EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
Dated as of February 13, 2002
by and
among
CAPITAL COMMUNICATIONS CDPQ INC.
DCPI INVESTCO, INC.
DCPI MERGERCO, INC.
and
xxxx xxxxx productions, inc.
4
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS....................................................................................2
ARTICLE II THE MERGER...................................................................................10
Section 2.1 The Merger..........................................................................10
Section 2.2 Closing.............................................................................10
Section 2.3 Effective Time......................................................................10
Section 2.4 Effects of the Merger...............................................................10
Section 2.5 Corporate Governance Documents......................................................11
Section 2.6 Directors...........................................................................11
Section 2.7 Officers............................................................................11
Section 2.8 Further Actions.....................................................................11
Section 2.9 Effect on Capital Stock of the Company and Merger Sub...............................11
Section 2.10 Exchange of Certificates............................................................12
Section 2.11 Stock Option Plans..................................................................14
Section 2.12 Certain Adjustments.................................................................14
Section 2.13 Withholding.........................................................................15
Section 2.14 Lost, Stolen or Destroyed Certificates..............................................15
Section 2.15 Stock Transfer Books................................................................15
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY...............................................15
Section 3.1 Organization, Standing and Corporate Power..........................................16
Section 3.2 Subsidiaries........................................................................16
Section 3.3 Capital Structure...................................................................16
Section 3.4 Authority; Noncontravention.........................................................18
Section 3.5 SEC Documents; Financial Statements; Cash Balance...................................19
Section 3.6 Environmental.......................................................................20
Section 3.7 Absence of Certain Changes or Events................................................21
Section 3.8 Litigation..........................................................................22
Section 3.9 [Omitted]...........................................................................22
Section 3.10 [Omitted]...........................................................................22
Section 3.11 Employee Benefits; ERISA............................................................22
Section 3.12 Taxes...............................................................................26
Section 3.13 [Omitted]...........................................................................28
Section 3.14 Permits; Compliance with Laws.......................................................28
Section 3.15 State Takeover Statutes.............................................................29
Section 3.16 Broker's or Finder's Fee............................................................29
Section 3.17 Company Intellectual Property and Library Properties................................29
Section 3.18 Real Property.......................................................................33
Section 3.19 Insurance...........................................................................34
Section 3.20 Contracts...........................................................................34
Section 3.21 Board Consent and Recommendation....................................................35
Section 3.22 [Omitted]...........................................................................35
Section 3.23 Related Party Transactions..........................................................35
Section 3.24 Vote Required.......................................................................35
Section 3.25 Employment Matters..................................................................36
Section 3.26 [Omitted]...........................................................................37
Section 3.27 Opinion of Financial Advisor........................................................37
Section 3.28 [Omitted]...........................................................................37
Section 3.29 NASDAQ Qualification................................................................37
Section 3.30 Memorabilia.........................................................................37
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT, MERGER SUB AND CAPITAL COMMUNICATIONS.............38
Section 4.1 Organization, Standing and Corporate Power..........................................38
Section 4.2 Authority; Noncontravention.........................................................38
Section 4.3 Financing...........................................................................39
Section 4.4 Information Supplied................................................................39
Section 4.5 Balance Sheet.......................................................................40
Section 4.6 Ownership of Shares.................................................................40
Section 4.7 Brokers or Finders..................................................................40
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS.....................................................40
Section 5.1 Conduct of Business.................................................................40
Section 5.2 Advice of Changes...................................................................43
Section 5.3 No Solicitation of Offers; Notice of Proposals from Others..........................44
Section 5.4 Third Party Standstill Agreements...................................................46
Section 5.5 Certain Litigation..................................................................46
Section 5.6 Assignment of Company Intellectual Property.........................................46
Section 5.7 Trademark License...................................................................46
ARTICLE VI ADDITIONAL AGREEMENTS........................................................................47
Section 6.1 Stockholders Meeting; Proxy Statement; Provided Information.........................47
Section 6.2 Access to Information; Confidentiality..............................................49
Section 6.3 Reasonable Efforts; Notification....................................................50
Section 6.4 Indemnification and Insurance.......................................................51
Section 6.5 Expenses............................................................................52
Section 6.6 Public Announcement.................................................................52
Section 6.7 Transfer Taxes......................................................................52
ARTICLE VII CONDITIONS PRECEDENT........................................................................53
Section 7.1 Conditions to Obligations of Parent and Merger Sub..................................53
Section 7.2 Conditions to Obligations of the Company............................................54
Section 7.3 Conditions to Each Party's Obligation To Effect the Merger Prior to the Closing Date54
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER..........................................................55
Section 8.1 Termination.........................................................................55
Section 8.2 Effect of Termination...............................................................56
Section 8.3 Amendment...........................................................................57
Section 8.4 Extension; Waiver...................................................................57
ii
ARTICLE IX GENERAL PROVISIONS...........................................................................57
Section 9.1 Nonsurvival of Representations......................................................57
Section 9.2 Notices.............................................................................57
Section 9.3 Interpretation......................................................................60
Section 9.4 Counterparts........................................................................60
Section 9.5 Entire Agreement; No Third-Party Beneficiaries......................................60
Section 9.6 Governing Law.......................................................................60
Section 9.7 Assignment..........................................................................61
Section 9.8 Enforcement.........................................................................61
Section 9.9 Severability........................................................................61
Section 9.10 Independent Counsel.................................................................61
iii
COMPANY DISCLOSURE SCHEDULES
Section 3.2 Subsidiaries
Section 3.3(a) Outstanding Company Stock
Section 3.3(b) Outstanding Company Securities
Section 3.3(c) Voting Trusts or Other Agreements
Section 3.3(e) Capital Stock Liens
Section 3.4(a) Licenses
Section 3.4(b) Consents
Section 3.5(d) December Balance Sheet
Section 3.6(b) Pending Claims
Section 3.6(c) Activities or Events
Section 3.6(d) Materials of Environmental Concern
Section 3.7 Certain Changes or Events
Section 3.8 Litigation and Claims
Section 3.11(a) Employee Benefits
Section 3.11(c) Title IV of ERISA
Section 3.11(g) Qualified ERISA Plans
Section 3.11(h) Post-Employment Benefits
Section 3.11(k) Excess Parachute Payments
Section 3.11(m) Leased Employees
Section 3.12(f) Power of Attorney
Section 3.14(a) Governmental Approvals
Section 3.17(b)(i) Applications and Registrations
- Pending Trademark Applications
- U.S. Trademark Registrations
- Japanese Trademark Registrations
- Registered Domain Names
- Copyrights
Section 3.17(b)(ii) Applications and Registration - Pending
Trademark Applications to be Assigned
Section 3.17(c) Library Properties
Section 3.17(e) Material Intellectual Property
Section 3.17(g) Intellectual Property Litigation
Section 3.17(h) Settlements and Judgments
Section 3.17(j) Infringement
Section 3.18(a) Owned Properties
Section 3.18(b) Leased Properties
Section 3.23 Related Party Transactions
Section 3.25 Employment Matters
Section 3.30 Material Memorabilia
Section 5.1 Conduct of Business
Section 7.1(f) Officers' Certificate
iv
Section 7.1(f) Officers' Certificate
PARENT, MERGER SUB AND CAPITAL COMMUNICATIONS
DISCLOSURE SCHEDULES
Section 4.7 Stockholders Agreement
v
AGREEMENT AND PLAN OF MERGER dated as of February 13, 2002 (this
"Agreement"), by and among CAPITAL COMMUNICATIONS CDPQ INC., a Quebec
corporation ("Capital Communications") DCPI INVESTCO, Inc., a Delaware
corporation ("Parent"), DCPI Mergerco, Inc., a Delaware corporation ("Merger
Sub"), and xxxx xxxxx productions, inc., Delaware corporation ( the "Company").
W I T N E S S E T H
WHEREAS, a Special Committee of the Board of Directors of the Company
(the "Special Committee") has (i) determined that the merger of Merger Sub with
and into the Company (the "Merger"), upon the terms and provisions of and
subject to the conditions set forth in this Agreement is advisable and in the
best interests of the Company's stockholders, and (ii) approved the Merger and
recommended approval of the Merger by the Board of Directors of the Company;
WHEREAS, the Board of Directors of the Company, subsequent to the
recommendation of the Special Committee, has (i) determined that the Merger is
advisable and in the best interests of the Company's stockholders, and (ii)
approved the Merger;
WHEREAS, the board of directors of each of Merger Sub and Parent has
determined that the Merger is advisable and in the best interests of its
stockholders;
WHEREAS, by resolutions duly adopted, the respective boards of
directors of the Company, Capital Communications, Merger Sub and Parent have
approved this Agreement and the transactions and other agreements contemplated
hereby; and
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, as a condition and an inducement to the willingness of Capital
Communications, Parent and Merger Sub to enter into this Agreement, Parent is
entering into a Voting Agreement (the "Voting Agreement") with Xxxxxxx X. Xxxxx,
Xxxxx X. Xxxxx and Olive Enterprises, Inc. (collectively, the "Principal
Stockholders") pursuant to which, on the terms and subject to the conditions
thereof, the Principal Stockholders have agreed to vote (i) 818,605 shares of
Class A common stock, par value $0.01 per share of the Company (the "Class A
Common Stock"), and (ii) 6,309,142 shares of common stock, par value of $0.01
per share of the Company (the "Common Stock" and together with the Class A
Common Stock, the "Capital Stock") owned by the Principal Stockholders of record
and beneficially, in favor of the adoption of this Agreement and approval of the
transactions contemplated hereby to be performed by the Company, upon the terms
and conditions set forth in the Voting Agreement; and
WHEREAS, the parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained in this Agreement and for other
good
1
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE I
DEFINITIONS
Capitalized and certain other terms used in this Agreement and not
otherwise defined have the meanings set forth below. Unless the context
otherwise requires, such terms shall include the singular and plural and the
conjunctive and disjunctive forms of the terms defined.
"Acquisition Proposal" has the meaning set forth in Section 5.3(a).
"Affiliate" of any Person means another Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first Person.
"Agreement" has the meaning set forth in the recitals hereof.
"Audit" means any audit, assessment of Taxes, other examination by any
Tax Authority, administrative or court proceeding or appeal of such proceeding
relating to Taxes.
"Balance Sheet Date" has the meaning set forth in Section 3.7.
"Board" means the Board of Directors of the Company.
"Business Day" means any day other than Saturday, Sunday and any day
upon which banking institutions in the City of New York are required or
authorized by law or other governmental action to close.
"Capital Communications" has the meaning set forth in the recitals
hereof.
"Capital Stock" has the meaning set forth in the recitals hereof.
"Certificate of Merger" has the meaning set forth in Section 2.1.
"Class A Common Stock" has the meaning set forth in the recitals
hereof.
"Closing" has the meaning set forth in Section 2.2.
"Closing Date" has the meaning set forth in Section 2.2.
"Code" has the meaning set forth in Section 3.11(a).
"Common Stock" has the meaning set forth in the recitals hereof.
"Company" has the meaning set forth in the recitals hereof.
2
"Company Certificates" has the meaning set forth in Section 2.10(b).
"Company Intellectual Property" means the Intellectual Property Rights
owned by, or used or held for use by, the Company or any Subsidiary in the
course of its business, excluding, however, (i) any right, title and interest in
and to any xxxx comprised solely of the name "Xxxx Xxxxx"; (ii) any right, title
and interest in and to any xxxx containing the name "Xxxx Xxxxx" except for
those Trademarks set forth on Section 3.17(b)(i) of the Disclosure Schedules;
(iii) any right to use the xxxx or name "Xxxx Xxxxx" as part of a corporate or
trade name except for the non-exclusive right to use the xxxx or name "Xxxx
Xxxxx" as part of the corporate name of the Company and its Subsidiaries; (iv)
any right to use the likeness of Xxxxxxx X. Xxxxx; and (v) any other rights to
the xxxx and name "Xxxx Xxxxx" not specifically included or licensed as
contemplated herein ((i) through (v) collectively, the "Excluded Intellectual
Property"). The foregoing definition of Company Intellectual Property shall in
no way limit or preclude the Company's or any of its Subsidiaries': (i) rights
in and to the Excluded Intellectual Property pursuant to any other agreement,
including, but not limited to, the Employment Agreement, or (ii) rights to use
any Excluded Intellectual Property which may be embodied in any Library
Property.
"Company SEC Reports" has the meaning set forth in Section 3.5(a).
"Company Securities" has the meaning set forth in Section 3.3(b).
"Company Stock Option" has the meaning set forth in Section 2.11.
"Company Stock Option Plans" has the meaning set forth in Section
2.11.
"Confidential Information" has the meaning set forth in Section 6.2.
"Contracts" has the meaning set forth in Section 3.20(a).
"control" when used with respect to any specified Person, means the
power to direct or cause the direction of the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" shall have meanings correlative to the foregoing.
"Copyright" has the meaning set forth in the definition of
"Intellectual Property Rights" in this section.
"December Balance Sheet" has the meaning set forth in Section 3.5(d).
"DGCL" means the Delaware General Corporation Law, as amended from
time to time.
"Disclosure Schedules" has the meaning set forth in Article III.
"Dissenting Shares" has the meaning set forth in Section 2.10(f).
3
"Effective Time" has the meaning set forth in Section 2.3.
"ERISA" means the United States Employee Retirement Income Security
Act of 1974, as amended.
"ERISA Affiliate" has the meaning set forth in Section 3.11(a).
"ERISA Plans" has the meaning set forth in Section 3.11(a).
"Employment Agreement" means the Employment Agreement dated as of
February 13, 2002 by and among the Company, Parent and Xxxxxxx X. Xxxxx.
"Enterprises" has the meaning set forth in Section 3.17(b).
"Environmental Claim" means any claim, action, cause of action,
investigation or written notice by any Person or entity alleging potential
liability (including, without limitation, potential liability for investigatory
costs, cleanup costs, governmental response costs, natural resources damages,
property damages, personal injuries, or penalties) arising out of, based on or
resulting from circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law.
"Environmental Laws" means all federal, state, local and foreign laws
and regulations relating to pollution or protection of public health or the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata, and natural resources), including,
without limitation, laws and regulations relating to emissions, discharges,
releases or threatened releases of Materials of Environmental Concern, or
otherwise relating to the treatment, storage, disposal, transport or handling of
Materials of Environmental Concern.
"Exchange Act" means the United States Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
"Exchange Funds" has the meaning set forth in Section 2.10(a).
"Excluded Intellectual Property" has the meaning set forth in the
definition of Company Intellectual Property in this section.
"Exploitation Rights" means any and all rights to publish, perform,
distribute, reproduce, adapt, translate and create derivative works of,
including, without limitation, any remake, abridgement, sequel, prequel, series,
compilation, and any ancillary rights of every kind, including, but not limited
to, merchandising and marketing, in all media including, without limitation,
stage, theatrical, non-theatrical, home video, television, internet,
interactive, or any other media now known.
"Financial Statements" has the meaning set forth in Section 3.5(a).
"GAAP" means generally accepted accounting principles of the United
States of America, as in effect from time to time.
4
"Governmental Entity" means any Federal, state or local government or
any court, administrative or regulatory agency or commission or other
governmental authority or agency, domestic or foreign.
"HSR Act" means the United States Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"Improvements" has the meaning set forth in Section 3.18(f).
"Indebtedness" means, with respect to any Person, without duplication,
(a) all obligations of such Person for borrowed money, or with respect to
deposits or advances of any kind, excluding advances or deposits received in
connection with the exploitation of Intellectual Property Rights, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations of such Person upon which interest charges are
customarily paid (other than trade payables incurred in the ordinary course of
business), (d) all obligations of such Person under conditional sale or other
title retention agreements relating to property purchased by such Person, (e)
all obligations of such Person issued or assumed as the deferred purchase price
of property or services (excluding obligations of such Person to creditors for
raw materials, inventory, services and supplies incurred in the ordinary course
of such Person's business), (f) all lease obligations of such Person capitalized
on the books and records of such Person, (g) all obligations of others secured
by any Lien on property or assets owned or acquired by such Person, whether or
not the obligations secured thereby have been assumed, (h) all obligations of
such Person under interest rate, or currency or commodity hedging, swap or
similar derivative transactions (valued in accordance with GAAP), (i) all
letters of credit issued for the account of such Person (excluding letters of
credit issued for the benefit of suppliers or lessors to support accounts
payable to suppliers incurred in the ordinary course of business) and (j) all
guarantees and arrangements having the economic effect of a guarantee by such
Person of the Indebtedness of any other Person.
"Indemnified Parties" has the meaning set forth in Section 6.4(a).
"Intellectual Property Rights" means (i) all U.S., foreign and state
trademarks, service marks, trade names, Internet domain names, designs, slogans,
and general intangibles of like nature, together with all goodwill associated
therewith, and all rights to apply for or register, applications for and
registrations of any of the foregoing ("Trademarks"); (ii) U.S. and foreign
patents (including, without limitation, provisionals, utility patents,
divisionals, continuations, continuations-in-part, renewals, reissues,
reexaminations, extensions), including all rights to apply for, applications
for, and any issuances or registrations of the foregoing ("Patents"); (iii) U.S.
and foreign copyrights (whether registered or unregistered), including all
rights to apply for, applications to register, registrations of any of the
foregoing and all moral rights ("Copyrights"); (v) trade secrets ("Trade
Secrets"); and (vi) all rights to privacy and publicity in connection with the
use of the names, likenesses, signatures and biographical information of any
natural Person.
5
"knowledge" of any Person means with respect to the matter in question
the actual knowledge of the executive officers of such Person, or in the case of
the Company (including its Subsidiaries) the actual knowledge of Xxxxxxx X.
Xxxxx, Xxxxxxx X. Xx Xxxxx, Xxxxxxx X. Xxxxx or Xxxxxx Xxxxx.
"law" means any law, statute, ordinance, code, regulation or rule or
any judgment, decree, order, injunction, regulation or rule of any court or
governmental authority or body.
"Leases" has the meaning set forth in Section 3.18(b).
"Leased Real Property" has the meaning set forth in Section 3.18(b).
"Library Agreements" means any and all (i) contracts in respect of the
production of Library Properties, including, but not limited to, all contracts
with authors, writers, composers, musicians, directors, producers, performers,
artists, animators, voice talent or other parties, including, but not limited
to, contracts pertaining to the assignment or license of all Library Underlying
Rights in connection therewith and (ii) contracts granting or obtaining
Exploitation Rights in any Library Properties.
"Library Properties" means any and all audio, visual, and/or
audio-visual works of any kind or character which the Company or any of its
Subsidiaries own or in which the Company or any of its Subsidiaries has
Exploitation Rights including, without limitation, programs, films, and
recordings, whether animated, live action or both, whether produced for
theatrical, non-theatrical, television, home video, interactive, the internet,
tapes, CDs, or any other media now known.
"Library Underlying Rights" means all rights in all: (i) literary,
dramatic, or other works of authorship incorporated into the Library Properties
or upon which the Library Properties are based or derived, including, but not
limited to, screenplays, stories, adaptations, scripts, treatments, formats,
bibles, scenarios, characters, titles, and (ii) musical works contained in the
Library Properties including, but not limited to, music synchronization and
public performance rights.
"License Agreements" means all contracts granting or obtaining rights
to use, exploit, or practice any rights in any Company Intellectual Property.
"Lien" means any mortgage, pledge, assessment, security interest,
lease, sublease, lien, adverse claim, levy, charge, option, or other encumbrance
of any kind, whether imposed by agreement, understanding, law or equity, or any
conditional sale contract, title retention contract or other contract to give or
to refrain from giving any of the foregoing.
"material adverse change" or "material adverse effect" with respect to
any Person means any change or effect that is individually or in the aggregate
materially adverse to the business, prospects, properties, assets or financial
condition or results of operations of such Person and its Subsidiaries, taken as
a whole; provided that any such (i) changes in circumstances or conditions
affecting the entertainment industry in general
6
and not solely the Company, (ii) changes in circumstances or conditions
affecting the advertising industry in general and not solely the Company, (iii)
changes in circumstances or conditions affecting broadcast, cable and satellite
television ratings insofar as they relate to the Company's television shows, or
any reduction in ratings of the Company's television properties, (iv) reduced
revenues or operating margins in the Company's restaurant operations and/or
dispositions of restaurant units, (v) changes in the United States or global
economy or financial market conditions or (vi) changes in GAAP, shall not be
considered a material adverse change or a material adverse effect.
"Materials of Environmental Concern" means, pollutants, contaminants,
solid and hazardous waste as defined in the Resource Conservation and Recovery
Act ("RCRA"), hazardous substances, as defined in the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), petroleum and
petroleum products, asbestos or asbestos-containing materials, polychlorinated
biphenyls, lead or lead-based paints or materials, or radon.
"Merger" has the meaning set forth in the recitals hereof.
"Merger Consideration" has the meaning set forth in Section 2.9(a).
"Merger Sub" has the meaning set forth in the recitals hereof.
"Non-Competition Agreement" means the Non-Competition and
Non-Solicitation Agreement, dated as of February 13, 2002, by and between
Xxxxxxx X. Xxxxx and Parent.
"Outside Date" has the meaning set forth in Section 8.1(b).
"Owned Real Property" has the meaning set forth in Section 3.18(a).
"Parent" has the meaning set forth in the recitals hereof.
"Patents" has the meaning set forth in the definition of "Intellectual
Property Rights" as defined in this Section.
"Paying Agent" has the meaning set forth in Section 2.10(a).
"Permits" has the meaning set forth in Section 3.14(a).
"Permitted Lien" means (i) any Lien for Taxes not yet due or
delinquent or being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with GAAP, (ii) any
statutory Lien arising in the ordinary course of business by operation of law
with respect to a liability that is not yet due or delinquent, (iii) any minor
imperfection of title or similar Lien which individually or in the aggregate
with other such Liens does not materially impair the value of the property
subject to such Lien or the use of such property in the conduct of the business
of the Company and its Subsidiaries taken as a whole, (iv) any Lien securing an
obligation of Capital Communications, Parent or Merger Sub, (v) real estate
taxes, assessments and
7
water and sewer charges that are a Lien, but not yet due and payable, (vi) any
Liens that are to be discharged or satisfied by the Company or any of its
Subsidiaries at Closing, (vii) any Lien to which any Lease where the Company or
its Affiliate is a lessee is subject or subordinate, (viii) any covenant,
condition, restriction or easement which encumbers any of the Real Property
which individually or in the aggregate with other such Liens does not materially
impair the value of the property subject to such Lien or the use of such
property in the conduct of the business of the Company and its Subsidiaries
taken as a whole, and (ix) anything an accurate survey of any of the Real
Property would disclose, provided that neither the value nor the use of such
Real Property is materially and adversely affected.
"Person" means any natural person, corporation, general partnership,
limited partnership, limited liability company, limited liability partnership,
proprietorship, trust, union, association, enterprise, authority or other form
of business organization.
"Physical Media" means all physical embodiments of all audio, visual,
and/or audio-visual works of any kind or character which the Company or any of
its Subsidiaries own or in which the Company or any of its Subsidiaries has
Exploitation Rights including, without limitation, programs, films, and
recordings, whether animated, live action or both, whether produced for
theatrical, non-theatrical, television, home video, interactive, the internet,
tapes, CDs, or any other media now known.
"Plans" has the meaning set forth in Section 3.11(a).
"Principal Stockholders" has the meaning set forth in the recitals
hereof.
"Proxy Statement" has the meaning set forth in Section 6.1(c).
"Real Property" has the meaning set forth in Section 3.18(c).
"Related Parties" has the meaning set forth in Section 3.23.
"Requisite Vote" has the meaning set forth in Section 3.24.
"Schedule 13E-3" has the meaning set forth in Section 3.4(b).
"SEC" means the United States Securities and Exchange Commission.
"SPD" has the meaning set forth in Section 3.11(b)(iv).
"Securities Act" means the United States Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Special Committee" has the meaning set forth in the recitals hereof.
"Special Meeting" has the meaning set forth in Section 6.1(a).
8
"Subsidiary" means, with respect to any Person, (a) any corporation
with respect to which such Person, directly or indirectly through one or more
Subsidiaries, (i) owns more than 50% of the outstanding shares of capital stock
having generally the right to vote in the election of directors or (ii) has the
power, under ordinary circumstances, to elect, or to direct the election of, a
majority of the board of directors of such corporation, (b) any partnership with
respect to which (i) such Person or a Subsidiary of such Person is a general
partner, (ii) such Person and its Subsidiaries together own more than 50% of the
interests therein, or (iii) such Person and its Subsidiaries have the right to
appoint or elect or direct the appointment or election of a majority of the
directors or other Person or body responsible for the governance or management
thereof, (c) any limited liability company with respect to which (i) such Person
or a Subsidiary of such Person is the manager or managing member, (ii) such
Person and its Subsidiaries together own more than 50% of the interests therein,
or (iii) such Person and its Subsidiaries have the right to appoint or elect or
direct the appointment or election of a majority of the directors or other
Person or body responsible for the governance or management thereof, or (d) any
other entity in which such Person has, and/or one or more of its Subsidiaries
have, directly or indirectly, (i) at least a 50% ownership interest or (ii) the
power to appoint or elect or direct the appointment or election of a majority of
the directors or other Person or body responsible for the governance or
management thereof.
"Superior Proposal" has the meaning set forth in Section 5.3(a)(B).
"Surviving Corporation" has the meaning set forth in Section 2.1.
"Surviving Corporation Common Stock" means the Common Stock of
Surviving Corporation, par value $0.001.
"Tax" or "Taxes" means all Federal, state, local and foreign taxes and
other assessments and governmental charges of a similar nature, including any
property Tax (whether imposed directly or through withholdings), including any
interest, penalties and additions to Tax applicable thereto.
"Tax Authority" means the United States Internal Revenue Service and
any other domestic or foreign governmental authority responsible for the
administration or collection of any Taxes.
"Tax Returns" means all Federal, state, local and foreign returns,
declarations, statements, reports, schedules, forms and information returns
relating to Taxes, and all amendments thereto.
"Termination Fee" has the meaning set forth in Section 8.2(b).
"Trademark" has the meaning set forth in the definition of
"Intellectual Property Rights" as defined in this Section.
"Trade Secrets" has the meaning set forth in the definition of
"Intellectual Property Rights" as defined in this Section.
9
"Voting Agreement" has the meaning set forth in the recitals hereof.
"WARN Act" has the meaning set forth in Section 3.25(c).
ARTICLE II
THE MERGER
Section 2.1 The Merger. Upon the terms and provisions of and subject
to the conditions set forth in this Agreement and the certificate of merger (the
"Certificate of Merger"), and in accordance with the applicable provisions of
the DGCL, Merger Sub shall be merged with and into the Company at the Effective
Time (as hereinafter defined), and at the Effective Time the separate existence
of Merger Sub will cease and the Company shall continue as the surviving
corporation (the "Surviving Corporation").
Section 2.2 Closing. The closing (the "Closing") of the Merger will
take place at 10:00 a.m., Los Angeles time, on a date (the "Closing Date") to be
agreed to by the parties, which may be on, but shall be no later than the fifth
Business Day after, the day on which there shall have been satisfaction or
waiver of the conditions set forth in Article VII. The Closing shall be held at
the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, 000 Xxxxx Xxxxx Xxxxxx,
Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000 unless another time, date or place is
agreed to in writing by the parties hereto.
Section 2.3 Effective Time. On or before the Closing Date but
following the satisfaction or waiver of all conditions to Closing, (i) the
parties shall cause the Certificate of Merger to be executed and filed with the
Secretary of State of the State of Delaware in such form and executed as
provided in the DGCL, and (ii) make all other filings or recordings as may be
required by applicable law in connection with the Merger. The Merger shall
become effective at such time as the Certificate of Merger is duly filed with
the Secretary of State of the State of Delaware, or at such other later time as
the parties shall agree and specify in the Certificate of Merger (the time the
Merger becomes effective being the "Effective Time").
Section 2.4 Effects of the Merger. The Merger shall have the effects
set forth in the DGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the properties, rights, privileges,
powers and franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
Section 2.5 Corporate Governance Documents. The Certificate of
Incorporation of Merger Sub, as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation
after the Effective Time, and thereafter may be amended in accordance with its
terms and as provided by applicable law; provided, however, that at the
Effective Time, Article I of the Certificate of Incorporation of the Surviving
Corporation shall be amended to reflect that the name of the Company shall be
the name of the Surviving Corporation. The By-laws of Merger
10
Sub, as in effect immediately prior to the Effective Time, shall be the By-laws
of the Surviving Corporation after the Effective Time, and thereafter may be
amended in accordance with their terms and as provided by applicable law.
Section 2.6 Directors. The directors of Merger Sub immediately prior
to the Effective Time shall be the directors of the Surviving Corporation, and
shall serve in such capacity until the earlier of their resignation or removal,
or until their respective successors are duly elected or appointed and
qualified, as the case may be.
Section 2.7 Officers. The officers of the Company immediately prior to
the Effective Time shall be the officers of the Surviving Corporation, and shall
serve in such capacity until the earlier of their resignation or removal, or
until their respective successors are duly elected or appointed and qualified,
as the case may be. Section 2.8 Further Actions. At and after the Effective
Time, the Surviving Corporation shall take all action as shall be required in
connection with the Merger, including, but not limited to, the execution and
delivery of any further deeds, assignments, instruments or documents as are
necessary or desirable to carry out and effectuate the Merger and the other
transactions contemplated hereby.
Section 2.9 Effect on Capital Stock of the Company and Merger Sub. At
the Effective Time, by virtue of the Merger and without any further action on
the part of the holder of any securities of the Company or Merger Sub:
(a) Capital Stock. (i) Subject to Section 2.14, each issued and
outstanding share of Capital Stock (other than shares to be cancelled in
accordance with Section 2.9(c), shares of Capital Stock held by the Principal
Stockholders and Dissenting Shares (as hereinafter defined)), shall be converted
automatically into the right to receive from the Surviving Corporation $14.50 in
cash, and (ii) each issued and outstanding share of Capital Stock held by the
Principal Stockholders shall be converted automatically into the right to
receive from the Surviving Corporation $12.50 in cash (collectively, the "Merger
Consideration"), payable, without interest to the holder of such share, upon
surrender in the manner provided in Section 2.10, of the certificate that
formerly evidenced such share. At the Effective Time, all shares of Capital
Stock upon which the Merger Consideration is payable pursuant to this Section
2.9(a) shall no longer be outstanding and shall automatically be cancelled and
retired and shall cease to exist, and each holder of a certificate representing
any such shares of Capital Stock shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration in respect of such
holder's shares.
(b) Capital Stock of Merger Sub. Each share of the Merger Sub
Common Stock issued and outstanding immediately prior to the Effective Time
shall be converted, into and become one fully paid and nonassessable share of
Surviving Corporation Common Stock.
(c) Cancellation of Treasury Stock and Parent or Merger Sub Owned
Stock. Each share of Capital Stock that is owned by Parent, Merger Sub, the
11
Company or by any Subsidiary of the Company shall automatically be cancelled and
retired and shall cease to exist, and no consideration shall be delivered in
exchange therefor.
Section 2.10 Exchange of Certificates
(a) Paying Agent. Immediately prior to the Effective Time,
Capital Communications, Parent or Merger Sub shall designate a bank or trust
company, reasonably satisfactory to the Company, to act as paying agent in the
Merger (the "Paying Agent"), and, on or prior to the Effective Time, Parent or
Merger Sub shall deposit with the Paying Agent immediately available funds (the
"Exchange Funds") in an amount necessary for the payment of the Merger
Consideration upon surrender of certificates representing Capital Stock as part
of the Merger pursuant to Section 2.9, it being understood that any and all
interest, dividend or other income earned on the Exchange Funds shall be the
property of the Surviving Corporation.
(b) Exchange Procedure. Promptly after the Effective Time, the
Surviving Corporation shall cause the Paying Agent to mail to each holder of
record of a certificate or certificates which immediately prior to the Effective
Time represented outstanding shares of Capital Stock (the "Company
Certificates") whose shares were converted into the right to receive the Merger
Consideration pursuant to Section 2.9, (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Company Certificates shall pass, only upon delivery of the Company Certificates
to the Paying Agent and shall be in such form and have such other customary
provisions as the Surviving Corporation may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Company Certificates in
exchange for the Merger Consideration. Upon surrender of a Company Certificate
for cancellation to the Paying Agent or to such other agent or agents as may be
appointed by the Surviving Corporation, together with such letter of
transmittal, duly completed and validly executed, and such other customary
documents as may reasonably be required by the Paying Agent, the holder of such
Company Certificate shall be entitled to receive in exchange therefor the Merger
Consideration into which the shares of Capital Stock theretofore represented by
such Company Certificate shall have been converted pursuant to Section 2.9 and
such Company Certificate so surrendered shall forthwith be cancelled. In the
event of a transfer of ownership of such Capital Stock which is not registered
in the transfer records of the Company, payment may be made to a Person other
than the Person in whose name the Company Certificate so surrendered is
registered, if such Company Certificate shall be properly endorsed or otherwise
be in proper form for transfer and the Person requesting such payment shall pay
any transfer or other taxes required by reason of the payment to a Person other
than the registered holder of such Company Certificate or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.10(b), each
Company Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the Merger
Consideration, without interest, into which the shares of capital stock
theretofore represented by such Company Certificate shall have been converted
pursuant to Section 2.9. No interest will be paid or will accrue on the
consideration payable upon the surrender of any Company Certificate.
12
(c) No Further Ownership Rights in Capital Stock. All
consideration paid upon the surrender of the Company Certificates in accordance
with the terms of this Article II shall be deemed to have been paid in full
satisfaction of all rights pertaining to the shares of capital stock theretofore
represented by such Company Certificates.
(d) Termination of Exchange Funds. Any portion of the Exchange
Funds which remains undistributed to the holders of the Company Certificates for
nine (9) months after the Effective Time shall be delivered to an entity
identified in writing to the Paying Agent by the Surviving Corporation, upon
demand, and any holders of the Company Certificates who have not theretofore
complied with this Article II shall thereafter look only to the Surviving
Corporation (subject to abandoned property, escheat or other similar laws) only
as general creditors thereof with respect to the Merger Consideration payable
upon due surrender of their Company Certificates without any interest thereon.
(e) No Liability. None of Parent, Merger Sub, the Company, the
Surviving Corporation or the Paying Agent shall be liable to any Person in
respect of any cash delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(f) Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, shares of Capital Stock which are issued and outstanding
immediately prior to the Effective Time and which are held by a holder who did
not vote such shares in favor of the Merger and who has complied with all of the
relevant provisions of Section 262 of the DGCL ("Dissenting Shares") shall not
be converted into a right to receive the Merger Consideration unless and until
the holder or holders thereof shall have failed to perfect or shall have
effectively withdrawn or lost their rights to appraisal under the DGCL. The
holders of such Dissenting Shares shall be entitled only to such rights as are
granted by Section 262 of the DGCL. Each holder of Dissenting Shares who becomes
entitled to payment for such shares pursuant to Section 262 of the DGCL shall
receive payment therefor from the Surviving Corporation in accordance with the
DGCL, and any portion of the Merger Consideration deposited with the Paying
Agent to pay for such shares shall be returned to the Surviving Corporation upon
demand; provided, however, that if any such holder of Dissenting Shares (i)
shall have failed to establish such holder's entitlement to relief as a
dissenting stockholder as provided in Section 262 of the DGCL, (ii) shall have
effectively withdrawn such holder's demand for relief as a dissenting
stockholder with respect to such Dissenting Shares or lost such holder's right
to relief as a dissenting stockholder and payment for such holder's Dissenting
Shares under Section 262 of the DGCL, or (iii) shall have failed to file a
complaint with the appropriate court seeking relief as to determination of the
value of all Dissenting Shares within the time provided in Section 262 of the
DGCL, if applicable, such holder shall forfeit the right to relief as a
dissenting stockholder with respect to such shares of Capital Stock, and each
such share shall be converted into the right to receive the Merger Consideration
without interest thereon, from the Surviving Corporation as provided in Section
2.9. The Company shall give Parent (i) written notice as soon as reasonably
practical of any demands received by the Company for relief as a dissenting
13
stockholder, attempted withdrawals of such demands and any other instruments
served pursuant to the DGCL and received by the Company relating to
stockholders' rights of appraisal, and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under the
DGCL. The Company shall not, except with the prior written consent of Parent,
make any payment with respect to, or settle or offer to settle, any such
demands.
Section 2.11 Stock Option Plans. As soon as practicable following the
date of this Agreement, but in any event no later than thirty (30) days before
the Closing Date, the Board (or, if appropriate, any committee administering the
Company Stock Option Plans (as hereinafter defined)) shall adopt such
resolutions or use all reasonable efforts to take such other actions as are
required to provide that each then outstanding stock option (whether or not
vested) to purchase shares of Company Common Stock (each a "Company Stock
Option") heretofore granted under any stock option or other stock-based
incentive plan, program or arrangement of the Company (collectively, the
"Company Stock Option Plans") shall be cancelled immediately prior to the
Effective Time in exchange for payment of an amount in cash equal to the product
of (i) the number of unexercised shares of Company Common Stock subject to such
Company Stock Option immediately prior to the Effective Time and (ii) the
excess, if any, of the Merger Consideration over the per share exercise price of
such Company Stock Option.
Section 2.12 Certain Adjustments. If at any time during the period
between the date of this Agreement and the Effective Time, any change in the
outstanding shares of capital stock of the Company shall occur by reason of any
reclassification, recapitalization, stock split, reverse stock split, exchange
or readjustment of shares, or any similar transaction, or any stock dividend
thereon with a record date during such period, the Merger Consideration shall be
appropriately adjusted to provide the holders of shares of Capital Stock the
same economic effect as contemplated by this Agreement.
Section 2.13 Withholding. The Surviving Corporation and the Paying
Agent shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of Capital Stock or
Company Stock Options, such amounts as the Surviving Corporation or the Paying
Agent is required to deduct and withhold with respect to the making of such
payment under any provision of applicable Federal, state, local or foreign tax
law. To the extent that amounts are so withheld by the Surviving Corporation or
the Paying Agent, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of the shares of Capital Stock
or Company Stock Options in respect of which such deduction and withholding was
made by the Surviving Corporation or the Paying Agent, as the case may be.
Section 2.14 Lost, Stolen or Destroyed Certificates. In the event any
Company Certificate shall have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the Person claiming such Company Certificate to
be lost, stolen or destroyed, the Paying Agent will issue in exchange for such
lost, stolen or destroyed Company Certificate, the Merger Consideration
deliverable in respect thereof as
14
determined in accordance with this Article II; provided that the Person to whom
the Merger Consideration is paid shall, as a condition precedent to the payment
thereof, give the Surviving Corporation a written indemnity agreement in form
and substance reasonably satisfactory to the Surviving Corporation and which is
customary in such instances and, if deemed reasonably advisable by the Surviving
Corporation, a bond in such sum as the Surviving Corporation may direct as
indemnity against any claim that may be made against the Surviving Corporation
with respect to such Company Certificate claimed to have been lost, stolen or
destroyed.
Section 2.15 Stock Transfer Books. After the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of shares of Capital Stock which were outstanding immediately prior
to the Effective Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except (i) as set forth in the corresponding numbered sections of the
disclosure schedules to this Agreement delivered by the Company to Parent and
Merger Sub concurrently with the execution of this Agreement (the "Disclosure
Schedules"), (ii) disclosed in the Company SEC Reports (as hereinafter defined)
or (iii) referenced in the particular section of this Article III to which
exception is being taken, the Company represents and warrants to Parent and
Merger Sub as follows:
Section 3.1 Organization, Standing and Corporate Power. Each of the
Company and its Subsidiaries is a corporation, partnership or limited liability
company, as the case may be, duly formed or organized, validly existing and in
good standing under the laws of the jurisdiction in which it is formed or
organized and has the requisite corporate, partnership or limited liability
company power and authority to carry on its business as now being conducted.
Each of the Company and its Subsidiaries is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
or licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed would not reasonably be expected to have a material
adverse effect on the Company. The Company has delivered to Parent and Merger
Sub complete and correct copies of the Certificate of Incorporation and By-laws
of the Company and the comparable charter and organizational documents of each
of its Subsidiaries, in each case as amended to the date of this Agreement.
Section 3.2 Subsidiaries. Each Subsidiary of the Company is identified
on Section 3.2 of the Disclosure Schedules. Except as otherwise provided in
Section 3.2 of the Disclosure Schedules, all the outstanding equity interests of
each Subsidiary are owned by the Company, free and clear of all Liens other than
Permitted Liens. There are no proxies with respect to any shares of any such
Subsidiary. Other than with respect to the Subsidiaries of the Company, and as
set forth on Section 3.2 of the Disclosure Schedules, the Company does not own,
directly or indirectly, any capital stock or other
15
equity securities of any corporation or have any direct or indirect equity or
ownership interest, including interests in partnerships and joint ventures, in
any business. There are no outstanding options, warrants or other rights of any
kind to acquire any additional shares of capital stock of any Subsidiary of the
Company or securities convertible into or exchangeable for any capital stock of
any Subsidiary of the Company, or which otherwise confer on the holder thereof
any right to acquire any such additional shares of any Subsidiary, nor is any
Subsidiary committed to issue any such option, warrant, right or security.
Section 3.3 Capital Structure
(a) The authorized capital stock of the Company consists of
22,000,000 shares of Capital Stock, consisting of 20,000,000 shares of Common
Stock, and 2,000,000 shares of Class A Common Stock. As of the date hereof,
10,193,576 shares of Capital Stock were issued and outstanding consisting of
9,284,016 shares of Common Stock and 909,560 shares of Class A Common Stock, all
of which were validly issued, fully paid and nonassessable and were issued free
of preemptive (or similar) rights. Section 3.3 of the Disclosure Schedules
contains a true, complete and correct list of all outstanding Company Stock
Options, and all other options, warrants, rights or other securities convertible
into or exercisable for shares of Capital Stock of the Company, the holders of
such options, warrants, rights and other securities, the portions of such
outstanding Company Stock Options that are exercisable, and the exercise price
with respect to such securities.
(b) Except as set forth in this Article III and as set forth in
Section 3.3 of the Disclosure Schedules, and except as may result from the
exercise, prior to the consummation of the Merger, of Company Stock Options
outstanding on the date hereof, there are no outstanding (i) shares of capital
stock or other voting securities of the Company, (ii) securities of the Company
convertible into or exchangeable for shares of capital stock or voting
securities of the Company or its Subsidiaries, (iii) options or other rights to
acquire from the Company or its Subsidiaries, or obligations of the Company or
its Subsidiaries to issue, any shares of capital stock, voting securities or
securities of the Company or its Subsidiaries, and (iv) no equity equivalent
interests in the ownership or earnings of the Company or its Subsidiaries or
other similar rights (the items in clauses (b)(i), (ii), (iii) and (iv) being
referred to collectively as the "Company Securities"). There are no outstanding
obligations of the Company or any Subsidiary to repurchase, redeem or otherwise
acquire any Company Securities.
(c) Except for the Voting Agreement and as set forth in Section
3.3(c) of the Disclosure Schedules, there are no voting trusts or other
agreements or understandings to which the Company or any of its Subsidiaries is
a party with respect to the voting of the shares of any capital stock of the
Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries will be required to redeem, repurchase or otherwise acquire any
shares of capital stock of the Company (other than pursuant to the Merger in
accordance with the terms of this Agreement) or any of its Subsidiaries, as a
result of the Merger and the transactions contemplated by this Agreement.
(d) No agreement or other document grants or imposes on any
shares of Capital Stock any right, preference, privilege or transfer restriction
with respect
16
to the transactions contemplated hereby (including, without limitation, any
rights of first refusal). All of the outstanding shares of Capital Stock are,
and all shares of Common Stock that may be issued upon the exercise of
outstanding Company Stock Options will be, when issued in accordance with the
terms thereof, duly authorized, validly issued, fully paid, nonassessable and
free of preemptive rights. There are no outstanding contractual obligations of
the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any shares of capital stock of the Company or any of its Subsidiaries or
to provide funds to make any investment (in the form of a loan, capital
contribution or otherwise) in the Company, any of its Subsidiaries or any other
Person.
(e) Except as set forth on Section 3.3(e) of the Disclosure
Schedules, all of the issued and outstanding shares of capital stock of the
Company's Subsidiaries are owned beneficially and of record by the Company, free
and clear of all Liens, equities, voting restrictions, claims and options of any
nature, and all such shares have been duly authorized, validly issued and are
fully paid, nonassessable and free of preemptive rights. The Company has not
made, directly or indirectly, any material investment in, advance to or purchase
or guaranty of any obligations of, any Person other than obligations of its
Subsidiaries.
Section 3.4 Authority; Noncontravention
(a) The Company has the requisite corporate power and authority
to enter into this Agreement, subject to approval of the Merger and this
Agreement by the Requisite Vote of the outstanding shares of Capital Stock, and
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby to which the Company is a party have been duly
authorized by all necessary corporate action on the part of the Company,
subject, in the case of the Merger and this Agreement, to approval of the Merger
and this Agreement by the Requisite Vote of the outstanding shares of Capital
Stock. This Agreement has been duly executed and delivered by the Company, and
assuming this Agreement constitutes the valid and binding obligation of the
other parties hereto, this Agreement constitutes the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms. The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby to which the Company is a
party and compliance with the provisions of this Agreement by the Company will
not, require notice or consent under, conflict with, or result in any violation
of, or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation
or to loss of a benefit under, or result in the creation of any Lien other than
Permitted Liens upon any of the properties or assets of the Company or any of
its Subsidiaries under, (i) the Certificate of Incorporation or By-laws of the
Company or the comparable charter or organizational documents of any of its
Subsidiaries, (ii) except as set forth in Section 3.4(a) of the Disclosure
Schedules and other than subject to the other matters referred to in Section
3.4(b) hereof, (A) any loan or credit agreement, note, bond, mortgage,
indenture, or any material lease or other material agreement or instrument or
(B) any material permit, concession, franchise or license applicable to the
Company or any of its Subsidiaries or their respective properties or assets or
(iii) subject to the governmental filings and other matters referred to in
Section 3.4(b) hereof, any judgment, order, decree, statute, law,
17
ordinance, rule or regulation applicable to the Company or any of its
Subsidiaries or their respective properties or assets.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
the Company or any of its Subsidiaries in connection with the execution and
delivery of the Agreement by the Company or the consummation by the Company of
the transactions contemplated hereby, except as set forth on Section 3.4(b) of
the Disclosure Schedules and except for (i) the filing of a pre-merger
notification and report form by the Company under the HSR Act, (ii) the filing
with the SEC of (A) the Proxy Statement (B) a Rule 13E-3 Transaction Statement
on Schedule 13E-3 (the "Schedule 13E-3"), and (C) such reports under Section
13(a) of the Exchange Act as may be required in connection with this Agreement
and the transactions contemplated hereby, (iii) any registration, filing or
notification required pursuant to state securities or "blue sky" laws, and (iv)
the filing of the Certificate of Merger with the Secretary of State of the State
of Delaware in connection with the Merger except where the failure to obtain
such authorization, consent or approval would not reasonably be expected to have
a material adverse effect on the Company or on the consummation of the
transactions contemplated hereby.
Section 3.5 SEC Documents; Financial Statements; Cash Balance
(a) The Company has filed with the SEC all forms, reports,
schedules, statements and other documents required to be filed by it since July
1, 1998, under the Securities Act or the Exchange Act (such documents, as
supplemented or amended since the time of filing, collectively, the "Company SEC
Reports"). As of their respective dates, the Company SEC Reports, including,
without limitation, any financial statements or schedules included or
incorporated by reference therein, at the time filed (and, in the case of
registration statements and proxy statements, on the dates of effectiveness and
the dates of mailing, respectively) (a) complied, in all material respects, with
all applicable requirements of the Securities Act and the Exchange Act, as the
case may be and (b) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The audited consolidated financial statements
and unaudited consolidated interim financial statements (the "Financial
Statements") included or incorporated by reference in the Company SEC Reports
(including any related notes and schedules) fairly present, in all material
respects, the financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and the results of their consolidated
operations and their consolidated cash flows for the periods set forth therein,
in each case in accordance with past practices and GAAP consistently applied
during the periods involved (except as otherwise disclosed in the notes thereto
and subject, where appropriate, to normal year-end adjustments and the absence
of notes in the case of interim statements.
(b) The Company has heretofore made available or promptly will
make available to Parent and Merger Sub a complete and correct copy of any
amendments or modifications to any Company SEC Reports to be filed with the SEC
but which have not yet been filed with the SEC.
18
(c) The Company will file with the SEC each registration
statement, report, schedule, proxy or information statement and other documents
(including exhibits thereto) required to be filed with the SEC under the
Securities Act or the Exchange Act following the execution of this Agreement.
(d) Attached as Section 3.5(d) of the Disclosure Schedules is the
unaudited and internally prepared consolidated balance sheet for the Company and
its consolidated Subsidiaries dated December 31, 2001 (the "December Balance
Sheet"). The December Balance Sheet fairly presents in all material respects the
financial position of the Company and its consolidated Subsidiaries at December
31, 2001 and has been prepared in accordance with past practices consistently
applied (except as otherwise disclosed in the notes thereto and subject, where
appropriate, to normal year end audit adjustments and the absence of notes).
(e) The amount of cash and marketable securities held by the
Company as of February 7, 2002, excluding cash related to the Company's
restaurant operations, is at least $71.8 million and the cash held in the
Company's restaurant operations as of February 7, 2002, is greater than $0.
Section 3.6 Environmental
(a) The Company is in material compliance with the Environmental
Laws, which compliance includes, but is not limited to, the possession by the
Company of all permits and other governmental authorizations required under
applicable Environmental Laws, and is in material compliance to its knowledge
with the terms and conditions thereof. The Company has not received any written
communication, whether from a governmental authority, citizens group, employee
or otherwise, that alleges that the Company is not in such material compliance,
and, to the Company's knowledge, there are no circumstances that may prevent or
interfere with such material compliance in the future.
(b) Except as set forth on Section 3.6(b) of the Disclosure
Schedules, there is no Environmental Claim pending or to the Company's knowledge
threatened against the Company or, against any Person or entity whose liability
for any Environmental Claim the Company has retained or assumed contractually.
(c) Except as set forth on Section 3.6(c) of the Disclosure
Schedules, to the Company's knowledge, there are no past or present actions,
activities, circumstances, conditions, events or incidents, including, without
limitation, the release, emission, discharge, presence or disposal of any
Material of Environmental Concern, that could reasonably form the basis of any
material Environmental Claim against the Company or, to the Company's knowledge,
against any Person or entity whose liability for any Environmental Claim the
Company has retained or assumed contractually.
(d) To the knowledge of the Company, (i) all on or off-site
locations at or to which the Company has stored (other than storage, in
compliance with applicable requirements, of commercial cleaning products or
other products regularly used in the normal course of its business which contain
Materials of Environmental Concern below applicable regulatory thresholds),
disposed or to which it has arranged for
19
the disposal of Materials of Environmental Concern, are identified in Section
3.6(d) of the Disclosure Schedules, (ii) all underground storage tanks for
Materials of Environmental Concern, and the capacity and contents of such tanks,
located on property owned or leased by the Company, as identified in Sections
3.18(a) and 3.18(b) of the Disclosure Schedules, are identified in Section
3.6(d) of the Disclosure Schedules, (iii) except as set forth in Section 3.6(d)
of the Disclosure Schedules, there is no asbestos contained in or forming part
of any building, building component, structure or office space owned or leased
by the Company as identified in Sections 3.18(a) and 3.18(b) of the Disclosure
Schedules, and (iv) except as set forth in Section 3.6(d) of the Disclosure
Schedules, no polychlorinated biphenyls (PCBs) or PCB-containing items are used
or stored at any property owned or leased by the Company as identified in
Sections 3.18(a) and 3.18(b) of the Disclosure Schedules.
(e) The Company has provided to Parent and Merger Sub all written
assessments, reports, data, results of investigations or audits, and other
information that are in the possession of, or to the Company's knowledge are
reasonably available to, the Company regarding environmental matters pertaining
to or the environmental condition of the business of the Company, or the
material compliance (or noncompliance) by the Company with any Environmental
Laws.
(f) To the knowledge of the Company, the Company is not required
by virtue of the Merger transactions contemplated hereby, or as a condition to
the effectiveness of any transactions contemplated hereby, (i) to perform a site
assessment for Materials of Environmental Concern, (ii) to remove or remediate
Materials of Environmental Concern, (iii) to give notice to or receive approval
from any governmental authority pertaining to environmental matters, or (iv) to
record or deliver to any Person or entity any disclosure document or statement
pertaining to environmental matters.
Section 3.7 Absence of Certain Changes or Events. Since September 30,
2001 (the "Balance Sheet Date"), except in connection with the transactions
contemplated hereby, and except as set forth on Section 3.7 of the Disclosure
Schedules, the Company and its Subsidiaries have conducted their respective
businesses only in the ordinary course of business consistent with past
practice, and, there has not been (a) any material adverse change in the
Company, (b) any declaration, setting aside or payment of any dividend or other
distribution with respect to its capital stock, (c) any split, combination or
reclassification of any of its capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock, (d) (i) any increase in the
compensation payable or to become payable to any of its officers, directors,
employees, agents or consultants (other than general increases in wages to
employees who are not officers or directors or Affiliates in the ordinary course
of business consistent with past practice or as required by agreements listed on
Section 3.7 or Section 3.11(a) of the Disclosure Schedules) or to persons
providing management services, (ii) any loans to any of its officers, directors,
employees, Affiliates, agents or consultants or made any change in its existing
borrowing or lending arrangements for or on behalf of any of such persons,
whether pursuant to an employee benefit plan or otherwise, other than advances
in the
20
ordinary course of business and consistent with past practices, (iii) any grant,
issuance, acceleration, payment, accrual or agreement to pay or make any accrual
or arrangement for payment of salary or other payments, compensation or benefits
pursuant to, or adopt or amend, any new or existing employee benefit plan,
agreement or arrangement, except in the ordinary course of business consistent
with past practice, or any payment of any bonus, or any incurrence of any
obligation to pay a bonus, to any of the executive officers, directors, or
members of senior management of the Company, except to the extent provided for
in any agreements in effect on the date hereof, all of which are listed on
Section 3.7 or Section 3.11(a) of the Disclosure Schedules, (e) any damage,
destruction or loss affecting the businesses or assets of the Company or any of
its Subsidiaries, that has or reasonably would be expected to have a material
adverse effect on the Company, (f) any change in accounting methods, principles
or practices by the Company other than those disclosed in the Company SEC
Reports or otherwise required by applicable law or accounting policy, (g) entry
into any commitment or transaction material to the Company and its Subsidiaries
taken as a whole (including, without limitation, any borrowing or sale of
assets) except in the ordinary course of business consistent with past practice,
(h) any incurrence, assumption or guarantee by the Company or any of its
Subsidiaries of any Indebtedness in excess of $250,000 that is not permitted
pursuant to Section 5.1 without the consent of Parent, (i) any creation or
assumption by the Company or any of its Subsidiaries of any material Lien on any
material asset, (j) any material adverse change in the business relationship of
the Company or any of its Subsidiaries with any significant customer, or
network, cable or satellite television provider (including, without limitation,
with respect to any unpaid invoices or uncollected accounts receivable) or, any
material adverse change, with respect to any of the Company Intellectual
Property or (k) any making of any loan, advance or capital contributions to or
investment in excess of $250,000 in any Person that is not permitted pursuant to
Section 5.1 without the consent of Parent.
Section 3.8 Litigation. Except as set forth in Section 3.8 of the
Disclosure Schedules, there are no investigations, actions, claims, suits or
proceedings pending against the Company or its Subsidiaries or, to the knowledge
of the Company, threatened against the Company or its Subsidiaries that would
reasonably be expected to have a material adverse effect on the Company or would
reasonably be expected to prevent, materially impair or materially delay the
consummation of the transactions contemplated by this Agreement. Neither the
Company nor its Subsidiaries is subject to any judgment, order or decree entered
in any lawsuit or proceeding which would reasonably be expected to have a
material adverse effect on the Company.
Section 3.9 [Omitted].
Section 3.10 [Omitted].
Section 3.11 Employee Benefits; ERISA
(a) Section 3.11(a) of the Disclosure Schedules contains a true
and complete list of each employment, consulting, bonus, deferred compensation,
incentive compensation, stock purchase, stock option, stock appreciation right
or other stock-based incentive, retention, severance, change-in-control or
termination pay, hospitalization or other medical, disability, life or other
employee
21
insurance, supplemental unemployment benefits, profit-sharing, pension, or
retirement plan, program, agreement or arrangement, and each other employee
benefit plan, program, agreement or arrangement, sponsored, maintained or
contributed to or required to be contributed to by the Company or any of its
Subsidiaries, or by any trade or business, whether or not incorporated, that
together with the Company or any of its Subsidiaries would be deemed to comprise
a controlled group or affiliated service group or be deemed to be under common
control or otherwise aggregated for purposes of Sections 414(b), (c), (m) or (o)
of the United States Internal Revenue Code of 1986, as amended (the "Code") (an
"ERISA Affiliate"), for the benefit of any current or former employee or
director of the Company or any of its Subsidiaries, or any ERISA Affiliate (the
"Plans"). Section 3.11(a) of the Disclosure Schedules identifies each of the
Plans that is an "employee welfare benefit plan," or "employee pension benefit
plan" as such terms are defined in Sections 3(1) and 3(2) of ERISA (such plans
being hereinafter referred to collectively as the "ERISA Plans"). Except as set
forth on Section 3.11(a) of the Disclosure Schedules, none of the Plans is
subject to Title IV of ERISA. None of the Company, any of its Subsidiaries nor
any ERISA Affiliate has any formal plan or commitment, whether legally binding
or not, to create any additional Plan or, except as required by applicable law
or to maintain tax-qualified status, modify or change any existing Plan that
would affect any current or former employee or director of the Company, any of
its Subsidiaries or any ERISA Affiliate.
(b) With respect to each of the Plans, the Company has heretofore
delivered or as promptly as practicable after the date hereof shall deliver to
Merger Sub true and complete copies of each of the following documents, as
applicable:
(i) a copy of the Plan documents currently in effect
(including all amendments thereto) for each written Plan or a written
description of any Plan that is not otherwise in writing;
(ii) a copy of the annual report or Internal Revenue Service
Form 5500 Series, if required under ERISA, with respect to each ERISA Plan
for the last three (3) Plan years ending prior to the date of this
Agreement for which such a report was filed;
(iii) a copy of the actuarial report, if required under
ERISA, with respect to each ERISA Plan for the last three (3) Plan years
ending prior to the date of this Agreement;
(iv) a copy of the most recent Summary Plan Description
("SPD"), together with all Summaries of Material Modification issued with
respect to such SPD, if required under ERISA, with respect to each ERISA
Plan, and all other material employee communications relating to each ERISA
Plan;
(v) if the Plan is funded through a trust or any other
funding vehicle, a copy of the trust or other funding agreement (including
all amendments thereto) and the latest financial statements thereof, if
any;
22
(vi) all contracts relating to the Plans with respect to
which the Company or any of its Subsidiaries or any ERISA Affiliate may
have any liability, including insurance contracts, investment management
agreements, subscription and participation agreements and record keeping
agreements; and
(vii) the most recent determination or opinion letter
received from the Internal Revenue Service with respect to each Plan that
is intended to be qualified under Section 401(a) of the Code.
(c) Except as set forth on Section 3.11(c) of the Disclosure
Schedules:
(i) No liability under Title IV of ERISA has been incurred
by the Company, any of its Subsidiaries or any ERISA Affiliate since the
effective date of ERISA that has not been satisfied in full, and, to the
knowledge of the Company, no condition exists that presents a material risk
to the Company, or any of its Subsidiaries or any ERISA Affiliate of
incurring any liability under such Title.
(ii) With respect to any ERISA Plan that is a "multiemployer
pension plan," as such term is defined in Section 4001(a)(3) of ERISA, (1)
neither the Company, any of its Subsidiaries nor any ERISA Affiliate has,
since September 26, 1980, made or suffered a "complete withdrawal" or a
"partial withdrawal," as such terms are respectively defined in Sections
4203 and 4205 of ERISA, (2) to the knowledge of the Company (or as the
Company should reasonably be aware), no event has occurred that presents a
material risk of a complete or partial withdrawal, (3) to the knowledge of
the Company (or as the Company should reasonably be aware), neither the
Company, any of its Subsidiaries nor any ERISA Affiliate has any contingent
liability under Section 4204 of ERISA, (4) to the knowledge of the Company,
no circumstances exist that present a material risk that any such
multiemployer plan will go into reorganization, and (5) to the knowledge of
the Company (or as the Company should reasonably be aware), the aggregate
withdrawal liability of the Company, each of its Subsidiaries and the ERISA
Affiliates, computed as if a complete withdrawal by the Company, each of
its Subsidiaries and all of its ERISA Affiliates had occurred under each
such multiemployer pension plan on the date hereof, would be greater than
$50,000.
(iii) To the extent the representations in Sections
3.11(c)(i) and 3.11(c)(ii) apply to Sections 4064, 4069 or 4204 of Title IV
of ERISA, it is made not only with respect to the ERISA Plans but also
23
with respect to any employee benefit plan, program, agreement or
arrangement subject to Title IV of ERISA to which the Company or any of its
Subsidiaries or any ERISA Affiliate made, or was required to make,
contributions during the past six years.
(d) None of the Company, any of its Subsidiaries, any ERISA
Affiliate, any of the ERISA Plans, any trust created thereunder, nor to the
Company's knowledge, any trustee or administrator thereof has engaged in a
transaction or has taken or failed to take any action in connection with which
the Company, any of its Subsidiaries, any ERISA Affiliate, any ERISA Plan or any
such trust could be subject to any material liability for either a civil penalty
assessed pursuant to Section 409 or 502(i) of ERISA or a tax imposed pursuant to
Section 4975(a) or (b), 4976 or 4980B of the Code.
(e) All contributions which the Company, any of its Subsidiaries
or any ERISA Affiliate is required to pay, prior to the date hereof, under the
terms of each of the ERISA Plans have been timely paid in full or properly
recorded on the financial statements or records of the Company or its
Subsidiaries.
(f) Each of the Plans has been operated and administered in all
material respects in accordance with its terms and applicable law, including but
not limited to ERISA and the Code.
(g) There has been no failure by any of the ERISA Plans that is
intended to be "qualified" within the meaning of Section 401(a) of the Code to
meet the requirements of such qualification. Except as set forth on Section
3.11(g) of the Disclosure Schedules hereto, the Company has applied for and
received a currently effective determination letter from the IRS stating that it
is so qualified including satisfaction of the requirements of the GUST
amendments (as referenced in IRS Announcement 2001-104), and no event has
occurred which would affect such qualified status.
(h) Except as set forth on Section 3.11(h) of the Disclosure
Schedules, no Plan provides benefits, including without limitation death or
medical benefits (whether or not insured), with respect to current or former
employees of the Company, its Subsidiaries or any ERISA Affiliate after
retirement or other termination of service (other than (i) coverage mandated by
applicable law, (ii) death benefits or retirement benefits under any "employee
pension plan," as that term is defined in Section 3(2) of ERISA, or (iii)
benefits, the full direct cost of which is borne by the current or former
employee (or beneficiary thereof)).
(i) The consummation of the transactions contemplated by this
Agreement will not, either alone or upon and in conjunction with the occurrence
of any additional or further acts or events, (i) entitle any current or former
employee, officer, consultant, agent or director of the Company, any of its
Subsidiaries or any ERISA Affiliate to severance pay, unemployment compensation
or any other similar termination payment, or (ii) accelerate the time of payment
or vesting, or increase the amount of or
24
otherwise enhance any benefit due, or any option or other equity security held
by, any such employee, officer, consultant, agent or director.
(j) There are no pending or, to the Company's knowledge,
threatened or anticipated claims by or on behalf of any Plan, by any employee or
beneficiary under any such Plan or otherwise involving any such Plan (other than
routine claims for benefits).
(k) Except as set forth on Section 3.11(k) of the Disclosure
Schedules, neither the Company nor any of its Subsidiaries has made any
payments, is obligated to make any payments, or is a party to any contract,
agreement or other arrangement which could result in the payment by the Company
or by any of its Subsidiaries of an "excess parachute payment" as that term is
used in Section 280G of the Code or the payment of compensation that will not be
deductible by the Company because of Section 162(m) of the Code.
(l) None of the Company, any of its Subsidiaries nor any ERISA
Affiliate has, prior to the Effective Time, violated any of the health care
continuation requirements of the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended or the Health Insurance Portability Accountability Act of
1996, as amended, or any similar provision of state law applicable to their
employees.
(m) Except as set forth in Section 3.11(m) of the Disclosure
Schedules, none of the Company, any of its Subsidiaries nor any ERISA Affiliate
has used the services or workers provided by third party contract labor
suppliers, temporary employees, "leased employees" (as that term is defined in
Section 414(n) of the Code), or individuals who have provided services as
independent contractors to the extent that any of these arrangements would
reasonably be expected to result in the disqualification of any of the Plans or
the imposition of penalties or excise taxes with respect to the Plans by the
IRS, the Department of Labor or the Pension Benefit Guaranty Corporation.
Section 3.12 Taxes
(a) All material Tax Returns required to be filed by the Company
and each of its Subsidiaries have been duly filed (or has had duly filed on its
behalf). All material Taxes that are due or claimed to be due from the Company
and each of its Subsidiaries have been paid other than those being contested in
good faith and by appropriate proceedings and for which adequate reserves have
been established on the balance sheets that are included in the Company SEC
Reports in accordance with GAAP. To the knowledge of the Company, the accruals
and reserves in the balance sheets that are included in the Company SEC Reports
in respect of any Tax liability of the Company and its Subsidiaries for any
taxable period not finally determined are adequate to meet any assessments of
Tax for any such period.
(b) No Audits are presently pending with regard to any Taxes or
Tax Returns of the Company or any of its Subsidiaries, and neither the Company
nor any of its Subsidiaries has received written notification that any such
Audit is threatened, contemplated, or may be initiated.
25
(c) There are no Liens for material Taxes upon any assets or
properties of the Company or any of its Subsidiaries, except for Liens for Taxes
not yet due.
(d) Other than any Tax Returns that have not yet been required to
be filed, the Company has delivered or made available to Parent and Merger Sub
true and complete copies of its Tax Returns for each of the taxable years ended
after June 30, 1997.
(e) No deficiency or adjustment for any Taxes has been proposed,
asserted, assessed or to the Company's knowledge, threatened in writing against
the Company or its Subsidiaries.
(f) Except as set forth in Section 3.12(f) of the Disclosure
Schedules, to the knowledge of the Company, no outstanding power of attorney has
been granted by or with respect to the Company or its Subsidiaries with respect
to any matter relating to Taxes.
(g) The Company and each of its Subsidiaries have complied in all
material respects with all applicable laws, rules, and regulations relating to
the payment and withholding of Taxes (including withholding of Taxes pursuant to
Section 1441 and 1442 of the Code or similar provisions under any state, local
or foreign laws) and have, within the time and the manner prescribed by law,
withheld and paid over to the proper Tax Authorities all amounts required to be
so withheld and paid over under applicable laws.
(h) Neither the Company nor any of its Subsidiaries is required
to include in income any material adjustment pursuant to Section 481(a) of the
Code by reason of any change in accounting method (nor has any Tax Authority
proposed in writing any such adjustment or change of accounting method).
(i) Neither the Company nor any of its Subsidiaries is or has
been a member of any affiliated group filing a consolidated Federal income tax
return within the meaning of Section 1504(a) of the Code or any similar state,
local or foreign law (other than a group the common parent of which is or was
the Company) or has any liability for Taxes of any Person under Treasury
Regulation Section 1.1502-6 or any similar provisions of state, local or foreign
law as a transferee or successor, by contract, or otherwise.
(j) [Omitted].
(k) [Omitted].
(l) The Company has delivered or made available to Parent and
Merger Sub complete and accurate copies of each of (i) all Audit reports, letter
rulings, technical advice memoranda and similar documents issued by a Tax
Authority relating to Taxes due from or with respect to the Company or its
Subsidiaries and (ii) all closing
26
agreements entered into by the Company or its Subsidiaries with any Tax
Authority, in each case existing on the date hereof.
(m) Neither the Company nor any of its Subsidiaries has received
written notice of any claim made by a Tax Authority in a jurisdiction where it
does not file Tax Returns that it is or may be subject to taxation by that
jurisdiction.
(n) Neither the Company nor any of its Subsidiaries has (i)
received a ruling from any Tax Authority or signed an agreement with respect
thereto or (ii) signed any closing agreement with respect to any Tax year.
(o) Neither the Company nor any of its Subsidiaries has waived
any statutory period of limitations for the assessment of any Tax or agreed to
any extension of time with respect to a Tax assessment or deficiency, in each
case, which is currently outstanding, nor is any request to so waive or extend
currently outstanding.
(p) [Omitted].
(q) Neither the Company nor any of its Subsidiaries is a party
to, is bound by or has any obligation under any Tax sharing agreement, Tax
indemnification agreement or similar contract, and does not have any potential
liability or obligation to any Person as a result of, or pursuant to, any such
contract.
(r) Neither the Company nor any of its Subsidiaries has, with
regard to any assets or property held or acquired, filed a consent to the
application of Section 341(f) of the Code, or agreed to have Section 341(f)(2)
of the Code apply to any disposition of a Subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by either the Company or any of
its Subsidiaries.
Section 3.13 [Omitted].
Section 3.14 Permits; Compliance with Laws
(a) Except as set forth on Section 3.14(a) of the Disclosure
Schedules, each of the Company and its Subsidiaries holds, to the extent legally
required, all federal, state, local and foreign governmental approvals,
authorizations, certificates, filings, franchises, orders, registrations,
findings of suitability, licenses, notices, permits, applications and rights,
including all authorizations under any applicable law ("Permits"), necessary for
the Company and its Subsidiaries to own, lease or operate their properties and
assets and to carry on their business as now conducted, other than such Permits
the absence of which would not reasonably be expected to have a material adverse
effect on the Company, and there has occurred no default under any such Permit
other than such defaults which would not reasonably be expected to have a
material adverse effect on the Company. To the knowledge of the Company, no
event has occurred, and no facts or circumstances exist, which would reasonably
be expected to adversely affect the ability of the Company and its Subsidiaries
to obtain all necessary Permits to allow the Company and its Subsidiaries to
conduct its business in the manner the Company and its Subsidiaries proposes to
conduct such business, except where the failure to obtain all necessary permits
would not reasonably be expected to have a material adverse effect on the
Company.
27
(b) Each of the Company and its Subsidiaries is in compliance
with all applicable laws, except for possible noncompliance which would not
reasonably be expected to have a material adverse effect on the Company.
Section 3.15 State Takeover Statutes. For purposes of Section
203(a)(1) of the DGCL, the Board, including the Special Committee of the Board,
has approved this Agreement and the Merger, and the other transactions
contemplated hereby and thereby.
Section 3.16 Broker's or Finder's Fee. Except for Xxxxx & Company
Incorporated and Ladenburg, Xxxxxxxx & Co., Inc., no agent, broker, Person or
firm acting on behalf of the Company is, or will be, entitled to any investment
banking or broker's or finder's fees from any of the parties hereto, or from any
Person controlling, controlled by, or under common control with any of the
parties hereto, in connection with this Agreement or any of the transactions
contemplated hereby. The Company has provided Parent and Merger Sub true and
correct copies of all agreements by and between Xxxxx and Company Incorporated
and the Company and between Ladenburg, Xxxxxxxx & Co., Inc. and the Company and
such agreements will not be amended without the consent of Parent and Merger
Sub, as applicable and which consent will not be unreasonably withheld or
delayed.
Section 3.17 Company Intellectual Property and Library Properties
(a) The Company or its Subsidiaries own all right, title and
interest in, or have a valid right to use, all Company Intellectual Property and
Library Properties, subject to third party clearances on the content, free and
clear of all written agreements granting liens, security interests, pledges,
hypothecations and mortgages, except for any such liens, security interests,
pledges, hypothecations and mortgages granted pursuant to any collective
bargaining or distribution agreements. The Company or Subsidiaries may exercise
Exploitation Rights with respect to the Library Properties in a manner
consistent with the conduct of the business by the Company and its Subsidiaries
as currently conducted. Company Intellectual Property shall not include any of
the Excluded Intellectual Property, and the Company and its Subsidiaries shall
have no right to use the Excluded Intellectual Property after the Closing Date
except for the Company's or any of its Subsidiaries' (i) rights in and to the
Excluded Intellectual Property to the extent and only to the extent granted
pursuant to any other agreement, including, but not limited to, the Employment
Agreement, or (ii) rights to use any Excluded Intellectual Property which may be
embodied in any Library Property.
(b) Section 3.17(b)(i) of the Disclosure Schedules sets forth an
accurate and complete list of all registrations and applications for
registration for Trademarks, Patents, and Copyrights owned by the Company and
its Subsidiaries. Section 3.17(b)(ii) sets forth a list of those Trademarks
currently owned by the Company which it has previously agreed to assign to Olive
Enterprises, Inc. ("Enterprises") upon issuance of US Federal trademark
registration certificates for the same. No Trademark set forth on Section
3.17(b)(ii) of the Disclosure Schedules is subject to material usage in the
business of the Company or any of its Subsidiaries as currently conducted other
than the Trademarks AMERICA'S OLDEST LIVING TEENAGER and I LIKE THE BEAT.
28
The Trademarks AMERICA'S OLDEST LIVING TEENAGER and I LIKE THE BEAT will be
licensed to the Company upon Closing pursuant to an agreement as contemplated in
Section 5.7.
(c) Section 3.17(c) of the Disclosure Schedules sets forth an
accurate and complete list of all Library Properties, indicating which Library
Properties are solely and exclusively owned by the Company or its Subsidiaries,
and which Library Properties are co-owned with or owned by third parties but as
to which the Company or its Subsidiaries has any Exploitation Rights.
(d) Neither the Company nor any of its Subsidiaries has (i)
licensed or sublicensed its rights in any material Company Intellectual Property
other than pursuant to License Agreements or Library Agreements; or (ii) granted
or obtained any material Exploitation Rights in the Library Properties, other
than pursuant to the Library Agreements.
(e) All material Trademarks, Copyrights, and Patents owned by
Company or its Subsidiaries are subsisting, in full force and effect, have not
been cancelled, expired, or abandoned, and to the knowledge of the Company are
valid and enforceable. Except as disclosed in Section 3.17(e) of the Disclosure
Schedules, the Company or one of its Subsidiaries is listed in the applicable
intellectual property registry as the record owner of any registration or
application for registration of any Trademark, Copyright or Patent owned by the
Company. Except as disclosed in Section 3.17(e) of the Disclosure Schedules,
there is no pending, or, to the knowledge of Company, threatened opposition,
interference, or cancellation proceeding before any court or registration
authority in any jurisdiction against any registrations or applications in
respect of any Trademark, Copyright or Patent owned by the Company.
(f) The exercise by the Company or any of its Subsidiaries of any
Exploitation Rights in the Library Properties in the United States and the
conduct of the Company's business (other than the exercise of Exploitation
Rights in the Library Properties), to the knowledge of the Company, does not
infringe, misappropriate, dilute or otherwise violate (either directly or
indirectly such as through contributory infringement or inducement to infringe)
any Intellectual Property Rights owned or controlled by any third party. Neither
the Library Properties nor the Company's, its Subsidiaries or licensee's
exercise of Exploitation Rights with respect thereto in the United States in a
manner consistent with past practices, libels, defames, violates the rights of
privacy or publicity of any person or violates any other applicable law that is
likely to result in a material adverse effect on the Company.
(g) Except as set forth on Section 3.17(g) of the Disclosure
Schedules, there is no pending, or to the knowledge of the Company, any
threatened claim, suit, arbitration or other adversarial proceeding before any
court, agency, arbitral tribunal, or registration authority in any jurisdiction
to which the Company or any Subsidiary or any of its licensees is a party (i)
involving the Company Intellectual Property or Library Properties; (ii) alleging
that the activities or the conduct of the business of the Company or any of its
Subsidiaries, or the exercise of any Exploitation
29
Rights with respect to the Library Properties infringes, misappropriates,
dilutes, or otherwise violates, the Intellectual Property Rights of any third
party; or (iii) challenging the ownership, use, validity, enforceability or
registrability of any Company Intellectual Property.
(h) Except as set forth on Section 3.17(h) of the Disclosure
Schedules, there are no settlements, forbearances to xxx, consents, judgments,
or orders that (i) materially restrict the rights of the Company or any
Subsidiaries to own or use any Company Intellectual Property or Library
Properties; (ii) materially restrict the conduct of the business of the Company
or any of its Subsidiaries in order to accommodate a third party's Intellectual
Property Rights; or (iii) permit third parties to use any Company Intellectual
Property or to exercise Exploitation Rights with respect to any Library
Properties.
(i) All officers of the Company or any of its Subsidiaries have
executed written nondisclosure agreements and, to the knowledge of the Company,
no party to any such nondisclosure agreement is in material breach or default
thereof. The Company and its Subsidiaries take reasonable measures to protect
the confidentiality of their material Trade Secrets.
(j) Except as set forth on Section 3.17(j) of the Disclosure
Schedules, no third party, to the knowledge of the Company, is infringing,
misappropriating, diluting, or otherwise violating any Company Intellectual
Property or the Company's, its Subsidiaries' or their licensees' rights in the
Library Properties.
(k) The consummation of the transactions contemplated by this
Agreement will not result in the loss or impairment of the right of the Company
or any of its Subsidiaries to own or use Company Intellectual Property or
exercise any Exploitation Rights with respect to the Library Properties.
(l) To the knowledge of the Company, all material Library
Underlying Rights owned solely by the Company and its Subsidiaries, were (i)
developed by employees of the Company or its Subsidiaries within the scope of
their employment; (ii) developed by independent contractors as
"works-made-for-hire," as that term is defined under Section 101 of the United
States Copyright Act, 17 U.S.C. ss.101; (iii) developed by third parties who
have assigned all of their rights therein to the Company or a Subsidiary; (iv)
duly licensed to the Company or its Subsidiaries pursuant to the Library
Agreements; (v) in the public domain; (vi) permitted to be exploited by the
Company and its Subsidiaries pursuant to the provisions of 17 U.S.C. ss. 107; or
(vii) a combination of any of the foregoing.
(m) To the knowledge of the Company, all music contained within
the Library Properties owned by the Company and its Subsidiaries is (i)
controlled by American Society of Composers, Authors and Publishers, Broadcast
Music Inc. or The Society of European Stage Authors and Composers; (ii) in the
public domain; or (iii) duly licensed or otherwise owned by the Company and its
Subsidiaries with sufficient rights to permit its public performance in the
United States in connection with the Library
30
Properties subject, however, to the terms and conditions of the License
Agreements, Library Agreements and any union, collective bargaining or guild
agreement.
(n) The Physical Media are in good physical condition, and to the
knowledge of the Company, no Physical Media have been rejected by a third party
on the basis of defective physical condition, and neither the Company nor any of
its Subsidiaries has received any written notice of such rejection. A Physical
Media exists for every Library Property set forth on Section 3.17(c) of the
Disclosure Schedules.
(o) All material License Agreements and Library Agreements to
which the Company or one of its Subsidiaries is a party, or is otherwise
obligated, are valid and binding obligations of the Company and/or the
applicable Subsidiaries, enforceable in accordance with their agreed terms,
except as enforcement may be limited by bankruptcy, insolvency, moratorium,
reorganization, arrangement or similar laws affecting creditors' rights
generally and by general principles of equity. There exists no event or
condition which will result in a violation or breach of, or constitute a default
by the Company or any of its Subsidiaries or, to the knowledge of the Company,
any other party thereto, under any such License Agreement or Library Agreement
which are likely to result in a material adverse effect on the Company's
business as currently conducted.
(p) The Company and its Subsidiaries have good title in and to
any Physical Media for the Library Properties that are solely owned by the
Company and its Subsidiaries, except for distributors' rights pursuant to any
distribution agreements. Except for Library Properties that are financially
immaterial to the financial condition or results of operation of the business of
the Company and its Subsidiaries, taken as a whole, and the value of the Library
Properties, taken as a whole, the Company has customary access to the Physical
Media for the Library Properties that are solely owned, or that are jointly
owned but solely controlled, by the Company and its Subsidiaries including the
right to remove such Physical Media from the custody of any third party with
which the Company has a storage agreement relating thereto. To the knowledge of
the Company, no Library Property solely owned or controlled by the Company and
its Subsidiaries for which there is only one Physical Media in existence is in
the custody of a third party other than pursuant to an agreement that grants
Company or any of its Subsidiaries the right to remove such Physical Media from
the custody of such third party. At Closing, the Company shall provide a list of
each third party that is contracted to store the Physical Media for the Library
Properties, that are solely owned by the Company and its Subsidiaries as set
forth on Section 3.17(c) of the Disclosure Schedules, setting forth the identity
of the third party and providing contact information for such third party and
the location of the Physical Media.
(q) The Company and its Subsidiaries, in the conduct of the
business as currently conducted, use only standard, commercially available and
"off-the-shelf" software licensed from third parties.
31
Section 3.18 Real Property.
(a) Owned Properties. Section 3.18(a) of the Disclosure Schedules
sets forth a true, correct and complete list of all real property owned by the
Company or any of its Subsidiaries (each, an "Owned Real Property"). Except as
otherwise set forth on Section 3.18(a) of the Disclosure Schedules, with respect
to each such parcel of Owned Real Property: (i) such parcel is free and clear of
all Liens, except for the Permitted Liens; (ii) there are no leases, subleases,
licenses, tenancies, concessions, or other agreements, written or oral, granting
to any Person the right of use or occupancy of any portion of such Owned Real
Property; and (iii) there are no outstanding actions, rights of first refusal or
options to purchase such parcel.
(b) Leased Properties. Section 3.18(b) of the Disclosure
Schedules sets forth a true, correct and complete list of all of the leases,
licenses, tenancies, subleases and all other material occupancy agreements
("Leases") in which the Company or any of its Subsidiaries is a tenant,
subtenant, landlord or sublandlord (the leased and subleased space or parcel of
Real Property thereunder being, collectively, the "Leased Real Property"), and
for each Lease indicates whether or not the consent of the landlord thereunder
will be required in connection with the Merger. With respect to each Lease: (i)
the Lease is in full force and effect; and (ii) neither the Company (or its
applicable Subsidiary), nor to the knowledge of the Company, any other party to
the Lease, is in material default under the Lease, and no event has occurred
which, with notice or lapse of time, would constitute a breach or default by the
Company (or such Subsidiary) under the Lease except where such breach or default
would not reasonably be expected to have a material adverse effect on the
Company or a material adverse effect on the Company's restaurant operations
taken as a whole.
(c) Real Property Disclosure. Except as disclosed on Sections
3.18(a) and 3.18(b) of the Disclosure Schedules, there is no Real Property (as
defined below) leased or owned by the Company or any of its Subsidiaries that is
used in their business. The Owned Real Property and Leased Real Property is
referred to collectively herein as the "Real Property."
(d) No Proceedings. There are no proceedings in eminent domain,
condemnation or other similar proceedings pending or, to the knowledge of the
Company, threatened, relating to or affecting any portion of the Real Property.
(e) Current Use. The current use of the Real Property does not
violate any instrument of record or agreement affecting such Real Property in a
manner that has had, or is reasonably likely to have or result in, a material
adverse effect on the Company. There are no violations of any covenants,
conditions, restrictions, easements, agreements or orders of any Governmental
Entity having jurisdiction over any of the Real Property that affect such Real
Property or the use or occupancy thereof in a manner that has had, or is
reasonably likely to have or result in, a material adverse effect on the
Company. No damage or destruction has occurred with respect to any of the Real
Property that has had, or is reasonably likely to have or result in, a material
adverse effect on the Company.
32
(f) Condition and Operation of Improvements. To the knowledge of
the Company, all buildings, structures, fixtures and other improvements included
within the Real Property (the "Improvements") are, in all material respects, in
operating condition and repair and adequate to operate such facilities as
currently used, and there are no facts or conditions affecting any of the
Improvements which would, individually or in the aggregate, interfere in any
material respect with the current use, occupancy or operation thereof.
Section 3.19 Insurance. The Company maintains insurance coverage with
reputable insurers in such amounts and covering such risks as are generally in
accordance with normal industry practice for companies engaged in businesses
similar to those of the Company and its Subsidiaries.
Section 3.20 Contracts
(a) The Company has provided to Parent true and complete copies
of all material contracts, undertakings, commitments, licenses or agreements
(other than contracts, undertakings, commitments or agreements for employee
benefit matters set forth in Section 3.11 of the Disclosure Schedules) (the
"Contracts") including, without limitation all:
(i) contracts requiring annual expenditures by or
liabilities of the Company and its Subsidiaries in excess of one hundred
thousand dollars ($100,000) which have a remaining term in excess of one
hundred eighty (180) days or are not cancellable (without material penalty,
cost or other liability) within one hundred eighty (180) days;
(ii) contracts containing covenants limiting the freedom of
the Company or any of its Subsidiaries to engage in any line of business
(other than prohibitions against engaging in business relating to specific
product lines) or compete with any person, in any product line or line of
business, or operate at any location; and
(iii) contracts containing change of control provisions or
requiring payment of cash or other consideration following a change of
control.
(b) Each of the Contracts (other than License Agreements and
Library Agreements which are covered by Section 3.17(o)) is a valid and binding
obligation of the Company and, to the Company's knowledge, the other parties
thereto, enforceable against the other parties thereto in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
moratorium, reorganization, arrangement or similar laws affecting creditors'
rights generally and by general principles of equity.
(c) None of the Company or its Subsidiaries is in breach, default
or violation (and no event has occurred or not occurred through the Company's
action or inaction or, to the knowledge of the Company, through the action or
inaction of any third parties, which with notice or the lapse of time or both
would constitute a breach, default
33
or violation) of any term, condition or provision of any Contract (other than
License Agreements and Library Agreements which are covered by Section 3.17(o))
to which the Company or any of its Subsidiaries is now a party or by which any
of them or any of their respective properties or assets may be bound, except for
violations, breaches or defaults that, individually or in the aggregate, would
not have a material adverse effect on the Company.
Section 3.21 Board Consent and Recommendation. Each of the Board and
the Special Committee has (a) determined that the Merger and this Agreement, and
the transactions contemplated hereby are advisable and fair to and in the best
interests of the Company and its stockholders, (b) approved the Merger and this
Agreement and the transactions contemplated hereby to which the Company is a
party, and (c) resolved to recommend that the stockholders of the Company
approve the Merger and this Agreement and the transactions contemplated hereby
to which the Company is a party.
Section 3.22 [Omitted]
Section 3.23 Related Party Transactions. Except as set forth in
Section 3.23 of the Disclosure Schedules or in the Company's SEC Reports filed
prior to the date of this Agreement, no (a) beneficial owner of 5% or more of
the Company's outstanding capital stock, nor (b) officer or director of the
Company or (c) any Person (other than the Company) in which any such beneficial
owner, officer or director owns any beneficial interest (other than a publicly
held corporation whose stock is traded on a national securities exchange or in
the over-the-counter market and less than 1% of the stock of which is
beneficially owned by all such Persons) (collectively, "Related Parties") has
entered into any transactions with the Company or its Subsidiaries that are
required to be disclosed in or will be required to be disclosed in, any Company
SEC Reports. Copies of all agreements relating to such transactions have been
provided to, or made available to Parent.
Section 3.24 Vote Required. The affirmative vote of the holders of at
least a majority of the votes entitled to be cast by the holders of the Class A
Common Stock and Common Stock entitled to vote thereon (voting together as a
single class) (the "Requisite Vote") is the only vote of the holders of any
class or series of capital stock of the Company necessary to approve the Merger
and this Agreement and the transactions contemplated hereby to which the Company
is a party.
Section 3.25 Employment Matters
(a) Except as set forth on Section 3.25 of the Disclosure
Schedules, (i) neither the Company nor any Subsidiary is a party to or bound by
any collective bargaining agreement or similar agreement with any labor
organization, or work rules or practices agreed to with any labor organization
or employee association applicable to employees of the Company or any
Subsidiary, (ii) none of the employees of the Company or any Subsidiary are
represented by any labor organization and there are no organizational campaigns,
demands or proceedings pending or, to the knowledge of the Company, threatened
by any labor organization or group of employees seeking recognition or
certification as collective bargaining representatives of any group of employees
of the Company or any Subsidiary, (iii) to the
34
knowledge of the Company, there are no union claims to represent the employees
of the Company or any Subsidiary, (iv) there are no strikes, slowdowns, work
stoppages, lockouts or material labor disputes pending, or, to the knowledge of
the Company, threatened against or affecting the Company, and there has not been
any such action during the past five years.
(b) Each of the Company and its Subsidiaries is and has at all
times during at least the last twelve months, been in material compliance with
all applicable laws, regulations, and ordinances respecting immigration,
employment and employment practices, and the terms and conditions of employment,
including without limitation, employment standards, equal employment
opportunity, family and medical leave, wages, hours of work and occupational
safety and health, and is not engaged in any unfair labor practices as defined
in the National Labor Relations Act or other applicable law, ordinance or
regulation, except where such material non-compliance would not, reasonably be
expected to have a material adverse effect on the Company. There are no
employment contracts or severance agreements with any employees of the Company
or any Subsidiary and no written personnel policies, rules or procedures
applicable to employees of the Company or any Subsidiary, other than those set
forth on Section 3.25 of the Disclosure Schedules, true and complete copies of
which have heretofore been made available to Parent and Merger Sub. Except as
set forth on Section 3.25 of the Disclosure Schedules, to the knowledge of the
Company, there are (i) no complaints, controversies, charges, investigations,
lawsuits or other proceedings relating to the Company or any Subsidiary pending
or threatened in any court or with any agency responsible for the enforcement of
Federal, state, local or foreign labor or employment laws regarding breach of
any express or implied contract of employment, any law or regulation governing
employment or the termination thereof or other illegal, discriminatory, wrongful
or tortious conduct in connection with the employment relationship, the terms
and conditions of employment, or applications for employment with the Company or
any Subsidiary except where such complaint, controversy, charge, investigation,
lawsuit, or other proceeding would not reasonably be expected to have a material
adverse effect on the Company or on the consummation of the transactions
contemplated hereby, and (ii) no Federal, state, local or foreign agency
responsible for the enforcement of immigration, labor, worker health and safety,
or employment laws intends to conduct or is conducting an investigation with
respect to or relating to the Company or any Subsidiary, except where such
investigation would not, reasonably be expected to have a material adverse
effect on the Company or on the consummation of the transactions contemplated
hereby.
(c) Except as set forth on Section 3.25 of the Disclosure
Schedules, since January 1, 1997, neither the Company nor any of its
Subsidiaries has effectuated (i) a "plant closing" as defined in the Worker
Adjustment and Retraining Notification Act of 1988 (the "WARN Act") affecting
any site of employment or one or more facilities or operating units within any
site of employment or facility of the Company or any of its Subsidiaries, or
(ii) a "mass layoff" (as defined in the WARN Act) affecting any site of
employment or facility of the Company or any of its Subsidiaries; nor has the
Company nor any of its Subsidiaries been affected by any transaction or
35
engaged in layoffs or employment terminations sufficient in number to trigger
application of any similar state or local law.
Section 3.26 [Omitted].
Section 3.27 Opinion of Financial Advisor. The Board has received a
written opinion of Xxxxx & Company Incorporated, dated as of the date of the
meeting of the Board approving this Agreement, to the effect that, as of the
date of such written opinion, the consideration to be received as a result of
the Merger by the holders of Common Stock, other than the Principal
Stockholders, is fair, from a financial point of view, to such stockholders. In
addition, the Board has received a written opinion of Ladenburg, Xxxxxxxx & Co.,
Inc., dated as of the date hereof, to the effect that, as of the date of such
written opinion, the consideration to be received as a result of the Merger by
the holders of Common Stock, other than the Principal Stockholders, is fair,
from a financial point of view, to such stockholders.
Section 3.28 [Omitted].
Section 3.29 NASDAQ Qualification. All outstanding shares of the
Common Stock are designated as qualified for trading on the NASDAQ National
Market of the NASDAQ Stock Market operated by the NASDAQ Stock Market Inc.
Section 3.30 Memorabilia. Section 3.30 of the Disclosure Schedules
sets forth a list of memorabilia owned by the Company or its Subsidiaries, and
any memorabilia not set forth on Section 3.30 of the Disclosure Schedules shall
be deemed to be owned by Xxxxxxx X. Xxxxx, individually, or Enterprises. For the
avoidance of doubt, the corporate records or production documents of the Company
and its Subsidiaries shall not be considered "memorabilia" and shall be owned by
the Company or its Subsidiaries. Subject to the terms of the Employment
Agreement and the Non-Competition Agreement, all memorabilia not owned by the
Company which is currently located in the Company's or its Subsidiaries'
restaurants shall remain on loan to the Company and its Subsidiaries, free of
charge, so long as the Company or its Subsidiaries continue to operate the
restaurants.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT, MERGER SUB AND CAPITAL COMMUNICATIONS
Except as set forth in the corresponding numbered sections of the
disclosure schedules delivered by Parent, Merger Sub and Capital Communications
to the Company concurrently with the execution of this Agreement or referenced
in the particular section of this Article IV to which exception is being taken,
Parent, Merger Sub and Capital Communications jointly and severally each
represents and warrants to the Company as follows:
Section 4.1 Organization, Standing and Corporate Power. Each of
Parent, Merger Sub and Capital Communications is a corporation duly organized,
validly
36
existing and in good standing under the laws of the State of Delaware or the
Province of Quebec, Canada, as the case may be. Each of Parent and Capital
Communications has the requisite corporate power and authority to carry on its
business as now being conducted. Merger Sub was formed solely for the purpose of
engaging in the transactions contemplated hereby and has not engaged in any
business activities or conducted any operations other than in connection with
the transactions contemplated hereby.
Section 4.2 Authority; Noncontravention
(a) Each of Parent, Merger Sub and Capital Communications has the
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by each of Parent, Merger Sub and Capital Communications and the
consummation by each of Parent, Merger Sub and Capital Communications of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of each of Parent, Merger Sub and Capital
Communications, respectively, and by Parent as the sole stockholder of Merger
Sub. This Agreement has been duly executed and delivered and, assuming this
Agreement constitutes the valid and binding obligation of the other parties
hereto, constitutes valid and binding obligations of each of Parent, Merger Sub
and Capital Communications, enforceable against each of Parent, Merger Sub and
Capital Communications, as the case may be, in accordance with its terms.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
Parent, Merger Sub or Capital Communications in connection with the execution
and delivery of this Agreement by Parent, Merger Sub and Capital Communications
or the consummation by Parent, Merger Sub and Capital Communications of any of
the transactions contemplated hereby and thereby, except (A) for the filing of a
pre-merger notification and report form by Parent, Merger Sub and Capital
Communications under the HSR Act, (B) applicable requirements under the Exchange
Act (C) for the filing of the Certificate of Merger with the Secretary of State
of the State of Delaware and appropriate documents with the relevant authorities
of other states in which Parent, Merger Sub or Capital Communications is
qualified to do business and (D) such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made would not reasonably be expected to impair, in any material
respect, the ability of Parent, Merger Sub or Capital Communications to perform
their respective obligations under or prevent or significantly delay the
consummation of the transactions contemplated by this Agreement.
Section 4.3 Financing. Capital Communications has and will provide
sufficient funds to enable Parent and Merger Sub to perform any and all of the
respective obligations (including, without limitation, any and all financial
obligations) of the Parent and/or the Merger Sub under this Agreement and in
connection with the transactions contemplated hereby, including, without
limitation, the payment of the Merger Consideration as provided for in this
Agreement until the total Merger Consideration has been paid to the Paying Agent
pursuant to Section 2.10(a) after which time this representation and warranty
shall cease to have any force or effect.
37
Section 4.4 Information Supplied. None of the information supplied or
to be supplied in writing by Parent, Merger Sub, Capital Communications or any
of their respective affiliates specifically for inclusion in the Proxy Statement
will, at the date the Proxy Statement is first mailed to the Company's
stockholders or the time of the Special Meeting, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. Notwithstanding the
foregoing, each of Parent, Merger Sub and Capital Communications makes no
representation or warranty with respect to any information supplied by the
Company or any of its representatives which is contained in or incorporated by
reference in any of the foregoing documents.
Section 4.5 Balance Sheet. Capital Communications has previously
provided to the Company an audited balance sheet for the year ended December 31,
2000, and such balance sheet fairly presents, in all material respects, the
financial position of Capital Communications at December 31, 2000. Since
December 31, 2000 there has been no adverse change in the financial condition of
Capital Communications which could adversely affect the ability of Capital
Communications to perform any of its obligations under this Agreement and in
connection with the transactions contemplated hereby and Capital Communications
has, and will have as of the Effective Time, the liquidity to perform all of its
obligations under this Agreement and in connection with the transactions
contemplated hereby, as such obligations become due or are otherwise to be
performed.
Section 4.6 Ownership of Shares. Each of Parent and Merger Sub does
not own any shares of Common Stock of the Company.
Section 4.7 Brokers or Finders. Except for BNY Capital Markets, Inc.,
whose fees and expenses will be paid by the Parent in accordance with the
Parent's agreement with such firm, and the fees described in Section 10.11 of
the Stockholders Agreement, by and among Parent, Capital Communications and the
other stockholders of Parent, the form of which is attached hereto on Section
4.7 of the disclosure schedules of Parent, Merger Sub and Capital
Communications, no agent, broker, Person or firm acting on behalf of the Parent,
Merger Sub or Capital Communications is, or will be, entitled to any investment
banking or broker's or finder's fees from any of the parties hereto, or from any
Person controlling, controlled by, or under common control with any of the
parties hereto, in connection with this Agreement or any of the transactions
contemplated hereby. Parent, Merger Sub and Capital Communications have provided
the Company true and correct copies of all agreements by and between BNY Capital
Markets, Inc. and Parent, Merger Sub and Capital Communications and such
agreements will not be amended without the consent of the Company, as
applicable.
38
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 5.1 Conduct of Business. The Company covenants and agrees that
prior to the Effective Time, except (i) as expressly contemplated by this
Agreement, or (ii) with the written consent of the Parent after the date hereof
(which consent shall not be unreasonably withheld or delayed):
(a) the Company shall not, and shall not permit any of its
Subsidiaries, to take any actions that would cause it not to conduct its
business in the ordinary course and consistent with past practices, and, except
as set forth on Section 5.1(a) of the Disclosure Schedules, the Company shall
use commercially reasonable efforts to preserve its business organization intact
and keep available the services of its current officers and employees and
maintain its existing material business relationships;
(b) the Company shall not, and shall not permit any of its
Subsidiaries, to: (i) amend its certificate of incorporation or by-laws or
similar organizational documents of its Subsidiaries except as may be required
by applicable law, (ii) issue, sell, transfer, pledge, dispose of or encumber
any shares of any class or series of its Capital Stock, or securities
convertible into or exchangeable for, or options, warrants, calls, commitments
or rights of any kind to acquire, any shares of any class or series of its
Capital Stock other than shares reserved for issuance on the date of this
Agreement pursuant to the exercise of Company Stock Options outstanding on the
date of this Agreement, (iii) declare, set aside or pay any dividend or other
distribution payable in cash, stock or property with respect to any shares of
any class or series of its Capital Stock other than dividends and distributions
by any direct or indirect wholly owned Subsidiary of the Company to its parent,
(iv) split, combine or reclassify any shares of any class or series of its stock
or (v) redeem, purchase or otherwise acquire, directly or indirectly, any shares
of any class or series of its Capital Stock (other than in connection with the
exercise of Company Stock Options outstanding as of the date of this Agreement),
or any instrument or security which consists of or includes a right to acquire
such shares;
(c) the Company shall not and shall not permit any of its
Subsidiaries to: (i) modify, amend or terminate any of its material contracts or
waive, release or assign any material rights or claims, except in the ordinary
course of business and consistent with past practice or (ii) prepay liabilities
outside the ordinary course of business consistent with past practice;
(d) except as set forth on Section 5.1(d) of the Disclosure
Schedules, the Company shall not and shall not permit any of its Subsidiaries to
enter into any commitments to produce projects (including, without limitation,
TV shows, TV movies or syndicated shows) for which the production budget will
exceed the licensing fee or third party financing by more than $250,000 for any
single expenditure or $500,000 in the aggregate.
39
(e) the Company shall not and shall not permit any of its
Subsidiaries to: (i) other than in the ordinary course of business, consistent
with past practice, (x) incur or modify any Indebtedness for borrowed money, or
(y) incur or assume any other material Indebtedness; (ii) subject to Section
5.1(e) of the Disclosure Schedules, assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other Person, except in the ordinary course of business
and consistent with past practice; (iii) subject to Section 5.1(e) of the
Disclosure Schedules, make any loans, advances or capital contributions to, or
investments in, any other Person except in the ordinary course of business and
consistent with past practices; or (iv) subject to Section 5.1(e) of the
Disclosure Schedules, enter into any material commitment or transaction
including any capital expenditure or purchase, sale or lease of assets or real
estate, except in the ordinary course of business and consistent with past
practices, and for any sale, transfer or other disposition of assets related to
the restaurant business, provided, further, that capital expenditures,
purchases, sales, except the sale or other disposition of the Company's
restaurants, or leases of capital assets or real property (excluding
acquisitions of Intellectual Property) may not exceed $250,000 in the aggregate
for the restaurant business of the Company and $250,000 in the aggregate for all
other businesses of the Company;
(f) except as permitted by Section 5.1(f) of the Disclosure
Schedules the Company shall not and shall not permit any of its Subsidiaries to
transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any
assets other than in the ordinary course of business and consistent with past
practice or in connection with any sale, transfer or other disposition of any of
the Company's restaurants; or
(g) except as set forth on Section 5.1(g) of the Disclosure
Schedules, the Company shall not and shall not permit any of its Subsidiaries to
(i) make or offer to make any change in the compensation or benefits payable or
to become payable (including acceleration of vesting or time of payment) to any
of its current officers, directors, employees, agents or consultants (other than
normal recurring increases in wages to employees who are not officers or
directors or Affiliates in the ordinary course of business and consistent with
past practice, or except for such offers or changes with respect to consultants
as are in the ordinary course of business consistent with past practice) or to
Persons providing management services (other than as set forth in existing
agreements with persons providing management services) or in the ordinary course
of business and consistent with past practices, or (ii) enter into or amend any
employment, severance, consulting, termination or other agreement or employee
benefit plan (other than such agreements or amendments which would not violate
subparagraph (i) hereof) or (iii) make any loans to any of its officers,
directors, employees, Affiliates, agents or consultants or make any change in
its existing borrowing or lending arrangements for or on behalf of any of such
Persons pursuant to an employee benefit plan or otherwise, other than advances
in the ordinary course of business consistent with past practices;
(h) except if not prohibited by Sections 5.1(d) and 5.1(e) the
Company shall not and shall not permit any of its Subsidiaries to enter into any
contract
40
or transaction relating to the purchase of assets other than in the ordinary
course of business and consistent with past practices;
(i) the Company shall not and shall not permit any of its
Subsidiaries to hire any permanent non-production full time new employee with a
salary in excess of $75,000 per year but the Company may replace existing
employees whose employment with the Company terminates prior to the Effective
Time with new employees provided such new employees have positions and
compensation that are generally comparable to that of the replaced employees;
(j) the Company shall not and shall not permit any of its
Subsidiaries to fail to file, on a timely basis, including allowable extensions,
with appropriate Tax Authorities all Tax Returns required to be filed by or with
respect to the Company and each of its Subsidiaries for taxable years or periods
ending on or before the Closing Date or fail to timely pay or remit (or cause to
be paid or remitted) any Taxes due in respect of such taxable years or periods;
(k) the Company shall not and shall not permit any of its
Subsidiaries to: (i) change any of the accounting methods used by it unless
required by GAAP, or (ii) make any material election relating to Taxes, change
any material election relating to Taxes already made, adopt any material
accounting method relating to Taxes, change any material accounting method
relating to Taxes unless required by GAAP or change in the Code or the
regulations under the Code, enter into any closing agreement relating to Taxes,
settle any claim or assessment relating to Taxes or consent to any claim or
Audit relating to Taxes or any waiver of the statute of limitations for any such
claim or Audit;
(l) the Company shall not and shall not permit any of its
Subsidiaries to settle any litigation, where the Company is a defendant, that
requires the payment of in excess of $250,000, that is not covered by insurance;
and
(m) the Company shall not and shall not permit any of its
Subsidiaries to enter into any agreement, contract, commitment, understanding or
arrangement to engage in any action prohibited by this Section 5.1.
Section 5.2 Advice of Changes. Parent, Merger Sub, Capital
Communications and the Company shall promptly advise the other party orally and
in writing of:
(a) Any representation or warranty made by it contained in this
Agreement becoming untrue or inaccurate in any material respect;
(b) The failure by it to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied by
it under this Agreement;
(c) Any change or event having, or which, to such party's
knowledge could reasonably be expected to constitute, a material adverse effect
or could
41
reasonably be expected to delay or impede the ability of such party to
consummate the transactions contemplated by this Agreement or to fulfill its
obligations set forth herein;
(d) Any written notice or other communication from any Person
alleging that the consent of such Person is or may be required in connection
with the Merger;
(e) Any material written notice or other material communication
from any Governmental Entity in connection with the Merger as well as such other
information or documentation from any Governmental Entity as may be reasonably
requested in writing from time to time by Parent, Merger Sub, Capital
Communications or the Company;
(f) Any action, suit, claim, investigation or proceeding
commenced or threatened in writing against, relating to or involving or
otherwise affecting the Company or any of its Subsidiaries or Parent, Merger Sub
or Capital Communications that relate to the consummation of the Merger; or
(g) Any offer to purchase assets relating to the Company's
restaurant operations which is being seriously considered by the Company.
provided, however, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties set forth in this Agreement. Additionally, the
Company shall furnish to Parent, as promptly as practicable following Parent's
request therefor, all information reasonably necessary for Parent accurately to
determine (i) what amounts, if any, payable under any of the Plans or any other
contract, agreement, or arrangement as a result of which the Company or any of
its Subsidiaries may have any liability for Federal taxes (including the
inability to deduct such amounts) by virtue of section 162(m) or section 280G of
the Code, or (ii) whether the Company or any of its Subsidiaries has entered
into any contract, agreement or arrangement that would result in the
disallowance of any tax deductions pursuant to section 280G of the Code.
Section 5.3 No Solicitation of Offers; Notice of Proposals from
Others
(a) Neither the Company nor any of its Subsidiaries shall (and
the Company shall cause the officers, directors, employees, representatives and
agents of the Company and each of its Subsidiaries, including investment
bankers, attorneys and accountants, not to), directly or indirectly, encourage,
solicit, participate in or initiate (including by way of furnishing or
disclosing non-public information) or knowingly take any action designed to
facilitate any discussions, inquiries, negotiations or the making of any
proposals with respect to or concerning any merger, consolidation, share
acquisition, asset purchase, share exchange, business combination, tender offer,
exchange offer or similar transaction involving the acquisition of all or a
substantial portion of the assets of the Company and its Subsidiaries, taken as
a whole, or a significant equity interest in (including by way of tender offer),
or a recapitalization or restructuring of, the Company (any of those proposed
transactions being an "Acquisition Proposal"). Nothing contained in this Section
5.3 or any other provision of this Agreement shall prohibit the Company or the
42
Board from (i) taking and disclosing to the Company's stockholders a position
with respect to a tender or exchange offer by a third party not solicited,
encouraged, discussed, continued or failed to be ceased or terminated in
contravention of this Agreement pursuant to Rules 14d-9 and 14e-2 under the
Exchange Act, or (ii) making such disclosure to the Company's stockholders as,
in the good faith judgment of the Board, pursuant to advice from outside
counsel, is reasonably expected to be required under applicable law, provided
that the Company may not, except as permitted by Section 8.3, withdraw or modify
its position with respect to the Merger or approve or recommend any Acquisition
Proposal, or enter into any agreement with respect to any Acquisition Proposal.
Upon execution of this Agreement, the Company will immediately cease any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing. Notwithstanding the foregoing,
prior to the Effective Time, the Company may furnish information (including
non-public information) to any Person pursuant to appropriate confidentiality
agreements (which shall permit the disclosure contemplated by this Section
5.3(a)), and may negotiate and participate in discussions and negotiations with
such Person concerning an Acquisition Proposal if:
(A) such entity or group has, on an unsolicited basis, submitted
a bona fide written proposal to the Board relating to any such transaction which
the Board determines in good faith, consistent with advice of an independent
investment banker, (i) is reasonably capable of being funded on the disclosed
terms and (ii) is reasonably likely to be consummated in accordance with its
terms; and
(B) in the opinion of the Special Committee such action is
reasonably expected to be required in order to discharge the Board's fiduciary
duties to the Company's stockholders under applicable law, determined only after
the Special Committee concludes in good faith that the Acquisition Proposal
could reasonably be expected to constitute a proposal that is superior, from a
financial point of view with respect to the stockholders of the Company,
excluding the Principal Stockholders, to the Merger (a "Superior Proposal").
The Company will promptly notify the Parent of (i) the existence of any
Acquisition Proposal received by the Company or its agents or representatives,
the terms and conditions of such Acquisition Proposal and the identity of the
Person making such Acquisition Proposal, or (ii) any inquiry received by the
Company or any of its agents or representatives, in each case, with respect to
an Acquisition Proposal, and the Company will promptly communicate to the Parent
any material changes in the terms and conditions of any such Acquisition
Proposal which it or any of its representatives may receive. The Company will
promptly provide to the Parent any non-public information concerning the Company
provided to any other party which was not previously provided to the Parent.
(b) Except as set forth below in this Section 5.3(b), neither the
Board nor any committee thereof shall (i) withdraw or modify the approval or
recommendation by such Board or any such committee of this Agreement or the
Merger, (ii) approve or recommend any Acquisition Proposal or (iii) enter into
any agreement with respect to any Acquisition Proposal. Notwithstanding anything
set forth in this
43
Agreement, prior to the Effective Time, the Board may, at any time, withdraw or
modify its approval or recommendation of this Agreement or the Merger, approve
or recommend a Superior Proposal, or enter into an agreement with respect to a
Superior Proposal, in each case at any time after the fourth Business Day
following the Parent's receipt of written notice from the Company advising the
Parent that the Board has received a Superior Proposal which it intends to
accept, specifying the terms and conditions of such Superior Proposal and
identifying the Person making such Superior Proposal.
Section 5.4 Third Party Standstill Agreements. During the period from
the date of this Agreement until the Effective Time or earlier termination of
this Agreement, the Company shall not terminate, amend, modify or waive any
provision of any confidentiality or standstill agreement to which it or any of
its Subsidiaries is a party (other than any involving Parent or its
Subsidiaries). During such period, the Company agrees to enforce, to the fullest
extent permitted under applicable law, the provisions of any such agreements,
including obtaining injunctions to prevent any breaches of such agreements and
to enforce specifically the terms and provisions thereof in any court of the
United States or any state thereof having jurisdiction.
Section 5.5 Certain Litigation. The Company agrees that, prior to the
termination of this Agreement pursuant to Article VIII, it shall not settle any
litigation commenced after the date of this Agreement against the Company or any
of its directors by any stockholder of the Company relating to the Merger, this
Agreement, the Voting Agreement or the other transactions contemplated hereby or
thereby, without the prior written consent of Parent, which consent shall not be
unreasonably withheld. In addition, prior to the termination of this Agreement
pursuant to Article VIII, but subject to the provisions of Section 5.3 hereto,
the Company shall not voluntarily cooperate with any Third Party that may
hereafter seek to restrain or prohibit or otherwise oppose the Merger and shall
cooperate with Parent to resist any such effort to restrain or prohibit or
otherwise oppose the Merger and the other transactions contemplated by this
Agreement, provided, however, voluntary cooperation shall not include the
Company acting in a derivative capacity without the support of the Board of
Directors.
Section 5.6 Assignment of Company Intellectual Property. Prior to the
Closing Date, the Company shall cause all Company Intellectual Property set
forth on Section 3.17(b)(i) of the Disclosure Schedules that is solely owned to
be effectively transferred to the Company or a Subsidiary, and the Company shall
record any such transfers in all applicable US intellectual property registries.
Section 5.7 Trademark License. Upon Closing, the parties shall enter
into a trademark license agreement that grants the Company and its Subsidiaries
a non-exclusive, royalty-free right and license to use the Trademarks AMERICA'S
OLDEST LIVING TEENAGER and I LIKE THE BEAT in connection with the sale of
clothing and other designated souvenir paraphernalia at the Company's or its
Subsidiaries' restaurants in the United States for so long as the Company or its
Subsidiaries continue to operate the restaurants. Such license shall contain
customary terms and conditions for licenses of this nature.
44
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 Stockholders Meeting; Proxy Statement; Provided
Information
(a) If required by the Certificate of Incorporation and/or
applicable law in order to consummate the Merger, the Company shall take all
action necessary in accordance with the DGCL and its Certificate of
Incorporation and By-Laws duly to call, give notice of, convene and hold a
meeting of the Company's stockholders (the "Special Meeting") as promptly as
practicable for the purpose of considering and taking action upon this Agreement
and the Merger. Notwithstanding the foregoing, if prior to the scheduled date of
the Special Meeting the Special Committee determines that it has received an
Acquisition Proposal that constitutes a Superior Proposal, then the Company may
postpone the Special Meeting for up to twelve (12) business days. At the Special
Meeting, all of the Capital Stock then owned by Parent, Merger Sub or any other
Subsidiary of Parent shall be voted in favor of adoption of this Agreement and
to approve the Merger (subject to applicable law).
(b) Notwithstanding Section 6.1(a), in the event that Parent,
Merger Sub or any other Subsidiary of Parent shall have acquired at least 90%
(in the aggregate) of the outstanding shares of Capital Stock, the parties
hereto agree to take all necessary or appropriate action to cause the Merger to
become effective as soon as practicable after the acquisition of 90% of the
shares of Capital Stock of the Company without a meeting of stockholders of the
Company, in accordance with Section 253 of the DGCL.
(c) If required under applicable law, the Company shall as
promptly as practicable prepare and file with the SEC a preliminary proxy or
information statement and a Schedule 13E-3 relating to the Merger and the other
transactions contemplated by this Agreement and obtain and furnish the
information required to be included by the SEC in the Proxy Statement and, after
consultation with Parent, respond promptly to any comments made by the SEC with
respect to the preliminary proxy or information statement and the Schedule
13E-3, and cause a definitive proxy or information statement, including any
amendments or supplements thereto (the "Proxy Statement") to be mailed to its
stockholders at the earliest practicable date, provided that no amendments or
supplements to the Proxy Statement and the Schedule 13E-3 will be made by the
Company without consultation with Parent and its counsel. Capital
Communications, Parent and Merger Sub shall provide all information relating to
them required to be included in the Proxy Statement and the Schedule 13E-3, and
Capital Communications, Parent, Merger Sub and the Company shall cooperate with
each other in the preparation of the Proxy Statement and the Schedule 13E-3, and
the Company shall notify Parent of the receipt of any comments of the SEC with
respect to the Proxy Statement and the Schedule 13E-3 and of any requests by the
SEC for any amendment or supplement thereto or for additional information and
shall provide a copy of such comments or requests to Parent within three (3)
Business Days after receipt, and shall provide to Parent promptly copies of all
correspondence between the Company or any representative of the Company and the
SEC. The Company shall give Parent and its
45
counsel the opportunity to review and comment on any proposed responses to
comments, which review shall be concluded as promptly as possible, but in no
event more than three (3) Business Days after the receipt of the Company's
proposed responses to comments or other correspondence to the SEC. If at any
time after the date the Proxy Statement is mailed to stockholders and prior to
the Special Meeting any information relating to the Company, Parent or Merger
Sub, or any of their respective Affiliates, officers or directors, is discovered
by the Company, Parent or Merger Sub which is required to be set forth in an
amendment or supplement to the Proxy Statement or the Schedule 13E-3 so that the
Proxy Statement or the Schedule 13E-3 will not include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, the party which discovers such information shall promptly notify
the other parties hereto and an appropriate amendment or supplement describing
such information shall be promptly filed with the SEC and to the extent required
by applicable law, disseminated to the stockholders. As promptly as practicable
after the Proxy Statement and Schedule 13E-3 have been cleared by the SEC (or
sooner if permitted by applicable rule or regulation), the Company shall mail
the Proxy Statement to the stockholders of the Company. Except as expressly
permitted pursuant to Section 5.3, the Proxy Statement shall include the
recommendation of the Board in favor of the Merger and this Agreement.
(d) As promptly as practicable, each party hereto shall prepare
and file any other filings required under the Exchange Act, the Securities Act
or any other applicable laws relating to the Merger and the transactions
contemplated by this Agreement.
(e) The Company covenants that, except for information supplied
by Capital Communications, Parent and Merger Sub, all information in (a) the
Schedule 13E-3; and (b) the Proxy Statement will not, in the case of the
Schedule 13E-3, as of the date thereof, of each amendment or supplement thereto
and as of the Effective Time, and in the case of the Proxy Statement, either at
the date mailed to the Company's stockholders or at the time of the Special
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The Company covenants that each of the Proxy Statement and the
Schedule 13E-3, as to information supplied by the Company, will comply in all
material respects with all applicable provisions of the Exchange Act.
(f) Capital Communications, Parent and Merger Sub covenant that
the information supplied or to be supplied in writing by Capital Communications,
Parent and Merger Sub for inclusion in the Schedule 13E-3, and in the Proxy
Statement, as of the respective dates thereof, of each amendment or supplement
thereto and as of the Effective Time, will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. Capital Communications, Parent and
Merger Sub covenant that the Schedule 13E-3, as to information supplied in
writing by Capital Communications, the Parent and Merger Sub, will comply in all
material respects with all applicable provisions of the Exchange Act.
46
Section 6.2 Access to Information; Confidentiality. The Company shall
afford to Parent, and to its officers, employees, accountants, counsel,
financial advisers and other representatives, reasonable access during normal
business hours during the period prior to the Effective Time to all the
properties, books, contracts, commitments and records of the Company and its
Subsidiaries and, during such period, the Company shall furnish promptly to
Parent (a) a copy of each additional report, schedule, registration statement
and other document filed by it or its Subsidiaries during such period pursuant
to the requirements of Federal or state securities laws and (b) all other
information concerning its or its Subsidiaries' business, properties and
personnel as Parent may reasonably request. Except as otherwise agreed to by the
Company, notwithstanding termination of this Agreement, each of Capital
Communications, Parent and Merger Sub will keep, and will cause their respective
officers, employees, accountants, counsel, financial advisers and other
representatives and Affiliates to keep, all Confidential Information (as defined
below) confidential and not to disclose any Confidential Information to any
Person other than Capital Communications, Parent, Merger Sub or their respective
directors, officers, employees, Affiliates, representatives or agents, and then
only on a confidential basis; provided, however, that Capital Communications,
Parent and Merger Sub may disclose Confidential Information (i) as required by
applicable law, rule, regulation or judicial process, (ii) to its attorneys,
accountants, financial advisors, lenders, placement agents and underwriters on a
confidential basis, and (iii) as required by any Governmental Entity; provided,
however, that Capital Communications, Parent and Merger Sub will cooperate with
the Company so that the Company may seek a protective order or other appropriate
remedy. For purposes of this Agreement, "Confidential Information" shall include
all information about the Company which has been furnished by the Company to
Parent; provided, however, that Confidential Information does not include
information which (A) is or becomes generally available to the public other than
as a result of a disclosure by Parent, its attorneys, accountants or financial
advisors not permitted by this Agreement, (B) was available to Parent on a
non-confidential basis prior to its disclosure to Parent by the Company or (C)
becomes available to Parent on a non-confidential basis from a Person other than
the Company who, to the knowledge of Parent, is not otherwise bound by a
confidentiality agreement with the Company or is not otherwise prohibited from
transmitting the relevant information to Parent. In the event of termination of
this Agreement for any reason, Capital Communications, Parent and Merger Sub
shall promptly destroy all Confidential Information without retaining any copy
thereof, and each of Capital Communications, Parent and Merger Sub will, and
will cause their respective attorneys, accountants and financial advisors to,
promptly destroy all copies of any analyses, compilations, studies or other
documents, records or data prepared by Capital Communications, Parent or Merger
Sub, as the case may be, which contain or otherwise reflect or are generated
from the Confidential Information, and a duly authorized officer of each of
Capital Communications, Parent and Merger Sub will certify in writing to the
Company that it has destroyed all the Confidential Information in its possession
and each of Capital Communications, Parent and Merger Sub will request written
confirmation from each of their respective attorneys, accountants and financial
advisors that they have destroyed all the Confidential in their possession, and
Capital
47
Communications, Parent and Merger Sub will forward a copy of each such written
confirmation to the Company.
Section 6.3 Reasonable Efforts; Notification
(a)Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use all commercially reasonable efforts
to take, or cause to be taken (including through its officers and directors and
other appropriate personnel), all actions, and to do, or cause to be done, and
to assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated by this
Agreement, including (a) the obtaining of all necessary actions or nonactions,
waivers, consents and approvals from Governmental Entities and the making of all
necessary registrations and filings (including filings with Governmental
Entities, if any) and the taking of all reasonable steps as may be necessary to
obtain Permits or waivers from, or to avoid an action or proceeding by, any
Governmental Entity, (b) the seeking of all necessary consents, approvals or
waivers from third parties, (c) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of any of the transactions contemplated herein, including
seeking to have any stay or temporary restraining order entered by any court or
other Governmental Entity vacated or reversed and (d) the execution and delivery
of any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement.
(b) In connection with and without limiting the foregoing, the
Company and its Board shall (including through its officers and directors and
other appropriate personnel) (i) take all reasonable action necessary to ensure
that no U.S. state takeover, business combination, control share, fair price or
fair value statute or similar statute or regulation is or becomes applicable to
the Merger or any of the other transactions contemplated hereby, other than
Section 203 of the DGCL or (ii) if any U.S. state takeover, business
combination, control share, fair price or fair value statute or similar statute
or regulation becomes applicable to the Merger or any other transaction
contemplated hereby, take all reasonable action to ensure that the Merger and
the other transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated and otherwise to minimize the effect of
such statute or regulation on the Merger and the other transactions contemplated
hereby, except if doing so would result in a material adverse effect to the
Company.
(c) The Company, Capital Communications, Parent and Merger Sub
shall keep the other reasonably apprised of the status of matters relating to
completion of the transactions contemplated hereby, including promptly
furnishing the other with copies of notices or other communications received by
the Company, Capital Communications, Parent and Merger Sub, as the case may be,
or any of their respective Subsidiaries, from any third party and/or any
Governmental Entity with respect to the transactions contemplated by this
Agreement; provided that this Section 6.3(c) shall not be applicable to any
Acquisition Proposal which shall be subject to Section 5.3 hereof.
48
Section 6.4 Indemnification and Insurance
(a) Parent and Merger Sub agree that (i) the articles of
incorporation or the bylaws of the Surviving Corporation and its Subsidiaries
immediately after the Effective Time shall contain provisions with respect to
indemnification and exculpation from liability that are at least as favorable to
the beneficiaries of such provisions as those provisions that are set forth in
the certificate of incorporation and bylaws of the Company and its Subsidiaries,
respectively, on the date of this Agreement and to the fullest extent permitted
by applicable law, which provisions shall not be amended, repealed or otherwise
modified for a period of six (6) years following the Effective Time in any
manner that would adversely affect the rights thereunder of persons who on or
prior to the Effective Time were directors, officers, employees or agents of the
Company or any of its Subsidiaries (collectively, the "Indemnified Parties"),
unless the Surviving Corporation receives a written opinion of counsel, upon
which the Indemnified Parties shall have a right to rely and which shall be
delivered to them, that such modification is required by applicable law;
provided, however, in the event such modification alters, modifies or changes
the substance of such indemnification, the parties shall take all steps
reasonably necessary to alter, modify or change the terms hereof to provide
substantially similar benefits as shall be permitted by applicable law, and (ii)
all rights to indemnification as provided in any indemnification agreements with
any current or former directors, officers, employees or agents of the Company or
any of the its Subsidiaries as in effect as of the date hereof with respect to
matters occurring at or prior to the Effective Time shall survive the Merger and
thereafter terminate as provided in such agreements.
(b) For a period of six (6) years after the Effective Time, the
Surviving Corporation shall maintain officers' and directors' liability
insurance and fiduciary liability insurance covering the Indemnified Parties
(whether or not they are entitled to indemnification) or fiduciary liability
insurance policies on terms no less advantageous to such indemnified parties
than such existing insurance. The provisions of the immediately preceding
sentence shall be satisfied by the purchase and full prepayment of policies that
have been obtained by the Company and fully paid for by the Company prior to
Closing which policies provide such Indemnified Parties with coverage for an
aggregate period of six (6) years after the Effective Time with respect to
claims arising from facts or events that occurred on or before the Effective
Time.
(c) The Surviving Corporation shall advance to the Indemnified
Parties amounts needed to pay all reasonable expenses, including, without
limitation, attorneys' fees and disbursements and costs of investigation, that
may be incurred by any Indemnified Parties in enforcing the indemnity and other
provisions provided for in this Section 6.4 to the fullest extent permitted by
applicable law provided, however, the Indemnified Parties shall reimburse the
Surviving Corporation in accordance with, and if required by, their respective
indemnification agreements between the Company and such Indemnified Parties.
(d) In the event the Surviving Corporation or any of its
respective successors or assigns (i) consolidates with or merges into any other
Person and is not the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any Person as a condition
49
precedent to any such transaction, all necessary provisions shall be made so
that the successors and assigns of the Surviving Corporation fully assumes all
of the obligations set forth in this Section 6.4.
(e) This Section 6.4, which shall survive the consummation of the
Merger at the Effective Time and shall continue for the periods specified
herein, is intended to benefit the Company, the Surviving Corporation and the
Indemnified Parties (and the heirs, successors and representatives of the
Indemnified Parties), and shall be binding on all successors and assigns of
Parent and the Surviving Corporation and shall be enforceable by each
Indemnified Party and their heirs, representatives, and any Person or entity
referenced in this Section 6.4 or indemnified hereunder, each of whom may
enforce the provisions of this Section 6.4 (whether or not parties to this
Agreement). Without limiting the foregoing, the heirs, successors and
representatives of the Indemnified Parties shall be entitled to the benefits of
Section 6.4(b).
Section 6.5 Expenses. Except as set forth in this Section 6.5 and
Section 8.2, all fees and expenses incurred in connection with the transactions
contemplated by this Agreement, including, without limitation, the fees and
disbursements of counsel, financial advisors, accountants and consultants, shall
be paid by the party incurring such fees or expenses, whether or not the Merger
is consummated, except that each of Parent and the Company shall bear and pay
one-half of the costs and expenses solely arising out of the Merger (other than
the fees and expenses of each party's attorneys and accountants which shall be
paid by the party incurring such expenses) incurred by Parent, Merger Sub,
Capital Communications or the Company in connection with (i) the filings of the
premerger notification and report forms under the HSR Act (including filing
fees); and (ii) the filing of the Proxy Statement (including SEC filing fees).
Section 6.6 Public Announcement. Parent and the Company shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this Agreement or
any related agreements and shall not issue any such press release or make any
such public statement prior to such consultation and review by the other party
of such release or statement, except as may be required by applicable laws and
regulations, court process or by obligations pursuant to any listing agreement
with a national securities exchange or pursuant to applicable law or regulation.
Section 6.7 Transfer Taxes. Subject to Section 2.10(b), all liability
for any transfer or other similar taxes in connection with the consummation of
any transaction contemplated by this Agreement shall be borne by the Surviving
Corporation.
50
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1 Conditions to Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to effect the Merger are subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and correct
on the date hereof and at and as of the Closing Date (except for those
representations and warranties which address matters only as of a particular
date which need only be true and accurate as of such date), except where the
failure of such representations and warranties to be true and correct would not
reasonably be expected to have a material adverse effect on the Company.
(b) Covenants. The Company shall have performed in all material
respects any material obligation required to be performed by it under this
Agreement at or prior to the Closing Date.
(c) Consents. Other than filing the Certificate of Merger in
accordance with the DGCL and filings required under the HSR Act, any
authorization, consent or approval of (i) any Governmental Entities required to
be obtained prior to consummation of the Merger shall have been obtained and
(ii) the third parties listed in Sections 3.4(a) and 3.4(b) of the Disclosure
Schedules with respect to which consent is indicated on such Schedule to be
required to be obtained, shall have been obtained or made, free of any material
condition, prior to the Closing Date.
(d) Litigation. There are no actions, claims, suits or
proceedings pending against the Company challenging the Merger, this Agreement
or the transactions contemplated hereby, or seeking damages therefrom, which
would reasonably be expected to have a material adverse effect on the Company or
any of the transactions contemplated by this Agreement.
(e) Voting Agreement and Non-Competition Agreement. The Voting
Agreement and the Non-Competition Agreement shall have been duly executed and
delivered, Xxxxxxx X. Xxxxx shall have performed all of his obligations under
such agreements required to be performed by him on or prior to the Closing and
none of the Principal Stockholders shall be in breach of the Voting Agreement
and Xxxxxxx X. Xxxxx shall not be in breach of the Non-Competition Agreement.
(f) Officers' Certificates. Each of Xxxxxxx X. Xxxxx, Xxxxxxx Xx
Xxxxx and Xxxxxxx X. Xxxxx shall have delivered to Parent and Merger Sub a duly
executed officer's certificate in the form attached as Section 7.1(f) of the
Disclosure Schedules.
(g) Tax Withholding Forms and Certificates. Parent shall have
received a statement (in form and substance reasonably satisfactory to Parent)
that
51
satisfies Parent's obligations under Treasury Regulation Section 1.1445-2(b)(2)
in order to relieve Parent of any obligation to withhold any portion of the
payments pursuant to this Agreement to any of the Principal Stockholders, or any
other stockholder of the Company.
Section 7.2 Conditions to Obligations of the Company. The obligations
of the Company to effect the Merger are subject to the satisfaction or waiver on
or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Capital Communications, Parent and Merger Sub set forth in this
Agreement (disregarding all qualifications as to materiality or material adverse
effect set forth in such representations and warranties) shall be true and
correct on the date hereof and at and as of the Closing Date (except for those
representations and warranties that address matters only as of a particular date
which need only be true and accurate as of such date), except where the failure
of such representations and warranties to be true and correct would not
reasonably be expected to have a material adverse effect on Capital
Communications, Parent or Merger Sub.
(b) Covenants. Each of Capital Communications, Parent and Merger
Sub shall have performed in all material respects any material obligation
required to be performed by it under this Agreement at or prior to the Closing
Date.
Section 7.3 Conditions to Each Party's Obligation To Effect the Merger
Prior to the Closing Date. The respective obligations of each party to effect
the Merger are subject to the satisfaction or waiver on or prior to the Closing
Date of the following conditions:
(a) Stockholder Approval. Either (i) the Company shall have
obtained the Requisite Vote to approve this Agreement and the transactions
contemplated hereby to be performed by the Company in accordance with applicable
law and the Certificate of Incorporation of the Company, or (ii) the Merger can
be consummated without a meeting of stockholders in accordance with Section 253
of the DGCL.
(b) No Injunctions or Restraints. No statute, rule, regulation,
executive order, decree, temporary restraining order, preliminary or permanent
injunction or other order enacted, entered, promulgated, enforced or issued by
any Governmental Entity or other legal restraint or prohibition preventing the
consummation of the Merger or the transactions contemplated hereby shall be in
effect; provided, in the case of a decree, injunction or other order, each of
the parties shall have used their best efforts to prevent the entry of any such
injunction or other order and to appeal as promptly as possible any decree,
injunction or other order that may be entered.
(c) HSR Act. Any waiting period (and any extension thereof)
applicable to the transactions contemplated by this Agreement under the HSR Act
shall have expired or shall have been terminated.
52
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of matters
presented in connection with the Merger by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if (i) the Merger has not
been consummated on or before July 31, 2002 (the "Outside Date"); provided,
however, that the right to terminate this Agreement pursuant to this Section
8.1(b)(i) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of the failure of the Merger
to have been consummated; (ii) a statute, rule, regulation or executive order
shall have been enacted, entered or promulgated prohibiting the consummation of
the Merger substantially on the terms contemplated hereby; or (iii) an order,
decree, ruling or injunction shall have been entered permanently restraining,
enjoining or otherwise prohibiting the consummation of the Merger substantially
on the terms contemplated hereby and such order, decree, ruling or injunction
shall have become final and non-appealable; provided, that the party seeking to
terminate this Agreement pursuant to this Section 8.1(b)(iii) shall have used
its reasonable best efforts to remove such order, decree, ruling or injunction
and shall not be in violation of Section 6.3; or (iv) if the other party is in
material breach of its representations or warranties or fails to perform in any
material respect its covenants or other agreements hereunder to the extent
required to have been performed at such time, which breach or failure to perform
is incapable of being cured by the party so breaching or failing to perform
prior to the Outside Date or, if capable of being cured by such date, has not
been cured within 30 days after the terminating party gives written notice of
such breach to the other party; provided, further, the Outside Date shall
automatically be extended by the number of days that the Special Meeting is
postponed pursuant to Section 6.1(a);
(c) by the Company, if the Board, after consultation with and
based upon the advice of outside legal counsel and its financial advisors, after
giving effect to all modifications to the Merger Consideration and all other
relevant terms and conditions, which may be proposed in writing by Parent, shall
have determined in good faith that an agreement in connection with a Superior
Proposal should be approved and entered into because consummating the
transactions contemplated by this Agreement would not result in a transaction
which is more favorable to its stockholders (other than the Principal
Stockholders) from a financial point of view, than the transaction contemplated
by the Superior Proposal; provided, however, that this Agreement may not be
terminated pursuant to this Section 8.1(c) unless (i) the Company shall have
provided Parent with at least four (4) Business Days advance notice required
under Section 5.3(b), and (ii) concurrent with the termination, the Company pays
Parent the fee required by Section 8.2(b) hereof.
53
Section 8.2 Effect of Termination
(a) In the event of termination of this Agreement by either the
Company or Parent as provided in Section 8.1, this Agreement shall forthwith
become void and have no effect, without any liability or obligation on the part
of Parent or the Company, other than the provisions of Sections 6.2 and 6.5,
this Section 8.2 and Article IX and there shall be no other liability on the
part of Parent, Merger Sub or the Company or their respective officers or
directors except liability arising out of a material breach of this Agreement.
(b) In the event of termination of this Agreement by the Company
pursuant to Section 8.1(c), the Company shall concurrently with such termination
pay Parent a fee equal to either (i) $4,250,000 (four million two hundred and
fifty thousand dollars), or (ii) if such Superior Proposal provides for the
payment of consideration to the Principal Stockholders in excess of $13.00 per
share of Capital Stock, $4,085,000 (four million eighty-five thousand dollars),
((i) or (ii) as applicable, the "Termination Fee"), payable by wire transfer of
immediately available funds, the receipt of which by Parent, shall be a
condition to the effectiveness of such termination provided, however, no
Termination Fee shall be payable if Capital Communications, Parent or Merger Sub
is in material breach of its representations and warranties or fails to perform
in any material respect its covenants or other agreements hereunder to the
extent required to be performed at such time. The Company acknowledges that the
agreements contained in this Section 8.2(b) are an integral part of the
transactions contemplated by this Agreement, and that, without these agreements,
Parent and Merger Sub would not enter into this Agreement; accordingly, if the
Company fails to pay the amount due pursuant to this Section 8.2(b), and, in
order to obtain such payment, Parent commences a suit which results in a
judgment against the Company for the Termination Fee, the Company shall pay to
Parent its costs and expenses (including attorneys' fees and expenses) in
connection with such suit. The payment of the Termination Fee shall be paid
together with the payment of interest on the amount of the Termination Fee at
the prime rate of Citibank N.A. in effect on the date such payment was required
to be made.
(c) In the event of termination of this Agreement by the Company
pursuant to Section 8.1(a), (b) or (c), Capital Communications, the Parent,
Merger Sub and any Affiliate thereof shall be prohibited for two (2) years from
the date of termination from initiating or participating in any way in a hostile
tender offer for the Capital Stock of the Company.
Section 8.3 Amendment. This Agreement may be amended by the mutual
agreement of the parties at any time before or after any required approval of
matters presented in connection with the Merger by the stockholders of the
Company; provided, that after any such approval, there shall not be made any
amendment that by law requires further approval by such stockholders without the
further approval of such stockholders. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties.
Section 8.4 Extension; Waiver. At any time prior to the Effective
Time, the parties may, but are not obligated to (a) extend the time for the
performance of any of the obligations or other acts of the other parties, (b)
waive any inaccuracies in the
54
representations and warranties of the other party contained in this Agreement or
in any document delivered pursuant to this Agreement or (c) subject to the
proviso of Section 8.3, waive compliance by the other party with any of the
agreements or conditions contained in this Agreement. Any agreement on the part
of a party to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Nonsurvival of Representations. None of the
representations and warranties in this Agreement shall survive the Effective
Time (except for the representation and warranty contained in Section 4.3, which
shall survive until the Merger Consideration has been paid to the Paying Agent
pursuant to Section 2.10(a)) and shall not be deemed waived or otherwise
affected by any investigation made by any party. This Section 9.1 shall not
limit or affect any covenant or agreement of the parties which by its terms
provides for performance after the Effective Time.
Section 9.2 Notices. All notices, demands, consents, requests,
instructions and other communications to be given or delivered or permitted
under or by reason of the provisions of this Agreement, or in connection with
the transactions contemplated hereby and thereby shall be in writing and shall
be deemed to be delivered and received by the intended recipient as follows: (a)
if personally delivered, on the Business Day of such delivery (as evidenced by
the receipt of the personal delivery service); (b) if mailed by certified or
registered mail return receipt requested, four (4) Business Days after the
aforesaid mailing; (c) if delivered by overnight courier (with all charges
having been prepaid), on the second Business Day of such delivery (as evidenced
by the receipt of the overnight courier service of recognized standing); or (d)
if delivered by facsimile transmission, on the Business Day of such delivery if
sent by 6:00 p.m. in the time zone of the recipient, or if sent after that time,
on the next succeeding Business Day (as evidenced by the printed confirmation of
delivery generated by the sending party's telecopier machine). If any notice,
demand, consent, request, instruction or other communication cannot be delivered
because of a changed address of which no notice was given (in accordance with
this Section 9.2), or the refusal to accept same, the notice shall be deemed
received on the Business Day the notice is sent (as evidenced by a sworn
affidavit of the sender). All such notices, demands, consents, requests,
instructions and other communications will be sent to the following addresses or
facsimile numbers as applicable:
55
If to the Merger Sub or Parent:
Xxxxx Xxxxxxx
Xxxxx Xxxxxxxxx
CDP Investco, Inc.
0000 Xxxxxx Xxxx.
Xxx Xxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
and
Xxxxxx Xxxx
Senior Legal Counsel
Capital Communications CDPQ, Inc.
2001, avenue XxXxxx College, 7e etage
Xxxxxxxx, Xxxxxx X0X0X0
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy of all notices and communications
concurrently sent to:
Xxxxxx X. Xxxxx, Esq.
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
and
Xxxxxx X. Xxxx, Esq.
Stikeman Elliott
Barristers & Solicitors
40th Floor
0000 Xxxx-Xxxxxxxx Xxxx. Xxxx
Xxxxxxxx, Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Company:
Xxxxxxx Xx Xxxxx, President
xxxx xxxxx productions, inc.
Xxxxxxx, XX 00000
Tel: (000) 000-0000_
Fax: (000) 000-0000
56
with a copy of all notices and communications
concurrently sent to:
Xxxxxx Xxxx Xxxxxxxx, Esq.
Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
and to:
Xxxxxxx X. Xxxxxxxx, Esq.
Moses & Singer LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
If to Capital Communications:
Xxxxxx Xxxx
Senior Legal Counsel
Capital Communications CDPQ, Inc.
2001, avenue XxXxxx College, 7e etage
Xxxxxxxx, Xxxxxx X0X0X0
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy of all notices and communications
concurrently sent to:
Xxxxxx X. Xxxx, Esq.
Stikeman Elliott
Barristers & Solicitors
40th Floor
0000 Xxxx-Xxxxxxxx Xxxx. Xxxx
Xxxxxxxx, Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
or to such other address as any party may specify by notice given to the other
party in accordance with this Section 9.2.
57
Section 9.3 Interpretation. When a reference is made in this Agreement
to an Article, Section or Schedule, such reference shall be to an Article or
Section of or a Schedule to this Agreement unless otherwise indicated. The table
of contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
Section 9.4 Counterparts. This Agreement may be executed in two 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 of the parties and delivered to the other parties.
Section 9.5 Entire Agreement; No Third-Party Beneficiaries. This
Agreement (together with the schedules hereto) constitutes the entire agreement,
and supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter of this Agreement, and this
Agreement is not intended to confer upon any Person other than the parties any
rights or remedies hereunder, except that officers, directors, employees and
agents of the Company and its Subsidiaries are intended beneficiaries of the
covenants and agreements set forth in Section 6.4.
Section 9.6 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD
TO ANY APPLICABLE CONFLICTS OF LAWS THAT WOULD DEFER TO THE SUBSTANTIVE LAWS OF
ANOTHER JURISDICTION.
Section 9.7 Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, except that Merger Sub may assign, in its
sole discretion, any of or all its rights, interests and obligations under this
Agreement to any wholly-owned Subsidiary of Parent; provided such Subsidiary
assumes Merger Sub's obligations hereunder, and Merger Sub remains liable
hereunder. Subject to the immediately preceding sentence, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.
Section 9.8 Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in Delaware state
58
court, this being in addition to any other remedy to which they are entitled at
law or in equity. In addition, each of the parties hereto (a) consents to commit
itself to the personal jurisdiction of any Federal court located in the State of
Delaware or any Delaware state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees that it will not
bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a Federal or state court
sitting in the State of Delaware.
Section 9.9 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated herein is not affected in any manner
materially adverse to any party hereto, after taking into account the mitigation
contemplated by the next sentence. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner.
Section 9.10 Independent Counsel. Each of the parties acknowledges
that it has been represented by independent counsel of its choice throughout all
negotiations that have preceded the execution of this Agreement and that it has
executed the same with consent and upon the advice of said independent counsel.
Each party and its counsel cooperated in the drafting and preparation of this
Agreement and the documents referred to herein, and any and all drafts relating
thereto shall be deemed the work product of the parties and may not be construed
against any party by reason of its preparation. Accordingly, any rule of law or
any legal decision that would require interpretation of any ambiguities in this
Agreement against the party that drafted it is of no application and is hereby
expressly waived. The provisions of this Agreement shall be interpreted in a
reasonable manner to effect the intentions of the parties and this Agreement.
59
[PAGE LEFT INTENTIONALLY BLANK]
[signature page follows]
60
IN WITNESS WHEREOF, Parent, the Company and Merger Sub have caused
this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
CAPITAL COMMUNICATIONS CDPQ INC.
By:/s/ Xxxxxx Xxxxxxxx /s/ Xxxxxx Xxxxxxxx
------------------------------- -------------------------------
Name: Xxxxxx Xxxxxxxx Name: Xxxxxx Xxxxxxxx
Title: Vice President Title: President
DCPI INVESTCO, INC.
By:/s/ Xxxxxx Xxxxxxxx /s/ Xxxxxx Xxxx
------------------------------- -------------------------------
Name: Xxxxxx Xxxxxxxx Name: Xxxxxx Xxxx
Title: President Title: Vice President
DCPI MERGERCO, INC.
By:/s/ Xxxxxx Xxxxxxxx /s/ Xxxxxx Xxxx
------------------------------- -------------------------------
Name: Xxxxxx Xxxxxxxx Name: Xxxxxx Xxxx
Title: Vice President Title: Vice President
xxxx xxxxx productions, inc.
By:/s/ Xxxxxxx X. XxXxxxx
-------------------------------
Name: Xxxxxxx X. XxXxxxx
Title: President and
Chief Operating Officer
61
