI nor any of the MMI Subsidiaries has issued or granted
securities convertible into or exchangeable for interests in MMI or any MMI
Subsidiary, and, except as set forth on SCHEDULE 5.4(A), neither MMI nor any MMI
Subsidiary is a party to any outstanding commitment of any kind relating to, or
any presently effective agreement or understanding with respect to, interests in
MMI or any MMI Subsidiary, whether issued or unissued.
(c) Neither MMI nor any of the MMI Subsidiaries owns directly or
indirectly any material interest or investment (whether equity or debt) in any
corporation, partnership, joint business venture, trust or other legal entity
(other than the list set forth on SCHEDULE 5.4(C), which is a list of all of the
investments of MMI and the MMI Subsidiaries).
5.5 FINANCIAL STATEMENTS AND ABSENCE OF UNDISCLOSED LIABILITIES.
(a) MMI has delivered to FAJ financial statements for MMI and
Acquisition (the "FINANCIAL STATEMENTS") for the two calendar years prior to the
date of this Agreement or for the period of its incorporation if such period is
shorter, which are attached as SCHEDULE 5.5.
(b) The consolidated balance sheet of MMI (including the related notes
and schedules), included in the Financial Statements, have been prepared to
reflect the financial position and results of operations of MMI and Acquisition
on a carve-out basis and not to reflect MMI and all majority-owned subsidiaries
19
on a consolidated basis. Accordingly, FAJ has been excluded. Such statements
fairly present the financial position of each of MMI and Acquisition as of its
date, and the consolidated statement of operations, shareholders' equity
(deficit) and cash flows included in the Financial Statements (including any
related notes and schedules) fairly present the results of operations, retained
earnings or cash flows, as the case may be, of MMI and Acquisition for the
periods covered thereby, in each case in accordance with GAAP consistently
applied during the periods involved, except as may be noted therein or that
would not, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Effect with respect to MMI or any MMI Subsidiary. All such
balance sheets and statements are free of errors, omissions and misstatements
except for such errors, omissions and misstatements that would not, individually
or in the aggregate, have, or reasonably be expected to have, a Material Adverse
Effect with respect to MMI or any MMI Subsidiary. None of the receivables of
each of MMI and the MMI Subsidiaries are materially overstated, and no payables
and other liabilities of MMI and each of the MMI Subsidiaries are materially
understated, on any such balance sheet or statement.
(c) Except as and to the extent set forth in the Financial Statements
or in any Schedule hereto, to MMI's knowledge, none of MMI or Acquisition has
any material Liabilities, nor do there exist any circumstances that would,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect with respect to MMI or any MMI Subsidiary.
(d) Except as and to the extent set forth in SCHEDULE 5.5(D) hereto,
there are no intercompany transactions that would be eliminated in consolidation
should a consolidated financial statement, consolidating MMI and Acquisition, be
prepared for each of the two calendar years prior to the date of this Agreement,
the date hereof, or the Closing Date.
5.6 LITIGATION; COMPLIANCE WITH LAW.
(a) SCHEDULE 5.6 sets forth a list and a brief description of all
pending Actions against MMI and any of the MMI Subsidiaries or the MMI Shares of
which MMI or Acquisition have notice, in which the amount of damages prayed for
in any complaint or pleading exceeds $150,000 or that is reasonably likely to
result in damages of $150,000 or more.
(b) Except as set forth on SCHEDULE 5.6, there are no Actions pending
or, to the knowledge of MMI or Acquisition threatened, against MMI or any of the
MMI Subsidiaries, or any property (including proprietary rights) of MMI or any
of the MMI Subsidiaries in any court or other forum or before any arbitrator of
any kind or before or by any Governmental Authority of which Acquisition or MMI
have notice, in which the amount of damages prayed for in any complaint or
pleading exceeds $150,000 or that is reasonably likely to result in damages of
$150,000 or more.
(c) To the knowledge of MMI or Acquisition, neither MMI nor any of the
MMI Subsidiaries is in violation of any statute, rule, regulation, order, writ,
decree or injunction of any Government Authority or any body having jurisdiction
over them or any of their respective properties. SCHEDULE 5.6 sets forth all
such violations known to MMI or Acquisition except for violations that would
not, individually or in the aggregate, have, or reasonably be expected to have,
a Material Adverse Effect.
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5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in SCHEDULE
5.7 or in any other Schedule hereto, MMI and each of the MMI Subsidiaries has
conducted its business only in the ordinary course of business, and there has
not been (a) any change, circumstance or event that had or that could reasonably
be expected to have a Material Adverse Effect or (b) any change in any
accounting principles, practices or methods, except as required by changes in
GAAP.
5.8 TAX MATTERS.
(a) MMI and each of the MMI Subsidiaries has timely filed with the
appropriate taxing authority all Tax Returns required to be filed by it or has
timely requested extensions and any such request has been granted and has not
expired. Each such Tax Return is complete and accurate in all material respects
and all information shown thereon is correct in all material respects. All Taxes
required to have been paid by MMI or any of the MMI Subsidiaries have been paid
when due, except for Taxes contested in good faith and for which adequate
reserves as required by GAAP have been taken and which are listed on SCHEDULE
5.8. MMI and each of the MMI Subsidiaries have properly accrued their liability
for all Taxes for periods subsequent to the periods covered by such Tax Returns
as required by GAAP. Neither MMI nor any of the MMI Subsidiaries has executed or
filed with the IRS or any other taxing authority any agreement now in effect
extending the period for assessment or collection of any Tax. Except as set
forth on SCHEDULE 5.8, neither MMI nor any of the MMI Subsidiaries is a party to
any pending action or proceeding by any taxing authority for assessment or
collection of any Tax, and no claim for assessment or collection of any Tax has
been asserted against any of them. Except as set forth on SCHEDULE 5.8, no claim
has been made by any authority in a jurisdiction where MMI or any of the MMI
Subsidiaries does not file Tax Returns that it is or may be subject to taxation
or reporting in that jurisdiction. There is no dispute or claim concerning any
information, reporting or tax liability of MMI or any of the MMI Subsidiaries,
(i) claimed or raised by any taxing authority in writing or (ii) as to which MMI
or Acquisition has knowledge. Except as set forth on SCHEDULE 5.8, neither MMI
nor any of the MMI Subsidiaries has had its tax returns audited by any
Government Authority within the last four years.
(b) No amount or other entitlement that could be received (whether in
cash or property or the vesting of property) as a result of any of the
transactions contemplated hereby by any Employee of MMI or any of the MMI
Subsidiaries or of any of their Affiliates who is a "disqualified individual"
(as such term is defined in proposed Treasury Regulation Section 1.280G-1) under
any employment, severance or termination agreement, other compensation
arrangement or plan currently in effect would be characterized as an "excess
parachute payment" (as such term is defined in Section 280G(b)(2) of the Code).
5.9 COMPLIANCE WITH AGREEMENTS.
(a) Neither MMI nor any of the MMI Subsidiaries is in default under or
in violation of any provision of its articles of incorporation or organization,
or bylaws or operating agreement or any similar organizational document.
(b) MMI and each of the MMI Subsidiaries has filed all material
reports, registrations, documents and statements, together with any amendments
and supporting materials required with respect thereto, that it was required to
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file with any Government Authority and all other material reports, documents,
materials and statements required to be filed by it, and has paid all fees or
assessments due and payable in connection therewith. There is no unresolved
violation asserted by any Government Authority against MMI or any of the MMI
Subsidiaries of which MMI or Acquisitionhas received notice.
(c) Neither MMI nor any of the MMI Subsidiaries is in default, and, to
MMI or Acquisition's knowledge, no event has occurred that, with the giving of
notice or the lapse of time or both, would constitute a default, under any
Commitment to which MMI or any of the MMI Subsidiaries are bound, whether as a
party or otherwise or in respect of any payment obligations thereunder except
for defaults that would not, individually or in the aggregate, have, or
reasonably be expected to have, a Material Adverse Effect with respect to MMI or
any MMI Subsidiary. Except as set forth in SCHEDULE 5.9(C), neither MMI nor any
of the MMI Subsidiaries is a party to any joint venture or partnership
agreements. To MMI and Acquisition's knowledge, there is no condition with
respect to MMI or the MMI Subsidiaries that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect with respect
to MMI or any MMI Subsidiary.
(d) SCHEDULE 5.9(D) sets forth a complete and accurate list of all
material agreements of MMI and each of the MMI Subsidiaries in effect on the
date hereof. Each agreement or policy listed on SCHEDULE 5.9(D) is in full force
and effect, and MMI and each of the MMI Subsidiaries and, to MMI or
Acquisition's knowledge, the other parties thereto, are in compliance with such
agreements or policies. Solely for purposes of this Section, material agreements
shall mean agreements that involve an expense to MMI or any of the MMI
Subsidiaries or annual revenue over $500,000.
5.10 FINANCIAL RECORDS; ARTICLES AND BYLAWS, CORPORATE RECORDS.
(a) The books of account and other financial records of MMI and the MMI
Subsidiaries are true and complete in all material respects, and have been
maintained in accordance with GAAP.
(b) MMI has delivered or made available to FAJ true and complete copies
of the Articles and the Bylaws of MMI and each of the MMI Subsidiaries, as
amended to date, and the Articles of Organization, organizational documents and
joint venture agreements of MMI and each of the MMI Subsidiaries, and all
amendments thereto.
(c) The corporate minute books and other records of proceedings of MMI
and the MMI Subsidiaries contain accurate records of all meetings and consents
of the equity holders, directors and other governing bodies thereof and
accurately reflect in all material respects all other corporate action of the
directors and shareholders and any committees of the board of directors of MMI
and the MMI Subsidiaries.
5.11 TITLE TO ASSETS; LIENS. MMI and each MMI Subsidiary has good and
marketable title (insurable and indefeasible fee simple title in the case of
owned real property), to all of the respective property, equipment and other
assets owned by it (the "MMI AND SUBSIDIARIES' PROPERTIES"), and, except as set
forth on SCHEDULE 5.11, such assets are free and clear of any and all mortgages,
22
liens, security interests, charges, encumbrances or title defects of any nature
whatsoever other than Permitted Liens and liens that would not, individually or
in the aggregate, materially impair the use of such MMI and Subsidiaries'
Properties. SCHEDULE 5.11 contains a complete and accurate list of each parcel
of real property owned, leased or used by MMI and any MMI Subsidiary in the
conduct of its business. There are no pending or, to the best knowledge of MMI
or Acquisition, threatened zoning, condemnation or eminent domain proceedings,
building, utility or other moratoria, or injunctions or court orders that would
materially adversely affect such real property. To the knowledge of MMI or
Acquisition, the current use of the owned real property by MMI and the MMI
Subsidiaries is permissible and in material compliance with all applicable
zoning ordinances and other regulations of any Government Authority.
5.12 ENVIRONMENTAL MATTERS.
(a) MMI and each of the MMI Subsidiaries' ownership, operation and use
of its respective property have been and currently are in compliance in all
material respects with all applicable Environmental Laws.
(b) No Environmental Claim with respect to the operations or the
businesses of the MMI or the MMI Subsidiaries, or with respect to any real
property owned by MMI or the MMI Subsidiaries, has been asserted or, to
Acquisition's knowledge, threatened, and, to MMI and Acquisition's knowledge, no
circumstances exist with respect to MMI or any of the MMI Subsidiaries or any
such real property that would reasonably be expected to result in any
Environmental Claim being asserted, in any such case, against (i) MMI or any of
the MMI Subsidiaries, or (ii) any Person whose liability for any Environmental
Claims MMI or any of the MMI Subsidiaries has or may have retained or assumed
either contractually or by operation of law.
(c) (i) Neither MMI nor any of the MMI Subsidiaries has been notified,
or has reason to anticipate being notified, of potential responsibility in
connection with any site that has been placed on, or proposed to be placed on,
the National Priorities List or its state or foreign equivalent pursuant CERCLA,
or analogous state or foreign laws, (ii) no Materials of Environmental Concern
are present on, in or under any real property owned by MMI or the MMI
Subsidiaries, (iii) neither MMI nor any MMI Subsidiary nor, to the knowledge of
MMI or Acquisition, any tenant of any such real property has released or
arranged for the release of any Materials of Environmental Concern at or on any
such real property, (iv) no underground storage tanks, surface disposal areas,
pits, ponds, lagoons or open trenches are present at any such real property, (v)
no transformers, capacitors or other equipment containing fluid with more than
50 parts per million polychlorinated biphenyls are present at, on or under any
such real property, except for any such transformers, capacitors or other
equipment owned by any utility company, and (vi) to MMI or Acquisition's
knowledge, no employee, agent, contractor, subcontractor or tenant of MMI or any
of the MMI Subsidiaries is now or has in the past been exposed to friable
asbestos or asbestos-containing material at any such real property whether now
or previously owned or occupied by MMI or any of the MMI Subsidiaries.
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5.13 EMPLOYEES AND BENEFIT PLANS.
(a) SCHEDULE 5.13(A) sets forth a complete and accurate list of all
employment agreements with Employees of MMI and each of the MMI Subsidiaries.
Except for the Employees who are parties to such employment agreements, all of
the Employees of MMI and the MMI Subsidiaries are employed in an at-will status
(except for restrictions or limitations on the at-will status of such employees
imposed by general principles of law or equity).
(b) SCHEDULE 5.13(B) sets forth a complete and accurate list of each of
the MMI Plans. There has been no adoption, modification, amendment or alteration
of any MMI Plan by MMI or any of the MMI Subsidiaries. All MMI Plans, including
any such plan that is an "employee benefit plan" as defined in Section 3(3) of
ERISA, are in compliance, in all material respects, with all applicable
requirements of law, including ERISA and the Code, and neither MMI nor any of
the MMI Subsidiaries has any liabilities or obligations with respect to any MMI
Plan, whether accrued, contingent or otherwise.
5.14 LABOR MATTERS. Except as disclosed in SCHEDULE 5.14, there are no
pending or, to the knowledge of MMI or Acquisition, threatened Actions or work
stoppages relating to any Employee of MMI or any MMI Subsidiary. Neither MMI nor
any of the MMI Subsidiaries is a party to any collective bargaining agreement
with respect to Employees, and, to the knowledge of MMI or Acquisition, there
are no activities of any labor union seeking to represent or organize the
employees of MMI or any of the MMI Subsidiaries. No unfair labor practice or
labor arbitration, or race, sex, age, disability or other discrimination
complaint is pending, nor is any such complaint, to the knowledge of MMI or
Acquisition, threatened against MMI or any of the MMI Subsidiaries before the
National Labor Relations Board, Equal Employment Opportunity Commission,
Department of Labor or any other Governmental Authority, and no grievance is
pending, nor is any grievance, to the knowledge of MMI or Acquisition,
threatened against MMI or any of the MMI Subsidiaries. MMI and each of the MMI
Subsidiaries is in compliance in all material respects with all applicable
federal, state and local laws relating to employment, including without
limitation, the provisions thereof relating to wages, non-discriminatory hiring
and employment practices, collective bargaining, and payment of Social Security
and Unemployment Compensation taxes or similar taxes, and neither MMI nor any of
the MMI Subsidiaries is liable for any arrears of wages or subject to any
liabilities or penalties for failure to comply with any of the foregoing laws.
5.15 PROPRIETARY RIGHTS. Attached as SCHEDULE 5.15 is a list of (a) all
trademark, service xxxx or trade name registrations and all pending applications
for any such registration; (b) all patent and copyright registrations and all
pending applications therefor; (c) all other trademarks, service marks, domain
names, or trade names, whether or not registered; and (d) all licenses with
respect thereto as well as rights or licenses to use any proprietary rights
(including software licenses) of any other entities (the items in clauses (a),
(b), (c) and (d) collectively, the "MMI PROPRIETARY RIGHTS"), that are owned or
used by MMI or any of the MMI Subsidiaries. To the knowledge of MMI or
Acquisition, the use of any of the proprietary rights by MMI or any of the MMI
Subsidiaries has not infringed, is not infringing upon, and is not otherwise
violating the rights of any Person or other entity in or to such Proprietary
Rights or the asserted Proprietary Rights of others. No notices have been
received by MMI or any of the MMI Subsidiaries that the use of the MMI
Proprietary Rights by MMI or any of the MMI Subsidiaries infringes upon or
otherwise materially violates any rights of a person or other entity in or to
such MMI Proprietary Rights or the proprietary rights of others. To the
knowledge of MMI or Acquisition, no person or other entity is infringing on the
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MMI Proprietary Rights owned by MMI or any of the MMI Subsidiaries. The MMI
Proprietary Rights include all proprietary rights used in, or necessary to, the
conduct of the business of MMI and each of the MMI Subsidiaries.
5.16 INSURANCE. MMI and each of the MMI Subsidiaries maintains insurance
policies covering the assets, business, equipment, properties, operations and
Employees of it, each of which insurance policies are of a type and in amounts
customarily carried by Persons similar in size to MMI or the MMI Subsidiaries
conducting businesses similar to those of MMI or the MMI Subsidiaries. SCHEDULE
5.16 sets forth a list of all insurance coverage or policies currently
maintained by MMI and the MMI Subsidiaries. All such coverage or policies shall
be maintained in full force and effect until the Closing. There is no material
claim by MMI or any of the MMI Subsidiaries pending under any of their insurance
policies as to which coverage has been questioned, denied or disputed by the
underwriters of such policies.
5.17 TAKEOVER STATUTES. No "fair price," "moratorium," "business
combination," "control share acquisition" or other anti-takeover statute or
similar statute or regulation enacted by the states of Delaware or Ohio applies
to the transactions contemplated by this Agreement. All actions have been taken
to ensure that no statute or regulation of the states of Delaware or Ohio,
including any "business combination act," limits MMI's ability to engage in
further transactions with FAJ.
5.18 BROKERS AND FINDERS. No agent, broker, investment banker or other
Person, including any of the foregoing that is an Affiliate of MMI or any of the
MMI Subsidiaries, is or will be entitled to any broker's or finder's fee or any
other commission or similar fee agreed to or arranged by MMI or any of the MMI
Subsidiaries in connection with this Agreement or any of the transactions
contemplated hereby.
5.19 GOVERNMENT APPROVALS; COMPLIANCE WITH LAWS AND ORDERS.
(a) MMI and each of the MMI Subsidiaries has obtained from the
appropriate Government Authority that is charged with regulating or supervising
any business conducted by MMI or any of the MMI Subsidiaries all material
permits, variances, exemptions, orders, approvals, certificates of authority and
licenses necessary for the conduct of its business and operations as and to the
extent currently conducted (the "MMI PERMITS"), which MMI Permits are valid and
remain in full force and effect. MMI and the MMI Subsidiaries are in compliance
in all material respects with the terms of all such MMI Permits.
(b) Neither MMI nor any of the MMI Subsidiaries has received notice of
or, to the knowledge of MMI or Acquisition, is subject to any Action, order or
any complaint, proceeding or investigation of any Government Authority that is
charged with regulating or supervising any business conducted by MMI or any of
the MMI Subsidiaries, that is pending or threatened, that affects or that could
affect the effectiveness or validity of any MMI Permit or that could impair the
renewal thereof or that is likely to result in any such Action, agreement,
consent decree or order or in any fine, penalty or other liability in excess of
$20,000 or the forfeiture of a certificate of authority of MMI or any of the MMI
Subsidiaries. As of the date hereof, neither MMI nor any of the MMI Subsidiaries
is a party or subject to any Action, agreement, consent decree or order, or
other understanding or arrangement with, or any directive of, any Government
25
Authority that is charged with regulating or supervising any business conducted
by MMI or any of the MMI Subsidiaries that imposes any material restrictions on
or otherwise affects in any material way the conduct of the business of MMI or
any of the MMI Subsidiaries, as currently conducted.
5.20 KNOWLEDGE DEFINED. As used herein, the phrase "to MMI or Acquisition's
knowledge" (or words of similar import) means the actual knowledge, after
reasonable inquiry, of any of the chief executive officers, chief financial
officers or directors of each of MMI and the MMI Subsidiaries.
5.21 PLACEMENT.
(a) MMI acknowledges that the FAJ Shares being acquired are being
acquired for Acquisition's own account without a view to public distribution or
resale and that Acquisition has no contract, undertaking, agreement, or
arrangement to sell or otherwise transfer or dispose of the FAJ Shares or any
portion thereof to any other person or entity.
(b) MMI agrees that it will not sell or otherwise transfer or dispose
of the FAJ Shares, or any portion thereof, unless such FAJ Shares are registered
under the Securities Act and any applicable state securities laws or MMI obtains
an opinion of reputable securities counsel that such FAJ Shares may be sold in
reliance on an exemption from such registration requirements.
(c) MMI understands that no federal or state agency including the SEC,
the Arizona Corporation Commission or the securities commission or authorities
of any other state has approved or disapproved the FAJ Shares, passed upon or
endorsed the merits of the Merger or the adequacy of the disclosure given in
connection with the offering, or made any finding or determination as to the
fairness of the FAJ Shares for investment.
5.22 NO CONFLICTING INFORMATION. MMI acknowledges that it owns a majority
of the issued and outstanding capital stock of FAJ. In addition, certain
officers of MMI are also officers of FAJ and manage certain day-to-day matters
for FAJ. Accordingly, MMI has, and has access to, certain information regarding
the business, operations and financial condition of FAJ.
5.23 PROXY STATEMENT. None of the information in this Agreement relating to
MMI or Acquisition or otherwise supplied or to be supplied by MMI, including
information for inclusion or incorporation by reference in the Proxy Statement,
as of the date hereof and as of the date such information was provided to FAJ
for inclusion in the Proxy Statement to be mailed to the FAJ's shareholders,
contains or will contain any untrue statement of a material fact or omit to
state any material fact required to be stated herein or therein or necessary to
make the statements herein or therein, in light of the circumstances under which
they are made, not misleading. MMI will advise FAJ in writing of any material
changes in any such information or if any such information contains any untrue
statements of material facts or omits to state any material facts required to be
stated herein or therein or necessary to make the statements herein or therein,
in light of the circumstances under which they are made, not misleading.
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ARTICLE 6
COVENANTS RELATING TO THE CLOSING
6.1 TAKING OF NECESSARY ACTION. Each party hereto agrees to use its
commercially reasonable best efforts promptly to take or cause to be taken all
action and promptly to do or cause to be done all things reasonably necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, subject to the terms
and conditions of this Agreement.
6.2 PUBLIC ANNOUNCEMENT; CONFIDENTIALITY.
(a) For as long as this Agreement is in effect, no party shall issue or
cause the publication of any press release or any other announcement with
respect to this Agreement, or the transactions contemplated hereby or thereby
without the consent of the others (which consent shall not be unreasonably
withheld or delayed), except when, in the reasonable judgment of FAJ, such
release or announcement is required by applicable law or pursuant to any listing
agreement with, or the rules or regulations of, any securities exchange or any
other regulatory requirement.
(b) Each party agrees that all information provided to another party or
any of its representatives pursuant to this Agreement shall be kept
confidential, and shall not disclose such information to any Persons other than
the directors, officers, employees, financial advisors, legal advisors,
accountants, consultants and affiliates of such party who reasonably need to
have access to the confidential information and who are advised of the
confidential nature of such information, but the foregoing obligation shall not
(i) relate to any information that (A) is or becomes generally available other
than as a result of unauthorized disclosure by the receiving party or by Persons
to whom the receiving party has made such information available, (B) is or
becomes available to the receiving party on a nonconfidential basis from a third
party that is not, to the receiving party's knowledge, bound by any other
confidentiality agreement with the disclosing party, or (C) is independently
developed or already known to the receiving party prior to disclosure by the
disclosing party, or (ii) prohibit disclosure of any information if required by
law, rule, regulation, court order or other legal or governmental process.
6.3 CONDUCT OF BUSINESS. Except as agreed to by the other parties and set
forth on SCHEDULE 6.3, during the period from the date of this Agreement to the
Effective Date: (i) each of FAJ and MMI will, and FAJ and MMI will cause each of
their respective Subsidiaries to, conduct its business only in the ordinary
course consistent with past practice; (ii) neither of MMI nor FAJ will, and FAJ
and MMI will cause each of their respective Subsidiaries not to, take any action
or enter into any material transaction other than in the ordinary course of
business consistent with past practice; and (iii) to the extent consistent with
the foregoing, each of FAJ and MMI will, and FAJ and MMI will cause each of
their respective Subsidiaries to, use its commercially reasonable best efforts
to preserve intact its current business organization and reputation, existing
relationships with customers, franchisees, licensees, suppliers, government
officials, regulatory authorities and others having business dealings with it or
regulatory authority over it and shall comply in all material respects with all
laws and orders of each Governmental Authority and regulatory authority having
jurisdiction over it. Without limiting the generality of the foregoing and
except as otherwise expressly permitted in this Agreement, prior to the Closing,
27
neither FAJ nor MMI will, and FAJ and MMI will not permit any of their
respective Subsidiaries to, without the prior written consent of the other:
(a) issue, deliver or sell, or authorize or enter into any agreement or
commitment to issue, deliver or sell (y) any additional shares of its capital
stock of any class, or any securities or rights which are convertible into,
exchangeable for, or evidencing the right to subscribe for any shares of its
capital stock, or any rights, warrants, options, calls, commitments or any other
agreements to purchase or acquire any shares of its capital stock or any
securities or rights convertible into, exchangeable for, or evidencing the right
to subscribe for, any shares of its capital stock, or (z) any other of its
securities or the securities of any of its Subsidiaries; (ii) split, combine,
subdivide, reclassify, redeem, repurchase or otherwise acquire or take similar
action with respect to any shares of its capital stock, or (iii) declare, set
aside for payment or pay any dividend, or make any other distribution in respect
of any shares of its capital stock or other outstanding securities or make any
payments to shareholders in their capacity as such, other than in a manner and
amount consistent with prior business practices;
(b) (i) create, increase the benefits payable or accruing under, or
modify in any manner any FAJ Plan or MMI Plan or the compensation, pension,
welfare, medical or fringe benefits of any of its directors, officers or
Employees, except for normal increases in the ordinary course of business
consistent with past practice that, in the aggregate, do not result in a
material increase in benefits or compensation expense to FAJ, MMI or their
Subsidiaries, or (ii) enter into any new, or amend any existing, employment,
severance, "golden parachute" or other similar agreement with any such director,
officer or Employee, except as may be approved in writing by the other party;
(c) make any acquisition, by means of merger, consolidation, purchase
of a substantial equity interest in or a substantial portion of the assets of,
or otherwise, of any business or corporation, partnership, association or other
business organization or division thereof (except as herein contemplated);
(d) adopt any amendments to its articles of incorporation, bylaws or
similar organizational documents, or alter through merger with any entity,
liquidation, reorganization, restructuring or in any other fashion the corporate
structure or ownership of it or any of its Subsidiaries, or encumber, dispose
of, sell or lease any material amount of the assets of FAJ or MMI or any of
their Subsidiaries except as herein authorized;
(e) enter into any contract, arrangement or understanding requiring the
expenditure of greater than $150,000;
(f) in the event that a claim is made for damages during the period
prior to the Closing Date that is reasonably likely to have a Material Adverse
Effect, fail to promptly notify the other party of the pendency of such claim;
or
(g) authorize, recommend, propose or announce an intention to do any of
the foregoing, or enter into any agreement, contract or commitment to do any of
the foregoing.
6.4 NOTIFICATION OF CERTAIN MATTERS. Each of the parties shall notify the
other parties in writing of its discovery of any matter that would render any of
such party's or the other party's representations and warranties contained
28
herein untrue or incorrect in any material respect, but the failure of any party
to so notify another party of the inaccuracy of that other party's
representations and warranties does not constitute a breach of this Agreement.
6.5 PROVISION OF CERTAIN DOCUMENTS. Each party shall, upon reasonable
request by another party, deliver true and complete copies of any documents
related to such party or any of its Subsidiaries that are reasonably requested
within five Business Days after the date of such request.
ARTICLE 7
CERTAIN ADDITIONAL COVENANTS AND CONDITIONS
7.1 RESALE. MMI acknowledges and agrees that, as a result of the
effectiveness of the Merger, and pursuant to a then effective Schedule 13e-3 and
a Form 15, FAJ will cease to be subject to the reporting requirements under the
Securities Exchange Act of 1934, as amended. Accordingly, the FAJ Shares to be
acquired pursuant to the transactions hereby contemplated will not upon
completion of the Merger, as of the Closing Date or the Effective Date, be
registered under the Securities Act or the Blue Sky Laws of any state and they
may be sold or otherwise disposed of only in one or more transactions registered
under the Securities Act and, where applicable, such Blue Sky Laws or as to
which an exemption from the registration requirements of the Securities Act and,
where applicable, such Blue Sky Laws is available.
7.2 ACCESS TO INFORMATION. From the date of this Agreement until the
Effective Date, each party shall provide the other and its representatives with
such financial and other information regarding such party's or any of the
Subsidiaries' business, operations, properties and financial statements a party
or its representatives shall reasonably request and shall provide the other
party or its representatives access to all of the properties, assets, books,
records, tax returns, contracts and personnel during the normal business hours
of the party providing the information.
7.3 EFFECTIVENESS OF AGREEMENT; CONDITION PRECEDENT. The effectiveness of
this Agreement and the obligations of the parties hereunder are subject to the
acquisition by MMI of approximately 58.7% of the issued and outstanding capital
stock of FAJ within 10 days after the date of this Agreement.
ARTICLE 8
CLOSING; CLOSING DELIVERIES
8.1 CLOSING; TERMINATION. The Closing (the "CLOSING") shall take place at
10:00 a.m., local time, at the offices of FAJ, 00 Xxxx Xxxxxxxx Xxx, Xxxxxxx,
Xxxxxxx 00000, on the Business Day following the satisfaction or waiver of the
last to be satisfied or waived of the conditions set forth in SECTIONS 9.1 AND
9.2 (other than those conditions that are to be satisfied concurrently with the
Closing), or on such other date or at such other time and place as the parties
shall agree on in writing (the "CLOSING DATE"). If the Closing has not occurred
on or before the first anniversary of this Agreement and this Agreement has not
been previously terminated under ARTICLE 10, this Agreement shall terminate on
29
such anniversary without further action by the parties hereto, and this
Agreement shall be null and void and have no further effect.
8.2 FAJ CLOSING DELIVERIES. At the Closing, FAJ shall deliver, or cause to
be delivered, to Acquisition and MMI each of the following:
(a) resolutions of the Board of Directors of FAJ, certified by the
Secretary of FAJ, authorizing the execution and delivery of this Agreement, and
the transactions contemplated hereby, including the Merger;
(b) the legal opinion of FAJ's counsel required by SECTION 9.1(F);
(c) evidence or copies of any consents, approvals, orders,
qualifications or waivers required by SECTION 9.1;
(d) the Certificate of Merger executed by FAJ;
(e) the Articles of Incorporation or similar organizational documents
of each of FAJ and the FAJ Subsidiaries, each certified as of a recent date by a
duly authorized official of the jurisdiction of its incorporation or
organization, and the bylaws or similar organizational documents of each of FAJ
and the FAJ Subsidiaries, each certified as of a recent date by the Secretary or
similar officer of the entity;
(f) certificates of a duly authorized official of the jurisdiction of
its organization, dated as of a recent date, as to the good standing of each of
FAJ and the FAJ Subsidiaries in the jurisdiction of its organization or
incorporation;
(g) if not previously delivered, all other certificates and instruments
and documents required pursuant this Agreement to be delivered by FAJ to MMI or
Acquisition at or prior to the Closing; and
(h) such other instruments reasonably requested by MMI or Acquisition
as may be necessary or appropriate to confirm or carry out the provisions of
this Agreement.
8.3 MMI AND ACQUISITION CLOSING DELIVERIES. At the Closing, MMI or
Acquisition shall deliver, or cause to be delivered, to FAJ the following:
(a) the certificate, dated the Closing Date and validly executed
required by SECTION 9.2(A);
(b) the legal opinion of counsel required by SECTION 9.2(G);
(c) the Certificate of Incorporation or similar organizational
documents of each of MMI and the MMI Subsidiaries, each certified as of a recent
date by a duly authorized official of the jurisdiction of its incorporation or
organization, and the bylaws or similar organizational documents of each of MMI
and the MMI Subsidiaries, each certified as of a recent date by the Secretary or
similar officer of the entity;
30
(d) certificates of a duly authorized official of the jurisdiction of
its organization, dated as of a recent date, as to the good standing of each of
MMI and the MMI Subsidiaries in the jurisdiction of its organization or
incorporation;
(e) if not previously delivered to FAJ, all other certificates,
documents, instruments and writings required pursuant to this Agreement to be
delivered by or on behalf of Acquisition or MMI at or before the Closing;
(f) the Certificate of Merger executed by MMI and Acquisition; and
(g) such other instruments reasonably requested by FAJ as may be
necessary or appropriate to confirm or carry out the provisions of this
Agreement.
ARTICLE 9
CONDITIONS TO CLOSING
9.1 CONDITIONS TO MMI AND ACQUISITION CLOSING. The obligations of MMI and
Acquisition hereunder are subject to the satisfaction or waiver by MMI or
Acquisition of each of the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES; COVENANTS. The representations and
warranties of FAJ contained herein that are not qualified as to materiality
shall have been true and correct in all material respects on and as of the date
hereof, and shall be true and correct in all material respects on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of the Closing Date, and the representations and
warranties already qualified with respect to materiality shall have been true
and correct in all respects at each such date without regard to the materiality
qualification contained in this Section. The covenants and agreements of FAJ to
be performed on or before the Closing Date in accordance with this Agreement
shall have been duly performed in all material respects. FAJ shall have
delivered to MMI and Acquisition at the Closing a certificate of an appropriate
officer in form and substance satisfactory to MMI and Acquisition, dated the
Closing Date to such effect.
(b) NO MATERIAL ADVERSE CHANGE. Since December 31, 2000, there shall
not have been any change, circumstance or event with respect to any of FAJ or
the FAJ Subsidiaries that has had or could reasonably be expected to have a
Material Adverse Effect.
(c) NO LIMITATION. There is (i) no Action, suit, investigation or
proceeding instituted (x) by any Government Authority or any Person that seeks
to prevent the consummation of the transactions contemplated hereby or (y) that
is reasonably likely to result in material damages to FAJ or any of the FAJ
Subsidiaries in connection with the transactions contemplated hereby, which, in
either case, continues to be outstanding and (ii) no injunction or restraining
order (temporary or permanent) in effect to stay, prevent or delay the
consummation of the transactions provided for herein, which continues to be
outstanding.
(d) SHAREHOLDER APPROVAL. The shareholders of FAJ shall have approved
this Agreement and the transactions contemplated hereby, including the Merger,
by a vote of a majority of the shares of FAJ Common Stock present, in person or
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by proxy, at a special meeting of FAJ shareholders, including the Merger. FAJ
shall have delivered to MMI and Acquisition at the Closing a certificate of the
Secretary of FAJ in form and substance satisfactory to MMI dated the Closing
Date to such effect.
(e) PROCEEDINGS. All corporate and other proceedings to be taken by FAJ
connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory to MMI and
Acquisition, and MMI and Acquisition shall have received all such counterpart
originals or other copies of such documents as it has reasonably requested.
(f) OPINION OF COUNSEL. MMI and Acquisition shall have received a legal
opinion from Xxxxxxxxx & Xxxxxxx, P.A., counsel to FAJ, dated the Closing Date
concerning, FAJ's existence, authority, capitalization, SEC filings (excluding
financial and statistical data contained therein), compliance with law, and such
other legal matters within the scope of the Report of the State Bar of Arizona,
Corporate, Banking and Business Law Section Subcommittee on Rendering Legal
Opinions in Business Transactions, dated February 1, 1989, as MMI and
Acquisition may request, in form and substance reasonably satisfactory to MMI
and Acquisition.
9.2 CONDITIONS TO FAJ CLOSING. The obligations of FAJ hereunder are subject
to the satisfaction or waiver by FAJ of each of the following conditions
precedent:
(a) REPRESENTATIONS AND WARRANTIES, COVENANTS. The representations and
warranties of MMI and Acquisition contained herein that are not qualified as to
materiality shall have been true and correct in all material respects on and as
of the date hereof, and shall be true and correct in all material respects on
and as of the Closing Date with the same effect as though such representations
and warranties had been made on and as of the Closing Date, and the
representations and warranties already qualified with respect to materiality
shall have been true and correct in all respects at each such date without
regard to the materiality qualification contained in this Section. The covenants
and agreements of MMI and Acquisition to be performed on or before the Closing
Date in accordance with this Agreement shall have been duly performed in all
material respects. MMI and Acquisition shall have delivered to FAJ at the
Closing a certificate of an appropriate officer in form and substance reasonably
satisfactory to FAJ dated the Closing Date to such effect.
(b) NO MATERIAL ADVERSE CHANGE. Since the date hereof, there shall not
have been any change, circumstance or event with respect to any of MMI or the
MMI Subsidiaries that has had or could reasonably be expected to have a Material
Adverse Effect.
(c) NO LIMITATION. There is (i) no Action, suit, investigation or
proceeding instituted (x) by any Government Authority or any Person that seeks
to prevent the consummation of the transactions contemplated hereby or (y) that
is reasonably likely to result in material damages to MMI, or any of the MMI
Subsidiaries in connection with the transactions contemplated hereby, which, in
either case, continues to be outstanding and (ii) no injunction or restraining
order (temporary or permanent) in effect to stay, prevent or delay the
consummation of the transactions provided for herein, which continues to be
outstanding.
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(d) SHAREHOLDER APPROVAL. The shareholders of FAJ shall have approved
this Agreement and the transactions contemplated hereby, including the Merger,
by the requisite vote.
(e) PROCEEDINGS. All corporate and other proceedings to be taken by MMI
in connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory in form and
substance to FAJ and FAJ shall have received all such counterpart originals or
certified or other copies of such documents as they may reasonably request.
(f) FAIRNESS OPINION. The Board of Directors of FAJ shall have received
a fairness opinion from XxxXxxxx Valuation Advisors, Inc. satisfactory to the
Board of Directors of FAJ and to a committee of the Board comprised entirely of
independent third-party directors, in their reasonable discretion.
(g) OPINION OF COUNSEL. FAJ shall have received a legal opinion from
counsel to Acquisition and MMI, dated the Closing Date, concerning the existence
and authority of Acquisition and the existence, authority, capitalization, and
compliance with law of each of MMI and the MMI Subsidiaries, and such other
legal matters as FAJ may reasonably request, in form and substance reasonably
satisfactory to FAJ.
ARTICLE 10
WAIVER, MODIFICATION, ABANDONMENT
10.1 WAIVERS. The failure of MMI to comply with any of its obligations,
agreements or conditions as set forth herein may be waived expressly in writing
by FAJ, by action of its Board of Directors without the requirement for a vote
of shareholders. The failure of FAJ to comply with any of its obligations,
agreements or conditions as set forth herein may be waived expressly in writing
by MMI, by action of its Board of Directors, without the vote of shareholders.
10.2 MODIFICATION. This Agreement may be modified at any time in any
respect by the mutual consent of all of the parties, notwithstanding prior
approval by the shareholders. Any such modification may be approved for any
party by its Board of Directors, without further shareholder approval, except
that the Merger Consideration may not be decreased without the consent of the
FAJ shareholders and may not be increased without the consent of the MMI
shareholders given, in each case, by the same vote as is required under
applicable state law for approval of this Agreement.
10.3 ABANDONMENT. The Merger may be abandoned on or before the Effective
Date notwithstanding adoption of this Agreement by the shareholders of the
parties hereto:
(a) By the mutual agreement of the Boards of Directors of FAJ, MMI and
Acqusition;
33
(b) By the Board of Directors of FAJ, if any of the conditions provided
in SECTION 9.2 shall not have been satisfied, complied with or performed in any
material respect, and FAJ shall not have waived such failure of satisfaction,
noncompliance or nonperformance;
(c) By the Board of Directors of MMI, if any of the conditions provided
in SECTION 9.1 shall not have been satisfied, complied with or performed in any
material respect, and MMI shall not have waived such failure of satisfaction,
noncompliance or nonperformance; or
(d) At the option of FAJ and MMI, if there shall have been instituted
and be pending or threatened any legal proceeding before any court or
governmental agency seeking to restrain or prohibit or to obtain damages in
respect of this Agreement or the consummation of the Merger contemplated by this
Agreement, or if any order restraining or prohibiting the Merger shall have been
issued by any court or governmental agency and shall be in effect.
In the event of any termination pursuant to this Section (other than pursuant to
subparagraph (a) hereof) written notice setting forth the reasons thereof shall
forthwith be given by MMI, if it is the terminating party, to FAJ, or by FAJ, if
it is the terminating party, to MMI.
ARTICLE 11
SURVIVAL; INDEMNIFICATION
11.1 SURVIVAL. Subject to the limitations set forth in this Article and
notwithstanding any investigation conducted at any time by or on behalf of any
party, all representations and warranties, and, except as otherwise provided in
this Agreement, covenants and agreements of the parties (as applicable) in this
Agreement and in any Schedule hereto, or any certificate, document or other
instrument delivered in connection herewith ("ADDITIONAL DOCUMENTS"), shall
survive the execution, delivery and performance of this Agreement and shall be
deemed to have been made again by the parties (as applicable) at and as of the
Closing. Such representations and warranties, and the rights of any party to
seek indemnification with respect thereto pursuant to SECTION 11.2, shall
expire, except with respect to claims asserted prior to and pending at the time
of such expiration, on the first anniversary of the Effective Date. All
statements contained in any Exhibit, Schedule or Additional Document shall be
deemed representations and warranties of the parties (as applicable) set forth
in this Agreement within the meaning of this Article. Without duplication of
Loss and Expense (as hereinafter defined), FAJ, MMI or Acquisition, as the case
may be, shall be deemed to have suffered Loss and Expense arising out of or
resulting from the matters referred to herein if the same shall be suffered by
any parent, Subsidiary or Affiliate of FAJ, MMI or Acquisition; PROVIDED,
HOWEVER, that MMI shall not be deemed to have suffered any Loss and Expense
arising out of or resulting from any Loss and Expense suffered by FAJ.
11.2 INDEMNIFICATION.
(a) Subject to SECTION 11.4, from and after the Effective Date, FAJ
shall indemnify, defend and hold harmless MMI (and its officers, directors or
members) and their successors and assigns, for, from and against any and all
damages, claims, losses, expenses, costs, obligations and Liabilities, including
Liabilities for all reasonable attorneys' fees and expenses (collectively, "LOSS
34
AND EXPENSE"), suffered, directly or indirectly, by MMI by reason of, or arising
out of, (i) any breach of any representation or warranty made by FAJ in this
Agreement, or (ii) any failure by FAJ to perform or fulfill any of its covenants
or agreements set forth herein.
(b) Subject to SECTION 11.4, from and after the Effective Date, MMI
shall indemnify, defend and hold harmless FAJ (and its officers and directors),
its successors and assigns, for, from and against any and all Loss and Expense,
suffered, directly or indirectly, by FAJ by reason of, or arising out of, (i)
any breach of any representation or warranty made by Acquisition or MMI in this
Agreement and, (ii) any failure by Acquisition or MMI to perform or fulfill any
of its covenants or agreements set forth herein.
11.3 THIRD-PARTY CLAIMS. If a claim by a third party is made against a
party and if such party intends to seek indemnity with respect thereto under
this Article, such party (the "INDEMNIFIED PARTY") shall promptly notify the
party required to provide such indemnity (the "INDEMNIFYING PARTY") in writing
of such claim setting forth such claim in reasonable detail and shall otherwise
make available to the indemnifying party all relevant information which is
material to the claim and which is in the possession of the Indemnified Party.
The Indemnifying Party shall have 30 days after receipt of such notice (or such
shorter time period as required so that the interests of the Indemnified Party
would not be materially prejudiced as a result of the failure to have received
such notice) to undertake, through counsel of its own choosing and at its own
expense, the settlement or defense thereof, and the Indemnified Party shall
cooperate with it in connection therewith. The Indemnified Party may participate
in such settlement or defense through counsel chosen by such Indemnified Party,
so long as the fees and expenses of such counsel are borne by that Indemnified
Party. The Indemnified Party shall not pay or settle any claim which the
Indemnifying Party is diligently contesting, as herein required, without the
prior written consent of the Indemnifying Party. Notwithstanding the foregoing,
the Indemnified Party shall have the right to pay or settle any such claim
without such consent, but in such event it shall waive any right to indemnity
therefor by the Indemnifying Party. However, if the Indemnifying Party does not
notify the Indemnified Party within 30 days after the receipt of the Indemnified
Party's notice of a claim for indemnity hereunder that it elects to undertake
the defense thereof or if the Indemnifying Party fails to undertake or pursue
the defense, the Indemnified Party shall have the right to contest or compromise
and may settle or pay the claim and no such contesting, compromise, settlement
or payment will constitute a waiver of any right to indemnity therefor pursuant
to this Agreement.
11.4 LIMITATIONS ON INDEMNIFICATION, SURVIVAL. Rights to indemnification
under this Agreement are subject to the following limitations:
(a) No party shall be entitled to indemnification hereunder with
respect to any Loss and Expense (or if more than one claim for indemnification
is asserted, with respect to all such Loss and Expense), until the cumulative
aggregate amount of all Loss and Expense incurred by such party with respect to
such claim or claims exceeds $250,000 (the "INDEMNITY THRESHOLD"), in which case
the Indemnifying Party shall then be liable for the full amount of all such Loss
and Expense, without regard to the Indemnity Threshold.
35
(b) The obligation of indemnity provided for in this Agreement with
respect to the representations and warranties set forth herein has no expiration
or termination date.
(c) Except with respect to third-party claims being defended in good
faith or claims for indemnification with respect to which there exists a good
faith dispute, the Indemnifying Party shall satisfy its obligations hereunder
within 30 days of receipt of a notice of claim under this ARTICLE 11.
(d) The amount of any Loss and Expense otherwise recoverable under this
Article by an Indemnified Party shall be reduced by any amounts recovered by the
Indemnified Party under insurance policies (net of any costs incurred in
connection with the collection thereof), it being understood that none of the
parties shall have any obligation to, but each agrees to use commercially
reasonable efforts to, timely pursue all reasonable remedies against applicable
insurers, and provided it does not invalidate any coverage, each party hereby
waives all rights of subrogation against the other parties under all applicable
insurance policies.
(e) The indemnification provisions of this Article shall be the sole
monetary remedy available to each of the parties. Equitable remedies shall
remain available to each of the parties, provided that no unjust enrichment
results from the enforcement of such remedies.
ARTICLE 12
MISCELLANEOUS
12.1 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each
party hereto and delivered to the other party. Copies of executed counterparts
transmitted by telecopy, telefax or other electronic transmission service shall
be considered original executed counterparts for purposes of this Section,
provided receipt of copies of such counterparts is confirmed.
12.2 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE THE LAWS OF THE STATE OF ARIZONA WITHOUT REFERENCE TO THE CHOICE OF
LAW PRINCIPLES THEREOF.
12.3 JURISDICTION. Each party to this Agreement hereby irrevocably agrees
that any legal action or proceeding arising out of or relating to this Agreement
or any agreements or transactions contemplated hereby may be brought only in a
United States District Court sitting in Phoenix, Arizona, or in the United
States District that encompasses Phoenix, Arizona, and hereby expressly submits
to the personal jurisdiction and venue of any such court of proper jurisdiction
for the purposes thereof and expressly waives any claim of improper venue and
any claim that such court is an inconvenient forum. TO THE EXTENT NOT PROHIBITED
BY APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH PARTY HEREBY WAIVES, AND
COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR
OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE,
CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS
AGREEMENT OR THE SUBJECT MATTER HEREOF, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING OR WHETHER IN CONTRACT OR TORT OR OTHERWISE.
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12.4 ENTIRE AGREEMENT. This Agreement (including the agreements
incorporated or referred to herein) and the Schedules and Exhibits hereto
contain the entire agreement between the parties with respect to the subject
matter hereof and supersede prior agreements, understandings, representations or
warranties between the parties. This Agreement is not intended to confer upon
any Person not a party hereto (and their successors and assigns) any rights or
remedies hereunder.
12.5 NOTICES. All notices and other communications hereunder shall be
sufficiently given for all purposes hereunder if in writing and delivered
personally, sent by documented overnight delivery service or, to the extent
receipt is confirmed, telefax or other electronic transmission service to the
appropriate address or number as set forth below, unless and until either of
such parties notifies the other in accordance with this Section of a change of
address or change of telecopy number:
If to MMI: Merrymeeting, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxxx, Xxxx 00000
Attn: President
Fax No.:_______________
With a copy to: Xxxxx & Berne LLP
0000 Xxxx 0xx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Fax No.: (000) 000-0000
If to Acquisition: MM Merger Corporation
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxxx, Xxxx 00000
Attn: President
Fax No.:_______________
With a copy to: Xxxxx & Berne LLP
0000 Xxxx 0xx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Fax No.: (000) 000-0000
If to FAJ: Frontier Adjusters of America, Inc.
00 Xxxx Xxxxxxxx Xxx
Xxxxxxx, Xxxxxxx 00000
Attention: President
Fax Number: (000) 000-0000
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With a copy to: Xxxxxxxxx & Xxxxxxx, P.A.
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Fax Number: (000) 000-0000
12.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns, but neither this Agreement nor any of the rights, interests
or obligations hereunder may be assigned by either of the parties hereto without
the prior written consent of the other party.
12.7 AMENDMENTS AND WAIVERS. This Agreement may not be modified or amended
except by an instrument in writing signed by the party against whom enforcement
of any such modification or amendment is sought. Either party hereto may, only
by an instrument in writing, waive compliance by the other party hereto with any
term or provision hereof on the part of such other party hereto to be performed
or complied with. The waiver by any party hereto of a breach of any term or
provision hereof shall not be construed as a waiver of any subsequent breach
thereof.
12.8 INTERPRETATION; ABSENCE OF PRESUMPTION.
(a) For the purposes hereof, (i) words in the singular shall be held to
include the plural and vice versa and words of one gender shall be held to
include the other gender as the context requires, (ii) the terms "hereof,"
"herein," and "herewith" and words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement as a whole (including all of the
Schedules and Exhibits hereto) and not to any particular provision of this
Agreement, and Article, Section, paragraph, Exhibit and Schedule references are
to the Articles, Sections, paragraphs, Exhibits and Schedules to this Agreement
unless otherwise specified, (iii) the word "including" and words of similar
import when used in this Agreement shall mean "including, without limitation,"
unless otherwise specified, and (iv) the word "or" shall not be exclusive, but
shall be interpreted as "and/or."
(b) This Agreement will be construed without regard to any presumption
or rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted.
12.9 SEVERABILITY. If any provision of this Agreement is held to be
unenforceable for any reason, it shall be adjusted by a court of competent
jurisdiction rather than voided, if possible, in order to achieve the intent of
the parties to this Agreement to the fullest extent possible. In any event, all
other provisions of this Agreement shall be deemed valid and enforceable to the
fullest extent permitted.
12.10 FURTHER ASSURANCES. The parties agree that, from time to time,
whether before, at or after the Closing Date, each of them will execute and
deliver such further instruments and take such other actions as may be necessary
to carry out the purposes and intents hereof.
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12.11 SPECIFIC PERFORMANCE. The parties each acknowledge that, in view of
the uniqueness of the Merger, the parties hereto would not have an adequate
remedy at law for money damages if this Agreement were not performed in
accordance with its terms, and therefore agree that the parties hereto shall be
entitled to specific enforcement of the terms hereof in addition to any other
remedy to which the parties hereto be entitled at law or in equity.
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties hereto as of the date first above written.
FRONTIER ADJUSTERS OF AMERICA, INC.,
an Arizona corporation
By: /s/ XXXXXXX X. XXXXXXXX
--------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: CFO / Treasurer
MERRYMEETING, INC., a Delaware corporation
By: /s/ XXXX X. XXXXXX
--------------------------------------------
Name: Xxxx X. Xxxxxx
Title: President
MM MERGER CORPORATION, a Delaware corporation
By: /s/ XXXX X. XXXXXX
--------------------------------------------
Name: Xxxx X. Xxxxxx
Title: President
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Exhibit 1 - Certificate of Merger
Exhibit 2 - Letter of Transmittal
Exhibit 3 - Permitted Investments
SCHEDULES
Schedule A Directors and Executive Officers of FAJ
Schedule 4.3(a) FAJ Outstanding Options
Schedule 4.3(c) FAJ Investments
Schedule 4.7 FAJ Actions and Violations
Schedule 4.8 FAJ Changes since December 31, 2000
Schedule 4.9 FAJ Tax Issues
Schedule 4.10(c) FAJ Joint Venture or Partnership Agreements
Schedule 4.10(d) FAJ Material Agreements
Schedule 4.12 FAJ Properties and Permitted Liens
Schedule 4.14(a) FAJ Employment Agreements
Schedule 4.14(b) FAJ Plans
Schedule 4.15 FAJ Labor Matters
Schedule 4.16 FAJ Proprietary Rights
Schedule 4.17 FAJ Insurance
Schedule 5.4(a) MMI Outstanding Options
Schedule 5.4(c) MMI Investments
Schedule 5.5 MMI Financial Statements
Schedule 5.5(d) MMI Intercompany Transactions
Schedule 5.6 MMI Actions and Violations
Schedule 5.7 MMI Changes
Schedule 5.8 MMI Tax Issues
Schedule 5.9(c) MMI Joint Venture or Partnership Agreements
Schedule 5.9(d) MMI Material Agreements
Schedule 5.11 MMI Properties and Permitted Liens
Schedule 5.13(a) MMI Employment Agreements
Schedule 5.13(b) MMI Plans
Schedule 5.14 MMI Labor Matters
Schedule 5.15 MMI Proprietary Rights
Schedule 5.16 MMI Insurance
40
