AGREEMENT AND PLAN OF MERGER Dated as of July 30, 2008 between Zones Acquisition Corp. and Zones, Inc.
EXHIBIT
2.1
AGREEMENT
AND PLAN OF MERGER
Dated as
of July 30, 2008
between
Zones
Acquisition Corp.
and
Zones,
Inc.
TABLE
OF CONTENTS
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Page
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| ARTICLE I |
THE
MERGER
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1
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|
Section
1.01
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The
Merger
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1
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Section
1.02
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Closing
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1
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|
Section
1.03
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Effective
Time
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2
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|
Section
1.04
|
Effects
of the Merger
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2
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Section
1.05
|
Articles
of Incorporation and Bylaws
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2
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|
Section
1.06
|
Directors
and Officers of Zac
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2
|
|
Section
1.07
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Reservation
of Right to Revise Transaction
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2
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|
Section
1.08
|
Further
Assurances
|
2
|
| ARTICLE II |
EFFECT
OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
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3
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|
Section
2.01
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Effect
on Capital Stock
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3
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|
Section
2.02
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Exchange
of Certificates
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4
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|
Section
2.03
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Stock
Options
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7
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| ARTICLE III |
REPRESENTATIONS
AND WARRANTIES
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7
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|
Section
3.01
|
Representations
and Warranties of the Company
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7
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|
Section
3.02
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Representations
and Warranties of Zac
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14
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| ARTICLE IV |
COVENANTS
RELATING TO CONDUCT OF BUSINESS; NO SOLICITATION
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17
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|
Section
4.01
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Conduct
of Business by the Company
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17
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|
Section
4.02
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No
Solicitation
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20
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| ARTICLE V |
ADDITIONAL
AGREEMENTS
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24
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|
Section
5.01
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Preparation
of the Proxy Statement and Schedule 13E-3; Shareholders’
Meeting
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24
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|
Section
5.02
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Access
to Information; Confidentiality
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26
|
|
Section
5.03
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Reasonable
Best Efforts
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26
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|
Section
5.04
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Indemnification,
Exculpation and Insurance
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29
|
|
Section
5.05
|
Fees
and Expenses
|
30
|
|
Section
5.06
|
Public
Announcements
|
32
|
|
Section
5.07
|
Financing
|
32
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| ARTICLE VI |
CONDITIONS
PRECEDENT
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33
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|
Section
6.01
|
Conditions
to Each Party’s Obligation to Effect the Merger
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33
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|
Section
6.02
|
Conditions
to Obligations of Zac
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34
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|
Section
6.03
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Conditions
to Obligation of the Company
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35
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|
Section
6.04
|
Frustration
of Closing Conditions
|
35
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| ARTICLE VII |
TERMINATION,
AMENDMENT AND WAIVER
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35
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|
Section
7.01
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Termination
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35
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|
Section
7.02
|
Effect
of Termination
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36
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|
Section
7.03
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Amendment
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37
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|
Section
7.04
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Extension;
Waiver
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37
|
i
|
Section
7.05
|
Procedure
for Termination or Amendment
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37
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| ARTICLE VIII |
GENERAL
PROVISIONS
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37
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|
Section
8.01
|
Nonsurvival
of Representations and Warranties
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37
|
|
Section
8.02
|
Notices
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37
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|
Section
8.03
|
Definitions
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38
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|
Section
8.04
|
Interpretation
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40
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|
Section
8.05
|
Consents
and Approvals
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41
|
|
Section
8.06
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Counterparts
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41
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|
Section
8.07
|
Entire
Agreement; No Third-Party Beneficiaries
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41
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|
Section
8.08
|
Governing
Law
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41
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|
Section
8.09
|
Assignment
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41
|
|
Section
8.10
|
Enforcement;
Consent to Jurisdiction
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41
|
|
Section
8.11
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Severability
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42
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|
Section
8.12
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No
Recourse
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42
|
|
Section
8.13
|
WAIVER
OF JURY TRIAL
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42
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Annex
I Index of Defined
Terms
ii
ANNEX
I
TO THE
MERGER AGREEMENT
INDEX
OF DEFINED TERMS
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Page
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1993
Plan
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7
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1999
Plan
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7
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|
2003
Plan
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7
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|
Acceptable
Confidentiality Agreement
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20
|
|
Affiliate
|
38
|
|
Agreement
|
1
|
|
Articles
of Merger
|
2
|
|
Benefit
Plans
|
38
|
|
Book
Entry Shares
|
3
|
|
Business
Day
|
39
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|
Cancelled
Shares
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3
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|
Capitalization
Date
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9
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|
Certificate
|
3
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|
Change
in Recommendation
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23
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|
Closing
|
1
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|
Closing
Date
|
1
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|
Code
|
6
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|
Company
|
1
|
|
Company
Articles
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8
|
|
Company
Board Recommendation
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11
|
|
Company
Bylaws
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8
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|
Company
Common Stock
|
1
|
|
Company
Disclosure Schedule
|
8
|
|
Company
Information
|
14
|
|
Company
Preferred Stock
|
9
|
|
Company
SEC Documents
|
12
|
|
Company
Shareholder Approvals
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33
|
|
Company
Stock Option
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7
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|
Company
Stock Plans
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7
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|
Company
Stock-Based Awards
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10
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|
Company
Termination Fee
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30
|
|
Contract
|
11
|
|
Converted
Shares
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3
|
|
Dissenting
Share
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6
|
|
Dissenting
Shareholder
|
6
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|
Effective
Time
|
2
|
|
ESPP
|
9
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|
Exchange
Act
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11
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|
Exchange
Fund
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4
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iii
|
Excluded
Party
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22
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|
Expenses
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31
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|
Filed
Company SEC Documents
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7
|
|
Financing
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15
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|
Financing
Agreements
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32
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|
Financing
Commitments
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15
|
|
GAAP
|
12
|
|
Governmental
Entity
|
11
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|
Key
Persons
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19
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|
Knowledge
|
39
|
|
Law
|
11
|
|
Liens
|
8
|
|
Material
Adverse Change
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39
|
|
Material
Adverse Effect
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39
|
|
Merger
|
1
|
|
Merger
Consideration
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1
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|
New
Financing Commitments
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32
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|
No-Shop
Period Start Time
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20
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|
Notice
Period
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24
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|
Order
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11
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|
Outside
Date
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35
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|
Paying
Agent
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4
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|
Person
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39
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|
Proxy
Statement
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11
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|
Remaining
Shares
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3
|
|
Representative
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39
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|
Schedule
13E-3
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11
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|
SEC
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11
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|
Securities
Act
|
12
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|
Shareholder
Approval
|
13
|
|
Shareholders’
Meeting
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25
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|
Solvent
|
17
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|
SOX
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12
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|
Special
Shareholder Approval
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33
|
|
subsidiary
|
39
|
|
Superior
Proposal
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21
|
|
Surviving
Corporation
|
1
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|
Takeover
Proposal
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20
|
|
tax
|
39
|
|
taxing
authority
|
40
|
|
WBCA
|
1
|
|
Zac
|
1
|
|
Zac
Information
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16
|
|
Zac
Material Adverse Change
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40
|
|
Zac
Material Adverse Effect
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40
|
|
Zac
Termination Fee
|
31
|
iv
AGREEMENT
AND PLAN OF MERGER (this “Agreement”), dated as
of July 30, 2008, between Zones Acquisition Corp., a Washington corporation
(“Zac”), and
Zones, Inc., a Washington corporation (the “Company”).
W I T N E
S S E T H:
WHEREAS
the Board of Directors of each of the Company and Zac has approved and declared
advisable this Agreement and the merger of Zac with and into the Company, with
the Company continuing as the surviving corporation in the merger (the “Merger”), upon the
terms and subject to the conditions set forth in this Agreement, whereby each
issued and outstanding share of common stock, without par value, of the Company
(“Company Common
Stock”), other than any Cancelled Shares, Remaining Shares or Dissenting
Shares, will be converted into the right to receive $8.65 in cash, without
interest (the “Merger
Consideration”); and
WHEREAS
Zac and the Company desire to make certain representations, warranties,
covenants and agreements in connection with the Merger and also to prescribe
various conditions to the Merger.
NOW,
THEREFORE, in consideration of the representations, warranties, covenants and
agreements contained in this Agreement, and subject to the conditions set forth
herein, the parties hereto (intending to be legally bound) hereby agree as
follows:
Section
1.01 The
Merger. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the Washington Business Corporation
Act (the “WBCA”), Zac shall be
merged with and into the Company at the Effective Time. Following the
Effective Time, the separate corporate existence of Zac shall cease and the
Company shall continue as the surviving corporation in the Merger (the “Surviving
Corporation”) and shall succeed to and assume all the rights and
obligations of Zac and the Company in accordance with the WBCA.
1
Section
1.03 Effective
Time. Subject to the provisions of this Agreement, as soon as
practicable on the Closing Date, the parties shall file with the Secretary of
State of the State of Washington Articles of Merger (the “Articles of Merger”)
in accordance with the relevant provisions of the WBCA and, as soon as
practicable on or after the Closing Date, shall make or cause to be made all
other filings or recordings required under the WBCA. The Merger shall
become effective upon the filing of the Articles of Merger with the Secretary of
State of the State of Washington, or at such later time as Zac and the Company
shall agree in writing and specify in the Articles of Merger (the time the
Merger becomes effective being the “Effective
Time”).
2
EFFECT
OF THE MERGER ON THE CAPITAL STOCK OF THE
(a) Capital Stock of
Zac. Each share of common stock, without par value, of Zac
issued and outstanding immediately prior to the Effective Time shall be
cancelled.
(b) Cancellation of Certain
Stock. Each share of Company Common Stock that is (i) owned,
directly or indirectly, by Zac (but not including any Remaining Shares)
immediately prior to the Effective Time, if any, or (ii) that has been
reacquired by the Company and is held as authorized but unissued Company Common
Stock immediately prior to the Effective Time (collectively, the “Cancelled Shares”)
shall automatically be canceled and shall cease to exist, and no consideration
shall be delivered in exchange therefor.
(c) Conversion of Company Common
Stock. Subject to Section 2.02(j), each share of Company
Common Stock (including any share subject to a restricted stock award or similar
agreement regardless of whether any such share was vested or not vested pursuant
to such award or agreement) issued and outstanding immediately prior to the
Effective Time (other than (i) any shares of Company Common Stock held by the
shareholders set forth on Schedule 2.01(c) (the “Remaining Shares”)
and (ii) any Cancelled Shares) shall be converted into the right to receive the
Merger Consideration on the terms set forth in this Agreement (the “Converted
Shares”). As of the Effective Time, subject to Section
2.02(j), all of the Converted Shares shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and each holder of a
certificate which immediately prior to the Effective Time represented any such
Converted Shares (each, a “Certificate”) and
each holder of book-entry shares that immediately prior to the Effective Time
represented shares of Company Common Stock (“Book Entry Shares”)
shall cease to have any rights with respect thereto, except the right to receive
the Merger Consideration to be issued or paid in consideration therefor upon
surrender of such Certificate or Book Entry Shares and other required
documentation in accordance with Section 2.02(b). As of the Effective
Time, all of the Remaining Shares shall remain outstanding, and each certificate
which immediately prior to the Effective Time represented any such Remaining
Shares shall continue to represent the same number of shares of Surviving
Corporation and the holder thereof shall have all rights with respect thereto as
set forth in the Company Articles.
3
Notwithstanding
the foregoing, if between the date of this Agreement and the Effective Time, (i)
the outstanding shares of Company Common Stock shall have been changed into a
different number of shares or a different class, by reason of the occurrence or
record date of any stock dividend, subdivision, reclassification,
recapitalization, split, combination, exchange of shares or similar transaction,
(ii) the Company declares or pays any cash dividend or (iii) the Company
declares or pays any non-cash dividends or distributions, then in any such case
the Merger Consideration shall be appropriately adjusted to reflect such action;
provided, that nothing in this Section 2.01(c) shall be construed to permit the
Company to take any action with respect to its securities that is prohibited by
the terms of this Agreement. The right of any holder of a Certificate
or Book Entry Shares to receive the Merger Consideration, any dividends or other
distributions payable pursuant to Section 2.02(c) shall be subject to and
reduced by the amount of any withholding that is required under applicable tax
Law.
(a) Paying
Agent. Prior to the Effective Time, Zac shall appoint a bank
or trust company that is reasonably satisfactory to the Company to act as paying
agent (the “Paying
Agent”) for the payment of the Merger Consideration and shall use its
reasonable best efforts to enter into a paying agent agreement with the Paying
Agent. At the Effective Time, Zac shall deposit, or cause the
Surviving Corporation to deposit, with the Paying Agent, for the benefit (from
and after the Effective Time) of the holders of Certificates and Book Entry
Shares, cash in an amount sufficient to pay the aggregate Merger Consideration
required to be paid pursuant to Section 2.01(c). All cash deposited
with the Paying Agent pursuant to this Section 2.02(a) shall hereinafter be
referred to as the “Exchange
Fund”.
(b) Exchange
Procedures. As soon as reasonably practicable after the
Effective Time, Zac shall cause the Paying Agent to mail to each holder of
record of a Certificate or Book Entry Shares whose shares of Company Common
Stock were converted into the right to receive the Merger Consideration (i) a
form of letter of transmittal (which shall specify 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 or, in the case of Book
Entry Shares, upon adherence to the procedures set forth in the letter of
transmittal, and shall be in customary form and have such other provisions as
Zac may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates or Book Entry Shares in exchange for the Merger
Consideration. Each holder of record of one or more Certificates or
Book Entry Shares shall, upon surrender to the Paying Agent of such Certificate
or Certificates or Book Entry Shares, together with such letter of transmittal,
duly executed, and such other documents as may reasonably be required by the
Paying Agent, be entitled to receive in exchange therefor the amount of cash to
which such holder is entitled pursuant to Section 2.01(c), and the Certificates
or Book Entry Shares so surrendered shall forthwith be canceled. In
the event of a transfer of ownership of Company Common Stock which is not
registered in the transfer records of the Company, payment of the Merger
Consideration in accordance with this Section 2.02(b) may be made to a Person
other than the Person in whose name the Certificate or Book Entry Share so
surrendered is registered if such Certificate or Book Entry Share shall be
properly endorsed or otherwise be in proper form for transfer (and accompanied
by all documents required to evidence and effect such transfer) and the Person
requesting such payment shall pay any transfer or other taxes required by reason
of the payment of the Merger Consideration to a Person other than the registered
holder of such Certificate or Book Entry Share. Until surrendered as
contemplated by this Section 2.02(b), each Certificate and Book Entry Share
(other than Certificates or Book Entry Shares evidencing Dissenting Shares,
Cancelled Shares and Remaining Shares) shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender the
Merger Consideration. No interest shall be paid or will accrue on any
payment to holders of Certificates or Book Entry Shares pursuant to the
provisions of this Article II.
4
(c) Distributions with Respect
to Unexchanged Shares. No payment of Merger Consideration
shall be paid to any such holder, in each case, until the holder of such
Certificate or Book Entry Share shall have surrendered such Certificate or Book
Entry Share in accordance with this Article II. Following the
surrender of any Certificate or Book Entry Share, there shall be paid to the
record holder of the Certificate or Book Entry Share representing whole shares
of Company Common Stock issued in exchange therefor, without interest, at the
time of such surrender, the Merger Consideration payable in respect therefor in
accordance with this Article II.
(d) No Further Ownership Rights
in Company Common Stock. The Merger Consideration paid upon
the surrender of Certificates (or affidavits in lieu thereof) or Book Entry
Shares in accordance with the terms of this Article II shall be deemed to have
been paid in full satisfaction of all rights pertaining to the shares of Company
Common Stock formerly represented by such Certificates or Book Entry
Shares. At the close of business on the day on which the Effective
Time occurs, the share transfer books of the Company shall be closed, and there
shall be no further registration of transfers on the share transfer books of the
Surviving Corporation of the Converted Shares. If, after the
Effective Time, any Certificate or Book Entry Share is presented to the
Surviving Corporation or Zac for transfer, it shall be canceled against delivery
of the Merger Consideration as provided in this Article II.
(e) Termination of the Exchange
Fund. Any portion of the Exchange Fund which remains
undistributed to the holders of the Certificates or Book Entry Shares for twelve
months after the Effective Time shall be delivered to the Surviving Corporation,
upon demand, and any holders of the Certificates or Book Entry Shares who have
not theretofore complied with this Article II shall thereafter look only to the
Surviving Corporation for payment of their claim for the Merger Consideration in
accordance with this Article II.
(f)
No
Liability. None of Zac, the Company, the Surviving Corporation
or the Paying Agent or any of their respective Affiliates shall be liable to any
Person in respect of any Merger Consideration properly delivered to a public
official pursuant to any applicable abandoned property, escheat or similar
Law. If any Certificate or Book Entry Share shall not have been
surrendered immediately prior to the date on which any Merger Consideration
would otherwise escheat to or become the property of any Governmental Entity,
any such Merger Consideration shall, to the extent permitted by applicable Law,
become the property of the Surviving Corporation, free and clear of all claims
or interest of any Person previously entitled thereto.
5
(g) Investment of Exchange
Fund. The Paying Agent shall invest the cash included in the Exchange
Fund as directed by Zac prior to the Effective Time and by the Surviving
Corporation after the Effective Time. Any interest and other income
resulting from such investments shall be payable to Zac prior to the Effective
Time and to the Surviving Corporation after the Effective Time. If
for any reason (including losses) the cash in the Exchange Fund shall be
insufficient to fully satisfy all of the payment obligations to be made in cash
by the Paying Agent hereunder, the Surviving Corporation shall promptly deposit
cash or cause to be deposited into the Exchange Fund in an amount which is equal
to the deficiency in the amount of cash required to fully satisfy such cash
payment obligations. The Exchange Fund shall not be used for any
other purpose except as provided in this Agreement.
(h) Lost
Certificates. If any Certificate has been 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 Zac or the
Paying Agent, the entering into of an indemnity or the posting of a bond as
indemnity against any claim that may be made against it with respect to such
Certificate, the Paying Agent shall deliver in exchange for such lost, stolen or
destroyed Certificate the Merger Consideration pursuant to this Article
II.
(i)
Withholding
Rights. The Surviving Corporation or the Paying Agent shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Certificates or Book Entry Shares
such amounts as the Surviving Corporation or the Paying Agent is required to
deduct and withhold with respect to the making of such payment under the
Internal Revenue Code of 1986, as amended (the “Code”), or any
provision of state, local or foreign tax Law. To the extent that
amounts are so withheld and paid over to the appropriate taxing authority by the
Surviving Corporation or the Paying Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
Certificates or Book Entry Shares in respect of which such deduction and
withholding was made by the Surviving Corporation or the Paying
Agent.
(j)
Dissenting
Shares. Notwithstanding anything in this Agreement to the
contrary, any issued and outstanding shares of Company Common Stock held by a
Person (a “Dissenting
Shareholder”) who has not voted in favor of this Agreement and has
properly perfected dissenter’s rights in accordance with the provisions of
Chapter 23B.13 of the WBCA (each, a “Dissenting Share”),
if any, shall not be converted into the right to receive the Merger
Consideration, but shall become the right to receive such consideration as may
be determined to be due to such Dissenting Shareholder to the extent permitted
by, and in accordance with the provisions and pursuant to the procedures of,
Chapter 23B.13 of the WBCA; provided, however, that (i)
if any Dissenting Shareholder, under the circumstances permitted by and in
accordance with the WBCA, affirmatively withdraws such holder’s demand for
appraisal of such Dissenting Shares, (ii) if any Dissenting Shareholder fails to
establish such holder’s entitlement to dissenter’s rights as provided in the
WBCA or (iii) if any Dissenting Shareholder takes or fails to take any action
the consequence of which is that such holder is not entitled to payment under
Chapter 23B.13 of the WBCA for such holder’s shares, such holder shall forfeit
the right to appraisal of such shares of Company Common Stock and such shares of
Company Common Stock shall thereupon be deemed to have been converted, as of the
Effective Time, into and represent the right to receive the Merger Consideration
(without interest) payable in respect of such shares of Company Common
Stock. At the Effective Time, any holder of Dissenting Shares shall
cease to have any rights with respect thereto, except the rights set forth in
Chapter 23B.13 of the WBCA and as provided in the previous
sentence. The Company shall give Zac prompt notice of any written
notice received by the Company for dissenter’s rights with respect to Company
Common Stock, and Zac shall have the right to participate in (and the Company
shall provide Zac the opportunity to participate in) all negotiations and
proceedings with respect to such demands. The Company shall not
settle, make any payments with respect to, or offer to settle, any claim with
respect to Dissenting Shares without the prior written consent of
Zac.
6
(a) Except
as otherwise agreed by Zac and the holder thereof, each Company Stock Option
that is outstanding immediately prior to the Effective Time (whether or not such
Company Stock Option is then exercisable) shall at the Effective Time remain
outstanding and be unchanged.
(b) Prior
to the Effective Time, the Company shall deliver to the holders of Company Stock
Options appropriate notices setting forth such holders’ rights. Prior
to the Effective Time, the Board of Directors of the Company (or, if
appropriate, any committee thereof administering the Company Stock Plans) shall
take appropriate action to cause any unvested Company Stock Options to become
vested prior to the Effective Time and shall adopt such resolutions as may be
required to effectuate the provisions of Section 2.03(a).
(c) For
purposes of this Agreement: (i) “Company Stock Option”
means any option or right to purchase Company Common Stock under any Company
Stock Plan; and (ii) “Company Stock Plans”
means the Company’s Amended and Restated 1993 Stock Incentive Plan (the “1993 Plan”), the
Company’s Amended and Restated 1999 Director Stock Option Plan (the “1999 Plan”), and the
Company’s 2003 Equity Incentive Plan (the “2003
Plan”).
REPRESENTATIONS
AND WARRANTIES
7
(a) Organization, Standing and
Corporate Power. The Company and each of its subsidiaries is
duly organized and is validly existing under the Laws of the jurisdiction of its
incorporation or formation, as the case may be. The Company and each
of its subsidiaries has all requisite corporate, partnership or similar power
and authority and possesses all governmental licenses, permits, authorizations
and approvals necessary to enable it to use its corporate or other name and to
own, lease or otherwise hold and operate its properties and other assets and to
carry on its business as currently conducted, except where the failure to have
such power, authority, licenses, permits, authorizations and approvals would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company and each of its subsidiaries is duly
qualified or licensed to do business and is in good standing in each other
jurisdiction in which the nature of its business or the ownership, leasing or
operation of its properties makes such qualification, licensing or good standing
necessary, other than in such other jurisdictions where the failure to be so
qualified, licensed or in good standing, individually or in the aggregate, has
not had and would not reasonably be expected to have, a Material Adverse
Effect. The Company has made available to Zac, prior to the execution
of this Agreement, true, complete and accurate copies of the Company’s articles
of incorporation (the “Company Articles”)
and bylaws (the “Company Bylaws”), and
the comparable organizational documents of each of its subsidiaries, in each
case as amended to, and in effect on, the date of this Agreement.
(b) Subsidiaries. Section
3.01(b) of the Company Disclosure Schedule lists, as of the date of this
Agreement, each direct and indirect subsidiary of the Company (including its
jurisdiction of incorporation or formation). Except as set forth on
Section 3.01(b) of the Company Disclosure Schedule, all of the outstanding
capital stock of, or other equity interests in, each subsidiary of the Company,
is directly or indirectly owned by the Company. All the issued and
outstanding shares of capital stock of, or other equity interests in, each such
subsidiary of the Company have been duly authorized, validly issued and are
fully paid and nonassessable and are owned directly or indirectly by the Company
free and clear of all pledges, liens, charges, encumbrances or security
interests of any kind or nature whatsoever (collectively, “Liens”), other than
Liens imposed by or arising under applicable Law or which are not material, and
free of any restriction on the right to vote, sell or otherwise dispose of such
capital stock or other equity interests. Except as set forth in
Section 3.01(b) of the Company Disclosure Schedule and except for the capital
stock of, or voting securities or equity interests in, its subsidiaries, the
Company does not own, directly or indirectly, as of the date of this Agreement,
any capital stock of, or other voting securities or equity interests in, any
corporation, partnership, joint venture, association or other entity, or any
options, warrants, rights or securities convertible, exchangeable or exercisable
therefor. There are no bonds, debentures, notes or other indebtedness
of the Company’s subsidiaries having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters upon which
subsidiary equityholders may vote. Except as set forth on Section
3.01(b) of the Company Disclosure Schedule and capital stock held by the Company
or a wholly-owned subsidiary of the Company, there are not issued, reserved for
issuance or outstanding (i) any shares of capital stock or other voting
securities or equity interests of any subsidiary of the Company, (ii) any
securities of any subsidiary of the Company convertible into or exchangeable or
exercisable for shares of capital stock or other voting securities or equity
interests of such subsidiary, (iii) any warrants, calls, options or other rights
to acquire, and no obligation to issue, any capital stock, voting securities,
equity interests or securities convertible into or exchangeable or exercisable
for capital stock or voting securities of any subsidiary of the Company and (iv)
there are not any outstanding obligations to repurchase, redeem or otherwise
acquire any such securities or to issue, deliver or sell, or cause to be issued,
delivered or sold, any such securities. Neither the Company nor any
of its subsidiaries is a party to any voting Contract with respect to the voting
of any such securities. There are no outstanding obligations to
repurchase, redeem or otherwise acquire any such outstanding securities or to
issue, deliver or sell, or cause to be issued, delivered or sold, any such
securities.
8
(c) Capital
Structure. The authorized capital stock of the Company
consists of 45,000,000 shares of Company Common Stock and 5,000,000 shares of
preferred stock, without par value (“Company Preferred
Stock”). At the close of business on June 30, 2008 (the “Capitalization
Date”), (i) 13,226,553 shares of Company Common Stock were issued and
outstanding, (ii) options to purchase 945,880 shares of Company Common Stock
were outstanding under the 1993 Plan, such options having a weighted average
exercise price of $3.15, (iii) options to purchase 60,000 shares of Company
Common Stock were outstanding under the 1999 Plan, such options having a
weighted average exercise price of $5.73, (iv) options to purchase 1,396,452
shares of Company Common Stock under the 2003 Plan were outstanding, such
options having a weighted average exercise price of $2.53, (v) no shares of
Company Preferred Stock were issued or outstanding, (vi) no shares of Company
Common Stock were held by the Company as treasury stock and (vii) no shares of
Company Common Stock were owned by any subsidiary of the Company. At
the close of business on the Capitalization Date, no shares of Company Common
Stock were reserved for issuance for future grants under the 1993 Plan, 165,000
shares of Company Common Stock were reserved for issuance for future grants
under the 1999 Plan, 529,382 shares of Company Common Stock were reserved for
issuance under the 2003 Plan, and 342,633 shares of Company Common Stock were
reserved for issuance under the Company’s 1996 Employee Stock Purchase Plan (the
“ESPP”), which
was amended on June 30, 2003 to suspend the purchase of Company Common Stock
under the ESPP until such time as the Board takes further action to amend the
ESPP to begin a new payment period thereunder.
9
Except as
set forth above in this Section 3.01(c), at the close of business on the
Capitalization Date, no shares of capital stock or other voting securities or
equity interests of the Company were issued, reserved for issuance or
outstanding. There are no outstanding stock appreciation rights,
“phantom” stock rights, restricted stock units, performance units, rights to
receive shares of Company Common Stock on a deferred basis or other rights
(other than Company Stock Options) that are linked to the value of Company
Common Stock (collectively, “Company Stock-Based
Awards”). All Company Stock Options are evidenced by stock
option agreements or other award agreements. All outstanding shares
of capital stock of the Company are, and all shares which may be issued pursuant
to the Company Stock Options will be, when issued in accordance with the terms
thereof, duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. There are no bonds, debentures, notes
or other indebtedness of the Company having the right to vote (or convertible
into, or exchangeable for, securities having the right to vote) on any matters
on which shareholders of the Company may vote. Except as set forth
above in this Section 3.01(c) and for issuances of shares of Company Common
Stock pursuant to the Company Stock Options set forth above in this Section
3.01(c), (A) there are not issued, reserved for issuance or outstanding (1) any
shares of capital stock or other voting securities or equity interests of the
Company, (2) any securities of the Company convertible into or exchangeable or
exercisable for shares of capital stock or other voting securities or equity
interests of the Company, (3) any warrants, calls, options or other rights to
acquire from the Company or any of its subsidiaries, and no obligation of the
Company or any of its subsidiaries to issue, any capital stock, voting
securities, equity interests or securities convertible into or exchangeable or
exercisable for capital stock or voting securities of the Company or (4) any
Company Stock-Based Awards and (B) there are not any outstanding obligations to
repurchase, redeem or otherwise acquire any such shares of capital stock, equity
interests or other securities or to register, issue, deliver or sell, or cause
to be issued, delivered or sold, any such shares of capital stock, equity
interests or other securities. Neither the Company nor any of its
subsidiaries is a party to any voting Contract with respect to the voting of any
such securities. Section 3.01(c) of the Company Disclosure Schedule
lists, as of the date of this Agreement, each outstanding Company Stock Option
and the exercise price thereof.
10
(d) Authority;
Noncontravention. The Company has all requisite corporate
power and authority to execute and deliver this Agreement and, subject to
receipt of the Shareholder Approval and the governmental filings and other
matters referred to in the last sentence of this Section 3.01(d), to perform its
obligations under this Agreement and to consummate the Merger and the other
transactions contemplated by this Agreement. The execution, delivery
and performance of this Agreement by the Company and the consummation by the
Company of the Merger and the other transactions contemplated by this Agreement
have been duly authorized by all necessary corporate action on the part of the
Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the Merger and the other
transactions contemplated by this Agreement, subject, in the case of the
consummation of the Merger, to the obtaining of the Company Shareholder
Approvals. This Agreement has been duly executed and delivered by the
Company and, assuming the due authorization, execution and delivery by Zac,
constitutes a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to the enforcement of creditors’ rights
generally and (ii) is subject to general principles of equity. The
Board of Directors of the Company, at a meeting duly called and held, duly
adopted resolutions (i) approving and declaring advisable this Agreement, the
Merger and the other transactions contemplated by this Agreement, (ii) declaring
and recommending to its shareholders that it is advisable and in the best
interests of the Company and the shareholders of the Company that the Company
enter into this Agreement and consummate the Merger and the other transactions
contemplated by this Agreement on the terms and subject to the conditions set
forth in this Agreement, and (iii) recommending that the shareholders of the
Company adopt this Agreement, which resolutions, as of the date of this
Agreement, have not been subsequently rescinded, modified or withdrawn in any
way (the “Company
Board Recommendation”). Except as set forth in Section 3.01(d)
of the Company Disclosure Schedules, the execution, delivery and performance of
this Agreement by the Company do not, and the consummation by the Company of the
Merger and the other transactions contemplated by this Agreement and compliance
by the Company with the provisions of this Agreement will not, conflict with, or
result in any violation or breach of, or default (with or without notice or
lapse of time, or both) under, require consent under, or give rise to a right
of, or result in, termination, cancellation, modification or acceleration of any
obligation or to the loss of a benefit under, or result in the creation of any
Lien in or upon any of the properties or other assets of the Company or any of
its subsidiaries under, (A) subject to the obtaining of the Shareholder
Approval, the Company Articles or the Company Bylaws or the comparable
organizational documents of any of its subsidiaries, (B) any loan or credit
agreement, bond, debenture, note, mortgage, indenture, lease, supply agreement,
license agreement, development agreement or other contract, agreement,
obligation, commitment or instrument that is intended by the Company or any of
its subsidiaries to be legally binding, (each, including all amendments thereto,
a “Contract”),
to which the Company or any of its subsidiaries is a party or any of their
respective properties or other assets is subject or (C) subject to the obtaining
of the Shareholder Approval and the governmental filings and other matters
referred to in the following sentence, any (1) federal, state, local, provincial
or foreign statute, law, ordinance, rule or regulation (each, a “Law”) applicable to
the Company or any of its subsidiaries or their respective properties or other
assets or (2) order, writ, injunction, decree, judgment or stipulation (each, an
“Order”)
applicable to the Company or any of its subsidiaries or their respective
properties or other assets, other than, in the case of clauses (B) and (C), any
such conflicts, violations, breaches, defaults, consents, rights of termination,
cancellation, modification or acceleration, losses or Liens that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect or prevent or materially impede, interfere with, hinder or delay
the consummation of the Merger and the other transactions contemplated by this
Agreement. No consent, approval, order or authorization of, action by
or in respect of, or registration, declaration, notice to or filing with, any
federal, state, local or foreign government, any court, administrative,
regulatory or other governmental agency, commission or authority or any
organized securities exchange (each, a “Governmental Entity”)
is required by or with respect to the Company or any of its subsidiaries in
connection with the execution and delivery of this Agreement by the Company or
the consummation of the Merger or the other transactions contemplated by this
Agreement, except for (i) the filing with the Securities and Exchange Commission
(the “SEC”) of
(A) a proxy statement relating to the adoption by the shareholders of the
Company of this Agreement (as amended or supplemented from time to time, the
“Proxy
Statement”) and a transaction statement on Schedule 13E-3 (as amended or
supplemented from time to time, the “Schedule 13E-3”), and
(B) such reports under the Securities Exchange Act of 1934, as amended
(including the rules and regulations promulgated thereunder, the “Exchange Act”), as
may be required in connection with this Agreement and the Merger and the other
transactions contemplated by this Agreement, (ii) the filing of the Articles of
Merger with the Secretary of State of the State of Washington and appropriate
documents with the relevant authorities of other states in which the Company or
any of its subsidiaries is qualified to do business, (iii) any filings with and
approvals of the Nasdaq Global Market and (iv) such other consents, approvals,
orders, authorizations, actions, registrations, declarations, notices and
filings the failure of which to be obtained or made, individually or in the
aggregate, would not (A) reasonably be expected to have a Material Adverse
Effect or (B) prevent or materially impede, interfere with, hinder or delay the
consummation of the transactions contemplated by this
Agreement.
11
(e) Company SEC
Documents.
(i) The
Company has filed with or furnished to the SEC, on a timely basis, all reports,
schedules, forms, statements and other documents (including exhibits and other
information incorporated therein) required to be filed or furnished by the
Company since January 1, 2005 (such documents, together with any documents filed
during such period by the Company with the SEC on a voluntary basis on Current
Reports on Form 8-K, the “Company SEC
Documents”). As of their respective filing dates, or, if
revised, amended, supplemented or superseded by a later-filed Company SEC
Document filed prior to the date of this Agreement, as of the date of filing of
the last such revision, amendment, supplement or superseding filing, the Company
SEC Documents complied in all material respects with, to the extent in effect at
the time of filing, the requirements of the Securities Act of 1933, as amended
(including the rules and regulations promulgated thereunder, the “Securities Act”), the
Exchange Act and the Xxxxxxxx-Xxxxx Act of 2002 (including the rules and
regulations promulgated thereunder, “SOX”) applicable to
such Company SEC Documents, and none of the Company SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading. None of the Company SEC Documents (as revised, amended,
supplemented or superseded by a later-filed Company SEC Document) contains any
untrue statement of a material fact or omits 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 were made, not misleading, which
individually or in the aggregate would require an amendment, supplement or
corrective filing to such Company SEC Documents. Each of the
financial statements (including the related notes) of the Company included in
the Company SEC Documents complied at the time it was filed as to form in all
material respects with the applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto in effect at the time of
filing, had been prepared in accordance with generally accepted accounting
principles in the United States (“GAAP”) (except as
otherwise noted therein and, in the case of unaudited statements, as permitted
by the rules and regulations of the SEC) applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto) and
fairly presented in all material respects the consolidated financial position of
the Company and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments). Neither the Company nor any of its subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) other than (i) liabilities or obligations reflected or reserved
against on the balance sheet of the Company and its subsidiaries as of December
31, 2007 included in the Filed Company SEC Documents (including the notes
thereto), (ii) liabilities or obligations incurred after December 31, 2007 in
the ordinary course of business or (iii) liabilities or obligations which,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect. None of the subsidiaries of the Company are,
or have at any time been, subject to the reporting requirements of Section 13(a)
or 15(d) of the Exchange Act.
12
(ii) Except
as set forth in Section 3.01(e)(ii) of the Company Disclosure Schedule, (A) as
of the date of this Agreement, there are no outstanding or unresolved comments
in comment letters received from the SEC staff with respect to the Company SEC
Documents and (B) to the Knowledge of the Company, as of the date of this
Agreement, none of the Company SEC Documents is the subject of ongoing SEC
review, outstanding SEC comment or outstanding SEC investigation.
(f) Voting
Requirements. Subject to the accuracy of the representations
and warranties of Zac in Section 3.02(g), and except for the Special Shareholder
Approval (as defined in Section 6.01(a) below) provided under Section 6.01(a)
hereof, the only votes of holders of securities of the Company which are
required to approve this Agreement and the Merger are the affirmative vote of
holders of at least a majority of the outstanding shares of Company Common Stock
at the Shareholders’ Meeting or any adjournment or postponement thereof to
approve this Agreement (the “Shareholder
Approval”).
(g) State Takeover
Laws. The independent members of the Board of Directors of the
Company has unanimously approved this Agreement, the terms of this Agreement and
the consummation of the Merger and the other transactions contemplated by this
Agreement, and such approval represents all the actions necessary to render
inapplicable to this Agreement, the Merger and the other transactions
contemplated by this Agreement, the provisions of Chapter 23.B.19 of the WBCA to
the extent, if any, the restrictions contained therein would otherwise be
applicable to this Agreement, the Merger and the other transactions contemplated
by this Agreement. To the Knowledge of the Company, no other state
takeover Law or similar Law applies or purports to apply to this Agreement, the
Merger or the other transactions contemplated by this Agreement. The
Company does not have any shareholder rights plan in effect.
(h) Brokers and Other
Advisors. No broker, investment banker, financial advisor or
other Person (other than Cascadia Capital and the fees of Xxxxxxxx Xxxxx Xxxxxx
& Xxxxx Financial Advisors, Inc. for its opinion in Section 3.01(i) below),
the fees and expenses of which will be paid by the Company, is entitled to any
broker’s, finder’s, financial advisor’s or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. The Company has delivered to Zac true,
complete and accurate copies of all written agreements entered into on or prior
to the date of this Agreement under which any such fees or expenses are payable
and all indemnification and contribution related to the engagement of the
Persons to whom such fees are payable.
(i) Opinion of Financial
Advisors. The Company has received the opinion of Xxxxxxxx
Xxxxx Xxxxxx & Xxxxx Financial Advisors, Inc., on July 30, 2008, to the
effect that, as of such date, the Merger Consideration is fair, from a financial
point of view, to the holders of shares of Company Common Stock other than Xxxxx
Xxxxx and his Affiliates.
13
(j) Schedule 13E-3/Proxy
Statement; Other Information. None of the information provided by the
Company for inclusion in the Schedule 13E-3 or the Proxy Statement (the “Company Information”)
will, in the case of the Schedule 13E-3, as of the date of its filing and of
each amendment or supplement thereto and, in the case of the Proxy Statement,
(i) at the time of the mailing of the Proxy Statement or any amendments or
supplements thereto and (ii) at the time of the Shareholders’ Meeting, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to any information that is contained or incorporated by
reference in the Proxy Statement or the Schedule 13E-3 other than with respect
to the Company Information as set forth in this paragraph.
(a) Organization, Standing and
Corporate Power. Zac is a corporation duly organized and
validly existing under the laws of the State of Washington. Zac has
made available to the Company true, complete and accurate copies of its
organizational documents. Zac has the requisite corporate power and
authority to own, operate or lease its properties and to carry on its business
as it is now being conducted, and is duly qualified or licensed to do business,
and is in good standing, in each jurisdiction in which the nature of its
business or the properties owned, operated or leased by it makes such
qualification, licensing or good standing necessary, except where the failure to
have such power, authority or to be so qualified, licensed or in good standing,
would not, individually or in the aggregate, reasonably be expected to have a
Zac Material Adverse Effect. Zac has no subsidiaries.
(b) Authority;
Noncontravention. Zac has all requisite power and authority to
execute and deliver this Agreement, to perform its obligations under this
Agreement and to consummate the transactions contemplated by this
Agreement. The execution, delivery and performance of this Agreement
by Zac and the consummation by Zac of the transactions contemplated by this
Agreement have been duly authorized by all necessary entity action on the part
of Zac and no other proceedings on the part of Zac are necessary to authorize
this Agreement or to consummate the Merger and the other transactions
contemplated by this Agreement. This Agreement has been duly executed
and delivered by Zac and, assuming the due authorization, execution and delivery
by the Company, constitutes a legal, valid and binding obligation of Zac,
enforceable against Zac, in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to the enforcement of creditors’ rights
generally and (ii) is subject to general principles of equity. The
execution, delivery and performance of this Agreement by Zac do not, and the
consummation by Zac of the Merger and the other transactions contemplated by
this Agreement and compliance by Zac with the provisions of this Agreement will
not, conflict with, or result in any violation or breach of, or default (with or
without notice or lapse of time, or both) under, require consent under, or give
rise to a right of, or result in, termination, cancellation, modification or
acceleration of any obligation or to the loss of a benefit under, or result in
the creation of any Lien in or upon any of the properties or other assets of Zac
under (i) the respective organizational and governing documents of Zac, (ii) any
Contract to which Zac is a party or any of its respective properties or other
assets is subject (including any credit facilities or agreements and any other
indebtedness arrangements) or (iii) subject to the governmental filings and
other matters referred to in the following sentence, any Laws and Orders
applicable to Zac or its respective properties or other assets, other than, in
the case of the immediately preceding clauses (ii) and (iii), any such
conflicts, violations, breaches, defaults, consents, rights of termination,
cancellation, modification or acceleration, losses or Liens that would not,
individually or in the aggregate, reasonably be expected to have a Zac Material
Adverse Effect. No consent, approval, order or authorization of,
action by or in respect of, or registration, declaration, notice to or filing
with, any Governmental Entity is required by or with respect to Zac in
connection with the execution and delivery of this Agreement by Zac or the
consummation by Zac of the Merger or the other transactions contemplated by this
Agreement, except for (1) the filing of the Articles of Merger with the
Secretary of State of the State of Washington and appropriate documents with the
relevant authorities of the other states in which Zac is qualified to do
business, and (2) such other consents, approvals, orders, authorizations,
actions, registrations, declarations, notices and filings the failure of which
to be obtained or made would not individually or in the aggregate, reasonably be
expected to have a Zac Material Adverse Effect.
14
(c) Capital
Structure. The authorized capital stock of Zac consists of
1,000 shares of common stock, without par value. Xxxxx Xxxxx
beneficially owns each issued and outstanding share of capital stock of
Zac.
(d) Financing. Zac
has delivered to the Company a true and complete copy, as of the date of this
Agreement, of executed commitment letters to provide equity and debt financing
to Zac in an aggregate amount set forth therein, subject to the terms and
conditions thereof (the “Financing
Commitments”), the proceeds of which shall be used to consummate the
Merger and the other transactions contemplated by this Agreement (the “Financing”). As
of the date of this Agreement, each of the Financing Commitments, in the form
delivered to the Company, (i) has not been amended or modified, withdrawn or
rescinded in any respect, and (ii) is in full force and effect and is a legal,
valid and binding obligation of Zac and, to the Knowledge of Zac, the other
parties thereto. The Financing Commitments contain all of the
conditions precedent to the obligations of the parties thereunder to make the
Financing available to Zac. As of the date of this Agreement, subject
to the accuracy of the representations and warranties of the Company set forth
in Section 3.01, Zac has no reason to believe that it will be unable to satisfy
on a timely basis any term or condition to be satisfied by it contained in the
Financing Commitments. Zac has fully paid any and all commitment fees
that have been incurred and are due and payable in connection with the Financing
Commitments prior to the date of this Agreement. Subject to the
accuracy of the representations and warranties of the Company set forth in
Section 3.01(c), the proceeds from the Financing, when funded in accordance with
the Financing Commitments and together with available funds at the Company, are
sufficient for the satisfaction of all of Zac’s obligations under this
Agreement, including the payment of the Merger Consideration and the
consideration in respect of the Company Stock Options and to pay all related
fees and expenses. Notwithstanding anything in this Agreement to the
contrary, the Financing Commitments may be superseded at the option of Zac after
the date of this Agreement but prior to the Effective Time by the New Financing
Commitments in accordance with Section 5.07. In such event, the term
“Financing Commitments” as used in this Agreement shall be deemed to include the
New Financing Commitments to the extent then in effect.
15
(e) Brokers. No
broker, investment banker, financial advisor or other Person is entitled to any
broker’s, finder’s, financial advisor’s or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Zac.
(f) Schedule 13E-3/Proxy
Statement; Other Information. None of the information provided by Zac
with respect to itself for inclusion in the Schedule 13E-3 or the Proxy
Statement (the “Zac
Information”) will, in the case of the Schedule 13E-3, as of the date of
its filing and of each amendment or supplement thereto and, in the case of the
Proxy Statement, (i) at the time of the mailing of the Proxy Statement or any
amendments or supplements thereto and (ii) at the time of the Shareholders’
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Notwithstanding the foregoing, Zac makes no representation or
warranty with respect to any information that is contained or incorporated by
reference in the Proxy Statement or the Schedule 13E-3 other than with respect
to the Zac Information as set forth in this paragraph.
(g) Absence of Arrangements with
Management. As of the date of this Agreement, other than this
Agreement there are no contracts, undertakings, commitments, agreements or
obligations or understandings between Zac, any of its Affiliates or any
shareholder set forth on Schedule 2.01(c) on the one hand, and any member of the
Company’s management or the Board of Directors (other than Xxxxx Xxxxx), on the
other hand, relating to the transactions contemplated by this Agreement or the
operations of the Company after the Effective Time.
(h) Access to Information and
Investigation by Zac. Zac and its Representatives have received access to
such books and records, facilities, equipment, contracts and other assets of the
Company which it and its Representatives, as of the date hereof, have requested
to review, and that it and its Representatives have had full opportunity to meet
with officers and other Representatives of the Company for the purpose of
investigating and obtaining information regarding the Company’s business,
operations and legal affairs. Zac has conducted its own independent
investigation, review and analysis of the business, operations, assets,
liabilities, results of operations, financial condition, and prospects of the
Company and the Company subsidiaries, which investigation, review and analysis
was done by Zac and, to the extent Zac deemed appropriate, by Zac’s
Representatives. Without limiting the generality of the foregoing,
none of the Company or its subsidiaries nor any of their respective
Representatives or any other person has made a representation or warranty to Zac
with respect to (i) any projections, estimates or budgets for the Company or its
subsidiaries, (ii) any material, documents or information relating to the
Company or its subsidiaries made available to Zac or (iii) in connection with
any materials prepared for or in connection with the Zac’s arrangement of the
Financing or the Financing Commitment, except as expressly and specifically
covered by a representation or warranty set forth in Section
3.01.
16
(i) Solvency. Assuming
the satisfaction of the conditions to the obligation of Zac to consummate the
Merger, or the waiver of such conditions, and the accuracy of the
representations and warranties of the Company set forth in Section 3.01 hereof,
then immediately after giving effect to the transactions contemplated by this
Agreement, the Surviving Corporation will be Solvent. For purposes of this
Section 3.02, the term “Solvent” with respect
to the Surviving Corporation means that, as of any date of determination, (i)
the amount of the fair saleable value of the assets of the Surviving Corporation
and its subsidiaries, taken as a whole, exceeds, as of such date, the sum of (A)
the value of all liabilities of the Surviving Corporation and its subsidiaries,
taken as a whole, including contingent liabilities valued at the amount that is
reasonably expected to become due, as of such date, as such quoted terms are
generally determined in accordance with the applicable federal laws governing
determinations of the solvency of debtors, and (B) the amount that will be
required to pay the liabilities that are reasonably expected to become due of
the Surviving Corporation and its subsidiaries, taken as a whole, on its
existing debts (including contingent liabilities) as such debts become absolute
and matured, (ii) the Surviving Corporation and its subsidiaries, taken as a
whole, will not have, as of such date, an unreasonably small amount of capital
for the operation of their businesses in which it is engaged or proposed to be
engaged by Zac following such date, and (iii) the Surviving Corporation and its
subsidiaries, taken as a whole, will be able to pay its liabilities, including
contingent and other liabilities, as they mature. For purposes of this
definition, “not have an unreasonably small amount of capital for the operation
of the businesses in which it is engaged or proposed to be engaged” and “able to
pay its liabilities, including contingent and other liabilities, as they mature”
means that the Surviving Corporation will be able to generate enough cash from
operations, asset dispositions or refinancing, or a combination thereof, to meet
its obligations as they become due.
COVENANTS
RELATING TO CONDUCT OF BUSINESS; NO SOLICITATION
(a) During
the period from the date of this Agreement to the Effective Time, except as set
forth in Section 4.01(a) of the Company Disclosure Schedule or as contemplated
by this Agreement or as consented to in writing in advance by Zac (which consent
shall not unreasonably be withheld or delayed), the Company shall, and shall
cause each of its subsidiaries to, carry on its business in all material
respects in the ordinary course and, to the extent consistent therewith, use all
commercially reasonable efforts to preserve intact its current business
organizations, keep available the services of its current officers, key
employees and consultants and preserve its relationships with customers,
suppliers, licensors, licensees, distributors and others having business
dealings with it. In addition to and without limiting the generality
of the foregoing, during the period from the date of this Agreement to the
Effective Time, except as otherwise set forth in Section 4.01(a) of the Company
Disclosure Schedule or as contemplated by this Agreement, the Company shall not,
and shall not permit any of its subsidiaries to, without Zac’s prior written
consent (which consent shall not unreasonably be withheld or
delayed):
17
(i) (A)
declare, set aside or pay any dividends on, or make any other distributions
(whether in cash, stock or property) in respect of, any of its capital stock,
other than dividends or distributions by a direct or indirect subsidiary wholly
owned by the Company to the Company or another directly or indirectly wholly
owned subsidiary of the Company in the ordinary course of business consistent
with past practice, (B) split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock or (C) purchase, redeem or
otherwise acquire any shares of its capital stock or any other securities
thereof or any rights, warrants or options to acquire any such shares or other
securities, except for purchases, redemptions or other acquisitions of capital
stock or other securities (1) required by the terms of the Company Stock Plans
in effect as of the date of this Agreement or (2) required by the terms of any
plans, arrangements or Contracts existing on the date of this Agreement between
the Company or any of its subsidiaries and any director or employee of the
Company or any of its subsidiaries (to the extent complete and accurate copies
of which have been heretofore delivered to Zac);
(ii) issue,
deliver, sell, grant, pledge or otherwise encumber or subject to any Lien any
shares of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities, or any “phantom” stock,
“phantom” stock rights, stock appreciation rights or stock based performance
units, including pursuant to Contracts as in effect on the date of this
Agreement (other than (A) the issuance of shares of Company Common Stock upon
the exercise of Company Stock Options or in connection with Company Stock Based
Awards, in each case in accordance with their terms on the date of this
Agreement; or (B) grants required by the terms of any plans, arrangements or
Contracts existing on the date of this Agreement between the Company or any of
its subsidiaries and any director or employee of the Company or any of its
subsidiaries (to the extent complete and accurate copies of which have been
heretofore delivered to Zac));
(iii) amend
or waive any material provision in the Company Articles or the Company Bylaws or
other comparable charter or organizational documents of any of the Company’s
subsidiaries, except as may be required by applicable Law or the rules and
regulations of the SEC or the Nasdaq Global Market, or, in the case of the
Company, enter into any agreement with any of its shareholders in their capacity
as such;
(iv) directly
or indirectly acquire, (A) by merging or consolidating with, by purchasing a
substantial portion of the assets of, by making an investment in or capital
contribution to, or by any other manner, any Person or division, business or
equity interest of any Person or (B) any material asset or assets, except for
capital expenditures, which shall be subject to the limitations of Section
4.01(a)(vi) below;
(v) (A)
incur, create, assume or otherwise become liable for, any indebtedness for
borrowed money or guarantee any such indebtedness of another Person, issue or
sell any debt securities or calls, options, 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 Contract
to maintain any financial statement condition of another Person or enter into
any arrangement having the economic effect of any of the foregoing (other than
borrowings under the Company’s existing loan facilities in the ordinary course
of business), or (B) make any loans or advances to any other Person, except for
loans, advances, capital contributions or investments between any subsidiary of
the Company and the Company or another subsidiary of the Company in the ordinary
course of business consistent with past practice;
18
(vi) make
any new capital expenditure exceeding $200,000 individually or $500,000 in the
aggregate;
(vii) except
as required by Law or any final, nonappealable judgment by a court of competent
jurisdiction, (A) pay, discharge, settle or satisfy any material claims,
liabilities, obligations or litigation (absolute, accrued, asserted or
unasserted, contingent or otherwise) where the uninsured amount to be paid is
greater than $500,000, other than the payment, discharge, settlement or
satisfaction in the ordinary course of business or in accordance with their
terms, of liabilities disclosed, reflected or reserved against in the most
recent financial statements (or the notes thereto) of the Company included in
the Filed Company SEC Documents (for amounts not in excess of such reserves), or
(B) cancel any material indebtedness in excess of $200,000;
(viii) except
(x) as required to ensure that any Benefit Plan is not then out of compliance
with applicable Law or (y) to comply with any Benefit Plan other Contract
entered into prior to the date of this Agreement, (A) adopt, enter into,
terminate or amend (1) any collective bargaining Contract or Benefit Plan or (2)
any other Contract, plan or policy involving the Company or any of its
subsidiaries as applied to directors and executive officers of the Company
(“Key
Persons”), (B) increase in any manner the compensation, bonus or fringe
or other benefits of, or pay any discretionary bonus of any kind or amount
whatsoever to, any current or former director, officer, employee or consultant,
except in the ordinary course of business consistent with past practice to
employees of the Company or its subsidiaries other than Key
Persons;
(ix) adopt
or enter into a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of such
entity (other than among wholly-owned subsidiaries); or
(x) authorize
any of, or commit, resolve, propose or agree to take any of, the foregoing
actions.
(b) Advice of Changes;
Filings. The Company and Zac shall promptly advise the other
party in writing if (i) any representation, warranty, condition or agreement
made by it contained in this Agreement becomes untrue or inaccurate in a manner
that would result in the failure of any one more of the conditions set forth in
Section 6.02(a) or 6.02(b) or Section 6.03(a) or 6.03(b) and (ii) the Company or
Zac fails to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement; provided,
however, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties (or remedies with respect
thereto) or the conditions precedent to the obligations of the parties under
this Agreement.
19
(c) Confidential Portions of
Governmental Entity Filings. The Company and Zac shall, to the
extent permitted by Law, promptly provide the other with copies of all filings
made by such party with any Governmental Entity in connection with this
Agreement and the transactions contemplated by this Agreement, other than the
portions of such filings that include confidential or proprietary information
not directly related to the transactions contemplated by this
Agreement.
(a) Notwithstanding
any other provision of this Agreement to the contrary, during the period
beginning on the date of this Agreement and continuing until 11:59 p.m. Seattle,
Washington time on September 3, 2008, subject to the extension to September 17,
2008 in the discretion of the independent members of the Board of Directors of
the Company (the “No-Shop Period Start
Time”), the Company and its subsidiaries and their respective
Representatives shall have the right to: (i) initiate, solicit and encourage,
whether publicly or otherwise, Takeover Proposals, including by way of providing
access to non-public information pursuant to (but only pursuant to) one or more
Acceptable Confidentiality Agreements; provided that (A) the Company
shall promptly provide to Zac any material non-public information concerning the
Company or its subsidiaries that is provided to any Person given such access
which was not previously provided to Zac and (B) the Company shall not disclose
(and shall not permit any of its Representatives to disclose) the terms of the
Financing Commitments or the identities of any other potential financing sources
for the transactions contemplated by this Agreement to any Person, except to the
extent such terms are otherwise publicly available; and (ii) enter into and
maintain discussions or negotiations with respect to Takeover Proposals or
otherwise cooperate with or assist or participate in, or facilitate any such
inquiries, proposals, discussions or negotiations.
“Acceptable Confidentiality
Agreement” means a confidentiality agreement substantially in the form
approved by the independent members of the Board of Directors, provided that such
confidentiality agreement shall not prohibit compliance with Section
4.02(f)(i). To the extent the Company has a pre-existing
confidentiality agreement with a Person that remains in effect, the term
“Acceptable Confidentiality Agreement” also means such pre-existing
confidentiality agreement, provided that either (i) such
pre-existing confidentiality agreement does not prohibit compliance with Section
4.02(f)(i) or (ii) the Company is able to obtain an effective waiver of the
provisions of such pre-existing confidentiality agreement that would otherwise
prohibit the Company from complying with Section 4.02(f)(i).
“Takeover Proposal”
means any inquiry, proposal or offer from any Person or group of Persons (other
than Zac and its Affiliates) relating to, or that is reasonably likely to lead
to, any direct or indirect acquisition or purchase, in one transaction or a
series of related transactions, of assets (including equity securities of any
subsidiary of the Company) or businesses that constitute 15% or more of the
revenues, net income or assets of the Company and its subsidiaries (taken as a
whole), or 15% or more of any class of equity securities of the Company or any
of its subsidiaries, any tender offer or exchange offer that if consummated
would result in any Person beneficially owning 15% or more of any class of
equity securities of the Company or any of its subsidiaries, or any merger,
consolidation, business combination, recapitalization, liquidation, dissolution,
joint venture, binding share exchange or similar transaction involving the
Company or any of its subsidiaries pursuant to which any Person or the
shareholders of any Person would own 15% or more of any class of equity
securities of the Company or any of its subsidiaries, in each case other than
the transactions contemplated by this Agreement.
20
“Superior Proposal”
means any written Takeover Proposal that if consummated would result in such
Person (or its shareholders) owning, directly or indirectly, more than 50% of
the shares of Company Common Stock then outstanding (or of the shares of the
surviving entity in a merger or the direct or indirect Zac of the surviving
entity in a merger) or a majority of the assets of the Company and its
subsidiaries (taken as a whole), which the independent members of the Board of
Directors of the Company reasonably determine in good faith (after consultation
with the Company’s outside counsel and financial advisor) would, if consummated,
be more favorable to the shareholders of the Company from a financial point of
view than the transactions contemplated by this Agreement (taking into account
all the terms and conditions of such proposal and this Agreement, including (x)
the likelihood and timing of consummation of such transaction on the terms set
forth therein (as compared to the terms herein), (y) all appropriate legal,
financial (including the financing terms of such proposal), regulatory and other
aspects of such proposal and (z) any changes to the financial and other terms of
this Agreement proposed by Zac in response to such Takeover Proposal or
otherwise).
Zac
agrees that neither it nor any Affiliate of Zac shall, and that it shall use its
reasonable best efforts to cause Zac’s and its respective Representatives not
to, intentionally enter, or seek to enter, into any agreement, arrangement or
understanding with a potential bidding party that materially interferes with the
Company’s ability to seek and obtain a Superior Proposal from such party
(including interfering with the ability of the Company to hold discussions and
negotiations with such party in connection
therewith); provided, however , that the obligations under
this Section 4.02(a) shall not prevent Zac or its Affiliates from (i) exercising
its rights under this Section 4.02, (ii) making any public announcement with
respect to such rights not otherwise prohibited hereby, or (iii) contacting
third parties with respect to obtaining additional debt or equity financing in
order to consummate the transactions contemplated hereby, other than financing
sources known by Zac or its Affiliates to be, or reasonably likely to be, a
bidder for the Company.
(b) During
the period from the No-Shop Period Start Time to the Effective Time or the date,
if any, on which this Agreement is earlier terminated pursuant to Section 7.01,
the Company will not, and will cause its subsidiaries not to, and will use its
reasonable best efforts to cause the Company’s and its subsidiaries’ respective
officers, directors, employees and other Representatives not to, directly or
indirectly, (i) initiate or solicit or knowingly encourage (including by way of
providing information), the submission of any inquiries, proposals or offers or
any other efforts or attempts that constitute or may reasonably be expected to
lead to, a Takeover Proposal or (ii) except as permitted in Section 4.02(c), (A)
engage in negotiations or discussions with, or furnish access to its properties,
books and records or provide any information or data to, any Person relating to
an Takeover Proposal, (B) approve, endorse or recommend, or propose publicly to
approve, endorse or recommend, any Takeover Proposal, (C) execute or enter into
any letter of intent, agreement in principle, merger agreement, acquisition
agreement or other similar agreement providing for or relating to any Takeover
Proposal (other than a confidentiality agreement in connection with the actions
contemplated by Section 4.02(c)), (D) enter into any agreement or agreement in
principle requiring the Company to abandon, terminate or fail to consummate the
transactions contemplated by this Agreement or breach its obligations under this
Agreement or (E) publicly propose or agree to do any of the
foregoing. Subject to Section 4.02(c) and except with respect to any
Takeover Proposal received prior to the No-Shop Period Start Time with respect
to which the requirements of Section 4.02(c)(ii) and (iii) have been satisfied
as of the No-Shop Period Start Time (any such Person so submitting such a
Takeover Proposal, an “Excluded Party”), as
determined, with respect to any Excluded Party, by the independent members of
the Board of Directors of the Company no later than the later of (i) the No-Shop
Period Start Time and (ii) the Business Day following the date on which the
Company received such Excluded Party’s written Takeover Proposal (it being
understood, that following the No-Shop Period Start Time until such time as the
independent members of the Board of Directors of the Company determine that a
Person is an Excluded Party, the Company shall not be permitted to take any
action with respect to such Person that it would be prohibited from taking with
respect to a non-Excluded Party pursuant to Section 4.02(c)), on the No-Shop
Period Start Time the Company and its subsidiaries and their respective
Representatives shall immediately cease and cause to be terminated any
solicitation, encouragement, discussion or negotiation with any Persons
conducted theretofore by the Company, its subsidiaries or any Representatives
with respect to any Takeover Proposal. Notwithstanding anything
contained in Section 4.02 to the contrary, any Excluded Party shall cease to be
an Excluded Party for all purposes under this Agreement at such time as the
Takeover Proposal made by such party fails, in the reasonable judgment of the
independent members of the Board of Directors of the Company, to satisfy the
requirements of Section 4.02(c). Within two Business Days of the
No-Shop Period Start Time, the Company shall notify Zac of the number of
Excluded Parties and provide Zac a written summary of the material terms and
conditions of each Takeover Proposal received from any Excluded
Party.
21
(c) Notwithstanding
anything to the contrary in Section 4.02(b), at any time prior to obtaining the
Company Shareholder Approvals, in the event that (i) the Company receives an
unsolicited written Takeover Proposal that the independent members of the Board
of Directors of the Company believe in good faith to be bona fide following
disclosure thereof to the full Board of Directors, (ii) the independent members
of the Board of Directors of the Company determine in good faith, after
consultation with its independent financial advisors and outside counsel, that
such Takeover Proposal constitutes or could reasonably be expected to result in
a Superior Proposal and (iii) after consultation with outside counsel, the
independent members of the Board of Directors of the Company determine in good
faith that the failure to take such action would be inconsistent with the
fulfillment of their fiduciary duties to the shareholders of the Company under
applicable Law, then the Company and the independent members of the Board of
Directors may (A) participate in discussions or negotiations (including, as a
part thereof, making any counterproposal) with the Person making the Takeover
Proposal regarding such Takeover Proposal and (B) furnish information with
respect to the Company and its subsidiaries to the Person making the Takeover
Proposal; provided that
the Company (x) will not, and will not allow its Representatives to, disclose
any non-public information to such Person without entering into an Acceptable
Confidentiality Agreement, and (y) will promptly provide or make available to
Zac any non-public information concerning the Company or its subsidiaries
provided to such other Person which was not previously provided to
Zac. Notwithstanding anything to the contrary contained in Section
4.02(b) or this Section 4.02(c), prior to obtaining the Company Shareholder
Approvals, the Company shall be permitted to take the actions described in
clauses (A) and (B) above with respect to any Excluded Party.
22
(d) From
and after the No-Shop Period Start Time, the Company will promptly (and in any
event within one Business Day) notify Zac of the receipt by the Company of any
Takeover Proposal, which notice shall include the material terms of and identity
of the Person(s) making such Takeover Proposal. From and after the
No-Shop Period Start Time, the Company will keep Zac informed on a current basis
of the status and details of any such Takeover Proposal and of any material
amendments or proposed material amendments thereto and any material
developments, discussions and negotiations concerning such Takeover Proposal, in
each case, in any event no later than 48 hours after the occurrence of the
applicable amendment, development, discussion, or
negotiation. Without limiting the foregoing, the Company shall
promptly (within one Business Day) notify Zac orally and in writing if it
determines to begin providing information or to engage in discussions or
negotiations with a Person or group of Persons in connection with any Takeover
Proposal.
(e) The
Board of Directors of the Company shall not (i) approve, endorse or recommend
(or publicly propose to approve, endorse or recommend) any Takeover Proposal or
enter into a definitive agreement with respect to a Takeover Proposal or (ii)
modify or amend (or publicly propose to modify or amend) in a manner adverse to
Zac or withdraw (or publicly propose to withdraw) the Company Board
Recommendation ((i) or (ii) above being referred to as a “Change in
Recommendation”); provided, however, that the
independent members of the Board of Directors of the Company may, at any time
prior to obtaining the Company Shareholder Approvals, make a Change in
Recommendation if (i) the independent members of the Board of Directors of the
Company determine, in good faith (after consultation with its outside legal
counsel), that the failure to take such action would be inconsistent with the
fulfillment of their fiduciary duties to the shareholders of the Company under
applicable Law or (ii) in response to a Superior Proposal under the
circumstances contemplated in Section 4.02(f).
(f) Notwithstanding
anything to the contrary contained in this Agreement, if, at any time prior to
obtaining the Company Shareholder Approvals, the Company receives a Takeover
Proposal which the independent members of the Board of Directors of the Company
conclude in good faith constitutes a Superior Proposal after giving effect to
all of the adjustments which may be offered by Zac pursuant to clause (ii)
below, the Board of Directors of the Company may (x) effect a Change in
Recommendation and/or (y) terminate this Agreement (in accordance with Section
7.01) to enter into a definitive agreement with respect to such Superior
Proposal if the independent members of the Board of Directors of the Company
determine in good faith, after consultation with outside counsel, that failure
to take such action would be inconsistent with the fulfillment of their
fiduciary duties to the shareholders of the Company under applicable Law; provided, however, that the
Company shall not terminate this Agreement pursuant to the foregoing clause (y),
and any purported termination pursuant to the foregoing clause (y) shall be void
and of no force or effect, unless concurrently with such termination the Company
pays the Company Termination Fee payable pursuant to Section 5.05(b); provided, further, that the
Board of Directors may not effect a Change in Recommendation pursuant to the
foregoing clause (x) or terminate this Agreement pursuant to the foregoing
clause (y) unless:
23
(i) the
Company shall have provided prior written notice to Zac, at least three calendar
days in advance (the “Notice Period”), of
its intention to effect a Change in Recommendation in response to such Superior
Proposal or terminate this Agreement to enter into a definitive agreement with
respect to such Superior Proposal, which notice shall specify the material terms
and conditions of any such Superior Proposal (including the identity of the
party making such Superior Proposal), and shall have contemporaneously provided
a copy of the relevant proposed transaction agreements with the party making
such Superior Proposal and other material documents; and
(ii) prior
to effecting such Change in Recommendation or terminating this Agreement to
enter into a definitive agreement with respect to such Superior Proposal, the
Company shall, and shall cause its financial and legal advisors to, during the
Notice Period, negotiate with Zac in good faith (to the extent Zac desires to
negotiate) to make such adjustments in the terms and conditions of this
Agreement so that such Takeover Proposal ceases to constitute a Superior
Proposal.
In the
event of any material revisions to the Superior Proposal, the Company shall be
required to deliver a new written notice to Zac and to comply with the
requirements of this Section 4.02(f) with respect to such new written notice,
except that the Notice Period shall be reduced to two calendar
days.
(g) Nothing
in this Agreement shall prohibit or restrict the independent members of the
Board of Directors of the Company, in circumstances not involving a Takeover
Proposal, from amending, modifying or withdrawing the Board of Directors
recommendation to the extent that the independent members of the Board of
Directors determine in good faith (after consultation with outside legal
counsel) that such action is necessary under applicable Law in order for the
directors to comply with their fiduciary duties to the Company's shareholders.
The Company shall give Zac written notice of any such action taken by the Board
of Directors not later than the Business Day next succeeding the day on which
such action is taken, setting forth in reasonable detail the action taken and
the basis therefor.
ADDITIONAL
AGREEMENTS
(a) As
soon as reasonably practicable following the date of this Agreement, the Company
and Zac shall prepare and the Company shall file with the SEC the Proxy
Statement. The Company shall use its reasonable best efforts to cause
the Proxy Statement to be mailed to the shareholders of the Company as promptly
as practicable. Zac shall furnish to the Company all information as
may be reasonably requested by the Company in connection with the preparation,
filing and distribution of the Proxy Statement. No filing of, or
amendment or supplement to, the Proxy Statement will be made by the Company
without providing Zac a reasonable opportunity to review and comment
thereon. If at any time prior to the Effective Time any information
relating to the Company or Zac, or any of their respective Affiliates, directors
or officers, should be discovered by the Company or Zac which should be set
forth in an amendment or supplement to the Proxy Statement, so that such
document would not include any misstatement of a material fact or omit to state
any material fact necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading, the party which
discovers such information shall promptly notify the other parties hereto and an
appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by Law, disseminated to
the shareholders of the Company. The parties shall notify each other
promptly of the receipt of any comments from the SEC or the staff of the SEC and
of any request by the SEC or the staff of the SEC for amendments or supplements
to the Proxy Statement or for additional information and shall supply each other
with copies of all correspondence between it or any of its Representatives, on
the one hand, and the SEC or the staff of the SEC, on the other hand, with
respect to the Proxy Statement or the Merger.
24
(b) Concurrently
with the filing of the Proxy Statement with the SEC, Zac and its Affiliates
shall prepare and file with the SEC, together with the Company, the Schedule
13E-3. Zac and the Company shall use all reasonable efforts to cause the
Schedule 13E-3 to comply with the rules and regulations promulgated by the SEC
and to respond promptly to any comments of the SEC or its staff. Each
party agrees to provide the other party and its counsel with copies of any
comments that such party or its counsel may receive from the staff of the SEC
promptly after receipt thereof. The Company shall promptly furnish to Zac all
information concerning the Company and its executive officers and directors as
may reasonably be requested in connection with the preparation of the Schedule
13E-3. The Company and its counsel shall be given an opportunity to review and
comment on the Schedule 13E-3 and each supplement, amendment or response to
comments with respect thereto prior to filing with or delivering to the
SEC.
(c) The
Company shall use its reasonable best efforts to, within 90 days following the
date of this Agreement, establish a record date for, duly call, give notice of,
convene and hold a meeting of its shareholders (the “Shareholders’
Meeting”) for the purpose of obtaining the Company Shareholder Approvals;
provided, that such date may be extended to the extent reasonably necessary to
permit the Company to file and distribute any material amendment to the Proxy
Statement as is required by applicable law. Subject to Section 4.02,
the Company shall, through its Board of Directors, recommend to its shareholders
adoption of this Agreement and the Merger and shall include the Company Board
Recommendation in the Proxy Statement. A Change in Recommendation
permitted by Section 4.02(e), (f) or (g) will not constitute a breach by the
Company of this Agreement. Without limiting the generality of the
foregoing, but subject to the terms of this Agreement, the Company’s obligations
pursuant to the first sentence of this Section 5.01(b) shall not be affected by
the commencement, public proposal, public disclosure or communication to the
Company of any Takeover Proposal (whether or not a Superior
Proposal). In addition, notwithstanding any Change in Recommendation,
unless this Agreement is terminated pursuant to, and in accordance with, Section
7.01, this Agreement shall be submitted to the shareholders of the Company at
the Shareholders Meeting for the purpose of adopting this
Agreement.
25
(a) To
the extent permitted by applicable Law, the Company shall afford to Zac, and to
Zac’s Representatives, reasonable access during normal business hours and upon
reasonable prior notice to the Company during the period prior to the Effective
Time to all its and its subsidiaries’ properties, books, Contracts, commitments,
personnel and records, and, during such period, the Company shall furnish
promptly to Zac (i) a copy of each report, schedule, registration statement and
other document filed by it during such period pursuant to the requirements of
federal or state securities Laws and (ii) all other information concerning its
and its subsidiaries’ business, properties and personnel as Zac may reasonably
request; provided that
such access and inspections shall not unreasonably disrupt the operations of the
Company or its subsidiaries; and provided further, that the
Company shall not be required to (or to cause any of its subsidiaries to) so
confer, afford such access or furnish such copies or other information to the
extent that doing so would result in a violation of law, result in the loss of
attorney-client privilege or violate confidentiality obligations owing to third
parties. Without limiting the foregoing, between the date of this
Agreement and the Effective Time, the Company shall (and shall cause its
Affiliates to) reasonably cooperate with Zac in connection with Zac securing the
Financing contemplated by Section 3.02(d).
(b) Except
for disclosures expressly permitted by the terms of this Agreement (i) Zac shall
hold, and shall cause its accountants, counsel, financial advisors and other
Representatives to hold, all information received from the Company, directly or
indirectly, in confidence and not make any public disclosure thereof; provided, that the foregoing
shall not prevent Zac from disclosing such information (i) to the extent
required by applicable Law or by a Governmental Entity, (ii) to the extent such
information is or becomes generally available to the public other than by
disclosure by Zac or any Affiliate or Representative Zac, (iii) as reasonably
necessary in connection with Zac securing the Financing contemplated by Section
3.02(d).
(a) Upon
the terms and subject to the conditions set forth in this Agreement, each of the
parties agrees to use its reasonable best efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, and to assist and cooperate with
the other parties in doing, all things necessary, proper and advisable to
consummate and make effective, as promptly as practicable, the Merger and the
other transactions contemplated by this Agreement, including using reasonable
best efforts to accomplish the following: (i) that the conditions set forth in
Article VI are satisfied, (ii) the obtaining of all necessary actions or
nonactions, waivers, consents, clearances, and approvals from Governmental
Entities and non-governmental third parties and the making of all necessary
registrations, notices and filings (including filings with Governmental
Entities) and (iii) the obtaining of all necessary consents, approvals or
waivers from third parties. Subject to first having used all
reasonable efforts to negotiate a resolution of any objections underlying such
lawsuits or other legal proceedings, Company and Zac shall use reasonable best
efforts to defend and contest any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of
the Merger or the other transactions contemplated by this Agreement, including
seeking to have any stay, temporary restraining order, or preliminary injunction
entered by any Governmental Entity vacated or reversed.
26
(b) The
Company and Zac shall cooperate and consult with each other in connection with
the making of all such filings, notifications and any other material actions
pursuant to this Section 5.03, subject to applicable Law, by permitting counsel
for the other party to review in advance, and consider in good faith the views
of the other party in connection with, any proposed material written
communication to any Governmental Entity and by providing counsel for the other
party with copies of all filings and submissions made by such party and all
correspondence between such party (and its advisors) with any Governmental
Entity and any other information supplied by such party and such party’s
Affiliates to a Governmental Entity or received from such a Governmental Entity
in connection with the transactions contemplated by this Agreement; provided, however, that
material may be redacted (x) as necessary to comply with contractual
arrangements, and (y) as necessary to address good faith legal privilege or
confidentiality concerns. Neither party shall file any such document
or take such action if the other party has reasonably objected (and not
withdrawn its objection) to the filing of such document or the taking of such
action on the grounds that such filing or action would reasonably be expected to
either (i) prevent, materially delay or materially impede the consummation of
the Merger or the other transactions contemplated hereby or (ii) cause a
condition set forth in Article VI to not be satisfied in a timely
manner. Neither party shall 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.
(c) Each
of the Company and Zac will promptly inform the other party upon receipt of any
material communication from any Governmental Entity regarding any of the
transactions contemplated by this Agreement. If the Company or Zac
(or any of their respective Affiliates) receives a request for additional
information or documentary material from any such Governmental Entity that is
related 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 after consultation with the other party, an appropriate response
in compliance with such request. The parties agree not to
participate, or to permit their Affiliates to participate, in any substantive
meeting or discussion with any Governmental Entity in connection with the
transactions contemplated by this Agreement unless it so consults with the other
party in advance and, to the extent not prohibited by such Governmental Entity,
gives the other party the opportunity to attend and participate. Each
party will advise the other party promptly of any understandings, undertakings
or agreements (oral or written) which the first party proposes to make or enter
into with any Governmental Entity in connection with the transactions
contemplated by this Agreement. In furtherance and not in limitation
of the foregoing, each party will use all reasonable efforts to resolve any
objections that may be asserted with respect to the transactions contemplated by
this Agreement under any antitrust, competition or trade regulatory Laws,
including (subject to first having used all reasonable efforts to negotiate a
resolution to any such objections) contesting and resisting any action or
proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other Order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the Merger or the other transactions contemplated by this
Agreement and to have such statute, rule, regulation, decree, judgment,
injunction or other Order repealed, rescinded or made inapplicable so as to
permit consummation of the transactions contemplated by this
Agreement.
27
(d) Notwithstanding
anything herein to the contrary (including Section 5.03), no party is required
to, and the Company may not, without the prior written consent of Zac, become
subject to, consent or agree to, or otherwise take any action with respect to,
any requirement, condition, limitation, understanding, agreement or Order to
sell, to hold separate or otherwise dispose of, or to conduct, restrict,
operate, invest or otherwise change the assets or business of the Company, Zac,
or any of their Affiliates in any manner which, individually or in the aggregate
with all other such requirements, conditions, understandings, agreements and
Orders could reasonably be expected to have a material adverse effect on the
combined business, financial condition or results of operations of Zac, the
Company and their respective subsidiaries taken as a
whole. Notwithstanding anything in this Agreement to the contrary,
the Company will, upon the request of Zac, become subject to, or consent or
agree to or otherwise take any action with respect to, any requirement,
condition, understanding, agreement or Order to sell, to hold separate or
otherwise dispose of, or to conduct, restrict, operate, invest or otherwise
change the assets or business of the Company or any of its Affiliates, so long
as such requirement, condition, understanding, agreement or Order is binding on
the Company only in the event that the Closing occurs. Furthermore,
without the prior written consent of the Zac (determined in its sole
discretion), in no event shall the Company or Zac or any of their respective
subsidiaries or Affiliates: (i) pay any consideration to, amend or enter into
any agreement with, any non-governmental third party to obtain any consent to
the Merger or to otherwise comply with Section 5.03(e); or (ii) agree to the
imposition of limitations on the ability of Zac or any Affiliate of Zac to hold,
or exercise full rights of ownership of, any shares of capital stock of the
Surviving Corporation, including the right to vote such shares on all matters
properly presented to the shareholders of the Surviving
Corporation.
(e) The
Company and its Board of Directors shall (i) use reasonable best efforts to
ensure that no state takeover Law or similar Law is or becomes applicable to
this Agreement, the Merger or any of the other transactions contemplated by this
Agreement and (ii)if any state takeover Law or similar Law becomes applicable to
this Agreement, the Merger or any of the other transactions contemplated by this
Agreement, use reasonable best efforts to ensure that the Merger and the other
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such Law on this Agreement, the Merger and the other
transactions contemplated by this Agreement.
28
(a) Zac
acknowledges and agrees that the Surviving Corporation shall by operation of law
assume the obligations with respect to all rights to indemnification and
exculpation from liabilities, including advancement of expenses, for acts or
omissions occurring at or prior to the Effective Time now existing in favor of
the current or former directors, officers, employees or agents of the Company or
any of its subsidiaries as provided in the Company’s or any of its subsidiaries’
articles of incorporation, bylaws or any indemnification Contract between such
directors, officers, employees or agents and the Company or any of its
subsidiaries (in each case, as in effect on the date of this Agreement), without
further action, as of the Effective Time and such obligations shall survive the
Merger and shall continue in full force and effect in accordance with their
terms for a period of not less than six years from the Effective Time and that
all rights to indemnification in respect of any action pending or asserted or
any claim made within such period shall continue until the disposition of such
action or resolution of such claim.
(b) In
the event that the Surviving Corporation or any of its successors or assigns (i)
consolidates with or merges into any other Person and is not the continuing or
surviving corporation or entity of such consolidation or merger or (ii)
transfers or conveys all or substantially all of its properties and other assets
to any Person, then, and in each such case, the Surviving Corporation shall
cause proper provision to be made so that the successors and assigns of the
Surviving Corporation shall expressly assume the obligations set forth in this
Section 5.04 for a period of not less than six years from the Effective
Time.
(c) For
six years after the Effective Time, the Surviving Corporation shall maintain
(directly or indirectly through the Company’s existing insurance programs) in
effect directors’ and officers’ liability insurance in respect of acts or
omissions occurring at or prior to the Effective Time, covering each person
currently covered by the directors’ and officers’ liability insurance policy
maintained by the Company or its subsidiaries on terms with respect to such
coverage and amounts comparable to the insurance maintained currently by the
Company or its subsidiaries, as applicable; provided that the Surviving
Corporation may substitute therefor policies of at least the same coverage
containing terms and conditions which are not less advantageous to the
beneficiaries of the current policies and with carriers having an A.M. Best “key
rating” of A X or better, provided that such
substitution shall not result in any gaps or lapses in coverage with respect to
matters occurring prior to the Effective Time, and provided, further, that the
Surviving Corporation shall first use its reasonable best efforts to obtain from
such carriers a so-called “tail” policy providing such coverage and being
effective for the full six year period referred to above, and shall be entitled
to obtain such coverage in annual policies from such carriers only if it is
unable, after exerting such efforts for a reasonable period of time, to obtain
such a “tail” policy; and provided, further, that the
Surviving Corporation shall not be required to pay an annual premium in excess
of 300% of the last annual premium paid by the Company prior to the date of this
Agreement as set forth in Section 5.04(c) of the Company Disclosure Schedule
(or, in the case of a “tail” policy obtained pursuant to the preceding proviso,
shall not be required to pay an aggregate premium therefor in excess of an
amount equal to six times 300% of such last annual premium) and, if the
Surviving Corporation is unable to obtain the insurance required by this Section
5.04(c), it shall obtain as much comparable insurance as possible for an annual
premium (or an aggregate premium, as the case may be) equal to such maximum
amount.
29
(d) The
provisions of this Section 5.04 (i) are intended to be for the benefit of, and
will be enforceable by, each indemnified party, his or her heirs and his or her
representatives, and (ii) are in addition to, and not in substitution for, any
other rights to indemnification or contribution that any such Person may have by
Contract or otherwise. It is expressly agreed that the indemnified
parties shall be third party beneficiaries of this Section 5.04.
(a) Except
as otherwise provided in this Section 5.05, all fees and expenses incurred in
connection with this Agreement, the Merger and the other transactions
contemplated by this Agreement shall be paid by the party incurring such fees or
expenses, whether or not the Merger is consummated, except that expenses
incurred in connection with the filing, printing and mailing of the Proxy
Statement shall be shared equally by Zac and the Company.
(b) In
the event that
(i) this
Agreement is terminated by the Company pursuant to Section 7.01(e) or Zac
pursuant to Section 7.01(f); or
(ii) (A)
a Takeover Proposal shall have been made to the shareholders of the Company
generally or shall have otherwise become publicly known, disclosed or proposed
or any Person shall have publicly announced an intention (whether or not
conditional) to make a Takeover Proposal, (B) thereafter this Agreement is
terminated by either Zac or the Company pursuant to Section 7.01(b)(i) or
Section 7.01(b)(ii) or by Zac pursuant to Section 7.01(c) and (C) within twelve
(12) months after such termination, the Company enters into, or submits to the
shareholders of the Company for adoption, a definitive agreement with respect to
any Takeover Proposal, or consummates the transactions contemplated by any
Takeover Proposal (provided that, for purposes of this Section 5.05(b)(ii), all
references to 15% in the definition of Takeover Proposal shall be deemed to be
50%) which in each case, need not be the same Takeover Proposal that shall have
been publicly announced or made known at or prior to termination of this
Agreement; then (in the case of the occurrence of any one or more of Sections
5.05(b)(i) and 5.05(b)(ii)) the Company shall pay Zac a one-time Company
Termination Fee (less any Expenses that may previously have been paid or are
payable in the circumstances as provided below) by wire transfer of immediately
available funds on the first Business Day following (x) in the case of a payment
required by Section 5.05(b)(i), the date of termination of this Agreement, and
(y) in the case of a payment required by Section 5.05(b)(ii) above, the date of
the consummation of such Takeover Proposal. For purposes of this
Agreement, “Company
Termination Fee”) means an amount equal to $750,000; provided, if the Company
Termination Fee becomes payable by the Company in connection with a termination
under Section 7.01(e) in order to enter into a definitive agreement with respect
to a Takeover Proposal with an Excluded Party, then the Company Termination Fee
shall be $300,000.
30
(c) In
the event that this Agreement is terminated by Zac, on the one hand, or the
Company, on the other hand, pursuant to Section 7.01(b)(ii) (or is terminated by
the Company pursuant to a different section of 7.01 at a time when this
Agreement was terminable pursuant to Section 7.01(b)(ii)) or by Zac pursuant to
Section 7.01(c) (or is terminated by the Company pursuant to a different section
of Section 7.01 at a time when this Agreement was terminable pursuant to Section
7.01(c)), then the Company shall pay to Zac an amount equal to the sum of Zac’s
Expenses (not to exceed $300,000 in the aggregate) for which Zac has not
theretofore been reimbursed by the Company in cash by wire transfer in
immediately available funds, such payment to be made following such termination
within two Business Days following delivery to the Company of notice of demand
for such payment. For purposes of this Agreement, the term “Expenses” means, with
respect to a party hereto, all reasonable, documented out-of-pocket expenses
(including all reasonable fees and expenses of debt financing sources (including
those who are parties to any financing commitments), counsel, accountants,
investment bankers, experts and consultants to a party hereto) incurred by a
party or on its behalf in connection with or related to the sale process,
including the authorization, negotiation, execution and performance of this
Agreement and the transactions contemplated hereby.
(d) In
the event that this Agreement is terminated by the Company pursuant to (i)
Section 7.01(d) or (ii) Section 7.01(b)(i); and, at the time of such
termination, the conditions set forth in Section 6.01 and Section 6.02(a), (b),
and (d) have been satisfied; and, in the case of termination by the Company
pursuant to Section 7.01(b)(i), the conditions set forth in Section 6.01 and
Section 6.02(a), (b) and (d) have been satisfied for at least three Business
Days prior to such termination, then Zac shall pay to the Company a fee of
$750,000 (the “Zac
Termination Fee”) by wire transfer in immediately available funds no
later than two Business Days after such termination by the Company.
Contemporaneously with the signing of this Agreement, Xxxxx Xxxxx is entering
into a Limited Guarantee in favor of the Company providing for, upon the terms
and subject to the conditions set forth in the Limited Guarantee, the guarantee
of the payment obligations of Zac under this Section 5.05(d) in an amount up to
the Zac Termination Fee.
(e) The
Company and Zac acknowledge and agree that the agreements contained in this
Section 5.05 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, the Company and Zac would not
have entered into this Agreement; accordingly, if any party fails to pay when
due the amount payable pursuant to this Section 5.05, and, in order to obtain
such payment, the owed party commences a suit that results in a judgment against
the owing party for the amounts set forth in this Section 5.05, the owing party
shall pay to the owed party its costs and expenses (including reasonable
attorneys’ fees and expenses) incurred in connection with such suit, together
with interest on the terms set forth in this Section 5.05, from the date such
payment was required to be made until the date of receipt by the owed party of
immediately available funds in such amount at the prime rate of US Bank, N.A.,
in effect on the date such payment was required to be made.
(f) Each
of the parties hereto acknowledges that the agreements contained in this Section
5.05 are an integral part of the transactions contemplated by this Agreement and
that neither the Company Termination Fee nor the Zac Termination Fee is a
penalty, but rather is liquidated damages in a reasonable amount that will
compensate Zac or the Company, as the case may be, in the circumstances in which
such termination fee is payable for the efforts and resources expended and
opportunities foregone while negotiating this Agreement and in reliance on this
Agreement and on the expectation of the consummation of the transactions
contemplated hereby, which amount would otherwise be impossible to calculate
with precision. Notwithstanding anything to the contrary in this Agreement, the
Company’s right to receive payment of the Zac Termination Fee from Zac pursuant
to this Section 5.05 shall be the sole and exclusive remedy of the Company and
its subsidiaries against Zac, and any of their respective former, current or
future shareholders, directors, officers, Affiliates or agents for the loss
suffered as a result of the failure of the Merger to be consummated, and upon
payment of such amount, none of Zac or any of its former, current or future
shareholders, directors, officers, Affiliates or agents shall have any further
liability or obligation relating to or arising out of this Agreement or the
transactions contemplated hereby.
31
(a) Zac
shall use its reasonable best efforts to (i) arrange the Financing on the terms
and conditions described in the Financing Commitments (or on other terms that
would not adversely impact the ability of Zac to timely consummate the
transactions contemplated by this Agreement) and (ii) satisfy all conditions
applicable to it in such definitive agreements and consummate the Financing no
later than the Closing. In the event that any portion of the
Financing becomes unavailable in the manner or from the sources contemplated in
the Financing Commitment, (A) Zac shall promptly notify the Company and (B) Zac
shall use their reasonable best efforts to arrange to obtain any such portion
from alternative sources, on terms that are no less favorable to Zac, as
promptly as practicable following the occurrence of such event, including
entering into definitive agreements with respect thereto (such definitive
agreements entered into pursuant to the first or second sentence of this Section
5.07(a) being referred to as the “Financing
Agreements”). In the event that all conditions to the
Financing Commitments have been satisfied, Zac shall, subject to the
satisfaction of the conditions set forth in Section 6.01 and 6.02 of this
Agreement, use its reasonable best efforts to cause other Persons providing such
Financing to fund the Financing required to consummate the Merger on the Closing
Date. In connection with its obligations under this Section 5.07, Zac
shall be permitted to amend, modify or replace the Financing Commitments with
new Financing Commitments (the “New Financing
Commitments”), provided that Zac shall not
permit any replacement of, or amendment or modification to be made to, or any
waiver of any material provision or remedy under, the Financing Commitments can
reasonably be expected to delay the Closing beyond the Outside
Date. Zac shall keep the Company reasonably informed of the status of
Zac’s efforts to arrange the Financing.
32
(b) The
Company shall, and shall cause each of its subsidiaries to, reasonably cooperate
in connection with the arrangement of the Financing as may be reasonably
requested by Zac (provided that such requested
cooperation does not unreasonably interfere with the ongoing operations of the
Company and its subsidiaries). Such cooperation by the Company and its
subsidiaries shall include, at the reasonable request of Zac, (i) using its
reasonable best efforts to cause to be delivered such officer’s or other
certificates as are customary in financings of such type (including a
certificate of the chief financial officer of the Company with respect to
solvency matters) and as are, in the good faith determination of the persons
executing such certificates, accurate, (ii) agreeing to enter into such
agreements as are customary in financings of such type, including definitive
financing documents, lock-box, blocked account and similar agreements, and
agreeing to pledge, guarantee, grant security interests in, and otherwise grant
liens on, the Company’s or its subsidiaries’ assets pursuant to such agreements,
as may be reasonably requested (and executing and delivering any documents or
instruments, or agreeing to enter into agreements, in connection with the
foregoing); provided,
that no obligation of the Company or its subsidiaries under any such agreement,
pledge, guarantee or grant contemplated by this clause (ii) shall be effective
until the Effective Time, (iii) using its reasonable best efforts to cause its
independent registered public accountants to deliver such comfort letters as are
customary in financings of such type, (iv) providing Zac and its Financing
sources as promptly as practicable (and in no event later than 30 days prior to
the Outside Date) with financial and other pertinent information (including
quarterly financial statements of the Company and its subsidiaries prepared in
the ordinary course of business) with respect to the Company and its
subsidiaries (v) making the Company’s executive officers and other relevant
employees reasonably available to assist the lenders providing the Financing,
and (vi) taking all corporate actions, subject to the occurrence of the Closing,
to permit consummation of the Financing and the direct borrowing or incurrence
of all proceeds of the Debt Financing by the Surviving Corporation immediately
following the Effective Time.
CONDITIONS
PRECEDENT
(a) Shareholder
Approval. The Company shall have obtained both (i) the
Shareholder Approval, and (ii) the affirmative vote to adopt the Agreement of a
majority of the number of shares of Company Common Stock present in person or by
proxy and voting at the Shareholders’ Meeting, or any adjournment or
postponement thereof, which are held by shareholders that are not set forth in
Schedule 2.01(c) (the “Special Shareholder
Approval” and, together with the Shareholder Approval, the “Company Shareholder
Approvals”).
33
(b) No Injunctions or
Restraints. There shall not be in effect any statute,
regulation, order, decree or judgment of any Governmental Entity which makes
illegal or enjoins or prevents the consummation of the Merger.
(a) Representations and
Warranties. The representations and warranties of the Company
set forth in this Agreement (other than the representations and warranties set
forth in Section 3.01(a), 3.01(b), 3.01(c) and 3.01(g)) shall be true and
correct (disregarding all qualifications or limitations as to “materiality”,
“Material Adverse Effect”, “Material Adverse Change” and words of similar import
set forth therein) as of the Closing Date as though such representations and
warranties had been made at and as of such time (or, in the case of those
representations and warranties that are made as of a particular date or period,
at and as of such date or period), except where the failure of such
representations and warranties to be so true and correct would not, individually
or in the aggregate, have a Material Adverse Effect. Each of the
representations and warranties of the Company set forth in Sections 3.01(a),
3.01(b), 3.01(c), and 3.01(g) shall be true and correct in all material respects
as of the Closing Date as though each had been made at and as of the Closing
Date (other than those of such representations and warranties that expressly
relate to an earlier date, in which case such particular representations shall
have been true and correct in all respects as of such earlier
date). Zac shall have received a certificate signed on behalf of the
Company by the chief executive officer and the chief financial officer of the
Company to such effect dated as of the Closing Date.
(b) Performance of Obligations
of the Company. The Company shall have performed in all
material respects all obligations required to be performed by the Company under
this Agreement at or prior to the Closing Date. Zac shall have
received a certificate signed on behalf of the Company by the chief financial
officer of the Company to such effect dated as of the Closing Date.
(c) Dissenter’s
Rights. The aggregate number of shares of Company Common Stock
at the Effective Time, the holders of which have properly exercised dissenter’s
rights under Chapter 23B.13 of the WBCA, shall not equal 10% or more of the
shares of Company Common Stock outstanding as of the record date for the Company
Shareholders Meeting.
(d) Company Stock
Options. The aggregate number of shares of Company Common
Stock subject to purchase upon the exercise of Company
Stock Options outstanding at the Effective Time shall be less than 200,000
shares (subject to appropriate adjustment in the case of stock splits, stock
dividends and the like).
34
(a) Representations and
Warranties. The representations and warranties of Zac set
forth in this Agreement shall be true and correct in all material respects at
and as of the Closing Date as though such representations and warranties had
been made at and as of such date (or, in the case of those representations and
warranties that are made as of a particular date or period, at and as of such
date or period). The Company shall have received a certificate signed
on behalf of Zac by an officer of Zac to such effect dated as of the Closing
Date.
(b) Performance of Obligations
of Zac. Zac shall have performed in all material respects all
obligations required to be performed by them under this Agreement at or prior to
the Closing Date, and the Company shall have received a certificate signed on
behalf of Zac by the Chief Executive Officer to such effect dated as of the
Closing Date.
TERMINATION,
AMENDMENT AND WAIVER
(a) by
mutual written consent of Zac and the Company;
(b) by
either Zac or the Company:
(i)
if the Merger shall not have been
consummated on or before December 31, 2008 (the “Outside Date”); provided, however, that the
right to terminate this Agreement under this Section 7.01(b)(i) shall not be
available to any party whose breach of a representation, warranty, covenant or
agreement in this Agreement has (directly or indirectly) in whole or in material
part been a cause of or resulted in the failure of the Merger to be consummated
on or before such date; or
(ii)
if the Shareholder Approval shall not have been
obtained at the Shareholders’ Meeting duly convened therefor or at any
adjournment or postponement thereof;
(iii) if
any Governmental Entity of competent jurisdiction shall have issued or entered
an injunction or similar legal restraint or order permanently enjoining or
otherwise prohibiting the consummation of the Merger and such injunction, legal
restraint or order shall have become final and non-appealable; provided, however, that the
party seeking to terminate this Agreement pursuant to this Section 7.01(b)(iii)
shall have used such reasonable best efforts as may be required by Section 5.03
to prevent, oppose and remove such injunction;
35
(c) by
Zac if the Company shall have breached or failed to perform any of its
representations, warranties, covenants or agreements set forth in this
Agreement, which breach or failure to perform (i) would give rise to the failure
of any condition set forth in Section 6.02 and (ii) is uncured or incapable of
being cured by the Company prior to the earlier to occur of (A) 30 calendar days
following receipt of written notice of such breach or failure to perform from
Zac or (B) the Outside Date; provided, however, that Zac
shall not have the right to terminate this Agreement pursuant to this Section
7.01(c) if it is then in material breach of any representation, warranty,
covenant or other agreement contained in this Agreement that would cause any of
the conditions in Section 6.03 not to be satisfied;
(d) by
the Company, if Zac shall have breached or failed to perform any of its
representations, warranties, covenants or agreements set forth in this
Agreement, which breach or failure to perform (i) would give rise to the failure
of any condition set forth in Section 6.03 and (ii) is uncured or incapable of
being cured by Zac prior to the earlier to occur of (A) 30 calendar days
following receipt of written notice of such breach or failure to perform from
the Company or (B) the Outside Date; provided, however, that the
Company shall not have the right to terminate this Agreement pursuant to this
Section 7.01(d) if it is then in material breach of any representation,
warranty, covenant or other agreement contained in this Agreement that would
cause any of the conditions in Section 6.02 not to be satisfied;
(e) prior
to obtaining the Shareholder Approval, by the Company, in accordance with and
subject to the terms and conditions of, Section 4.02(f); or
(f) by
Zac, in the event that (i) the Board of Directors shall have made a Change in
Recommendation (or publicly proposes to make a Change in Recommendation) or (ii)
the Company has failed to comply in any material respect with Section 4.02
(including the Company approving, recommending or entering into any actual or
proposed acquisition agreement in violation of Section 4.02) or (iii) the
Company shall have failed to include in the Proxy Statement the Company Board
Recommendation.
36
GENERAL
PROVISIONS
37
if to
Zac, to:
Xxxxx
Xxxxx
0000
00xx
Xxxxxx XX, Xxxxx 000
Xxxxxx,
XX 00000-0000
Facsimile: (000)
000-0000
with a
copy (which shall not constitute notice) to:
K&L
Gates LLP
000
Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxxxxxxx 00000-0000
Facsimile: (000)
000-0000
Attention: Xxxx
X. Xxxxxx
if to the
Company, to:
Special
Committee of the Board of Directors
0000 X.
Xxxxxxxxxxx Xxxx
Xxxxxxxx
Xxxxxx, XX 00000
Facsimile: (000)
000-0000
Attention: Xxxxxxx
Xxxxxx
with a
copy (which shall not constitute notice) to:
Xxxx
Xxxxxx PC
0000
Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx,
XX 00000
Facsimile: (000)
000-0000
Attention: Xxxxxxx
X. Xxxxxx
with an
additional copy (which shall not constitute notice) to:
DLA Piper
US LLP
000 Xxxxx
Xxxxxx, Xxxxx 0000
Xxxxxxx,
XX 00000
Facsimile: (000)
000-0000
Attention: Xxxx
Xxxxx
(a) an
“Affiliate” of
any Person means another Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with,
such first Person. For purposes hereof, “control” means the
possession directly or indirectly, of the power to direct or cause the direction
of the management or policies of a Person by virtue of ownership of voting
securities, by contract or otherwise,
(b) “Benefit Plans” means
all employee benefit plans, as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended, and all employment benefit,
compensation, stock option, stock purchase, restricted stock, deferred
compensation, retiree medical or life insurance, split dollar insurance,
supplemental retirement, severance, change of control, fringe benefit, bonus,
incentive, employee loan or other employee benefit, arrangements, plans,
policies or programs, in each case, which are provided, maintained, contributed
to or sponsored by the Company or any of its subsidiaries on behalf of current
or former directors, officers, employees or consultants or for which the Company
or any of its subsidiaries has any liability, contingent or
otherwise.
38
(c) “Business Day” shall
mean any day other than a Saturday, Sunday or a day on which the banks in
Seattle, Washington are authorized by Law or executive order to be
closed.
(d) “Knowledge” of the
Company or Zac means, with respect to any matter in question, the actual
knowledge (after making reasonable inquiry) of such entity’s executive
officers;
(e) “Material Adverse
Change” or “Material Adverse
Effect” means any fact, circumstance, change, occurrence or effect that,
individually or in the aggregate with all other facts, circumstances,
changes, occurrences or effects, (1) is or would reasonably be expected to be
materially adverse to the business, condition (financial or otherwise) or
results of operations of the Company and its subsidiaries, taken as a whole, or
(2) that prevents or materially delays or materially impairs the ability of the
Company to consummate the Merger, except for any such facts, circumstances,
changes, occurrences or effects arising out of or relating to (i) the
announcement or the existence of this Agreement and the transactions
contemplated hereby or actions by Zac or the Company required to be taken
pursuant to this Agreement (in each case, other than in respect of Section
3.01(d)), (ii) changes in general economic or political conditions or the
financial markets (so long as the Company or its subsidiaries are not
disproportionately affected thereby), (iii) changes in applicable laws, rules,
regulations or orders of any Governmental Entity or interpretations thereof by
any Governmental Entity or changes in accounting rules or principles (so long as
the Company or its subsidiaries are not disproportionately affected thereby),
(iv) changes affecting generally the industries in which the Company or its
subsidiaries conduct business (so long as the Company or its subsidiaries are
not disproportionately affected thereby); or (v) any outbreak or escalation of
hostilities or war or any act of terrorism (so long as the Company or its
subsidiaries are not disproportionately affected thereby);
(f) “Person” means an
individual, corporation, partnership, limited liability company, joint venture,
association, trust, unincorporated organization or other entity;
(g) “Representative” means
any officer, employee, counsel, investment banker, accountant, consultant and
debt financing source and other authorized representative of any
Person;
(h) a
“subsidiary” of
any Person means another Person of which such first Person directly or
indirectly owns an amount of the voting securities, other voting rights or
voting partnership interests sufficient to elect at least a majority of its
Board of Directors or other governing body (or, if there are no such voting
interests, 50% or more of the equity interests thereof);
39
(i) “tax” means any
federal, state, local or foreign income, gross receipts, property, sales, use
license, excise, franchise employment, payroll, withholding, alternative or add
on minimum, ad valorem, transfer or excise tax, or any other tax, custom, duty,
governmental fee or other like assessment or charge of any kind whatsoever
(including withholding on amounts paid to or by any Person), together with any
related interest, penalty, addition to tax or additional amount;
(j) “taxing authority”
means any federal, state, local or foreign government, any subdivision, agency,
commission or authority thereof, or any quasi-governmental body exercising tax
regulatory authority; and
(k) “Zac Material Adverse
Change” or “Zac
Material Adverse Effect” means any fact, circumstance, change, occurrence
or effect that, individually or in the aggregate, prevents or materially impairs
or delays the consummation of the Merger or the other transactions contemplated
by this Agreement (other than the inability of the Zac to obtain the
Financing).
40
41
[Signature
Page Follows]
42
IN
WITNESS WHEREOF, each of the parties hereto has caused this Agreement and Plan
of Merger to be signed by its respective officers hereunto duly authorized, all
as of the date first written above.
|
Zones
Acquisition Corp.
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||
|
By:
|
/s/ XXXXX XXXXX | |
|
Name:
|
Xxxxx
Xxxxx
|
|
|
Title:
|
President
& CEO
|
|
|
Zones,
Inc.
|
||
|
By:
|
/s/ XXXXXX XXXXXXXX | |
|
Name:
|
Xxxxxx
XxXxxxxx
|
|
|
Title:
|
SVP,
CFO
|
|
[Signature Page to Merger
Agreement]
