EXHIBIT M
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EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SALTON, INC.,
SFP MERGER SUB, INC.
AND
APN HOLDING COMPANY, INC.
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DATED AS OF FEBRUARY 7, 2007
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TABLE OF CONTENTS
PAGE NO.
I. DEFINITIONS...........................................................2
1.1 DEFINITIONS..................................................2
1.2 INTERPRETATION...............................................9
II. MERGER ...............................................................9
2.1 THE MERGER...................................................9
2.2 CERTIFICATE OF INCORPORATION AND BYLAWS.....................10
2.3 DIRECTORS...................................................10
2.4 OFFICERS....................................................10
III. CONVERSION OF SHARES AND OTHER MATTERS...............................11
3.1 CONVERSION OF CAPITAL STOCK.................................11
3.2 ADJUSTMENTS TO PREVENT DILUTION.............................11
3.3 EXCHANGE OF CERTIFICATES....................................12
3.4 TREATMENT OF STRAWBERRY STOCK OPTIONS AND OTHER
EQUITY BASED AWARDS.........................................12
3.5 NO FURTHER RIGHTS; STOCK TRANSFER BOOKS.....................13
3.6 TAX CONSEQUENCES............................................13
3.7 SECURITIES ACT EXEMPTION AND COMPLIANCE;
REGISTRATION RIGHTS.........................................13
IV. REPRESENTATIONS AND WARRANTIES OF PARENT.............................14
4.1 DUE ORGANIZATION, GOOD STANDING AND CORPORATE POWER.........14
4.2 AUTHORIZATION AND VALIDITY OF AGREEMENT.....................14
4.3 CONSENTS AND APPROVALS; NO VIOLATIONS.......................15
4.4 INFORMATION TO BE SUPPLIED..................................15
4.5 CAPITALIZATION OF PARENT AND MERGERSUB......................16
4.6 ABSENCE OF CERTAIN EVENTS...................................18
4.7 LITIGATION..................................................18
4.8 TITLE TO PROPERTIES; ENCUMBRANCES...........................18
4.9 STRAWBERRY SEC REPORTS; FINANCIAL STATEMENTS................19
4.10 NO UNDISCLOSED LIABILITIES..................................20
4.11 COMPLIANCE WITH LAW.........................................20
4.12 INSURANCE...................................................20
4.13 REGULATORY MATTERS..........................................21
4.14 BROKER'S OR FINDER'S FEE....................................21
4.15 TAXES, TAX RETURNS, TAX TREATMENT...........................22
4.16 EMPLOYEE BENEFIT MATTERS....................................22
4.17 INTELLECTUAL PROPERTY.......................................25
4.18 ENVIRONMENTAL LIABILITY.....................................25
4.19 MATERIAL CONTRACTS..........................................26
4.20 LABOR RELATIONS.............................................26
4.21 STATE TAKEOVER LAWS.........................................26
4.22 VOTING REQUIREMENTS; APPROVAL; BOARD APPROVAL...............27
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4.23 OPINION OF PARENT FINANCIAL ADVISOR.........................27
4.24 TRANSACTIONS WITH RELATED PARTIES...........................27
4.25 CUSTOMERS...................................................28
4.26 STRAWBERRY RIGHTS AGREEMENTS................................28
4.27 MERGERSUB FORMATION.........................................29
V. REPRESENTATIONS AND WARRANTIES OF APPLE HOLDCO.......................29
5.1 DUE ORGANIZATION, GOOD STANDING AND CORPORATE POWER.........29
5.2 AUTHORIZATION AND VALIDITY OF AGREEMENT.....................29
5.3 CONSENTS AND APPROVALS; NO VIOLATIONS.......................30
5.4 INFORMATION TO BE SUPPLIED..................................30
5.5 CAPITALIZATION OF APPLE HOLDCO AND APPLE....................31
5.6 ABSENCE OF CERTAIN EVENTS...................................32
5.7 LITIGATION..................................................32
5.8 TITLE TO PROPERTIES; ENCUMBRANCES...........................32
5.9 APPLE SEC REPORTS; FINANCIAL STATEMENTS.....................33
5.10 NO UNDISCLOSED LIABILITIES..................................34
5.11 COMPLIANCE WITH LAW.........................................34
5.12 INSURANCE...................................................34
5.13 REGULATORY MATTERS..........................................35
5.14 BROKER'S OR FINDER'S FEE....................................35
5.15 TAXES, TAX RETURNS, TAX TREATMENT...........................36
5.16 EMPLOYEE BENEFIT MATTERS....................................36
5.17 INTELLECTUAL PROPERTY.......................................39
5.18 ENVIRONMENTAL LIABILITY.....................................39
5.19 MATERIAL CONTRACTS..........................................40
5.20 LABOR RELATIONS.............................................40
5.21 STATE TAKEOVER LAWS.........................................40
5.22 VOTING REQUIREMENTS; APPROVAL; BOARD APPROVAL...............41
5.23 TRANSACTIONS WITH RELATED PARTIES...........................41
5.24 CUSTOMERS...................................................41
5.25 APPLE HOLDCO................................................42
VI. COVENANTS 42
6.1 COVENANTS OF PARENT.........................................42
6.2 COVENANTS OF APPLE HOLDCO...................................45
6.3 ANTITRUST CLEARANCE.........................................47
6.4 EFFORTS TO CLOSE............................................48
6.5 CONFIDENTIALITY.............................................49
6.6 ACCESS......................................................49
6.7 PUBLIC ANNOUNCEMENTS........................................49
6.8 BOARD RECOMMENDATION; STRAWBERRY STOCKHOLDERS MEETING.......50
6.9 PREPARATION OF PROXY STATEMENT AND ADDITIONAL FILINGS.......50
6.10 NO SOLICITATION; OTHER OFFERS...............................51
6.11 NOTIFICATION OF CERTAIN MATTERS.............................53
6.12 FEES AND EXPENSES...........................................54
6.13 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE......54
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6.14 FINANCING...................................................55
6.15 LITIGATION..................................................57
6.16 DIRECTOR RESIGNATIONS; APPOINTMENTS.........................58
6.17 POST CLOSING GOVERNANCE OF PARENT...........................58
6.18 APPLE DEREGISTRATION........................................58
6.19 TRANSACTION DOCUMENTS.......................................58
VII. CONDITIONS TO THE MERGER.............................................58
7.1 CONDITIONS TO THE MERGER....................................58
7.2 CONDITIONS TO THE OBLIGATIONS OF APPLE HOLDCO...............59
7.3 CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGERSUB.......61
VIII. TERMINATION AND ABANDONMENT..........................................62
8.1 TERMINATION.................................................62
8.2 EFFECT OF TERMINATION.......................................63
8.3 FEES AND EXPENSES...........................................64
IX. MISCELLANEOUS........................................................65
9.1 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS....65
9.2 AMENDMENT AND MODIFICATION..................................65
9.3 WAIVER OF COMPLIANCE........................................65
9.4 NOTICES.....................................................66
9.5 THIRD PARTY BENEFICIARIES...................................67
9.6 SUCCESSORS AND ASSIGNS......................................67
9.7 SEVERABILITY................................................67
9.8 GOVERNING LAW...............................................67
9.9 SUBMISSION TO JURISDICTION; WAIVERS.........................67
9.10 SPECIFIC PERFORMANCE........................................68
9.11 COUNTERPARTS................................................68
9.12 ENTIRE AGREEMENT............................................68
9.13 WAIVER OF JURY TRIAL........................................68
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EXHIBITS
Exhibit A Amended Strawberry Certificate of Incorporation
Exhibit B Commitment Agreement
Exhibit C Surviving Corporation Certificate of Incorporation
Exhibit D Surviving Corporation Bylaws
Exhibit E Registration Rights Agreement
Exhibit F Apple Holdco Stockholder Agreement
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), is dated as of
February 7, 2007, by and among Salton, Inc., a Delaware corporation ("PARENT"),
SFP Merger Sub, Inc., a Delaware corporation ("MERGERSUB") and a wholly owned
direct subsidiary of Parent, and APN Holding Company, Inc., a Delaware
corporation ("APPLE HOLDCO") and the direct parent of Applica Incorporated, a
Florida corporation ("APPLE").
RECITALS
A. Each of the boards of directors of Parent (acting upon the
unanimous recommendation of the Special Committee), MergerSub and Apple Holdco
has approved and declared advisable the business combination transaction
contemplated by this Agreement in which MergerSub will merge with and into
Apple Holdco (the "Merger"), with Apple Holdco being the surviving corporation
(as such, the "SURVIVING CORPORATION"), all on the terms and subject to the
conditions set forth in this Agreement.
B. By virtue of the Merger, all of the issued and outstanding
shares of common stock, par value $0.01 per share, of Apple Holdco (the "APPLE
HOLDCO COMMON STOCK") will be converted into the right to receive fully paid
and non assessable shares of common stock, par value $0.01 per share, of Parent
(the "STRAWBERRY COMMON STOCK").
C. Parent's board of directors (acting upon the unanimous
recommendation of the Special Committee) has approved and has resolved to
recommend to Parent's stockholders that they approve (i) the issuance of
Strawberry Common Stock to be issued to the stockholders of Apple Holdco in
connection with the Merger (the "SHARE ISSUANCE") and (ii) an amendment of the
Certificate of Incorporation of Parent to be effected contemporaneously with
the consummation of the Merger such that, after giving effect thereto, the
Certificate of Incorporation of Parent shall be substantially in the form
attached hereto as EXHIBIT A (the "STRAWBERRY CHARTER AMENDMENT").
D. Concurrently with the execution of this Agreement, and as a
condition to the willingness of Parent to enter into this Agreement, Apple
Holdco and each of the Apple Holdco Stockholders will enter into a commitment
agreement in the form attached hereto as EXHIBIT B, pursuant to which the Apple
Holdco Stockholders will, among other things, agree (i) to execute and deliver,
and not to revoke or modify, the unanimous written consent of the Apple Holdco
Stockholders approving the Transactions and (ii) not to transfer any of their
shares of Apple Holdco Common Stock (the "COMMITMENT AGREEMENT");
E. Contemporaneously with, and as a condition to Closing, Parent
and each of the Apple Holdco Stockholders will enter into an agreement in the
form attached hereto as EXHIBIT F, pursuant to which the Apple Holdco
Stockholders will agree to restrictions on certain activities in respect of the
shares of Strawberry Common Stock issued in the Merger, corporate governance
and other related corporate matters (the "APPLE HOLDCO STOCKHOLDER AGREEMENT");
and
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F. For federal income tax purposes, the Merger will constitute a
reorganization within the meaning of Section 368(a)(1)(A) and 368(a)(2)(E) of
the Code and the exchange of Apple Holdco Common Stock for Strawberry Common
Stock pursuant to the Merger will constitute an exchange of securities in
pursuance of a plan of reorganization within the meaning of Section 354(a) of
the Code.
Accordingly, the parties agree as follows:
I. DEFINITIONS
1.1 DEFINITIONS. (a) In addition to the terms defined elsewhere
herein, as used in this Agreement, the following terms have the meanings
specified below when used in this Agreement with initial capital letters:
"ACTION" means any controversy, claim, action, litigation,
arbitration, mediation or any other proceeding by or before any Governmental
Entity, arbitrator, mediator or other Person acting in a dispute resolution
capacity, or any investigation, subpoena or demand preliminary to any of the
foregoing.
"ADVERSE RECOMMENDATION CHANGE" means either (i) any failure by the
board of directors of Parent to make, or any withdrawal, qualification,
amendment or modification in a manner adverse to Apple Holdco of, the
Strawberry Board Recommendation or (ii) any approval, endorsement or
recommendation by Parent's board of directors of a Strawberry Competing
Transaction.
"AFFILIATE" means, with respect to a Person, another Person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person. For purposes of
this Agreement, (i) Apple Holdco and its Subsidiaries shall not be considered
Affiliates of Parent, MergerSub or their respective Affiliates and (ii) Parent,
MergerSub and their respective Affiliates shall not be considered Affiliates of
Apple Holdco or any of its Subsidiaries.
"ANTITRUST LAWS" means the Xxxxxxx Antitrust Act, as amended, the
Xxxxxxx Act of 1914, as amended, the HSR Act, the Federal Trade Commission Act
of 1914, as amended, and all other Laws and Orders that are designed or
intended to prohibit, restrict or regulate actions having the purpose or effect
of monopolization or restraint of trade.
"APPLE CONFIDENTIALITY AGREEMENT" means the confidentiality agreement
entered into by and among Apple and Parent, dated as of November 11, 2005, as
the same may be amended from time to time in accordance with its terms.
"APPLE MATERIAL ADVERSE EFFECT" means a material adverse effect on (i)
the business, financial condition or results of operations of Apple Holdco and
its Subsidiaries taken as a whole or (ii) the ability of Apple Holdco to
consummate the Merger or to perform its obligations under this Agreement on a
timely basis or to consummate the Transactions on a timely basis; PROVIDED,
HOWEVER, that in no event shall any of the following be deemed to constitute an
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Apple Material Adverse Effect: any event, circumstance, change or effect
resulting from or relating to (i) a change in general political, economic or
financial market conditions, (ii) changes affecting the industries generally in
which Apple or its Subsidiaries conduct business, (iii) seasonal fluctuations
in the business of Apple and its Subsidiaries, (iv) any acts of terrorism or
war or (v) compliance with the terms of, or the taking of any action required
by, this Agreement; except in the case of each of clauses (i), (ii), (iii) and
(iv) to the extent such event, circumstance, change or effect has had a
disproportionate effect on Apple and its Subsidiaries as compared to other
Persons in the industry in which Apple and its Subsidiaries conduct their
business.
"APPLE HOLDCO STOCKHOLDERS" means the holders of record of Apple
Holdco Common Stock.
"AUTHORIZATION" means any legally required consent or Permit of or
from, or declaration or filing with, any Governmental Entity, including any
legally required filing with any Governmental Entity and the subsequent
expiration of any legally required waiting period under any Antitrust Laws.
"BUSINESS DAY" means any day on which commercial banks in New York,
New York are not required or authorized to be closed by Law or executive order.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIALITY AGREEMENTS" means the Apple Confidentiality Agreement
and the Harbinger Confidentiality Agreement.
"CONTRACT" means any legally binding instrument or legal obligation of
any kind, whether written or oral.
"CONTROL" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, as a trustee or executor,
by Contract or credit arrangement or otherwise.
"ENCUMBRANCE" means any lien, security interest, pledge, mortgage,
deed of trust, charge, option or other encumbrance attaching to title to any
tangible or intangible property or right.
"ENVIRONMENT" means any land, soil, substrata, groundwater, surface
water, drinking water, sediment, air or terrestrial or aquatic biota.
"ENVIRONMENTAL LAWS" means all Laws and Orders in effect on and after
the date hereof relating to the protection of human health and the Environment,
including Laws relating to Releases or threatened Releases of Hazardous
Materials, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous
Materials.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXPENSES" means all out of pocket costs and expenses (including all
fees and expenses of counsel, accountants, investment bankers, experts and
consultants to a party to this Agreement or such party's Affiliates) incurred
at or prior to the Effective Time by a party to this Agreement or on its behalf
in connection with or related to the authorization, preparation, negotiation,
execution or performance of this Agreement and the Transactions, excluding all
costs and expenses that constitute ongoing business expenses (as opposed to
Transaction related expenses) of such party, or such party's Affiliates,
including, salary and benefits of a party's, or such party's Affiliates',
employees or similar overhead costs that a party, or such party's Affiliates,
would have regardless of pursuit of the Transactions.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time, consistently applied.
"GOVERNMENTAL ENTITY" means any arbitrator, court, judicial,
legislative, administrative or regulatory agency, commission, department,
board, bureau, body or other governmental authority or instrumentality or any
Person exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, whether foreign,
federal, state or local.
"HARBINGER CONFIDENTIALITY AGREEMENT" means the confidentiality
agreement entered into by and between Harbinger Capital Partners Master Fund I,
Ltd. and Parent, dated as of October 25, 2006 an amended November 3, 2006, as
the same may be amended from time to time in accordance with its terms.
"HAZARDOUS MATERIALS" means any material, substance, chemical, waste,
hazardous waste, pollutant, contaminant or hazardous or toxic substance as to
which liabilities, restrictions or standards of conduct are imposed pursuant to
any Environmental Laws, including asbestos, formaldehyde, polychlorinated
biphenyls, lead based paint, radioactive materials, waste oil and other
petroleum products.
"IRS" means the Internal Revenue Service.
"INDEBTEDNESS" means without duplication, (i) indebtedness for
borrowed money (excluding any interest thereon), secured or unsecured, (ii)
obligations under conditional sale or other title retention Contracts relating
to purchased property, (iii) capitalized lease obligations, (iv) obligations
under interest rate cap, swap, collar or similar transactions or currency
hedging, transactions and (v) guarantees of any Indebtedness of the foregoing
of any other Person.
"KNOWLEDGE" (and any variation thereof) means (i) in the case of Apple
Holdco, the actual knowledge after due inquiry of the individuals listed on
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Section 1.1(a)(i) of the Apple Disclosure Schedule as of the date of the
applicable representation or warranty, and (ii) in the case of Parent, the
actual knowledge after due inquiry of the individuals listed on Section
1.1(a)(ii) of the Strawberry Disclosure Schedule as of the date of the
applicable representation or warranty.
"LAW" means any statute, law, ordinance, rule or regulation of any
Governmental Entity.
"MERGER CONSIDERATION" shall mean 75,048,737 fully paid and
non-assessable shares of Strawberry Common Stock; PROVIDED, HOWEVER, that for
each share of Strawberry Common Stock issued upon any exercise of the Common
Stock Purchase Warrant, dated August 15, 2006, the Merger Consideration shall
be increased by an additional 4.8823529 shares of fully paid and non-assessable
shares of Strawberry Common Stock.
"MERGERSUB COMMON STOCK" means the MergerSub Common Stock, par value
$0.01 per share.
"NYSE" means the New York Stock Exchange.
"NYSE COMPLIANCE PLAN" means Parent's Presentation to the NYSE, dated
July 3, 2006, together with the letter agreement between the NYSE and Parent,
dated August 18, 2006 and any subsequent correspondence from the NYSE to Parent
related thereto.
"ORDER" means any order, judgment, ruling, decree, writ, permit,
license or other requirement of any Governmental Entity.
"PERMIT" means any permit, approval, license, authorization,
certificate, right, exemption or Order from any Governmental Entity.
"PERSON" means any individual or legal entity, including any
partnership, joint venture, corporation, trust, unincorporated organization,
limited liability company or Governmental Entity.
"RELEASE" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor Environment, including the movement of Hazardous
Materials through ambient air, soil, surface water, sewer system, groundwater,
wetlands, or land surface strata.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SERIES A CERTIFICATE OF DESIGNATION" shall mean the Certificate of
Designation of Series A Voting Convertible Preferred Stock of the Company.
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"SERIES C CERTIFICATE OF DESIGNATION" shall mean the Certificate of
Designation of Series C Preferred Stock of the Company.
"SPECIAL COMMITTEE" means a committee of Parent's board of directors,
the members of which are not affiliated with Parent and are not members of
Parent's management, formed for the reasons set forth in the resolution
establishing such committee.
"STRAWBERRY MATERIAL ADVERSE EFFECT" means a material adverse effect
on (i) the business, financial condition or results of operations of Parent and
its Subsidiaries taken as a whole or (ii) the ability of Parent and/or Merger
Sub to consummate the Merger or to perform their respective obligations under
this Agreement on a timely basis or to consummate the Transactions on a timely
basis; PROVIDED, HOWEVER, that in no event shall any of the following be deemed
to constitute a Strawberry Material Adverse Effect: any event, circumstance,
change or effect resulting from or relating to (i) a change in general
political, economic or financial market conditions, (ii) changes affecting the
industries generally in which Parent or its Subsidiaries conduct business,
(iii) seasonal fluctuations in the business of Parent and its Subsidiaries,
(iv) any acts of terrorism or war, (v) compliance with the terms of, or the
taking of any action required by, this Agreement or (vi) any matter listed on
Schedule 1.1 (provided that the underlying causes of such matters shall not be
excluded from the determination of a Strawberry Material Adverse Effect);
except in the case of each of clauses (i), (ii), (iii) and (iv) to the extent
such event, circumstance, change or effect has had a disproportionate effect on
Parent and its Subsidiaries as compared to other Persons in the industry in
which Parent and its Subsidiaries conduct their business.
"STRAWBERRY OPTION PLANS" means (i) the Salton/Maxim Housewares, Inc.
Stock Option Plan, (ii) the Salton/Maxim Housewares, Inc. Non-Employee
Directors Stock Option Plan, (iii) the Salton/Maxim Housewares, Inc. 1995
Employee Stock Option Plan, (iv) the Salton/Maxim Housewares, Inc. 1998 Stock
Option Plan, (v) the Salton, Inc. 1999 Employee Stock Option Plan, (vi) the
Salton, Inc. 2001 Employee Stock Option Plan, and (vii) the Salton, Inc. 2002
Stock Option Plan.
"STRAWBERRY STOCKHOLDERS" means the holders of record of Strawberry
Common Stock.
"SUBSIDIARY" of any Person means any Person whose financial condition
is required to be consolidated with the financial condition of the first Person
in the preparation of the first Person's financial statements under GAAP.
"TAX" means (i) any federal, state, local or foreign income, excise,
gross receipts, gross income, ad valorem, profits, gains, property, capital,
sales, transfer, use, payroll, employment, severance, withholding, intangibles,
franchise, backup withholding, or other tax, charge, levy, duty or like
assessment imposed by a Tax Authority together with all penalties and additions
and interest thereon and (ii) any liability for Taxes described in clause (i)
under Treasury Regulation Section 1.1502 6 (or any similar provision of state,
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local or foreign Law) or pursuant to agreement, successor liability or
otherwise.
"TAX AUTHORITY" means, with respect to any Tax, the governmental
entity or political subdivision thereof that imposes such Tax and agency (if
any) charged with the collection of such Tax for such entity or subdivision.
"TAX RETURN" means a report, return, statement or other information
(including any attached schedules or any amendments to such report, return or
other information) required to be supplied to or filed with a Tax Authority
with respect to any Tax, including an information return, claim for refund,
amended return or declaration of estimated Tax.
"TRANSACTION DOCUMENTS" means this Agreement, the Commitment Agreement
and the Apple Holdco Stockholder Agreement.
"TRANSACTIONS" means the Merger, the Share Issuance, the Strawberry
Charter Amendment and the other transactions contemplated by this Agreement.
(b) The following terms have the meanings specified in
the indicated Sections:
TERM SECTION
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Acquiring Person............................................... 4.26(b)
ACT............................................................ 3.7(b)
Additional Filings............................................. 6.9(a)
Agreement...................................................... Preamble
Alternate Financing............................................ 6.14(c)
Apple.......................................................... Preamble
Apple 2006 Financial Statements................................ 6.9(d)
Apple Benefit Plans............................................ 5.16(a)
Apple Certificates............................................. 3.1(a)
Apple Disclosure Schedule...................................... 4.27
Apple ERISA Affiliate.......................................... 5.16(a)
Apple Financial Statements..................................... 5.9(b)
Apple Foreign Plan............................................. 5.16(a)
Apple Holdco................................................... Preamble
Apple Holdco Common Stock...................................... Recitals
Apple Holdco Equity Interests.................................. 5.5(a)
Apple Holdco Stockholder Agreement............................. Recitals
Apple Holdco Stockholder Commitment............................ 6.14(b)
Apple Intellectual Property.................................... 5.17
Apple Merger Agreement......................................... 5.25
Apple SEC Reports.............................................. 5.9(a)
ARC Notice..................................................... 6.10(e)
Certificate of Merger.......................................... 2.1
Closing........................................................ 2.1
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TERM SECTION
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Closing Date................................................... 2.1
Commitment Agreement........................................... Recitals
Contingent Workers............................................. 4.16(e)
DGCL........................................................... 2.1
Distribution Date.............................................. 4.26(b)
Effective Time................................................. 2.1
Financing...................................................... 6.14(a)
Financing Commitment Deadline.................................. 6.14(a)
Financing Commitments.......................................... 6.14(a)..
FIRPTA......................................................... 7.2(f)
HSR Act........................................................ 4.3
Indemnified Parties............................................ 6.13(a)
Indemnifying Party............................................. 6.13(a)
Maximum Premium................................................ 6.13(b)
Measurement Date............................................... IV
Merger......................................................... Recitals
MergerSub...................................................... Preamble
Outside Date................................................... 8.1(e)
Parent......................................................... Preamble
Proxy Statement................................................ 4.3
Redemptions.................................................... 7.2(k)
Registration Rights Agreement.................................. 3.7(c)
Reverse Termination Fee........................................ 8.3(b)
Series A Redemption............................................ 7.2(k)
Share Issuance................................................. Recitals
Shares Acquisition Date........................................ 4.26(b)
Strawberry Benefit Plans....................................... 4.16(a)
Strawberry Board Recommendation................................ 4.22(c)
Strawberry Certificates........................................ 3.1(a)
Strawberry Charter Amendment................................... Recitals
Strawberry Common Stock........................................ Recitals
Strawberry Competing Transaction............................... 6.10(b)
Strawberry Disclosure Schedule................................. IV
Strawberry Equity Interests.................................... 4.5(a)
Strawberry ERISA Affiliate..................................... 4.16(a)
Strawberry Financial Statements................................ 4.9(b)
Strawberry Foreign Plan........................................ 4.16(a)
Strawberry Intellectual Property............................... 4.17
Strawberry Options............................................. 4.5(a)
Strawberry Preferred........................................... 4.5(a)
Strawberry Restricted Share.................................... 3.4
Strawberry Rights.............................................. 4.5(a)
Strawberry Rights Agreement.................................... 4.5(a)
Strawberry SEC Reports......................................... 4.9(a)
Strawberry Series A Preferred.................................. 4.5(a)
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TERM SECTION
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Strawberry Series B Preferred.................................. 4.5(a)
Strawberry Series C Preferred.................................. 4.5(a)
Strawberry Stock............................................... 4.5(a)
Strawberry Stockholder Approval................................ 4.22(a)
Strawberry Stockholders Meeting................................ 6.8
Strawberry Superior Proposal................................... 6.10(f)
Strawberry Warrants............................................ 4.5(a)
Surviving Corporation.......................................... Recitals
Triggering Event............................................... 4.26(b)
1.2. INTERPRETATION. (a) When a reference is made in this
Agreement to Articles, Sections, Exhibits or Schedules, such reference will be
to an Article or Section or Exhibit or Schedule to this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and will not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they will be deemed to be
followed by the words "without limitation." Unless the context otherwise
requires, (i) "or" is disjunctive but not necessarily exclusive, (ii) words in
the singular include the plural and vice versa, (iii) the use in this Agreement
of a pronoun in reference to a party hereto includes the masculine, feminine or
neuter, as the context may require, and (iv) unless otherwise defined herein,
terms used herein which are defined in GAAP have the meanings ascribed to them
therein. This Agreement will not be interpreted or construed to require any
Person to take any action, or fail to take any action, that would violate any
applicable Law. The Apple Disclosure Schedule, the Strawberry Disclosure
Schedule, as well as all other Schedules and all Exhibits hereto, will be
deemed part of this Agreement and included in any reference to this Agreement.
Notwithstanding anything in this Agreement to the contrary, the mere inclusion
of an item in any Schedule or Exhibit hereto as an exception to a
representation or warranty will not be deemed an admission that such item
represents a material exception or material fact, event or circumstance or that
such item has had or would, individually or in the aggregate, have a Strawberry
Material Adverse Effect or an Apple Material Adverse Effect, as the case may
be.
(b) The parties have participated jointly in negotiating and
drafting this Agreement. In the event that an ambiguity or a question of intent
or interpretation arises, this Agreement will be construed as if drafted
jointly by the parties, and no presumption or burden of proof will arise
favoring or disfavoring any party by virtue of the authorship of any provision
of this Agreement.
II. MERGER
2.1 THE MERGER. (a) On the terms and subject to the conditions of
this Agreement and in accordance with the provisions of the General Corporation
Law of the State of Delaware (the "DGCL"), at the Effective Time, MergerSub
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will merge with and into Apple Holdco. Following the Merger, Apple Holdco will
continue as the Surviving Corporation and the separate corporate existence of
MergerSub will cease.
(b) On the terms and subject to the conditions of this
Agreement, the closing of the Merger (the "CLOSING") will take place at the
offices of Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP, 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx at 10:00 a.m., New York City time, as soon as
practicable, but in no event later than the third Business Day, following
satisfaction or waiver of the conditions set forth in Article VII hereof (other
than those conditions that by their nature or pursuant to the terms of this
Agreement are to be satisfied or waived at or immediately prior to the Closing,
but subject to the satisfaction or, where permitted, the waiver of those
conditions), or at such other date, time or place as Parent and Apple Holdco
may agree. The date on which the Closing occurs is referred to as the "CLOSING
DATE."
(c) The Merger will become effective as set forth in the
certificate of merger relating thereto (the "CERTIFICATE OF MERGER") that will
be filed on the Closing Date with the Secretary of State of the State of
Delaware in accordance with Section 251 of the DGCL and that will state, unless
the parties otherwise agree, that the effective time of the Merger will occur
upon filing. The time that the Merger becomes effective in accordance with
Section 251 of the DGCL is referred to in this Agreement as the "EFFECTIVE
TIME."
(d) The Merger will have the effects set forth in
Section 259 of the DGCL. Without limiting the generality or effect of the
foregoing, as of the Effective Time, all properties, rights, privileges, powers
and franchises of MergerSub and Apple Holdco will vest in the Surviving
Corporation and all debts, liabilities and duties of MergerSub and Apple Holdco
will become debts, liabilities and duties of the Surviving Corporation.
2.2 CERTIFICATE OF INCORPORATION AND BYLAWS. The certificate of
incorporation and the bylaws of Apple Holdco as in effect immediately prior to
the Effective Time, attached as EXHIBIT C and D, respectively, will be the
certificate of incorporation and bylaws of the Surviving Corporation at the
Effective Time until thereafter amended further in compliance with the DGCL.
2.3 DIRECTORS. Apple Holdco shall take all requisite action so
that, at the Effective Time, the board of directors of the Surviving
Corporation will consist of individuals identified or designated by Apple
Holdco who will hold office until their respective successors are duly elected
or appointed and qualified, or their earlier death, resignation or removal, in
accordance with the certificate of incorporation and bylaws of the Surviving
Corporation and the DGCL.
2.4 OFFICERS. At the Effective Time, the officers of Apple Holdco
shall resign and the board of directors of the Surviving Corporation shall
appoint officers of the Surviving Corporation to hold office until their
respective successors are duly appointed and qualified, or their earlier death,
resignation or removal, in accordance with the certificate of incorporation and
bylaws of the Surviving Corporation and the DGCL.
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III. CONVERSION OF SHARES AND OTHER MATTERS
3.1 CONVERSION OF CAPITAL STOCK. At the Effective Time, by virtue
of the Merger and without any action on the part of Parent, MergerSub, Apple
Holdco or the holders of the following securities:
(a) CONVERSION OF APPLE HOLDCO COMMON STOCK. Each share
of Apple Holdco Common Stock issued and outstanding immediately prior to the
Effective Time shall be converted into the right to receive an amount of fully
paid and non assessable shares of Strawberry Common Stock equal to the QUOTIENT
of (x) the Merger Consideration DIVIDED BY (y) the number of Shares of Apple
Holdco Common Stock issued and outstanding immediately prior to the Effective
Time, subject to (A) the anti dilution adjustments provided in Section 3.2 and
(B) the payment of cash in lieu of fractional shares of Parent Common Stock as
provided in Section 3.1(c). All shares of Apple Holdco Common Stock that have
been so converted into the right to receive shares of Strawberry Common Stock
shall be canceled automatically and shall cease to exist, and the holders of
certificates, which immediately prior to the Effective Time represented those
shares ("APPLE CERTIFICATES"), shall cease to have any rights with respect to
those shares, other than the right to receive certificates representing shares
of Strawberry Common Stock ("STRAWBERRY CERTIFICATES") and cash in lieu of
fractional shares of Parent Common Stock as provided in Section 3.1(c) upon
surrender of Apple Certificates in accordance with Section 3.3(a).
(b) CONVERSION OF MERGERSUB CAPITAL STOCK. Each share of
MergerSub Common Stock issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the
part of Parent, MergerSub or Apple Holdco, be converted into one share of
common stock of the Surviving Corporation.
(c) FRACTIONAL SHARES. No fractional shares of
Strawberry Common Stock shall be issued in connection with the Merger, and no
certificates or scrip for any such fractional shares shall be issued. Any Apple
Holdco Stockholder who would otherwise be entitled to receive a fraction of a
share of Strawberry Common Stock (after aggregating all fractional shares of
Strawberry Common Stock issuable to such holder) shall, in lieu of such
fraction of a share and upon surrender of such holder's certificates that
formerly evidenced shares of Apple Holdco Common Stock, be paid in cash the
dollar amount (rounded to the nearest whole cent), without interest, determined
by multiplying such fraction by the closing price of a share of Strawberry
Common Stock on the NYSE on the date that the Merger becomes effective.
3.2 ADJUSTMENTS TO PREVENT DILUTION. If, after the date hereof
and prior to the Effective Time, Parent (i) declares a stock dividend or other
distribution payable in shares of Strawberry Common Stock or securities
convertible or exchangeable into or exercisable for shares of Strawberry Common
Stock or (ii) effects a stock split (including a reverse stock split),
reclassification, combination or other similar change with respect to the
Strawberry Common Stock, then the Merger Consideration shall be equitably
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adjusted to eliminate the effects of that stock dividend, distribution, stock
split, reclassification, combination or other change.
3.3 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE PROCEDURES. At the Closing, in exchange for
Strawberry Certificates and cash in lieu of fractional shares pursuant to
Section 3.1(c), each Apple Holdco Stockholder shall deliver to Parent Apple
Certificates representing the Apple Holdco Common Stock owned by such holder,
duly endorsed in blank or accompanied by stock powers duly endorsed in blank in
proper form for transfer. Upon surrender to Parent of an Apple Certificate for
cancellation, the holder of such Apple Certificate shall be entitled to receive
in exchange therefor a certificate representing that number of whole shares of
Strawberry Common Stock (after taking into account all Apple Certificates
surrendered by such holder) to which such holder is entitled pursuant to
Section 3.1(a) and payment in lieu of fractional shares to which such holder is
entitled pursuant to Section 3.1(c), and the Apple Certificate so surrendered
shall forthwith be cancelled. Until surrendered as contemplated by this Section
3.3(a), each Apple Certificate shall be deemed at all times after the Effective
Time to represent only the right to receive upon such surrender shares of
Strawberry Common Stock pursuant to Section 3.1(a) and cash in lieu of
fractional shares pursuant to Section 3.1(c). No interest shall be paid or will
accrue on any cash payable in lieu of fractional shares to Apple Holdco
Stockholders pursuant to the provisions of this Article III.
(b) WITHHOLDING RIGHTS. Each of Parent and the Surviving
Company shall be entitled to deduct and withhold from any consideration
otherwise payable pursuant to this Agreement to any Apple Holdco Stockholder
such amounts as it is required to deduct and withhold with respect to such
payment under all applicable Tax laws and pay such withholding amount over to
the appropriate taxing authority. To the extent that amounts are so properly
withheld by Parent or the Surviving Company, as the case may be, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the Apple Holdco Stockholder in respect of which such deduction and
withholding was made by Parent or the Surviving Company, as the case may be.
(c) LOST, STOLEN OR DAMAGED CERTIFICATES. If any Apple
Certificate shall have been lost, stolen, defaced or destroyed, Parent may, in
its reasonable discretion and as a condition to the issuance of any Strawberry
Certificate, require the owner of such lost, stolen, defaced or destroyed Apple
Certificate to make an affidavit of that fact and provide an indemnity against
any claim that may be made against it or the Surviving Company with respect to
such Apple Certificate.
3.4 TREATMENT OF STRAWBERRY STOCK OPTIONS AND OTHER EQUITY BASED
AWARDS. The Strawberry Option Plans shall remain outstanding and governed by
the terms of the existing Strawberry Option Plans. Notwithstanding anything to
the contrary in this Agreement, each share of Strawberry Common Stock which is
unvested or is subject to any conditions or restrictions under any applicable
restricted stock agreement or other Contract (a "STRAWBERRY RESTRICTED SHARE")
shall continue to be governed by the terms of the restrictions applicable to
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such Strawberry Restricted Share and the restrictions shall not lapse as a
result of the transactions contemplated by this Agreement.
3.5 NO FURTHER RIGHTS; STOCK TRANSFER BOOKS. At the Effective
Time, the stock transfer books of Apple Holdco shall be closed, and there shall
be no further registration of transfers of Apple Holdco Common Stock issued and
outstanding immediately prior to the Effective Time thereafter on the records
of Parent. From and after the Effective Time, the Apple Holdco Stockholders
shall cease to have any rights with respect to any shares of Apple Holdco
Common Stock outstanding immediately prior to the Effective Time, except as
otherwise provided in this Agreement or by Law. On or after the Effective Time,
any Apple Certificates presented to Parent for any reason shall be canceled
against delivery of the consideration to which the holders thereof are entitled
pursuant to Section 3.1(a) and Section 3.1(c), without interest.
3.6 TAX CONSEQUENCES. For federal income tax purposes, the Merger
is intended to constitute a reorganization within the meaning of Section 368 of
the Code. The parties hereby adopt this Agreement as a "plan of reorganization"
within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States
Treasury Regulations.
3.7 SECURITIES ACT EXEMPTION AND COMPLIANCE; REGISTRATION RIGHTS.
(a) PRIVATE PLACEMENT. The Strawberry Common Stock to be
issued pursuant to this Agreement initially will not be registered under the
Securities Act in reliance on the exemptions from the registration requirements
of Section 5 of the Securities Act set forth in Section 4(2) thereof and
Regulation D promulgated thereunder.
(b) LEGENDS. In addition to any legend imposed by
applicable state securities laws or by any contract which continues in effect
after the Effective Time, the certificates representing the shares of
Strawberry Common Stock issued pursuant to this Agreement shall bear a
restrictive legend (and stop transfer orders shall be placed against the
transfer thereof with Parent's transfer agent), stating substantially as
follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"). THEY MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, OR, AN OPINION
OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE ACT."
(c) REGISTRATION RIGHTS. The Apple Holdco Stockholders
shall be entitled to the registration rights set forth in the Registration
Rights Agreement to be executed and delivered by Parent and each of the Apple
Holdco Stockholders at Closing in the form attached hereto as EXHIBIT E (the
"REGISTRATION RIGHTS AGREEMENT"), in each case on the terms and subject to the
conditions set forth therein.
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IV. REPRESENTATIONS AND WARRANTIES OF PARENT
Except as disclosed in (x) the Strawberry SEC Reports filed prior to
the close of business on February 7, 2007 (the "MEASUREMENT DATE"), but
excluding any risk factor disclosure contained in any such Strawberry SEC
Reports under the heading "Risk Factors" or "Cautionary Statement Regarding
Forward Looking Statements" or otherwise or (y) the disclosure schedule (the
"STRAWBERRY DISCLOSURE SCHEDULE") delivered by Parent to Apple Holdco in
connection with the execution of this Agreement (which schedule sets forth,
among other things, items the disclosure of which is necessary or appropriate
either in response to an express disclosure requirement contained in a
provision hereof or as an exception to one or more representations or
warranties contained in this Article IV), Parent hereby represents and warrants
to Apple Holdco as follows:
4.1 DUE ORGANIZATION, GOOD STANDING AND CORPORATE POWER. Parent
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware and has all requisite corporate power and
authority to own, lease and operate its properties and to conduct its business
as now being conducted. Each of Parent's Subsidiaries is a corporation or other
entity duly organized, validly existing and in good standing or has equivalent
status under the laws of its jurisdiction of organization and has all requisite
corporate power and authority to own, lease and operate its properties and to
conduct its business as now being conducted. Each of Parent and its
Subsidiaries is duly qualified or licensed to do business and is in good
standing or has equivalent status in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary, except in such jurisdictions where the
failure to be so qualified or licensed and in good standing or to have
equivalent status would not, individually or in the aggregate, reasonably be
expected to have a Strawberry Material Adverse Effect.
4.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. Each of Parent and
MergerSub has the requisite corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. The execution
and delivery of this Agreement by each of Parent and MergerSub, the
consummation by Parent of the Share Issuance and the Strawberry Charter
Amendment and the consummation by Parent and MergerSub of the Merger, have been
duly authorized and approved by their respective boards of directors (in the
case of Parent, acting upon the unanimous written consent of the Special
Committee), and except for the Strawberry Stockholder Approval and approval by
Parent in its capacity as sole stockholder of MergerSub, no other corporate
action on the part of Parent or MergerSub is necessary to authorize the
execution and delivery of this Agreement or the consummation of the Merger, the
Share Issuance and the Strawberry Charter Amendment. This Agreement has been,
and each of the other Transaction Documents to which it is a party will be when
executed and delivered, duly executed and delivered by each of Parent and
MergerSub, and, to the extent it is a party thereto, each is, or will be when
executed and delivered, a valid and binding obligation of each of Parent and
MergerSub enforceable against each of Parent and MergerSub in accordance with
its terms, except to the extent that its enforceability may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws
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affecting the enforcement of creditors' rights generally and by general
equitable principles.
4.3 CONSENTS AND APPROVALS; NO VIOLATIONS. Assuming (a) the
filings required under the Xxxx-Xxxxx Xxxxxx Antitrust Improvement Act of 1976,
as amended (the "HSR ACT") and any other applicable Antitrust Law, are made and
the waiting periods thereunder (if applicable) have been terminated or expired,
(b) the applicable requirements of the Securities Act and state securities or
"blue sky" laws and the Exchange Act are met, including the filing with the SEC
of a proxy statement in definitive form that will be mailed to Strawberry
Stockholders in connection with the Strawberry Stockholders Meeting (the "PROXY
STATEMENT"), (c) the required notices to the NYSE related to the Transactions
are delivered, (d) compliance with applicable foreign competition laws, (e) the
filing of the Certificate of Merger and other appropriate merger documents, if
any, as required by the DGCL, are made, (f) the filing of the Strawberry
Charter Amendment and (g) the Strawberry Stockholder Approval and approval by
Parent in its capacity as sole stockholder of MergerSub is obtained, the
execution and delivery of this Agreement and the other Transaction Documents to
which it is a Party by Parent and MergerSub and the consummation by each of
Parent and MergerSub of the Transactions, do not and will not (i) violate or
conflict with any provision of their respective certificates of incorporation
or bylaws or the comparable governing documents of any of its Subsidiaries,
(ii) violate or conflict with any Law or Order applicable to Parent or any of
its Subsidiaries or by which any of their respective properties or assets may
be bound, (iii) require any filing with, or Permit, consent or approval of, or
the giving of any notice to, any Governmental Entity, or (iv) result in a
violation or breach of, conflict with, constitute (with or without due notice
or lapse of time or both) a default under, or give rise to any right of
termination, cancellation or acceleration of, or result in the creation of any
Encumbrance upon any of the properties or assets of Parent or any of its
Subsidiaries under, or give rise to any obligation, right of termination,
cancellation, acceleration or increase of any obligation or a loss of a
material benefit under, any of the terms, conditions or provisions of any
Contract to which Parent or any of its Subsidiaries is a party, or by which
Parent or any of its Subsidiaries may be bound, excluding in the case of
clauses (iii) and (iv) above, conflicts, violations, breaches, defaults, rights
of termination, cancellations, accelerations, increases, losses, creations and
impositions of Encumbrances which would not, individually or in the aggregate,
reasonably be expected to have a Strawberry Material Adverse Effect.
4.4 INFORMATION TO BE SUPPLIED. None of the information included
or incorporated by reference in the Proxy Statement or any Additional Filings
will, in the case of the Proxy Statement, at the date it is first mailed to
Strawberry Stockholders or at the time of the Strawberry Stockholders Meeting
or at the time of any amendment or supplement thereof, or, in the case of any
Additional Filing, at the date it is first mailed to Strawberry Stockholders or
at the date it is first filed with the SEC or applicable Governmental Entity,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading in any material respect, except that no representation is made by
Parent and MergerSub with respect to statements made or incorporated by
reference therein based on information supplied in writing by Apple Holdco, its
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stockholders or any Affiliate of Apple Holdco or its stockholders in connection
with the preparation of the Proxy Statement or the Additional Filings for
inclusion or incorporation by reference therein. The Proxy Statement and the
Additional Filings that are filed by Parent with the SEC will comply as to form
in all material respects with the requirements of the Exchange Act and the
rules and regulations promulgated thereunder.
4.5 CAPITALIZATION OF PARENT AND MERGERSUB.
(a) The authorized capital stock of (i) Parent consists
of 40,000,000 shares of Strawberry Common Stock, (ii) 2,000,000 shares of
Preferred Stock, 40,000 of which are designated Series A Voting Convertible
Preferred Stock, $0.01 par value per share and convertible into shares of
Strawberry Common Stock (the "STRAWBERRY SERIES A PREFERRED"), 500,000 of which
are designated Series B Junior Participating Preferred Stock, $0.01 par value
per share (the "STRAWBERRY SERIES B PREFERRED"), 150,000 of which are
designated Series C Preferred Stock, $0.01 par value per share (the "STRAWBERRY
SERIES C PREFERRED"), and 1,310,000 of which are designated Preferred Stock,
$0.01 par value per share (the "STRAWBERRY PREFERRED" and together with the
Strawberry Common Stock, the Strawberry Series A Preferred, the Strawberry
Series B Preferred and the Strawberry Series C Preferred, the "STRAWBERRY
STOCK"). As of the Measurement Date, there were 15,084,990 shares of Strawberry
Common Stock (of which 189,750 were Strawberry Restricted Shares) issued and
outstanding, 40,000 shares of Strawberry Series A Preferred issued and
outstanding, no shares of Strawberry Series B Preferred issued and outstanding,
135,217 shares of Strawberry Series C Preferred issued and outstanding, and no
shares of Strawberry Preferred issued and outstanding. As of the Measurement
Date, no shares of Strawberry Common Stock were reserved for issuance except
for (a) 2,150,795 shares of Strawberry Common Stock that were reserved for
issuance upon the exercise of outstanding options (the "STRAWBERRY OPTIONS"),
(b) 719,320 shares of Strawberry Common Stock reserved for issuance upon the
exercise of outstanding warrants (the "STRAWBERRY WARRANTS") and (c) 3,529,412
shares of Strawberry Common Stock reserved for issuance upon the conversion of
the Strawberry Series A Preferred for Strawberry Common Stock. Between the
Measurement Date and the date hereof, Parent has not issued any shares of
Strawberry Common Stock (other than pursuant to the exercise of Strawberry
Options outstanding as of the Measurement Date) or awarded any Strawberry
Options. The Strawberry Series B Preferred are issuable in connection with the
rights to purchase those shares (the "STRAWBERRY RIGHTS") issued under the
Rights Agreement, dated as of June 28, 2004 and as amended on June 7, 2006 (the
"STRAWBERRY RIGHTS AGREEMENT"), by and between Parent and UMB Bank N.A., as
rights agent. All issued and outstanding shares of Strawberry Stock have been
duly authorized and validly issued and are fully paid and nonassessable. As of
the date hereof, except as set forth above and except for shares of Strawberry
Common Stock issuable pursuant to the Strawberry Options, Strawberry Warrants
and the Strawberry Series A Preferred outstanding as of the Measurement Date,
there are no outstanding or authorized options, warrants, rights, calls,
commitments, preemptive rights, subscriptions, claims of any character,
convertible or exchangeable securities, or other Contracts, contingent or
otherwise, relating to Strawberry Common Stock or any capital stock or capital
stock equivalent or other nominal interest in Parent or any of its Subsidiaries
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which relate to Parent (collectively, "STRAWBERRY EQUITY INTERESTS") pursuant
to which Parent or any of its Subsidiaries is or may become obligated to issue
or sell shares of its capital stock or other equity interests or any securities
convertible into, or exchangeable for, or evidencing the right to subscribe
for, any Strawberry Equity Interests. There are no outstanding obligations of
Parent to repurchase, redeem or otherwise acquire any outstanding securities of
Parent or any Strawberry Equity Interests. There are no Contracts to which
Parent is a party relating to the issuance, sale, transfer, registration or
voting of any equity securities or other securities of Parent. No bonds,
debentures, notes or other indebtedness having the right to vote on any matters
on which Strawberry Stockholders may vote are issued or outstanding as of the
date hereof.
(b) When issued in accordance with the terms of this
Agreement, the Strawberry Common Stock to be issued in connection with the
Share Issuance will be duly authorized, validly issued, fully paid and non
assessable free and clear of all Encumbrances (other than as imposed by federal
or state securities laws).
(c) Exhibit 21.1 to Parent's Annual Report on Form 10 K
for the fiscal year ended July 1, 2006 includes all the Subsidiaries of Parent
that constitute "significant subsidiaries" as defined in Rule 1-02(w) of
Regulation S-X in existence as of the date hereof. All of the issued and
outstanding shares of capital stock or other equity ownership interests of each
Subsidiary of Parent are owned by Parent, directly or indirectly, free and
clear of any Encumbrances, and all of such shares or equity ownership interests
are duly authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights. No such Subsidiary has or is bound by any
outstanding or authorized subscriptions, options, rights, preemptive rights,
warrants, calls, commitments, claims of any character, convertible or
exchangeable securities, or Contracts, contingent or otherwise, of any nature
relating to the purchase or issuance of any shares of capital stock or any
other security of such Subsidiary or any securities representing the right to
purchase or otherwise receive any shares of capital stock or any other security
of such Subsidiary. There are no outstanding obligations to repurchase, redeem
or otherwise acquire any outstanding securities of any such Subsidiary and
there are no Contracts to which any Subsidiary of Parent is a party relating to
the issuance, sale, transfer, registration or voting of any equity securities
or other securities of Parent or any of its Subsidiaries.
(d) All Strawberry Options have an exercise price per
share that was not less than the "fair market value" of a share of Strawberry
Common Stock on the date of grant, as determined in accordance with the terms
of the applicable Strawberry Option Plan and, to the extent applicable,
Sections 162(m), 409A and 422 of the Code. All Strawberry Options have been
properly accounted for by Parent in accordance with GAAP, and no change is
expected in respect of any prior Strawberry Financial Statement relating to
expenses for stock compensation. There is no pending audit, investigation or
inquiry by Parent, or to the Knowledge of Parent, any governmental agency with
respect to the Parent's stock option granting practices or other equity
compensation practices. Except as set forth in SECTION 4.5(D) OF THE STRAWBERRY
DISCLOSURE SCHEDULE, the terms of each of the option agreements for each
optionee are substantially similar to the forms of such option agreement
attached to SECTION 4.5(D) OF THE STRAWBERRY DISCLOSURE SCHEDULE, and no such
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option agreement or Strawberry Option Plan provides for any payment or other
transfer from Parent or any Affiliate of Parent or for any adjustment to the
terms of the option in connection with the Transactions contemplated by this
Agreement that is not provided for in such forms.
(e) Each subsidiary of Parent constitutes a Subsidiary
of Parent as defined in this Agreement.
(f) The authorized capital stock of MergerSub consists
of 10,000 shares of common stock, $0.01 par value per share, 1,000 of which
have been duly authorized and validly issued, are fully paid and nonassessable
and are owned by Parent free and clear of any Encumbrance.
4.6 ABSENCE OF CERTAIN EVENTS. Except as required or expressly
permitted by this Agreement or as reflected in the Strawberry Financial
Statements filed on or prior to the Measurement Date, since July 1, 2006,
Parent and its Subsidiaries have operated their respective businesses only in
the ordinary course of business and there has not occurred any event,
occurrence or condition which (i) would have been a breach of Section 6.1 had
such Section 6.1 been in effect since July 1 2006, or (ii) would, individually
or in the aggregate, reasonably be expected to have a Strawberry Material
Adverse Effect.
4.7 LITIGATION. There are no Actions pending against Parent or
any of its Subsidiaries or, to the Knowledge of Parent, threatened against
Parent or any of its Subsidiaries (or any of their respective properties,
rights or franchises), at law or in equity, or before or by any Governmental
Entity, that would, individually or in the aggregate, reasonably be expected to
have a Strawberry Material Adverse Effect, and, to the Knowledge of Parent, no
development has occurred with respect to any pending or threatened Action that,
individually or in the aggregate, would reasonably be expected to have a
Strawberry Material Adverse Effect. Neither Parent nor any of its Subsidiaries
are subject to any Orders that, individually or in the aggregate, would
reasonably be expected to have a Strawberry Material Adverse Effect.
4.8 TITLE TO PROPERTIES; ENCUMBRANCES. Each of Parent and its
Subsidiaries has good and valid title to, or, in the case of leased properties
and assets, valid leasehold interests in, all of its tangible properties and
assets, except where the failure to have such good and valid title or valid
leasehold interests, as applicable, would not, individually or in the
aggregate, reasonably be expected to have a Strawberry Material Adverse Effect,
in each case subject to no Encumbrances, except for (a) Encumbrances consisting
of zoning or planning restrictions, easements, permits and other restrictions
or limitations on the use of real property or irregularities in title thereto
which do not materially detract from the value of, or impair the use of, such
property by Parent or any of its Subsidiaries, (b) Encumbrances for current
Taxes, assessments or governmental charges or levies on property not yet due or
which are being contested in good faith and for which appropriate reserves in
accordance with GAAP have been created, (c) Encumbrances which would not,
individually or in the aggregate, reasonably be expected to have a Strawberry
Material Adverse Effect.
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4.9 STRAWBERRY SEC REPORTS; FINANCIAL STATEMENTS.
(a) Each of Parent and its Subsidiaries has timely filed
with the SEC all registration statements, prospectuses, reports, schedules,
forms, proxy statements, certifications and other documents (including exhibits
and all other information incorporated by reference therein) required to be
filed by Parent since June 28, 2003 (the "STRAWBERRY SEC REPORTS"). The
Strawberry SEC Reports (i) were prepared and will be prepared (when filed after
the date of this Agreement) in all material respects in accordance with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
(ii) did not at the time they were filed and will not, when filed after the
date of this Agreement, contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading, except to the extent corrected by a subsequent
Strawberry SEC Report filed with the SEC prior to the date of this Agreement.
No Subsidiary of Parent is subject to the periodic reporting requirements of
the Exchange Act by Law or Contract.
(b) Each of the consolidated financial statements of
Parent (including, in each case, any notes thereto) contained in the Strawberry
SEC Reports (the "STRAWBERRY FINANCIAL STATEMENTS") was prepared and will be
prepared (when filed after the date of this Agreement) in accordance with GAAP
(except as may be indicated in the notes thereto) and presented fairly and will
present fairly (when filed after the date of this Agreement) in all material
respects the consolidated financial position and consolidated results of
operations of Parent and its Subsidiaries as of the respective dates thereof
and for the respective periods indicated therein, except as otherwise noted
therein and subject, in the case of unaudited statements, to normal year end
audit adjustments in amounts that are immaterial in nature and amounts
consistent with past experience. The books and records of Parent and its
Subsidiaries (i) have been, and are being, maintained in accordance with GAAP
and any other applicable legal and accounting requirements, (ii) reflect only
actual transactions, (iii) are complete and accurate in all material respects,
and (iv) reflect in reasonable detail all material transactions to which Parent
and its Subsidiaries are a party.
(c) The records, systems, controls, data and information
of Parent and its Subsidiaries are recorded, stored, maintained and operated
under means (including any electronic, mechanical or photographic process,
whether computerized or not) that are under the exclusive ownership and direct
control of Parent or its Subsidiaries, except for any non exclusive ownership
and non direct control that would not have a material adverse effect on the
system of internal accounting controls described in the following sentence.
Parent and its Subsidiaries have devised and maintain a system of internal
controls over financial reporting sufficient to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements in accordance with GAAP. Parent (i) has designed
disclosure controls and procedures to ensure that material information relating
to Parent, including its consolidated Subsidiaries, is made known to its
management by others within those entities and (ii) has disclosed, based on its
most recent evaluation prior to the date hereof, to Parent's auditors and the
audit committee of Parent's board of directors (A) any significant deficiencies
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in the design or operation of internal controls which could adversely affect in
any material respect Parent's ability to record, process, summarize and report
financial data and have identified for Parent's auditors any material
weaknesses in internal controls and (B) any fraud, whether or not material,
that involves management or other employees who have a significant role in
Parent's internal controls. Parent has made available to Apple Holdco a summary
of each such disclosure made by management to its auditors and audit committee
since July 2, 2005.
4.10 NO UNDISCLOSED LIABILITIES. Except for those liabilities that
are reflected or reserved against on the consolidated financial statements of
Parent as of and for the period ended September 30, 2006 included in Parent's
Form 10 Q for the quarter ended September 30, 2006, including the notes
thereto, since such date, neither Parent nor any of its Subsidiaries has
incurred any liability of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether due or to become due and including any off
balance sheet financings, loans, indebtedness, make whole or similar
liabilities or obligations) whether or not required to be reflected in a
consolidated balance sheet of Parent prepared in accordance with GAAP, except
for liabilities incurred in the ordinary course of business that would not,
individually or in the aggregate, reasonably be expected to have a Strawberry
Material Adverse Effect.
4.11 COMPLIANCE WITH LAW.
(a) Each of Parent and its Subsidiaries is, and since
July 2, 2005, has been, in compliance with all Laws and Orders applicable to
it, except where the failure to so comply would not, individually or in the
aggregate, reasonably be expected to have a Strawberry Material Adverse Effect.
(b) Each of Parent and its Subsidiaries holds, to the
extent legally required, all Permits that are required for the lawful operation
of its business as now conducted, except where the failure to hold any such
Permit would not, individually or in the aggregate, reasonably be expected to
have a Strawberry Material Adverse Effect, and there has not occurred any
default under any such Permit, except to the extent that such default would
not, individually or in the aggregate, reasonably be expected to have a
Strawberry Material Adverse Effect.
4.12 INSURANCE. Parent and its Subsidiaries maintain insurance
coverage with reputable insurers in such amounts and covering such risks as are
in accordance with normal industry practice for companies engaged in businesses
similar to that of Parent and its Subsidiaries. Except as set forth on SECTION
4.12 OF THE STRAWBERRY DISCLOSURE SCHEDULE, each insurance policy of Parent
and/or its Subsidiaries shall survive the Closing and continue in full force
and effect as policies of the Parent and/or its Subsidiaries.
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4.13 REGULATORY MATTERS.
(a) Except for such of the following as would not,
individually or in the aggregate, reasonably be expected to have a Strawberry
Material Adverse Effect, there are no facts:
(i) which would furnish a substantial basis for
the recall, withdrawal or suspension of any products of Parent or its
Subsidiaries by any competent Governmental Entity; or
(ii) which would otherwise reasonably be
expected to cause Parent or its Subsidiaries to withdraw, recall or suspend any
products of Parent or its Subsidiaries from the market or to change the
marketing classification of any products of Parent or its Subsidiaries or to
terminate or suspend testing of any products of Parent or its Subsidiaries.
(b) There are no:
(i) products which have been recalled by Parent
or its Subsidiaries (whether voluntarily or otherwise) at any time since June
28, 2003; or
(ii) Actions pending, or to the Knowledge of
Parent, contemplated or threatened, and no such Actions have been settled or
resolved since July 3, 2004, seeking the recall, suspension or seizure of any
products of Parent or its Subsidiaries.
(c) Since July 3, 2004, Parent and each of its
Subsidiaries has timely filed or submitted all reports, filings, applications
and notifications required by statutes or regulations administered by the U.S.
Consumer Products Safety Commission including, without limitation, 15 U.S.C.
xx.xx. 2064(b) and 2084) and any other Governmental Entity with respect to the
manufacture, distribution and safety of any products manufactured, imported,
distributed or sold by Parent or any of its Subsidiaries. Each such report,
filing, application and notification complied, at the time of such filing or
submission, in all material respects, with the requirements for such report,
filing, application and notification, and has been supplemented to the extent
required by applicable law or regulation.
4.14 BROKER'S OR FINDER'S FEE. Except for Xxxxxxxx Xxxxx Xxxxxx &
Xxxxx Capital, Inc., to which only Parent has any liability or obligation as
set forth on SECTION 4.14 OF THE STRAWBERRY DISCLOSURE SCHEDULE, no Person
acting on behalf of Parent or any of its Subsidiaries is, or will be, entitled
to any investment banking, broker's, finder's or similar fee for which Parent,
MergerSub, Apple Holdco, Apple or any of their respective Affiliates or the
Surviving Corporation after the Effective Time could have any liabilities in
connection with this Agreement or any of the Transactions.
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4.15 TAXES, TAX RETURNS, TAX TREATMENT.
(a) Parent and each of its subsidiaries has duly filed
all Tax Returns required to be filed by it on or prior to the date of this
Agreement (all such returns being accurate and complete in all material
respects) and has duly paid or made provision for the payment of all Taxes that
have been incurred or are due or claimed to be due from it by federal, state,
foreign or local Tax Authorities other than (i) Taxes that (a) are not yet
delinquent or (b) are being contested in good faith, have not been finally
determined and have been adequately reserved against or (ii) Tax Returns or
Taxes as to which the failure to file, pay or make provision for would not,
individually or in the aggregate, reasonably be expected to have a Strawberry
Material Adverse Effect. The period (including any extensions) within which the
IRS may assess federal income Taxes against Parent and its subsidiaries has
closed with respect to all taxable years through and including the fiscal year
ended June 30, 1999 and any liability with respect thereto has been satisfied.
There are no disputes pending, or claims asserted, for Taxes or assessments
upon Parent or any of its subsidiaries for which Parent does not have adequate
reserves that would, individually or in the aggregate, reasonably be expected
to have a Strawberry Material Adverse Effect. Neither Parent nor any of its
Subsidiaries joins or has joined in the filing of any affiliated, aggregate,
consolidated, combined or unitary federal, state, local and foreign Tax Return
other than consolidated Tax Returns for the affiliated group of its
corporations of which Parent is the common parent, and neither Parent nor any
of its Subsidiaries is a party to any agreement providing for the allocation or
sharing of Taxes with any person that is not a member of such affiliated group.
Neither Parent nor any of its subsidiaries is a party to or is bound by any Tax
sharing, allocation or indemnification agreement or arrangement (other than
such an agreement or arrangement exclusively between or among Parent and its
subsidiaries). Within the past two years, neither Parent nor any of its
subsidiaries has been a "distributing corporation" or a "controlled
corporation" in a distribution intended to qualify under Section 355(a) of the
Code. No disallowance of a deduction under Sections 162(m) or 280G of the Code
for employee remuneration of any amount paid or payable by Parent or any of its
subsidiaries under any contract, plan, program or arrangement or understanding
would, individually or in the aggregate, reasonably be expected to have a
Strawberry Material Adverse Effect. Parent and its subsidiaries have complied
with the requirements of Code Section 409A (and its related reporting and
withholding requirements), for all amounts paid or payable under any contract,
plan, program or arrangement or understanding except where such failure to
comply would not, individually or in the aggregate, reasonably be expected to
have a Strawberry Material Adverse Effect.
4.16 EMPLOYEE BENEFIT MATTERS.
(a) SECTION 4.16 OF THE STRAWBERRY DISCLOSURE SCHEDULE
sets forth a true and complete list of each benefit or compensation plan,
arrangement or agreement, and any bonus, incentive, deferred compensation,
vacation, stock purchase, stock option, severance, employment, change of
control or fringe benefit plan, program or agreement, whether written or oral,
that is maintained, or contributed to, for the benefit of current or former
officers, directors, Contingent Workers or employees of Parent and its
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Subsidiaries, with respect to which Parent or its Subsidiaries may, directly or
indirectly, have any liability (whether contingent or otherwise), as of the
date of this Agreement or as of the Closing Date, including all material plans
of any Strawberry ERISA Affiliate that are subject to Title IV of ERISA (the
"STRAWBERRY BENEFIT PLANS"). For purposes of this Agreement, (i) a "STRAWBERRY
ERISA AFFILIATE" is any trade or business, whether or not incorporated, all of
which together with Parent would be deemed a "single employer" within the
meaning of Section 4001(a) or (b) of ERISA or Section 414 of the Code and (ii)
a "Strawberry Foreign Plan" means any Strawberry Benefit Plan that is
maintained outside of the United States (and each such Strawberry Foreign Plan
is separately identified on SECTION 4.16(A) OF THE STRAWBERRY DISCLOSURE
SCHEDULE).
(b) Except with respect to clauses (i), (iii), (v),
(vii), (ix), (x), and (xi) below (as would not, either individually or in the
aggregate, reasonably be expected to have a Strawberry Material Adverse Effect)
(i) each of the Strawberry Benefit Plans has been operated and administered in
compliance in all material respects with its terms and applicable Laws,
including ERISA and the Code, (ii) each of the Strawberry Benefit Plans
intended to be "qualified" within the meaning of Section 401(a) of the Code has
received or timely filed for a favorable determination letter from the IRS with
respect to all changes in applicable Law for which certain qualified plans were
required to be amended, and there are no existing circumstances or any events
that have occurred that will adversely affect the qualified status of any such
Strawberry Benefit Plan, (iii) no Strawberry Benefit Plan is a "defined benefit
plan" as defined in Section 3(35) of ERISA, (iv) no Strawberry Benefit Plan
provides benefits coverage, including death or medical benefits coverage
(whether or not insured), with respect to current or former officers,
employees, Contingent Workers or directors of Parent or its Subsidiaries beyond
their retirement or other termination of service, other than (A) coverage
mandated by applicable Law, (B) death benefits or retirement benefits under any
"employee pension plan" (as such term is defined in Section 3(2) of ERISA), (C)
benefits the full cost of which is borne by the current or former employee,
consultant, leased employee or director (or his beneficiary) or (D) coverage
through the last day of the calendar month in which retirement or other
termination of service occurs, (v) no Strawberry Benefit Plan is or was a
"multiemployer pension plan" (as such term is defined in Section 3(37) of
ERISA) or a "multiple employer plan" (as such term is defined Section 210(a) of
ERISA or Section 413(c) of the Code), (vi) none of Parent or its Subsidiaries
or, to the Knowledge of Parent, any other person, including any fiduciary, has
engaged in a transaction in connection with which Parent, its Subsidiaries or
any Strawberry Benefit Plan would reasonably be expected to be subject to
either a material civil penalty assessed pursuant to Section 409 or 502(i) of
ERISA or a material Tax imposed pursuant to Section 4975 or 4976 of the Code,
(vii) to the Knowledge of Parent, (A) there are no pending, threatened or
anticipated claims (other than routine claims for benefits) by, on behalf of or
against any of the Strawberry Benefit Plans or any trusts or other funding
vehicles related thereto and (B) no administrative investigation, audit or
proceeding is pending or in progress with respect to the Strawberry Benefit
Plans, (viii) all contributions or other amounts payable by Parent or its
Subsidiaries as of the Effective Time with respect to each Strawberry Benefit
Plan in respect of current or former plan years have been paid or accrued in
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accordance with GAAP and Section 412 of the Code and, other than transfers
incident to an incentive stock option plan within the meaning of Section 422 of
the Code or as restricted under Section 162(m) of the Code, have been or are
fully deductible under the Code, (ix) with respect to any insurance policy
providing funding for benefits under any Strawberry Benefit Plan, (A) there is
no liability of Parent or its Subsidiaries, in the nature of a retroactive rate
adjustment, loss sharing arrangement or other actual or contingent liability,
nor would there be any such liability if such insurance policy was terminated
at or after the Closing Date and (B) no insurance company issuing any such
policy is in receivership, conservatorship, liquidation or similar proceeding
and, to the Knowledge of Parent, no such proceedings with respect to any
insurer are imminent, (x) Parent and its Subsidiaries have reserved all rights
necessary to amend or terminate each of the Strawberry Benefit Plans, without
the consent of any other Person, and (xi) no Strawberry Benefit Plan provides
benefits to any individual who is not a current or former employee of Parent or
its Subsidiaries, or the dependents or other beneficiaries of any such current
or former employee.
(c) In addition to the representation contained in
Subsection (b) above (if applicable), except as would not, either individually
or in the aggregate, reasonably be expected to have a Strawberry Material
Adverse Effect, (i) each Strawberry Foreign Plan complies with all applicable
Laws (including, without limitation, applicable Laws regarding the funding,
form and operation of the Strawberry Foreign Plan); (ii) the Strawberry
Financial Statements accurately reflect the Strawberry Foreign Plan liabilities
and accruals for contributions required to be paid to the Strawberry Foreign
Plans, in accordance with GAAP, (iii) there have not occurred, nor are there
continuing any transactions or breaches of fiduciary duty under applicable Law,
and (iv) no administrative investigation, audit or other proceeding by any
Governmental Authority is pending or in progress or, to the Knowledge of Parent
and its Subsidiaries, threatened, with respect to any Strawberry Foreign Plan.
(d) Neither the execution and delivery of this Agreement
nor the consummation of the Transactions will (either alone or in conjunction
with any other event) (i) result in any payment (including severance,
unemployment compensation, "excess parachute payment" (within the meaning of
Section 280G of the Code), forgiveness of indebtedness or otherwise) becoming
due to any director, consultant, employee or former employee of Parent or any
of its Subsidiaries from Parent or any of its Subsidiaries under any Strawberry
Benefit Plan or otherwise, (ii) increase any benefits otherwise payable under
any Strawberry Benefit Plan or otherwise, or (iii) result in any acceleration
of the time of funding, payment or vesting of any such benefits.
(e) Except as would not reasonably be expected to have a
Strawberry Material Adverse Effect, with respect to independent contractors,
consultants and leased employees (collectively, "CONTINGENT WORKERS") who are
located within the United States, (i) all Persons so classified satisfy and
have at all times satisfied in all material respects the requirements of
applicable Law to be so classified, (ii) Parent and its Subsidiaries have fully
and accurately reported such persons' compensation on IRS Form 1099 when
required to do so, (iii) neither Parent or its Subsidiaries has or had any
obligations to provide benefits with respect to such persons under any
Strawberry Benefit Plan or otherwise and (iv) Parent and its Subsidiaries have
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no material liability with respect to the misclassification of any Contingent
Worker.
4.17 INTELLECTUAL PROPERTY. SECTION 4.17 OF THE STRAWBERRY
DISCLOSURE SCHEDULE identifies (i) all applied for and registered trademarks
and service marks, trade names, domain names, registered copyrights, pending
and issued patents owned, used or licensed by or to Parent or any of its
Subsidiaries that are material to the conduct of the business of Parent and its
Subsidiaries, and (ii) all agreements and licenses relating to trademarks,
technology, know how or processes that Parent or its Subsidiaries is licensed
or authorized to use, or which it licenses or authorizes others to use, that is
material to the conduct of the business of Parent and its Subsidiaries
(collectively, the "STRAWBERRY INTELLECTUAL PROPERTY"). Parent and its
Subsidiaries own and possess all rights, title and interest in and to, or as of
the Closing, will own and possess all rights, title and interest in and to,
free and clear of all Encumbrances, all of the Strawberry Intellectual Property
and, as of the Closing, all of the Strawberry Intellectual Property will be in
the name of Parent or its Subsidiaries. Parent and its Subsidiaries own or have
the right to use the Strawberry Intellectual Property without infringing or
violating the rights of any third parties, except where such infringement or
violation would not, individually or in the aggregate, reasonably be expected
to have a Strawberry Material Adverse Effect. No consent of any third party
will be required for the use by the Parent or its Subsidiaries of the
Strawberry Intellectual Property after the Effective Time. There are no Actions
pending or claims asserted in writing by any Person against Parent or any of
its Subsidiaries regarding the ownership of or the right to use any Strawberry
Intellectual Property or challenging the rights of Parent or any of its
Subsidiaries with respect to any of the Strawberry Intellectual Property which
would, individually or in the aggregate, reasonably be expected to have a
Strawberry Material Adverse Effect. To the Knowledge of Parent as of the date
hereof, there is no infringement or misappropriation of the Strawberry
Intellectual Property by any Person.
4.18 ENVIRONMENTAL LIABILITY. Except for such of the following as
would not, individually or in the aggregate, reasonably be expected to have a
Strawberry Material Adverse Effect, (i) the operations of Parent and its
Subsidiaries are and have been in compliance with all applicable Environmental
Laws, (ii) each of Parent and its Subsidiaries possess and maintains in effect
all environmental permits, licenses, authorizations and approvals required
under Environmental Law with respect to the properties and business of Parent
and its Subsidiaries, (iii) to the Knowledge of Parent, there has been no
release of any Hazardous Materials which would reasonably be expected to result
in liability to Parent or any of its Subsidiaries, (iv) there are no legal,
administrative or arbitral bodies seeking to impose, nor are there Actions of
any nature reasonably likely to result in the imposition of, on Parent or any
of its Subsidiaries, any liability or obligation arising under common law
relating to the Environment or under any Environmental Law, nor are there any
such liabilities or obligations pending or, to the Knowledge of Parent,
threatened against Parent or its Subsidiaries and (v) neither Parent nor any of
its Subsidiaries is subject to any Order by or with any Governmental Entity or
third party imposing any liability or obligation with respect to the foregoing.
To the Knowledge of Parent, as of the date of this Agreement, the Strawberry
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Financial Statements contain an adequate reserve as determined in accordance
with GAAP for Environmental liabilities and obligations.
4.19 MATERIAL CONTRACTS. Neither Parent nor any of its
Subsidiaries is a party to or bound by (a) any "material contract" as defined
in Item 601(b)(10) of Regulation S K promulgated by the SEC or any Contract
that would be such a "material contract" but for the exception for Contracts
entered into in the ordinary course of business or (b) any non competition or
other Contract that materially limits or will materially limit Parent or any of
its Subsidiaries from engaging in the business currently conducted by it. Each
of the "material contracts" (as defined above) of Parent and its Subsidiaries
is valid and in full force and effect and neither Parent nor any of its
Subsidiaries has violated any provisions of, or committed or failed to perform
any act that, with or without notice, lapse of time, or both, would constitute
a default under the provisions of any such "material contract." To Parent's
Knowledge, the other party to any "material contract" described in this Section
4.19 is not in material breach of or default under such "material contract."
4.20 LABOR RELATIONS.
(a) As of the date of this Agreement and during the
preceding three (3) years, (i) none of Parent, its Subsidiaries or any of their
controlled Affiliates or Strawberry ERISA Affiliates are a party to any
collective bargaining agreement, works council or workers' association or
similar arrangements, (ii) except as would not, individually or in the
aggregate, reasonably be expected to have a Strawberry Material Adverse Effect,
no labor organization or group of employees of Parent or any of its
Subsidiaries has made a pending demand for recognition or certification, and
there are no representation or certification proceedings or petitions seeking a
representation proceeding presently pending or, to the Knowledge of Parent,
threatened to be brought or filed, with the National Labor Relations Board or
any other domestic or foreign labor relations tribunal or authority, (iii)
there are no organizing activities, strikes, work stoppages, slowdowns,
lockouts, arbitrations or grievances, or other labor disputes pending or, to
the Knowledge of Parent, threatened against or involving any of Parent or its
Subsidiaries, and (iv) to the Knowledge of Parent, Parent and its Subsidiaries
are in compliance with their obligations pursuant to the Workers Adjustment and
Retraining Notification Act.
(b) To the Knowledge of Parent, Parent and its
Subsidiaries are in material compliance with all applicable Laws, governmental
orders, agreements, contracts and policies relating to the employment of their
employees, including, without limitation, all such Laws relating to wages,
overtime, terms and conditions of employment, discrimination, immigration,
disability, workers' compensation, the collection and payment of withholding
and/or social contribution taxes and similar Taxes, except where noncompliance
would not reasonably be expected, individually or in the aggregate, to have a
Strawberry Material Adverse Effect.
4.21 STATE TAKEOVER LAWS. Parent's certificate of incorporation
contains a provision expressly electing that Parent not be governed by Section
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203 of the DGCL and Parent shall not amend its certificate of incorporation to
amend or remove such election. No applicable "takeover" or "interested
stockholder" Law is applicable to this Agreement and the Transactions.
4.22 VOTING REQUIREMENTS; APPROVAL; BOARD APPROVAL.
(a) The only stockholder votes required to approve and
adopt this Agreement and the Transactions are (i) in the case of the Merger,
the affirmative vote of Parent, as the sole stockholder of MergerSub, (ii) in
the case of the Share Issuance, the affirmative vote of a majority of the votes
cast on the proposal by the holders of shares of Strawberry Common Stock and
Strawberry Series A Preferred voting as a single class at a meeting of the
Strawberry Stockholders or any adjournment or postponement thereof and (iii) in
the case of the Strawberry Charter Amendment, the affirmative vote of the
holders of a majority of the outstanding shares of Strawberry Common Stock and
Strawberry Series A Preferred (assuming conversion of all of the outstanding
shares of Strawberry Series A Preferred) at a meeting of the Strawberry
Stockholders or any adjournment or postponement thereof (the votes referred to
in clauses (ii) and (iii) of this Section 4.22(a), the "STRAWBERRY STOCKHOLDER
APPROVAL").
(b) The board of directors of MergerSub has, at a
meeting duly called and held, by a unanimous vote (i) determined that the
Merger is advisable and in the best interest of MergerSub and Parent, as the
sole stockholder of MergerSub, (ii) adopted this Agreement, (iii) resolved to
recommend that Parent, as the sole stockholder of MergerSub, vote in favor of
adopting this Agreement and (iv) directed that this Agreement and the Merger be
submitted to Parent, as the sole stockholder of MergerSub, for approval at a
duly held meeting of such stockholder.
(c) The board of directors of Parent, acting upon the
unanimous recommendation of the Special Committee, has, at a meeting duly
called and held, by a unanimous vote (i) determined that the Merger, the Share
Issuance and the Strawberry Charter Amendment are advisable and in the best
interest of Parent, (ii) adopted this Agreement and (iii) approved and resolved
to recommend (the "STRAWBERRY BOARD RECOMMENDATION") that the stockholders of
Parent vote in favor of (A) approving the Share Issuance and (B) the Strawberry
Charter Amendment to be effected contemporaneously with the consummation of the
Merger such that, after giving effect thereto, the Strawberry Charter Amendment
shall be substantially in the form attached hereto as EXHIBIT A.
4.23 OPINION OF PARENT FINANCIAL ADVISOR. The Special Committee
and the board of directors of Parent have received the opinion of Xxxxxxxx
Xxxxx Xxxxxx & Xxxxx Financial Advisors, Inc. to the effect that, as of the
date of such opinion and subject to the matters set forth therein, the Merger
Consideration is fair, from a financial point of view to Strawberry.
4.24 TRANSACTIONS WITH RELATED PARTIES. Parent is not a party to
any transaction or proposed transaction, with its directors, officers or
employees, or any other Person who is an Affiliate of Parent (other than the
Persons listed on SECTION 4.24 OF THE STRAWBERRY DISCLOSURE SCHEDULE). Neither
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Parent nor any of its Affiliates owns or has any ownership interest in any
Person which is in competition with Parent or which is engaged in a related or
similar business to the business conducted by Parent and none of such Persons
has entered into any Contract or understanding in effect on or after the date
hereof contemplating such ownership or ownership interest.
4.25 CUSTOMERS.
(a) Between July 2, 2005 and the date hereof, no
material customer or group of customers (whether or not related) of Parent or
any of its Subsidiaries has canceled or otherwise terminated its Contract or
relationship with Parent or any of its Subsidiaries or has at any time
decreased significantly its purchases of products from Parent or any of its
Subsidiaries and, to the Knowledge of Parent, there has been no material
adverse change in the business relationship of Parent or any of its
Subsidiaries with any of their material customers or group of customers. To the
Knowledge of Parent, no such customer or group of customers intends to cancel
or otherwise terminate its relationship with Parent or any of its Subsidiaries
or to decrease significantly its purchases of the products from Parent or its
Subsidiaries, except for such of the foregoing arising after the date hereof as
would not, individually or in the aggregate, reasonably be expected to have a
Strawberry Material Adverse Effect.
(b) To the Knowledge of Parent, there is no dispute with
any material customer or group of customers (whether or not related) or delays
or other problem in connection with any products sold or services rendered by
Parent or any of its Subsidiaries to any material customer or group of
customers that have given rise or could reasonably be expected to give rise to
a liability or the need to provide additional products or services for the
customer or group of customers involved, in each case that would, individually
or in the aggregate, reasonably be expected to have a Strawberry Material
Adverse Effect.
4.26 STRAWBERRY RIGHTS AGREEMENTS. Parent has made available to
Apple Holdco a correct and complete copy of the Strawberry Rights Agreement in
effect as of the date of this Agreement. Parent has taken all necessary action
to:
(a) render the Strawberry Rights inapplicable to this
Agreement, the Merger, the Share Issuance, the Strawberry Charter Amendment and
the other transactions contemplated by this Agreement;
(b) ensure that (i) none of the Apple Holdco
Stockholders nor any of their Affiliates will become or be deemed to be an
"Acquiring Person" (as defined in the Strawberry Rights Agreement) and (ii) no
"Distribution Date," "Shares Acquisition Date" or "Triggering Event" (each as
defined in the Strawberry Rights Agreement) will occur by reason of (A) the
approval, execution or delivery of this Agreement, (B) the approval of the
Merger, the Share Issuance or the Strawberry Charter Amendment, (C) the
announcement or consummation of the Merger, the Share Issuance or the
Strawberry Charter Amendment or (D) the consummation of any of the other
transactions contemplated by this Agreement; and
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(c) cause the Strawberry Rights to expire immediately
prior to the Effective Time.
4.27 MERGERSUB FORMATION. MergerSub was formed solely for the
purpose of engaging in the Transactions contemplated by this Agreement and has
not engaged, and will not engage, in any business activities or conducted, and
will not conduct, any operations other than in connection with the Transactions
and this Agreement, except for such of the foregoing as would not, individually
or in the aggregate, reasonably be expected to have a Strawberry Material
Adverse Effect.
V. REPRESENTATIONS AND WARRANTIES
OF APPLE HOLDCO
Except as disclosed in (x) the Apple SEC Reports filed prior to the
close of business on the Measurement Date, but excluding any risk factor
disclosure contained in any such Apple SEC Reports under the heading "Risk
Factors" or "Cautionary Statements Regarding Forward Looking Statements" or (y)
the disclosure schedule (the "APPLE DISCLOSURE SCHEDULE") delivered by Apple
Holdco to Parent and MergerSub in connection with the execution of this
Agreement (which schedule sets forth, among other things, items the disclosure
of which is necessary or appropriate either in response to an express
disclosure requirement contained in a provision hereof or as an exception to
one or more representations or warranties contained in this Article V), Apple
Holdco hereby represents and warrants to Parent and MergerSub as follows:
5.1 DUE ORGANIZATION, GOOD STANDING AND CORPORATE POWER. Apple
Holdco is a corporation duly organized, validly existing and in good standing
under the laws of the state of Delaware and has all requisite corporate power
and authority to own, lease and operate its properties and to conduct its
business as now being conducted. Each of Apple Holdco's Subsidiaries is a
corporation or other entity duly organized, validly existing and in good
standing or has equivalent status under the laws of its jurisdiction of
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to conduct its business as now being conducted.
Each of Apple Holdco and its Subsidiaries is duly qualified or licensed to do
business and is in good standing or has equivalent status in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except in such
jurisdictions where the failure to be so qualified or licensed and in good
standing or to have equivalent status would not, individually or in the
aggregate, reasonably be expected to have an Apple Material Adverse Effect.
5.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. Apple Holdco has the
requisite corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder. The execution and delivery of this
Agreement by Apple Holdco, and the consummation by Apple Holdco of the Merger,
have been duly authorized and approved by its board of directors and, other
than the approval of the stockholders of Apple Holdco, which will be granted in
accordance with the terms of the Commitment Agreement, no other corporate
action on the part of Apple Holdco is necessary to authorize the execution and
delivery of this Agreement or the consummation of the Merger. This Agreement
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has been and the other Transaction Documents will be when executed and
delivered, duly executed and delivered by Apple Holdco to the extent it is a
party thereto and is, or will be when executed and delivered, a valid and
binding obligation of Apple Holdco enforceable against Apple Holdco in
accordance with its terms, except to the extent that its enforceability may be
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar Laws affecting the enforcement of creditors' rights generally and by
general equitable principles.
5.3 CONSENTS AND APPROVALS; NO VIOLATIONS. Assuming (a) the
filings required under the HSR Act and any other applicable Antitrust Law are
made and the waiting periods thereunder (if applicable) have been terminated or
expired, (b) the applicable requirements of the Securities Act and state
securities or "blue sky" laws and the Exchange Act are met, including the
filing with the SEC of Proxy Statement, (c) the required notices to the NYSE
related to the Transactions are delivered, (d) compliance with applicable
foreign competition laws, (e) the approval of the stockholders of Apple Holdco
in accordance with the Commitment Agreement and (f) the filing of the
Certificate of Merger and other appropriate merger documents, if any, as
required by the DGCL, are made, the execution and delivery of this Agreement
and the other Transaction Documents by Apple Holdco and the consummation by
Apple Holdco of the Transactions, do not and will not (i) violate or conflict
with any provision of its certificate of incorporation or bylaws or the
comparable governing documents of any of its Subsidiaries, (ii) violate or
conflict with any Law or Order applicable to Apple Holdco or any of its
Subsidiaries or by which any of their respective properties or assets may be
bound, (iii) require any filing with, or Permit, consent or approval of, or the
giving of any notice to, any Governmental Entity, or (iv) result in a violation
or breach of, conflict with, constitute (with or without due notice or lapse of
time or both) a default under, or give rise to any right of termination,
cancellation or acceleration of, or result in the creation of any Encumbrance
upon any of the properties or assets of Apple Holdco or any of its Subsidiaries
under, or give rise to any obligation, right of termination, cancellation,
acceleration or increase of any obligation or a loss of a material benefit
under, any of the terms, conditions or provisions of any Contract to which
Apple Holdco or any of its Subsidiaries is a party, or by which Apple Holdco or
any of its Subsidiaries may be bound, excluding in the case of clauses (iii)
and (iv) above, conflicts, violations, breaches, defaults, rights of
termination, cancellations, accelerations, increases, losses, creations and
impositions of Encumbrances which would not, individually or in the aggregate,
reasonably be expected to have an Apple Material Adverse Effect.
5.4 INFORMATION TO BE SUPPLIED. None of the information supplied
in writing by Apple Holdco for inclusion or incorporation by reference in the
Proxy Statement or any Additional Filings will, in the case of the Proxy
Statement, at the date it is first mailed to Strawberry Stockholders or at the
time of the Strawberry Stockholders Meeting or at the time of any amendment or
supplement thereof, or, in the case of any Additional Filing, at the date it is
first mailed to Strawberry Stockholders or, at the date it is first filed with
the SEC or other Governmental Entity, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. No representation is
made by Apple Holdco with respect to statements made or incorporated by
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reference therein based on information supplied by Parent and/or MergerSub in
connection with the preparation of the Proxy Statement or the Additional
Filings for inclusion or incorporation by reference therein.
5.5 CAPITALIZATION OF APPLE HOLDCO AND APPLE.
(a) The authorized capital stock of Apple Holdco
consists of 1,000 shares of Apple Holdco Common Stock. As of the Measurement
Date, there were 100 shares of Apple Holdco Common Stock issued and
outstanding. As of the Measurement Date, no shares of Apple Holdco Common Stock
were reserved for issuance. SECTION 5.5 OF THE APPLE DISCLOSURE SCHEDULE sets
forth a true and complete list of each recordholder of Apple Holdco Common
Stock as of the Measurement Date and the number of shares of Apple Holdco
Common Stock so owned by such Person as of the Measurement Date. All issued and
outstanding shares of Apple Holdco Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable. As of the date hereof,
except as set forth above, there are no outstanding or authorized options,
warrants, rights, calls, commitments, preemptive rights, subscriptions, claims
of any character, convertible or exchangeable securities, or other Contracts,
contingent or otherwise, relating to Apple Holdco Common Stock or any capital
stock or capital stock equivalent or other nominal interest in Apple Holdco or
any of its Subsidiaries which relate to Apple Holdco (collectively, "APPLE
HOLDCO EQUITY INTERESTS") pursuant to which Apple Holdco or any of its
Subsidiaries is or may become obligated to issue or sell shares of its capital
stock or other equity interests or any securities convertible into, or
exchangeable for, or evidencing the right to subscribe for, any Apple Holdco
Equity Interests. There are no outstanding obligations of Apple Holdco to
repurchase, redeem or otherwise acquire any outstanding securities of Apple
Holdco or any Apple Holdco Equity Interests. There are no Contracts to which
Apple Holdco is a party relating to the issuance, sale, transfer, registration
or voting of any equity securities or other securities of Apple Holdco. No
bonds, debentures, notes or other indebtedness having the right to vote on any
matters on which Apple Holdco Stockholders may vote are issued or outstanding
as of the date hereof.
(b) Apple Holdco has no Subsidiaries other than Apple.
Exhibit 21.1 of Apple Annual Report on Form 10-K for the fiscal year ended
December 31, 2005 includes all the Subsidiaries of Apple that constitute
"significant subsidiaries" as defined in Rule 1-02(w) of Regulation S-X in
existence as of the date hereof. All of the issued and outstanding shares of
capital stock or other equity ownership interests of each Subsidiary of Apple
Holdco are owned by Apple Holdco, directly or indirectly, free and clear of any
Encumbrances, and all of such shares or equity ownership interests are duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights. No such Subsidiary has or is bound by any outstanding or
authorized subscriptions, options, rights, preemptive rights, warrants, calls,
commitments, claims of any character, convertible or exchangeable securities,
or Contracts, contingent or otherwise, of any nature relating to the purchase
or issuance of any shares of capital stock or any other security of such
Subsidiary or any securities representing the right to purchase or otherwise
receive any shares of capital stock or any other security of such Subsidiary.
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There are no outstanding obligations to repurchase, redeem or otherwise acquire
any outstanding securities of any such Subsidiary and there are no Contracts to
which any Subsidiary of Apple Holdco is a party relating to the issuance, sale,
transfer, registration or voting of any equity securities or other securities
of Apple Holdco or any of its Subsidiaries.
(c) Each subsidiary of Apple Holdco constitutes a
Subsidiary of Apple Holdco as defined in this Agreement.
(d) Apple properly accounted for options to purchase
common stock, par value $0.01 per share, of Apple in accordance with GAAP, and
no change is expected in respect of any prior Apple Financial Statement
relating to expenses for such compensation. There is no pending audit,
investigation or inquiry by Apple, or, to the Knowledge of Apple Holdco, any
governmental agency with respect to Apple's stock option granting practices or
other equity compensation practice).
(e) The authorized capital stock of Apple consists of
10,000 shares of common stock, $0.01 par value per share. All issued shares
have been duly authorized and validly issued, are fully paid and nonassessable
and are owned by Apple Holdco free and clear of any Encumbrances (other than as
imposed by federal or state securities laws).
5.6 ABSENCE OF CERTAIN EVENTS. Except as required or expressly
permitted by this Agreement or as reflected in the Apple Financial Statements
filed on or prior to the Measurement Date, since July 1, 2006, Apple Holdco and
its Subsidiaries have operated their respective businesses only in the ordinary
course of business and there has not occurred any event, occurrence or
condition which (i) would have been a breach of Section 6.2 had such Section
6.2 been in effect since July 1, 2006, or (ii) would, individually or in the
aggregate, reasonably be expected to have an Apple Material Adverse Effect.
5.7 LITIGATION. There are no Actions pending against Apple Holdco
or any of its Subsidiaries or, to the Knowledge of Apple Holdco, threatened
against Apple Holdco or any of its Subsidiaries (or any of their respective
properties, rights or franchises), at law or in equity, or before or by any
Governmental Entity, that would, individually or in the aggregate, reasonably
be expected to have an Apple Material Adverse Effect, and, to the Knowledge of
Apple Holdco, no development has occurred with respect to any pending or
threatened Action that, individually or in the aggregate, would reasonably be
expected to have an Apple Material Adverse Effect. Neither Apple Holdco nor any
of its Subsidiaries are subject to any Orders that, individually or in the
aggregate, would reasonably be expected to have an Apple Material Adverse
Effect.
5.8 TITLE TO PROPERTIES; ENCUMBRANCES. Each of Apple Holdco and
its Subsidiaries has good and valid title to, or, in the case of leased
properties and assets, valid leasehold interests in, all of its tangible
properties and assets, except where the failure to have such good and valid
title or valid leasehold interests, as applicable, would not, individually or
in the aggregate, reasonably be expected to have an Apple Material Adverse
Effect, in each case subject to no Encumbrances, except for (a) Encumbrances
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consisting of zoning or planning restrictions, easements, permits and other
restrictions or limitations on the use of real property or irregularities in
title thereto which do not materially detract from the value of, or impair the
use of, such property by Apple Holdco or any of its Subsidiaries, (b)
Encumbrances for current Taxes, assessments or governmental charges or levies
on property not yet due or which are being contested in good faith and for
which appropriate reserves in accordance with GAAP have been created, and (c)
Encumbrances which would not, individually or in the aggregate, reasonably be
expected to have an Apple Material Adverse Effect.
5.9 APPLE SEC REPORTS; FINANCIAL STATEMENTS.
(a) Each of Apple and its Subsidiaries has timely filed
with the SEC all registration statements, prospectuses, reports, schedules,
forms, proxy statements, certifications and other documents (including exhibits
and all other information incorporated by reference therein) required to be
filed by Apple between January 1, 2003 and January 23, 2007 (the "APPLE SEC
REPORTS"). The Apple SEC Reports (i) were prepared in all material respects in
accordance with the requirements of the Securities Act or the Exchange Act and
(ii) did not at the time they were filed contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading, except to the extent
corrected by a subsequent Apple SEC Report filed with the SEC prior to the date
of this Agreement. Neither Apple Holdco nor any of its Subsidiaries is subject
to the periodic reporting requirements of the Exchange Act by Law or Contract.
(b) Each of the consolidated financial statements of
Apple (including, in each case, any notes thereto) contained in the Apple SEC
Reports, the "APPLE FINANCIAL STATEMENTS") was prepared and the Apple 2006
Financial Statements will be prepared in accordance with GAAP (except as may be
indicated in the notes thereto) and presented fairly and will present fairly
(when filed after the date of this Agreement) in all material respects the
consolidated financial position and consolidated results of operations of Apple
and its Subsidiaries as of the respective dates thereof and for the respective
periods indicated therein, except as otherwise noted therein and subject, in
the case of unaudited statements, to normal year end audit adjustments in
amounts that are immaterial in nature and amounts consistent with past
experience. The books and records of Apple and its Subsidiaries (i) have been,
and are being, maintained in accordance with GAAP and any other applicable
legal and accounting requirements, (ii) reflect only actual transactions, (iii)
are complete and accurate in all material respects, and (iv) reflect in
reasonable detail all material transactions to which Apple and its Subsidiaries
are a party.
(c) The records, systems, controls, data and information
of Apple and its Subsidiaries are recorded, stored, maintained and operated
under means (including any electronic, mechanical or photographic process,
whether computerized or not) that are under the exclusive ownership and direct
control of Apple or its Subsidiaries, except for any non exclusive ownership
and non direct control that would not have a material adverse effect on the
system of internal accounting controls described in the following sentence.
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Apple and its Subsidiaries have devised and maintain a system of internal
controls over financial reporting sufficient to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements in accordance with GAAP. Apple (i) has designed disclosure
controls and procedures to ensure that material information relating to Apple,
including its consolidated Subsidiaries, is made known to its management by
others within those entities and (ii) has disclosed, based on its most recent
evaluation prior to the date hereof, to Apple's auditors and the audit
committee of Apple's board of directors (A) any significant deficiencies in the
design or operation of internal controls which could adversely affect in any
material respect Apple's ability to record, process, summarize and report
financial data and have identified for Apple's auditors any material weaknesses
in internal controls and (B) any fraud, whether or not material, that involves
management or other employees who have a significant role in Apple's internal
controls. Apple has made available to Parent a summary of each such disclosure
made by management to its auditors and audit committee since January 1, 2005.
5.10 NO UNDISCLOSED LIABILITIES. Except for those liabilities that
are reflected or reserved against on the consolidated financial statements of
Apple as of and for the period ended September 30, 2006 included in Apple's
Form 10 Q for the quarter ended September 30, 2006, including the notes
thereto, since such date, neither Apple nor any of its Subsidiaries has
incurred any liability of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether due or to become due and including any off
balance sheet financings, loans, indebtedness, make whole or similar
liabilities or obligations) whether or not required to be reflected in a
consolidated balance sheet of Apple prepared in accordance with GAAP, except
for liabilities incurred in the ordinary course of business that would not,
individually or in the aggregate, reasonably be expected to have an Apple
Material Adverse Effect.
5.11 COMPLIANCE WITH LAW.
(a) Each of Apple Holdco and its Subsidiaries is, and
since January 1, 2005, has been, in compliance with all Laws and Orders
applicable to it, except where the failure to so comply would not, individually
or in the aggregate, reasonably be expected to have an Apple Material Adverse
Effect.
(b) Each of Apple Holdco and its Subsidiaries holds, to
the extent legally required, all Permits that are required for the lawful
operation of its business as now conducted, except where the failure to hold
any such Permit would not, individually or in the aggregate, reasonably be
expected to have an Apple Material Adverse Effect, and there has not occurred
any default under any such Permit, except to the extent that such default would
not, individually or in the aggregate, reasonably be expected to have an Apple
Material Adverse Effect.
5.12 INSURANCE. Apple Holdco and its Subsidiaries maintain
insurance coverage with reputable insurers in such amounts and covering such
risks as are in accordance with normal industry practice for companies engaged
in businesses similar to that of Apple Holdco and its Subsidiaries.
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5.13 REGULATORY MATTERS.
(a) Except for such of the following as would not,
individually or in the aggregate, reasonably be expected to have an Apple
Material Adverse Effect, there are no facts:
(i) which would furnish a substantial basis for
the recall, withdrawal or suspension of any products of Apple Holdco or its
Subsidiaries by any competent Governmental Entity; or
(ii) which would otherwise reasonably be
expected to cause Apple Holdco or its Subsidiaries to withdraw, recall or
suspend any products of Apple Holdco or its Subsidiaries from the market or to
change the marketing classification of any products of Apple Holdco or its
Subsidiaries or to terminate or suspend testing of any products of Apple Holdco
or its Subsidiaries.
(b) There are no:
(i) products which have been recalled by Apple
Holdco or its Subsidiaries (whether voluntarily or otherwise) at any time since
January 1, 2003; or
(ii) Actions pending, or to the Knowledge of
Apple Holdco, contemplated or threatened, and no such Actions have been settled
or resolved since January 1, 2004, seeking the recall, suspension or seizure of
any products of Apple Holdco or its Subsidiaries.
(c) Since January 1, 2004, Apple Holdco and each of its
Subsidiaries has timely filed or submitted all reports, filings, applications
and notifications required by statutes or regulations administered by the U.S.
Consumer Products Safety Commission including, without limitation, 15 U.S.C.
xx.xx. 2064(b) and 2084) and any other Governmental Entity with respect to the
manufacture, distribution and safety of any products manufactured, imported,
distributed or sold by Apple Holdco or any of its Subsidiaries. Each such
report, filing, application and notification complied, at the time of such
filing or submission, in all material respects, with the requirements for such
report, filing, application and notification, and has been supplemented to the
extent required by applicable law or regulation. 5.14 BROKER'S OR FINDER'S FEE.
Except for Lazard Freres & Co. LLC, no Person acting on behalf of Apple Holdco
or any of its Subsidiaries is, or will be, entitled to any investment banking,
broker's, finder's or similar fee for which Parent, MergerSub, Apple Holdco,
Apple or any of their respective Affiliates or the Surviving Corporation after
the Effective Time could have any liabilities in connection with this Agreement
or any of the Transactions.
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5.15 TAXES, TAX RETURNS, TAX TREATMENT.
(a) Apple Holdco and each of its subsidiaries has duly
filed all Tax Returns required to be filed by it on or prior to the date of
this Agreement (all such returns being accurate and complete in all material
respects) and has duly paid or made provision for the payment of all Taxes that
have been incurred or are due or claimed to be due from it by federal, state,
foreign or local Tax Authorities other than (i) Taxes that (a) are not yet
delinquent or (b) are being contested in good faith, have not been finally
determined and have been adequately reserved against or (ii) Tax Returns or
Taxes as to which the failure to file, pay or make provision for would not,
individually or in the aggregate, reasonably be expected to have an Apple
Material Adverse Effect. The period (including any extensions) within which the
IRS may assess federal income Taxes against Apple Holdco and its subsidiaries
has closed with respect to all taxable years through and including the fiscal
year ended December 31, 1998 and any liability with respect thereto has been
satisfied. There are no disputes pending, or claims asserted, for Taxes or
assessments upon Apple Holdco or any of its subsidiaries for which Apple Holdco
does not have adequate reserves that would, individually or in the aggregate,
reasonably be expected to have an Apple Material Adverse Effect. Neither Apple
Holdco nor any of its Subsidiaries joins or has joined in the filing of any
affiliated, aggregate, consolidated, combined or unitary federal, state, local
and foreign Tax Return other than consolidated Tax Returns for the affiliated
group of its corporations of which Apple Holdco is the common parent, and
neither Apple Holdco nor any of its Subsidiaries is a party to any agreement
providing for the allocation of sharing of Taxes with any person that is not a
member of such affiliated group. Neither Apple Holdco nor any of its
subsidiaries is a party to or is bound by any Tax sharing, allocation or
indemnification agreement or arrangement (other than such an agreement or
arrangement exclusively between or among Apple Holdco and its subsidiaries).
Within the past two years, neither Apple Holdco nor any of its subsidiaries has
been a "distributing corporation" or a "controlled corporation" in a
distribution intended to qualify under Section 355(a) of the Code. No
disallowance of a deduction under Sections 162(m) or 280G of the Code for
employee remuneration of any amount paid or payable by Apple Holdco or any of
its subsidiaries under any contract, plan, program or arrangement or
understanding would, individually or in the aggregate, reasonably be expected
to have an Apple Material Adverse Effect. Apple Holdco and its subsidiaries
have complied with the requirements of Code Section 409A (and its related
reporting and withholding requirements), for all amounts paid or payable under
any contract, plan, program or arrangement or understanding except where such
failure to comply would not, individually or in the aggregate, reasonably be
expected to have an Apple Material Adverse Effect.
5.16 EMPLOYEE BENEFIT MATTERS.
(a) SECTION 5.16 OF THE APPLE DISCLOSURE SCHEDULE sets
forth a true and complete list of each benefit or compensation plan,
arrangement or agreement, and any bonus, incentive, deferred compensation,
vacation, stock purchase, stock option, severance, employment, change of
control or fringe benefit plan, program or agreement, whether written or oral,
that is maintained, or contributed to, for the benefit of current or former
officers, directors, Contingent Workers or employees of Apple Holdco and its
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Subsidiaries, with respect to which Apple Holdco or its Subsidiaries may,
directly or indirectly, have any liability (whether contingent or otherwise),
as of the date of this Agreement or as of the Closing Date, including all
material plans of any Apple ERISA Affiliate that are subject to Title IV of
ERISA (the "APPLE BENEFIT PLANS"). For purposes of this Agreement, (i) an
"Apple ERISA Affiliate" is any trade or business, whether or not incorporated,
all of which together with Apple Holdco would be deemed a "single employer"
within the meaning of Section 4001(a) or (b) of ERISA or Section 414 of the
Code and (ii) an "APPLE FOREIGN PLAN" means any Apple Benefit Plan that is
maintained outside of the United States (and each such Apple Foreign Plan is
separately identified on SECTION 5.16(A) OF THE APPLE DISCLOSURE SCHEDULE).
(b) Except with respect to clauses (i), (iii), (v),
(vii), (ix), (x), and (xi) below (as would not, either individually or in the
aggregate, reasonably be expected to have an Apple Material Adverse Effect) (i)
each of the Apple Benefit Plans has been operated and administered in
compliance in all material respects with its terms and applicable Laws,
including ERISA and the Code, (ii) each of the Apple Benefit Plans intended to
be "qualified" within the meaning of Section 401(a) of the Code has received or
timely filed for a favorable determination letter from the IRS with respect to
all changes in applicable Law for which certain qualified plans were required
to be amended, and there are no existing circumstances or any events that have
occurred that will adversely affect the qualified status of any such Apple
Benefit Plan, (iii) no Apple Benefit Plan is a "defined benefit plan" as
defined in Section 3(35) of ERISA, (iv) no Apple Benefit Plan provides benefits
coverage, including death or medical benefits coverage (whether or not
insured), with respect to current or former officers, employees, Contingent
Workers or directors of Apple Holdco or its Subsidiaries beyond their
retirement or other termination of service, other than (A) coverage mandated by
applicable Law, (B) death benefits or retirement benefits under any "employee
pension plan" (as such term is defined in Section 3(2) of ERISA), (C) benefits
the full cost of which is borne by the current or former employee, consultant,
leased employee or director (or his beneficiary) or (D) coverage through the
last day of the calendar month in which retirement or other termination of
service occurs, (v) no Apple Benefit Plan is or was a "multiemployer pension
plan" (as such term is defined in Section 3(37) of ERISA) or a "multiple
employer plan" (as such term is defined Section 210(a) of ERISA or Section
413(c) of the Code), (vi) none of Apple Holdco or its Subsidiaries or, to the
Knowledge of Apple Holdco, any other person, including any fiduciary, has
engaged in a transaction in connection with which Apple Holdco, its
Subsidiaries or any Apple Benefit Plan would reasonably be expected to be
subject to either a material civil penalty assessed pursuant to Section 409 or
502(i) of ERISA or a material Tax imposed pursuant to Section 4975 or 4976 of
the Code, (vii) to the Knowledge of Apple Holdco, (A) there are no pending,
threatened or anticipated claims (other than routine claims for benefits) by,
on behalf of or against any of the Apple Benefit Plans or any trusts or other
funding vehicles related thereto and (B) no administrative investigation, audit
or proceeding is pending or in progress with respect to the Apple Benefit
Plans, (viii) all contributions or other amounts payable by Apple Holdco or its
Subsidiaries as of the Effective Time with respect to each Apple Benefit Plan
in respect of current or former plan years have been paid or accrued in
accordance with GAAP and Section 412 of the Code and, other than transfers
incident to an incentive stock option plan within the meaning of Section 422 of
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the Code or as restricted under Section 162(m) of the Code, have been or are
fully deductible under the Code, (ix) with respect to any insurance policy
providing funding for benefits under any Apple Benefit Plan, (A) there is no
liability of Apple Holdco or its Subsidiaries, in the nature of a retroactive
rate adjustment, loss sharing arrangement or other actual or contingent
liability, nor would there be any such liability if such insurance policy was
terminated at or after the Closing Date and (B) no insurance company issuing
any such policy is in receivership, conservatorship, liquidation or similar
proceeding and, to the Knowledge of Apple Holdco, no such proceedings with
respect to any insurer are imminent, (x) Apple Holdco and its Subsidiaries have
reserved all rights necessary to amend or terminate each of the Apple Benefit
Plans, without the consent of any other Person, and (xi) no Apple Benefit Plan
provides benefits to any individual who is not a current or former employee of
Apple Holdco or its Subsidiaries, or the dependents or other beneficiaries of
any such current or former employee.
(c) In addition to the representation contained in
Subsection (b) above (if applicable), except as would not, either individually
or in the aggregate, reasonably be expected to have an Apple Material Adverse
Effect, (i) each Apple Foreign Plan complies with all applicable Laws
(including, without limitation, applicable Laws regarding the funding, form and
operation of the Apple Foreign Plan); (ii) the Apple Financial Statements
accurately reflect the Apple Foreign Plan liabilities and accruals for
contributions required to be paid to the Apple Foreign Plans, in accordance
with GAAP, (iii) there have not occurred, nor are there continuing any
transactions or breaches of fiduciary duty under applicable Law, and (iv) no
administrative investigation, audit or other proceeding by any Governmental
Authority is pending or in progress or, to the Knowledge of Apple Holdco and
its Subsidiaries, threatened, with respect to any Apple Foreign Plan.
(d) Neither the execution and delivery of this Agreement
nor the consummation of the Transactions will (either alone or in conjunction
with any other event) (i) result in any payment (including severance,
unemployment compensation, "excess parachute payment" (within the meaning of
Section 280G of the Code), forgiveness of indebtedness or otherwise) becoming
due to any director, consultant, employee or former employee of Apple Holdco or
any of its Subsidiaries from Apple Holdco or any of its Subsidiaries under any
Apple Benefit Plan or otherwise, (ii) increase any benefits otherwise payable
under any Apple Benefit Plan or otherwise, or (iii) result in any acceleration
of the time of funding, payment or vesting of any such benefits.
(e) Except as would not reasonably be expected to have
an Apple Material Adverse Effect, with respect to Contingent Workers who are
located within the United States, (i) all Persons so classified satisfy and
have at all times satisfied in all material respects the requirements of
applicable Law to be so classified, (ii) Apple Holdco and its Subsidiaries have
fully and accurately reported such persons' compensation on IRS Form 1099 when
required to do so, (iii) neither Apple Holdco or its Subsidiaries has or had
any obligations to provide benefits with respect to such persons under any
Apple Benefit Plan or otherwise and (iv) Apple Holdco and its Subsidiaries have
no material liability with respect to the misclassification of any Contingent
Workers.
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5.17 INTELLECTUAL PROPERTY. SECTION 5.17 OF THE APPLE DISCLOSURE
SCHEDULE identifies (i) all applied for and registered trademarks and service
marks, trade names, domain names, registered copyrights, pending and issued
patents owned, used or licensed by or to Apple Holdco or any of its
Subsidiaries that are material to the conduct of the business of Apple Holdco
and its Subsidiaries, and (ii) all agreements and licenses relating to
trademarks, technology, know how or processes that Apple Holdco or its
Subsidiaries is licensed or authorized to use, or which it licenses or
authorizes others to use, that is material to the conduct of the business of
Apple Holdco and its Subsidiaries (collectively, the "APPLE INTELLECTUAL
PROPERTY"). Apple Holdco and its Subsidiaries own and possess all rights, title
and interest in and to, or as of the Closing, will own and possess all rights,
title and interest in and to, free and clear of all Encumbrances, all of the
Apple Intellectual Property and, as of the Closing, all of the Apple
Intellectual Property will be in the name of Apple Holdco or its Subsidiaries.
Apple Holdco and its Subsidiaries own or have the right to use the Apple
Intellectual Property without infringing or violating the rights of any third
parties, except where such infringement or violation would not, individually or
in the aggregate, reasonably be expected to have an Apple Material Adverse
Effect. No consent of any third party will be required for the use by the
Surviving Corporation or its Subsidiaries of the Apple Intellectual Property
after the Effective Time. There are no Actions pending or claims asserted in
writing by any Person against Apple Holdco or any of its Subsidiaries regarding
the ownership of or the right to use any Apple Intellectual Property or
challenging the rights of Apple Holdco or any of its Subsidiaries with respect
to any of the Apple Intellectual Property which would, individually or in the
aggregate, reasonably be expected to have an Apple Material Adverse Effect. To
the Knowledge of Apple Holdco as of the date hereof, there is no infringement
or misappropriation of the Apple Intellectual Property by any Person.
5.18 ENVIRONMENTAL LIABILITY. Except for such of the following as
would not, individually or in the aggregate, reasonably be expected to have an
Apple Material Adverse Effect, (i) the operations of Apple Holdco and its
Subsidiaries are and have been in compliance with all applicable Environmental
Laws, (ii) each of Apple Holdco and its Subsidiaries possess and maintains in
effect all environmental permits, licenses, authorizations and approvals
required under Environmental Law with respect to the properties and business of
Apple Holdco and its Subsidiaries, (iii) to the Knowledge of Apple Holdco,
there has been no release of any Hazardous Materials which would reasonably be
expected to result in liability to Apple Holdco or any of its Subsidiaries,
(iv) there are no legal, administrative or arbitral bodies seeking to impose,
nor are there Actions of any nature reasonably likely to result in the
imposition of, on Apple Holdco or any of its Subsidiaries, any liability or
obligation arising under common law relating to the Environment or under any
Environmental Law, nor are there any such liabilities or obligations pending
or, to the Knowledge of Apple Holdco, threatened against Apple Holdco or its
Subsidiaries and (v) neither Apple Holdco nor any of its Subsidiaries is
subject to any Order by or with any Governmental Entity or third party imposing
any liability or obligation with respect to the foregoing. To the Knowledge of
Apple Holdco, as of the date of this Agreement, the Apple Financial Statements
contain an adequate reserve as determined in accordance with GAAP for
Environmental liabilities and obligations.
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5.19 MATERIAL CONTRACTS. Neither Apple Holdco nor any of its
Subsidiaries is a party to or bound by (a) any "material contract" as defined
in Item 601(b)(10) of Regulation S K promulgated by the SEC or any Contract
that would be such a "material contract" but for the exception for Contracts
entered into in the ordinary course of business or (b) any non competition or
other Contract that materially limits or will materially limit Apple Holdco or
any of its Subsidiaries from engaging in the business currently conducted by
it. Each of the "material contracts" (as defined above) of Apple Holdco and its
Subsidiaries is valid and in full force and effect and neither Apple Holdco nor
any of its Subsidiaries has violated any provisions of, or committed or failed
to perform any act that, with or without notice, lapse of time, or both, would
constitute a default under the provisions of any such "material contract." To
Apple Holdco's Knowledge, the other party to any "material contract" described
in this Section 5.19 is not in material breach of or default under such
"material contract."
5.20 LABOR RELATIONS.
(a) As of the date of this Agreement and during the
preceding three (3) years, (i) none of Apple Holdco, its Subsidiaries or any of
their controlled Affiliates or Apple ERISA Affiliates are a party to any
collective bargaining agreement, works council or workers' association or
similar arrangements, (ii) except as would not, individually or in the
aggregate, reasonably be expected to have an Apple Material Adverse Effect, no
labor organization or group of employees of Apple Holdco or any of its
Subsidiaries has made a pending demand for recognition or certification, and
there are no representation or certification proceedings or petitions seeking a
representation proceeding presently pending or, to the Knowledge of Apple
Holdco, threatened to be brought or filed, with the National Labor Relations
Board or any other domestic or foreign labor relations tribunal or authority,
(iii) there are no organizing activities, strikes, work stoppages, slowdowns,
lockouts, arbitrations or grievances, or other labor disputes pending or, to
the Knowledge of Apple Holdco, threatened against or involving any of Apple
Holdco or its Subsidiaries, and (iv) to the Knowledge of Apple Holdco, Apple
Holdco and its Subsidiaries are in compliance with their obligations pursuant
to the Workers Adjustment and Retraining Notification Act.
(b) To the Knowledge of Apple Holdco, Apple Holdco and
its Subsidiaries are in material compliance with all applicable Laws,
governmental orders, agreements, contracts and policies relating to the
employment of their employees, including, without limitation, all such Laws
relating to wages, overtime, terms and conditions of employment,
discrimination, immigration, disability, workers' compensation, the collection
and payment of withholding and/or social contribution taxes and similar Taxes,
except where noncompliance would not reasonably be expected, individually or in
the aggregate, to have an Apple Material Adverse Effect.
5.21 STATE TAKEOVER LAWS. The board of directors of Apple Holdco
has taken all necessary action to ensure that the restrictions on business
combinations contained in Section 203 of the DGCL will not apply to this
Agreement. No applicable "takeover" or "interested stockholder" Law is
applicable to this Agreement and the Transactions.
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5.22 VOTING REQUIREMENTS; APPROVAL; BOARD APPROVAL.
(a) Except for the adoption of this Agreement by the
affirmative vote of the holders of a majority of the outstanding shares of
Apple Holdco Common Stock entitled to vote, no other vote of the holders of
Apple Holdco Common Stock is necessary to approve and consummate the
Transactions. (b) The board of directors of Apple Holdco has, by a unanimous
consent, (i) determined that the Merger is advisable and in the best interest
of Apple Holdco and the Apple Holdco Stockholders, (ii) adopted this Agreement,
(iii) resolved to recommend that the Apple Holdco Stockholders vote in favor of
adopting this Agreement, and (iv) directed that this Agreement and the Merger
be submitted to the Apple Holdco Stockholders for approval by such
stockholders.
5.23 TRANSACTIONS WITH RELATED PARTIES. Apple Holdco is not a
party to any transaction or proposed transaction, with its directors, officers
or employees, or any other Person who is an Affiliate of Apple Holdco (other
than the Persons listed in SECTION 5.23 OF THE APPLE DISCLOSURE SCHEDULE).
Neither Apple Holdco nor any of its Subsidiaries owns or has any ownership
interest in any Person (other than Parent) which is in competition with Apple
Holdco or which is engaged in a related or similar business to the business
conducted by Apple Holdco and none of such Persons has entered into any
Contract or understanding in effect on or after the date hereof contemplating
such ownership or ownership interest.
5.24 CUSTOMERS.
(a) Between January 1, 2005 and the date hereof, no
material customer or group of customers (whether or not related) of Apple or
any of its Subsidiaries has canceled or otherwise terminated its Contract or
relationship with Apple or any of its Subsidiaries or has at any time decreased
significantly its purchases of products from Apple and, to the Knowledge of
Apple Holdco, there has been no material adverse change in the business
relationship of Apple or any of its Subsidiaries with any of their material
customers or group of customers. To the Knowledge of Apple Holdco, no such
customer or group of customers intends to cancel or otherwise terminate its
relationship with Apple or any of its Subsidiaries or to decrease significantly
its purchases of the products from Apple or its Subsidiaries, except for such
of the foregoing arising after the date hereof as would not, individually or in
the aggregate, reasonably be expected to have an Apple Material Adverse Effect.
(b) To the Knowledge of Apple Holdco, there is no
dispute with any material customer or group of customers (whether or not
related) or delays or other problem in connection with any products sold or
services rendered by Apple or any of its Subsidiaries to any material customer
or group of customers that have given rise or could reasonably be expected to
give rise to a liability or the need to provide additional products or services
for the customer or group of customers involved, in each case that would,
individually or in the aggregate, reasonably be expected to have an Apple
Material Adverse Effect.
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5.25 APPLE HOLDCO. Apple Holdco was formed solely for the purpose
of engaging in the transactions contemplated by the Agreement of Plan and
Merger, dated October 19, 2006, by and among Apple Holdco, APN Mergersub, Inc.
a Florida corporation, and Apple (as amended, the "APPLE MERGER AGREEMENT") and
has not engaged, and will not engage, in any business activities or conducted,
and will not conduct, any operations other than in connection with the
Transactions, this Agreement, the transactions contemplated by the Apple Merger
Agreement, the Apple Merger Agreement, the Financing, the Alternative Financing
and the transactions contemplated by the Financing Commitments, except for such
of the foregoing as would not, individually or in the aggregate, reasonably be
expected to have a Apple Material Adverse Effect.
VI. COVENANTS
6.1 COVENANTS OF PARENT. During the period from the date of this
Agreement and continuing until the Effective Time, Parent agrees as to itself
and its Subsidiaries that (except for the Merger, as required or otherwise
expressly contemplated or permitted by this Agreement or SECTION 6.1 (INCLUDING
ITS SUBSECTIONS) OF THE STRAWBERRY DISCLOSURE SCHEDULE, as required by a
Governmental Entity or to the extent that Apple Holdco otherwise consents in
writing in its sole discretion):
(a) ORDINARY COURSE. Parent will, and will cause each of
its Subsidiaries to, carry on their respective businesses in the ordinary
course, in substantially the same manner as heretofore conducted and use
commercially reasonable efforts to preserve intact their present business
organizations, keep available the services of their current officers and other
key employees and preserve their relationships with customers, suppliers and
others having business dealings with them, except that no action by Parent or
its Subsidiaries with respect to matters specifically addressed by any other
provision of this Section 6.1 will be deemed a breach of this Section 6.1(a)
unless such action would constitute a breach of one or more of such other
provisions. Without limiting the generality or effect of the foregoing, other
than in connection with acquisitions permitted by Section 6.1(e) or investments
permitted by Section 6.1(g), Parent will not, and will cause its Subsidiaries
not to, (i) enter into any new material line of business, (ii) enter into any
Contract with a supplier, distributor or customer representative that involves
the purchase, distribution or sale of goods or services with a term extending
more than one year that is not terminable by Parent or any of its Subsidiaries
upon less than 30 days prior written notice, (iii) enter into any Contract with
respect to the licensing of any Strawberry Intellectual Property with a term
extending more than one year that is not terminable by Parent or any of its
Subsidiaries without penalty or premium upon less than 30 days prior written
notice, or (iv) incur or commit to any capital expenditures or any obligations
or liabilities in connection with any capital expenditures other than capital
expenditures and obligations or liabilities in connection therewith incurred or
committed to in the ordinary course of business consistent with past practice.
(b) DIVIDENDS; CHANGES IN SHARE CAPITAL. Parent will
not, and will cause its foreign Subsidiaries not to, declare or pay any
dividends on or make other distributions (whether in cash, stock or property)
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in respect of any of its capital stock. Except to the extent required to comply
with its obligations hereunder and as set forth in SECTION 6.1(B) OF THE
STRAWBERRY DISCLOSURE SCHEDULE, Parent will not, and will cause its
Subsidiaries not to (i) split, combine or reclassify any of its capital stock
or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for, shares of its capital stock, or
(ii) repurchase, redeem or otherwise acquire any shares of its capital stock or
any securities convertible into or exercisable for any shares of its capital
stock, except upon the exercise of Strawberry Options pursuant to the terms of
the Strawberry Option Plans.
(c) ISSUANCE OF SECURITIES. Except as set forth in
SECTION 6.1(C) OF THE STRAWBERRY DISCLOSURE SCHEDULE for Strawberry Common
Stock to be issued in connection with the Merger, Parent will not, and will
cause its Subsidiaries not to, offer, issue, deliver, sell, pledge or otherwise
Encumber, or authorize or propose the offering, issuance, delivery, sale,
pledge or Encumbrance of, any shares of its capital stock of any class or any
securities convertible into or exercisable for, or any rights, warrants, calls
or options to acquire, any such shares, or enter into any commitment,
arrangement, undertaking or agreement with respect to any of the foregoing,
except upon the exercise of Strawberry Options pursuant to the terms of the
Strawberry Option Plans.
(d) GOVERNING DOCUMENTS. Except to the extent required
to comply with its obligations hereunder or with applicable Laws, Parent will
not amend or propose to amend its certificate of incorporation, bylaws or other
governing documents and will not, and will cause each of its Subsidiaries not
to, amend its certificate of incorporation, bylaws or other governing
documents.
(e) NO ACQUISITIONS. Parent will not, and will cause its
Subsidiaries not to, acquire or agree to acquire by merger or consolidation, or
by purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation,
partnership, limited liability entity, joint venture, association or other
business organization or division thereof or otherwise acquire or agree to
acquire any material assets (excluding the acquisition of assets in the
ordinary course of business consistent with past practice); PROVIDED, HOWEVER,
that the foregoing restrictions will not prohibit (i) internal reorganizations
or consolidations involving Subsidiaries of Parent in existence on the date of
this Agreement or (ii) the creation of new direct or indirect wholly owned
Subsidiaries of Parent organized to conduct or continue activities otherwise
permitted by this Agreement.
(f) NO DISPOSITIONS. Other than (i) internal
reorganizations or consolidations involving existing Subsidiaries of Parent or
(ii) as may be required by or in conformance with applicable Laws in order to
permit or facilitate the consummation of the Transactions, Parent will not, and
will cause its Subsidiaries not to, sell, lease, license or otherwise Encumber
or subject to any Encumbrance or otherwise dispose of, or agree to sell, lease,
license or otherwise Encumber or subject to any Encumbrance or otherwise
dispose of, any assets (including capital stock of any Subsidiary of Parent,
but excluding inventory and obsolete equipment in the ordinary course of
business consistent with past practice).
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(g) INVESTMENTS; INDEBTEDNESS. Parent will not, and will
cause its Subsidiaries not to, (i) make any loans, advances or capital
contributions to, or investments in, any other Person, other than (A)
investments by Parent or any of its Subsidiaries to or in Parent or any other
wholly owned Subsidiary of Parent, or (B) pursuant to any Contract or other
legal obligation of Parent as in effect on the date of this Agreement, or (C)
employee loans or advances for travel, business, relocation or other
reimbursable expenses made in the ordinary course of business; or (ii) create,
incur, assume or suffer to exist any indebtedness, issuances of debt
securities, guarantees, loans or advances not in existence as of the date of
this Agreement other than (A) in the ordinary course of business pursuant to
its existing revolving credit facility or (B) for trade payables incurred in
the ordinary course of business or as otherwise permitted by this Section
6.1(g).
(h) STRAWBERRY NYSE LISTING. Parent will use its
commercially reasonable efforts to maintain the listing of Strawberry Common
Stock on the NYSE and to continue to satisfy any and all requirements in the
NYSE Compliance Plan and any and all listing qualifications and criteria
related thereto (other than those listing qualifications and criteria expressly
waived by the NYSE in the NYSE Compliance Plan during periods that such listing
qualifications and criteria have been waived).
(i) COMPENSATION. Except (i) as required by applicable
Laws or Contract in effect on the date hereof that relates to Parent or any of
its Subsidiaries or any of their employees or (ii) as required under this
Agreement, Parent will not, and will cause its Subsidiaries not to, increase
the amount of compensation or employee benefits of any employee, consultant or
director of Parent or any of its Subsidiaries, pay any severance, pension,
retirement, savings or profit sharing allowance to any employee, consultant or
director that is not required by any existing plan or agreement, enter into any
Contract with any employee, consultant or director regarding his or her
employment or service, compensation or benefits, increase or commit to increase
any benefits for employees, consultants or directors, adopt or amend or make
any commitment to adopt or amend, other than amendments required by Law, any
Strawberry Benefit Plan or make any contribution, other than regularly
scheduled contributions, to any Strawberry Benefit Plan for the benefit of any
Person. Parent will not accelerate the vesting of, or the lapsing of
restrictions with respect to, any stock options or other equity based
compensation, except as may be required by any plan or agreement presently in
effect pursuant to which such stock options or other equity based compensation
were granted, any applicable Laws or in accordance with this Agreement and as
such shall be set forth on Section 6.1(i) of the Strawberry Disclosure
Schedule.
(j) ACCOUNTING METHODS; INCOME TAX ELECTIONS. Except as
reflected in the Strawberry Financial Statements filed on or prior to the
Measurement Date, as required by a Governmental Entity or as required by
changes in GAAP as concurred in by Parent's independent public accountants,
Parent will not make, and Parent will cause its Subsidiaries not to make, any
material change in method of accounting in effect as of the date of this
Agreement. Parent will not, and will not permit any of its Subsidiaries to, (i)
change its fiscal year or (ii) make any material Tax election or settle or
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compromise any material income Tax liability with respect to matters that will
be a liability of Parent or any of its Subsidiaries after the Merger, other
than in the ordinary course of business consistent with past practice.
(k) CERTAIN AGREEMENTS AND ARRANGEMENTS. Parent will
not, and will cause its Subsidiaries not to, enter into any Contract that will
limit or otherwise restrict, after the Effective Time, Parent or any of its
Subsidiaries, or any of their respective Affiliates or any successor thereto,
from engaging or competing in any line of business in any geographic area or by
any means, which Contracts, individually or in the aggregate, would reasonably
be expected to have a material adverse effect on the business, financial
condition or results of operations of Parent and its Subsidiaries, taken as a
whole, following the Merger.
(l) ACTIONS REGARDING STRAWBERRY BENEFIT PLANS. Parent
will, effective at (or, at the election of Parent, immediately prior to), the
Effective Time, take or cause to be taken with respect to the Strawberry
Benefit Plans the actions set forth in SECTION 6.1(L) OF THE STRAWBERRY
DISCLOSURE SCHEDULE.
(m) ACTIONS REGARDING ANTI TAKEOVER STATUTES. If the
provisions of any potentially applicable anti takeover or similar statute is or
becomes applicable to the Transactions or Apple Holdco or its Affiliates,
Parent and its board of directors shall grant such approvals and take such
other actions to the extent permitted by applicable Law as may be required so
that the Transactions may be consummated as promptly as practicable on the
terms and conditions set forth in this Agreement.
(n) NO RELATED ACTIONS. Parent will not, and will not
permit any of its Subsidiaries to, agree or commit to do any of the foregoing
actions that are prohibited or restricted by this Section 6.1.
6.2 COVENANTS OF APPLE HOLDCO. During the period from the date of
this Agreement and continuing until the Effective Time, Apple Holdco agrees as
to itself and its Subsidiaries that (except for the Merger, as required or
otherwise expressly contemplated or permitted by this Agreement or SECTION 6.2
(INCLUDING ITS SUBSECTIONS) OF THE APPLE DISCLOSURE SCHEDULE, as required by a
Governmental Entity or to the extent that Parent otherwise consents in writing
in its sole discretion):
(a) ORDINARY COURSE. Apple Holdco will, and will cause
each of its Subsidiaries to, carry on their respective businesses in the
ordinary course, in substantially the same manner as heretofore conducted and
use commercially reasonable efforts to preserve intact their present business
organizations, keep available the services of their current officers and other
key employees and preserve their relationships with customers, suppliers and
others having business dealings with them, except that no action by Apple
Holdco or its Subsidiaries with respect to matters specifically addressed by
any other provision of this Section 6.2 will be deemed a breach of this Section
6.2(a) unless such action would constitute a breach of one or more of such
other provisions.
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(b) DIVIDENDS; CHANGES IN SHARE CAPITAL. Apple Holdco
will not, and will cause its foreign Subsidiaries not to, declare or pay any
dividends on or make other distributions (whether in cash, stock or property)
in respect of any of its capital stock. Except as set forth in SECTION 6.2(B)
OF THE APPLE DISCLOSURE SCHEDULE, Apple Holdco will not, and will cause its
Subsidiaries not to (i) split, combine or reclassify any of its capital stock
or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for, shares of its capital stock, or
(ii) repurchase, redeem or otherwise acquire any shares of its capital stock or
any securities convertible into or exercisable for any shares of its capital
stock.
(c) ISSUANCE OF SECURITIES. Apple Holdco will not, and
will cause its Subsidiaries not to, offer, issue, deliver, sell, pledge or
otherwise Encumber, or authorize or propose the offering, issuance, delivery,
sale, pledge or Encumbrance of, any shares of its capital stock of any class or
any securities convertible into or exercisable for, or any rights, warrants,
calls or options to acquire, any such shares, or enter into any commitment,
arrangement, undertaking or agreement with respect to any of the foregoing.
(d) GOVERNING DOCUMENTS. Except to the extent required
to comply with its obligations hereunder or with applicable Laws, Apple Holdco
will not amend or propose to amend its certificate of incorporation, bylaws or
other governing documents and will not, and will cause each of its Subsidiaries
not to, amend its certificate of incorporation, bylaws or other governing
documents.
(e) NO ACQUISITIONS. Apple Holdco will not, and will
cause its Subsidiaries not to, acquire or agree to acquire by merger or
consolidation, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, limited liability entity, joint venture,
association or other business organization or division thereof or otherwise
acquire or agree to acquire any material assets (excluding the acquisition of
assets in the ordinary course of business consistent with past practice);
provided, however, that the foregoing restrictions will not prohibit (i)
internal reorganizations or consolidations involving Subsidiaries of Apple
Holdco in existence on the date of this Agreement or (ii) the creation of new
direct or indirect wholly owned Subsidiaries of Apple Holdco organized to
conduct or continue activities otherwise permitted by this Agreement.
(f) ACTIONS REGARDING ANTI TAKEOVER STATUTES. If the
provisions of any potentially applicable anti takeover or similar statute is or
becomes applicable to the Transactions or Parent, MergerSub or their
Affiliates, Apple Holdco and its board of directors shall grant such approvals
and take such other actions to the extent permitted by applicable Law as may be
required so that the Transactions may be consummated as promptly as practicable
on the terms and conditions set forth in this Agreement.
(g) NO RELATED ACTIONS. Apple Holdco will not, and will
not permit any of its Subsidiaries to, agree or commit to do any of the
foregoing actions that are prohibited or restricted by this Section 6.2.
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6.3 ANTITRUST CLEARANCE.
(a) Each of Parent, MergerSub and Apple Holdco shall
comply fully with all applicable notification, reporting and other requirements
under any Antitrust Laws. Parent and Apple Holdco have prepared and filed the
Notification and Report Form pursuant to the HSR Act and the waiting period
under the HSR Act terminated on January 11, 2007. Within 10 Business Days after
the date of this Agreement, or any shorter period as required by applicable
Antitrust Law, each of Parent and Apple Holdco shall, and shall cause their
respective Subsidiaries to, file any other required notifications with the
appropriate Governmental Entities, in each case pursuant to and in compliance
with the respective Antitrust Laws. Parent and Apple Holdco shall, and shall
cause their respective Subsidiaries to, as soon as practicable file any
additional information reasonably requested by any Governmental Entity in
respect of the Merger. If Parent or Apple Holdco (or any of their respective
Affiliates) receives a request for additional information 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 to such request.
(b) Upon and subject to the terms of this Section 6.3,
Parent and Apple Holdco shall, and shall cause their respective Subsidiaries
to: (i) use their reasonable best efforts to obtain prompt termination of any
requisite waiting period under any applicable Antitrust Law; (ii) cooperate and
consult with each other in connection with the making of all filings,
notifications and any other material actions pursuant to this Section 6.3,
including subject to applicable Antitrust 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 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
materials may be redacted before being provided to the other party (A) to
remove references concerning the valuation of Parent, Apple Holdco, or any of
their Subsidiaries, (B) as necessary to comply with contractual arrangements,
and (C) as necessary to address reasonable privilege or confidentiality
concerns; (iii) furnish to the other parties such information and assistance as
such parties reasonably may request in connection with the preparation of any
submissions to, or agency proceedings by, any Governmental Entity; and (iv)
promptly inform the other party of any communications with, and inquiries or
requests for information from, such Governmental Entities in connection with
the transactions contemplated by the Agreement. In furtherance and not in
limitation of the covenants of the parties contained in Section 6.3(a) and this
Section 6.3(b), each of Parent and Apple Holdco agrees to cooperate and use its
reasonable best efforts to assist in any defense by the other party hereto of
the transactions contemplated by this Agreement before any Governmental Entity
reviewing the transactions contemplated by this Agreement, including by
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providing (as promptly as practicable) such information as may be requested by
such Governmental Entity or such assistance as may be reasonably requested by
the other party hereto in such defense.
(c) If any objections are asserted by any Governmental
Entity with respect to the transactions contemplated hereby, or if any Action
is instituted by any Governmental Entity challenging any of the transactions
contemplated hereby as violative of any applicable Antitrust Law or an Order is
issued enjoining the Merger under any applicable Antitrust Law, each of Parent
and Apple Holdco shall, subject to the provisions of this Section 6.3, use its
reasonable best efforts to resolve any such objections or challenge as such
Governmental Entity may have to such transactions under such Law or to have
such Order vacated, reversed or otherwise removed in accordance with applicable
legal procedures with the goal of enabling the transactions contemplated by
this Agreement to be consummated by the Outside Date. Parent and Apple Holdco
shall, and shall cause their respective Subsidiaries to, subject to the
provision of this Section 6.3, use their respective reasonable best efforts to
seek to lift, reverse or remove any temporary restraining order, preliminary or
permanent injunction or other order or decree that would prohibit, prevent or
restrict consummation of the transactions contemplated by this Agreement.
(d) Notwithstanding anything to the contrary contained
in this Agreement, in no event will Parent, MergerSub or Apple Holdco be
required to take any action or accept any condition, restriction, obligation or
requirement with respect to Parent, Apple Holdco, their respective Subsidiaries
or their and their respective Subsidiaries' assets if such action, condition,
restriction, obligation or requirements (i) would reasonably be expected to
require Parent, Apple Holdco or their respective Subsidiaries to sell, license,
transfer, assign, lease, dispose of or hold separate any material business or
assets, (ii) would reasonably be expected to result in any material limitations
on Parent, Apple Holdco or their respective Subsidiaries to own, retain,
conduct or operate all or a material portion of their respective businesses or
assets or (iii) would bind Parent, Apple Holdco or any of their Subsidiaries to
take an action irrespective of whether the Closing occurs.
6.4 EFFORTS TO CLOSE.
(a) (i) Subject to Sections 6.3(d) and 6.14, each of
Parent and MergerSub on the one hand, and Apple Holdco on the other, will use
its reasonable best efforts to cause all of the conditions, as specified in
Article VII, to the obligations of the other party to consummate the
Transactions to be met as soon as practicable after the date of this Agreement,
(ii) each of Parent and MergerSub will not, and Parent will cause its
Subsidiaries to not, take or cause to be taken any action that would reasonably
be expected to have, with respect to actions of Parent or MergerSub, a
Strawberry Material Adverse Effect and (iii) Apple Holdco will not, and will
cause its Subsidiaries not to, take or cause to be taken any action that would
reasonably be expected to have, with respect to actions of Apple Holdco or its
Subsidiaries, an Apple Material Adverse Effect.
(b) Subject to Sections 6.3(d) and 6.14, each of Parent,
MergerSub and Apple Holdco and their respective Subsidiaries will use its
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reasonable best efforts to obtain, as soon as practicable, the Authorizations
and third party consents that may be or become necessary for the performance of
its respective obligations under this Agreement and the consummation of the
Transactions and will cooperate fully with each other in promptly seeking to
obtain such Authorizations and third party consents, except that no such party
hereto will be required to make any material expenditures in connection with
its obligations under this Section 6.4, except as required by Section 6.3.
6.5 CONFIDENTIALITY. Prior to the Effective Time, each of Parent,
MergerSub and Apple Holdco will, and will cause each of their respective
Subsidiaries, if any, and controlling Affiliates, to comply with, all of their
respective obligations under the Confidentiality Agreements with respect to any
information obtained by any such Person in connection with this Agreement and
the Transactions.
6.6 ACCESS.
(a) From the date hereof to the Effective Time, as
applicable, (i) each of Parent, on the one hand, and Apple Holdco on the other,
will allow all designated officers, attorneys, accountants, and other
representatives of Apple Holdco and Parent, as the case may be, and (ii) Parent
will allow the financing sources of Apple Holdco, access at reasonable times
upon reasonable notice and in a manner as will not adversely impact the conduct
of the business of Apple Holdco, Parent, MergerSub or any of their respective
Subsidiaries, to the personnel, records, files, correspondence, audits and
properties, as well as to all information relating to commitments, contracts,
titles and financial position, or otherwise pertaining to the business and
affairs, of Parent and Apple Holdco, as the case may be, including inspection
of such properties.
(b) No investigation pursuant to this Section 6.6 will
affect any representation or warranty given by any party hereunder, and,
notwithstanding the provision of information or investigation by any party, no
party will be deemed to make any representation or warranty except as expressly
set forth in this Agreement. Notwithstanding the foregoing, no party will be
required to provide any information which it reasonably believes it may not
provide to the other party by reason of applicable Law, which such party
reasonably believes constitutes information protected by attorney/client
privilege or the attorney work product doctrine or which it is required to keep
confidential by reason of Contracts with third parties. The parties hereto will
make reasonable and appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the preceding sentence apply. All
information provided by a party to the other party hereunder will be subject to
the confidentiality provisions of Section 6.5.
6.7 PUBLIC ANNOUNCEMENTS. Prior to the Effective Time, Parent,
MergerSub and Apple Holdco will consult with each other before issuing any
press releases or otherwise making any public statements with respect to this
Agreement, or the Transactions, and none of them will issue any such press
release or make any such public statement or communication without the prior
approval of the others, except as any party may determine in good faith is
required by Law or by obligations pursuant to any listing agreement with any
national securities market or exchange.
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6.8 BOARD RECOMMENDATION; STRAWBERRY STOCKHOLDERS MEETING.
Parent's board of directors, acting upon the unanimous recommendation of the
Special Committee, has made the Strawberry Board Recommendation and will, as
promptly as practicable, cause Parent to take all lawful action to solicit the
Strawberry Stockholder Approval. Subject to Section 6.10, neither the board of
directors of Parent nor any committee thereof will withdraw or modify, or
propose to withdraw or modify, in a manner adverse to Apple Holdco, the
Strawberry Board Recommendation. Unless this Agreement is terminated in
accordance with its terms, Parent will call and hold a meeting of the
Strawberry Stockholders (the "STRAWBERRY STOCKHOLDERS MEETING") as promptly as
practicable for the purpose of obtaining the Strawberry Stockholder Approval
regardless of any action contemplated by Section 6.10, including receipt of a
Strawberry Superior Proposal and whether or not Parent's board of directors
makes an Adverse Recommendation Change.
6.9 PREPARATION OF PROXY STATEMENT AND ADDITIONAL FILINGS.
(a) As promptly as reasonably practicable after the
execution of this Agreement, Parent will prepare, and Parent will file with the
SEC, the Proxy Statement. The parties hereto will furnish all information
concerning themselves, their Affiliates and the holders of their capital stock
as required in connection with such action, the preparation of the Proxy
Statement and the preparation of any other SEC filing required in connection
with the Transactions contemplated by this Agreement ("ADDITIONAL FILINGS")
including, with respect to Apple Holdco, any information required by Regulation
14(f)(1) under the Exchange Act. As promptly as practicable Parent will mail
the Proxy Statement to the Strawberry Stockholders. The Proxy Statement will
include the Strawberry Board Recommendation unless the board of directors of
Parent has withdrawn or modified the Strawberry Board Recommendation in
accordance with Section 6.10.
(b) No amendment or supplement to the Proxy Statement
will be made without the consent of the parties hereto (which consent will not
be unreasonably withheld or delayed). The parties hereto will advise each other
promptly after any of them receives notice of any request by the SEC for
amendment of the Proxy Statement or any Additional Filings or comments thereon
and responses thereon or requests by the SEC for additional information.
(c) If at any time prior to the Effective Time any
information relating to Parent, MergerSub or any of their respective
Affiliates, officers or directors, should be discovered by Parent or MergerSub
which should be set forth in an amendment or supplement to the Proxy Statement
or the Additional Filings so that any of such documents would not include any
misstatement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, Parent or MergerSub will, as applicable, promptly
notify Apple Holdco and, to the extent required by applicable Laws, will
promptly file with the SEC and disseminate to the Strawberry Stockholders an
appropriate amendment or supplement describing such information.
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(d) Without limiting the generality of the foregoing,
Apple Holdco shall use its commercially reasonable efforts to deliver to Parent
for inclusion in the Proxy Statement as promptly as practicable the audited
consolidated balance sheet and related consolidated statements of operations,
cash flows and shareholders' equity for Apple and its Subsidiaries as of
December 31, 2006, and for the year then ended, accompanied by the report
thereon of Apple's independent certified public accountants (the "APPLE 2006
FINANCIAL STATEMENTS"), if the Apple 2006 Financial Statements are required to
be included in the Proxy Statement. If at any time prior to the Effective Time,
any event or circumstance relating to Apple Holdco or its officers or
directors, should be discovered by Apple Holdco and such information should be
set forth in an amendment or supplement to the Proxy Statement or the
Additional Filings so that any of such documents would not include any
misstatement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, Apple Holdco will promptly notify Parent and
MergerSub and, to the extent required by applicable Laws, Parent or MergerSub
will promptly file with the SEC and, if required by Law, disseminate to the
Strawberry Stockholders an appropriate amendment or supplement describing such
information.
(e) All documents that either of Parent or MergerSub and
their Affiliates are responsible for filing with the SEC in connection with the
Transactions will comply as to form and substance in all material aspects with
the applicable requirements of the Securities Act and the rules and regulations
thereunder and the Exchange Act and the rules and regulations thereunder.
6.10 NO SOLICITATION; OTHER OFFERS.
(a) Parent will immediately cease, terminate and
discontinue any discussions or negotiations with any Person conducted before
the date of this Agreement with respect to any Strawberry Competing
Transaction, and will promptly, following the execution of this Agreement,
request the return or destruction (and certification thereof) (as provided in
the applicable agreement) of all confidential information provided by or on
behalf of Parent to all Persons who have had such discussions or negotiations
or who have entered into confidentiality agreements with Parent pertaining to a
Strawberry Competing Transaction.
(b) Prior to the Effective Time, Parent will not, and
will cause its Affiliates and representatives not to, directly or indirectly
(i) solicit, initiate, encourage or take any action to facilitate or encourage
any inquiries or proposals from, discuss or negotiate with, or provide any non
public information to, any Person (other than Apple Holdco and its
representatives) relating to any merger, consolidation, share exchange,
business combination or other transaction or series of transactions involving
Parent that is conditioned on the termination of this Agreement or could
reasonably be expected to preclude or materially delay the completion of the
Merger (a "STRAWBERRY COMPETING TRANSACTION"), (ii) make an Adverse
Recommendation Change, (iii) enter into any agreement in principle, letter of
intent, term sheet, merger agreement, stock purchase agreement or similar
instrument relating to a Strawberry Competing Transaction (other than a
confidentiality agreement of the type and in the circumstances described in
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Section 6.10(d)), or (iv) propose or agree to do or propose any of the
foregoing. Parent agrees that any failure on the part of its Affiliates and
representatives to comply with this Section 6.10(b) shall be deemed to be a
breach of this Section 6.10(b) by Parent.
(c) Parent will promptly (and in any event within 24
hours) notify Apple Holdco of its or any of its officers', directors' or
representatives' receipt of any inquiry or proposal relating to, a Strawberry
Competing Transaction, including the identity of the Person submitting such
inquiry or proposal and the terms thereof.
(d) Notwithstanding anything in this Agreement to the
contrary, Parent or its board of directors will be permitted to engage in any
discussions or negotiations with, or provide any information to, any Person in
response to an unsolicited bona fide written offer regarding a Strawberry
Competing Transaction by any such Person (which has not been withdrawn), if and
only to the extent that, (i) the Strawberry Stockholder Approval has not been
given, (ii) Parent has received an unsolicited bona fide written offer
regarding a Strawberry Competing Transaction from such third party (which has
not been withdrawn) and its board of directors has determined, after
consultation with its outside counsel and financial advisor, in good faith that
there is a reasonable likelihood that such Strawberry Competing Transaction
would constitute a Strawberry Superior Proposal, (iii) its board of directors,
after consultation with its outside counsel, determines in good faith that such
action is required by its fiduciary duties, (iv) prior to providing any
information or data to any Person in connection with a Strawberry Competing
Transaction by any such Person or entering into discussions or negotiations
with any Person, it receives from such Person an executed confidentiality
agreement containing terms Parent determines to be substantially the same
(including with respect to standstill provisions, as such provisions were in
effect on the date of execution of the Harbinger Confidentiality Agreement) as
the Harbinger Confidentiality Agreement (but permitting the disclosures to
Apple Holdco and its Affiliates described in this Section 6.10(d) to be made to
Apple Holdco and its Affiliates); PROVIDED that (1) such confidentiality
agreement may not restrict Parent in any way from complying with Sections 6.8,
6.9 or 6.10, and (2) Parent advises Apple Holdco of all non public information
delivered to such person concurrently with delivery to such person and
concurrently with such delivery also delivers all such information to Apple
Holdco that was not previously provided to Apple Holdco, and (v) prior to
providing any information or data to any Person or entering into discussions or
negotiations with any Person, it complies with Section 6.10(c). Parent will use
its commercially reasonable efforts to keep Apple Holdco and its Affiliates
informed promptly of the status and terms of any such proposal or offer and the
status and terms of any such discussions or negotiations and will promptly
provide Apple Holdco with any such written proposal or offer. Parent will
promptly inform its directors, officers, key employees, agents and
representatives of the obligations undertaken by Parent in this Section 6.10.
Nothing in this Section 6.10(d), (x) permits Parent to terminate this Agreement
or (y) affects any other obligation of Parent or Apple Holdco under this
Agreement.
(e) Notwithstanding anything in this Agreement to the
contrary (but subject to the next sentence), Parent's board of directors shall
be permitted to effect an Adverse Recommendation Change if (i) Parent shall not
have received the Strawberry Stockholder Approval, (ii) Parent has received an
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unsolicited bona fide written offer regarding a Strawberry Competing
Transaction from a third party, (iii) Parent's board of directors has
determined in good faith by a majority vote (after consultation with its
outside counsel and its financial advisor) that such Strawberry Competing
Transaction constitutes a Superior Proposal, (iv) Parent's board of directors,
after consultation with its outside counsel, determines in good faith by a
majority vote that such action is required by its fiduciary duties under
applicable Law and (v) Parent has complied with the terms of this Section 6.10.
However, Parent's board of directors shall nevertheless not make such an
Adverse Recommendation Change, unless, (x) Parent promptly notifies Apple
Holdco, in writing at least four (4) Business Days before taking such action,
of its intention to make an Adverse Recommendation Change and attaching the
most current version of any proposed agreement (including any schedules,
exhibits and annexes thereto) and a detailed summary of all material terms of
any such proposal and the identity of the offeror (an "ARC NOTICE"), and (y)
Apple Holdco does not propose, within such four (4) Business Days after its
receipt of such ARC Notice, such adjustments to the terms and conditions of
this Agreement as would enable Parent's board of directors to determine in good
faith (after consultation with its outside counsel and its financial advisor)
that such proposal is at least as favorable in the aggregate (taking into
account all of the factors and other aspects of such proposal included in the
definition of Strawberry Superior Proposal) to the Strawberry Stockholders as
such Strawberry Superior Proposal. Any material amendment to any offer
regarding a Strawberry Competing Transaction will be deemed to be a new offer
regarding a Strawberry Competing Transaction for purposes of re-starting the
four (4) Business Day clock described in the preceding sentence.
(f) For purposes of this Agreement, "STRAWBERRY SUPERIOR
PROPOSAL" means a bona fide written offer regarding a Strawberry Competing
Transaction (i) made by a Person other than a party hereto or its controlled
Affiliates which the board of directors of Parent concludes, after consultation
with its financial advisor and following receipt of the advice of its outside
counsel, is more favorable (taking into account the terms and conditions
thereof) from a financial point of view to the Strawberry Stockholders than the
transactions contemplated hereby (including any alterations to this Agreement
proposed by Apple Holdco in response thereto) and (ii) is reasonably likely to
be consummated.
(g) No provision of this Agreement will be deemed to
prohibit Parent from publicly disclosing any information which its board of
directors determines, after consultation with outside counsel, is required to
be disclosed by Law, whether pursuant to the federal securities laws, state law
fiduciary requirements or otherwise.
6.11 NOTIFICATION OF CERTAIN MATTERS. Each of Parent and Apple
Holdco will give prompt written notice to the other of (a) any notice or other
communication from any Person alleging that the consent of such Person is or
may be required in connection with the Transactions, (b) any Action commenced
or threatened in writing against, relating to or involving or otherwise
affecting it or any of its Subsidiaries that relates to the consummation of the
Transactions, and (c) any change that would reasonably be expected to have,
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individually or in the aggregate, a Strawberry Material Adverse Effect or an
Apple Material Adverse Effect, as the case may be.
6.12 FEES AND EXPENSES. Except for filing fees paid under
Antitrust Laws and fees incurred in connection with the filing, printing and
mailing of the Proxy Statement or any other document filed with the SEC in
connection with the Transactions, which will be borne equally by Apple Holdco
and Parent, (a) Apple Holdco will bear all of the Expenses of Apple Holdco and
its Affiliates, including the broker's or finder's fees referred to in Section
5.14 and (b) MergerSub and Parent will bear all of the respective Expenses of
Parent, MergerSub and their respective Affiliates, including the broker's or
finder's fees referred to in Section 4.14.
6.13 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE.
(a) In the event of any threatened or actual Action,
whether civil or administrative, including any such Action in which any present
or former director or officer of Parent or any of its Subsidiaries (together,
the "INDEMNIFIED PARTIES") is, or is threatened to be, made a party based in
whole or in part on, or arising in whole or in part out of, or pertaining in
whole or in part to, any action or failure to take action by any such Person in
such capacity taken prior to the Effective Time, Parent (the "INDEMNIFYING
PARTY") will, from and after the Effective Time, indemnify, defend and hold
harmless, as and to the fullest extent permitted or required by applicable Law
in effect on the date of this Agreement, against any losses, claims, damages,
liabilities, costs, legal and other expenses (including reimbursement for legal
and other fees and expenses incurred in advance of the final disposition of any
claim, suit, proceeding or investigation to each Indemnified Party), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
Indemnified Party in connection with such claim Action, subject to or Parent's
receipt of an undertaking by such Indemnified Party to repay such legal and
other fees and expenses paid in advance if it is ultimately determined that
such Indemnified Party is not entitled to be indemnified under applicable Law;
provided, however, Parent will not be liable for any settlement effected
without Parent's prior written consent (which will not be unreasonably delayed
or withheld) and will not be obligated to pay the fees and expenses of more
than one counsel (selected by a plurality of the applicable Indemnified
Parties) for all Indemnified Parties in any jurisdiction with respect to any
single such Action, except to the extent that two or more of such Indemnified
Parties have conflicting interests in the outcome of such claim, action, suit,
proceeding or investigation.
(b) Parent will (i) maintain in effect for a period of
six years after the Effective Time, if available, the current policies of
directors' and officers' liability insurance maintained by Parent (provided
that Parent may substitute therefore policies of at least the same coverage and
amounts containing terms and conditions which are not less advantageous to the
directors and officers of Parent) or (ii) obtain as of the Effective Time
"tail" insurance policies with a claims period of six years from the Effective
Time with at least the same coverage and amounts and containing terms and
conditions which are no less advantageous to the directors and officers of
Parent, in each case, with respect to claims arising out of or relating to
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events which occurred before or at the Effective Time; provided, however, that
in no event will the Surviving Corporation or Parent be required to expend an
annual premium for such coverage in excess of 250% of the last annual premium
paid by Parent for such insurance prior to the Measurement Date (the "MAXIMUM
PREMIUM"). If such insurance coverage cannot be obtained at all, or can only be
obtained at an annual premium in excess of the Maximum Premium, the Surviving
Corporation or Parent will obtain that amount of directors' and officers'
insurance (or "tail" coverage) obtainable for an annual premium equal to the
Maximum Premium.
(c) The provisions of this Section 6.13 will survive the
Closing and are intended to be for the benefit of, and will be enforceable by,
each Indemnified Party and its successors and representatives after the
Effective Time and their rights under this Section 6.13 are in addition to, and
will not be deemed to be exclusive of, any other rights to which an Indemnified
Party is entitled, whether pursuant to Law, Contract or otherwise.
(d) The obligations under this Section 6.13 may not be
terminated or modified by the Surviving Corporation or Parent in a manner as to
adversely affect any Indemnified Party to whom this Section 6.13 applies
without the consent of the affected Indemnified Party. In the event that the
Surviving Corporation, Parent or any of their respective successors or assigns
(i) consolidates with or merges into any other Persons or (ii) transfers 50% or
more of its properties or assets to any Person, then and in each case, proper
provision will be made so that the applicable successors, assigns or
transferees assume the obligations set forth in this Section 6.13.
6.14 FINANCING.
(a) Apple Holdco shall use its commercially reasonable
efforts to obtain executed commitment letters with terms that in the aggregate
satisfy the parameters set forth on SECTION 6.14(A)(I) of the Apple Disclosure
Schedule (the "FINANCING COMMITMENTS"), no later than March 26, 2007 (such
date, the "FINANCING COMMITMENT DEADLINE"), for financing in an aggregate
amount, which together with all cash available at Apple Holdco, Parent and
their respective Subsidiaries, is sufficient to: (i) fully redeem the Series A
Preferred, including pay any prepayment penalty required to be paid to the
holders of Series A Preferred, (ii) fully redeem the Series C Preferred,
including pay any prepayment penalty required to be paid to the holders of
Series C Preferred, (iii) refinance in full all amounts outstanding under the
Indebtedness listed on SECTION 6.14(A)(II) of the Apple Disclosure Schedule and
(iv) pay all fees and expenses incurred in connection with the Transactions
(the "FINANCING").
(b) Notwithstanding anything to the contrary contained
herein, at its option, any Apple Holdco Stockholder may elect to provide an
executed commitment letter (the "APPLE HOLDCO STOCKHOLDER COMMITMENT"),
pursuant to which such Apple Holdco Stockholder will provide a financing
commitment sufficient to satisfy all or a portion of the Financing Commitments
referred to in Section 6.14(a), no later than the Financing Commitment
Deadline. In the event any Apple Holdco Stockholder elects to provide the Apple
Holdco Stockholder Commitment and such Apple Holdco Stockholder Commitment has
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terms that satisfy the parameters set forth on SECTION 6.14(A)(I) of the Apple
Disclosure Schedule and are otherwise acceptable to Parent in its sole
discretion, such Apple Holdco Stockholder Commitment shall be deemed to be a
"Financing Commitment" for all purposes of this Agreement and any financing
provided under such Apple Holdco Stockholder Commitment shall be deemed to be
all or a portion of, as the case may be, the "Financing" for all purposes of
this Agreement.
(c) Apple Holdco shall use its commercially reasonable
efforts to complete the Financing on the terms and conditions described in the
Financing Commitments, including using commercially reasonable efforts to (i)
negotiate definitive agreements with respect thereto on terms and conditions
contained therein and (ii) satisfy all conditions applicable to Apple Holdco
and Apple in such definitive agreements that are within its control. In the
event any portion of the Financing becomes unavailable on the terms and
conditions contemplated in the Financing Commitments, Apple Holdco shall use
its commercially reasonable efforts to arrange to obtain any such portion from
alternative sources ("ALTERNATE FINANCING") on comparable or more favorable
terms to Parent as promptly as practicable following the occurrence of such
event (it being understood that such commercially reasonable efforts would not
require Apple Holdco to obtain Alternate Financing that is on terms
substantially less favorable than the Financing Commitment relating to the
Financing that could not be obtained, but will include reasonable commercial
efforts to obtain financing on terms at least as favorable as such Financing
Commitment). At the option of Apple Holdco, Alternative Financing may be
provided by any Apple Holdco Stockholder; PROVIDED, that the terms of such
Alternative Financing are acceptable to Parent in its sole discretion. Apple
Holdco shall give Parent prompt notice of any material breach by any party of
the Financing Commitments or any termination of the Financing Commitments.
Apple Holdco shall keep Parent informed on a reasonably current basis of the
status of its efforts to arrange the Financing and shall not permit any
material amendment or modification to be made to, or any waiver of any material
provision or condition under, the Financing Commitments without first
consulting with Parent.
(d) Parent shall, and shall cause its Subsidiaries and
their respective representatives to, reasonably cooperate (provided that such
cooperation does not unreasonably interfere with the ongoing operations of
Parent and its Subsidiaries) in connection with obtaining the Financing and
Alternate Financing, including by (i) taking reasonable actions as may be
necessary or advisable to consummate such financing transactions as
contemplated by the Financing Commitments, (ii) providing assistance from the
senior management of Parent and its Subsidiaries in the preparation for, and
participation in, meetings, drafting sessions, due diligence sessions, road
shows and similar presentations to and with, among others, prospective lenders,
investors and rating agencies, (iii) furnishing Apple Holdco and its financing
sources with financial and other pertinent information regarding Parent and its
Subsidiaries as may be reasonably requested by Apple Holdco, including
financial statements and financial data of the type required by Regulation S-X
and Regulation S-K under the Securities Act and of the type and form
customarily included in private placements under Rule 144A of the Securities
Act to consummate the offering of senior or senior subordinated notes and such
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monthly financial information as is prepared by Parent or its Subsidiaries in
the ordinary course of business in a manner consistent with past practice, (iv)
assisting Apple Holdco and its financing sources in the preparation of (A) an
offering document, private placement memorandum and bank information memorandum
for any debt or equity to be raised to complete the Financing and (B) in the
case of any debt financing, materials for rating agency presentations, (v)
reasonably cooperating with the marketing efforts of Apple Holdco and its
financing sources for any equity or debt to be raised to complete the
Financing, (vi) forming new direct or indirect Subsidiaries, (vii) providing
and executing such documents as may be reasonably requested by Apple Holdco,
including a certificate of the chief financial officer of Parent or any of its
Subsidiaries with respect to solvency matters and consents of accountants for
use of their reports in an offering document relating to the Financing, (viii)
using commercially reasonable efforts to facilitate the pledging of collateral
and (ix) using commercially reasonable efforts to obtain accountants' comfort
letters and consents, legal opinions, surveys and title insurance and provide
management representation letters relating to such comfort letters, as
reasonably requested by Apple Holdco. In no event shall Parent or any of its
Subsidiaries be required to pay any commitment or similar fee or incur any
other liability in connection with the Financing prior to the Closing. It is
understood and agreed that notwithstanding the Confidentiality Agreements,
Apple Holdco and its Affiliates shall be permitted to include financial and
other information concerning Parent and its Subsidiaries in filings made under
the Securities Act and the Exchange Act, regardless of whether in connection
with the Financing. Parent hereby consents to the use of the logos of the
Parent or any of its Subsidiaries in connection with the Financing.
Notwithstanding anything to the contrary, the condition set forth in Section
7.2(a) of this Agreement, as it applies to Parent's obligations under this
Section 6.14(b), shall be deemed satisfied unless the Financing (or any
Alternate Financing) has not been obtained as a result of Parent's breach of
its obligations under this Section 6.14(b).
(e) Parent agrees to provide, and shall cause its
Subsidiaries to provide, all reasonable cooperation requested by Apple Holdco
in connection with the repayment of such outstanding indebtedness, including,
without limitation, cooperating in connection with (i) the repayment or
defeasance of any such indebtedness, (ii) delivering payoff, redemption,
defeasance or similar notices and (iii) obtaining payoff letters, UCC 3
financing statements and such other documents and instruments as may reasonably
be required to demonstrate the repayment of such indebtedness and release of
any Encumbrances on the properties or assets of Parent and/or any of its
Subsidiaries.
6.15 LITIGATION. Except as otherwise required by Law or to the
extent, in the reasonable opinion of outside counsel to Parent, there exists a
conflict between Apple Holdco and Parent, Parent shall give Apple Holdco the
opportunity to participate in the defense or settlement of any stockholder or
other material litigation against Parent and/or its directors relating to the
Transactions contemplated by this Agreement, and no such settlement shall be
agreed to without the prior written consent of Apple Holdco, which shall not be
unreasonably withheld or delayed in the event that the settlement would not be
material.
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6.16 DIRECTOR RESIGNATIONS; APPOINTMENTS.
(a) Parent shall use its reasonable best efforts to
obtain and deliver to Apple Holdco written resignation letters, effective as of
the Effective Time, from those members of the boards of directors of Parent
and/or any of its Subsidiaries designated by Apple Holdco to Parent in writing
at least five calendar days prior to Closing.
(b) Parent shall use its reasonable best efforts to
cause the persons designated by Apple Holdco to Parent to be appointed to the
board of directors of Parent as of the Closing, to serve as directors until
their respective successors are duly elected or appointed and qualified, or
their earlier death, resignation or removal, in accordance with the certificate
of incorporation and bylaws of Parent and the DGCL.
6.17 POST CLOSING GOVERNANCE OF PARENT. Subject to the receipt of
the Strawberry Stockholder Approval, Parent shall take all action necessary to
cause the Strawberry Charter Amendment to be duly executed, acknowledged and
filed with the Secretary of State of the State of Delaware effective as of the
Closing
6.18 APPLE DEREGISTRATION. On January 24, 2007, Apple filed
Exchange Act Form 15. Apple Holdco shall use its commercially reasonable
efforts to have Apple's common stock, par value $0.01 per share, deregistered,
including by making or arranging for any necessary filings with the SEC.
6.19 TRANSACTION DOCUMENTS. At or prior to the Closing, each of
Parent, MergerSub and Apple Holdco shall, and Apple Holdco shall cause the
Apple Holdco Stockholders to, execute and deliver each Transaction Document to
which it has been designated to become a party thereto pursuant to this
Agreement.
VII. CONDITIONS TO THE MERGER
7.1 CONDITIONS TO THE MERGER. The respective obligations of
Parent, MergerSub and Apple Holdco to effect the Merger are subject to the
satisfaction or waiver of the following conditions:
(a) the Strawberry Stockholder Approval shall have been
obtained at the Strawberry Stockholders Meeting;
(b) no preliminary or permanent injunction or other
Order shall have been issued that would make unlawful the consummation of the
Transactions, and consummation of the Transactions shall not be prohibited or
made illegal by any Law;
(c) all applicable waiting periods under the HSR Act
shall have terminated or expired;
(d) all other Authorizations of or filings with any
Governmental Entity required in connection with the consummation of the
Transactions shall have been made or obtained, except where the failure to make
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or obtain such Authorizations or filings would not, individually or in the
aggregate, have a Strawberry Material Adverse Effect or an Apple Material
Adverse Effect; and
(e) the third party consents set forth on SECTION 7.1(E)
OF THE APPLE DISCLOSURE SCHEDULE shall have been received in accordance with
the terms and conditions hereof; and
(f) Parent shall have received the proceeds of the
Financing (on terms and conditions set forth in the Financing Commitments) or
through Alternative Financing.
7.2 CONDITIONS TO THE OBLIGATIONS OF APPLE HOLDCO. The obligation
of Apple Holdco to effect the Merger is subject to the satisfaction of each of
the following conditions (each of which is for the exclusive benefit of Apple
Holdco and may be waived by Apple Holdco):
(a) (i) all covenants of MergerSub under this
Agreement to be performed by MergerSub on or before the Closing shall have been
duly performed by MergerSub in all material respects;
(ii) all covenants of Parent under this
Agreement to be performed by Parent on or before the Closing shall have been
duly performed by Parent in all material respects;
(b) the representations and warranties of Parent in this
Agreement (which for purposes of this paragraph shall be read as though none of
them contained any materially or material adverse effect qualifications) shall
have been true and correct on the date of this Agreement and shall be true and
correct as of the Closing with the same effect as though made as of the
Closing, except where the failure of such representations and warranties to be
true and correct in all respects as of the applicable time would not,
individually or in the aggregate, have a Strawberry Material Adverse Effect. In
addition, the representations and warranties set forth in Section 4.5(a), (b)
and (f) shall have been true and correct in all material respects on the date
of this Agreement and shall be true and correct in all material respects as of
the Closing with the same effect as though made as of the Closing;
(c) (i) Apple Holdco shall have received a
certificate of MergerSub addressed to Apple Holdco and dated the Closing Date,
signed by an executive officer of MergerSub (on MergerSub's behalf and without
personal liability), confirming the matters set forth in Section 7.2(a)(i);
(ii) Apple Holdco shall have received a
certificate of Parent addressed to Apple Holdco and dated the Closing Date,
signed by an executive officer of Parent (on Parent's behalf and without
personal liability), confirming the matters set forth in Section 7.2(a)(ii) and
Section 7.2(b).
(d) no event, circumstance, change or effect shall have
occurred since the date of this Agreement that, individually or in the
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aggregate, with all other events, circumstances, changes and effects, is or
could reasonably be expected to have a Strawberry Material Adverse Effect;
(e) there is no Action pending, or threatened in
writing, which the board of directors of Apple Holdco determines, following the
receipt of the advice from its outside counsel, could reasonably be expected to
have a Strawberry Material Adverse Effect;
(f) Parent shall, on or prior to the Closing Date,
provide Apple Holdco with a properly executed Foreign Investment in Real
Property Tax Act of 1980 ("FIRPTA") Notification Letter, in form and substance
reasonably satisfactory to Apple Holdco, which states that shares of capital
stock of Parent do not constitute "United States real property interests" under
Section 897(c) of the Code, for purposes of satisfying Apple Holdco's
obligations under Treasury Regulations Section 1.1445-2(c)(3). In addition,
simultaneously with delivery of such Notification Letter, Parent shall have
provided to Apple Holdco, as agent for Parent, a form of notice to the IRS in
accordance with the requirements of Treasury Regulations Section 1.897-2(h)(2)
along with written authorization for Apple Holdco to deliver such notice form
to the IRS on behalf of Parent upon the consummation of the Merger;
(g) Apple Holdco shall have received the opinion of
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP, in form and substance reasonably
satisfactory to Apple Holdco, on the basis of certain facts, representations
and assumptions set forth in such opinion, dated the Effective Time, to the
effect that for U.S. federal income tax purposes, the Merger will constitute a
reorganization within the meaning of Section 368(a)(1)(A) and 368(a)(2)(E) of
the Code and the exchange of Apple Holdco Common Stock for Strawberry Common
Stock pursuant to the Merger will constitute an exchange of securities in
pursuance of a plan of reorganization within the meaning of Section 354(a) of
the Code. In rendering such opinion, such counsel shall be entitled to rely
upon customary representations of officers of Parent, Apple Holdco, and
MergerSub;
(h) All of the resignations of directors of Parent and
its Subsidiaries, requested by Apple Holdco pursuant to Section 6.16(a) shall
have been obtained and each of the Persons identified pursuant to Section
6.16(b) shall have been appointed to Parent's board of directors;
(i) Each of Parent and MergerSub shall have executed and
delivered each Transaction Document to which they are or have been designated
to become a party pursuant to this Agreement;
(j) Apple's common stock, $0.01 par value per share,
shall have been deregistered under Section 12 of the Exchange Act; and
(k) The board of directors of Parent shall have, at a
meeting duly called and held, (i) determined that Parent has sufficient surplus
(determined in accordance with Section 154 of the DGCL) to effect the
Redemptions, (ii) authorized the Company to redeem all shares of Strawberry
Series A Preferred required to be redeemed by the holders of such shares
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pursuant Section 4 of the Series A Certificate of Designation (the "SERIES A
REDEMPTION") and all shares of Strawberry Series C Preferred required to be
redeemed by the holders of such shares pursuant Section 4 of the Series C
Certificate of Designation (together with the Series A Redemption, the
"REDEMPTIONS"), (iii) resolved that the Redemptions shall be made "out of
capital" (as set forth in Section 160 of the DGCL) and (iv) resolved that in
connection with the Redemptions, the capital of Parent attributable to the
Series A Preferred shall be reduced in accordance with Section 243 and 244 of
the DGCL, the capital of Parent attributable to the Series C Preferred shall be
reduced in accordance with Section 243 and 244 of the DGCL and the shares of
Series A Preferred and Series C Preferred redeemed in connection with the
Redemptions shall be retired.
7.3 CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGERSUB. The
obligations of Parent or MergerSub to effect the Merger are subject to the
satisfaction of each of the following conditions (each of which is for the
exclusive benefit of Parent and MergerSub and may be waived by Parent, on
behalf of itself and MergerSub):
(a) all covenants of Apple Holdco under this Agreement
to be performed on or before the Closing Date shall have been duly performed by
Apple Holdco in all material respects;
(b) the representations and warranties of Apple Holdco
in this Agreement (which for purposes of this paragraph shall be read as though
none of them contained any materiality or material adverse effect
qualifications) shall have been true and correct on the date of this Agreement
and shall be true and correct as of the Closing with the same effect as though
made as of the Closing, except where the failure of such representations and
warranties to be true and correct in all respects as of the applicable time
would not, individually or in the aggregate, have an Apple Material Adverse
Effect. In addition, the representations and warranties set forth in Section
5.5(a) shall have been true and correct on the date of this Agreement and shall
be true and correct as of the Closing with the same effect as though made as of
the Closing;
(c) Parent shall have received a certificate of Apple
Holdco addressed to Parent and dated the Closing Date, signed by an executive
officer of Apple Holdco (on Apple Holdco's behalf and without personal
liability), confirming the matters set forth in Section 7.3(a) and Section
7.3(b);
(d) no event, circumstance, change or effect shall have
occurred since the date of this Agreement that, individually or in the
aggregate, with all other events, circumstances, changes and effects, is or
could reasonably be expected to have an Apple Material Adverse Effect;
(e) there is no Action pending, or threatened in
writing, which the board of directors of Parent determines, following the
receipt of the advice from its outside counsel could reasonably be expected to
have an Apple Material Adverse Effect;
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(f) Apple Holdco shall, on or prior to the Closing Date,
provide Parent with a properly executed FIRPTA Notification Letter, in form and
substance reasonably satisfactory to Parent, which states that shares of
capital stock of Apple Holdco do not constitute "United States real property
interests" under Section 897(c) of the Code, for purposes of satisfying
Parent's obligations under Treasury Regulations Section 1.1445-2(c)(3). In
addition, simultaneously with delivery of such Notification Letter, Apple
Holdco shall have provided to Parent, as agent for Apple Holdco, a form of
notice to the IRS in accordance with the requirements of Treasury Regulations
Section 1.897-2(h)(2) along with written authorization for Parent to deliver
such notice form to the IRS on behalf of Apple Holdco upon the consummation of
the Merger;
(g) Parent shall have received the opinion of
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx LLP in form and substance reasonably satisfactory
to Parent, on the basis of certain facts, representations and assumptions set
forth in such opinion, dated the Effective Time, to the effect that for U.S.
federal income tax purposes, the Merger will constitute a reorganization within
the meaning of Section 368(a)(1)(A) and 368(a)(2)(E) of the Code and the
exchange of Apple Holdco Common Stock for Strawberry Common Stock pursuant to
the Merger will constitute an exchange of securities in pursuance of a plan of
reorganization within the meaning of Section 354(a) of the Code. In rendering
such opinion, such counsel shall be entitled to rely upon customary
representations of officers of Parent, Apple Holdco, and MergerSub;
(h) Each of Apple Holdco and the Apple Holdco
Stockholders shall have executed and delivered each Transaction Document to
which they are or have been designated to become a party pursuant to this
Agreement; and
(i) The Indebtedness of Apple Holdco and its
Subsidiaries shall not exceed $50 million.
VIII. TERMINATION AND ABANDONMENT
8.1 TERMINATION. Except as otherwise provided in this Section
8.1, this Agreement may be terminated at any time prior to the Effective Time,
whether before or after the Strawberry Stockholder Approval:
(a) by mutual written consent of Parent and Apple Holdco;
(b) by Apple Holdco (provided that Apple Holdco is not
then in material breach of any covenant, representation, warranty or other
agreement contained herein), if there has been a breach by Parent or MergerSub
of any of their respective representations, warranties, covenants or agreements
contained in this Agreement or any such representation and warranty has become
untrue, in either case such that Section 7.2(a), Section 7.2(b) or Section
7.2(d) would be incapable of being satisfied, and such breach or condition
either by its terms cannot be cured or if reasonably capable of being cured has
not been cured within 30 calendar days following receipt by Parent of notice of
such breach;
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(c) by Parent (provided that neither Parent nor
MergerSub is then in material breach of any covenant, representation, warranty
or other agreement contained herein), if there has been a breach by Apple
Holdco of any of its representations, warranties, covenants or agreements
contained in this Agreement, or any such representation and warranty has become
untrue, in either case such that Section 7.3(a), Section 7.3(b) or Section
7.3(d) would be incapable of being satisfied, and such breach or condition
either by its terms cannot be cured or if reasonably capable of being cured has
not been cured within 30 calendar days following receipt by Apple Holdco of
notice of such breach;
(d) by either Parent or Apple Holdco if any Order
preventing or prohibiting consummation of the Transactions has become final and
nonappealable; PROVIDED, HOWEVER, that the party terminating this Agreement
pursuant to this Section 8.1(d) shall use all commercially reasonable efforts
to have such Order vacated;
(e) by either Parent or Apple Holdco if the Merger shall
not have occurred prior to July 31, 2007 (the "OUTSIDE DATE");
(f) by either Parent or Apple Holdco if the Strawberry
Stockholder Approval is not obtained at the Strawberry Stockholders Meeting;
(g) by Apple Holdco if the board of directors of Parent
or the Special Committee shall have modified or withdrawn the Strawberry Board
Recommendation, delivered an ARC Notice or failed to confirm the Strawberry
Board Recommendation within four Business Days after Apple Holdco's request to
do so (it being understood, however, that for all purposes of this Agreement,
and without limitation, the fact that Parent, in compliance with this
Agreement, has supplied any Person with information regarding Parent or has
entered into discussions or negotiations with such Person as permitted by this
Agreement, or the disclosure of such facts, shall not be deemed a withdrawal or
modification of the Strawberry Board Recommendation);
(h) by either Parent or Apple Holdco within two (2)
Business Days on or after the day immediately following the Financing
Commitment Deadline, if Apple Holdco has not delivered the Financing
Commitments to Parent by the Financing Commitment Deadline;
(i) by Parent within two (2) Business Days on or after
the day immediately following Financing Commitment Deadline, if Parent has
delivered written notice to Apple Holdco that the Apple Holdco Stockholder
Commitment delivered by Apple Holdco pursuant to Section 6.14(b) is not
acceptable to Parent; or
(j) by Parent if the Merger shall not have occurred
prior to the Outside Date, if all of the conditions set forth in Sections 7.1
and 7.2 have been satisfied or waived other than the condition set forth in
Section 7.1(f).
8.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either Parent or Apple Holdco pursuant to Section 8.1, this
Agreement will forthwith become void and there will be no liability under this
Agreement on the part of Parent, MergerSub or Apple Holdco, except (i) to the
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extent that such termination results from the willful and material breach by a
party of any of its representations, warranties or covenants in this Agreement
and (ii) as provided in Section 8.3; PROVIDED, HOWEVER, that the provisions of
Sections 6.5, 6.12, this Section 8.2, Section 8.3, and Article IX will each
remain in full force and effect and will survive any termination of this
Agreement.
8.3 FEES AND EXPENSES.
(a) Notwithstanding Section 6.12, if this Agreement is
terminated by (i) Apple Holdco or Parent pursuant to either Section 8.1(e)
(unless the failure of the Merger to have occurred by such date is due to the
failure of Apple Holdco to perform in all material respects the covenants and
agreements of Apple Holdco set forth herein) or Section 8.1(f) and prior to the
time of such termination a Strawberry Competing Transaction has been made or
proposed to Parent's board of directors or its stockholders or otherwise
publicly announced (whether or not conditional) and within twelve months Parent
enters into any agreement in principle, arrangement, understanding or Contract
providing for the implementation of a Strawberry Competing Transaction or shall
complete a Strawberry Competing Transaction whether or not such Strawberry
Competing Transaction was the same as the initial Strawberry Competing
Transaction referred to in this clause (i), (ii) Apple Holdco pursuant to
Section 8.1(g) or (iii) Parent pursuant to Section 8.1(i) and prior to the time
of such termination a Strawberry Competing Transaction has been made or
proposed to Parent's board of directors or its stockholders or otherwise
publicly announced (whether or not conditional) and within twelve months Parent
enters into any agreement in principle, arrangement, understanding or Contract
providing for the implementation of a Strawberry Competing Transaction or shall
complete a Strawberry Competing Transaction whether or not such Strawberry
Competing Transaction was the same as the initial Strawberry Competing
Transaction referred to in this clause (iii), then Parent will pay to Apple
Holdco a termination fee equal to $2.5 million plus up to $2.0 million of
reasonable documented, third party, out of pocket Expenses unless (in the case
of clauses (i) and (ii) of this Section 8.3(a)) prior to such termination,
Apple Holdco has not delivered Financing Commitments to Parent, in which case,
Parent will pay to Apple Holdco a termination fee equal to $1.5 million plus up
to $1.0 million of reasonable documented, third party, out of pocket Expenses.
(b) Notwithstanding Section 6.12, if this Agreement is
terminated by (i) Parent or Apple Holdco pursuant to either Section 8.1(h) or
(ii) Parent pursuant to Section 8.1(j) (provided that in the case of each of
clause (i) and (ii) of this Section 8.3(b), neither Parent nor MergerSub is
then in material breach of any covenant, representation, warranty or other
agreement contained herein), then Apple Holdco will pay to Parent a termination
fee equal to $10.3 million (the "REVERSE TERMINATION FEE"); PROVIDED, THAT,
such Reverse Termination Fee may be paid and satisfied in full by Apple Holdco
or any Apple Holdco Stockholder delivering to Parent a principal amount of
Parent's 12 1/4% Senior Subordinated Notes due 2008 and/or Second Lien Notes in
the aggregate equal to the Reverse Termination Fee (plus any accrued and unpaid
interest thereon through the date of delivery). Notwithstanding anything to the
contrary contained herein, the payment of the Reverse Termination Fee in
accordance with this Section 8.3(b) shall constitute liquidated damages and in
no event shall Apple Holdco have any additional liability under this Agreement
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beyond its obligation to pay the Reverse Termination Fee, except that nothing
herein shall limit the liability of Apple Holdco for any act of fraud or bad
faith.
(c) Each of the parties acknowledges that the agreements
contained in this Section 8.3 are an integral part of the Transactions and
that, without these agreements, the other party would not enter into this
Agreement. In the event that Parent fails to pay the amounts due pursuant to
this Section 8.3 when due, and, in order to obtain such payment, Apple Holdco
commences a suit that results in a judgment against Parent for the amounts set
forth in this Section 8.3, Parent will pay to Apple Holdco (i) the costs and
expenses (including all reasonable fees and expenses of counsel) in connection
with any action taken to obtain a judgment and (ii) interest on the amounts set
forth in this Section 8.3, commencing on the date that such amounts become due,
at a rate equal to the rate of interest publicly announced by Citibank, N.A.,
from time to time, in The City of New York, as such bank's base rate plus
2.00%. In the event that Apple Holdco fails to pay the amounts due pursuant to
this Section 8.3 when due, and, in order to obtain such payment, Parent
commences a suit that results in a judgment against Apple Holdco for the
amounts set forth in this Section 8.3, Apple Holdco will pay to Parent (i) the
costs and expenses (including all reasonable fees and expenses of counsel) in
connection with any action taken to obtain a judgment and (ii) interest on the
amounts set forth in this Section 8.3, commencing on the date that such amounts
become due, at a rate equal to the rate of interest publicly announced by
Citibank, N.A., from time to time, in The City of New York, as such bank's base
rate plus 2.00%.
IX. MISCELLANEOUS
9.1 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
Except for the covenants set forth in Section 6.13, none of the
representations, warranties or covenants in this Agreement will survive the
Merger.
9.2 AMENDMENT AND MODIFICATION. Subject to applicable Law, this
Agreement may be amended, modified, or supplemented only by the written
agreement of the parties hereto before the Effective Time; provided, however,
that after the Strawberry Stockholder Approval is obtained there will not be
any amendment that by Law requires further approval by the Strawberry
Stockholders without further approval of such stockholders.
9.3 WAIVER OF COMPLIANCE. Except as otherwise provided in this
Agreement, the failure by any Person to comply with any obligation, covenant,
agreement or condition may be waived by the Person entitled to the benefit
thereof only by a written instrument signed by the Person granting such waiver,
but such waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement or condition will not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure. The failure of
any Person to enforce at any time any of the provisions of this Agreement will
in no way be construed to be a waiver of any such provision, nor in any way to
affect the validity of this Agreement or any part of this Agreement or the
right of any Person thereafter to enforce each and every such provision. No
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waiver of any breach of any provisions of this Agreement will be held to be a
waiver of any other or subsequent breach.
9.4 NOTICES. All notices required or permitted pursuant to this
Agreement will be in writing and will be deemed to be properly given when
actually received by the Person entitled to receive the notice at the address
stated below, or at such other address as a party may provide by notice to the
other:
If to Apple Holdco:
c/o 000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Facsimile: (000) 000 0000
With a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000 6064
Attention: Xxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxxx
Facsimile: (000) 000 0000
and:
Xxx Xxxxxxxxxx Xxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000 0000
If to Parent or MergerSub:
Salton, Inc.
0000 X. Xxxxx Xxxxx
Xxxx Xxxxxx, Xxxxxxxx 00000
Attention:
Facsimile: (000) 000 0000
With a copy to:
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx LLP
7800 Sears Tower, 000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000 6404
Attention: Xxxx Xxxxxxxxxx
Facsimile: (000) 000 0000
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9.5 THIRD PARTY BENEFICIARIES. Except as specifically set forth
in Section 6.13(c), nothing in this Agreement, expressed or implied, is
intended to confer on any Person other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
9.6 SUCCESSORS AND ASSIGNS. This Agreement will be binding upon
and will inure to the benefit of the signatories hereto and their respective
successors and permitted assigns. None of Parent, MergerSub or Apple Holdco may
assign this Agreement or any of their rights or liabilities thereunder without
the prior written consent of the other parties hereto, and any attempt to make
any such assignment without such consent will be null and void. Any such
assignment will not relieve the party making the assignment from any liability
under such agreements.
9.7 SEVERABILITY. The illegality or partial illegality of any of
this Agreement, or any provision hereof, will not affect the validity of the
remainder of this Agreement, or any provision hereof, and the illegality or
partial illegality of this Agreement will not affect the validity of this
Agreement in any jurisdiction in which such determination of illegality or
partial illegality has not been made, except in either case to the extent such
illegality or partial illegality causes this Agreement to no longer contain all
of the material provisions reasonably expected by the parties to be contained
herein.
9.8 GOVERNING LAW. This Agreement will be governed by and
construed in accordance with the internal Laws of the State of Delaware
applicable to Contracts made and wholly performed within such state, without
regard to any applicable conflict of laws principles.
9.9 SUBMISSION TO JURISDICTION; WAIVERS. Each of Apple Holdco,
Parent and MergerSub irrevocably agrees that any Action with respect to this
Agreement, the Transactions, any provision hereof, the breach, performance,
validity or invalidity hereof or for recognition and enforcement of any
judgment in respect hereof brought by another party hereto or its successors or
permitted assigns shall be brought and determined in the Court of Chancery or
other courts of the State of Delaware located in the State of Delaware, and
each of Apple Holdco, Parent and MergerSub hereby irrevocably submits and
consents with regard to any such Action or proceeding for itself and in respect
to its property, generally and unconditionally, to the exclusive jurisdiction
of the aforesaid courts. Each of Apple Holdco, Parent and MergerSub hereby
irrevocably waives, and agrees not to assert, by way of motion, as a defense,
counterclaim or otherwise, in any Action with respect to this Agreement, the
Transactions, any provision hereof or the breach, performance, enforcement,
validity or invalidity hereof, (a) any claim that it is not personally subject
to the jurisdiction of the above named courts for any reason, (b) that it or
its property is exempt or immune from jurisdiction of any such court or from
any legal process commenced in such courts (whether through service of notice,
attachment prior to judgment, attachment in aid of execution of judgment,
execution of judgment or otherwise), and (c) to the fullest extent permitted by
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applicable Laws, that (i) Action in any such court is brought in an
inconvenient forum, (ii) the venue of such Action is improper and (iii) this
Agreement, or the subject matter hereof, may not be enforced in or by such
courts. Each party hereto hereby agrees that, to the fullest extent permitted
by Law, service of any process, summons, notice or document by U.S. registered
mail to the respective addresses set forth in Section 9.4 shall be effective
service of process for any suit or proceeding in connection with this Agreement
or the transactions contemplated hereby.
9.10 SPECIFIC PERFORMANCE. The parties hereby acknowledge and
agree that the failure of any party to perform its agreements and covenants
hereunder, including its failure to take all actions as are necessary on its
part to the consummation of the Transactions, will cause irreparable injury to
the other parties for which damages, even if available, will not be an adequate
remedy. Accordingly, each party hereby consents to the issuance of injunctive
relief by any court of competent jurisdiction to compel performance of such
party's obligations and to the granting by any court of the remedy of specific
performance of its obligations hereunder.
9.11 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which will be considered one and the same agreement and
will become effective when counterparts have been signed by each of the parties
and delivered to the other parties, it being understood that each party need
not sign the same counterpart.
9.12 ENTIRE AGREEMENT. This Agreement (including the documents and
the instruments referred to in this Agreement), the Transaction Documents and
the Confidentiality Agreements constitute the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter of this Agreement.
9.13 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE MERGER. EACH
OF THE PARTIES HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY
OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THAT FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE MERGER, AS APPLICABLE, BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.13.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, each of the signatories hereto has caused this
Agreement to be signed by their respective duly authorized officers as of the
date first above written.
SALTON, INC.
By: /s/ Xxxx Xxxxxxxx
----------------------------------
Name: Xxxx Xxxxxxxx
Title: CEO
SFP MERGER SUB, INC.
By: /s/ Xxxx Xxxxxxxx
----------------------------------
Name: Xxxx Xxxxxxxx
Title: Chief Executive Officer
APN HOLDING COMPANY, INC.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President and Senior
Managing Director
[Signature Page to Merger Agreement]
