Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
XXX CORNER HOLDINGS, LLC,
XXX CORNER ACQUISITION CORP.
AND
XXXXX XXXXX INC.
DATED AS OF DECEMBER 22, 2003
TABLE OF CONTENTS
PAGE
RECITALS ........................................................................1
ARTICLE I THE MERGER ........................................................................1
Section 1.1 The Merger..............................................................1
Section 1.2 Closing.................................................................2
Section 1.3 Effective Time..........................................................2
Section 1.4 Effects of the Merger...................................................2
Section 1.5 Certificate of Incorporation............................................2
Section 1.6 Bylaws..................................................................2
Section 1.7 Directors...............................................................2
Section 1.8 Officers................................................................3
ARTICLE II EFFECT OF THE MERGER ON CAPITAL STOCK..................................................3
Section 2.1 Conversion of Capital Stock.............................................3
Section 2.2 Surrender of Certificates...............................................3
Section 2.3 Stock Options...........................................................5
Section 2.4 Dissenting Shares.......................................................6
Section 2.5 Adjustments.............................................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................7
Section 3.1 Organization and Power..................................................7
Section 3.2 Authorization; Enforceability...........................................8
Section 3.3 Organizational Documents and Minute Books...............................8
Section 3.4 Subsidiaries............................................................8
Section 3.5 Governmental Authorizations.............................................9
Section 3.6 Non-Contravention.......................................................9
Section 3.7 Capitalization.........................................................10
Section 3.8 Options and Other Rights...............................................11
Section 3.9 Voting.................................................................12
Section 3.10 SEC Reports and Disclosure Procedures..................................13
Section 3.11 Financial Statements; Liabilities......................................14
Section 3.12 Absence of Certain Changes.............................................15
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Section 3.13 Litigation.............................................................15
Section 3.14 Contracts..............................................................15
Section 3.15 Benefit Plans..........................................................16
Section 3.16 Labor Relations........................................................19
Section 3.17 Taxes..................................................................19
Section 3.18 Environmental Matters..................................................21
Section 3.19 Intellectual Property..................................................22
Section 3.20 Real Property..........................................................23
Section 3.21 Personal Property; Inventory...........................................24
Section 3.22 Permits; Compliance with Laws..........................................25
Section 3.23 Insurance..............................................................27
Section 3.24 Rights Agreement.......................................................28
Section 3.25 Takeover Statutes......................................................28
Section 3.26 Opinion of Financial Advisor...........................................28
Section 3.27 Brokers and Finders....................................................28
Section 3.28 Information in Proxy Statement.........................................29
Section 3.29 Transactions with Affiliates...........................................29
Section 3.30 No Other Representations or Warranties.................................29
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT..............................................29
Section 4.1 Organization and Power.................................................30
Section 4.2 Authorization; Enforceability..........................................30
Section 4.3 Governmental Authorizations............................................30
Section 4.4 Non-Contravention......................................................31
Section 4.5 Interim Operations of Merger Sub.......................................31
Section 4.6 Schedule 13E-3 and Proxy Information...................................31
Section 4.7 Financing..............................................................32
Section 4.8 Brokers and Finders....................................................32
Section 4.9 No Other Representations or Warranties.................................33
ARTICLE V COVENANTS .......................................................................33
Section 5.1 Conduct of Business of the Company.....................................33
Section 5.2 Access to Information; Cooperation; Confidentiality....................36
Section 5.3 No Solicitation........................................................37
Section 5.4 Notices of Certain Events..............................................39
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Section 5.5 Company Proxy Statement and Schedule 13E-3.............................40
Section 5.6 Company Stockholders Meeting...........................................41
Section 5.7 Financing..............................................................41
Section 5.8 Directors' and Officers' Indemnification and Insurance.................42
Section 5.9 Commercially Reasonable Efforts........................................42
Section 5.10 Consents; Filings; Further Action......................................43
Section 5.11 Public Announcements...................................................44
Section 5.12 Stock Exchange De-listing..............................................44
Section 5.13 Fees, Costs and Expenses...............................................44
Section 5.14 Takeover Statutes......................................................44
Section 5.15 Defense of Litigation..................................................44
Section 5.16 Rights Agreement.......................................................45
Section 5.17 Tax Matters............................................................45
Section 5.18 Infringement of Company Intellectual Property..........................46
Section 5.19 Employee Matters.......................................................46
ARTICLE VI CONDITIONS............................................................................47
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger.............47
Section 6.2 Conditions to Obligations of Parent and Merger Sub.....................47
Section 6.3 Conditions to Obligation of the Company................................49
Section 6.4 Frustration of Closing Conditions......................................49
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER....................................................50
Section 7.1 Termination by Mutual Consent..........................................50
Section 7.2 Termination by Either Parent or the Company............................50
Section 7.3 Termination by Parent..................................................50
Section 7.4 Termination by the Company.............................................51
Section 7.5 Effect of Termination..................................................52
Section 7.6 Expenses Following Termination.........................................52
Section 7.7 Amendment..............................................................54
Section 7.8 Extension; Waiver......................................................54
Section 7.9 Procedure for Termination, Amendment, Extension or Waiver..............54
ARTICLE VIII MISCELLANEOUS.......................................................................54
Section 8.1 Certain Definitions....................................................54
Section 8.2 Interpretation.........................................................58
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Section 8.3 Survival...............................................................58
Section 8.4 Governing Law..........................................................58
Section 8.5 Submission to Jurisdiction.............................................59
Section 8.6 Waiver of Jury Trial...................................................59
Section 8.7 Notices................................................................59
Section 8.8 Entire Agreement.......................................................60
Section 8.9 No Third-Party Beneficiaries...........................................60
Section 8.10 Severability...........................................................60
Section 8.11 Rules of Construction..................................................60
Section 8.12 Assignment.............................................................61
Section 8.13 Remedies...............................................................61
Section 8.14 Specific Enforcement...................................................61
Section 8.15 Counterparts; Effectiveness............................................61
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 22, 2003
(this "Agreement"), by and among Xxx Corner Holdings, LLC, a Delaware limited
liability company ("Parent"), Xxx Corner Acquisition Corp., a Delaware
corporation and a wholly-owned subsidiary of Parent ("Merger Sub"), and Xxxxx
Xxxxx Inc., a Delaware corporation (the "Company").
RECITALS
(a) The respective boards of directors of Merger Sub and
the Company have approved and declared advisable, and the board of directors of
Parent has approved, this Agreement and the merger of Merger Sub with and into
the Company (the "Merger") upon the terms and subject to the conditions set
forth in this Agreement.
(b) Subject to certain exceptions, by virtue of the Merger,
all of the issued and outstanding shares of common stock, par value $0.01 per
share, of the Company (the "Company Common Stock") will be converted into the
right to receive $17.00 in cash per share, without interest.
(c) The board of directors of the Company has determined
that this Agreement and the transactions contemplated hereby, including the
Merger, are advisable and fair to, and in the best interests of, the Company's
unaffiliated stockholders and has agreed to recommend that the Company's
stockholders adopt this Agreement.
(d) Concurrently with the execution of this Agreement, and
as a condition to the willingness of Parent and Merger Sub to enter into this
Agreement, Xxxxxxx X. Xxxx ("AJC") has entered into an employment agreement (the
"AJC Agreement") with Merger Sub, the effectiveness of which is conditioned upon
consummation of the Merger.
(e) Certain capitalized terms used in this Agreement have
the meanings specified in Section 8.1.
Accordingly, in consideration of the mutual
representations, warranties, covenants and agreements contained in this
Agreement, the parties to this Agreement, intending to be legally bound, agree
as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Delaware
General Corporation Law (the "DGCL"), at the Effective Time, (a) Merger Sub
shall be merged with and into the Company, (b) the separate corporate existence
of Merger Sub shall cease and the Company shall continue its corporate existence
under Delaware law as the surviving corporation in the Merger (the "Surviving
Corporation") and (c) the Surviving Corporation shall become a wholly-owned
subsidiary of Parent.
Section 1.2 Closing. Subject to the satisfaction or waiver
of all of the conditions set forth in Article VI hereof, the closing of the
Merger (the "Closing") shall take place (a) at the offices of Xxxx, Weiss,
Rifkind, Xxxxxxx & Xxxxxxxx LLP, 1285 Avenue of the Americas, New York, New
York, at 10:00 a.m. as expeditiously as possible but no later than five (5)
Business Days after the day on which the last of such conditions (other than any
conditions that by their nature are to be satisfied at the Closing) is satisfied
or waived in accordance with this Agreement or (b) at such other place and time
or on such other date as Parent and the Company may agree in writing. The date
on which the Closing occurs is referred to herein as the "Closing Date."
Section 1.3 Effective Time. Concurrently with the Closing,
Parent and the Company shall cause a certificate of merger (the "Certificate of
Merger") to be executed, signed, acknowledged and filed with the Secretary of
State of the State of Delaware as provided in Section 251 of the DGCL. The
Merger shall become effective when the Certificate of Merger has been duly filed
with the Secretary of State of the State of Delaware or at such other subsequent
date or time as Parent and the Company may agree in writing and specify in the
Certificate of Merger in accordance with the DGCL. The time at which the Merger
becomes effective is referred to herein as the "Effective Time."
Section 1.4 Effects of the Merger. The Merger shall have
the effects set forth herein and in the applicable provisions of the DGCL,
including Section 259 thereof. 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 1.5 Certificate of Incorporation. The certificate
of incorporation of the Surviving Corporation shall, at the Effective Time, be
amended and restated in accordance with Exhibit A attached hereto (the
"Surviving Charter") until amended in accordance with the Surviving Charter and
applicable Laws.
Section 1.6 Bylaws. The bylaws of Merger Sub in effect
immediately prior to the Effective Time shall be, from and after the Effective
Time, the bylaws of the Surviving Corporation (the "Surviving Bylaws") until
amended in accordance with the Surviving Charter, the Surviving Bylaws and
applicable Laws.
Section 1.7 Directors. The parties shall take all requisite
action so that the directors of Merger Sub immediately prior to the Effective
Time shall be, from and after the Effective Time, the directors of the Surviving
Corporation until their successors are duly elected and qualified or until their
earlier death, resignation or removal in accordance with the Surviving Charter,
the Surviving Bylaws and the DGCL.
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Section 1.8 Officers. From and after the Effective Time,
the officers of the Company immediately prior to the Effective Time shall be the
officers of the Surviving Corporation until their successors are duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Surviving Charter, the Surviving Bylaws and the DGCL.
ARTICLE II
EFFECT OF THE MERGER ON CAPITAL STOCK
Section 2.1 Conversion of Capital Stock. At the Effective
Time, by virtue of the Merger and without any action on the part of Parent,
Merger Sub, the Company or the holder of any shares of capital stock of Merger
Sub or the Company:
(a) Conversion of Merger Sub Capital Stock. Each share of
common stock, par value $0.01 per share, of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into and become one
fully paid and non-assessable share of common stock, par value $0.01 per share,
of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock.
Each share of Company Common Stock owned by the Company or any of its
wholly-owned Subsidiaries or by Parent or any of its wholly-owned Subsidiaries
immediately prior to the Effective Time (collectively, the "Excluded Shares")
shall be cancelled automatically and shall cease to exist, without payment of
any consideration being made in respect thereof.
(c) Conversion of Company Common Stock. Each share of
Company Common Stock (other than Excluded Shares and Dissenting Shares) issued
and outstanding immediately prior to the Effective Time (such shares of Company
Common Stock are hereinafter referred to each, as a "Share" and collectively, as
the "Shares"), shall be converted into the right to receive $17.00 in cash,
without interest (the "Merger Consideration"). At the Effective Time, all Shares
shall be cancelled automatically and shall cease to exist, and the holders of
certificates which immediately prior to the Effective Time represented Shares
(the "Certificates") shall cease to have any rights with respect to the Shares,
other than the right to receive the Merger Consideration (without any interest
being payable thereon) upon surrender of the Certificates in accordance with
Section 2.2.
Section 2.2 Surrender of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall
(i) select a bank or trust company to act as the paying agent in the Merger (the
"Paying Agent") and (ii) enter into an agreement with the Paying Agent, the
terms and conditions of which shall be reasonably satisfactory to the Company
and Parent.
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(b) Payment Fund. Promptly following the Effective Time on
the Closing Date, Parent shall provide funds to the Paying Agent in amounts
necessary for the payment of the aggregate Merger Consideration payable under
Section 2.1(c) upon surrender of the Certificates. Such funds provided to the
Paying Agent are referred to herein as the "Payment Fund."
(c) Payment Procedures.
(i) Letter of Transmittal. Promptly after the Effective
Time, the Paying Agent shall mail to each holder of record of a Certificate (A)
a letter of transmittal in customary form, specifying that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Paying Agent and (B) instructions for
surrendering the Certificates.
(ii) Surrender of Certificates. Upon surrender of a
Certificate for cancellation to the Paying Agent or such agent or agents as
Parent may designate, together with a duly executed letter of transmittal and
any other documents required by the Paying Agent, the holder of such Certificate
shall be entitled to receive in exchange therefor the applicable Merger
Consideration payable in respect of such Certificate less any required
withholding of Taxes in accordance with Section 2.2(e). Any Certificates so
surrendered shall be cancelled immediately. No interest shall accrue or be paid
on any amount payable upon surrender of the Certificates.
(iii) Unregistered Transferees. If any Merger Consideration
is to be paid to a Person other than the Person in whose name the surrendered
Certificate is registered, then the Merger Consideration may be paid to such a
transferee so long as (A) the surrendered Certificate is accompanied by all
documents required to evidence and effect such transfer and (B) the Person
requesting such payment (1) pays any applicable transfer taxes or (2)
establishes to the reasonable satisfaction of Parent and the Paying Agent that
such taxes have already been paid or are not applicable.
(iv) No Other Rights. Until surrendered in accordance with
this Section 2.2(c), each Certificate shall be deemed, except as provided in
this Agreement or by applicable Law, from and after the Effective Time, to
represent for all purposes solely the right to receive the applicable Merger
Consideration in accordance with the terms hereof. Payment of the Merger
Consideration upon the surrender of any Certificate shall be deemed to have been
paid in full satisfaction of all rights pertaining to that Certificate and the
Shares formerly represented by it.
(d) No Further Transfers. Upon and after the Effective
Time, the stock transfer books of the Company shall be closed and there shall be
no further registration of transfers of the shares of Company Common Stock that
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be cancelled and exchanged for cash as provided in this
Article II.
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(e) Required Withholding. Parent, the Surviving Corporation
and the Paying Agent shall be entitled to deduct and withhold from any Merger
Consideration payable under this Agreement such amounts as may be required to be
deducted or withheld therefrom under (i) the Code or (ii) any applicable state,
local or foreign Tax Laws. To the extent that amounts are so deducted and
withheld, such amounts shall be treated for all purposes under this Agreement as
having been paid to the Person in respect of which such deduction and
withholding was made.
(f) No Liability. None of Parent, the Surviving Corporation
or the Paying Agent shall be liable to any holder of Certificates for any amount
properly paid from the Payment Fund or delivered to a public official under any
applicable abandoned property, escheat or similar Laws.
(g) Investment of Payment Fund. The Paying Agent shall
invest the Payment Fund as directed by Parent. Any interest and other income
resulting from such investment shall be deemed property of, and shall be paid
promptly to, Parent. Any losses resulting from such investment shall not in any
way diminish Parent's and the Surviving Corporation's obligation to pay the full
amount of the Merger Consideration.
(h) Termination of Payment Fund. Any portion of the Payment
Fund that remains unclaimed by the holders of Certificates one year after the
Effective Time shall be delivered by the Paying Agent to the Surviving
Corporation upon demand. Any holder of Certificates who has not complied with
this Article II shall look thereafter only to the Surviving Corporation for
payment of the applicable Merger Consideration. If any Certificates shall not
have been surrendered immediately prior to the date on which any Merger
Consideration would otherwise become subject to any abandoned property, escheat
or similar Law, the Merger Consideration payable in respect of such Certificates
shall, to the extent permitted by applicable Law, on the Business Day
immediately prior to such date become the property of Surviving Corporation,
free and clear of any claim or interest of any Person previously entitled
thereto.
(i) Lost, Stolen or Destroyed Certificates. If any
Certificate is lost, stolen or destroyed, upon the making of an affidavit of
that fact by the Person claiming such Certificate to be lost, stolen or
destroyed and, if required by the Surviving Corporation, the posting by such
Person of a bond in such form and reasonable amount as the Surviving Corporation
may direct as indemnity against any claim that may be made against the Surviving
Corporation with respect to the alleged loss, theft or destruction of such
Certificate, the Paying Agent shall pay the Merger Consideration to such Person
in exchange for such lost, stolen or destroyed Certificate.
Section 2.3 Stock Options.
(a) The Company shall take all requisite action so that, as
of the Effective Time, each option to acquire shares of Company Common Stock
(each, a "Company Stock Option") outstanding immediately prior to the Effective
Time, whether or not then exercisable or vested, by virtue of the Merger and
without any further action on the part of Parent, Merger Sub, the Company or the
holder of that Company Stock Option, shall be cancelled and converted into the
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right to receive an amount in cash, without interest, equal to (x) the Option
Merger Consideration multiplied by (y) the aggregate number of shares of Company
Common Stock into which the applicable Company Stock Option was exercisable
immediately prior to the Effective Time (whether or not then vested or
exercisable by its terms). "Option Merger Consideration" means the excess, if
any, of the Merger Consideration over the per share exercise or purchase price
of the applicable Company Stock Option. The payment of the Option Merger
Consideration to the holder of a Company Stock Option shall be reduced by any
income or employment Tax withholding required under (i) the Code or (ii) any
applicable state, local or foreign Tax Laws. To the extent that amounts are so
withheld, such withheld amounts shall be treated for all purposes under this
Agreement as having been paid to the holder of that Company Stock Option. At the
Effective Time, all Company Stock Options shall be cancelled and all Company
Option Plans shall terminate. On the Closing Date, Parent shall provide funds to
the Company in amounts necessary for the payment of the aggregate Option Merger
Consideration under this Section 2.3(a) which amounts shall be paid to the
holders of Company Stock Options as promptly as practicable following the
Closing Date. The Company shall take all actions to ensure that the Company
Option Plans shall terminate as of the Effective Time. All administrative and
other rights and authorities granted under any Company Option Plan to the
Company, the board of directors of the Company or any committee or designee
thereof, shall, following the Effective Time, reside with the Surviving
Corporation.
(b) The Company shall take all reasonable actions required
to qualify for the exemption contemplated by Rule 16b-3 under the Exchange Act
for the treatment of the Company Stock Options contemplated hereby, including,
if necessary or appropriate, obtaining the approval of the Company's board of
directors, of the type described in a pertinent SEC no-action letter dated
January 12, 1999.
Section 2.4 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the
contrary, any Shares for which the holder thereof has not voted in favor of the
Merger or consented thereto in writing and has demanded the appraisal of such
Shares in accordance with, and has complied in all respects with, Section 262 of
the DGCL (collectively, the "Dissenting Shares") shall not be converted into the
right to receive the Merger Consideration in accordance with Section 2.1(c). At
the Effective Time, by virtue of the Merger and without any action on the part
of the holder thereof, all Dissenting Shares shall be cancelled and shall cease
to exist and the holder or holders of Dissenting Shares shall be entitled only
to such rights as may be granted to them under Section 262 of the DGCL.
(b) Notwithstanding the provisions of Section 2.4(a), if
any holder of Dissenting Shares effectively withdraws or loses such appraisal
rights (through failure to perfect such appraisal rights or otherwise), then
such holder's shares (i) shall be deemed not to be Dissenting Shares and (ii)
shall be treated as if they had been converted automatically at the Effective
Time into the right to receive the Merger Consideration upon surrender of the
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Certificate representing such shares in accordance with Section 2.2. Parent
shall promptly provide funds to the Paying Agent in amounts necessary for the
payment of the Merger Consideration to such holders,
(c) The Company shall give Parent (i) prompt notice of any
demands for appraisal of any shares of Company Common Stock, the withdrawals of
such demands, any other instrument served on the Company under the provisions of
Section 262 of the DGCL and any other matters relating to such demands, and (ii)
the right to direct all negotiations and proceedings with respect to demands for
appraisal under the DGCL. Prior to the Effective Time, the Company shall not
settle, offer to settle or make any payment with respect to any demands for
appraisal without the prior written consent of Parent.
Section 2.5 Adjustments. If during the period between the
date of this Agreement and the Effective Time, any change in the outstanding
Shares shall occur by reason of any reclassification, recapitalization, stock
dividend, stock split or combination, exchange or readjustment of Shares, or any
stock dividend thereon with a record date during such period, the price per
share to be paid to holders of Shares in the Merger Consideration shall be
appropriately adjusted.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure letter (with specific
reference to the Section or Subsection of this Agreement to which the
information stated in such disclosure relates; provided that any fact or
condition disclosed in any section of such disclosure letter in such a way as to
make its relevance to another section of such disclosure letter that relates to
a representation or representations made elsewhere in Article III of this
Agreement reasonably readily apparent shall be deemed to be an exception to such
representation or representations notwithstanding the omission of a reference or
cross reference thereto) delivered by the Company to Parent prior to the
execution of this Agreement (the "Company Disclosure Letter"), the Company
represents and warrants to Parent and Merger Sub that:
Section 3.1 Organization and Power. Each of the Company and
its Subsidiaries is a corporation or other legal entity duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization. Each of the Company and its Subsidiaries has the requisite power
and authority to own, lease and operate its assets and properties (collectively,
the "Company Assets"), and to carry on its business as now conducted. Each of
the Company and its Subsidiaries is duly qualified or licensed to do business as
a foreign corporation or other legal entity and is in good standing in each
jurisdiction where the character of the Company Assets owned, leased or operated
by it or the nature of its business makes such qualification or license
necessary, except where failures to be so qualified or licensed or in good
standing would not reasonably be expected, individually or in the aggregate, to
have a Company Material Adverse Effect.
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Section 3.2 Authorization; Enforceability. The Company has
all necessary corporate power and authority to enter into this Agreement and,
subject to adoption of this Agreement by the affirmative vote of the holders of
a majority of the outstanding shares of Company Common Stock (the "Requisite
Company Vote"), to consummate the transactions contemplated by this Agreement.
The independent members of the board of directors of the Company have
unanimously adopted resolutions: (i) approving and declaring advisable the
Merger, this Agreement and the transactions contemplated by this Agreement; (ii)
declaring that it is in the best interests of the stockholders of the Company
that the Company enter into this Agreement and consummate the Merger upon the
terms and subject to the conditions set forth in this Agreement; (iii) declaring
that the consideration to be paid to the stockholders of the Company in the
Merger is fair to the Company's unaffiliated stockholders; (iv) directing that
adoption of this Agreement be submitted to a vote at a meeting of the
stockholders of the Company; and (v) recommending to the stockholders of the
Company that they adopt this Agreement (the "Company Board Recommendation"). The
execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated by this Agreement
have been duly and validly authorized by all necessary corporate action on the
part of the Company, subject, in the case of such performance, to the Requisite
Company Vote. This Agreement has been duly executed and delivered by the Company
and constitutes a legal, valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting the rights and remedies of creditors generally and to general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).
Section 3.3 Organizational Documents and Minute Books.
(a) Correct and complete copies of the Company's
certificate of incorporation and bylaws, together with all amendments thereto,
have been filed with the SEC and the Company has made available to Parent
correct and complete copies of the certificates of incorporation and bylaws (or
the equivalent organizational documents) of each of its Subsidiaries, in each
case as in effect on the date of this Agreement (collectively, the "Company
Organizational Documents").
(b) The Company has made available to Parent correct and
complete copies of the minutes of all meetings of the stockholders, the boards
of directors and each committee of the boards of directors of the Company and
each of its Subsidiaries held since January 1, 2000.
Section 3.4 Subsidiaries.
(a) A correct and complete list of all Subsidiaries of the
Company and their respective jurisdictions of organization is set forth in
Section 3.4(a) of the Company Disclosure Letter. Each outstanding share of
capital stock of (or other ownership interest in) each Subsidiary of the Company
is duly authorized, validly issued, fully paid and non-assessable and not
subject to any pre-emptive rights. Each of the Subsidiaries of the Company is
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wholly-owned by the Company, directly or indirectly, free and clear of any
Liens. The Company does not own, directly or indirectly, any capital stock of
(or other ownership interest in) or any other securities convertible or
exchangeable into or exercisable for capital stock of (or ownership interest in)
any Person other than the Subsidiaries of the Company.
(b) There are no outstanding contractual obligations of the
Company or any of its Subsidiaries to provide loans to or make any investment in
(i) any Subsidiary of the Company that is not wholly-owned by the Company or
(ii) any other Person.
Section 3.5 Governmental Authorizations. The execution,
delivery and performance of this Agreement by the Company and the consummation
by the Company of the transactions contemplated by this Agreement do not and
will not require any consent, approval or other authorization of, or filing with
or notification to, any domestic or foreign international, national, federal,
state, provincial or local governmental, regulatory or administrative authority,
agency, commission, court, tribunal, arbitral body or self-regulated entity
(each, a "Governmental Entity"), other than:
(a) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware;
(b) the filing with the United States Securities and
Exchange Commission (the "SEC") of (i) a proxy statement (together with any
amendments thereof or supplements thereto, the "Company Proxy Statement")
relating to the special meeting of the stockholders of the Company to be held to
consider the adoption of this Agreement (the "Company Stockholders Meeting")
and, (ii) any other filings and reports that may be required in connection with
this Agreement and the transactions contemplated by this Agreement under the
Securities Exchange Act of 1934 (the "Exchange Act");
(c) compliance with state securities or "blue sky" laws;
(d) compliance with the rules and regulations of the New
York Stock Exchange ("NYSE"); and
(e) the pre-merger notification required under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX Xxx").
Section 3.6 Non-Contravention. The execution, delivery and
performance of this Agreement by the Company and the consummation by the Company
of the transactions contemplated by this Agreement do not and will not:
(a) contravene or conflict with, or result in any violation
or breach of, any provision of the Company Organizational Documents;
(b) contravene or conflict with, or result in any violation
or breach of, any material Laws or Orders applicable to the Company or any of
its Subsidiaries or by which any Company Assets are bound, assuming that all
9
consents, approvals, authorizations, filings and notifications described in
Section 3.5 have been obtained or made;
(c) result in any violation or breach of, or constitute a
default (with or without notice or lapse of time or both) under, any Contracts
to which the Company or any of its Subsidiaries is a party or by which any
Company Assets are bound (collectively, "Company Contracts");
(d) require any consent, approval or other authorization
of, or any filing with or notification to, any Person under any Company Contract
(for the purposes of this Section 3.6(d) only, the term Company Contract shall
be deemed to exclude Real Property Leases);
(e) give rise to any termination, cancellation, amendment,
modification or acceleration of any rights or obligations under any Company
Contract, or require any offer to purchase or any prepayment of any indebtedness
or similar obligation;
(f) cause the creation or imposition of any Liens on any
Company Assets;
except, in the case of clauses (c) - (f) for any of the foregoing that would not
reasonably be expected, individually or in the aggregate, to have a Company
Material Adverse Effect; or
(g) require any consent, approval or other authorization
of, or any filing with or notification to, any Person under any Real Property
Lease, except for the absence of any consent, approval or other authorization
that would not, individually or in the aggregate, materially impair the
business, value or operations of the Company and its Subsidiaries, taken as a
whole.
Section 3.7 Capitalization.
(a) The authorized capital stock of the Company consists
solely of (i) 75,000,000 shares of Company Common Stock and (ii) 5,000,000
shares of preferred stock, par value $0.01 per share.
(b) Under a Resolution Establishing Designation,
Preferences and Rights of Series A Preferred Stock, the board of directors of
the Company created a series of 75,000 shares of preferred stock designated as
the "Series A Preferred Stock," par value $0.01 per share (the "Company Series A
Preferred Stock"), which are issuable in connection with the rights to purchase
those shares (the "Company Rights") issued under the Rights Agreement, dated as
of September 12, 2002 (the "Company Rights Agreement"), by and between the
Company and EquiServe Trust Company, N.A., as rights agent, a correct and
complete copy of which, together with all amendments thereto, has been filed
with the SEC.
10
(c) As of the close of business on December 19, 2003, (i)
24,162,272 shares of Company Common Stock were issued and outstanding, (ii) no
shares of Company Common Stock were held in treasury by the Company and its
Subsidiaries, (iii) 3,606,441 shares of Company Common Stock were reserved for
issuance under the Company Option Plans, (iv) 4,958,232 shares of Company Common
Stock were reserved for issuance in respect of the Company's Senior Convertible
Notes due 2002 (the "Convertible Notes") issued pursuant to an Indenture, dated
as of April 16, 2002, by and among the Company, the guarantors named therein and
State Street Bank and Trust Company (the "Indenture") and (v) 75,000 shares of
Company Series A Preferred Stock were reserved for issuance in connection with
the Company Rights.
(d) Except as set forth in Sections 3.7(b) and 3.7(c), as
of the close of business on December 19, 2003, no shares of capital stock of the
Company were issued, reserved for issuance or outstanding. Since September 27,
2003, (i) no shares of capital stock of the Company, or securities convertible
or exchangeable into or exercisable for shares of capital stock of the Company,
have been issued other than upon exercise of the Company Stock Options
outstanding on that date and (ii) the Company has not split, combined or
reclassified any of its shares of capital stock.
(e) All of the outstanding shares of capital stock of the
Company have been, and all shares of Company Common Stock that are subject to
issuance will be, upon issuance prior to the Effective Time on the terms and
subject to the conditions specified in the instruments under which they are
issuable, duly authorized, validly issued, fully paid and non-assessable, and
have not been, and will not be, issued in violation of (nor are any of the
authorized shares of capital stock of the Company subject to) any pre-emptive
rights or similar rights created by statute, the Company Organizational
Documents or any agreement to which the Company is a party or is bound.
Section 3.8 Options and Other Rights.
(a) As of the date of this Agreement, Company Stock Options
to acquire an aggregate of 2,493,217 shares of Company Common Stock have been
granted and are outstanding under the Xxxxx Xxxxx Holding Corp. 1992 Stock
Option Plan and the 1997 Equity Participation Plan of Xxxxx Xxxxx Holding Corp.
(collectively, the "Company Option Plans"). Except (i) for Company Stock Options
to purchase an aggregate of 3,606,441 shares of Company Common Stock outstanding
or available for grant under the Company Option Plans, (ii) the Convertible
Notes, (iii) the Company Rights, (iv) those Company Contracts set forth in
Section 3.8(a) of the Company Disclosure Letter and (v) incentive compensation
plans set forth in Section 3.15(a) of the Company Disclosure Letter, there are
not now and as of the Effective Time there will not be, any (A) securities of
the Company or any of its Subsidiaries convertible into or exchangeable for
shares of capital stock, voting securities or ownership interests in the Company
or any of its Subsidiaries, (B) options (including stock option plans and
programs), warrants, rights or other agreements or commitments to acquire from
the Company or any of its Subsidiaries (whether contingent, unvested or
11
otherwise), or obligations of the Company or any of its Subsidiaries to issue,
sell, deliver, exchange, convert, transfer or cause to be issued, sold,
delivered, exchanged, converted or transferred, any capital stock, voting
securities or other ownership interests in (or securities convertible into or
exchangeable for capital stock, voting securities or other ownership interests
in) the Company or any of its Subsidiaries, (C) obligations of the Company or
any of its Subsidiaries to grant, extend or enter into any subscription,
warrant, right, convertible or exchangeable security or other similar agreement
or commitment relating to any capital stock, voting securities or other
ownership interests in the Company or any of its Subsidiaries, (D) bonds,
debentures, notes or other indebtedness of the Company or any of its
Subsidiaries having the right to vote on any matters on which stockholders of
the Company may vote (the items in the immediately preceding clauses (A), (B),
(C) and (D), together with the Shares and any other capital stock of (or
ownership interest in) the Company or any of its Subsidiaries, being referred to
collectively as "Company Securities") or (E) obligations by the Company or any
of its Subsidiaries to make any payments based on the price or value of the
Shares or the business, operations or performance (or any portion thereof) of
the Company or any of its Subsidiaries, or any similar or other derivative
securities. There are no outstanding obligations (whether contingent, unvested
or otherwise) of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any Company Securities.
(b) The Company has made available to Parent correct and
complete copies of all Company Option Plans and all forms of options issued
under those Company Option Plans. Section 3.8(b) of the Company Disclosure
Letter sets forth a correct and complete list of the following information, as
of the date of this Agreement, with respect to each Company Stock Option: (i)
the name of the holder of that option; (ii) the exercise price for that option;
(iii) the number of shares of Company Common Stock subject to that option; (iv)
the Company Option Plan under which that option was granted, together with any
Contract that modifies or purports to modify the terms or conditions of the
applicable Company Option Plan; and (v) the dates on which that option was
granted.
(c) The Company has made available to Parent correct and
complete copies of the Indenture and the global note representing the
Convertible Notes. Section 3.8(c) of the Company Disclosure Letter sets forth a
correct and complete list of the following information, as of the date of this
Agreement, with respect to the Convertible Notes: (i) the aggregate principal
amount thereof, (ii) the aggregate amount of accrued and unpaid interest
thereon, (iii) the conversion price thereof and (iv) the "Change in Control
Purchase Price" (as defined in the Indenture), assuming a "Change in Control"
(as defined in the Indenture) shall have occurred as of the date hereof.
Original issue discount on the Convertible Notes does not accrue (other than for
tax purposes) until after April 16, 2007.
Section 3.9 Voting.
(a) The Requisite Company Vote is the only vote of the
holders of any class or series of the capital stock of the Company or any of its
Subsidiaries necessary (under the Company Organizational Documents, the DGCL,
12
other applicable Laws or otherwise) to approve and adopt this Agreement, the
Merger and the other transactions contemplated by this Agreement.
(b) There are no voting trusts, proxies or similar
agreements, arrangements or commitments to which the Company or any of its
Subsidiaries is a party with respect to the voting of any shares of capital
stock of (or other ownership interests in) the Company or any of its
Subsidiaries.
Section 3.10 SEC Reports and Disclosure Procedures.
(a) The Company has timely filed with the SEC, and has made
available to Parent correct and complete copies of, all forms, reports,
certifications, schedules, registration and definitive proxy statements and
other documents required to be filed by the Company with the SEC since January
1, 2001 (collectively, the "Company SEC Reports"). The Company SEC Reports (i)
were prepared in accordance with the requirements of the Securities Act of 1933
(the "Securities Act"), the Exchange Act and the Xxxxxxxx-Xxxxx Act of 2002 (the
"Sarbanes Act"), as the case may be, and (ii) did not, at the time they were
filed, 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 the light of the circumstances under which such
statements were made, not misleading, unless such information contained in any
Company SEC Report has been corrected by a later-filed Company SEC Report filed
prior to the date hereof. The Company is not required to file any forms,
reports, schedules, statements or other documents with any foreign Governmental
Entity that performs a similar function to that of the SEC or any securities
exchange or quotation service other than the NYSE. No Subsidiary of the Company
is subject to the periodic reporting requirements of the Exchange Act or is
otherwise required to file any forms, reports, schedules, statements or other
documents with the SEC, any foreign Governmental Entity that performs a similar
function to that of the SEC or any securities exchange or quotation service.
(b) The Company has established and maintained proper
disclosure controls and procedures (as such term is defined in Rule 13a-14 under
the Exchange Act) to ensure that material information required to be included in
the Company SEC Reports is known to the officers of the Company responsible for
preparing, and certifying as to the accuracy of, the Company SEC Reports (the
"Company Responsible Officers").
(c) The Company Responsible Officers have disclosed to the
Company's independent auditors and to the audit committee of the Company's board
of directors (i) all known significant deficiencies in the design or operation
of such disclosure controls and procedures which would adversely affect, in any
material respect, the Company's ability to record, process, summarize and report
financial data, and (ii) any known fraud, whether or not material, that involves
management or other employees of the Company or any of its Subsidiaries who have
a significant role in such disclosure controls and procedures.
13
(d) The books and records of the Company and its
Subsidiaries (i) have been and are being maintained in accordance with GAAP and
all other applicable legal and accounting requirements in all material respects
and (ii) accurately reflect, in all material respects, the transactions and
accounts of the Company and its Subsidiaries.
(e) There are no outstanding loans made by the Company or
any of its Subsidiaries to any executive officer (as defined in Rule 3b-7 under
the Exchange Act) or director of the Company or any of its Subsidiaries. There
are no outstanding Contracts or understandings that forgive (or purport to
forgive) any loan set forth in Section 3.10(e) of the Company Disclosure Letter.
Since the enactment of the Sarbanes Act, neither the Company nor any of its
Subsidiaries has made any loans to any executive officer or director of the
Company or any of its Subsidiaries.
Section 3.11 Financial Statements; Liabilities.
(a) The audited consolidated financial statements and
unaudited consolidated interim financial statements of the Company and its
consolidated Subsidiaries included or incorporated by reference in the Company
SEC Reports:
(i) comply in all material respects with applicable
accounting requirements and the rules and regulations of the SEC;
(ii) were prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis (except as may be
indicated in the notes to those financial statements);
(iii) fairly present in all material respects the
consolidated financial position of the Company and its consolidated Subsidiaries
as of their respective dates and their consolidated results of operations,
stockholders equity and cash flows for the periods then ended (subject, in the
case of any unaudited interim financial statements, to normal year-end
adjustments, none of which are of a material nature); and
(iv) since December 28, 2002, there has not been any change
in any method of accounting or accounting principle by the Company or any of its
Subsidiaries except as required by GAAP.
(b) There are no liabilities or obligations of any kind,
whether accrued, contingent, absolute, inchoate or otherwise, whether due or to
become due and whether known or unknown (collectively, "Liabilities"), of the
Company or any of its Subsidiaries, that would reasonably be expected,
individually or in the aggregate, to have a Company Material Adverse Effect,
other than:
(i) Liabilities disclosed in the consolidated balance sheet
of the Company and its consolidated Subsidiaries as of December 28, 2002 and the
14
footnotes thereto set forth in the Company's Annual Report on Form 10-K for the
fiscal year ended December 28, 2002;
(ii) Liabilities disclosed in the consolidated balance
sheet of the Company and its consolidated Subsidiaries as of September 27, 2003
and the footnotes thereto set forth in the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended September 27, 2003 (the "September 2003
Balance Sheet"); and
(iii) Liabilities incurred since December 28, 2002 in the
ordinary course of business consistent with past practices.
(c) Except as set forth in the Company SEC Reports filed
prior to the date hereof, there are no related party transactions or off-balance
sheet structures or transactions with respect to the Company or any of its
Subsidiaries that would be required to be reported or set forth in such Company
SEC Reports.
Section 3.12 Absence of Certain Changes. Since December 28,
2002, there has not been any Company Material Adverse Effect nor has there been
any event, occurrence or development, and there has not arisen any state of
circumstances or facts that has had or would reasonably be expected,
individually or in the aggregate, to have a Company Material Adverse Effect.
Since September 28, 2003, except for liabilities incurred in connection with
this Agreement or the transactions contemplated hereby and as set forth in the
Company SEC Reports filed prior to the date of this Agreement, (a) the Company
and each of its Subsidiaries have conducted their business in the ordinary
course consistent with past practices and (b) neither the Company nor any of its
Subsidiaries has taken any action which, if taken after the date of this
Agreement, would be prohibited by Section 5.1.
Section 3.13 Litigation. Section 3.13 of the Company
Disclosure Letter contains a list of all legal actions, claims, demands,
arbitrations, hearings, charges, complaints, investigations, examinations,
indictments, litigations, suits or other civil, criminal, administrative or
investigative proceedings (collectively, "Legal Actions") pending or, to the
knowledge of the Company, threatened, in each case as of the date hereof,
against or affecting (a) the Company or any of its Subsidiaries, (b) all or any
material portion of the Company Assets or (c) any director, officer or employee
of the Company or any of its Subsidiaries or other Person for whom the Company
or any of its Subsidiaries may be liable. Except as set forth in the Company SEC
Reports filed prior to the date of this Agreement, the Legal Actions set forth
in Section 3.13 of the Company Disclosure Letter would not reasonably be
expected, individually or in the aggregate, to have a Company Material Adverse
Effect.
Section 3.14 Contracts.
(a) As of the date hereof, there are no Company Contracts
required to be described in, or filed as an exhibit to, any Company SEC Report
that are not so described or filed as required by the Securities Act or the
Exchange Act, as the case may be.
15
(b) Except as would not reasonably be expected,
individually or in the aggregate, to have a Company Material Adverse Effect, (i)
all Company Contracts are valid and binding, in full force and effect and
enforceable in accordance with their respective terms, (ii) neither the Company
nor any of its Subsidiaries is in violation or breach of, or in default (with or
without notice or the lapse of time or both) under, any Company Contract, (iii)
to the knowledge of the Company, no other Person is in violation or breach of,
or in default (with or without notice or the lapse of time or both) under, any
Company Contract and (iv) no party to any Company Contract has informed the
Company that it intends to terminate or modify the terms of such Contract.
(c) As of the date hereof, there are no Company Contracts
in effect that (i) restrict the ability of the Company or any of its
Subsidiaries to compete in any line of business or to engage in business in any
geographic area, except for such restrictions that are customary for such
Contracts and that only restrict the operation of individual stores (e.g.,
restrictions in a Real Property Lease on the permitted uses that may be made of
the underlying premises) or (ii) contain any provision requiring the Company or
any of its Subsidiaries to purchase a minimum amount of product or allocate a
minimum amount of shelf space to certain products, (iii) provide for
"earn-outs," "performance guarantees" or contingent payments by the Company or
any of its Subsidiaries involving more than $250,000 over the term of such
Company Contract, (iv) relate to indebtedness for borrowed money, letters of
credit, the deferred purchase price of property, conditional sale arrangements,
capital lease obligations, obligations secured by a Lien (other than a Permitted
Lien), or guarantees (but excluding trade payables arising in the ordinary
course of business consistent with past practice, intercompany indebtedness and
immaterial leases for telephones, copy machines, facsimile machines and other
office equipment), (v) relate to any material joint venture, partnership,
strategic alliance or similar arrangement (including any franchising agreement)
and (vi) relate to any pending purchase or sale by the Company or any of its
Subsidiaries of any customer prescription files.
(d) Neither the Company nor any of its Subsidiaries is a
party to or bound by any financial derivatives master agreements, futures
account opening agreements and/or brokerage statements evidencing financial
hedging or other trading activities.
Section 3.15 Benefit Plans.
(a) The Company does not maintain or contribute to or have
any obligation to maintain or contribute to, or have any direct or indirect
Liability, with respect to any Company Benefit Plan or Multiemployer Plan. No
named executive officer (as listed in the Company's most recently filed proxy
statement with the SEC) participates in or is otherwise eligible to receive
payments or benefits from any Company Benefit Plan not listed in Section 3.15 of
the Company Disclosure Letter. The Company has made available to Parent with
respect to each Company Benefit Plan, a correct and complete copy (or, to the
extent no such copy exists, an accurate description) thereof and, to the extent
applicable: (i) the most recent documents constituting the Company Benefit Plan
16
and all amendments thereto; (ii) any related trust agreement or other funding
instrument; (iii) the most recent determination letter received from the
Internal Revenue Service ("IRS"); (iv) the most recent summary plan description
and summary of material modifications; (v) the three most recent (A) Forms 5500
and attached schedules, (B) audited financial statements and (C) actuarial
valuation reports; and (vi) all material correspondence with any Governmental
Entity regarding the operation or the administration of any Company Benefit Plan
given or received within the last three years. All references to the "Company"
in this Section 3.15 shall refer to the Company and any employer that would be
considered a single employer with the Company under Sections 414(b), (c), (m) or
(o) of the Code.
(b) Since the date of most recent financial statements
contained in the Company SEC Reports filed prior to the date hereof, there has
been no amendment, modification or change relating to any Company Benefit Plan
which would materially increase the cost of such Company Benefit Plan.
(c) The Company does not maintain or contribute to, and has
not within the preceding six years maintained or contributed to, or had during
such period the obligation to maintain or contribute to, any Company Benefit
Plan subject to (i) Section 412 of the Code, (ii) Title IV of ERISA or (iii) any
"multiple employer plan" within the meaning of the Code or ERISA.
(d) Each Company Benefit Plan is in compliance in all
respects with all applicable Laws, except for such noncompliance which would not
reasonably be expected, individually or in the aggregate, to have a Company
Material Adverse Effect. Each Company Benefit Plan that requires registration
with a Governmental Entity has been so registered. Except as set forth in
Section 3.15(d) of the Company Disclosure Letter, (i) each Company Benefit Plan
which is intended to qualify under Section 401(a) of the Code has been issued a
favorable determination letter by the IRS with respect to such qualification;
(ii) its related trust has been determined to be exempt from taxation under
Section 501(a) of the Code; (iii) to the knowledge of the Company, no event has
occurred since the date of such qualification or exemption that would adversely
affect such qualification or exemption or the imposition of any material
liability, penalty or tax under ERISA, the Code or any other applicable Law;
(iv) with respect to any Company Benefit Plan, other than routine claims for
benefits, no Liens, Legal Actions or complaints to or by any Person have been
filed or made against such Company Benefit Plan or the Company or, to the
knowledge of the Company, against any other Person and, to the knowledge of the
Company, no such Liens, Legal Actions or complaints are contemplated or
threatened and (v) except for noncompliance which would not reasonably be
expected, individually or in the aggregate, to have a Company Material Adverse
Effect, no individual who has performed services for the Company has been
improperly excluded from participation in any Company Benefit Plan.
(e) Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will (either alone
or in combination with another event) (i) result in any payment becoming due, or
increase the amount of any compensation due, to any current or former employee
17
of the Company; (ii) increase any benefits otherwise payable under any Company
Benefit Plan; (iii) result in the acceleration of the time of payment or vesting
of any such compensation or benefits; (iv) result in the payment of any amount
that could reasonably be construed, individually or in combination with any
other such payment, to constitute an "excess parachute payment," as defined in
Section 280G(b)(1) of the Code; or (iv) result in the triggering or imposition
of any restrictions or limitations on the rights of the Company to amend or
terminate any Company Benefits Plan.
(f) The Company has no Liabilities with respect to any
misclassification of any Person as an independent contractor rather than as an
employee except as would not reasonably be expected, individually or in the
aggregate, to have a Company Material Adverse Effect.
(g) Neither the Company nor any Company Benefit Plan, nor
to the knowledge of the Company any "disqualified person" (as defined in Section
4975 of the Code) or "party in interest" (as defined in Section 3(18) of ERISA),
has engaged in any non-exempt prohibited transaction (within the meaning of
Section 4975 of the Code or Section 406 of ERISA) which, individually or in the
aggregate, has resulted or would reasonably be expected to result in any Company
Material Adverse Effect.
(h) The Company has not withdrawn in a complete or partial
withdrawal from any Multiemployer Plan or incurred any unsatisfied liability due
to the termination, insolvency or reorganization of a Multiemployer Plan within
the last six years. The Company has not received any notification that any
Multiemployer Plan is in reorganization (within the meaning of Section 4121 of
ERISA), is insolvent (within the meaning of Section 4245 of ERISA) or has been
terminated (within the meaning of Title IV of ERISA).
(i) No Company Securities constitute or have constituted a
material part of the assets of any Company Benefit Plan.
(j) Neither the Company nor any organization to which the
Company is a successor or parent corporation, within the meaning of Section
4069(b) of ERISA, has engaged in any transaction described in Sections 4069 or
4212(c) of ERISA.
(k) No Company Benefit Plan covers employees of the Company
or any of its Subsidiaries outside of the United States.
(l) There is no Contract, plan or arrangement covering any
Person that, individually or in the aggregate, could give rise to the payment of
any amount that would not be deductible by Parent, the Company or any of their
respective Subsidiaries by reason of Section 162(m) of the Code.
18
Section 3.16 Labor Relations.
(a) Neither the Company nor any of its Subsidiaries is a
party to or otherwise bound by any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization and,
within the last three years there has not been any, and there is no pending or,
to the Company's knowledge, threatened (i) labor strike or (ii) material
arbitration, grievance, unfair labor practice charge or complaint, dispute,
strike, picket, walkout, work stoppage, slow-down, other job action, lockout or
organizational effort involving the Company or any of its Subsidiaries.
(b) The Company and each of its Subsidiaries is in
compliance in all material respects with all applicable Laws relating to the
employment of labor, including all such applicable Laws relating to wages,
hours, collective bargaining, employment discrimination, civil rights, safety
and health, workers' compensation, pay equity and the collection and payment of
withholding and/or Social Security taxes and similar Taxes, and, to the
knowledge of the Company, there is no pending or threatened inquiry or audit
from any Governmental Entity concerning the Company's compliance with any
applicable Law relating to the employment of labor. Neither the Company nor any
of its Subsidiaries has any obligation to pay overtime in respect of any
employee determined by the Company or such Subsidiary to be exempt from the
overtime requirements of the Fair Labor Standards Act or any similar State Law.
(c) The Company or its Subsidiaries maintains in all
material respects the original I-9 Employment Eligibility Verification Forms for
persons it has employed, including those persons it currently employs, during
the three year period ending on the date of the execution of this Agreement.
Section 3.17 Taxes.
(a) All material Tax Returns required to be filed by or
with respect to the Company or any of its Subsidiaries have been properly
prepared and timely filed, and all such Tax Returns are correct and complete in
all material respects.
(b) The Company and its Subsidiaries have fully and timely
paid all material Taxes owed by them (whether or not shown on any Tax Return)
and have made adequate provision in accordance with GAAP for any Taxes that are
not yet due and payable, other than Taxes being contested in good faith by
appropriate proceedings for which adequate reserves have been provided on the
September 2003 Balance Sheet or, if any such contest commenced after September
27, 2003, for which adequate reserves are provided in accordance with GAAP.
(c) The Company and its Subsidiaries have made available to
Parent correct and complete copies of all material Tax Returns, examination
reports and statements of deficiencies for taxable periods for which the
applicable statutory periods of limitation have not expired.
19
(d) There are no outstanding agreements extending or
waiving the statutory period of limitations applicable to any claim for, or the
period for the collection, assessment or reassessment of, Taxes due from the
Company or any of its Subsidiaries for any taxable period and no request for any
such waiver or extension is currently pending.
(e) No audit or other proceeding by any Governmental Entity
is pending with respect to any Taxes due from or with respect to the Company or
any of its Subsidiaries. No Governmental Entity has given written notice of its
intention to assert any deficiency or claim for additional Taxes against the
Company or any of its Subsidiaries. No written claim has been made against the
Company or any of its Subsidiaries by any Governmental Entity in a jurisdiction
where the Company and its Subsidiaries do not file Tax Returns that the Company
or such Subsidiary is or may be subject to taxation by that jurisdiction. All
deficiencies for Taxes asserted or assessed against the Company or any of its
Subsidiaries have been fully and timely paid, settled or properly reflected in
the most recent financial statements contained in the Company SEC Reports filed
prior to the date hereof.
(f) There are no Liens for Taxes upon the Company Assets,
except for Liens for current Taxes not yet due.
(g) Neither the Company nor any of its Subsidiaries is a
party to any Contract relating to the sharing, allocation or indemnification of
Taxes (collectively, "Tax Sharing Agreements") or has any liability for Taxes of
any Person (other than members of the affiliated group, within the meaning of
Section 1504(a) of the Code, filing consolidated federal income tax returns of
which the Company is the common parent) under Treasury Regulation ss. 1.1502-6,
Treasury Regulation ss. 1.1502-78 or any similar state, local or foreign Laws,
as a transferee or successor, or otherwise.
(h) Neither the Company nor any of its Subsidiaries has
constituted a "distributing corporation" or a "controlled corporation" (within
the meaning of Section 355(a)(1)(A) of the Code) in a distribution of shares
qualifying for tax-free treatment under Section 355 of the Code.
(i) Neither the Company nor any of its Subsidiaries has
executed or entered into a closing agreement under Section 7121 of the Code or
any similar provision of state, local or foreign Laws, and neither the Company
nor any of its Subsidiaries is subject to any private letter ruling of the IRS.
(j) Neither the Company nor any of its Subsidiaries has
entered into any transaction that constitutes a "listed transaction" within the
meaning of Treasury Regulation ss. 1.6011-4(b)(2).
(k) The net operating loss carryforwards of the Company and
its Subsidiaries (the "NOLs") are not subject to any limitation under Section
382 or 384 of the Code or otherwise and, as of the date hereof, such NOLs are
set forth in Section 3.17(k) of the Company Disclosure Letter. There are no
Legal Actions pending or, to the knowledge of the Company, threatened against,
20
with respect to or in limitation of the NOLs, including any limitations under
Section 382 or 384 of the Code (other than limitations incurred in connection
with transactions contemplated by this Agreement).
(l) None of the Company or any of its Subsidiaries has
agreed, or is required, to make any adjustment under Section 481(a) of the Code,
and no Governmental Entity has proposed in writing any such adjustment or change
in accounting method.
(m) Neither the Company nor any of its Subsidiaries is, or
has been, a person other than a "United States person" within the meaning of the
Code.
(n) Neither the Company nor any of its Subsidiaries is a
"United States real property holding corporation" within the meaning of Section
897 of the Code.
Section 3.18 Environmental Matters.
(a) Except as would not reasonably be expected,
individually or in the aggregate, to have a Company Material Adverse Effect, the
Company and each of its Subsidiaries are in compliance with all applicable Laws
relating to (i) pollution, contamination, protection of the environment, or to
health or safety as they may be affected by exposure to Hazardous Substances,
(ii) emissions, discharges, disseminations, releases or threatened releases of
Hazardous Substances into the air (indoor or outdoor), surface water,
groundwater, soil, land surface or subsurface, buildings, facilities, real or
personal property or fixtures or (iii) the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances (collectively, "Environmental Laws").
(b) Except as would not reasonably be expected,
individually or in the aggregate, to have a Company Material Adverse Effect,
there are no past or present conditions, events, circumstances, facts,
activities, practices, incidents, actions, omissions or plans:
(i) that (A) would reasonably be expected to give rise to
any Liabilities of the Company or any of its Subsidiaries under any
Environmental Law or (B) have given rise to any such Liability that has not been
resolved or discharged in all material respects;
(ii) that would reasonably be expected to require the
Company or any of its Subsidiaries to incur any cleanup, remediation, removal or
other response costs (including the cost of coming into compliance with
Environmental Laws), investigation costs (including fees of consultants, counsel
and other experts in connection with any environmental investigation, testing,
audits or studies), losses, Liabilities, payments, damages (including any
actual, punitive or consequential damages (A) under any Environmental Law,
contractual obligations or otherwise or (B) to third parties for personal injury
or property damage), civil or criminal fines or penalties, judgments or amounts
21
paid in settlement, in each case arising under or relating to any Environmental
Law (collectively, "Environmental Costs"); or
(iii) that, to the knowledge of the Company, would
reasonably be expected to form the basis of any Legal Action against or
involving the Company or any of its Subsidiaries arising under or relating to
any Environmental Law.
(c) Neither the Company nor any of its Subsidiaries has
since January 1, 2001, received any written notice and the Company does not
otherwise have knowledge: (i) that any of them is or may be a potentially
responsible Person or otherwise liable in connection with any waste disposal
site or other location allegedly containing any Hazardous Substances; (ii) of
any failure by any of them to comply with any Environmental Law or the
requirements of any environmental Permits; or (iii) that any of them is
requested or required by any Governmental Entity to perform any investigatory or
remedial activity or other action in connection with any actual or alleged
release of Hazardous Substances or any other Environmental Law. Neither the
Company nor any of its Subsidiaries has received any such notice or other
communication and the Company does not otherwise have knowledge of any such
circumstances occurring prior to January 1, 2001 with respect to which the
Company has any outstanding material Liability.
(d) The Company and its Subsidiaries have provided Parent
access to all environmental assessment reports, in the Company's or its
Subsidiaries' control, relating to the Company's or its Subsidiaries' current or
former owned or leased real property.
Section 3.19 Intellectual Property.
(a) The Company and its Subsidiaries own, or otherwise
possess valid IP Licenses or other rights to use the Intellectual Property used
in connection with their respective businesses (the "Company Intellectual
Property") free and clear of any Liens other than Permitted Liens.
(b) Section 3.19(b) of the Company Disclosure Letter sets
forth a correct and complete list of all registrations, issuances, filings and
applications for any material Intellectual Property filed by the Company or any
of its Subsidiaries specifying as to each item, as applicable: (i) the nature of
the item, including the title; (ii) the owner of the item; (iii) the
jurisdictions in which the item is issued or registered or in which an
application for issuance or registration has been filed; and (iv) the issuance,
registration or application numbers and dates.
(c) Section 3.19(c) of the Company Disclosure Letter sets
forth a correct and complete list of all material IP Licenses under which the
Company or any of its Subsidiaries is a licensor or licensee as of the date
hereof.
(d) To the knowledge of the Company, all of the Company's
and its Subsidiaries' rights in the material Company Intellectual Property owned
or purportedly owned by the Company or its Subsidiaries are valid and
22
enforceable. The Company and its Subsidiaries have used reasonable efforts to
maintain and protect each material item of Company Intellectual Property owned
or purported to be owned by them. To the knowledge of the Company, none of the
products or services owned, used, developed, provided, sold, licensed, imported
or otherwise exploited by the Company or any of its Subsidiaries infringes upon
or otherwise violates any Intellectual Property rights of others other than with
respect to merchandise carried in the ordinary course of business. To the
knowledge of the Company, no Person is materially infringing upon or otherwise
violating the Intellectual Property rights of the Company or any of its
Subsidiaries.
(e) All material Software (other than
commercially-available off-the-shelf software) used or owned by the Company or
any of its Subsidiaries is set forth and described in Section 3.19(e) of the
Company Disclosure Letter.
(f) The Company has privacy policies (each, a "Privacy
Policy") regarding the collection and use of information from customers and
website visitors ("Customer Information"), correct and complete copies of which
have been made available to Parent. Neither the Company nor any of its
Subsidiaries has collected or used any Customer Information in material
violation of any applicable Laws or in material violation of any applicable
Privacy Policy. The Company and its Subsidiaries have reasonable security
measures in place to protect the Customer Information they receive through their
websites and store in their computer systems from illegal use by third parties
or use by third parties in a manner that violates the privacy rights of their
customers. To the knowledge of the Company, the transactions contemplated by
this Agreement will not materially violate any Privacy Policy as it existed when
the relevant Customer Information was collected or obtained.
Section 3.20 Real Property.
(a) Section 3.20(a) of the Company Disclosure Letter sets
forth a correct and complete schedule of all leases, subleases, licenses and
other agreements (the "Real Property Leases") under which the Company or any of
its Subsidiaries uses or occupies or has the right to use or occupy any real
property as of the date hereof (the "Leased Real Property") and the address of
the real property demised by each Real Property Lease, the name of landlord
under each Real Property Lease and the commencement date of each Real Property
Lease. The information set forth in Section 3.20(a) of the Company Disclosure
Letter with respect to each Real Property Lease is correct and complete in all
material respects.
(b) Section 3.20(b) of the Company Disclosure Letter sets
forth a correct and complete schedule of all real property owned by the Company
or any of its Subsidiaries as of the date hereof (the "Owned Real Property" and,
together with the Leased Real Property, the "Real Property"). The Real Property
constitutes all of the real property used by the Company and its Subsidiaries in
the conduct of their business as of the date hereof.
23
(c) Section 3.20(c) of the Company Disclosure Letter is a
correct and complete list of all of the stores operated by the Company or any of
its Subsidiaries as of the date hereof.
(d) The Company and its Subsidiaries have good and
marketable title to the Owned Real Property and good and valid leasehold
interests in the Leased Real Property, in each case not subject to any Liens
other than Permitted Liens and except as would not reasonably be expected,
individually or in the aggregate, to materially impair the business, value or
operations of the Company and its Subsidiaries, taken as a whole.
(e) Section 3.20(e) of the Company Disclosure Letter is a
correct and complete schedule of all subleases of Leased Real Property or leases
of Owned Real Property, if any, pursuant to which a third party has the right to
occupy any of the Real Property as of the date hereof (the "Real Property
Subleases") and the address of the real property demised by each Real Property
Sublease, the name of the sub-tenant under each Real Property Sublease and the
commencement date of each Real Property Sublease.
(f) Since September 28, 2003, there has been no damage by
fire or other casualty affecting the Real Property for which adequate insurance
coverage is not available.
(g) Since January 1, 2001, neither the Company nor any of
its Subsidiaries has received any written notice of any pending, threatened or
contemplated condemnation proceeding affecting the Real Property or any part
thereof or any sale or other disposition of the Real Property or any part
thereof in lieu of condemnation. To the knowledge of the Company, there is no
pending, threatened or contemplated condemnation proceeding affecting a material
portion of the Real Property or any sale or other disposition of a material
portion of the Real Property in lieu of condemnation.
Section 3.21 Personal Property; Inventory.
(a) The Company and its Subsidiaries have good and
marketable title to, or a valid and enforceable leasehold interest in, all
Company Assets (other than the Real Property) owned, used or held for use by
them, except as would not reasonably be expected, individually or in the
aggregate, to have a Company Material Adverse Effect. Neither the Company's nor
any of its Subsidiaries' ownership of or leasehold interest in any such Company
Asset is subject to any Liens, except for Liens that would not reasonably be
expected, individually or in the aggregate, to have a Company Material Adverse
Effect. Except for normal wear and tear, to the knowledge of the Company, the
machinery and equipment of the Company and its Subsidiaries necessary for the
continued conduct of their respective businesses are in generally good operating
condition and in a state of reasonable maintenance and repair.
(b) Since January 1, 2001, the Company has not received
written notice requesting a material recall of any item of Inventory.
"Inventory" means all of the Company's and its Subsidiaries' inventory and
24
merchandise, whether located in any of the Company's or its Subsidiaries'
stores, warehouse, or in transit to any of such stores, together with the
Company's and its Subsidiaries packaging inventory and displays.
Section 3.22 Permits; Compliance with Laws.
(a) Each of the Company and its Subsidiaries is in
possession of all franchises, grants, authorizations, licenses, easements,
variances, exceptions, certifications, registrations, consents, certificates,
approvals and other permits of any Governmental Entity ("Permits") necessary for
it to own, lease and operate the Company Assets or to carry on its business as
it is now being conducted (collectively, the "Company Permits"), and all such
Company Permits are in full force and effect, except as would not reasonably be
expected, individually or in the aggregate, to have a Company Material Adverse
Effect. No suspension, revocation or cancellation of any of the Company Permits
is pending or, to the knowledge of the Company, threatened, and no such
suspension or cancellation will result from the transactions contemplated by
this Agreement, except as would not reasonably be expected, individually or in
the aggregate, to have a Company Material Adverse Effect.
(b) The Company, and any of its Subsidiaries that directly
or indirectly receive reimbursement or payments under Titles XVIII and XIX of
the Social Security Act (the "Medicare and Medicaid programs") are certified for
participation and reimbursement under the Medicare and Medicaid programs. The
Company, and any of its Subsidiaries that directly or indirectly receive
reimbursement or payments under the Medicare and Medicaid programs, the CHAMPUS
and TRICARE programs and such other similar federal, state or local
reimbursement or governmental programs, (collectively, the "Government
Programs"), have current provider numbers and provider agreements required under
such Government Programs. The Company, and any of its Subsidiaries that directly
or indirectly receive payments under any non-governmental program, including any
private insurance program (collectively, the "Private Programs"), have all
provider agreements and provider numbers that are required under such Private
Programs.
(c) The Company has made available to Parent correct and
complete copies of the Company Permits relating to the Government Programs and
the Private Programs (including the name of the issuing agency and the
expiration date). All licenses, DEA registration certificates, provider numbers
and provider agreements under all Government Programs and Private Programs have
been provided to Parent.
(d) None of the Company, any of its Subsidiaries or any of
their respective directors, officers, managers, employees or agents, is, and
during the past two years has not been, in conflict with, or in default or
violation of, (i) any Laws applicable to the Company or such Subsidiary or by
which any of the Company Assets is bound or (ii) any Company Permits, except as
would not reasonably be expected, individually or in the aggregate, to have a
Company Material Adverse Effect. No violation, default, Order or Legal Action
exists with respect to the aforementioned Company Permits, Medicare or Medicaid
25
certifications, provider agreements or provider numbers (collectively, "Company
Regulatory Authorizations"), except as would not reasonably be expected,
individually or in the aggregate, to have a Company Material Adverse Effect.
Neither the Company nor any of its Subsidiaries has received any pending and
unresolved (or, if resolved, without material Liability to the Company or any of
its Subsidiaries) written or oral notice of any violation or of any
investigation or inquiry into an alleged or suspected violation of any Law or of
any of the Company Regulatory Authorizations that would reasonably be expected,
individually or in the aggregate, to materially impair the business, value or
operations of the Company and its Subsidiaries, taken as a whole. To the
knowledge of the Company and its Subsidiaries, no event has occurred that, with
the giving of notice, the passage of time, or both, would constitute grounds for
a material violation or order with respect to any such Company Regulatory
Authorizations, or to revoke, withdraw or suspend any such Company Regulatory
Authorizations, or to terminate the participation of the Company or any of its
Subsidiaries in any Government Program or Private Program.
(e) To the knowledge of the Company, since January 1, 2001,
none of the Company, any of its Subsidiaries or any officer, professional
employee or contractor of the Company (during the term of such individual's
employment by the Company or while acting as an agent of the Company) or its
Subsidiaries or Affiliates has been convicted of any crime, or knowingly engaged
in any conduct, for which debarment or similar punishment is mandated or
permitted by any applicable Law. None of the Company, any of its Subsidiaries or
any officer, director or managing employee of the Company or any of its
Subsidiaries and no Person providing professional services in connection with
the operations of the Company or any of its Subsidiaries has engaged in any
activities that are prohibited, or cause for the imposition of penalties or
mandatory or permissive exclusion, under 42 U.S.C. xx.xx. 1320a-7, 1230a-7a,
1320a-7b, 1395nn or 1396b, 31 U.S.C. xx.xx. 3729-3733, or the federal
CHAMPUS/TRICARE statute (or other federal or state statutes related to false or
fraudulent claims) or the regulations promulgated thereunder pursuant to such
Laws or related Laws, or under any criminal Laws relating to health care
services or payments, or that are prohibited by rules of professional conduct.
(f) Since January 1, 2001, the Company and each of its
Subsidiaries have timely filed all reports and xxxxxxxx required to be filed
prior to the date hereof with respect to the Government Programs and Private
Programs, all fiscal intermediaries and other insurance carriers and all such
reports and xxxxxxxx are complete and accurate in all material respects and have
been prepared in compliance in all material respects with all applicable Laws,
regulations, rules, manuals and guidance governing reimbursement and claims,
except where the failure to file in a timely manner would not reasonably be
expected, individually or in the aggregate, to materially impair the business,
value or operations of the Company and its Subsidiaries, taken as a whole. The
Company and its Subsidiaries have paid or caused to be paid all known and
undisputed refunds, overpayments, discounts or adjustments that have become due
pursuant to such reports and xxxxxxxx, to the knowledge of the Company, have not
claimed or received reimbursements from Government Programs or Private Programs
in excess of amounts permitted by Law, and have no Liability under any
26
Government Program or Private Program for any material refund, overpayment,
discount or adjustment. There are no pending appeals, adjustments, challenges,
audits, inquiries, litigation or written notices of intent to audit with respect
to such prior reports or xxxxxxxx, and during the last three years neither the
Company nor any of its Subsidiaries has been audited, or otherwise examined by
any Government Program or Private Program.
(g) Neither the Company nor any of its Subsidiaries (i) is
a party to any consent, agreement or memorandum of understanding with any
Governmental Entity, (ii) is subject to any Order or (iii) has adopted any board
resolutions at the request of any Governmental Entity, in any case that
restricts the conduct of its business or that in any manner relates to the
management or operation of its business (collectively, "Company Regulatory
Agreements"). To the knowledge of the Company, neither the Company nor any of
its Subsidiaries has been advised by any Governmental Entity that such
Governmental Entity is considering issuing or requesting any Company Regulatory
Agreement.
(h) To the knowledge of the Company, neither the Company
nor any of its Subsidiaries, nor any director, officer, employee, agent or
representative of the Company or any of its Subsidiaries has made, directly or
indirectly, any (i) bribe or kickback, (ii) illegal political contribution,
(iii) payment from corporate funds which was improperly recorded on the books
and records of the Company or any of its Subsidiaries, (iv) unlawful payment
from corporate funds to governmental officials for the purpose of influencing
their actions or the actions of the Governmental Entity which they represent or
(v) unlawful payment from corporate funds to obtain or retain any business.
Section 3.23 Insurance. All material policies of fire,
liability, workers' compensation, director and officer, malpractice and
professional liability and other forms of insurance providing insurance coverage
to or for any of the Company and its Subsidiaries including loss runs in respect
of each such policy for the last three years have been made available to Parent
and (i) the Company or its Subsidiaries are named insureds under such policies,
(ii) all premiums required to be paid with respect thereto covering all periods
up to and including the Effective Time have been paid, (iii) there has been no
material lapse in coverage under such policies during any period for which the
Company and its Subsidiaries have conducted their respective operations, (iv)
each such policy has been issued on an "occurrence" basis and (v) no notice of
cancellation or termination has been received by the Company or any of its
Subsidiaries with respect to any such policy. None of the Company or its
Subsidiaries has any obligation for retrospective premiums for any period prior
to the Effective Time which would reasonably be expected, individually or in the
aggregate, to have a Company Material Adverse Effect. All such policies are in
full force and effect and will remain in full force and effect up to and
including the Effective Time, unless replaced with comparable insurance policies
having comparable terms and conditions. No insurer has put the Company on notice
that coverage has or may be denied with respect to any pending claim equal to or
in excess of $500,000 submitted to insurer by the Company.
27
Section 3.24 Rights Agreement. Except for the Company
Rights Agreement, neither the Company nor any Subsidiary of the Company has in
effect any stockholder rights plan or similar device or arrangement, commonly or
colloquially known as a "poison pill" or "anti-takeover" plan or any similar
plan, device or arrangement and the board of directors of the Company has not
adopted or authorized the adoption of such a plan, device or arrangement. The
Company has made available to Parent a correct and complete copy of the Company
Rights Agreement in effect as of the date of this Agreement. The Company has
taken all necessary action to:
(a) render the Company Rights inapplicable to this
Agreement, the Merger and the other transactions contemplated by this Agreement;
and
(b) ensure that (i) neither Parent, Merger Sub nor any of
their Affiliates will become or be deemed to be an "Acquiring Person" (as
defined in the Company Rights Agreement) and (ii) no "Distribution Date,"
"Shares Acquisition Date" or "Trigger Event" (each as defined in the Company
Rights Agreement) will occur by reason of (A) the approval, execution or
delivery of this Agreement, (B) the announcement or consummation of the Merger
or (C) the consummation of any of the other transactions contemplated by this
Agreement; and
(c) cause the Company Rights to terminate immediately upon
the Effective Time.
Section 3.25 Takeover Statutes. The board of directors of
the Company has taken all necessary action to ensure that the restrictions on
business combinations contained in Section 203 of the DGCL will not apply to
this Agreement, the Merger or the other transactions contemplated by this
Agreement, including by approving this Agreement, the Merger and the other
transactions contemplated by this Agreement. To the knowledge of the Company, no
other so-called "fair price," "moratorium," "control share acquisition" or other
similar state anti-takeover laws ("Takeover Statutes") apply or purport to apply
to this Agreement, the Merger or any of the other transactions contemplated by
this Agreement.
Section 3.26 Opinion of Financial Advisor. Bear, Xxxxxxx &
Co. Inc. (the "Company Financial Advisor") has delivered to the board of
directors of the Company its written opinion to the effect that, as of the date
of this Agreement, the Merger Consideration is fair to the stockholders of the
Company from a financial point of view. The Company has made available to Parent
a complete and correct copy of such opinion. The Company has obtained the
authorization of the Company Financial Advisor to include a copy of such opinion
in the Company Proxy Statement.
Section 3.27 Brokers and Finders. No broker, finder or
investment banker other than the Company Financial Advisor is entitled to any
brokerage, finder's or other fee or commission in connection with the Merger or
the other transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company or any of its Subsidiaries. The Company has
made available to Parent a correct and complete copy of all agreements between
the Company and the Company Financial Advisor under which the Company Financial
28
Advisor would be entitled to any payment relating to the Merger or such other
transactions.
Section 3.28 Information in Proxy Statement. (a) The
Company Proxy Statement and any other document filed with the SEC by the Company
in connection with the Merger (or any amendment thereof or supplement thereto),
at the date first mailed to the Company stockholders, at the time of the Company
Stockholders Meeting and at the time filed with the SEC, as the case may be,
shall not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading; provided, however, that no representation is made by the Company
with respect to statements made therein based on information supplied by Parent
or Merger Sub for inclusion in such documents. The Company Proxy Statement and
such other documents filed with the SEC by the Company shall comply in all
material respects with the provisions of the Exchange Act and the rules and
regulations thereunder.
(b) The information furnished to Parent and Merger Sub
specifically for inclusion in the Schedule 13E-3, or any amendment or supplement
thereto, or specifically for inclusion in any other documents filed with the SEC
by Parent or the Merger Sub in connection with the Merger, shall, at the date
first mailed to the Company's stockholders, at the time of the Company
Stockholders Meeting and at the time filed with the SEC, not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Section 3.29 Transactions with Affiliates. Except to the
extent disclosed in the Company SEC Reports filed prior to the date hereof, from
January 1, 2001 through the date hereof there have been no transactions,
agreements, arrangements or understandings between the Company or any of its
Subsidiaries, on the one hand, and the Company's directors, officers, Affiliates
(other than wholly-owned Subsidiaries of the Company) or other Persons, on the
other hand, that would be required to be disclosed under Item 404 of Regulation
S-K under the Securities Act. Section 3.29 of the Company Disclosure Letter sets
forth a correct and complete list of all Contracts between the chief executive
officer of the Company, on the one hand, and the Company or any of its
Affiliates, on the other hand.
Section 3.30 No Other Representations or Warranties. The
Company has not made, and does not hereby make, any representations or
warranties, express or implied, except as specifically set forth herein.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Except as set forth in the disclosure letter (with specific
reference to the Section or Subsection of this Agreement to which the
information stated in such disclosure relates; provided that any fact or
29
condition disclosed in any section of such disclosure letter in such a way as to
make its relevance to another section of such disclosure letter that relates to
a representation or representations made elsewhere in Article IV of this
Agreement reasonably readily apparent shall be deemed to be an exception to such
representation or representations notwithstanding the omission of a reference or
cross reference thereto) delivered by Parent to the Company prior to the
execution of this Agreement (the "Parent Disclosure Letter"), Parent and Merger
Sub represent and warrant to the Company that:
Section 4.1 Organization and Power. Parent is a limited
liability company and Merger Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Each of
Parent and Merger Sub has the requisite power and authority to own, lease and
operate its assets and properties and to carry on its business as now conducted.
Section 4.2 Authorization; Enforceability. Each of Parent
and Merger Sub has all necessary limited liability company or corporate power
and authority to enter into this Agreement and to consummate the transactions
contemplated by this Agreement. The managing member of Parent has unanimously
adopted resolutions approving this Agreement and the transactions contemplated
by this Agreement. The board of directors of Merger Sub has unanimously adopted
resolutions approving and declaring advisable this Agreement and the
transactions contemplated by this Agreement. The execution and delivery and
performance of this Agreement by each of Parent and Merger Sub and the
consummation by each of Parent and Merger Sub of the transactions contemplated
by this Agreement have been duly and validly authorized by all necessary limited
liability company or corporate action on the part of Parent and Merger Sub. This
Agreement has been duly executed and delivered by each of Parent and Merger Sub
and constitutes a legal, valid and binding agreement of each of Parent and
Merger Sub, enforceable against each of them in accordance with its terms.
Section 4.3 Governmental Authorizations. The execution,
delivery and performance of this Agreement by Parent and Merger Sub and the
consummation by Parent and Merger Sub of the transactions contemplated by this
Agreement do not and will not require any consent, approval or other
authorization of, or filing with or notification to, any Governmental Entity,
other than:
(a) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware;
(b) the filing with the SEC of a Schedule 13E-3 and any
other filings or reports that may be required in connection with this Agreement
and the transactions contemplated by this Agreement under the Exchange Act;
(c) compliance with state securities or "blue sky" laws;
(d) the pre-merger notification required under the HSR Act;
and
30
(e) assuming that all of the consents, approvals,
authorizations, filings and notifications set forth in Section 3.5 of the
Company Disclosure Letter have been obtained or made, where the failure to
obtain such consents, approvals or authorizations, or to make such filings or
notifications would not reasonably be expected, individually or in the
aggregate, to have a Parent Material Adverse Effect.
Section 4.4 Non-Contravention. The execution, delivery and
performance of this Agreement by Parent and Merger Sub and the consummation by
Parent and Merger Sub of the transactions contemplated by this Agreement do not
and will not:
(a) contravene or conflict with, or result in any violation
or breach of, any provision of the certificate of formation, operating agreement
and other organizational documents of Parent and the certificate of
incorporation and bylaws of Merger Sub;
(b) contravene or conflict with, or result in any violation
or breach of, any material Laws or Orders applicable to Parent or any of its
Subsidiaries or by which any assets of Parent or any of its Subsidiaries
("Parent Assets") are bound, assuming that all consents, approvals,
authorizations, filings and notifications described in Section 4.3 have been
obtained or made;
(c) result in any violation or breach of, or constitute a
default (with or without notice or lapse of time or both) under, any Contracts
to which Parent or any of its Subsidiaries is a party or by which any Parent
Assets are bound (collectively, "Parent Contracts"); or
(d) require any consent, approval or other authorization
of, or filing with or notification to, any Person under any Parent Contracts;
except, in the case of clauses (c) - (d) for any of the foregoing that would not
reasonably be expected, individually or in the aggregate, to have a Parent
Material Adverse Effect.
Section 4.5 Interim Operations of Merger Sub. Merger Sub
was formed solely for the purpose of engaging in the transactions contemplated
by this Agreement and has not engaged in any business activities or conducted
any operations other than in connection with the transactions contemplated by
this Agreement.
Section 4.6 Schedule 13E-3 and Proxy Information. (a) The
Schedule 13E-3 and any other document filed with the SEC by Parent or the Merger
Sub in connection with the Merger (or any amendment thereof or supplement
thereto), at the date first mailed to the Company stockholders, at the time of
the Company Stockholders Meeting and at the time filed with the SEC, as the case
may be, shall not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading; provided, however, that no representation is made by
Parent or the Merger Sub with respect to (i) statements made therein based on
31
information supplied by the Company for inclusion in such documents and (ii)
without limiting Section 4.6(b), the Company Proxy Statement and the exhibits
thereto. The Schedule 13E-3 and such other documents filed with the SEC by
Parent or the Merger Sub shall comply in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder.
(b) The information furnished to the Company by Parent and
Merger Sub specifically for inclusion in the Company Proxy Statement, or any
amendment or supplement thereto, or specifically for inclusion in any other
documents filed with the SEC by the Company in connection with the Merger,
shall, at the date first mailed to the Company's stockholders, at the time of
the Company Stockholders Meeting and at the time filed with the SEC, not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
Section 4.7 Financing.
(a) Parent has entered into an equity commitment letter
(the "Equity Commitment Letter") pursuant to which the equity financing source
identified therein has committed to contribute to Parent up to $253,900,000 in
the aggregate (the "Equity Financing"), subject to the terms and conditions
therein and assuming that the conditions set forth in Sections 6.1 and 6.2 are
satisfied as of the Closing. Parent has delivered correct and complete copies of
the Equity Commitment Letter to the Company. As of the date hereof, the Equity
Commitment Letter is in full force and effect and has not been amended or
terminated in any manner adverse to the Company.
(b) Parent has entered into a debt commitment letter (the
"Debt Commitment Letter" and together with the Equity Commitment Letter, the
"Commitment Letters") pursuant to which the debt financing sources identified
therein have committed to contribute to Parent up to $495,000,000 in the
aggregate (the "Debt Financing" and together with Equity Financing, the
"Financing"), subject to the terms and conditions therein and assuming that the
conditions set forth in Sections 6.1 and 6.2 are satisfied as of the Closing.
Parent has delivered correct and complete copies of the Debt Commitment Letter
to the Company. As of the date hereof, the Debt Commitment Letter is in full
force and effect and has not been amended or terminated in any manner adverse to
the Company.
(c) To the knowledge of Parent, as of the date hereof,
there are no conditions precedent related to the funding of the Financing other
than as set forth in the Commitment Letters.
Section 4.8 Brokers and Finders. No broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger or the other transactions contemplated
by this Agreement based upon arrangements made by or on behalf of Parent or
Merger Sub.
32
Section 4.9 No Other Representations or Warranties. Parent
and Merger Sub have not made, and do not hereby make, any representations or
warranties, express or implied, except as specifically set forth herein.
ARTICLE V
COVENANTS
Section 5.1 Conduct of Business of the Company. During the
period from the date of this Agreement until and including the Effective Time or
the date on which this Agreement is terminated pursuant to its terms, except as
expressly contemplated by this Agreement, the Company shall, and shall cause
each of its Subsidiaries to, (x) conduct its operations only in the ordinary
course of business consistent with past practice and with no less diligence and
effort than would be applied in the absence of this Agreement and (y) use
commercially reasonable efforts to maintain and preserve intact its business
organization, retain the services of its current officers and key employees and
preserve the good will of its customers, suppliers and other Persons with whom
it has material business relationships. Without limiting the generality of the
foregoing, during the period from the date of this Agreement until and including
the Effective Time or the date on which this Agreement is terminated pursuant to
its terms, and except as otherwise contemplated by this Agreement or set forth
in Section 5.1 of the Company Disclosure Letter, the Company shall not, and
shall not permit any of its Subsidiaries to, without the prior written consent
of Parent:
(a) amend any of the Company Organizational Documents;
(b) do or effect any of the following actions with respect
to the Company Securities: (i) adjust, split, combine or reclassify any Company
Securities, (ii) make, declare or pay any dividend (other than dividends paid by
wholly-owned Subsidiaries) or distribution on, or, directly or indirectly,
redeem, purchase or otherwise acquire, any Company Securities, (iii) grant any
Person any right or option to acquire any Company Securities other than to
employees hired after the date hereof pursuant to the Company Option Plans
consistent with past practice but in any event not in excess of 100,000
underlying Shares, (iv) issue, deliver, pledge, dispose of or sell any Company
Securities (except pursuant to the exercise of the Company Stock Options or the
conversion of any Convertible Notes that are outstanding as of the date of this
Agreement) or (v) enter into any Company Contract, understanding or arrangement
with respect to the sale, voting, registration or repurchase of any Company
Securities;
(c) except for increases in salary, wages and benefits of
officers or employees (i) consistent with past practice, (ii) in conjunction
with new hires, promotions or other changes in job status, (iii) pursuant to
existing collective bargaining agreements, or (iv) changes to Company Benefit
Plans as of a beginning of a plan year in the ordinary course of business
consistent with past practice, (A) increase the compensation or benefits payable
or to become payable to its directors, officers or employees, (B) pay any
compensation or benefits not required by any existing plan or arrangement
(including the granting of stock options, stock appreciation rights, shares of
33
restricted stock or performance units) or grant any severance or termination pay
to (except pursuant to existing agreements, plans or policies), or enter into
any employment or severance agreement with, any director, officer or other
employee or (C) establish, adopt, enter into, amend or take any action to
accelerate rights under any Company Benefit Plans, except in each case to the
extent required by applicable Laws or such plans;
(d) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, joint venture, association
or other business organization or division thereof with a purchase price in
excess of $5,000,000, individually or in the aggregate, or acquire, lease or
manage any material assets, other than the acquisition of inventory, equipment
and customer prescription files in the ordinary course of business consistent
with past practice;
(e) other than in the ordinary course of business
consistent with past practice, not sell, lease, license or subject to any Lien
or otherwise dispose of any material Company Assets other than (i) any Liens for
Taxes not yet due and payable or Taxes that are being contested in good faith by
appropriate proceedings for which adequate reserves have been provided on the
September 2003 Balance Sheet or, if any such contest commenced after September
27, 2003, for which adequate reserves are provided in accordance with GAAP, and
(ii) such mechanics and similar liens, if any, as arise in the ordinary course
of business for amounts that are not more than thirty (30) days overdue or that
are being contested in good faith by appropriate proceedings for which adequate
reserves have been provided on the September 2003 Balance Sheet or if any such
contest commenced after September 27, 2003, for which adequate reserves are
provided in accordance with GAAP;
(f) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
reorganization;
(g) except for contracts entered into in the ordinary
course of business consistent with past practice and commitments, amendments,
modifications, terminations or waivers in the ordinary course of business
consistent with past practice, not make any commitment (including any payment
not expressly required thereunder) or enter into, or amend, modify, or
terminate, or waive any rights under, any material Company Contract;
(h) without the prior written consent of Parent (which
consent shall not be unreasonably withheld), not make any commitment or enter
into, or amend, or terminate, or waive any rights under, any collective
bargaining agreement;
(i) without the prior written consent of Parent (which
consent shall not be unreasonably withheld), not (i) incur any indebtedness for
borrowed money or guarantee any such indebtedness of another Person, issue or
sell any debt securities or warrants or other rights to acquire any debt
securities of the Company or any of its Subsidiaries, guarantee any debt
securities of another Person, enter into any "keep well" or other agreement to
34
maintain any financial statement condition of another Person or enter into any
arrangement having the economic effect of any of the foregoing, except for (x)
borrowings under its existing revolving line of credit that are made in the
ordinary course of business consistent with past practice and that do not result
in aggregate borrowings at any time outstanding in excess of $120,000,000, and
(y) the endorsement of checks in the normal course of business consistent with
past practice, (ii) enter into derivative, swap or any other off-balance sheet
structure or transaction or (iii) make any loans, advances or capital
contributions to, or investments in, any other Person, other than the Company or
any direct or indirect wholly-owned Subsidiary of the Company and other than
travel and entertainment advances to employees in the ordinary course of
business consistent with past practice;
(j) without the prior written consent of Parent (which
consent shall not be unreasonably withheld), make any capital expenditure, other
than capital expenditures that are not, in the aggregate, for any fiscal year,
more than $2,500,000 in excess of the capital expenditures provided for in the
Company's budget for 2003 (a correct and complete copy of which has been
provided to Parent);
(k) change its accounting policies or procedures (including
procedures with respect to payment of accounts payable), other than as required
by GAAP or other applicable Laws;
(l) without the prior written consent of Parent (which
consent shall not be unreasonably withheld) (i) fail to maintain or renew its
material existing insurance policies (or substantial equivalents) to the extent
available at comparable rates or (ii) increase the premium on such policies or
replacements thereof in excess of generally available market rates;
(m) settle or compromise any material Legal Actions
(whether or not commenced prior to the date of this Agreement) other than
settlements or compromises of such Legal Actions where the settlement (i) either
(A) is limited solely to monetary payment or (B) would not reasonably be
expected, individually or in the aggregate, to materially impair the business,
value or operations of the Company and its Subsidiaries, taken as a whole, (ii)
includes a release of all material claims that are outside of the ordinary
course of business consistent with past practice and (iii) the amount paid by
the Company in all such settlements or compromises does not exceed any amounts
reflected or reserved against in the September 2003 Balance Sheet by $4,000,000
in the aggregate or $2,000,000 for any individual settlement or compromise;
(n) not engage in any transaction with, or enter into any
Contract or understanding with, directly or indirectly, any of the Company's
Affiliates, including any transactions, Contracts or understandings with any
Affiliate or other Person covered under Item 404 of SEC Regulation S-K that
would be required to be disclosed under such Item 404 other than transactions
between the Company and its wholly-owned Subsidiaries or between the Company's
wholly-owned Subsidiaries;
35
(o) effectuate a "plant closing" or "mass layoff," as those
terms are defined in the Worker Adjustment and Retraining Act of 1988 or any
similar state Laws, affecting in whole or in part any site of employment,
facility, operating unit or employee of the Company or any of its Subsidiaries;
(p) intentionally invalidate, abandon or dedicate to the
public domain, any material Company Intellectual Property owned or purportedly
owned by the Company or its Subsidiaries, fail to respond within the applicable
deadline to any U.S. Patent and Trademark Office or U.S. Copyright Office
actions relating to material Company Intellectual Property owned or purportedly
owned by the Company or its Subsidiaries or fail to pay maintenance or similar
fees for material Company Intellectual Property owned or purportedly owned by
the Company or its Subsidiaries so as to lead to its invalidation or
abandonment; or
(q) authorize, propose or commit or agree to do any of the
foregoing.
Section 5.2 Access to Information; Cooperation;
Confidentiality.
(a) The Company shall, and shall cause its Subsidiaries, to
(i) provide to Parent and its Representatives access at reasonable times upon
prior notice to the officers, employees, agents, properties, books and records
of the Company and its Subsidiaries and (ii) make available as promptly as
practicable such information concerning the Company and its Subsidiaries as
Parent or its Representatives may reasonably request. No investigation conducted
under this Section 5.2(a), however, will affect or be deemed to modify any
representation or warranty made by the Company in this Agreement.
(b) The Company shall reasonably cooperate with and assist
Parent with respect to the Financing, including (i) making available to Parent's
financing sources all information reasonably requested by them to complete the
Financing, (ii) assisting Parent, Merger Sub or such financing sources upon
their reasonable request in the preparation of information memoranda (including
financial information) to be used in connection with the Financing, including
requests for audits, comfort letters or similar accounting reviews and legal
opinions, and (iii) otherwise assisting such financing sources in all reasonable
respects in their efforts, including by making reasonably available officers of
the Company and its Subsidiaries, as appropriate, at meetings of prospective
lenders in various locations. Unless this Agreement is terminated for any reason
attributable to an action or omission of the Company, Parent will promptly
reimburse the Company for any reasonable out-of-pocket expenses it incurs
pursuant to this Section 5.2(b).
(c) Parent and the Company shall comply with, and shall
cause their respective Representatives to comply with, all of their respective
obligations under the Confidentiality Agreement, dated April 4, 2003 (the
"Confidentiality Agreement"), between Parent and the Company with respect to the
information disclosed under this Section 5.2. Notwithstanding anything contained
herein (or in the Confidentiality Agreement) to the contrary, any party to this
36
Agreement (and each Representative of any party to this Agreement) may disclose
to any and all Persons, without limitation of any kind, the tax treatment and
tax structure of the transactions contemplated by this Agreement, and all
materials of any kind (including opinions or other tax analyses) related to such
tax treatment and tax structure; provided that this sentence shall not permit
any Person to disclose the name of, or other information that would identify,
any party to such transactions or to disclose confidential commercial
information regarding such transactions.
Section 5.3 No Solicitation.
(a) From the date of this Agreement until the Effective
Time or the termination of this Agreement in accordance with Article VII, except
as specifically permitted in Section 5.3(e), 5.3(g) or 5.3(h)(ii), the Company
shall not, nor shall it authorize or permit any of its Subsidiaries or
Representatives to, directly or indirectly (i) solicit, initiate, knowingly
facilitate or knowingly encourage any inquiries, offers or proposals that
constitute, or are reasonably likely to lead to, any Acquisition Proposal; (ii)
engage in discussions or negotiations with, furnish or disclose any information
relating to the Company or any of its Subsidiaries to, or in response to a
request therefor, give access to the Company Assets or the books and records of
the Company or its Subsidiaries to, any Person that has made or, to the
knowledge of the Company, may be considering making any Acquisition Proposal or
otherwise in connection with an Acquisition Proposal; (iii) grant any waiver or
release under any standstill or similar Contract with respect to the Shares, any
Company Securities or any Company Assets; (iv) withdraw, modify or amend the
Company Board Recommendation in any manner adverse to Parent; (v) approve,
endorse or recommend any Acquisition Proposal; (vi) enter into any agreement in
principle, arrangement, understanding or Contract relating to any Acquisition
Proposal; or (vii) take any other action inconsistent with the obligations of
the Company under this Section 5.3.
(b) The term "Acquisition Proposal" shall mean any
Contract, proposal, offer or other indication of interest (whether or not in
writing and whether or not delivered to the Company stockholders generally)
relating to (i) a merger, consolidation, or other business combination involving
the Company or any of its Subsidiaries, (ii) a sale, lease, exchange, mortgage,
transfer or other disposition, in a single transaction or series of related
transactions, of twenty (20%) or more of the Company Assets (including the
capital stock of (or other ownership interest in) any Subsidiary of the
Company), (iii) a purchase or sale of Company Securities, in a single
transaction or series of related transactions, representing twenty percent (20%)
or more of the voting power of the capital stock of (or other ownership interest
in) the Company or any of its Subsidiaries or any new class or series of stock
that would be entitled to a class or series vote with respect to the Merger,
including by way of a tender offer, exchange offer or issuance of any Company
Securities in connection with any acquisition by the Company or any of its
Subsidiaries or (iv) a reorganization, recapitalization, liquidation or
dissolution of the Company or any of its Subsidiaries, in each case other than
the transactions contemplated by this Agreement.
37
(c) The Company shall, and shall cause each of its
Subsidiaries and instruct its Representatives to, immediately cease any existing
solicitations, discussions, negotiations or other activity with any Person then
being conducted with respect to any Acquisition Proposal. The Company shall
promptly inform its Representatives of the Company's obligations under this
Section 5.3. Without limiting the foregoing, the Company agrees that any breach
of the restrictions set forth in this Section 5.3 by any Subsidiary of the
Company or any of its or their Representatives shall be deemed to be a breach by
the Company of this Section 5.3.
(d) The Company shall notify Parent within twenty-four (24)
hours after receipt of (i) any Acquisition Proposal or indication that any
Person is considering making an Acquisition Proposal, (ii) or any request for
information relating to the Company or any of its Subsidiaries or (iii) any
request for access to the Company Assets or the books and records of the Company
or its Subsidiaries that the Company reasonably believes could lead to an
Acquisition Proposal. The Company shall provide Parent promptly with the
identity of such Person, a detailed description of such Acquisition Proposal,
indication or request and, if applicable, a copy of such Acquisition Proposal.
The Company shall keep Parent fully informed on a reasonably current basis of
the status and details of any such Acquisition Proposal, indication or request.
(e) Subject to the Company's compliance with the provisions
of this Section 5.3 and prior to the obtaining of the Requisite Company Vote,
nothing in this Agreement shall prevent the Company or its board of directors
from:
(i) engaging in discussions or negotiations with, or
furnishing or disclosing any information relating to the Company or any of its
Subsidiaries or, in response to a request therefor, giving access to the Company
Assets or the books and records of the Company or any of its Subsidiaries to,
any Person who has made a bona fide written and unsolicited Acquisition Proposal
if the board of directors determines that such Acquisition Proposal is
reasonably likely to result in a Superior Proposal, but only so long as (x) the
board of directors has (A) acted in good faith and by a majority of the
independent members of the board of directors, (B) determined, after
consultation with a financial advisor of nationally recognized reputation, that
such Acquisition Proposal is reasonably likely to result in a Superior Proposal
and (C) determined, after consultation with outside legal counsel, that the
failure to take such action is reasonably likely to result in a breach of its
fiduciary obligations to the stockholders of the Company under applicable Laws
and (y) the Company (A) enters into a confidentiality agreement with such Person
on terms and conditions no more favorable to such Person than those contained in
the Confidentiality Agreement and (B) concurrently discloses or makes available
the same information to Parent as it makes available to such Person; and
(ii) subject to compliance with Section 5.3(e)(i), entering
into a definitive agreement providing for the implementation of a Superior
Proposal, but only so long as (A) the board of directors, acting in good faith
and by a majority of the independent members of the board of directors, has
approved such definitive agreement, (B) the board of directors has determined,
38
after consultation with a financial advisor of nationally recognized reputation,
that such bona fide written and unsolicited Acquisition Proposal constitutes a
Superior Proposal, (C) the board of directors of the Company has determined,
after consultation with outside legal counsel, that the failure to take such
action is reasonably likely to result in a breach of its fiduciary obligations
to the stockholders of the Company under applicable Laws and (D) the Company
terminates this Agreement pursuant to, and after complying with all of the
provisions of, Section 7.4(a).
(f) The term "Superior Proposal" shall mean an Acquisition
Proposal for at least a majority of the voting power of the Company's then
outstanding securities or all or substantially all of the Company Assets, taken
as a whole, which (i) is on terms and conditions more favorable from a financial
point of view to the unaffiliated stockholders of the Company than those
contemplated by this Agreement, (ii) the conditions to the consummation of which
are all reasonably capable of being satisfied in a timely manner, (iii) for
which financing, to the extent required, is then committed or reasonably likely
to be available and (iv) which was not made in violation of any standstill or
similar agreement to which the Company or any of its Subsidiaries is a party.
(g) The board of directors of the Company shall not (i)
approve, endorse or recommend, or propose to approve, endorse or recommend, any
Acquisition Proposal or (ii) enter into any agreement in principle or
understanding or a Contract relating to an Acquisition Proposal, unless the
Company terminates this Agreement pursuant to, and after complying with all of
the provisions of, Section 7.4(a).
(h) Notwithstanding the foregoing, (i) the board of
directors of the Company shall be permitted to disclose to the stockholders of
the Company a position with respect to an Acquisition Proposal required by Rule
14e-2(a), Item 1012(a) of Regulation M-A or Rule 14d-9 promulgated under the
Exchange Act and (ii) the board of directors of the Company may withdraw, modify
or amend the Company Board Recommendation at any time if it determines, after
consultation with outside legal counsel, that the failure to take such action is
reasonably likely to result in a breach of its fiduciary obligations to the
stockholders of the Company under applicable Laws.
Section 5.4 Notices of Certain Events.
(a) The Company shall notify Parent as promptly as
practicable of (i) any notice or other communication from any Person alleging
that the consent of such Person (or another Person) is or may be required in
connection with the transactions contemplated by this Agreement, (ii) any notice
or other communication from any Governmental Entity in connection with the
transactions contemplated by this Agreement, (iii) any Legal Actions, to the
knowledge of the Company, threatened or commenced against or otherwise affecting
the Company or any of its Subsidiaries or any investigation, complaint, hearing
or proceeding by or before any Governmental Entity relating to the Company or
any of its Subsidiaries, (iv) except to the extent set forth in the Company
Disclosure Letter, any material labor dispute involving the employees of the
Company or its Subsidiaries and, whether or not previously disclosed, any
39
adverse change or development of a significant nature relating to such a
dispute, (v) any write-off or write-down of, or any determination to write-off
or write-down, any asset of the Company or any of its Subsidiaries which
write-off, write-down or determination exceeds $1 million individually or $5
million in the aggregate, together with any other write-off or write-down, or
(vi) any event, change, occurrence, destruction, damage, loss, circumstance or
development between the date of this Agreement and the Effective Time that, in
the case of this clause (vi), has made or would reasonably be expected,
individually or in the aggregate, to make any of the representations or
warranties of the Company contained in this Agreement untrue or inaccurate in a
material respect or causes or would reasonably be expected, individually or in
the aggregate, to cause any breach of the obligations of the Company under this
Agreement.
(b) Parent shall notify the Company as promptly as
practicable of (i) any notice or other communication from any Person alleging
that the consent of such Person (or other Person) is or may be required in
connection with the transactions contemplated by this Agreement, (ii) any notice
or other communication from any Governmental Entity in connection with the
transactions contemplated by this Agreement, (iii) any written notice from any
financing source providing funds to effect the Merger and the other transactions
contemplated hereby or (iv) any event, change, occurrence, destruction, damage,
loss, circumstance or development between the date of this Agreement and the
Effective Time that, in the case of clause (iii) and this clause (iv), has made
or would reasonably be expected, individually or in the aggregate, to make any
of the representations or warranties of Parent and Merger Sub contained in this
Agreement untrue or inaccurate in a material respect or causes or would
reasonably be expected to, individually or in the aggregate, to cause any breach
of the obligations of Parent or Merger Sub under this Agreement.
Section 5.5 Company Proxy Statement and Schedule 13E-3.
(a) As promptly as practicable following the date of this
Agreement, the Company shall prepare and file the Company Proxy Statement with
the SEC. The Company shall use its commercially reasonable efforts to (i)
respond to any comments on the Company Proxy Statement or requests for
additional information from the SEC as soon as practicable after receipt of any
such comments or requests and (ii) cause the Company Proxy Statement to be
mailed to the stockholders of the Company as promptly as practicable following
the date of this Agreement. The Company shall promptly (A) notify Parent upon
the receipt of any such comments or requests and (B) provide Parent with copies
of all correspondence between the Company and its Representatives, on the one
hand, and the SEC and its staff, on the other hand. Prior to responding to any
such comments or requests or the filing or mailing of the Company Proxy
Statement, the Company (x) shall provide Parent with a reasonable opportunity to
review and comment on any drafts of the Company Proxy Statement and related
correspondence and filings, (y) shall include all comments reasonably proposed
by Parent for inclusion in such drafts, correspondence and filings and, (z) to
the extent practicable, the Company and its outside counsel shall permit Parent
and its outside counsel to participate in all communications with the SEC and
its staff (including all meetings and telephone conferences) relating to the
40
Company Proxy Statement, this Agreement or any of the transactions contemplated
thereby. The Company Proxy Statement shall include the Company Board
Recommendation and a copy of the written opinion of the Company Financial
Advisor referred to in Section 3.26. If at any time prior to the Effective Time
any event shall occur that should, in the reasonable judgment of the Company, be
set forth in an amendment of or a supplement to the Proxy Statement, the Company
shall, in accordance with the procedures set forth in this Section 5.5(a),
prepare and file with the SEC such amendment or supplement as soon thereafter as
is reasonably practicable.
(b) Merger Sub and any Person that may be deemed to be an
Affiliate of the Company shall prepare and file concurrently with the filing of
the Company Proxy Statement a Statement on Schedule 13E-3 ("Schedule 13E-3")
with the SEC. If at any time prior to the Special Meeting any event should occur
which is required by applicable Law to be set forth in an amendment of, or
supplement to, the Schedule 13E-3, Merger Sub and such Person shall file such
amendments or supplements.
Section 5.6 Company Stockholders Meeting. The Company shall
call and hold the Company Stockholders Meeting as promptly as practicable
following the date hereof for the purpose of voting on adoption of this
Agreement. Subject to Section 5.3(h)(ii), the Company shall use its reasonable
efforts to solicit or cause to be solicited from its stockholders proxies in
favor of adoption of this Agreement and shall take all other action necessary or
advisable to secure the Requisite Company Vote.
Section 5.7 Financing.
(a) Parent shall use commercially reasonable efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to (i) maintain in effect the Commitment
Letters and to satisfy the conditions (to the extent such conditions are under
the reasonable control of Parent) to obtaining the Financing set forth therein,
(ii) enter into definitive financing agreements (the "Financing Agreements")
with respect to the Financing so that the Financing Agreements are in effect as
promptly as practicable following satisfaction of the conditions to this
Agreement set forth in Sections 6.1 and 6.2 and (iii) consummate the Financing
as soon as practicable following satisfaction of the conditions to this
Agreement set forth in Sections 6.1 and 6.2. Parent shall keep the Company
reasonably informed of the status of the financing process.
(b) If the Commitment Letters or the Financing Agreements
expire or are terminated for any reason, Parent shall (i) promptly notify the
Company of such expiration or termination and the reasons therefor and (ii) use
commercially reasonable efforts to obtain alternative financing to consummate
the transactions contemplated by this Agreement; it being understood, however,
that such commercially reasonable efforts would not require Parent to obtain
financing that is (A) with respect to the economic terms thereof, on terms less
favorable to Parent thereunder than those set forth in the Commitment Letters or
the Financing Agreements, as the case may be (e.g., Parent shall not be required
to increase the amount of either the Equity Financing or the Debt Financing (or
41
the interest rates applicable thereto)) or (B) with respect to the non-economic
terms thereof, on terms that are substantially similar to those set forth in the
Commitment Letters or the Financing Agreements, as the case may be.
Section 5.8 Directors' and Officers' Indemnification and
Insurance.
(a) All rights to indemnification now existing in favor of
any current or former director, officer and employee of the Company or any of
its Subsidiaries (the "Indemnified Parties") as provided in the Company
Organizational Documents shall survive the Merger and shall continue in full
force and effect for a period of not less than six years after the Effective
Time.
(b) The Surviving Corporation shall indemnify all
Indemnified Parties to the fullest extent permitted by applicable Laws with
respect to all acts and omissions arising out of or relating to their services
as directors or officers of the Company or its Subsidiaries occurring prior to
the Effective Time including, without limitation, in respect of the matters set
forth herein. Parent shall indemnify and hold harmless, and provide advancement
of expenses to the Indemnified Parties to the same extent such persons are
indemnified or have the right to advancement of expenses as of the date hereof
by the Company pursuant to the Company Organizational Documents subject to
Parent's receipt of an undertaking by or on behalf of such Indemnified Party to
repay such legal fees, costs and expenses if it is ultimately determined under
applicable Laws that such Indemnified Party is not entitled to be indemnified.
(c) The Surviving Corporation shall maintain in effect for
at least six years after the Effective Time the current policies of directors'
and officers' liability insurance maintained by the Company or policies of at
least the same coverage and amounts and containing terms and conditions which
are no less advantageous with respect to claims arising out of or relating to
events which occurred before or at the Effective Time so long as the Surviving
Corporation is not required to pay an annual premium in excess of 200% of the
last annual premium paid by the Company for such insurance prior to the date of
this Agreement (such 200% amount being the "Maximum Premium"). If the Surviving
Corporation is unable to obtain the insurance described in the prior sentence
for an amount less than or equal to the Maximum Premium, it shall instead obtain
as much comparable insurance as possible for an annual premium equal to the
Maximum Premium. The Company represents that the last annual premium paid by the
Company for such insurance was approximately $1,304,000.
Section 5.9 Commercially Reasonable Efforts. Upon the terms
and subject to the conditions set forth in this Agreement and in accordance with
applicable Laws, each of the parties to this Agreement shall use its reasonable
commercial efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to ensure that the
conditions set forth in Article VI are satisfied and to consummate the
transactions contemplated by this Agreement as promptly as practicable, except,
in the case of the Company, to the extent (a) specifically permitted by Section
5.3(e) or (b) its board of directors takes action in accordance with 5.3(g) or
42
withdraws, modifies or amends the Company Board Recommendation in accordance
with Section 5.3(h)(ii) and terminates this Agreement in accordance with Section
7.4(a).
Section 5.10 Consents; Filings; Further Action.
(a) Upon the terms and subject to the conditions of this
Agreement and in accordance with applicable Laws, each of the parties to this
Agreement shall use its reasonable efforts to, as promptly as practicable (and
with respect to any HSR Act filings no later than twenty (20) Business Days
after the date hereof) (i) obtain any consents, approvals or other
authorizations required in connection with the transactions contemplated by this
Agreement and (ii) make any necessary filings and notifications, and thereafter
make any other submissions either required or deemed appropriate by each of the
parties to this Agreement, in connection with the transactions contemplated by
this Agreement under (A) the Exchange Act, (B) the HSR Act, (C) the DGCL, (D)
any other applicable Laws, (E) the rules and regulations of the NYSE and (F) the
applicable requirements of any Industry Regulatory Authorities. Parent and the
Company shall cooperate and consult with each other in connection with the
making of all such filings and notifications, including by providing copies of
all such documents to the non-filing party and its advisors prior to filing.
Neither Parent nor the Company shall file any such document if the other party
shall have reasonably objected to the filing of such document. The parties
hereto will consult and cooperate with one another, in connection with any
analyses, appearances, presentations, memoranda, briefs, arguments, opinions and
proposals made or submitted by or on behalf of any party hereto in connection
with proceedings under or relating to the HSR Act or other applicable Laws. Each
of the parties hereto will use all reasonable efforts to secure termination of
any waiting periods under the HSR Act and obtain the approval of any other
Governmental Entity for the transactions contemplated by this Agreement. Without
limiting the foregoing sentence, neither Parent nor its Affiliates will attempt
to acquire another entity who participates in the Company's industry if such
attempt would delay or jeopardize Parent's ability to effect the Merger. Neither
Parent nor the Company shall (x) independently participate in any meeting, or,
to the extent practicable, engage in any substantive conversation, with any
Governmental Entity in respect of any such filings, investigation, or other
inquiry without giving the other party hereto prior notice of the meeting and,
to the extent permitted by such Governmental Entity, the opportunity to attend
and/or participate or (y) consent to any voluntary extension of any statutory
deadline or waiting period or to any voluntary delay of the consummation of the
transactions contemplated by this Agreement at the behest of any Governmental
Entity without the consent of the other party, which consent shall not be
unreasonably withheld.
(b) Each of Parent and the Company shall promptly inform
the other party upon receipt of any notice or other communication from the
Federal Trade Commission, the Department of Justice or any other Governmental
Entity regarding any of the transactions contemplated by this Agreement. If
Parent or the Company (or any of their respective Affiliates) receives a request
for additional information from any such Governmental Entity with respect to the
transactions contemplated by this Agreement, then such party will endeavor in
good faith to make, or cause to be made, as soon as reasonably practicable and
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after consultation with the other party, an appropriate response in compliance
with such request.
Section 5.11 Public Announcements. Parent and the Company
shall consult with each other before issuing any press release or otherwise
making any public statements with respect to this Agreement or any of the
transactions contemplated by this Agreement. Neither Parent nor the Company
shall issue any such press release or make any such public statement prior to
such consultation, except to the extent required by applicable Laws, any Order
or the requirements of the NYSE, in which case the issuing party shall use its
reasonable efforts to consult with the other party before issuing any such
release or making any such public statement.
Section 5.12 Stock Exchange De-listing. Parent shall cause
the Company Common Stock to be de-listed from the NYSE and de-registered under
the Exchange Act as promptly as practicable following the Effective Time.
Section 5.13 Fees, Costs and Expenses. Whether or not the
Merger is consummated, all expenses (including those payable to Representatives)
incurred by any party to this Agreement or on its behalf in connection with this
Agreement and the transactions contemplated by this Agreement ("Expenses") shall
be paid by the party incurring such Expenses, except (a) that Expenses incurred
in connection with the filing fee under HSR Act shall be shared equally by
Parent and the Company and (b) as otherwise provided in Sections 5.2(b) and 7.6.
Section 5.14 Takeover Statutes. If any Takeover Statute is
or may become applicable to this Agreement, the Merger or the other transactions
contemplated by this Agreement, each of Parent and the Company and their
respective boards of directors shall take all necessary action to ensure that
such transactions may be consummated as promptly as practicable upon the terms
and subject to the conditions set forth in this Agreement and otherwise act to
eliminate or minimize the effects of such Takeover Statute.
Section 5.15 Defense of Litigation. The Company shall
provide Parent with prompt notice of and copies of all proceedings and
correspondence relating to any Legal Action against the Company, any of its
Subsidiaries or any of their respective directors or officers by any stockholder
of the Company arising out of or relating to this Agreement or the transactions
contemplated by this Agreement. The Company shall not cooperate with any Person
that may seek to restrain, enjoin, prohibit or otherwise oppose the transactions
contemplated by this Agreement, and the Company shall cooperate in good faith
with Parent and Merger Sub in resisting any such effort to restrain, enjoin,
prohibit or otherwise oppose such transactions. The Company shall give Parent
the opportunity to consult with the Company regarding the defense or settlement
of any such stockholder litigation, shall give due consideration to Parent's
advice with respect to such stockholder litigation and shall not settle any such
litigation without the prior written consent of Parent.
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Section 5.16 Rights Agreement. The board of directors of
the Company shall take all further action (in addition to that referred to in
Section 3.24) requested by Parent in order to render the Company Rights
inapplicable to the Merger and the other transactions contemplated by this
Agreement. Except as provided above with respect to the Merger and the other
transactions contemplated by this Agreement, the board of directors of the
Company shall not, without the prior written consent of Parent, (i) amend the
Company Rights Agreement (other than any such amendment solely to ensure that
the Company Rights remain redeemable) or (ii) take any action with respect to,
or make any determination under, the Company Rights Agreement (including a
redemption of the Company Rights or any action to facilitate an Acquisition
Proposal).
Section 5.17 Tax Matters. During the period from the date
of this Agreement until the Effective Time or the date on which this Agreement
is terminated pursuant to its terms, the Company shall, and shall cause each of
its Subsidiaries to:
(a) prepare and timely file all material Tax Returns
required to be filed by them on or before the Closing Date, including any
applicable extensions ("Post-Signing Returns"), in a manner consistent with past
practice, except as otherwise required by applicable Laws;
(b) consult with Parent with respect to all income tax
Post-Signing Returns and deliver drafts of such income tax Post-Signing Returns
to Parent for its review no later than ten (10) Business Days prior to the date
on which such income tax Post-Signing Returns are required to be filed;
(c) fully and timely pay all Taxes due and payable shown on
such Post-Signing Returns that are so filed;
(d) adequately provide for all Taxes payable by them for
which no Post-Signing Return is due prior to the Effective Time in a manner
consistent with past practice (except as otherwise required by applicable Law)
and in accordance with GAAP;
(e) promptly notify Parent of any Legal Action or audit
pending or threatened against the Company or any of its Subsidiaries in respect
of any material Tax matter, and not settle or compromise any such Legal Action
or audit without Parent's prior written consent, which consent shall not be
unreasonably conditioned, withheld or delayed; and
(f) not make or revoke any material Tax election, amend any
material Tax Return, or adopt or change a Tax accounting method without Parent's
prior written consent, which consent shall not be unreasonably conditioned,
withheld or delayed.
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Section 5.18 Infringement of Company Intellectual Property.
The Company shall promptly notify Parent of any material
infringement of any Company Intellectual Property owned by the Company or its
Subsidiaries of which it becomes aware and shall consult with Parent regarding
the course of action that is advisable in order to protect such Company
Intellectual Property.
Section 5.19 Employee Matters.
(a) It is Parent's general intention that for a period
ending not earlier than the first anniversary of the Effective Time, employees
of the Company and its Subsidiaries who continue their employment after the
Effective Time (the "Affected Employees") shall be provided base salary or
hourly wage rates that are no less favorable than those provided for such
employees immediately prior to the Effective Time; provided, however, that
neither Parent nor the Surviving Company shall have any obligation to continue
to employ such Affected Employees for any period of time on or after the
Effective Time and any such employment shall be on "at will" basis; provided,
further, that any Affected Employee whose employment with the Company and its
Subsidiaries is governed by a collective bargaining agreement will continue to
receive compensation and employee benefits in accordance with the terms of such
collective bargaining agreement.
(b) With respect to any benefit plan, program, arrangement
(including any "employee benefit plan" (as defined in Section 3(3) of ERISA) and
any vacation program), Parent shall, and shall cause the Surviving Corporation
to, recognize the service with the Company and its Subsidiaries prior to the
Effective Time of Affected Employees for purposes of eligibility and vesting
(but not benefit accrual) under such plan or program.
(c) With respect to any welfare plan in which employees of
the Company and its Subsidiaries are eligible to participate after the Effective
Time, Parent shall, and shall cause the Surviving Corporation to, (i) waive all
limitations as to preexisting conditions, exclusions and waiting periods with
respect to participation and coverage requirements applicable to such employees
to the extent such conditions were satisfied under the welfare plans of the
Company and its Subsidiaries prior to the Effective Time, and (ii) provide each
such employee with credit for any co-payments and deductibles paid prior to the
Effective Time in satisfying any analogous deductible or out-of-pocket
requirements to the extent applicable under any such plan.
(d) With respect to any accrued but unused vacation time to
which any Affected Employee is entitled pursuant to the vacation policy
applicable to such employee prior to the Effective Time, Parent shall, and shall
cause the Surviving Corporation to, (i) either allow such Affected Employee to
use such accrued vacation or pay to such Affected Employee in cash the amount of
such accrued vacation pay and (ii) pay in cash the accrued vacation of any
Affected Employee whose employment terminates for any reason on or after the
Effective Time.
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ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligation of each party to this Agreement to effect
the Merger is subject to the satisfaction or waiver on or prior to the Closing
Date of each of the following conditions:
(a) Company Stockholder Approval. This Agreement shall have
been duly adopted by the Requisite Company Vote.
(b) Antitrust. The waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated.
Section 6.2 Conditions to Obligations of Parent and Merger
Sub. The obligations of each of Parent and Merger Sub to effect the Merger are
also subject to the satisfaction or waiver by Parent on or prior to the Closing
Date of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall be true and correct
(without giving effect to any materiality or Company Material Adverse Effect
qualifiers set forth therein), as of the date of this Agreement and as of the
Closing Date with the same force and effect as if made as of the Closing Date,
other than such representations and warranties that are made as of another date,
which representations and warranties shall be true and correct as of such date,
except, in each case, where the failure of the representations and warranties
described in this Section 6.2(a) to be true and correct has not had and would
not reasonably be expected, individually or in the aggregate, to have a Company
Material Adverse Effect; provided, however, that the representations and
warranties made in Sections 3.5 (Governmental Authorizations), 3.6(a)
(Non-Contravention), 3.6(b) (Non-Contravention), 3.7 (Capitalization), 3.8
(Options and Other Rights), 3.11 (Financial Statements; Liabilities) and the
last sentence of Section 3.16(b) (Labor Relations) shall be true and correct in
all material respects at the time made and as of the Closing Date as if made at
and as of such time (except to the extent expressly made as of an earlier date,
in which case such representations and warranties shall be true and correct as
of such earlier date).
(b) Performance of Obligations. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date.
(c) Officer's Certificate. Parent shall have received a
certificate, signed by the chief executive officer or chief financial officer of
the Company, certifying as to the matters set forth in Sections 6.2(a) and
6.2(b).
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(d) Governmental Consents. All consents, approvals and other authorizations of
any Governmental Entity listed in Section 6.3(d) of the Company Disclosure
Letter shall have been obtained.
(e) No Injunctions or Restraints. No Governmental Entity
shall have enacted, issued, promulgated, enforced or entered any Laws or Orders
(whether temporary, preliminary or permanent) that (i) restrain, enjoin or
otherwise prohibit consummation of the Merger or the other transactions
contemplated by this Agreement or (ii) would require Parent or the Company to
consent to or become subject to any condition, restriction, prohibition or other
requirement to which such Person is not subject as of the date hereof and
consisting of a requirement to (A) sell, transfer, license, divest, place in
trust, or otherwise dispose of any assets, (B) agree or consent to (or otherwise
become subject to) any prohibition of, or limitation on, the acquisition,
ownership or operation of any assets, (C) terminate any existing relationships
or Contract rights or agree to forego any such relationships or rights that may
arise or become available in the future, that, in the case of clause (ii), would
reasonably be expected, individually or in the aggregate, to materially impair
the business, value or operations of the Company and its Subsidiaries, taken as
a whole.
(f) Financing Proceeds. Parent shall have received the
proceeds of the Financing (i) with respect to the economic terms thereof, on
terms no less favorable to Parent thereunder than those set forth in the
Commitment Letters or the Financing Agreements, as the case may be (e.g., Parent
shall not be required to increase the amount of either the Equity Financing or
the Debt Financing (or the interest rates applicable thereto)) or (ii) with
respect to the non-economic terms thereof, on terms that are substantially
similar to those set forth in the Commitment Letters or the Financing
Agreements, as the case may be.
(g) Consents Under Agreements. The Company shall have
obtained the consents, approvals and other authorizations set forth in Section
6.2(g) of the Company Disclosure Letter.
(h) Director Resignations. Parent shall have received
written resignation letters from each of the members of the board of directors
(or other persons performing similar functions) of the Company's Subsidiaries
effective as of the Effective Time.
(i) Employment Agreements. The AJC Agreement shall be in
full force and effect and AJC shall not have died, become incapacitated or
otherwise not in a position to perform his obligations thereunder.
(j) Appraisal Rights. Appraisal rights shall not have been
exercised and notice of the intention to exercise such rights shall not have
been given in accordance with the provisions of Section 262(d) of the DGCL by
the stockholders of the Company with respect to more than fifteen percent (15%)
of the issued and outstanding Shares as of immediately prior to the Effective
Time.
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(k) Company Rights. No "Distribution Date," "Share
Acquisition Date" or "Trigger Event" (as each such term is defined in the
Company Rights Agreement) shall have occurred.
(l) Litigation. There shall not have been instituted and
pending any Legal Action by or before any Governmental Entity, commenced after
the date hereof or not otherwise disclosed to Parent, that, in the good faith
judgment of Parent, has had or would reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
Section 6.3 Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is also subject to the
satisfaction or waiver by the Company on or prior to the Closing Date of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of the Parent contained in this Agreement shall be true and correct
(without giving effect to any materiality or Parent Material Adverse Effect
qualifiers set forth therein), as of the date of this Agreement and as of the
Closing Date, with the same force and effect as if made as of the Closing Date,
other than such representations and warranties that are made as of another date,
which representations and warranties shall be true and correct as of such date,
except where failure of the representations and warranties described in this
Section 6.3(a) to be true and correct has not had and would not reasonably be
expected, individually or in the aggregate, to have a Parent Material Adverse
Effect.
(b) Performance of Obligations. Each of Parent and Merger
Sub shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date.
(c) Officer's Certificate. The Company shall have received
a certificate, signed by a senior executive officer of Parent, certifying as to
the matters set forth in Sections 6.3(a) and 6.3(b).
(d) Governmental Consents. All consents, approvals and
other authorizations of any Governmental Entity listed in Section 6.3(d) of the
Company Disclosure Letter shall have been obtained.
(e) No Injunctions or Restraints. No Governmental Entity
shall have enacted, issued, promulgated, enforced or entered any Laws or Orders
(whether temporary, preliminary or permanent) that restrain, enjoin or otherwise
prohibit consummation of the Merger or the other transactions contemplated by
this Agreement.
Section 6.4 Frustration of Closing Conditions. None of the
parties to this Agreement may rely on the failure of any condition set forth in
this Article VI to be satisfied if such failure was caused by such party's
failure to use commercially reasonable efforts to consummate the Merger and the
other transactions contemplated by this Agreement.
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ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination by Mutual Consent. This Agreement
may be terminated at any time prior to the Effective Time by mutual written
consent of Parent and the Company so long as such termination has been duly
authorized by their respective boards of directors or other applicable governing
bodies.
Section 7.2 Termination by Either Parent or the Company.
This Agreement may be terminated by either Parent or the Company at any time
prior to the Effective Time:
(a) if the Merger has not been consummated by June 30,
2004, provided that the right to terminate this Agreement under this clause (a)
shall not be available to any party to this Agreement whose failure to fulfill
any of its obligations has been a principal cause of, or resulted in, the
failure to consummate the Merger by such date;
(b) if any Law prohibits consummation of the Merger;
(c) if any Order restrains, enjoins or otherwise prohibits
consummation of the Merger, and such Order has become final and nonappealable;
or
(d) if this Agreement is not adopted by the Requisite
Company Vote at a duly held Company Stockholders Meeting or adjournment or
postponement thereof.
Section 7.3 Termination by Parent. This Agreement may be
terminated by Parent at any time prior to the Effective Time:
(a) if the board of directors of the Company fails to make,
withdraws or modifies in any manner adverse to Parent, the Company Board
Recommendation;
(b) if (i) the board of directors of the Company approves,
endorses or recommends a Superior Proposal, (ii) the Company enters into an
agreement in principle, arrangement or understanding or a Contract relating to a
Superior Proposal, (iii) a tender offer or exchange offer for any outstanding
shares of capital stock of the Company is commenced and the board of directors
of the Company fails to recommend against acceptance of such tender offer or
exchange offer by its stockholders (including, for these purposes, by taking no
position with respect to the acceptance of such tender offer or exchange offer
by its stockholders, which shall constitute a failure to recommend against
acceptance of such tender offer or exchange offer) within ten Business Days of
the commencement thereof, (iv) the board of directors of the Company shall
exempt any other Person from the provisions of Section 203 of the DGCL, (v) the
board of directors of the Company shall exempt any other Person under the
50
Company Rights Agreement, (vi) the board of directors of the Company or the
Company at the direction of the board of directors of the Company makes any
communication to the stockholders of the Company that is materially inconsistent
with the Company Board Recommendation (in a manner that is adverse to Parent) or
(vii) the Company or its board of directors publicly announces its intention to
do any of the foregoing;
(c) if the board of directors of the Company shall have
refused to affirm its approval or recommendation of this Agreement of the Merger
within five Business Days of any written request from Parent or there shall have
been a breach by the Company of its representations or warranties contained in
Section 3.24 of this Agreement;
(d) if the chief executive officer or the chief financial
officer of the Company fails to provide the necessary certifications when due,
under Sections 302 or 906 of the Sarbanes Oxley Act of 2002;
(e) if the Company breaches any of its representations,
warranties, covenants or agreements contained in this Agreement, which breach
(i) would give rise to the failure of a condition set forth in Section 6.2(a) or
6.2(b) and (ii) is not curable or has not been cured by the Company within
twenty (20) Business Days after the Company's receipt of written notice of such
breach from Parent; or
(f) if, on or prior to March 31, 2004, the Company shall
have not publicly filed its Annual Report on Form 10-K for the fiscal year
ending December 27, 2003, containing the audited consolidated financial
statements of the Company and its consolidated Subsidiaries for such period and
accompanied by an opinion of PricewaterhouseCoopers LLP, in its capacity as the
Company's independent accountants, that is free of any qualifications or, if at
any time after the date hereof, there is any restatement of the Company's
consolidated financial statements.
Section 7.4 Termination by the Company. This Agreement may
be terminated by the Company:
(a) at any time prior to the obtaining of the Requisite
Company Vote, if a majority of the independent members of the board of directors
of the Company approves , and the Company concurrently with such termination
enters into, a definitive agreement, arrangement, understanding or Contract
providing for the implementation of a Superior Proposal, so long as:
(i) the Company is not then and has not been in breach of
any of its obligations under Section 5.3;
(ii) the board of directors of the Company shall have
authorized the Company, subject to complying with the terms and conditions of
this Agreement, to enter into a binding written agreement concerning a
transaction that constitutes a Superior Proposal and the Company notifies Parent
in writing that it intends to enter into such an agreement, attaching the most
51
current version of such agreement (including any amendments, supplements or
modifications) to such notice;
(iii) during the three Business Day period following
Parent's receipt of such notice, (A) the Company shall have offered to negotiate
in good faith with (and, if accepted, negotiate in good faith with), and shall
have instructed its respective financial and legal advisors to have offered to
negotiate in good faith with (and, if accepted, negotiate in good faith with),
Parent to make adjustments in the terms and conditions of this Agreement, and
(B) the board of directors of the Company shall have concluded, after
considering the results of such negotiations and the revised proposals made by
Parent, if any, that any Superior Proposal giving rise to such notice continues
to be a Superior Proposal;
(iv) such termination occurs within two Business Days
following the three Business Day period referred to in Section 7.4(a)(iii); and
(v) immediately prior to and as a condition precedent to
such termination, the Company makes the payment required by Section 7.6(b);
(b) if Parent breaches any of its representations,
warranties, covenants or agreements contained in this Agreement, which breach
(i) would give rise to the failure of a condition set forth in Section 6.3(a) or
6.3(b) and (ii) is not curable or has not been cured by Parent within twenty
(20) Business Days after Parent's receipt of written notice of such breach from
the Company; or
(c) if any Commitment Letter or Financing Agreement expires
or is terminated for any reason and within 30 days of such expiration or
termination Parent does not enter into alternative financing to consummate the
transactions contemplated by this Agreement in a form that is either (i)on
substantially similar terms to such Commitment Letter or Financing Agreement or
(ii) reasonably satisfactory to the Company.
Section 7.5 Effect of Termination. If this Agreement is
terminated pursuant to this Article VII, it shall become void and of no further
force and effect, with no liability on the part of any party to this Agreement
(or any stockholder, member, partner or Representative of such party), except
that if such termination results from the willful (a) failure of any party to
perform its obligations or (b) breach by any party of its representations or
warranties contained in this Agreement, then such party shall be fully liable
for any Liabilities incurred or suffered by the other parties as a result of
such failure or breach. The provisions of Sections 5.2(c), 5.13, 7.5, 7.6 and,
to the extent applicable, Article VIII, shall survive any termination of this
Agreement.
Section 7.6 Expenses Following Termination.
(a) Except as set forth in this Section 7.6, all Expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid in accordance with the provisions of Section 5.13.
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(b) Promptly (and in any event no later than two (2)
Business Days following the occurrence of the following events) the Company
shall pay, or cause to be paid, to Parent by wire transfer of immediately
available funds the sum of (x) an amount equal to the Expenses of the Parent and
its Affiliates up to a maximum amount of $2,000,000 plus (y) $10,000,000 if:
(i) this Agreement is terminated by the Company pursuant to
Section 7.4(a); provided, however, that in such case payment shall be made
immediately prior to and as a condition precedent to such termination;
(ii) this Agreement is terminated by Parent pursuant to
Sections 7.3(a), 7.3(b) or 7.3(c); or
(iii) (A) an Acquisition Proposal shall have been made or
proposed to the Company or its stockholders or otherwise publicly announced
(whether or not conditional and whether or not withdrawn), (B) this Agreement is
terminated by (x) Parent pursuant to Section 7.2(a) and the circumstances
prescribed in the proviso to Section 7.2(a) apply to the Company, (y) either
Parent or the Company pursuant to Section 7.2(d) or (z) Parent pursuant to
Section 7.3(e) and such termination is in connection with a willful breach by
the Company of any of its representations, warranties or covenants, and (C)
within twelve (12) months following the date of such termination, the Company or
any of its Subsidiaries enters into any agreement in principle, arrangement or
Contract providing for the implementation of any Acquisition Proposal or shall
consummate any Acquisition Proposal, regardless of whether or not such
Acquisition Proposal was the same Acquisition Proposal referred to in clause
(A); provided, however, that for purposes of Section 7.6(b)(iii)(C) only,
Acquisition Proposal shall mean any Contract, proposal, offer or other
indication of interest (whether or not in writing and whether or not delivered
to the Company stockholders generally) relating to (i) a merger, consolidation,
or other business combination involving the Company or any of its Subsidiaries
representing twenty percent (20%) or more of the revenues or book or fair market
value of the Company Assets, (ii) a sale, lease, exchange, mortgage, transfer or
other disposition, in a single transaction or series of related transactions, of
twenty (20%) or more of the revenues or book or fair market value of the Company
Assets (including the capital stock of (or other ownership interest in) any
Subsidiary of the Company), (iii) a purchase or sale of Company Securities, in a
single transaction or series of related transactions, representing twenty
percent (20%) or more of the voting power of the capital stock of (or other
ownership interest in) the Company or any of its Subsidiaries representing
twenty percent (20%) or more of the revenues or book or fair market value of the
Company Assets or any new class or series of stock that would be entitled to a
class or series vote with respect to the Merger, including by way of a tender
offer, exchange offer or issuance of any Company Securities in connection with
any acquisition by the Company or any of its Subsidiaries or (iv) a
reorganization, recapitalization, liquidation or dissolution of the Company or
any of its Subsidiaries representing twenty percent (20%) or more of the
revenues or book or fair market value of the Company Assets, in each case other
than the transactions contemplated by this Agreement.
53
(c) The Company acknowledges that (i) the agreements
contained in this Section 7.6 are an integral part of the transactions
contemplated by this Agreement and (ii) without these agreements, Parent and
Merger Sub would not have entered into this Agreement. Accordingly, if the
Company fails to pay when due any amounts required to be paid by it pursuant to
this Section 7.6 and, in order to obtain such payment, Parent commences a Legal
Action which results in a judgment against the Company for such amounts, then in
addition to the amount of such judgment, the Company shall pay to Parent an
amount equal to the fees, costs and expenses (including attorneys' fees, costs
and expenses) incurred by Parent in connection with such Legal Action, together
with interest from the date of termination of this Agreement on all amounts so
owed at the prime rate per annum, as published by Citibank N.A., in effect from
time to time during such period, plus 2%.
Section 7.7 Amendment. This Agreement may be amended by the
parties to this Agreement at any time prior to the Effective Time, so long as no
amendment that requires stockholder approval under applicable Laws shall be made
without such required approval. This Agreement may not be amended except by an
instrument in writing signed by each of the parties to this Agreement.
Section 7.8 Extension; Waiver. At any time prior to the
Effective Time, Parent and Merger Sub, on the one hand, and the Company, on the
other hand, may (a) extend the time for the performance of any of the
obligations of the other party, (b) waive any inaccuracies in the
representations and warranties of the other party contained in this Agreement or
in any document or instrument delivered under this Agreement or (c) subject to
applicable Laws, waive compliance with any of the covenants or conditions
contained in this Agreement. Any agreement on the part of a party to any
extension or waiver shall be valid only if set forth in an instrument in writing
signed by such party. The failure of any party to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of such rights.
Section 7.9 Procedure for Termination, Amendment, Extension
or Waiver. In order to be effective, (a) any termination or amendment of this
Agreement shall require the prior approval of that action by the board of
directors or other applicable governing body of each party seeking to terminate
or amend this Agreement and (b) any extension or waiver of any obligation under
this Agreement or condition to the consummation of this Agreement shall require
the prior approval of a duly authorized designee of the board of directors or
other applicable governing body of the party or parties entitled to extend or
waive that obligation or condition.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Certain Definitions. For purposes of this
Agreement:
(a) "Affiliate" means, with respect to any Person, any
other Person that directly or indirectly controls, is controlled by or is under
common control with, such first Person. For the purposes of this definition,
54
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as applied to any Person,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of that Person, whether through the
ownership of voting securities, by contract or otherwise.
(b) "Business Day" means any day, other than Saturday,
Sunday or a federal holiday, and shall consist of the time period from 12:01
a.m. through 12:00 midnight Eastern time.
(c) "Code" means the Internal Revenue Code of 1986.
(d) "Company Benefit Plan" means any plan, program,
arrangement or agreement that is a pension, profit-sharing, savings, retirement,
employment, consulting, severance pay, termination, executive compensation,
incentive compensation, deferred compensation, bonus, stock purchase, stock
option, phantom stock or other equity-based compensation, change-in-control,
retention, salary continuation, vacation, sick leave, disability, death benefit,
group insurance, hospitalization, medical, dental, life (including all
individual life insurance policies as to which the Company is the owner, the
beneficiary, or both), Code Section 125 "cafeteria" or "flexible" benefit,
employee loan, educational assistance or fringe benefit plan (as defined in
Section 132 of the Code), whether written or oral, including any (i) "employee
benefit plan" within the meaning of Section 3(3) of ERISA or (ii) other employee
benefit plan, agreement, program, policy, arrangement or payroll practice,
whether or not subject to ERISA (including any funding mechanism therefor now in
effect or required in the future as a result of the transaction contemplated by
this Agreement or otherwise) under which any employee or former employee of the
Company has any present or future right to benefits.
(e) "Company Material Adverse Effect" means any material
adverse effect on the business, assets, properties, liabilities, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries, taken as a whole, or on the ability of the Company to perform its
obligations under this Agreement or consummate the transactions contemplated by
this Agreement, but shall exclude any changes, effects, events, circumstances,
occurrences or states of facts (i) in general economic, financial or market
conditions; (ii) directly arise out of or are directly attributable to the acts
of Parent and/or its Affiliates (other than as contemplated by this Agreement);
(iii) that generally affect the industries in which the Company operates or (iv)
that arise out of or are attributable to the identity of Parent.
(f) "Contracts" means any material contracts, agreements,
licenses, notes, bonds, mortgages, indentures, commitments, leases or other
instruments or obligations (whether written or oral).
(g) "ERISA" means the Employee Retirement Income Security
Act of 1974.
55
(h) "Hazardous Substances" means: (i) any substance that is
listed, classified or regulated under any Law as toxic or hazardous or capable
of causing contamination or pollution; (ii) any petroleum product or by-product,
asbestos-containing material, lead-containing paint or plumbing, polychlorinated
biphenyls, radioactive material or radon; or (iii) any other substance that is
or may become the subject of regulatory action under the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. xx.xx. 9601
et seq., the Resource Conservation and Recovery Act, 42 U.S.C. xx.xx. 6901 et
seq., the Toxic Substances Control Act, 15 U.S.C. xx.xx. 2601 et seq., the Oil
Pollution Act of 1990, 33 U.S.C. xx.xx. 2701 et seq., or the Clean Water Act, 33
U.S.C. xx.xx. 1401 et seq.
(i) "Industry Regulatory Authorities" shall mean the Food
and Drug Administration, Drug Enforcement Administration, the Medicare,
Medicaid, CHAMPUS and TRICARE programs, applicable state boards of pharmacy and
governmental liquor authorities.
(j) "Intellectual Property" shall mean all of the
following, as they exist anywhere in the world: (i) patents, patent applications
and inventions, designs and improvements described and claimed therein,
patentable inventions and other patent rights (including any divisions,
continuations, continuations-in-part, reissues, reexaminations, or interferences
thereof, whether or not patents are issued on any such applications and whether
or not any such applications are modified, withdrawn, or resubmitted)
("Patents"); (ii) trademarks, service marks, trade dress, trade names, brand
names, logos, or corporate names, whether registered or unregistered, and all
registrations and applications for registration thereof, and all goodwill
related thereto ("Trademarks"); (iii) copyrights, including all renewals and
extensions thereof, copyright registrations and applications for registration
thereof, and non-registered copyrights ("Copyrights"); (iv) trade secrets,
know-how, inventions, processes, procedures, databases, confidential business
information, concepts, ideas, designs, research or development information,
techniques, technical information, specifications, operating and maintenance
manuals, engineering drawings, methods, technical data, discoveries,
modifications, extensions, improvements, and other proprietary information and
rights (whether or not patentable or subject to copyright protection) ("Trade
Secrets"); (v) computer software programs, including all source code, object
code, and documentation related thereto ("Software"); and (vi) domain names.
(k) "knowledge" means, when used with respect to Parent,
the actual knowledge, after due inquiry, of the individuals listed in Section
8.1(k) of the Parent Disclosure Letter and with respect to the Company, the
actual knowledge, after due inquiry, of the individuals listed in Section 8.1(k)
of the Company Disclosure Letter.
(l) "IP Licenses" shall mean licenses, sublicenses and
other agreements or permissions, including the right to receive royalties or any
other consideration, related to Intellectual Property.
56
(m) "Laws" means any domestic or foreign laws, statutes,
ordinances, rules, regulations, codes or executive orders enacted, issued,
adopted, promulgated or applied by any Governmental Entity.
(n) "Liens" means any lien, pledge, mortgage, deed of
trust, security interest, claim or encumbrance of any kind or nature whatsoever,
other than exclusive licenses of Intellectual Property.
(o) "Multiemployer Plan" means any "multiemployer plan"
within the meaning of Section 4001(a)(3) of ERISA.
(p) "Orders" means any orders, judgments, injunctions,
awards, decrees or writs handed down, adopted or imposed by any Governmental
Entity.
(q) "Parent Material Adverse Effect" means any material
adverse effect on the business, assets, properties, liabilities, condition
(financial or otherwise) or results of operations of the Parent and its
Subsidiaries, taken as a whole, or on the ability of the Parent to perform its
obligations under this Agreement or consummate the transactions contemplated by
this Agreement.
(r) "Permitted Liens" means (i) Liens securing indebtedness
described in Section 3.20(e) of the Company Disclosure Letter, (ii) Liens
securing Liabilities described in Section 3.11(b) of this Agreement, (iii) any
Liens for Taxes not yet due and payable or Taxes that are being contested in
good faith by appropriate proceedings for which adequate reserves have been
provided in accordance with GAAP and (iv) such mechanics and similar liens, if
any, as arise in the ordinary course of business for amounts that are not more
than thirty (30) days overdue or that are being contested in good faith by
appropriate proceedings for which adequate reserves have been provided in
accordance with GAAP.
(s) "Person" means any individual, corporation, limited or
general partnership, limited liability company, limited liability partnership,
trust, association, labor union, joint venture, Governmental Entity, Industry
Regulatory Authority or other entity or group (which term shall include a
"group" as such term is defined in Section 13(d)(3) of the Exchange Act).
(t) "Representatives" means, when used with respect to
Parent or the Company, the directors, officers, employees, consultants,
accountants, legal counsel, financing sources, investment bankers, agents,
controlling persons and other representatives of Parent, its Affiliates and its
Subsidiaries or the Company, its Affiliates and its Subsidiaries.
(u) "Subsidiary" means, when used with reference to an
entity, any other entity of which securities or other ownership interests having
ordinary voting power, directly or indirectly, to elect a majority of the board
of directors or other persons performing similar functions, or a majority of the
outstanding voting securities of which, are owned, directly or indirectly, by
such entity.
57
(v) "Tax Returns" means any and all reports, returns,
declarations, claims for refund, elections, disclosures, estimates, information
reports or returns or statements required to be supplied to a taxing authority
in connection with Taxes, including any information, schedule or attachment
thereto or amendment thereof.
(w) "Taxes" means (i) any and all federal, state,
provincial, local, foreign and other taxes, levies, fees, imposts, customs,
duties, and similar governmental charges (including any interest, fines,
assessments, penalties or additions to tax imposed in connection therewith or
with respect thereto), whether collected by withholding or otherwise, including
(x) taxes imposed on, or measured by, income, franchise, profits or gross
receipts, and (y) ad valorem, value added, capital gains, sales, goods and
services, use, real or personal property, capital stock, license, branch,
payroll, estimated withholding, employment, social security, unemployment,
compensation, utility, severance, production, excise, stamp, occupation,
premium, windfall profits, transfer and gains taxes, and (ii) any transferee
liability in respect of any items described in the foregoing clause (i).
(x) "Treasury Regulations" means the Treasury regulations
promulgated under the Code.
Section 8.2 Interpretation. The table of contents and
headings in this Agreement are for reference only and shall not affect the
meaning or interpretation of this Agreement. Definitions shall apply equally to
both the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. All references in this Agreement to Articles, Sections and
Exhibits shall refer to Articles and Sections of, and Exhibits to, this
Agreement unless the context shall require otherwise. The words "include,"
"includes" and "including" shall not be limiting and shall be deemed to be
followed by the phrase "without limitation." Unless the context shall require
otherwise, any agreements, documents, instruments or Laws defined or referred to
in this Agreement shall be deemed to mean or refer to such agreements,
documents, instruments or Laws as from time to time amended, modified or
supplemented, including (a) in the case of agreements, documents or instruments,
by waiver or consent and (b) in the case of Laws, by succession of comparable
successor statutes. All references in this Agreement to any particular Law shall
be deemed to refer also to any rules and regulations promulgated under such Law.
References to a Person also refer to its predecessors and permitted successors
and assigns.
Section 8.3 Survival. None of the representations or
warranties contained in this Agreement or in any instrument delivered under this
Agreement shall survive the Effective Time. This Section 8.3 shall not limit any
covenant or agreement of the parties to this Agreement which, by its terms,
contemplates performance after the Effective Time.
Section 8.4 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware, without
regard to the laws that might otherwise govern under applicable principles of
conflicts of law.
58
Section 8.5 Submission to Jurisdiction. The parties to this
Agreement (a) irrevocably submit to the exclusive jurisdiction of the state or
federal courts of the United States of America located in the State of Delaware
and (b) waive any claim of improper venue or any claim that those courts are an
inconvenient forum. The parties to this Agreement agree that mailing of process
or other papers in connection with any such action or proceeding in the manner
provided in Section 8.7 or in such other manner as may be permitted by
applicable Laws, shall be valid and sufficient service thereof.
Section 8.6 Waiver of Jury Trial. Each party acknowledges
and agrees that any controversy which may arise under this Agreement is likely
to involve complicated and difficult issues and, therefore, each such party
irrevocably and unconditionally waives any right it may have to a trial by jury
in respect of any Legal Action arising out of or relating to this Agreement or
the transactions contemplated by this Agreement. Each party to this Agreement
certifies and acknowledges that (a) no Representative of any other party has
represented, expressly or otherwise, that such other party would not seek to
enforce the foregoing waiver in the event of a Legal Action, (b) such party has
considered the implications of this waiver, (c) such party makes this waiver
voluntarily, and (d) such party has been induced to enter into this Agreement
by, among other things, the mutual waivers and certifications in this Section
8.6.
Section 8.7 Notices. Any notice, request, instruction or
other communication under this Agreement shall be in writing and delivered by
hand or overnight courier service or by facsimile:
If to Parent or Merger Sub, to:
c/o Oak Hill Capital Partners, L.P.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 000-000-0000
Attention: Xxxx X. Xxxxxx, Esq.
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
If to the Company, to:
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx Xxxxxxx, Esq.
59
with a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Xxxxxxx X. Xxxxx, Esq.
or to such other Persons, addresses or facsimile numbers as may be designated in
writing by the Person entitled to receive such communication as provided above.
Each such communication shall be effective (a) if delivered by hand, when such
delivery is made at the address specified in this Section 8.7, (b) if delivered
by overnight courier service, the next Business Day after such communication is
sent to the address specified in this Section 8.7, or (c) if delivered by
facsimile, when such legible facsimile is transmitted to the facsimile number
specified in this Section 8.7 and appropriate confirmation is received.
Section 8.8 Entire Agreement. This Agreement (including the
Exhibits to this Agreement), the Company Disclosure Letter, the Parent
Disclosure Letter, the Confidentiality Agreement and any document or instrument
delivered pursuant hereto constitute the entire agreement and supersede all
other prior agreements, understandings, representations and warranties, both
written and oral, among the parties to this Agreement with respect to the
subject matter of this Agreement. No representation, warranty, inducement,
promise, understanding or condition not set forth in this Agreement has been
made or relied upon by any of the parties to this Agreement.
Section 8.9 No Third-Party Beneficiaries. Except as
expressly provided in Section 5.8, this Agreement is not intended to confer any
rights or remedies upon any Person other than the parties to this Agreement.
Section 8.10 Severability. The provisions of this Agreement
shall be deemed severable and the invalidity or unenforceability of any
provision shall not affect the validity or enforceability of the other
provisions of this Agreement. If any provision of this Agreement, or the
application of that provision to any Person or any circumstance, is invalid or
unenforceable, (a) a suitable and equitable provision shall be substituted for
that provision in order to carry out, so far as may be valid and enforceable,
the intent and purpose of the invalid or unenforceable provision and (b) the
remainder of this Agreement and the application of that provision to other
Persons or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability affect the
validity or enforceability of that provision, or the application of that
provision, in any other jurisdiction.
Section 8.11 Rules of Construction. The parties to this
Agreement have been represented by counsel during the negotiation and execution
of this Agreement and waive the application of any Laws or rule of construction
60
providing that ambiguities in any agreement or other document shall be construed
against the party drafting such agreement or other document.
Section 8.12 Assignment. This Agreement shall not be
assignable by operation of law or otherwise, except that Parent may designate,
by written notice to the Company, a Subsidiary that is wholly-owned by Parent to
be merged with and into the Company in lieu of Merger Sub, in which event all
references in this Agreement to Merger Sub shall be deemed references to such
Subsidiary, and in that case, all representations and warranties made in this
Agreement with respect to Merger Sub as of the date of this Agreement shall be
deemed representations and warranties made with respect to such Subsidiary as of
the date of such designation.
Section 8.13 Remedies. Except as otherwise provided in this
Agreement, any and all remedies expressly conferred upon a party to this
Agreement shall be cumulative with, and not exclusive of, any other remedy
contained in this Agreement, at law or in equity. The exercise by a party to
this Agreement of any one remedy shall not preclude the exercise by it of any
other remedy
Section 8.14 Specific Enforcement. The parties agree that
irreparable damage would occur and that the parties would not have any adequate
remedy at law 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, this being in addition to any other
remedy to which are entitled at law or in equity.
Section 8.15 Counterparts; Effectiveness. This Agreement
may be executed in any number of counterparts, all of which shall be one and the
same agreement. This Agreement shall become effective when each party to this
Agreement shall have received counterparts signed by all of the other parties.
[Signature page follows]
61
IN WITNESS WHEREOF, this Agreement has been duly executed
and delivered by the duly authorized officers of the parties to this Agreement
as of the date first written above.
XXX CORNER HOLDINGS, LLC
By: /s/ Xxxx Xxxxxx
---------------------------------
Name: Xxxx Xxxxxx
Title: Vice President
XXX CORNER ACQUISITION CORP.
By: /s/ Xxxx Xxxxxx
---------------------------------
Name: Xxxx Xxxxxx
Title: Vice President
XXXXX XXXXX INC.
By: /s/ Xxxxxxxx Xxxxxxx
---------------------------------
Name: Xxxxxxxx Xxxxxxx
Title: Vice President
62
Exhibit A
CERTIFICATE OF MERGER OF
XXXXX XXXXX INC.
WITH AND INTO
XXX CORNER ACQUISITION CORP.
------------------------------------------------
Pursuant to Title 8, Section 251(c) of the Delaware General
Corporation Law (the "General Corporation Law"), the undersigned corporation
executed the following Certificate of Merger:
FIRST: The name of the corporation surviving the merger is
Xxxxx Xxxxx Inc., and the name of the corporation being merged into this
corporation is Xxx Corner Acquisition Corp.
SECOND: The Agreement of Merger has been approved, adopted,
certified, executed and acknowledged by each of the constituent corporations.
THIRD: The name of the surviving corporation is Xxxxx Xxxxx
Inc., a Delaware corporation (the "Corporation").
FOURTH: The Certificate of Incorporation of the Corporation
shall be amended and restated as follows:
1. Name. The name of the Corporation is Xxxxx Xxxxx Inc.
2. Address; Registered Office and Agent. The address of
the Corporation's registered office is 000 XxXxxx Xxxxxxx, Xxxxx,
Xxxx Xxxxxx, Xxxxxxxx 00000 and the name of its registered agent at
such address is National Corporate Research, Ltd.
3. Purposes. The purpose of the Corporation is to engage
in any lawful act or activity for which corporations may be organized
under the General Corporation Law.
4. Number of Shares. The total number of shares of stock
that the Corporation shall have authority to issue is one thousand
(1,000) all of which shall be shares of Common Stock of the par value
of one cent ($0.01) each.
5. Election of Directors. Unless and except to the extent
that the By-laws of the Corporation (the "By-laws") shall so require,
the election of members of the board of directors of the Corporation
(the "Board") need not be by written ballot.
6. Limitation of Liability. To the fullest extent
permitted under the General Corporation Law, as amended from time to
time, no director of the Corporation shall be personally liable to
the Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director.
Any amendment, repeal or modification of the foregoing
provision shall not adversely affect any right or protection of a
director of the Corporation hereunder in respect of any act or
omission occurring prior to the time of such amendment, repeal or
modification.
7. Indemnification.
7.1 Right to Indemnification. The Corporation
shall indemnify and hold harmless each person (and the
heirs, executors or administrators of such person) who was
or is a party or is threatened to be made a party to, or
is involved in any threatened, pending or completed
action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact
that such person is or was a director or officer of the
Corporation or is or was serving at the request of the
Corporation as a director or officer of another
corporation, partnership, joint venture, trust or other
enterprise (a "Covered Person"), to the fullest extent
permitted by General Corporation Law. The right to
indemnification conferred in this Section 7 shall be a
contract right.
7.2 Other Indemnification. Nothing in this
Section 7 shall limit the right of the Corporation to
provide, by action of its Board, indemnification to such
of the officers, employees and agents of the Corporation
to such extent and to such effect as the Board shall
determine to be appropriate and authorized by the General
Corporation Law.
7.3 Prepayment of Expenses. The right of any
person to indemnification conferred in this Section 7
shall also include the right to be paid by the Corporation
the expenses incurred in connection with any threatened,
pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, in
advance of its final disposition to the fullest extent
authorized by the General Corporation Law, subject to
receipt by the Corporation of an undertaking, by or on
behalf of such director or officer (or other person
indemnified hereunder), to repay any such amount so
advanced if it shall ultimately be determined by final
judicial decision from which there is no further right of
appeal that such director, officer or other person is not
entitled to be indemnified for such expenses.
7.4 Other Sources. The Corporation's
obligation, if any, to indemnify or to advance expenses to
any Covered Person who was or is serving at its request as
a director, officer, employee or agent of an Other Entity
shall be reduced by any amount such Covered Person may
collect as indemnification or advancement of expenses from
such Other Entity.
7.5 Insurance. The Corporation shall have the
power to purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer,
employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any
expense, liability or loss incurred by such person in any
such capacity or arising out of his status as such,
whether or not the Corporation would have the power to
indemnify him against such liability under the General
Corporation Law.
7.6 Nonexclusivity of Rights. The rights to
authority conferred in this Section 7 shall not be
exclusive of any other right that any Covered Person may
otherwise have or hereafter acquire.
7.7 Amendment or Repeal of Certificate of
Incorporation or By-laws. Neither the amendment nor repeal
of this Section 7, nor the adoption of any provision of
this Certificate of Incorporation or the By-laws, nor, to
the fullest extent permitted by the General Corporation
Law, any modification of law, shall eliminate or reduce
the effect of this Section 7 in respect of any act or
omission occurring prior to such amendment, repeal,
adoption or modification.
8. Adoption, Amendment and/or Repeal of By-Laws. In
furtherance and not in limitation of the powers conferred by the laws
of the State of Delaware, the Board is expressly authorized to make,
alter and repeal the By-laws, subject to the power of the
stockholders of the Corporation to alter or repeal any By-law whether
adopted by them or otherwise.
9. Certificate Amendments. The Corporation reserves the
right at any time, and from time to time, to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation,
and other provisions authorized by the laws of the State of Delaware
at the time in force may be added or inserted, in the manner now or
hereafter prescribed by applicable law; and all rights, preferences
and privileges of whatsoever nature conferred upon stockholders,
directors or any other persons whomsoever by and pursuant to this
Certificate of Incorporation in its present form or as hereafter
amended are granted subject to the rights reserved in this article.
FIFTH: The merger is to become effective on the date
hereof.
SIXTH: The Agreement of Merger is on file at Xxxxx Xxxxx
Inc., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, the place of business of the
Corporation.
SEVENTH: A copy of the Agreement of Merger will be
furnished by the Corporation on request, without cost, to any stockholder of the
constituent corporations.
IN WITNESS WHEREOF, the Corporation has caused this
certificate to be signed by an authorized officer, this _____ day of
________________, A.D., 2004.
XXXXX XXXXX INC.
By: _________________________________
Name:
Title:
