EXHIBIT 1
---------
AGREEMENT AND PLAN OF MERGER
AMONG
CAMERON 1 S.A.R.L.,
CAMERON ACQUISITIONS CORPORATION
AND
SAMSONITE CORPORATION
DATED AS OF JULY 5, 2007
TABLE OF CONTENTS
Page
Article I THE MERGER
Section 1.1 The Merger...................................................1
Section 1.2 Closing 1
Section 1.3 Effective Time...............................................2
Section 1.4 Effects of the Merger........................................2
Section 1.5 Certificate of Incorporation and By-laws of the
Surviving Company............................................2
Section 1.6 Directors and Officers.......................................2
Article II CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES
Section 2.1 Effect on Stock..............................................2
Section 2.2 Surrender and Payment........................................5
Article III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Qualification, Organization, Etc.............................9
Section 3.2 Capital Stock...............................................10
Section 3.3 Corporate Authority Relative to this Agreement;
No Violation................................................11
Section 3.4 Reports and Financial Statements............................12
Section 3.5 No Undisclosed Liabilities..................................13
Section 3.6 No Violation of Law; Permits................................14
Section 3.7 Employee Benefit Plans......................................14
Section 3.8 Absence of Certain Changes or Events........................16
Section 3.9 Investigations; Litigation..................................16
Section 3.10 Information Statement; Other Information....................17
Section 3.11 Tax Matters.................................................17
Section 3.12 Labor Matters...............................................19
Section 3.13 Intellectual Property.......................................20
Section 3.14 Opinion of Financial Advisor................................20
Section 3.15 Required Vote of the Company Stockholders...................21
Section 3.16 Material Contracts..........................................21
Section 3.17 Transactions with Affiliates................................21
Section 3.18 Insurance...................................................21
Section 3.19 Environmental Matters.......................................21
Section 3.20 Real Estate Matters.........................................22
Section 3.21 Finders or Brokers..........................................22
Article IV REPRESENTATIONS AND WARRANTIES OF PARENT
Section 4.1 Qualification; Organization, Etc............................23
Section 4.2 Capitalization of Merger Sub................................23
Section 4.3 Corporate Authority Relative to this Agreement;
No Violation................................................23
Section 4.4 Litigation..................................................24
Section 4.5 Information Statement; Other Information....................24
Section 4.6 Lack of Ownership of the Company Common Stock...............25
Section 4.7 Finders or Brokers..........................................25
Section 4.8 Availability of Funds.......................................25
Section 4.9 No Disqualification.........................................25
Section 4.10 Section 203 of the DGCL.....................................25
Section 4.11 Disclaimer of Other Representations and Warranties..........26
Article V COVENANTS AND AGREEMENTS
Section 5.1 Conduct of Business by the Company or Parent................26
Section 5.2 Transfer Taxes..............................................31
Section 5.3 Investigation...............................................31
Section 5.4 No Solicitation.............................................31
Section 5.5 Preparation of Information Statement........................33
Section 5.6 Employee Matters............................................34
Section 5.7 Notification of Certain Matters.............................35
Section 5.8 Filings; Other Action.......................................35
Section 5.9 Takeover Statute............................................36
Section 5.10 Financing...................................................37
Section 5.11 Public Announcements........................................38
Section 5.12 Indemnification and Insurance...............................38
Section 5.13 Section 16 Matters..........................................39
Section 5.14 Control of Operations.......................................39
Article VI CONDITIONS TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to
Effect the Merger...........................................40
Section 6.2 Conditions to Obligation of the Company to
Effect the Merger...........................................40
Section 6.3 Conditions to Obligation of Parent to
Effect the Merger...........................................41
Section 6.4 Frustration of Closing Conditions...........................41
Article VII TERMINATION
Section 7.1 Termination or Abandonment..................................41
Section 7.2 Termination Fees............................................43
Section 7.3 Amendment or Supplement.....................................44
Article VIII MISCELLANEOUS
Section 8.1 No Survival of Representations and Warranties...............45
Section 8.2 Expenses 45
Section 8.3 Certain Defined Terms.......................................45
Section 8.4 Counterparts; Effectiveness.................................46
Section 8.5 Governing Law...............................................46
Section 8.6 Submission to Jurisdiction..................................46
Section 8.7 Specific Performance........................................46
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Section 8.8 Waiver of Jury Trial........................................46
Section 8.9 Notices 46
Section 8.10 Assignment; Binding Effect..................................48
Section 8.11 Severability................................................48
Section 8.12 Entire Agreement; No Third-Party Beneficiaries..............48
Section 8.13 Headings 48
Section 8.14 Interpretation..............................................48
Section 8.15 Extension of Time, Waiver, Etc..............................49
EXHIBITS
Exhibit A Form of Certificate of Merger
Exhibit B Form of Equity Commitments
iv
INDEX OF DEFINED TERMS
affiliate............................45 Hazardous Substances.................22
Agreement.............................1 HSR Act..............................12
Ares Warrant Agreement................4 Indemnified Parties..................38
associate............................45 Information Statement................17
Bank Boston Warrant Agreement.........4 Intellectual Property................20
business day.........................45 IRS..................................19
CB Employees.........................34 knowledge............................45
Certificate of Merger.................2 Laws.................................14
Closing...............................1 Lien.................................12
Closing Date..........................1 Loan Agreements......................25
Company...............................1 Material Adverse Effect...............9
Company Alternative Proposal.........33 Maximum Amount.......................39
Company Approvals....................12 Merger................................1
Company Benefit Plans................14 Merger Consideration..................2
Company Change of Recommendation.....32 Merger Sub............................1
Company Common Stock..................2 New Plans............................34
Company Disclosure Schedule...........9 Non-CB Employees.....................34
Company Employees....................19 Old Plans............................34
Company Material Contract............21 Option Plans.........................10
Company Permits......................14 Options Consideration.................3
Company Preferred Stock..............10 Parent................................1
Company SEC Documents................12 Parent Approvals.....................24
Company Stock Awards.................11 Parent Review Period.................42
Company Stock Option..................3 person...............................45
Company Stockholder Approval.........21 Principal Stockholder.................1
Company Superior Proposal............33 Principal Stockholder Consent.........1
Confidentiality Agreement............31 Qualifying Transaction...............44
control..............................45 Regulatory Law.......................36
Data Room............................27 Representatives......................31
Defaulting Party.....................44 SEC..................................12
Delaware Court.......................46 Subsequent Company SEC Documents.....12
DGCL..................................1 Subsidiary...........................45
Dissenting Shares.....................5 Superior Proposal Notice.............42
EC Merger Regulation.................36 Surviving Company.....................1
Effective Time........................2 Tax Authority........................19
Environmental Laws...................22 Tax Return...........................19
Equity Commitments...................25 Taxes................................19
ERISA................................14 Termination Date.....................42
ERISA Affiliate......................16 Treasury Regulations.................19
Exchange Act.........................12 WARN.................................20
Financing Agreements.................25 Warrant Agreements....................4
Foreign Benefit Plan.................16 Warrants..............................4
GAAP..................................9 Warrants Consideration................4
Governmental Entity..................12 Written Consent and Voting Agreement..1
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AGREEMENT AND PLAN OF MERGER, dated as of July 5, 2007 (the "AGREEMENT"),
among Cameron 1 S.a.r.l., a Luxembourg corporation ("PARENT"), Cameron
Acquisitions Corporation, a Delaware corporation and a wholly-owned Subsidiary
of Parent ("MERGER Sub"), and Samsonite Corporation, a Delaware corporation
(the "COMPANY").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company have approved and declared advisable this Agreement and the merger of
Merger Sub with and into the Company (the "MERGER") upon the terms and subject
to the conditions set forth in this Agreement and in accordance with the
Delaware General Corporation Law (the "DGCL"); and
WHEREAS, concurrent with the execution of this Agreement, as an inducement
to Parent's willingness to enter into this Agreement and incur the obligations
set forth herein, certain of the Company's stockholders, who beneficially or of
record hold an aggregate of approximately 85% of the outstanding shares of
Company Common Stock (each, a "PRINCIPAL STOCKHOLDER"), have entered into a
Written Consent and Voting Agreement, dated as of the date hereof, with Parent
(the "WRITTEN CONSENT AND VOTING AGREEMENT"), pursuant to which, upon the terms
set forth therein, such stockholders have agreed to take specified actions in
furtherance of the Merger, including executing and delivering written consents
(each, a "PRINCIPAL STOCKHOLDER CONSENT") under Section 288 of the DGCL
pursuant to which this Agreement and the Merger are adopted in accordance with
Section 251(c) of the DGCL immediately following the execution and delivery of
this Agreement.
NOW THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements contained herein, and intending to be
legally bound hereby, Parent, Merger Sub and the Company agree as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. Upon the terms and subject to the conditions
set forth in this Agreement and in accordance with the DGCL, Merger Sub shall
be merged with and into the Company at the Effective Time. Following the
Merger, the separate corporate existence of Merger Sub shall cease, and the
Company shall continue as the surviving company (the "SURVIVING COMPANY") and
shall succeed to and assume all the rights and obligations of the Company in
accordance with the DGCL.
Section 1.2 CLOSING. The closing of the Merger (the "CLOSING") shall
take place at 10:00 a.m., local time in Delaware, on a date to be specified by
the parties (the "CLOSING DATE") which shall be no later than sixth business
days after the satisfaction or waiver (to the extent permitted by applicable
Law) of the conditions set forth in ARTICLE VI (other than those that, by their
terms, are to be satisfied by action at the Closing, but subject to such
satisfaction or waiver) at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ and
▇▇▇▇ (UK) LLP, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇.
Section 1.3 EFFECTIVE TIME. On the Closing Date, the parties shall
execute and file in the office of the Secretary of State of the State of
Delaware a certificate of merger, in such form as required by, and executed in
accordance with, the relevant provisions of the DGCL, a form of which is
attached hereto as EXHIBIT A (the "CERTIFICATE OF MERGER"). The Merger shall
become effective at the time of filing of the Certificate of Merger, or at such
later time as is agreed upon by the parties hereto and set forth therein (such
time as the Merger becomes effective is referred to herein as the "EFFECTIVE
TIME").
Section 1.4 EFFECTS OF THE MERGER. At the Effective Time, the effect
of the Merger shall be as provided in this Agreement and the applicable
provisions of the DGCL.
Section 1.5 CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE SURVIVING
COMPANY. Subject to SECTION 5.12, at the Effective Time, (a) the certificate of
incorporation of the Surviving Company shall be amended to read in its entirety
as the certificate of incorporation of Merger Sub read immediately prior to the
Effective Time, except that the name of the Surviving Company shall be
"Samsonite Corporation", and (b) the by-laws of the Surviving Company shall be
amended so as to read in their entirety as the by-laws of Merger Sub as in
effect immediately prior to the Effective Time, until thereafter amended in
accordance with applicable Law, except that the references to Merger Sub's name
shall be replaced by references to "Samsonite Corporation".
Section 1.6 DIRECTORS AND OFFICERS. The Board of Directors of Merger
Sub immediately prior to the Effective Time shall be the initial Board of
Directors of the Surviving Company, and the officers of the Company immediately
prior to the Effective Time shall be the initial officers of the Surviving
Company.
ARTICLE II
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES
Section 2.1 EFFECT ON STOCK. At the Effective Time, by virtue of the
Merger and without any action on the part of the Company, Merger Sub or the
holders of any securities of the Company or Merger Sub:
(a) CONVERSION OF COMPANY COMMON STOCK. Subject to SECTION 2.1(f)
and SECTION 2.1(g), each issued and outstanding share of common stock, par
value $0.01 per share ("COMPANY COMMON STOCK"), of the Company (other than
shares to be canceled in accordance with SECTION 2.1(b) and any Dissenting
Shares (to the extent provided in SECTION 2.1(g)) shall thereupon be converted
into and shall thereafter represent the right to receive an amount in cash
equal to $1.49, without interest (the "MERGER CONSIDERATION").
(b) COMPANY STOCK OPTIONS.
(i) Each unexercised option to purchase or acquire shares of
Company Common Stock under the Option Plans (each such option, a "COMPANY
2
STOCK OPTION"), including unvested Company Stock Options, shall, by virtue
of the Merger and without any action on the part of Parent, Merger Sub or
the Company or the holder thereof, be canceled, and, (A) in the case of a
Company Stock Option having a per share exercise price less than the
Merger Consideration, such option shall be converted into the right to
receive from the Surviving Company an amount (subject to any applicable
withholding tax) in cash equal to the product of (x) the number of shares
of Company Common Stock subject to such Company Stock Option immediately
prior to the Effective Time and (y) the amount by which the Merger
Consideration exceeds the per share exercise price of such Company Stock
Option, and (B) in the case of a Company Stock Option having a per share
exercise price (the "OPTIONS CONSIDERATION") equal to or greater than the
Merger Consideration, such option shall be canceled without the payment of
cash or issuance of other securities in respect thereof. The cancellation
of a Company Stock Option as provided in the immediately preceding
sentence shall be deemed a release of any and all rights the holder
thereof had or may have had in respect of such Company Stock Option. The
Company shall take such actions as may be necessary to accelerate the
vesting of all Company Stock Options that are not vested Company Stock
Options as of the Effective Time.
(ii) All payments with respect to canceled Company Stock
Options shall be made by the Paying Agent (and Parent and the Surviving
Company shall cause Paying Agent to make such payments) as promptly as
practicable after the Effective Time from the Exchange Fund. Such payments
shall be accompanied by a letter from the Paying Agent explaining how the
payment amounts with respect to the canceled Company Stock Options were
determined.
(iii) Prior to the Effective Time, the Company shall take such
actions as may be necessary (to the extent permitted under applicable Law)
to cause any transactions contemplated by this SECTION 2.1(b) by each
individual who is subject to the reporting requirements of Section 16(a)
of the Exchange Act with respect to the Company to be exempt under Rule
16b-3 promulgated under the Exchange Act.
(iv) (A) The Option Plans shall terminate as of the Effective
Time and all rights in and the provisions of any other plan, program or
arrangement providing for the issuance or grant of any other interest in
respect of the capital stock of the Company or any Subsidiary thereof
shall be canceled as of the Effective Time and (B) the Company shall adopt
such resolutions and take such other commercially reasonable actions such
that following the Effective Time no participant in the Option Plans or
other plans, programs or arrangements shall have any right thereunder to
acquire any equity securities of the Company, the Surviving Company or any
Subsidiary thereof. No additional Company Stock Options or other equity
based awards shall be granted pursuant to the Option Plans or otherwise
after the date hereof.
(v) Prior to the Effective Time, the Company shall deliver
to the holders of Company Stock Options a letter describing the treatment
3
and payment for such Company Stock Options pursuant to this SECTION 2.1
and providing instructions for obtaining such payment.
(vi) The Board of Directors of the Company shall adopt such
resolutions and take such other commercially reasonable actions as may be
required or appropriate such that, upon the Effective Time, each Company
Stock Option and Option Plan is treated in accordance with this SECTION
2.1.
(c) WARRANTS. The warrants (the "WARRANTS") issued pursuant to the
Amended and Restated Warrant Agreement between Ares Leveraged Investment Fund,
L.P. and the Company (the "ARES WARRANT AGREEMENT") and the Warrant Agreement,
dated as of June 24, 2008, between the Company and Bank Boston, N.A., as
amended (the "BANK BOSTON WARRANT AGREEMENT," and together with the Ares
Warrant Agreement, the "WARRANT AGREEMENTS") shall be canceled and converted
into the right to receive an amount (subject to any applicable withholding tax)
in cash equal to the product of (i) the number of shares of Company Common
Stock subject to such Warrants immediately prior to the Effective Time and (ii)
the amount, if any, by which the Merger Consideration exceeds the per share
exercise price of such Warrants (the "WARRANTS CONSIDERATION"). All payments
with respect to the Warrants shall be made by the Paying Agent (and Parent and
the Surviving Company shall cause the Paying Agent to make such payments) as
promptly as reasonably possible after the Effective Time from the Exchange
Fund. Prior to the Effective Time, the Company shall deliver to the holders of
the Warrants notices setting forth such holders' rights pursuant to this
Agreement. As soon as reasonably practicable after the Effective Time, Parent
shall cause the Paying Agent to mail to each holder of Warrants a letter of
transmittal and instructions for use in obtaining the value of the Warrants as
contemplated by this SECTION 2.1(C).
(d) TREASURY SHARES; PARENT- AND MERGER SUB-OWNED SHARES. Each
share of Company Common Stock held in treasury of the Company and each share of
Company Common Stock that is owned by Parent or Merger Sub immediately prior to
the Effective Time shall automatically be canceled and retired and shall cease
to exist, and no consideration shall be delivered in exchange therefor.
(e) CONVERSION OF MERGER SUB COMMON STOCK. Each issued and
outstanding share of the common stock, par value of $0.01 per share, of Merger
Sub issued and outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and non-assessable share of common
stock, par value of $0.01 per share, of the Surviving Company.
(f) ADJUSTMENTS. If at any time during the period between the date
of this Agreement and the Effective Time, any change in the outstanding shares
of capital stock of the Company shall occur as a result of any
reclassification, recapitalization, stock split (including a reverse stock
split) or combination, exchange or readjustment of shares, or any stock
dividend or stock distribution with a record date during such period, the
Merger Consideration shall be equitably adjusted; PROVIDED, HOWEVER, that
nothing contained herein shall be deemed to permit any action that the Company
is otherwise prohibited from taking pursuant to this Agreement.
4
(g) DISSENTING SHARES.
(i) Notwithstanding any provision of this Agreement to the
contrary, other than SECTION 2.1(g)(ii), any shares of Company Common
Stock held by a holder who has properly exercised appraisal rights for
such shares pursuant to Section 262 of the DGCL and who, as of the
Effective Time, has not effectively withdrawn or lost or failed to perfect
such appraisal rights ("DISSENTING SHARES"), shall not be converted into
or represent a right to receive Merger Consideration pursuant to SECTION
2.1(A), but instead shall be converted into the right to receive only such
consideration as may be determined to be due with respect to such
Dissenting Shares under the DGCL. From and after the Effective Time, a
holder of Dissenting Shares shall not be entitled to exercise any of the
voting rights or other rights of an equity owner of the Surviving Company
or of a stockholder of Parent.
(ii) Notwithstanding the provisions of SECTION 2.1(g)(i), if
any holder of shares of Company Common Stock who demands appraisal for
such shares in accordance with the DGCL shall effectively withdraw or lose
(through failure to perfect or otherwise) the right to dissent, then, as
of the later of the Effective Time and the occurrence of such event, such
holder's shares shall no longer be Dissenting Shares and shall
automatically be converted into and represent only the right to receive
Merger Consideration as set forth in SECTION 2.1(a) of this Agreement,
without any interest thereon.
(iii) The Company shall give Parent (A) prompt notice of any
written demands for appraisal rights of any shares of Company Common
Stock, withdrawals of such demands, and any other instruments served
pursuant to the DGCL and received by the Company which relate to any such
demand for appraisal rights and (B) the opportunity to participate in all
negotiations and proceedings which take place prior to the Effective Time
with respect to demands for appraisal rights under the DGCL. The Company
shall not, except with the prior written consent of Parent, make any
payment with respect to any demands for appraisal rights of Company Common
Stock or offer to settle or settle any such demands.
Section 2.2 SURRENDER AND PAYMENT
(a) PAYING AGENT. Prior to the Effective Time, Parent shall
designate, or shall cause to be designated (pursuant to an agreement in form
and substance reasonably acceptable to the Company), a bank or trust company
that is reasonably satisfactory to the Company to act as agent for the holders
of Company Common Stock and holders of the Company Stock Options and Warrants
in connection with the Merger (the "PAYING AGENT") and to receive the payment
of the Merger Consideration, the Options Consideration and the Warrants
Consideration, respectively, to which such holders shall become entitled
Pursuant to this ARTICLE II. At the Closing, Parent shall deposit with the
Paying Agent, for the benefit of the stockholders, Options holders and Warrant
holders of the Company, cash in an amount sufficient for the payment of the
aggregate Merger Consideration payable pursuant to this ARTICLE II (assuming no
Dissenting Shares) in respect of all shares of Company Common Stock outstanding
as of the Effective Time, the aggregate Options Consideration payable pursuant
to SECTION 2.1(b) and the aggregate Warrants Consideration payable pursuant to
SECTION 2.1(c) (the "EXCHANGE FUND"). The Paying Agent shall, pursuant to
irrevocable instructions, deliver the Merger Consideration payable pursuant to
5
this ARTICLE II, the Options Consideration payable pursuant to SECTION 2.1(b)
and the Warrants Consideration payable pursuant to SECTION 2.1(c) in each case,
out of the Exchange Fund.
(b) EXCHANGE PROCEDURES.
(i) Within one business day following the Effective Time,
the Paying Agent shall mail:
(1) to each record holder, as of immediately prior to
the Effective Time, of (1) an outstanding certificate or certificates
which immediately prior to the Effective Time represented shares of
Company Common Stock (the "CERTIFICATES") or (2) shares of Company
Common Stock represented by book-entry ("BOOK-ENTRY SHARES"), a
customary letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the
Paying Agent or, in the case of Book-Entry Shares, upon adherence to
the procedures set forth in the letter of transmittal, and which shall
be in a customary form and agreed to by Parent and the Company prior
to the Closing) and instructions for use in effecting the surrender of
the Certificates or, in the case of Book-Entry Shares, the surrender
of such shares, for payment of the Merger Consideration set forth in
SECTION 2.1(a);
(2) to each holder of a Company Stock Option as of
the Effective Time (1) a letter describing the treatment and payment
for such Company Stock Option, and (2) instructions for effecting the
surrender of such Company Stock Option in exchange for the Options
Consideration set forth in SECTION 2.1(b);
(3) To each holder of a Warrants as of the Effective
Time (1) a customary letter of transmittal and (2) instructions for
use in effecting the surrender of the Warrants in exchange for payment
of the Warrants Consideration set forth in SECTION 2.1(c); and
(ii) Each former stockholder of the Company, upon surrender
to the Paying Agent of a Certificate or Book-Entry Shares together with a
letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as may customarily
be required by the Paying Agent, shall be entitled to receive by check or,
if such amount is in excess of $500,000, by wire transfer or delivery of
other immediately available funds, an amount of U.S. dollars (after giving
effect to any required withholdings pursuant this SECTION 2.2(c)) equal to
the amount of Merger Consideration into which such holder's shares of
Company Common Stock represented by such holder's properly surrendered
Certificates or Book-Entry Shares were converted in accordance with this
ARTICLE II. Parent or the Paying Agent shall be entitled to deduct and
withhold from the consideration otherwise payable under this Agreement to
any holder of Company Common Stock such amounts as Parent or the Paying
Agent are required to withhold or deduct under the Internal Revenue Code
6
of 1986, as amended (the "CODE"), or any provision of state, local or
foreign Tax law with respect to the making of such payment. To the extent
that amounts are so withheld by Parent or the Paying Agent, such withheld
amounts shall be treated for all purposes of this Agreement as having been
paid to the holder of the Company Common Stock in respect of whom such
deduction and withholding were made by Parent or the Paying Agent. Until
surrendered as contemplated by this SECTION 2.2, each Certificate or
Book-Entry Share shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the Merger
Consideration as contemplated by this ARTICLE II. No interest will be paid
or will accrue on any cash payable to holders of Certificates or
Book-Entry Shares under the provisions of this ARTICLE II.
(iii) Upon cancellation of a Company Stock Option, together
with the delivery of the Option Surrender Agreement, duly executed, and
any other documents reasonably required by the Surviving Company or the
Paying Agent, the holder of the Company Stock Option shall be entitled to
receive in exchange therefor the amount of cash which such holder has the
right to receive pursuant to the provisions of SECTION 2.1(b)(i).
(iv) Upon cancellation of a Warrant, together with the
delivery of the letter of transmittal, duly executed, and any other
documents reasonably required by the Surviving Company or the Paying
Agent, the holder of the Warrant shall be entitled to receive in exchange
therefor the amount of cash which such holder has the right to receive
pursuant to the provisions of SECTION 2.1(c).
(c) TERMINATION OF RIGHTS.
(i) The Merger Consideration paid in accordance with the
terms of this ARTICLE II shall be deemed payment in full satisfaction of
all rights pertaining to the shares of Company Common Stock previously
represented by such Certificates or Book Entry Shares, SUBJECT, HOWEVER,
to the Surviving Company's obligation to pay any dividends or make any
other distributions with a record date prior to the Effective Time which
may have been authorized or made by the Company on such shares of Company
Common Stock in compliance with SECTION 5.1(d)(i) which remain unpaid at
the Effective Time.
(ii) The cancellation of a Company Stock Option in exchange
for the Options Consideration shall be deemed a release of any and all
rights the holder had or may have had in respect of such Company Stock
Option.
(iii) The cancellation of a Warrant in exchange for the
Warrants Consideration shall be deemed a release of any and all rights the
holder had or may have had in respect of such Warrant.
(d) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. The Merger
Consideration paid in accordance with the terms of this ARTICLE II shall be
deemed payment in full satisfaction of all rights pertaining to the shares of
Company Common Stock previously represented by such Certificates or Book Entry
7
Shares, SUBJECT, HOWEVER, to the Surviving Company's obligation to pay any
dividends or make any other distributions with a record date prior to the
Effective Time which may have been authorized or made by the Company on such
shares of Company Common Stock which remain unpaid at the Effective Time.
(e) TERMINATION OF PAYMENT FUND. Any portion of the Exchange Fund
which remains undistributed to the holders of the Certificates for nine (9)
months after the Effective Time shall be delivered to Parent upon demand, and
any holders of the Certificates or Book Entry Shares, Company Stock Options or
Warrants who have not theretofore complied with this ARTICLE II shall
thereafter look only to the Surviving Company for payment of their claim for
Merger Consideration, Options Consideration or Warrants Consideration,
respectively.
(f) CLOSING OF TRANSFER BOOKS. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers on the transfer books of the Surviving Company of the
Company Common Stock which were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates or Book Entry Shares are
presented to the Surviving Company or the Paying Agent for any reason, they
shall be canceled and exchanged as provided in this ARTICLE II, except as
otherwise provided by Law.
(g) NO LIABILITY. None of the Company, Parent, Merger Sub, the
Surviving Company or the Paying Agent shall be liable to any person in respect
of cash from the Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar Law. If any Certificate, Book
Entry Share, Company Stock Option or Warrant shall not have been surrendered
prior to such date on which any Merger Consideration, Options Consideration or
Warrants Consideration in respect of such Certificate, Book Entry Share,
Company Stock Option or Warrant would otherwise escheat to or become the
property of any Governmental Entity, any such shares, cash, dividends or
distributions in respect of such Certificate, Book Entry Share, Company Stock
Option or Warrant shall, to the extent permitted by applicable Law, become the
property of the Surviving Company, and any holders of the Certificates, Book
Entry Share, Company Stock Option or Warrant who have not theretofore complied
with this ARTICLE II shall thereafter look only to the Surviving Company for
payment of their claim for Merger Consideration, Options Consideration or
Warrants Consideration.
(h) INVESTMENT OF EXCHANGE FUND. Parent shall cause the Paying
Agent to invest the funds deposited with the Paying Agent in accordance with
SECTION 2.2(a) in a money market fund registered under the Investment Company
Act of 1940, as amended, the principal of which is invested solely in
obligations issued or guaranteed by the U.S. Government and repurchase
agreements in respect of such obligations. Any interest and other income
resulting from such investment shall be the property of, and shall be paid to,
Parent. Any losses resulting from such investment shall not in any way diminish
Parent's and Merger Sub's payment obligation under SECTION 2.1(a), (b) AND (c).
(i) LOST CERTIFICATES. In the case of any Certificate that has been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Paying Agent, the posting by such person of a bond in customary
8
amount as indemnity against any claim that may be made against it with respect
to such Certificate, the Paying Agent will issue in exchange for such lost,
stolen or destroyed Certificate the Merger Consideration.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the Company SEC Documents or in the corresponding
section of the disclosure schedule delivered by the Company to Parent
immediately prior to the execution of this Agreement (the "COMPANY DISCLOSURE
SCHEDULE") (it being agreed that disclosure of any item in any section of the
Company Disclosure Schedule shall be deemed disclosure with respect to any
other section of this Agreement to which the relevance of such item is
reasonably apparent from the face of such disclosure), the Company represents
and warrants to Parent and Merger Sub as follows:
Section 3.1 QUALIFICATION, ORGANIZATION, ETC.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has the
corporate power and authority to own its properties and assets and to carry on
its business as it is now being conducted. The Company is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the ownership of its properties and assets or the conduct of its business
requires such qualification, except for jurisdictions in which the failure to
be so qualified, licensed or in good standing has not had, and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. As used in this Agreement, any reference to a "MATERIAL ADVERSE
EFFECT" means any state of facts, event, circumstance, change or effect that
has had a material adverse effect on the business, results of operations or
financial condition of the Company and its Subsidiaries, taken as a whole, but
shall not include any state of facts, events, circumstances, changes or effects
(i) (A) generally affecting air travel, the travel industry or any other
industry in the United States or in other countries in which the Company or its
Subsidiaries conduct business, including regulatory and political developments,
so long as such state of facts, events, circumstances, changes or effects do
not have a materially disproportionate effect on the Company and its
Subsidiaries as compared to other companies in the industries in which the
Company and its Subsidiaries operate, (B) generally affecting the economic,
political or financial market conditions in the United States or in other
countries in which the Company or its Subsidiaries conduct business, including
changes in interest or exchange rates, so long as such state of facts, events,
circumstances, changes or effects do not have a materially disproportionate
effect on the Company and its Subsidiaries as compared to other companies in
the industries in which the Company and its Subsidiaries operate, (C) resulting
from ordinary seasonal fluctuation affecting the Company or its Subsidiaries,
(D) resulting from changes in U.S. generally accepted accounting principles
("GAAP") or the accounting rules and regulations of the SEC, (E) resulting from
any acts of God, any acts of terrorism, war or hostilities, so long as such
state of facts, events, circumstances, changes or effects do not have a
materially disproportionate effect on the Company and its Subsidiaries as
compared to other companies in the industries in which the Company and its
Subsidiaries operate, (F) resulting from any action taken by Parent or its
affiliates with respect to the transactions contemplated hereby, (G) resulting
9
from any failure to meet internal or published projections, estimates or
forecasts of revenues, earning, or other measures of financial or operating
performance for any period (PROVIDED, that the underlying causes of such
failures (subject to the other provisions of this definition) shall not be
excluded) or (I) resulting from any matter reserved for in the consolidated
financial statements included in the Company SEC Documents, (ii) resulting from
the negotiation or announcement of this Agreement and the transactions
contemplated hereby, including any such state of facts, events, circumstances,
change or effect that adversely affects the Company's and/or its Subsidiaries'
relationships with its customers or suppliers, or (iii) resulting from actions
taken by the Company and its Subsidiaries with the consent of Parent either by
virtue of their inclusion in SECTION 5.1 of the Company Disclosure Schedule or
in writing following the date hereof pursuant to SECTION 5.1(d) of this
Agreement. The copies of the Company's certificate of incorporation and by-laws
which have been delivered or made available to Parent are complete and correct
copies thereof, each as amended through the date hereof. The Company is not in
violation of any provision of its certificate of incorporation or by-laws.
(b) Except as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, each of the
Company's Subsidiaries is a corporation, partnership or other entity duly
organized, validly existing and, if applicable, in good standing under the laws
of its jurisdiction of incorporation or organization, has the power and
authority to own its properties and to carry on its business as it is now being
conducted, and is duly qualified or licensed to do business and, if applicable,
is in good standing in each jurisdiction in which the ownership of its property
or the conduct of its business requires such qualification.
Section 3.2 CAPITAL STOCK.
(a) The authorized capital stock of the Company consists of
1,000,000,000 shares of Company Common Stock and 10,000,000 shares of preferred
stock, par value $0.01 per share ("COMPANY PREFERRED STOCK"). As of July 1,
2007, (i) 742,430,474 shares of Company Common Stock were issued and
outstanding, (ii) options and other awards to acquire an aggregate of
71,637,140 shares of Company Common Stock were outstanding under the Company's
1995 Stock Option and Incentive Award Plan and FY 1999 Stock Option and
Incentive Award Plan (the "OPTION PLANS"), (iii) 15,515,892 shares of Company
Common Stock were reserved for issuance pursuant to the Ares Warrant Agreement,
(iv) 1,061,012 shares of Company Common Stock were reserved for issuance
pursuant to the Bank Boston Warrant Agreement, and (v) no shares of Company
Preferred Stock were issued or outstanding. All the outstanding shares of
Company Common Stock are, and all shares of Company Common Stock reserved for
issuance as noted in clauses (ii), (iii) and (iv) above, shall be, when issued
in accordance with the Option Plans or Warrant Agreements, as applicable, duly
authorized, validly issued and fully paid and non-assessable and free of
pre-emptive rights. Neither the Company nor any of its Subsidiaries directly or
indirectly owns any shares of Company Common Stock.
(b) Except as set forth in SECTION 3.2(a), as of the date hereof:
(i) the Company does not have any shares of its capital stock issued or
outstanding other than shares of Company Common Stock that have become
outstanding after April 30, 2007, but were reserved for issuance as set forth
in SECTION 3.2(a), and (ii) subject to immaterial exceptions with respect to
the Company's Subsidiaries, there are no outstanding subscriptions, options,
warrants, calls, convertible securities, rights of first refusal, preemptive
10
rights, or other similar rights, agreements or commitments relating to the
issuance of capital stock to which the Company or any of its Subsidiaries is a
party obligating the Company or any of its Subsidiaries to (A) issue, transfer
or sell any shares of capital stock or other equity interests of the Company or
any Subsidiary of the Company or securities convertible into or exchangeable
for such shares or equity interests; (B) grant, extend or enter into any such
subscription, option, warrant, call, convertible securities or other similar
right, agreement, arrangement or commitment to repurchase; (C) redeem or
otherwise acquire any such shares of capital stock or other equity interests;
or (D) provide an amount of funds to, or make any investment (in the form of a
loan, capital contribution or otherwise) in, any Subsidiary of the Company.
(c) SECTION 3.2(c) OF THE COMPANY DISCLOSURE SCHEDULE sets forth a
true, complete and correct list of all persons who, as of June 30, 2007 held
outstanding awards to acquire shares of Company Common Stock (the "COMPANY
STOCK AWARDS") under the Option Plans, indicating, with respect to each Company
Stock Award then outstanding, the type of award granted, the number of shares
of Company Common Stock subject to such Company Stock Award, the exercise
price, date of grant and vesting schedule thereof.
(d) Neither the Company nor any of its Subsidiaries has outstanding
bonds, debentures, notes or other obligations, the holders of which have the
right to vote (or which are convertible into or exercisable for securities
having the right to vote) with the stockholders of the Company or such
Subsidiary on any matter.
(e) Except for the stockholders agreements filed as exhibits to the
Company's most recent Annual Report on Form 10-K, there are no voting trusts or
other agreements or understandings to which the Company or any of its
Subsidiaries is a party with respect to the voting of the capital stock or
other equity interest of the Company or any of its Subsidiaries.
Section 3.3 CORPORATE AUTHORITY RELATIVE TO THIS AGREEMENT;
NO VIOLATION.
(a) The Company has requisite corporate power and authority to
enter into this Agreement and, subject to receipt of the Company Stockholder
Approval, to consummate the transactions contemplated hereby, including the
Merger. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of the Company and, except for the (i) Company
Stockholder Approval and (ii) the filing of the Certificate of Merger with the
Secretary of State of Delaware, no other corporate proceedings on the part of
the Company are necessary to authorize the consummation of the transactions
contemplated hereby. The Board of Directors of the Company has determined that
the transactions contemplated by this Agreement are fair to and in the best
interest of the Company and its stockholders and to recommend to such
stockholders that they adopt this Agreement. This Agreement has been duly and
validly executed and delivered by the Company and, assuming this Agreement
constitutes a valid and binding agreement of the other parties hereto,
constitutes a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms (except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency,
11
reorganization or other Laws affecting the enforcement of creditors' rights
generally or by principles governing the availability of equitable remedies).
(b) Other than in connection with or in compliance with (i) the
provisions of the DGCL, (ii) the Securities Exchange Act of ▇▇▇▇ (▇▇▇ "▇▇▇▇▇▇▇▇
▇▇▇"), (▇▇▇) the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇
▇▇▇"), (▇▇) any applicable non-U.S. competition, antitrust and investment Laws
and (vi) the approvals set forth on SECTION 3.3(b) OF THE COMPANY DISCLOSURE
SCHEDULE (collectively, the "COMPANY APPROVALS"), no authorization, consent or
approval of, or filing with, any U.S. or foreign governmental or regulatory
agency, commission, court, body, entity or authority (each a "GOVERNMENTAL
ENTITY") is necessary for the consummation by the Company of the transactions
contemplated by this Agreement, except for such authorizations, consents,
approvals or filings that, if not obtained or made, would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
or significantly impair or delay the consummation of the transactions
contemplated hereby.
(c) Subject to the receipt of the Company Approvals, the execution
and delivery by the Company of this Agreement does not, and the consummation of
the transactions contemplated hereby and compliance with the provisions hereof
will not (i) result in any violation of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to the loss of a material
benefit under any loan, guarantee of indebtedness, credit agreement, note,
bond, mortgage, indenture, lease, agreement, contract, instrument, permit,
concession, franchise, right or license binding upon the Company or any of its
Subsidiaries or result in the creation of any liens, mortgages, encumbrances,
pledges, security interests, equities or charges of any kind (each, a "LIEN")
upon any of the properties or assets of the Company or any of its Subsidiaries,
(ii) conflict with or result in any violation of any provision of the
certificate of incorporation or by-laws, in each case as amended, of the
Company, (iii) materially conflict with or result in a material violation of
any provision of the certificate of incorporation or by-laws or other
equivalent organizational document, in each case as amended, of any of the
Company's Subsidiaries or (iv) conflict with or violate any Laws applicable to
the Company or any of its Subsidiaries or any of their respective properties or
assets, other than, in the case of clauses (i) and (iv), any such violation,
conflict, default, right, loss or Lien that has not had, and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
Section 3.4 REPORTS AND FINANCIAL STATEMENTS.
(a) The Company has filed all forms, documents and reports required
to be filed prior to the date hereof by it under the Exchange Act with the U.S.
Securities and Exchange Commission (the "SEC") since January 31, 2006 (together
with the most recently filed S-1 Registration Statement of the Company, the
"COMPANY SEC DOCUMENTS"). As of their respective dates, or, if amended, as of
the date of the last such amendment, the Company SEC Documents complied in all
material respects, and all documents required to be filed by the Company under
the Exchange Act with the SEC after the date hereof and prior to the Effective
Time (the "SUBSEQUENT COMPANY SEC DOCUMENTS") will comply in all material
respects, with the requirements of the Exchange Act and the applicable rules
and regulations promulgated thereunder.
12
(b) The consolidated financial statements (including all related
notes and schedules) of the Company included in the Company SEC Documents
fairly present in all material respects, and included in the Subsequent Company
SEC Documents will fairly present in all material respects, the consolidated
financial position of the Company and its consolidated Subsidiaries, as at the
respective dates thereof and the consolidated results of their operations and
their consolidated cash flows for the respective periods then ended (subject,
in the case of the unaudited statements, to normal period-end review or audit
adjustments) in conformity with GAAP (except, in the case of the unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated therein or in the notes
thereto). Since January 31, 2007, the Company has not made any material change
in the accounting practices or policies applied in the preparation of its
financial statements, except as required by GAAP, SEC rule or policy or
applicable Law.
(c) As of January 31, 2007, the Company's principal executive
officer and its principal financial officer have (i) devised and maintained a
system of internal control over financial reporting sufficient to provide
reasonable assurances regarding the reliability of financial reporting and the
preparation of financial statements in accordance with GAAP and the rules and
regulations under the Exchange Act, and (ii) disclosed to the Company's
auditors and the audit committee of the Board of Directors of the Company (A)
all significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting which are reasonably likely to
adversely affect the Company's or any of its Subsidiaries' ability to record,
process, summarize and report financial information and (B) any fraud of which
the Company has knowledge, whether or not material, that involves management or
other employees who have a significant role in the Company's internal control
over financial reporting. The Company maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act);
to the Company's knowledge, such disclosure controls and procedures are
designed to ensure that material information relating to the Company and its
Subsidiaries required to be included in the Company's periodic reports under
the Exchange Act, is made known to the Company's principal executive officer
and its principal financial officer by others within the Company or any of its
Subsidiaries, and, to the Company's knowledge, such disclosure controls and
procedures are effective in timely alerting the Company's principal executive
officer and its principal financial officer to such material information
required to be included in the Company's periodic reports required under the
Exchange Act.
Section 3.5 NO UNDISCLOSED LIABILITIES. Except (a) as disclosed,
reflected or reserved against in the Company's consolidated financial
statements (or the notes thereto) included in the Company SEC Documents, (b)
for liabilities and obligations incurred in the ordinary course of business
since January 31, 2007, (c) liabilities or obligations which have been
discharged or paid in full in the ordinary course of business, (d) liabilities
directly or indirectly related to the exploration of strategic alternatives or
the public equity offering referred to in the Company SEC Documents, and (e)
other liabilities and obligations arising after January 31, 2007, which do not
exceed $5 million in the aggregate, neither the Company, nor any Subsidiary of
the Company, has any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, that would be required by GAAP to be
reflected on a consolidated balance sheet of the Company and its Subsidiaries
(or in the notes thereto).
13
Section 3.6 NO VIOLATION OF LAW; PERMITS.
(a) The Company and each of its Subsidiaries are in compliance with
and are not in default under or in violation of any federal, state, local or
foreign law, statute, ordinance, rule, regulation, judgment, order, injunction,
decree, arbitration award, agency requirement, license or permit of any
Governmental Entity (collectively, "LAWS") applicable to the Company, such
Subsidiaries or any of their respective properties or assets, except where such
non-compliance, default or violation has not had, and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
(b) The Company and its Subsidiaries are in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exceptions, consents, certificates, approvals and orders of any Governmental
Entity necessary for the Company and its Subsidiaries to own, lease and operate
their properties and assets or to carry on their businesses as they are now
being conducted (the "COMPANY PERMITS"), except where the failure to have any
of the Company Permits has not had, and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect. All Company
Permits are in full force and effect, except where the failure to be in full
force and effect has not had, and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
Section 3.7 EMPLOYEE BENEFIT PLANS.
(a) SECTION 3.7(A) OF THE COMPANY DISCLOSURE SCHEDULE lists all
material Company Benefit Plans as of the date hereof (other than those
employment agreements and offer letters providing for an annual base salary of
less than $250,000). "COMPANY BENEFIT PLANS" means all employee benefit plans,
compensation arrangements and other benefit arrangements, whether or not
"employee benefit plans" (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974 ("ERISA")), providing cash- or
equity-based incentives, health, medical, dental, disability, accident or life
insurance benefits or vacation, severance, retirement, pension or savings
benefits, that are sponsored, maintained or contributed to by the Company, any
of its wholly-owned Subsidiaries or any ERISA Affiliate for the benefit of
employees, directors, consultants, officers, former employees, former
consultants, former officers and former directors of the Company or its
wholly-owned Subsidiaries and all employee agreements providing compensation,
vacation, severance or other benefits to any officer, employee, consultant or
former employee of the Company or its wholly-owned Subsidiaries, except to the
extent providing mandatory benefits required by applicable foreign Law.
(b) Any Company Benefit Plan intended to be qualified under Section
401(a) or 401(k) of the Code has received a determination letter from the
Internal Revenue Service to the effect that it is so qualified and exempt from
income tax under Sections 401(a) and 501(a) of the Code, and no event has
occurred which would reasonably be expected to cause the loss, revocation or
denial of such qualified status or any favorable determination letter. Each
Company Benefit Plan has been maintained and administered in compliance with
its terms and applicable Law (including ERISA and the Code to the extent
applicable thereto), except for such non-compliance which has not had, and
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. All employer and employee contributions to each
Company Benefit Plan required by Law or by the terms of such Company Benefit
Plan have been made, except for such contributions the failure of which to make
14
has not had, and would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect. There are no pending, threatened or
anticipated claims by or on behalf of any Company Benefit Plan, by any employee
or beneficiary covered under any Company Benefit Plan, or otherwise involving
any Company Benefit Plan (other than routine claims for benefits) except for
any such claims which have not had, and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries has incurred any liability or penalty under
Section 4975 of the Code or Section 502(i) of ERISA which would be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect
or has engaged in any transaction which is reasonably likely to result in any
liability or penalty which would be reasonably expected to have, individually
or in the aggregate, a Material Adverse Effect. Except as would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect, there have been no non-exempt prohibited transactions (as defined in
Section 406 of ERISA and Code Section 4975) with respect to any Company Benefit
Plan, no fiduciary has any liability for breach of fiduciary duty or any other
failure to act or comply in connection with the administration or investment of
the assets of any such plan, and no material action, suit, proceeding, hearing
or investigation with respect to the administration or the investment of the
assets of such plan (other than routine claims for benefits) is pending or
threatened in writing.
(c) No Company Benefit Plan is subject to Section 302 or Title IV
of ERISA or Section 412 of the Code. No Company Benefit Plan is a
"multiemployer plan," as such term is defined in Section 3(37) of ERISA, or a
"multiple employer plan" as such term is defined in Section 413 of the Code. No
liability under Title IV or Section 302 of ERISA has been incurred by the
Company or any ERISA Affiliate that has not been satisfied in full, and no
condition exists that presents a material risk to the Company or any ERISA
Affiliate of incurring any such liability, other than liability for premiums
due the Pension Benefit Guaranty Corporation (which premiums have been paid
when due).
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated by this Agreement will, either
alone or in combination with another event (A) entitle any current or former
employee, consultant, director or officer of the Company or any its
Subsidiaries to severance pay, unemployment compensation or any other
compensatory benefit or payment, except as required by applicable Law, (B)
accelerate the time of payment or vesting, or increase the amount of
compensation due any such employee, consultant, director or officer, (C) result
in the payment of any amount that could, individually or in combination with
any other such payment, constitute an "excess parachute payment," as defined in
Section 280G(b)(1) of the Code, except as would not, individually or in the
aggregate, have a Material Adverse Effect, or (D) result in the triggering or
imposition of any restrictions or limitations on the rights of the Company to
amend or terminate any Company Benefit Plan. No person is entitled to be
compensated (whether by the Company, any of its Subsidiaries, the Surviving
Company or any other person) for excise or other additional Taxes paid pursuant
to Code Section 409A or any similar provision of any state or local Law of the
United States. No person that is a "named executive officer" (as defined in the
Company SEC Documents) is entitled to be compensated (whether by the Company,
any of its Subsidiaries, the Surviving Company or any other person) for excise
or other additional Taxes paid pursuant to Code Section 4999 or any similar
provision of any state or local Law in the United States.
15
(e) Except as required by applicable Law, neither the Company nor
any of its Subsidiaries has any material obligation to provide medical, health,
life insurance or other welfare benefits for currently retired or future
retired or terminated employees, their spouses or their dependents (other than
in accordance with Code Section 4980B), including any such obligations
resulting from transactions contemplated by this Agreement.
(f) Except as would not individually or in the aggregate, have a
Material Adverse Effect, (x) no individual who has performed services for the
Company or any of its Subsidiaries has been improperly excluded from
participation in any Company Benefit Plan and (y) neither the Company nor any
of its Subsidiaries has any direct or indirect liability, whether actual or
contingent, with respect to any misclassification of any person as an
independent contractor rather than as an employee, or with respect to any
employee leased from another employer.
(g) Each "non-qualified deferred compensation plan" (as defined in
Section 409(A)(d)(1) of the Code) has been operated since January 1, 2005 in
good faith compliance with Section 409A of the Code and guidance issued
thereunder, except as would not, individually or in the aggregate, have a
Material Adverse Effect.
(h) To the knowledge of the Company, each Company Benefit Plan that
is not subject to U.S. Law (a "FOREIGN BENEFIT PLAN") that is required by Law
to be registered has been registered and each Foreign Benefit Plan has been
maintained in good standing with applicable regulatory authorities and has been
operated and maintained in all respects in compliance with Law, except for such
failures to register, operate or maintain as have not had, and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
(i) For purposes of this Agreement, "ERISA AFFILIATE" means any
business or entity which is a member of the same "controlled group of
corporations," under "common control" or an "affiliated service group" with the
Company or any of its Subsidiaries within the meanings of Sections 414(b), (c)
or (m) of the Code, or required to be aggregated with the Company or any of its
Subsidiaries under Section 414(o) of the Code, or is under "common control"
with the Company or any of its Subsidiaries, within the meaning of Section
400l(a)(14) of ERISA, or any regulations promulgated or proposed under any of
the foregoing Sections of ERISA and the Code.
Section 3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Other than the
transactions contemplated by this Agreement and as disclosed in the Company SEC
Documents, from January 31, 2007 through the date of this Agreement, (a) the
businesses of the Company and its Subsidiaries have been conducted in the
ordinary course, (b) there has not been any event, occurrence, development or
state of circumstances or facts that has had, or would be reasonably expected
to have, individually or in the aggregate, a Material Adverse Effect and (c)
neither the Company nor any of its Subsidiaries has taken any actions which, if
taken after the date of this Agreement, would be prohibited by Sections 5.1(d)
(i), (v) and (ix).
Section 3.9 INVESTIGATIONS; LITIGATION. There (a) is no investigation
or review pending or threatened in writing by any Governmental Entity with
respect to the Company or any of its Subsidiaries (including with respect to
16
any directors, officers or employees for whom the Company or any of its
Subsidiaries may be liable) which has had or would be reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect; and (b) are
no actions, suits, inquiries, investigations or proceedings pending or
threatened in writing against or affecting the Company, any of its Subsidiaries
or any of their respective assets or properties at law or in equity before, and
there are no orders, judgments or decrees of or before, any Governmental
Entity, in each case, which has had or would be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect.
Section 3.10 INFORMATION STATEMENT; OTHER INFORMATION. None of the
information with respect to the Company or its Subsidiaries to be included in
the Information Statement will, in the case of the Information Statement or any
amendments thereof or supplements thereto, at the time of the mailing of the
Information Statement or any amendments or supplements thereto, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
Information Statement will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations promulgated
thereunder. The Information Statement and other related material to be
distributed to stockholders in connection with the Merger and any schedules
required to be filed with the SEC in connection therewith are collectively
referred to herein as the "INFORMATION STATEMENT."
Section 3.11 TAX MATTERS.
(a) The Company and each of its Subsidiaries have (i) timely filed
(or there has been filed on their behalf) all material Tax Returns required to
be filed by them (taking into account all applicable extensions) with the
appropriate Tax Authority and all such Tax Returns are true, correct and
complete in all material respects, and (ii) fully and timely paid all material
Taxes owed by them except for such Taxes that are being contested in good faith
and for which adequate reserves (as required by GAAP) have been established and
have made adequate provision for any material Taxes that are not yet due and
payable as of the date hereof for all taxable periods, or portions thereof,
ending on or before the date of this Agreement (to the extent required by
GAAP). The Company and its Subsidiaries have made available to Parent copies of
all material Tax Returns, and, to the extent applicable, all material
examination reports and statements of deficiencies for taxable periods for
which the applicable statutory periods of limitations have not expired.
(b) There are no material Liens for Taxes upon any property or
assets of the Company or any of its Subsidiaries except for liens for Taxes not
yet due and payable or for which adequate reserves have been provided in
accordance with GAAP in the most recent financial statements contained in the
Company SEC Documents filed prior to the date of this Agreement.
(c) There is no audit, examination, deficiency, refund litigation,
proposed adjustment or other proceeding by any Tax Authority in progress,
pending or threatened in writing by any Tax Authority with respect to any
material amount of Taxes due from or with respect to the Company or any of its
Subsidiaries. As of the date hereof, none of the Company or any of its
17
Subsidiaries has received notice in writing of any material claim made by a Tax
Authority in a jurisdiction where the Company or any of its Subsidiaries, as
applicable, does not file a Tax Return, that the Company or such Subsidiary is
or may be subject to material taxation by that jurisdiction, other than where
such claim has not been resolved favorably to the Company or such Subsidiary.
All deficiencies for Taxes asserted or assessed in writing against the Company
or any of its Subsidiaries have been fully and timely paid, settled or, to the
extent required, properly reflected in the most recent financial statements
contained in the Company SEC Documents.
(d) There are no outstanding written requests, agreements, consents
or waivers to extend the statutory period of limitations applicable to the
assessment of any material income Taxes or material income Tax deficiencies
against the Company or any of its Subsidiaries and no request for any such
waiver or extension is currently pending.
(e) Neither the Company nor any of its Subsidiaries (x) is a party
to any agreement providing for the allocation, indemnification or sharing of
Taxes other than such an agreement exclusively between or among the Company and
any of its Subsidiaries or joint venture partners to written agreements
provided to Parent in the Data Room, and (y) (A) has been a member of an
affiliated group (or similar state, local or foreign filing group) filing a
consolidated income Tax Return (other than a group the common parent of which
is the Company) or (B) has any liability (including as a result of any
agreement or obligation to reimburse or indemnify) for the Taxes of any other
person (other than the Company or any of its Subsidiaries) under Treasury
Regulation Sections 1.1502-6-1.1502-78 (or any similar provision of state,
local or foreign Tax law), as a transferee or successor, by contract or
otherwise.
(f) Neither the Company nor any of its Subsidiaries has constituted
either a "distributing corporation" or a "controlled corporation" (within the
meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock
qualifying for tax-free treatment under Section 355 of the Code (i) in the two
years prior to the date of this Agreement or (ii) in a distribution that could
otherwise constitute part of a "plan" or "series of related transactions"
(within the meaning of Section 355(e) of the Code) in conjunction with the
transactions contemplated by this Agreement.
(g) The Company and each of its Subsidiaries is in all material
respects in compliance with all applicable Tax withholding and information
reporting requirements under federal, foreign state and local Tax laws and have
properly withheld and timely paid to the appropriate Tax Authority proper and
accurate amounts in all material respects for all periods ending on or before
the Closing Date.
(h) Neither the Company nor any of its Subsidiaries has executed or
entered into a closing agreement under Section 7121 of the Code or any similar
provision of state, local or foreign Laws, and neither the Company nor any of
its Subsidiaries is subject to any private letter ruling of the IRS or
comparable ruling of any other Tax Authority.
(i) There is no contract, plan or arrangement covering any person
that, individually or in the aggregate, could give rise to the payment of any
18
material amount that would not be deductible by Parent, the Company or any of
their respective Subsidiaries by reason of Section 162(m) of the Code.
(j) Neither the Company nor any of its Subsidiaries has entered
into any transaction that constitutes (i) a "listed transaction" within the
meaning of Treasury Regulation Section 1.6011-4(b), (ii) a "confidential tax
shelter" within the meaning of Treasury Regulation ss.301.6111-2(a)(2) or (iii)
a "potentially abusive tax shelter within the meaning of Treasury Regulation
Sections 301.6112-1(b)-4.
(k) There are no actions, audits, or other legal proceedings
pending or threatened in writing against, with respect to or in limitation of
the net operating loss carryforwards of the Company and its Subsidiaries for
U.S. federal income Tax purposes.
(l) None of the Company or any of its Subsidiaries has agreed, or
is required to make, any material adjustment under Section 481(a) of the Code,
and no Governmental Authority has proposed any such adjustment or change in
accounting method.
(m) The Company and its Subsidiaries have not taken any reporting
position on a Tax Return, which reporting position (i) if not sustained would
be reasonably likely, absent disclosure, to give rise to a penalty for
substantial understatement of federal income Tax under Section 6662 of the Code
(or any similar provision of state, local, or foreign Tax law), and (ii) has
not adequately been disclosed on such Tax Return in accordance with Section
6662(d)(2)(B) of the Code (or any similar provision of state, local, or foreign
Tax law).
(n) For purposes of this Agreement: (i) "TAXES" means any and all
federal, state, local, foreign or other taxes of any kind (together with any
and all interest, penalties, additions to tax and additional amounts imposed
with respect thereto) imposed by any Governmental Entity, including taxes on or
with respect to income, alternative minimum, accumulated earnings, personal
holding company, capital, transfer, stamp, franchises, windfall or other
profits, gross receipts, property, sales, use, capital stock, payroll,
employment, unemployment, social security, workers' compensation or net worth,
and taxes in the nature of excise, withholding, ad valorem or value added; (ii)
"TAX AUTHORITY" means the United States Internal Revenue Service (the "IRS")
and any other domestic or foreign Governmental Entity responsible for the
administration or collection of any Taxes; (iii) "TAX RETURN" means any return,
report or similar statement (including any attached schedules) required to be
filed with respect to Taxes and any information return, claim for refund,
amended return, or declaration of estimated Taxes; and (iv) "TREASURY
REGULATIONS " means the regulations promulgated under the Code.
Section 3.12 LABOR MATTERS. Except to the extent imposed or implied by
applicable foreign Law, neither the Company nor any of its Subsidiaries is a
party to, or bound by, any collective bargaining agreement (or similar
agreement or arrangement in any foreign country) with a labor union or labor
organization covering any employees of the Company or any of its Subsidiaries
("COMPANY Employees"). Except for such matters which have not had, and would
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, (a) there are no strikes, lockouts, work stoppages or
slowdowns involving any Company Employees that are pending or threatened in
writing; (b) there is no pending demand for recognition or certification for
19
representative status with respect to any Company Employees and there are no
representation or certification proceedings presently pending or threatened in
writing to be brought before the National Labor Relations Board or any other
labor relations tribunal or authority; (c) there is no unfair labor practice or
labor arbitration proceeding pending or threatened in writing against the
Company or any of its Subsidiaries; and (d) the Company and its Subsidiaries
are in compliance with all applicable Laws respecting (i) employment and
employment practices, (ii) terms and conditions of employment, wages and hours,
employment of minors, employment discrimination, health and safety, withholding
and insurance, and (iii) unfair labor practices. Neither the Company nor any of
its Subsidiaries has any liabilities or obligations under the Worker Adjustment
and Retraining Notification Act of 1988, including the regulations promulgated
thereto ("WARN") or any similar state, local or foreign law as a result of any
action taken by the Company or any of its Subsidiaries (other than at the
written direction of Parent), that would be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect. During the 90-day
period immediately prior to the Closing, the Company and each of its
Subsidiaries will be in compliance with WARN and any similar state, local or
foreign Law.
Section 3.13 INTELLECTUAL PROPERTY. SECTION 3.13 OF THE COMPANY
DISCLOSURE SCHEDULE lists all of the material registered trademarks owned by
the Company and its Subsidiaries. With respect to each such trademark, except
as would not be reasonably expected to have, individually or in the aggregate,
a Material Adverse Effect, (x) the Company or one of its Subsidiaries is the
sole owner of such item, free and clear of all Liens and (y) except in the
ordinary course of business, neither the Company nor any of its Subsidiaries
has granted any Person an exclusive license to any such item. Except as would
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, (i) either the Company or a Subsidiary of the Company
owns, or is licensed or otherwise possesses legally enforceable rights to use,
all Intellectual Property used in their respective businesses as currently
conducted, and (ii) the consummation of the transactions contemplated by this
Agreement will not alter or impair such rights. There are no claims pending or
threatened in writing by any person challenging the use by the Company or its
Subsidiaries of any trademarks, trade names, service marks, service names, ▇▇▇▇
registrations, logos, assumed names, registered copyrights, patents or
applications and registrations therefor (collectively, the "INTELLECTUAL
PROPERTY") in their respective businesses as currently conducted that would be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect. To the knowledge of the Company, the conduct of the businesses
of the Company and its Subsidiaries does not infringe upon any intellectual
property rights or any other proprietary right of any person in any material
respect, and neither the Company nor any Subsidiary has received any written
notice from any other person (i) pertaining to or challenging the right of the
Company or any Subsidiary to use any of the Intellectual Property and (ii)
stating a claim that the Company believed to be material. Neither the Company
nor any of its Subsidiaries has made any material claim of a violation or
infringement by others of its rights to or in connection with the Intellectual
Property used in their respective businesses in the last twelve (12) months.
Section 3.14 OPINION OF FINANCIAL ADVISOR. The Board of Directors of
the Company has received the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ International, dated the
date of this Agreement, substantially to the effect that, as of such date, the
Merger Consideration is fair to the holders of the Company Common Stock from a
financial point of view.
20
Section 3.15 REQUIRED VOTE OF THE COMPANY STOCKHOLDERS. The affirmative
vote of the holders of a majority of the outstanding shares of Company Common
Stock is the only vote of holders of securities of the Company which is
required to adopt this Agreement (the "COMPANY STOCKHOLDER APPROVAL").
Section 3.16 MATERIAL CONTRACTS.
(a) Subject to actions taken by the Company in compliance with
SECTION 5.1(d), neither the Company nor any of its Subsidiaries is a party to
or bound by any written contract, arrangement, commitment or understanding (i)
that is a "material contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC) to be performed after the date of this Agreement
that has not been made available to Parent prior to the date hereof or (ii)
that materially limits the ability of the Company or any of its Subsidiaries to
compete in any business line or in any geographic area. Each written contract,
arrangement, commitment or understanding of the type described in clauses (i)
and (ii) of this SECTION 3.16(a), whether or not set forth in the Company
Disclosure Schedule or made available to Parent in the case of clause (i), is
referred to as a "COMPANY MATERIAL CONTRACT."
(b) Neither the Company nor any Subsidiary of the Company is in
material breach of or material default under the terms of any Company Material
Contract. To the knowledge of the Company, no other party to any Company
Material Contract is in material breach of or material default under the terms
of any Company Material Contract. Except as would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect, each Company
Material Contract is a valid and binding obligation of the Company or the
Subsidiary of the Company which is party thereto and, to the knowledge of the
Company, of each other party thereto, and is enforceable against the Company or
the Subsidiary of the Company, as the case may be, in accordance with its terms
(except to the extent that enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other Laws affecting the enforcement
of creditors' rights generally or by principles governing the availability of
equitable remedies).
Section 3.17 TRANSACTIONS WITH AFFILIATES. Other than any compensation,
indemnification or other similar agreements between the Company or a Subsidiary
of the Company and any officer or director and other than rights to receive
Merger Consideration and as provided in SECTION 5.6, no relationship, direct or
indirect, exists between or among the Company or any Subsidiary of the Company,
on the one hand, and any director, officer or affiliate of the Company, on the
other hand, that is required to be described under Item 404 of Regulation S-K
of the SEC in the Company SEC Reports, which is not described therein.
Section 3.18 INSURANCE. As of the date hereof, the Company has all
material insurance policies, including those set forth in SECTION 3.18 OF THE
COMPANY DISCLOSURE SCHEDULE, necessary to operate its business in the ordinary
course. The insurance policies set forth in SECTION 3.18 OF THE COMPANY
DISCLOSURE SCHEDULE are valid and effective in all material respects. All
premiums payable under such policies have been duly paid to date. None of the
Company or any of its Subsidiaries has received any written notice of
cancellation of any such policy.
Section 3.19 ENVIRONMENTAL MATTERS.
21
(a) Except as would not have, individually or in the aggregate, a
Material Adverse Effect, the Company and each of its Subsidiaries and, to the
knowledge of the Company, their respective predecessors, are and have been in
compliance with all applicable Laws relating to (i) pollution, contamination,
protection of the environment, health or safety, (ii) emissions, discharges,
releases or threatened releases of Hazardous Substances into the air (indoor or
outdoor), surface water, groundwater, soil or land surface or subsurface or
buildings, or (iii) the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Substances (collectively,
"ENVIRONMENTAL LAWS").
(b) Except as would not have, individually or in the aggregate, a
Material Adverse Effect, there are no past or present conditions, events,
circumstances, facts, activities, practices, incidents, actions, omissions or
plans: (i) that have given rise or could reasonably be expected to give rise to
any liabilities or obligations of the Company or any of its Subsidiaries under
any Environmental Laws; (ii) that have required or could reasonably be expected
to require the Company or any of its Subsidiaries to incur any actual or
potential cleanup, remediation, removal or other response costs (including the
cost of coming into compliance with Environmental Laws), investigation costs
(including fees of consultants, counsel and other experts in connection with
any environmental investigation, testing, audits or studies), losses,
liabilities, payments, damages (including any actual, punitive or consequential
damages (A) under any Environmental Laws, contractual obligations or otherwise
or (B) to third parties for personal injury or property damage), civil or
criminal fines or penalties, judgments or amounts paid in settlement, in each
case arising out of or relating to any liabilities or obligations under any
Environmental Laws; or (iii) that have formed or, to the knowledge of the
Company, could reasonably be expected to form the basis of any actions, suits,
inquiries, investigations or proceedings against or involving the Company or
any of its Subsidiaries arising out of or relating to any Environmental Laws.
(c) As used herein, "HAZARDOUS SUBSTANCES" means any pollutant
contaminant, waste material or hazardous, toxic or dangerous substance,
including any material defined by or regulated under any Environmental Laws.
Section 3.20 REAL ESTATE MATTERS. All real property owned or leased by
the Company or any of its Subsidiaries that is material to the business of the
Company and its Subsidiaries, taken as a whole, is disclosed in the Company SEC
Documents. The Company and its Subsidiaries have good and marketable title to,
or have a valid and enforceable leasehold interest in, all real property
(including all buildings, fixtures and other improvements) owned, used or held
for use by them, except for exceptions that would not have, individually or in
the aggregate, a Material Adverse Effect. Neither the Company's nor any of its
Subsidiaries' ownership of or leasehold interest in any such real property is
subject to any Liens, except for Liens that would not have, individually or in
the aggregate, a Material Adverse Effect.
Section 3.21 FINDERS OR BROKERS. Except for ▇▇▇▇▇▇▇ ▇▇▇▇▇ International
and ▇▇▇▇▇▇▇ Sachs International, neither the Company nor any of its
Subsidiaries has employed any investment banker, broker or finder in connection
with the transactions contemplated by this Agreement who would be entitled to
any fee or any commission in connection with or upon consummation of the
Merger. The Company has provided Parent a true and correct copy of the
22
Company's engagement letters with each of ▇▇▇▇▇▇▇ ▇▇▇▇▇ International and
▇▇▇▇▇▇▇ Sachs International prior to the date hereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent and Merger Sub jointly and severally represent and warrant to the
Company as follows:
Section 4.1 QUALIFICATION; ORGANIZATION, ETC. Parent and each of
Parent's Subsidiaries (including Merger Sub) is a corporation, partnership or
other entity duly organized, validly existing and, if applicable, in good
standing under the laws of its jurisdiction of incorporation or organization,
has the power and authority to own its properties and to carry on its business
as it is now being conducted, and is duly qualified or licensed to do business
and, if applicable, is in good standing in each jurisdiction in which the
ownership of its property or the conduct of its business requires such
qualification. The copies of each of Parent's and Merger Sub's certificate of
incorporation and by-laws, which have been delivered to the Company prior to
the date hereof, are complete and correct copies thereof, each as amended
through the date hereof. Neither Parent nor Merger Sub is in violation of any
provision of its certificate of incorporation or by-laws.
Section 4.2 CAPITALIZATION OF MERGER SUB. The authorized capital stock
of Merger Sub consists of 1,000 shares of common stock, par value $0.01 per
share. All of the issued and outstanding capital stock of Merger Sub is, and at
the Effective Time will be, owned by Parent. Merger Sub has not conducted any
business prior to the date hereof and has no, and prior to the Effective Time
will have no, assets, liabilities or obligations of any nature other than those
incident to its formation and pursuant to this Agreement, the Written Consent
and Voting Agreement and the other transactions contemplated by this Agreement
and the Written Consent and Voting Agreement.
Section 4.3 CORPORATE AUTHORITY RELATIVE TO THIS AGREEMENT;
NO VIOLATION.
(a) Each of Parent and Merger Sub has requisite corporate or
limited liability company power and authority to enter into this Agreement and
the Written Consent and Voting Agreement and to consummate the transactions
contemplated hereby, including the Merger. The execution and delivery of this
Agreement and the Written Consent and Voting Agreement and the consummation of
the transactions contemplated hereby and thereby have been duly and validly
authorized by the Boards of Directors of Parent and Merger Sub and, except for
the filing of the Certificate of Merger with the Secretary of State of
Delaware, no other corporate proceedings on the part of Parent or Merger Sub
are necessary to authorize the consummation of the transactions contemplated
hereby and thereby. This Agreement and the Written Consent and Voting Agreement
have been duly and validly executed and delivered by Parent and Merger Sub and,
assuming this Agreement and the Written Consent and Voting Agreement constitute
valid and binding agreements of the other parties hereto or thereto, this
Agreement and the Written Consent and Voting Agreement constitute valid and
binding agreements of Parent and Merger Sub, enforceable against Parent and
Merger Sub in accordance with their terms (except to the extent that
23
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other Laws affecting the enforcement of creditors' rights
generally or by principles governing the availability of equitable remedies).
(b) Other than in connection with or in compliance with (i) the
provisions of the DGCL, (ii) the Exchange Act, (iii) the HSR Act and (iv) any
applicable non-U.S. competition, antitrust and investment laws (collectively,
the "PARENT APPROVALS"), no authorization, consent or approval of, or filing
with, any Governmental Entity is necessary for the consummation by Parent of
the transactions contemplated by this Agreement and the Written Consent and
Voting Agreement, except for such authorizations, consents, approvals or
filings, that, if not obtained or made, would not reasonably be expected to
significantly impair or delay the consummation of the transactions contemplated
hereby and thereby.
(c) Subject to the receipt of the Parent Approvals, the execution
and delivery by Parent and Merger Sub of this Agreement and the Written Consent
and Voting Agreement do not, and the consummation of the transactions
contemplated hereby and thereby and compliance with the provisions hereof will
not (i) result in any violation of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation
or acceleration of any obligation or to the loss of a material benefit under
any loan, guarantee of indebtedness or credit agreement, note, bond, mortgage,
indenture, lease, agreement, contract, instrument, permit, concession,
franchise, right or license binding upon Parent or any of its Subsidiaries or
result in the creation of any Lien upon any of the properties or assets of
Parent or any of its Subsidiaries, (ii) conflict with or result in any
violation of any provision of the certificate of incorporation or by-laws or
other equivalent organizational document, in each case as amended, of Parent or
any of its Subsidiaries, (iii) conflict with or violate any Laws applicable to
Parent, any of its Subsidiaries or any of their respective properties or
assets, other than, in the case of clauses (i) and (iii), any such violation,
conflict, default, right, loss or Lien that, has not, and would not reasonably
be expected to, significantly impair or delay the consummation of the
transactions contemplated hereby and thereby.
Section 4.4 LITIGATION. There are no actions, suits, inquiries,
investigations or proceedings pending or threatened in writing against or
affecting Parent or its Subsidiaries, or any of their respective properties at
law or in equity before, and there are no orders, judgments or decrees of or
before any Governmental Entity, in each case, which would reasonably be
expected to significantly impair or delay the consummation of the transactions
contemplated hereby.
Section 4.5 INFORMATION STATEMENT; OTHER INFORMATION. None of the
information with respect to Parent or its Subsidiaries to be included in the
Information Statement will, in the case of the Information Statement or any
amendments thereof or supplements thereto, at the time of the mailing of the
Information Statement or any amendments or supplements thereto, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
Information Statement will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations promulgated
thereunder.
24
Section 4.6 LACK OF OWNERSHIP OF THE COMPANY COMMON STOCK. Neither
Parent nor any of its Subsidiaries owns any shares of the Company Common Stock
or other securities convertible into shares of the Company Common Stock.
Section 4.7 FINDERS OR BROKERS. Except for ▇▇▇▇▇▇ Brothers
International (Europe) - Italian Branch and UBS Limited, neither Parent nor any
of its Subsidiaries has employed any investment banker, broker or finder in
connection with the transactions contemplated by this Agreement who might be
entitled to any fee or any commission in connection with or upon consummation
of the Merger.
Section 4.8 AVAILABILITY OF FUNDS. Parent's and Merger Sub's
obligations hereunder are not subject to any conditions regarding Parent's,
Merger Sub's or any other person's ability to obtain financing for the
consummation of the Merger and the other transactions contemplated by this
Agreement. Parent and Merger Sub have, and as of the Closing will have, (i)
cash on hand, (ii) written equity commitment letters to Parent and Merger Sub,
a form of which is attached hereto as EXHIBIT B (the "EQUITY COMMITMENTS")
and/or (iii) detailed debt commitment letters from Parent's financing sources
(the "LOAN AGREEMENTS," and together with the Equity Commitments, the
"FINANCING AGREEMENTS"), which together are sufficient to enable Parent and
Merger Sub to perform each of its obligations hereunder, consummate the Merger
and the other transactions contemplated by this Agreement, and pay all related
fees and expenses, including payment of the Merger Consideration, payments
contemplated by SECTION 2.1 on account of Company Stock Options and the
Warrants and any other repayment or refinancing of any indebtedness of the
Company. True and correct copies of the Financing Agreements have been provided
to the Company prior to the date hereof. The Financing Agreements have been
duly executed and delivered by the parties thereto and are in full force and
effect enforceable against the parties thereto in accordance with their terms.
As of the date hereof, no event has occurred which, with or without notice,
lapse of time or both, would constitute a default or breach on the part of
Parent or Merger Sub under any term or condition of the Financing Agreements.
As of the date hereof, Parent and Merger Sub have no reason to believe that
either will be unable to satisfy on a timely basis any term or condition of
closing to be satisfied by Parent or Merger Sub contained in the Financing
Agreements. Parent and Merger Sub have fully paid any and all commitment fees
or other fees required by the Financing Agreements to be paid on or before the
date hereof.
Section 4.9 NO DISQUALIFICATION. To the Parent's knowledge, there are
no facts that relate to the qualifications of Parent or Merger Sub which would,
under applicable Law, disqualify Parent or Merger Sub with respect to the
consummation of the transactions contemplated hereby or that would be
reasonably likely to prevent the parties from obtaining any Parent Approval or
Company Approval in a timely manner or which would prevent any Governmental
Entity from consenting to the transactions contemplated by this Agreement in a
timely manner.
Section 4.10 SECTION 203 OF THE DGCL. None of Parent, Merger Sub or
their respective affiliates or associates is or ever has been an "interested
stockholder" (as defined in Section 203 of the DGCL) with respect to the
Company.
25
Section 4.11 DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES. Parent
and Merger Sub each acknowledges and agrees that, except for the
representations and warranties expressly set forth in this Agreement, the
Written Consent and Voting Agreement and the Company Disclosure Schedule, (a)
neither the Company nor any of its Subsidiaries nor any other person (whether
or not a party to this Agreement and whether or not authorized by the Company
or any of its Subsidiaries) makes, or has made, any representations or
warranties, express or implied, at law or in equity, relating to itself, the
Company, any Subsidiaries of the Company, or any of their respective
businesses, assets, liabilities or operations, including with respect to
merchantability or fitness for any particular purpose or otherwise in
connection with the Merger, and Parent and Merger Sub are not relying on any
representation or warranty except for those expressly set forth in this
Agreement, the Written Consent and Voting Agreement and the Company Disclosure
Schedule and any other such representations and warranties are hereby expressly
disclaimed, (b) no person has been authorized by the Company or any of its
Subsidiaries to make any representation or warranty relating to itself or its
business or otherwise in connection with the Merger, and if made, such
representation or warranty must not be relied upon by Parent or Merger Sub as
having been authorized by such party and is hereby expressly disclaimed and (c)
any estimates, projections, predictions, data, financial information,
memoranda, presentations or any other materials or information provided or
addressed to Parent, Merger Sub or any of their Representatives are not and
shall not be deemed to be or include representations or warranties unless any
such materials or information is the subject of any express representation or
warranty set forth in ARTICLE III of this Agreement and there is no assurance
that any estimates, projections, predictions or any other forward-looking
statements in any such materials or information will be achieved. Parent and
Merger Sub each hereby acknowledges and agrees that, except for the
representations and warranties expressly set forth in this Agreement, the
Written Consent and Voting Agreement and the Company Disclosure Schedule, the
Company shall merge with Merger Sub pursuant to this Agreement on an "as-is,
where-is" basis.
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1 CONDUCT OF BUSINESS BY THE COMPANY OR PARENT. From and
after the date hereof and prior to the Effective Time or the date, if any, on
which this Agreement is earlier terminated pursuant to SECTION 7.1, and except
(i) as may be required by Law (provided that any party availing itself of such
exception must first consult with the other party), (ii) as may be agreed in
writing by Parent and the Company after seeking consent from the other party
(which consent shall not be unreasonably withheld, delayed or conditioned),
(iii) as set forth in SECTION 5.1 OF THE COMPANY DISCLOSURE SCHEDULE or (iv) as
expressly contemplated by this Agreement:
(a) the Company covenants and agrees with Parent that the business
of the Company and its Subsidiaries shall be conducted only in the ordinary
course of business; and the Company for itself and on behalf of its
Subsidiaries agrees with Parent to use its commercially reasonable efforts to
preserve substantially intact their business organizations and goodwill,
including their relationships with customers, suppliers, joint venture partners
and employees, PROVIDED, HOWEVER, that no action by the Company or its
26
Subsidiaries with respect to matters specifically permitted by any other
provision of this SECTION 5.1 shall be deemed a breach of this sentence unless
such action would constitute a breach of such other provision.
(b) The Company covenants and agrees with Parent that the Company
and its Subsidiaries shall: (i) prepare and timely file all Tax Returns
required to be filed by them on or before the Closing Date ("Post-Signing
Returns") in a manner consistent with past practice, except as otherwise
required by applicable Laws, (ii) fully and timely pay all Taxes due and
payable in respect of such Post-Signing Returns that are so filed, (iii)
properly reserve (and reflect such reserve in their books and records and
financial statements), for all Taxes payable by them for which no Post-Signing
Return is due prior to the Effective Time in a manner consistent with past
practice, to the extent required by GAAP, (iv) promptly notify Parent of any
material action, suit, inquiry, investigation or proceeding or audit pending or
threatened against the Company or any of its Subsidiaries in respect of any Tax
matter, including Tax liabilities and refund claims, and not settle or
compromise any such action, suit, inquiry, investigation or proceeding or audit
without Parent's prior written consent, and (v) terminate all material
agreements providing for the allocation, indemnification or sharing of Taxes
(other than any such agreement exclusively between or among the Company and any
of its Subsidiaries or joint venture partners to written agreements provided to
Parent in the Data Room) to which the Company or any of its Subsidiaries is a
party such that there are no further liabilities thereunder.
(c) the Company covenants and agrees that it and its Subsidiaries
will be in compliance in all material respects with WARN and any similar state,
local or foreign Law.
(d) the Company agrees, on behalf of itself and its Subsidiaries,
not to do any of the following between the date hereof and the Effective Time,
except with the prior written consent of Parent or as required by Law:
(i) authorize or pay any dividends on or make any
distribution with respect to the outstanding shares of capital stock of
the Company (whether in cash, assets, stock or other securities of the
Company or its Subsidiaries);
(ii) other than in the ordinary course of business or
pursuant to existing written joint venture arrangements in effect prior to
the execution of this Agreement that have been made available to Parent in
the Company's virtual data room managed by ▇▇▇▇▇▇▇ Corp. as at 8 pm London
time on July 4, 2007 with respect to documents and information in such
data room that is either in English or Italian (the "DATA ROOM"), permit
any of the Company's Subsidiaries that is not wholly-owned to authorize or
pay any dividends on or make any distribution with respect to its
outstanding shares of capital stock (whether in cash, assets, stock or
other securities of the Company or its Subsidiaries);
(iii) 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, except for any such transaction by a wholly-owned Subsidiary of the
Company which remains a wholly-owned Subsidiary after consummation of such
transaction;
27
(iv) except as required pursuant to existing written
agreements or employee benefit plans in effect prior to the execution of
this Agreement and made available to Parent in the Data Room, or any
collective bargaining agreement (or similar agreement or arrangement in
any foreign country), or as otherwise required by Law, (A) increase the
compensation, severance or other benefits payable or to become payable to
any current or former directors, officers, employees or consultants,
except for increases in compensation for non-officer or director employees
in the ordinary course of business and except for payments that are
permitted in accordance with section (xx) below, subject to the cap stated
therein, (B) establish, adopt, enter into or amend any collective
bargaining agreement, plan, trust, fund, policy or arrangement for the
benefit of any current or former directors, officers, employees or
consultants or any of their beneficiaries, except, in each case, as would
not result in a material increase in the cost of maintaining such
collective bargaining agreement, plan, trust, fund, policy or arrangement;
PROVIDED, HOWEVER, that this Agreement shall not restrict the ability of
the Company or any of its Subsidiaries to negotiate, execute or deliver
any replacement, renewal or extension of any existing collective
bargaining agreement (or similar agreement or arrangement in any foreign
country) that expires in accordance with its terms, or (C) except as
otherwise provided for in this Agreement and other than entry into
employment agreements with non-officer and director employees of the
Company or its Subsidiaries in the ordinary course of business consistent
with past practice, enter into, adopt, amend or terminate any Company
Benefit Plan, except immaterial amendments or replacements of existing
Company Benefit Plans on substantially the same terms in the ordinary
course;
(v) enter into or make any loans to any of its officers,
directors, employees, affiliates, agents or consultants (other than travel
and other expense reimbursements in the ordinary course of business) or
make any change in its existing borrowing or lending arrangements for or
on behalf of any of such persons, except as required by the terms of any
Company Benefit Plan;
(vi) change accounting policies or procedures or any of its
accounting methods except as required by GAAP, SEC rule or policy or
applicable Law, other than to change (A) the fiscal year end of the
Company to December 31 or (B) the inventory accounting method used by the
Company to an alternative inventory accounting method permitted under
GAAP;
(vii) except as permitted pursuant to SECTION 5.4, approve or
authorize any action to be submitted to the stockholders of the Company
for approval that is intended or would reasonably be expected to, prevent,
impede, interfere with, delay, postpone or adversely affect the
transactions contemplated by this Agreement;
(viii) except (A) in respect of the Merger, except as permitted
pursuant to SECTION 5.4, (B) as required pursuant to existing written
agreements made available to Parent in the Data Room and (C) a result of
any investment made by the Company in an amount that does not exceed $1
million, authorize, propose or announce an intention to authorize or
propose, or enter into agreements with respect to, any mergers,
28
consolidations or business combinations or acquisitions of assets or
securities;
(ix) adopt any amendments to the Company's or its
Subsidiaries' certificate of incorporation or by-laws;
(x) except as required pursuant to the Company Stock
Options, the Warrant Agreements, existing written agreements made
available to Parent in the Data Room or employee benefit plans in effect
prior to the execution of this Agreement, issue, sell, pledge, dispose of
or encumber, or authorize the issuance, sale, pledge, disposition or
encumbrance of, any shares of its capital stock or other ownership
interest in the Company or any Subsidiaries or any securities convertible
into or exchangeable for any such shares or ownership interest, or any
rights, warrants or options to acquire or with respect to any such shares
of capital stock, ownership interest or convertible or exchangeable
securities;
(xi) grant, confer or award any options, warrants,
convertible security or other rights to acquire any shares of its capital
stock;
(xii) directly or indirectly, purchase, redeem or otherwise
acquire any shares of its capital stock or any rights, warrants or options
to acquire any such shares;
(xiii) incur, assume, guarantee, prepay or otherwise become
liable for any indebtedness for borrowed money (directly, contingently or
otherwise), except for (A) any indebtedness owing to the Company or any of
its wholly-owned Subsidiaries, (B) indebtedness for borrowed money
incurred to replace, renew, extend, refinance or refund any existing
indebtedness for borrowed money on commercially reasonable terms, (C)
guarantees by the Company of indebtedness for borrowed money of
Subsidiaries of the Company, which indebtedness is incurred in compliance
with this SECTION 5.1(d), (D) indebtedness for borrowed money incurred
pursuant to, or in connection with, written agreements in effect prior to
the execution of this Agreement or disclosed in the Company SEC Documents,
(E) retail guarantees with landlords on store rentals in lieu of cash
deposits or letter of credit in the ordinary course of business, and (F)
indebtedness for borrowed money not to exceed $1 million in aggregate
principal amount outstanding at any time incurred by the Company or any of
its Subsidiaries other than in accordance with clauses (A)-(D), inclusive;
(xiv) make any material loans, advances or capital
contributions to, or investments in, any other person, other than by the
Company or a Subsidiary of the Company to or in the Company or any
Subsidiary of the Company;
(xv) sell, lease, license, transfer, exchange or swap,
mortgage or otherwise encumber (including securitizations), or subject to
any Lien or otherwise dispose of any material portion of its properties or
assets, including the capital stock of Subsidiaries other than in the
ordinary course of business and except (A) for sales, leases, licenses,
29
transfers, mortgages or encumbrances (x) of obsolete assets or (y) by and
among the Company and its Subsidiaries, and (B) pursuant to existing
agreements made available to Parent in the Data Room in effect prior to
the execution of this Agreement;
(xvi) enter into, terminate or amend any Company Material
Contract, except for entering into, terminating or amending license and
distribution agreements in the ordinary course (other than the Company's
top five agreements) or license and distribution agreements between the
Company and any of its Subsidiaries;
(xvii) make any capital expenditures, except for the capital
expenditures not to exceed $23 million in the aggregate and in line with
the Company's business plan provided to Parent;
(xviii) settle or compromise any material actions, suits,
inquiries, investigations or proceedings (it being understood that any
settlement involving a payment of over $5 million will be deemed material
for this purpose);
(xix) make or revoke any material election with regard to
Taxes or file any material amended Tax Returns;
(xx) make any payment incurred by the Company or any of its
Subsidiaries for fees and expenses related to the initial public offering
and the sale processes that have been conducted by the Company (including
to the persons named in SECTION 3.21 hereof), except for the payment of
fees and expenses of up to $18.18 million; or
(xxi) agree, in writing or otherwise, to take any of the
foregoing actions.
(e) Parent agrees that the business of Parent and its Subsidiaries
shall be conducted only in, and such entities shall not take any action except
in, the ordinary course of business; PROVIDED, HOWEVER, that no action by
Parent or its Subsidiaries with respect to matters specifically addressed by
any other provision of this SECTION 5.1 shall be deemed a breach of this
sentence unless such action would constitute a breach of such other provision.
(f) Parent agrees with the Company, on behalf of itself and its
Subsidiaries, that between the date hereof and the Effective Time, Parent:
(i) except in respect of the Merger, or any mergers,
consolidations or business combinations in the ordinary course of business
among Parent's wholly-owned Subsidiaries, shall not, and shall not permit
any of its Subsidiaries to, authorize, propose or announce an intention to
authorize or propose, or enter into agreements with respect to any
mergers, consolidations or business combinations or acquisitions of assets
or securities which would reasonably be expected to have the legal or
practical effect of delaying or preventing, or reducing the likelihood of
consummation of the Merger or the obtaining of any regulatory or other
consent or approval contemplated hereby; PROVIDED, that Parent shall
30
inform the Company prior to entering into a definitive agreement relating
to any material acquisition;
(ii) shall not, and shall not permit Merger Sub to, adopt any
amendments to its certificate of incorporation or by-laws; and
(iii) shall not, and shall not permit any of its Subsidiaries
to, agree, in writing or otherwise, to take any of the foregoing actions
or any action that would be reasonably likely to prevent Parent or Merger
Sub from performing its covenants hereunder.
Section 5.2 TRANSFER TAXES. Parent shall pay any real property or
other transfer Taxes and all conveyance fees, recording charges and other fees
and charges (including any penalties and interest) incurred in connection with
the Merger when due, and Parent shall, at its own expense, file all necessary
Tax Returns and other documentation with respect to all such Taxes, fees and
charges, and, if required by applicable Law, the parties hereto will, and will
cause their affiliates to, join in the execution of any such Tax Returns and
other documentation.
Section 5.3 INVESTIGATION. The Company shall afford to Parent and to
its officers, employees, accountants, consultants, legal counsel, financial
advisors and agents and other representatives (collectively, "REPRESENTATIVES")
reasonable access during normal business hours and with reasonable advance
notice, throughout the period prior to the earlier of the Effective Time or the
date, if any, on which this Agreement is earlier terminated pursuant to SECTION
7.1, to the Company and its Subsidiaries' properties, contracts, commitments,
books and records and any report, schedule or other document filed or received
by the Company pursuant to the requirements of federal or state securities laws
and shall use all reasonable efforts to cause the Company's Representatives to
furnish promptly to Parent or its Representatives such additional financial and
operating data and other information as to the Company and its Subsidiaries'
respective businesses and properties as Parent or its Representatives may from
time to time reasonably request (including the monthly management pack and any
available daily sales information), except that nothing herein shall require
either the Company or any of its respective Subsidiaries to disclose any
information to the other that would cause a violation of any agreement to which
the disclosing party is a party, would cause a risk of a loss of privilege to
the party disclosing such data or information, or would constitute a violation
of applicable Laws. Parent hereby agrees that it will treat any such
information in accordance with the Confidentiality Agreement, dated as of June
4, 2007 between the Company and Parent (the "CONFIDENTIALITY AGREEMENT").
Notwithstanding any provision of this Agreement to the contrary, no party shall
be obligated to make any disclosure in violation of applicable Laws.
Section 5.4 NO SOLICITATION.
(a) The Company shall not, nor shall it authorize or permit, any
Subsidiary of the Company or any of its or their respective Representatives to,
directly or indirectly (i) solicit, initiate, encourage, knowingly facilitate
or induce any inquiry with respect to, or the making, submission or
announcement of, any Company Alternative Proposal, (ii) participate in any
negotiations regarding, or furnish to any person any nonpublic information with
respect to, any Company Alternative Proposal or in response to any inquiries or
31
proposals that would reasonably be expected to lead to any Company Alternative
Proposal (except to the extent specifically permitted pursuant to this SECTION
5.4), (iii) engage in discussions with any person with respect to any Company
Alternative Proposal, except to notify such person as to the existence of the
provisions of this SECTION 5.4 and except to the extent specifically permitted
under this SECTION 5.4, (iv) approve, endorse or recommend any Company
Alternative Proposal, except to the extent specifically permitted under this
SECTION 5.4 or (v) enter into any letter of intent or similar document or any
agreement or commitment providing for, any Company Alternative Proposal (except
for confidentiality agreements specifically permitted under SECTION 5.4(C) and
except to the extent specifically permitted under this SECTION 5.4). The
Company shall immediately terminate, and shall cause its Subsidiaries and its
and their Representatives to immediately terminate, all discussions or
negotiations, if any, that are ongoing as of the date hereof with any third
party with respect to a Company Alternative Proposal.
(b) Promptly after receipt of any Company Alternative Proposal, the
Company shall notify Parent of its receipt of such Company Alternative
Proposal, which notice shall include the identity of the third party making
such Company Alternative Proposal, a description of the material terms and
conditions of such Company Alternative Proposal, and copies of any substantive
written communications and documents relating to such Company Alternative
Proposal received by the Company from the third party making such Company
Alternative Proposal.
(c) If the Company receives a Company Alternative Proposal which
(i) constitutes a Company Superior Proposal or (ii) the Board of Directors of
the Company determines in good faith, after consultation with its outside
financial and legal advisors, after the taking of any of the actions referred
to in either of clause (x) or (y) below, could reasonably be expected to result
in a Company Superior Proposal, the Company may take the following actions: (x)
furnish nonpublic information to the third party making such Company
Alternative Proposal, if, and only if, prior to so furnishing such information
to the third party, the Company receives from the third party an executed
confidentiality agreement on terms substantially the same as the
Confidentiality Agreement and the Company provides copies of the same such
information to Parent, unless such information has previously been provided to
Parent, and (y) engage in discussions or negotiations with the third party with
respect to the Company Alternative Proposal.
(d) In response to the receipt of a Company Superior Proposal, the
Board of Directors of the Company may withdraw, amend or modify the Company
Recommendation (a "COMPANY CHANGE OF RECOMMENDATION") if the Board of Directors
of the Company has concluded in good faith, after consultation with its outside
legal counsel, that, in light of a Company Superior Proposal, the failure of
the Board of Directors of the Company to effect a Company Change of
Recommendation would be reasonably likely to result in a breach by the
directors of their fiduciary obligations to the Company's stockholders under
applicable Law.
(e) Nothing contained in this Agreement shall prohibit the Company
or its Board of Directors from disclosing to its stockholders a position
contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act,
if, in the good faith judgment of the Company's Board of Directors, after
consultation with its outside legal and financial advisors, such disclosure is
32
required in order for the Board of Directors to comply with its fiduciary
obligations, or is otherwise required, under applicable Law.
(f) As used in this Agreement, "COMPANY ALTERNATIVE PROPOSAL" shall
mean any inquiry, proposal or offer made by any person prior to the receipt of
the Company Stockholder Approval (other than a proposal or offer by Parent or
any of its Subsidiaries) for (i) the acquisition of the Company by merger,
consolidation, recapitalization, business combination or similar transaction,
or for a "merger of equals" with the Company; (ii) the acquisition by any
person of twenty-five percent (25%) or more of the assets of the Company and
its Subsidiaries, taken as a whole; or (iii) the acquisition by any person of
twenty-five percent (25%) or more of the outstanding shares of Company Common
Stock.
(g) As used in this Agreement, "COMPANY SUPERIOR PROPOSAL" shall
mean a bona fide Company Alternative Proposal contemplating an acquisition of
100% of the outstanding shares of Company Common Stock or 100% of the assets of
the Company and its Subsidiaries, taken as a whole, made by any person (and
which has not been obtained by or on behalf of the Company in violation of this
SECTION 5.4 and with respect to which the Company has fulfilled its obligations
pursuant to this SECTION 5.4) (i) on terms that the Board of Directors of the
Company determines in good faith, after consultation with the Company's
financial and legal advisors, and considering such factors as the Board of
Directors reasonably considers to be appropriate (including legal, financial,
regulatory and other aspects of such proposal), would, if consummated, result
in a transaction more favorable to the Company's stockholders than the
transactions contemplated by this Agreement (as this Agreement may be amended
or modified pursuant to SECTION 7.1(c)(ii)), (ii) that is reasonably likely to
be consummated and (iii) is financed or reasonably capable of being financed by
such third party.
Section 5.5 PREPARATION OF INFORMATION STATEMENT.
(a) The Company shall, as soon as is reasonably practicable (but in
any event within 15 business days after the date hereof), prepare and file with
the SEC the Information Statement in preliminary form, and each of the Company
and Parent shall use its reasonable best efforts to respond as promptly as
practicable to any comments of the SEC with respect thereto. The Company shall
notify Parent promptly of the receipt of any comments from the SEC or its staff
and of any request by the SEC or its staff for amendments or supplements to the
Information Statement or for additional information and shall supply Parent
with copies of all correspondence between the Company or any of its
representatives, on the one hand, and the SEC or its staff, on the other hand,
with respect to the Information Statement. Notwithstanding the foregoing, prior
to filing or mailing the Information Statement (or any amendment or supplement
thereto) or responding to any comments of the SEC with respect thereto, the
Company (i) shall provide Parent with a reasonable opportunity to review and
comment on such document or response and (ii) shall reasonably consider all
comments reasonably proposed by Parent. The Company shall cause the Information
Statement to be mailed to its stockholders as promptly as practicable after the
Information Statement is cleared by the SEC (or the SEC notifies the Company
that it will not review the Information Statement).
(b) The obligation of the Company to mail the Information Statement
shall not be limited or otherwise affected by the commencement, disclosure,
announcement or submission to it of any Company Alternative Proposal (whether
33
or not it is a Company Superior Proposal), or by any Company Change of
Recommendation effected pursuant to SECTION 5.4(d). The Company agrees that,
except in accordance with SECTION 5.4(d), it shall not submit to the vote of
its stockholders any Company Alternative Proposal (whether or not a Company
Superior Proposal) or propose to do so.
Section 5.6 EMPLOYEE MATTERS.
(a) From and after the Effective Time, Parent shall honor or cause
to be honored all Company Benefit Plans in accordance with their terms as in
effect immediately before the Effective Time. With respect to Company Employees
who are not covered by a collective bargaining agreement (or similar agreement
or arrangement in any foreign country) listed on SECTION 3.12 OF THE COMPANY
DISCLOSURE SCHEDULE or any replacement, renewal or extension of any such
agreement (the "NON-CB EMPLOYEES"), for a period of one year following the
Effective Time, Parent shall provide or cause the Surviving Company to provide
such Non-CB Employees with salary, incentive compensation opportunities and
employee benefits plans, programs and arrangements that are no less favorable,
in the aggregate, to those provided to such Non-CB Employees immediately before
the Effective Time; it being understood that nothing contained herein shall
preclude (i) Parent from changing or terminating any existing plan, program or
arrangement applicable to such Non-CB Employees pursuant to its terms or (ii)
terminating any Non-CB Employees. With respect to Company Employees who are
covered by a collective bargaining agreement (or similar agreement or
arrangement in any foreign country) listed on SECTION 3.12 OF THE COMPANY
DISCLOSURE SCHEDULE or any replacement, renewal or extension of any such
agreement (the "CB EMPLOYEES"), Parent agrees to honor or cause to be honored
all such agreements and provide such CB Employees with compensation and
benefits as set forth in such agreements. For the avoidance of doubt, nothing
contained herein shall preclude the Parent from terminating any CB Employee in
accordance with the terms of the applicable collective bargaining agreement.
(b) For purposes of vesting, eligibility to participate and level
of benefits (but not benefit accrual under pension or similar plans) under the
employee benefit plans of Parent and its Subsidiaries providing benefits to any
Company Employees after the Effective Time (the "NEW PLANS"), each Company
Employee shall be credited with his or her years of service with the Company
and its Subsidiaries before the Effective Time, to the same extent as such
Company Employee was entitled, before the Effective Time, to credit for such
service under any similar Company employee benefit plan in which such Company
Employee participated or was eligible to participate immediately prior to the
Effective Time, provided, that the foregoing shall not apply to the extent that
its application would result in a duplication of benefits. In addition, and
without limiting the generality of the foregoing: (i) each Company Employee
shall be immediately eligible to participate, without any waiting time, in any
and all New Plans to the extent coverage under such New Plan is comparable to
Company employee benefit plan or compensation arrangement or agreements in
which such Company Employee participated immediately before the consummation of
the Merger (such plans, collectively, the "OLD PLANS"); and (ii) for purposes
of each New Plan providing medical, dental, pharmaceutical and/or vision
benefits to any Company Employee, Parent shall cause all pre-existing condition
exclusions and actively-at-work requirements of such New Plan to be waived for
such employee and his or her covered dependents, to the extent such conditions
were waived under the comparable plans of the Company or its Subsidiaries in
34
which such employee participated immediately prior to the Effective Time and
Parent shall cause any eligible expenses incurred by such employee and his or
her covered dependents during the portion of the plan year of the Old Plan
ending on the date such employee's participation in the corresponding New Plan
begins to be taken into account under such New Plan for purposes of satisfying
all deductible, coinsurance and maximum out-of-pocket requirements applicable
to such employee and his or her covered dependents for the applicable plan year
as if such amounts had been paid in accordance with such New Plan.
Section 5.7 NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(a) the occurrence of any event known to it which would reasonably be expected
to, individually or in the aggregate, (i) in the case of the Company, cause a
material breach of any of the Company's representations or warranties under
this Agreement or have a Material Adverse Effect, or, in the case of Parent,
significantly impair or delay the consummation of the transactions contemplated
hereby, or (ii) cause any condition set forth in ARTICLE VI to be unsatisfied
in any material respect at any time prior to the Effective Time; or (b) any
action, suit, proceeding, inquiry or investigation pending or threatened in
writing which questions or challenges the validity of this Agreement; PROVIDED,
HOWEVER, that the delivery of any notice pursuant to this SECTION 5.7 shall not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice nor shall the party giving such notice be prejudiced with
respect to any such matters solely by virtue of having given such notice.
Section 5.8 FILINGS; OTHER ACTION.
(a) Subject to the terms and conditions set forth in this
Agreement, each of the parties hereto shall use reasonable best efforts
(subject to, and in accordance with, applicable Law) to take promptly, or cause
to be taken, all actions, and to do promptly, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable under applicable Laws to consummate and make effective the
Merger and the other transactions contemplated by this Agreement, including (i)
the obtaining of all necessary actions or non actions, waivers, consents and
approvals, including the Company Approvals, from Governmental Entities and the
making of all necessary registrations and filings and the taking of all steps
as may be necessary to obtain an approval or waiver from, or to avoid an action
or proceeding by, any Governmental Entity, (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
by this Agreement and (iv) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by this
Agreement.
(b) Subject to the terms and conditions herein provided and without
limiting the foregoing, the Company and Parent shall (i) promptly but in no
event later than seven (7) days after the date hereof make their respective
filings and thereafter make any other required submissions under the HSR Act,
(ii) use reasonable best efforts to cooperate with each other in (x)
determining whether any filings are required to be made with, or consents,
permits, authorizations or approvals are required to be obtained from, any
third parties or other Governmental Entities (including any foreign
35
jurisdiction in which the Company's Subsidiaries are operating any business) in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and (y) timely making all
such filings and timely seeking all such consents, permits, authorizations or
approvals, (iii) use reasonable best efforts to take, or cause to be taken, all
other actions and do, or cause to be done, all other things necessary, proper
or advisable to consummate and make effective the transactions contemplated
hereby, including taking all such further action as reasonably may be necessary
to resolve such objections, if any, as the Federal Trade Commission, the
Antitrust Division of the Department of Justice, state antitrust enforcement
authorities or competition authorities of any other nation or other
jurisdiction may assert under relevant antitrust or competition laws with
respect to the transactions contemplated hereby; and (iv) subject to applicable
legal limitations and the instructions of any Governmental Entity, keep each
other reasonably apprised of the status of matters relating to the completion
of the transactions contemplated thereby.
(c) In furtherance and not in limitation of the covenants of the
parties contained in this SECTION 5.8, if any administrative or judicial action
or proceeding, including any proceeding by a private party, is instituted (or
threatened to be instituted) challenging any transaction contemplated by this
Agreement as violative of any Regulatory Law, each of the Company and Parent
shall cooperate in all reasonable respects with each other and use reasonable
best efforts to contest, resist and resolve any such action or proceeding and
to have vacated, lifted, reversed or overturned any decree, judgment,
injunction or other order, whether temporary, preliminary or permanent, that is
in effect and that prohibits, prevents or restricts consummation of the
transactions contemplated by this Agreement. If any objections are asserted
with respect to the transactions contemplated hereby under any Regulatory Law
or if any suit is instituted by any Governmental Entity or any private party
challenging any of the transactions contemplated hereby as violative of any
Regulatory Law, each of the Company and Parent shall use reasonable best
efforts to resolve any such objections or challenges as such Governmental
Entity or private party may have to such transactions under such Regulatory Law
so as to permit consummation of the transactions contemplated hereby. For the
avoidance of doubt, for purposes of this SECTION 5.8, "reasonable best efforts"
shall include defending through litigation on the merits, including appeals,
any claim asserted in any court or other proceeding by any party, but shall not
include committing to and effecting, by consent decree, hold separate order or
otherwise, the sale, divestiture or disposition of any assets or businesses of
Parent (including its Subsidiaries) or the Company (including its
Subsidiaries). For purposes of this Agreement, "REGULATORY LAW" means the
▇▇▇▇▇▇▇ Act, the ▇▇▇▇▇▇▇ Act, the HSR Act, the Federal Trade Commission Act,
Council Regulation No. 139/2004 of the European Community (the "EC MERGER
REGULATION") and all Laws that are designed or intended to prohibit, restrict
or regulate actions having the purpose or effect of monopolization or restraint
of trade or lessening competition, through merger or acquisition.
Section 5.9 TAKEOVER STATUTE. If any "fair price," "moratorium,"
"control share acquisition" or other form of antitakeover statute or regulation
shall become applicable to the transactions contemplated hereby, each of the
Company and Parent and the members of their respective Boards of Directors
shall grant such approvals and take such actions as are reasonably necessary so
that the transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to eliminate or
minimize the effects of such statute or regulation on the transactions
contemplated hereby.
36
Section 5.10 FINANCING.
(a) Parent shall (i) obtain as of the Closing the financing under
the Loan Agreements and (ii) to the extent that the Loan Agreements are
terminated or the financing contemplated under the Loan Agreements is otherwise
unavailable, promptly arrange for alternative third party financing in an
amount at least equal to that contemplated by the Loan Agreements and on terms
reasonably satisfactory to the Company. Prior to the Closing, Parent shall not
agree to, or permit, any amendment or modification of, or waiver under, the
Financing Agreements or other documentation relating to the financing
thereunder, including provisions relating to conditions precedent or other
contingencies related to funding, without the prior written consent of the
Company (which consent shall not be unreasonably withheld).
(b) Subject to applicable Law, from the date of this Agreement
until Closing, the Company shall use commercially reasonable efforts, and shall
cause each of its Subsidiaries to use commercially reasonable efforts, to cause
their respective employees and advisors to, provide all cooperation reasonably
requested by Parent that is reasonably necessary and customary in connection
with arranging the repayment of the existing indebtedness of the Company and
its Subsidiaries and obtaining the financing contemplated under the Loan
Agreements, including (i) participating in a reasonable number of meetings,
presentations, road shows, due diligence sessions, drafting sessions and
sessions with rating agencies, (ii) assisting with the preparation of materials
for rating agency presentations, offering documents, private placement
memoranda, bank information memoranda, prospectuses, business projections and
similar documents reasonably necessary and customary in connection with the
Loan Agreements, (iii) furnishing Parent and Merger Sub and their financing
sources with other pertinent financial information regarding the Company and
its Subsidiaries as may be reasonably requested by Parent, (iv) assisting
Parent in procuring accountants' comfort letters, accountants' consents, legal
opinions, surveys and title insurance as reasonably requested by Parent;
PROVIDED, that neither the Company nor any of its Subsidiaries shall be
required to enter into any agreement or commit to take any action that is not
contingent upon the Closing and that none of the above shall unreasonably
interfere with the operations of the Company and its Subsidiaries, and (v)
executing and delivering pledge and security documents, hedging arrangements or
other financing documents as may be reasonably requested by Parent or otherwise
facilitating the pledging of collateral as may be reasonably requested by
Parent (provided that any such documents or obligations contained in such
documents shall be executed or effective no earlier than as of the Effective
Time).
(c) Neither the Company nor any of its Subsidiaries shall be
required to pay any commitment or other similar fee or incur any other
liability in connection with SECTION 5.10(b) or the Loan Agreements prior to
the Effective Time. Parent shall, promptly upon request by the Company,
reimburse the Company for all reasonable out-of-pocket costs and third-party
expenses incurred by the Company or any of its Subsidiaries and their
respective representatives in connection with the cooperation described in
SECTION 5.10(b). Parent and Merger Sub shall, on a joint and several basis,
indemnify and hold harmless the Company and its Subsidiaries and their
respective officers, directors and other representatives for and against any
and all liabilities, losses, damages, claims, costs, expenses, interest,
awards, judgments and penalties suffered or incurred by them in connection with
the arrangement of the financing contemplated under the Loan Agreements and any
information utilized in connection therewith except with respect to information
37
supplied by the Company specifically for including or incorporation by
reference therein.
Section 5.11 PUBLIC ANNOUNCEMENTS. The Company and Parent will consult
with and provide each other the opportunity to review and comment upon any
press release or other public statement or comment prior to the issuance of
such press release or other public statement or comment relating to this
Agreement or the transactions contemplated herein and shall not issue any such
press release or other public statement or comment prior to such consultation
except (a) as may be required by Law or by obligations pursuant to any
agreement with any securities exchange or (b) the Company may disclose
information about this Agreement and the transactions contemplated herein in
the ordinary course in connection with its investor relations practices. Parent
and the Company agree to issue a press release announcing this Agreement.
Section 5.12 INDEMNIFICATION AND INSURANCE.
(a) Parent and Merger Sub agree that all rights to exculpation,
indemnification and payment or reimbursement of fees and expenses incurred in
advance of the final disposition of any claim related to acts or omissions
occurring at or prior to the Effective Time, whether asserted or claimed prior
to, at or after the Effective Time (including any matters arising in connection
with the transactions contemplated by this Agreement), now existing in favor of
the current or former directors, officers or employees, as the case may be (the
"INDEMNIFIED PARTIES"), of the Company or its Subsidiaries as provided in their
respective certificate of incorporation or by-laws (or comparable
organizational documents) or in any agreement shall survive the Merger and
shall continue in full force and effect for a period of six (6) years from and
after the Effective Time. For a period of six (6) years from and after the
Effective Time, Parent and Surviving Company shall (i) maintain in effect (A)
the current provisions regarding indemnification of officers and directors
contained in the certificate of incorporation and bylaws (or comparable
organizational documents) of each of the Company and its Subsidiaries and (B)
any indemnification agreements of the Company and its Subsidiaries with any of
their respective directors, officers and employees existing as on the date
hereof, and (ii) jointly and severally indemnify and hold harmless the
Indemnified Parties to the fullest extent permitted by applicable Law against
any losses, claims, damages, liabilities, costs, expenses (including
reimbursement for reasonable fees and expenses incurred in advance of the final
disposition of any claim, suit, proceeding or investigation to each Indemnified
Party), judgments, fines and, subject to approval by Parent (which shall not be
unreasonably withheld), amounts paid in settlement in connection with any
threatened or actual claim, action, suit, proceeding or investigation to which
such Indemnified Party is, or is threatened to be, made a party based in whole
or in part on, or arising in whole or in part out of, or pertaining to (i) the
fact that such individual is or was a director or officer of the Company or any
of its Subsidiaries or is or was serving at the request of the Company or any
of its Subsidiaries as a director or officer of another person or (ii) this
Agreement or any of the transactions contemplated hereby, whether asserted or
arising before or after the Effective Time.
(b) For a period of six (6) years from and after the Effective
Time, the Surviving Company shall either cause to be maintained in effect the
current policies of directors' and officers' liability insurance and fiduciary
liability insurance maintained by the Company or its Subsidiaries or provide
38
substitute policies or purchase a "tail policy," in either case, 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, except that
in no event shall the Surviving Company be required to pay with respect to such
insurance policies in respect of any one policy year more than 300% of the
annual premium paid by the Company for such insurance for the year ending
December 31, 2005 (the "MAXIMUM AMOUNT"), and if the Surviving Company is
unable to obtain the insurance required by this SECTION 5.12 it shall obtain as
much comparable insurance as possible for an annual premium equal to the
Maximum Amount.
(c) The provisions of this SECTION 5.12 are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties and
their heirs and legal representatives. Parent shall advance expenses, including
reasonable fees and expenses of counsel, to an Indemnified Party as incurred to
the fullest extent permitted under applicable Law upon receipt from the
applicable Indemnified Party of an undertaking to repay such advances if it is
ultimately determined such person is not entitled to indemnification.
(d) The rights of the Indemnified Parties and their heirs and legal
representatives under this SECTION 5.12 shall be in addition to any rights such
Indemnified Parties may have under the certificate of incorporation or by-laws
(or comparable organizational documents) of the Company or any of its
Subsidiaries, or under any applicable agreement or Law.
(e) In the event that either Parent or the Surviving Company or any
of their respective successors or assigns (i) consolidates with or merges into
any other persons, (ii) transfers 50% or more of its properties or assets to
any person or (iii) enters into any similar transaction, then and in each case,
proper provision shall be made so the applicable successors and assigns or
transferees assume the obligations set forth in this SECTION 5.12.
Section 5.13 SECTION 16 MATTERS. Prior to the Effective Time, the
Company shall use all reasonable efforts to approve in advance in accordance
with the procedures set forth in Rule 16b-3 promulgated under the Exchange Act
and the Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP SEC No-Action Letter (January
12, 1999) any dispositions of Company Common Stock (including derivative
securities with respect to Company Common Stock) resulting from the
transactions contemplated by this Agreement by each officer or director of the
Company who is subject to Section 16 of the Exchange Act with respect to equity
securities of the Company.
Section 5.14 CONTROL OF OPERATIONS. Nothing contained in this Agreement
shall give Parent, directly or indirectly, the right to control or direct the
Company's operations prior to the Effective Time. Prior to the Effective Time,
the Company shall exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision over its respective operations.
39
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment (or waiver by Parent and the Company) at or prior to
the Effective Time of the following conditions:
(a) Twenty (20) calendar days after the mailing of the Information
Statement to the Company stockholders shall have elapsed, which, under Rule
14c-2 promulgated under the Exchange Act, is the earliest date upon which
corporate action with respect to the Principal Stockholder Consent may be
taken.
(b) No statute, rule, regulation, executive order, decree, ruling
or injunction shall have been enacted, entered, promulgated or enforced by any
court or other tribunal or Governmental Entity which prohibits the consummation
of the Merger, and shall continue to be in effect.
(c) Any applicable waiting period under the HSR Act shall have
expired or been earlier terminated and all required approvals shall have been
obtained under the EC Merger Regulations.
(d) Any other Company Approvals and other Parent Approvals required
to be obtained for the consummation, as of the Effective Time, of the
transactions contemplated by this Agreement, other than any Company Approvals
and Parent Approvals which the failure to obtain would not reasonably be
expected to have, individually, or in the aggregate, a Material Adverse Effect
shall have been obtained.
Section 6.2 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger is further subject
to the fulfillment of the following conditions:
(a) The representations and warranties of Parent and Merger Sub
contained herein shall be true and correct both when made and at and as of the
Effective Time, as if made at and as of such time (except to the extent
expressly made as of an earlier date, in which case as of such date) with the
same effect as though made as of the Effective Time except where any such
failure of the representations and warranties to be true and correct would not
reasonably be expected to significantly impair or delay the consummation of the
transactions contemplated hereby;
(b) Parent and Merger Sub shall have performed in all material
respects all obligations and complied with all material covenants required by
this Agreement to be performed or complied with by it prior to the Effective
Time; and
(c) Parent shall have delivered to the Company a certificate, dated
the Effective Time and signed by its Chief Executive Officer or any Executive
Vice President certifying to the effect that the conditions set forth in
SECTION 6.2(a) and SECTION 6.2(b) have been satisfied.
40
Section 6.3 CONDITIONS TO OBLIGATION OF PARENT TO EFFECT THE MERGER.
The obligation of Parent and Merger Sub to effect the Merger are further
subject to the fulfillment of the following conditions:
(a) The representations and warranties of the Company contained in
this Agreement (other than the representations and warranties contained in
SECTION 3.2(a), SECTION 3.2(b) and SECTION 3.2(d)) shall be true and correct as
of the Effective Time as though made on and as of the Effective Time except (A)
for changes specifically permitted by the terms of this Agreement, (B) that
those representations and warranties which address matters only as of a
particular date shall be true and correct as of such particular date and (C)
where the failure to be so true and correct, when taken together and
disregarding all qualifications and exceptions contained therein relating to
materiality or Material Adverse Effect, would not reasonably be expected to
have a Material Adverse Effect;
(b) The representations and warranties of the Company contained in
SECTION 3.2(a), SECTION 3.2(b) and SECTION 3.2(d) shall be true and correct as
of the Effective Time as though made on and as of the Effective Time, except
that those representations and warranties which address matters only as of a
particular date shall be true and correct as of such particular date;
(c) The Company shall have performed in all material respects all
obligations and complied with all material covenants required by this Agreement
to be performed or complied with by it prior to the Effective Time; and
(d) The Company shall have delivered to Parent a certificate, dated
the Effective Time and signed by its Chief Executive Officer or Executive Vice
President certifying to the effect that the conditions set forth in SECTION
6.3(a), SECTION 6.3(b) and SECTION 6.3(c) have been satisfied.
Section 6.4 FRUSTRATION OF CLOSING CONDITIONS. None of the Company,
Parent or Merger Sub may rely on the failure of any condition set forth in
SECTION 6.1, SECTION 6.2, SECTION 6.3, as the case may be, to be satisfied if
such failure was caused by such party's failure to act in good faith or use its
reasonable best efforts to consummate the Merger and the other transactions
contemplated by this Agreement, as required by and subject to SECTION 5.8.
ARTICLE VII
TERMINATION
Section 7.1 TERMINATION OR ABANDONMENT. Notwithstanding anything
contained in this Agreement to the contrary, this Agreement may be terminated
and abandoned at any time prior to the Effective Time, whether before or after
any approval of the matters presented in connection with the Merger by the
stockholders of the Company:
(a) by the mutual written consent of the Company and Parent;
(b) by either the Company or Parent, if (i) the Effective Time
shall not have occurred on or before the date that is 120 calendar days after
41
the date of this Agreement (the "TERMINATION DATE") and (ii) the party seeking
to terminate this Agreement pursuant to this SECTION 7.1(b) shall not have
breached in any material respect its obligations under this Agreement in any
manner that shall have proximately caused the failure to consummate the Merger
on or before such date;
(c) by the Company, prior to the date that is 20 business days
after the date of this Agreement in order to concurrently enter into a letter
of intent, agreement in principle, acquisition agreement or other similar
agreement with respect to any Company Superior Proposal, but only so long as:
(i) the Company provides Parent with at least five business
days prior written notice ("SUPERIOR PROPOSAL NOTICE") that it intends to
enter into such letter of intent, agreement in principle, acquisition
agreement or other similar agreement, which Superior Proposal Notice shall
specify the reasons for the Company's intent to enter into such letter of
intent, agreement in principle, acquisition agreement or other similar
agreement and attach the most current version of such document; and
(ii) during the period of five business days following
receipt of a Superior Proposal Notice (the "PARENT REVIEW PERIOD"), if
requested by Parent, the Company and its Representatives shall have
engaged in good faith negotiations with Parent and its Representatives
over amendments or modifications to this Agreement proposed by Parent and
the Board of Directors of the Company shall, in determining whether to
enter into a letter of intent, agreement in principle, acquisition
agreement or other similar agreement, take into account any amendments or
modifications to this Agreement proposed by Parent.
For the avoidance of doubt, (i) if a Company Superior Proposal is received
after the date that is 20 business days after the date of this Agreement, then
the Company shall not be permitted to terminate this Agreement and (ii) upon
receipt by Parent of a Superior Proposal Notice, the Company shall have the
right to terminate this Agreement pursuant to this SECTION 7.1(C) upon entering
into a letter of intent, agreement in principle, acquisition agreement or other
similar agreement with the third party that has made the Company Superior
Proposal (or an amended Company Superior Proposal) that is the subject to the
Superior Proposal Notice (or such amended notice), even if the Company enters
into such letter of intent, agreement in principle, acquisition agreement or
other similar agreement on a date that is later than 20 business days after the
date of this Agreement; PROVIDED, HOWEVER, that the Company's right to
terminate this Agreement pursuant to this SECTION 7.1(C) after the 20-business
day period following the date of this Agreement, shall terminate three business
days following the expiration of the Parent Review Period in connection with a
Company Superior Proposal received during such 20-business day period (or an
amendment to such Company Superior Proposal);
(d) by Parent, if the Principal Stockholders shall have failed to
deliver the Principal Stockholder Consents as contemplated by this Agreement;
(e) by either the Company or Parent, if an order, decree, ruling or
injunction shall have been entered permanently restraining, enjoining or
42
otherwise prohibiting the consummation of the Merger and such order, decree,
ruling or injunction shall have become final and non-appealable and the party
seeking to terminate this Agreement pursuant to this SECTION 7.1(e) shall have
used all reasonable efforts to remove such injunction, order, decree or ruling;
(f) by the Company, if Parent shall have breached or failed to
perform in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach or
failure to perform (i) would result in a failure of a condition set forth in
SECTION 6.1 or SECTION 6.2 and (ii) cannot be cured by the Termination Date,
provided that the Company shall have given Parent written notice, delivered at
least forty-five (45) days prior to such termination, stating the Company's
intention to terminate this Agreement pursuant to this SECTION 7.1(F) and the
basis for such termination;
(g) by Parent, if the Company shall have breached or failed to
perform in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach or
failure to perform (i) would result in a failure of a condition set forth in
SECTION 6.1 or SECTION 6.3 and (ii) cannot be cured by the Termination Date,
provided that Parent shall have given the Company written notice, delivered at
least forty-five (45) days prior to such termination, stating Parent's
intention to terminate the Agreement pursuant to this SECTION 7.1(G) and the
basis for such termination; and
(h) by the Company, if (i) the Merger shall not have been
consummated within nine (9) business days of the first date upon which all
conditions set forth in SECTION 6.1 and SECTION 6.3 (other than 6.3(d)) are
satisfied and (ii) at the time of such termination such conditions continue to
be satisfied.
In the event of termination of this Agreement pursuant to this SECTION
7.1, this Agreement shall terminate (except for the Confidentiality Agreement
and the provisions of SECTION 7.2 and ARTICLE VIII), and there shall be no
other liability on the part of the Company or Parent to the other except
liability arising out of a breach of this Agreement, including as provided in
SECTION 8.12, or as provided for in the Confidentiality Agreement in which case
the aggrieved party shall be entitled to all rights and remedies available at
law or in equity; PROVIDED, HOWEVER, that nothing herein shall relieve any
party from liability for willful breach of this Agreement.
Section 7.2 TERMINATION FEES.
(a) Notwithstanding any provision in this Agreement to the
contrary,
(i) if (A) this Agreement is terminated by Parent pursuant
to SECTION 7.1(g) and (b) concurrently with or within twelve (12) months
after such termination, an agreement in principle, acquisition agreement
or other similar binding agreement with respect to a Qualifying
Transaction shall have been entered into with any person other than Parent
or any of its affiliates or associates, then the Company shall pay to
Parent a fee of $50 million in cash and the Company shall have no further
liability with respect to this Agreement or the transactions contemplated
hereby to Parent, Merger Sub or their stockholders or their
Representatives (PROVIDED that nothing herein shall release any party from
liability for intentional breach or fraud), such payment to be made upon
43
consummation of such Qualifying Transaction, it being understood that in
no event shall the Company be required to pay the fee referred to in this
SECTION 7.2 on more than one occasion; and
(ii) if this Agreement is terminated by the Company pursuant
to SECTION 7.1(c) or by Parent pursuant to SECTION 7.1(d), then the
Company shall pay to Parent a fee of $50 million in cash and the Company
shall have no further liability with respect to this Agreement or the
transactions contemplated hereby to Parent, Merger Sub or their
stockholders or their Representatives (PROVIDED that nothing herein shall
release any party from liability for intentional breach or fraud), such
payment to be made within two (2) business days of such termination by the
Company, it being understood that in no event shall the Company be
required to pay the fee referred to in this SECTION 7.2 on more than one
occasion;
For purposes of this Agreement, "QUALIFYING TRANSACTION" shall mean any (i)
acquisition of the Company by merger or business combination transaction, or
for a "merger of equals" with the Company; (ii) acquisition by any person
(other than Parent, any of its Subsidiaries or their affiliates or associates)
of fifty percent (50%) or more of the assets of the Company and its
Subsidiaries, taken as a whole; or (iii) acquisition by any person of fifty
percent (50%) or more of the outstanding shares of Company Common Stock.
(b) If this Agreement is terminated by the Company pursuant to
SECTION 7.1(h), then Parent shall pay to the Company a fee of $50 million plus
reimbursement for a portion of the expenses incurred by the Company as a result
of the Company's strategic process in cash and Parent and Merger Sub shall have
no further liability with respect to this Agreement or the transactions
contemplated hereby to the Company, its stockholders or their Representatives
(PROVIDED that nothing herein shall release any party from liability for
fraud), such payment to be made within two (2) business days of such
termination by the Company.
(c) Each of the parties hereto acknowledges that the agreements
contained in this SECTION 7.2 are an integral part of the transactions
contemplated by this Agreement. If any party fails to timely pay the amount due
under this SECTION 7.2 when due and as directed in writing by the other party
to accounts designated by such other party within the time periods specified in
this SECTION 7.2 (the "DEFAULTING PARTY") and the other party, in order to
obtain payment, commences on legal action which results in a judgment against
the Defaulting Party for the amount due under this SECTION 7.2, then in
addition to the amount of such judgment the Defaulting Party shall pay to the
other party an amount equal to its documented costs and expenses (including
reasonable attorneys' fees and expenses) incurred in connection with such legal
action, together with interest at the prime rate of JPMorgan Chase Bank, N.A.
in effect on the date such payment was required to be made through the date of
payment.
Section 7.3 AMENDMENT OR SUPPLEMENT. At any time before or after
approval of the matters presented in connection with the Merger by the
respective stockholders of the Company and prior to the Effective Time, this
Agreement may be amended or supplemented in writing by the Company and Parent
with respect to any of the terms contained in this Agreement, except that
following approval of the Merger by the stockholders of the Company there shall
be no amendment or change to the provisions hereof which by Law or in
44
accordance with the rules of any relevant stock exchange requires further
approval by such stockholders without such further approval.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Merger.
Section 8.2 EXPENSES. Except as otherwise set forth in this Agreement,
whether or not the Merger is consummated, all costs and expenses incurred in
connection with the Merger, this Agreement and the transactions contemplated
hereby shall be paid by the party incurring or required to incur such expenses,
except expenses incurred in connection with the printing, filing and mailing of
the Information Statement (including applicable SEC filing fees) shall be
shared equally by the Company and Parent.
Section 8.3 CERTAIN DEFINED TERMS. For the purposes of this Agreement,
unless the context requires otherwise, the following terms shall have the
following meanings:
"AFFILIATE" shall mean, as to any person, any other person which, directly
or indirectly, controls, or is controlled by, or is under common control with,
such person. As used in this definition, "CONTROL" (including, with its
correlative meanings, "controlled by" and "under common control with") shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of management or policies of a person, whether through the
ownership of securities or partnership of other ownership interests, by
contract or otherwise.
"ASSOCIATE" shall have the meaning set forth in Section 12b-2 of the
Exchange Act.
"BUSINESS DAY " shall mean any day, other than a Saturday, Sunday or day
on which banking institutions in New York, New York, Milan, Italy or London,
England, are authorized or obligated by Law or executive order to be closed for
business during normal working hours.
"KNOWLEDGE" shall mean, with respect to (i) the Company, the actual
knowledge of the Chief Executive Officer, the Chief Financial Officer and the
General Counsel of the Company and (ii) Parent, the actual knowledge of the
directors of Parent.
"PERSON" shall mean an individual, a corporation, a partnership, an
association, a trust or any other entity, group (as such term is used in
Section 13 of the Exchange Act) or organization, including, without limitation,
a Governmental Entity.
"SUBSIDIARY" shall mean, with respect to any party, any corporation,
partnership, limited liability company, association, trust or other form of
legal entity of which (i) more than 50% of the outstanding voting securities
are on the date hereof directly or indirectly owned by such party, (ii) such
party or any Subsidiary of such party is a general partner (excluding
45
partnerships in which such party or any Subsidiary of such party does not have
a majority of the voting interests in such partnership), or (iii) such party or
any Subsidiary of such party has the power to direct or cause the direction of
the management and policies, whether through the ownership of voting
securities, by contract or otherwise.
Section 8.4 COUNTERPARTS; EFFECTIVENESS. This Agreement may be
executed in two or more counterparts (including by facsimile), each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument, and shall become effective when one or
more counterparts have been signed by each of the parties and delivered (by
facsimile or otherwise) to the other parties.
Section 8.5 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Delaware, regardless of
the Laws that might otherwise govern under applicable principles of conflict of
Laws thereof.
Section 8.6 SUBMISSION TO JURISDICTION. Each of the parties hereto
unconditionally and irrevocably (a) consents to submit itself to the
jurisdiction of any federal or state court located in the State of Delaware (
"DELAWARE COURT") in the event of any dispute arising out of or relating to
this Agreement or any of the transactions contemplated by this Agreement, or
the breach, termination or validity thereof, (b) agrees that it will not
attempt to deny or defeat such jurisdiction by motion or other request for
leave from any such Delaware Court and irrevocably waives any objections which
it may have now or in the future to the jurisdiction of any Delaware Court
including without limitation objections by reason of lack of personal
jurisdiction, improper venue, or inconvenient forum and (c) agrees that it will
not bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a Delaware Court, except
for an action to enforce an order or judgment of a Delaware Court.
Section 8.7 SPECIFIC PERFORMANCE. Without prejudice to SECTION 7.2,
each of the Company, Parent and Merger Sub recognizes and acknowledges that a
breach by it of any covenants or agreements contained in this Agreement will
cause the other party to sustain damages for which it would not have an
adequate remedy at law for money damages, and therefore each of the Company,
Parent and Merger Sub agrees that in the event of any such breach, the
aggrieved party shall be entitled to specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity. It is accordingly
agreed that the parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement in any Delaware Court.
Section 8.8 WAIVER OF JURY TRIAL. Each of Parent, the Company and
Merger Sub hereby irrevocably waives all right to trial by jury in any action,
suit, proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to this Agreement or any of the transactions
contemplated by this Agreement or the actions of Parent, the Company or Merger
Sub in the negotiation, administration, performance and enforcement hereof.
Section 8.9 NOTICES. Any notice required to be given hereunder shall
be sufficient if in writing and sent electronically by pdf file (with delivery
46
electronically confirmed) or by confirmed facsimile transmission (provided that
any notice received by facsimile transmission or otherwise at the addressee's
location on any business day after 5:00 p.m. (addressee's local time) shall be
deemed to have been received at 9:00 a.m. (addressee's local time) on the next
business day), by reliable overnight delivery service (with proof of service),
hand delivery or certified or registered mail (return receipt requested and
first-class postage prepaid), addressed as follows:
To Parent or Merger Sub:
Cameron 1 S.a.r.l.
▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Facsimile: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
Attention: ▇▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with copies to:
▇▇ ▇▇▇▇▇▇ LLP
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇
Facsimile: ▇▇▇ ▇▇ ▇▇ ▇▇ ▇▇ ▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
and
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
Alder Castle, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Facsimile: ▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
To the Company:
Samsonite Corportion
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Attention: General Counsel
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with copies to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (UK) LLP
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Facsimile: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed. Any party to this Agreement
may notify any other party of any changes to the address or any of the other
details specified in this paragraph; provided that such notification shall only
be effective on the date specified in such notice or five (5) business days
after the notice is given, whichever is later. Rejection or other refusal to
accept or the inability to deliver because of changed address of which no
notice was given shall be deemed to be receipt of the notice as of the date of
such rejection, refusal or inability to deliver.
Section 8.10 ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns.
Section 8.11 SEVERABILITY. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
Section 8.12 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement (including the exhibits and schedules hereto), the Written Consent
and Voting Agreement, the Equity Commitments and the Confidentiality Agreement
constitute the entire agreement, and supersede all other prior agreements and
understandings, both written and oral, between the parties, or any of them,
with respect to the subject matter hereof and thereof. Except for the
provisions of SECTION 5.12 hereof, this Agreement is not intended to and shall
not confer upon any person other than the parties hereto any rights or remedies
hereunder.
Section 8.13 HEADINGS. Headings of the Articles and Sections of this
Agreement are for convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
Section 8.14 INTERPRETATION. When a reference is made in this Agreement
to an Article or Section, such reference shall be to an Article or Section of
this Agreement unless otherwise indicated. The table of contents to this
Agreement is for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
48
"includes" or "including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation." The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant
thereto unless otherwise defined therein. The definitions contained in this
Agreement are applicable to the singular as well as the plural forms of such
terms and to the masculine as well as to the feminine and neuter genders of
such term. Any agreement, instrument or statute defined or referred to herein
or in any agreement or instrument that is referred to herein means such
agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes and references to all attachments thereto and instruments incorporated
therein. References to a person are also to its permitted successors and
assigns. Each of the parties has participated jointly in the drafting and
negotiation of this Agreement. If an ambiguity or question of intent or
interpretation arises, this Agreement must be construed as if it is drafted
jointly by all the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of authorship of any of the
provisions of this Agreement.
Section 8.15 EXTENSION OF TIME, WAIVER, ETC. At any time prior to the
Effective Time, the Company and Parent may (a) extend the time for the
performance of any of the obligations or acts of the other party; (b) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered pursuant hereto; or (c) waive compliance
with any of the agreements or conditions of the other party contained herein.
Notwithstanding the foregoing, no failure or delay by the Company or Parent in
exercising any right hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise of
any other right hereunder. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
CAMERON 1 S.A.R.L.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: ATTORNEY-IN-FACT
CAMERON ACQUISITIONS CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: ATTORNEY-IN-FACT
SAMSONITE CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: VP - LEGAL & GENERAL COUNSEL