EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
dated as of
April 27, 2004
among
VANS, INC.,
VF CORPORATION
and
MCGARRETT CORP.
TABLE OF CONTENTS(1)
Page
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ARTICLE 1
Definitions
Section 1.01. Definitions.............................................................1
Section 1.02. Other Definitional and Interpretative Provisions........................5
Article 2
The Merger
Section 2.01. The Merger..............................................................6
Section 2.02. Conversion of Shares....................................................7
Section 2.03. Surrender and Payment...................................................7
Section 2.04. Dissenting Shares.......................................................8
Section 2.05. Stock Options...........................................................9
Section 2.06. Adjustments.............................................................9
Section 2.07. Withholding Rights......................................................9
Section 2.08. Lost Certificates......................................................10
Article 3
The Surviving Corporation
Section 3.01. Certificate of Incorporation...........................................10
Section 3.02. Bylaws.................................................................10
Section 3.03. Directors and Officers.................................................10
Article 4
Representations and Warranties of the Company
Section 4.01. Corporate Existence and Power..........................................11
Section 4.02. Corporate Authorization................................................11
Section 4.03. Governmental Authorization.............................................11
Section 4.04. Non-Contravention......................................................12
Section 4.05. Capitalization.........................................................12
Section 4.06. Subsidiaries...........................................................13
Section 4.07. SEC Filings and Xxxxxxxx-Xxxxx.........................................14
Section 4.08. Financial Statements...................................................15
Section 4.09. Disclosure Documents...................................................16
Section 4.10. Absence of Certain Changes.............................................16
Section 4.11. No Undisclosed Material Liabilities....................................18
Section 4.12. Material Contracts.....................................................18
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1 The Table of Contents is not a part of this Agreement.
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Section 4.13. Compliance with Laws and Court Orders..................................20
Section 4.14. Litigation.............................................................20
Section 4.15. Finders' Fees..........................................................21
Section 4.16. Opinion of Financial Advisor...........................................21
Section 4.17. Taxes..................................................................21
Section 4.18. Employee Benefit Plans and Labor Matters...............................23
Section 4.19. Environmental Matters..................................................25
Section 4.20. Antitakeover Statutes and Rights Agreement.............................26
Section 4.21. Intellectual Property..................................................26
Section 4.22. Properties.............................................................29
Section 4.23. Insurance..............................................................30
Section 4.24. Transactions with Affiliates...........................................30
Article 5
Representations and Warranties of Parent
Section 5.01. Corporate Existence and Power..........................................30
Section 5.02. Corporate Authorization................................................31
Section 5.03. Governmental Authorization.............................................31
Section 5.04. Non-Contravention......................................................31
Section 5.05. Disclosure Documents...................................................32
Section 5.06. Finders' Fees..........................................................32
Section 5.07. Financing..............................................................32
Article 6
Covenants of the Company
Section 6.01. Conduct of the Company.................................................32
Section 6.02. Stockholder Meeting; Proxy Material....................................35
Section 6.03. No Solicitation; Other Offers..........................................35
Section 6.04. Tax Matters............................................................37
Section 6.05. Intellectual Property Rights...........................................37
Article 7
Covenants of Parent
Section 7.01. Obligations of MergerSub...............................................39
Section 7.02. Voting of Shares.......................................................39
Section 7.03. Indemnification; Directors' and Officers' Insurance....................39
Section 7.04. Delisting and Deregistration...........................................42
Section 7.05. Employee Matters.......................................................42
Article 8
Covenants of Parent and the Company
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Section 8.01. All Commercially Reasonable Efforts....................................43
Section 8.02. Certain Filings........................................................44
Section 8.03. Public Announcements...................................................45
Section 8.04. Further Assurances.....................................................45
Section 8.05. Access to Information..................................................46
Section 8.06. Notices of Certain Events..............................................46
Section 8.07. Takeover Statute.......................................................47
Article 9
Conditions to the Merger
Section 9.01. Conditions to Obligations of Each Party................................47
Section 9.02. Conditions to the Obligations of Parent and MergerSub..................47
Section 9.03. Conditions to the Obligations of the Company...........................49
Article 10
Termination
Section 10.01. Termination...........................................................49
Section 10.02. Effect of Termination.................................................50
Article 11
Miscellaneous
Section 11.01. Notices...............................................................51
Section 11.02. Survival of Representations and Warranties............................52
Section 11.03. Amendments and Waivers................................................52
Section 11.04. Expenses..............................................................52
Section 11.05. Binding Effect; Benefit; Assignment...................................54
Section 11.06. Governing Law.........................................................54
Section 11.07. Jurisdiction..........................................................54
Section 11.08. WAIVER OF JURY TRIAL..................................................54
Section 11.09. Counterparts; Effectiveness...........................................54
Section 11.10. Entire Agreement......................................................55
Section 11.11. Severability..........................................................55
Section 11.12. Specific Performance..................................................55
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") dated as of April 27, 2004
among Vans, Inc., a Delaware corporation (the "COMPANY"), VF Corporation, a
Pennsylvania corporation ("PARENT"), and McGarrett Corp., a Delaware corporation
and a wholly owned subsidiary of Parent ("MERGERSUB").
The parties to this Agreement agree as follows:
Article 1
Definitions
Section 1.01. Definitions. (a) As used in this Agreement, the following
terms have the following meanings:
"ACQUISITION PROPOSAL" means, other than the transactions contemplated by
this Agreement, any offer, proposal or inquiry by a Third Party relating to, or
any Third Party indication of interest in, (i) any acquisition or purchase,
direct or indirect (and however structured), of 15% or more of the consolidated
assets of the Company and its Subsidiaries, taken as a whole, or over 15% of any
class of equity or voting securities of the Company or any of its Subsidiaries
whose assets, individually or in the aggregate, constitute more than 15% of the
consolidated assets of the Company, (ii) any tender offer (including a
self-tender offer) or exchange offer that, if consummated, would result in that
Third Party beneficially owning 15% or more of any class of equity or voting
securities of the Company or any of its Subsidiaries whose assets, individually
or in the aggregate, constitute more than 15% of the consolidated assets of the
Company, or (iii) a merger, consolidation, share exchange, business combination,
material asset sale outside the ordinary course of business, joint venture,
reorganization, recapitalization, liquidation, dissolution or other similar
transaction involving the Company or any of its Subsidiaries whose assets,
individually or in the aggregate, constitute more than 15% of the consolidated
assets of the Company.
"AFFILIATE" means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by, or under common control with that
Person.
"BUSINESS DAY" means any day, other than Saturday, Sunday or other day on
which commercial banks in New York, New York or Los Angeles, California are
authorized or required by law to close.
"CODE" means the Internal Revenue Code of 1986.
"COMPANY BALANCE SHEET" means the consolidated balance sheet of the
Company as of May 31, 2003 and the footnotes thereto, as set forth in the
Company 10-K.
"COMPANY BALANCE SHEET DATE" means May 31, 2003.
"COMPANY COMMON STOCK" means the common stock, $0.001 par value, of the
Company.
"COMPANY 10-K" means the Company's annual report on Form 10-K for the
fiscal year ended May 31, 2003.
"DELAWARE LAW" means the General Corporation Law of the State of Delaware.
"ENVIRONMENTAL LAWS" means any federal, state, local or foreign law
(including common law), treaty, judicial decision, regulation, rule, judgment,
order, decree, injunction, permit or governmental restriction or requirement or
any agreement with any Governmental Entity, relating to protection of the
environment or to pollutants, contaminants, wastes or chemicals or any toxic,
radioactive, ignitable, corrosive, reactive or otherwise hazardous substances,
wastes or materials.
"ENVIRONMENTAL PERMITS" means all permits, licenses, franchises,
certificates, approvals and other similar authorizations of governmental
authorities relating to or required by Environmental Laws and affecting, or
relating in any way to, the business of the Company or any Subsidiary as
currently conducted.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA AFFILIATE" of any entity means any other entity that, together with
that entity, would be treated as a single employer under Section 414 of the
Code.
"GOVERNMENTAL ENTITY" means (i) any government or any state, department,
local authority or other political subdivision thereof, (ii) any governmental
body, agency, authority (including, but not limited to, any central bank, taxing
authority or transgovernmental or supranational entity or authority) or
instrumentality (including any court or tribunal) exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, or (iii) The New York Stock Exchange (the "NYSE") or the NASDAQ
Stock Market ("NASDAQ").
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976.
"INTELLECTUAL PROPERTY RIGHTS" means (i) inventions reduced to practice or
made the subject of one or more pending patent applications, (ii) national and
multinational statutory invention registrations, patents and patent applications
(including all reissues, divisions, continuations, continuations-in-part,
extensions and reexaminations thereof) registered or applied for in the United
States and all other jurisdictions throughout the world, (iii) trademarks,
service marks, trade
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dress, logos, Internet domain name registrations, and trade names (whether or
not registered) in the United States and all other nations throughout the world,
including all registrations and applications for registration of the foregoing
and all goodwill associated therewith, (iv) copyrights (whether or not
registered) and registrations and applications for registration thereof in the
United States and all other nations throughout the world, including all moral
rights, renewals, extensions, reversions or restorations associated with those
copyrights, now or hereafter provided by law, regardless of the medium of
fixation or means of expression, (v) rights in computer software (including
source code, object code, firmware, operating systems and specifications), (vi)
non-patentable inventions the confidentiality of which have been maintained,
rights in trade secrets and, to the extent protectable as trade secrets or
proprietary information, business information (including confidential pricing
and cost information, business and marketing plans and customer and supplier
lists) and know-how (including confidential manufacturing and production
processes and techniques and research and development information), (vii) rights
in industrial designs (whether or not registered), (viii) rights in databases
and data collections, and (ix) all rights in all of the foregoing provided by
treaties, conventions and common law.
"KNOWLEDGE" of the Company means the actual knowledge of any officer or
director of the Company or of any other individual listed on Schedule 1.01(a)
(without any inquiry).
"LICENSED INTELLECTUAL PROPERTY RIGHTS" means all Intellectual Property
Rights owned by a Person other than the Company or a Subsidiary of the Company
and licensed or sublicensed to either the Company or a Subsidiary of the Company
or for which the Company or a Subsidiary of the Company is the recipient of a
covenant not to xxx.
"LIEN" means, with respect to any property or asset, any mortgage, lien,
pledge, charge, security interest, encumbrance or other adverse claim of any
kind in respect of that property or asset. For purposes of this Agreement, a
Person shall be deemed to own subject to a Lien any property or asset that it
has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to that property or asset.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
condition (financial or otherwise), business, assets or results of operations of
the Company and its Subsidiaries, taken as a whole, or (ii) the Company's
ability to consummate the transactions contemplated by this Agreement or to
perform its obligations under this Agreement, other than, in the case of the
immediately preceding clause (i), any such effect arising out of, resulting from
or caused by, (x) any change in GAAP or interpretations thereof that applies to
the Company or (y) any change in economic conditions generally or in the apparel
or footwear
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industries specifically (provided such change does not affect the Company and
its Subsidiaries taken as a whole in a materially disproportionate manner).
"1933 ACT" means the Securities Act of 1933.
"1934 ACT" means the Securities Exchange Act of 1934.
"OWNED INTELLECTUAL PROPERTY RIGHTS" means all Intellectual Property
Rights owned by either the Company or a Subsidiary of the Company.
"PERMITTED LIENS" means (i) Liens securing liabilities which are reflected
or reserved against in the Company Balance Sheet to the extent so reflected or
reserved, (ii) Liens for Taxes not yet due and payable or which are being
contested in good faith and by appropriate proceedings (provided adequate
reserves with respect thereto are maintained on the Company's books in
accordance with GAAP), (iii) mechanic's, materialmen's and similar Liens, and
(iv) Liens that, individually and in the aggregate, do not and would not
materially detract from the value of the property and assets of the Company or
materially interfere with the use thereof as currently used.
"PERSON" means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
Governmental Entity.
"SEC" means the Securities and Exchange Commission.
"SUBSIDIARY" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at any time directly or indirectly owned by that Person.
"THIRD PARTY" means any Person as defined in this Agreement or in Section
13(d) of the 1934 Act, other than Parent or any of its Affiliates.
(b) Each of the following terms is defined in the Section set forth
opposite that term:
TERM SECTION
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1991 Plan................................................ 4.05
2000 Plan................................................ 4.05
Agreement................................................ Preamble
Certificates............................................. 2.03
Company Affiliate........................................ 4.24
Company Proxy Statement.................................. 4.09
Company Registered Intellectual Property Rights.......... 4.21
Company SEC Documents.................................... 4.07
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TERM SECTION
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Company Securities....................................... 4.05
Company Stockholder Meeting.............................. 6.02
Company Stock Option..................................... 2.04
Company Subsidiary Securities............................ 4.06
Confidentiality Agreement................................ 6.03
Current SEC Documents.................................... 4.10
Effective Time........................................... 2.01
e-mail................................................... 11.01
Employee Plans........................................... 4.18
End Date................................................. 10.01
Exchange Agent........................................... 2.03
Foreign Antitrust Laws................................... 4.03
GAAP..................................................... 4.08
Indemnified Person....................................... 7.03
International Plan....................................... 4.18
Leases................................................... 4.22
Material Contracts....................................... 4.12
Merger................................................... 2.01
Merger Communication..................................... 8.02
Merger Consideration..................................... 2.02
Multiemployer Plan....................................... 4.18
NASDAQ................................................... 1.01(a)
NYSE..................................................... 1.01(a)
Payment Event............................................ 11.04
Preferred Shares......................................... 4.05
PTO...................................................... 4.21
Right.................................................... 2.02
Rights Agreement......................................... 2.02
Stock Plans.............................................. 4.05
Superior Proposal........................................ 6.03
Surviving Corporation.................................... 2.01
Takeover Statute......................................... 4.20
Tax Asset................................................ 4.17
Tax Return............................................... 4.17
Taxes.................................................... 4.17
Taxing Authority......................................... 4.17
Third Party Acquisition Event............................ 11.04
Title IV Plan............................................ 4.18
Transferred Employees.................................... 7.05
Uncertificated Shares.................................... 2.03
Vanstastic Plan.......................................... 4.05
Section 1.02. Other Definitional and Interpretative Provisions. The words
"of this Agreement", "in this Agreement" and "hereunder" and words of like
import used in this Agreement shall refer to this Agreement as a whole and
5
not to any particular provision of this Agreement. The captions in this
Agreement are included for convenience of reference only and shall be ignored in
the construction or interpretation of this Agreement. References to Articles,
Sections, Exhibits and Schedules are to Articles, Sections, Exhibits and
Schedules of this Agreement unless otherwise specified. All Exhibits and
Schedules annexed to this Agreement or referred to in this Agreement are hereby
incorporated in and made a part of this Agreement as if set forth in full in
this Agreement. Any capitalized terms used but not otherwise defined in any
Exhibit or Schedule shall have the meaning set forth in this Agreement. Any
singular term in this Agreement shall be deemed to include the plural, and any
plural term the singular. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words, "but not limited to," whether or not they are in fact followed by
those words or words of like import. "Writing", "written" and comparable terms
refer to printing, typing and other means of reproducing words (including
electronic media) in a visible form. References to any agreement or contract are
to that agreement or contract as amended, modified or supplemented from time to
time in accordance with the terms of this Agreement and that agreement or
contract, as applicable. References to any Person include the successors and
permitted assigns of that Person. Any reference in this Agreement to a statute
shall be to that statute, as amended from time to time, and to the rules and
regulations promulgated thereunder. References from or through any date mean,
unless otherwise specified, from and including or through and including,
respectively.
Article 2
The Merger
Section 2.01. The Merger. (a) At the Effective Time, MergerSub shall be
merged (the "MERGER") with and into the Company in accordance with Delaware Law,
whereupon the separate existence of MergerSub shall cease, and the Company shall
be the surviving corporation (the "SURVIVING CORPORATION").
(b) As soon as practicable after satisfaction and/or, to the extent
permitted by this Agreement, waiver of all conditions to the Merger, the Company
and MergerSub shall file a certificate of merger with the Delaware Secretary of
State and make all other filings or recordings required by Delaware Law in
connection with the Merger. The Merger shall become effective at the time (the
"EFFECTIVE TIME") that the certificate of merger is duly filed with the Delaware
Secretary of State (or at any later time that may be specified in the
certificate of merger).
(c) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, powers, privileges and franchises and be subject to all
of the obligations, liabilities, restrictions and disabilities of the Company
and MergerSub, all as provided under Delaware Law.
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Section 2.02. Conversion of Shares. At the Effective Time,
(a) except as otherwise provided in Section 2.02(b), Section 2.04 or
Section 2.05, each share of Company Common Stock that is outstanding immediately
before the Effective Time, together with each preferred share purchase right
(each, a "RIGHT") issued pursuant to the amended and restated Rights Agreement
dated as of May 18, 1999 between the Company and Mellon Investor Services
(formerly ChaseMellon Shareholder Services, LLC), as rights agent (the "RIGHTS
AGREEMENT"), shall be collectively converted into the right to receive $20.55 in
cash, without interest (the "MERGER CONSIDERATION");
(b) each share of Company Common Stock held by the Company as treasury
stock or owned by Parent or any of its Subsidiaries immediately before the
Effective Time shall be canceled, and no payment shall be made with respect to
any such share; and
(c) each share of common stock of MergerSub outstanding immediately before
the Effective Time shall be converted into and become one share of common stock
of the Surviving Corporation with the same rights, powers and privileges as the
shares so converted and shall constitute the only outstanding shares of capital
stock of the Surviving Corporation.
Section 2.03. Surrender and Payment. (a) Prior to the Effective Time,
Parent shall appoint an agent reasonably acceptable to the Company (the
"EXCHANGE AGENT") for the purpose of exchanging for the Merger Consideration (i)
certificates representing shares of Company Common Stock (the "CERTIFICATES") or
(ii) uncertificated shares of Company Common Stock (the "UNCERTIFICATED
SHARES"). Parent shall make available to the Exchange Agent, as needed in order
to ensure prompt payment to the holders of Company Common Stock pursuant to the
Merger in accordance with the terms of this Agreement, the Merger Consideration
to be paid in respect of the Certificates and the Uncertificated Shares.
Promptly after the Effective Time, Parent shall send, or shall cause the
Exchange Agent to send, to each holder of shares of Company Common Stock at the
Effective Time a letter of transmittal and instructions (which shall be in a
form reasonably acceptable to each of Parent and the Company and which shall
specify that the delivery shall be effected, and risk of loss and title shall
pass, only upon proper delivery of the Certificates or transfer of the
Uncertificated Shares to the Exchange Agent) for use in that exchange.
(b) Each holder of shares of Company Common Stock that have been converted
into the right to receive the Merger Consideration shall be entitled to receive,
upon (i) surrender to the Exchange Agent of a Certificate, together with a
properly completed letter of transmittal, or (ii) receipt of an "agent's
message" by the Exchange Agent (or any other evidence, if any, of transfer that
the Exchange Agent may reasonably request) in the case of a book-entry transfer
of Uncertificated Shares, the Merger Consideration in respect of the Company
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Common Stock represented by a Certificate or Uncertificated Share. Until so
surrendered or transferred, as the case may be, each such Certificate or
Uncertificated Share shall represent after the Effective Time for all purposes
only the right to receive the Merger Consideration in respect of the Company
Common Stock represented thereby.
(c) If any portion of the Merger Consideration is to be paid to a Person,
other than the Person in whose name the surrendered Certificate or the
transferred Uncertificated Share is registered, it shall be a condition to that
payment that (i) either such Certificate shall be properly endorsed or shall
otherwise be in proper form for transfer or that Uncertificated Share shall be
properly transferred and (ii) the Person requesting that payment shall pay to
the Exchange Agent any transfer or other taxes required as a result of that
payment to a Person other than the registered holder of that Certificate or
Uncertificated Share or establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not payable.
(d) After the Effective Time, there shall be no further registration of
transfers of shares of Company Common Stock. If, after the Effective Time,
Certificates or Uncertificated Shares are presented to the Surviving
Corporation, they shall be canceled and exchanged for the Merger Consideration
provided for, and in accordance with the procedures set forth, in this Article
2.
(e) Any portion of the Merger Consideration made available to the Exchange
Agent pursuant to Section 2.03(a) that remains unclaimed by the holders of
shares of Company Common Stock six months after the Effective Time shall be
returned to Parent, upon demand, and any such holder who has not exchanged
shares of Company Common Stock for the Merger Consideration that is payable in
respect of those shares in accordance with this Section 2.03 after that time
shall thereafter look only to Parent for payment of the Merger Consideration
that is so payable without any interest thereon. Notwithstanding the foregoing,
Parent shall not be liable to any holder of shares of Company Common Stock for
any amounts paid to a public official pursuant to applicable abandoned property,
escheat or similar laws. Any amounts remaining unclaimed by holders of shares of
Company Common Stock two years after the Effective Time (or any earlier date,
immediately before that time when the amounts would otherwise escheat to or
become property of any governmental authority) shall become, to the extent
permitted by applicable law, the property of Parent, free and clear of any
claims or interest of any Person previously entitled to those amounts.
Section 2.04. Dissenting Shares. Notwithstanding Section 2.02, shares of
Company Common Stock outstanding immediately before the Effective Time and held
by a holder who has not voted in favor of the Merger or consented to the Merger
in writing and who has demanded appraisal for those shares of Company Common
Stock in accordance with Delaware Law shall not be converted into a right to
receive the Merger Consideration that is payable in respect of those shares,
unless that holder fails to perfect, withdraws or otherwise loses the right to
8
appraisal. If, after the Effective Time, such holder fails to perfect,
withdraws or loses the right to appraisal, each share of Company Common Stock of
that Holder shall be treated as if they had been converted as of the Effective
Time into a right to receive the Merger Consideration that is payable in respect
of each such share. The Company shall give Parent prompt notice of any demands
received by the Company for appraisal of shares of Company Common Stock, and
Parent shall have the right to participate in and control all negotiations and
proceedings with respect to those demands. Except with the prior written consent
of Parent, the Company shall not make any payment with respect to, or offer to
settle or settle, any of those demands.
Section 2.05. Stock Options. (a) At or immediately before the Effective
Time, each employee stock option to purchase shares of Company Common Stock
outstanding under any employee stock option or compensation plan or arrangement
of the Company (a "COMPANY STOCK OPTION"), whether or not vested or exercisable,
shall be canceled, and Parent shall pay or cause the Surviving Corporation to
pay each holder of any such option cancelled at or promptly after the Effective
Time for each such option an amount in cash determined by multiplying (i) the
excess, if any, of $20.55 per share of Company Common Stock over the applicable
exercise price of that option by (ii) the number of shares of Company Common
Stock that holder could have purchased (assuming full vesting of all options)
had that holder exercised that option in full immediately before the Effective
Time.
(b) Prior to the Effective Time, the Company shall use all commercially
reasonable efforts (but without the expenditure of any funds) to (i) obtain any
consents from holders of options to purchase shares of Company Common Stock
granted under the Company's stock option or compensation plans or arrangements
and (ii) make any amendments to the terms of that stock option or compensation
plans or arrangements that, in the case of either clauses (i) or (ii), are
reasonably necessary to give effect to the transactions contemplated by Section
2.05(a). Notwithstanding any other provision of this Section, payment may be
withheld in respect of any employee stock option until those necessary consents
are obtained.
Section 2.06. Adjustments. If, 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, including by reason of any
reclassification, recapitalization, stock split or combination, exchange or
readjustment of shares, or any stock dividend thereon with a record date during
that period, the Merger Consideration and any other amounts payable pursuant to
this Agreement shall be appropriately adjusted.
Section 2.07. Withholding Rights. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration otherwise
payable to any Person pursuant to this Article 2 any amounts that it is required
to deduct and withhold with respect to the making of that payment under any
9
provision of federal, state, local or foreign tax law. If the Surviving
Corporation or Parent, as the case may be, so withholds amounts, those amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the shares of Company Common Stock in respect of which the Surviving
Corporation or Parent, as the case may be, made that deduction and withholding.
Section 2.08. 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 that Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by that Person of a bond, in any
reasonable amount that the Surviving Corporation may direct, as indemnity
against any claim that may be made against it with respect to that Certificate,
the Exchange Agent will issue, in exchange for that lost, stolen or destroyed
Certificate, the Merger Consideration to be paid in respect of the shares of
Company Common Stock represented by that Certificate, as contemplated by this
Article 2.
Article 3
The Surviving Corporation
Section 3.01. Certificate of Incorporation. The certificate of
incorporation of the Company in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until amended in
accordance with applicable law.
Section 3.02. Bylaws. The bylaws of MergerSub in effect at the Effective
Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
Section 3.03. Directors and Officers. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable law, (i) the directors of MergerSub at the Effective Time shall be
the directors of the Surviving Corporation, and (ii) the officers of the Company
at the Effective Time shall be the officers of the Surviving Corporation.
Article 4
Representations and Warranties of the Company
Except as disclosed in the schedules attached to this Agreement (the
"SCHEDULES") (it being understood and agreed by the parties that each disclosure
in any such Schedule shall make a specific reference to the particular Section
or subsection of this Agreement to which exception is being taken or disclosure
is being made), the Company represents and warrants to Parent that:
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Section 4.01. Corporate Existence and Power. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and has all corporate powers and all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted, except for those licenses, authorizations, permits,
consents and approvals the absence of which would not be reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect. The Company
is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where qualification is necessary, except for those
jurisdictions where failure to be so qualified would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect. The
Company has made available to Parent before the date of this Agreement true and
complete copies of the certificate of incorporation and bylaws of the Company as
currently in effect.
Section 4.02. Corporate Authorization. (a) The execution, delivery and
performance by the Company of this Agreement, and the consummation by the
Company of the transactions contemplated by this Agreement, are within the
Company's corporate powers and, except for the required approval of the
Company's stockholders in connection with the consummation of the Merger, have
been duly authorized by all necessary corporate action on the part of the
Company. The affirmative vote of the holders of a majority of the outstanding
shares of Company Common Stock is the only vote of the holders of any of the
Company's capital stock that is necessary in connection with the consummation of
the Merger. The Company does not have outstanding any bonds, debentures, notes
or other indebtedness of the Company, the holders of which have the right to
vote (or convertible into, or exchangeable for, securities having the right to
vote) on any matters on which stockholders of the Company may vote. This
Agreement constitutes a valid and binding agreement of the Company enforceable
in accordance with its terms, except as that enforceability may be limited by
laws relating to bankruptcy, insolvency and creditors' rights generally and by
general equitable principles.
(b) At a meeting duly called and held, the Company's Board of Directors
has (i) unanimously determined that this Agreement and the transactions
contemplated by this Agreement are advisable to the Company's stockholders, (ii)
unanimously approved this Agreement and the transactions contemplated by this
Agreement and (iii) unanimously resolved (subject to Section 6.03(b)) to
recommend adoption of this Agreement by its stockholders.
Section 4.03. Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement, and the consummation by the
Company of the transactions contemplated by this Agreement, require no action by
or in respect of, or filing with, any Governmental Entity, other than (i) the
filing of a certificate of merger with respect to the Merger with the Delaware
Secretary of State and appropriate documents with the relevant authorities of
other
11
states in which the Company is qualified to do business, (ii) compliance with
any applicable requirements of the HSR Act and of laws, rules and regulations
analogous to the HSR Act existing in foreign jurisdictions ("FOREIGN ANTITRUST
LAWS"), (iii) compliance with any applicable requirements of the 1934 Act, and
any other applicable securities laws, whether state or foreign, and (iv) any
actions or filings the absence of which would not be reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect.
Section 4.04. Non-Contravention. The execution, delivery and performance
by the Company of this Agreement, and the consummation of the transactions
contemplated by this Agreement, do not and will not (i) contravene, conflict
with, or result in any violation or breach of any provision of the certificate
of incorporation or bylaws of the Company, (ii) assuming compliance with the
matters referred to in Section 4.03, contravene, conflict with or result in a
violation or breach of any provision of any applicable law, statute, ordinance,
rule, regulation, judgment, injunction, order, or decree, (iii) require any
consent by any Person under, constitute a default, or an event that, with or
without notice or lapse of time or both, would constitute a default, under, or
cause or permit the termination, cancellation, acceleration or loss of any
benefit to which the Company or any of its Subsidiaries is entitled under any
provision of any agreement or other instrument binding upon the Company or any
of its Subsidiaries or any license, franchise, permit, certificate, approval or
other similar authorization affecting, or relating in any way to, the assets or
business of the Company and its Subsidiaries or (iv) result in the creation or
imposition of any Lien on any asset of the Company or any of its Subsidiaries,
except for those contraventions, conflicts and violations referred to in clause
(ii) and for those failures to obtain any such consent or other action,
defaults, terminations, cancellations, accelerations, changes, losses or Liens
referred to in clauses (iii) and (iv) that would not be reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect.
Section 4.05. Capitalization. (a) The authorized capital stock of the
Company consists of 40,000,000 shares of Company Common Stock, of which
17,951,584 shares of Company Common Stock were outstanding as of the close of
business on April 26, 2004 and 5,000,000 shares of Preferred Stock, par value
$.001 per share (the "PREFERRED SHARES"), of which no shares were outstanding as
of the close of business on April 26, 2004. All of the outstanding shares of
Company Common Stock have been duly authorized and are validly issued, fully
paid and nonassessable. The Company has no shares of Company Common Stock
reserved for issuance, except that, as of April 26, 2004, there were 2,300,000
shares of Company Common Stock reserved for issuance pursuant to the Company's
1991 Long-Term Incentive Plan (the "1991 PLAN"), 400,000 shares of Company
Common Stock reserved for issuance pursuant to the Company's Vanstastic Employee
Stock Incentive Plan (the "VANSTASTIC PLAN") and 2,250,000 shares of Company
Common Stock reserved for issuance pursuant to the Company's 2000 Long-Term
Incentive Plan (the "2000 PLAN") (collectively, the
12
1991 Plan, the Vanstastic Plan and the 2000 Plan are the "STOCK PLANS"). Other
than the Rights, there are no Preferred Shares reserved for issuance. As of
April 26, 2004, there were 599,180 shares of Company Common Stock subject to
outstanding options granted under the 1991 Plan, 157,114 shares of Company
Common Stock subject to outstanding options granted under the Vanstastic Plan
and 1,421,801 shares of Company Common Stock subject to outstanding options
granted under the 2000 Plan. As of the Effective Time, there will be no more
than an aggregate of 20,129,679 shares of Company Common Stock which are either
then outstanding or subject to Company Stock Options which are then outstanding.
The shares of Company Common Stock that may be issued pursuant to the Stock
Plans will be, when issued in accordance with the respective terms thereof, duly
authorized and validly issued, fully paid and nonassessable. No Company
Subsidiary owns any shares of capital stock of the Company.
(b) There are no agreements or understandings to which the Company or any
of its Subsidiaries are a party with respect to the voting (including voting
trusts and proxies) or sale or transfer (including agreements imposing transfer
restrictions) of any shares of capital stock of the Company or any of its
Subsidiaries.
(c) Except as set forth in this Section 4.05 and except for changes since
April 26, 2004 resulting from the exercise of Company Stock Options outstanding
under the Stock Plans on that date, there are no outstanding (i) shares of
capital stock or voting securities of the Company, (ii) securities of the
Company convertible into or exchangeable for shares of capital stock or voting
securities of the Company or (iii) options or other rights to acquire from the
Company, or other obligation of the Company to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of the Company (the items in (i), (ii), and (iii) being
referred to collectively as the "COMPANY SECURITIES"). There are no outstanding
obligations of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any of the Company Securities.
Section 4.06. Subsidiaries. (a) Each Subsidiary of the Company is a
business entity that is duly organized, validly existing and (to the extent
relevant in the jurisdiction of organization) in good standing under the laws of
its jurisdiction of organization, has all organizational powers and all
governmental licenses, authorizations, permits, consents and approvals required
to carry on its business as now conducted, except for those licenses,
authorizations, permits, consents and approvals the absence of which would not
reasonably be expected to have, individually and in the aggregate, a Material
Adverse Effect. Each such Subsidiary is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where
qualification is necessary, except for those jurisdictions where failure to be
so qualified would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. The Company has no Significant
Subsidiaries (as defined in Regulation S-X of the 1934 Act).
13
(b) All of the outstanding capital stock of, or other voting securities or
ownership interests in, each Subsidiary of the Company, is owned by the Company,
directly or indirectly, free and clear of any Lien and free of any other
limitation or restriction (including any restriction on, or required process
with respect to, the right to vote, sell or otherwise dispose of that capital
stock or other voting securities or ownership interests) other than restrictions
imposed by federal and state securities laws. There are no outstanding (i)
securities of the Company or any of its Subsidiaries convertible into or
exchangeable for shares of capital stock or other voting securities or ownership
interests in any Subsidiary of the Company or (ii) options or other rights to
acquire from the Company or any of its Subsidiaries, or other obligation of the
Company or any of its Subsidiaries to issue, any capital stock or other voting
securities or ownership interests in, or any securities convertible into or
exchangeable for any capital stock or other voting securities or ownership
interests in, any Subsidiary of the Company (the items in clauses (i) and (ii)
being referred to collectively as the "COMPANY SUBSIDIARY SECURITIES"). There
are no outstanding obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any of the Company Subsidiary
Securities.
(c) Neither the Company nor any Subsidiary has any obligation (i) under
any agreement, contract or arrangement to provide any funds, capital or other
assets to any Subsidiary that is not wholly owned on a fully diluted basis or
(ii) to satisfy any liability or provide any funds, capital or other asset to
any joint venture that has been wound down, liquidated or dissolved since May
31, 2003.
Section 4.07. SEC Filings and Xxxxxxxx-Xxxxx. (a) The Company has made
available to Parent (i) the Company's annual reports on Form 10-K for its fiscal
years ended May 31, 2002 and 2003, (ii) its quarterly reports on Form 10-Q for
its fiscal quarters ended August 31, 2003, November 30, 2003 and February 28,
2004, (iii) its proxy or information statements relating to meetings of, or
actions taken without a meeting by, the stockholders of the Company held since
May 31, 2003, and (iv) all of its other reports, statements, schedules and
registration statements filed with the SEC since May 31, 2003 (the documents
referred to in this Section 4.07(a), collectively, the "COMPANY SEC DOCUMENTS".)
(b) As of its filing date, each Company SEC Document complied, and each
such Company SEC Document filed subsequent to the date of this Agreement will
comply, as to form in all material respects with the applicable requirements of
the 1933 Act and the 1934 Act, as the case may be.
(c) As of its filing date (or, if amended or superseded by a filing before
the date of this Agreement, on the date of that filing), each Company SEC
Document filed pursuant to the 1934 Act did not, and each such Company SEC
Document filed subsequent to the date of this Agreement will not, contain any
untrue statement of a material fact or omit to state any material fact necessary
in
14
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
(d) Each Company SEC Document that is a registration statement, as amended
or supplemented, if applicable, filed pursuant to the 1933 Act, as of the date
that registration statement or amendment became effective, did not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated in that Company SEC Document or necessary to make the statements in
that Company SEC Document not misleading.
(e) The Company is in compliance in all material respects with (i) the
applicable provisions of the Xxxxxxxx-Xxxxx Act of 2002 (the "XXXXXXXX-XXXXX
ACT") and (ii) the applicable listing and corporate governance rules and
regulations of the NASDAQ. Except as permitted by the Exchange Act, including,
without limitation, Sections 13(k)(2) and (3), since the enactment of the
Xxxxxxxx-Xxxxx Act, neither the Company nor any of its Affiliates has made,
arranged or modified (in any material way) personal loans to any executive
officer or director of the Company.
(f) The Company has designed disclosure controls and procedures to ensure
that material information relating to the Company, including its consolidated
Subsidiaries, is made known to the management of the Company by others within
those entities.
(g) The Company and its Subsidiaries have devised and maintained systems
of internal accounting control over financial reporting sufficient in all
material respects to (i) in reasonable detail accurately and fairly reflect the
transactions and dispositions of Company assets, and (ii) provide reasonable
assurances (A) that transactions are recorded as necessary to permit the
preparation of financial statements in conformity with generally accepted
accounting principles in the United States ("GAAP") and that receipts and
expenditures are being made only in accordance with authorization of management
and directors and (B) regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Company's assets that could have a
material effect on the financial statements.
Section 4.08. Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of the
Company included or incorporated by reference in the Company SEC Documents filed
before the date of this Agreement fairly present in all material respects, in
conformity with GAAP applied on a consistent basis (except as may be indicated
in the notes thereto), the consolidated financial position of the Company and
its consolidated Subsidiaries as of the dates thereof and their consolidated
results of operations and cash flows for the periods then ended (subject to
normal year-end adjustments in the case of any unaudited interim financial
statements).
15
Section 4.09. Disclosure Documents. The proxy statement of the Company to
be filed with the SEC in connection with the Merger (the "COMPANY PROXY
STATEMENT") and any amendments or supplements to the Company Proxy Statement
will, when filed, comply as to form in all material respects with the applicable
requirements of the 1934 Act. At the time the Company Proxy Statement or any
amendment or supplement to the Company Proxy Statement is first mailed to
stockholders of the Company, and at the time those stockholders vote on adoption
of this Agreement, the Company Proxy Statement, as supplemented or amended, if
applicable, will not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
The representations and warranties contained in this Section 4.09 will not apply
to statements or omissions included in the Company Proxy Statement based upon
information furnished to the Company in writing by Parent specifically for use
therein.
Section 4.10. Absence of Certain Changes. Since the Company Balance Sheet
Date, except as expressly disclosed in the Company 10-K or any SEC Document
filed subsequent to the filing of the Company 10-K but prior to the date of this
Agreement (collectively, the "CURRENT SEC DOCUMENTS") or as may be permitted to
be taken pursuant to Section 6.01 or actions expressly contemplated to be taken
by this Agreement, the business of the Company and its Subsidiaries has been
conducted in the ordinary course consistent with past practices, and since the
Balance Sheet Date, except as expressly disclosed in the Current SEC Documents,
there has not been:
(a) any event, occurrence, development or state of circumstances or facts
that has had or would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company or any
repurchase, redemption or other acquisition by the Company or any of its
Subsidiaries of any outstanding shares of capital stock or other securities of,
or other ownership interests in, the Company or any of its Subsidiaries;
(c) any amendment of any material term of any outstanding security of the
Company or any of its Subsidiaries;
(d) any incurrence, assumption or guarantee by the Company or any of its
Subsidiaries of any indebtedness for borrowed money, other than in the ordinary
course of business and in amounts and on terms consistent with past practices;
(e) any creation or other incurrence by the Company or any of its
Subsidiaries of any Lien on any material asset, other than in the ordinary
course of business consistent with past practices;
16
(f) any making of any loan, advance or capital contributions to or
investment in any Person, other than loans, advances or capital contributions to
or investments in its wholly owned Subsidiaries in the ordinary course of
business consistent with past practices;
(g) any damage, destruction or other casualty loss (whether or not covered
by insurance) affecting the business or assets of the Company or any of its
Subsidiaries that has had or would reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect;
(h) any transaction or commitment made, or any contract or agreement
entered into, by the Company or any of its Subsidiaries relating to its assets
or business (including the acquisition or disposition of any assets) or any
relinquishment by the Company or any of its Subsidiaries of any contract or
other right, in either case, material to the Company and its Subsidiaries, taken
as a whole, other than transactions and commitments in the ordinary course of
business consistent with past practices and those contemplated by this
Agreement;
(i) any change in any method of accounting or accounting principles or
practice by the Company or any of its Subsidiaries, except for any such change
required by reason of a concurrent change in GAAP or Regulation S-X under the
1934 Act;
(j) any (i) increase or change in any severance or termination pay or
protection to (or amendment to any existing arrangement with) any current or
former director, officer or employee of the Company or any of its Subsidiaries,
(ii) entering into any employment, deferred compensation, change of control,
sale bonus or other similar agreement or any change of control, sale bonus or
other plan or arrangement (or any amendment to any such existing agreement, plan
or arrangement) with any director, officer or employee of the Company or any of
its Subsidiaries (other than any such agreement or amendment entered into in the
ordinary course of business, consistent with past practices, provided that, in
the aggregate, all such new commitments shall not entail any actual or
contingent liability to the Company upon termination of employment in an amount
in excess of $300,000), (iii) establishment, adoption or amendment (except as
required by applicable law or expressly contemplated by this Agreement) of any
collective bargaining, bonus, profit-sharing, thrift, pension, retirement,
deferred compensation, compensation, stock option, restricted stock or other
benefit plan or arrangement covering any director, officer or employee of the
Company or any of its Subsidiaries or (iv) increase in compensation, bonus or
other benefits payable to any director, officer or employee of the Company or
any of its Subsidiaries, other than in the ordinary course of business
consistent with past practice;
(k) any labor dispute, other than routine individual grievances, or any
activity or proceeding by a labor union or representative thereof to organize
any employees of the Company or any of its Subsidiaries, which employees were
not
17
subject to a collective bargaining agreement at the Company Balance Sheet Date,
or any lockouts, strikes, slowdowns, work stoppages or, to the Knowledge of the
Company, threats thereof by or with respect to those employees; or
(l) any Tax election made or changed, any annual tax accounting period
changed, any method of tax accounting adopted or changed, any amended Tax
Returns or claims for Tax refunds filed, any closing agreement entered into, any
Tax claim, audit or assessment settled, or any right to claim a Tax refund,
offset or other reduction in Tax liability surrendered which would be reasonably
expected to have a Material Adverse Effect.
Section 4.11. No Undisclosed Material Liabilities. There are no
liabilities or obligations of the Company or any of its Subsidiaries of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise other than:
(a) liabilities or obligations disclosed and provided for in the Company
Balance Sheet;
(b) liabilities or obligations under this Agreement;
(c) out-of-pocket fees and expenses (including, but not limited to, any
obligations to pay any such fees and expenses to Xxxxxxx, Xxxxx & Co. and the
outside counsel, accountants and other advisors to the Company and its
Subsidiaries) incurred in connection with the transactions contemplated by this
Agreement;
(d) current operational liabilities or obligations incurred after the
Balance Sheet Date in the ordinary course of business and consistent with past
practice; provided that in no event shall any tortious, litigation, breach of
contract or Intellectual Property Rights or other extraordinary liability be
deemed to be a current operational liability that was incurred in the ordinary
course of business;
(e) liabilities or obligations incurred in performing its obligations
expressly set forth, and in compliance with (but not from any breach or default
under) any agreement, contract or other instrument binding upon the Company or
any of its Subsidiaries, including any agreement, contract or other instrument
that is entered into after the date of this Agreement, as long as entering into
such agreement, contract or other instrument does not violate any provision of
this Agreement; and
(f) other liabilities or obligations that, individually or in the
aggregate, would not be reasonably expected to have a Material Adverse Effect.
Section 4.12. Material Contracts. (a) Neither the Company nor any of its
Subsidiaries is a party to or bound by:
18
(i) any lease of personal property providing for annual rentals of
$500,000 or more;
(ii) any agreement (other than purchase orders and currently
budgeted store openings and store remodelings, in each case in the
ordinary course of business) for the purchase of materials, supplies,
goods, services, equipment or other assets providing for either (A) annual
payments by the Company and its Subsidiaries of $500,000 or more or (B)
aggregate payments by the Company and its Subsidiaries of $1,000,000 or
more;
(iii) any sales, distribution or other similar agreement providing
for the sale by the Company or any of its Subsidiaries of materials,
supplies, goods, services, equipment or other assets (other than sales of
inventory pursuant to purchase orders of third parties in the ordinary
course of business) that provides for either (A) annual payments to the
Company and its Subsidiaries of $500,000 or more or (B) aggregate payments
to the Company and the Subsidiaries of $1,000,000 or more;
(iv) any partnership, joint venture or other similar agreement or
arrangement;
(v) any agreement relating to the acquisition or disposition of any
business or of any material assets outside of the ordinary course of
business (in each case, whether by merger, sale of stock, sale of assets
or otherwise) under which the Company or any Subsidiary has any ongoing
material rights or obligations;
(vi) any agreement relating to indebtedness for borrowed money or
the deferred purchase price of property (in either case, whether incurred,
assumed, guaranteed or secured by any asset), except any such agreement
(A) with an aggregate outstanding principal amount not exceeding
$1,000,000 and which may be prepaid on not more than 30 days' notice
without the payment of any penalty and (B) entered into subsequent to the
date of this Agreement as permitted by Section 6.01;
(vii) any material franchise or similar agreement that is not
terminable on 90 days' notice or less;
(viii) any material agency, dealer or sales representative agreement
that is not terminable on 90 days' notice or less;
(ix) any agreement that (A) limits or purports to limit the freedom
of the Company or any of its Subsidiaries to compete in any line of
business or with any Person or in any area or which would so limit the
freedom of the Company or any of its Subsidiaries after the Effective
Time, (B) grants any exclusive license or supply or distribution agreement
19
or right or other exclusive rights or (C) grants any "most favored nation"
or similar rights;
(x) any agreement for material Licensed Intellectual Property
Rights;
(xi) any agreement that grants material rights to or materially
restricts the rights of the Company or its Subsidiaries in the material
Owned Intellectual Property Rights (excluding purchase orders entered into
in the ordinary course of business but including all grants of exclusive
licenses);
(xii) any agreement with any director or officer of the Company or
any of its Subsidiaries or with any "associate" or any member of the
"immediate family" (as such terms are respectively defined in Rules 12b-2
and 16a-1 of the 0000 Xxx) of any such director or officer; or
(xiii) any other agreement, commitment, arrangement or plan not made
in the ordinary course of business that is material to the Company and the
Subsidiaries, taken as a whole.
(b) Each agreement, contract, plan, lease, arrangement or commitment
disclosed in any Schedule to this Agreement or required to be disclosed pursuant
to this Section (collectively, the "MATERIAL CONTRACTS") is a valid and binding
agreement of the Company or one of its Subsidiaries, as the case may be, and is
in full force and effect, and none of the Company, any of its Subsidiaries or,
to the Knowledge of the Company, any other party thereto is in default or breach
in any material respect under the terms of any such agreement, contract, plan,
lease, arrangement or commitment, and, to the Knowledge of the Company, no event
or circumstance has occurred that, with notice or lapse of time or both, would
constitute any event of default thereunder, except for such failure to be in
full force and effect and such breaches and defaults which, in the aggregate,
would not be reasonably expected to have a Material Adverse Effect. True and
complete copies of each such agreement, contract, plan, lease, arrangement or
commitment have been made available to Parent.
Section 4.13. Compliance with Laws and Court Orders. Except as expressly
disclosed in the Current SEC Documents, the Company and each of its Subsidiaries
is and since January 1, 2001 has been in compliance with, and, to the Knowledge
of the Company, is not under investigation with respect to and has not been
threatened to be charged with or given notice of any violation of, any
applicable law, statute, ordinance, rule, regulation, judgment, injunction,
order or decree, except for failures to comply or violations that would not be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect.
Section 4.14. Litigation. Except as expressly disclosed in the Current SEC
Documents, there is no action, suit, investigation or proceeding pending
20
against, or, to the Knowledge of the Company, threatened against, the Company,
any of its Subsidiaries, any present or former officer, director or employee (in
such officer's, director's or employee's capacity as such) of the Company or any
of its Subsidiaries or any Person for whom the Company or any Subsidiary may be
liable or any of their respective properties before any court or arbitrator or
before or by any other Governmental Entity that would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect. Schedule 4.14
lists each action, suit and proceeding pending on the date of this Agreement
involving an amount in controversy greater than $250,000 (or that is otherwise
material), against the Company, any of its Subsidiaries, any of its present or
former directors, officers or employees or any Person for whom the Company or
any Subsidiary may be liable or any of their respective properties before any
court or arbitrator or by or before any other Governmental Entity.
Section 4.15. Finders' Fees. Except for Xxxxxxx, Xxxxx & Co., a copy of
whose engagement agreement has been provided to Parent in its entirety, there is
no investment banker, broker, finder or other intermediary that has been
retained by or is authorized to act on behalf of the Company or any of its
Subsidiaries who might be entitled to any fee or commission from the Company or
any of its Affiliates in connection with the transactions contemplated by this
Agreement.
Section 4.16. Opinion of Financial Advisor. The Company has received the
opinion of Xxxxxxx, Sachs & Co., financial advisor to the Company, to the effect
that, as of the date of this Agreement, the Merger Consideration is fair to the
Company's stockholders from a financial point of view.
Section 4.17. Taxes. (a) All material Tax Returns required by applicable
law to be filed with any Taxing Authority by, or on behalf of, the Company or
any of its Subsidiaries have been filed when due in accordance with all
applicable laws, and all of those Tax Returns were, at the time of filing, true
and complete in all material respects.
(b) The Company and each of its Subsidiaries has paid (or has had paid on
its behalf) or has withheld and remitted to the appropriate Taxing Authority all
Taxes shown as due and payable on such filed Tax Returns referred to in
subsection (a), or, where payment is not yet due, has established (or has had
established on its behalf and for its sole benefit and recourse) in accordance
with GAAP an adequate accrual for all Taxes through the end of the last period
for which the Company and its Subsidiaries ordinarily record items on their
respective books.
(c) The income and franchise Tax Returns of the Company and its
Subsidiaries through the Tax year ended May 31, 1997 have been examined and
closed or are Tax Returns with respect to which the applicable period for
assessment under applicable law, after giving effect to extensions or waivers,
has expired.
21
(d) There is no claim, audit, action, suit, proceeding or investigation
now pending or, to the Company's Knowledge, threatened against or with respect
to the Company or its Subsidiaries in respect of any Tax or Tax Asset.
(e) During the two-year period ending on the date of this Agreement,
neither the Company nor any of its Subsidiaries was a distributing corporation
or a controlled corporation in a transaction intended to be governed by Section
355 of the Code.
(f) Schedule 4.17(f) contains a list, as of the date of this Agreement, of
all jurisdictions (whether foreign or domestic) in which the Company or any of
its Subsidiaries currently files Tax Returns.
(g) Neither the Company nor any of its Subsidiaries is a party to any
understanding or arrangement described in Section 6111(d) of the Code, or has
"participated" in a "reportable transaction" within the meaning of Treasury
Regulations Section 1.6011-4.
(h) Neither the Company nor any of its Subsidiaries is party to any tax
sharing agreement or to any other agreement or arrangement referred to in clause
(ii) or (iii) of the definition of "Tax".
(i) "TAX" means (i) any tax or other like assessment or charge of any kind
whatsoever (including withholding on amounts paid by or on behalf of the Company
or any of its Subsidiaries), together with any interest, penalty, addition to
tax or additional amount imposed by any governmental authority (a "TAXING
AUTHORITY") responsible for the imposition of any such tax (domestic or
foreign), and any liability for any of the foregoing as transferee, (ii) in the
case of the Company or any of its Subsidiaries, liability for the payment of any
amount of the type described in clause (i) as a result of being or having been
before the Effective Time a member of an affiliated, consolidated, combined or
unitary group, or a party to any agreement or arrangement, as a result of which
liability of the Company or any of its Subsidiaries to a Taxing Authority is
determined or taken into account with reference to the activities of any other
Person, and (iii) liability of the Company or any of its Subsidiaries for the
payment of any amount as a result of being party to any tax sharing agreement or
with respect to the payment of any amount imposed on any person of the type
described in (i) or (ii) as a result of any existing express or implied
agreement or arrangement (including an indemnification agreement or
arrangement). "TAX RETURN" means any report, return, document, declaration or
other information or filing required to be supplied to any Taxing Authority with
respect to Taxes, including information returns, any documents with respect to
or accompanying payments of estimated Taxes, or with respect to or accompanying
requests for the extension of time in which to file any such report, return,
document, declaration or other information. "TAX ASSET" means any net operating
loss, net capital loss, investment tax credit, foreign tax credit, charitable
deduction or any other credit or tax attribute that
22
could be carried forward or back to reduce Taxes (including without limitation
deductions and credits related to alternative minimum Taxes).
Section 4.18. Employee Benefit Plans and Labor Matters. (a) Schedule
4.18(a) contains a correct and complete list identifying each material "employee
benefit plan," as defined in Section 3(3) of ERISA (whether or not subject to
ERISA), each material employment, severance or similar contract, plan,
arrangement or policy and each other material plan or arrangement (written or
oral) providing for compensation, bonuses, profit-sharing, stock option or other
stock related rights or other forms of incentive or deferred compensation,
vacation benefits, insurance (including any self-insured arrangements), health
or medical benefits, employee assistance program, disability or sick leave
benefits, workers' compensation, supplemental unemployment benefits, severance
benefits and post-employment or retirement benefits (including compensation,
pension, health, medical or life insurance benefits) which is maintained,
administered or contributed to by the Company or any ERISA Affiliate and covers
any current or former employee, director, officer or independent contractor or
former employee of the Company or any of its Subsidiaries, or with respect to
which the Company or any of its Subsidiaries has any liability. Copies of those
plans (and, if applicable, related trust or funding agreements or insurance
policies) and all amendments thereto and written interpretations thereof have
been made available to Parent together with the most recent annual report (Form
5500 including, if applicable, Schedule B thereto) prepared in connection with
any such plan or trust. Those plans are referred to collectively in this
Agreement as the "EMPLOYEE PLANS".
(b) Neither the Company nor any ERISA Affiliate nor to the Knowledge of
the Company any predecessor thereof sponsors, maintains or contributes to, or
has in the past sponsored, maintained or contributed to, any Employee Plan
subject to Title IV of ERISA with such exceptions as would not be reasonably
expected to have any material liability for the Company, the Surviving
Corporation or their respective Affiliates.
(c) Neither the Company nor any ERISA Affiliate nor any predecessor
thereof contributes to, or has in the past contributed to, any multiemployer
plan, as defined in Section 3(37) of ERISA (a "MULTIEMPLOYER PLAN").
(d) Each Employee Plan which is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter, or has pending
or has time remaining in which to file, an application for that determination
from the Internal Revenue Service, and the Company is not aware of any reason
why any such determination letter should be revoked or not be reissued. The
Company has made available to Parent copies of the most recent Internal Revenue
Service determination letters with respect to each such Employee Plan. Each
Employee Plan has been maintained in material compliance with its terms and with
the requirements prescribed by any and all statutes, orders,
23
rules and regulations, including ERISA and the Code, which are applicable to
that Employee Plan with such exceptions as would not be reasonably expected,
individually or in the aggregate, to have any material liability for the
Company, the Surviving Corporation or their respective Affiliates. No material
events have occurred with respect to any Employee Plan that could result in
payment or assessment by or against the Company of any material excise taxes
under Sections 4972, 4975, 4976, 4977, 4979, 4980B, 4980D, 4980E or 5000 of the
Code with such exceptions as would not be reasonably expected, individually or
in the aggregate, to have any material liability for the Company, the Surviving
Corporation or their respective Affiliates.
(e) The consummation of the transactions contemplated by this Agreement
will not (either alone or together with any other event) entitle any director,
officer, employee or independent contractor of the Company or any of its
Subsidiaries to severance pay or accelerate the time of payment or vesting or
trigger any payment of funding (through a grantor trust or otherwise) of
compensation or benefits under, increase the amount payable or trigger any other
material obligation pursuant to, any Employee Plan. There is no contract, plan
or arrangement (written or otherwise) covering any employee or former employee
of the Company or any of its Subsidiaries that, individually or collectively,
would entitle any employee or former employee to any severance or other payment
solely as a result of the transactions contemplated hereby, or could give rise
to the payment of any amount that would not be deductible pursuant to the terms
of Section 280G or 162(m) of the Code. Schedule 4.18(e) sets forth, opposite the
name of each person listed in that schedule, the maximum bonus payment to which
that person may be entitled in respect of the Company's fiscal year ending May
31, 2004 under the Company's CEO Bonus Plan, 2004 Bonus Plan, Long-Term
Executive Bonus Plan and any other bonus plan or arrangement.
(f) Neither the Company nor any of its Subsidiaries has any liability in
respect of post-retirement health, medical or life insurance benefits for
retired, former or current employees of the Company or its Subsidiaries except
as required to avoid excise tax under Section 4980B of the Code or as may be
required under other applicable law.
(g) There has been no amendment to, written interpretation or announcement
(whether or not written) by the Company or any of its Affiliates relating to, or
change in employee participation or coverage under, an Employee Plan which would
increase materially the expense of maintaining that Employee Plan above the
level of the expense incurred in respect thereof for the fiscal year ended May
31, 2003.
(h) All contributions and payments accrued under each Employee Plan,
determined in accordance with prior funding and accrual practices, as adjusted
to include proportional accruals for the period ending as of the date of this
24
Agreement, have been discharged, paid or accrued in accordance with ordinary
Company practice.
(i) There is no action, suit, investigation, audit or proceeding pending
against or involving or, to the Knowledge of the Company, threatened against or
involving, any Employee Plan before any court or arbitrator or any state,
federal or local governmental body, agency or official with such exceptions as
would not be reasonably expected, individually or in the aggregate, to have any
material liability for the Company, the Surviving Corporation or their
respective Affiliates.
(j) The Company has no material Employee Plan that principally covers
non-U.S. employees.
(k) Neither the Company nor any of its Subsidiaries is a party to or
subject to, or is currently negotiating in connection with entering into, any
collective bargaining agreement or other contract or understanding with a labor
union or organization nor, as of the date hereof, is the Company or any of its
Subsidiaries the subject of any material proceeding asserting that the Company
or any of its Subsidiaries has committed an unfair labor practice or seeking to
compel it to bargain with any labor union or labor organization nor is there
pending or, to the Knowledge of the Company, threatened, nor has there been for
the past five years, any labor strike, material dispute, walk-out, work
stoppage, slow-down or lockout involving the Company or any of its Subsidiaries.
There are no campaigns being conducted to solicit cards from Company employees
to authorize representation by an labor organization or other proposed
bargaining unit representative.
(l) Since January 1, 2000, neither the Company nor any of its Subsidiaries
has closed any facility or work site used in the business of the Company or any
of its Subsidiaries or effectuated any material employee layoffs or down-sizing
or implemented any early retirement, separation or window program or announced
any such action or program that has triggered any WARN Act requirements or
similar state or foreign labor laws.
Section 4.19. Environmental Matters. (a) Except as expressly set forth in
the Company SEC Documents or would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect:
(i) no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been filed,
no penalty has been assessed, and no investigation, action, claim, suit,
proceeding or review (or any basis therefor) is pending or, to the
Knowledge of the Company, is threatened by any governmental entity or
other Person relating to or arising out of any Environmental Law;
25
(ii) the Company and its Subsidiaries are and have been in
compliance during the past five years with all Environmental Laws and all
Environmental Permits; and
(iii) there are no liabilities of or relating to the Company or any
of its Subsidiaries of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise arising under or relating
to any Environmental Law.
(b) There has been no environmental investigation, study, audit, test,
review or other analysis in the possession of the Company that has been prepared
in the past ten years concerning the current or prior business of the Company or
any of its Subsidiaries or any property or facility now or previously owned or
leased by the Company or any of its Subsidiaries that has not been delivered to
Parent at least five Business Days prior to the date of this Agreement.
(c) Neither the Company nor any of its Subsidiaries owns, leases or
operates or has owned, leased or operated any real property, or conducts or has
conducted any operations, in New Jersey or Connecticut, that in any such case is
subject to the environmental transfer acts of either such state.
(d) For purposes of this Section 4.19, the terms "COMPANY" and
"SUBSIDIARIES" shall include any entity that is deemed by operation of law to be
a corporate predecessor of the Company or any of its Subsidiaries.
Section 4.20. Antitakeover Statutes and Rights Agreement. (a) The Company
has taken all action necessary to exempt the Merger, this Agreement and the
transactions contemplated by this Agreement from Section 203 of Delaware Law,
and, accordingly, neither such Section nor any other anti-takeover or similar
statute or regulation (each, a "TAKEOVER STATUTE") applies or purports to apply
to any of those transactions. No other "control share acquisition," "fair
price," "moratorium" or other anti-takeover laws or regulations enacted under
U.S. state or federal laws apply to this Agreement or any of the transactions
contemplated by this Agreement.
(b) The Company has amended the Rights Agreement to provide that Parent
shall not be deemed an Acquiring Person (as defined in the Rights Agreement) and
that the Rights will not separate from the shares of Company Common Stock or
become exercisable solely as a result of entering into this Agreement, or
consummation of the Merger and/or the other transactions contemplated by this
Agreement. The Company has taken all other action necessary to render the rights
issued pursuant to the terms of the Rights Agreement inapplicable to the Merger,
this Agreement and the transactions contemplated hereby.
Section 4.21. Intellectual Property. (a) Schedule 4.21(a)(i) contains a
true and complete list of patents, registered copyrights, registered trademarks,
26
registered service marks, Internet domain name registrations and any
applications for registrations for any of the foregoing included in the Owned
Intellectual Property Rights (collectively, the "COMPANY REGISTERED INTELLECTUAL
PROPERTY RIGHTS"), specifying as to each such Intellectual Property Right, as
applicable, (i) the owner of such Intellectual Property Right, (ii) the
jurisdictions by or in which such Intellectual Property Right has been issued or
registered or in which an application for such issuance or registration has been
filed and (iii) the registration or application numbers thereof. Schedule
4.21(a)(ii) contains a true and complete list of all pending inter-parties
proceedings or actions before any court, tribunal (including the United States
Patent and Trademark Office ("PTO") or equivalent authority anywhere in the
world) involving the Company or any Subsidiary of the Company and Company
Registered Intellectual Property Rights, specifying as to each, the Company
Registered Intellectual Property Right at issue, the name of the counterparty,
the jurisdiction, the filing date and the status. Neither the Company nor a
Subsidiary of the Company incorrectly has claimed "small business status" in
application for any U.S. patents which are Company Registered Intellectual
Property Rights.
(b) The Licensed Intellectual Property Rights and the Owned Intellectual
Property Rights together constitute all of the Intellectual Property Rights
necessary to conduct the business of the Company and any Subsidiary of the
Company as currently conducted by the Company or the Subsidiary of the Company
except, individually or in the aggregate, as would not be reasonably expected to
have an Material Adverse Effect. All material Company Registered Intellectual
Property Rights are owned exclusively by the Company or a Subsidiary of the
Company. The consummation of the transactions contemplated by this Agreement
will not alter, impair or extinguish any of Company's or the Company's
Subsidiaries' rights, as of the date hereof, in material Owned Intellectual
Property Rights or material Licensed Intellectual Property Rights.
(c) All of the material Company Registered Intellectual Property Rights
are valid and enforceable.
(d) There are no contracts, licenses or agreements between the Company or
a Subsidiary of the Company and any other Person wherein or whereby the Company
or a Subsidiary of the Company has agreed to, or assumed, any obligation or duty
to warrant, indemnify, reimburse, hold harmless, guaranty or otherwise assume or
incur any obligation or liability in connection with any Intellectual Property
Right that could, individually or in the aggregate, result in a Material Adverse
Effect. Schedule 4.21(d) lists all pending warranty claims asserted in writing
by any Third Party against the Company or a Subsidiary of the Company that
would, individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect.
(e) Neither the Company nor a Subsidiary of the Company has infringed,
misappropriated or otherwise violated any Intellectual Property Right of
27
any Third Party except, individually or in the aggregate, as would not be
reasonably expected to have an Material Adverse Effect. There is no claim,
action, suit or proceeding asserted, or to the Knowledge of the Company
threatened in writing, against the Company or a Subsidiary of the Company (i)
based upon, or challenging or seeking to deny or restrict, the rights of the
Company or a Subsidiary of the Company in any of the material Owned Intellectual
Property Rights, the Company Registered Intellectual Property Rights or the
material Licensed Intellectual Property Rights, (ii) alleging that the use by
the Company or a Subsidiary of the Company of the material Owned Intellectual
Property Rights, the Company Registered Intellectual Property Rights or the
material Licensed Intellectual Property Rights does or may misappropriate,
infringe or otherwise violate any Intellectual Property Right of any Third Party
or breach any obligation owed to a Third Party with respect to such party's
Intellectual Property Rights or (iii) alleging on or after April 26, 2001 that
the Company or a Subsidiary of the Company has infringed, misappropriated or
otherwise violated any Intellectual Property Right of any Third Party. Neither
the Company nor a Subsidiary of the Company has received any written offer on or
after April 26, 2001 for a license of Intellectual Property Rights, including,
but not limited to, patent rights, from any Third Party in connection with a
written allegation by such Third Party giving rise to a reasonable apprehension
of suit that the Company or a Subsidiary of the Company has misappropriated or
infringed any of the Intellectual Property Rights of such Third Party.
(f) To the Knowledge of the Company, there is no reasonable basis
(including any prior use, application or registration) that would prevent the
Company from obtaining trademark registrations for each of the VANS, SWITCH,
PRO-TEC, OFF THE WALL, VANS OFF THE WALL and TRIPLE CROWN, marks in
International Classes 9, 18, 25, 28, 35 and 41 (or corresponding national
classes) for footwear, clothing, equipment and accessories as reasonably
required to conduct its business materially as currently conducted in each of
the United States, Canada, the Xxxxxxxx Xxxxx, Xxxxxx, Xxxxx, Xxxxx Xxxxx,
Xxxxxxxxxxx, People's Republic of China, Chile, Russia, Australia and New
Zealand.
(g) The Company or a Subsidiary of the Company holds its rights to the
material Owned Intellectual Property Rights and the material Licensed
Intellectual Property Rights free and clear of any Lien, other than restrictions
contained in agreements for the Licensed Intellectual Property Rights. The
Company and all of the Company's Subsidiaries have taken actions reasonably
necessary to maintain and protect all material Intellectual Property Rights and
Company Registered Intellectual Property Rights, including payment of applicable
maintenance fees and filing of applicable statements of use.
(h) To the Knowledge of the Company, within three (3) years prior to the
date of this Agreement, no Person has infringed, misappropriated, breached or
otherwise violated any Owned Intellectual Property Right or Licensed
Intellectual
28
Property Rights (other than nonexclusively Licensed Intellectual Property
Rights) except, individually or in the aggregate, as would not be reasonably
expected to have a Material Adverse Effect.
(i) The Company and all of the Company's Subsidiaries have taken
reasonable steps in accordance with normal industry practice to maintain the
confidentiality of (i) all of the Company's and Company's Subsidiaries'
confidential information and trade secrets (ii) information received from Third
Parties which the Company or a Subsidiary of the Company is obligated to treat
as confidential. To the Knowledge of the Company, none of the material
Intellectual Property Rights of the Company or of a Subsidiary of the Company,
the value of which to the Company or a Subsidiary of the Company is contingent
upon maintaining the confidentiality thereof, has been disclosed other than
pursuant to written confidentiality agreements.
(j) The Company and all of the Company's Subsidiaries have taken
reasonable steps in accordance with normal industry practice to secure from all
parties who have created any material portion of the Owned Intellectual Property
Rights valid and enforceable written assignments of any such work or other
rights to the Company. Without limiting the foregoing, the Company has, and
enforces, a policy requiring each employee who contributes to the development of
the Company's Intellectual Property Rights to execute proprietary information,
confidentiality and assignment agreements substantially in the form of the
Company's standard forms.
(k) Except, individually or in the aggregate, as would not be reasonably
expected to have a Material Adverse Effect no (i) product, technology, service
or publication provided to the public by the Company or a Subsidiary of the
Company, (ii) material published or distributed to the public by the Company or
a Subsidiary of the Company, or (iii) conduct or statement of the Company or a
Subsidiary of the Company directed to the public, constitutes obscene material,
a defamatory statement or false advertising.
Section 4.22. Properties. The Company and its Subsidiaries have sufficient
title to all their tangible properties and assets to conduct their respective
businesses as currently conducted or as contemplated to be conducted, with only
such exceptions as, individually or in the aggregate, have not had and are not
reasonably expected to have a Material Adverse Effect. Schedule 4.22(a)
correctly describes by common address all real property owned by the Company or
any Subsidiary, and such real property is owned free and clear of all Liens,
except for Liens disclosed in the Company SEC Documents and Permitted Liens.
Schedule 4.22(b)(1) contains a correct and complete list of all properties in
which the Company or a Subsidiary holds a leasehold or sub-leasehold estate in,
or is granted the right to use or occupy, any land, buildings, improvements,
fixtures or other interest in real property (collectively, the "LEASES"). The
Company has made available to Parent true and complete copies of the Leases
listed in
29
Schedule 4.22(b)(2). All Leases are in full force and effect and have not been
further modified or amended, and there exists no default under any such Lease by
the Company or any such Subsidiary, nor any event which with notice or lapse of
time or both would constitute a default under any such Lease by the Company or
any such Subsidiary, except as, individually or in the aggregate, has not had
and would not reasonably be expected to have a Material Adverse Effect. None of
the Leases permit the landlord under any such Lease to terminate that Lease at
will and, in connection with that termination, require the tenant under that
Lease to pay any termination fee, accelerated rent or other similar charge.
Section 4.23. Insurance.
(a) Attached as Schedule 4.23 to this Agreement is a list of all material
insurance policies, fidelity bonds and self-insurance arrangements relating to
the assets, business, operations, employees, officers or directors of the
Company and its Subsidiaries. Except as would not, individually or in the
aggregate, be reasonably expected to have a Material Adverse Effect, (i) all
premiums payable under all such policies and bonds have been timely paid in all
material respects and the Company and the Subsidiaries have otherwise complied
in all material respects with the terms and conditions of all of those policies
and bonds, and (ii) such policies and bonds provide sufficient coverage for all
normal risks incident to the business of the Company and its Subsidiaries and
their respective properties and assets.
(b) There is no material claim by the Company or any of its Subsidiaries
pending under any of those policies or bonds as to which coverage has been
questioned, denied or disputed by the underwriters of those policies or bonds or
in respect of which those underwriters have reserved their rights.
Section 4.24. Transactions with Affiliates. Except as expressly disclosed
in the Company SEC Documents, neither the Company nor any of its Subsidiaries
has entered into any transaction with any director, officer or other "affiliate"
(as defined in Rule 405 promulgated under the Securities Act) of the Company or
its Subsidiaries (each, a "COMPANY AFFILIATE") or any transaction that would be
subject to proxy statement disclosure pursuant to Item 404 of Regulation S-K.
Schedule 4.24 sets forth a complete list of each contract, agreement or
arrangement to which the Company or its Subsidiaries is a party or bound with
any Company Affiliate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company that:
Section 5.01. Corporate Existence and Power. Each of Parent and MergerSub
is a corporation duly incorporated, validly existing and in good
30
standing under the laws of its jurisdiction of incorporation and has all
corporate powers and all governmental licenses, authorizations, permits,
consents and approvals required to carry on its business as now conducted,
except for those licenses, authorizations, permits, consents and approvals the
absence of which would not materially impair or delay the ability of Parent to
consummate the transactions contemplated by this Agreement.
Section 5.02. Corporate Authorization. The execution, delivery and
performance by Parent and MergerSub of this Agreement, and the consummation by
Parent and MergerSub of the transactions contemplated by this Agreement, are
within the corporate powers of Parent and MergerSub and have been duly
authorized by all necessary corporate action. This Agreement constitutes a valid
and binding agreement of each of Parent and MergerSub enforceable in accordance
with its terms, except as that enforceability may be limited by laws relating to
bankruptcy, insolvency and creditors' rights generally and by general equitable
principles.
Section 5.03. Governmental Authorization. The execution, delivery and
performance by Parent and MergerSub of this Agreement, and the consummation by
Parent and MergerSub of the transactions contemplated by this Agreement, require
no action by or in respect of, or filing with, any Governmental Entity, other
than (i) the filing of a certificate of merger with respect to the Merger with
the Delaware Secretary of State and appropriate documents with the relevant
authorities of other states in which Parent is qualified to do business, (ii)
compliance with any applicable requirements of the HSR Act and of the Foreign
Antitrust Laws, (iii) compliance with any applicable requirements of the 1934
Act and any other securities laws, whether state or foreign, and (iv) any
actions or filings the absence of which would not materially impair or delay the
ability of Parent and MergerSub to consummate the transactions contemplated by
this Agreement.
Section 5.04. Non-Contravention. The execution, delivery and performance
by Parent and MergerSub of this Agreement, and the consummation by Parent and
MergerSub of the transactions contemplated by this Agreement, do not and will
not (i) contravene, conflict with, or result in any violation or breach of any
provision of the certificate of incorporation or bylaws of Parent or MergerSub,
(ii) assuming compliance with the matters referred to in Section 5.03, result in
a violation or breach of any provision of any law, rule, regulation, judgment,
injunction, order or decree, (iii) require any consent or other action by any
Person under, constitute a default, or an event that, with or without notice or
lapse of time or both, could become a default, under, or cause or permit the
termination, cancellation, acceleration or other change of any right or
obligation or the loss of any benefit to which Parent or any of its Subsidiaries
is entitled under any provision of any agreement or other instrument binding
upon Parent or any of its Subsidiaries or any license, franchise, permit,
certificate, approval or other similar authorization affecting, or relating in
any way to, the assets or
31
business of the Parent and its Subsidiaries or (iv) result in the creation or
imposition of any Lien on any asset of the Parent or any of its Subsidiaries,
except for those contraventions, conflicts and violations referred to in clause
(ii) and for those failures to obtain any such consent or other action,
defaults, terminations, cancellations, accelerations, changes, losses or Liens
referred to in clauses (iii) and (iv) that would not materially impair or delay
the ability of Parent and MergerSub to consummate the transactions contemplated
by this Agreement.
Section 5.05. Disclosure Documents. None of the information provided or to
be provided in writing by Parent for inclusion in the Company Proxy Statement or
any amendment or supplement to the Company Proxy Statement, at the time the
Company Proxy Statement or any amendment or supplement to the Company Proxy
Statement is first mailed to stockholders of the Company and at the time the
stockholders vote on adoption of this Agreement, will contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made in any such document, in the light of the
circumstances under which they were made, not misleading.
Section 5.06. Finders' Fees. Except for Wachovia Securities, whose fees
will be paid by Parent, there is no investment banker, broker, finder or other
intermediary that has been retained by or is authorized to act on behalf of
Parent who is entitled to any fee or commission from the Company or any of its
Affiliates upon consummation of the transactions contemplated by this Agreement.
Section 5.07. Financing. Parent has sufficient cash, available lines of
credit or other sources of immediately available funds to satisfy its
obligations under this Agreement and in connection with the transactions
contemplated by this Agreement.
ARTICLE 6
COVENANTS OF THE COMPANY
The Company agrees that:
Section 6.01. Conduct of the Company. From the date of this Agreement
until the Effective Time, the Company and its Subsidiaries shall conduct their
business in the ordinary course consistent with past practice and shall use all
commercially reasonable efforts to (i) preserve intact its present business
organization, (ii) maintain in effect all material foreign, federal, state and
local licenses, approvals and authorizations, including, without limitation, all
material licenses and permits that are required for the Company or any Company
Subsidiary to carry on its business, (iii) keep available the services of its
officers and key employees, and (iv) maintain satisfactory relationships with
its material customers, lenders, suppliers and others having material business
relationships
32
with it. Without limiting the generality of the foregoing, except as set forth
in Schedule 6.01 or as expressly contemplated by this Agreement, from the date
of this Agreement until the Effective Time, without the prior written consent of
Parent (which consent shall not be unreasonably withheld, conditioned or
delayed), the Company shall not, nor shall it permit any Company Subsidiary to:
(a) amend the Company's articles of incorporation or by-laws;
(b) split, combine or reclassify any shares of capital stock of the
Company or any less than wholly owned Company Subsidiary or declare, set aside
or pay any dividend or other distribution (whether in cash, stock or property or
any combination thereof) in respect of its capital stock, or redeem, repurchase
or otherwise acquire or offer to redeem, repurchase, or otherwise acquire any of
its securities or any securities of any Company Subsidiary, except for regular
dividends by less than wholly owned Company Subsidiaries on a pro rata basis to
the equity owners thereof;
(c) (i) issue, deliver or sell, or authorize the issuance, delivery or
sale of, any shares of its capital stock of any class or any securities
convertible into or exercisable for, or any rights, warrants or options to
acquire, any such capital stock or any such convertible securities, other than
the issuance of any shares of the Company Common Stock upon the exercise of
Company Stock Options that are outstanding under the Stock Plans on the date of
this Agreement in accordance with the present terms of those options or (ii)
amend any term of any outstanding Company Security or Subsidiary Security;
(d) other than in connection with transactions permitted by Section
6.01(e), incur any capital expenditures or any obligations or liabilities in
respect thereof, except for (i) those contemplated by the capital expenditure
budget for the Company and the Company Subsidiaries attached as Schedule 6.01(d)
and (ii) any unbudgeted capital expenditures not to exceed $500,000 individually
or $1,000,000 in the aggregate;
(e) acquire (by merger, consolidation, acquisition of stock or assets or
otherwise), directly or indirectly, any assets, other than in the ordinary
course of business of the Company and the Company Subsidiaries in a manner that
is consistent with past practice;
(f) other than sales in the ordinary course of business consistent with
past practice, sell, lease, encumber or otherwise transfer, any assets having a
fair market value exceeding $100,000 in any one transaction or $250,000 in the
aggregate;
(g) other than in connection with actions permitted by Section 6.01(d),
(i) make any loans, advances or capital contributions to, or investments in, any
other Person, other than pursuant to any existing contract with or other legal
obligation to that Person or in the ordinary course of business consistent with
past
33
practice or (ii) create, incur, assume, suffer to exist or otherwise be liable
with respect to, any indebtedness or guarantees thereof having an aggregate
principal amount outstanding at any time greater than $1,000,000;
(h) (i) enter into any agreement or arrangement that limits or otherwise
restricts the Company, any Company Subsidiary or any of their respective
Affiliates or any successor thereto or that could, after the Effective Time,
limit or restrict the Company, any Company Subsidiary, the Surviving
Corporation, Parent or any of their respective Affiliates, from engaging or
competing in any line of business, in any territory or location or with any
Person or (ii) enter into, amend or modify in any material respect or terminate
any Material Contract of the Company or any Company Subsidiary (other than any
termination pursuant to the lapse of the term of any such Material Contract) or
otherwise waive, release or assign any material rights, claims or benefits of
the Company or any Company Subsidiary;
(i) (i) other than across-the-board increases to non-executive employees
in the ordinary course of business consistent with past practices, increase the
amount of compensation of any director or executive officer or, except as
required by an existing agreement, make any increase in any employee benefits,
(ii) other than pursuant to the terms of any existing Employee Plan or as may be
required by applicable law, grant any severance or termination pay to any
director, officer or employee of the Company or any Company Subsidiary, (iii)
enter into any new employment contract or arrangement, (iv) adopt any additional
employee benefit plan or make any contribution to any existing such plan, other
than the minimum contributions required by law, (v) amend in any material
respect any Employee Plan or (vi) enter into or amend any agreement, contract or
arrangement with any current or former director, officer, employee (or any
individual hired in any such capacity) or commit to provide any payment to any
such individual that would have been required to be disclosed on Schedule
4.18(e) if any such commitment existed on or before the date of this Agreement;
(j) change the Company's methods of accounting, except as required by
changes in GAAP or by Regulation S-X of the Exchange Act, as concurred in by its
independent public accountants;
(k) settle, or propose to settle, any litigation, investigation,
arbitration, proceeding or other claim involving or against the Company or any
Company Subsidiary involving an amount in controversy that is greater than
$250,000 for any individual matter or $500,000 for all such matters (or that
seeks equitable relief that is material to the Company and its Subsidiaries,
taken as a whole);
(l) knowingly take any action that would make any representation or
warranty of the Company in this Agreement that is qualified by materiality or
Material Adverse Effect inaccurate; or, with regard to any representation or
warranty that is not so qualified, inaccurate in any material respect, at, or as
of any time before, the Effective Time; or
34
(m) agree, resolve or commit to do any of the foregoing;
provided that the limitations set forth in Section 6.01(a) through 6.01(m) shall
not apply to any action, transaction or event occurring exclusively between the
Company and any wholly owned Company Subsidiary or between any wholly owned
Company Subsidiaries.
Section 6.02. Stockholder Meeting; Proxy Material. The Company shall cause
a meeting of its stockholders (the "COMPANY STOCKHOLDER MEETING") to be duly
called and held as soon as reasonably practicable for the purpose of voting on
the approval and adoption of this Agreement and the Merger. Subject to Section
6.03(b), the Board of Directors of the Company shall recommend approval and
adoption of this Agreement and the Merger by the Company's stockholders. In
connection with that meeting, the Company shall (i) promptly prepare and file
with the SEC, use all commercially reasonable efforts to have cleared by the SEC
and thereafter mail to its stockholders as promptly as practicable the Company
Proxy Statement and all other proxy materials for that meeting, (ii) use all
commercially reasonable efforts to obtain the necessary approvals by its
stockholders of this Agreement and the transactions contemplated by this
Agreement and (iii) otherwise comply with all legal requirements applicable to
that meeting.
Section 6.03. No Solicitation; Other Offers. (a) Neither the Company nor
any of its Subsidiaries shall, nor shall the Company or any of its Subsidiaries
authorize or permit any of its or their officers, directors, employees,
investment bankers, attorneys, accountants, consultants or other agents or
advisors to, directly or indirectly, (i) solicit, initiate or take any action to
facilitate the submission of any Acquisition Proposal, (ii) engage in any
discussions or negotiations with, furnish any nonpublic information relating to
the Company or any of its Subsidiaries or afford access to the business,
properties, assets, books or records of the Company or any of its Subsidiaries
to, otherwise cooperate in any way with, or knowingly assist, participate in,
facilitate or encourage any effort by any Third Party that is seeking to make,
or has made, an Acquisition Proposal, (iii) grant any waiver or release under
any standstill or similar agreement with respect to any class of equity
securities of the Company or any of its Subsidiaries or (iv) enter into any
agreement with respect to an Acquisition Proposal (other than a confidentiality
agreement in compliance with Section 6.03(b)(ii) or a letter of intent or any
agreement or contract accepting any Superior Proposal in accordance with Section
10.01(d)).
(b) Notwithstanding the foregoing, the Board of Directors of the Company,
directly or indirectly through advisors, agents or other intermediaries, may (i)
subject to the Company's compliance with Sections 6.03(a) and 6.03(c), engage in
negotiations or discussions with any Third Party that submits a bona fide,
unsolicited written Acquisition Proposal that the Board of Directors reasonably
believes will lead to a Superior Proposal, (ii) furnish to that Third
35
Party nonpublic information relating to the Company or any of its Subsidiaries
pursuant to a confidentiality agreement with terms no less favorable to the
Company than those contained in the Confidentiality Agreement dated as of March
3, 2004 between the Company and Parent (the "CONFIDENTIALITY AGREEMENT") (a copy
of which shall be provided to Parent), (iii) following receipt of any such
Acquisition Proposal, fail to make, withdraw, or modify in a manner adverse to
Parent its recommendation to its stockholders referred to in Section 6.02 of
this Agreement or fail to call the Company Stockholder Meeting in accordance
with Section 6.02 of this Agreement and/or (iv) take any non-appealable, final
action that any court of competent jurisdiction orders the Company to take, but
in each case referred to in the foregoing clauses (i) through (iv) only if the
Board of Directors of the Company determines in good faith, after consultation
with its outside legal counsel, that such action is likely to be required in
order for its directors to comply with their fiduciary duties under applicable
law. Nothing contained in this Agreement shall prevent the Board of Directors of
the Company from complying with Rule 14e-2(a) under the 1934 Act with regard to
an Acquisition Proposal.
(c) The Board of Directors of the Company shall not take any of the
actions referred to in Sections 6.03(b)(i) through (b)(iv) unless the Company
shall have delivered to Parent, no later than substantially contemporaneously
with the taking of that action, a written notice advising Parent that it is
taking (or intends to take) that action, and the Company shall continue to keep
Parent reasonably current with any developments after taking that action. In
addition, the Company shall notify Parent promptly (but in no event later than
24 hours) after receipt by the Company (or any of its advisors) of any
Acquisition Proposal or of any request for information relating to the Company
or any of its Subsidiaries or for access to the business, properties, assets,
books or records of the Company or any of its Subsidiaries (other than such
components of such businesses, properties or assets that are generally
accessible to the public) by any Third Party that has made, an Acquisition
Proposal. The Company shall provide that notice orally and in writing and shall
identify the Third Party making, and the material terms and conditions of, any
such Acquisition Proposal, indication or request. The Company shall keep Parent
informed in all material respects, on a prompt basis, of the status and material
details of any such Acquisition Proposal, indication or request. The Company
shall, and shall cause its Subsidiaries and the advisors, employees and other
agents of the Company and its Subsidiaries to, cease immediately and cause to be
terminated any and all existing activities, discussions or negotiations, if any,
with any Third Party conducted prior to the date of this Agreement with respect
to any Acquisition Proposal and shall use all commercially reasonable efforts to
cause any such party (or its agents or advisors) in possession of confidential
information about the Company that was furnished by or on behalf of the Company
to return or destroy all of that information.
(d) "SUPERIOR PROPOSAL" means any bona fide, unsolicited written
Acquisition Proposal for at least a majority of the outstanding shares of
Company
36
Common Stock on terms that the Board of Directors of the Company determines in
good faith, after considering the advice of its outside counsel and a financial
advisor of nationally recognized reputation and taking into account all of the
terms and conditions of the Acquisition Proposal, including any break-up fees,
expense reimbursement provisions and conditions to consummation, is (i)
reasonably likely to be consummated and (ii) would, if consummated, result in a
transaction more favorable to all of the Company's stockholders from a financial
point of view than as provided hereunder and for which financing, to the extent
required, is then fully committed or reasonably determined to be available by
the Board of Directors of the Company.
Section 6.04. Tax Matters. (a) From the date hereof until the Effective
Time, neither the Company nor any of its Subsidiaries shall make or change any
Tax election, change any annual tax accounting period, adopt or change any
method of tax accounting, file any amended Tax Returns or claims for Tax
refunds, enter into any closing agreement, surrender any Tax claim, audit or
assessment, surrender any right to claim a Tax refund, offset or other reduction
in Tax liability surrendered, consent to any extension or waiver of the
limitations period applicable to any Tax claim or assessment or take or omit to
take any other action, if any such action or omission, considered in the
aggregate, would have the effect of materially increasing the Tax liability or
reducing any Tax Asset of the Company or any of its Subsidiaries.
(b) The Company and each of its Subsidiaries shall establish or cause to
be established in accordance with GAAP on or before the Effective Time an
adequate accrual for all Taxes due with respect to any period ending prior to or
as of the Effective Time.
(c) All transfer, documentary, sales, use, stamp, registration, value
added and other Taxes and fees (including any penalties and interest) incurred
in connection with the Merger (including any real property transfer tax and any
similar Tax) shall be paid by the Company when due, and the Company shall, at
its own expense, file all necessary Tax returns and other documentation with
respect to all of those Taxes and fees, and, if required by applicable law, the
Company shall, and shall cause its Affiliates to, join in the execution of any
such Tax returns and other documentation.
Section 6.05. Intellectual Property Rights. (a) Except as may be consented
to in writing by Parent, after the date of this Agreement and before the
Effective Time:
(i) the Company and its Subsidiaries will make payments and take
such other actions as are reasonably necessary to maintain material
Company Registered Intellectual Property Rights, including the payment of
any registration, maintenance or renewal fees or the filing of any
responses to office actions by the patent, copyright, trademark or other
authorities in the United States or foreign jurisdictions, documents,
37
applications or certificates for the purposes of obtaining, maintaining,
perfecting or preserving or renewing such material Company Registered
Intellectual Property Rights, provided that the Company shall not be
obligated to do so in any instance in which the Company deems such action
unnecessary or inadvisable in its reasonable business judgment not
inconsistent with past practices;
(ii) the Company and its Subsidiaries will provide information to
Parent upon the Parent's reasonable written request about the status of
any pending applications for material Company Registered Intellectual
Property Rights and, subject to compliance with any anti-trust or other
legal requirements, allow Parent to provide instruction and direction as
to the prosecution of such applications in a timely manner so as not to
hinder or unduly delay or inconvenience the Company's prosecution
activities; and
(iii) neither the Company nor any of its Subsidiaries will license
or will commit to license any of the material Owned Intellectual Property
Rights or the material Licensed Intellectual Property Rights, except in
the ordinary course of business not inconsistent with past practices.
(b) Prior to the Effective Time, the Company will provide Parent with a
list of actions that to the Knowledge of the Company (but for the avoidance of
doubt excluding knowledge merely of outside counsel or other third person
representatives of the Company or its Subsidiaries) must be taken by the Company
or any Subsidiary of the Company within sixty (60) calendar days immediately
following the Effective Time, including the payment of any registration,
maintenance or renewal fees or the filing of any responses to PTO office
actions, documents, applications or certificates, for the purposes of obtaining,
maintaining, perfecting, preserving or renewing any Company Registered
Intellectual Property Rights.
(c) For purposes of Sections 4.21 and 6.05, each trademark (viewing all
rights therein and registrations and applications for registration therefor in
the aggregate and taken as a whole in each of the United States, Canada, the
Xxxxxxxx Xxxxx, Xxxxxx, Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxxx, People's Republic of
China, Chile, Russia, Australia and New Zealand) identified in the following
list shall be deemed "material": VANS, SWITCH, PRO-TEC, OFF THE WALL, VANS OFF
THE WALL and TRIPLE CROWN.
ARTICLE 7
COVENANTS OF PARENT
Parent agrees that:
38
Section 7.01. Obligations of MergerSub. Parent shall take all action
necessary to cause MergerSub to perform its obligations under this Agreement and
to consummate the Merger on the terms and conditions set forth in this
Agreement.
Section 7.02. Voting of Shares. Parent shall vote all shares of Company
Common Stock beneficially owned by it or any of its Subsidiaries in favor of
adoption of this Agreement at the Company Stockholder Meeting.
Section 7.03. Indemnification; Directors' and Officers' Insurance. Parent
shall cause the Surviving Corporation, and the Surviving Corporation hereby
agrees, to do the following:
(a) From and after the Effective Time, the Surviving Corporation shall,
and Parent shall cause the Surviving Corporation to, indemnify and hold harmless
any Person who is now, or has been at any time prior to the date of this
Agreement or who becomes such prior to the Effective Time, an officer or
director of the Company or any of its Subsidiaries (each, an "INDEMNIFIED
PERSON") from and against, and defend any Indemnified Person from and reimburse
any Indemnified Person for, (i) any and all losses, claims, damages,
out-of-pocket costs and expenses (including reasonable and documented attorneys'
fees), fines, liabilities and judgments and amounts that are paid in settlement
arising out of or in connection with any claim, action, suit, proceeding or
investigation (A) to the extent based on, or arising out of, the fact that such
Person is or was a director or officer of the Company or any of its Subsidiaries
pertaining to any action or omission existing or occurring at or prior to the
Effective Time and whether asserted or claimed prior to, at or after the
Effective Time or (B) to the extent based on, or arising out of, or pertaining
to, this Agreement or the transactions contemplated hereby and (ii) without
limitation to clause (i), but only to the extent based on, arising out of, or
pertaining to, the matters described in the immediately preceding clauses (A)
and (B), to the fullest extent permitted by Delaware Law or any other applicable
laws or provided under the Company's certificate of incorporation and bylaws in
effect on the date of this Agreement, or any applicable indemnification
agreement or other document providing for indemnification in existence on the
date of this Agreement; provided that such indemnification shall be subject to
any limitation imposed from time to time under applicable law. The Surviving
Corporation will, and the Parent will cause the Surviving Corporation to, pay
all reasonable and documented out-of-pocket expenses (including reasonable
attorneys' fees) of each Indemnified Person incurred in defending against or
investigating any such claim, action, suit, investigation or proceeding with
respect to which such Indemnified Person is seeking indemnification hereunder
promptly after being invoiced therefor (subject to having received an
undertaking from such Indemnified Person to reimburse such expenses if it is
subsequently determined that the Indemnified Person is not entitled to
indemnification under applicable law).
39
(b) Parent shall be jointly and severally liable with the Surviving
Corporation for the performance of the Surviving Corporation's obligations under
this Section 7.03.
(c) Upon receipt by an Indemnified Person of actual notice of a claim,
action or proceeding against such Indemnified Person in respect of which
indemnity may be sought pursuant to this Section 7.03, such Indemnified Person
shall promptly notify the Surviving Corporation with respect thereto. In
addition, an Indemnified Person shall promptly notify the Surviving Corporation
after any action is commenced (by way of service with a summons or other legal
process giving information as to the nature and basis of the claim) against such
Indemnified Person. In any event, failure so to notify the Surviving Corporation
shall not relieve the Surviving Corporation or Parent from any liability which
the Surviving Corporation or Parent may have on account of this indemnity or
otherwise, except to the extent the Surviving Corporation shall have been
materially prejudiced by such failure. The Surviving Corporation may, at its
election (such election to be made within 30 days of receipt of the summons or
other legal process referred to above), and, if requested by an Indemnified
Person, shall (within 30 days of receipt of a request thereto), assume the
defense of and control any litigation or proceeding in respect of which
indemnity may be sought hereunder, including the employment of counsel
reasonably satisfactory to the Indemnified Person and the payment of the fees
and expenses of such counsel, in which event, except as provided below, the
Surviving Corporation shall not be liable for the fees and expenses of any other
counsel retained by an Indemnified Person in connection with such litigation or
proceeding. The Indemnified Person may assume the defense of and control any
such litigation or proceeding if within the applicable period specified in the
immediately preceding sentence the Surviving Corporation shall not assume the
defense of such matter. In the case of any proceeding or litigation the defense
and control of which the Indemnified Person shall have assumed in accordance
with this Section 7.03(c), (i) the Indemnified Party may retain its own counsel,
(ii) the Surviving Corporation shall, and the Parent shall cause the Surviving
Corporation to, pay all reasonable and documented fees and expenses of such
counsel promptly after receipt of any invoices with respect thereto (subject to
having received an undertaking from such Indemnified Person to reimburse such
expenses if it is subsequently determined that the Indemnified Person is not
entitled to indemnification under applicable law), and (iii) the Surviving
Corporation shall use reasonable efforts to assist in the defense of any such
matter. In any such litigation or proceeding the defense of which the Surviving
Corporation shall have so assumed, any Indemnified Person shall have the right
to participate in (but not control) such litigation or proceeding and to retain
its own counsel, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Person, unless representation of both parties by the
same counsel would, in the good faith opinion of outside counsel to the
Surviving Corporation, be inappropriate due to actual or potential differing
interests between the Surviving Corporation and such Indemnified Person (in
which case the reasonable and documented fees and expenses of separate counsel
40
for that Indemnified Person shall also be borne and paid by the Surviving
Corporation). In any litigation or proceeding of which the Surviving Corporation
shall have assumed the defense in which equitable relief or criminal penalties
are sought, the Surviving Corporation shall not settle such matter without the
prior written consent of the Indemnified Person (which consent shall not be
unreasonably withheld or delayed), and no Indemnified Person shall be required
to agree to settle such matter unless such settlement (x) includes an
unconditional release of such Indemnified Person from all liability arising out
of or in connection with such matter, (y) does not include any admission of
fault, culpability or a failure to act by, or on behalf of, such Indemnified
Person or payment of any money by such Indemnified Person and (z) does not
result in the imposition against such Indemnified Person of injunctive or other
equitable relief. The Surviving Corporation shall not be liable for any
settlement of any litigation or proceeding effected without its written consent
(which consent shall not be unreasonably withheld or delayed), but if settled
with such consent or if there be a final judgment for the plaintiff, the
Surviving Corporation agrees to indemnify the Indemnified Person from and
against any loss or liability by reason of such settlement or judgment to the
extent that such Indemnified Person is entitled to such indemnification under
this Section 7.03; provided that, if the Surviving Corporation shall not have
assumed the defense of any litigation or proceeding, the Indemnified Person may
settle any such litigation or proceeding with the consent of the Surviving
Corporation (which consent shall not be unreasonably withheld or delayed), in
which case the Surviving Corporation shall be liable for such settlement and
promptly indemnify the Indemnified Person from and against any liability by
reason of such settlement.
(d) For six years after the Effective Time, the Surviving Corporation
shall provide officers' and directors' liability insurance in respect of acts or
omissions occurring prior to the Effective Time covering each such Indemnified
Person currently covered by the Company's officers' and directors' liability
insurance policy on terms with respect to coverage and amount no less favorable
than those of that policy in effect on the date of this Agreement (to the extent
that those terms are reasonably available in the directors' and officers'
insurance market at that time); provided that, in satisfying its obligation
under this Section 7.03, the Surviving Corporation shall not be obligated to pay
an aggregate premium amount in excess of the aggregate amount set forth in
Schedule 7.03(d).
(e) If Parent, the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity of that consolidation or
merger, or (ii) transfers or conveys all or substantially all of its properties
and assets to any Person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Parent or
the Surviving Corporation, as the case may be, shall assume all of the
obligations set forth in this Section 7.03.
41
(f) The rights of each Indemnified Person under this Section 7.03 shall be
in addition to any rights to indemnification and exculpation of personal
liability that such Person may have under the certificate of incorporation or
bylaws of the Company or the certificate of incorporation or bylaws of any of
its Subsidiaries, or under Delaware Law or any other applicable laws or under
any agreement of any Indemnified Person with the Company or any of its
Subsidiaries. These rights shall survive consummation of the Merger and are
intended to benefit, and shall be enforceable by, each Indemnified Person, his
or her heirs and his or her personal representatives.
Section 7.04. Delisting and Deregistration. The Surviving Corporation
shall use all commercially reasonable efforts to cause the Company Common Stock
to be no longer quoted on the NASDAQ and deregistered under the Exchange Act as
soon as practicable following the Effective Time.
Section 7.05. Employee Matters. (a) Parent shall cause the Surviving
Corporation and/or any of its Subsidiaries, as applicable, effective on and
after the Effective Time, to honor and assume and agree to perform the
obligations of the Company or any of its Subsidiaries under the Employee Plans
and all employment, severance, termination, change of control, consulting and
collective bargaining agreements to which the Company or any Subsidiary is a
party, in each case, to the extent the Company or any of its Subsidiaries would
have been required to perform such plan or agreement.
(b) Parent agrees that, for at least one year following the Effective
Time, subject to applicable law, Parent will provide, or cause to be provided,
to the individuals who are employees of the Company and its Subsidiaries as of
the Effective Time (the "TRANSFERRED EMPLOYEES") benefits materially no less
favorable in the aggregate than those currently provided by the Company and its
Subsidiaries to such employees or, at the election of Parent, materially no less
favorable, in the aggregate, than the benefits provided from time to time to
similarly situated employees of Parent and its Subsidiaries (other than any
stock option or other equity based incentive plan currently provided by the
Company) and Parent shall cause to be provided to any Transferred Employee who
is terminated during the one-year period following the Effective Time, severance
benefits no less favorable than those described in Schedule 4.18(a).
Notwithstanding the foregoing, nothing herein shall otherwise limit Parent's
right to amend, modify or terminate any Employee Plan.
(c) Parent agrees that each employee of the Company and its Subsidiaries
will receive service credit for all periods of employment with the Company and
its Subsidiaries or any predecessors thereto prior to the Effective Time for
purposes of participation eligibility and vesting under any employee benefit
plan of Parent or its Affiliates in which such employee participates after the
Effective Time to the extent that such service was recognized under any
analogous Employee Plan of the Company or its Subsidiaries in effect
42
immediately prior to the Effective Time (but not for other purposes, including,
but not limited to, benefit accruals, benefit determinations or eligibility for
early retirement or special separation programs).
(d) For purposes of each new or existing employee benefit plan of Parent
or its Affiliates providing medical, dental, pharmaceutical or vision benefits
to any employee of the Company or its Subsidiaries, Parent or its Affiliates
shall cause all pre-existing condition exclusions and actively-at-work
requirements of such new or existing employee benefit plan of Parent or its
Affiliates to be waived for such employee and his or her covered dependents, to
the extent such exclusions were not applicable or requirements were waived under
the corresponding Employee Plan, and Parent or its Affiliates shall cause any
eligible expenses incurred by such employee and his or her covered dependents
during the portion of the plan year of the Employee Plan ending on the date such
employee's participation in the corresponding new or existing employee benefit
plan of Parent or its Affiliates begins to be taken into account under such new
or existing employee benefit plan of Parent or its Affiliates for purposes of
satisfying all deductible, coinsurance and maximum out-of-pocket requirements
applicable to such employee and/or his or her covered dependents for the
applicable plan year as if such amounts had been paid in accordance with such
new or existing employee benefit plan.
(e) Nothing in this Section 7.05 will be or be deemed to be for the
benefit of or enforceable by, any person who is not a party hereto, including,
without limitation, any employee of the Company, the Surviving Corporation or
any of their respective Affiliates or shall be deemed to limit the Surviving
Corporation's or its Affiliates' ability to modify or eliminate any Employee
Plan.
ARTICLE 8
COVENANTS OF PARENT AND THE COMPANY
The parties to this Agreement agree that:
Section 8.01. All Commercially Reasonable Efforts. (a) Subject to the
terms and conditions of this Agreement, each of the Company and Parent shall use
all commercially reasonable efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate the transactions contemplated by
this Agreement, including (i) preparing and filing as promptly as practicable
with any Governmental Entity or other third party all documentation to effect
all necessary filings, notices, petitions, statements, registrations,
submissions of information, applications and other documents and (ii) obtaining
and maintaining all approvals, consents, registrations, permits, authorizations
and other confirmations required to be obtained from any Governmental Entity or
other third party that are necessary, proper or advisable to consummate the
transactions contemplated by this
43
Agreement; provided that for these purposes, all commercially reasonable efforts
of any of the Company, Parent and/or MergerSub shall not be deemed to include
(i) entering into any settlement, undertaking, consent decree, stipulation or
agreement or agreeing to any order regarding antitrust matters in connection
with any objections of any Governmental Entity to the transactions contemplated
by this Agreement or (ii) divesting or otherwise holding separate (including by
establishing a trust or otherwise), or taking any other action (or otherwise
agreeing to do any of the foregoing) with respect to any material portion of its
and/or its Subsidiaries' (or the Surviving Corporation's) business, assets or
properties.
(b) In furtherance and not in limitation of the foregoing, each of Parent
and the Company shall make an appropriate filing of a Notification and Report
Form pursuant to the HSR Act with respect to the transactions contemplated by
this Agreement as promptly as practicable and in any event within 10 Business
Days of the date of this Agreement and supply as promptly as practicable any
additional information and documentary material that may be requested pursuant
to the HSR Act and take all other actions necessary to cause the expiration or
termination of the applicable waiting periods under the HSR Act as soon as
practicable.
Section 8.02. Certain Filings. (a) The Company and Parent shall cooperate
with one another (i) in connection with the preparation of the Company Proxy
Statement, (ii) in determining whether any action by or in respect of, or filing
with, any Governmental Entity is required, or any actions, consents, approvals
or waivers are required to be obtained from parties to any material contracts,
in connection with the consummation of the transactions contemplated by this
Agreement and (iii) in taking those actions or making any such filings,
furnishing information required in connection therewith or with the Company
Proxy Statement and seeking timely to obtain any such actions, consents,
approvals or waivers.
(b) Parent and its counsel shall be given a reasonable opportunity to
review and comment on the Company Proxy Statement, each time before that
document (or any amendment or supplement thereto) is filed with the SEC, and
reasonable and good faith consideration shall be given to any comments made by
that party and its counsel. Each of Parent and the Company shall provide the
other party and its counsel with (i) any comments or other communications,
whether written or oral, that such party or its counsel may receive from time to
time from the SEC or its staff with respect to the Company Proxy Statement
promptly after receipt of those comments or other communications and (ii) a
reasonable opportunity to participate in the response to those comments and to
provide comments on that response (to which reasonable and good faith
consideration shall be given), including by participating in any discussions or
meetings with the SEC.
44
(c) Before any Merger Communication of Parent, the Company or any of their
respective "participants" (as defined in Item 4 of Schedule 14A of the 1934 Act)
is (i) disseminated to any investor, analyst, member of the media, employee,
client, customer or other third party or otherwise made accessible on the
website of Parent, the Company or any such participant, as applicable (whether
in written, video or oral form via webcast, hyperlink or otherwise), or (ii)
utilized by any officer, senior manager, key employee or advisor of Parent, the
Company or any such participant, as applicable, as a script in discussions or
meetings with any such third parties, Parent or the Company, as the case may be,
shall (or shall cause any such participant to) provide the other such party and
its counsel with a reasonable opportunity to review any such Merger
Communication for purposes of, among other things, determining whether that
communication constitutes "soliciting material" that is required to be filed by
Rule 14a-6(b) or Rule 14a-12(b) of the 1934 Act, as applicable. Parent and
MergerSub or the Company, as applicable, shall (or shall cause any such
participant to) give reasonable and good faith consideration to any comments
made by the other such party or parties and their counsel on any such Merger
Communication. For purposes of the foregoing, the term "MERGER COMMUNICATION"
shall mean, with respect to any Person, any document or other written
communication prepared by or on behalf of that Person, or any document or other
material or information posted or made accessible on the website of that Person
(whether in written, video or oral form via webcast, hyperlink or otherwise),
that is related to any of the transactions contemplated by this Agreement and,
if reviewed by a holder of Company Common Stock, could reasonably be deemed to
constitute a "solicitation" of "proxies" (in each case, as defined in Rule 14a-1
of the 0000 Xxx) in favor of the Merger.
Section 8.03. Public Announcements. Parent and the Company shall consult
with each other before issuing any press release, making any other public
statement or scheduling any press conference or conference call with investors
or analysts with respect to this Agreement or the transactions contemplated by
this Agreement and, except as may be required by applicable law, order of a
court of competent jurisdiction or any listing agreement with or rule of any
national securities exchange or association, shall not issue any such press
release, make any such other public statement or schedule any such press
conference or conference call before that consultation.
Section 8.04. Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of the Company or MergerSub, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or MergerSub, any other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the rights, properties or
assets of the Company acquired or to be acquired by the Surviving Corporation as
a result of, or in connection with, the Merger.
45
Section 8.05. Access to Information. From the date of this Agreement until
the Effective Time and subject to applicable law and the Confidentiality
Agreement, the Company shall, upon reasonable notice, (i) give Parent, its
counsel, financial advisors, auditors and other authorized representatives
reasonably full access to the offices, properties, books and records of the
Company (including access to perform physical examinations and to take samples
of the soil, ground water, air, products or other areas as desired by that other
party), (ii) furnish to Parent, its counsel, financial advisors, auditors and
other authorized representatives all financial and operating data and other
information as those Persons may reasonably request and (iii) instruct its
employees, counsel, financial advisors, auditors and other authorized
representatives to cooperate with Parent in its investigation; provided that the
foregoing shall not require the Company (A) to permit any inspection, or to
disclose any information, that in the reasonable judgment of the Company would
result in the disclosure of any trade secrets of third parties or violate any of
its obligations with respect to confidentiality if the Company shall have used
all commercially reasonable efforts to obtain the consent of such third party to
such inspection or disclosure or (B) to disclose any attorney-client privileged
information of the Company or any of its Subsidiaries. Any investigation
pursuant to this Section shall be conducted in a manner so as not to interfere
unreasonably with the conduct of the business of the Company. No information or
knowledge obtained in any investigation pursuant to this Section shall affect or
be deemed to modify any representation or warranty made by any party hereunder.
Section 8.06. Notices of Certain Events. Each of the Company and
Parent shall promptly notify the other of:
(a) any notice or other communication from any Person alleging that the
consent of that Person is or may be required in connection with the transactions
contemplated by this Agreement;
(b) any notice or other communication from any Governmental Entity in
connection with the transactions contemplated by this Agreement; and
(c) any actions, suits, claims, investigations or proceedings commenced
or, to its Knowledge, threatened against, relating to or involving or otherwise
affecting the Company or any of its Subsidiaries or Parent and any of its
Subsidiaries, as the case may be, that, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant to Sections
4.13, 4.14, 4.17, 4.18, 4.19, or 4.21, as the case may be, or that relate to the
consummation of the transactions contemplated by this Agreement.
(d) any inaccuracy of any representation or warranty contained in this
Agreement at any time during the term hereof that could reasonably be expected
to cause the condition set forth in Section 9.02(a) not to be satisfied; and
46
(e) any failure of such party to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder.
Section 8.07. Takeover Statute. If any Takeover Statute is or may become
applicable to the Merger or the other transactions contemplated by this
Agreement, each of Parent and the Company and their respective Board of
Directors shall grant such approvals and take such actions as are necessary so
that such transactions may be consummated as promptly as practicable on the
terms contemplated hereby or by the Merger and otherwise act to eliminate or
minimize the effects of such statute or regulation on such transactions.
ARTICLE 9
CONDITIONS TO THE MERGER
Section 9.01. Conditions to Obligations of Each Party. The
obligations of the Company, Parent and MergerSub to consummate the Merger are
subject to the satisfaction of the following conditions:
(a) this Agreement and the Merger shall have been approved and adopted by
the stockholders of the Company in accordance with Delaware Law;
(b) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Merger;
(c) (i) any applicable waiting period under the HSR Act relating to the
Merger shall have expired or been terminated, and (ii) all approvals, consents,
actions, notices and filings that are required to have been obtained, taken or
made under all other Foreign Antitrust Laws in order to consummate the Merger
shall have been obtained, taken or made; and
(d) the Company shall have filed its definitive Company Proxy Statement in
accordance with the provisions of the 1934 Act, and the SEC shall not have
initiated an enforcement action or otherwise sought to prevent the solicitation
of proxies with regard to the Merger.
Section 9.02. Conditions to the Obligations of Parent and MergerSub. The
obligations of Parent and MergerSub to consummate the Merger are subject to the
satisfaction of the following further conditions:
(a) (i) the Company shall have performed in all material respects all of
its obligations required to be performed by it under this Agreement at or before
the Effective Time, (ii) the representations and warranties of the Company that
are contained in this Agreement and in any certificate or other writing
delivered by the Company pursuant to this Agreement, disregarding all
qualifications contained herein or therein relating to materiality or Material
Adverse Effect, shall be true and correct at and as of the Effective Time, as if
made at and as of that time
47
(except to the extent those representations and warranties expressly relate to
an earlier date, in which case as of that earlier date), provided that the
condition set forth in this 9.02(a)(ii) shall only be deemed to have not been
satisfied if the failure of any such representation(s) and warranty(ies) to be
so true and correct has had or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, (iii) no event,
occurrence, development or state of circumstances or facts shall have occurred
or arisen that has had or would reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect, and (iv) Parent shall have received
a certificate signed by the Chief Executive Officer, the Chief Financial Officer
and the General Counsel of the Company to the foregoing effect;
(b) there shall not have been instituted or pending any action or
proceeding (or any investigation or other inquiry that would be reasonably
expected to result in that action or proceeding) by any Governmental Entity or
by any other Person before any court or other Governmental Entity, (i)
challenging or seeking to make illegal, to delay materially or otherwise,
directly or indirectly, to restrain or prohibit the consummation of the Merger
or seeking to obtain material damages or (ii) seeking to restrain or prohibit
Parent's ownership or operation (or that of its respective Subsidiaries or
Affiliates) of all or any material portion of the business or assets of the
Company and its Subsidiaries, taken as a whole, or of Parent and its
Subsidiaries, taken as a whole, or to compel Parent or any of its Subsidiaries
or Affiliates to dispose of or hold separate all or any material portion of the
business or assets of the Company and its Subsidiaries, taken as a whole, or of
Parent and its Subsidiaries, taken as a whole;
(c) there shall not have been after the date of this Agreement any
statute, rule, regulation, injunction, order or decree proposed, enacted,
enforced, promulgated, issued or deemed applicable to the Merger, by any
Governmental Entity, other than the application of the waiting period provisions
of the HSR Act to the Merger and any applicable waiting periods under the
Foreign Antitrust Laws, that, in the reasonable judgment of Parent, is likely,
directly or indirectly, to result in any of the consequences referred to in
clauses (i) or (ii) of paragraph (b) above;
(d) the Company shall have delivered a certification, in a form reasonably
acceptable to Parent and the Company, dated not more than 30 days before the
Effective Time and signed by the Company to the effect that the Company is not,
nor has it been within five years of the date of the certification, a "United
States real property holding corporation" as defined in Section 897 of the Code.
(e) All consents, approvals, assignments, waivers, authorizations or other
certificates from third parties respecting which the failure to obtain,
individually or in the aggregate, would be reasonably expected to have a
Material Adverse Effect shall have been duly executed by such third parties.
48
(f) The holders of not more than 8.5% of the outstanding shares of Company
Common Stock shall have demanded appraisal of their shares in accordance with
Delaware Law.
Section 9.03. Conditions to the Obligations of the Company. The
obligations of the Company to consummate the Merger are subject to the
satisfaction of the following further conditions:
(a) (i) each of Parent and MergerSub shall have performed in all material
respects all of its obligations hereunder required to be performed by it at or
prior to the Effective Time, (ii) the representations and warranties of Parent
and MergerSub contained in this Agreement and in any certificate or other
writing delivered by Parent or MergerSub pursuant to this Agreement shall be
true in all material respects at and as of the Effective Time as if made at and
as of that time, and (iii) the Company shall have received a certificate signed
by the Chief Executive Officer and Chief Financial Officer of Parent to the
foregoing effect.
ARTICLE 10
TERMINATION
Section 10.01. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time before the Effective Time:
(a) by mutual written agreement of the Company and Parent;
(b) by either the Company or Parent, if:
(i) the Merger has not been consummated on or before (A) August 15,
2004 if the SEC has completed its review of the Company Proxy Statement by
July 1, 2004 or (B) November 15, 2004 in all other cases (the "END DATE");
provided that the right to terminate this Agreement pursuant to this
Section 10.01(b)(i) shall not be available to any party whose breach of
any provision of this Agreement is a proximate cause of the failure of the
Merger to be consummated by that time;
(ii) (A) there shall be any law or regulation that makes
consummation of the Merger illegal or otherwise prohibited, or (B) any
judgment, injunction, order or decree of any Governmental Entity having
competent jurisdiction enjoining the Company, MergerSub or Parent from
consummating the Merger is entered;
(iii) this Agreement shall not have been approved and adopted in
accordance with Delaware Law by the Company's stockholders at the Company
Stockholder Meeting (or any adjournment of that meeting); or
49
(iv) as permitted by Section 6.03, at any time before the approval
and adoption of this Agreement and the Merger by the stockholders of the
Company, (A) the Board of Directors of the Company shall have failed to
make or withdrawn, or modified in a manner adverse to Parent, its approval
or recommendation of this Agreement or the Merger, or shall have failed to
call the Company Stockholder Meeting in accordance with Section 6.02, (B)
the Board of Directors of the Company shall have approved or publicly
recommended any Acquisition Proposal or (C) the Company shall have decided
to enter into any letter of intent or any agreement or contract accepting
any Superior Proposal, provided that (x) the Company shall have paid any
amounts due pursuant to Sections 11.04(b) and 11.04(c) in accordance with
the terms, and at the times, specified in those Sections, and (y) in the
case of any such termination by the Company, (i) the Company notifies
Parent, in writing at least 5 Business Days before that termination,
promptly of its intention to terminate this Agreement and to enter into a
binding written agreement concerning an Acquisition Proposal that
constitutes a Superior Proposal, attaching the most current version of
that agreement, and (ii) Parent does not make, within 5 Business Days of
receipt of that written notification, an offer that would reasonably be
concluded to be at least as favorable to the stockholders of the Company
as that Superior Proposal, it being understood that the Company shall not
enter into any such binding agreement during that 5-Business Day period.
(c) by Parent, if (i) a breach of any representation or warranty or
failure to perform any covenant or agreement on the part of the Company set
forth in this Agreement shall have occurred that would cause the condition set
forth in Section 9.02(a) not to be satisfied, and such condition is incapable of
being satisfied by the End Date or (ii) any of the directors, officers,
investment bankers, or outside counsel of the Company shall have committed any
willful and material breach of Section 6.03.
(d) by the Company, if a breach of any representation or warranty or
failure to perform any covenant or agreement on the part of the Parent or
MergerSub set forth in this Agreement shall have occurred that would cause the
condition set forth in Section 9.03(a) not to be satisfied, and that condition
is incapable of being satisfied by the End Date.
The party desiring to terminate this Agreement pursuant to this Section 10.01
(other than pursuant to Section 10.01(a)) shall give notice of that termination
to the other party.
Section 10.02. Effect of Termination. If this Agreement is terminated
pursuant to Section 10.01, this Agreement shall become void and of no effect
without liability of any party or any of its Affiliates (or any stockholder,
director, officer, employee, agent, consultant or representative of that party
or any of its
50
Affiliates) to the other party to this Agreement; provided that, if that
termination shall result from the willful (i) failure of any party to fulfill a
condition to the performance of the obligations of the other party or (ii)
failure of any party to perform a covenant of this Agreement, that party shall
be fully liable for any and all liabilities and damages incurred or suffered by
the other part(ies) as a result of that failure. The provisions of this Section
10.02 and Sections 10.02, 11.04, 11.05, 11.06, 11.07 and 11.08 shall survive any
termination of this Agreement pursuant to Section 10.01.
ARTICLE 11
MISCELLANEOUS
Section 11.01. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile transmission and
electronic mail ("E-MAIL") transmission, so long as a receipt of that e-mail is
requested and received) and shall be given as follows:
if to Parent or MergerSub, to:
VF Corporation
000 Xxxxxxxxx Xxxxxx Xxxx.
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx,
Vice President - Administration,
General Counsel and Secretary
Facsimile No.: (000) 000-0000
E-mail: xxxxxxx_xxxxxxxx@xxx.xxx
with a copy to:
Xxxxx Xxxx & Xxxxxxxx
0000 Xx Xxxxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
(000) 000-0000
E-mail: xxxxxxx@xxx.xxx
if to the Company, to:
Vans, Inc.
00000 Xxxxxxxxx Xxxxxx
Xxxxx Xx Xxxxxxx, XX 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
E-mail: xxxxxxxxx@xxxx.xxx
51
with a copy to:
Xxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
E-mail: xxxxxxxx@xxxxxxxx.xxx
or to any other address or facsimile number as that party may hereafter specify
for the purpose by notice to the other parties to this Agreement. All of those
notices, requests and other communications shall be deemed received on the date
of receipt by the recipient if received before 5:00 p.m. on a Business Day in
the place of receipt. Otherwise, any such notice, request or communication shall
be deemed to have been received on the next succeeding Business Day in the place
of receipt.
Section 11.02. Survival of Representations and Warranties. The
representations, warranties, covenants and agreements contained in this
Agreement and in any certificate or other writing delivered pursuant to this
Agreement shall not survive the Effective Time, except for the agreements set
forth in Section 7.03.
Section 11.03. Amendments and Waivers. (a) Any provision of this Agreement
may be amended or waived before the Effective Time if, but only if, that
amendment or waiver is in writing and is signed, in the case of an amendment, by
each party to this Agreement or, in the case of a waiver, by each party against
whom the waiver is to be effective; provided that, after the adoption of this
Agreement by the stockholders of the Company and without their further approval,
no such amendment or waiver shall reduce the amount or change the kind of
consideration to be received in exchange for the Shares.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
provided in this Agreement shall be cumulative and not exclusive of any rights
or remedies provided by law.
Section 11.04. Expenses. (a) Except as otherwise provided in this
Agreement, all costs and expenses incurred in connection with this Agreement
shall be paid by the party incurring that cost or expense. Notwithstanding the
foregoing, Parent and the Company each shall pay 50% of any fees and expenses,
other than attorneys' and accounting fees and expenses, incurred in respect of
the printing, filing and mailing of the Proxy Statement and any amendments or
supplements thereto.
52
(b) If a Payment Event occurs, the Company shall (i) pay Parent (by wire
transfer of immediately available funds) simultaneously with the occurrence of
that Payment Event, or otherwise within two Business Days following that Payment
Event, a fee of $10,900,000 (the "TERMINATION FEE") and (ii) reimburse Parent
promptly (but in any event within two Business Days of receipt of any invoice(s)
therefor) for all of its reasonable and documented, out-of-pocket expenses
incurred in connection with the transactions contemplated hereby up to a maximum
of $1,000,000.
(c) For purposes of this Agreement, the following terms have the following
meanings:
(i) "PAYMENT EVENT" means (A) the termination of this Agreement
pursuant to any of Sections 10.01(b)(iv) or 10.01(c)(ii) or (B) the
termination of this Agreement pursuant to any of Section 10.01(b)(i),
Section 10.01(b)(iii) or Section 10.01(c)(i) and before that termination,
(x) an Acquisition Proposal shall have been publicly announced and (y)
concurrently with or within 12 months after that termination, a Third
Party Acquisition Event occurs.
(ii) A "THIRD PARTY ACQUISITION EVENT" means (A) the consummation of
an Acquisition Proposal (which shall, for purposes of this defined term
only, be deemed to be defined by replacing each reference to "15%" in the
definition thereof (which shall otherwise remain unchanged) with a
reference to "50%") or any transaction that, if it had been proposed prior
to the termination of this Agreement would have constituted an Acquisition
Proposal (again, as so defined) or (B) the entering into by the Company or
any of its Subsidiaries of a definitive agreement with respect to any such
transaction.
(d) The Company acknowledges that the agreements contained in this Section
11.04 are an integral part of the transactions contemplated by this Agreement
and that, without these agreements, Parent and MergerSub would not enter into
this Agreement. Accordingly, if the Company fails to pay any amount due to
Parent pursuant to this Section 11.04 at the time or within the time period
prescribed by this Section 11.04, it shall also pay any costs and expenses
incurred by Parent or MergerSub in connection with a legal action to enforce
this Agreement that results in a judgment against the Company for that amount.
(e) The Company's payment of the Termination Fee and reimbursement of
Parent expenses pursuant to this Section 11.04 shall be the sole and exclusive
remedy of Parent and Merger Sub against the Company and its Subsidiaries and
their respective directors, officers, employees, agents, advisors or other
representatives with respect to any termination of this Agreement by the Company
pursuant to Section 10.01(b)(iv).
53
Section 11.05. Binding Effect; Benefit; Assignment. (a) The provisions of
this Agreement shall be binding upon and, except as provided in Section 7.03,
shall inure to the benefit of the parties to this Agreement and their respective
successors and assigns. Except as provided in Sections 7.03, no provision of
this Agreement is intended to confer any rights, benefits, remedies, obligations
or liabilities hereunder upon any Persons other than the parties to this
Agreement and their respective successors and assigns.
(b) No party may assign, delegate or otherwise transfer any of its rights
or obligations under this Agreement without the consent of each other party to
this Agreement, except that Parent or MergerSub may transfer or assign, in whole
or from time to time in part, to one or more of their Affiliates, the right to
enter into the transactions contemplated by this Agreement, but any such
transfer or assignment shall not relieve Parent or MergerSub of its obligations
hereunder.
Section 11.06. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
regard to its conflicts of law rules.
Section 11.07. Jurisdiction. The parties to this Agreement agree that any
suit, action or proceeding seeking to enforce any provision of, or based on any
matter arising out of or in connection with, this Agreement or the transactions
contemplated hereby shall be brought in any federal court located in the State
of Delaware or any Delaware state court, and each of the parties hereby
irrevocably consents to the jurisdiction of those courts (and of the appropriate
appellate courts therefrom) in any such suit, action or proceeding and
irrevocably waives, to the fullest extent permitted by law, any objection that
it may now or hereafter have to the laying of the venue of any such suit, action
or proceeding in any such court or that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum. Process in
any such suit, action or proceeding may be served on any party anywhere in the
world, whether within or without the jurisdiction of any such court. Without
limiting the foregoing, each party agrees that service of process on that party
as provided in Section 11.01 shall be deemed effective service of process on
that party.
Section 11.08. WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT.
Section 11.09. Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and to this Agreement were upon the same
instrument. This Agreement shall become effective when each party to this
Agreement shall have received a counterpart of this Agreement signed by all of
the other parties to this Agreement. Until and unless each party has received a
54
counterpart of this Agreement signed by the other party to this Agreement, this
Agreement shall have no effect and no party shall have any right or obligation
hereunder (whether by virtue of any other oral or written agreement or other
communication).
Section 11.10. Entire Agreement. This Agreement and the Confidentiality
Agreement constitute the entire agreement between the parties with respect to
the subject matter of this Agreement and supersedes all prior agreements and
understandings, both oral and written, between the parties with respect to the
subject matter of this Agreement.
Section 11.11. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
a determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated by
this Agreement be consummated as originally contemplated to the fullest extent
possible.
Section 11.12. Specific Performance. The parties to this Agreement agree
that irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms of this Agreement and that the parties
shall be entitled to an injunction or injunctions to prevent breaches of this
Agreement or to enforce specifically the performance of the terms and provisions
of this Agreement in any federal court located in the State of Delaware or any
Delaware state court, in addition to any other remedy to which they are entitled
at law or in equity.
55
IN WITNESS OF THIS AGREEMENT, the parties to this Agreement have caused
this Agreement to be duly executed by their respective authorized officers as of
the date first written above.
VANS, INC.
By: /s/ Xxxx X. Xxxxxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: President & CEO
VF CORPORATION
By: /s/ Xxxxxx X. XxXxxxxx
--------------------------------
Name: Xxxxxx X. XxXxxxxx
Title: Chairman, President & CEO
MCGARRETT CORP.
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
