EXHIBIT 99.1
------------
AGREEMENT AND PLAN OF MERGER
by and between
S.I. ACQUISITION LLC,
an Illinois limited liability company
and
SUCCESSORIES, INC.,
an Illinois corporation
Dated as of February 13, 2003
TABLE OF CONTENTS
PAGE
Article I THE MERGER.....................................................................................1
1.1 The Merger.....................................................................................1
1.2 Closing........................................................................................1
1.3 Effective Time.................................................................................1
1.4 Effects of the Merger..........................................................................2
1.5 Articles of Organization.......................................................................2
1.6 Operating Agreement............................................................................2
1.7 Officers.......................................................................................2
1.8 Effect on Capital Stock........................................................................2
1.9 Dissenting Shares..............................................................................3
1.10 Stock Options and Warrants.....................................................................3
Article II EXCHANGE OF CERTIFICATES.......................................................................3
2.1 Exchange Fund..................................................................................3
2.2 Exchange Procedures............................................................................4
2.3 Further Ownership Rights in Company Common Stock and Company Preferred Stock...................5
2.4 Termination of Exchange Fund; Unclaimed Funds..................................................5
2.5 No Liability...................................................................................5
2.6 Lost Certificates..............................................................................5
2.7 Withholding Rights.............................................................................5
Article III REPRESENTATIONS AND WARRANTIES.................................................................6
3.1 Representations and Warranties of the Company..................................................6
3.2 Representations and Warranties of Acquirer....................................................11
Article IV COVENANTS RELATING TO CONDUCT OF BUSINESS.....................................................13
4.1 Covenants of the Company......................................................................13
4.2 Covenants of Acquirer.........................................................................14
4.3 Advice of Chances; Government Filings.........................................................15
Article V ADDITIONAL AGREEMENTS.........................................................................16
5.1 Shareholders' Meeting; Preparation of Disclosure Documents....................................16
5.2 Access to Information; Confidentiality........................................................17
5.3 Approval and Consents; Cooperation............................................................18
5.4 Acquisition Proposals.........................................................................18
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TABLE OF CONTENTS
(continued)
PAGE
5.5 Fees and Expenses.............................................................................19
5.6 Indemnification, Directors' and Officers' Insurance...........................................19
5.7 Public Announcements..........................................................................21
5.8 Further Assurances............................................................................21
Article VI CONDITIONS PRECEDENT..........................................................................22
6.1 Conditions to Each Party's Obligation to Effect the Merger....................................22
6.2 Conditions to the Obligation of Acquirer to Effect the Merger.................................22
6.3 Conditions to the Obligation of the Company to Effect the Merger..............................23
Article VII TERMINATION AND AMENDMENT.....................................................................23
7.1 Termination...................................................................................23
7.2 Effect of Termination, Termination Fee and Reimbursement of Expenses..........................24
7.3 Amendment.....................................................................................25
7.4 Extension; Waiver.............................................................................25
7.5 Procedure for Termination, Amendment, Extension or Waiver.....................................26
Article VIII GENERAL PROVISIONS............................................................................26
8.1 Non-Survival of Representations, Warranties, Covenants and Agreements.........................26
8.2 Notices.......................................................................................26
8.3 Interpretation................................................................................27
8.4 Counterparts..................................................................................27
8.5 Entire Agreement; No Third Party Beneficiaries................................................28
8.6 Governing Law.................................................................................28
8.7 Waiver of Jury Trial..........................................................................28
8.8 Severability..................................................................................28
8.9 Assignment....................................................................................28
8.10 Enforcement...................................................................................28
8.11 Definitions...................................................................................29
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GLOSSARY OF DEFINED TERMS
Location of
Defined Term Definition
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Acquirer..............................................................................................Preamble
Acquisition Proposal............................................................................Section 5.4(a)
Affiliate.........................................................................................Section 8.11
Aggregate Merger Consideration.....................................................................Section 2.1
Agreement.............................................................................................Preamble
Business Day......................................................................................Section 8.11
Closing............................................................................................Section 1.2
Closing Date.......................................................................................Section 1.2
Code...............................................................................................Section 2.7
Common Merger Consideration.....................................................................Section 1.8(c)
Company...............................................................................................Preamble
Company Articles................................................................................Section 1.8(d)
Company Board.........................................................................................Recitals
Company Common Stock.........................................................................Section 3.1(b)(i)
Company Disclosure Schedule........................................................................Section 3.1
Company Preferred Stock......................................................................Section 3.1(b)(i)
Company Stock Options.............................................................................Section 1.10
Confidential Information..........................................................................Section 8.11
Dissenting Shares..................................................................................Section 1.9
Dissenting Shareholder.............................................................................Section 1.9
Effective Time.....................................................................................Section 1.3
Employee Benefit Plan.............................................................................Section 8.11
Employee Pension Benefit Plan.....................................................................Section 8.11
Employee Welfare Benefit Plan.....................................................................Section 8.11
Environmental Laws................................................................................Section 8.11
ERISA.............................................................................................Section 8.11
Exchange Act...............................................................................Section 3.1(c)(iii)
Exchange Agent.....................................................................................Section 2.1
Exchange Fund......................................................................................Section 2.1
Expenses..........................................................................................Section 8.11
GAAP............................................................................................Section 3.1(d)
Governmental Entity........................................................................Section 3.1(c)(iii)
Hazardous Materials...............................................................................Section 8.11
IBCA...............................................................................................Section 1.1
ILLCA..............................................................................................Section 1.1
Illinois Articles of Merger........................................................................Section 1.3
Illinois Secretary of State........................................................................Section 1.3
Income Tax........................................................................................Section 8.11
Income Tax Return.................................................................................Section 8.11
Indemnified Parties................................................................................Section 5.6
Law...............................................................................................Section 8.11
Liens......................................................................................Section 3.1(b)(iii)
Material Adverse Effect...........................................................................Section 8.11
Merger.............................................................................................Section 1.1
Merger Consideration............................................................................Section 1.8(d)
Organizational Documents..........................................................................Section 8.11
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Location of
Defined Term Definition
------------ ----------
Outside Date....................................................................................Section 7.1(b)
Permitted Recipients............................................................................Section 5.2(b)
Person............................................................................................Section 8.11
Proxy Statement............................................................................Section 3.1(c)(iii)
Reports.........................................................................................Section 3.1(d)
Representatives...................................................................................Section 8.11
Required Company Vote...........................................................................Section 3.1(g)
Required Regulatory Approvals......................................................................Section 5.3
Schedule 13E-3.............................................................................Section 3.1(c)(iii)
SEC........................................................................................Section 3.1(c)(iii)
Securities Act..................................................................................Section 3.1(d)
Series A Preferred Stock..........................................................................Section 8.11
Series B Preferred Merger Consideration.........................................................Section 1.8(d)
Series B Preferred Stock..........................................................................Section 8.11
Special Committee.....................................................................................Recitals
Shareholders' Meeting...........................................................................Section 5.1(a)
Subsidiary........................................................................................Section 8.11
Superior Proposal...............................................................................Section 5.4(c)
Surviving Company..................................................................................Section 1.1
Termination Fee.................................................................................Section 7.2(b)
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THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
February 13, 2003, is by and between S.I. Acquisition LLC, an Illinois limited
liability company ("Acquirer"), and Successories, Inc., an Illinois corporation
(the "Company").
WITNESSETH:
A. The members of Acquirer and the Board of Directors of the
Company (the "Company Board") have approved and adopted this Agreement and the
transactions contemplated hereby, including the Merger, subject to the terms and
conditions set forth in this Agreement.
B. The Company Board, based in part upon the recommendation of a
special committee of independent directors thereof (the "Special Committee"),
has determined that this Agreement and the transactions contemplated hereby,
including the Merger, are advisable and fair to, and in the best interests of,
the Company's unaffiliated shareholders.
C. Acquirer and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger as set forth in
this Agreement.
D. Acquirer agrees, pursuant to the terms below, to vote its
shares of Company Common Stock and Company Preferred Stock in favor of the
adoption of this Agreement and the Merger at any meeting of the Company
shareholders.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and for
other good and valuable consideration, the parties hereto, intending to be
legally bound hereby, agree as follows:
ARTICLE I
THE MERGER
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1.1 THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the Business Corporation Act of
1983 of the State of Illinois (the "IBCA") and the Limited Liability Company Act
of the State of Illinois (the "ILLCA"), the Company shall be merged with and
into Acquirer (the "Merger") at the Effective Time. Upon the Effective Time, the
separate corporate existence of the Company shall cease and Acquirer shall
continue as the surviving company (the "Surviving Company") in accordance with
the ILLCA.
1.2 CLOSING. Unless this Agreement shall have been terminated
pursuant to Section 7.1, the closing of the Merger (the "Closing") will take
place no later than the second Business Day after satisfaction or waiver (as
permitted by this Agreement and applicable Law) of the conditions (excluding
conditions that, by their terms, cannot be satisfied until the Closing Date) set
forth in Article 6 (the "Closing Date"), unless another time or date is agreed
to in writing by the parties hereto. The Closing shall be held at the offices of
▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, unless another place is agreed to in writing by the parties
hereto.
1.3 EFFECTIVE TIME. Upon the Closing, the parties shall (i) file
with the Secretary of State of the State of Illinois (the "Illinois Secretary of
State") articles of merger or other appropriate documents (in any such case, the
"Illinois Articles of Merger"), executed in accordance with the relevant
provision of the IBCA and ILLCA and (ii) make all other filings, recordings or
publications required under the IBCA and the ILLCA in connection with the
Merger. The Merger shall become effective upon the filing of the Illinois
Articles of Merger with the Illinois Secretary of State, or at such later time
as the parties may
agree and specify in the Illinois Articles of Merger (the date and time the
Merger becomes effective being herein referred to as the "Effective Time").
1.4 EFFECTS OF THE MERGER. At and after the Effective Time, the
Merger will have the effects set forth in the IBCA and the ILLCA. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, all the properties, rights, privileges, powers and franchises of the
Company and Acquirer shall vest in the Surviving Company, and all debts,
liabilities and duties of the Company and Acquirer shall become the debts,
liabilities and duties of the Surviving Company.
1.5 ARTICLES OF ORGANIZATION. The articles of organization of
Acquirer in effect immediately prior to the Effective Time shall be the articles
of organization of the Surviving Company from and after the Effective Time,
until thereafter amended as provided therein or by applicable Law, except that
at the Effective Time such articles of organization shall be amended to change
the name of the Surviving Company to Successories, LLC.
1.6 OPERATING AGREEMENT. The operating agreement of Acquirer as in
effect immediately prior to the Effective Time shall be the operating agreement
of the Surviving Company from and after the Effective Time, until thereafter
amended as provided therein or by applicable Law.
1.7 OFFICERS. The officers of Acquirer at the Effective Time shall
be the officers of the Surviving Company from and after the Effective Time,
until the earlier of their death, resignation, removal or otherwise ceasing to
be officers or until their respective successors are duly elected and qualified,
as the case may be.
1.8 EFFECT ON CAPITAL STOCK. As of the Effective Time, by virtue
of the Merger and without any action on the part of the Company, Acquirer or any
holder of any Company Common Stock, Company Preferred Stock or Acquirer
membership units:
(a) Acquirer Membership Units. Each membership unit of
Acquirer outstanding immediately prior to the Effective Time shall remain
outstanding and shall not be modified.
(b) Cancellation of Certain Stock. Each share of Company
Common Stock or Company Preferred Stock issued and outstanding immediately prior
to the Effective Time that is owned by the Company, any wholly-owned Subsidiary
of the Company or by Acquirer (including shares of Company Common Stock and
Company Preferred Stock which are set forth on Exhibit A all of which are owned
by Acquirer) shall automatically be cancelled and retired and shall cease to
exist, and no cash or other consideration shall be delivered or deliverable in
exchange therefor.
(c) Conversion of Company Common Stock. Each share of
Company Common Stock issued and outstanding immediately prior to the Effective
Time (other than shares cancelled pursuant to Section 1.8(b) and Dissenting
Shares) shall be converted into and become the right to receive an amount equal
to $0.30 in cash, without interest thereon (the "Common Merger Consideration").
As of the Effective Time, all such shares of Company Common Stock shall no
longer be outstanding and shall automatically be cancelled and retired and shall
cease to exist, and each holder of a certificate representing any such shares of
Company Common Stock shall cease to have any rights with respect thereto, except
the right to receive the Common Merger Consideration, upon surrender of such
certificate(s) in accordance with Article 2.
(d) Conversion of Company Preferred Stock. Each share of
Series A Preferred Stock issued and outstanding immediately prior to the
Effective Time shall be cancelled. Each share of Series B Preferred Stock issued
and outstanding immediately prior to the Effective Time (other than shares
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cancelled pursuant to Section 1.8(b) and Dissenting Shares) shall be converted
into and become the right to receive an amount equal to the Stated Value of the
Series B Preferred Stock (as defined in the Company's Amended and Restated
Articles of Incorporation (the "Company Articles")) plus all accrued and unpaid
dividends on such Series B Preferred Stock (as set forth in the Company
Articles) in cash and without interest thereon (the "Series B Preferred Merger
Consideration" and, together with the Common Merger Consideration, the "Merger
Consideration"). As of the Effective Time, all such shares of Company Preferred
Stock shall no longer be outstanding and shall automatically be cancelled and
retired and shall cease to exist, and each holder of a certificate representing
any such shares of Company Preferred Stock shall cease to have any rights with
respect thereto, except the right to receive the Preferred Merger Consideration,
upon surrender of such certificate(s) in accordance with Article 2.
1.9 DISSENTING SHARES. Notwithstanding anything in this Agreement
to the contrary, including, without limitation, Section 1.8, shares of Company
Common Stock and Company Preferred Stock issued and outstanding immediately
prior to the Effective Time and held by a holder who has not voted in favor of
the Merger or otherwise consented thereto in writing and who has the right to
demand, and properly demands, an appraisal of such holder's shares in accordance
with Section 11.70 of the IBCA, or any successor provision (such holder being
herein referred to as a "Dissenting Shareholder" and such shares being herein
referred to as "Dissenting Shares"), shall not be converted into or represent
the right to receive the Merger Consideration, unless such Dissenting
Shareholder fails to perfect or otherwise loses or withdraws any such right to
appraisal. With respect to any Dissenting Shares, a Dissenting Shareholder shall
have solely the appraisal rights provided under Section 11.70 of the IBCA,
provided such Dissenting Shareholder complies with the provisions thereof. If,
after the Effective Time, such Dissenting Shareholder fails to perfect or
otherwise loses or withdraws any such right to appraisal, each Dissenting Share
held by such Dissenting Shareholder shall be treated as if such share had been
converted into, as of the Effective Time, the right to receive, without any
interest thereon, the Merger Consideration. The Company shall give Acquirer
prompt notice of any demand for appraisal of shares of Company Common Stock
received by the Company and any withdrawals of such demands, and Acquirer shall
have the right to participate in and approve (which approval shall not be
unreasonably withheld or delayed) all negotiations and proceedings with respect
to any such demand. The Company shall not, except with the prior written consent
of Acquirer, make any payment with respect to, or settle or offer to settle, any
such demand.
1.10 STOCK OPTIONS AND WARRANTS. Each outstanding and unexercised
option or warrant to purchase shares of Company Common Stock (collectively, the
"Company Stock Options"), whether vested or unvested, shall terminate and be
cancelled as of the Effective Time. Each Person who holds an exercisable Company
Stock Option (including options which, by their terms, become exercisable as a
result of the transactions contemplated hereby) shall be entitled to receive, in
consideration therefor, a cash payment on the Closing Date equal to the product
of (i) the excess, if any, of the Common Merger Consideration over the per share
exercise price of such Company Stock Option, multiplied by (ii) the aggregate
number of shares of Company Common Stock then subject to such Company Stock
Option. Such cash payment shall be net of any required withholding taxes.
ARTICLE II
EXCHANGE OF CERTIFICATES
------------------------
2.1 EXCHANGE FUND. Prior to the Effective Time, Acquirer shall
deposit, or shall cause to be deposited into a segregated account, with a bank,
trust company or other exchange agent reasonably satisfactory to the Company
appointed to act as exchange agent (the "Exchange Agent") for the benefit of the
holders of shares of Company Common Stock and Company Preferred Stock, cash in
an aggregate amount (the "Aggregate Merger Consideration") equal to the sum of
(a) the product of (i) the number of
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shares of Company Common Stock outstanding immediately prior to the Effective
Time (other than shares to be cancelled pursuant to Section 1.8(b)), and (ii)
the Common Merger Consideration and (b) the product of (i) the number of shares
of Series B Preferred Stock (other than shares to be cancelled pursuant to
Section 1.8(b)) and (ii) the Series B Preferred Merger Consideration (the
"Exchange Fund"). Prior to the Effective Time, Acquirer shall cause the Exchange
Agent to issue to the Company a certificate or other writing confirming deposit
of the Aggregate Merger Consideration into the Exchange Fund with such Exchange
Agent. The Exchange Agent shall invest all cash in the Exchange Fund as directed
by the Surviving Company, provided all such investments shall be marketable U.S.
government securities backed by the full faith and credit of the U.S.
government. Interest and other income with respect to the Exchange Fund shall
accrue for the account of, and shall be promptly paid to, the Surviving Company.
2.2 EXCHANGE PROCEDURES. The exchange of outstanding shares of
Company Common Stock and Company Preferred Stock (other than shares to be
cancelled and retired pursuant to Section 1.8(b) and Dissenting Shares) shall
take place in the following manner:
(a) Exchange of Certificates. As soon as reasonably
practicable after the Effective Time, each holder of an outstanding certificate
or certificates which prior thereto represented shares of Company Common Stock
or Company Preferred Stock shall, upon surrender to the Exchange Agent of such
certificate(s) and acceptance thereof by the Exchange Agent (together with the
letter of transmittal described in Section 2.2(b), duly executed, and such other
documents as may reasonably be required by the Exchange Agent), be entitled to
receive the amount of the Merger Consideration into which the number of shares
of Company Common Stock or Company Preferred Stock previously represented by
such certificate(s) so surrendered shall have been converted pursuant to this
Agreement. After the Effective Time, there shall be no further transfer on the
records of the Company or its transfer agent of certificates representing shares
of Company Common Stock and Company Preferred Stock which have been converted
pursuant to this Agreement into the right to receive the Merger Consideration,
and if such certificates are presented for transfer, they shall be cancelled
against delivery of the Merger Consideration. If the Merger Consideration is to
be delivered to any Person other than the Person in whose name the
certificate(s) representing shares of Company Common Stock or Company Preferred
Stock surrendered for exchange is registered, it shall be a condition of such
exchange that the certificate(s) so surrendered shall be properly endorsed with
the signature guaranteed or otherwise in proper form for transfer, and that the
Person requesting such exchange shall pay to the Exchange Agent any transfer or
other taxes required by reason of the payment of the Merger Consideration to a
Person other than the registered holder thereof, or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.2(a), each
certificate which, prior to the Effective Time, represented outstanding shares
of Company Common Stock or Company Preferred Stock (other than shares cancelled
pursuant to Section 1.8(b) and Dissenting Shares) shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the Merger Consideration in accordance with Section 1.8. No interest
will be paid or will accrue on any cash payable as Merger Consideration to any
holder of shares of Company Common Stock or Company Preferred Stock.
(b) Letter of Transmittal. Promptly following the
Effective Time (but no later than five (5) Business Days thereafter), the
Surviving Company shall cause the Exchange Agent to mail to each holder of
record of a certificate or certificates which immediately prior to the Effective
Time represented outstanding shares of Company Common Stock and Company
Preferred Stock (other than shares to be cancelled or retired in accordance with
Section 1.8(b)) a letter of transmittal (which shall specify that delivery shall
be effected, and risk of loss and title to the certificate(s) shall pass, only
upon delivery thereof to the Exchange Agent and shall be in such form and have
such other provisions as the Surviving Company may reasonably specify) and
instructions for use in effecting the surrender of such certificate(s) in
exchange for the Merger Consideration.
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2.3 FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK AND COMPANY
PREFERRED STOCK. The Merger Consideration paid upon the surrender for exchange
of certificates representing shares of Company Common Stock and Company
Preferred Stock in accordance with the terms of Article 1 and this Article 2
shall be deemed to have been paid in full satisfaction of all rights pertaining
to the shares of Company Common Stock and Company Preferred Stock theretofore
represented by such certificates, and no holder of shares of Company Common
Stock or Company Preferred Stock shall thereby have any equity interest in the
Surviving Company.
2.4 TERMINATION OF EXCHANGE FUND; UNCLAIMED FUNDS. Any portion of
the Exchange Fund that remains undistributed to or unclaimed by the holders of
certificates representing shares of Company Common Stock and Company Preferred
Stock for twelve (12) months after the Effective Time shall be delivered to the
Surviving Company or otherwise at the direction of the Surviving Company, upon
demand, and any holders of such certificates who have not theretofore complied
with this Article 2 shall thereafter look only to the Surviving Company for the
Merger Consideration to which such holders are entitled pursuant to this
Agreement (subject to applicable abandoned property, escheat or other similar
Laws) and only as general creditors thereof for payment of their claim for the
Merger Consideration.
2.5 NO LIABILITY. None of Acquirer, the Company, the Surviving
Company or the Exchange Agent shall be liable to any person for any Merger
Consideration delivered to a public official pursuant to any abandoned property,
escheat or similar Law. Any portion of the Exchange Fund remaining unclaimed by
holders of certificates representing shares of Company Common Stock or Company
Preferred Stock as of a date that is immediately prior to such time as such
amounts would otherwise escheat to or become property of any Governmental Entity
will, to the extent permitted by applicable Law, become the property of the
Surviving Company free and clear of any claims or interest of such Person
previously entitled thereto.
2.6 LOST CERTIFICATES. If any certificate representing shares of
Company Common Stock or Company Preferred Stock has been lost, stolen or
destroyed, then 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 Company, the posting by such Person of a bond in such reasonable amount as
the Company may direct as indemnity against any claim that may be made against
the Company with respect to such certificate, the Exchange Agent will deliver in
exchange for such lost, stolen or destroyed certificate the applicable Merger
Consideration with respect to the shares of Company Common Stock or Company
Preferred Stock formerly represented thereby.
2.7 WITHHOLDING RIGHTS. The Surviving Company or the Exchange
Agent, as applicable, shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock or Company Preferred Stock such amounts as the
Surviving Company or the Exchange Agent, as the case may be, may be required to
deduct and withhold with respect to the making of such payment under the
Internal Revenue Code of 1986, as amended (the "Code"), or any provision of
state, local or foreign tax Law, including, without limitation, withholdings
required in connection with payments under Section 1.10. To the extent withheld
by the Surviving Company or the Exchange Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
shares of Company Common Stock or Company Preferred Stock in respect of which
such deduction and withholding was made.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as
otherwise set forth in the disclosure schedule delivered by the Company to
Acquirer at or prior to the execution of this Agreement (the "Company Disclosure
Schedule") or as disclosed and set forth in a Report (defined below), the
Company represents and warrants to Acquirer as set forth in this Section 3.1:
(a) Organization, Standing and Power. Each of the Company
and its Subsidiaries has been duly organized and is validly existing and in good
standing under the Laws of its respective state of incorporation and has the
corporate power and authority to carry on its business as presently being
conducted and to own, operate and lease its properties. Each of the Company and
its Subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, except where the failure to be so qualified or licensed, either
individually or in the aggregate, would not have a Material Adverse Effect on
the Company or would not prevent the consummation of the Merger by the Outside
Date. The copies of the Organizational Documents of each of the Company and its
Subsidiaries which were previously furnished to Acquirer are true, complete and
correct copies of such documents. The Subsidiaries set forth in Section 3.1 (a)
of the Company Disclosure Schedule constitute all of the Company's Subsidiaries.
(b) Capital Structure.
(i) As of the date of this Agreement, the
authorized capital stock of the Company consists of (A) 20,000,000
shares of Common Stock, par value $.O1 per share (the "Company Common
Stock"), of which 9,910,984 shares are outstanding and no shares are
held in the Company's treasury, and (B) 1,000,000 shares of Preferred
Stock, par value $.O1 per share (the "Company Preferred Stock"), of
which 503,092 shares have been designated as Series A Convertible
Preferred Stock and are outstanding and 101,667 shares have been
designated as Series B Convertible Preferred Stock and are outstanding.
(ii) The Company has no class of voting shares
that is held of record by more than 2,000 shareholders.
(iii) All issued and outstanding shares of capital
stock of the Company and its Subsidiaries are duly authorized, validly
issued, fully paid and nonassessable, and no class of capital stock is
entitled to preemptive rights (except as expressly provided in the
Company's Organizational Documents).
(iv) All of the issued and outstanding shares of
capital stock of each of the Company's Subsidiaries are owned directly
or indirectly by the Company and are owned free and clear of any liens,
security interests, pledges, claims, encumbrances, restrictions,
preemptive rights or any other claims of any third party ("Liens"),
except for Liens which, individually or in the aggregate, would not
have a Material Adverse Effect on the Company or would not prevent the
consummation of the Merger by the Outside Date.
(v) As of the date of this Agreement, (A) no
bonds, notes, debentures or other indebtedness of the Company having
the right to vote on any matters on which shareholders may vote are
issued and outstanding, (B) other than the Company Stock Options
representing in the aggregate the right to purchase up to 1,805,162
shares of Company Common Stock, there are
6
no securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which the
Company is a party or by which the Company is bound obligating the
Company to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock or other voting securities of
the Company or obligating the Company to issue, grant, extend or enter
into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking, and (C) there are no outstanding
obligations of the Company to repurchase, redeem or otherwise acquire
any shares of capital stock of the Company.
(c) Authority; No Conflicts.
(i) The Company has all requisite corporate
power and authority to enter into this Agreement and, subject to the
adoption of this Agreement by the requisite vote of the holders of
Company Common Stock and Company Preferred Stock, to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part
of the Company, subject in the case of the consummation of the Merger
to the adoption of this Agreement by the holders of Company Common
Stock and Company Preferred Stock. This Agreement has been duly
executed and delivered by the Company and constitutes a valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be limited
by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar Laws relating to or affecting creditors' rights
generally or by general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(ii) The execution and delivery of this Agreement
do not, and the consummation of the transactions contemplated hereby
and compliance with the provisions hereof will not, (A) violate any
provision of the Organizational Documents of the Company or its
Subsidiaries, (B) subject to obtaining or making the consents,
approvals, orders, authorizations, registrations, declarations and
filings referred to in Section 3.1(c)(iii) below, conflict with or
result in any violation of or constitute a default (with or without
notice or lapse of time, or both) under any statute, Law, ordinance,
rule or regulation of any state or the United States or any political
subdivision thereof or therein applicable to the Company or any
judgment, order, decree, determination or award currently in effect,
which, individually or in the aggregate, would have a Material Adverse
Effect on the Company or would prevent the consummation of the Merger
by the Outside Date, or (C) except as set forth in Section 3.1(c)(ii)
of the Company Disclosure Schedule, violate, conflict with, constitute
a breach or default under or give rise to a right of termination under
any contract, loan or credit agreement, note, mortgage, bond,
indenture, lease, benefit plan or other agreement, obligation,
instrument, permit, concession, franchise or license to which the
Company is a party or by which any of its properties or assets is bound
or subject, which, individually or in the aggregate, would have a
Material Adverse Effect on the Company or would prevent the
consummation of the Merger by the Outside Date.
(iii) No consent, approval, order or authorization
of, or registration, declaration or filing with, any supranational,
national, state, municipal or local government, any instrumentality,
subdivision, court, administrative agency or commission or other
authority thereof, or any quasi-governmental authority or any private
body exercising any regulatory, taxing or other governmental authority
(a "Governmental Entity"), which has not been received or made, is
required by or with respect to the Company or any Subsidiary in
connection with the execution and delivery of this Agreement by the
Company or the consummation by the Company of the transactions
contemplated hereby, except for (A) the filing with the Securities and
7
Exchange Commission (the "SEC") of a proxy statement in connection with
the Shareholders' Meeting (such proxy statement, including any
preliminary version thereof, in either case, as amended, modified or
supplemented from time to time, the "Proxy Statement"), (B) the filing
with the SEC of a Rule 13e-3 Transaction Statement on Schedule 13E-3
(the "Schedule 13E-3") under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), (C) state securities or "blue sky" Laws,
(D) any other filings or reports required under the Exchange Act or the
rules and regulations promulgated thereunder in connection with the
transactions contemplated by this Agreement, (E) the filing and
recordation of appropriate merger or other documents under the IBCA and
ILLCA, (F) compliance with the rules and regulations of the
Over-the-Counter Bulletin Board (the "OTCBB"), (G) antitrust or other
competition Laws, and (H) such consents, approvals, orders,
authorizations, registrations, declarations and filings with any
Governmental Entity the failure of which to make or obtain would not
reasonably be expected to have a Material Adverse Effect on the Company
or prevent the consummation of the Merger by the Outside Date.
(d) Reports and Financial Statements. Since February 2,
2002, the Company has filed all required reports, schedules, forms, statements
and other documents required to be filed by it with the SEC (collectively, the
"Reports"). None of the Company's Subsidiaries is required to file any form,
report or other document with the SEC. Each of the financial statements and the
related schedules and notes thereto included in the Reports (or incorporated
therein by reference) present fairly, in all material respects, the consolidated
financial position and consolidated results of operations and cash flows of the
Company and its Subsidiaries as of the respective dates or for the respective
periods set forth therein, all in conformity with generally accepted accounting
principles ("GAAP") (except, in the case of interim unaudited financial
statements, as permitted by Form 10-Q) consistently applied during the periods
involved except as otherwise noted therein, and subject, in the case of interim
unaudited financial statements, to normal and recurring year-end adjustments
that have not been and are not reasonably expected to be material in amount, and
such financial statements complied as to form as of their respective dates in
all material respects with the Securities Act of 1933, as amended (the
"Securities Act"), the Exchange Act and the rules and regulations promulgated
thereunder. Each Report was prepared in all material respects in accordance with
the requirements of the Securities Act, the Exchange Act and the rules and
regulations promulgated thereunder and did not, on the date of effectiveness in
the case of any registration statement under the Securities Act, on the date of
mailing in the case of any proxy statement under the Exchange Act and on the
date of filing in the case of any other Report (and, if amended or superseded by
a filing prior to the date of this Agreement or the Closing Date, then on the
date of such filing), contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(e) Disclosure Documents. The Proxy Statement and the
Schedule 13E-3 will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations promulgated
thereunder. None of the information supplied or to be supplied by the Company
for inclusion or incorporation by reference in (i) the Proxy Statement, at the
date such Proxy Statement is first mailed to the Company's shareholders or at
the time of the Shareholders' Meeting, or (ii) the Schedule 13E-3, at the time
of filing with the SEC (and at any time such Proxy Statement or Schedule 13E-3
is amended or supplemented), will contain any untrue statement of a material
fact or omit to make the statements therein, in light of the circumstances under
which they are made, not misleading. Notwithstanding the foregoing provisions of
this Section 3.1(e), no representation or warranty is made by the Company with
respect to statements made or incorporated by reference in the Proxy Statement
or the Schedule 13E-3 based on information supplied in writing by Acquirer or
any of its Representatives specifically for inclusion or incorporation by
reference therein.
8
(f) Absence of Certain Changes of Events. Except as may
be disclosed in the Reports, (i) since February 2, 2002 through the date of this
Agreement, each of the Company and its Subsidiaries has conducted its respective
business in the ordinary course consistent with its past practices and has not
incurred any material liability, except in the ordinary course of its respective
business consistent with its past practices and except which, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect on the Company or prevent the consummation of the Merger by the Outside
Date; and (ii) since February 2, 2002 through the date of this Agreement, there
has not been any change in the business, financial condition or results of
operations of the Company and its Subsidiaries taken as a whole that has had or
would reasonably be expected to have a Material Adverse Effect on the Company.
(g) Vote Required. The affirmative vote of the holders of
at least two-thirds of the aggregate votes of (i) the outstanding shares of
Company Common Stock and (ii) the outstanding shares of Company Preferred Stock
on an "as converted" basis (the "Required Company Vote") is the only vote of the
holders of any class or series of the Company's capital stock necessary to
approve this Agreement and the transactions contemplated hereby.
(h) Brokers or Finders. No agent, broker, investment
banker, financial advisor or other firm or Person, the fees of which will be
paid by the Company, is or will be entitled to any broker's, financial advisory
or finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement, based upon arrangements made by
or on behalf of the Company, except the fees payable to Duff & ▇▇▇▇▇▇, LLC
pursuant to the engagement letter dated April 30, 2002 (a copy of which has been
delivered to Acquirer) whose fees and expenses shall remain the sole
responsibility of the Company and the Surviving Company in accordance therewith,
and shall be paid upon consummation of the Merger.
(i) Company Action. As of the date hereof, the Company
Board, based upon the recommendation of the Special Committee, at a meeting
thereof duly called and held has (i) approved the acquisition by Acquirer of the
Company pursuant to the Merger and approved and adopted and declared advisable
this Agreement and the transactions contemplated hereby, including the Merger,
(ii) determined that this Agreement and the transactions contemplated hereby,
including the Merger, are advisable and fair to and in the best interests of the
Company's shareholders, and (iii) recommended approval of this Agreement and the
transactions contemplated hereby, including the Merger, by the Company's
shareholders.
(j) Fairness Opinion. As of the date hereof, the Special
Committee has received the written opinion of Duff & ▇▇▇▇▇▇, LLC, financial
advisor to the Special Committee, dated February 13, 2003, to the effect that,
subject to the qualifications and limitations stated therein, the Merger
Consideration to be received by the holders of shares of Company Common Stock
and Company Preferred Stock (other than Acquirer) is fair to such holders from a
financial point of view. The Special Committee has furnished an accurate and
complete copy of such written opinion to Acquirer.
(k) Contracts. All material contracts of the Company are
in full force and effect and enforceable against the Company, except which,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on the Company or prevent the consummation of the Merger
by the Outside Date. There does not exist under any contract any event of
default or event or condition that, after notice or lapse of time or both, would
constitute a violation, breach or event of default thereunder on the part of the
Company or, to the knowledge of the Company, any other party thereto, except
which, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on the Company or prevent the consummation of the
Merger by the Outside Date.
9
(l) Environmental Matters. The Company is in conformance
with all applicable Environmental Laws, and there are no past or present (or, to
the Company's knowledge, future) events, conditions, circumstances, activities,
practices, incidents, actions, omissions or plans, all of the Company or
attributable to the Company, (i) which may interfere with or prevent compliance
or continued compliance with Environmental Laws or with any order issued,
entered, promulgated or approved thereunder, or (ii) which may subject the
Company to damages, penalties, injunctive relief or cleanup costs under any
Environmental Laws or pursuant to any third-party claim, or which require or are
likely to require report, cleanup, removal, remedial action or other response
pursuant to Environmental Laws or a third party claim, in each case except to
the extent that any of the foregoing would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company or prevent the consummation of the Merger by the Outside Date.
(m) Employee Benefit Plans. Each Employee Benefit Plan is
and at all times has been in compliance with all applicable Laws (including
ERISA), except which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on the Company or prevent the
consummation of the Merger by the Outside Date. The Company is not contributing
to, and has not contributed to, any multiemployer plan, as defined in ERISA
Section 3(37)(A). Any Employee Benefit Plan that has been terminated was done so
in full compliance with all applicable Laws, and there is no basis for further
liability or obligation of the Company with respect to any such Employee Benefit
Plans, except which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on the Company or prevent the
consummation of the Merger by the Outside Date. Except as required by Internal
Revenue Code Section 4980B and ERISA Section 602, no Employee Benefit Plan
provides or has any obligation to provide (or contribute to the cost of)
post-retirement welfare benefits with respect to current or former employees of
the Company, including without limitation, post-retirement medical, dental, life
insurance, severance or any similar benefit, whether provided on an insured or
self-insured basis, except which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on the Company or
prevent the consummation of the Merger by the Outside Date. The Company has
performed all of its obligations under all Employee Benefit Plans, and has made
appropriate entries in its financial records and statements for all obligations
and liabilities under each Employee Benefit Plan, except which, individually or
in the aggregate, would not reasonably be expected to have a Material Adverse
Effect on the Company or prevent the consummation of the Merger by the Outside
Date.
(n) Litigation. There is no pending or, to the Company's
knowledge, threatened litigation, environmental claim, arbitration, proceeding,
governmental investigation or inquiry involving the Company which, if adversely
determined, would result in a Material Adverse Effect on the Company. As of the
date hereof, there are no actions, suits or proceedings pending or, to the
knowledge of the Company, proposed or threatened, by any Person or Governmental
Authority which question the legality, validity or propriety of the transactions
contemplated by this Agreement.
(o) Tax Matters.
(i) The Company has filed all Income Tax Returns
that it was required to file, and has paid or made provision to pay all
Income Taxes shown thereon as owing, except where the failure to file
Income Tax Returns or to pay Income Taxes would not have a Material
Adverse Effect on the Company.
(ii) The Company has not waived any statute of
limitation in respect of Income Taxes or agreed to any extension of
time with respect to an Income Tax assessment or deficiency.
10
(iii) The Company is not a party to any Income Tax
allocation or sharing agreement.
(p) Franchise Matters. The Company is in compliance with
all federal and state Laws pertaining to the offer and sale of franchises,
except which, individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect on the Company or prevent the consummation of
the Merger by the Outside Date. The offer and sale by the Company of all
franchises (including area franchises and subfranchises) since January 1, 2000
were made in compliance with such Laws and before January 1, 2000 were, to the
knowledge of the Company, made in compliance with such Laws, other than
noncompliance which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on the Company.
(q) Each of the representations and warranties in this
Section 3.1 (other than those set forth in Sections 3.1(g), (i) and (j)) is
qualified by, and the Company Disclosure Schedule shall be deemed to disclose in
qualification thereof, any facts, circumstances, conditions or events actually
known by any of the Persons identified in Section 3.1 (q) of the Company
Disclosure Schedule.
3.2 REPRESENTATIONS AND WARRANTIES OF ACQUIRER. Acquirer
represents and warrants to the Company as follows:
(a) Organization, Standing and Power. Acquirer has been
duly organized and is validly existing and in good standing under the Laws of
its jurisdiction of organization and has the power and authority to carry on its
business as presently being conducted and to own, operate and lease its
properties. Acquirer is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, except where the failure to be so qualified or licensed, either
individually or in the aggregate, would not have a Material Adverse Effect on
Acquirer or would not prevent the consummation of the Merger by the Outside
Date. The copies of the Organizational Documents of Acquirer which were
previously furnished to the Company are true, complete and correct copies of
such documents.
(b) Capital Structure. All of the outstanding membership
units of Acquirer are owned in the amounts and by the Persons identified on
Exhibit A, and Acquirer is the sole beneficial owner of the number of shares of
Company Common Stock and Company Preferred Stock set forth on Exhibit A.
(c) Authority; No Conflicts.
(i) Acquirer has all requisite limited liability
company power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary limited
liability company action on the part of Acquirer. This Agreement has
been duly executed and delivered by Acquirer and constitutes a valid
and binding agreement of Acquirer, enforceable against it in accordance
with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar Laws relating to or affecting creditors'
rights generally, or by general equity principles (regardless of
whether such enforceability is considered in a proceeding in equity or
at law).
(ii) The execution and delivery of this Agreement
do not, and the consummation of the transactions contemplated hereby
and compliance with the provisions
11
hereof will not, (A) violate any provision of the Organizational
Documents of Acquirer, (B) subject to obtaining or making the consents,
approvals, orders, authorizations, registrations, declarations and
filings referred to in Section 3.2(c)(iii) below, conflict with or
result in any violation of or constitute a default (with or without
notice or lapse of time, or both) under any statute, Law, ordinance,
rule or regulation of any state or the United States or any political
subdivision thereof or therein or any judgment, order, decree,
determination or award currently in effect which, individually or in
the aggregate, would prevent the consummation of the Merger by the
Outside Date, or (C) violate, conflict with, constitute a breach or
default under or give rise to a right of termination under any
contract, loan or credit agreement, note, mortgage, bond, indenture,
lease, benefit plan or other agreement, obligation, instrument, permit,
concession, franchise or license to which Acquirer is a party or by
which any of its properties or assets is bound or subject, which,
individually or in the aggregate, would prevent the consummation of the
Merger by the Outside Date.
(iii) No consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental
Entity, which has not been received or made, is required by or with
respect to Acquirer in connection with the execution and delivery of
this Agreement by Acquirer or the consummation by Acquirer of the
transactions contemplated hereby, except for (A) state securities or
"blue sky" Laws, (B) any filings, or reports required under the
Exchange Act or the rules and regulations promulgated thereunder in
connection with the transactions contemplated by this Agreement, (C)
the filing and recordation of appropriate merger or other documents
under the IBCA and ILLCA, (D) antitrust or other competition Laws and
(E) such consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to obtain would not
reasonably be expected to prevent the consummation of the Merger by the
Outside Date.
(d) Available Resources. Acquirer has delivered to the
Company a personal guarantee from ▇▇▇▇ ▇▇▇▇▇▇ pursuant to which he has
guaranteed the obligation of Acquirer to pay the Aggregate Merger Consideration
and the amounts required under Section 1.10 in respect of Company Stock Options
and all other Acquirer costs and expenses arising in connection therewith.
(e) Disclosure Documents. None of the information
supplied or to be supplied by Acquirer for inclusion or incorporation by
reference in (i) the Proxy Statement, at the date such Proxy Statement is first
mailed to the Company's shareholders or at the time of the Shareholders'
Meeting, or (ii) the Schedule 13E-3, at the time of filing with the SEC (and at
any time such Proxy Statement or Schedule 13E-3 is amended or supplemented),
will contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
(f) No Vote Required. No vote of the members of Acquirer
is necessary to approve this Agreement and the transactions contemplated hereby
other than those obtained by Acquirer as of the date hereof.
(g) Brokers or Finders. No agent, broker, investment
banker, financial advisor or other firm or Person is or will be entitled to any
broker's, financial advisory or finder's fee or any other similar commission or
fee in connection with any of the transactions contemplated by this Agreement,
based upon arrangements made by or on behalf of Acquirer.
(h) No Business Activities. Acquirer is not a party to
any material agreement nor has it conducted any activities other than in
connection with its organization, the preparation, negotiation and execution of
this Agreement and the consummation of the transactions contemplated hereby.
12
Acquirer has no material liabilities. Except for its ownership of the shares of
Company Common Stock and Company Preferred Stock set forth in Section 3.2(b),
Acquirer does not own, directly or indirectly, any capital stock or other
ownership interest in any Person and Acquirer has no Subsidiaries.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
-----------------------------------------
4.1 COVENANTS OF THE COMPANY. During the period from the date of
this Agreement and continuing until the Effective Time (except as expressly
contemplated or permitted by this Agreement or to the extent that Acquirer shall
otherwise consent in writing, which consent shall not be unreasonably withheld
or delayed):
(a) Ordinary Course. Except as set forth in Section 4.1
(a) of the Company Disclosure Schedule, the Company shall operate, and shall
cause each of its Subsidiaries to operate, their respective businesses in the
ordinary course of business in all material respects, in substantially the same
manner as heretofore conducted, and shall use all reasonable efforts to preserve
intact their present lines of business, maintain their rights and preserve their
relationships with customers, suppliers and others having business dealings with
them; provided, however, that no action by the Company or its Subsidiaries with
respect to matters specifically addressed by any other provision of this Section
4.1 shall be deemed a breach of this Section 4.1 (a) unless such action would
constitute a breach of one or more of such other provisions.
(b) Dividends; Changes in Capital Stock. The Company
shall not, and shall not permit any of its Subsidiaries to, and shall not
propose to, (i) declare, set aside or pay any dividends on or make any other
distributions (whether cash, stock or property) in respect of any of its capital
stock, except dividends by the Company and the Company's Subsidiaries in the
ordinary course of business consistent with past practice, (ii) split, combine
or reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (iii) repurchase, redeem or otherwise
acquire any shares of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock.
(c) Issuance of Securities. Except as set forth in
Section 4.1 (c) of the Company Disclosure Schedule, the Company shall not and
shall cause its Subsidiaries not to issue, sell, grant, pledge or otherwise
encumber, or authorize or propose the issuance, grant, sale or encumbrance of,
any shares of its capital stock of any class, any other voting securities or any
securities convertible into or exercisable for, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible
securities, or accelerate the vesting of, or the lapsing of restrictions with
respect to, or enter into any agreement with respect to any of the foregoing,
other than the issuance of Company Common Stock upon (i) the exercise of Company
Stock Options or (ii) the conversion of Company Preferred Stock.
(d) Organization Documents. Except to the extent required
to comply with their respective obligations hereunder or as required by Law, the
Company and its Subsidiaries shall not amend or propose to amend their
respective Organizational Documents.
(e) Extraordinary Transactions. The Company shall not (i)
merge, amalgamate or consolidate with any other Person or (ii) sell all or
substantially all of its assets.
(f) Indebtedness. Except as set forth in Section 4.1(f)
of the Company Disclosure Schedule, the Company shall not, and shall not permit
its Subsidiaries to, (i) incur any indebtedness for borrowed money, other than
pursuant to existing loan agreements, or guarantee any such indebtedness of
13
another Person or issue or sell any debt securities or warrants or rights to
acquire any debt securities of the Company or its Subsidiaries; (ii) make any
loans, advances or capital contributions to, or investments in, any other
Person, other than by the Company or its Subsidiaries to or in the Company or
its Subsidiaries or routine advances to employees; or (iii) pay, discharge or
satisfy any claims, liabilities or obligations (absolute, accrued, asserted,
unasserted, contingent or otherwise), other than in the case of clauses (ii) or
(iii) above, loans, advances, capital contributions, investments, payments,
discharges or satisfactions entered into, incurred or committed to in the
ordinary course of business consistent with past practice.
(g) Employee Salaries and Benefit Plans. Except as set
forth in Section 4.1 (g) of the Company Disclosure Schedule, the Company shall
not, and shall not permit its Subsidiaries to, (i) increase the compensation
payable or to become payable to any of its executive officers or employees, or
(ii) take any action with respect to the grant of or make any material
modification to any deferred compensation, retirement, severance or termination
pay, or stay, bonus or other incentive arrangement, except, in either such case,
any such increases or grants made in the ordinary course of business consistent
with past practice.
(h) Employment and Other Agreements. Except as set forth
in Section 4.1 (h) of the Company Disclosure Schedule, the Company shall not
enter into or amend any employment, consulting, severance or similar agreement
with any Person, the effect of which would be to materially increase,
individually or in the aggregate, the Company's obligations to employees,
consultants and similar Persons.
(i) Other Actions. Except as otherwise permitted by
Section 5.4, the Company shall not, and shall not permit its Subsidiaries to,
take any action that could reasonably be expected to result in any of the
conditions to the Merger set forth in Article 6 not being satisfied.
(j) Accounting Methods, Income Tax Elections. Except as
disclosed in the Reports filed prior to the date of this Agreement and in
Section 4.1(j) of the Company Disclosure Schedule, or as required by a
Governmental Entity or a change in GAAP as concurred in by the Company's
independent auditors, the Company shall not change its methods of accounting in
effect as of the date hereof. The Company shall not, without the prior approval
of Acquirer (which approval shall not be unreasonably withheld or delayed), (i)
change its fiscal year, or (ii) make any material tax election or settle or
compromise any federal, state, local or foreign tax liability, other than in the
ordinary course of business consistent with past practice.
(k) Certain Agreements. The Company shall not, and shall
not permit any of its Subsidiaries to, enter into any agreement or arrangement
that limits or otherwise restricts the Company or any of its Subsidiaries or any
of their respective Affiliates or any successor thereto or that could, after the
Closing, limit or restrict the Surviving Company or any of its Affiliates or any
successor thereto from engaging or competing in any line of business or in any
geographic area.
(l) Capital Expenditures. The Company shall not (i)
acquire all or substantially all of the business or assets of any other person,
or (ii) make any capital expenditures or commitments, other than in the ordinary
course of business consistent with past practice.
(m) Commitments. The Company shall not commit or agree to
take any of the actions specified in this Section 4.1.
4.2 COVENANTS OF ACQUIRER. During the period from the date of this
Agreement and continuing until the Effective Time (except as expressly
contemplated or permitted by this Agreement or
14
to the extent that the Company otherwise consents in writing, which consent
shall not be unreasonably withheld or delayed):
(a) Changes in Capital Structure. Acquirer shall not
change its capital structure or permit any material change with respect to the
ownership of Acquirer. Acquirer shall not transfer any Company Common Stock or
Company Preferred Stock.
(b) Company Shareholder Meeting. Acquirer will vote any
and all Company Common Stock and Company Preferred Stock owned by Acquirer in
favor of the Merger and the adoption of this Agreement at any meeting of the
Company's shareholders at which a proposal relating to such approval or adoption
is submitted to a vote of the Company's shareholders.
(c) Other Actions. Acquirer shall not take any action
that could reasonably be expected to result in any of the conditions to the
Merger set forth in Article 6 not being satisfied.
4.3 ADVICE OF CHANCES; GOVERNMENT FILINGS. Each party hereto shall
(a) confer on a regular and frequent basis with the other party, (b) report (to
the extent permitted by Law, regulation and any applicable confidentiality
agreement) to the other on operational matters, and (c) promptly advise the
other orally and in writing of (i) any representation or warranty made by it
contained in this Agreement that is qualified as to materiality becoming untrue
or any such representation or warranty that is not so qualified becoming untrue
in any material respect, (ii) the failure by it (A) to comply with or satisfy in
any respect any covenant, condition or agreement required to be complied with or
satisfied by it under this Agreement that is qualified as to materiality or (B)
to comply with or satisfy in any material respect any covenant, condition or
agreement required to be complied with or satisfied by it under this Agreement
that is not so qualified as to materiality, or (iii) any change, event or
circumstance that has had or would reasonably be expected to have a Material
Adverse Effect on such party or materially adversely affect its ability to
consummate the Merger by the Outside Date; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement. The Company shall file all reports required to be filed by
it with the SEC (and all other Governmental Entities) between the date of this
Agreement and the Effective Time and shall (to the extent permitted by Law or
regulation or any applicable confidentiality agreement) deliver to the other
party copies of all such reports promptly after the same are filed. Subject to
applicable Laws relating to the exchange of information, each of the Company and
Acquirer shall have the right to review and comment upon in advance, and to the
extent practicable each will consult with the other with respect to, all the
information relating to the other party which appears in any filings,
announcements or publications made with, or written materials submitted to, any
Governmental Entity in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of the parties hereto agrees
to act reasonably and as promptly as practicable. Each party agrees that, to the
extent practicable, it will consult with the other party with respect to the
obtaining of all permits, consents, approvals and authorizations of all third
parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
party apprised of the status of matters relating to completion of the
transactions contemplated hereby.
15
ARTICLE V
ADDITIONAL AGREEMENTS
---------------------
5.1 SHAREHOLDERS' MEETING; PREPARATION OF DISCLOSURE DOCUMENTS.
(a) Except as otherwise provided in Section 5.4, the
Company shall, as soon as practicable following the date of this Agreement, duly
call, give notice of, convene and hold a meeting of its shareholders (the
"Shareholders' Meeting") for the purpose of adopting this Agreement and the
transactions contemplated hereby, including the Merger, by obtaining the
Required Company Vote. Except as otherwise provided in Section 5.4, the Company
Board, based upon the recommendation of the Special Committee, shall declare the
advisability of, and recommend to its shareholders the approval and adoption of,
this Agreement and the transactions contemplated hereby, including the Merger,
shall include such recommendation in the Proxy Statement and shall take all
lawful action to solicit such approval and adoption.
(b) As soon as practicable following the date of this
Agreement, the Company and Acquirer shall jointly prepare, and the Company shall
file with the SEC, the Proxy Statement and the Schedule 13E-3. Acquirer will
cooperate with the Company in connection with the preparation and filing with
the SEC of the Proxy Statement and the Schedule 13E-3, including, but not
limited to, furnishing the Company upon request with any and all information
regarding Acquirer or its Affiliates, the plans of such Persons for the
Surviving Company after the Effective Time and all other matters and information
as may be required to be set forth therein under the Exchange Act or the rules
and regulations promulgated thereunder. The Company shall use its reasonable
good faith efforts (i) to respond to the comments of the SEC concerning the
Proxy Statement or the Schedule 13E-3 as promptly as practicable, and (ii) to
cause the final Proxy Statement to be mailed to the Company's shareholders not
later than 10 business days after clearance from the SEC. The Company shall pay
the filing fees for the Proxy Statement and the Schedule 13E-3. Acquirer shall
be given a reasonable opportunity to review and comment upon all filings with
the SEC and all mailings to the Company's shareholders in connection with the
Merger prior to the filing or mailing thereof. The Company and Acquirer each
agree to correct any information provided by such party for use in the Proxy
Statement or the Schedule 13E-3 which becomes false or misleading. The Company
shall cause the fairness opinion of Duff & ▇▇▇▇▇▇, LLC referred to in Section
3.10) to be included as an exhibit to the Proxy Statement and the Schedule
13E-3.
(c) Each party shall notify the other party promptly of
(i) the receipt of any notices, comments or other communications from the SEC or
any other Governmental Entity, and (ii) any requests by the SEC for amendments
or supplements to the Proxy Statement or the Schedule 13E-3 or for additional
information, and will promptly provide the other party with copies of all
correspondence between such parry or its representatives on the one hand and the
SEC or members of its staff on the other hand with respect to the Proxy
Statement or the Schedule 13E-3.
(d) If, at any time prior to the Shareholders' Meeting,
any event should occur relating to the Company or its Subsidiaries which should
be set forth in an amendment of, or a supplement to, the Proxy Statement or the
Schedule 13E-3, the Company will promptly inform Acquirer. If, at any time prior
to the Shareholders' Meeting, any event should occur relating to Acquirer or
relating to the plans of Acquirer for the Surviving Company after the Effective
Time, which should be set forth in an amendment of, or a supplement to, the
Proxy Statement or the Schedule 13E-3, Acquirer will promptly inform the
Company. In any such case, the Company or Acquirer, as the case may be, with the
cooperation of the other party, shall, upon learning of such event, promptly
prepare, file and, if required, mail such amendment or supplement to the
Company's shareholders; provided that, prior to such filing or
16
mailing, the parties shall approve (which approval, with respect to either
party, shall not be unreasonably withheld or delayed) the form and content of
such amendment or supplement.
5.2 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) From and after the date hereof until the Effective
Time, upon reasonable notice, the Company shall (and shall cause its
Subsidiaries, to the extent permitted by the Organizational Documents or other
pertinent agreements of such entities, to) afford to the officers, employees,
accountants, counsel, financial advisors and other representatives of Acquirer
reasonable access, during normal business hours, to all its properties, books,
contracts, commitments and records and its officers, employees, representatives
and lenders and, during such period, the Company shall (and shall cause its
Subsidiaries, to the extent permitted by the Organizational Documents or other
pertinent agreements of such entities, to) furnish promptly to Acquirer (i) a
copy of each report, schedule, registration statement and other document filed,
published, announced or received by it during such period pursuant to the
requirements of federal or state securities Laws, as applicable (other than
reports or documents which it is not permitted to disclose under applicable
Law), and (ii) consistent with its legal obligations, all other information
concerning its business, properties and personnel as Acquirer may reasonably
request; provided, however, the Company may restrict the foregoing access to the
extent that (A) a Governmental Entity requires it or any of its Subsidiaries to
restrict access to any properties or information reasonably related to any such
contract on the basis of applicable Laws and regulations, or (B) any Law,
treaty, rule or regulation of any Governmental Entity applicable to it or any of
its Subsidiaries requires it or any of its Subsidiaries to restrict access to
any properties or information.
(b) Acquirer shall use the Confidential Information
solely for the purpose of evaluating the transactions contemplated hereby or any
modification of such transactions and for no other purpose. Acquirer agrees to
keep all Confidential Information confidential and shall not, without the prior
written consent of the Company, disclose any Confidential Information to any
third party, in whole or in part, except those who have an actual need to know
the Confidential Information for the purpose of evaluating the transactions
contemplated hereby, who are informed of the confidential nature of the
Confidential Information and who agree to be bound by this Section 5.2(b)
("Permitted Recipients"). Acquirer shall be responsible for any breach of any
provision of this Section 5.2(b) by its Permitted Recipients. Upon the Company's
request, Acquirer shall: (i) destroy or, at the Company's option, return to the
Company all Confidential Information which is in tangible form, including any
copies thereof, and destroy all Confidential Information provided on computer
disks or tape or in other digital format and all abstracts and summaries of
Confidential Information and references thereto which may have been prepared by
Acquirer; and (b) certify to the Company that all Confidential Information has
been returned or destroyed as requested by the Company.
In the event that Acquirer becomes legally compelled to disclose any
Confidential Information, Acquirer shall provide the Company with prompt notice,
if lawful, so that the Company may seek a protective order or other appropriate
remedy and/or waive compliance with the provisions of this Section 5.2(b). In
the event such protective order or other remedy is not obtained, or the Company
waives compliance with the provisions of this Section 5.2(b), Acquirer shall
furnish or permit to be furnished only that portion of the Confidential
Information which Acquirer is advised by its counsel is legally required to be
furnished, and Acquirer shall use its reasonable best efforts to obtain
assurances that such Confidential Information shall be treated confidentially by
the recipient thereof.
Acquirer acknowledges and agrees that any breach or threatened breach
of the terms of this Section 5.2(b) regarding the treatment of Confidential
Information may result in irreparable damage to the Company for which there may
be no adequate remedy at law. Therefore, Acquirer agrees that in the event of
any breach of this Section 5.2(b) by it or any third party to whom any Acquirer
makes
17
Confidential Information available, the Company shall be entitled, in
addition to any other rights and remedies available to it, to specific
enforcement of the terms of this Section 5.2(b) and/or injunctive relief
requiring the immediate return of all Confidential Information in the possession
of Acquirer or any such third party and enjoining Acquirer and any parties to
which Acquirer has made Confidential Information available from using
Confidential Information in violation of this Section 5.2(b), in either case
without the necessity of showing or proving that any actual damages have been
sustained. The Company shall be entitled to recover from Acquirer the costs of
litigation, including reasonable attorneys' fees, incurred by it in any
successful legal or equitable action taken by it to enforce the provisions of
this Section 5.2(b).
5.3 APPROVAL AND CONSENTS; COOPERATION. Each of the Company and
Acquirer shall cooperate with each other and use (and shall cause their
respective Subsidiaries, if any, to use) their respective reasonable best
efforts to take or cause to be taken all actions, and do or cause to be done all
things, necessary, proper or advisable on their part to consummate and make
effective the Merger and the other transactions contemplated by this Agreement
(including the satisfaction of the conditions set forth in Article 6) as soon as
practicable, including (i) preparing and filing as promptly as practicable all
documentation to effect all applications, notices, petitions, filings, tax
ruling requests and other documents and to obtain as promptly as practicable all
consents, waivers, licenses, orders, registrations, approvals, permits, tax
rulings and authorizations necessary to be obtained from any Governmental Entity
in order to consummate the Merger or any of the other transactions contemplated
by this Agreement, other than those as to which the failure to so prepare and
file such documentation would not have a Material Adverse Effect on either of
the Company or Acquirer as the case may be, or would not prevent the
consummation of the Merger by the Outside Date (the "Required Regulatory
Approvals") and (ii) taking all reasonable steps as may be necessary to obtain
all such Required Regulatory Approvals. The Company and Acquirer each shall,
upon request by the other, furnish the other with all information concerning
itself, its Subsidiaries, directors, officers and equity holders and such other
matters as may reasonably be necessary or advisable in connection with the Proxy
Statement, the Schedule 13E-3 or any Required Regulatory Approvals or other
statement, filing, tax ruling request, notice or application made by or on
behalf of the Company, Acquirer or any of their respective Subsidiaries to any
third party and/or any Governmental Entity in connection with the Merger or the
other transactions contemplated by this Agreement.
5.4 ACQUISITION PROPOSALS. During the period from the date of this
Agreement and continuing until the earlier of the Effective Time or the date
upon which this Agreement is terminated in accordance with the terms hereof
(except as expressly contemplated or permitted by this Agreement or to the
extent that Acquirer shall otherwise consent in writing, which consent shall not
be unreasonably withheld or delayed):
(a) The Company agrees that the directors constituting
the Special Committee shall not, and the Company shall use its reasonable best
efforts to cause the Company's other Representatives and the Special Committee's
Representatives not to, directly or indirectly, initiate, or solicit the making,
submission or announcement of, any Acquisition Proposal. As used herein, the
term "Acquisition Proposal" means and includes any offer, indication of interest
or proposal (other than by Acquirer) relating to a transaction involving the
acquisition of stock or assets of the Company, or a merger or consolidation with
the Company, which would upon the consummation thereof materially and adversely
affect the ability of the parties to consummate the transactions contemplated
hereby, including the Merger. The Company agrees that the directors constituting
the Special Committee shall not, and the Company shall use its reasonable best
efforts to cause the Company's Representatives and the Special Committee's
Representatives not to, directly or indirectly, engage in discussions or
negotiations, furnish or provide any non-public information or data or afford
access to the properties, books, records and Representatives of the Company to
any Person with respect to any Acquisition Proposal.
18
(b) Notwithstanding the foregoing, the Company, the
Company Board or the Special Committee may (or may direct any Representative of
the Company Board or the Special Committee to) (i) engage in discussions or
negotiations regarding an Acquisition Proposal, (ii) furnish or provide
non-public information, or (iii) afford access to the properties, books, records
and Representatives of the Company, with or to any Person that has made and has
pending a written Acquisition Proposal which the Special Committee has
determined in good faith is reasonably likely to lead to a Superior Proposal;
provided that, prior to taking any action described in any of the foregoing
clauses (i), (ii) or (iii), such Person has entered into a confidentiality
agreement for the benefit of the Company on substantially the same terms as set
forth in Section 5.2 hereof or on terms more favorable to the Company. The
Company shall promptly notify Acquirer of the Company's first receipt of a
written Acquisition Proposal, and of the material terms and conditions thereof
and the identity of the Person making any such Acquisition Proposal. The Company
shall further promptly notify or update Acquirer on the status of discussions or
negotiations (including the status of such Acquisition Proposal or any
amendments or proposed amendments thereto) between the Company and such Person.
However, nothing contained in this Agreement shall prevent or otherwise restrict
the Company, the Company Board or the Special Committee from complying with Rule
14e-2 and Rule 14d-9 promulgated under the Exchange Act with regard to an
Acquisition Proposal.
(c) Subject to Section 7.1 hereof, at any time prior to
the approval of this Agreement by the shareholders of the Company, the Company
Board or the Special Committee may (i) withdraw or modify its recommendation of,
or refrain from recommending, the Merger and this Agreement, (ii) approve any
Superior Proposal or declare a Superior Proposal advisable or recommend a
Superior Proposal to the Company's shareholders or (iii) cause the Company to
enter into any definitive acquisition agreement with respect to a Superior
Proposal. A "Superior Proposal" shall mean an Acquisition Proposal which the
Special Committee determines in good faith, after consultation with and giving
due consideration to the advice of its legal and financial advisors (x) is one
as to which there has been provided evidence of cash on hand or readily
available financing under existing lines of credit or written commitments
sufficient to fund the consummation of such Acquisition Proposal and (y) would,
if consummated, result in a transaction more favorable to the Company's
shareholders from a financial point of view than the Merger contemplated by this
Agreement.
(d) The Company represents and warrants that, as of the
date hereof, it has ceased and has caused to be terminated all existing
discussions or negotiations with any parties conducted heretofore in respect of
any Acquisition Proposal.
5.5 FEES AND EXPENSES. All Expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such Expenses, except (i) Expenses incurred in connection with
the printing, filing and mailing to shareholders of the Proxy Statement and the
solicitation of shareholder approvals shall be paid one-half by the Acquirer and
one-half by the Company unless this Agreement is terminated pursuant to Section
7.1(g); provided, however, Acquirer's obligation under this clause (i) shall not
exceed, in the aggregate, Twenty-Five Thousand Dollars ($25,000) and (ii) as
provided in Section 7.2.
5.6 INDEMNIFICATION, DIRECTORS' AND OFFICERS' INSURANCE.
(i) From and after the Effective Time, the
Surviving Company shall indemnify and hold harmless each person who was
or is a party or is threatened to be made a party to or is involved or
is threatened to be involved in (as a witness or otherwise) or
otherwise requires representation by counsel now or at any time
hereafter in connection with any threatened, pending or completed
action, suit or proceeding, or any inquiry that such person in good
faith believes might lead to the institution of any such action, suit
or proceeding, whether
19
civil, criminal, administrative or investigative (hereinafter, a
"proceeding"), by reason of the fact that he or she was a director,
officer, employee or agent of the Company or was serving at the request
of the Company as a director, officer, trustee, partner, employee or
agent of another corporation or of a partnership, joint venture, trust
or other enterprise, including service with respect to employee benefit
plans (each, an "Indemnified Party"), whether the basis of such
proceeding is alleged action or inaction in an official capacity as a
director, officer, trustee, partner, employee or agent or in any other
capacity while serving or having agreed to serve as a such a director,
officer, trustee, partner, employee or agent, such indemnification to
be given, made and provided to the fullest extent authorized by the
IBCA, as now in effect or as it may hereafter be amended (but, in the
case of any such amendment with reference to events occurring prior to
the Effective Time, only to the extent that such amendment permits the
Surviving Company to provide broader indemnification rights than said
law, permitted the Company to provide prior to such amendment), against
all costs, charges, expenses, liabilities and losses (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and
amounts paid or to be paid in settlement) actually and reasonably
incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to serve
in the capacity which initially entitled such person to indemnity
hereunder and such indemnity shall also inure to the benefit of such
person's heirs, personal representatives and estate; provided, however,
that except as provided in paragraph (b) hereof, the Company shall
indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person against the
Company or Surviving Company only if such proceeding (or part thereof)
was authorized prior to its initiation by a majority of the
disinterested members of the Board of Directors of the Company. The
rights to indemnification conferred in this Section 5.6(a) shall
include the right to be paid by the Surviving Company any expenses
incurred in defending any such proceeding in advance of its final
disposition, provided, however, that, if and to the extent that the
IBCA so requires, the payment of such expenses incurred in advance of
the final disposition of a proceeding shall be made to or on behalf of
a person only upon delivery to the Surviving Company of an undertaking,
by or on behalf of such person, to repay all amounts so advanced if it
shall ultimately be determined that such person is not entitled to be
indemnified under this Section 5.6(a) or otherwise. The rights to
indemnification conferred in this Section 5.6(a) shall be deemed to be
contract rights between the Surviving Company and each person who
served in the capacities described above.
(ii) If a claim made under subsection (i) above
shall not have been paid in full by the Surviving Company within sixty
days after a written claim has been received by the Surviving Company,
the claimant may at any time thereafter bring suit against the
Surviving Company to recover the unpaid amount of the claim, and if
successful in whole or in part, the claimant shall be entitled to be
paid, in addition, the expense of prosecuting such claim. In any action
brought by the claimant to enforce a right to indemnification hereunder
or by the Surviving Company to recover payments by the Surviving
Company of expenses incurred by a claimant in a proceeding in advance
of its final disposition, the burden of proving that the claimant is
not entitled to be indemnified under this Section or otherwise shall be
on the Surviving Company. Neither the failure of the Surviving Company
(including its managers, independent legal counsel, or its members) to
have made a determination prior to the commencement of such action that
indemnification of the claimant is proper under the circumstances
because he or she has met the applicable standard of conduct set forth
in the IBCA, nor an actual determination by the Surviving Company
(including its managers, independent legal counsel, or its members)
that the claimant has not met such applicable standard of conduct,
shall create a presumption that the claimant has not met the applicable
standard of conduct, or, in the case of such an action brought by the
claimant, be a defense to this action.
20
(iii) The right to indemnification and the payment
of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section shall not be exclusive of any
other right which any person may have or hereafter acquire under any
law (common or statutory), the disinterested managers, any agreement, a
vote of disinterested managers or otherwise, both as to action in that
person's official capacity and as to action in any other capacity by
holding such office, and shall continue after the person ceases to
serve in the capacity which initially entitled such person to indemnity
hereunder.
(iv) The Surviving Company may, under procedures
authorized from time to time by the Surviving Company's members or
managers, grant rights to indemnification, and the right to be paid by
the Surviving Company the expenses incurred in defending, to any
employee or agent of the Company to the fullest extent permitted by
Law.
(b) As of the Effective Time, the Surviving Company shall
assume any indemnification agreements between the Company and any of its
officers and directors which are in effect as of the date of this Agreement.
(c) For a period of six years after the Effective Time,
the Surviving Company shall cause to be maintained in effect the current
policies of directors' and officers' liability insurance and fiduciary liability
insurance maintained by the Company (provided that the Surviving Company may
substitute therefor policies with an insurer of equal claims paying ratings and
of at least the same coverage and amounts containing terms and conditions which
are, in the aggregate, no less advantageous to the insured) with respect to
claims arising from facts or events that occurred on or before the Effective
Time. This covenant is intended to be for the benefit of, and shall be
enforceable by, each of the Indemnified Parties and their respective heirs and
legal representatives. Notwithstanding the foregoing, the obligations of the
Surviving Company to cause such insurance to be maintained shall terminate and
be of no further force or effect in the event that prior to the Effective Time
"tail" coverage for the Company's existing policies is obtained by the Company
for the six-year period after the Effective Time upon terms and conditions
approved in writing by the Special Committee.
(d) In the event that the Surviving Company or any of its
successors or assigns (i) consolidates with or merges into any other Person and
will not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its equity
or assets to any Person, then, and in each such case, proper provision will be
made so that the successors and assigns of the Surviving Company will assume the
obligations set forth in this Section 5.6.
5.7 PUBLIC ANNOUNCEMENTS. From and after the date hereof until the
Effective Time, the Company and Acquirer shall use all reasonable best efforts
to develop a joint communications plan and each party shall use all reasonable
best efforts (i) to ensure that all press releases and other public statements
with respect to the transactions contemplated hereby shall be consistent with
such joint communications plan, and (ii) unless otherwise required by applicable
Law or by obligations pursuant to the rules of the OTCBB, to consult with each
other before issuing any press release or otherwise making any public statement
with respect to this Agreement or the transactions contemplated hereby.
5.8 FURTHER ASSURANCES. The proper officers of the Company and
Acquirer shall take any reasonably necessary actions if, at any time after the
Effective Time, any further action is reasonably necessary to carry out the
purposes of this Agreement. Without limiting the generality of the foregoing,
if, at any time after the Effective Time, the Surviving Company shall consider
or be advised of any deeds, bills of sale, assignments, assurances or any other
actions or things that are necessary or desirable to vest, perfect or confirm of
record or otherwise in the Surviving Company its right, title or interest in, to
or under any of the rights, properties or assets of the Company or Acquirer or
otherwise to carry out this
21
Agreement, the officers of the Surviving Company shall be authorized to execute
and deliver, in the name and on behalf of the Company or Acquirer, as the case
may be, all such deeds, bills of sale, assignments and assurances and take and
do, in the name and on behalf of the Company or Acquirer, as the case may be,
all such other actions and things as may be necessary or desirable to vest,
perfect or confirm any and all right, title and interest in, to and under such
rights, properties or assets in the Surviving Company or otherwise to carry out
this Agreement.
ARTICLE VI
CONDITIONS PRECEDENT
--------------------
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of the Company and Acquirer to effect the Merger are
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Shareholder Approval. The Company shall have obtained
all approvals of holders of shares of capital stock of the Company necessary to
approve this Agreement and all the transactions contemplated hereby, including
the Merger, under the IBCA.
(b) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or other order issued by
a court or other Governmental Entity of competent jurisdiction shall be in
effect and have the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger; provided, however, the party invoking this condition
shall use its reasonable best efforts to have any such order or injunction
vacated. The provisions of this Section 6.1 (b) shall not be available to any
party whose failure to fulfill its obligations pursuant to Section 5.3 shall
have been the cause of, or shall have resulted in, such order or injunction.
6.2 CONDITIONS TO THE OBLIGATION OF ACQUIRER TO EFFECT THE MERGER.
In addition to the conditions set forth in Section 6.1, the obligation of
Acquirer to effect the Merger are further subject to the satisfaction or waiver
by Acquirer, on or prior to the Closing Date, of the following conditions:
(a) Representations and Warranties. The representations
and warranties of the Company set forth in this Agreement shall be true and
correct as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date, except to the extent (i) any inaccuracies in
such representations or warranties, individually or in the aggregate, would not
have a Material Adverse Effect on the Company (provided that, solely for
purposes of this Section 6.2(a), any representation or warranty of the Company
that is qualified by materiality or Material Adverse Effect shall be read as if
such language were not present) or would not prevent the consummation of the
Merger by the Outside Date, or (ii) such representations and warranties speak as
of an earlier date. Acquirer shall have received an officer's certificate
executed on behalf of the Company to such effect.
(b) Performance of Obligations and Covenants. The Company
shall have performed or complied with all of its obligations and covenants
required to be performed by the Company under this Agreement at or prior to the
Closing Date, except where the failure to so perform or comply would not have a
Material Adverse Effect on the Company or would not prevent the consummation of
the Merger by the Outside Date. Acquirer shall have received an officer's
certificate executed on behalf of the Company to such effect.
(c) Fairness Opinion. The fairness opinion of Duff &
▇▇▇▇▇▇, LLC referred to in Section 3.10) shall not have been withdrawn at or
prior to the Effective Time.
22
(d) Dissenting Shares. At the Effective Time, Dissenting
Shares shall not exceed fifteen percent (15%) of the outstanding shares of
Company Common Stock.
(e) Certificate. The Company shall have delivered to
Acquirer duly adopted resolutions of the Board of Directors of the Company
approving the execution, delivering and performance of this Agreement, and
resolutions of the shareholders of the Company approving the Merger, in each
case certified by the Secretary or Assistant Secretary of the Company.
6.3 CONDITIONS TO THE OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER. In addition to the conditions set forth in Section 6.1, the obligation
of the Company to effect the Merger is further subject to the satisfaction or
waiver by the Company, on or prior to the Closing Date, of the following
conditions:
(a) Representations and Warranties. The representations
and warranties of Acquirer set forth in this Agreement shall be true and correct
as of the date of this Agreement and as of the Closing Date as though made on
and as of the Closing Date, except to the extent (i) any inaccuracies in such
representations or warranties, individually or in the aggregate, would not
prevent the consummation of the Merger by the Outside Date or (ii) such
representations and warranties speak as of an earlier date. The Company shall
have received an officer's certificate executed on behalf of Acquirer to such
effect.
(b) Performance of Obligations and Covenants. Acquirer
shall have performed or complied with all of its obligations and covenants
required to be performed by Acquirer under this Agreement at or prior to the
Closing Date, except where the failure to so perform or comply would not prevent
the consummation of the Merger by the Outside Date. The Company shall have
received an officer's certificate executed on behalf of Acquirer to such effect.
(c) Exchange Fund Deposit. The Aggregate Merger
Consideration shall have been deposited into the Exchange Fund in the manner
contemplated by Section 2.1.
ARTICLE VII
TERMINATION AND AMENDMENT
-------------------------
7.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after any approval of the matters
presented in connection with the Merger by the shareholders of the Company.
(a) By mutual written consent of the Company and
Acquirer.
(b) By either the Company or Acquirer if the Merger shall
not have been consummated by the date which is nine months after the date of
this Agreement (the "Outside Date"); provided, however, the right to terminate
this Agreement under this Section 7.1 (b) shall not be available to any party
whose material breach of any representation, warranty, covenant or agreement
under this Agreement has been the cause of, or resulted in, the failure of the
Merger to occur on or before the Outside Date; provided, further, that if on the
Outside Date any conditions to Closing set forth in Section 6.2 have not been
fulfilled, but all other conditions to Closing have been fulfilled or are
capable of being fulfilled by the Outside Date, then the Outside Date shall be
extended to the date which is twelve months after the date of this Agreement.
(c) By either the Company or Acquirer if any Governmental
Entity shall have issued any judgment, injunction, order, decree or ruling or
taken any other action permanently restraining, enjoining or prohibiting
Acquirer or the Company from consummating the transactions contemplated by
23
this Agreement, including the Merger, and such judgment, injunction, order,
decree, ruling or other action shall have become final and nonappealable.
(d) By either the Company or Acquirer if any approval by
the shareholders of the Company required for the consummation of the Merger and
the other transactions contemplated hereby shall not have been obtained at the
Shareholders' Meeting or any adjournment thereof by reason of the failure to
obtain the Required Company Vote; provided that, the right to terminate this
Agreement under this Section 7.1 (d) shall not be available to Acquirer if
Acquirer shall have failed to vote its shares of Company Common Stock or Company
Preferred Stock (or otherwise consented in writing with respect thereto) in
favor of the Merger at the Shareholders' Meeting.
(e) By the Company or Acquirer, if, prior to the
Effective Time, the Company Board or the Special Committee has resolved to
accept a Superior Proposal.
(f) By Acquirer, if, prior to the Effective Time, (i) the
Company Board or the Special Committee shall have withdrawn or adversely
modified its recommendation of this Agreement and the Merger; (ii) the Company
Board or the Special Committee shall have recommended to the shareholders of the
Company that they approve an Acquisition Proposal other than the transactions
contemplated by this Agreement, including the Merger; (iii) an Acquisition
Proposal made as a tender offer or exchange offer is commenced and the Company
Board shall not have recommended rejection of such tender offer or exchange
offer by the date required for such recommendation under Rule 14e-2 promulgated
under the Exchange Act; (iv) the Company fails to include in the Proxy Statement
(x) the Company Board's recommendation to the Company's shareholders to approve
and adopt this Agreement and the transactions contemplated hereby, including the
Merger, or (y) the fairness opinion of Duff & ▇▇▇▇▇▇, LLC referred to in Section
3.10) (subject to such modifications thereto as do not adversely modify the
opinion of Duff & ▇▇▇▇▇▇, LLC as to the fairness of the consideration to be
received in the Merger from a financial point of view); (v) the Company has
failed to mail the Proxy Statement in accordance with Section 5.1(b)(ii) or has
postponed or, without having obtained the Required Company Vote, adjourned the
Shareholders' Meeting (unless such failure to mail, postponement or adjournment,
as the case may be, was necessitated by applicable Law) in each case at a time
when an Acquisition Proposal was publicly pending or was known to the Special
Committee; or (vi) the Company has resolved to take any of the actions specified
in clause (i), (ii) or (v) above.
(g) By Acquirer if, prior to the Effective Time, there
shall be a breach in any representation, warranty, covenant or agreement on the
part of the Company set forth in this Agreement which would result in a failure
of any of the conditions set forth in Section 6.2, which breach cannot be or
shall not have been cured in all material respects on or before the Outside
Date.
(h) By the Company if, prior to the Effective Time, there
shall be a breach of any representation, warranty, covenant or agreement on the
part of Acquirer set forth in this Agreement which would result in a failure of
any of the conditions set forth in Section 6.3, which breach cannot be or shall
not have been cured in all material respects on or before the Outside Date.
7.2 EFFECT OF TERMINATION, TERMINATION FEE AND REIMBURSEMENT OF
EXPENSES.
(a) In the event of termination of this Agreement by
either the Company or Acquirer as provided in Section 7.1, this Agreement shall
forthwith become void and have no effect, there shall be no liability or
obligation on the part of the Company, Acquirer or their respective
Representatives and Affiliates, and all rights and obligations of the parties
hereto shall cease, except (i) with respect to Section 3.1 (h) (Brokers and
Finders), Section 3.2(g) (Brokers and Finders), Section 5.2 (Access to
Information; Confidentiality), Section 5.5 (Fees and Expenses), this Section 7.2
(Effect of Termination;
24
Termination Fee and Reimbursement of Expenses) and Article 8, and (ii) with
respect to any liabilities or damages incurred or suffered by a party as a
result of the willful breach by the other party of any of its covenants or other
agreements set forth in this Agreement.
(b) If:
(i) (A) this Agreement is terminated by the
Company or Acquirer pursuant to Section 7.1(d), and (B) a public
announcement or public disclosure of any Acquisition Proposal was made
prior to the date of the Shareholders' Meeting and was publicly pending
on or within five (5) Business Days prior to the date of the
Shareholders' Meeting;
(ii) this Agreement is terminated by the Company
or Acquirer pursuant to Section 7.1(e);
(iii) this Agreement is terminated by Acquirer
pursuant to Section 7.1 (f) (except that if this Agreement is
terminated pursuant to clause (iv) thereof no Termination Fee shall be
payable unless an Acquisition Proposal was publicly pending or was
known to the Special Committee at the time the Company Board's
recommendation or the fairness opinion of Duff & ▇▇▇▇▇▇, LLC, as the
case may be, was not included in the Proxy Statement);
(iv) this Agreement is terminated by Acquirer
pursuant to Section 7.1(g); or
(v) the Company willfully and materially
breaches the provisions of Section 5.4;
then the Company shall pay Acquirer a cash termination payment equal to the
out-of-pocket expenses of Acquirer and its Affiliates incurred on or after
October 1, 2002 in connection with the transactions contemplated hereby
(including proxy costs paid by Acquirer as provided in Section 5.5(i) above),
but not to exceed $150,000 (the "Termination Fee"), which amount shall be
payable by wire transfer of immediately available funds no later than two (2)
Business Days after such termination. The Termination Fee (provided the same
shall be promptly paid) shall be the exclusive remedy of Acquirer as a result of
(x) the termination of this Agreement by the Company or Acquirer pursuant to
Section 7.1 (d) or Section 7.1 (e) or by Acquirer pursuant to Section 7.1(f) or
Section 7.1(g), or (y) the Company's willful and material breach of the
provisions of Sections 5.4(b) or (c).
7.3 AMENDMENT. This Agreement may be amended by the parties hereto
at any time before or after any required approval of the matters presented in
connection with the Merger by the shareholders of the Company; provided,
however, after any such approval, no amendment shall be made which by Law or in
accordance with the rules of the OTCBB requires further approval by such
shareholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
7.4 EXTENSION; WAIVER. At any time prior to the Effective Time,
the parties hereto may, to the extent permitted by applicable Law, (a) extend
the time for the performance of any of the obligations or other acts of the
other party hereto, (b) waive any inaccuracies in the representations and
warranties contained in this Agreement or in any document delivered pursuant
hereto, or (c) subject to Section 7.3, waive compliance with any of the
agreements or conditions contained in this Agreement. Any agreement on the part
of a party hereto to any such extension or waiver shall be valid only if set
forth in a written instrument signed on behalf of such party. No delay or
failure on the part of any party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party hereto of any right, power or privilege hereunder operate
as a waiver of any other
25
right, power or privilege hereunder, nor shall any single or partial exercise of
any right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder. Unless
otherwise provided, the rights and remedies herein provided are cumulative and
are not exclusive of any rights or remedies which the parties hereto may
otherwise have at law or in equity.
7.5 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER. A
termination of this Agreement pursuant to Section 7.1, an amendment of this
Agreement pursuant to Section 7.3, an extension or waiver pursuant to Section
7.4 or any other approval or consent required or permitted to be given pursuant
to this Agreement or the exercise of any rights or satisfaction of any
obligations of the parties hereunder shall, in order to be effective and in
addition to the requirements of applicable Law, require (a) in the case of the
Company, the action of the Special Committee or (b) in the case of Acquirer, the
action by the managers thereof.
ARTICLE VIII
GENERAL PROVISIONS
------------------
8.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. None of the representations, warranties, covenants and other
agreements set forth in this Agreement or in any instrument delivered pursuant
to this Agreement, including any rights arising out of any breach of such
representations, warranties, covenants and other agreements, shall survive the
Effective Time, except for those covenants and agreements contained herein and
therein which by their terms apply or are to be performed in whole or in part
after the Effective Time and this Article 8. EACH PARTY HERETO AGREES THAT,
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT,
NEITHER THE COMPANY NOR ACQUIRER MAKES ANY OTHER REPRESENTATIONS OR WARRANTIES,
AND EACH PARTY HEREBY DISCLAIMS ANY OTHER REPRESENTATIONS AND WARRANTIES MADE BY
ITSELF OR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, FINANCIAL AND LEGAL
ADVISORS OR OTHER REPRESENTATIVES WITH RESPECT TO THE EXECUTION AND DELIVERY OF
THIS AGREEMENT, THE DOCUMENTS AND THE INSTRUMENTS REFERRED TO HEREIN, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, NOTWITHSTANDING THE DELIVERY OR
DISCLOSURE TO THE OTHER PARTY OR THE OTHER PARTY'S REPRESENTATIVES OF ANY
DOCUMENTATION OR OTHER INFORMATION WITH RESPECT TO ANY ONE OR MORE OF THE
FOREGOING.
8.2 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed duly given (i) on the date of delivery if
delivered personally, (ii) on the first Business Day following the date of
dispatch if delivered by nationally recognized next-day courier service, (iii)
on the fifth Business Day following the date of mailing if delivered by
registered or certified mail, return receipt requested, postage prepaid or (iv)
if sent by facsimile transmission, when transmitted and confirmation of such
transmission is received. All notices hereunder shall be delivered as set forth
below, or pursuant to such other instructions as may be designated in writing by
the party to receive such notice:
(a) if to Acquirer, to:
S.I. Acquisition LLC
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
26
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company, to:
Successories, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Special Committee of the Board of Directors
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ Price ▇▇▇▇▇▇▇ & Kammholz
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
8.3 INTERPRETATION. When a reference is made in this Agreement to
a Section or Exhibit, such reference shall be to a Section of or Exhibit to this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretations of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." The parties have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties and no
presumption or burden or proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement. Any
reference to any federal, state, local or foreign statute or Law shall be deemed
also to refer to all rules and regulations promulgated thereunder, unless the
context requires otherwise.
8.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts (including by means of telecopied signature pages), all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other party, it being understood that both parties need not sign the same
counterpart.
27
8.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.
(a) This Agreement and the other agreements referred to
herein constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.
(b) This Agreement shall be binding upon and inure solely
to the benefit of each party hereto and its successors and permitted assigns,
and except as set forth in Sections 1.4, 1.8, 1.9, 1.10, 5.6, 8.5 and 8.9 (which
are intended to and shall create third party beneficiary rights if the Merger is
consummated), nothing in this Agreement, express or implied, is intended to
confer upon any other Person any rights or remedies of any nature whatsoever
under or by reason of this Agreement. Each of the Indemnified Parties referred
to in Section 5.6 shall be entitled to enforce the provisions hereof directly
against the Surviving Company, to the same extent as if such Indemnified Party
were a party hereto.
8.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO THE LAWS
THAT MIGHT BE APPLICABLE UNDER CONFLICTS OF LAWS PRINCIPLES.
8.7 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO ACKNOWLEDGES
AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY
TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION OR PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY AND FOR ANY COUNTERCLAIM THEREIN. EACH PARTY (i) UNDERSTANDS
AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (ii) MAKES THIS WAIVER
VOLUNTARILY, AND (iii) HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE PROVISIONS OF THIS SECTION 8.7.
8.8 SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any Law or public policy,
all other terms and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible. Any provision of this Agreement
held invalid or unenforceable only in part, degree or in certain jurisdictions
will remain in full force and effect to the extent not held invalid or
unenforceable. To the extent permitted by applicable Law, each party waives any
provision of Law which renders any provision of this Agreement invalid, illegal
or unenforceable in any respect.
8.9 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, in whole or in part (whether by operation of law or otherwise), without
the prior written consent of the other party, and any attempt to make any such
assignment without such consent shall be null and void.
8.10 ENFORCEMENT. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to specific performance
28
of the terms and provisions of this Agreement (without requirement to post a
bond, if applicable), this being in addition to any other remedy to which the
parties are entitled at law or in equity.
8.11 DEFINITIONS. As used in this Agreement, the following terms
shall have the following definitions:
"AFFILIATE" shall have the meaning ascribed to such term under Rule
12b-2 of the General Rules and Regulations under the Exchange Act.
"BUSINESS DAY" means any day on which banks are not required or
authorized to close in the City of Chicago.
"CONFIDENTIAL INFORMATION" means information in whatever form provided
by or on behalf of the Company to Acquirer or its directors, managers, officers,
employees, agents, lenders, investors or advisors in connection with the
evaluation by Acquirer of the transactions contemplated herein, including,
without limitation, information relating to the financial condition of the
Company and its business strategies, marketing plans, developmental plans,
computer programs, computer systems, processes, inventions, developments and
trade secrets of every kind and nature. However, Confidential Information does
not include any information which (i) was or becomes generally available to the
public other than as a result of an unauthorized disclosure by Acquirer, (ii)
was or becomes available to Acquirer on a nonconfidential basis from a source
other than the Company or its advisors, provided that the disclosure by such
source does not violate any confidentiality obligation or duty of such source to
the Company or (iii) was within the possession of or known by Acquirer or any of
its Affiliates prior to its being furnished by or on behalf of Company, provided
that the disclosure by the original source of such information did not violate
any confidentiality obligation or duty of such source to the Company.
"EMPLOYEE BENEFIT PLAN" means any (i) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (ii) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (iii) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any multiemployer plan), or (iv) Employee Welfare Benefit Plan.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(1).
"ENVIRONMENTAL LAWS" means all Laws relating to the environment or the
use, disposal, existence or release of any Hazardous Materials, including but
not limited to any and all Laws concerning, affecting, controlling, or in any
way relating to, whether in whole or in part, air pollutants, water pollutants,
process waste water or Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXPENSES" means and includes all out-of-pocket costs and expenses
(including, without limitation, all fees and expenses of counsel, accountants,
banks, investment bankers, experts and consultants to a party hereto and its
Affiliates) incurred by a party or on its behalf, whenever incurred, in
connection with or related to the authorization, preparation, negotiation,
execution and performance of this Agreement and the transactions contemplated
hereby.
"HAZARDOUS MATERIALS" means any waste, hazardous waste, pollutant,
contaminant, or hazardous or toxic substance as specified, listed, identified,
or defined in (i) the Resource Conservation and Recovery Act, 42 U.S.C.A. 6901,
et seq., and the rules, regulations and orders promulgated
29
thereunder; (ii) CERCLA; (iii) the Clean Water Act, 33 U.S.C. 1251, et seq., and
the rules, regulations and orders promulgated thereunder; (iv) the Clean Air
Act, 42 U.S.C. 7401 et seq., and the rules, regulations and orders promulgated
thereunder; (v) the Toxic Substances Control Act, 15 U.S.C. 2601, et seq., and
the rules, regulations and orders promulgated thereunder; (vi) the Hazardous
Materials Transportation Act, 49 U.S.C. 1801 et seq., and the rules, regulations
and orders promulgated thereunder, and (vii) the Occupational Safety and Health
Act, 29 U.S.C. 651 et seq., and the rules, regulations, and orders promulgated
thereunder, all as in effect as of the Closing Date.
"INCOME TAX" means any federal, state, local or foreign income tax,
including any interest, penalty or addition thereto, whether disputed or not.
"INCOME TAX RETURN" means any return, declaration, report, claim for
refund or information return or statement relating to Income Taxes, including
any schedule or attachment thereto.
"LAW" means all provisions of any federal, state, foreign, local or
other law, ordinance, rule, regulation, or governmental requirement or
restriction of any kind, including any rules, regulations and orders promulgated
thereunder, and any final orders, decrees, consents or judgments of any
regulatory agency or court.
"MATERIAL ADVERSE EFFECT" means, when used with respect to any entity,
any event, change or effect that when taken together with all other such events,
changes or effects, is materially adverse to the business, financial condition
or results of operations of such entity and its Subsidiaries, taken as a whole,
except to the extent resulting from or relating to (i) any changes or events
(including without limitation, a war or terrorist incident) affecting the
economy of the United States, (ii) compliance with the terms of this Agreement
or (iii) the taking of any action by the Company that has been approved in
writing by the Acquirer.
"ORGANIZATIONAL DOCUMENTS" means, with respect to any entity, the
certificate of incorporation or organization, bylaws or other governing
documents of such entity.
"PERSON" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization, "group" (as defined in the Exchange Act) or other entity.
"REPRESENTATIVES" means, collectively, the directors, officers,
employees, agents and other representatives (including any investment bankers,
financial advisors, attorneys and accountants) of any Person.
"SERIES A PREFERRED STOCK" means the Company's Series A Convertible
Preferred Stock, par value $.O1 per share.
"SERIES B PREFERRED STOCK" means the Company's Series B Convertible
Preferred Stock, par value $0.01 per share.
"SUBSIDIARY" when used with respect to any party means any corporation
or other organization, whether incorporated or unincorporated, (i) of which such
party or any other Subsidiary of such party is a general partner (excluding
partnerships, the general partnership interests of which held by such party or
any Subsidiary of such party do not have a majority of the voting and economic
interests in such partnership), or (ii) at least a majority of the securities or
other interests of which having by their terms ordinary voting power to elect a
majority of the board of directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
owned or
30
controlled by such party or by any one or more of its Subsidiaries, or by such
party and one or more of its Subsidiaries.
[SIGNATURE PAGE FOLLOWS]
31
IN WITNESS WHEREOF, Acquirer and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized, in each
case as of the date first written above.
S.I. ACQUISITION LLC, an Illinois limited
liability company
By: SI HOLDINGS LLC, an Illinois limited
liability company, its Manager
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇▇▇▇▇▇, Manager
SUCCESSORIES, INC., an Illinois corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Title: Interim President and CEO
and Chief Operating and Financial
Officer
32
EXHIBIT A
ACQUIRER'S MEMBERS AND OWNERSHIP INTEREST IN THE COMPANY AS OF
FEBRUARY 13, 2003.
1. Company Common Stock and Company Preferred Stock owned by the
Acquirer:
(a) 2,799,565 shares of Company Common Stock.
(b) 503,092 shares of Series A Preferred Stock.
(c) 100,000 shares of Series B Preferred Stock.
2. Ownership of the Acquirer:
OWNERSHIP
---------
NAME PERCENTAGE
---- ----------
▇▇▇▇ ▇▇▇▇▇▇ Family Limited
Partnership # 1 33.39%
▇▇▇▇ ▇▇▇▇▇▇ Trust Dated January
18, 1984 50.92%
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Trust Dated
January 21, 1983 11.70%
The ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 1994
Trust .09%
TWS Investment Group, L.P. .09%
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ .02%
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Declaration
of Trust Dated April 28, 1987 3.48%
▇▇▇▇ ▇▇▇▇▇▇▇▇ .31
-----
100%