Exhibit 10.2
AGREEMENT AND PLAN OF MERGER
Dated as of August 22, 2005,
By and Among
REFAC,
USV Merger Sub, Inc.,
U.S. Vision, Inc.,
and
the Stockholders of U.S. Vision, Inc.
TABLE OF CONTENTS
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Page
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ARTICLE I. THE MERGER.......................................................................................1
Section 1.01 The Merger..............................................................1
Section 1.02 Closing.................................................................2
Section 1.03 Effective Time..........................................................2
Section 1.04 Effect of the Merger....................................................2
Section 1.05 Certificate of Incorporation and By-laws................................2
Section 1.06 Directors...............................................................2
Section 1.07 Officers................................................................2
ARTICLE II. EFFECT ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES...........3
Section 2.01 Effect on Capital Stock.................................................3
Section 2.02 Exchange of Certificates................................................4
Section 2.03 Federal Income Tax Treatment............................................5
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................................5
Section 3.01 Organization, Standing and Power........................................5
Section 3.02 The Company Subsidiaries; Equity Interests..............................6
Section 3.03 Capital Structure.......................................................6
Section 3.04 Authority; Execution and Delivery; Enforceability.......................7
Section 3.05 No Conflicts; Consents..................................................7
Section 3.06 Financial Statements; Undisclosed Liabilities...........................8
Section 3.07 Absence of Certain Changes or Events....................................9
Section 3.08 Information Supplied....................................................9
Section 3.09 Litigation..............................................................9
Section 3.10 Compliance With Applicable Laws.........................................9
Section 3.11 Environmental..........................................................10
Section 3.12 Intellectual Property..................................................11
Section 3.13 Employee Benefit Plans.................................................12
Section 3.14 Labor Matters..........................................................14
Section 3.15 Material Agreements....................................................14
Section 3.16 Properties.............................................................16
Section 3.17 Tax Matters............................................................18
Section 3.18 Products Liability.....................................................18
Section 3.19 Brokers................................................................19
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.............................................20
Section 4.01 Authorization..........................................................20
Section 4.02 Ownership of Shares....................................................20
Section 4.03 Appraisal Rights.......................................................20
Section 4.04 Acknowledgement........................................................20
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PARENT........................................................21
Section 5.01 Organization, Standing and Power.......................................21
Section 5.02 The Parent Subsidiaries; Equity Interests..............................21
Section 5.03 Capital Structure......................................................21
Section 5.04 Authority; Execution and Delivery; Enforceability......................22
Section 5.05 No Conflicts; Consents.................................................23
Section 5.06 Parent SEC Documents; Undisclosed Liabilities..........................23
Section 5.07 Absence of Certain Changes or Events...................................24
Section 5.08 Form S-4; Proxy Statement..............................................25
Section 5.09 Litigation.............................................................25
Section 5.10 Compliance with Applicable Laws........................................25
Section 5.11 Ownership of Company Shares............................................25
Section 5.12 Brokers................................................................25
Section 5.13 Opinion of Financial Advisor...........................................25
ARTICLE VI. COVENANTS RELATING TO CONDUCT OF BUSINESS......................................................25
Section 6.01 Covenants Relating to Conduct of Business..............................25
Section 6.02 Other Actions..........................................................29
Section 6.03 Advice of Changes......................................................29
ARTICLE VII. ADDITIONAL AGREEMENTS.........................................................................30
Section 7.01 Preparation of the Form S-4 and Proxy Statement........................30
Section 7.02 Access to Information..................................................31
Section 7.03 Reasonable Efforts; Notification.......................................31
Section 7.04 Public Announcements...................................................32
Section 7.05 Tax Free Reorganization Treatment......................................32
Section 7.06 Indemnification........................................................32
ARTICLE VIII. CONDITIONS PRECEDENT.........................................................................33
Section 8.01 Conditions to Each Party's Obligation to Effect the Merger.............33
Section 8.02 Conditions to Obligation of Parent and Merger Sub......................34
Section 8.03 Conditions to Obligation of the Company................................35
ARTICLE IX. TERMINATION, AMENDMENT AND WAIVER..............................................................35
Section 9.01 Termination............................................................35
Section 9.02 Effect of Termination..................................................35
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Section 9.03 Amendment..............................................................36
Section 9.04 Extension; Waiver......................................................36
ARTICLE X. GENERAL PROVISIONS..............................................................................36
Section 10.01 Nonsurvival of Representations and Warranties..........................36
Section 10.02 Fees and Expenses......................................................37
Section 10.03 Notices................................................................37
Section 10.04 Definitions............................................................38
Section 10.05 Interpretation.........................................................39
Section 10.06 Severability...........................................................39
Section 10.07 Counterparts; Facsimile................................................40
Section 10.08 Entire Agreement; No Third-Party Beneficiaries.........................40
Section 10.09 Governing Law..........................................................40
Section 10.10 Assignment.............................................................40
Section 10.11 Disputes; Waiver of Jury Trial.........................................40
Exhibit A - Form of Affiliate Letter
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AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of August
22, 2005, by and among REFAC, a Delaware corporation ("Parent"), USV Merger
Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent
("Merger Sub"), U.S. Vision, Inc., a Delaware corporation (the "Company"),
Palisade Concentrated Equity Partnership, L.P., a Delaware limited partnership
("Palisade"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇, III, Pinnacle Advisors Limited, a New York corporation, WRS
Advisors III, LLC, a New York limited liability company, and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
(Palisade, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇, III, Pinnacle Advisors Limited, WRS Advisors III, LLC, and
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ together, the "Stockholders"). Certain capitalized terms used
but not otherwise defined herein are defined in Section 10.04 hereof.
WHEREAS, the respective boards of directors of Parent and the Company
have approved this Agreement and the Merger and the other transactions
contemplated hereby and determined that they are advisable;
WHEREAS, the respective boards of directors of Parent, Merger Sub and
the Company have approved the Merger on the terms and subject to the
conditions set forth in this Agreement, whereby each issued share of common
stock, par value $0.001 per share, of the Company (the "Company Common Stock")
not owned by the Company shall be converted into the right to receive the
Merger Consideration (as defined below);
WHEREAS, Parent, as the sole stockholder of Merger Sub, and the
Stockholders, being the holders of all of the outstanding shares of Company
Common Stock, are concurrently with the execution of this Agreement approving
this Agreement;
WHEREAS, for Federal income tax purposes it is intended that the
Merger qualify as a "reorganization" within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, Parent, Merger Sub, the Company and the Stockholders desire
to make certain representations, warranties, covenants and agreements in
connection with the Merger.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements hereinafter set forth,
the parties hereto agree as follows:
ARTICLE I.
THE MERGER
Section 1.01 The Merger. On the terms and subject to the conditions
set forth in this Agreement, and in accordance with the General Corporation
Law of the State of Delaware (the "DGCL"), Merger Sub shall be merged with and
into the Company at the Effective Time (as defined in Section 1.03 below). At
the Effective Time and as a result of the Merger, the separate corporate
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existence of Merger Sub shall cease and the Company shall continue as the
surviving entity after the Merger (the "Surviving Entity").
Section 1.02 Closing. The closing of the Merger (the "Closing") shall
take place at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, Four
Times Square, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, as soon as possible after the satisfaction
or waiver of the conditions set forth in Article VIII (other than those
conditions which can only be satisfied at the Closing) or such time and date
as agreed by Parent and the Company. The date on which the Closing occurs is
referred to in this Agreement as the "Closing Date."
Section 1.03 Effective Time. Prior to the Closing Parent shall
prepare, and on the Closing Date the Surviving Entity shall file with the
Secretary of State of the State of Delaware a certificate of merger or other
appropriate documents (the "Certificate of Merger") executed in accordance
with the relevant provisions of the DGCL and shall make all other filings or
recordings required under the DGCL. The Merger shall become effective at such
time as the Certificate of Merger is duly filed with such Secretary of State,
or at such later time as Parent and the Company shall agree and specify in the
Certificate of Merger (the time the Merger becomes effective being the
"Effective Time").
Section 1.04 Effect of the Merger. At the Effective Time, the effect
of the Merger shall be as provided herein and in the applicable provisions of
the DGCL.
Section 1.05 Certificate of Incorporation and By-laws.
(a) The certificate of incorporation of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Entity (except that the name of the Surviving
Entity shall be "U.S. Vision, Inc.") until thereafter changed or amended as
provided therein or by the DGCL or applicable Law.
(b) The by-laws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be the by-laws of the Surviving Entity (except that the
name of the Surviving Entity shall be "U.S. Vision, Inc.") until thereafter
changed or amended as provided therein or by applicable Law.
Section 1.06 Directors. The directors of the Company immediately
prior to the Effective Time shall be the directors of the Surviving Entity
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
Section 1.07 Officers. The officers of the Company immediately prior
to the Effective Time shall continue to be the officers of the Surviving
Entity until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
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ARTICLE II.
EFFECT ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
Section 2.01 Effect on Capital ▇▇▇▇▇.▇▇ the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any shares
of Company Common Stock or any shares of capital stock of Merger Sub:
(a) Capital Stock of Merger Sub.Each issued and outstanding share of
capital stock of Merger Sub shall be converted into and become one duly
authorized, validly issued, fully paid and non-assessable share of common
stock, $0.001 par value per share, of the Surviving Entity.
(b) Cancellation of Treasury Stock.Each share of Company Common Stock
that is owned by the Company (or any of its direct or indirect wholly-owned
subsidiaries) shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and no Merger Consideration
shall be delivered or deliverable in exchange therefor.
(c) Conversion of Common Stock.
(1) Other than shares cancelled pursuant to Section 2.01(b),
each issued and outstanding share of Company Common Stock outstanding
immediately prior to the Effective Time shall be converted into the right to
receive 0.4141 (the "Exchange Ratio") shares of common stock, par value $0.001
per share, of Parent ("Parent Common Stock") (the "Merger Consideration").
(2) If, between the date of this Agreement and the Effective
Time, the outstanding shares of Parent Common Stock or Company Common Stock
shall have been changed into a different number of shares or a different class
by reason of any reclassification, recapitalization, split-up, combination,
exchange of shares or readjustment, or a stock dividend thereon shall be
declared with a record date within said period, the Exchange Ratio shall be
correspondingly adjusted.
(d) Options and Warrants. As of the Effective Time, each outstanding
option, warrant or other right to acquire shares of Company Common Stock then
outstanding (each, a "Company Stock Option"), whether or not then exercisable,
shall be assumed by Parent and converted into an option, warrant or other
right to purchase shares of Parent Common Stock in accordance with this
Section 2.01(d). Each Company Stock Option so converted shall continue to
have, and be subject to, the same material terms and conditions (including
vesting schedule) as set forth in the applicable agreement pursuant to which
such Company Stock Option was issued immediately prior to the Effective Time,
except that, as of the Effective Time, (i) each Company Stock Option shall be
exercisable for that number of whole shares of Parent Common Stock equal to
the product of the number of shares of Company Common Stock that were issuable
upon exercise of such Company Stock Option immediately prior to the Effective
Time multiplied by the Exchange Ratio, rounded to the nearest whole number of
shares of Parent Common Stock, and (ii) the per share exercise price for each
share of Parent Common Stock
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issuable upon exercise of each Company Stock Option so converted shall be
equal to the quotient determined by dividing the exercise price per share of
Company Common Stock at which such Company Stock Option was exercisable
immediately prior to the Effective Time by the Exchange Ratio, rounded to the
nearest whole cent. The Company shall use its reasonable best efforts to
obtain all consents necessary to allow for the conversion of the Company Stock
Options as provided in this Section 2.01(d).
Section 2.02 Exchange of Certificates.
(a) Exchange Procedures. At the Closing, each holder of record of a
certificate or certificates that immediately prior to the Effective Time
represented outstanding shares of Company Common Stock whose shares were
converted into the right to receive Merger Consideration pursuant to Section
2.01(c) (the "Certificates"), shall surrender such Certificate to Parent or an
agent designated thereby in exchange for the Merger Consideration. Upon
surrender of a Certificate to Parent or to such other agent, the holder of
such Certificate shall be entitled to receive in exchange therefor the number
of whole shares of Parent Common Stock into which the aggregate number of
shares of Company Common Stock previously represented by such Certificate
shall have been converted pursuant to Section 2.01(c) and cash in lieu of
fractional shares of Parent Common Stock to which such holder is entitled
pursuant to Section 2.02(c), and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Company
Common Stock that is not registered in the transfer records of the Company,
payment may be made to a person other than the person in whose name the
Certificate so surrendered is registered, if such Certificate shall be
properly endorsed or otherwise be in proper form for transfer and the person
requesting such payment shall pay any transfer or other taxes required by
reason of the payment to a person other than the registered holder of such
Certificate or establish to the satisfaction of Parent that such tax has been
paid or is not applicable. Until surrendered as contemplated by this Section
2.02, each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the Merger
Consideration into which the shares of Company Common Stock theretofore
represented by such Certificate have been converted pursuant to Section
2.01(c).
(b) No Further Ownership Rights in Common Stock. The Merger
Consideration issued in accordance with the terms of this Article II upon
conversion of any shares of Company Common Stock shall be deemed to have been
issued in full satisfaction of all rights pertaining to such shares of Company
Common Stock. After the Effective Time of the Merger there shall be no further
registration of transfers on the stock transfer books of the Surviving Entity
of shares of Company Common Stock that were outstanding immediately prior to
the Effective Time.
(c) No Fractional Shares.
(1) No certificates or scrip representing fractional shares of
Parent Common Stock shall be issued upon the conversion of Company Common
Stock, and such fractional share interests shall not entitle the owner thereof
to vote or to any rights of a holder of Parent Common Stock.
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(2) In lieu of any such fractional shares, each holder of
Company Common Stock who would otherwise be entitled to such fractional shares
shall be entitled to an amount in cash, without interest, rounded to the
nearest cent, equal to the product of (A) the amount of the fractional share
interest in a share of Parent Common Stock to which such holder is entitled
and (B) an amount equal to the average of the closing sale prices for Parent
Common Stock on the American Stock Exchange for each of the five consecutive
trading days ending with (and including) the trading day which is two days
prior to the date of the Effective Time.
(d) Withholding Rights. Parent shall be entitled to deduct and
withhold from the consideration otherwise payable to any holder of Company
Common Stock pursuant to this Agreement such amounts as may be required to be
deducted and withheld with respect to the making of such payment under the
Code, or under any provision of state, local or foreign Law (as defined in
Section 3.05 below). To the extent that amounts are so withheld and paid over
to the appropriate taxing authority, the Surviving Entity will be treated as
though it withheld an appropriate amount of the type of consideration
otherwise payable pursuant to this Agreement to any holder of Company Common
Stock, respectively, sold such consideration for an amount of cash equal to
the fair market value of such consideration at the time of such deemed sale
and paid such cash proceeds to the appropriate taxing authority.
Section 2.03 Federal Income Tax Treatment. It is intended by the
parties hereto that the Merger qualify as a "reorganization" within the
meaning of Section 368(a) of the Code. The parties hereto hereby adopt this
Agreement as a "plan of reorganization" within the meanings of Sections
1.368-2(g) and 1.368-3(a) of the U.S. Treasury Regulations promulgated under
the Code.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as expressly set forth in the corresponding section of the
disclosure letter delivered by the Company to Parent prior to the execution of
this Agreement (the "Company Disclosure Letter"), the Company hereby
represents and warrants to Parent as follows (for the avoidance of doubt, if
any section of the Company Disclosure Letter includes an appropriate
cross-reference with respect to a specific matter to the disclosure included
in another section of the Company Disclosure Letter, the matter shall be
deemed to have been disclosed in such section of the Company Disclosure
Letter):
Section 3.01 Organization, Standing and Power. Each of the Company
and each of its subsidiaries (the "Company Subsidiaries") is duly organized or
formed, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has full corporate, partnership or
limited liability company power and authority to conduct its businesses as
presently conducted. The Company and each Company Subsidiary is duly qualified
to do business in each jurisdiction where the nature of its business or the
ownership or leasing of its properties make such qualification necessary or
the failure to so qualify, individually or in the aggregate, has had or would
reasonably be expected to have a Company Material Adverse Effect. The Company
has delivered to Parent true and complete copies of the certificate of
incorporation
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of the Company, as amended (as so amended, the "Company Charter"), and the
by-laws of the Company, as amended (as so amended, the "Company By-laws").
The Company is not in violation of any provision of the Company Charter or
the Company By-laws.
Section 3.02 The Company Subsidiaries; Equity Interests.
(a) Section 3.02(a) of the Company Disclosure Letter lists each
Company Subsidiary and its jurisdiction of organization or formation. All the
outstanding shares of capital stock of each Company Subsidiary have been
validly issued and are fully paid and nonassessable and are owned by the
Company, by another Company Subsidiary or by the Company and another Company
Subsidiary, free and clear of all Liens, except Permitted Liens.
(b) Except for its interests in the Company Subsidiaries, the Company
does not own, directly or indirectly, any Equity Interest in any person.
Section 3.03 Capital Structure.
(a) The authorized capital stock of the Company consists of
20,000,000 shares of Company Common Stock and 5,000,000 shares of preferred
stock, par value $0.001 per share. As of the date hereof, (i) 15,476,733
shares of Company Common Stock are issued and outstanding, (ii) 673,003 shares
of Company Common Stock are held by the Company in its treasury, (iii)
1,495,147 shares of Company Common Stock are subject to outstanding Company
Stock Options and (iv) no shares of preferred stock are issued or outstanding.
Section 3.03(a) of the Company Disclosure Letter contains a list of the
outstanding Company Stock Options, including their holders, number of
underlying shares, vesting schedule, term and exercise price. Except as set
forth above, no shares of capital stock or other voting securities of the
Company are issued, reserved for issuance or outstanding.
(b) All outstanding shares of Company Common Stock are, and all such
shares that may be issued prior to the Effective Time will be when issued,
duly authorized, validly issued, fully paid and nonassessable and not subject
to or issued in violation of any purchase option, call option, right of first
refusal, preemptive right, subscription right or any similar right under any
provision of the DGCL, the Company Charter, the Company By-laws or any
Contract (as defined in Section 3.05 below) to which the Company is a party or
otherwise bound.
(c) There are not any bonds, debentures, notes or other indebtedness
of the Company having the right to vote (or convertible into, or exchangeable
for, securities having the right to vote) on any matters on which holders of
Company Common Stock may vote ("Voting Company Debt").
(d) Except as set forth above, as of the date hereof, there are not
any options, warrants, rights, convertible or exchangeable securities,
"phantom" stock rights, stock appreciation rights, stock-based performance
units, commitments, Contracts, arrangements or undertakings of any kind to
which the Company or any Company Subsidiary is a party or by which any of them
is bound (i) obligating the Company or any Company Subsidiary to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares
of capital stock or other
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Equity Interests in, or any security convertible or exercisable for or
exchangeable into any capital stock of or other Equity Interests in, the
Company or any Company Subsidiary or any Voting Company Debt, (ii) obligating
the Company or any Company Subsidiary to issue, grant, extend or enter into
any such option, warrant, call, right, security, commitment, Contract,
arrangement or undertaking or (iii) that give any person the right to receive
any economic benefit or right similar to or derived from the economic benefits
and rights occurring to holders of Company Common Stock.
(e) There are not any outstanding contractual obligations of the
Company or any Company Subsidiary to repurchase, redeem or otherwise acquire
any shares of capital stock of the Company or any Company Subsidiary.
Section 3.04 Authority; Execution and Delivery; Enforceability.
(a) The Company has all requisite corporate power and authority to
execute and deliver this Agreement to consummate the Merger and the other
transactions contemplated hereby. The execution and delivery by the Company of
this Agreement and the consummation by the Company of the Merger and the other
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company. The Company has duly executed and
delivered this Agreement, and, assuming due authorization, execution and
delivery of this Agreement by Parent and Merger Sub, this Agreement
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms, except that enforcement hereof may be subject to or
limited by (i) bankruptcy, insolvency or other similar laws, now or hereafter
in effect, affecting its creditors' rights generally and (ii) the effect of
general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).
(b) The board of directors of the Company (the "Company Board"), at
meetings duly called and held, duly adopted resolutions (which resolutions
have not been rescinded or modified) approving this Agreement and approving
the Merger and the other transactions contemplated hereby and determining they
are advisable. No state takeover statute or similar statute or regulation is
applicable to or purports to be applicable to the Merger or any other
transactions contemplated hereby.
(c) The only vote of holders of any class or series of the capital
stock of the Company necessary to adopt this Agreement and approve the Merger
is the approval of this Agreement, at a stockholders meeting or by written
consent, by a majority of the outstanding shares of Company Common Stock
entitled to vote thereon. The Company has received a duly executed written
consent (which consent has not been rescinded or modified) of the holders of
all of the outstanding shares of Company Common Stock entitled to vote thereon
approving the Merger and the other transactions contemplated hereby, a copy of
which has been delivered to Parent.
Section 3.05 No Conflicts; Consents.
(a) The execution and delivery by the Company of this Agreement do
not, and the consummation by the Company of the Merger and the other
transactions contemplated
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hereby and compliance by the Company with the terms hereof will not, conflict
with, or result in any violation of or default (with or without notice or
lapse of time, or both) under, or give rise to a right of consent,
termination, cancellation or acceleration of any obligation or to loss of a
material benefit under, or to increased, additional, accelerated or guaranteed
rights or entitlements of any person under, or result in the creation of any
Lien upon any of the properties or assets of the Company or any Company
Subsidiary under, any provision of (i) the Company Charter, the Company
By-laws or the comparable organizational documents of any Company Subsidiary,
(ii) any contract, management agreement, development agreement, consulting
agreement, lease, license, indenture, note, bond, agreement, permit,
concession, franchise or other instrument (a "Contract") to which the Company
or any Company Subsidiary is a party or by which any of their respective
properties or assets is bound or (iii) any judgment, order or decree
("Judgment") or statute, law (including common law), ordinance, rule or
regulation ("Law") applicable to the Company or any Company Subsidiary or
their respective properties or assets.
(b) No consent, approval, license, order or authorization ("Consent")
of, or registration, declaration or filing with, or Permit (as defined in
Section 3.10 below) from, any Federal, state, local or foreign government or
any court of competent jurisdiction, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign (a
"Governmental Entity"), is required to be obtained or made by the Company or
any Company Subsidiary in connection with the execution, delivery and
performance of this Agreement or the consummation of the Merger and the other
transactions contemplated hereby, other than the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware.
Section 3.06 Financial Statements; Undisclosed Liabilities.
(a) Section 3.6 of the Company Disclosure Letter sets forth the (a)
audited consolidated balance sheet of the Company and the Company Subsidiaries
as of January 31, 2004, (b) audited consolidated balance sheet of the Company
and the Company Subsidiaries as of January 31, 2005 (the "Company 2005 Balance
Sheet"), (c) related consolidated statements of income and cash flows for each
of the years ended January 31, 2004 and January 31, 2005, (d) unaudited
consolidated balance sheet of the Company and the Company Subsidiaries as of
June 30, 2005, and (e) related consolidated statements of income and cash flow
for the five months ended June 30, 2005 (collectively, the "Company Financial
Statements").
(b) The Company Financial Statements (i) have been prepared from, are
in accordance with, and accurately reflect the books and records of the
Company and the Company Subsidiaries in all material respects, (ii) have been
prepared in accordance with generally accepted accounting principles ("GAAP")
in all material respects applied on a consistent basis during the periods
involved and (iii) fairly present in all material respects in accordance with
GAAP the consolidated financial position of the Company and the Company
Subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods shown (subject, in the case of
clauses (ii) and (iii), to normal year-end adjustments, none of which,
individually or in the aggregate, would reasonably be expected to have a
company Material Adverse Effect, and the absence of footnotes in the case of
unaudited interim financial statements). The books and records of the Company
and the Company Subsidiaries have been,
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and are being, maintained in all material respects in accordance with GAAP and
any other applicable legal and accounting requirements.
(c) Except as and to the extent disclosed or reserved against on the
Company 2005 Balance Sheet, neither the Company nor any Company Subsidiary has
any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by GAAP to be set forth on a consolidated
balance sheet of the Company and the Company Subsidiaries or in the notes
thereto, except for liabilities that, individually or in the aggregate, have
not had and would not reasonably be expected to have a Company Material
Adverse Effect.
(d) Neither the Company nor any of the Company Subsidiaries is, or
has at any time since January 1, 2003 been, subject to the reporting
requirements of Sections 13(a) and 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act").
Section 3.07 Absence of Certain Changes or Events. Since January 31,
2005, the Company has conducted its business in all material respects only in
the ordinary course consistent with past practice, and since such date there
has not been any event or development, condition or occurrence that,
individually or in the aggregate, has had or would reasonably be expected to
have a Company Material Adverse Effect.
Section 3.08 Information Supplied. None of the information supplied
or to be supplied by the Company for inclusion or incorporation by reference
in the registration statement on Form S-4 to be filed with the Securities and
Exchange Commission (the "SEC") by Parent in connection with the issuance of
shares of Parent Common Stock in the Merger (the "Form S-4") will, at the time
the Form S-4 is filed with the SEC, at any time it is amended or supplemented
or at the time it becomes effective under the Securities Act of 1933, as
amended (the "Securities Act"), contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
Section 3.09 Litigation. There is no suit, claim, action,
investigation or proceeding ("Claim") pending or, to the Knowledge of the
Company, threatened against the Company or any Company Subsidiary that,
individually or in the aggregate, has had or would reasonably be expected to
have a Company Material Adverse Effect, nor is there any Judgment outstanding
against the Company or any Company Subsidiary.
Section 3.10 Compliance With Applicable Laws. The Company and the
Company Subsidiaries and their relevant personnel and operations are in
compliance with all applicable Laws, except to the extent that the failure to
be in compliance with any such Law has not had and would not reasonably be
expected to have a Company Material Adverse Effect. Neither the Company nor
any Company Subsidiary has received any written communication during the past
two years from a Governmental Entity that alleges that the Company or a
Company Subsidiary is not in compliance with any applicable Law. The Company
and the Company Subsidiaries have in effect all permits, findings of
suitability, licenses, variances, certificates of occupancy, exemptions,
authorizations, operating certificates, franchises, entitlements, consents,
orders and approvals of all Governmental Entities (collectively,
9
"Permits"), necessary or advisable for them to own, lease or operate their
properties and assets (including the Real Property, as defined in Section
3.16(a)(iv) below) and to carry on their businesses as now conducted or
proposed to be conducted. Neither the Company nor any Company Subsidiary is in
conflict with or in default (or would be in default with the giving of notice,
the passage of time or both) with, or in violation of, any Permit, except to
the extent that, individually or in the aggregate, such conflict or default
has not had and would not reasonably be expected to have a Company Material
Adverse Effect. There is no event which caused or, to the Knowledge of the
Company, would reasonably be expected to result in the revocation,
cancellation, non-renewal or adverse modification of any such Permit.
Section 3.11 Environmental.
(a) For the purpose of this Agreement, the following defined terms
shall have the following meanings:
(i) "Environmental Laws" shall mean all Laws relating to pollution or
protection of the environment or human health and safety, including, without
limitation, Laws relating to Releases (as defined in Section 3.11(a)(iii)
below) or threatened Releases of Hazardous Substances (as defined in Section
3.11(a)(ii) below) into the indoor or outdoor environment (including, without
limitation, ambient air, surface water, groundwater, land, surface and
subsurface strata) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, Release, transport or handling of
Hazardous Substances and all Laws with regard to recordkeeping, notification,
disclosure and reporting requirements respecting Hazardous Substances, and all
Laws relating to endangered or threatened species of fish, wildlife and plants
and the management or use of natural resources.
(ii) "Hazardous Substances" shall mean (1) any petrochemical or
petroleum products, radioactive materials, asbestos in any form that is or
could become friable, urea formaldehyde foam insulation, transformers or other
equipment that contain dielectric fluid containing polychlorinated biphenyls
and radon gas; (2) any chemicals, materials or substances defined as or
included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "restricted hazardous materials," "extremely hazardous
substances," "toxic substances," "contaminants" or "pollutants" or words of
similar meaning and regulatory effect; or (3) any other chemical, material or
substance, exposure to which is prohibited, limited, or regulated by any
applicable Environmental Laws.
(iii) "Release" shall mean any release, spill, emission, discharge,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration into the indoor or outdoor environment (including, without
limitation, ambient air, surface water, groundwater, and surface or subsurface
strata) or into or out of any property, including the movement of Hazardous
Substances through or in the air, soil, surface water, groundwater or
property.
(b) The Company and the Company Subsidiaries have obtained all
material permits, licenses and other authorizations which are required under
the Environmental Laws ("Environmental Permits") for the operation of their
businesses and the ownership, use and operation of the Real Property, all such
permits, licenses and authorizations are in effect, no appeal nor any other
action is pending to revoke any Environmental Permit and the Company and the
10
Company Subsidiaries are in material compliance with all terms and conditions
of all such Environmental Permits.
(c) The Company and the Company Subsidiaries have been, and are, in
material compliance with all applicable Environmental Laws.
(d) Neither the Company nor any of Company Subsidiary has received
written notice of any existing or pending material civil, criminal or
administrative Claim, hearing, notice of violation or demand letter
(collectively, "Allegations"), or, to the Knowledge of the Company, threatened
Allegations, relating to the Company or any Company Subsidiary, the Real
Property or any other property or facility previously owned, operated or
leased by the Company or any Company Subsidiary, relating in any way to the
Environmental Laws. None of the Company and the Company Subsidiaries are
subject to any material administrative or judicial Judgment or any other
enforceable or voluntary agreement with a Governmental Entity relating in any
way to the Environmental Laws.
(e) The Company and the Company Subsidiaries have not, and, to the
Knowledge of the Company, no other person has, Released, discharged, or
otherwise disposed of any Hazardous Substances on, beneath or adjacent to the
Real Property or any property formerly owned, operated or leased by the
Company or any of the Company Subsidiaries, except for Releases of Hazardous
Substances that are not likely to result in a material Claim against the
Company or any of the Company Subsidiaries.
(f) Neither the execution of this Agreement nor the consummation of
the Merger will require compliance with any Environmental Laws relating to the
transfer of property or businesses, including, without limitation, the New
Jersey Industrial Site Recovery Act, N.J.S.A. 13:1K-6, et seq.
Section 3.12 Intellectual Property.
(a) For the purpose of this Agreement, the following defined terms
shall have the following meanings:
(i) "Company Intellectual Property" means all Intellectual Property
owned, singly or jointly, by the Company or any of the Company Subsidiaries;
(ii) "Intellectual Property" means all copyrights, copyright
registrations and applications, patents and industrial designs, including
without limitation any continuations, divisionals, continuations-in-part,
renewals, reissues and applications for any of the foregoing, trademarks,
service marks, trade names, domain names, designs, logos, emblems, signs or
insignia, slogans, other similar designations of source or origin and general
intangibles of like nature, together with the goodwill of the business
symbolized by any of the foregoing, registrations and applications relating to
any of the foregoing, trade secrets, financing and marketing information,
technology, know-how, inventions, proprietary processes, formulae, algorithms,
models and methodologies, Software (as defined in Section 3.12(a)(iii) below),
and similar property anywhere in the world, together with the rights to ▇▇▇
for past infringement thereof; and
11
(iii) "Software" means all computer programs (whether in source code
or object code form), databases, compilations and data, and all documentation
related to any of the foregoing. (b) Section 3.12(b)(i) of the Company
Disclosure Letter sets forth a complete list of all United States, foreign,
international and state: (i) patents and patent applications; (ii) trademark
or trade name registrations and applications and material unregistered
trademarks; (iii) domain names; and (iv) copyright registrations and
applications and material unregistered copyrights, that are Company
Intellectual Property. Section 3.12(b)(ii) of the Company Disclosure Letter
sets forth a complete list of all material Intellectual Property agreements
(other than standard off-the-shelf licenses for commercially available
Software).
(c) The Intellectual Property set forth on Sections 3.12(b)(i) and
3.12(b)(ii) of the Company Disclosure Letter are sufficient for the continued
conduct of the Company after the Effective Time in the same manner as the
Company was conducted prior to such time. The Company or a Company Subsidiary
owns all Company Intellectual Property and has the valid and enforceable right
to use all Company Intellectual Property and any other Intellectual Property
used by the Company or any Company Subsidiary, in each case, free and clear of
all Liens, except Permitted Liens.
(d) There is no pending or, to the Knowledge of the Company,
threatened Claim against the Company or any Company Subsidiary (i) with
respect to any Company Intellectual Property or any other Intellectual
Property used by Company or any Company Subsidiary, (ii) alleging that the
Company Intellectual Property infringes the rights of any person or (iii)
challenging the Company's or any Company Subsidiary's ownership of any Company
Intellectual Property or use of any Intellectual Property, or the validity,
enforceability or registrability of any Company Intellectual Property or any
other Intellectual Property used by the Company or any Company Subsidiary,
and, to the Knowledge of the Company, there is no reasonable basis for a Claim
regarding any of the foregoing. Neither Company nor any Company Subsidiary has
brought or threatened a Claim against any person (x) alleging infringement of
any Company Intellectual Property or any other Intellectual Property used by
the Company or any Company Subsidiary or (y) challenging any person's
ownership or use of, or the validity, enforceability or registrability of, any
Company Intellectual Property or any other Intellectual Property used by the
Company or any Company Subsidiary, and, to the Knowledge of the Company, there
is no reasonable basis for a Claim regarding any of the foregoing.
Section 3.13 Employee Benefit Plans.
(a) Section 3.13(a) of the Company Disclosure Letter sets forth a
true and correct list of each deferred compensation plan, incentive
compensation plan, equity compensation plan, "welfare" plan, fund or program
(within the meaning of section 3(1) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"); "pension" plan, fund or program (within the
meaning of section 3(2) of ERISA); each employment , termination or severance
agreement; and each other employee benefit plan, fund, program, agreement or
arrangement, in each case, that is sponsored, maintained or contributed to or
required to be contributed to by the Company, any of the Company Subsidiaries
or by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), all of which together with the Company would be deemed a "single
12
employer" within the meaning of Section 4001(b) of ERISA, for the benefit of
any employee or former employee of the Company or any Company Subsidiary (the
"Plans").
(b) Each Plan that is intended to be qualified under Section 401(a)
of the Code, has received a favorable determination letter from the Internal
Revenue Service ("IRS") with respect to such qualification, and the Company is
not aware of any circumstances likely to result in revocation of any such
favorable determination letter. There is no material pending or, to the
Knowledge of the Company, threatened litigation relating to the Plans. Neither
the Company nor any of the Company Subsidiaries has engaged in a transaction
with respect to any Plan that, assuming the taxable period of such transaction
expired as of the date hereof, could subject the Company or any Company
Subsidiary to a Tax or penalty imposed by either Section 4975 of the Code or
Section 502(i) of ERISA.
(c) Neither the Company nor any ERISA Affiliate maintains or has ever
maintained a Plan that is subject to Title IV of ERISA. Neither the Company or
any of the Company Subsidiaries nor an ERISA Affiliate has contributed to a
"multiemployer plan," within the meaning of Section 3(37) of ERISA, at any
time.
(d) The Company has heretofore made available to Parent with respect
to each of the Plans true and correct copies of each of the following
documents, if applicable: (i) the Plan document and any amendments thereto;
(ii) any related trust or other funding vehicle; (iii) the most recent IRS
determination letter for such Plans as well as the application materials
submitted to the IRS; (iv) the most recent summary plan description and
related summaries of material modifications for each Plan that is governed by
ERISA; (v) for the three most recent plan years, all annual reports (5500
Series) for each Plan that have been filed with any Governmental Entity and
(vi) all other material documents relating to any Plan as may reasonably be
requested by Parent.
(e) Neither the Company nor any of the Company Subsidiaries has any
obligations for retiree health and life benefits under any Plan. The Company
or any Company Subsidiary may amend or terminate any such Plan at any time
without incurring any liability thereunder.
(f) Neither the execution of this Agreement nor the consummation of
the transactions contemplated hereby will (i) entitle any employees of the
Company or any Company Subsidiary to severance pay or any increase in
severance pay upon any termination of employment prior to or after the date
hereof, (ii) accelerate the time of payment or vesting or trigger any payment
or 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 of the Plans, (iii) cause the Company or any Company
Subsidiary to record additional compensation expense on its income statement
with respect to any outstanding stock option or other equity-based award or
(iv) result in any payments under, any of the Plans which would not be
deductible under Section 162(m) or Section 280G of the Code.
(g) None of the Company, any of the Company Subsidiaries, any ERISA
Affiliate, any of the Plans, any trust created thereunder, nor to the
Knowledge of the Company,
13
any trustee or administrator thereof has engaged in a transaction or has taken
or failed to take any action in connection with which the Company, any of the
Company Subsidiaries or any ERISA Affiliate could be subject to any material
liability for either a civil penalty assessed pursuant to Section 409 or
502(i) of ERISA or a tax imposed pursuant to Section 4975, 4976 or 4980B of
the Code.
(h) Each of the Plans has been operated and administered in all
material respects in accordance with the terms of each Plan, applicable Laws,
including but not limited to ERISA and the Code.
(i) No "leased employee," as that term is defined in Section 414(n)
of the Code, performs services for the Company or any of the Company
Subsidiaries.
(j) There are no pending or, to the Knowledge of the Company,
threatened or anticipated claims by or on behalf of any Plan, by any employee
or beneficiary under any such Plan or otherwise involving any such Plan (other
than routine claims for benefits).
Section 3.14 Labor Matters.Since January 1, 2001, neither the Company
nor any Company Subsidiary has experienced any labor strikes or, to the
Knowledge of the Company, union organization attempts, requests for
representation, work slowdowns or stoppages or other disputes due to labor
disagreements, and, to the Knowledge of the Company, there is currently no
such action threatened against or affecting the Company or any Company
Subsidiary. The Company and the Company Subsidiaries are each in compliance
with all applicable Laws with respect to labor relations, employment and
employment practices, occupational safety and health standards, terms and
conditions of employment, wages and hours, human rights, pay equity and
workers compensation, except to the extent that the failure to be in
compliance with any such Law has not had and would not reasonably be expected
to have a Company Material Adverse Effect. The Company and the Company
Subsidiaries are not engaged in any unfair labor practice, and no unfair labor
practice charge or complaint against the Company or any Company Subsidiary is
pending or, to the Knowledge of the Company, threatened before the National
Labor Relations Board or any comparable Federal, state, provincial or foreign
agency or authority. No grievance or arbitration proceeding arising out of a
collective bargaining agreement is pending or, to the Knowledge of the
Company, threatened against the Company or any Company Subsidiary that would
reasonably be expected to result in material Liability (as defined in Section
10.04(a) below) to the Company.
Section 3.15 Material Agreements.
(a) Neither the Company nor any of the Company Subsidiaries is a
party to or bound by:
(i) any agreement for the purchase of materials, supplies, goods,
services, equipment or other assets, including any license for Software, that
provides for either (A) annual payments by the Company or any Company
Subsidiary of $100,000 or more or (B) aggregate payments by the Company or any
Company Subsidiary of $500,000 or more;
14
(ii) any limited partnership, joint venture or other unincorporated
business organization or similar arrangement or agreement in which the Company
or any Company Subsidiary serves as a general partner or otherwise has
unlimited liability or any other material similar agreement or arrangement;
(iii) any agreement relating to the acquisition or disposition of any
business of the Company, any Company Subsidiary or any other person (whether
by merger, sale of stock, sale of assets or otherwise);
(iv) any agreement relating to indebtedness for borrowed money or any
guarantee or similar agreement or arrangement relating thereto;
(v) any lease of real property;
(vi) any license, franchise or similar agreement material to the
Company or any Company Subsidiary, taken as a whole;
(vii) any material marketing or other similar agreement and any
agreement under which the Company or any Company Subsidiary has granted any
exclusive marketing or other right to any person;
(viii) any agreement that restricts or prohibits the Company or any
Company Subsidiary from competing with any person in any line of business or
from competing in, engaging in or entering into any line of business in any
area and which would so restrict or prohibit the Company or any Company
Subsidiary after the Effective Time;
(ix) any agreements to which the Company or any Company Subsidiary is
a party or otherwise bound which contain provisions (a) granting to any person
rights in Intellectual Property used by the Company or any Company Subsidiary;
(b) granting to the Company or any Company Subsidiary any rights in
Intellectual Property owned or controlled by any person; (c) restricting the
Company's or any Company Subsidiary's use of Intellectual Property that is
used by the Company or any Company Subsidiary; or (d) transferring ownership
of Intellectual Property rights to the Company or any Company Subsidiary;
(x) any material agreement containing a "change in control" or
similar provisions relating to a change in control of the Company or any
Company Subsidiary;
(xi) any powers of attorney other than those entered into in the
ordinary course of business;
(xii) any agreements material to the Company or any Company
Subsidiary taken as a whole pursuant to which the Company or Company
Subsidiary is obligated to indemnify any other person;
(xiii) any agreement with any Governmental Entity;
(xiv) any agreement with any of the Stockholders or any of their
affiliates or any current or former officer, director, stockholder, employee,
15
consultant, agent or other representative of the Company or any Company
Subsidiary (or with a person in which any of the foregoing is a controlling
person);
(xv) any agreement having a duration of six months or more and not
terminable without penalty upon 60 days or less prior notice by the Company or
any Company Subsidiary that are a party thereto; or
(xvi) any agency, broker, exclusive dealing, distributor, dealer,
manufacturer, representative, reseller, agency and sales promotion agreements
involving payments in excess of $50,000 or any other agreement that
compensates any person, other than employees or consultants of the Company or
any Company Subsidiary, based on any sales by the Company or any Company
Subsidiary.
Such contracts, agreements and instruments, each as amended or
modified (including all waivers with respect thereto), are referred to herein
as the "Material Agreements."
(b) The Company has heretofore furnished or made available to Parent
complete and correct copies of the Material Agreements. (i) Each of the
Material Agreements is in full force and effect and enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar Laws affecting the enforcement of creditors' rights generally
and general principles of equity (regardless of whether enforcement is
considered in a proceeding at Law or in equity); (ii) neither the Company nor
any Company Subsidiary has received any written notice of cancellation or
termination of or, to the Knowledge of the Company, any expression or
indication of an intention or desire to cancel or terminate any of the
Material Agreements; (iii) no Material Agreement is the subject of or, to the
Knowledge of the Company, has been threatened to be made the subject of, any
arbitration, suit or other legal proceeding; (iv) with respect to any Material
Agreement which by its terms will terminate as of a certain date unless
renewed or unless an option to extend such Material Agreement is exercised,
neither the Company nor any Company Subsidiary has received any written
notice, or otherwise has any Knowledge, that any such Material Agreement will
not be so renewed or that any such extension option will not be exercised; and
(v) there exists no material event of default or occurrence, condition or act
on the part of the Company or any Company Subsidiary or, to the Knowledge of
the Company, on the part of the other parties to the Material Agreements,
which constitutes or would constitute (with notice or lapse of time or both) a
material breach of or material default under any of the Material Agreements.
Section 3.16 Properties.
(a) For the purpose of this Agreement, the following defined terms
shall have the following meanings:
(i) "Lease" means the lease, sublease, license or other agreement
relating to the use and/or occupancy of any of the Leased Premises.
(ii) "Leased Premises" means all the real property that is leased or
operated by the Company and the Company Subsidiaries and used or held for use
by the Company or any Company Subsidiary in the operation or conduct of their
business.
16
(iii) "Owned Real Property" means all the real property that is owned
and used or held for use by the Company and the Company Subsidiaries in the
operation or conduct of their business.
(iv) "Real Property" means, collectively, the Leased Premises under
the Leases and the Owned Real Property.
(b) Section 3.16(b) of the Company Disclosure Letter contains a true,
correct and complete list, as of the date hereof, of the Leased Premises and
the Leases, the lessor and lessee (or sublessor and sublessee, or licensor or
licensee, as the case may be) and any guarantor under each Lease and the
current use (or uses) of such Leased Premises. Prior to the date hereof,
Parent has either been provided with a true, correct and complete copy of each
Lease and all amendments thereto or has been given access to the Company's
files to examine and copy each Lease and all amendments thereto. The Company
and the Company Subsidiaries have good, valid and binding license, leasehold
or equivalent interest in all Leased Premises, free and clear of any Liens
except for Permitted Liens. Each Lease is the legal, valid and binding
obligation of the Company or the Company Subsidiaries thereunder and is
enforceable and is in full force and effect. No event has occurred or
circumstance exists which, with the delivery of notice or the passage of time
or both, would constitute such a breach or default by the Company or any
Company Subsidiary, or, to the Knowledge of the Company, the lessor or
sublessor or licensor or licensee, or which would permit the termination,
modification or acceleration of performance of the obligations of the Company
or any of the Company Subsidiaries, or the lessor or sublessor or licensor or
licensee, under any Lease.
(c) Section 3.16(b) of the Company Disclosure Letter contains a true,
correct and complete list of the Owned Real Property, including the entity
which owns such Owned Real Property and the current use (or uses) of such
Owned Real Property. Prior to the date hereof, Parent has been provided with a
true, correct and complete copy of all deeds, mortgages, surveys, title
insurance policies (including any underlying documents relating to Liens), if
any, or equivalent documentation with respect to the Owned Real Property and
other material documents relating to or affecting the title to the Owned Real
Property. The Company or one of the Company Subsidiaries has good, valid and
marketable title in fee simple to each of the Owned Real Property and to all
buildings, structures and other improvements thereon and all fixtures thereto,
in each case, free and clear of any Liens except for Permitted Liens. Neither
the Company nor any of the Company Subsidiaries has granted to any person any
right to use or occupy any of the applicable Owned Real Property, other than
rights or grants which appear of record.
(d) No options or rights of first offer or rights of first refusal or
similar rights or options have been granted by the Company or any Company
Subsidiary to any person to purchase, lease, license or otherwise acquire any
interest in any of the Real Property. Neither the Company nor any of its
Subsidiaries has mortgaged, hypothecated, pledged or otherwise encumbered any
of the Real Property or their interest in any Real Property.
(e) All the plants, structure and equipment of the Company and the
Company Subsidiaries that are material to the operations of their business are
in good operating condition and repair, ordinary wear and tear excepted.
17
Section 3.17 Tax Matters.
(a) Each of the Company and the Company Subsidiaries has filed or
will file or cause to be filed all material Tax Returns required by applicable
Law to be filed by any of them prior to or as of the Closing Date. All such
Tax Returns and amendments thereto are or will be true, complete and correct
in all material respects.
(b) Each of the Company and the Company Subsidiaries has paid or
accrued adequate reserves for all material Taxes due with respect to any
period ending prior to or as of the Closing Date.
(c) There are no Liens for Taxes upon any property or assets of the
Company or the Company Subsidiaries, except for Liens for Taxes not yet due or
for Taxes being contested in good faith for which adequate reserves have been
made.
(d) No federal, state, local or foreign audits, examinations,
investigations or other administrative proceedings (such audits, examinations,
investigations and other administrative proceedings referred to collectively
as "Audits") or court proceedings are presently pending or threatened in
writing with regard to any Taxes or Tax Returns filed by or on behalf of the
Company or the Company Subsidiaries. Neither the Company nor any of the
Company Subsidiaries has been informed in writing by any taxing authority that
the jurisdiction or agency believes that the Company or any of the Company
Subsidiaries was required to file any Tax Return that was not filed.
(e) There are no outstanding requests, Contracts, consents or waivers
to extend the statutory period of limitations applicable to the assessment of
any Taxes or deficiencies against the Company or any of the Company
Subsidiaries.
(f) Neither the Company nor any of the Company Subsidiaries is a
party to, bound by, or has any obligation under, any Tax sharing agreement,
Tax indemnification agreement or similar Contract or arrangement.
(g) Neither the Company nor any of the Company Subsidiaries has
agreed to make any adjustment pursuant to Section 481(a) of the Code (or any
predecessor provision or comparable provision of other Law) by reason of any
change in accounting method. Neither the Company nor any of its Subsidiaries
has an application pending as to any such change in accounting method and no
Tax authority has proposed such a change in accounting method.
(h) No closing agreement pursuant to Section 7121 of the Code (or any
predecessor provision) or any similar provision of any Laws has been entered
into by or with respect to the Company or the Company Subsidiaries.
(i) Neither the Company nor any of its Subsidiaries has engaged in
any "listed transaction" within the meaning of Treasury Regulation
1.6011-4(b)(2).
Section 3.18 Products Liability.
18
(a) (i) Neither the Company nor any Company Subsidiary has received
any written notice (of violation or otherwise), Claim or hearing of a civil,
criminal or administrative nature by or before any Governmental Entity against
or involving the Company or any Company Subsidiary (past or present) or
concerning any product relating to the businesses of the Company and the
Company Subsidiaries (past or present) which is pending or, to the Knowledge
of the Company, threatened, relating to or resulting from: (x) an alleged
defect in design, manufacture, materials or workmanship of any product
manufactured, designed, distributed or sold by, or on behalf of, the Company
or any Company Subsidiary (past or present); (y) any alleged failure to warn;
or (z) from any alleged breach of express or implied warranties or
representations (nor, to the Knowledge of the Company, is there any valid
basis for any such notice (of violation or otherwise), Claim or hearing); (ii)
there has not been any Occurrence (as defined below); (iii) there has not been
any product recall, rework, retrofit or post-sale warning (collectively,
"Recalls") by the Company or any Company Subsidiary concerning any products
relating to the businesses of the Company and the Company Subsidiaries which
are manufactured, designed, distributed or sold by the businesses of the
Company and the Company Subsidiaries (nor is there, or has there been, any
investigation or consideration or decision made by the Company or any Company
Subsidiary concerning whether to undertake or not to undertake any Recalls);
and (iv) there are no defects in design, manufacturing, materials or
workmanship (including, without limitation, any failure to warn, or any breach
of express or implied warranties or representations, which involve any product
relating to the businesses of the Company and the Company Subsidiaries) that,
individually or in the aggregate, has had or would reasonably be expected to
have a Company Material Adverse Effect.
(b) For purposes of this Section 3.18, the term "Occurrence" shall
mean any accident, happening or event which is caused, or allegedly caused by,
any alleged hazard or alleged defect in manufacture, design, materials or
workmanship (including, without limitation, any alleged failure to warn or any
breach of express or implied warranties or representations with respect to),
or otherwise involves a product (including any parts or components) relating
to the businesses of the Company and the Company Subsidiaries manufactured,
designed, distributed or sold by, or on behalf of, the Company and the Company
Subsidiaries (past or present) which results, or is alleged to have resulted
in, injury or death to any person or damage to or destruction of property or
other consequential damages, at any time.
Section 3.19 Brokers. No broker, investment banker, financial advisor
or other person, other than ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc. ("▇▇▇▇▇▇▇"), the fees
and expenses of which will be paid by the Company, is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the Merger and the other transactions contemplated hereby
based upon arrangements made by or on behalf of the Company. The Company has
furnished to Parent a true and complete copy of all agreements between the
Company and ▇▇▇▇▇▇▇ relating to the Merger and the other transactions
contemplated hereby.
19
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Except as contained in the Stockholder Agreement (which agreement
terminates upon the consummation of the Merger) and except as expressly set
forth in the corresponding section of the disclosure letter delivered by each
Stockholder to Parent prior to the execution of this Agreement (the
"Stockholder Disclosure Letter"), each Stockholder, severally and not jointly,
hereby represents and warrants to Parent that:
Section 4.01 Authorization. Such Stockholder has all requisite power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery by such Stockholder of this
Agreement and the performance of its obligations hereunder have been duly
authorized by all necessary actions on the part of such Stockholder. Such
Stockholder has duly executed and delivered this Agreement, and, assuming due
authorization, execution and delivery of this Agreement by Parent, Merger Sub
and the Company, this Agreement constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except that
enforcement hereof may be subject to or limited by (i) bankruptcy, insolvency
or other similar laws, now or hereafter in effect, affecting its creditors'
rights generally and (ii) the effect of general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or
in equity).
Section 4.02 Ownership of Shares. Such Stockholder owns beneficially
and of record the number of shares of Company Common Stock and any other
securities of the Company that is listed in Section 4.02 to the Stockholder
Disclosure Letter (the "Company Securities"). Subject to the Stockholder
Agreement, such Stockholder has a good and valid title, right and interest to
the Company Securities, free and clear of any Liens, and there are no options,
warrants, calls, rights, commitments or agreements of any kind to which such
Stockholder is a party or by which such Stockholder (or the Company
Securities) is bound which contain any obligations of such Stockholder,
relating to the sale, issuance or the granting of rights to acquire, any of
such shares or evidencing the right to purchase any of such shares or
obligating the Stockholder to grant, extend or enter into any such option,
warrant, call, right, commitment or agreement. Such Stockholder is not a party
to, and neither such Stockholder nor the shares of Company Common Stock owned
by such Stockholder is bound by, any voting trust, proxy, or other agreement
or understanding with respect to the manner it which it may or should vote of
any of such shares.
Section 4.03 Appraisal Rights. By execution of this Agreement, such
Stockholder waives its appraisal rights under the DGCL in connection with the
Merger.
Section 4.04 Acknowledgement. Such Stockholder has received the
August 2005 report of ▇▇▇▇▇▇▇ and has reviewed and understands the report and
its views with respect to the Merger Consideration to be received by such
Stockholder.
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ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PARENT
Except as expressly set forth in any Parent SEC Document (as defined
in Section 5.06 below) filed since January 1, 2003 and publicly available
prior to the date hereof, Parent hereby represents and warrants to the Company
as follows:
Section 5.01 Organization, Standing and Power. Each of Parent, Merger
Sub and OptiCare Merger Sub, Inc., a Delaware corporation ("OptiCare Merger
Sub"), Parent's only subsidiaries (the "Parent Subsidiaries") is duly
organized or formed, validly existing and in good standing under the laws of
the jurisdiction in which it is organized and has full corporate, partnership
or limited liability company power and authority to conduct its businesses as
presently conducted. Parent and each Parent Subsidiary is duly qualified to do
business in each jurisdiction where the nature of its business or the
ownership or leasing of its properties make such qualification necessary or
the failure to so qualify, individually or in the aggregate, has had or would
reasonably be expected to have a Parent Material Adverse Effect (as defined in
Section 10.04(a) below). Parent has delivered to the Company true and complete
copies of the certificate of incorporation of Parent, as amended to the date
of this Agreement (as so amended, the "Parent Charter"), and the by-laws of
Parent, as amended to the date of this Agreement (as so amended, the "Parent
By-laws"). Parent is not in violation of any of the provision of the Parent
Charter or the Parent By-laws.
Section 5.02 The Parent Subsidiaries; Equity Interests.
(a) All the outstanding shares of capital stock of each Parent
Subsidiary have been validly issued and are fully paid and nonassessable and
are owned by Parent free and clear of all Liens, except Permitted Liens.
(b) Except for its interests in the Parent Subsidiaries, Parent does
not own, directly or indirectly, any Equity Interest (as defined in Section
10.04(a) below) in any person.
(c) Merger Sub is a direct wholly owned subsidiary of Parent and was
formed solely for the purpose of engaging in the Merger, has engaged in no
other business activities and has conducted its operations only as
contemplated hereby.
Section 5.03 Capital Structure.
(a) As of the date hereof, the authorized capital stock of Parent
consists of 20,000,000 shares of Parent Common Stock and 1,000,000 shares of
preferred stock, par value $0.001 per share. As of the date hereof, (i)
7,051,393 shares of Parent Common Stock are issued and outstanding, (ii)
22,656 shares of Parent Common Stock are held by Parent in its treasury, (iii)
598,500 shares of Parent Common Stock are subject to outstanding stock
options, (iv) 5,000 shares are reserved for additional stock options that the
Parent is authorized to issue under its 2003 Stock Incentive Plan and (v) no
shares of preferred stock are issued or outstanding. Except as set forth
above, no shares of capital stock or other voting securities of Parent are
issued, reserved for issuance or outstanding. The authorized capital stock of
Merger Sub consists of
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1,000 shares of Merger Sub common stock, of which, as of the date hereof, 100
are issued and outstanding. The shares of Parent Common Stock to be issued in
the Merger will, upon issuance, be validly issued, fully paid, nonassessable,
not subject to any preemptive rights, and free and clear of all Liens).
(b) All outstanding shares of Parent Common Stock are, and all such
shares that may be issued prior to the Effective Time will be when issued,
duly authorized, validly issued, fully paid and nonassessable and not subject
to or issued in violation of any purchase option, call option, right of first
refusal, preemptive right, subscription right or any similar right under any
provision of the DGCL, the Parent Charter, the Parent By-laws or any Contract
to which Parent is a party or otherwise bound.
(c) There are not any bonds, debentures, notes or other indebtedness
of Parent having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which holders of Parent
Common Stock may vote ("Voting Parent Debt").
(d) Except as set forth in this Section 5.03 and for the Agreement
and Plan of Merger by and among the Parent, OptiCare Merger Sub and OptiCare
Health Systems, Inc., a Delaware corporation ("Opticare"), as of the date
hereof, there are not any options, warrants, rights, convertible or
exchangeable securities, "phantom" stock rights, stock appreciation rights,
stock-based performance units, commitments, Contracts, arrangements or
undertakings of any kind to which Parent or any Parent Subsidiary is a party
or by which any of them is bound (i) obligating Parent or any Parent
Subsidiary to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock or other Equity Interests in, or any
security convertible or exercisable for or exchangeable into any capital stock
of or other Equity Interests in, Parent or any Parent Subsidiary or any Voting
Parent Debt, (ii) obligating Parent or any Parent Subsidiary to issue, grant,
extend or enter into any such option, warrant, call, right, security,
commitment, Contract, arrangement or undertaking or (iii) that give any person
the right to receive any economic benefit or right similar to or derived from
the economic benefits and rights occurring to holders of Parent Common Stock.
Section 5.04 Authority; Execution and Delivery; Enforceability.
(a) Each of Parent and Merger Sub has all requisite corporate power
and authority to execute and deliver this Agreement and, subject to the Parent
Stockholder Approval (as defined in Section 5.04(e) below), to consummate the
Merger and the other transactions contemplated hereby. The execution and
delivery by Parent and Merger Sub of this Agreement and the consummation by
Parent and Merger Sub of the Merger have been duly authorized by all necessary
corporate action on the part of Parent and Merger Sub, subject to the Parent
Stockholder Approval (as defined in Section 5.04(c) below). Each of Parent and
Merger Sub has duly executed and delivered this Agreement and, assuming due
authorization, execution and delivery of this Agreement by the Company, this
Agreement constitutes its legal, valid and binding obligation, enforceable
against it in accordance with its terms, except that enforcement hereof may be
subject to or limited by (i) bankruptcy, insolvency or other similar laws, now
or hereafter in effect, affecting its creditors' rights generally and (ii) the
effect of general principles of equity (regardless of whether enforceability
is considered in a proceeding at law or in equity).
22
(b) Each of the special committee of the Parent board of directors
(the "Parent Board") formed in connection with the Merger and the other
transactions contemplated hereby (the "Parent Special Committee") and the
Parent Board, at meetings duly called and separately held, duly and
unanimously adopted resolutions (which resolutions have not been rescinded or
modified) (i) approving this Agreement and approving the Merger and the other
transactions contemplated hereby, (ii) determining that the terms of the
Merger and the other transactions contemplated hereby are advisable and fair
to and in the best interests of Parent and its stockholders and (iii)
recommending that Parent's stockholders approve the increase in the authorized
capital stock of Parent and the issuance of shares of Parent Common Stock in
the Merger pursuant to this Agreement.
(c) The increase in the authorized capital stock of Parent requires
the approval of a majority of the outstanding shares of Parent Common Stock
entitled to vote and the issuance of shares of Parent Common Stock in the
Merger pursuant to this Agreement requires the approval of the holders of at
least 55% of the outstanding shares of Parent Common Stock (collectively, the
"Parent Stockholder Approval"). Parent, as the sole stockholder of Merger Sub,
has approved the Merger (which approval has not been rescinded or modified).
Section 5.05 No Conflicts; Consents.
(a) The execution and delivery by Parent and Merger Sub of this
Agreement do not, and the consummation by Parent and Merger Sub of the Merger
and the other transactions contemplated hereby and compliance by Parent and
Merger Sub with the terms hereof will not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of consent, termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or to
increased, additional, accelerated or guaranteed rights or entitlements of any
person under, or result in the creation of any Lien upon any of the properties
or assets of Parent or any Parent Subsidiary under, any provision of (i) the
Parent Charter, the Parent By-laws or the comparable organizational documents
of any Parent Subsidiary, (ii) any Contract to which Parent or any Parent
Subsidiary is a party or by which any of their respective properties or assets
is bound or (iii) any Judgment or Law applicable to Parent or any Parent
Subsidiary or their respective properties or assets.
(b) No Consent of, or registration, declaration or filing with, or
Permit from, any Governmental Entity is required to be obtained or made by
Parent or any Parent Subsidiary in connection with the execution, delivery and
performance of this Agreement or the consummation of the Merger and the other
transactions contemplated hereby, other than (i) the filing with the SEC of
the Form S-4 and the Proxy Statement and such other reports under, or other
applicable requirements of, the Securities Act and the Exchange Act as may be
required in connection with this Agreement, the Merger and the other
transactions contemplated hereby and (ii) the filing of the Certificates of
Merger with the Secretary of State of the State of Delaware.
Section 5.06 Parent SEC Documents; Undisclosed Liabilities.
(a) Parent has filed all reports, schedules, forms, statements and
other documents required to be filed by Parent with the SEC since January 1,
2003 pursuant to Sections 13(a) and 15(d) of the Exchange Act (such documents
and any other documents filed by
23
Parent with the SEC, as have been amended since the time of their filing, the
"Parent SEC Documents"). As of its respective date, or if amended, as of the
date of the last such amendment, each Parent SEC Document (i) complied in all
material respects with the requirements of the Exchange Act or the Securities
Act, as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such Parent SEC Document, and (ii) did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except, in the case of clauses (i) and (ii) above, that no
representation is made by Parent with respect to statements made or
incorporated by reference in the Form S-4 or the Proxy Statement based on
information supplied by the Company or any Stockholder for inclusion or
incorporation by reference in the Form S-4 or the Proxy Statement.
(b) The consolidated financial statements of Parent and the Parent
Subsidiaries (including, in each case, any related notes thereto) as of
December 31, 2004 and for the year then ended (i) have been prepared from, are
in accordance with, and accurately reflect the books and records of Parent and
the Parent Subsidiaries in all material respects, (ii) have been prepared in
accordance with GAAP in all material respects applied on a consistent basis
during the periods involved and (iii) fairly present in all material respects
in accordance with GAAP the consolidated financial position of Parent and the
Parent Subsidiaries as of the dates thereof and the consolidated results of
their operations and cash flows for the periods shown (subject, in the case of
clauses (ii) and (iii), to normal year-end adjustments, none of which,
individually or in the aggregate, would reasonably be expected to have a
Parent Material Adverse Effect, and the absence of footnotes in the case of
unaudited interim financial statements). The books and records of Parent and
the Parent Subsidiaries have been, and are being, maintained in all material
respects in accordance with GAAP and any other applicable legal and accounting
requirements.
(c) To Parent's Knowledge, there is no reason to believe that its
auditors and its chief executive officer and chief financial officer would not
have been able to timely give the certifications and attestations required
pursuant to the rules and regulations adopted pursuant to Section 404 of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 for non-accelerated filers had Parent been subject
to such rules and regulations.
(d) Except as and to the extent disclosed or reserved against on the
audited consolidated balance sheet of Parent and the Parent Subsidiaries as of
December 31, 2004, neither Parent nor any Parent Subsidiary has any
liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by GAAP to be set forth on a consolidated
balance sheet of Parent and the Parent Subsidiaries or in the notes thereto,
except for liabilities that, individually or in the aggregate, have not had
and would not reasonably be expected to have a Parent Material Adverse Effect.
Section 5.07 Absence of Certain Changes or Events. Since December 31,
2004, Parent has conducted its business in all material respects only in the
ordinary course consistent with past practice, and since such date there has
not been any event or development, condition or occurrence that, individually
or in the aggregate, has had or would reasonably be expected to have a Parent
Material Adverse Effect.
24
Section 5.08 Form S-4; Proxy Statement. (i) The Form S-4, at the time
the Form S-4 is filed with the SEC, at any time it is amended or supplemented
or at the time it becomes effective under the Securities Act, will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, (ii)
the Proxy Statement, at the date it is first mailed to Parent's stockholders
or at the time of the Parent Stockholders Meeting (as defined below), will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made,
not misleading, and (iii) the Form S-4 and the Proxy Statement will comply as
to form in all material respects with the requirements of the Exchange Act and
the rules and regulations thereunder, except, in the case of clauses (i), (ii)
and (iii) above, that no representation is made by Parent with respect to
statements made or incorporated by reference in the Form S-4 or the Proxy
Statement based on information supplied by the Company or any Stockholder for
inclusion or incorporation by reference in the Form S-4 or the Proxy
Statement.
Section 5.09 Litigation. There is no Claim pending or, to the
Knowledge of Parent, threatened against Parent that, individually or in the
aggregate, has had or would reasonably be expected to have a Parent Material
Adverse Effect.
Section 5.10 Compliance with Applicable Laws. Neither Parent nor any
Parent Subsidiary is in conflict with, or in default or violation of (a) any
Law or Judgment applicable to Parent or any Parent Subsidiary or by which any
of their respective properties is bound, or (b) whether after the giving of
notice or passage of time or both, any Contract to which Parent or any Parent
Subsidiary is a party or by which Parent or any Parent Subsidiary or any of
their respective properties is bound, except for any such conflicts, defaults
or violations which, individually or in the aggregate, have not had and would
not reasonably be expected to have a Parent Material Adverse Effect.
Section 5.11 Ownership of Company Shares. As of the date hereof,
neither Parent nor any Parent Subsidiary owns any shares of Company Common
Stock.
Section 5.12 Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Merger based upon arrangements made by or on behalf of Parent or
Merger Sub.
Section 5.13 Opinion of Financial Advisor. The Parent Board has
received the written opinion of Mufson ▇▇▇▇ ▇▇▇▇▇▇ & Company LLC, dated as of
August 8, 2005, to the effect that, as of such date and subject to the
considerations set forth therein, the Merger Consideration to be paid by
Parent in respect of shares of Company Common Stock is fair, from a financial
point of view, to Parent and its stockholders other than Palisade.
ARTICLE VI.
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 6.01 Covenants Relating to Conduct of Business.
25
(a) Conduct of Business by the Company.Except for matters set forth
in Section 6.01(a) of the Company Disclosure Letter or otherwise expressly
permitted by this Agreement, from the date of this Agreement to the Effective
Time, the Company shall, and shall cause each Company Subsidiary to (i)
conduct its business in the usual, regular and ordinary course in
substantially the same manner as previously conducted and use its commercially
reasonable efforts to preserve intact its current business organization and
keep available the services of its current officers and employees and (ii) use
all commercially reasonable efforts to keep its relationships with customers,
suppliers, licensors, licensees, lessors, distributors and others having
business dealings with them to the end that its goodwill and ongoing business
shall be unimpaired at the Effective Time. In addition, and without limiting
the generality of the foregoing, except for matters set forth in Section
6.01(a) of the Company Disclosure Letter or otherwise expressly permitted by
this Agreement, from the date of this Agreement to the Effective Time the
Company shall not, and shall not permit any of the Company Subsidiaries to, do
any of the following without the prior written consent of Parent, which
consent shall not be unreasonably withheld or delayed:
(i) (A) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, other than dividends
and distributions by a wholly owned subsidiary to its security holders, (B)
split, combine or reclassify any of its capital stock or other Equity
Interests, or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock or
other Equity Interests or (C) purchase, redeem or otherwise acquire any of its
shares of capital stock or other Equity Interests, any other securities
thereof or any rights, warrants or options to acquire any such shares or other
securities, other than, in respect of any of the foregoing clauses (B) or (C),
pursuant to the terms of Company Stock Options outstanding as of the date
hereof or pursuant to the conversion of convertible debt outstanding as of the
date hereof;
(ii) issue, deliver, sell or grant (A) any shares of its capital
stock or other Equity Interests, (B) any Voting Debt or other voting
securities, (C) any securities convertible into or exchangeable for, or any
options, warrants or rights to acquire, any such shares, Voting Debt, voting
securities or convertible or exchangeable securities, (D) any "phantom" stock,
"phantom" stock rights, stock appreciation rights or stock-based performance
units or (E) any options, warrants, rights, securities, units, commitments,
Contracts, arrangements or undertakings of any kind that give any person the
right to receive any economic benefits and rights accruing to holders of its
or any Company Subsidiaries' capital stock, other than, in respect of any of
the foregoing, pursuant to the terms of Company Stock Options outstanding as
of the date hereof or pursuant to the conversion of convertible debt
outstanding as of the date hereof;
(iii) amend or otherwise change the Company Charter, the Company
By-laws or the certificate or articles of incorporation, by-laws or other
comparable charter or organizational documents of any Company Subsidiary;
(iv) acquire or agree to acquire (A) by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by any other
manner, any Equity Interest in or business of any person or (B) any material
assets, except for purchases of inventory in the ordinary course of business
consistent with past practice;
26
(v) (A) grant to any current or former director, officer, independent
contractor or employee (each a "Participant") any loan or increase in
compensation, benefits, perquisites or any bonus or award, or pay any bonus to
any such person, except to the extent required under employment agreements in
effect as of the date hereof or in the ordinary course of business consistent
with past practice, (B) grant to any Participant any increase in severance,
change in control or termination pay or benefits, except to the extent
required under any agreement in effect as of the date hereof, (C) enter into
any employment, loan, retention, consulting, indemnification, termination or
similar agreement with any Participant, except in the ordinary course of
business consistent with past practice, (D) enter into any change of control,
severance or similar agreement with any Participant, (E) take any action to
fund or in any other way secure the payment of compensation or benefits under
any benefit plan, except in the ordinary course of business consistent with
past practice, (F) establish, adopt, enter into, terminate or amend any
collective bargaining agreement or benefit plan, except in the ordinary course
of business consistent with past practice, (G) amend, waive or otherwise
modify any of the terms of any Company Stock Option or stock option plan or
(H) take any action to accelerate any rights or benefits or make any material
determinations, under any collective bargaining agreement or benefit plan;
(vi) make any change in accounting methods, principles or practices
materially affecting its reported consolidated assets, liabilities or results
of operations, other than as may have been required by a change in GAAP or any
Governmental Entity;
(vii) sell, lease, license, transfer, pledge or otherwise dispose of
or subject to any Lien any properties or assets that have a fair value,
individually, in excess of $100,000 or, in the aggregate, in excess of
$1,000,000;
(viii) (A) other than debt incurrence pursuant to any credit facility
or line of credit existing prior to the date hereof or any refinancing thereof
not to exceed the amount borrowable thereunder, incur any indebtedness for
borrowed money or guarantee any such indebtedness of another person, issue or
sell any debt securities or warrants or other rights to acquire any debt
securities, guarantee any debt securities of another person, except for
short-term borrowings incurred in the ordinary course of business consistent
with past practice, or (B) make any loans, advances or capital contributions
to, or investments in, any other person (other than to or in any direct or
indirect wholly owned subsidiary), individually, in excess of $100,000 or, in
the aggregate, in excess of $1,000,000;
(ix) make or agree to make any new capital expenditure or
expenditures other than capital expenditures for emergency repairs necessary
to avoid significant disruption to its business consistent with past
practices;
(x) make any material Tax election or settle or compromise any
material Tax Liability or refund, other than tax elections required by Law;
(xi) except in the ordinary course of business consistent with past
practice, (A) cancel any indebtedness owed to it or waive any of its claims or
rights of substantial value or (B) waive the benefits of, or agree to modify
27
in any manner, any confidentiality, standstill, non-competition, exclusivity
or similar agreement to which it or any of its subsidiaries is a party;
(xii) enter into any Contract otherwise addressed in this Section
6.01(a) having a duration of more than one year and total payment obligations
of in excess of $1,000,000 (other than Contracts terminable within one year or
the renewal, on substantially similar terms, of any Contract existing on the
date hereof);
(xiii) except in the ordinary course of business consistent with past
practice, cancel, terminate or adversely modify or amend any Material
Agreement, or waive, release, assign, settle or compromise any material rights
or Claims, or any material litigation or arbitration; or
(xiv) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) Conduct of Business by Parent. Except as otherwise expressly
permitted by this Agreement, from the date of this Agreement to the Effective
Time, Parent shall, and shall cause each Parent Subsidiary to (i) conduct its
business in the usual, regular and ordinary course in substantially the same
manner as previously conducted and use its commercially reasonable efforts to
preserve intact its current business organization and keep available the
services of its current officers and employees and (ii) use all commercially
reasonable efforts to keep its relationships with customers, suppliers,
licensors, licensees, lessors, distributors and others having business
dealings with them to the end that its goodwill and ongoing business shall be
unimpaired at the Effective Time of the Merger. In addition, and without
limiting the generality of the foregoing, except as otherwise expressly
permitted by this Agreement, from the date of this Agreement to the Effective
Time, Parent shall not do any of the following without the prior written
consent of the Company, which consent shall not be unreasonably withheld or
delayed:
(i) (A) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, other than dividends
and distributions by a wholly owned subsidiary to its security holders, (B)
split, combine or reclassify any of its capital stock or other Equity
Interests, or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock or
other Equity Interests or (C) purchase, redeem or otherwise acquire any of its
shares of capital stock or other Equity Interests, any other securities
thereof or any rights, warrants or options to acquire any such shares or other
securities, other than, in respect of any of the foregoing clauses (B) or (C),
pursuant to the terms of Parent stock options or warrants outstanding as of
the date hereof or pursuant to the conversion of convertible debt outstanding
as of the date hereof, and other than, in respect of the foregoing clause (C),
pursuant to the terms of the put option under the Agreement and Plan of
Merger, dated August 19, 2002, among Palisade, Palisade Merger Corp. and
Parent, as amended;
(ii) issue, deliver, sell or grant (A) any shares of its capital
stock or other Equity Interests, (B) any Voting Parent Debt or other voting
securities, (C) any securities convertible into or exchangeable for, or any
28
options, warrants or rights to acquire, any such shares, Voting Parent Debt,
voting securities or convertible or exchangeable securities, (D) any "phantom"
stock, "phantom" stock rights, stock appreciation rights or stock-based
performance units or (E) any options, warrants, rights, securities, units,
commitments, Contracts, arrangements or undertakings of any kind that give any
person the right to receive any economic benefits and rights accruing to
holders of capital stock of Parent, other than (x) pursuant to the terms of
Parent stock options or warrants or the conversion of convertible debt in
accordance with their present terms, in each case, outstanding as of the date
hereof, (y) grants of Parent equity awards and Parent stock options pursuant
to existing Parent benefits plans or (z) in connection with the proposed
acquisition of OptiCare;
(iii) amend or otherwise change the Parent Charter or Parent By-laws,
except to increase the authorized capital stock of Parent;
(iv) acquire or agree to acquire (A) by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by any other
manner, any Equity Interest in or business of any person or (B) any material
assets, except for purchases of inventory in the ordinary course of business
consistent with past practice and except for the proposed acquisition of
OptiCare;
(v) sell, lease, license, transfer, pledge or otherwise dispose of or
subject to any Lien any properties or assets that have a fair value,
individually, in excess of $250,000 or, in the aggregate, in excess of
$2,500,000;
(vi) other than debt incurrence pursuant to any credit facility or
line of credit existing prior to the date hereof this or any refinancing
thereof not to exceed the amount borrowable thereunder, incur any indebtedness
for borrowed money or guarantee any such indebtedness of another person, issue
or sell any debt securities or warrants or other rights to acquire any debt
securities, guarantee any debt securities of another person, except for
short-term borrowings incurred in the ordinary course of business consistent
with past practice;
(vii) except in the ordinary course of business consistent with past
practice, (A) cancel any indebtedness owed to it or waive any of its claims or
rights of substantial value or (B) waive the benefits of, or agree to modify
in any manner, any confidentiality, standstill, non-competition, exclusivity
or similar agreement to which it or any of its subsidiaries is a party; or
(viii) authorize any of, or commit or agree to take any of, the
foregoing actions.
Section 6.02 Other Actions. The Company, each Stockholder and Parent
shall not, directly or indirectly, take any action that would, or that would
reasonably be expected to, result in (i) any of the representations and
warranties of such party set forth in this Agreement becoming untrue or (ii)
any condition to the Merger set forth in Article VIII not being satisfied.
Section 6.03 Advice of Changes. Each of the Company and the
Stockholders, on the one hand, and Parent, on the other hand, shall promptly
advise the other in writing of any
29
state of facts, event, change, effect, development, condition or occurrence
that, individually or in the aggregate, has had or would reasonably be
expected to have a Company Material Adverse Effect or a Parent Material
Adverse Effect, respectively. The Company and each Stockholder shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company,
of (i) any representation or warranty made by it contained in this Agreement
that is qualified as to materiality becoming untrue or inaccurate in any
respect or any such representation or warranty that is not so qualified
becoming untrue or inaccurate in any material respect or (ii) the failure by
it to comply with or satisfy in any material respect any covenant, condition
or agreement to be complied with or satisfied by it under this Agreement;
provided, however, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement.
ARTICLE VII.
ADDITIONAL AGREEMENTS
Section 7.01 Preparation of the Form S-4 and Proxy Statement
(a) As soon as practicable following the date of this Agreement,
Parent and the Company shall prepare, together with OptiCare, and Parent shall
file with the SEC, an proxy statement (the "Proxy Statement") in preliminary
form and the Form S-4, in which the Proxy Statement will be included as a
prospectus, and Parent and the Company shall use their reasonable efforts to
respond as promptly as practicable to any comments of the SEC with respect
thereto. Parent and the Company shall use their reasonable efforts to have the
Form S-4 declared effective by the SEC as promptly as practicable after such
filing and to ensure that it complies in all material respects with the
applicable provisions of the Securities Act and the Exchange Act. Parent and
the Company shall also take any other action required to be taken under any
applicable federal and state securities laws in connection with the issuance
of Parent Common Stock in the Merger and the Company and the Stockholders
shall furnish all information concerning the Company and the holders of the
Company Common Stock as may be reasonably requested in connection with the
Proxy Statement or any such action. Parent, the Company and the Stockholders
shall each be solely responsible for any statement, information or omission in
the Form S-4 or the Proxy Statement relating to it based upon information
provided by it for inclusion therein.
(b) If, at any time prior to the receipt of the Parent Stockholder
Approval, any event occurs with respect to the Company or any Company
Subsidiary, or any change occurs with respect to other information supplied by
the Company or any Stockholder for inclusion in the Form S-4 or the Proxy
Statement, which is required to be described in an amendment of, or a
supplement to, the Form S-4 or the Proxy Statement, the Company or such
Stockholder shall promptly notify Parent of such event, and the Company, the
Stockholders and Parent shall cooperate in the prompt filing with the SEC of
any necessary amendment or supplement to the Form S-4 or the Proxy Statement
and, as required by Law, in disseminating the information contained in such
amendment or supplement to Parent's stockholders.
(c) Parent shall, as soon as practicable following the date of this
Agreement, duly call, give notice of, convene and hold an annual meeting of
its stockholders (the
30
"Parent Stockholders Meeting") for the purpose of, among other things, seeking
the Parent Stockholder Approval. Parent shall use its reasonable efforts to
cause the Proxy Statement to be mailed to Parent's stockholders as promptly as
practicable after the date of this Agreement. Parent shall, through the Parent
Board, recommend to its stockholders that they give the Parent Stockholder
Approval.
Section 7.02 Access to Information. Each of the Company and Parent
shall, and shall cause each of its subsidiaries to, afford to the other party
and its representatives reasonable access during normal business hours during
the period prior to the Effective Time to all its properties, books,
contracts, commitments, personnel and records and, during such period, shall,
and shall cause each of its subsidiaries to, furnish promptly to the other
party all information concerning its business, properties and personnel as the
other party may reasonably request. In addition, each party shall cause its
officers, employees, counsel and auditors to furnish such additional financial
and operating data and other information as the other party may reasonably
request, including any internal control recommendations made by such party's
or any of its subsidiaries' independent auditors in connection with any audit
of such party or any of its subsidiaries.
Section 7.03 Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties shall use its reasonable best efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, as promptly as
practicable, the Merger and the other transactions contemplated hereby,
including (i) the obtaining of all necessary actions or nonactions, waivers,
consents and approvals from Governmental Entities and the making of all
necessary registrations and filings and the taking of all reasonable steps as
may be necessary to obtain an approval or waiver from, or to avoid an action
or proceeding by, any Governmental Entity, (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the Merger and other
transactions contemplated hereby and (iv) the execution and delivery of any
additional instruments necessary to consummate the Merger and other
transactions contemplated hereby.
(b) Each party shall, subject to applicable Law, (i) promptly notify
the other party of any written communication to that party from any
Governmental Entity with respect to this Agreement and the Merger and permit
the other party to review in advance any proposed written communication to the
foregoing, (ii) consult with the other parties in advance with respect to, and
gives the other party the opportunity to attend and participate at, any
substantive meeting or discussion with any Governmental Entity in respect of
any filings, investigation or inquiry concerning this Agreement or the Merger
and (iii) unless subject to any applicable privilege, furnish the other party
with copies of all correspondence, filings, and written communications between
them and their respective representatives on the one hand and any Governmental
Entity on the other hand, with respect to this Agreement and the Merger.
31
Section 7.04 Public Announcements. Parent, the Stockholders and the
Company shall consult with each other before issuing, and provide each other
reasonable opportunity to review and comment upon, any press release or other
public statements with respect to the Merger and the other transactions
contemplated hereby and shall not issue any such press release or make any
such public statement prior to such consultation, except as may be required by
applicable Law, court process or by obligations pursuant to any listing
agreement with any national securities exchange.
Section 7.05 Tax Free Reorganization Treatment. Neither the Company
nor Parent shall, nor shall they permit any of their respective subsidiaries
to, take or cause to be taken any action that would disqualify the Merger as a
reorganization within the meaning of Section 368(a) of the Code. Parent and
the Company shall use all reasonable efforts, and shall cause their respective
subsidiaries to use their reasonable efforts, to take or cause to be taken any
action that would cause the Merger to qualify as a reorganization within the
meaning of Section 368(a) of the Code.
Section 7.06 Indemnification
(a) From and after the Effective Time, the Parent shall indemnify,
defend and hold harmless the current or former directors, officers, employees,
fiduciaries or agents (the "Indemnified Parties") of the Company and its
Subsidiaries against all losses, claims, damages, costs, expenses (including
attorneys' fees and expenses), liabilities or judgments, fines or amounts that
are paid in settlement or other final disposition, as the case may be, of any
pending, threatened or actual claim, action, suit, proceeding or investigation
(each, a "Claim") based upon or arising out this Agreement or the transactions
contemplated hereby, in each case to the fullest extent that a corporation is
permitted to indemnify its current or former directors, officers, employees or
agents under applicable law (and the Parent shall pay expenses in advance of
the final disposition of any Claim to each Indemnified Party to the fullest
extent that a corporation may do so with respect to its current or former
directors, officers, employees or agents under applicable law).
(b) In the event any such Claim is brought against any of the
Indemnified Parties, the indemnifying party shall have the right to assume and
direct all aspects of the defense thereof, including settlement, and the
Indemnified Parties shall cooperate in the defense of any such matter, provided
the indemnifying party shall reimburse the Indemnified Parties' reasonable
out-of-pocket expenses in connection therewith. The Indemnified Parties shall
have the right to participate with their own counsel and at their own expense
in (but not control) the defense of any such matter.
(c) Any Indemnified Party wishing to claim indemnification under this
Section 7.06 shall promptly notify the Parent upon learning of any Claim,
giving rise to such Claim for indemnification and shall, if required, deliver
to the Parent the undertaking contemplated by Section 145(e) of the DGCL. If
Parent does not assume the defense of any Claim within a reasonable period of
time, or if, after commencing or undertaking such defense Parent withdraws from
the defense thereof, the Indemnified Parties as a group may retain only one law
firm in each jurisdiction to represent them with respect to any single action
unless there is, under applicable standards of professional conduct, a conflict
on any significant issue between the positions of any two or more Indemnified
Parties in which case the Indemnified Parties may retain separate counsel. The
Company
32
(or, after the Effective Time, the Parent) shall pay all reasonable
fees and expenses of counsel retained by the Indemnified Parties pursuant to
the preceding sentence as promptly as statements therefor are received. In no
event shall the indemnifying party be liable for any settlement effected
without its prior written consent; provided that if such indemnifying party
elected not to assume and direct the defense of such action, or, if after
assuming the defense withdraws from the defense thereof, such indemnifying
party's consent to such settlement shall not be unreasonably withheld or
delayed.
(d) The provisions of this Section 7.06 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, and his or her
heirs and legal representatives, and shall be in addition to any other rights
an Indemnified Party may have under the organizational documents of the
Surviving Corporation, under the DGCL or otherwise.
(e) In the event Parent or the Surviving Corporation or any of their
respective successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of Parent or the
Surviving Corporation, as the case may be, shall assume the obligations set
forth in this Section 7.06.
ARTICLE VIII.
CONDITIONS PRECEDENT
Section 8.01 Conditions to Each Party's Obligation to Effect the
Merger.The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approvals. Parent shall have obtained the Parent
Stockholder Approval.
(b) Form S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order, and Parent shall have received all state securities or
"blue sky" authorizations necessary to issue Parent Common Stock pursuant to
the Merger.
(c) Consents, Approvals and Authorizations. All material consents,
approvals, orders or authorizations from, and all material declarations,
filings and registrations with, any Governmental Entity required to consummate
the Merger and the other transactions contemplated hereby shall have been
obtained or made.
(d) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
33
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect.
(e) No Litigation. There shall not be pending any suit, action or
proceeding by any Governmental Entity in any court of competent jurisdiction
seeking to restrain or prohibit the consummation of the Merger or any other
transaction contemplated hereby or that would otherwise cause a Parent
Material Adverse Effect (after giving effect to the Merger).
Section 8.02 Conditions to Obligation of Parent and Merger Sub.The
obligation of Parent and Merger Sub to effect the Merger is further subject to
the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. (i) The representations and
warranties of the Company contained in this Agreement shall be true and
correct (without giving effect to any limitation as to "materiality" or
"Company Material Adverse Effect" set forth therein) at and as of the
Effective Time of the Merger as if made at and as of such time (except to the
extent expressly made as of an earlier date, in which case as of such earlier
date), except where the failure of such representations and warranties to be
true and correct (without giving effect to any limitation as to "materiality"
or "Company Material Adverse Effect" set forth therein) would not,
individually or in the aggregate, result in a Company Material Adverse Effect,
and Parent shall have received a certificate signed by an executive officer of
the Company to such effect; and (ii) the representations and warranties of
each Stockholder contained in this Agreement shall be true and correct at and
as of the Effective Time of the Merger as if made at and as of such time, and
Parent shall have received certificates signed by each Stockholder (or by an
executive officer of such Stockholder, in the case of a Stockholder that is
not an individual) to such effect.
(b) Performance of Obligations. The Company and each Stockholder
shall have performed in all material respects all obligations required to be
performed by them under this Agreement at or prior to the Closing Date, and
Parent shall have received a certificate signed on behalf of the Company by an
executive officer of the Company and by each Stockholder (or by an executive
officer of such Stockholder, in the case of a Stockholder that is not an
individual) to such effect.
(c) Absence of Company Material Adverse Effect. Since the date of
this Agreement, there shall not have been any state of facts, event, change,
effect, development, condition or occurrence that, individually or in the
aggregate, has had or would reasonably be expected to have a Company Material
Adverse Effect.
(d) Affiliate Letters. The Company shall have delivered to Parent
duly executed letters, in substantially the form of Exhibit A hereto, from
each person who was, as of the date of the approval of this Agreement and the
Merger by the Stockholders, an "affiliate" for purpose of Rule 145 under the
Securities Act.
(e) Certificate of Good Standing.The Company shall have delivered to
Parent a certificate from the Secretary of State of Delaware, dated as of the
Closing Date or such date as soon as practicable before the Closing Date, as
to the good standing of the Company.
34
Section 8.03 Conditions to Obligation of the Company. The obligation
of the Company to effect the Merger is further subject to the satisfaction or
waiver on or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent contained in this Agreement shall be true and correct
(without giving effect to any limitation as to "materiality" or "Parent
Material Adverse Effect" set forth therein) at and as of the Effective Time of
the Merger as if made at and as of such time (except to the extent expressly
made as of an earlier date, in which case as of such earlier date), except
where the failure of such representations and warranties to be true and
correct (without giving effect to any limitation as to "materiality" or
"Parent Material Adverse Effect" set forth therein) would not, individually or
in the aggregate, result in a Parent Material Adverse Effect. The Company
shall have received a certificate signed on behalf of Parent by an executive
officer of Parent to such effect.
(b) Performance of Obligations. Parent and Merger Sub shall have
performed in all material respects all obligations required to be performed by
them under this Agreement at or prior to the Closing Date, and the Company
shall have received a certificate signed on behalf of Parent by an executive
officer of Parent to such effect.
(c) Absence of Parent Material Adverse Effect. Since the date of this
Agreement, there shall not have been any state of facts, event, change,
effect, development, condition or occurrence that, individually or in the
aggregate, has had or would reasonably be expected to have a Parent Material
Adverse Effect.
(d) Certificate of Good Standing.Parent shall have delivered to the
Company certificates from the Secretary of State of Delaware, dated as of the
Closing Date or such date as soon as practicable before the Closing Date, as
to the good standing of Parent and Merger Sub.
ARTICLE IX.
TERMINATION, AMENDMENT AND WAIVER
Section 9.01 Termination. This Agreement may be terminated at any
time prior to the Effective Time:
(a) by mutual written consent of Parent and the Company;
(b) by written notice of either Parent or the Company:
(i) if the Merger is not consummated on or before December 31, 2005;
provided that the right to terminate this Agreement under this Section
9.01(b) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or results in, the
failure of the Merger to occur on or before such date;
(ii) if any Governmental Entity issues an order, decree or ruling or
takes any other action permanently enjoining, restraining or otherwise
35
prohibiting the Merger and such order, decree, ruling or other action
shall have become final and nonappealable;
(c) by written notice of Parent, if the Company or any Stockholder
breaches or fails to perform in any material respect any of its
representations, warranties or covenants contained in this Agreement, which
breach or failure to perform (i) would give rise to
the failure of a condition set forth in Section 8.02(a) or 8.02(b), and (ii)
cannot be or has not been cured within 10 days after the giving of written
notice to the Company of such breach;
(d) by written notice of the Company, if Parent breaches or fails to
perform in any material respect of any of its representations, warranties or
covenants contained in this Agreement, which breach or failure to perform (i)
would give rise to the failure of a condition set forth in Section 8.03(a) or
8.03(b), and (ii) cannot be or has not been cured within 10 days after the
giving of written notice to Parent of such breach;
Section 9.02 Effect of Termination. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 9.01,
this Agreement shall forthwith become void and have no effect, without any
Liability or obligation on the part of Parent, Merger Sub, the Company or any
of the Stockholders, other than this Section 9.02 and Article X, which
provisions shall survive such termination, and except to the extent that such
termination results from a material breach by a party of any of its
representations, warranties or covenants set forth in this Agreement.
Section 9.03 Amendment. This Agreement may be amended by the parties
at any time by an instrument in writing signed on behalf of each of Parent,
Merger Sub and the Company (except that any amendment affecting any
representation, warranty or covenant of any Stockholder shall not be made
without the consent of such Stockholder).
Section 9.04 Extension; Waiver. At any time prior to the Effective
Time, Parent (with respect to the Company and any Stockholder) and the Company
(with respect to Parent and Merger Sub) may (a) extend the time for the
performance of any of the obligations or other acts of the other parties, (b)
waive any inaccuracies in the representations and warranties of the other
parties contained in this Agreement or in any document delivered pursuant to
this Agreement or (c) waive compliance by the other parties with any of the
agreements or conditions contained in this Agreement. No extension or waiver
by the Company shall require the approval of the Stockholders. Any agreement
on the part of a party to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party. The
failure of any party to this Agreement to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of such rights.
ARTICLE X.
GENERAL PROVISIONS
Section 10.01 Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time of the
Merger. This Section 10.01 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective Time.
36
Section 10.02 Fees and Expenses. All fees and expenses incurred in
connection with the Merger shall be paid by the party incurring such fees or
expenses, whether or not the Merger is consummated.
Section 10.03 Notices. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given (i) upon personal delivery, (ii) one business day after being
sent via a nationally recognized overnight courier service if overnight
courier service is requested or (iii) upon receipt of electronic or other
confirmation of transmission if sent via facsimile, in each case at the
addresses or fax numbers (or at such other address or fax number for a party
as shall be specified by like notice) set forth below:
(a) if to Parent or Merger Sub, to
REFAC
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to USV, to
U.S. Vision, Inc.
▇▇▇▇ Oaks Industrial Park
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Lidji & ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
37
Section 10.04 Definitions.
(a) For purposes of this Agreement:
An "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person.
"Company Material Adverse Effect" means any change, event, fact,
development, circumstance or effect that, individually or in the aggregate,
would reasonably be expected to be materially adverse to (i) the business,
assets, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, (ii) the ability of the Company to perform its
obligations under this Agreement or (iii) the ability of the Company to
consummate the Merger and the other transactions to be performed by the
Company hereunder, in each case other than any change, event, fact,
development, circumstance or effect relating to (A) the economy in general in
the U.S. or (B) regulatory or political conditions in general in the U.S.,
including acts of war or terrorism, in each of clauses (A) and (B), which do
not disproportionately affect the Company relative to the other participants
in the industry in which it operates.
"Equity Interest" means any share, capital stock, partnership, member
or similar interest in any entity, and any option, warrant, right or security
(including debt securities) convertible, exchangeable or exercisable therefor.
"Knowledge" of any person means what such person (and, if such person
is not an individual, such person's executive officers and any other officer
having primary responsibility for the specific matter) knew or should have
known after reasonable inquiry.
"Liabilities" mean any direct or indirect liability, indebtedness,
obligation, commitment, expense, claim, deficiency, guaranty or endorsement of
or by any person of any type, whether accrued, absolute, contingent, matured,
unmatured, liquidated, unliquidated, known or unknown.
"Liens" means any mortgage, deed of trust, deed to secure debt, title
retention agreement, pledge, lien, encumbrance, security interest, conditional
or installment sale agreement, charge or other Claims of third parties of any
kind.
"Parent Material Adverse Effect" means any change, event, fact,
development, circumstance or effect that, individually or in the aggregate,
would reasonably be expected to be materially adverse to (i) the business,
assets, financial condition or results of operations of Parent and its
subsidiaries, taken as a whole, (ii) the ability of Parent to perform its
obligations under this Agreement or (iii) the ability of Parent to consummate
the Merger and the other transactions to be performed by Parent hereunder, in
each case other than any change, event, fact, development, circumstance or
effect relating to (A) the economy in general in the U.S., (B) regulatory or
political conditions in general in the U.S., including acts of war or
terrorism, or (C) Parent's stock price or trading volume, in each of clauses
(A) and (B), which do not disproportionately affect Parent relative to the
other participants in the industry in which it operates.
38
"Permitted Lien" means (a) any Lien for Taxes not yet due or for
Taxes being contested in good faith for which adequate reserves have been
made, (b) any mechanics', materialmen's, warehousemen's, contractors',
workmen's, repairmens', carriers' or similar Lien attaching by operation of
Law, incurred in the ordinary course of business and securing payments not yet
due or delinquent or which are being contested in good faith, (c) statutory or
common law Liens to secure landlords, lessors or renters under leases or
rental agreements confined to the premises or equipment rented, to the extent
that no payment or performance under any such lease or rental agreement is in
arrears or otherwise due, (d) purchase money Liens and Liens securing rental
payments under capital lease arrangements, in each case, not in default and
incurred in the ordinary course of business consistent with past practice or
(e) any minor imperfection of title which does not have a material impact on
the continued use and operation of the property to which such Lien applies.
A "person" means any individual, firm, corporation, partnership,
company, limited liability company, trust, joint venture, association,
Governmental Entity or other entity.
A "subsidiary" of any person means another person in which it owns,
directly or indirectly, an amount of the voting securities, other voting
ownership or voting partnership interests which is sufficient to elect at
least a majority of its board of directors or other governing body (or, if
there are no such voting interests, 50% or more of the Equity Interests of
such entity).
"Taxes" means any and all taxes, charges, fees, levies, tariffs,
duties, liabilities, impositions or other assessments of any kind (together
with any and all interest, penalties, additions to tax and additional amounts
imposed with respect thereto) imposed by any Tax authority or other
Governmental Entity, and shall include any Liability for the Taxes of any
other person under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local, or foreign Law), or as a transferee or successor,
by contract, or otherwise.
"Tax Return" means any return, report, declaration, information
return or other document (including any related or supporting information)
required to be filed with respect to Taxes, including any amendments thereof.
Section 10.05 Interpretation. When a reference is made in this
Agreement to a Section or Subsection, such reference shall be to a Section or
Subsection of this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation."
Section 10.06 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or
Law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect 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 determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties hereto 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
39
acceptable manner to the end that transactions contemplated hereby are
fulfilled to the extent possible.
Section 10.07 Counterparts; Facsimile. This Agreement may be executed
in two or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties. Facsimile
transmission of any signed original document and/or retransmission of any
signed facsimile transmission will be deemed the same as delivery of an
original. At the request of any party, the parties will confirm facsimile
transmission by signing a duplicate original document.
Section 10.08 Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the documents and instruments relating to the Merger
referred to herein), taken together with the Company Disclosure Letter, the
Stockholder Disclosure Letters and the Confidentiality Agreement, dated March
23, 2005, by and between Parent and the Company, (a) constitutes the entire
agreement and supersede all prior agreements and understandings, whether
written or oral, among the parties with respect to the Merger and (b) is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.
Section 10.09 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without
regard to the principles of conflicts of laws thereof.
Section 10.10 Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties
without the prior written consent of the other parties. Subject to the
preceding sentences, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.
Section 10.11 Disputes; Waiver of Jury Trial.
(a) Each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of the state court located in the State of Delaware, and
that the Court of Chancery shall be the exclusive jurisdiction in the event
any dispute arises out of this Agreement or the Merger, (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court and (c) agrees that it will not
bring any action relating to this Agreement or the Merger in any court other
than the Court of Chancery of Delaware in the State of Delaware. Each of the
parties agrees that a final non-appealable judgment in any action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner permitted by Law.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE
40
AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
[SIGNATURE PAGE FOLLOWS]
41
IN WITNESS WHEREOF, Parent, Merger Sub, the Company and each
Stockholder have duly executed this Agreement, all as of the date first
written above.
REFAC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Executive Officer
USV MERGER SUB, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
U.S. VISION, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇ III
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇ III
Title: Chief Financial Officer
PALISADE CONCENTRATED EQUITY
PARTNERSHIP, L.P.
By: Palisade Concentrated Holdings,
L.L.C., General Partner
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Member
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇, III
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇, III
PINNACLE ADVISORS LIMITED
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
WRS ADVISORS III, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Managing Member
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇