ANNEX C
AGREEMENT AND PLAN OF MERGER
by and among
VF CORPORATION
SEQUOIA ACQUISITION, INC.
and
THE NORTH FACE, INC.
dated
APRIL 7, 2000
TABLE OF CONTENTS
PAGE
ARTICLE I THE OFFER AND MERGER.................................................. 2
Section 1.1 The Offer............................................... 2
Section 1.2 Company Actions......................................... 3
Section 1.3 Directors............................................... 4
Section 1.4 The Merger.............................................. 5
Section 1.5 Effective Time.......................................... 6
Section 1.6 Closing................................................. 6
Section 1.7 Directors and Officers of the Surviving Corporation..... 6
Section 1.8 Effects of the Merger................................... 6
Section 1.9 Stockholders' Meeting................................... 6
Section 1.10 Merger Without Meeting of Stockholders.................. 7
Section 1.11 Earliest Consummation................................... 7
ARTICLE II CONVERSION OF SECURITIES............................................. 7
Section 2.1 Conversion of Capital Stock............................. 7
Section 2.2 Dissenting Shares....................................... 8
Section 2.3 Surrender of Shares; Stock Transfer Books............... 8
Section 2.4 Company Stock Plans..................................... 10
Section 2.5 Adjustments............................................. 11
Section 2.6 Lost Certificates....................................... 11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................... 11
Section 3.1 Corporate Existence and Power........................... 11
Section 3.2 Corporate Authorization................................. 12
Section 3.3 Consents And Approvals; No Violations................... 12
Section 3.4 Capitalization.......................................... 13
Section 3.5 Subsidiaries............................................ 14
Section 3.6 SEC Documents........................................... 14
Section 3.7 Financial Statements.................................... 15
Section 3.8 Absence Of Undisclosed Liabilities...................... 15
Section 3.9 Information in Proxy Statement and Offer Documents...... 15
Section 3.10 Absence of Certain Changes.............................. 16
Section 3.11 Taxes................................................... 17
Section 3.12 Employee Matters........................................ 18
Section 3.13 Litigation; Compliance With Laws........................ 20
Section 3.14 Labor Matters........................................... 20
Section 3.15 Certain Contracts and Arrangements...................... 21
Section 3.16 Environmental Matters................................... 21
Section 3.17 Intellectual Property................................... 22
Section 3.18 Opinion Of Financial Advisor............................ 23
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TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 3.19 Board Recommendation.................................... 23
Section 3.20 Rights Plan; Antitakover Statues........................ 23
Section 3.21 Finders' Fees........................................... 24
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER............... 24
Section 4.1 Corporate Existence and Power........................... 24
Section 4.2 Authorization........................................... 24
Section 4.3 Consents And Approvals; No Violations................... 25
Section 4.4 Information in Proxy Statement.......................... 26
Section 4.5 Share Ownership......................................... 26
Section 4.6 Financing............................................... 26
Section 4.7 Finders' Fees........................................... 26
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER................................ 26
Section 5.1 Acquisition Proposals................................... 26
Section 5.2 Interim Operations of the Company....................... 27
Section 5.3 No Solicitation......................................... 27
Section 5.4 Notices of Certain Events............................... 28
ARTICLE VI ADDITIONAL AGREEMENTS................................................ 29
Section 6.1 Proxy Statement......................................... 29
Section 6.2 Meeting of Stockholders of the Company.................. 29
Section 6.3 Additional Agreements................................... 29
Section 6.4 Access; Confidentiality................................. 29
Section 6.5 Consents and Approvals.................................. 30
Section 6.6 Publicity............................................... 30
Section 6.7 Directors' and Officers' Insurance and Indemnification.. 30
Section 6.8 Purchaser Compliance.................................... 31
Section 6.9 Best Efforts............................................ 31
Section 6.10 Employee Benefits....................................... 32
Section 6.11 Further Assurances...................................... 32
ARTICLE VII CONDITIONS.......................................................... 33
Section 7.1 Conditions to Each Party's Obligations to Effect the
Merger.................................. ............... 33
ARTICLE VIII TERMINATION........................................................ 33
Section 8.1 Termination............................................. 33
Section 8.2 Effect of Termination................................... 34
ARTICLE IX MISCELLANEOUS........................................................ 35
Section 9.1 Amendment and Modification.............................. 35
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TABLE OF CONTENTS
(continued)
Page
Section 9.2 Non_Survival of Representations and Warranties.......... 35
Section 9.3 Expenses................................................ 35
Section 9.4 Notices................................................. 36
Section 9.5 Interpretation.......................................... 37
Section 9.6 Counterparts............................................ 37
Section 9.7 Entire Agreement; No Third Party Beneficiaries.......... 37
Section 9.8 Severability............................................ 38
Section 9.9 Specific Performance.................................... 38
Section 9.10 Governing Law........................................... 38
Section 9.11 Jurisdiction............................................ 38
Section 9.12 WAIVER OF JURY TRIAL.................................... 38
Section 9.13 Assignment.............................................. 38
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated April 7, 2000,
by and among VF Corporation, a Pennsylvania corporation ("Parent"), Sequoia
Acquisition, Inc., a Delaware corporation and a wholly owned subsidiary of
Parent ("Purchaser"), and The North Face, Inc., a Delaware corporation
(together with its subsidiaries from time to time (except as the context may
otherwise require), (the "Company")).
WHEREAS, the Board of Directors of each of Parent, Purchaser and the
Company has approved, and deems it advisable and in the best interests of its
respective stockholders to consummate, the acquisition of the Company by Parent
upon the terms and subject to the conditions set forth herein;
WHEREAS, in furtherance thereof, it is proposed that Purchaser make a
cash tender offer (the "Offer") to acquire all shares (the "Shares") of the
issued and outstanding common stock, par value $0.0025 per share, of the
Company (including the associated preferred share purchase rights issued
pursuant to the Rights Agreement (as defined in Section 3.20)), for $2.00 per
share, net to the seller in cash (such price, or any such higher price per
Share as may be paid in the Offer, being referred to herein as the "Offer
Price" and the aggregate being referred to herein as the "Offer
Consideration");
WHEREAS, also in furtherance of such acquisition, the Board of
Directors of each of Parent, Purchaser and the Company have each approved the
Merger (as defined below) following the Offer in accordance with the General
Corporation Law of the State of Delaware (the "DGCL") and upon the terms and
subject to the conditions set forth herein, whereby each issued and outstanding
Share not owned directly or indirectly by Parent, Purchaser or the Company will
be converted into the right to receive an amount equal to the Offer Price in
cash; and
WHEREAS, the Board of Directors of the Company (the "Company Board of
Directors") has determined that the consideration to be paid for each Share in
the Offer and the Merger is fair to the holders of such Shares and has resolved
to recommend that the holders of such Shares accept the Offer and approve this
Agreement and each of the transactions contemplated hereby upon the terms and
subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer.
(a) Provided that this Agreement shall not have been
terminated in accordance with Article VIII hereof and none of the events set
forth in Annex A shall have occurred and be existing, as promptly as
practicable (but in no event later than the later of (i) ten business days
after a public announcement of the execution of this Agreement and (ii) the
first business day following the filing by the Company with the United States
Securities and Exchange Commission (the "SEC") of its Annual Report on Form
10_K for the Fiscal Year Ended December 31, 1999 (the "1999 10_K")), Purchaser
shall, and Parent shall cause Purchaser to, commence (within the meaning of
Rule 14d_2 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) the Offer at the Offer Price. Subject only to the conditions set forth
in Annex A hereto, Purchaser shall, and Parent shall cause Purchaser to, accept
for payment and pay for all Shares validly tendered and not withdrawn pursuant
to the Offer prior to its expiration date. The Offer shall be made by means of
an offer to purchase (the "Offer to Purchase") subject to the conditions set
forth in Annex A hereto. Purchaser expressly reserves the right to waive any
conditions to the Offer and to make any change in the terms or conditions to
the Offer, provided that, except as provided in Section 1.1(d), Purchaser shall
not, without the prior consent of the Company, (i) decrease the Offer Price or
change the form of consideration payable in the Offer, (ii) decrease the number
of Shares sought to be purchased in the Offer, (iii) impose conditions to the
Offer in addition to those set forth in Annex A, (iv) amend any condition of
the Offer set forth in Annex A, or (v) amend or waive satisfaction of the
Minimum Condition (as defined in Annex A hereto). Purchaser shall on the terms
and subject to the prior satisfaction or waiver of the conditions of the Offer,
accept for payment, and pay for, Shares tendered as soon as it is legally
permitted to do so under applicable law, subject to Section 1.1(d) (the
"Acceptance Date"). Parent shall provide or cause to be provided to Purchaser
on a timely basis the funds necessary to accept for payment, and pay for, any
Shares that Purchaser becomes obligated to accept for payment, and pay for,
pursuant to the Offer.
(b) As soon as practicable on the date the Offer is
commenced, Parent and Purchaser shall file with the SEC a Statement on Schedule
TO (together with all amendments and supplements thereto and including the
exhibits thereto, the "Schedule TO") with respect to the Offer. The Schedule TO
will contain (including as an exhibit) or incorporate by reference the Offer to
Purchase and a form of letter of transmittal and summary advertisement
(collectively, together with any amendments and supplements thereto, the "Offer
Documents"). Parent and Purchaser agree that the Offer Documents will comply in
all material respects with the provisions of applicable Federal securities laws
and shall 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 made therein, in light of the circumstances under which they
were made, not misleading.
(c) Each of Parent and Purchaser will take all steps
necessary to cause the Offer Documents to be filed with the SEC as promptly as
practicable after the public announcement of the
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execution of this Agreement. Each of Parent and Purchaser will promptly correct
any information in the Offer Documents if and to the extent that it shall have
become false or misleading in any material respect, and Purchaser further will
take all steps necessary to cause the Schedule TO or the Offer Documents as so
corrected to be filed with the SEC and to be disseminated to holders of the
Shares, in each case as promptly as practicable. The Company and its counsel
shall be given the reasonable opportunity to review the Offer Documents,
including the initial Schedule TO (as well as all amendments or supplements
thereto), before any such document is filed with the SEC. In addition, Parent
and Purchaser will provide the Company and its counsel with any comments or
other communications, whether written or oral, Parent, Purchaser or their
counsel may receive from time to time from the SEC or its staff with respect to
the Offer Documents promptly after the receipt of such comments or other
communications.
(d) The Offer shall be made by means of an Offer to Purchase
which shall provide for an initial expiration date of twenty (20) business days
from the date of commencement (the "Initial Expiration Date"). Parent and
Purchaser agree that Purchaser shall not terminate or withdraw the Offer or
extend the expiration date of the Offer unless at the expiration date of the
Offer the conditions to the Offer shall not have been satisfied or earlier
waived; provided that notwithstanding the foregoing, Purchaser may, without the
consent of the Company, extend the Offer on one occasion following the time
that all of the conditions to the Offer have been satisfied as of the scheduled
expiration date of the Offer for a period not to exceed five (5) business days,
if the number of Shares tendered, together with any Shares beneficially owned
by Parent or Purchaser or any other subsidiary of Parent, is less than 90% of
the Shares outstanding on the scheduled expiration date of the Offer; provided,
further, that if Purchaser elects to extend the Offer as set forth in the
immediately preceding proviso, the obligation of Purchaser, and of Parent to
cause Purchaser to, accept for payment, purchase and pay for all of the Shares
tendered pursuant to the Offer and not withdrawn shall be subject only to the
Minimum Condition and the conditions set forth in Sections (a), (b) and (g) of
Annex A.
Section 1.2 Company Actions
(a) The Company represents that the Company Board of
Directors has (i) unanimously determined that each of the Agreement, the Offer
and the Merger are fair to and in the best interests of the stockholders of the
Company, (ii) duly approved this Agreement and the transactions contemplated
hereby, including the Offer and the Merger (collectively, the "Transactions"),
and such approval is sufficient to render Section 203 of the DGCL inapplicable
to this Agreement, and (iii) subject to the terms and conditions of this
Agreement, resolved to recommend that the stockholders of the Company accept
the Offer and tender their shares thereunder to Purchaser and approve and adopt
this Agreement and the Merger. The Company further represents that Deutsche
Bank Securities Inc. ("DB") has delivered to the Company's Board of Directors
its written opinion that the consideration to be paid in the Offer and the
Merger is fair to the holders of Shares from a financial point of view. The
Company will promptly furnish Parent with a list of its stockholders, mailing
labels and any available listing or computer file containing the names and
addresses of all record holders of Shares and lists of securities positions of
Shares held in stock depositories, in each case true and correct as of the most
recent practicable date, and will
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provide to Parent such additional information (including updated lists of
stockholders, mailing labels and lists of securities positions) and such other
assistance as Parent may reasonably request in connection with the Offer.
(b) As soon as practicable on the date the Offer is commenced, the Company
shall file with the SEC a Solicitation/Recommendation Statement on Schedule
14D_9 (together with all amendments or supplements thereto and including the
exhibits thereto, the "Schedule 14D_9") which shall, subject to Section 5.3 of
this Agreement, contain the recommendation referred to in clause (iii) of
Section 1.2(a) hereof. The Schedule 14D_9 will comply in all material respects
with the provisions of applicable federal securities laws and, on the date
filed with the SEC and on the date first published or sent to the Company's
stockholders, shall 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 made therein, in light of the circumstances under which
they were made, not misleading. The Company further agrees to take all steps
necessary to cause the Schedule 14D_9 to be filed with the SEC and to be
disseminated to holders of the Shares, in each case, as and to the extent
required by applicable federal securities laws. The Company shall mail, or
cause to be mailed, such Schedule 14D_9 to the stockholders of the Company at
the same time the Offer Documents are first mailed to the stockholders of the
Company together with such Offer Documents. The Company agrees promptly to
correct any information in the Schedule 14D_9 if and to the extent that it
shall have become false or misleading in any material respect and the Company
further agrees to take all steps necessary to cause the Schedule 14D_9 as so
corrected to be filed with the SEC and to be disseminated to holders of the
Shares, in each case, as and to the extent required by applicable federal
securities laws. Parent and its counsel shall be given the opportunity to
review and comment on the Schedule 14D_9 and any other material to be filed by
the Company with the SEC in connection with the Offer before it is filed with
the SEC. In addition, the Company agrees to provide Parent, Purchaser and their
counsel with any comments, whether written or oral, that the Company or its
counsel may receive from time to time from the SEC or its staff with respect to
the Schedule 14D_9 promptly after the receipt of such comments or other
communications.
Section 1.3 Directors
(a) Subject to compliance with applicable law, promptly upon
the purchase by Purchaser pursuant to the Offer of such number of Shares which
represents a majority of all outstanding Shares on a fully diluted basis,
Parent shall be entitled to designate the number of directors, rounded up to
the next whole number, on the Company Board of Directors as is equal to the
product of (i) the total number of directors on such Board (determined after
giving effect to the directors designated by Parent pursuant to this sentence)
and (ii) the percentage (expressed as a decimal) that the aggregate number of
Shares beneficially owned by Parent bears to the total number of Shares then
outstanding. In furtherance thereof, the Company shall, upon the request of
Parent promptly secure the resignations of such number of its incumbent
directors as is necessary to enable Parent's designees to be elected to the
Company Board of Directors and shall take all actions available to the Company
to cause Parent's designees to be so elected, subject to compliance with
Section 14(f) of the Exchange Act and Rule 14f_1 promulgated thereunder.
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(b) The Company shall promptly take all actions required
pursuant to Section 14(f) of the Exchange Act and Rule 14f_1 promulgated
thereunder in order to fulfill its obligations under Section 1.3(a) hereof, and
shall include in the Schedule 14D_9 mailed to stockholders promptly after the
commencement of the Offer (or an amendment thereof or an information statement
pursuant to Rule 14f_1 if Purchaser has not theretofore designated directors)
such information with respect to the Company and its officers and directors as
is required under Section 14(f) and Rule 14f_1 in order to fulfill its
obligations under Section 1.3(a). Parent or Purchaser shall supply the Company
information with respect to either of them and their nominees, officers,
directors and affiliates required by such Section 14(f) and Rule 14f_1.
(c) In the event that Parent's designees are elected to the
Company Board of Directors, subject to the other terms of this Agreement and
until the Effective Time, the Company Board of Directors shall have at least
two directors who are directors on the date hereof and neither of whom is an
officer of the Company nor a designee, stockholder, affiliate or associate
(within the meaning of the federal securities laws) of Parent (one or more of
such directors, the "Independent Directors"), provided that, in such event, if
the number of Independent Directors shall be reduced below two for any reason
whatsoever, any remaining Independent Director shall be entitled to designate
persons to fill such vacancies who shall be deemed Independent Directors for
purposes of this Agreement or, if no Independent Director then remains, the
other directors shall designate one person to fill one of the vacancies who
shall not be a stockholder, affiliate or associate of Parent or Purchaser and
such person shall be deemed to be an Independent Director for purposes of this
Agreement. Notwithstanding anything in this Agreement to the contrary, in the
event that Parent's designees are elected to the Company Board of Directors,
after the acceptance for payment of Shares pursuant to the Offer and prior to
the Effective Time, the affirmative vote of a majority of the Independent
Directors shall be required to (a) amend or terminate this Agreement on behalf
of the Company, (b) exercise or waive any of the Company's rights, benefits or
remedies hereunder, (c) extend the time for performance of Purchaser's
obligations hereunder or (d) take any other action by the Company Board of
Directors under or in connection with this Agreement.
Section 1.4 The Merger. In accordance with the applicable provisions of this
Agreement and the DGCL, at the Effective Time (as defined in Section 1.5), the
Company and Purchaser shall consummate a merger (the "Merger") pursuant to
which (a) Purchaser shall be merged with and into the Company and the separate
corporate existence of Purchaser shall thereupon cease, (b) the Company shall
be the successor or surviving corporation in the Merger (sometimes hereinafter
referred to as the "Surviving Corporation") and shall continue to be governed
by the laws of the State of Delaware, and (c) the separate corporate existence
of the Company with all of its rights, privileges, immunities, powers and
franchises shall continue unaffected by the Merger, except as set forth in this
Section 1.4. Pursuant to the Merger, (x) the Certificate of Incorporation of
the Company (the "Certificate of Incorporation") shall be amended in its
entirety to read as the Certificate of Incorporation of Purchaser in effect
immediately prior to the Effective Time, except that Article I thereof shall
read as follows: "The name of the Corporation is THE NORTH FACE, INC." and, as
so amended, shall be the certificate of incorporation of the Surviving
Corporation until thereafter amended as provided by law and such Certificate of
Incorporation and (y) the Bylaws of Purchaser (the "Bylaws"), as in effect
immediately prior to the Effective Time (as hereinafter defined), shall be
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the Bylaws of the Surviving Corporation until thereafter amended as provided by
law, such Certificate of Incorporation or such Bylaws.
Section 1.5 Effective Time. As soon as practicable after the satisfaction or
waiver of the conditions set forth in Article VII hereof, Parent, Purchaser and
the Company shall cause to be executed and filed on the Closing Date (as
defined in Section 1.6) (or on such other date as Parent and the Company may
agree) with the Secretary of State of the State of Delaware (the "Secretary of
State") in the manner required by the DGCL a certificate of merger, and the
parties shall take such other and further actions as may be required by law to
make the merger effective. The time the Merger becomes effective in accordance
with applicable law is hereinafter referred to as the "Effective Time."
Section 1.6 Closing. The closing of the Merger (the "Closing") shall take place
at 10:00 a.m. on a date to be specified by the parties, which shall be no later
than the second business day after satisfaction or waiver of all of the
conditions set forth in Article VII hereof (the "Closing Date"), at the offices
of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, unless another date
or place is agreed to in writing by the parties hereto.
Section 1.7 Directors and Officers of the Surviving Corporation. Subject to
applicable law, the directors of Purchaser and the officers of the Company at
the Effective Time shall, from and after the Effective Time, be the directors
and officers of the Surviving Corporation until their successors shall have
been duly elected or appointed or qualified or until their earlier death,
resignation or removal in accordance with the Certificate of Incorporation and
the Bylaws. If, at the Effective Time, a vacancy shall exist on the Company
Board of Directors or in any office of the Surviving Corporation, such vacancy
may thereafter be filled in the manner provided by law.
Section 1.8 Effects of the Merger. At the Effective Time, the Merger shall have
the effects set forth in the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time all the property, rights,
privileges, powers and franchises of the Company and Purchaser shall vest in
the Surviving Corporation, and all debts, liabilities and duties of the Company
and Purchaser shall become the debts, liabilities and duties of the Surviving
Corporation.
Section 1.9 Stockholders' Meeting. If required by the Certificate of
Incorporation and/or applicable law in order to consummate the Merger, the
Company, acting through its Board of Directors, shall, in accordance with
applicable law:
(i) duly call, give notice of, convene and hold a
special meeting of its stockholders (the "Special Meeting") as promptly as
practicable following the acceptance for payment and purchase of Shares by
Purchaser pursuant to the Offer for the purpose of considering and taking
action upon the approval of the Merger and the adoption of this Agreement; and
otherwise comply with all legal requirements applicable to such meeting.
Subject to Section 5.3, the Board of Directors of the Company shall recommend
the approval and adoption of the Merger, this Agreement and the transactions
contemplated hereby to the Company's stockholders;
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(ii) promptly prepare and file with the SEC a
preliminary proxy or information statement relating to the Merger and this
Agreement and use its best efforts (x) to obtain and furnish the information
required to be included by the SEC in the Proxy Statement (as hereinafter
defined) and to respond promptly to any comments made by the SEC with respect
to the preliminary proxy or information statement and cause a definitive proxy
or information statement, including any amendment or supplement thereto (the
"Proxy Statement") and all other proxy materials to be mailed to its
stockholders, and (y) to obtain the necessary approvals of the Merger,
Agreement and the transactions contemplated hereby by its stockholders; and
(iii) subject to Section 5.3, include in the Proxy
Statement the recommendation of the Board of Directors that stockholders of the
Company vote in favor of the approval of the Merger and the adoption of this
Agreement.
(b) Parent will provide the Company with the information
concerning Parent and Purchaser required to be included in the Proxy Statement.
Parent shall vote, or cause to be voted, all of the Shares then owned by it and
Purchaser or any of its other subsidiaries and affiliates in favor of the
approval of the Merger and the approval and adoption of this Agreement
Section 1.10 Merger Without Meeting of Stockholders. Notwithstanding
Section 1.9 hereof, in the event that Parent, Purchaser and any other
subsidiaries of Parent shall have acquired in the aggregate at least 90% of the
outstanding Shares pursuant to the Offer or otherwise, the parties hereto shall
take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the acceptance for payment of and
payment for Shares by Purchaser pursuant to the Offer, without a meeting of
stockholders of the Company, in accordance with the DGCL.
Section 1.11 Earliest Consummation. Each party hereto shall use its
best efforts to consummate the Merger as soon as practicable.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
Shares or holders of any class or series of common stock, par value $1.00 per
share, of Purchaser ("Purchaser Common Stock"):
(a) Each issued and outstanding share of Purchaser Common
Stock shall be converted into and become one validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation and shall
constitute the only outstanding shares of capital stock of the Surviving
Corporation.
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(b) All Shares held by the Company as treasury stock or owned
by Parent, Purchaser or any other subsidiary of Parent shall be cancelled and
retired, and shall cease to exist and no consideration shall be delivered in
exchange therefor.
(c) Each issued and outstanding Share immediately before the
Effective Time (other than any Shares to be cancelled pursuant to Section
2.1(b) and any Dissenting Shares (as hereinafter defined)) shall be cancelled
and extinguished and be converted into the right to receive the Offer Price in
cash, payable to the holder thereof, without interest (the "Merger
Consideration"), upon surrender of the certificate formerly representing such
Share in the manner provided in Section 2.3 hereof.
Section 2.2 Dissenting Shares. Notwithstanding Section 2.1 hereof,
Shares outstanding immediately prior to the Effective Time and held by a holder
who has not voted in favor of the Merger or consented thereto in writing and
who has demanded appraisal for such shares in accordance with the DGCL
("Dissenting Shares") shall not be converted into the right to receive the
Merger Consideration as provided in Section 2.1, unless and until such holder
fails to perfect or withdraws or otherwise loses his right to appraisal and
payment under the DGCL. If, after the Effective Time, any such holder fails to
perfect or withdraws or loses his right to appraisal, then such Dissenting
Shares shall thereupon be treated as if they had been converted as of the
Effective Time into the right to receive the Merger Consideration, if any, to
which such holder is entitled, without interest or dividends thereon. The
Company shall give Parent prompt notice of any demands received by the Company
for appraisal of Shares, and Parent shall have the right to participate in all
negotiations and proceedings with respect to such demands. Except with the
prior written consent of Parent, the Company shall not make any payment with
respect to, or settle or offer to settle, any such demands.
Section 2.3 Surrender of Shares; Stock Transfer Books.
(a) Before the consummation of the Merger, (i) Purchaser
shall designate a bank or trust company reasonably acceptable to the Company to
act as paying agent for the holders of Shares (the "Paying Agent") for the
payment of the Merger Consideration, and (ii) Parent shall deposit or shall
cause to be deposited with the Paying Agent in a separate fund established for
the benefit of the holders of Shares, for payment in accordance with this
Article II, through the Paying Agent (the "Payment Fund"), immediately
available funds in amounts necessary to make the payments pursuant to the
Merger to holders of Shares. The Paying Agent shall invest portions of the
Payment Fund as Parent directs in obligations of or guaranteed by the United
States of America, in commercial paper obligations receiving the highest
investment grade rating from both ▇▇▇▇▇'▇ Investors Services, Inc. and Standard
& Poor's Corporation, or in certificates of deposit, bank repurchase agreements
or banker's acceptances of commercial banks with capital exceeding
$1,000,000,000 (collectively, "Permitted Investments"); provided, however, that
the maturities of Permitted Investments shall be such as to permit the Paying
Agent to make prompt payment to former holders of Shares entitled thereto as
contemplated by this Agreement. Parent shall cause the Payment Fund to be
promptly replenished to the extent of any losses incurred as a result of
Permitted Investments. If for any reason (including losses) such funds are
inadequate to pay the amounts to
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which holders of Shares shall be entitled under this Agreement, Parent shall in
any event be liable for payment thereof. Such funds deposited with the Paying
Agent pursuant to this Section 2.3 shall not be used for any purpose except as
expressly provided in this Agreement. From time to time at or after the
Effective Time, Parent shall take all lawful action necessary to make the
appropriate cash payments, if any, to holders of Dissenting Shares. Prior to
the Effective Time, Parent shall enter into appropriate commercial arrangements
to ensure effectuation of the immediately preceding sentence.
(b) As soon as reasonably practicable after the Effective
Time, the Paying Agent shall mail to each holder of record of a certificate or
certificates, which immediately prior to the Effective Time represented
outstanding Shares (the "Certificates"), whose Shares were converted pursuant
to Section 2.1 into the right to receive the Merger Consideration (i) a letter
of transmittal (which shall specify that delivery shall be effected and that
the risk of loss of and title to the Certificates shall pass, only upon
delivery of the Certificates to the Paying Agent and shall be in such form and
have such other provisions not inconsistent with this Agreement as Parent may
specify) and (ii) instructions for use in effecting the surrender of
Certificates in exchange for payment of the Merger Consideration (together, the
"Transmittal Documents"). Upon surrender of a Certificate for cancellation to
the Paying Agent or to such other agent or agents as may be appointed by
Parent, together with such letter of transmittal, duly executed, the holder of
such Certificate shall be entitled to receive in exchange therefor the Merger
Consideration for each Share formerly represented by such Certificate, and the
Certificate so surrendered shall forthwith be cancelled. If payment of the
Merger Consideration is to be made to a person other than the person in whose
name the surrendered Certificate is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or shall
otherwise be in proper form for transfer and that the person requesting such
payment shall have paid any transfer and other taxes required by reason of the
payment of the Merger Consideration to a person other than the registered
holder of the Certificate surrendered or shall have established to the
satisfaction of the Surviving Corporation that such tax either has been paid or
is not applicable. Until surrendered as contemplated by this Section 2.3, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive the Merger Consideration in cash as contemplated by
this Section 2.3. Upon the surrender of Certificates in accordance with the
terms and instructions contained in the Transmittal Documents, Purchaser shall
cause the Paying Agent to pay the holder of such Certificates in exchange
therefor cash in an amount equal to the Merger Consideration multiplied by the
number of Shares represented by such Certificate (other than Certificates
representing Dissenting Shares and Certificates representing Shares held by
Purchaser).
(c) At the Effective Time, the stock transfer books of the
Company shall be closed and there shall not be any further registration of
transfers of shares of any shares of capital stock thereafter on the records of
the Company. From and after the Effective Time, the holders of certificates
evidencing ownership of the Shares outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such Shares,
except as otherwise provided for herein or by applicable law. If, after the
Effective Time, Certificates are presented to the Surviving Corporation, they
shall be cancelled and exchanged for cash as provided in this Article II. No
interest shall accrue or be paid on any cash payable upon the surrender of a
Certificate or Certificates which immediately before the Effective Time
represented outstanding Shares.
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(d) Promptly following the date which is six months after the
Effective Time, the Surviving Corporation shall be entitled to require the
Paying Agent to deliver to it any cash (including any interest received with
respect thereto), Certificates and other documents in its possession relating
to the transactions contemplated hereby, which had been made available to the
Paying Agent and which have not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look to the Surviving Corporation
(subject to abandoned property, escheat or similar laws) only as general
creditors thereof with respect to the Merger Consideration payable upon due
surrender of their Certificates, without any interest thereon. Notwithstanding
the foregoing, neither the Surviving Corporation nor the Paying Agent shall be
liable to any holder of a Certificate for Merger Consideration delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law. Any amounts remaining unclaimed by holders of Shares two years
after the Effective Time (or such earlier date immediately prior to such time
when the amounts would otherwise escheat to or become property of any
governmental authority) shall become, to the extent permitted by applicable
law, the property of Parent free and clear of any claims or interest of any
Person previously entitled thereto.
(e) Any portion of the Merger Consideration made available to
the Paying Agent pursuant to Section 2.3(a) to pay for Shares for which
appraisal rights have been perfected shall be returned to Parent, upon demand.
(f) The Merger Consideration paid in the Merger shall be net
to the holder of Shares in cash, subject to reduction only for any applicable
Federal, state, local or foreign withholding taxes or, as set forth in Section
2.3(b), stock transfer taxes payable by such holder.
Section 2.4 Company Stock Plans.
(a) Immediately after the Acceptance Date, each holder of a
then outstanding option under any employee stock option or compensation plan or
arrangement (the "Options"), whether or not then exercisable or fully vested,
and each holder of the warrants to purchase an aggregate of 202,597 Shares
issued to certain parties (collectively, the "Warrants"), shall, in settlement
thereof, receive for each Share subject to such Option, or Warrant, an amount
(net of any applicable withholding tax) in cash equal to the difference between
the Offer Price and the per Share exercise price of such Option, or Warrant, to
the extent the Offer Price is greater than the per Share exercise price of such
Option or Warrant (such excess amount with respect to Options being hereinafter
referred to as the "Option Consideration," and such amount with respect to the
Warrants being hereinafter referred to as the "Warrant Consideration");
provided, however, that with respect to any person subject to Section 16(a) of
the Exchange Act, any such amount shall be paid as soon as practicable after
the first date payment can be made without liability to such person under
Section 16(b) of the Exchange Act. Prior to the Acceptance Date, the Company
shall use its reasonable efforts to obtain all necessary consents or releases
from holders of Options and holders of Warrants, and take any such other action
as may be reasonably necessary to give effect to the transactions contemplated
by this Section 2.4 (except for such action that may require the approval of
the Company's stockholders) and to otherwise cause each Option, and each
Warrant, to be surrendered to the Company and cancelled at the Acceptance Date.
The surrender of an Option, or
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Warrant, to the Company shall be deemed a release of any and all rights the
holder had or may have had in such Option or Warrant, other than the right to
receive the Option Consideration or Warrant Consideration. Parent shall provide
the Company with sufficient funds to make the payments required by this Section
2.4.
(b) Notwithstanding anything in this Agreement to the
contrary, a vote of a majority of the Independent Directors shall be required
to amend this Section 2.4 in any manner adverse to the holders of Options or
Warrants described herein.
Section 2.5 Adjustments. If, during the period between the date of
this Agreement and the Effective Time, any change in the outstanding Shares
shall occur, including by reason of any reclassification, recapitalization,
stock split or combination, exchange or readjustment of Shares, or stock
dividend thereon with a record date during such period, but excluding the
issuance of Shares upon exercise of currently outstanding Options or Warrants
in accordance with their terms, the cash payable pursuant to the Offer, the
Merger Consideration and any other amounts payable pursuant to this Agreement
shall be appropriately adjusted.
Section 2.6 Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond, in
such reasonable amount as the Surviving Corporation may direct, as indemnity
against any claim that may be made against it with respect to such Certificate,
the Paying Agent will pay, in exchange for such lost, stolen or destroyed
Certificate, the Merger Consideration to be paid in respect of the Shares
represented by such Certificate, as contemplated by this Article.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Purchaser, subject
to such exceptions as are specifically disclosed in writing in the disclosure
letter supplied by the Company to Parent, which disclosure shall provide an
exception to or otherwise qualify only the representations or warranties of
Company specifically referred to in such disclosure, and such other
representations and warranties to which such disclosure manifestly appears to
be applicable (the "Company Disclosure Schedule"), as follows:
Section 3.1 Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and has all corporate powers and all
governmental licenses, authorizations, permits, consents and approvals
(collectively, "Licenses") required to carry on its business as now conducted
except for failures to have any such License which would not, in the aggregate,
have a Company Material Adverse Effect (as defined below). The Company is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where the character of the property owned, leased or operated
by it or the nature of its activities makes such qualification necessary,
except in such jurisdictions where failures to be so qualified would not
reasonably be expected to, in the aggregate, have a Company
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Material Adverse Effect. As used herein, the term "Company Material Adverse
Effect" means a material adverse effect on the financial condition, business,
assets or results of operations of the Company and its Subsidiaries (as defined
in Section 3.5 hereof), taken as a whole, provided, however, that in no event
shall any effect that results from (a) changes affecting the retail industry
generally, (b) changes affecting the United States economy generally, or (c) a
so_called "going concern" qualification in respect of the Company's financial
statements for the year ended December 31, 1999 or the absence of liquidity or
capital resources giving rise thereto or the adverse effect on the Company's
relations with customers, suppliers and others proximately resulting therefrom
constitute a Company Material Adverse Effect. The Company has heretofore made
available to Parent true and complete copies of the Certificate of
Incorporation and the Bylaws of the Company as currently in effect.
Section 3.2 Corporate Authorization. The Company has the requisite
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution and delivery of this Agreement
and the performance of its obligations hereunder have been duly and validly
authorized, and this Agreement has been approved, by the Board of Directors of
the Company and no other corporate proceedings on the part of the Company,
other than with respect to the Merger, the approval and adoption of the Merger
and this Agreement by the Company's stockholders to the extent required by the
Certificate of Incorporation and by applicable law, are necessary to authorize
the execution, delivery and performance of this Agreement. This Agreement has
been duly executed and delivered by the Company and constitutes, assuming due
authorization, execution and delivery of this Agreement by Parent and
Purchaser, a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws affecting creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an implied
covenant of good faith and fair dealing.
Section 3.3 Consents And Approvals; No Violations
(a) None of the execution and delivery of this Agreement, the
performance by the Company of its obligations hereunder or the consummation by
the Company of the transactions contemplated hereby will (i) conflict with or
result in any breach of any applicable law or any provision of the Certificate
of Incorporation or the Bylaws of the Company; (ii) require any consent or
other action by any Person under or result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration or
obligation to repurchase, repay, redeem or acquire or any similar right or
obligation) under any of the terms, conditions or provisions of any note,
mortgage, letter of credit, other evidence of indebtedness, guarantee, license,
lease or agreement or similar instrument or obligation to which the Company or
any of its Subsidiaries (as defined in Section 3.5 hereof) is a party or by
which any of them or any of their assets may be bound or (iii) assuming that
the filings, registrations, notifications, authorizations, consents and
approvals referred to in subsection (b) below have been obtained or made, as
the case may be, violate any applicable law or any order, injunction, decree,
statute, rule or regulation of any Governmental Entity to which the Company or
any of its Subsidiaries (as defined in Section 3.5 hereof) is subject,
excluding from the foregoing clauses (ii)
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and (iii) such requirements, defaults, breaches, rights or violations (A) that
would not, in the aggregate, reasonably be expected to have a Company Material
Adverse Effect and would not have a material adverse effect on the ability of
the Company to perform its obligations hereunder or (B) that become applicable
as a result of the business or activities in which Parent or Purchaser or any
of their respective affiliates is or proposes to be engaged or any acts or
omissions by, or facts specifically pertaining to, Parent or Purchaser.
(b) No filing or registration with, notification to, or
authorization, consent or approval of, any government or any agency, court,
tribunal, commission, board, bureau, department, political subdivision or other
instrumentality of any government (including any regulatory or administrative
agency), whether federal, state, multinational (including, but not limited to,
the European Community), provincial, municipal, domestic or foreign (each, a
"Governmental Entity") is required in connection with the execution and
delivery of this Agreement by the Company, the performance by the Company of
its obligations hereunder or the consummation by the Company of the
transactions contemplated hereby, except (i) the filing of an agreement of
merger together with an officer's certificate of the Company and Purchaser in
accordance with the DGCL; (ii) compliance with any applicable requirements of
the Hart_Scott_Rodino Antitrust Improvements Act of 1976, as amended, and the
rules and regulations thereunder (the "HSR Act"), or any foreign laws
regulating competition, antitrust, investment or exchange controls; (iii)
compliance with any applicable requirements of the Securities Act of 1933, as
amended, and the rules and regulations thereunder (the "Securities Act") and
the Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (the "Exchange Act"); (iv) compliance with any applicable
requirements of state blue sky or takeover laws and (v) such other consents,
approvals, orders, authorizations, notifications, registrations, declarations
and filings (A) the failure of which to be obtained or made would not, in the
aggregate, reasonably be expected to have a Company Material Adverse Effect and
would not have a material adverse effect on the ability of the Company to
perform its obligations hereunder or (B) that become applicable as a result of
the business or activities in which Parent or Purchaser or any of their
respective affiliates is or proposes to be engaged or any acts or omissions by,
or facts specifically pertaining to, Parent or Purchaser.
Section 3.4 Capitalization. The authorized capital stock of the
Company consists of 50,000,000 shares of Common Stock. As of March 9, 2000,
there were 12,751,896 shares of Common Stock issued and outstanding. All shares
of capital stock of the Company have been, and all Shares that may be issued
pursuant to the Option Plans (as defined below) will be, when issued in
accordance with the respective terms thereof, duly authorized and validly
issued and are fully paid and nonassessable and were not issued in violation of
any preemptive rights. The Company has no shares of its capital stock reserved
for issuance, except for shares reserved for issuance pursuant to Options
issued under the Company's 1994 Stock Incentive Plan, 1995 Stock Incentive
Plan, 1996 Stock Incentive Plan, 1996 Directors' Stock Option Plan and 1998
Nonstatutory Stock Option Plan (the "Option Plans"), which Options as of the
date of this Agreement cover the number of shares, and have the vesting dates
and exercise prices, as set forth in Section 3.4 of the Company Disclosure
Schedule, 202,597 shares reserved for issuance pursuant to outstanding Warrants
and 87,706 shares reserved for issuance pursuant to the Company's Employee
Stock Purchase Program. Except as set forth in Section 3.4 of the Company
Disclosure Schedule, there are no pre_emptive rights or
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outstanding subscriptions, options, warrants, rights, convertible securities or
other agreements or commitments of any character relating to the issued or
unissued capital stock or other securities of the Company or any of the
Company's Subsidiaries (as defined in Section 3.5). After the Effective Time,
the Surviving Corporation will have no obligation to issue, transfer or sell
any shares of the Company's capital stock or capital stock of the Surviving
Corporation (except as contemplated by Section 2.4 hereof). Except as set forth
in this Section 3.4 and for changes since March 9, 2000, resulting from the
exercise of employee stock options outstanding on such date and the issuance of
up to 87,706 shares pursuant to the Company's Employee Stock Purchase Program,
there are no outstanding (i) shares of capital stock or voting securities of
the Company, (ii) securities of the Company convertible into or exchangeable
for shares of capital stock or voting securities of the Company or (iii)
options or other rights to acquire from the Company, or other obligations of
the Company to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of the
Company. There are no outstanding obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any of the Company's
capital stock. No Subsidiary of the Company owns any capital stock or other
voting securities of the Company.
Section 3.5 Subsidiaries.
(a) Each Subsidiary of the Company (i) is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, (ii) has all corporate powers and all Licenses
required to carry on its business as now conducted and (iii) is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction where the character of the property owned or leased by it or the
nature of its activities makes such qualification necessary, except for
failures of this representation and warranty to be true which would not, in the
aggregate, have a Company Material Adverse Effect. For purposes of this
Agreement, "Subsidiary" means with respect to any Person, any corporation or
other legal entity of which such Person owns, directly or indirectly, more than
50% of the outstanding stock or other equity interests, the holders of which
are entitled to vote for the election of the board of directors or other
governing body of such corporation or other legal entity. All Subsidiaries and
their respective jurisdictions of incorporation are identified in Section 3.5
of the Company Disclosure Schedule.
(b) All of the outstanding capital stock of, or other voting
securities or ownership interests in, each Subsidiary of the Company, is owned
by the Company, directly or indirectly, free and clear of any lien, security
interest or other encumbrance (a "Lien") and free of any other limitation or
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or other voting securities or ownership
interests), except for the security interest of the banks under the Company's
loan agreement referred to in Section 3.21 of the Company Disclosure Schedule
(the "Loan Agreement").
Section 3.6 SEC Documents. Except for the 1999 10_K, which has not yet
been filed, the Company has filed all required reports, proxy statements,
registration statements, forms and other documents with the SEC since December
31, 1997 (the "Company SEC Documents"). As of their respective dates, and
giving effect to any amendments thereto or restatements thereof, (a) the
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Company SEC Documents complied, and, at the time the 1999 10_K is filed, the
1999 10_K will comply, in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the applicable
rules and regulations of the SEC promulgated thereunder and (b) none of the
Company SEC Documents contained, and, at the time the 1999 10_K is filed, the
1999 10_K will not contain, any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were (or, in the case of the 1999 10_K, will be) made, not misleading.
Section 3.7 Financial Statements. The financial statements of the
Company (including, in each case, any notes and schedules thereto) included in
the Company SEC Documents giving effect to any amendment thereto or
restatements thereof (a) were prepared from the books and records of the
Company and its Subsidiaries, (b) comply as to form in all material respects
with all applicable accounting requirements and the rules and regulations of
the SEC with respect thereto, (c) are in conformity with United States
generally accepted accounting principles ("GAAP"), applied on a consistent
basis (except in the case of unaudited statements, as permitted by Form 10_Q as
filed with the SEC under the Exchange Act) during the periods involved and (d)
fairly present, in all material respects, the consolidated financial position
of the Company and its consolidated Subsidiaries as of the dates thereof and
the consolidated results of their operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year_end
audit adjustments which were not and are not expected to be, individually or in
the aggregate, material in amount).
Section 3.8 Absence Of Undisclosed Liabilities. Except as set forth in
the Company SEC Documents or in Sections 3.12, 3.13, 3.15 or 3.21 of the
Company Disclosure Schedule, and except for liabilities and obligations
incurred in the ordinary course of business consistent with past practices
since the date of the most recent consolidated balance sheet included in the
Company SEC Documents, except for those that could not, in the aggregate,
reasonably be expected to have a Company Material Adverse Effect, neither the
Company nor any of its Subsidiaries has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) and there is no
existing condition, situation, or set of circumstances that could reasonably be
expected to result in such a liability.
Section 3.9 Information in Proxy Statement and Offer Documents
(a) The Proxy Statement, if any (or any amendment thereof or
supplement thereto), at the date mailed to Company shareholders and at the time
of the meeting of the Company shareholders to be held in connection with the
Merger, 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, except that no representation is made by the Company with
respect to statements made therein based on information supplied in writing by
Parent or Purchaser expressly for inclusion in the Proxy Statement. The Proxy
Statement will comply in all material respects with the provisions of the
Exchange Act and the rules and regulations thereunder.
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(b) The information with respect to the Company or any of its
Subsidiaries that the Company furnishes to Parent specifically for use in the
Offer Documents, at the time of the filing thereof, at the time of any
distribution or dissemination thereof and at the time of the consummation of
the Offer, will not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
Section 3.10 Absence of Certain Changes. Except as set forth in
Section 3.10 of the Company Disclosure Schedule, since December 31, 1999, the
Company and its Subsidiaries have conducted their respective businesses only in
the ordinary and usual course consistent with past practices. Since December
31, 1999, there has not occurred (i) any event, change or effect (including the
incurrence of any liabilities of any nature, whether or not accrued, contingent
or otherwise) having, or which would reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect; (ii) any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to the equity interests of
the Company or any of its Subsidiaries or any repurchase, redemption or other
acquisition by the Company or its Subsidiaries of any outstanding shares of
capital stock or other securities of, or other ownership interests in, the
Company or any of its Subsidiaries; (iii) any change in accounting principles
or methods, except insofar as may be required by a change in GAAP; (iv) any
amendment of any material term of any outstanding security of the Company or
any of its Subsidiaries; (v) any incurrence, assumption or guarantee by the
Company or any of its Subsidiaries of any indebtedness for borrowed money other
than in the ordinary course of business or in accordance with the Loan
Agreement; (vi) any creation or other incurrence by the Company or any of its
Subsidiaries of any Lien on any material asset other than in the ordinary
course of business consistent with past practices or in accordance with the
Loan Agreement; (vii) any making of any loan, advance or capital contributions
to or investment in any entity, other than loans, advances or capital
contributions to or investments in its wholly_owned Subsidiaries made in the
ordinary course of business consistent with past practices; (viii) any damage,
destruction or other casualty loss (whether or not covered by insurance)
affecting the business or assets of the Company or any of its Subsidiaries that
has had or could reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect; (ix) any transaction or
commitment made, or any contract or agreement entered into, by the Company or
any of its Subsidiaries relating to its assets or business (including the
acquisition or disposition of any assets) or any relinquishment by the Company
or any of its Subsidiaries of any contract or other right, in either case,
material to the Company and its Subsidiaries, taking as a whole, other than
transactions and commitments in the ordinary course of business consistent with
past practices, those contemplated by the Agreement and the amendment to the
Loan Agreement referred to in Section 3.21 of the Company Disclosure Schedule;
(x) any (1) grant of any severance or termination pay to (or amendment to any
existing arrangement with) any director, officer or employee of the Company or
any of its Subsidiaries, (2) increase in benefits payable under any existing
severance or termination pay policies or employment agreements, (3) entering
into any employment, deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any director, officer or
employee of the Company or any of its Subsidiaries, (4) establishment, adoption
or amendment (except as required by applicable law) of any collective
bargaining, bonus, profit_sharing, thrift, pension, retirement, deferred
compensation,
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compensation, stock option, restricted stock or other benefit plan or
arrangement covering any director, officer or employee of the Company or any of
its Subsidiaries, or (5) increase in compensation, bonus or other benefits
payable to any director, officer or employee of the Company or any of its
subsidiaries, other than in the ordinary course of business consistent with
past practices; or (xi) any labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union or representative
thereof to organize any employees of the Company or any of its Subsidiaries,
which employees were not subject to a collective bargaining agreement at
December 31, 1999, or any lockouts, strikes, slowdowns, work stoppages or
threats thereof by or with respect to such employees.
Section 3.11 Taxes.
(a) Except as set forth in Section 3.11 of the Company
Disclosure Schedule, (1) all federal, state, local and foreign Tax Returns (as
defined below) required to be filed by or on behalf of the Company, each of its
Subsidiaries, and each affiliated, combined, consolidated or unitary group of
which the Company or any of its Subsidiaries is a member (a "Company Group")
have been timely filed, and all returns filed are complete and accurate except
to the extent any failure to file or any inaccuracies in filed returns would
not, individually or in the aggregate, have a Company Material Adverse Effect;
(2) all Taxes (as defined below) due and owing by the Company, any Subsidiary
of the Company or any Company Group have been paid, or adequately reserved for
in accordance with GAAP, (3) there is no presently pending or, to the knowledge
of the Company, contemplated or scheduled material claim, audit, examination,
deficiency, refund litigation, proposed adjustment or matter (each a "Tax
Issue") in controversy with respect to any Taxes due and owing by the Company,
any Subsidiary of the Company or any Company Group, nor has the Company or any
Subsidiary of the Company filed any waiver of the statute of limitations
applicable to the assessment or collection of any Tax; (4) all assessments for
Taxes due and owing by the Company, any Subsidiary of the Company or any
Company Group with respect to completed and settled examinations or concluded
litigation have been paid; (5) neither the Company nor any Subsidiary of the
Company is a party to any tax indemnity agreement, tax sharing agreement or
other agreement under which the Company or any Subsidiary of the Company could
become liable to another person as a result of the imposition of a Tax upon any
person, or the assessment or collection of such a Tax; and (6) the Company and
each of its Subsidiaries has complied in all material respects with all rules
and regulations relating to the withholding of Taxes.
(b) For purposes of this Agreement, (i) "Taxes" means all
taxes, levies or other like assessments, charges or fees (including estimated
taxes, charges and fees), including, without limitation, income, corporation,
advance corporation, gross receipts, transfer, excise, property, sales, use,
value_added, license, payroll, withholding, social security and franchise or
other governmental taxes, duties or charges, imposed by the United States or
any state, county, local or foreign government or subdivision or agency
thereof, and such term shall include any interest, penalties or additions to
tax attributable to such taxes and (ii) "Tax Return" means any report, return,
statement or other written information required to be supplied to a taxing
authority in connection with Taxes.
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Section 3.12 Employee Matters.
(a) Except for any plan, fund, program, agreement or
arrangement that is subject to the laws of any jurisdiction outside the United
States, Schedule 3.12(a) of the Company Disclosure Schedule contains a true and
complete list of each material deferred compensation, incentive compensation,
and equity compensation plan; material "welfare" plan, fund or program (within
the meaning of Section 3(1) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")); material "pension" plan, fund or program (within
the meaning of Section 3(2) of ERISA); each material employment, termination or
severance agreement; and each other material employee benefit plan, fund,
program, agreement or arrangement, in each case, that is in writing and
sponsored, maintained or contributed to or required to be contributed to by the
Company or by any trade or business, whether or not incorporated (each, an
"ERISA Affiliate"), that together with the Company would be deemed a "single
employer" within the meaning of Section 4001(b) of ERISA, or to which the
Company or an ERISA Affiliate is party, whether written or oral, for the
benefit of any employee, consultant, director or former employee, consultant or
director of the Company or any Subsidiary of the Company. The plans, funds,
programs, agreements and arrangements listed on Schedule 3.12(a) of the Company
Disclosure Schedule are referred to herein collectively as the "Plans."
(b) With respect to each Plan, the Company has heretofore
delivered or made available to Parent true and complete copies of the Plan and
any amendments thereto (or if the Plan is not a written Plan, a description
thereof), any related trust or other funding vehicle, the most recent reports
or summaries required under ERISA or the Code and the most recent determination
letter received from the Internal Revenue Service with respect to each Plan
intended to qualify under Section 401 of the Code.
(c) Neither the Company nor any ERISA Affiliate nor any
predecessor thereof sponsors, maintains or contributes to, or has in the past
sponsored, maintained or contributed to, any Plan subject to Title IV of ERISA.
(d) No Plan is a "multiemployer plan," as defined in Section
3(37) of ERISA, nor is any Plan a plan described in Section 4063(a) of ERISA.
(e) Each Plan has been operated and administered in all
material respects in accordance with its terms and applicable law, including,
but not limited to, ERISA and the Code.
(f) Each Plan intended to be "qualified" within the meaning
of Section 401(a) of the Code has received a favorable determination letter
from the Internal Revenue Service, or in the case of such a Plan for which a
favorable determination letter has not yet been received, the applicable
remedial amendment period under Section 401(b) of the Code has not expired and
each trust forming a part thereof is exempt from tax pursuant to Section 501(a)
of the Code.
(g) Except as set forth in Section 3.12(g) of the Company
Disclosure Schedule, no Plan provides medical, surgical, hospitalization, death
or similar benefits (whether or not insured) for employees or former employees
of the Company or any Subsidiary for periods extending beyond
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their retirement or other termination of service, other than (i) coverage
mandated by applicable law, (ii) death benefits under any "pension plan," or
(iii) benefits the full cost of which is borne by the current or former
employee (or his or her beneficiary), dependant or other covered person.
(h) There are no pending, or to the knowledge of the Company,
threatened or anticipated, claims that would reasonably be expected to have a
Company Material Adverse Effect by or on behalf of any Plan, by any employee or
beneficiary covered under any such Plan, or otherwise involving any such Plan
(other than routine claims for benefits).
(i) Except as set forth in Section 3.12 of the Company
Disclosure Schedule, the consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with another event, (i)
entitle any current or former employee or officer of the Company or any ERISA
Affiliate to severance pay, unemployment compensation or any other payment,
except as expressly provided in this Agreement, or (ii) accelerate the time of
payment or vesting, or increase the amount of compensation due any such
employee or officer, other than payments, accelerations or increases (x) under
employee benefit plans that are subject to the laws of a jurisdiction outside
of the United States and are listed on Section 3.12(i) of the Company
Disclosure Schedule or (y) mandated by applicable law.
(j) No amounts payable under the Plans will fail to be
deductible for federal income tax purposes by virtue of Section 280G of the
Code.
(k) There has been no amendment to, written interpretation or
announcement (whether or not written) by the Company relating to, or change in
employee participation or coverage under, a Plan which would increase
materially the expense of maintaining such Plan above the level of the expense
incurred in respect thereof for the fiscal year ended prior to the date hereof.
(l) To the knowledge of the Company, all employee benefit
plans that are subject to the laws of any jurisdiction outside the United
States have been maintained in substantial compliance with their terms and are
in material compliance with such applicable laws, including relevant Tax laws,
and the requirements of any trust deed under which they were established,
except for such exceptions to the foregoing which, in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect. Section
3.12(l) of the Company Disclosure Schedule lists all material employee pension
benefit plans that are subject to the laws of any jurisdiction outside the
United States except for such plans that are governmental or statutory plans.
(m) Section 3.12(m) of the Company Disclosure Schedule lists
each agreement, arrangement, understanding or contract (a "Severance Contract")
that provides for severance, termination of employment, retention or other
special transaction bonus or similar benefit, or other similar benefits, to any
employee or former employee of the Company ("Severance Benefits") and
identifies the Severance Benefits thereunder (it being understood that the
omission from Schedule 3.12(m) of the Company Disclosure Schedule of Severance
Contracts under which the aggregate amount of Severance Benefits is less than
$100,000 shall not be deemed a misrepresentation). No Severance Contract listed
in such Section 3.12(m) entitles any such employee or former employee to
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receive any such benefit if the individual's employment is terminated for
"cause" or if the individual otherwise commits (by action or omission) an act
constituting "cause".
Section 3.13 Litigation; Compliance With Laws.
(a) Except as set forth in the Company SEC Documents, in
Section 3.13 of the Company Disclosure Schedule or as otherwise covered by
insurance, there is no action, suit, investigation or proceeding pending
against, or to the knowledge of the Company threatened against, the Company,
any Subsidiary of the Company, any present or former officer, director or
employee of the Company or any Subsidiary or any other person for whom the
Company may be liable or any of their respective properties before any court or
arbitrator or any Governmental Entity which would reasonably be expected to
have a Company Material Adverse Effect.
(b) The Company and its Subsidiaries are and, since January
1, 1998, have been in compliance with, and to the knowledge of the Company are
not under investigation with respect to and have not been threatened to be
charged with or been given notice of any violation of, any applicable laws,
ordinances, rules, orders and regulations of any federal, state, local or
foreign governmental authority applicable to their respective businesses and
operations, except for such violations, if any, which, in the aggregate, would
not reasonably be expected to have a Company Material Adverse Effect. All
governmental approvals, permits and Licenses required to conduct the business
of the Company and its Subsidiaries have been obtained, are in full force and
effect and are being complied with except for such violations and failures to
have Licenses in full force and effect, if any, which, individually or in the
aggregate, could not reasonably be expected to have a Company Material Adverse
Effect.
Section 3.14 Labor Matters.
(a) The Company and its Subsidiaries are in compliance with
all currently applicable laws respecting employment and employment practices,
terms and conditions of employment and wages and hours, and are not engaged in
any unfair labor practice, failure to comply with which or engagement in which,
as the case may be, would reasonably be expected to have a Company Material
Adverse Effect. The Company is in compliance with, and is performing in all
material respects all its obligations under, the Conciliation Agreement between
the U.S. department of Labor/ESA, Office of Federal Contract Compliance
Programs and the Company.
(b) As of the date of this Agreement (i) there is no labor
strike, dispute, slowdown, stoppage or lockout actually pending or, to the
knowledge of the Company, threatened against the Company; (ii) to the knowledge
of the Company, no union organizing campaign with respect to the Company's
employees is underway; (iii) there is no unfair labor practice charge or
complaint against the Company pending or, to the knowledge of the Company,
threatened before the National Labor Relations Board or any similar state or
foreign agency; (iv) there is no written grievance pending relating to any
collective bargaining agreement or other grievance procedure; (v) to the
knowledge of the Company, no charges with respect to or relating to the Company
are pending before the Equal Employment Opportunity Commission or any other
agency responsible for the prevention of unlawful employment practices; and
(vi) there are no collective bargaining
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agreements with any union covering employees of the Company, except for such
exceptions to the foregoing clauses (i) through (v) which, individually or in
the aggregate, would not reasonably be expected to have a Company Material
Adverse Effect.
Section 3.15 Certain Contracts and Arrangements. Except as set forth
in Section 3.15 of the Company Disclosure Schedule, each contract or agreement
to which the Company or any of its Subsidiaries is a party or by which any of
them is bound is in full force and effect, and neither the Company nor any of
its Subsidiaries, nor, to the knowledge of the Company, any other party
thereto, is in breach of, or default under, any such contract or agreement, and
no event has occurred that with notice or passage of time or both would
constitute such a breach or default thereunder by the Company or any of its
Subsidiaries, or, to the knowledge of the Company, any other party thereto,
except for such failures to be in full force and effect and such breaches and
defaults which, in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect.
Section 3.16 Environmental Matters.
(a) (i) "Environmental Claim" means any claim, action, cause
of action, investigation or written notice by any person or entity alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties) arising
out of, based on or resulting from (A) the presence or release of any Hazardous
Materials at any location, currently or formerly leased, owned or operated by
the Company or any of its Subsidiaries or (B) any matters relating to the
Company or any of its Subsidiaries and relating to or arising out of any
Environmental Law (as defined hereafter).
(ii) "Environmental Laws" means all federal, state,
local and foreign laws (including, without limitation, common law) and any
regulations, treaty, permit or governmental restriction, or any agreement with
any governmental authority, relating to pollution or protection of the
environment, including, without limitation, laws relating to releases or
threatened releases of pollutants, contaminants, wastes or chemicals or any
toxic, radioactive, ignitable, corrosive, reactive or otherwise hazardous
substances, wastes or materials or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, transport or handling of
pollutants, contaminants, wastes or chemicals or any toxic, radioactive,
ignitable, corrosive, reactive or otherwise hazardous substances, wastes or
materials.
(iii) "Hazardous Materials" means all substances
defined as hazardous materials, hazardous wastes, hazardous substances, oils,
pollutants or contaminants or other chemical substances in, or regulated as
such under, any Environmental Law.
(b) (i) The Company and its Subsidiaries are and have been in
compliance with all applicable Environmental Laws (which compliance includes,
but is not limited to, the possession by the Company and its Subsidiaries of
all permits and other governmental authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof),
except where failures to be in compliance would not, in the aggregate,
reasonably be expected to have a Company Material Adverse Effect. Neither the
Company nor any of its
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Subsidiaries has received any written communication alleging that the Company
or any of its Subsidiaries is not in such compliance or may have liability
under any Environmental Law, except where failures to be in compliance or such
liability would not, in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
(ii) There is no Environmental Claim pending or
threatened against the Company or any of its Subsidiaries that could result in
any environmental liability that would, in the aggregate, reasonably be
expected to result in a Company Material Adverse Effect.
(iii) There are no present or past actions,
activities, circumstances, conditions, events or incidents that could result in
any environmental liability that would, individually or in the aggregate,
reasonably be expected to result in a Company Material Adverse Effect.
(c) There has been no environmental investigation, study,
audit, test, review or other analysis conducted of which the company or any
Subsidiary has knowledge in relation to the current or prior business of the
Company or any Subsidiary or any property or facility currently or formerly
owned, leased or operated by the Company or any Subsidiary which has not been
delivered to Purchaser at least five days prior to the date hereof.
(d) Neither the Company nor any subsidiary owns, leases or
operates any real property, or conducts any operations, in New Jersey or
Connecticut.
(e) For purposes of this Section 3.16, "Company" and
"Subsidiary" shall include any entity which is, in whole or in part, a
predecessor of the Company or any Subsidiary.
Section 3.17 Intellectual Property.
(a) The Company and its Subsidiaries own or have the right to
use all material Intellectual Property (as defined hereafter) reasonably
necessary for the Company and its Subsidiaries to conduct their business as it
is currently conducted. Schedule 3.17(a) of the Company Disclosure Schedule
contains a complete and accurate list of all patent applications and issued
patents; and all registrations for trademarks, service marks and trade names,
copyrights, domain names and trade dress used or held for use by the Company or
any of its Subsidiaries in the conduct of their business specifying as to each
such item, as applicable: (i) the owner or owners of the item, (ii) the
jurisdictions in which the item is issued or registered or in which any
application for issuance or registration has been filed, (iii) the respective
registration or application number of the item and (iv) the date of application
and registration of the item. Section 3.17(b) of the Company Disclosure
Schedule contains a complete and accurate list of all material agreements to
which the Company or any Subsidiary is a party that provides for the license or
sublicense of Intellectual Property.
(b) (i) All of the registrations relating to material
Intellectual Property owned by the Company and its Subsidiaries are valid,
subsisting and unexpired, free of all liens or encumbrances (other than
pursuant to the Loan Agreement), and have not been abandoned; (ii) to the
knowledge of the Company, the Company does not infringe the intellectual
property rights of any
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third party in any respect that would reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect; (iii) no
judgment, decree, injunction, rule or order has been rendered by Governmental
Entity which would limit, cancel or question the validity of, or the Company's
or its Subsidiaries' rights in and to, any Intellectual Property owned by the
Company in any respect that would reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect; and (iv) the Company
has not received notice of any pending or threatened suit, action or
adversarial proceeding that seeks to limit, cancel or question the validity of,
or the Company's or its Subsidiaries' rights in and to, any Intellectual
Property, which would reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
(c) For purposes of this Agreement "Intellectual Property"
shall mean all rights, privileges and priorities provided under U.S., state and
foreign law relating to intellectual property, including without limitation all
(x) (1) proprietary inventions, discoveries, processes, formulae, patterns,
designs, methods, techniques, procedures, concepts, developments, technology,
new and useful improvements to any of the foregoing and proprietary know_how
relating thereto, whether or not patented or eligible for patent protection;
(2) copyrights and copyrightable works; (3) trademarks, service marks, trade
names, domain names and trade dress, the goodwill of any business symbolized
thereby, and all common law rights relating thereto; (4) trade secrets and
other confidential information; (y) all registrations, applications and
recordings for any of the foregoing and (z) licenses or other similar
agreements granting to the Company or any of its Subsidiaries the rights to use
any of the foregoing.
Section 3.18 Opinion Of Financial Advisor. The Company has received
the opinion of DB to the effect that, as of the date hereof, the consideration
to be received by the holders of Shares is fair from a financial point of view
to such holders.
Section 3.19 Board Recommendation. The Board of Directors of the
Company, at a meeting duly called and held, has approved this Agreement and (i)
determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, taken together are fair to and in the best
interests of the stockholders of the Company; and (ii) resolved to recommend
that the stockholders of the Company tender their Shares into the Offer, adopt
this Agreement and approve the Merger.
Section 3.20 Rights Plan; Antitakover Statues. The Board of Directors
of the Company has approved and adopted an amendment to the Preferred Shares
Rights Agreement between the Company and American Stock Transfer and Trust Co.,
dated as of July 6, 1998 (the "Rights Agreement") which provides that neither
the execution and delivery of this Agreement nor the consummation of any of the
transactions contemplated by this Agreement shall cause Parent or Purchaser to
be deemed to be "Acquiring Persons" within the meaning of the Rights Agreement
and the Company has taken all other action necessary to render the rights
issued pursuant to the Rights Agreement inapplicable to the Offer, the Merger,
this Agreement and the transactions contemplated hereby. The Company has taken
all action necessary to exempt the Offer, the Merger, this Agreement and the
transactions contemplated hereby from the provisions of Section 203 of DGCL,
-23-
and, accordingly, no such Section nor other antitakeover or similar statute or
regulation applies or purports to apply to any such transaction. No other
"control share acquisition," "fair price," "moratorium" or other antitakeover
laws or regulations enacted under U.S. state or federal laws apply to this
Agreement or any of the transactions contemplated hereby.
Section 3.21 Finders' Fees. Except for DB, whose fees will be paid by
the Company, there is no investment banker, broker, finder or other
intermediary which has been retained by, or is authorized to act on behalf of,
the Company or any Subsidiary of the Company that would be entitled to any fee
or commission from the Company, any Subsidiary of the Company, Parent or any of
Parent's affiliates upon consummation of the transactions contemplated by this
Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser, jointly and severally, represent and warrant to
the Company subject to such exceptions as are specifically disclosed in writing
in the disclosure letter and referencing a specific representation supplied by
Parent to Company, which disclosure shall provide an exception to or otherwise
qualify the representations or warranties of Parent specifically referred to in
such disclosure and such other representations and warranties to the extent
such disclosure shall reasonably appear to be applicable to such other
representations or warranties (the "Parent Disclosure Schedule"), as follows:
Section 4.1 Corporate Existence and Power. Each of Parent and
Purchaser is a corporation duly incorporated (or other entity duly organized),
validly existing and in good standing under the laws of its jurisdiction of
incorporation, has all corporate or other power, as the case may be, and all
Licenses required to carry on its business as now conducted except for failures
to have any such License which would not, in the aggregate, have a Parent
Material Adverse Effect (as defined below). Each of Parent and Purchaser is
duly qualified to do business and is in good standing in each jurisdiction
where the character of the property owned, leased or operated by it or the
nature of its activities makes such qualification necessary, except for those
jurisdictions where failures to be so qualified would not reasonably be
expected to, in the aggregate, have a Parent Material Adverse Effect. As used
herein, the term "Parent Material Adverse Effect" means a material adverse
effect on the financial condition, business, assets or results of operations of
Parent and its Subsidiaries, taken as a whole, provided, however, that in no
event shall any effect that results from (a) changes affecting the retail
industry generally or (b) changes affecting the United States economy
generally, constitute a Parent Material Adverse Effect.
Section 4.2 Authorization. Each of Parent and Purchaser has the
requisite power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution and delivery of this Agreement
and the performance of its obligations hereunder have been duly and validly
authorized by the Boards of Directors of Parent and Purchaser, by Parent as the
sole stockholder of Purchaser, this Agreement has been approved by the Board of
Directors of Purchaser, and no other proceedings on the part of Parent or
Purchaser are necessary to authorize the
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execution, delivery and performance of this Agreement. This Agreement has been
duly executed and delivered by each of Parent and Purchaser and constitutes,
assuming due authorization, execution and delivery of this Agreement by the
Company, a valid and binding obligation of each of Parent and Purchaser,
enforceable against each of them in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights generally,
general equitable principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing.
Section 4.3 Consents And Approvals; No Violations.
(a) Neither the execution and delivery of this Agreement nor
the performance by each of Parent and Purchaser of its obligations hereunder
will (i) conflict with or result in any breach of any provision of the articles
of incorporation or bylaws (or other governing or organizational documents) of
Parent or Purchaser, as the case may be, or (ii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both)
a default (or give rise to any right of termination, cancellation or
acceleration or obligation to repurchase, repay, redeem or acquire or any
similar right or obligation) under any of the terms, conditions or provisions
of any note, mortgage, letter of credit, other evidence of indebtedness,
guarantee, license, lease or agreement or similar instrument or obligation to
which any of Parent or Purchaser is a party or by which any of them or any of
the respective assets used or held for use by any of them may be bound or (iii)
assuming that the filings, registrations, notifications, authorizations,
consents and approvals referred to in subsection (b) below have been obtained
or made, as the case may be, violate any order, injunction, decree, statute,
rule or regulation of any Governmental Entity to which either Parent or
Purchaser is subject, excluding from the foregoing clauses (ii) and (iii) such
requirements, defaults, breaches, rights or violations (A) that would not, in
the aggregate, reasonably be expected to have a Parent Material Adverse Effect
and would not reasonably be expected to have a material adverse effect on the
ability of either Parent or Purchaser to consummate the transactions
contemplated hereby or (B) that become applicable as a result of any acts or
omissions by, or facts specifically pertaining to, the Company.
(b) No filing or registration with, notification to, or
authorization, consent or approval of, any Governmental Entity is required in
connection with the execution and delivery of this Agreement by each of Parent
and Purchaser or the performance by any of them of their respective obligations
hereunder, except (i) the filing of an agreement of merger together with an
officer's certificate of the Company and Purchaser in accordance with the DGCL;
(ii) compliance with any applicable requirements of the HSR Act or any foreign
laws regulating competition, antitrust, investment or exchange controls; (iii)
compliance with any applicable requirements of the Securities Act and the
Exchange Act; (iv) compliance with any applicable requirements of state blue
sky or takeover laws; and (v) such other consents, approvals, orders,
authorizations, notifications, registrations, declarations and filings, the
failure of which to be obtained or made would not reasonably be expected to
have a Material Adverse Effect and would not have a material adverse effect on
the ability of either Parent or Purchaser to perform their respective
obligations hereunder or that become applicable as a result of any acts or
omissions by, or facts specifically pertaining to, the Company.
25
Section 4.4 Information in Proxy Statement. None of the information
supplied by Parent or Purchaser in writing expressly for inclusion or
incorporation by reference in the Proxy Statement (or any amendment thereof or
supplement thereto) will, at the date mailed to shareholders and at the time of
the meeting of shareholders to be held in connection with the Merger, contain
any untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they are made, not
misleading.
Section 4.5 Share Ownership. Neither Parent nor Purchaser beneficially
owns any shares of capital stock of the Company.
Section 4.6 Financing. Parent has, or will have prior to the
expiration of the Offer, sufficient funds to consummate the transactions
contemplated by this Agreement, including payment in full for all Shares
validly tendered into the Offer or outstanding at the Effective Time.
Section 4.7 Finders' Fees. Except for ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., whose fees
will be paid by Parent, there is no investment banker, broker, finder or other
intermediary that might be entitled to any fee or commission in connection with
or upon consummation of the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of Parent or Purchaser.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.1 Acquisition Proposals. The Company will notify Purchaser
promptly (but in no event later than 24 hours) if any proposals are received
by, any information is requested from, or any negotiations or discussions are
sought to be initiated or continued with the Company or its executive officers,
directors, investment bankers, attorneys, accountants or other agents, in each
case in connection with any Acquisition Proposal (as defined below). The
Company shall provide such notice orally and in writing and, subject to the
Company's directors' performance of their fiduciary duties, shall identify the
person or entity making, and the terms and conditions of, any such Acquisition
Proposal, indication or request. Subject to the Company's directors'
performance of their fiduciary duties, the Company shall keep Parent fully
informed, on a current basis, of the status and details of any such Acquisition
Proposal, indication or request. The Company agrees that it will immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any
Acquisition Proposal. As used in this Agreement, "Acquisition Proposal" shall
mean any tender or exchange offer involving the Company, any proposal for a
merger, consolidation or other business combination involving the Company, any
proposal or offer to acquire in any manner a substantial equity interest in, or
a substantial portion of the business or assets of, the Company or any material
Subsidiary (other than immaterial or insubstantial assets or inventory in the
ordinary course of business or assets held for sale), any proposal or offer
with respect to any recapitalization or restructuring with respect to the
Company or any material Subsidiary or any proposal or offer with respect to any
other transaction similar to any
-26-
of the foregoing with respect to the Company other than pursuant to the
transactions to be effected pursuant to this Agreement.
Section 5.2 Interim Operations of the Company. From the date hereof
until the Effective Time, the Company and its Subsidiaries shall conduct their
businesses in the ordinary course consistent with past practice and shall use
their best efforts to preserve intact their business organizations and
relationships with third parties and to keep available the services of their
present officers and employees. Without limiting the generality of the
foregoing, from the date hereof until the Effective Time:
(a) The Company will not adopt or propose any change to its
certificate of incorporation or bylaws;
(b) The Company will not, and will not permit any of its
Subsidiaries to, merge or consolidate with any other Person or acquire a
material amount of stock or assets of any other Person;
(c) The Company will not, and will not permit any of its
Subsidiaries to, sell, lease, license or otherwise dispose of any material
subsidiary or material amount of assets, securities or property (including,
without limitation, the stock or assets of La Sportiva USA, Inc.) except
pursuant to existing contracts or commitments and in the ordinary course
consistent with past practice;
(d) The Company will not, and will not permit any of its
Subsidiaries to, knowingly take any action that would make any representation
and warranty of the Company hereunder inaccurate in any respect at, or as of
any time prior to, the Effective Time; and
(e) The Company will not, and will not permit any of its
Subsidiaries to, agree or commit to do any of the foregoing.
Section 5.3 No Solicitation.
(a) Except as provided in Section 5.3(b) below, the Company,
from the date of this Agreement until the earlier of termination of this
Agreement or the Acceptance Date, will not nor shall it authorize or permit its
officers, directors, employees, investment bankers, attorneys, accountants and
other agents to directly or indirectly (i) initiate, solicit or knowingly
encourage, or knowingly take any action to facilitate the making of, any offer
or proposal which constitutes or is reasonably likely to lead to any
Acquisition Proposal, (ii) enter into any agreement with respect to any
Acquisition Proposal, (iii) in the event of an unsolicited Acquisition Proposal
for the Company, engage in negotiations or discussions with, or provide any
information or data to, or afford access to the business, properties, assets,
books or records of the Company or any of its Subsidiaries to, otherwise
cooperate in any way with, or knowingly assist, participate in, facilitate or
encourage any effort by, any person or entity (other than Parent, any of its
affiliates or representatives) relating to any Acquisition Proposal or grant
any waiver or release under any standstill or similar agreement with respect to
any class of equity securities of the Company or any of its Subsidiaries;
provided,
-27-
however, that nothing contained in this Section 5.3 or any other provision
hereof shall prohibit the Company or the Company Board of Directors from (i)
taking and disclosing to the Company's stockholders its position with respect
to a tender or exchange offer by a third party pursuant to Rules 14d_9 and
14e_2 promulgated under the Exchange Act or (ii) making such disclosure to the
Company's stockholders as, in the good faith judgment of the Board of Directors
is necessary for the Company Board of Directors to comply with its fiduciary
duties to the Company's stockholders under applicable law.
(b) Notwithstanding the foregoing, prior to the acceptance of
Shares pursuant to the Offer, the Company may furnish information concerning
its business, properties or assets to any person or entity pursuant to a
confidentiality agreement with terms no less favorable to the Company than
those contained in the Confidentiality Agreement, dated January 20, 2000,
entered into between Parent and the Company (the "Confidentiality Agreement")
and may negotiate and participate in discussions and negotiations with such
person or entity concerning an Acquisition Proposal if (x) such entity or group
has on an unsolicited basis submitted a bona fide written proposal to the
Company relating to any such transaction which the Board of Directors
determines in good faith, after receiving advice from a nationally recognized
investment banking firm and taking into account all the terms and conditions of
the Acquisition Proposal, including any break_up fees, expense reimbursement
provisions and conditions to consummation, are more favorable and provide
greater value to all the Company's stockholders than as provided hereunder and
for which financing, to the extent required, is then fully committed or
reasonably determined to be available by the Board of Directors of the Company
and (y) in the opinion of the Company Board of Directors, the failure to
provide such information or access or to engage in such discussions or
negotiations would cause the Board of Directors to violate its fiduciary duties
to the Company's stockholders under applicable law (an Acquisition Proposal
which satisfies clauses (x) and (y) being referred to herein as a "Superior
Proposal"). The Company shall promptly, and in any event within 24 hours
following receipt of a Superior Proposal, notify Parent of the receipt of the
same and prior to entering into a confidentiality agreement with such person or
entity.
(c) Except as set forth herein, neither the Board of
Directors of the Company nor any committee thereof shall (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Parent or
Purchaser, the approval or recommendation by such Board of Directors or any
such committee of the Offer, this Agreement or the Merger, (ii) approve or
recommend or propose to approve or recommend, any Acquisition Proposal or (iii)
enter into any agreement with respect to any Acquisition Proposal.
Notwithstanding the foregoing, prior to the time of acceptance for payment of
Shares in the Offer, the Board of Directors of the Company may (subject to the
terms of this Agreement) withdraw or modify its approval or recommendation of
the Offer, this Agreement or the Merger, in each case, in connection with a
Superior Proposal, or approve or recommend a Superior Proposal.
Section 5.4 Notices of Certain Events. The Company shall promptly
notify Parent of:
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(a) any notice or other communication from any person or
entity alleging that the consent of such person or entity is or may be required
in connection with the transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental
or regulatory agency or authority in connection with the transactions
contemplated by this Agreement; and
(c) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge, threatened against, relating to or involving or
otherwise affecting the Company or any of its Subsidiaries that, if pending on
the date of this Agreement, would have been required to have been disclosed
pursuant to Section 3.12, 3.13 or 3.20, as the case may be, or that relate to
the consummation of the transactions contemplated by this Agreement.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 Proxy Statement. As promptly as practicable after the
consummation of the Offer and if required by the Exchange Act, the Company
shall prepare and file with the SEC, and shall use its best efforts to respond
promptly to any comments made by the SEC, and promptly thereafter shall mail to
stockholders, the Proxy Statement. In such event, the Proxy Statement shall
contain the recommendation of the Board of Directors in favor of the Merger.
Section 6.2 Meeting of Stockholders of the Company. At the Special
Meeting, if any, the Company shall use its best efforts to solicit from
stockholders of the Company proxies in favor of the Merger and shall take all
other action necessary or, in the reasonable opinion of Purchaser, advisable to
secure any vote or consent of stockholders required by the DGCL to effect the
Merger. Parent and Purchaser agree that each shall vote, or cause to be voted,
in favor of the Merger all Shares directly or indirectly beneficially owned by
it.
Section 6.3 Additional Agreements. Each of the parties hereto agrees
to use its best efforts to obtain in a timely manner all necessary waivers,
consents and approvals and to effect all necessary registrations and filings,
and to use all reasonable efforts to take, or cause to be taken, all other
actions and to do, or cause to be done, all other things necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement.
Section 6.4 Access; Confidentiality. From the date hereof to the
Effective Time, upon reasonable notice and subject to the terms of the
Confidentiality Agreement, the Company shall (and shall cause each of its
Subsidiaries to) afford to the officers, employees, accountants, counsel,
financing sources and other representatives of Parent, reasonable access,
during normal business hours during the period prior to the Acceptance Date, to
all its properties, books, contracts, commitments and records and, during such
period, the Company shall (and shall cause each of its subsidiaries to),
subject to any limitations imposed by law with respect to records of employees,
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furnish promptly to the Parent upon Parent's request (a) a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to the requirements of federal securities laws and
(b) all other information concerning its business, properties and personnel as
Parent may reasonably request. The Company shall instruct the employees,
counsel, financial advisors, auditors and other authorized representatives of
the Company and its Subsidiaries to cooperate with Parent in its investigation
of the Company and its Subsidiaries. No information or knowledge obtained by
Parent in any investigation pursuant to this Section shall affect or be deemed
to modify any representation or warranty made by the Company hereunder.
Section 6.5 Consents and Approvals. Each of Parent, Purchaser and the
Company will take all reasonable actions necessary to comply promptly with all
legal requirements which may be imposed on it with respect to this Agreement
and the Transactions (which actions shall include, without limitation,
furnishing all information required under the HSR Act and in connection with
approvals of or filings with any other Governmental Entity) and will promptly
cooperate with and, subject to such confidentiality agreements as may be
reasonably necessary or requested, furnish information to each other or their
counsel in connection with any such requirements imposed upon any of them or
any of their subsidiaries in connection with this Agreement and the
Transactions.
(a) Each of the Company, Purchaser and Parent shall take all
reasonable actions (including cooperating with each other) necessary to file as
soon as practicable notifications under the HSR Act, or under comparable merger
notification laws of non_U.S. jurisdictions and to respond as promptly as
practicable to any inquiries received from the Federal Trade Commission and the
Antitrust Division of the Department of Justice or the authorities of such
other jurisdiction for additional information or documentation and to respond
as promptly as practicable to all inquiries and requests received from any
State Attorney General or other Governmental Entity in connection with
antitrust matters.
Section 6.6 Publicity. Parent and the Company will consult with each
other before issuing any press release or making any public statement with
respect to this Agreement or the transactions contemplated hereby and, except
for any release or statement that may be required by applicable law or any
listing agreement with any national securities exchange, will not issue any
such press release or make any such public statement prior to such
consultation.
Section 6.7 Directors' and Officers' Insurance and Indemnification.
Parent shall cause the Surviving Corporation, and the Surviving Corporation
hereby agrees, to do the following:
(a) For six years after the Effective Time, the Surviving
Corporation shall indemnify and hold harmless the present and former officers
and directors of the Company (each an "Indemnified Person") in respect of acts
or omissions occurring at or prior to the Effective Time to the fullest extent
permitted by the DGCL or any other applicable laws or as provided under the
certificate of incorporation and bylaws in effect on the date hereof, provided
that such indemnification shall be subject to any limitation imposed from time
to time under applicable law.
(b) For six years after the Effective Time, the Surviving
Corporation shall provide officers' and directors' liability insurance in
respect of acts or omissions occurring prior to the
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Effective Time covering each such Indemnified Person currently covered by the
Company's officers' and directors' liability insurance policy on terms with
respect to coverage and amount no less favorable than those of such policy in
effect on the date hereof, provided that, in satisfying its obligation under
this Section 6.7(b), the Surviving Corporation shall not be obligated to pay
premiums in excess of 200% of the amount per annum the Company paid in its last
full fiscal year, which amount Company has disclosed to Parent prior to the
date hereof.
(c) If Parent, the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person or
entity and shall not be the continuing or surviving corporation or entity of
such consolidation or merger, or (ii) transfers or conveys all or substantially
all of its properties and assets to any person or entity, then, and in each
such case, to the extent necessary, proper provision shall be made so that the
successors and assigns of Parent or the Surviving Corporation, as the case may
be, shall assume the obligations set forth in this Section 6.7.
(d) The rights of each Indemnified Person under this Section
6.7 shall be in addition to any rights such Person may have under the
certificate of incorporation or bylaws of the Company or any of its
Subsidiaries, under the DGCL or any other applicable laws or under any
agreement of any Indemnified Person with the Company or any of its
Subsidiaries. These rights shall survive consummation of the Merger for the
periods set forth above and are intended to benefit, and shall be enforceable
by, each Indemnified Person.
Section 6.8 Purchaser Compliance. Parent shall cause Purchaser to
comply with all of its obligations under this Agreement.
Section 6.9 Best Efforts.
(a) Prior to the Closing, upon the terms and subject to the
conditions of this Agreement, Purchaser and the Company, agree to use their
respective best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things reasonably necessary and appropriate, under any
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as promptly as practicable
including, but not limited to (i) the preparation and filing of all forms,
registrations and notices required to be filed to consummate the transactions
contemplated by this Agreement and the taking of such actions as are necessary
to obtain any requisite approvals, consents, orders, exemptions or waivers by
any third party or Governmental Entity, and (ii) the satisfaction of the other
parties' conditions to Closing. In addition, no party hereto shall take any
action after the date hereof that would reasonably be expected to materially
delay the obtaining of, or result in not obtaining, any permission, approval or
consent from any Governmental Entity necessary to be obtained prior to the
acceptance for payment, and payment for, the Shares in the Offer or the
Closing.
(b) Prior to the Closing, each party shall promptly consult
with the other parties hereto with respect to and subject to such
confidentiality agreements as may be reasonably necessary or requested, provide
any necessary information with respect to and provide the other (or its
counsel)
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copies of, all filings made by such party with any Governmental Entity or any
other information supplied by such party to a Governmental Entity in connection
with this Agreement and the transactions contemplated by this Agreement. Each
party hereto shall promptly inform the other of any communication from any
Governmental Entity regarding any of the transactions contemplated by this
Agreement unless otherwise prohibited by law. If any party hereto or affiliate
thereof receives a request for additional information or documentary material
from any such Government Entity with respect to the transactions contemplated
by this Agreement then such party will endeavor in good faith to make, or cause
to be made, as soon as reasonably practicable and after consultation with the
other party, an appropriate response in compliance with such request. To the
extent that transfers of permits or Environmental Permits are required as a
result of execution of this Agreement or consummation of the transactions
contemplated hereby, the Company shall use its commercially reasonable efforts
to effect such transfers.
(c) Notwithstanding anything else contained herein, the
provisions of Sections 6.3 and 6.5 and this Section 6.9 shall not be construed
to require any party to undertake any particular efforts or to take any
particular action if the result thereof would give rise to one of the events or
conditions set forth in Section (a) of Annex A.
Section 6.10 Employee Benefits.
(a) Parent agrees that the Company will honor and, on and
after the Effective Time, Parent will cause the Surviving Corporation to honor
all employment, benefit, severance, termination, consulting and retirement
agreements to which the Company or any of its subsidiaries presently is a
party, including the Plans.
(b) Parent shall cause the Surviving Corporation to take such
actions as are necessary so that, until December 31, 2000, employees of the
Company and its subsidiaries during such period will be provided such employee
benefit plans and programs (other than incentive compensation or similar
programs) as will provide benefits which in the aggregate are not materially
less favorable than those provided to such employees as of the date hereof
under the Plans.
(c) Nothing in this Section 6.10 will be or be deemed to be
for the benefit of, or enforceable by, any person who is not a party hereto,
including, without limitation, any employee of the Company, the Surviving
Corporation or any of their respective subsidiaries or shall be deemed to limit
the Surviving Corporation's or its subsidiaries' ability to modify or eliminate
any Plan.
Section 6.11 Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Purchaser, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Purchaser, any other actions and things to
vest, perfect or confirm of record or otherwise in the Surviving Corporation
any and all right, title and interest in, to and under any of the rights,
properties or assets of the Company acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger.
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ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions, any and all of which may be waived in whole or in part by
Parent, Purchaser and the Company, as the case may be, to the extent permitted
by applicable law:
(a) Stockholder Approval. If required by the DGCL, this
Agreement shall have been approved and adopted by the Company's stockholders in
accordance with such law; provided, however, that Parent and Purchaser shall
vote all Shares purchased in the Offer in favor of such approval;
(b) Statutes; Court Orders. No statute, rule, regulation,
judgment, injunction, order or decree shall prohibit the consummation of the
Merger; and
(c) Purchase of Shares in Offer. Purchaser shall have
purchased, or caused to be purchased, the Shares pursuant to the Offer;
provided, that this condition shall be deemed to have been satisfied with
respect to the obligation of Parent and Purchaser to effect the Merger if
Purchaser fails to accept for payment or pay for Shares pursuant to the Offer
in violation of the terms of the Offer or of this Agreement.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated and the
transactions contemplated herein may be abandoned at any time before the
Effective Time, whether before or after stockholder approval thereof (provided,
however, that if Shares are purchased pursuant to the Offer, Parent may not in
any event terminate this Agreement):
(a) By mutual written consent of Parent and the Company; or
(b) By Parent or the Company if, without any material breach
by such terminating party of its obligations under this Agreement, the purchase
of Shares pursuant to the Offer shall not have occurred on or before June 15,
2000; or
(c) By either Parent or the Company if there shall be any law
or regulation that makes acceptance for payment of, and payment for, the Shares
pursuant to the Offer or consummation of the Merger illegal or otherwise
prohibited or a court of competent jurisdiction or other Governmental Entity
shall have issued an order, decree or ruling or taken any other action, in each
case permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated
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by this Agreement and such judgment, injunction, order or decree shall have
become final and nonappealable; or
(d) By the Company, but only prior to the Acceptance Date, if
it shall have received a Superior Proposal which the Board of Directors has
determined is more favorable to the stockholders of the Company than the
transactions contemplated hereby in the manner permitted by, and in compliance
with, Section 5.3, provided that the Company shall have paid any amounts due
pursuant to Section 9.3 in accordance with the terms, and at the times,
specified therein, and provided, further, that, unless the Company's Board of
Directors is advised by its principal, independent legal advisor that it would
be in contravention of the performance of the directors' fiduciary duties to do
so, (i) the Company notifies Parent, in writing and at least 72 hours prior to
such termination, promptly of its intention to terminate this Agreement and to
enter into a binding written agreement concerning an Acquisition Proposal that
constitutes a Superior Proposal of the nature described in Section 5.3(b),
attaching the most current version of such agreement (or a description of all
material terms and conditions thereof), and (ii) Parent does not make, within
72 hours of receipt of such written notification, an offer that is at least as
favorable to the shareholders of the Company as such Superior Proposal, it
being understood that the Company shall not enter into any such binding
agreement during such 72_hour period;
(e) By Parent, but only prior to the Acceptance Date, if (i)
the Company Board of Directors shall have withdrawn, modified, or changed in
any adverse respect its recommendation of this Agreement, the Merger and the
transactions contemplated hereby, (ii) the Company Board of Directors shall
have recommended to its stockholders a Superior Proposal, or (iii) resolved to
do any of the foregoing, provided that in no way shall such termination release
the Company from its obligation to pay any amounts due pursuant to Section 9.3
in accordance with the terms, and at the times, specified therein; or
(f) By Parent, if the 1999 10_K shall not have been filed on
or prior to May 1, 2000.
Section 8.2 Effect of Termination. In the event of the termination of
this Agreement as provided in Section 8.1 hereof, written notice thereof shall
forthwith be given to the other party or parties specifying the provision
hereof pursuant to which such termination is made (unless the Agreement is
terminated pursuant to Section 8.1(a)), and this Agreement shall forthwith
become null and void and there shall be no liability on the part of any party
or its directors, officers or shareholders, except for the provisions of this
Section 8.2 and Section 9.3 hereof; provided, however, that nothing in this
Section 8.2 shall relieve any party to this Agreement of liability for any
willful or intentional breach of this Agreement.
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ARTICLE IX
MISCELLANEOUS
Section 9.1 Amendment and Modification. Subject to applicable law and
except as otherwise provided in the Agreement, this Agreement may be amended,
modified and supplemented in any and all respects, whether before or after any
vote of the stockholders of the Company contemplated hereby, by written
agreement of the parties hereto, by action taken by their respective Boards of
Directors or equivalent governing bodies, but, after the purchase of Shares
pursuant to the Offer, no amendment shall be made which decreases the Merger
Consideration and, after the approval of this Agreement by the stockholders, no
amendment shall be made which by law requires further approval by such
stockholders without obtaining such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 9.2 Non_Survival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the acceptance for payment, and payment for, the Shares by Purchaser pursuant
to the Offer.
Section 9.3 Expenses.
(a) Except as expressly set forth in Section 9.3(b) below,
all fees, costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
fees, costs and expenses.
(b) If a Payment Event occurs, then the Company shall pay
Parent (by wire transfer of immediately available funds), if, pursuant to
clause (x) of the definition of Payment Event below, simultaneously with the
occurrence of such Payment Event or, if pursuant to clause (y) of the
definition of Payment Event below, within two Business Days following such
Payment Event a fee equal to $5 million. Upon such termination, the Company
shall also reimburse Parent and its Affiliates (by wire transfer of immediately
available funds), no later than two Business Days after such termination, for
100% of their Expenses (as defined in clause (c) below). "Payment Event" means
(x) the termination of this Agreement pursuant to Sections 8.1(d) or (e), or
(y) if any Acquisition Proposal has been made prior to the expiration or
termination of the Offer, the occurrence of any of the following events (in the
case of clauses (i), (ii) and (iii) below, whether or not the Third Party
referred to therein was the person or entity making the Acquisition Proposal)
within 12 months of the termination of this Agreement pursuant to Section
8.1(b) whereby stockholders of the Company receive, pursuant to any such event,
cash, securities or other consideration having an aggregate value, when taken
together with the value of any securities of the Company or its Subsidiaries
otherwise held by such stockholders after such event, in excess of $2.00 per
Share: (i) the Company merges with or into, or is acquired, directly or
indirectly, by merger or otherwise by, a person or entity which is not an
Affiliate of Parent or Purchaser (a "Third Party"); (ii) a Third Party,
directly or indirectly, acquires more than 50% of the total assets of the
Company and its Subsidiaries, taken as a whole; (iii) a Third Party, directly
or indirectly, acquires more than 50% of the outstanding Shares; or (iv) the
Company adopts or implements a plan of
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liquidation, recapitalization or share repurchase relating to more than 50% of
the outstanding Shares or an extraordinary dividend relating to more than 50%
of the outstanding Shares or 50% of the assets of the Company and its
Subsidiaries, taken as a whole.
(c) As used herein, the term "Expenses" shall mean all of
Parent's, Purchaser's and their affiliates' reasonable out_of_pocket expenses
(including all fees and expenses of counsel, accountants, experts, investment
bankers, financial and other consultants to Parent, Purchaser and their
affiliates) incurred by them or on their behalf in connection with the
transactions contemplated by this Agreement, including, but not limited to, in
connection with the negotiation, preparation, execution and performance of this
Agreement and the Parent's due diligence investigation of the Company.
(d) The Company acknowledges that the agreements contained in
this Section 9.3 are an integral part of the transactions contemplated by this
Agreement and that, without these agreements, Parent and Purchaser would not
enter into this Agreement. Accordingly, if the Company fails to pay any amount
due to Parent pursuant to this Section 9.3 promptly, it shall also pay any
costs and expenses incurred by Parent or Purchaser in connection with a legal
action to enforce this Agreement that results in a judgment against the Company
for such amount.
Section 9.4 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by a nationally recognized overnight
courier service, such as Federal Express (providing proof of delivery), to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Parent or Purchaser, to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President, Administration and General Counsel
VF Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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if to the Company, to:
The North Face, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chairman of the Board of Directors and
Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Proskauer Rose, LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Section 9.5 Interpretation. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include," "includes" or "including"
are used in this Agreement they shall be deemed to be followed by the words
"without limitation." As used in this Agreement, the term "affiliates" shall
have the meaning set forth in Rule 12b_2 of the Exchange Act. As used in this
Agreement, the term "Person" shall mean a natural person, partnership,
corporation, limited liability company, business trust joint stock company,
trust, unincorporated association, joint venture, Governmental Entity or other
entity or organization.
Section 9.6 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties.
Section 9.7 Entire Agreement; No Third Party Beneficiaries. This
Agreement and the Confidentiality Agreement:
(a) constitute the entire agreement among the parties with
respect to the subject matter hereof and thereof and supersedes all other prior
agreements and understandings, both written and oral, among the parties or any
of them with respect to the subject matter hereof and thereof (provided that
the provisions of this Agreement shall supersede any conflicting provisions of
the Confidentiality Agreement), and
(b) except as provided in Section 6.7, is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
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Section 9.8 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by rule of 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
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 acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
Section 9.9 Specific Performance. The parties acknowledge and agree
that any breach of the terms of this Agreement would give rise to irreparable
harm for which money damages would not be an adequate remedy and accordingly
the parties agree that, in addition to any other remedies, each shall be
entitled to enforce the terms of this Agreement by a decree of specific
performance without the necessity of proving the inadequacy of money damages as
a remedy.
Section 9.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof.
Section 9.11 Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby may be
brought in any federal court located in the State of Delaware or any Delaware
state court, and each of the parties hereby consents to the jurisdiction of
such courts (and of the appropriate appellate courts therefrom) in any such
suit, action or proceeding and irrevocably waives, to the fullest extent
permitted by law, any objection that it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding in any such court or that
any such suit, action or proceeding brought in any such court has been brought
in an inconvenient form. Process in any such suit, action or proceeding may be
served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each party
agrees that service of process on such party as provided in Section 12.01 shall
be deemed effective service of process on such party.
Section 9.12 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
Section 9.13 Assignment. This Agreement shall not be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written content of the other parties, except that Purchaser may assign,
in its sole discretion, any or all of its rights, interests and obligations
hereunder to Parent or any other subsidiary of Parent. Subject to the preceding
sentence, but without relieving any party hereto of any obligation hereunder,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns.
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IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized
as of the date first written above.
VF CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
Title: Vice President Treasurer
SEQUOIA ACQUISITION, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
Title: Vice President
and Assistant Secretary
THE NORTH FACE, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: CEO
ANNEX A
Notwithstanding any other provisions of the Offer, Purchaser shall not
be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e_1(c) under the Exchange Act
(relating to Purchaser's obligation to pay for or return tendered Shares
promptly after termination or expiration of the Offer), pay for, and may delay
the acceptance for payment of or, subject to the restriction referred to above,
the payment for, any tendered Shares (A) unless (i) there are validly tendered
and not withdrawn prior to the expiration date for the Offer that number of
Shares which, when added to the Shares owned by Purchaser, will represent at
least a majority of the outstanding Shares on a fully diluted basis (the
"Minimum Condition"), (ii) any applicable waiting period under the HSR Act has
expired or terminated prior to expiration of the Offer; and/or (B) if at any
time on or after the date of the Agreement and before the expiration date of
this Offer, if any of the following events shall have occurred and be
continuing:
(a)(i) there shall be instituted or pending any action or
proceeding by any government or governmental authority or agency,
domestic, foreign or supranational, before any court or governmental
authority or agency, domestic, foreign or supranational, (A)
challenging or seeking to make illegal, to delay materially or
otherwise directly or indirectly to restrain or prohibit the making of
the Offer, the acceptance for payment of or payment for some or all of
the Shares by Parent or Purchaser or the consummation of the Merger,
(B) seeking to obtain material damages or otherwise directly or
indirectly relating to the transactions contemplated by the Offer or
the Merger, (C) seeking to restrain or prohibit Parent's ownership or
operation (or that of its Affiliates) of all or any material portion
of the business or assets of the Company and its Subsidiaries, taken
as a whole, or of Parent and its Subsidiaries, taken as a whole, or to
compel Parent or any of its Affiliates to dispose of or hold separate
all or any material portion of the business or assets of the Company
and its Subsidiaries, taken as a whole, or of Parent and its
Subsidiaries, taken as a whole, (D) seeking to impose or confirm
material limitations on the ability of Parent, Purchaser or any of
Parent's other Affiliates effectively to exercise full rights of
ownership of the Shares, including the right to vote any Shares
acquired or owned by Parent, Purchaser or any of Parent's other
Affiliates on all matters properly presented to the Company's
stockholders, (E) seeking to require divestiture by Parent, Purchaser
or any of Parent's other Affiliates of any Shares or (F) that
otherwise, in the judgment of Parent, is likely to have a Company
Material Adverse Effect or a Parent Material Adverse Effect (any
action or proceeding described in clauses (A) through (E), a
"Significant Proceeding"); or (ii) there shall be instituted or
pending any other Significant Proceeding, or any development shall
have occurred in any action or proceeding pending on the date hereof
that, in each case, in the judgment of Parent is reasonably likely to
result in a Company Material Adverse Effect or a Parent Material
Adverse Effect; or
(b) there shall have been any action taken, or any statute, rule,
regulation, injunction, order or decree proposed, enacted, enforced,
promulgated, issued or deemed applicable to the Offer or the Merger, by any
court, government or governmental authority or agency, domestic, foreign or
A-1
supranational, other than the application of the waiting period provisions of
the HSR Act to the Offer or the Merger, that, in the judgment of Parent, is
likely, directly or indirectly, to result in any of the consequences referred
to in clauses (i)(A) through (F) of paragraph (a) above; or
(c) any change shall have occurred or been threatened (or any
development shall have occurred or been threatened involving a prospective
change) in the business, assets, liabilities, financial condition,
capitalization, operations or results of operations of the Company or any of
its Subsidiaries that, in the reasonable judgment of Parent, is or is likely to
have a Company Material Adverse Effect; or
(d) any of the representations and warranties of the Company contained
in the Agreement shall not be true and correct when made, (ii) any of the
representations and warranties of the Company contained in the Agreement (other
than Section 3.11(a)(3)) shall not be true and correct at any time prior to the
consummation of the Offer as if made at and as of such time or (iii) the
representation set forth in Section 3.11(a)(3) of the Agreement shall not be
true and correct at any time prior to the consummation of the Offer as if made
at and as of such time due to the existence of a Tax Issue or Tax Issues that
would, individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect; or
(e) the Company shall have breached or failed to perform or comply in
all material respects with the obligations under the Agreement to be performed
or complied with by it; or
(f) the Agreement shall have been terminated in accordance with its
terms; or
(g) prior to the purchase of Shares pursuant to the Offer, an
Acquisition Proposal for the Company exists and the Board shall have withdrawn
or materially modified or changed (including by amendment of the Schedule
14D_9) in a manner adverse to Purchaser its recommendation of the Offer, the
Agreement or the Merger; or
(h) it shall have been publicly disclosed or Purchaser shall have
otherwise learned that (1) any person or "group" (as defined in Section
13(d)(3) of the Exchange Act), other than Parent or its affiliates or any group
of which any of them is a member or any person or group that, on the date of
the Agreement, has beneficial ownership (determined pursuant to Rule 13(d)_3
promulgated under the Exchange Act) of more than 10% of the outstanding Shares
and which had filed a Schedule 13D or 13G with the SEC on or prior to March 31,
2000, shall have acquired beneficial ownership of more than 10% of any class or
series of capital stock of the Company (including the Shares), through the
acquisition of stock, the formation of a group or otherwise, or shall have been
granted an option, right or warrant, conditional or otherwise, to acquire
beneficial ownership of more than 10% of any class or series of capital stock
of the Company (including the Shares); or (2) any person or group that, prior
to March 31, 2000, had filed a Schedule 13D or 13G with the SEC, shall have
acquired beneficial ownership of additional shares of any class or series of
capital stock of the Company (including the Shares), through the acquisition of
stock, the formation of a group or otherwise, constituting 5% or more any such
class or series; or (3) any person or group shall have entered into a
definitive agreement or agreement in principle with the Company with respect to
a merger, consolidation or other business combination with the Company; or
A-2
(i) the Company or any material Subsidiary shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency,
reorganization or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, or shall consent to any
such relief or to the appointment of or taking possession by any such official
in an involuntary case or other proceeding commenced against it, or shall make
a general assignment for the benefit of creditors, or shall fail generally to
pay its debts as they become due, or shall take any corporate action to
authorize any of the foregoing; or
(j) an involuntary case or other proceeding shall be commenced against
the Company or any material Subsidiary seeking liquidation, reorganization or
other relief with respect to it or its debts under any bankruptcy, insolvency,
reorganization or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property; or an order for relief
shall be entered against the Company or any Subsidiary under the federal
bankruptcy laws as now or hereafter in effect; or
(k) the Company's and its Subsidiaries' existing lenders and their
Affiliates shall not have continued to fund the business of the Company and its
Subsidiaries on substantially the same basis as had been applicable prior to
the date of the Agreement;
which, in the sole judgment of Purchaser in any such case, and regardless of
the circumstances (including any action or omission by Purchaser or Parent)
giving rise to any such condition, makes it inadvisable to proceed with such
acceptance for payment.
The foregoing conditions are for the sole benefit of Parent and
Purchaser, may be asserted by Parent or Purchaser regardless of the
circumstances giving rise to such condition and may be waived by Parent or
Purchaser in whole or in part at any time and from time to time in the sole
discretion of Parent or Purchaser, subject in each case to the terms of this
Agreement. The failure by Parent or Purchaser at anytime to exercise any of the
foregoing rights shall be deemed an ongoing right which may be asserted at any
time and from time to time.
The capitalized terms used in this Annex A shall have the meanings set
forth in the Agreement and Plan of Merger among the Perent, Purchaser and the
Company to which it is annexed (the "Agreement").