EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
among
DLI Holding Corp.,
DLI Acquisition Corp.
and
Del Laboratories, Inc.
Dated as of July 1, 2004
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TABLE OF CONTENTS
ARTICLE I THE MERGER.....................................................
SECTION 1.01. The Merger................................................
SECTION 1.02. Closing...................................................
SECTION 1.03. Effective Time............................................
SECTION 1.04. Effects of the Merger.....................................
SECTION 1.05. Certificate of Incorporation and By-Laws..................
SECTION 1.06. Directors.................................................
SECTION 1.07. Officers..................................................
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES.............
SECTION 2.01. Effect on Capital Stock...................................
SECTION 2.02. Exchange of Certificates..................................
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................
SECTION 3.01. Organization..............................................
SECTION 3.02. Capitalization............................................
SECTION 3.03. Authority.................................................
SECTION 3.04. Consents and Approvals; No Violations.....................
SECTION 3.05. SEC Reports and Financial Statements......................
SECTION 3.06. Absence of Certain Changes or Events......................
SECTION 3.07. No Undisclosed Liabilities................................
SECTION 3.08. Information Supplied......................................
SECTION 3.09. Benefit Plans.............................................
SECTION 3.10. Litigation................................................
SECTION 3.11. Compliance with Applicable Law............................
SECTION 3.12. Tax Matters...............................................
SECTION 3.13. State Takeover Statutes...................................
SECTION 3.14. Brokers; Fees and Expenses................................
SECTION 3.15. Opinion of Financial Advisor..............................
SECTION 3.16. Intellectual Property.....................................
SECTION 3.17. Labor Relations and Employment............................
SECTION 3.18. Change of Control.........................................
SECTION 3.19. Environmental Matters.....................................
SECTION 3.20. Material Contracts........................................
SECTION 3.21. Property..................................................
SECTION 3.22. Insurance.................................................
SECTION 3.23. No Other Representations and Warranties...................
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB...............
SECTION 4.01. Organization..............................................
SECTION 4.02. Authority.................................................
SECTION 4.03. Consents and Approvals; No Violations.....................
SECTION 4.04. Information Supplied......................................
SECTION 4.05. Interim Operations of Sub.................................
SECTION 4.06. Financing.................................................
SECTION 4.07. Brokers...................................................
ARTICLE V COVENANTS......................................................
SECTION 5.01. Conduct of Business of the Company........................
SECTION 5.02. No Solicitation...........................................
SECTION 5.03. Other Actions.............................................
SECTION 5.04. Notice of Certain Events..................................
SECTION 5.05. Confidentiality...........................................
ARTICLE VI ADDITIONAL AGREEMENTS..........................................
SECTION 6.01. Proxy Statement; Stockholders' Meeting....................
SECTION 6.02. Access to Information.....................................
SECTION 6.03. Reasonable Best Efforts...................................
SECTION 6.04. Options...................................................
SECTION 6.05. Indemnification; Directors' and Officers' Insurance.......
SECTION 6.06. Employees.................................................
SECTION 6.07. Transfer Taxes............................................
SECTION 6.08. Calculation of Section 280(G) Excise Taxes and
Cutbacks..................................................
SECTION 6.09. State Takeover Laws.......................................
SECTION 6.10. Financing.................................................
ARTICLE VII CONDITIONS.....................................................
SECTION 7.01. Conditions to Each Party's Obligation to Effect the
Merger....................................................
SECTION 7.02. Conditions to Obligations of Parent and Sub...............
SECTION 7.03. Conditions to Obligations of the Company..................
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER..............................
SECTION 8.01. Termination...............................................
SECTION 8.02. Effect of Termination.....................................
SECTION 8.03. Amendment.................................................
SECTION 8.04. Extension; Waiver.........................................
ARTICLE IX MISCELLANEOUS..................................................
SECTION 9.01. Nonsurvival of Representations and Warranties.............
SECTION 9.02. Assumption of Obligations.................................
SECTION 9.03. Notices...................................................
SECTION 9.04. Interpretation............................................
SECTION 9.05. Counterparts..............................................
SECTION 9.06. Entire Agreement; Third Party Beneficiaries...............
SECTION 9.07. Governing Law.............................................
SECTION 9.08. Publicity.................................................
SECTION 9.09. Assignment................................................
SECTION 9.10. Enforcement...............................................
SECTION 9.11. Fees and Expenses.........................................
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of
July 1, 2004, is among DLI Holding Corp., a Delaware corporation ("Parent"),
DLI Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary
of Parent ("Sub"), and Del Laboratories, Inc., a Delaware corporation (the
"Company").
WHEREAS, the respective boards of directors of each of Parent, Sub
and the Company have approved and declared advisable this Agreement and the
merger of Sub with and into the Company on the terms and subject to the
conditions set forth in this Agreement (the "Merger") and have determined that
the Merger and the other transactions contemplated by this Agreement are fair
to, and in the best interest of, their respective stockholders.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Sub and the Company hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Delaware
General Corporation Law (the "DGCL"), Sub shall be merged with and into the
Company at the Effective Time (as defined in Section 1.03). Following the
Effective Time, the separate corporate existence of Sub shall cease and the
Company shall continue as the surviving corporation (the "Surviving
Corporation") and shall succeed to and assume all the rights and obligations of
Sub in accordance with the DGCL.
SECTION 1.02 Closing. The closing of the Merger (the "Closing") will
take place at 10:00 a.m. (New York City time) on a date to be specified by the
parties, which shall be no later than the second business day after satisfaction
or waiver of the conditions set forth in Article VII (the "Closing Date"), at
the offices of Cadwalader, Xxxxxxxxxx & Xxxx LLP, 000 Xxxxxx Xxxx, Xxx Xxxx, Xxx
Xxxx 00000, unless another date, time or place is agreed to in writing by the
parties hereto.
SECTION 1.03 Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on or after the Closing Date, the parties
shall file with the Secretary of State of the State of Delaware a certificate of
merger or other appropriate documents as provided in Section 251 of the DGCL (in
any such case, the "Certificate of Merger") executed in accordance with the
relevant provisions of the DGCL and shall make all other filings or recordings
required under the DGCL to effectuate the Merger. The Merger shall become
effective at such time as the Certificate of Merger is duly filed with the
Secretary of State of the State of Delaware, or at such other time as Sub and
the Company shall agree should be specified in the Certificate of Merger (the
time the Merger becomes effective being hereinafter referred to as the
"Effective Time").
SECTION 1.04 Effects of the Merger. The Merger shall have the
effects set forth in the DGCL.
SECTION 1.05 Certificate of Incorporation and By-Laws. (a) The
certificate of incorporation of the Company, as in effect immediately prior to
the Effective Time, shall be the certificate of incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law.
(b) The by-laws of the Company as in effect immediately prior to the
Effective Time shall be the by-laws of the Surviving Corporation, until
thereafter changed or amended as provided therein or by applicable law.
SECTION 1.06. Directors. From and after the Effective Time, the
directors of Sub shall become the directors of the Surviving Corporation and
shall serve on the Surviving Corporation's board of directors, until their
respective successors are duly elected and qualified.
SECTION 1.07. Officers. The officers of the Company immediately
prior to the Effective Time shall be the officers of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected or appointed or qualified, or until their earlier
death, resignation or removal in accordance with the certificate of
incorporation and by-laws of the Surviving Corporation.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.01. Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one fully paid and
nonassessable share of common stock, par value $1.00 per share, of the Surviving
Corporation.
(b) Cancellation of Treasury Stock and Parent Owned Stock. Each
share of Company Common Stock that is owned by the Company and each share of
Company Common Stock that is owned by Parent, Sub or any other subsidiary of
Parent shall automatically be canceled and retired and shall cease to exist, and
no consideration shall be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Each share of Company Common
Stock issued and outstanding (other than shares of Company Common Stock to be
canceled in accordance with Section 2.01(b) and any Dissenting Shares (as
hereinafter defined)) shall be converted into the right to receive $35.00 in
cash, without interest (the "Merger Consideration"). As of the Effective Time,
all such shares of Company Common Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate representing any such shares of Company Common Stock shall
cease to have any rights with respect thereto, except the right to receive the
Merger Consideration, without interest upon surrender of such certificate in
accordance with, or as otherwise contemplated by, Section 2.02.
(d) Shares of Dissenting Stockholders. Notwithstanding anything in
this Agreement to the contrary, any issued and outstanding shares of Company
Common Stock held by a person (a "Dissenting Stockholder") who complies with all
the provisions of Delaware law concerning the right of holders of Company Common
Stock to dissent from the Merger and require appraisal of their shares of
Company Common Stock ("Dissenting Shares") shall not be converted as described
in Section 2.01(c) but shall become the right to receive such consideration as
may be determined to be due to such Dissenting Stockholder pursuant to the laws
of the State of Delaware. If, after the Effective Time, such Dissenting
Stockholder withdraws his demand for appraisal or fails to perfect or otherwise
loses his right of appraisal, in any case pursuant to the DGCL, his shares of
Company Common Stock shall be deemed to be converted as of the Effective Time
into the right to receive the Merger Consideration, without interest. The
Company shall give Parent (i) prompt notice of any written demands for appraisal
of shares of Company Common Stock received by the Company and (ii) the
opportunity to participate in all negotiations and proceedings with respect to
any such demands. The Company shall not, without the prior written consent of
Parent, make any payment with respect to, or settle, offer to settle or
otherwise negotiate, any such demands.
(e) Withholding Tax. Parent and the Surviving Corporation shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Company Common Stock
outstanding immediately prior to the Effective Time such amounts as may be
required to be deducted and withheld with respect to the making of such payment
under the Internal Revenue Code of 1986, as amended (the "Code"), or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Company Common
Stock outstanding immediately prior to the Effective Time in respect of which
such deduction and withholding was made.
SECTION 2.02. Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall
designate a federally insured bank or trust company reasonably acceptable to the
Company to act as paying agent in the Merger (the "Paying Agent"), and, upon the
Effective Time, Parent shall deposit, or cause the Surviving Corporation to
deposit with the Paying Agent, funds in amounts necessary for the payment of the
Merger Consideration upon surrender of certificates representing shares of
Company Common Stock pursuant to Section 2.01 (it being understood that any and
all interest earned on funds made available to the Paying Agent pursuant to this
Agreement shall be turned over to Parent).
(b) Exchange Procedure. As soon as reasonably practicable after the
Effective Time, Parent shall cause the Paying Agent to mail to each holder of
record of a certificate or certificates which immediately prior to the Effective
Time represented shares of Company Common Stock (the "Certificates"), (i) a
letter of transmittal in a form mutually agreed upon by Parent and the Surviving
Corporation, which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Paying Agent or to such other
agent or agents as may be appointed by Parent, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Paying Agent, Parent or the Surviving Corporation shall pay or
cause to be paid, within three business days of receipt thereof (but in no event
prior to the Effective Time), to the holder of such Certificate in exchange
therefor the amount of cash into which the shares of Company Common Stock
theretofore represented by such Certificate shall have been converted pursuant
to Section 2.01, and the Certificate so surrendered shall forthwith be canceled.
In the event of a transfer of ownership of shares of Company Common Stock that
is not registered in the transfer records of the Company, payment may be made to
a person other than the person in whose name the Certificate so surrendered is
registered, if such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other than
the registered holder of such Certificate or establish to the satisfaction of
the Surviving Corporation that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 2.02, each Certificate shall
be deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the amount of cash, without interest, into which the
shares of Company Common Stock theretofore represented by such Certificate shall
have been converted pursuant to Section 2.01. No interest will be paid or will
accrue on the cash payable upon the surrender of any Certificate.
(c) No Further Ownership Rights in Company Common Stock. All cash
paid upon the surrender of Certificates in accordance with the terms of this
Section 2.02 shall be deemed to have been paid in full satisfaction of all
rights pertaining to the shares of Company Common Stock theretofore represented
by such Certificates. At the Effective Time, the stock transfer books of the
Company shall be closed, and there shall be no further registration of transfers
on the stock transfer books of the Surviving Corporation of the shares of
Company Common Stock that were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to the Surviving
Corporation or the Paying Agent for any reason, they shall be canceled and
exchanged as provided in this Article II.
(d) Termination of Fund; No Liability. At any time following twelve
months after the Effective Time, the Surviving Corporation shall be entitled to
require the Paying Agent to deliver to it any funds (including any interest
received with respect thereto) which had been made available to the Paying Agent
and which have not been disbursed to holders of Certificates, and thereafter
such holders shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) only as general creditors
thereof with respect to the Merger Consideration payable upon due surrender of
their Certificates, without any interest thereon. Notwithstanding the foregoing,
neither the Surviving Corporation nor the Paying Agent shall be liable to any
holder of a Certificate for Merger Consideration delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Certificate shall not have been surrendered prior to five years after the
Effective Time (or immediately prior to such earlier date on which any cash in
respect of such Certificate would otherwise escheat to or become the property of
any Governmental Entity (as defined in Section 3.04)), any such cash in respect
of such Certificate shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto.
(e) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Parent, the posting by such person of a bond in such reasonable amount as Parent
may direct as indemnity against any claim that may be made against it with
respect to such Certificate, the Paying Agent shall deliver in exchange for such
lost, stolen or destroyed Certificate the applicable Merger Consideration with
respect thereto.
(f) Adjustments to Prevent Dilution. In the event that prior to the
Effective Time, solely as a result of a reclassification, stock split (including
a reverse stock split), stock dividend or stock distribution which in any such
event is made on a pro rata basis to all holders, there is a change in the
number of shares of Company Common Stock outstanding or issuable upon the
conversion, exchange or exercise of securities or rights convertible or
exchangeable or exercisable for shares of Company Common Stock, then the Merger
Consideration and the Cash Amount (as defined in Section 6.04) shall each be
equitably adjusted to eliminate the effects of such event.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the schedules delivered to Parent in connection
with the execution of this Agreement setting forth exceptions to the Company's
representations and warranties set forth herein (the "Company Disclosure
Schedules"), the Company represents and warrants to Parent and Sub as set forth
below. The Company Disclosure Schedules are arranged in sections corresponding
to sections of this Agreement to be modified by such disclosure schedule, it
being understood and agreed that matters disclosed pursuant to one section of
the Company Disclosure Schedules or contained in the Company SEC Documents (as
defined in Section 3.05) shall be deemed disclosed with respect to any other
section of the Company Disclosure Schedules to the extent it is readily apparent
that the matters so disclosed are applicable to such other section. As used in
this Agreement, "knowledge" means, with respect to matters relating to the
Company, actual knowledge of the Chief Executive Officer, President, Chief
Financial Officer, Chief Legal Officer or any Executive Vice President of the
Company.
SECTION 3.01. Organization.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation,
and has all requisite power and authority to carry on its business as now being
conducted, except where the failure to be so in good standing or to have such
power and authority would not have a Material Adverse Effect (as defined in
Section 9.04) on the Company. The Company is duly qualified or licensed to do
business and in good standing 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 or licensing necessary, except in such jurisdictions where
the failure to be so duly qualified or licensed and in good standing would not
have a Material Adverse Effect on the Company or prevent or materially delay the
consummation of the Merger.
(b) Each subsidiary of the Company is an entity duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization (to the extent such concept is recognized) and has all necessary
powers required to carry on its business as now being conducted, except where
the failure to be so in good standing or to have such power and authority would
not have a Material Adverse Effect on the Company. All subsidiaries of the
Company and their respective jurisdictions of organization are identified on
Schedule 3.01.
SECTION 3.02. Capitalization.
(a) The authorized capital stock of the Company consists of
20,000,000 shares of Company Common Stock and 1,000,000 shares of preferred
stock, par value $0.01 per share (the "Preferred Shares"). As of May 31, 2004,
(i) 9,740,177 shares of Company Common Stock were issued and outstanding, (ii)
no shares of Company Preferred Stock were issued and outstanding, (iii) 259,823
shares of Company Common Stock were held by the Company in its treasury and (iv)
2,247,483 shares of Company Common Stock were reserved for issuance upon
exercise of outstanding Options (as defined in Section 6.04). Set forth on
Schedule 3.02 is a schedule as of May 31, 2004, setting forth the holder,
exercise xxxxx, xxxxx date, vesting dates(s) and expiration date of each
outstanding Option. Except as set forth above, as of the date of this Agreement,
no shares of capital stock or other voting securities of the Company were
issued, reserved for issuance or outstanding. All outstanding shares of capital
stock of the Company are, and all shares which may be issued will be, when
issued, duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. There are no bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
Company Stockholders may vote. Except as set forth above, or on Schedule 3.02,
as of the date of this Agreement, there are no securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any kind
to which the Company is a party or by which any of them is bound obligating the
Company to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other voting securities of the Company or
obligating the Company to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or undertaking.
As of the date of this Agreement, there are not any outstanding contractual
obligations of the Company to repurchase, redeem or otherwise acquire any shares
of capital stock or other equity securities of the Company.
(b) All of the outstanding shares of capital stock of each
subsidiary of the Company are duly authorized, validly issued, fully paid and
nonassessable, and, except as set forth on Schedule 3.01, such shares are owned
by the Company or by a subsidiary of the Company free and clear of any Liens or
limitation on voting rights. Except as set forth on Schedule 3.02, there are no
subscriptions, options, warrants, calls, rights, convertible securities or other
agreements or commitments of any character relating to the issuance, transfer,
sale, delivery, voting or redemption (including any rights of conversion or
exchange under any outstanding security or other instrument) for any of the
capital stock or other equity interests of any such subsidiaries.
(c) Except as set forth on Schedule 3.07 and except for (i)
Indebtedness (as defined in Section 9.04) set forth on, or described in, the
balance sheet or the notes to the Company's consolidated financial statements
included in its Quarterly Report on Form 10-Q for the three months ended Xxxxx
00, 0000, (xx) Indebtedness of the Company to any of its wholly owned
subsidiaries or of any subsidiary of the Company to the Company, and (iii)
prepayment penalties resulting from discharge of obligations arising under the
agreements set forth on Schedule 3.04.
SECTION 3.03. Authority. The Company has the requisite corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby (other than the approval and adoption of the
terms of this Agreement by the holders of more than 80% of the outstanding
shares of Company Common Stock (the "Company Stockholder Approval")). The
execution, delivery and performance of this Agreement and the consummation by
the Company of the Merger and of the other transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of the
Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the transactions so
contemplated in each case, other than, with respect to the Merger, the Company
Stockholder Approval. This Agreement has been duly executed and delivered by the
Company and, assuming this Agreement constitutes a valid and binding obligation
of Parent and Sub, constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors' rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.
SECTION 3.04. Consents and Approvals; No Violations. Except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Securities Exchange Act of
1934, as amended (the "Exchange Act"), including the filing with the SEC of a
proxy statement relating to any required approval by the Company Stockholders of
this Agreement (the "Proxy Statement"), the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), the laws of the states in
which the Company is qualified to do or is doing business, state takeover laws,
Environmental Laws and foreign laws, neither the execution, delivery or
performance of this Agreement by the Company nor the consummation by the Company
of the transactions contemplated hereby will (i) conflict with or result in any
breach of any provision of the certificate of incorporation or by-laws of the
Company, (ii) require any filing with, or permit, authorization, consent or
approval of, any Federal, state or local government or any court, tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency, domestic, foreign or supranational (a "Governmental
Entity") (except where the failure to obtain such permits, authorizations,
consents or approvals or to make such filings would not have a Material Adverse
Effect on the Company or prevent or materially delay the consummation of the
Merger), (iii) except as set forth on Schedule 3.04, result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which the Company is a party or by which any of them
or any of their properties or assets may be bound (except for violations,
breaches or defaults that would not have a Material Adverse Effect on the
Company or prevent or materially delay the consummation of the Merger), or (iv)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company or any of their properties or assets (except for
violations, breaches or defaults that would not have a Material Adverse Effect
on the Company or prevent or materially delay the consummation of the Merger).
Notwithstanding clause (iii) above, certain contracts and agreements as set
forth on Schedule 3.18 (A) provide for their termination or require consent upon
a change of control of the Company or (B) contain provisions restricting their
assignment.
SECTION 3.05. SEC Reports and Financial Statements. The Company has
filed with the SEC all forms, reports, schedules, statements and other documents
required to be filed by it since December 31, 2001, pursuant to the Exchange Act
or the Securities Act of 1933, as amended (the "Securities Act") (such forms,
reports, schedules, statements and other documents, including any financial
statements or schedules included therein, are referred to as the "Company SEC
Documents"). No subsidiary of the Company is required to file any forms,
reports, schedules, statements and other documents with SEC. The Company SEC
Documents, at the time filed, (a) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading and (b) complied in all material
respects with the applicable requirements of the Exchange Act and the Securities
Act, as the case may be, and the applicable rules and regulations of the SEC
thereunder. Except to the extent revised or superseded by a subsequently filed
Company SEC Document, the Company SEC Documents, considered as a whole as of
their date, do not contain an untrue statement of a material fact or omit to
state a material fact required to be stated or incorporated by reference therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading (it being understood
that the foregoing does not cover future events resulting from public
announcement of the Merger). The financial statements of the Company included in
the Company SEC Documents comply as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles of the United States ("GAAP"), except as may be
indicated in the notes thereto or, in the case of the unaudited statements, as
permitted by Forms 10-Q and 8-K of the SEC, and fairly present (subject, in the
case of the unaudited statements, to normal, recurring audit adjustments) the
consolidated financial position of the Company and its respective consolidated
subsidiaries as at the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended.
SECTION 3.06. Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Documents filed and publicly available prior to the
date of this Agreement or on Schedule 3.06, since December 31, 2003, each of the
Company and its subsidiaries has conducted its business only in the ordinary
course, and there has not been any Material Adverse Change with respect to the
Company. Except as disclosed in the Company SEC Documents or on Schedule 3.06,
since December 31, 2003, there has not been (i) any granting to any officer of
the Company or any of the Company's subsidiaries of any increase in
compensation, except in the ordinary course of business (including in connection
with promotions) consistent with past practice, (ii) any granting to any such
officer of any increase in severance or termination pay, except as part of a
standard employment package to any person promoted or hired, (iii) except
employment arrangements in the ordinary course of business consistent with past
practice with employees other than any executive officer of the Company or of
any of its subsidiaries, any entry by the Company or any of its subsidiaries
into any employment, severance or termination agreement with any such employee
or executive officer, (iv) any increase in or establishment of any bonus,
insurance, deferred compensation, pension, retirement, profit-sharing, stock
option (including the granting of stock options, stock appreciation rights,
performance awards or restricted stock awards or the amendment of any existing
stock options, stock appreciation rights, performance awards or restricted stock
awards), stock purchase or other employee benefit plan or agreement or
arrangement, except in the ordinary course of business consistent with past
practice or (v) any declaration, setting aside or payment of any dividend or
other distribution (within cash, stock or property) with respect to Company
Common Stock or the capital stock of any of the Company's subsidiaries, except
in the ordinary course of business consistent with part practice.
SECTION 3.07. No Undisclosed Liabilities. Except as and to the
extent set forth in the Company SEC Documents and Schedule 3.07, since December
31, 2003, neither the Company nor any of its subsidiaries has incurred any
liabilities of any nature, whether or not accrued, contingent or otherwise, that
would have a Material Adverse Effect on the Company.
SECTION 3.08. Information Supplied. None of the written information
supplied or to be supplied by the Company specifically for inclusion or
incorporation by reference in the Proxy Statement, will at the time the Proxy
Statement is first mailed to the Company Stockholders or at the time of the
Stockholders Meeting (as defined in Section 6.01), 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. The Proxy Statement
will comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder, except that no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied by
Parent or Sub specifically for inclusion or incorporation by reference therein.
SECTION 3.09. Benefit Plans. Except as set forth on Schedule 3.09,
and except to the extent that the failure of the following to be true would not
reasonably be expected to have a Material Adverse Effect:
(a) Each "employee pension benefit plan" (as defined in Section 3(2)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) (a
"Pension Plan"), "employee welfare benefit plan" (as defined in Section 3(1) of
ERISA) (a "Welfare Plan") and each other agreement, plan, or policy relating to
employment, stock options, compensation, deferred compensation, bonuses,
severance, fringe benefits or other employee benefits, in each case entered
into, maintained or contributed to, or required to be maintained or contributed
to, by the Company or any of its subsidiaries for the benefit of any present or
former employee, officer or director (each of the foregoing, a "Benefit Plan")
has been administered in all material respects in accordance with its terms. The
Benefit Plans, as well as the Company and all of its subsidiaries with respect
to the Benefit Plans, are in compliance in all material respects with the
applicable provisions of ERISA, the Code and all other applicable laws. Schedule
3.09 sets forth a complete list of each Benefit Plan arrangement.
(b) No Pension Plan subject to Title IV of ERISA or Section 412 of
the Code and none of the Company or any of its subsidiaries or any other person
that, together with the Company, is treated as a single employer under Section
414(b), (c), (m) or (o) of the Code (each, including the Company, a "Commonly
Controlled Entity"): (i) currently has an obligation to contribute to, or during
any time during the last six years had an obligation to contribute to, a Pension
Plan subject to Title IV of ERISA or Section 412 of the Code, or (ii) has
incurred any liability to the Pension Benefit Guaranty Corporation, which
liability has not been fully paid. All contributions and other payments required
to be made by the Company or any of its subsidiaries to any Pension Plan with
respect to any period ending before the Closing Date have been made or reserves
adequate for such contributions or other payments have been or will be set aside
therefor and have been or will be reflected in financial statements.
(c) Neither the Company nor any of its subsidiaries nor any Commonly
Controlled Entity is required to contribute to any "multiemployer plan" (as
defined in Section 4001(a)(3) of ERISA) or has withdrawn from any multiemployer
plan where such withdrawal has resulted or would result in any "withdrawal
liability" (within the meaning of Section 4201 of ERISA) that has not been fully
paid.
(d) Each Benefit Plan (and its related trust) that is intended to be
qualified under Section 401(a) of the Code has been determined by the IRS to
qualify under such section (and the related trust, if any, has been determined
to be exempt under Section 501(a) of the Code) and, to the knowledge of the
Company, nothing has occurred to cause the loss of such qualified status.
(e) The Company has heretofore made available to Parent correct and
complete copies of each of the following:
(1) Each Benefit Plan and all amendments thereto; the trust
instrument and/or insurance contracts, if any, forming a part of
such Benefit Plan and all amendments thereto;
(2) If applicable, the most recently filed Form 5500 and all
schedules thereto, if any;
(3) The most recent determination letter issued by the IRS
regarding the qualified status of each such Benefit Plan that is a
Pension Plan;
(4) The most recent accountant's report for each Benefit Plan,
if any; and
(5) The most recent summary plan description for each Benefit
Plan, if any.
SECTION 3.10. Litigation. Except as set forth on Schedule 3.10,
there is no suit, claim, action, proceeding or investigation pending before any
Governmental Entity or, to the knowledge of the Company, threatened against the
Company or any subsidiary of the Company or any of their respective properties
or any of their respective officers, employees or directors in their capacity as
such or any other person with respect to which, in whole or in part, the Company
or any subsidiary of the Company is liable or has agreed to indemnify such other
person that would reasonably be expected to have a Material Adverse Effect on
the Company or prevent or materially delay the consummation of the Merger.
Neither the Company nor any of its subsidiaries is subject to any outstanding
order, writ, injunction or decree that would reasonably be expected to have a
Material Adverse Effect on the Company or prevent or materially delay the
consummation of the Merger.
SECTION 3.11. Compliance with Applicable Law.
(a) Except as set forth on Schedule 3.11, each of the Company and
its subsidiaries holds all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for the lawful conduct of its
business (the "Company Permits"), except for failures to hold such permits,
licenses, variances, exemptions, orders and approvals that would not have a
Material Adverse Effect on the Company. Except as set forth on Schedule 3.11,
each of the Company and its subsidiaries is in compliance with the terms of the
Company Permits, except where the failure so to comply would not have a Material
Adverse Effect on the Company. Except as disclosed in the Company SEC Documents,
and except as set forth on Schedule 3.11, to the knowledge of the Company, the
business of the Company and its subsidiaries is not being conducted in violation
of any law, ordinance or regulation of any Governmental Entity, including (i)
the Federal Food, Drug and Cosmetic Act, the Controlled Substances Act, 21
U.S.C. Section 801, et seq, or any other law, ordinance or regulation of the
U.S. Food and Drug Administration, the U.S. Department of Justice or the Drug
Enforcement Agency and (ii) the Xxxxxxxx-Xxxxx Act of 2002 and the related rules
and regulations promulgated under such Xxxxxxxx-Xxxxx Act of 2002 and the
Exchange Act, except, in each case, for possible violations that would not have
a Material Adverse Effect on the Company or prevent or materially delay the
consummation of the Merger. Except as set forth on Schedule 3.11, as of the date
of this Agreement, no investigation or review by any Governmental Entity with
respect to the Company or any of its subsidiaries is pending or, to the
knowledge of the Company, threatened, nor has any Governmental Entity indicated
an intention to conduct any such investigation or review, other than, in each
case, those the outcome of which would not be reasonably expected to have a
Material Adverse Effect on the Company or prevent or materially delay the
consummation of the Merger.
(b) The management of the Company has (i) implemented disclosure
controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) to
ensure that material information relating to the Company and the Company's
subsidiaries is made known to the management of the Company by others within
those entities, and (ii) has disclosed, based on its most recent evaluation, to
the Company's outside auditors and the audit committee of the Company Board (A)
all significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting (as defined in Rule 13a-15(f) of
the Exchange Act), which are reasonably likely to adversely affect the Company's
ability to record, process, summarize and report financial data and (B) any
fraud, whether or not material, that involves management or other employees who
have a significant role in the Company's internal control over financial
reporting.
SECTION 3.12. Tax Matters. Except as set forth on Schedule 3.12, and
except to the extent that the failure of the following (other than clauses (e)
and (f)) to be true would not reasonably be expected to have a Material Adverse
Effect:
(a) The Company has timely filed, or has caused to be timely filed,
all Tax Returns required to be filed by it or any of its subsidiaries and all
such Tax Returns are true, complete and accurate. All Taxes shown to be due on
such Tax Returns have been timely paid.
(b) The most recent financial statements contained in the Company
SEC Documents reflect an adequate reserve for all Taxes payable by the Company
for all taxable periods and portions thereof through the date of such financial
statements. No deficiency with respect to any Taxes has been asserted or
assessed in writing against the Company, and no written requests for waivers of
the time to assess any such Taxes are pending.
(c) The Federal Income Tax Returns of the Company and its
subsidiaries consolidated in such Returns have never been examined by the United
States Internal Revenue Service. All assessments for Taxes due with respect to
completed and settled examinations or any concluded litigation have been fully
paid. No Tax Return of the Company or its subsidiaries is under audit or
examination and no written notice of such an audit or examination has been
received by the Company or any of its subsidiaries.
(d) There are no Liens for material Taxes (other than Liens for
current Taxes not yet due and payable) on the assets of the Company).
(e) The transactions contemplated by this Agreement will not trigger
any material income or gain for federal income tax purposes (i) that was
previously deferred pursuant to the Treasury Regulations issued under Section
1502 of the Code or (ii) under Section 355(e) of the Code in respect of a
distribution occurring prior to the Closing.
(f) Neither the Company nor any of its subsidiaries has any material
liability for the Taxes of any person other than the Company or any of its
subsidiaries (i) under the Treasury Regulations Section 1.1502-6 (or any similar
provision of state, local or foreign law), (ii) as transferee or successor or
(iii) by contract.
(g) For purposes of this Agreement:
"Taxes" includes all forms of taxation, whenever created or imposed,
and whether of the United States or elsewhere, and whether imposed
by a local, municipal, governmental, state, foreign, Federal or
other Governmental Entity, or in connection with any agreement with
respect to Taxes, including all interest, penalties and additions
imposed with respect to such amounts.
"Tax Return" means all Federal, state, local, provincial and foreign
Tax returns, declarations, statements, reports, schedules, forms and
information returns and any amended Tax return relating to Taxes.
SECTION 3.13. State Takeover Statutes. No state takeover statute or
similar statute or regulation applies or purports to apply to the Merger, this
Agreement or any of the transactions contemplated by this Agreement.
SECTION 3.14. Brokers; Fees and Expenses. No broker, investment
banker, financial advisor or other person, other than Xxxxx X. Xxxxxxx Company
Limited, the fees and expenses of which will be paid by the Company, is entitled
to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company. The Company has
provided Parent true and correct copies the engagement letter between the
Company and Xxxxx X. Xxxxxxx Company Limited.
SECTION 3.15. Opinion of Financial Advisor. The Company has received
the opinion of Xxxxx X. Xxxxxxx Company Limited to the effect that, as of the
date of this Agreement, the consideration to be received by the holders of the
outstanding shares of Company Common Stock (other than Parent or any of its
direct or indirect subsidiaries or affiliates) in connection with the Merger is
fair from a financial point of view to such holders, and a complete and correct
signed copy of such opinion has been, or promptly upon receipt thereof will be,
delivered to Parent.
SECTION 3.16. Intellectual Property. Except as set forth on Schedule
3.16, each of the Company and its subsidiaries owns all right, title and
interest to, is licensed to use or otherwise possesses adequate rights to use
(in each case, free and clear of any Liens other than Liens that do not
materially impair the existing use of the Intellectual Property Right) all
Intellectual Property Rights used or necessary to conduct the business of the
Company and its subsidiaries, except where failure to own or possess such
licenses or rights, individually or in the aggregate, has not had, and would not
have, a Material Adverse Effect on the Company. Except as set forth on Schedule
3.16, to the knowledge of the Company, (a) the Intellectual Property Rights of
the Company and its subsidiaries do not conflict with or infringe upon any
Intellectual Property Rights of others, and (b) none of the Intellectual
Property Rights owned by and/or licensed to the Company or its subsidiaries is
being infringed or misappropriated by any third party; in each case except for
such conflict, infringement or misappropriation, individually or in the
aggregate, that would not have a Material Adverse Effect on the Company. The
Company and its subsidiaries have taken all reasonably necessary actions to
ensure protection of their Intellectual Property Rights under applicable law,
including duly registering such Intellectual Property Rights with the
appropriate filing office, and maintaining the secrecy of all confidential
Intellectual Property Rights, except for such failures that, individually or in
the aggregate, would not have a Material Adverse Effect on the Company. For
purposes hereof, "Intellectual Property Right" means any trademark, service
xxxx, trade name, trade dress, domain name, copyright, patent, software,
database, website, invention, process, design, formula, trade secret, know-how
(including any registrations or applications for registration of any of the
foregoing, and any renewals thereof); or any other similar type of proprietary
intellectual property right.
SECTION 3.17. Labor Relations and Employment. Except as set forth on
Schedule 3.17, (i) there is no labor strike, slowdown, stoppage or lockout
actually pending, or, to the knowledge of the Company, threatened against the
Company or any of its subsidiaries, which would reasonably be expected to have a
Material Adverse Effect on the Company and (ii) neither the Company nor any of
its subsidiaries is a party to or bound by any collective bargaining or similar
agreement with any labor organization.
SECTION 3.18. Change of Control. Except as set forth on Schedule
3.18, the transactions contemplated by this Agreement will not require the
consent from or the giving of notice to a third party, permit a third party to
terminate or accelerate vesting, repayment or repurchase rights, or create any
other detriment under the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, lease, contract, agreement or other instrument or
obligation to which the Company or any of its subsidiaries is a party or by
which any of them or any of their properties or assets may be bound, except
where the adverse consequences resulting from such change of control or where
the failure to obtain such consents or provide such notices would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
SECTION 3.19. Environmental Matters.
(a) Except as set forth on Schedule 3.19, each of the Company and
its subsidiaries has been and is in compliance with all applicable Environmental
Laws (as this term and the other terms in this section are defined below),
except for such violations and defaults as would not, individually or in the
aggregate, have a Material Adverse Effect on the Company.
(b) The Company has provided to Parent complete and accurate copies
of all Phase I and Phase II environmental reports which are in the possession or
control of the Company or any of its subsidiaries in relation to real properties
owned by the Company or its subsidiaries.
(c) The Company and its subsidiaries possesses all required
Environmental Permits; all such Environmental Permits are in full force and
effect; there are no pending or threatened proceedings to revoke such
Environmental Permits and each of the Company and its subsidiaries is in
compliance with all terms and conditions thereof, except where the failure to
possess or comply with such Environmental Permits or the failure for such
Environmental Permits to be in full force and effect would not, individually or
in the aggregate, have a Material Adverse Effect on the Company.
(d) Except as set forth on Schedule 3.19, and except for matters
which would not, individually or in the aggregate, have a Material Adverse
Effect on the Company, neither the Company nor any of its subsidiaries has
received any written notification that the Company or such subsidiary as a
result of any of the operations of the Business, or any property currently or
formerly owned or leased in connection with the Business, is adversely affected
by any proceeding, investigation, claim, lawsuit or order by any Governmental
Entity or other person relating to (i) any Remedial Action that is needed to
respond to a Release or threat of Release into the environment of Hazardous
Materials, or (ii) any Environmental Liabilities and Costs imposed or
potentially imposed on the Company.
(e) Except as set forth on Schedule 3.19, there is not now and, to
the Company's knowledge, has not been at any time in the past, any circumstance,
including, without limitation, any Release in connection with the current or
former conduct of the Business for which the Company or any of its subsidiary is
required to implement or pay for any Remedial Action, or to reimburse costs
incurred by third parties with respect to any Remedial Action, or to incur
Environmental Liabilities and Costs that would, individually or in the
aggregate, have a Material Adverse Effect on the Company.
(f) For purposes of this Agreement:
(A) "Business" means the businesses of the Company or its
subsidiaries.
(B) "Environmental Laws" means all Laws as in effect on or
prior to the date hereof relating to the protection of human health,
safety, or welfare or the environment, including any emission,
discharge, generation, manufacture, distribution, use, sale,
receipt, processing, storage, treatment, disposal, abatement,
existence, exposure to, Release, threatened Release, reporting,
licensing, permitting, investigation, cleanup, mitigation,
remediation, transportation, or other handling of any chemical,
drug, device, or any other substance or item, including, but not
limited to, the following federal laws as amended and their state
counterparts (i) the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C.ss.ss.9601, et seq.
("CERCLA"), the Resource Conservation and Recovery Act, 42 U.S.C.
ss.ss.6901, et seq., the Clean Water Act, 33 U.S.C.ss.ss.1251, et.
seq., the Oil Pollution Act of 1990, 33 U.S.C.ss.ss.2701, et seq.,
the Clean Air Act, 42 U.S.C.ss.ss.7401, et seq., the Toxic
Substances Control Act, 15 U.S.C.ss.ss.2601, et. seq., the Federal
Food, Drug, and Cosmetic Act, 21 U.S.C.ss.ss.301, et. seq., and (ii)
all other requirements pertaining to protection of air, surface
water, groundwater or land and subsurface, natural resources, human
health, safety, or welfare.
(C) "Environmental Liabilities and Costs" means all damages,
natural resource damages, claims, losses, expenses, costs,
obligations, and liabilities (collectively, "Losses") imposed by,
under or pursuant to Environmental Laws, including, but not limited
to, all Losses related to Remedial Actions, and all fees, capital
costs, compliance costs, disbursements, penalties, fines and
expenses of counsel, experts, contractors, personnel and consultants
and expenditures necessary to cause any such property, the Company,
any subsidiary of the Company or the Business to be in compliance
with requirements of Environmental Laws.
(D) "Environmental Permits" means any federal, state,
provincial or local permit, license, registration, consent, order,
administrative consent order, certificate, approval, waiver or other
authorization necessary for the conduct of the Business as currently
conducted, and wherever it is currently conducted, under any
applicable Environmental Law.
(E) "Governmental Entity" means any government or subdivision
thereof, domestic, foreign or supranational or any administrative,
governmental or regulatory authority, agency, commission, tribunal
or body, domestic, foreign or supranational.
(F) "Hazardous Materials" means any substance that (a) is
defined, listed, identified or otherwise regulated under any
Environmental Law (including, without limitation, "hazardous" and
"toxic" substances and wastes, radioactive substances including
radon gas, polychlorinated-biphenyls, asbestos and petroleum) or (b)
requires investigation, remediation, or other protective measures
under applicable Environmental Law.
(G) "Laws" or "laws" means all (A) constitutions, treaties,
statutes, laws (including, but not limited to, the common law),
rules, regulations, ordinances or codes of any Governmental Entity,
(B) Environmental Permits, and (C) orders, decisions, injunctions,
judgments, awards and decrees of any Governmental Entity.
(H) "Release" means any releasing, spilling, disposing or
other discharging of Hazardous Materials into the environment
(including air, soil, subsurface, surface water and groundwater).
(I) "Remedial Action" means all actions required by any
Governmental Entity pursuant to Environmental Law or otherwise taken
as necessary to comply with Environmental Law to (i) mitigate, clean
up, remove, treat or in any other way remediate any Hazardous
Materials, (ii) prevent the release or threatened release of
Hazardous Materials so that they do not endanger or threaten to
endanger public health or welfare or the environment or (iii)
perform studies, investigations or monitoring in respect of any such
matter.
SECTION 3.20. Material Contracts(a) . (a) The Company has provided
or made available to Parent (i) true and complete copies of all written
contracts and agreements to which the Company or any of its subsidiaries is a
party and which are material to the Company or such subsidiary ("Material
Contracts"), and (ii) with respect to such Material Contracts that have not been
reduced to writing, a written description thereof which is listed on Schedule
3.20. All Material Contracts are valid, binding and in full force and effect,
except to the extent they have previously expired in accordance with their terms
or to the extent the failure to be in full force and effect would not have a
Material Adverse Effect. The Company is not, or has not received any notice or
has any knowledge that any other party is, in default in any respect under any
such Material Contract, except for those defaults which would not reasonably be
likely, either individually or in the aggregate, to have a Material Adverse
Effect with respect to the Company; and there has not occurred any event that,
with the lapse of time or the giving of notice or both, would constitute such a
material default.
(b) Except as set forth on Schedule 3.20, no officer or director of
the Company, no shareholder of the Company related to any such officer or
director, and no "associate" (as defined in Rule 14a-1 under the Exchange Act)
of any of them, has any interest in any material contract or agreement of, or
other business arrangement with, the Company, or in any material property
(including any real property and any material personal property, tangible or
intangible), used in or pertaining to the business of the Company.
SECTION 3.21. Property. Schedule 3.21 accurately identifies all real
property, leases and other rights in real property, structures and other
buildings of the Company and its subsidiaries. All properties and assets of the
Company and its subsidiaries, real and personal, material to the conduct of its
business are, except for changes in the ordinary course of business consistent
with past practice since December 31, 2003, reflected in the most recent balance
sheet of the Company included in the Company SEC Documents, and except as set
forth on Schedule 3.21, each of the Company and its subsidiaries has good and
marketable title to its real property set forth on Schedule 3.21 and to the
personal property reflected on such balance sheet or acquired by it since the
date of the balance sheet, free and clear of all mortgages, liens, pledges,
encumbrances, charges, agreements, claims, restrictions and defects of title
(collectively "Liens"). All real property, structures and other buildings and
material equipment of the Company and its subsidiaries currently used in the
operation of the business of the Company and its subsidiaries, are adequately
maintained and are in satisfactory operating condition and repair for the
requirements of the business of the Company and its subsidiaries as presently
conducted.
SECTION 3.22. Insurance. All insurance policies carried by or
covering the Company and its subsidiaries with respect to their business, assets
and properties (the "Insurance Policies") are in full force and effect, and no
notice of cancellation has been received by the Company or any of its
subsidiaries with respect to any material Insurance Policy which has not been
cured by the payment of premiums that are due. All premiums due on the Insurance
Policies have been paid in a timely manner and the Company and its subsidiaries
have complied in all material respects with the terms and provisions of the
Insurance Policies.
SECTION 3.23. No Other Representations and Warranties. Except for
the representations and warranties contained in this Article III, none of the
Company, any affiliate of the Company or any other Person makes any
representations or warranties, and the Company hereby disclaims any other
representations or warranties, whether made by the Company, any affiliate of the
Company, or any of their officers, directors, employees, agents or
representatives, with respect to the negotiation, execution and delivery of this
Agreement or the transactions contemplated hereby, notwithstanding the delivery
or disclosure, in writing or orally, to the Parent, Sub or any of their
officers, directors, employees, agents or representatives of any documentation
or other information.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub jointly and severally represent and warrant to the
Company as follows:
SECTION 4.01. Organization. Each of Parent and Sub is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to carry on its business as now being conducted, except where the
failure to be so in good standing or to have such power and authority would not
be reasonably expected to prevent or materially delay the consummation of the
Merger.
SECTION 4.02. Authority. Parent and Sub have requisite corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Parent and
Sub and no other corporate proceedings on the part of Parent and Sub are
necessary to authorize this Agreement or to consummate such transactions. No
vote of Parent shareholders is required to approve this Agreement or the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Parent and Sub, as the case may be, and, assuming this Agreement
constitutes a valid and binding obligation of the Company, constitutes a valid
and binding obligation of each of Parent and Sub enforceable against them in
accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally and (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies.
SECTION 4.03. Consents and Approvals; No Violations. Except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act, the HSR Act, the
DGCL, the laws of other states in which Parent is qualified to do or is doing
business, state takeover laws and foreign laws, neither the execution, delivery
or performance of this Agreement by Parent and Sub nor the consummation by
Parent and Sub of the transactions contemplated hereby will (i) conflict with or
result in any breach of any provision of the respective certificate of
incorporation or by-laws of Parent and Sub, (ii) require any filing with, or
permit, authorization, consent or approval of, any Governmental Entity (except
where the failure to obtain such permits, authorizations, consents or approvals
or to make such filings would not be reasonably expected to prevent or
materially delay the consummation of the Merger), (iii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, lease, contract, agreement or other
instrument or obligation to which Parent or any of its subsidiaries is a party
or by which any of them or any of their properties or assets may be bound or
(iv) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Parent, any of its subsidiaries or any of their properties or
assets, except in the case of clauses (iii) and (iv) for violations, breaches or
defaults which would not, individually or in the aggregate, be reasonably
expected to prevent or materially delay the consummation of the Merger.
SECTION 4.04. Information Supplied. None of the information supplied
or to be supplied by Parent or Sub specifically for inclusion or incorporation
by reference in the Proxy Statement will, at the time the Proxy Statement is
first mailed to the Company Stockholders or at the time of the Stockholders
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading; provided, however, that no representation is made by Parent or Sub
with respect to statements made in any such Proxy Statement based upon
information previously supplied by the Company or its subsidiaries to Parent or
Sub.
SECTION 4.05. Interim Operations of Sub. Sub was formed solely for
the purpose of engaging in the transactions contemplated hereby and, except for
activities incidental to its organization and maintenance of corporate
existence, has engaged in no other business activities and has conducted its
operations only as contemplated hereby.
SECTION 4.06. Financing. Parent and Sub have previously delivered to
the Company the following: (i) a fully executed commitment letter (the "Senior
Debt Letter") from Bear, Xxxxxxx & Co. Inc., X.X Xxxxxx Securities Inc.,
Deutsche Bank Securities Inc., Bear Xxxxxxx Corporate Lending Inc., JPMorgan
Chase Bank and Deutsche Bank AG Cayman Islands Branch (the "Banks") and accepted
by Parent, providing the terms and conditions upon which the Banks have
committed to provide the senior secured revolving credit portion of the
financing required in connection with the Merger, (ii) a fully executed forward
underwriting commitment (the "Subordinated Debt Letter") from Bear, Xxxxxxx &
Co. Inc., X.X Xxxxxx Securities Inc. and Deutsche Bank Securities Inc. and
accepted by Parent with respect to the placement of subordinated debt of the
Surviving Corporation pursuant to an offering under Rule 144A of the Exchange
Act, (iii) a fully executed letter (the "Xxxxx Equity Commitment Letter") from
Xxxxx & Company ("Xxxxx") and accepted by Parent with respect to a portion of
the equity financing required in connection with the Merger and (iv) a fully
executed commitment letter from Church & Xxxxxx Co., Inc. (the "Church & Xxxxxx
Letter") and accepted by Parent with respect to a portion of the equity/debt
financing required in connection with the Merger (the Church & Xxxxxx Letter,
together with the Senior Debt Letter, the Subordinated Debt Letter and the Xxxxx
Equity Commitment Letter, the "Financing Letters"). The financing contemplated
by the Financing Letters (the "Financing") is sufficient to pay the aggregate
Merger Consideration and Cash Amount and pay all fees and expenses (including,
without limitation, legal, accounting and investment banking expenses, change of
control payments, and repayment of indebtedness) to be paid by Parent, Sub, the
Company or any of their respective affiliates related to the transactions
contemplated hereby. The Financing Letters are in full force and effect as of
the date hereof. The obligations to fund the commitments under the Financing
Letters are not subject to any condition other than as set forth in the
Financing Letters. All commitment and other fees required to be paid under the
Financing Letters on or prior to the date hereof have been paid.
SECTION 4.07. Brokers. Except as set forth on Schedule 4.07, none of
Parent, Sub, or any of their respective officers, directors or employees has
employed any broker or finder or incurred any liability for any broker or finder
in connection with the transactions contemplated herein.
ARTICLE V
COVENANTS
SECTION 5.01. Conduct of Business of the Company(i) . Except as
contemplated by this Agreement or as expressly agreed to in writing by Parent,
the Company will, and will cause its subsidiaries to, conduct its operations
according to its ordinary and usual course of business and consistent with past
practice and, subject to its obligations under Section 6.04(d), use its
commercially reasonable efforts to preserve intact its current business
organization, keep available the services of its current officers and employees
and preserve its relationships with customers, suppliers, licensors, licensees,
advertisers, distributors and others having business dealings with it and to
preserve goodwill. Without limiting the generality of the foregoing, and except
as (x) otherwise expressly provided in this Agreement, (y) required by law, or
(z) set forth on Schedule 5.01, the Company will not and will cause its
subsidiaries not to, without the consent of Parent, which shall not be
unreasonably withheld:
(i) except with respect to bonuses or other incentive compensation
made in the ordinary course of business consistent with past practice,
adopt or amend in any material respect any bonus, profit sharing,
compensation, severance, termination, stock option, stock purchase, stock
appreciation right, pension, retirement, employment or other employee
benefit agreement, trust, plan or other arrangement for the benefit or
welfare of any director, officer or employee of the Company or any of its
subsidiaries or increase in any manner the compensation or fringe benefits
of any director, officer or employee of the Company or any of its
subsidiaries (except, in each case, for normal annual increases and cost
of living increases for the benefit of officers and employees of the
Company or any of its subsidiaries) or pay any benefit not required by any
existing agreement or place any assets in any trust for the benefit of any
director, officer or employee of the Company or any of its subsidiaries
(in each case, except in the ordinary course of business consistent with
past practice);
(ii) sell, lease, license, mortgage or otherwise encumber or subject
to any Lien or otherwise dispose of any of its properties or assets other
than immaterial properties or assets (or immaterial portions of properties
or assets), except in the ordinary course of business consistent with past
practice;
(iii) (x) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its capital stock, (y) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (z) purchase, redeem or
otherwise acquire any shares of capital stock of the Company or any of its
subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities, except that the
Company may withhold shares of Company Common Stock in order to pay any
taxes due as a result of the exercise of Options;
(iv) other than in connection with Options outstanding as of the
date hereof, authorize for issuance, issue, deliver, sell or agree or
commit to issue, sell or deliver (whether through the issuance or granting
of options, warrants, commitments, subscriptions, rights to purchase or
otherwise), pledge or otherwise encumber any shares of its capital stock,
any other voting securities or any securities convertible into, or any
rights, warrants or options to acquire, any such shares, voting securities
or convertible securities or any other securities or equity equivalents
(including, without limitation, stock appreciation rights) other than
issuances upon exercise of Options;
(v) amend its certificate of incorporation or by-laws;
(vi) acquire (x) by merging or consolidating with, or by purchasing
a substantial portion of the assets of, or by any other manner, any
business or any corporation, partnership, joint venture, association or
other business organization or division thereof or (y) any assets,
including real estate, except acquisitions of assets in the ordinary
course of business consistent with past practice;
(vii) make or agree to make any capital expenditure or expenditures,
or enter into any agreement or agreements providing for payments in excess
of $11 million for calendar year 2004.
(viii) pay, discharge, settle or satisfy any claims, liabilities,
obligations or litigation (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge, settlement or
satisfaction, in the ordinary course of business consistent with past
practice without admission of liability or in accordance with their terms,
of liabilities recognized or disclosed in the most recent consolidated
financial statements (or the notes thereto) of the Company included in the
Company SEC Documents or incurred since the date of such financial
statements;
(ix) make any change to its method of reporting income or deductions
for Tax purposes; or
(x) authorize, or commit or agree to take, any of the foregoing
actions.
SECTION 5.02. No Solicitation.
(a) The Company shall not, and shall not permit its subsidiaries or
any of its or its subsidiaries' officers, directors or employees to, directly or
indirectly (including through intermediaries), solicit, initiate, knowingly
encourage or knowingly facilitate any discussions or negotiations with any
Person other than Parent, concerning any offer or proposal, which constitutes or
is reasonably likely to lead to an Acquisition Proposal (as defined below);
provided, however, that the Company may, in response to an unsolicited bona fide
written Acquisition Proposal received subsequent to the date hereof but prior to
obtaining Company Stockholder Approval, which the Company Board determines in
good faith, after consultation with its independent financial and legal
advisors, is reasonably likely to result in a Superior Proposal (as defined
below), furnish information with respect to the Company to any Person making
such Acquisition Proposal, and participate in discussions or negotiations
regarding such Acquisition Proposal. Any information furnished to any Person in
connection with an Acquisition Proposal shall be provided pursuant to a
confidentiality agreement in customary form; provided that any non-public
information concerning the Company or any of its subsidiaries provided to such
Person that was not previously provided to Parent shall promptly be provided to
Parent by the Company. The Company will promptly notify Parent orally and in
writing (i) of any Acquisition Proposal, of the identity of the Person making
such Acquisition Proposal and of the material terms and conditions thereof,
and/or (ii) of the fact that any information is requested by any Person with
respect to an Acquisition Proposal or which could lead to an Acquisition
Proposal. The Company shall keep Parent generally informed of the status of and
material developments respecting any Acquisition Proposal that is reasonably
likely to result in a Superior Proposal.
For purposes of this Agreement, "Acquisition Proposal" means any inquiry,
proposal or offer from any Person (other than Parent) relating to any direct or
indirect acquisition or purchase of any shares of any class of equity securities
of the Company or any of its subsidiaries constituting 20% or more of the
outstanding equity securities of the Company or any of its subsidiaries, any
tender offer or exchange offer that if consummated would result in any person
beneficially owning 20% or more of any class of equity securities of the Company
or any of its subsidiaries, any merger, reorganization, consolidation, share
exchange, business combination, sale of all or substantially all of the assets,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its subsidiaries, other than the transactions contemplated by
this Agreement.
For purposes of this Agreement, "Superior Proposal" means any written
proposal made by a third party to consummate a tender offer, exchange offer,
merger, consolidation or similar transaction, which (i) would result in such
third party (or its stockholders) owning, directly or indirectly, a majority of
the shares of Company Common Stock then outstanding (or of the surviving entity
in a merger) or all or substantially all of the assets of the Company and its
Subsidiaries, taken as a whole, or which would result in the individuals
comprising the Company Board prior to such transaction not constituting a
majority of the board of directors (or other governing body) of the entity
surviving or resulting from such transaction and (ii) is on terms which the
Company Board determines in good faith (based on such matters as it deems
relevant, but including the advice of its independent financial advisor and
outside counsel) to be (a) more favorable to the Company's stockholders entitled
to receive Merger Consideration hereunder (in their capacities as stockholders),
from a financial point of view, than the transactions contemplated by this
Agreement and (b) reasonably capable of being consummated without undue delay.
(b) If (i) the Company Board receives a proposal that the Company
Board concludes in good faith, after consultation with its independent legal and
financial advisors, is a Superior Proposal, and (ii) the Company Board concludes
in good faith, after consultation with its independent legal advisors, that
failure to take any of the following actions could result in a breach of the
directors' fiduciary duties under applicable law, then the Company Board may
withdraw or modify its approval or recommendation of this Agreement or the
Merger, approve or recommend the Superior Proposal or terminate this Agreement
pursuant to Section 8.01(c) hereof and shall promptly notify Parent in writing
of any such determination.
(c) Nothing contained in this Section 5.02 shall prohibit the
Company from complying with Rules 14d-9 and 14e-2 promulgated under the Exchange
Act or from making any disclosure to the Company Stockholders if, in the good
faith judgment of the Company Board, failure so to disclose would be
inconsistent with its obligations under applicable law.
SECTION 5.03. Other Actions. The Company shall not take any action
that would, or that would reasonably be expected to, result in (i) any of the
representations and warranties of the Company set forth in this Agreement that
are qualified as to materiality becoming untrue or (ii) any of such
representations and warranties that are not so qualified becoming untrue in any
material respect.
SECTION 5.04. Notice of Certain Events. The Company and Parent shall
promptly notify each other of:
(i) 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 contemplated by this Agreement;
(ii) any notice or other communication from any Governmental Entity
in connection with the transactions contemplated by this Agreement;
(iii) any action, suits, claims, investigations or proceedings
commenced or, to the actual knowledge of the executive officers of the
notifying party, threatened against, relating to or involving or otherwise
affecting such party, which would reasonably be expected to have a
Material Adverse Effect on the Company;
(iv) an administrative or other order or notification relating to
any material violation or claimed material violation of law;
(v) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material
respect at or prior to the Closing Date; and
(vi) any material failure of any party to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder;
provided, however, that the delivery of any notice pursuant to this Section 5.04
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
SECTION 5.05. Confidentiality. Notwithstanding anything to the
contrary contained herein, any confidentiality obligations set forth herein or
in any other agreement to which the parties hereto are parties or by which they
are bound as they relate to the transactions contemplated by this Agreement
shall not apply to the purported or claimed Federal income tax treatment of the
transactions (the "Tax Treatment") or to any fact that may be relevant to
understanding the purported or claimed Federal income tax treatment of the
transactions (the "Tax Structure"), and each party hereto (and any employee,
representative, or agent of any party hereto) may disclose to any and all
persons, without limitation of any kind, the Tax Treatment and Tax Structure of
the transactions contemplated by this Agreement and any materials of any kind
(including any tax opinions or other tax analyses) that relate to the Tax
Treatment or Tax Structure. In addition, each party hereto acknowledges that it
has no proprietary or exclusive rights to any tax matter or tax idea related to
the transactions contemplated by this Agreement. The preceding sentence is
intended to ensure that the transactions contemplated by this Agreement shall
not be treated as having been offered under conditions of confidentiality for
purposes of Treasury Regulation Section 1.6011-4(b)(3) or any successor
provision of the Treasury Regulations promulgated under Section 6011 of the Code
and shall be construed in a manner consistent with such purpose.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Proxy Statement; Stockholders' Meeting. (a) As
promptly as practicable following the date of this Agreement, the Company shall
prepare and file with the SEC the Proxy Statement, and the Company shall use all
reasonable efforts to respond as promptly as practicable to any comments of the
SEC with respect thereto and to cause the Proxy Statement to be mailed to the
stockholders of the Company as promptly as practicable following the date of
this Agreement. The Company shall promptly notify Parent upon the receipt of any
comments from the SEC or the staff of the SEC or any request from the SEC or the
staff of the SEC for amendments or supplements to the Proxy Statement and shall
provide Parent with copies of all correspondence between the Company and its
Representatives, on the one hand, and the SEC and the staff of the SEC, on the
other hand, relating to the Proxy Statement. Notwithstanding the foregoing,
prior to filing or mailing the Proxy Statement (or any amendment or supplement
thereto) or responding to any comments of the SEC or the staff of the SEC with
respect thereto, the Company (i) shall provide Parent an opportunity to review
and comment on such document or response and (ii) shall include in such document
or response all comments reasonably proposed by Parent. Whenever any event
occurs which is required to be set forth in an amendment or supplement to the
Proxy Statement, the Company or Parent, as the case may be, will promptly inform
the other of such occurrence and cooperate in filing with the SEC and/or mailing
to stockholders of the Company such amendment or supplement.
(b) The Company shall, as soon as practicable following the date of
this Agreement, establish a record date for, duly call, give notice of, convene
and hold a meeting of its stockholders (the "Stockholders Meeting") solely for
the purpose of obtaining the Stockholder Approval. Subject to Section 5.02(b),
the Company shall, through its Company Board, recommend that the Company's
stockholders vote in favor of the adoption and approval of this Agreement and
approval of the Merger and shall include such recommendation in the Proxy
Statement. Subject to Section 5.02(b), the Company will use all reasonable
efforts to solicit from its stockholders proxies in favor of the adoption and
approval of this Agreement and approval of the Merger, and will take all other
action necessary or advisable under applicable Law to secure Stockholder
Approval. Notwithstanding anything to the contrary contained in this Agreement,
the Company may adjourn or postpone the Stockholders' Meeting to the extent
necessary to ensure that any necessary supplement or amendment to the Proxy
Statement is provided to its stockholders in advance of a vote on the Merger and
this Agreement or, if as of the time for which the Stockholders' Meeting is
originally scheduled (as set forth in the Proxy Statement) there are
insufficient Shares represented (either in person or by proxy) to constitute a
quorum necessary to conduct the business of such Stockholders' Meeting; provided
that any Stockholders Meeting so adjourned or postponed shall be held as
promptly as permitted by the organizational documents of the Company.
SECTION 6.02. Access to Information. Upon reasonable notice, and
except as may otherwise be required by applicable Law, the Company shall give
Parent and Sub, their potential financing sources, counsel, financial advisors,
auditors and other authorized representatives reasonable access to the offices,
properties, books and records of the Company and its subsidiaries during normal
business hours, will furnish to Parent and Sub, their counsel, financial
advisors, financial institutions, auditors and other authorized representatives
such financial and operating data and other information as such may be
reasonably requested and will instruct the employees of the Company and its
subsidiaries, their respective counsel and financial advisors to cooperate with
Parent and Sub in their investigation of the business of the Company and its
subsidiaries; provided, however, that the Company may restrict the foregoing
access to the extent that (A) in the reasonable judgment of the Company, any
law, treaty, rule or regulation of any Governmental Entity applicable to the
Company requires the Company or its subsidiaries to restrict or prohibit access
to any such properties or information, (B) in the reasonable judgment of the
Company, the information is subject to confidentiality obligations to a third
party, (C) such disclosure would result in disclosure of any trade secrets of
third parties, or (D) disclosure of any such information or document could
result in the loss of attorney-client privilege; provided, further, however,
that with respect to this clause (D), the Company and/or its counsel shall use
their reasonable efforts to enter into such joint defense agreements or other
arrangements, as appropriate, so as to avoid the loss of attorney-client
privilege; provided, further, that, subject to Section 5.05, any information
provided to Parent and/or Sub pursuant to this Section 6.02 shall be subject to
the confidentiality agreement, dated as of December 9, 2003 (the
"Confidentiality Agreement"), the terms of which shall continue to apply and
which shall be binding upon Parent, Sub and their respective shareholders and
affiliated companies, except as otherwise agreed by the Company, notwithstanding
termination of this Agreement. Subject to Section 5.05, in the event of any
conflict between the terms of this Section 6.02 and the terms of the
Confidentiality Agreement, the terms of the Confidentiality Agreement shall
control.
SECTION 6.03. Reasonable Best Efforts. (a) Subject to the terms and
conditions of this Agreement, each party will use its reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under this Agreement and applicable laws
and regulations to consummate the Merger and the other transactions contemplated
by this Agreement as soon as practicable after the date hereof, including (i)
preparing and filing as promptly as practicable all documentation to effect all
necessary applications, notices, petitions, filings, tax ruling requests and
other documents and to obtain as promptly as practicable all consents,
clearances, waivers, licenses, orders, registrations, approvals, permits, tax
rulings and authorizations necessary or advisable to be obtained from any third
party and/or any Governmental Entity in order to consummate the Merger or any of
the other transactions contemplated by this Agreement (provided that the Company
shall not agree to any material modification to any Material Contract
(including, without limitation, any increase in amounts payable under such
Material Contract or extension of the term thereof) in connection with obtaining
any such consents, clearances, waivers, licenses, orders, registrations,
approvals, permits, tax rulings and authorizations without the prior approval of
such modification by Parent) and (ii) taking all reasonable steps as may be
necessary to obtain all such material consents, clearances, waivers, licenses,
registrations, permits, authorizations, tax rulings, orders and approvals. In
furtherance and not in limitation of the foregoing, each party hereto agrees to
make an appropriate filing of a Notification and Report Form pursuant to the HSR
Act and any other Regulatory Law (as defined in Section 6.03(b) below) with
respect to the transactions contemplated hereby as promptly as practicable after
the date hereof and to supply as promptly as practicable any additional
information and documentary material that may be requested pursuant to the HSR
Act and any other Regulatory Law and to use reasonable best efforts to take all
other actions necessary to cause the expiration or termination of the applicable
waiting periods under the HSR Act as soon as practicable. If necessary to obtain
any regulatory approval pursuant to any Regulatory Law, or if any administrative
or judicial action or proceeding, including any proceeding by a private party,
is instituted (or threatened to be instituted by a Governmental Entity),
challenging the Merger or any other transaction contemplated by this Agreement
as violative of any Regulatory Law, each of Parent and the Company shall
cooperate with each other with respect to obtaining such approval or responding
to such administrative or judicial action. Notwithstanding anything to the
contrary contained in this Section 6.03, Parent and Sub shall have no obligation
to (a) hold separate (or agree to hold separate) any portion of the assets of
the Company or the Parent or any of their respective affiliates, (b) conduct the
business of the Company or the Parent or any of their respective affiliates in a
substantially different manner, (c) dispose (or agree to dispose) of any assets
or businesses of the Company or the Parent or any of their respective
affiliates, (d) defend any litigation commenced by any third party or
Governmental Entity against the Company or Parent or any of their respective
affiliates, or (e) materially alter the economic or governance rights of
Parent's stockholders with respect to Parent (except with respect to the
composition of Parent's board of directors, if necessary) or the Company or any
of their respective affiliates and each of their respective businesses and
brands.
(b) To the extent permissible under applicable law or any rule,
regulation or restriction of a Governmental Entity, each of Parent and the
Company shall, in connection with the efforts referenced in Section 6.03(a) to
obtain all requisite material approvals, clearances and authorizations for the
transactions contemplated by this Agreement under the HSR Act or any other
Regulatory Law, use its reasonable best efforts to (i) cooperate in all respects
with each other in connection with any filing or submission and in connection
with any investigation or other inquiry, including any proceeding initiated by a
private party, (ii) promptly inform the other party of any communication
received by such party from, or given by such party to, the Antitrust Division
of the Department of Justice (the "DOJ"), the Federal Trade Commission (the
"FTC") or any other Governmental Entity and of any material communication
received or given in connection with any proceeding by a private party, in each
case regarding any of the transactions contemplated hereby, (iii) permit the
other party, or the other party's legal counsel, to review any communication
given by it to, and consult with each other in advance of any meeting or
conference with, the DOJ, the FTC or any such other Governmental Entity or, in
connection with any proceeding by a private party, with any other Person and
(iv) give the other party the opportunity to attend and participate in such
meetings and conferences. For purposes of this Agreement, "Regulatory Law" means
the Xxxxxxx Act, as amended, Council Regulation No. 4064/89 of the European
Community, as amended (the "EC Merger Regulation"), the Xxxxxxx Act, as amended,
the HSR Act, the Federal Trade Commission Act, as amended, and all other
Federal, state and foreign, if any, statutes, rules, regulations, orders,
decrees, administrative and judicial doctrines and other laws that are designed
or intended to prohibit, restrict or regulate (i) foreign investment or (ii)
actions having the purpose or effect of monopolization or restraint of trade or
lessening of competition.
SECTION 6.04. Options. (a) The Company shall take all reasonable
steps or measures to amend, or cause to be amended, (or to obtain consents or
waivers from optionees, if necessary, with respect to) any stock option plan and
any other program or arrangement (collectively, the "Stock Option Plans")
pursuant to which there are holders of options or warrants to purchase shares
granted by the Company or stock appreciation rights with respect to shares of
Company Common Stock (each, an "Option") to provide that, at the Effective Time,
each such holder shall receive, in settlement of each unexercised (vested or
unvested) Option held by such holder, a "Cash Amount" (less any applicable
withholding taxes) equal to the product of (i) the amount (if any) by which the
Merger Consideration exceeds the Option exercise price, and (ii) the number of
underlying shares with respect to which the Option had not been exercised prior
to the Effective Time, unless such holder and Parent shall have consented to a
different treatment. The Company shall use commercially reasonable efforts to
amend the Stock Option Plans to provide that each Option shall terminate as of
the Effective Time upon the making of such payments.
(b) The Company shall provide notice to participants in the Stock
Option Plans and other holders of Options to purchase shares of Company Common
Stock granted by the Company that the Company proposes to merge into another
corporation; that the participant under the plans or program may exercise his
Options in full with respect to shares not theretofore purchased by him prior to
the Effective Time; and that the plans and program have been amended to provide
that to the extent a participant does not exercise such Options prior to the
Effective Time, such Options shall terminate at the Effective Time and the
participant shall receive, in settlement of each Option held by the participant,
the "Cash Amount" described in the preceding paragraph.
(c) Prior to the Effective Time, the Company shall take all actions
necessary to amend the Stock Option Plans as provided in this Section 6.04.
(d) Except as may be otherwise agreed to by Parent or Sub and the
Company, the Company's Stock Option Plans shall terminate as of the Effective
Time and the provisions in any other plan, program or arrangement providing for
the issuance or grant of any other interest in respect of the capital stock of
the Company shall be deleted as of the Effective Time.
(e) Notwithstanding anything to the contrary herein, if it is
determined that compliance with any of the foregoing would cause any individual
subject to Section 16 of the Exchange Act to become subject to the profit
recovery provisions thereof, any Options held by such individual will be
canceled or purchased, as the case may be, at the Effective Time or at such
later time as may be necessary to avoid application of such profit recovery
provisions and such individual will be entitled to receive from the Company or
the Surviving Corporation an amount in cash or other consideration satisfactory
to the Surviving Corporation and such individual equal to the excess, if any, of
the Merger Consideration over the per share exercise price of such Option,
multiplied by the number of underlying shares subject thereto (less any
applicable withholding taxes), and the parties hereto will cooperate and take
any and all necessary actions so as to achieve the intent of the foregoing
without giving rise to such profit recovery.
SECTION 6.05. Indemnification; Directors' and Officers' Insurance.
(a) Following the Effective Time, Parent and the Surviving
Corporation shall, jointly and severally (i) indemnify and hold harmless, and
provide advancement of expenses to, all past and present directors, officers,
employees and agents of the Company and its Subsidiaries and all other Persons
who may presently serve or have served at the Company's request as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise (the "Indemnified Parties") (A) to the same extent
such individuals are indemnified or have the right to advancement of expenses as
of the date of this Agreement by the Company pursuant to the certificate of
incorporation and bylaws of the Company and indemnification agreements, if any,
in existence on the date hereof with, or for the benefit of, any directors,
officers and employees of the Company and its Subsidiaries or any other Persons
and (B) without limitation to subclause (A) above, to the fullest extent
permitted by law, in each case for acts or omissions occurring at or prior to
the Effective Time (including for acts or omissions occurring in connection with
the approval of this Agreement and the consummation of the transactions
contemplated hereby), (ii) include and cause to be maintained in effect in the
certificate of incorporation and bylaws of the Surviving Corporation (or any
successor to the Surviving Corporation) for a period of six years after the
Effective Time, provisions regarding elimination of liability of directors,
indemnification of officers, directors and employees and advancement of expenses
that are, in the aggregate, no less advantageous to the intended beneficiaries
than the corresponding provisions contained in the current certificate of
incorporation and bylaws and (iii) cause to be maintained for a period of six
years after the Effective Time the current policies of directors' and officers'
liability insurance and fiduciary liability insurance with one or more reputable
unaffiliated third-party insurers maintained by the Company (provided that
Parent (or any successor thereto) may substitute therefor one or more policies
with one or more reputable unaffiliated third-party insurers of at least the
same coverage and amounts containing terms and conditions that are, in the
aggregate, no less advantageous to the insured) with respect to claims arising
from facts or events that occurred on or before the Effective Time; provided,
however, that in no event shall the Surviving Corporation be required to expend
in any one year an amount in excess of 300% of the annual premiums currently
paid by the Company for such insurance if the board of directors of Parent as
constituted after the Effective Time shall have so determined; and, provided
further that if the annual premiums of such insurance coverage exceed such
amount, the Surviving Corporation shall obtain a policy with at least the
greatest coverage available for a cost not exceeding such amount. In determining
whether an Indemnified Party is entitled to indemnification under this Section
6.05(a), if requested by such Indemnified Party, such determination shall be
made in a written opinion by independent counsel selected by Parent and
reasonably approved by the Indemnified Party, which counsel shall not have, at
the time of such determination, otherwise performed services for the Surviving
Corporation, Parent or their respective affiliates during the preceding three
years.
(b) Any Indemnified Party wishing to claim indemnification under
paragraph (a) of this Section 6.05, upon receiving written notification of any
such claim, action, suit, proceeding or investigation, shall promptly notify
Parent and the Surviving Corporation thereof, but the failure to so notify shall
not relieve Parent and the Surviving Corporation of any liability they may have
to such Indemnified Party except if, and only to the extent that, such failure
materially and irreversibly prejudices Parent or the Surviving Corporation, as
applicable. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) Parent
and the Surviving Corporation shall pay the fees and expenses of counsel
selected by the Indemnified Party, promptly after statements therefor are
received, and otherwise advance to such Indemnified Party upon request
reimbursement of documented expenses reasonably incurred; provided that prior
thereto the Indemnified Party provides to Parent and the Surviving Corporation
an undertaking to repay such advances if it is ultimately determined that such
person is not entitled to indemnification from Parent and the Surviving
Corporation, (ii) Parent and the Surviving Corporation will cooperate in the
defense of any such matter, and (iii) any determination required to be made with
respect to whether an Indemnified Party's conduct complies with the standards
set forth under applicable Law shall be made by independent counsel mutually
acceptable to Parent, the Surviving Corporation and the Indemnified Party;
provided, however, that (A) Parent and the Surviving Corporation shall be
obligated pursuant to this Section 6.05(b) to pay for only one firm of counsel
for all Indemnified Parties in any jurisdiction, except to the extent there is,
in the opinion of counsel to an Indemnified Party, under applicable standards of
professional conduct, a conflict on any significant issue between the positions
of such Indemnified Party and any other Indemnified Party or Indemnified
Parties, in which case each Indemnified Party with a conflicting position on a
significant issue shall be entitled to retain separate counsel mutually
satisfactory to Parent, the Surviving Corporation and such Indemnified Party,
(B) the Indemnified Parties shall cooperate in the defense of any such matter
and (C) Parent and the Surviving Corporation shall not be liable for any
settlement effected without its prior written consent (which consent may not be
unreasonably withheld or delayed).
(c) If Parent or the Surviving Corporation or any of its successors
or assigns shall (i) consolidate with or merge into any other Person and shall
not be the continuing or surviving corporation or entity of such consolidation
or merger or (ii) transfers all or substantially all of its properties and
assets to any Person, then, and in each such case, proper provisions shall be
made so that the successors and assigns of Parent or the Surviving Corporation,
as the case may be, shall assume all of the obligations of Parent and the
Surviving Corporation set forth in this Section 6.05.
(d) The rights of each Indemnified Party under this Section 6.05
shall be in addition to any right such Person might have under the certificate
of incorporation or by-laws of the Company or any of its Subsidiaries, or under
applicable Law (including the DGCL) or under any agreement of any Indemnified
Party with the Company or any of its Subsidiaries. The provisions of this
Section 6.05 are intended to be for the benefit of, and shall be enforceable by,
each of the Indemnified Parties, their respective heirs and representatives.
(e) The obligations of Parent and the Surviving Corporation under
this Section 6.05 shall not be terminated or modified in such a manner as to
adversely affect any indemnitee to whom this Section 6.05 applies without the
consent of such affected indemnitee (it being expressly agreed that the
indemnitees to whom this Section 6.05 applies shall be third-party beneficiaries
of this Section 6.05).
(f) The Company (or, after the Effective Time, the Surviving
Corporation and Parent) shall indemnify any Indemnified Party against all
reasonable costs and expenses (including reasonable attorneys' fees and
expenses), such amounts to be payable in advance upon request as provided in
this Section 6.05, relating to the enforcement of such Indemnified Party's
rights under this Section 6.05 or under the certificate of incorporation or
by-laws or existing indemnification agreements, but only to the extent that such
Indemnified Party is ultimately determined to be entitled to indemnification
hereunder or thereunder. Any amounts due pursuant to the preceding sentence
shall be payable upon request by the Indemnified Party.
SECTION 6.06. Employees. (a) For not less than one year following
the Effective Time, Parent shall maintain, or shall cause the Surviving
Corporation and its subsidiaries to maintain, compensation and employee benefit
plans and arrangements for employees of the Company ("Affected Employees") that
are, in the aggregate, substantially comparable to the compensation arrangements
and Benefit Plans as in effect on the date hereof (excluding, for all purposes,
any equity-based or long-term incentive plans or programs). Without limiting the
generality of the foregoing, for not less than one year following the Effective
Time, Parent shall provide, or cause the Surviving Corporation and its
subsidiaries to provide, severance pay and benefits to each Affected Employee as
of the Effective Time that are not less favorable than under the Benefit Plans
and current policies or practices of the Company as in effect as of the date of
this Agreement.
(b) Parent shall, or shall cause the Surviving Corporation to, honor
all Benefit Plans and other contractual commitments in effect immediately prior
to the Effective Time between the Company and Affected Employees or former
employees of the Company, including, without limitation, the Change in Control
Agreements set forth on Schedule 6.06(b). Without limiting the generality of the
foregoing, Parent shall, or shall cause the Surviving Corporation to, honor all
vacation, holiday, sickness and personal days accrued by Affected Employees and,
to the extent applicable, former employees of the Company ("Former Employees")
as of the Effective Time.
(c) Parent shall, or shall cause the Surviving Corporation to, give
all Affected Employees full credit for purposes of eligibility, and vesting
under any employee benefit plan arrangement maintained by Parent or the
Surviving Corporation or any subsidiary thereof for such Affected Employees'
service with the Company (or any prior employer) to the same extent recognized
by the Company or any Benefit Plan immediately prior to the Effective Time.
(d) Parent shall, or shall cause the Surviving Corporation to, (i)
with respect to any life, health or long-term disability insurance plan, waive
all limitations as to preexisting conditions, exclusions and waiting periods
with respect to participation and coverage requirements of any welfare benefit
plan established to replace any Benefit Plan in which such Affected Employees
may be eligible to participate after the Effective Time, other than limitations
or waiting periods that are already in effect with respect to such Affected
Employee and that have not been satisfied as of the Effective Time under any
Welfare Plan maintained for the Affected Employee immediately prior to the
Effective Time, (ii) with respect to any health insurance plan, provide each
Affected Employee with credit for any co-payments and deductibles paid prior to
the Effective Time in satisfying any applicable deductible or out-of-pocket
requirements under any such plan that such Affected Employees are eligible to
participate in after the Effective Time and (iii) with respect to any life or
long-term disability plan, waive any medical certification otherwise required in
order to assure the continuation of coverage at a level not less than that in
effect immediately prior to the implementation of such plan (but subject to any
overall limit on the maximum amount of coverage under such plans).
SECTION 6.07. Transfer Taxes. Except as provided in Section 2.02(b),
all stock transfer, real estate transfer, documentary, stamp, recording and
other similar Taxes (including interest, penalties and additions to any such
Taxes) ("Transfer Taxes") incurred in connection with the transactions
contemplated by this Agreement shall be paid by either Sub or the Surviving
Corporation, and the Company shall cooperate with Sub and Parent in preparing,
executing and timely filing any Tax Returns with respect to such Transfer Taxes.
SECTION 6.08. Calculation of Section 280(G) Excise Taxes and
Cutbacks. The Company shall, promptly after execution of this Agreement, request
that the Audit Committee of the Company Board approve the retention by the
Company of an independent accounting firm with expertise in calculating excise
taxes under Code Section 4999 on "parachute payments" under Section 280(G) of
the Code. Such accounting firm shall promptly review the Change in Control
Agreements listed on Schedule 6.06(b) and calculate (a) the amount, if any, of
excise taxes that must be withheld by the Company from monies due to each
applicable executive as a result of any "parachute payments" (as defined in
Section 280(G) of the Code) that would be payable to such executive as a result
of the transactions contemplated by this Agreement and (b) the amount, if any,
that monies due to any executive as "parachute payments" must be reduced as a
result of the "cut-back" provisions in such executive's Change in Control
Agreement, which calculations shall promptly be provided to Parent.
SECTION 6.09. State Takeover Laws. If any "fair price," "business
combination" or "control share acquisition" statute or other similar statute or
regulation is or may become applicable to the transactions contemplated hereby,
the Company, Parent and Sub shall each take such actions as are necessary so
that the transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to eliminate or
minimize the effects of any such statute or regulation on the transactions
contemplated hereby.
SECTION 6.10. Financing.
(a) Parent and Sub shall use their reasonable best efforts to obtain
the Financing as set forth in the Financing Letters. Notwithstanding anything in
this Agreement to the contrary, (i) Parent and Sub shall be entitled at any time
to obtain substitute financing ("Substitute Financing") on conditions pursuant
to which the Substitute Financing would not reasonably be expected to delay the
consummation of the Merger past January 31, 2005, provided that the leverage
ratios required for Parent under the agreements and documentation for such
Substitute Financing shall not be materially higher than the leverage ratios set
forth in the Financing Letters without the consent of the Company, which consent
shall not be unreasonably withheld and (ii) should Parent and Sub fail to obtain
the Financing as set forth in the Financing Letters prior to January 31, 2005,
then Parent and Sub shall use their reasonable best efforts to obtain Substitute
Financing, provided that such obligation shall be limited to obtaining
Substitute Financing on terms and conditions substantially equivalent to those
set forth in the Financing Letters.
(b) Parent shall provide prompt written notice to the Company of (i)
the Banks' refusal or stated intent to refuse to provide the financing described
in the Senior Debt Letter, (ii) the refusal of or stated intent to refuse by any
of Bear, Xxxxxxx & Co. Inc., X.X Xxxxxx Securities Inc. and Deutsche Bank
Securities Inc. to provide the financing described in the Subordinated Debt
Letter, (iii) Xxxxx'x refusal or stated intent to refuse to provide the
financing described in the Xxxxx Equity Commitment Letter, (iv) Church & Xxxxxx
Co., Inc.'s refusal or stated intent to refuse to provide the financing
described in the Church & Xxxxxx Letter, and/or (v) any other lender's stated
intent to refuse to provide the financing contemplated by any Substitute
Financing, and, in each case, the stated reasons therefor.
(c) The Company agrees to provide and to cause its subsidiaries to
provide, and will use its reasonable best efforts to cause its officers,
employees, advisors and representatives to provide, all necessary cooperation
reasonably requested by Parent in connection with the arrangement and the
negotiation of agreements with respect to, the Financing (and any substitutions,
replacements or refinancing thereof). Such cooperation will include (i) to the
extent reasonably requested, the making available to Parent, the lenders
providing the Financing, their respective representatives, and the rating
agencies of personnel, documents and information of the Company and its
subsidiaries, (ii) to the extent reasonably requested, requiring the senior
management of the Company to participate in meetings, due diligence sessions and
road shows and helping to prepare offering memoranda; and (iii) requesting the
Company's accountants to provide their reasonable cooperation in connection with
the Financing, including (x) granting consents to the inclusion of their
auditors' reports in relevant offering documents and any related governmental
filings, (y) granting consents to references to them as experts in a customary
manner in any such offering materials and related governmental filings and (z)
issuing comfort letters covering such matters as are reasonably requested by
Parent, the Company or any initial purchaser or underwriter, as the case may be.
ARTICLE VII
CONDITIONS
SECTION 7.01. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction or waiver at or prior to the Closing Date of each of
the following conditions:
(a) Company Stockholder Approval. If required by applicable law, the
Company Stockholder Approval shall have been obtained.
(b) No Injunctions or Restraints. No statute, rule, regulation,
executive order, decree, temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
Governmental Entity or other legal restraint or prohibition restricting,
preventing or prohibiting the consummation of the Merger shall be in effect;
provided, however, that each of the parties shall have used reasonable efforts
to prevent the entry of any such injunction or other order and to appeal as
promptly as possible any injunction or other order that may be entered.
(c) HSR Approvals. The applicable waiting periods (and any extension
thereof) under the HSR Act shall have expired or been terminated.
SECTION 7.02. Conditions to Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger shall be subject to the
satisfaction or waiver by Parent at or prior to the Effective Time of each of
the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement, without giving effect to
any exception or qualification as to materiality or Material Adverse Effect,
shall be true and correct as of the date hereof and as of the Closing Date, as
if such representations and warranties were made as of the date hereof and as of
the Closing Date (except as to any such representation or warranty which speaks
as of a specific date, which must be true and correct as of such specific date)
except where the failure to be so true and correct would not, individually or in
the aggregate with all such failures, be reasonably likely to have a Material
Adverse Effect.
(b) Performance of Obligations of the Company. The Company shall
have performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date.
(c) Officer's Certificate. Parent shall have received a certificate
signed by an executive officer of the Company, dated the Closing Date, to the
effect that the conditions set forth in Sections 7.02(a) and 7.02(b) have been
satisfied or waived.
(d) Financing. The Company shall have received the Financing
proceeds under the Financing Letters (other than any portion of the Financing
under the Xxxxx Equity Commitment Letter and the Church & Xxxxxx Letter), or the
Financing proceeds of any Substitute Financing, in either such case in the
amounts and on the terms and conditions set forth in the Financing Letters or
upon terms and conditions which are substantially equivalent thereto, and to the
extent any of the terms and conditions are not as so set forth or as
substantially equivalent, on terms and conditions reasonably satisfactory to
Parent and the Company.
(e) Resignations. The Company shall have received, and delivered
copies to Parent and Sub of, valid resignations, effective as of immediately
following the Effective Time, of each member of the Company Board.
(f) FIRPTA. The Company shall have furnished to Parent and Sub a
certification in accordance with Treasury Regulations ss. 1.1445-2(c) certifying
that stock in the Company is not a real property interest because the Company is
not and has not been a United States real property holding corporation (as
defined in Section 897(c)(2) of the Code) during the applicable period specified
in Section 897(c)(1)(A)(ii) of the Code.
SECTION 7.03. Conditions to Obligations of the Company. The
obligations of the Company to effect the Merger shall be subject to the
satisfaction or waiver by the Company at or prior to the Effective Time of each
of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Sub set forth in this Agreement, without giving effect
to any exception or qualification as to materiality or Material Adverse Effect,
shall be true and correct as of the date hereof and as of the Closing Date, as
if such representations and warranties were made as of the date hereof and as of
the Closing Date (except as to any such representation or warranty which speaks
as of a specific date, which must be true and correct as of such specific date)
except where the failure to be so true and correct would not, individually or in
the aggregate with all such failures, be reasonably likely to materially
adversely affect the ability of Parent to effect the Merger in accordance with
this Agreement.
(b) Performance of Obligations of Parent and Sub. Each of Parent and
Sub shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date.
(c) Officer's Certificate. The Company shall have received
certificates signed by an executive officer of each of Parent and Sub, dated the
Closing Date, to the effect that the conditions set forth in Sections 7.03(a)
and 7.03(b) have been satisfied or waived.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval of the terms
of this Agreement by the Company Stockholders:
(a) by mutual written consent of Parent and the Company, by action
of their respective boards of directors;
(b) by either the Company or Parent, if:
(i) the Company Stockholder Approval shall not have been
obtained at a meeting duly convened therefor or at any adjournment or
postponement thereof; or
(ii) any Governmental Entity, the taking of action by which is
a condition to the obligations of either the Company or Parent to
consummate the transactions contemplated hereby, shall have determined not
to take such action and all appeals of such determination shall have been
taken and have been unsuccessful, or any court of competent jurisdiction
or other competent Governmental Entity shall have issued an order, decree
or ruling or taken any other action making illegal or otherwise
restricting, preventing or prohibiting the Merger and such order shall
have become final and nonappealable; provided, however, that the party
seeking to terminate this Agreement shall have used its reasonable efforts
to remove or lift such order, decree, ruling or other action;
(c) by the Company, if, prior to when Company Stockholder Approval
has been obtained, any Person has made a proposal relating to an Acquisition
Proposal, or has commenced a tender or exchange offer for the shares of Company
Common Stock, and the Company Board concludes that such proposal or tender or
exchange offer if consummated would be a Superior Proposal;
(d) by Parent, if, prior to when Company Stockholder Approval has
been obtained, the Company Board or any committee thereof shall have (i) failed
to recommend to the Company Stockholders that they approve and adopt this
Agreement (the "Stockholder Acceptance"), (ii) withdrawn or modified its
approval or recommendation of this Agreement or the Merger, (iii) approved or
recommended an Acquisition Proposal or (iv) resolved to effect any of the
foregoing;
(e) by Parent, at any time prior to the Effective Time, whether
before or after the time when Company Stockholder Approval has been obtained, if
there has been a material violation or breach by the Company of any
representation, warranty, covenant or agreement contained in this Agreement that
(i) would give rise to the failure of the conditions set forth in Section
7.02(a) or 7.02(b) and (ii) cannot be cured by the Company within thirty (30)
days after written notice reasonably describing such breach; or
(f) by the Company, at any time prior to the Effective Time, whether
before or after the time when Company Stockholder Approval has been obtained, if
there has been a material violation or breach by Parent or Sub of any
representation, warranty, covenant or agreement contained in this Agreement
(which violation or breach is not cured by Parent or Sub within ten (10) days
after written notice reasonably describing such breach);
(g) by either the Company or Parent, if the Merger shall not have
been consummated on or before January 31, 2005; or
(h) by either the Company or Parent, if as of October 31, 2004, the
condition specified in Section 7.01(c) shall not have been satisfied, provided
that either party may only exercise this termination right by delivering written
notice of termination to the other party not later than November 5, 2004, and if
such notice shall not have been delivered by such date, the parties' right to
terminate this agreement pursuant to this Section 8.01(h) shall thereafter
expire.
SECTION 8.02. Effect of Termination.
(a) In the event of a termination of this Agreement pursuant to
Section 8.01, this Agreement shall forthwith become null and void and there
shall be no liability or obligation on the part of Parent, Sub or the Company or
their respective officers or directors, except with respect to the last proviso
of the first sentence of Section 6.02, this Section 8.02 and Article IX;
provided, however, that nothing herein shall relieve any party for liability for
any breach hereof prior to such termination.
(b) (i) If this Agreement is terminated pursuant to Section 8.01(c)
or Section 8.01(d), and, in either case, on or before the date of any such
termination an Acquisition Proposal with respect to the Company shall have been
publicly announced, disclosed or otherwise communicated to the Company Board,
then the Company shall pay to Parent all out-of-pocket expenses of Xxxxx and
Church & Xxxxxx, Co., Inc. and their respective affiliates, including fees and
expenses of financial advisors, outside legal counsel and accountants, incurred
in connection with the transaction contemplated hereby and fees and expenses
incurred in connection with the proposed financing of the Merger up to a maximum
amount of Expenses of $6,000,000 (such out-of-pocket expenses, up to such
maximum amount, the "Expenses); provided, however, that if within twelve months
of such termination, the Company or a third party consummates, or the Company
enters into a definitive agreement to consummate, an Acquisition Proposal, then
the Company shall pay to Parent an additional amount equal to $12,000,000 less
the amount of Expenses previously paid to Parent pursuant to this clause (i);
(ii) If this Agreement is terminated pursuant to Section 8.01(b)(i),
and, on or before the date of any such termination an Acquisition Proposal with
respect to the Company shall have been publicly announced, disclosed or
otherwise communicated to the Company Board, and within twelve months of such
termination, the Company or a third party consummates, or the Company enters
into a definitive agreement to consummate, an Acquisition Proposal, the Company
shall pay to Parent $12,000,000;
(iii) If this Agreement is terminated pursuant to Section 8.01(g),
and (x) Parent, at the time of such termination, was in compliance with its
obligations under this Agreement in all material respects and (y) on or before
the date of any such termination an Acquisition Proposal with respect to the
Company shall have been publicly announced, disclosed or otherwise communicated
to the Company Board and (z) within twelve months of such termination, the
Company or a third party consummates, or the Company enters into a definitive
agreement to consummate, an Acquisition Proposal, the Company shall pay to
Parent the Expenses;
(iv) If (x) this Agreement is terminated pursuant to Section 8.01(e)
with respect to a material violation or breach by the Company of any of the
provisions of Section 5.02 and (y) Parent, at the time of such termination, was
in compliance with its obligations under this Agreement in all material respects
and (z) within twelve months of such termination, the Company or a third party
consummates, or the Company enters into a definitive agreement to consummate, an
Acquisition Proposal, the Company shall pay to Parent $12,000,000.
(c) Any payment required to be made pursuant to Section 8.02(b)
shall be made (i) concurrently with a termination by the Company giving rise to
the payments provided for in Section 8.02(b) or (ii) in the case of a
termination by Parent, not more than three business days after the occurrence of
the conditions for such payment pursuant to Section 8.02(b). All payments under
this Section 8.02 shall be made by wire transfer of immediately available funds
to an account designated by the party entitled to receive payment.
SECTION 8.03. Amendment. This Agreement may be amended by the
parties hereto, by action taken or authorized by their respective boards of
directors, at any time before or after obtaining the Company Stockholder
Approval (if required by law), but, after any such approval, no amendment shall
be made which by law requires further approval by such shareholders without
obtaining such further approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
SECTION 8.04. Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
boards of directors, may, to the extent legally allowed, (i) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto or (iii) waive
compliance with the agreements or conditions for the benefit of such party
contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written instrument
signed on behalf of such party. The failure of any party hereto to assert any of
its rights hereunder or otherwise shall not constitute a waiver of those rights.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Nonsurvival of Representations and Warranties. The
representations and warranties in this Agreement or in any instrument delivered
pursuant hereto shall terminate at the Effective Time, unless the survival
thereof is provided for by their terms.
SECTION 9.02. Assumption of Obligations. Effective upon the Closing,
Parent unconditionally assumes, jointly and severally with the Company, all
obligations of the Company under the Letter Agreement, between Xxxxx X. Xxxxxxx
Company Limited and the Company, dated as of July 10, 2003.
SECTION 9.03. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed), sent by overnight courier (providing proof of
delivery) or mailed by registered or certified mail (return receipt requested)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to Parent or Sub, to:
c/o Kelso & Company
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx XX, Esq.
Telecopy No.: (000) 000-0000
and
Church & Xxxxxx Co., Inc.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
Telecopy No.: (000) 000-0000
with copies (which shall not constitute notice) to:
Debevoise & Xxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
and
Dechert LLP
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxx X. XxXxxxx, Esq.
Telecopy No.: (000) 000-0000
and
(b) if to the Company, to:
Del Laboratories, Inc.
000 XXX Xxxxx
X.X. Xxx 0000
Xxxxxxxxx, Xxx Xxxx 00000
Attention: General Counsel
Telecopy No.: (000) 000-0000
with a copy to:
Cadwalader, Xxxxxxxxxx & Xxxx LLP
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Block, Esq.
Telecopy No.: (000) 000-0000
SECTION 9.04. Interpretation. When a reference is made in this
Agreement to an Article or a Section, such reference shall be to an Article or a
Section of this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation". The phrase
"made available" in this Agreement shall mean that the information referred to
has been made available if requested by the party to whom such information is to
be made available. As used in this Agreement, "Person" or "person" means an
individual, corporation, limited liability company, partnership, joint venture,
trust or other entity. As used in this Agreement, "Subsidiary" or "subsidiary"
of (x) the Company, means another person, of which an amount of voting
securities or voting partnership interests that is sufficient to elect at least
a majority of its board of directors or other governing body (or, if there are
no such voting interests, 50% or more of the equity interests) is owned directly
or indirectly by the Company, provided that either (i) the assets of such person
exceed 10% of the total assets of the Company on a consolidated basis as of the
end of the Company's last completed fiscal year, (ii) for the most recently
ended four fiscal quarter period such person had revenues constituting 10% or
more of the consolidated revenues of the Company for such period, as determined
in accordance with GAAP or (iii) such person is any of the following entities:
Del Pharmaceuticals, Inc., 565 Broad Hollow Realty Corp., Parfums Schiaparelli,
Inc., Royce & Xxxxx, Inc., Del Laboratories (Canada) Inc., Pharmaceutics
(Canada) Inc. or Del Professional Products, Inc., and (y) any person other than
the Company, means another person, of which an amount of voting securities or
voting partnership interests that is sufficient to elect at least a majority of
its board of directors or other governing body (or, if there are no such voting
interests, 50% or more of the equity interests) is owned directly or indirectly
by such first person. As used in this Agreement, "Material Adverse Change" or
"Material Adverse Effect" means, when used in connection with the Company, any
change or effect on the Company (or, where applicable, an affected subsidiary of
the Company) that, individually or in the aggregate, is, or is reasonably likely
to be, materially adverse to the business, liabilities, financial condition or
assets of the Company and its subsidiaries taken as a whole. Notwithstanding the
foregoing, a Material Adverse Change or Material Adverse Effect shall not
include any material adverse change or material adverse effect caused by (i) any
failure by the Company to meet analysts' published revenue or earnings
predictions for any period ending (or for which revenues or earnings are
released) on or after the date of this Agreement, (ii) other than in connection
with the use of the defined term Material Adverse Effect specifically in Section
3.04, any adverse change resulting from the Merger, or the announcement or
pendancy of or any costs or expenses associated with the Merger, including a
decline in the trading price of Company Common Stock, (iii) any adverse changes
in general market and economic conditions, (iv) any adverse changes affecting
the Company's industry generally (but only to the extent any such change does
not disproportionately affect the Company relative to other companies in such
industry), (v) any adverse regulatory or legislative changes affecting the
Company or companies in general and (vi) any adverse change relating to changes
in GAAP which the Company is required to adopt. As used in this Agreement, the
term "material" refers to the Company and its subsidiaries taken as a whole. As
used in this Agreement, "Indebtedness" means, without duplication, (i) any
indebtedness of the Company or its subsidiaries for borrowed money, whether
current, short-term, or long-term, secured or unsecured, (ii) any purchase price
money indebtedness of the Company or its subsidiaries for purchases of property
or assets, (iii) any lease obligations of the Company or its subsidiaries under
leases which are capital leases in accordance with GAAP, (iv) any financing of
the Company or its subsidiaries effected through "special purpose entities" and
any synthetic leases and project financing, (v) any obligations of the Company
or its subsidiaries in respect of banker's acceptances or letters of credit,
(vi) any liability of the Company or its subsidiaries with respect to interest
rate swaps, collars, caps and similar hedging obligations, (vii) any
indebtedness referred to in clauses (i) through (vi) above of any person other
than the Company which is either guaranteed by, or secured by any Lien upon any
property or assets owned by, the Company or any of its subsidiaries and (viii)
any prepayment penalties resulting from the discharge of any of the foregoing
obligations which are or will be actually prepaid pursuant to a pre-existing
contractual arrangement as a result of the transactions contemplated hereby;
provided, however, that the foregoing definition of Indebtedness shall not
include ordinary course trade payables and accrued expenses (other than
interest).
SECTION 9.05. Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, including delivery by
facsimile, it being understood that all parties need not sign the same
counterpart.
SECTION 9.06. Entire Agreement; Third Party Beneficiaries. This
Agreement (including the documents and the instruments referred to herein) (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) except as provided in Sections 6.04 and 6.05 is
not intended to confer upon any person other than the parties hereto any rights
or remedies hereunder.
SECTION 9.07. Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware without regard to
any applicable conflicts of law.
SECTION 9.08. Publicity. Except as otherwise required by law or by
obligations pursuant to the rules of any security exchange, for so long as this
Agreement is in effect, neither the Company nor Parent shall, or shall permit
any of its subsidiaries to, issue or cause the publication of any press release
or other public announcement with respect to the transactions contemplated by
this Agreement without the consent of the other party, which consent shall not
be unreasonably withheld.
SECTION 9.09. Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to any
direct or indirect wholly owned subsidiary of Parent. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
SECTION 9.10. Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of New York or Delaware or in a New York or Delaware state
court, this being in addition to any other remedy to which they are entitled at
law or in equity. In addition, each of the parties hereto (i) consents to submit
to the personal jurisdiction of any Federal court located in the States of New
York or Delaware or any New York or Delaware state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated
hereby, (ii) agrees that such party will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
(iii) agrees that such party will not bring any action relating to this
Agreement or any of the transactions contemplated hereby in any court other than
a Federal court sitting in the State of New York or Delaware or a New York or
Delaware state court and (iv) waives any right to trial by jury with respect to
any claim or proceeding related to or arising out of this Agreement or any of
the transactions contemplated hereby.
SECTION 9.11. Fees and Expenses. (a) Except as otherwise
specifically provided for herein, whether or not the Merger is consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated by this Agreement shall be paid by the party incurring
such expenses.
(b) The prevailing party in any legal action undertaken to enforce
this Agreement or any provision hereof shall be entitled to recover from the
other party the costs and expenses (including attorneys' and expert witness fees
and expenses) incurred in connection with such action.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
DLI Holding Corp.
By: /s/ Xxxxx X. Xxxxxxx, XX
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Name: Xxxxx X. Xxxxxxx, XX
Title: Vice President & Secretary
DLI Acquisition Corp.
By: /s/ Xxxxx X. Xxxxxxx, XX
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Name: Xxxxx X. Xxxxxxx, XX
Title: Vice President & Secretary
Del Laboratories, Inc.
By: /s/ Xxx X. Xxxxxxx
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Name: Xxx X. Xxxxxxx
Title: Chairman, President & CEO
