EXHIBIT 2
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AGREEMENT AND PLAN OF MERGER
among
CI MERGER CO.,
CAPRICORN INVESTORS III, L.P.,
and
TCBY ENTERPRISES, INC.
Dated as of February 9, 2000
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TABLE OF CONTENTS
Page
Article I
THE MERGER
Section 1.01. The Merger..................................................1
Section 1.02. Closing.....................................................2
Section 1.03. Effective Time..............................................2
Section 1.04. Effects of the Merger.......................................2
Section 1.05. Certificate of Incorporation and By-Laws of
the Surviving Corporation................................2
Section 1.06. Directors...................................................2
Section 1.07. Officers....................................................2
Article II
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES
Section 2.01. Effect on Stock.............................................2
Section 2.02. Exchange of Certificates....................................3
Section 2.03. Dissenting Shares...........................................5
Section 2.04. Options.....................................................6
Article III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.01. Organization, Qualification, Etc............................6
Section 3.02. Capital Stock...............................................7
Section 3.03. Corporate Authority Relative to this Agreement;
No Violation..............................................7
Section 3.04. Reports and Financial Statements............................8
Section 3.05. No Undisclosed Liabilities..................................9
Section 3.06. No Violation of Law.........................................9
Section 3.07. Environmental Laws and Regulations..........................9
Section 3.08. ERISA; Benefit Plans.......................................10
Section 3.09. Absence of Certain Changes or Events.......................12
Section 3.10. Investigations; Litigation.................................12
Section 3.11. Proxy Statement; Other Information.........................12
Section 3.12. Tax Matters................................................13
Section 3.13. Opinion of Financial Advisor...............................14
Section 3.14. Required Vote of the Company Stockholders..................14
Section 3.15. Material Contracts.........................................14
Section 3.16. Takeover Statute...........................................15
Section 3.17. Finders or Brokers.........................................15
Section 3.18. No Conflicts...............................................15
Section 3.19. Intellectual Property......................................15
Section 3.20. Labor Matters..............................................16
Section 3.21. Title to Properties........................................16
Section 3.22. Equipment..................................................17
Section 3.23. Suppliers and Franchisees..................................17
Section 3.24. Transactions with Affiliates...............................17
Section 3.25. Insurance..................................................17
Section 3.26. Legal Proceedings..........................................18
Section 3.27. Year 2000 Compliance.......................................18
Section 3.28. Company Financial Position.................................18
Article IV
REPRESENTATIONS AND WARRANTIES OF NEWCO AND GUARANTOR
Section 4.01. Organization, Qualification, Etc...........................19
Section 4.02. Legal Authority Relative to this Agreement;
No Violation.............................................19
Section 4.03. Investigations; Litigation.................................20
Section 4.04. Proxy Statement; Other Information.........................20
Section 4.05. Lack of Ownership of the Company Common Stock..............20
Section 4.06. Finders or Brokers.........................................20
Section 4.07. Financing..................................................21
Section 4.08. Solvency...................................................21
Section 4.09. Guarantor Financial Position...............................21
Article V
COVENANTS AND AGREEMENTS
Section 5.01. Conduct of Business by the Company.........................22
Section 5.02. Investigation..............................................24
Section 5.03. Proxy Material.............................................24
Section 5.04. Asset Sales................................................25
Section 5.05. Executive Security Agreements/Severance Plan...............25
Section 5.06. Filings; Other Action......................................26
Section 5.07. Further Assurances.........................................27
Section 5.08. Takeover Statute...........................................27
Section 5.09. No Solicitation............................................27
Section 5.10. Public Announcements.......................................28
Section 5.11. Indemnification and Insurance..............................28
Section 5.12. Reserved...................................................29
Section 5.13. Additional Reports and Information.........................29
Section 5.14. Financing..................................................30
Section 5.15. Solvency at Closing........................................30
Section 5.16. Guaranty of Performance....................................30
Section 5.17. Headquarters Employees/WARN Act Compliance.................31
Article VI
CONDITIONS TO THE MERGER
Section 6.01. Conditions to Each Party's Obligation to Effect
the Merger...............................................32
Section 6.02. Conditions to Obligation of the Company to
Effect the Merger........................................32
Section 6.03. Conditions to Obligation of Newco to Effect the
Merger...................................................32
Article VII
TERMINATION
Section 7.01. Termination or Abandonment.................................33
Section 7.02. Termination Fee............................................35
Section 7.03. Amendment or Supplement....................................36
Section 7.04. Extension of Time, Waiver, Etc.............................36
Article VIII
MISCELLANEOUS
Section 8.01. No Survival of Representations and Warranties..............36
Section 8.02. Expenses...................................................36
Section 8.03. Counterparts; Effectiveness................................37
Section 8.04. Governing Law..............................................37
Section 8.05. Jurisdiction...............................................37
Section 8.06. Notices....................................................37
Section 8.07. Assignment; Binding Effect.................................38
Section 8.08. Severability...............................................38
Section 8.09. Enforcement of Agreement...................................38
Section 8.10. Entire Agreement; No Third-Party Beneficiaries.............38
Section 8.11. Headings...................................................39
Section 8.12. Certain Definitions........................................39
INDEX OF DEFINED TERMS
1999 Financial Statements..................................................8
Affiliates................................................................39
Aggregate Merger Consideration............................................21
Agreement..................................................................1
AmeriServe................................................................22
Benefit Plans.............................................................10
Cash Balance..............................................................18
Certificate of Merger......................................................2
Certificates...............................................................3
Change of Control Arrangement.............................................12
Closing Date...............................................................2
Code......................................................................10
Company....................................................................1
Company Affiliated Group..................................................13
Company Affiliates........................................................29
Company Common Stock.......................................................2
Company Current SEC Reports................................................8
Company Disclosure Schedule................................................6
Company Material Contracts................................................14
Company Meeting...........................................................25
Company Required Approvals.................................................8
Company SEC Reports........................................................8
Company Stockholder Approval..............................................14
Confidentiality Agreement.................................................24
Contingent Financing......................................................21
Control...................................................................39
Costs.....................................................................28
Current Company Group.....................................................13
D&O Insurance.............................................................29
DGCL.......................................................................1
Disclosure Schedule.......................................................19
Dissenting Shares..........................................................5
Effective Time.............................................................2
Environmental Claims......................................................10
Environmental Laws.........................................................9
Equity Financing..........................................................21
ERISA.....................................................................10
Exchange Act...............................................................8
Exchange Agent.............................................................3
Exchange Fund..............................................................3
Executive Security Agreements.............................................25
GAAP.......................................................................9
Guarantor..................................................................1
Guarantor Financial Statements............................................21
Guarantor Interim Financial Statements....................................30
Guaranty..................................................................30
Headquarters Employees....................................................31
HSR Act....................................................................8
Indemnified Parties.......................................................28
Intellectual Property Rights..............................................16
Lien.......................................................................7
Material Adverse Effect...................................................39
Material Adverse Effect in Financing......................................30
Material State............................................................14
Merger.....................................................................1
Net Worth.................................................................18
Newco......................................................................1
Newco Disclosure Schedule.................................................19
Newco Required Approvals..................................................20
Non-Contingent Financing..................................................21
Option Plans...............................................................6
Options....................................................................6
Past Company Group........................................................13
Pension Plans.............................................................10
Per Share Merger Consideration.............................................3
Proxy Statement...........................................................12
Regulatory Law............................................................27
SEC........................................................................8
Securities Act.............................................................8
Severance Plan............................................................26
Stock Voting Agreement.....................................................1
Subsidiaries..............................................................39
Superior Proposal.........................................................27
Surviving Corporation......................................................1
Tail D&O Coverage.........................................................29
Takeover Proposal.........................................................27
Tax Return................................................................14
Taxes.....................................................................13
Termination Date..........................................................22
Termination Fee...........................................................35
WARN Act..................................................................31
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of February 9, 2000
(the "Agreement"), among CI Merger Co., a Delaware corporation ("Newco"),
Capricorn Investors III, L.P., a Delaware limited partnership, as limited
guarantor of Newco's obligations ("Guarantor"), and TCBY Enterprises, Inc.,
a Delaware corporation ("Company").
W I T N E S S E T H :
WHEREAS, the respective Boards of Directors of Newco and the
Company have approved the acquisition of the Company by Newco upon the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, the respective Boards of Directors of Newco, and the
Company have approved this Agreement and the merger of Newco with and into
the Company (the "Merger") in accordance with the General Corporation Law
of the State of Delaware ("DGCL") and upon the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, Guarantor owns all of the outstanding capital stock of
Newco, and due to the benefits to be received by Guarantor as a result of
the transactions contemplated by this Agreement, Guarantor has agreed,
subject to the limitations provided herein, to unconditionally guarantee
the performance of Newco's obligations under the Agreement;
WHEREAS, as a condition and an inducement to Newco and Guarantor
entering into this Agreement and incurring the obligations set forth
herein, concurrently with the execution and delivery of this Agreement,
Newco is entering into a Stock Voting Agreement with certain stockholders
of the Company, in the form of Exhibit A hereto (the "Stock Voting
Agreement");
NOW THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained herein, and
intending to be legally bound hereby, Newco, Guarantor and the Company
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 DGCL,
Newco shall be merged with and into the Company at the Effective Time (as
defined in Section 1.03) of the Merger. Following the Merger, the separate
corporate existence of Newco shall cease, and the Company shall continue as
the surviving corporation and a majority owned subsidiary of Guarantor (the
"Surviving Corporation") and shall succeed to and assume all the rights and
obligations of Newco in accordance with the DGCL.
SECTION 1.02. CLOSING. The closing of the Merger shall take place
at 10:00 a.m. on a date to be specified by the parties (the "Closing Date")
which shall be no later than the second business day after the satisfaction
or waiver of the conditions set forth in Article VI at the offices of Xxxxx
Xxxx, Little Rock, Arkansas, unless another date or place is agreed to in
writing by the parties hereto.
SECTION 1.03. EFFECTIVE TIME. On the Closing Date, the parties
shall execute and file in the office of the Secretary of State of the State
of Delaware a certificate of merger (the "Certificate of Merger") executed
in accordance with the DGCL and shall make all other filings or recordings,
if any, required under the DGCL. The Merger shall become effective at the
time of filing of the Certificate of Merger, or at such later time as is
agreed upon by the parties hereto and set forth therein (such time as the
Merger becomes effective is referred to herein as the "Effective Time").
SECTION 1.04. EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in Section 259 of the DGCL.
SECTION 1.05. CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE
SURVIVING CORPORATION.
(a) The Certificate of Incorporation of the Company in
effect immediately prior to the Effective Time shall become the
Certificate of Incorporation of the Surviving Corporation after
the Effective Time, until thereafter amended as provided by the
DGCL and such Certificate of Incorporation.
(b) The By-laws of the Company as in effect immediately
prior to the Effective Time shall become the By-laws of the
Surviving Corporation after the Effective Time, until thereafter
amended as provided by the DGCL, the Certificate of Incorporation
of the Surviving Corporation and such By-laws.
SECTION 1.06. DIRECTORS. The directors of Newco immediately prior
to the Effective Time shall become the directors of the Surviving
Corporation, until the earlier of their death, resignation or removal or
until their respective successors are duly elected and qualified.
SECTION 1.07. OFFICERS. The officers of Newco immediately prior to
the Effective Time shall become the officers of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified.
ARTICLE II
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES
SECTION 2.01. EFFECT ON STOCK. At the Effective Time, by virtue of
the Merger and without any action on the part of the Company, Newco or the
holders of any securities of the Company or Newco:
(a) Each share of common stock, par value $.10 per share, of
the Company (the "Company Common Stock") issued and held,
immediately prior to the Effective Time, in the Company's treasury
or by any of the Company's direct or indirect wholly owned
subsidiaries, and each share of Company Common Stock that is owned
by Newco shall automatically be cancelled and retired and shall
cease to exist, and no consideration shall be delivered in
exchange therefor.
(b) Each issued and outstanding share of Company Common
Stock (other than shares to be cancelled in accordance with
Section 2.01(a) and shares which are held by stockholders
exercising appraisal rights under Section 262 of the DGCL) shall
thereupon be converted into the right to receive $6.00 in cash,
without interest thereon (the "Per Share Merger Consideration").
As of the Effective Time, all such shares of Company Common Stock
shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and each holder of
a certificate or certificates which immediately prior to the
Effective Time represented such outstanding shares of Company
Common Stock (the "Certificates") shall cease to have any rights
with respect thereto, except the right to receive the Per Share
Merger Consideration set forth in this Section 2.01(b) for each
such share.
(c) Each issued and outstanding share of common stock, par
value $.01 per share, of Newco shall be converted into one validly
issued, fully paid and nonassessable share of common stock of the
Surviving Corporation.
SECTION 2.02. EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. Prior to the Effective Time, Newco shall
enter into an agreement with Continental Stock Transfer and Trust
Company, or such other bank or trust company as may be designated
by Newco and as shall be reasonably satisfactory to the Company
(the "Exchange Agent"), which shall provide that Newco shall
deposit with the Exchange Agent at the Effective Time, for the
benefit of the holders of shares of Company Common Stock, for
exchange in accordance with this Article II through the Exchange
Agent cash in an amount sufficient to make the cash payment due
under Section 2.01(b) (the "Exchange Fund"), which such funds
shall be held by Exchange Agent in a segregated trust account for
the benefit of the Company's stockholders.
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable
after the Effective Time, Surviving Corporation shall cause the
Exchange Agent to mail to each holder of record of a Certificate
whose shares were converted into the right to receive Per Share
Merger Consideration pursuant to Section 2.01(b): (i) a letter of
transmittal (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 Exchange Agent and shall
be in such customary form and have such other customary provisions
as the Company and Newco may reasonably specify), and (ii)
instructions for use in effecting the surrender of the
Certificates in exchange for the Per Share Merger Consideration.
Upon surrender of a Certificate for cancellation to the Exchange
Agent, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the
Exchange Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor (A) the product of the Per Share
Merger Consideration multiplied by the number of shares of Company
Common Stock represented by the Certificate, and (B) any amounts
to which the holder is entitled to receive pursuant to Section
2.02(c) hereof, and the Certificate so surrendered shall forthwith
be cancelled. In the event of a transfer of ownership of Company
Common Stock which is not registered in the transfer records of
the Company, the Per Share Merger Consideration and the amounts
distributable under Section 2.01(c) hereof may be distributed 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 issuance shall pay any transfer or other
non-income taxes required by reason of such distribution to a
person other than the registered holder of such Certificate or
establish to the satisfaction of Surviving Corporation that any
such tax has been paid or is not applicable. To the extent that
amounts are withheld by Surviving Corporation pursuant to Section
2.02(i) below, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of
the Company Common Stock in respect of whom such deduction and
withholding were made by Surviving Corporation or the Exchange
Agent. 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
Per Share Merger Consideration and other amounts to which the
holder is entitled pursuant to Section 2.02(c) hereof. No interest
will be paid or will accrue on any cash payable to holders of
Certificates pursuant to the provisions of this Article II.
(c) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. The
delivery of the Per Share Merger Consideration distributed upon
the surrender of Certificates in accordance with the terms of this
Article II shall be deemed payment in full satisfaction of all
rights pertaining to the shares of Company Common Stock
theretofore represented by such Certificates, subject, however, to
the Surviving Corporation's obligation to pay any dividends or
make any other distributions with a record date prior to the
Effective Time which may have been authorized or made by the
Company on such shares of Company Common Stock and which remain
unpaid at the Effective Time, 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 which
were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the
Surviving Corporation or the Exchange Agent for any reason, they
shall be cancelled and exchanged as provided in this Article II,
except as otherwise provided by law.
(d) RETURN OF EXCHANGE FUND. Any portion of the Exchange
Fund, together with any dividends or distributions payable in
respect thereof pursuant to Section 2.02(c) hereof, which remains
undistributed to the holders of the Certificates for six months
after the Effective Time shall be delivered to Newco upon demand,
and any holders of the Certificates who have not theretofore
complied with this Article II shall thereafter look only to
Surviving Corporation for payment of their claim for Per Share
Merger Consideration.
(e) NO LIABILITY. None of the Company, Newco, the Surviving
Corporation or the Exchange Agent shall be liable to any person in
respect of any Per Share 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 one year after the Effective Time any such
Per Share Merger Consideration 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.
(f) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall
invest all cash included in the Exchange Fund as directed by
Surviving Corporation. Any interest and other income resulting
from such investments shall be paid to Surviving Corporation.
(g) 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 the Surviving Corporation, the
posting by such person of a bond in such reasonable amount as the
Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the Per Share Merger Consideration and, if
applicable, any unpaid dividends and distributions payable in
respect thereof pursuant to Section 2.02(c) hereof.
(h) ADJUSTMENTS. If at any time during the period between
the date of this Agreement and the Effective Time, any change in
the outstanding shares of capital stock of the Company shall occur
as a result of any reclassification, recapitalization, stock split
(including a reverse stock split) or combination, exchange or
readjustment of shares, or any stock dividend or stock
distribution with a record date during such period, the Per Share
Merger Consideration shall be equitably adjusted.
(i) WITHHOLDING RIGHTS. The Surviving Corporation shall be
entitled to deduct and withhold from consideration otherwise
payable to any holder of Company Common Stock pursuant to this
Agreement such amounts as may be required to be deducted and
withheld with respect to the making of such payment under the Code
(as defined in Section 3.08), or under any provision of state,
local or foreign tax law.
SECTION 2.03. DISSENTING SHARES. Each outstanding share of Company
Common Stock as to which a written demand for appraisal is filed in
accordance with Section 262 of the DGCL at or prior to the Company Meeting
and not withdrawn at or prior to the Company Meeting (as defined in Section
5.03(d)) and which is not voted in favor of the Merger shall not be
converted into or represent a right to receive the Per Share Merger
Consideration unless and until the holder thereof shall have failed to
perfect, or shall have effectively withdrawn or lost the right to appraisal
of and payment for each such share of Company Common Stock under said
Section 262, at which time each such share shall be converted into the
right to receive the Per Share Merger Consideration. All such shares of
Company Common Stock as to which such a written demand for appraisal is so
filed and not withdrawn at or prior to the Company Meeting and which are
not voted in favor of the Merger, except any such shares of Company Common
Stock the holder of which, prior to the Effective Time, shall have
effectively withdrawn or lost such right to appraisal and payment for such
shares of Company Common Stock under said Section 262, are herein referred
to as "Dissenting Shares." The Company shall give Newco notice upon receipt
by the Company of any written demands for appraisal rights, withdrawal of
such demands, and any other written communications delivered to the Company
pursuant to said Section 262, and the Company shall give Newco the
opportunity, to the extent permitted by law, to participate in all
negotiations and proceedings with respect to such demands. Except with the
prior written consent of Newco, the Company shall not voluntarily make any
payment with respect to any demands for appraisal rights and shall not
settle or offer to settle any such demands. Each holder of Dissenting
Shares who becomes entitled, pursuant to the provisions of said Section
262, to payment for such shares of Dissenting Shares under the provisions
of said Section 262 shall receive payment therefor from the Surviving
Corporation and such shares of Company Common Stock shall be cancelled.
SECTION 2.04. OPTIONS. At the Effective Time, each holder of a
then outstanding option to purchase shares of Company Common Stock
(collectively "Options") granted by the Company under the Company's 1992
Employee Stock Option Plan and 1992 Non-Employee Directors Stock Option
Plan (collectively, the "Option Plans"), if then exercisable, shall in
settlement thereof, become entitled to receive for each such share subject
to any such Option, upon payment of the exercise price under such Option
for such share, the Per Share Merger Consideration multiplied by the number
of shares of Company Common Stock for which such Option is exercisable;
provided that, prior to the Effective Time, Newco and the Company shall use
their respective reasonable best efforts to establish procedures for the
cashless exercise of such Options. Prior to the Effective Time, the Company
shall use its reasonable best efforts to obtain all necessary consents or
releases from holders of Options, to the extent required by the terms of
the Option Plans, or pursuant to the terms of any Option granted
thereunder, and take all such other lawful action as may be necessary to
give effect to the transactions contemplated by this Section 2.04 (except
for such action that may require the approval of the Company's
shareholders).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Disclosure Schedule delivered by the
Company to Newco prior to the execution of this Agreement (the "Company
Disclosure Schedule"), the Company represents and warrants to Newco as
follows:
SECTION 3.01. ORGANIZATION, QUALIFICATION, ETC. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the corporate power and authority and
possesses all governmental franchises, licenses, permits, authorizations
and approvals necessary to enable it to own its properties and assets and
to carry on its business as it is now being conducted. The Company is duly
qualified to do business and is in good standing in each jurisdiction in
which the ownership of its properties or the conduct of its business
requires such qualification, except for jurisdictions in which the failure
to be so qualified or in good standing would not, individually or in the
aggregate, have a Material Adverse Effect (as defined in Section 8.12) on
the Company. The copies of the Company's certificate of incorporation and
by-laws which have been delivered to Newco are complete and correct and in
full force and effect. Each of the Company's Subsidiaries (as defined in
Section 8.12) is a corporation or partnership duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has the corporate power and authority and
possesses all governmental franchises, licenses, permits, authorizations
and approvals necessary to enable it to own its properties and to carry on
its business as it is now being conducted. Each of the Company's
Subsidiaries is duly qualified to do business and is in good standing in
each jurisdiction in which the ownership of its property or the conduct of
its business requires such qualification, except for jurisdictions in which
the failure to be so qualified or in good standing would not, individually
or in the aggregate, have a Material Adverse Effect on the Company. All the
outstanding shares of capital stock of, or other ownership interests in,
the Company's Subsidiaries which are corporations are validly issued, fully
paid and non-assessable and all the outstanding shares of capital stock of,
or other ownership interests in, the Company's Subsidiaries are owned by
the Company, directly or indirectly, free and clear of all liens, claims,
mortgages, encumbrances, pledges, security interests, equities or charges
of any kind (each, a "Lien"). There are no existing options, rights of
first refusal, preemptive rights, calls, claims or commitments of any
character relating to the issued or unissued capital stock or other
securities of, or other ownership interests in, any Subsidiary of the
Company.
SECTION 3.02. CAPITAL STOCK.
(a) The authorized stock of the Company consists of
50,000,000 shares of Company Common Stock, and 2,000,000 shares of
Preferred Stock, par value of $.10 per share. As of the date
hereof, 22,896,137 shares of Company Common Stock were issued and
outstanding and 5,012,509 shares of Company Common Stock were held
in the treasury of the Company. All the outstanding shares of
Company Common Stock have been validly issued and are fully paid
and non-assessable and not subject to preemptive rights. There are
no outstanding subscriptions, options, warrants, rights or other
arrangements or commitments obligating the Company to issue any
shares of its capital stock or voting securities other than
options to acquire 3,093,974 shares of Company Common Stock
pursuant to the Option Plans. No options have been granted since
December 17, 1999. Such options granted on December 17, 1999 are
not vested on the date hereof and will not vest prior to or upon
consummation of the Merger. Attached as Section 3.02 to the
Company Disclosure Schedule is detailed information regarding all
outstanding options granted prior to the date hereof.
(b) As of the date of this Agreement, no bonds, debentures,
notes or other indebtedness of the Company having the right to
vote on any matters on which stockholders may vote are issued or
outstanding. There are no outstanding contractual obligations of
the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of the Company or
such Subsidiaries.
SECTION 3.03. CORPORATE AUTHORITY RELATIVE TO THIS AGREEMENT; NO
VIOLATION.
(a) The Company has the corporate power and authority to
enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement, the Stock
Voting Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and validly
authorized by the Board of Directors of the Company and, except
for the approval and adoption of this Agreement by its
stockholders, no other corporate proceedings on the part of the
Company are necessary to authorize the consummation of the
transactions contemplated hereby. The Board of Directors of the
Company has taken all necessary and appropriate action so that
Section 203 of the DGCL will be inapplicable to this Agreement,
the Stock Voting Agreement and the transactions contemplated
hereby and thereby. The Board of Directors of the Company has
determined that the transactions contemplated by this Agreement
are in the best interest of the Company and its stockholders and,
except as otherwise may be required to comply or act in a manner
consistent with its fiduciary duties under the DGCL, to recommend
to such stockholders that they approve and adopt this Agreement.
This Agreement has been duly and validly executed and delivered by
the Company and, assuming this Agreement constitutes a valid and
binding agreement of the other parties hereto, this Agreement
constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms
(except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other laws
affecting the enforcement of creditors' rights generally, or by
principles governing the availability of equitable remedies).
(b) Other than in connection with or in compliance with (i)
the provisions of the DGCL, (ii) the Securities Act of 1933, as
amended (the "Securities Act"), (iii) the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), (iv) the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), (v) any applicable non-United States competition,
antitrust and investment laws and (vi) the securities or blue sky
laws of the various states (collectively, the "Company Required
Approvals"), no authorization, consent or approval of, or filing
with, any governmental body or authority is necessary for the
consummation by the Company of the transactions contemplated by
this Agreement, except for such authorizations, consents,
approvals or filings, the failure to obtain or make which would
not, individually or in the aggregate, have a Material Adverse
Effect on the Company or substantially impair or delay the
consummation of the transactions contemplated hereby.
SECTION 3.04. REPORTS AND FINANCIAL STATEMENTS. The Company has
previously furnished to Newco, or its Affiliates or representatives, true
and complete copies of:
(a) the Company's Annual Reports on Form 10-K filed with the
Securities and Exchange Commission (the "SEC") for each of the
years ended November 30, 1997 and 1998; and the Company's audited
consolidated financial statements for the fiscal year ended
November 28, 1999 (the "1999 Financial Statements");
(b) each definitive proxy statement filed by the Company
with the SEC on or after February 27, 1998;
(c) all Current Reports on Form 8-K and Quarterly Reports on
Form 10-Q filed by the Company with the SEC since December 1,
1998.
As of their respective dates, such reports and proxy statements
(collectively, the "Company SEC Reports" and with specific reference to all
current Company SEC Reports filed through the date hereof, the "Company
Current SEC Reports") (i) complied as to form in all material respects with
the applicable requirements of the Securities Act, the Exchange Act and the
rules and regulations promulgated thereunder and (ii) did not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
Except to the extent that information contained in any Company SEC Report
has been revised or superseded by a later filed Company SEC Report, none of
the Company SEC Reports contains any untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The (i) audited consolidated
financial statements and unaudited consolidated interim financial
statements included in the Company SEC Reports and (ii) 1999 Financial
Statements (including, in each case, any related notes and schedules)
fairly present the financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and the results of operations and cash
flows for the periods or as of the dates then ended (subject, in the case
of the unaudited interim financial statements, to normal recurring year-end
adjustments), in each case in accordance with past practice and generally
accepted accounting principles in the United States ("GAAP") consistently
applied during the periods involved (except as otherwise disclosed in the
notes thereto). Since December 1, 1998, the Company has timely filed all
reports, registration statements and other filings required to be filed by
it with the SEC under the rules and regulations of the SEC. None of the
Company's Subsidiaries is required to file any forms, reports or other
documents with the SEC.
SECTION 3.05. NO UNDISCLOSED LIABILITIES. Neither the Company nor
any of its Subsidiaries has any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, and there is no existing
condition, situation or set of circumstances which would reasonably be
expected to result in such a liability or obligation, except liabilities or
obligations reflected in the Company Current SEC Reports or the 1999
Financial Statements (and notes and schedules thereto).
SECTION 3.06. NO VIOLATION OF LAW. The businesses of the Company
and its Subsidiaries are not being conducted in violation of any law,
ordinance or regulation of any governmental body or authority (provided
that no representation or warranty is made in this Section 3.06 with
respect to Environmental Laws (as hereinafter defined)) except as described
in the Company Current SEC Reports or the 1999 Financial Statements (and
notes and schedules thereto).
SECTION 3.07. ENVIRONMENTAL LAWS AND REGULATIONS. Except as
described in the Company Current SEC Reports, (a) the Company and each of
its Subsidiaries is in compliance with all applicable federal, state, local
and foreign laws and regulations relating to pollution or protection of
human health or the environment (including, without limitation, ambient
air, surface water, ground water, land surface or subsurface strata)
(collectively, "Environmental Laws"), which compliance includes, but is not
limited to, the possession by the Company and its Subsidiaries of all
material permits and other governmental authorizations required under
applicable Environmental Laws, and compliance with the terms and conditions
thereof, except for non-compliance which would not, individually or in the
aggregate, have a Material Adverse Effect on the Company; (b) neither the
Company nor any of its Subsidiaries has received written notice of, or, is
the subject of, any actions, causes of action, claims, investigations,
demands or notices by any person asserting an obligation to conduct
investigations or clean-up activities under any Environmental Law or
alleging liability under or non-compliance with any Environmental Law
(collectively, "Environmental Claims") which would, individually or in the
aggregate, have a Material Adverse Effect on the Company; and (c) there are
no facts, circumstances or conditions in connection with the operation of
its business or any currently owned or leased facilities that are
reasonably likely to lead to any Environmental Claims in the future which
would individually or in the aggregate, have a Material Adverse Effect on
the Company.
SECTION 3.08. ERISA; BENEFIT PLANS.
(a) The Company Disclosure Schedule contains a list of all
"employee pension benefit plans" (as defined in Section 3(2) of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) (sometimes referred to herein as "Pension Plans"),
"employee welfare benefit plans" (as defined in Section 3(l) of
ERISA), bonus, stock option, stock purchase and deferred
compensation plans or arrangements, and other employee fringe
benefit plans (all the foregoing being herein referred to as
"Benefit Plans") maintained, or contributed to, by the Company,
any of its Subsidiaries or any entity that is treated as under
common control with the Company or any of its Subsidiaries under
Section 414(b), (c), (m) or (o) of the Internal Revenue Code of
1986, as amended (the "Code"), for the benefit of, or relating to,
any employees or former employees of the Company or any of its
Subsidiaries. The Company has delivered or made available to
Newco, or its Affiliates or representatives, true, complete and
correct copies of (i) each Benefit Plan (or, in the case of any
unwritten Benefit Plan, a description thereof), (ii) the most
recent determination letter received from the Internal Revenue
Service, (iii) the latest actuarial evaluations, if any, (iv) the
most recent annual report on Form 5500 filed with the Internal
Revenue Service with respect to each Benefit Plan (if any such
report was required), including Schedule A and Schedule B thereto,
(v) the most recent summary plan description for each Benefit Plan
for which such a summary plan description is required, and (vi)
each trust agreement and group annuity contract relating to any
Benefit Plan.
(b) Each Benefit Plan has been administered in all material
respects in accordance with its terms and the applicable
provisions of ERISA and the Code. There are no investigations by
any governmental agency, termination proceedings or other claims
(except for benefits payable in the normal operation of the
Benefit Plans), suits or proceedings or against or involving any
Benefit Plan or asserting any rights or claims to benefits under
any Benefit Plan that could reasonably give rise to any material
liability and, to the Company's knowledge, there are no facts that
could reasonably give rise to any material liability in the event
of any such investigation, claim, suit or proceeding. All
contributions to, and payments from, the Benefit Plans that may
have been required to be made in accordance with the Benefit Plans
have been timely made.
(c) No "prohibited transaction" (as defined in Section 4975
of the Code or Section 406 of ERISA) has occurred that involves
the assets of any Benefit Plan and that could subject the Company
or the Subsidiary or any of their employees or, to the Company's
knowledge, a trustee, administrator or other fiduciary of any
trusts created under any Benefit Plan, to any material tax or
penalty on prohibited transactions imposed by Section 4975 of
ERISA or the sanctions imposed under Title I of ERISA. None of the
Company, any of its Subsidiaries or any trustee, administrator or
other fiduciary of any Benefit Plan nor any agent of any of the
foregoing has engaged in any transaction or acted or failed to act
in a manner that could subject the Company or any of its
Subsidiaries to any material liability for breach of fiduciary
duty under ERISA or any other applicable law. No liability under
Title IV of ERISA has been incurred by the Company, any of its
Subsidiaries or their affiliates within six years prior to the
date hereof that has not been satisfied in full, and, to the
Company's knowledge, no condition exists that presents a material
risk of incurring such liability.
(d) At no time within the five years preceding the date of
this Agreement has the Company or any of its Subsidiaries been
required to contribute to any "multiemployer plan" (as defined in
Section 4001(a)(3) of ERISA) or incurred any withdrawal liability,
within the meaning of Section 4201 of ERISA, which liability has
not been fully paid as of the date hereof, or announced an
intention to withdraw, but not yet completed such withdrawal, from
any multiemployer plan.
(e) Neither the Company nor any of its Subsidiaries
contributes to a Pension Plan that is subject to Section 302 of
ERISA or Section 412 of the Code.
(f) With respect to any Benefit Plan that is an employee
welfare benefit plan, (1) no such Benefit Plan is funded through a
welfare benefits fund, as such term is defined in Section 419(e)
of the Code, and (2) each such Benefit Plan that is a group health
plan, as such term is defined in Section 5000(b)(1) of the Code,
complies with the applicable requirements of Section 4980B(f) of
the Code.
(g) Neither the Company nor any of its Subsidiaries has
incurred any liability under Section 4062(b) of ERISA to the
Pension Benefit Guaranty Corporation in connection with any
Benefit Plan which is subject to Title IV of ERISA. The Internal
Revenue Service has issued a letter for each Benefit Plan
identified on the Company Disclosure Schedule determining that
such plan is exempt from United States Federal Income Tax under
Sections 401(a) and 501(a) of the Code, and there has been no
occurrence since the date of any such determination letter which
purports to adversely affect such qualification.
(h) Neither the Company, any of its Subsidiaries nor any of
their affiliates maintains or contributes to, or has any liability
(fixed, contingent or otherwise, under any current or former plan)
for, medical, health or life insurance benefits for terminated
employees of the Company or any of its Subsidiaries or for present
employees of the Company or any of its Subsidiaries after
termination of their employment (other than any such welfare
benefits provided pursuant to Code Section 4980B or ERISA Sections
601-608).
(i) The Company Disclosure Schedule contains a true and
complete list, as of the date of this Agreement, showing the names
of all employees who during the fiscal year ended November 30,
1999, received compensation (including commissions and bonuses) in
excess of $50,000. Neither the Company nor any of its Subsidiaries
has agreed to increase the salary payable to any employee so
listed by more than five percent.
(j) The Company has made available to Newco, or its
Affiliates or representatives, true and complete copies of all
contracts, agreements, plans or arrangements covering any employee
or former employee of the Company or any of its Subsidiaries with
"change of control" or similar provisions or providing for "stay
on" bonuses or post-change of control severance payments (each, a
"Change of Control Arrangement"). No Change of Control Arrangement
individually or collectively is expected to give rise to the
payment of any amount that would not be deductible by Newco
pursuant to Section 280G of the Code.
SECTION 3.09. ABSENCE OF CERTAIN CHANGES OR EVENTS. Other than the
transactions contemplated by this Agreement or as disclosed in the Company
Disclosure Schedules, the Company Current SEC Reports or the 1999 Financial
Statements (and notes and schedules thereto), since December 1, 1998, the
businesses of the Company and its Subsidiaries have been conducted in the
ordinary course consistent with past practice, and the Company has taken no
action that could reasonably be expected to have constituted a breach of
Section 5.01 hereof had it been in effect during such period.
SECTION 3.10. INVESTIGATIONS; LITIGATION. Except as described in
the Company Current SEC Reports:
(a) there is no investigation or review pending by any
governmental body or authority with respect to the Company or any
of its Subsidiaries which could reasonably be expected,
individually or in the aggregate, to have a Material Adverse
Effect on the Company, nor has any governmental body or authority
notified the Company of an intention to conduct the same; and
(b) there are no actions, suits or proceedings pending (or,
to the Company's knowledge, threatened) against or affecting the
Company or its Subsidiaries, or any of their respective properties
at law or in equity, or before any federal, state, local or
foreign governmental body or authority, which, individually or in
the aggregate, are reasonably likely to have a Material Adverse
Effect on the Company;
provided that no representation or warranty is made in this Section 3.10
with respect to Environmental Laws.
SECTION 3.11. PROXY STATEMENT; OTHER INFORMATION. None of the
information with respect to the Company or its Subsidiaries to be included
in the Proxy Statement (as defined below) will, at the time of the mailing
of the Proxy Statement or any amendments or supplements thereto, and at the
time of the Company Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information supplied
in writing by Newco or any Affiliate of Newco specifically for inclusion in
the Proxy Statement. The Proxy Statement will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations promulgated thereunder. The letter to stockholders, notice of
meeting, proxy statement and form of proxy to be distributed to
stockholders in connection with the Merger and any schedules required to be
filed with the SEC in connection therewith are collectively referred to
herein as the "Proxy Statement."
SECTION 3.12. TAX MATTERS.
(a) All federal, state, local and foreign Tax Returns (as
such term is defined below) required to be filed by or on behalf
of the Company, each of its Subsidiaries, and each affiliated,
combined, consolidated or unitary group of which the Company or
any of its Subsidiaries (i) is a member (a "Current Company
Group") or (ii) has been a member within six years prior to the
date hereof but is not currently a member, but only insofar as any
such Tax Return relates to a taxable period ending on a date
within the last six years (a "Past Company Group," together with
Current Company Groups, a "Company Affiliated Group") have been
timely filed, and all such Tax Returns are complete and accurate
except to the extent any failure to file or any inaccuracies in
filed returns would not, individually or in the aggregate, have a
Material Adverse Effect on the Company (it being understood that
the representations made in this Section, to the extent that they
relate to Past Company Groups, are made to the knowledge of the
Company). All Taxes due and owing by the Company, any Subsidiary
of the Company or any Company Affiliated Group have been timely
paid, or adequately reserved for, except to the extent any failure
to pay or reserve would not, individually or in the aggregate,
have a Material Adverse Effect on the Company. There is no audit
examination, deficiency, refund litigation, proposed adjustment or
matter in controversy with respect to any Taxes due and owing by
the Company, any Subsidiary of the Company or any Affiliated Group
All assessments for Taxes due and owing by the Company, any
Subsidiary of the Company or any Company Affiliated Group with
respect to completed and settled examinations or concluded
litigation have been paid. Prior to the date of this Agreement,
the Company has provided Newco, or its Affiliates or
representatives, with written schedules of (i) the taxable years
of the Company for which the statutes of limitations with respect
to federal income Taxes have not expired, and (ii) with respect to
federal income Taxes, for all taxable years for which the statute
of limitations has not yet expired, those years for which
examinations have been completed, those years for which
examinations are presently being conducted, and those years for
which examinations have not yet been initiated. The Company and
each of its Subsidiaries have complied in all material respects
with all rules and regulations relating to the payment and
withholding of Taxes, except to the extent any such failure to
comply would not, individually or in the aggregate, have a
Material Adverse Effect on the Company. Neither the Company nor
any of its Subsidiaries is a party to, bound by, or has any
obligation under any Tax sharing, allocation, indemnity, or
similar contract or arrangement.
(b) For purposes of this Agreement: (i) "Taxes" means any
and all federal, state, local, foreign, provincial, territorial or
other taxes, imposts, rates, levies, assessments and other charges
of any kind whatsoever whether imposed directly or through
withholding (together with any and all interest, penalties,
additions to tax and additional amounts applicable with respect
thereto), including, without limitation, income, franchise,
windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers'
compensation, unemployment compensation, net worth, excise,
withholding, ad valorem and value added taxes; (ii) "Tax Return"
means any declaration, return, report, schedule, certificate,
statement or other similar document (including relating or
supporting information) required to be filed with a taxing
authority, or, where none is required to be filed with a taxing
authority, the statement or other document issued by a taxing
authority in connection with any Tax, including, without
limitation, any information return, claim for refund, amended
return or declaration of estimated Tax; and (iii) "Material State"
means any state for which the average allocation percentage of the
Company and its Subsidiaries for the past three years exceeds ten
percent (10%).
SECTION 3.13. OPINION OF FINANCIAL ADVISOR. The Board of Directors
of the Company has received the opinion of Xxxxxxxx Inc., dated the date of
this Agreement, substantially to the effect that, as of such date, the Per
Share Merger Consideration is fair to the holders of the Company Common
Stock from a financial point of view. The Company has delivered a complete
and accurate copy of such opinion to Newco or its Affiliates or
representatives.
SECTION 3.14. REQUIRED VOTE OF THE COMPANY STOCKHOLDERS. The
affirmative vote of the holders of a majority of the outstanding shares of
Company Common Stock (the "Company Stockholder Approval") is required to
approve and adopt this Agreement. No other vote of the stockholders of the
Company, or of the holders of any other securities of the Company (equity
or otherwise), is required by law, the certificate of incorporation or
by-laws of the Company or otherwise in order for the Company to consummate
the Merger and the transactions contemplated hereby.
SECTION 3.15. MATERIAL CONTRACTS. Except as set forth in the
Company Current SEC Reports, neither the Company nor any of its
Subsidiaries is a party to or bound by any "material contract" (as such
term is defined in item 601(b)(10) of Regulation S-K of the SEC) (all
contracts of the type described in this Section 3.15 being referred to
herein as "Company Material Contracts"). The Company Disclosure Schedule
sets forth, as of the date of this Agreement, a true and complete list of
all contracts (other than those disclosed in the Company SEC Reports) to
which the Company or any of its Subsidiaries is a party relating to the
business or assets of the Company or any of its Subsidiaries (except, with
respect to clauses (ii) and (iv) below, any of the foregoing calling for
aggregate payments of less than $50,000), including, without limitation,
all written or oral, express or implied (i) contracts not made in the
ordinary course of business consistent with past practice; (ii) purchase,
supply and customer contracts; (iii) contracts relating to the borrowing of
money or for lines of credit; (iv) contracts involving leases and subleases
of real or personal property; (v) contracts for the sale of any assets
other than in the ordinary course of business consistent with past practice
or for the grant of any options or preferential rights to purchase any
assets, property or rights; (vi) contracts granting any power of attorney
with respect to the affairs of either the Company or any of its
Subsidiaries; (vii) suretyship contracts, working capital maintenance or
other forms of guaranty contracts; (viii) contracts limiting or restraining
the Company or any of its Subsidiaries from engaging or competing in any
lines of business or with any person, firm or corporation, (ix) partnership
and joint venture contracts; (x) employment contracts; (xi) indentures,
mortgages, notes, installment obligations, or other instruments relating to
the borrowing of money in excess of $50,000 by the Company or any of its
Subsidiaries; (xii) contracts which have remaining terms, as of the date of
this Agreement, of over one year in length of obligation on the part of the
Company or any of its Subsidiaries and provide for aggregate payments in
excess of $50,000; (xiii) franchise contracts; and (xiv) all amendments,
modifications, extensions or renewals of any of the foregoing. Each
contract described above is valid and binding on the Company and is in full
force and effect, and the Company and each of its Subsidiaries have in all
material respects performed all obligations required to be performed by
them to date under each Company Material Contract, except where such
noncompliance, individually or in the aggregate, would not have a Material
Adverse Effect on the Company. Neither the Company nor any of its
Subsidiaries knows of, or has received notice of, any violation or default
under any such contract except for such violations or defaults as would not
in the aggregate have a Material Adverse Effect on the Company.
SECTION 3.16. TAKEOVER STATUTE. The Board of Directors of the
Company has unanimously approved this Agreement and the Stock Voting
Agreement and the transactions contemplated hereby and thereby and,
assuming the accuracy of the representation and warranty contained in
Section 4.05, such approval constitutes approval of the Merger and the
other transactions contemplated hereby by the Board of Directors of the
Company under the provisions of Section 203 of the DGCL such that Section
203 of the DGCL does not apply to this Agreement and the transactions
contemplated hereby. To the knowledge of the Company, no other state
takeover statute is applicable to the Merger or the other transactions
contemplated hereby.
SECTION 3.17. FINDERS OR BROKERS. Except for Xxxxxxxx Inc., a copy
of whose engagement agreement has been provided to Newco or its Affiliates
or representatives, neither the Company nor any of its Subsidiaries has
employed any investment banker, broker, finder or intermediary in
connection with the transactions contemplated hereby who might be entitled
to any fee or any commission in connection with or upon consummation of the
Merger.
SECTION 3.18. NO CONFLICTS. The execution and delivery by the
Company of the Agreement does not, and the consummation of the Merger and
the other transactions contemplated by the Agreement and compliance with
the terms hereof and thereof will not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration
of any obligation or to loss of a material benefit under, or to increased,
additional, accelerated or guaranteed rights or entitlements of any person
under, or result in the creation of any Lien upon any of the properties or
assets of the Company or any of its Subsidiaries under, any provision of
(i) the Certificate of Incorporation of the Company, the By-laws of the
Company or the comparable certificate of incorporation or organizational
documents of any of the Company's Subsidiaries, (ii) any contract, lease,
license, indenture, note, bond, agreement, permit, concession, franchise or
other instrument to which the Company or any of its Subsidiaries is a party
or by which any of their respective properties or assets is bound, or (iii)
any judgment, order or decree or statute, law (including common law),
ordinance, rule or regulation applicable to the Company or any of its
Subsidiaries or their respective properties or assets, other than, in the
case of clause (ii) above, any such items that, individually or in the
aggregate, have not had and could not reasonably be expected to have a
Company Material Adverse Effect on the Company.
SECTION 3.19. INTELLECTUAL PROPERTY. The Company Disclosure
Schedule sets forth a description of all patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, service
marks, service xxxx rights, copyrights and other proprietary intellectual
property rights and proprietary computer programs necessary to produce the
products of the Company and its Subsidiaries and to conduct the business of
the Company and its Subsidiaries as currently conducted (collectively,
"Intellectual Property Rights"). The Company and its Subsidiaries own, or
are validly licensed or otherwise have the right to use, all Intellectual
Property Rights with no infringement of, or conflict with, the rights of
any others. No claims are pending or, to the knowledge of the Company,
threatened that the Company or any of its Subsidiaries is infringing or
otherwise adversely affecting the rights of any person with regard to any
Intellectual Property Right. Other than pursuant to franchise agreements
entered into in the ordinary course of business, neither the Company nor
any of its Subsidiaries has granted to any third party a license or other
right to any Intellectual Property Right. To the knowledge of the Company,
no person is infringing the rights of the Company or any of its
Subsidiaries with respect to any Intellectual Property Right.
SECTION 3.20. LABOR MATTERS. There are no collective bargaining or
other labor union agreements to which the Company or any of its
Subsidiaries is a party or by which any of them is bound. Since December
31, 1996, neither the Company nor any of its Subsidiaries has encountered
any labor union organizing activity, or had any actual or threatened
employee strikes, work stoppages, slowdowns or lockouts.
SECTION 3.21. TITLE TO PROPERTIES.
(a) Each of the Company and each of its Subsidiaries has
good and marketable title to, or valid leasehold interests in, all
its respective properties and assets (including the properties
upon which the Americana Foods' manufacturing facility is
located), except for such properties and assets as are no longer
used or useful in the conduct of its respective business or as
have been disposed of in the ordinary course of business. All such
assets and properties, other than assets and properties in which
the Company or any of its Subsidiaries has leasehold interests,
are free and clear of all Liens, except: (i) any easement,
quasi-easement, right of way, land use ordinance, zoning plan or
similar type of encumbrance that may affect use of the property
subject thereto (but not title to such property) provided that
such encumbrances do not materially restrict or impair the use by
the Company of the property subject thereto or affected thereby;
(ii) any Encumbrances for Taxes (and assessments) not delinquent
or which are being contested by Seller in good faith by
appropriate proceedings; (iii) any workmen, repairman,
warehousemen and carriers liens and encumbrances arising in the
ordinary course of business which are not due or which are being
contested by Seller in good faith by appropriate proceedings; and
(iv) any encumbrances which are matters of record, such as
easements, quasi-easements, rights of way, land use ordinances and
zoning plans. The Company Disclosure Schedule sets forth a
complete list of all real property owned by the Company or any of
its Subsidiaries.
(b) Each of the Company and each of its Subsidiaries has
complied in all material respects with the terms of all leases to
which it is a party and under which it is in occupancy, and all
such leases are in full force and effect. Each of the Company and
each of its Subsidiaries enjoys peaceful and undisturbed
possession under all such leases. To the knowledge of the Company,
no other party to any of such leases is (with or without the lapse
of time or the giving of notice, or both) in breach or default in
any material respect thereunder.
SECTION 3.22. EQUIPMENT. All the equipment necessary to produce
the products of the Company and its Subsidiaries or otherwise necessary to
conduct the business of the Company and its Subsidiaries as currently
conducted is in good operating condition and repair (ordinary wear and tear
excepted) and is available for immediate use in the business of the Company
and its Subsidiaries.
SECTION 3.23. SUPPLIERS AND FRANCHISEES. The Company and its
Subsidiaries have not purchased, from any single supplier, goods or
services for which the aggregate purchase price exceeded 5% of the total
purchase price for goods and services purchased by the Company and its
Subsidiaries during their most recent fiscal year. Since December 31, 1998,
except as disclosed or referred to in the Company Disclosure Schedule, the
Company Current SEC Reports or the 1999 Financial Statements (and notes and
schedules thereto), there has not been (i) any material, adverse change in
the business relationship of the Company or any of its Subsidiaries with
any of their top 20 suppliers or franchisees, (ii) any material, adverse
change in the terms of the supply agreements, franchise agreements or
related arrangements with any such supplier or franchisee. To the knowledge
of the Company, the transactions contemplated by the Agreement will not
materially adversely affect its or its Subsidiaries' business relationship
with any of their top 20 suppliers or franchisees and the execution and
delivery by the Company of this Agreement does not, and the consummation of
the Merger and the other transactions contemplated by this Agreement and
compliance with the terms hereof will not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration
of any obligation or to loss of a material benefit under the Company's
agreements with its franchisees.
SECTION 3.24. TRANSACTIONS WITH AFFILIATES. As of the date hereof,
except as disclosed in the Company Current SEC Reports, the 1999 Financial
Statements (and notes and schedules thereto) or in the Company Disclosure
Schedule, (i) there are no outstanding amounts payable to or receivable
from, or advances by the Company or any of its Subsidiaries to, and neither
the Company nor any Subsidiary is otherwise a creditor of or debtor to, any
holder of 5% or more of the outstanding shares of Company Common Stock or
any of its affiliates or any officer, director or employee of the Company
and (ii) neither the Company nor any Subsidiary is a party to any
transaction, agreement, arrangement or understanding with any holder of 5%
or more of the outstanding shares of Company Common Stock or any of its
affiliates or any officer, director or employee of the Company.
SECTION 3.25. INSURANCE. All policies of fire, liability,
workmen's compensation and other forms of insurance owned or held by and
insuring the Company or its Subsidiaries are listed on the Company
Disclosure Schedule. All policies of fire, liability, workmen's
compensation and other forms of insurance owned or held by and insuring the
Company and its Subsidiaries are in full force and effect, all premiums
with respect thereto covering all periods up to and including the date as
of which this representation is being made have been paid (other than
retroactive premiums which may be payable with respect to comprehensive
general liability and workmen's compensation insurance policies), and no
notice of cancellation or termination has been received with respect to any
such policy which was not replaced on substantially similar terms prior to
the date of such cancellation. Such policies are valid, outstanding and
enforceable policies and will not be adversely affected by, or terminate or
lapse by reason of, the transactions contemplated by this Agreement.
Neither the Company nor any of its Subsidiaries has been refused any
insurance with respect to its assets or operations nor has their coverage
been limited in any material respect by any insurance carrier to which
either of them has applied for any such insurance or with which it has
carried insurance during the last three years. The Company has heretofore
made available to Parent true and complete copies of all such policies.
SECTION 3.26. LEGAL PROCEEDINGS. There are no claims, actions, or
proceedings pending, or investigations pending or, to the knowledge of the
Company, threatened, against or relating to the Company or any of its
Subsidiaries before any court, governmental or regulatory authority or body
acting in an adjudicative capacity, which (a) relate to or involve more
than $50,000, (b) seek any injunctive relief, or (c) relate to the
transactions contemplated by this Agreement.
SECTION 3.27. YEAR 2000 COMPLIANCE.
(a) Except as set forth in the Company Disclosure Schedule,
the computer systems of the Company and each of the Company's
Subsidiaries are Year 2000 Compliant (as defined below). Any
failure on the part of the customers of and suppliers to the
Company and the Company Subsidiary to be Year 2000 Compliant by
December 31, 1999, is not reasonably expected to have a Material
Adverse Effect on the Company.
(b) The term "Year 2000 Compliant", with respect to a
computer system or software program, means that such computer
system or software program, means that such computer system or
program: (i) is capable of recognizing, processing, managing,
representing, interpreting and manipulating correctly date-related
data for dates earlier and later than January 1, 2000; (ii) has
the ability to provide date recognition for any data element
without limitation; (iii) has the ability to function
automatically into and beyond the year 2000 without human
intervention and without any change in operations, where such
intervention or change in operations is associated with the advent
of the year 2000; (iv) has the ability to interpret data, dates
and time correctly into and beyond the year 2000; (v) will not
produce noncompliance in existing data, nor otherwise corrupt such
data, into and beyond the year 2000; (vi) has the ability to
process correctly after January 1, 2000, data containing dates
before that date; and (viii) has the ability to recognize all
"leap year" dates, including February 29, 2000.
SECTION 3.28. COMPANY FINANCIAL POSITION. As of January 30, 2000,
the total amount of cash and short-term investments of the Company ("Cash
Balance") was at least $17.19 million and the total amount of all assets
less all liabilities of the Company ("Net Worth") was at least $77.24
million. As of April 30, 2000, the Cash Balance of the Company will be at
least $12.5 million and the Net Worth of the Company will be at least $76
million (without taking into account any payment to be made upon or in
connection with the Closing, including, without limitation, employee
severance payments, payments under agreements identified in Section 5.05
hereof, and payment of transaction fees and expenses, and any payments made
at the request of Newco). The Company's third-party expenses incurred in
connection with the negotiation of this Agreement and/or the completion of
the transactions contemplated hereby, will not exceed $2.75 million.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NEWCO AND GUARANTOR
Except as set forth on the Disclosure Schedule delivered by Newco
to the Company prior to the execution of this Agreement (the "Newco
Disclosure Schedule," and together with the Company Disclosure Schedule,
the "Disclosure Schedule"), Newco and, as applicable, Guarantor represent
and warrant to the Company as follows:
SECTION 4.01. ORGANIZATION, QUALIFICATION, ETC. Newco is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the corporate power and authority to
own its properties and assets and to carry on its business as it is now
being conducted and is duly qualified to do business and is in good
standing in each jurisdiction in which the ownership of its properties or
the conduct of its business requires such qualification, except for
jurisdictions in which the failure to be so qualified or in good standing
would not, individually or in the aggregate, have a Material Adverse Effect
on Newco. Guarantor is a limited partnership duly organized, validly
existing and in good standing under the laws of Delaware and has the power
and authority to own its properties and assets and to carry on its business
as it is now being conducted and is duly qualified to do business and is in
good standing in each jurisdiction in which the ownership of its properties
or the conduct of its business requires such qualification, except for
jurisdictions in which the failure to be so qualified or in good standing
would not, individually or in the aggregate, have a Material Adverse Effect
on Guarantor. The copies of Newco's and Guarantor's certificate of
incorporation, by-laws or other applicable organizational documents which
have been delivered to the Company are complete and correct and in full
force and effect. Newco has no Subsidiaries.
SECTION 4.02. LEGAL AUTHORITY RELATIVE TO THIS AGREEMENT; NO
VIOLATION.
(a) Each of Newco and Guarantor has the legal authority to
enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been
duly and validly authorized by the Board of Directors of Newco and
Guarantor and no other corporate proceedings on the part of Newco
or Guarantor are necessary to authorize the consummation of the
transactions contemplated hereby. The Board of Directors of Newco
has determined that the transactions contemplated by this
Agreement are in the best interest of Newco and its stockholders.
This Agreement has been duly and validly executed and delivered by
Newco and Guarantor and, assuming this Agreement constitutes a
valid and binding agreement of the other parties hereto, this
Agreement constitutes a valid and binding agreement of Newco and
Guarantor, enforceable against Newco and Guarantor in accordance
with its terms (except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or
other laws affecting the enforcement of creditors' rights
generally, or by principles governing the availability of
equitable remedies).
(b) Neither Newco nor Guarantor is subject to or obligated
under any charter, by-law or contract provision or any license,
franchise or permit, or subject to any order or decree, which, by
its terms, would be breached or violated or would accelerate any
payment or obligation, trigger any right of first refusal or other
purchase right as a result of Newco or Guarantor executing or
carrying out the transactions contemplated by this Agreement,
except for any breaches or violations which would not,
individually or in the aggregate, have a Material Adverse Effect
on Newco or Guarantor. Other than in connection with or in
compliance with (i) the provisions of the DGCL, (ii) the
Securities Act, (iii) the Exchange Act, (iv) the HSR Act, (v) any
applicable non-United States competition, antitrust and
investments laws, and (vi) the securities or blue sky laws of the
various states (collectively, the "Newco Required Approvals"), no
authorization, consent or approval of, or filing with, any
governmental body or authority is necessary for the consummation
by Newco or Guarantor of the transactions contemplated by this
Agreement, except for such authorizations, consents, approvals or
filings, the failure to obtain or make which would not,
individually or in the aggregate, have a Material Adverse Effect
on Newco or substantially impair or delay the consummation of the
transactions contemplated hereby and thereby.
SECTION 4.03. INVESTIGATIONS; LITIGATION. Except as described in
the Newco Disclosure Schedule:
(a) there is no investigation or review pending by any
governmental body or authority with respect to Newco or any of its
Affiliates which would, individually or in the aggregate, have a
Material Adverse Effect in Financing, nor has any governmental
body or authority notified Newco of an intention to conduct the
same; and
(b) there are no actions, suits or proceedings pending (or,
to Newco's knowledge, threatened) against or affecting Newco or
its Affiliates, or any of their respective properties at law or in
equity, or before any federal, state, local or foreign
governmental body or authority which, individually or in the
aggregate, are reasonably likely to have a Material Adverse Effect
in Financing.
SECTION 4.04. PROXY STATEMENT; OTHER INFORMATION. None of the
information with respect to Newco or its Affiliates to be included in the
Proxy Statement will, at the time of the mailing of the Proxy Statement or
any amendments or supplements thereto, and at the time of the Company
Meeting, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no representation is made by Newco
with respect to information supplied in writing by the Company or any
affiliate of the Company specifically for inclusion in the Proxy Statement.
SECTION 4.05. LACK OF OWNERSHIP OF THE COMPANY COMMON STOCK.
Neither Newco nor any of its Affiliates owns any shares of the Company
Common Stock or other securities convertible into shares of the Company
Common Stock (exclusive of any shares owned by Newco's or its Affiliates'
employee benefit plans).
SECTION 4.06. FINDERS OR BROKERS. Except for Jefferies & Co., a
copy of whose engagement agreements have been or will be provided to the
Company, neither Newco nor any of its Affiliates has employed any
investment banker, broker, finder or intermediary in connection with the
transactions contemplated hereby who might be entitled to any fee or any
commission in connection with or upon consummation of the Merger.
SECTION 4.07. FINANCING. Exhibit B provides detailed terms and
conditions of all financing required by Newco to fund the aggregate Per
Share Merger Consideration for all shares of Company Common Stock (the
"Aggregate Merger Consideration"). Newco's obligations to consummate the
Merger are conditioned upon receipt of proceeds from $95.2 million in
senior and subordinated debt financing on terms described in the commitment
letters attached hereto as Exhibits B-1 through B-5 inclusive, or on such
other terms that are substantially no less favorable than those set forth
on Exhibits B-1 through B-5, inclusive. Such debt financing is referred to
as the "Contingent Financing". Newco represents that it has undertaken a
commercially reasonable investigation of the availability of the Contingent
Financing and expects that such Contingent Financing will be available on
terms and conditions acceptable to it on a timely basis. Newco also has
undertaken a reasonable investigation of the terms and conditions pursuant
to which all funds other than the Contingent Financing necessary to fund
the Aggregate Merger Consideration will either be invested by Newco or made
available through the operations of the Company or the cash proceeds from
the sale of assets, land and real property referred to in Section 6.03(c)
(such funding being referred to as the "Non-Contingent Financing"). Newco
has received commitments sufficient to provide the $33.0 million equity
portion of the funds necessary to pay the Aggregate Merger Consideration
(the "Equity Financing"). Newco expects that, subject to the accuracy of
the representations from the Company in Section 3.28, the Non-Contingent
Financing will be available so that, together with the Contingent
Financing, Newco will have available the Aggregate Merger Consideration,
together with merger-related expenses, at Closing.
SECTION 4.08. SOLVENCY. Newco reasonably believes that,
immediately after the Effective Time and after giving effect to the Merger
and the transactions contemplated thereby, including the payment of the
Aggregate Merger Consideration, the Surviving Corporation will not (i) be
insolvent (either because its financial condition is such that the sum of
its debts is greater than the value of its assets or because the fair
saleable value of its assets is less than the amount required to pay its
probable liability on its existing debts as they mature), (ii) have
unreasonably small capital with which to engage in its business, or (iii)
have incurred debts beyond its ability to pay as they become due.
SECTION 4.09. GUARANTOR FINANCIAL POSITION. Guarantor will furnish
to the Company, as soon as available, its financial statements as of
December 31, 1999 ("Guarantor Financial Statements"). The Guarantor
Financial Statements fairly present the financial condition of the
Guarantor and will be prepared in accordance with GAAP. Since September 30,
1999, there has not been any material, adverse change in the financial
condition or operations of Guarantor. Guarantor has sufficient committed
capital such that when called pursuant to its limited partnership
agreement, it will have funds sufficient to satisfy its obligations set
forth in Section 5.16 hereof.
ARTICLE V
COVENANTS AND AGREEMENTS
SECTION 5.01. CONDUCT OF BUSINESS BY THE COMPANY. From and after
the date hereof and prior to the Effective Time or the date, if any, on
which this Agreement is earlier terminated pursuant to Section 7.01 (the
"Termination Date"), and except (i) as may be required by law (provided
that any party availing itself of such exception must first consult with
the other party), (ii) as may be agreed in writing by Newco and the
Company, (iii) as may be expressly permitted pursuant to this Agreement, or
(iv) as set forth in Section 5.01 of the Company Disclosure Schedule, the
Company:
(a) shall, and shall cause each of its Subsidiaries to,
conduct its operations according to their ordinary and usual
course of business in substantially the same manner as heretofore
conducted;
(b) shall use its reasonable best efforts, and shall cause
each of its Subsidiaries to use its reasonable best efforts, to
preserve intact its business organization and goodwill, keep
available the services of its current officers and other key
employees and preserve its relationships with those persons having
business dealings with it;
(c) shall confer at such times as Newco may reasonably
request to report material operational matters and the general
status of ongoing operations (to the extent Newco reasonably
requires such information);
(d) shall notify Newco of any emergency or other change in
the normal course of its or its Subsidiaries' respective
businesses or in the operation of its or its Subsidiaries'
respective properties and of any complaints, investigations or
hearings (or communications indicating that the same may be
contemplated) of any governmental body or authority;
(e) shall not, and shall not permit any of its Subsidiaries
that is not wholly owned to, authorize or pay any dividends on or
make any distribution with respect to its outstanding shares of
stock; provided however, that the Company may pay regular
quarterly cash dividends, in amounts consistent with past
practice, to the extent of, but not exceeding, any amounts
collected form AmeriServe Food Distribution, Inc. ("AmeriServe")
with respect to the $2.8 million account receivable owed by
AmeriServe to the Company as of January 31, 2000;
(f) shall not, and shall not permit any of its Subsidiaries
to, split, combine or reclassify any of its capital stock or issue
or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for, shares of its
capital stock;
(g) shall not, and shall not permit any of its Subsidiaries
to, except in the ordinary course of business consistent with past
practice, enter into or amend any employment, severance or similar
agreements or arrangements with any of their respective directors
or executive officers;
(h) shall not, and shall not permit any of its Subsidiaries
to, authorize, propose or announce an intention to authorize or
propose, or enter into an agreement with respect to, any merger,
consolidation or business combination (other than (A) the Merger
and (B) any mergers, consolidations or business combinations with
its Subsidiaries entered into in the ordinary course of business
consistent with past practice), any acquisition of assets or
securities, any disposition of assets or securities or any release
or relinquishment of material contract rights, in each case not in
the ordinary course of business consistent with past practice;
(i) shall not propose or adopt any amendments to its
corporate charter or by-laws;
(j) shall not, and shall not permit any of its Subsidiaries
to, issue or authorize the issuance of, or agree to issue or sell
any shares of their capital stock of any class (whether through
the issuance or granting of options, warrants, commitments,
subscriptions, rights to purchase or otherwise);
(k) shall not, and shall not permit any of its Subsidiaries
to, grant, confer or award any options, warrants, conversion
rights or other rights, not existing on the date hereof, to
acquire any shares of its capital stock;
(l) shall not, and shall not permit any of its Subsidiaries
to, purchase or redeem any shares of its stock or any rights,
warrants or options to acquire any such shares;
(m) shall not, and shall not permit any of its Subsidiaries
to, (i) amend in any respect the terms of their respective
employee benefit plans, programs or arrangements or any severance
or similar agreements or arrangements in existence on the date
hereof, (ii) adopt any new employee benefit plans, programs or
arrangements or any severance or similar agreements or
arrangements, (iii) grant to any officer or director of the
Company or any of its Subsidiaries any increase in compensation,
or (iv) grant to any officer or director of the Company or any of
its Subsidiaries any increase in severance or termination pay;
(n) shall not, and shall not permit any of its Subsidiaries
to, incur, assume or prepay any indebtedness or any other material
liabilities;
(o) shall not, and shall not permit any of its Subsidiaries
to, (i) make any loans, advances or capital contributions to, or
investments in, any other person, other than by it or a Subsidiary
of the Company to or in the Company or any wholly-owned Subsidiary
thereof or (ii) pay, discharge or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than indebtedness, issuances of
debt securities, guarantees, loans, advances, capital
contributions, investments, payments, discharges or satisfactions
incurred or committed to in the ordinary course of business
consistent with past practice;
(p) shall not sell, lease, license, mortgage or otherwise
encumber or subject to any Lien or otherwise dispose of any of its
properties or assets (including securitizations), other than in
the ordinary course of business consistent with past practice;
(q) shall not, and shall not permit any of its Subsidiaries
to, (i) make any Tax election or settle or compromise any Tax
liability or (ii) change its fiscal year;
(r) except as disclosed in the Company Current SEC Reports
filed prior to the date of this Agreement or in the 1999 Financial
Statements (and notes and schedules thereto), or as required by a
governmental body or authority, shall not change its methods of
accounting (including, without limitation, make any material
write-off or reduction in the carrying value of any assets) in
effect at November 28 1999, except as required by changes in GAAP
as concurred in writing by its independent auditors; and
(s) shall not, and shall not permit any of its Subsidiaries
to, agree, in writing or otherwise, to take any of the foregoing
actions or take any action which would (x) make any representation
or warranty in Article III hereof untrue or incorrect or (y)
result in any of the conditions to the Merger set forth in Article
VI not being satisfied.
SECTION 5.02. INVESTIGATION. Each of the Company and Newco shall
afford to one another and to one another's officers, employees,
accountants, counsel and other authorized representatives full and complete
access during normal business hours, throughout the period prior to the
earlier of the Effective Time or the Termination Date, to its and its
Subsidiaries' properties, contracts, commitments, books and records and any
report, schedule or other document filed or received by it pursuant to the
requirements of federal or state securities laws and shall use their
reasonable best efforts to cause their respective representatives to
furnish promptly to one another such additional financial and operating
data and other information as to its and its Subsidiaries' respective
businesses and properties as the other or its duly authorized
representatives may from time to time reasonably request, except that
nothing herein shall require either the Company or Newco or any of their
respective Subsidiaries to disclose any information to the other that would
cause significant competitive harm to such disclosing party or its
affiliates if the transactions contemplated by this Agreement are not
consummated. The parties hereby agree that each of them will treat any such
information in accordance with the Confidentiality and Standstill
Agreement, dated as of October 19, 1999, between the Company and Newco, as
amended or superceded by subsequent agreement (the "Confidentiality
Agreement"). Notwithstanding any provision of this Agreement to the
contrary, no party shall be obligated to make any disclosure in violation
of applicable laws or regulations, including any such laws or regulations
pertaining to the treatment of classified information.
SECTION 5.03. PROXY MATERIAL.
(a) The Company and Newco shall together, or pursuant to an
allocation of responsibility to be agreed upon between them:
(i) prepare and file with the SEC as soon as is
reasonably practicable the Proxy Statement and shall use
their reasonable best efforts to have the Proxy Statement
cleared by the SEC under the Exchange Act; and
(ii) cooperate with one another in order to lift any
injunctions or remove any other impediment to the
consummation of the transactions contemplated herein.
(b) Subject to the limitations contained in Section 5.02,
the Company and Newco shall each furnish to one another and to one
another's counsel all such information as may be required in order
to effect the foregoing actions and each represents and warrants
to the other that no information furnished by it in connection
with such actions or otherwise in connection with the consummation
of the transactions contemplated by this Agreement will contain
any untrue statement of a material fact or omit to state a
material fact required to be stated in order to make any
information so furnished, in light of the circumstances under
which it is so furnished, not misleading.
(c) The Company shall cause the Proxy Statement to be mailed
to the Company's stockholders as promptly as practicable after the
date hereof.
(d) The Company shall, as soon as practicable following the
date of this Agreement, duly call, give notice of, convene and
hold a meeting of its stockholders (the "Company Meeting") for the
purpose of obtaining the Company Stockholder Approval and, subject
to its rights to terminate this Agreement pursuant to Section
7.01, shall, through its Board of Directors, recommend to its
stockholders the adoption of this Agreement, the Merger and the
other transactions contemplated hereby.
SECTION 5.04. ASSET SALES. The Company agrees to use commercially
reasonable efforts to cause to be sold (contingent upon consummation of the
transactions contemplated by this Agreement) for the cash proceeds set
forth below the following assets: (i) the real estate assets of America
Best Care, Inc. located in Jacksonville, Arkansas; proceeds of $800,000;
(ii) the real property and other assets of Xxxxxx Manufacturing located in
Fresno, California; proceeds of $1.8 million, and (iii) certain notes
receivable (other than the receivable due from Suiza Foods) existing on the
date hereof and having an outstanding principal balance (net of allowances)
at January 30, 1999 of $4.0 million; proceeds of $2.5 million. The Company
undertakes to keep Newco reasonably informed of its efforts pursuant to
this Section 5.04 and agrees not to sell these assets for less than the
specified proceeds or later than the Closing Date without Newco's prior
written consent. The Company makes no representation as to the value of any
of the foregoing assets and provides to Newco no assurances that it will be
successful in its efforts hereunder.
SECTION 5.05. EXECUTIVE SECURITY AGREEMENTS/SEVERANCE PLAN.
Simultaneously with the Merger and to the extent not performed by the
Company on or prior to the Closing Date, the Surviving Corporaiton shall
assume and agree to perform the Company's obligations under the executive
security agreements (the "Executive Security Agreements") listed in Section
5.05(a) of the Company Disclosure Schedule complete and accurate copies of
which have been provided to Newco, or its Affiliates or representatives. To
the extent not undertaken by the Company on or prior to the Closing Date,
at the Effective Time, the Surviving Corporation shall provide each
executive who is a party to an Executive Security Agreement with a written
undertaking evidencing Surviving Corporation's assumption of the
obligations under the Executive Security Agreement and confirming the
amount of payments to be made to each executive thereunder. The Company's
Severance Plan for employees, dated August 8, 1993 (the "Severance Plan"),
is set forth in Schedule 5.05(b) to the Company Disclosure Schedule.
Simultaneously with the Merger and to the extent not performed by the
Company on or prior to the Closing Date, the Surviving Corporation shall
assume and agree to perform the Company's obligations under the Severance
Plan.
SECTION 5.06. FILINGS; OTHER ACTION.
(a) Subject to the terms and conditions herein provided, the
Company and Newco shall (i) promptly make their respective filings
and thereafter make any other required submissions under the HSR
Act, (ii) use their reasonable best efforts to cooperate with one
another in (x) determining whether any filings are required to be
made with, or consents, permits, authorizations or approvals are
required to be obtained from, any third party or other
governmental or regulatory bodies or authorities of federal,
state, local and foreign jurisdictions in connection with the
execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby and (y) timely making all
such filings and timely seeking all such consents, permits,
authorizations or approvals, and (iii) use their reasonable best
efforts to take, or cause to be taken, all other actions and do,
or cause to be done, all other things necessary, proper or
advisable to consummate and make effective the transactions
contemplated hereby, including, without limitation, taking all
such further action as reasonably may be necessary to resolve such
objections, if any, as the Federal Trade Commission, the Antitrust
Division of the Department of Justice, state antitrust enforcement
authorities or competition authorities of any other nation or
other jurisdiction or any other person may assert under relevant
antitrust or competition laws with respect to the transactions
contemplated hereby.
(b) In furtherance and not in limitation of the covenants of
the parties contained in this Section 5.06, if any administrative
or judicial action or proceeding, including any proceeding by a
private party, is instituted (or threatened to be instituted)
challenging any transaction contemplated by this Agreement as
violative of any Regulatory Law (as defined below), each of the
Company and Newco shall cooperate in all respects with each other
and use its respective reasonable best efforts to contest and
resist any such action or proceeding and to have vacated, lifted,
reversed or overturned any decree, judgment, injunction or other
order, whether temporary, preliminary or permanent, that is in
effect and that prohibits, prevents or restricts consummation of
the transactions contemplated by this Agreement. Notwithstanding
the foregoing or any other provision of this Agreement, nothing in
this Section 5.06 shall limit a party's right to terminate this
Agreement pursuant to Section 7.01(b) or 7.01(c) so long as such
party has until then complied in all respects with its obligations
under this Section 5.06.
(c) If any objections are asserted with respect to the
transactions contemplated hereby under any Regulatory Law or if
any suit is instituted by any governmental body or authority or
any private party challenging any of the transactions contemplated
hereby as violative of any Regulatory Law, each of the Company and
Newco shall use its reasonable best efforts to resolve any such
objections or challenge as such governmental body or authority or
private party may have to such transactions under such Regulatory
Law so as to permit consummation of the transactions contemplated
hereby. For purposes of this Agreement, "Regulatory Law" means the
Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended, the HSR Act,
and all other federal, state or 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 actions having the purpose or
effect of monopolization or restraint of trade or lessening
competition through merger or acquisition.
SECTION 5.07. FURTHER ASSURANCES. In case at any time after the
Effective Time any further action is necessary or desirable to carry out
the purposes of this Agreement, the proper officers of the Company and
Newco shall take all such necessary action.
SECTION 5.08. TAKEOVER STATUTE. If any "fair price," "moratorium,"
"control share acquisition" or other form of antitakeover statute or
regulation shall become applicable to the transactions contemplated hereby,
each of the Company and Newco and the members of their respective Boards of
Directors shall grant such approvals and take such actions as are
reasonably 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 such statute or
regulation on the transactions contemplated hereby.
SECTION 5.09. NO SOLICITATION.
(a) From and after the date hereof, the Company will not,
and shall use its reasonable best efforts not to permit, any of
its officers, directors, employees, attorneys, financial advisors,
agents or other representatives or those of any of its
Subsidiaries to, directly or indirectly, solicit or knowingly
encourage any Takeover Proposal from any person. The Company may
engage in discussions or negotiations with, and furnish
information concerning the Company and its Subsidiaries,
businesses, properties or assets to, any third party which has
made an unsolicited Takeover Proposal if the Board of Directors of
the Company concludes in good faith at a meeting of the Board,
after having received advice from the Company's legal counsel,
that the failure to take such action would be inconsistent with
its fiduciary duties under applicable law. The Company will
promptly (but in no case later than 24 hours) notify Newco, orally
and in writing, of the receipt of any Takeover Proposal, including
the material terms and conditions thereof (and any change in the
material terms and conditions thereof) and the identity of the
person making such Takeover Proposal, and will promptly (but in no
case later than 24 hours) notify Newco, orally and in writing, of
any determination by the Company's Board of Directors that a
Superior Proposal (as hereinafter defined) has been made. Prior to
providing any information or data to any person in connection with
a Takeover Proposal pursuant to this Section 5.09, the Board of
Directors of the Company shall receive from such person a
confidentiality agreement in a customary form. As used in this
Agreement, (i) "Takeover Proposal" shall mean any bona fide
proposal or offer made by any third party prior to the stockholder
vote at the Company Meeting (other than a proposal or offer by
Newco or any of its Subsidiaries) for a merger, consolidation or
other business combination involving, or any purchase of, all or
substantially all of the assets or more than 50% of the voting
securities of, the Company, and (ii) "Superior Proposal" shall
mean a bona fide Takeover Proposal made by a third party on terms
that a majority of the disinterested members of the Board of
Directors of the Company reasonably determines in good faith (in
consideration of advice of an independent financial advisor) is
more favorable to the Company and to its stockholders than the
transactions contemplated hereby (including taking into account,
among other things, the financing thereof).
(b) The Company shall immediately cease and cause to be
terminated any discussions or negotiations with any parties (other
than Newco and Guarantor) conducted prior to the date of this
Agreement with respect to this Section 5.09.
SECTION 5.10. PUBLIC ANNOUNCEMENTS. The Company and Newco will
consult with and provide each other the opportunity to review and comment
upon any press release or other public statement or comment prior to the
issuance of such press release or other public statement or comment
relating to this Agreement or the transactions contemplated herein and
shall not issue any such press release or other public statement or comment
prior to such consultation except as may be required by law or by
obligations pursuant to any listing agreement with any national securities
exchange.
SECTION 5.11. INDEMNIFICATION AND INSURANCE.
(a) From and after the Effective Time, Newco shall, and
shall cause the Surviving Corporation to, indemnify and hold
harmless each present and former director, officer, employee or
agent of the Company (when acting in such capacity) determined as
of the Effective Time (the "Indemnified Parties"), against any
costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of or
pertaining to matters existing or occurring at or prior to the
Effective Time, whether asserted or claimed prior to, at or after
the Effective Time, to the fullest extent permitted under the
DGCL, the Company's certificate of incorporation or bylaws (and
the Surviving Corporation shall also advance expenses as incurred
to the fullest extent permitted under applicable law, provided the
person to whom expenses are advanced provides an undertaking to
repay such advances if it is ultimately determined that such
person is not entitled to indemnification).
(b) Any Indemnified Party wishing to claim indemnification
under paragraph (a) of this Section 5.11, upon learning of any
such claim, action, suit, proceeding or investigation, shall
notify the Surviving Corporation thereof, but the failure to so
notify shall not relieve the Surviving Corporation of any
liability it may have to such Indemnified Party if such failure
does not materially prejudice the Surviving Corporation. In the
event of any such claim, action, suit, proceeding or investigation
(whether arising before or after the Effective Time), the
Surviving Corporation shall have the right to assume the defense
thereof and the Surviving Corporation shall not be liable to such
Indemnified Parties for any legal expenses of other counsel or any
other expenses subsequently incurred by such Indemnified Parties
in connection with the defense thereof, except that if the
Surviving Corporation elects not to assume such defense, or
counsel for the Indemnified Parties advises that there are issues
which raise conflicts of interest between the Surviving
Corporation and the Indemnified Parties, the Indemnified Parties
may retain counsel mutually satisfactory to the Surviving
Corporation and the Indemnified Parties, and the Surviving
Corporation shall pay all reasonable fees and expenses of such
counsel for the Indemnified Parties promptly as statements
therefor are received.
(c) The Surviving Corporation shall maintain a policy of
officers' and directors' liability insurance for acts and
omissions occurring prior to the Effective Time ("D&O Insurance")
with coverage in amount and scope at least as favorable as the
Company's existing directors' and officers' liability insurance
coverage (attached hereto as Section 5.11(c) of the Company
Disclosure Schedule) for a period of six years after the Effective
Time (the "Tail D&O Coverage"). The Company represents, based upon
quotes from its existing carrier, that the premium to obtain the
Tail D&O Coverage will be determined by multiplying the current
annual premium ($110,000) by a factor of from 1.85 to 2.85. The
Company's annual premium is due and payable on March 15, 2000. A
portion of the premium paid on such date will be credited to the
Company towards the purchase of the Tail D&O Coverage. The Company
will give all required notices to its existing carrier in order to
continue the D&O Insurance after the date hereof.
(d) If Newco or any of its successors or assigns (i) shall
consolidate with or merge into any other corporation or entity and
shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) shall transfer all or
substantially all of its properties and assets to any individual,
corporation or other entity, then and in each such case, proper
provisions shall be made so that the successors and assigns of
Newco shall assume all of the obligations set forth in this
Section.
(e) The provisions of this Section are intended to be for
the benefit of, and shall be enforceable by, each of the
Indemnified Parties, their heirs and their representatives.
(f) None of the officers, directors, shareholders,
attorneys, financial advisors, agents or other representatives or
affiliates of the Company (the "Company Affiliates") shall have
any liability or obligation of any kind to Newco or its affiliates
under or resulting from this Agreement or the transactions
contemplated hereby, regardless whether any Company Affiliate may
otherwise be liable on the basis of contract, quasi-contract, tort
or strict liability (whether statutory or common law) and
regardless whether or to what extent any statute or common law
permits the waiver or exclusion thereof.
SECTION 5.12. RESERVED.
SECTION 5.13. ADDITIONAL REPORTS AND INFORMATION. The Company
shall furnish to Newco copies of any reports of the type referred to in
Sections 3.04 which it or its Subsidiaries file with the SEC on or after
the date hereof, and the Company represents and warrants that as of the
respective dates thereof, such reports will not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statement therein, in light of
the circumstances under which they were made, not misleading. Any unaudited
consolidated interim financial statements included in such reports
(including any related notes and schedules) will fairly present the
financial position of the Company and its consolidated Subsidiaries as of
the dates thereof and the results of operations and changes in financial
position or other information included therein for the periods or as of the
date then ended (subject, where appropriate, to normal year-end
adjustments), in each case in accordance with past practice and GAAP
consistently applied during the periods involved (except as otherwise
disclosed in the notes thereto). The Guarantor shall furnish to the Company
an unaudited consolidated balance sheet and statement of partners' equity
as of the end of each calendar month occurring after the date hereof until
the Effective Date (the "Guarantor Interim Financial Statements"). Any
Guarantor Interim Financial Statements (including any related notes and
schedules) will fairly present the financial position of the Guarantor as
of the dates thereof and in each case will be prepared in accordance with
past practice and GAAP consistently applied during the periods involved
(except as otherwise disclosed in the notes thereto).
SECTION 5.14. FINANCING. Newco will use its best efforts to
satisfy all conditions to the Contingent Financing and Non-Contingent
Financing described in Exhibit B. If any Material Adverse Effect in
Financing (as defined below) shall occur, (i) Newco shall promptly notify
the Company in writing in reasonable detail of such Material Adverse Effect
in Financing, (ii) Newco shall use its best efforts to arrange for
alternative financing, if necessary, and (iii) after a Material Adverse
Effect in Financing occurs, and from time to time thereafter, until Newco
or Company terminates this Agreement pursuant to Section 7.01, (x) Newco
shall provide, and shall cause its lenders to provide, to the Company
copies of all term sheets and other similar materials reasonably pertaining
to Newco's efforts to obtain the Contingent Financing, and (y) the Company
shall have the right to discuss with the principal officers and affiliates
of Guarantor and Newco the status and prospects of Newco's obtaining the
Contingent Financing. A "Material Adverse Effect in Financing" means any
state of facts, event, change or effect (other than a Material Adverse
Effect with respect to the Company or a failure of the conditions to
Newco's obligations to close under Section 6.01 or 6.03, other than
6.03(c)) that has had or could reasonably be expected to have a material
adverse effect on the availability of any portion of the Contingent
Financing. Without limiting the foregoing, a Material Adverse Effect in
Financing shall be deemed to occur if Newco shall have received notice that
any portion of the Contingent Financing will not be available on terms that
are substantially no less favorable than those set forth in Exhibits X-0,
X-0, X-0, X-0 or B-5.
SECTION 5.15. SOLVENCY AT CLOSING. Newco agrees for the benefit of
the directors of the Company to take all actions necessary to ensure that
immediately following the Effective Time the Surviving Corporation will be
solvent for all purposes under federal bankruptcy and applicable state
fraudulent transfer and fraudulent conveyance laws; provided however, that
immediately before the Effective Time on the Closing Date, the Company
shall comply with Section 3.28.
SECTION 5.16. GUARANTY OF PERFORMANCE. Subject to the limitations
set forth below, the Guarantor does hereby unconditionally guarantee the
payment and performance of all covenants and obligations of Newco under
this Agreement including, but not limited to, the obligation to fund the
Per Share Merger Consideration pursuant to Section 2.01 hereof and to pay
the termination fee contemplated by Section 7.02 hereof, up to a total of
$34.65 million (the "Guaranty"). The obligation of Guarantor under the
Guaranty is primary, absolute and unconditional, is a continuing guaranty,
and shall remain in force at all times hereafter, until all of Newco's
obligations hereunder have been satisfied in full. Guarantor hereby waives
notice, presentment, demand, protest and notice of dishonor of any of the
liabilities or obligations guaranteed hereby, and hereby waives any failure
to promptly commence suit against any party or to give any notice to or
make any claim or demand upon Newco. Guarantor further agrees that this
Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment, or any part thereof, by Newco is rescinded
or must otherwise be restored or returned upon the insolvency, bankruptcy
or reorganization of Newco, or otherwise, all as though such payment had
not been made. Guarantor agrees that sufficiently in advance of Closing it
shall make such calls for capital contributions from its general and
limited partners, and take such other actions necessary, to ensure that
Guarantor has sufficient cash funds at Closing to fully fund its
obligations under this Section 5.16. This Guaranty shall inure to the
benefit of the Company and each shareholder entitled to receive the Per
Share Merger Consideration on a pro rata basis. There shall be no duty or
obligation upon the Company or its shareholders (i) to proceed against
Newco, (ii) to initiate any proceeding or exhaust any remedy against Newco,
or (iii) to give any notice to Newco or Guarantor, whatsoever, before
bringing suit, or instituting proceedings of any kind against Newco or
Guarantor. Until all of the obligations of Newco under this Agreement have
been satisfied in full, Guarantor shall have no right or subrogation and
hereby waives any right to enforce any remedy which Company or its
shareholders now has or may hereafter have against Newco and any benefit
of, and any right to participate in, any security now or hereafter held by
Company or its shareholders. All rights and remedies under this Guaranty
are cumulative and those granted hereunder are in addition to any rights
and remedies available under law. From the date hereof until the Effective
Time, Guarantor shall not take any action that would reasonably be expected
to materially, adversely affect its ability to perform its obligations
under this Section 5.16. Notwithstanding the foregoing provisions of this
Section 5.16, Guarantor's obligation is limited to $1.65 million and will
be deemed satisfied in full if Newco pays the termination fee under Section
7.02 or if the Merger is consummated and the Merger Consideration is paid
pursuant Section 2.02.
SECTION 5.17. HEADQUARTERS EMPLOYEES/WARN ACT COMPLIANCE.
(a) Except for individuals identified by Newco in writing to
the Company at least 45 days prior to the Closing Date, the
Company shall terminate the employment of all persons who are
employees at the Company's headquarters located in Little Rock,
Arkansas (the "Headquarters Employees") on or before the Closing
Date (but in any event prior to the Effective Time) and shall,
simultaneously with such termination, make all payments required
to made to such persons under the Executive Security Agreements
and Severance Plan. In no case shall the aggregate payments made
or required to be made under the Executive Security Agreements and
Severance Plan (for all Company employees other than those of
Americana Foods, Inc., a Subsidiary of the Company, which
employees are not expected to be terminated) exceed $8.3 million.
(b) In executing the provision of Section 5.17(a), the
Company shall comply fully with the notice and other requirements
of the Worker Adjustment and Retraining Notification Act of 1988
(the "WARN Act") and any similar state or local law. The Company
shall (i) time the delivery of the WARN Act and any similar state
or local law notice to allow termination of the Headquarters
Employees in accordance with Section 5.17(a) without the
incurrence of any liabilities under the WARN Act or any similar
state or local law and (ii) prevent Newco from being characterized
as an "employer" of the Headquarters Employees for purposes of the
WARN Act and any similar state or local law.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall
be subject to the fulfillment at or prior to the Effective Time of the
following conditions:
(a) The Company Stockholder Approval shall have been
obtained in accordance with applicable law.
(b) No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated
or enforced by any court or other tribunal or governmental body or
authority which prohibits the consummation of the Merger
substantially on the terms contemplated hereby and shall continue
to be in effect.
(c) Any applicable waiting period under the HSR Act shall
have expired or been terminated and any other Company Required
Approvals and Newco Required Approvals shall have been obtained,
except where the failure to obtain such other Company Required
Approvals and Newco Required Approvals would not have a Material
Adverse Effect on the Company or Newco, as the case may be.
SECTION 6.02. CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT
THE MERGER. The obligation of the Company to effect the Merger is further
subject to the fulfillment of the following conditions:
(a) (i) The representations and warranties of Newco
contained herein shall be true and correct in all material
respects (but without regard to materiality qualifications or
references to Material Adverse Effect contained in any specific
representation or warranty) as of the Effective Time with the same
effect as though made as of the Effective Time except (x) for
changes specifically permitted by the terms of this Agreement, (y)
that the accuracy of representations and warranties that by their
terms speak as of the date of this Agreement or some other date
will be determined as of such date and (z) where any such failure
of the representations and warranties in the aggregate to be true
and correct in all respects would not have a Material Adverse
Effect on Newco, (ii) Newco shall have performed in all material
respects all obligations and complied with all covenants required
by this Agreement to be performed or complied with by it prior to
the Effective Time and (iii) Newco shall have delivered to the
Company a certificate, dated the Effective Time and signed by its
Chief Executive Officer or President certifying to both such
effects.
SECTION 6.03. CONDITIONS TO OBLIGATION OF NEWCO TO EFFECT THE
MERGER. The obligation of Newco to effect the Merger is further subject to
the fulfillment of the following conditions:
(a) (i) The representations and warranties of the Company
contained herein shall be true and correct in all material
respects (but without regard to any materiality qualification or
reference to Material Adverse Effect contained in any specific
representation or warranty) as of the Effective Time with the same
effect as though made as of the Effective Time except (x) for
changes specifically permitted by the terms of this Agreement, (y)
that the accuracy of representations and warranties that by their
terms speak as of the date of this Agreement or some other date
will be determined as of such date and (z) where any such failure
of the representations and warranties in the aggregate to be true
and correct in all respects would not have a Material Adverse
Effect on the Company, (ii) the Company shall have performed in
all material respects all obligations and complied with all
covenants required by this Agreement to be performed or complied
with by it prior to the Effective Time and (iii) the Company shall
have delivered to Newco a certificate, dated the Effective Time
and signed by its Chief Executive Officer or Executive Vice
President certifying to both such effects. Notwithstanding the
foregoing, the $8.3 million limit in Section 5.17 and the minimum
Company Cash Balance and Net Worth specified in Section 3.28 must
have been fully observed.
(b) The Company shall have obtained the consent or approval
of each Person whose consent or approval shall be required in
order to consummate the transactions contemplated by this
Agreement under any agreement, lease, contract, note, mortgage,
indenture or other obligation to which the Company or any of its
Subsidiaries is a party, except those for which the failure to
obtain such consent or approval, individually or in the aggregate,
is not reasonably likely to have, a Material Adverse Effect on the
Company.
(c) Newco shall have received the proceeds of the Contingent
Financing upon terms and conditions which are not materially more
onerous than those set forth in Exhibits X-0, X-0, X-0, X-0 or
B-5, respectively; provided that Newco shall have complied with
the provisions of Section 5.14 and the Company shall have received
no less than $3 million in cash proceeds from the sale of the
assets, land and real property of the AIMCO division of its
Riverport Equipment and Distribution Company Subsidiary.
ARTICLE VII
TERMINATION
SECTION 7.01. TERMINATION OR ABANDONMENT. Notwithstanding anything
contained in this Agreement to the contrary, this Agreement may be
terminated and abandoned at any time prior to the Effective Time (whether
before or after any approval of the matters presented in connection with
the Merger by the respective stockholders of the Company and Newco,
provided however, in the case of a termination by the Company pursuant to
this Section 7.01 the Stock Voting Agreement shall have been complied with
in all material respects):
(a) by the mutual written consent of the Company and Newco;
(b) by either the Company or Newco if (i) the Effective Time
shall not have occurred on or before May 31, 2000; (ii) the party
seeking to terminate this Agreement pursuant to this clause
7.01(b) shall not have breached in any material respect its
obligations under this Agreement in any manner that shall have
proximately contributed to the failure to consummate the Merger on
or before such date and (iii) in the case of the Company seeking
to terminate this Agreement, either (A) the Company Meeting shall
have been held prior to such termination and the Company
Shareholder Approval shall have been obtained and (B) the
condition to Newco's obligations as set forth in Section 6.03(c)
shall not have been fully satisfied or irrevocably waived by Newco
prior to such termination.
(c) by either the Company or Newco if (i) a statute, rule,
regulation or executive order shall have been enacted, entered or
promulgated prohibiting the consummation of the Merger
substantially on the terms contemplated hereby or (ii) an order,
decree, ruling or injunction shall have been entered permanently
restraining, enjoining or otherwise prohibiting the consummation
of the Merger substantially on the terms contemplated hereby and
such order, decree, ruling or injunction shall have become final
and non-appealable and the party seeking to terminate this
Agreement pursuant to this clause 7.01(c)(ii) shall have used its
reasonable best efforts to remove such injunction, order or
decree;
(d) by the Company or Newco if the Company Stockholder
Approval shall not have been obtained by reason of the failure to
obtain the required vote at a duly held meeting of stockholders or
of any adjournment thereof;
(e) by either the Company or Newco if the Board of Directors
of the Company reasonably determines that a Takeover Proposal
constitutes a Superior Proposal, except that the Company may not
terminate this Agreement pursuant to this clause 7.01(e) unless
and until (i) three business days have elapsed following delivery
to Newco of a written notice of such determination by the Board of
Directors of the Company and during such three business day period
the Company (x) informs Newco of the terms and conditions of the
Takeover Proposal and the identity of the person making the
Takeover Proposal and (y) otherwise cooperates with Newco with
respect thereto (subject, in the case of this clause (y), to the
condition that the Board of Directors of the Company shall not be
required to take any action that it believes that such action
would be inconsistent with its fiduciary duties under applicable
law) with the intent of enabling Newco to agree to a modification
of the terms and conditions of this Agreement so that the
transactions contemplated hereby may be effected, (ii) at the end
of such three business day period the Board of Directors of the
Company continues reasonably to believe that the Takeover Proposal
constitutes a Superior Proposal, (iii) simultaneously with such
termination the Company enters into a definitive acquisition,
merger or similar agreement to effect the Superior Proposal, and
(iv), if required by Section 7.02, the Company pays to Newco the
amount specified and within the time period specified in Section
7.02;
(f) by Newco if the Board of Directors of the Company shall
have (i) withdrawn or modified in a manner adverse to Newco its
approval or recommendation of this Agreement and the transactions
contemplated hereby for reasons other than a Material Adverse
Effect in Financing or (ii) approved or recommended, or proposed
publicly to approve or recommend, any Takeover Proposal;
(g) by Newco if a tender offer or exchange offer for 50% or
more of the outstanding shares of capital stock of the Company is
commenced prior to the Company Meeting, and the Board of Directors
of the Company fails to recommend against acceptance of such
tender offer or exchange offer by its stockholders (including by
taking no position with respect to the acceptance of such tender
offer or exchange offer by its stockholders) within the time
period specified by Rule 14e-2;
(h) by the Company if (i) a Material Adverse Effect in
Financing shall occur, and (ii) within fifteen business days after
written demand by the Company, Newco fails to either (x) waive the
condition set forth in Section 6.03(c), or (y) provide information
such that the Company reasonably concludes that Newco's receipt of
the Contingent Financing is likely; or
(i) by either the Company or Newco if there shall have been
a material breach by the other of any of its representations,
warranties, covenants or agreements contained in this Agreement,
which if not cured would cause the conditions set forth in
Sections 6.02(a) or 6.03(a), as the case may be, not to be
satisfied, and such breach shall not have been cured within 30
days after notice thereof shall have been received by the party
alleged to be in breach.
In the event of termination of this Agreement pursuant to this
Section 7.01, this Agreement shall terminate (except for the
Confidentiality Agreement referred to in Section 5.02 and the provisions of
Sections 7.02, 8.02, 8.04 and 8.05), and there shall be no other liability
on the part of the Company or Newco to the other except as provided for in
the Confidentiality Agreement.
SECTION 7.02. TERMINATION FEE. Notwithstanding any provision in
this Agreement to the contrary, if (i) this Agreement is terminated by the
Company or Newco pursuant to Section 7.01(e), (ii) this Agreement is
terminated by Newco pursuant to Section 7.01(f), or (iii) (w) prior to the
termination of this Agreement, a bona fide Takeover Proposal is commenced,
publicly proposed or publicly disclosed and not withdrawn, and (x) this
Agreement is terminated by the Company pursuant to Section 7.01(b) or
7.01(d) (but only due to the failure of the Company stockholders to approve
the Merger) or by Newco pursuant to Section 7.01(g), and (y) concurrently
with or within 120 days after such termination a Takeover Proposal shall
have been consummated, then, in each case, the Company shall pay to Newco a
termination fee of $6.5 million in cash, plus its reasonable out of pocket
expenses incurred in connection with this Agreement and the transactions
contemplated hereby ("Termination Fee"), such payment to be made
simultaneously with such termination in the case of a termination by the
Company pursuant to Section 7.01(e) and promptly, but in no event later
than the second business day following a termination by Newco pursuant to
Section 7.01(e) or 7.01(f) and, in the case of clause (iii), upon the
consummation of such Takeover Proposal; provided, however, that the Company
shall have no obligation to pay Newco such Termination Fee if prior to any
termination by the Company or Newco pursuant to Section 7.01(e) or by Newco
pursuant to Section 7.01(f)(ii) or (g) a Material Adverse Effect in
Financing shall have occurred or Newco shall have failed to comply with its
obligations under Section 5.14 hereof. Notwithstanding any provision in
this Agreement to the contrary, if this Agreement is terminated (1) by the
Company or Newco under Section 7.01(b) and either (a) Newco shall have
failed to perform its obligations under Section 5.14 or (b) all conditions
to each of Newco's obligations specified in Sections 6.01 and 6.03 hereof
other than the condition specified in 6.03(c) shall have occurred, been
satisfied or waived, as appropriate, or (c) if the Equity Financing shall
be unavailable for any reason or (2) by the Company pursuant to Section
7.01(h), then in each case Newco shall pay the Company a termination fee of
$1.65 million. The foregoing fees shall be considered liquidated damages
for any breach under this Agreement for the party paying the fee. The
parties further agree that Newco's payment of any fee pursuant to this
Section 7.02 shall satisfy in full any obligation of Guarantor as the
limited guarantor of Newco's obligations under this Agreement.
SECTION 7.03. AMENDMENT OR SUPPLEMENT. At any time before or after
Company Stockholder Approval and prior to the Effective Time, this
Agreement may be amended or supplemented in writing by the Company and
Newco with respect to any of the terms contained in this Agreement, except
that following approval by the stockholders of the Company there shall be
no amendment or change to the provisions hereof which by law or in
accordance with the rules of any relevant stock exchange requires further
approval by such stockholders without such further approval nor any
amendment or change not permitted under applicable law.
SECTION 7.04. EXTENSION OF TIME, WAIVER, ETC. At any time prior to
the Effective Time, the Company and Newco may:
(a) extend the time for the performance of any of the
obligations or acts of the other party;
(b) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any document
delivered pursuant hereto; or
(c) waive compliance with any of the agreements or
conditions of the other party contained herein.
Notwithstanding the foregoing, no failure or delay by the Company
or Newco in exercising any right hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other
or further exercise of any other right hereunder. Any agreement on the part
of a party hereto to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None
of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Merger.
SECTION 8.02. EXPENSES. Whether or not the Merger is consummated,
all costs and expenses incurred in connection with the Merger, this
Agreement and the transactions contemplated hereby shall be paid by the
party incurring or required to incur such expenses, except (a) expenses
incurred in connection with the printing and mailing of the Proxy Statement
shall be shared equally by the Company and Newco and (b) as otherwise
provided herein.
SECTION 8.03. COUNTERPARTS; EFFECTIVENESS. This Agreement may be
executed in two or more consecutive counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument, and shall become effective when one or more
counterparts have been signed by each of the parties and delivered (by
telecopy or otherwise) to the other parties.
SECTION 8.04. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, without
regard to the principles of conflicts of laws thereof.
SECTION 8.05. JURISDICTION. Each of the parties hereto (i)
consents to submit itself to the personal jurisdiction of any Federal court
located in the State of Arkansas or any Arkansas state court in the event
any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement, (ii) agrees that it will not attempt to
deny or defeat such personal jurisdiction by motion or other request for
leave from any such court, and (iii) agrees that it will not bring any
action relating to this Agreement or any of the transactions contemplated
by this Agreement in any court other than a Federal court sitting in the
State of Arkansas or an Arkansas state court.
SECTION 8.06. NOTICES. All notices and other communications
hereunder shall be in writing (including telecopy or similar writing) and
shall be effective (a) if given by telecopy, when such telecopy is
transmitted to the telecopy number specified in this Section 8.06 and the
appropriate telecopy confirmation is received or (b) if given by any other
means, when delivered at the address specified in this Section 8.06:
To Newco or Guarantor:
c/o Capricorn Investors III, L.P.
00 Xxxx Xxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Xx.
Telecopy: (000) 000-0000
copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxx
Telecopy: (000) 000-0000
To the Company:
TCBY Enterprises, Inc.
000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Attention: General Counsel
Telecopy: (000) 000-0000
copy to:
Xxxxx Xxxx LLP
000 X. Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopy: (000)-000-0000
SECTION 8.07. ASSIGNMENT; BINDING EFFECT. 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. Subject to the
preceding sentence, this Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and
assigns.
SECTION 8.08. SEVERABILITY. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as
to that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, such
provision shall be interpreted to be only so broad as is enforceable.
SECTION 8.09. ENFORCEMENT OF AGREEMENT. The parties hereto agree
that money damages or other remedy at law would not be a sufficient or
adequate remedy for any breach or violation of, or a default under, this
Agreement by them and that in addition to all other remedies available to
them, each of them shall be entitled to the fullest extent permitted by law
to an injunction restraining such breach, violation or default or
threatened breach, violation or default and to any other equitable relief,
including, without limitation, specific performance, without bond or other
security being required.
SECTION 8.10. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement and the Confidentiality Agreement constitute the entire
agreement, and supersede all other prior agreements and understandings,
both written and oral, between the parties, or any of them, with respect to
the subject matter hereof and thereof and except for the provisions of
Section 5.11 hereof, is not intended to and shall not confer upon any
person other than the parties hereto any rights or remedies hereunder.
SECTION 8.11. HEADINGS. Headings of the Articles and Sections of
this Agreement are for convenience of the parties only, and shall be given
no substantive or interpretive effect whatsoever.
SECTION 8.12. CERTAIN DEFINITIONS. References in this Agreement to
"Subsidiaries" of any party shall mean any corporation, partnership,
association, trust or other form of legal entity of which (i) more than 50%
of the outstanding voting securities are on the date hereof directly or
indirectly owned by such party, or (ii) such party or any Subsidiary of
such party is a general partner (excluding partnerships in which such party
or any Subsidiary of such party does not have a majority of the voting
interests in such partnership). References in this Agreement (except as
specifically otherwise defined) to "affiliates" shall mean, as to any
person, any other person which, directly or indirectly, controls, or is
controlled by, or is under common control with, such person. As used in
this definition, "control" (including, with its correlative meanings,
"controlled by" and "under common control with") shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of
management or policies of a person, whether through the ownership of
securities or partnership of other ownership interests, by contract or
otherwise. References in the Agreement to "person" shall mean an
individual, a corporation, a partnership, an association, a trust or any
other entity, group (as such term is used in Section 13 of the Exchange
Act) or organization, including, without limitation, a governmental body or
authority. As used in this Agreement, any reference to any state of facts,
event, change or effect having a "Material Adverse Effect" on or with
respect to the Company or Newco, as the case may be, means such state of
facts, event, change or effect that has had, or could reasonably be
expected to have, a material adverse effect on the business, results of
operations or financial condition of the Company and its Subsidiaries,
taken as a whole, or Newco, as the case may be. "Material Adverse Effect"
shall specifically exclude any material adverse effect on the business,
results of operations or financial condition of the Company and its
Subsidiaries, taken as a whole, or Newco, as the case may be, if and to the
extent that the foregoing results from the execution, delivery and
performance of this Agreement or from changes in (a) the national economy
generally, (b) the securities markets generally or (c) a decline in the
Company's same or comparable store sales consistent with trends existing on
the date hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered as of the date first above written.
TCBY ENTERPRISES, INC.
By: /s/ Xxxxx X. Xxxxxxxxxxxx
---------------------------
Name: Xxxxx X. Xxxxxxxxxxxx
Title: Chairman
CI MERGER CO.
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
---------------------------
Name: Xxxxxxx X. Xxxxxxx, Xx.
Title:
CAPRICORN INVESTORS III, L.P.
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
---------------------------
Name: Xxxxxxx X. Xxxxxxx, Xx.
Title:
