EXHIBIT 2.1
CONFORMED COPY
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AGREEMENT AND PLAN OF MERGER
Dated as of April 13, 2001
Among
▇▇▇▇▇ APPAREL GROUP, INC.,
MCN ACQUISITION CORP.
And
▇▇▇▇▇▇▇▇▇▇ APPAREL GROUP INC.
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TABLE OF CONTENTS
Page
ARTICLE I
The Merger
SECTION 1.01. The Merger...................................1
SECTION 1.02. Closing......................................2
SECTION 1.03. Effective Time...............................2
SECTION 1.04. Effects of the Merger........................2
SECTION 1.05. Certificate of Incorporation and By-laws.....3
SECTION 1.06. Directors....................................3
SECTION 1.07. Officers.....................................3
ARTICLE II
Conversion of Securities; Exchange of Certificates
SECTION 2.01. Conversion of Capital Stock..................3
SECTION 2.02. Anti-Dilution Provisions.....................5
SECTION 2.03. Exchange of Certificates.....................6
SECTION 2.04. Adjustment..................................10
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of
the Company...............................10
SECTION 3.02. Representations and Warranties of
Parent and Sub............................34
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business.........................39
SECTION 4.02. Conduct of Business by Parent...............44
SECTION 4.03. No Solicitation.............................45
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Form S-4 and
the Proxy Statement/Prospectus;
Stockholders Meeting......................49
SECTION 5.02. Letters of the Company's Accountants........50
ii
SECTION 5.03. Letters of Parent's Accountants.............50
SECTION 5.04. Access to Information; Confidentiality......51
SECTION 5.05. Commercially Reasonable Efforts;
Notification..............................51
SECTION 5.06. Company Stock Options.......................53
SECTION 5.07. Indemnification, Exculpation and
Insurance.................................56
SECTION 5.08. Fees and Expenses...........................57
SECTION 5.09. Information Supplied........................58
SECTION 5.10. Employee Benefit Matters....................59
SECTION 5.11. Public Announcements........................60
SECTION 5.12. Affiliates..................................60
SECTION 5.13. Stock Exchange Listings.....................60
SECTION 5.14. Tax Treatment...............................61
SECTION 5.15. Rights Agreement............................61
Section 5.16. Transfer Taxes..............................61
SECTION 5.17. Parent Board of Directors...................61
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation
to Effect the Merger......................62
SECTION 6.02. Conditions to Obligations of Parent
and Sub...................................62
SECTION 6.03. Conditions to Obligation of the Company.....64
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination.................................65
SECTION 7.02. Effect of Termination.......................66
SECTION 7.03. Amendment...................................67
SECTION 7.04. Extension; Waiver...........................67
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations
and Warranties............................68
SECTION 8.02. Notices.....................................68
SECTION 8.03. Definitions.................................69
SECTION 8.04. Interpretation..............................69
SECTION 8.05. Counterparts................................70
iii
SECTION 8.06. Entire Agreement; No Third-Party
Beneficiaries.............................70
SECTION 8.07. Governing Law...............................70
SECTION 8.08. Assignment..................................70
SECTION 8.09. Consent to Jurisdiction.....................71
SECTION 8.10. Waiver of Jury Trial........................71
SECTION 8.11. Enforcement.................................72
AGREEMENT AND PLAN OF MERGER dated
as of April 13, 2001, among ▇▇▇▇▇ APPAREL
GROUP, INC. , a Pennsylvania corporation
("Parent"), MCN ACQUISITION CORP., a
Delaware corporation and a direct wholly
owned subsidiary of Parent ("Sub"), and
▇▇▇▇▇▇▇▇▇▇ APPAREL GROUP INC., a Delaware
corporation (the "Company").
WHEREAS the Board of Directors of each of the
Company and Sub has approved and declared advisable, and the
Board of Directors of Parent has approved, this Agreement and
the merger of the Company with and into Sub, upon the terms
and subject to the conditions set forth in this Agreement
(such transactions or the alternative transaction referred to
in Section 1.01 being referred to hereinafter as the
"Merger"), whereby each issued and outstanding share of
Common Stock, par value $0.01 per share, of the Company (the
"Company Common Stock") not directly owned by Parent, Sub or
the Company (other than Appraisal Shares (as defined in
Section 2.01(b))), will be converted into the right to
receive the Merger Consideration (as defined in Section
2.01(a)(iii));
WHEREAS for United States federal income tax
purposes, it is intended that the Merger shall qualify as a
reorganization within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS Parent, Sub and the Company desire to make
certain representations, warranties, covenants and agreements
in connection with the Merger and also to prescribe various
conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing
and the representations, warranties, covenants and agreements
set forth herein, the parties hereto agree as follows:
ARTICLE I
The Merger
SECTION 1.01. The Merger. Upon the terms and
subject to the conditions set forth in this Agreement, and in
accordance with the General Corporation Law of the State of
Delaware ("DGCL"), the Company shall be merged with and into
Sub at the Effective Time (as defined in Section 1.03). At
the Effective Time, the separate corporate existence of
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the Company shall cease and Sub shall continue as the
surviving corporation (the "Surviving Corporation") in the
Merger and shall succeed to and assume all the rights and
obligations of the Company in accordance with the DGCL. At
the election of Parent, any other direct wholly owned
subsidiary of Parent may be substituted for Sub as a
constituent corporation in the Merger.
SECTION 1.02. Closing. Upon the terms and subject
to the conditions set forth in this Agreement, the closing of
the Merger (the "Closing") will take place at 11:00 a.m., New
York time, on the second business day after the satisfaction
or (to the extent permitted by applicable law) waiver of the
conditions set forth in Article VI (other than those that by
their terms cannot be satisfied until the time of the
Closing), at the offices of Cravath, Swaine & ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other
time, date or place agreed to in writing by Parent and the
Company; provided, however, that if all the conditions set
forth in Article VI shall not have been satisfied or (to the
extent permitted by applicable law) waived on such second
business day, then the Closing will take place on the first
business day on which all such conditions shall have been
satisfied or (to the extent permitted by applicable law)
waived. The date on which the Closing occurs is referred to
in this Agreement as the "Closing Date".
SECTION 1.03. Effective Time. Upon the terms and
subject to the conditions set forth in this Agreement, as
soon as practicable after the Closing and on the Closing
Date, a certificate of merger or other appropriate documents
(in any such case, the "Certificate of Merger") shall be duly
prepared, executed and acknowledged by the parties in
accordance with the relevant provisions of the DGCL and filed
with the Secretary of State of the State of Delaware. The
Merger shall become effective upon the filing of the
Certificate of Merger with the Secretary of State of the
State of Delaware or at such subsequent time or date as
Parent and the Company shall specify in the Certificate of
Merger. The time at which the Merger becomes effective is
referred to in this Agreement as the "Effective Time".
SECTION 1.04. Effects of the Merger. The Merger
shall have the effects set forth in Section 259 of the DGCL.
Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property, rights,
privileges, powers and franchises of the Company and Sub
shall be vested in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Sub shall
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become the debts, liabilities and duties of the Surviving
Corporation.
SECTION 1.05. Certificate of Incorporation and
By-laws. (a) The Certificate of Incorporation of Sub as in
effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation
until thereafter changed or amended as provided therein or by
applicable law, except that Article I of the Certificate of
Incorporation of the Surviving Corporation shall be amended
in the Merger to read in its entirety as follows: "The name
of the corporation is ▇▇▇▇▇▇▇▇▇▇ Apparel Group Inc.".
(b) The By-laws of Sub as in effect immediately
prior to the Effective Time shall be the By-laws of the
Surviving Corporation until thereafter changed or amended as
provided therein or by applicable law.
SECTION 1.06. Directors. The directors of Sub
immediately prior to the Effective Time shall be the
directors of the Surviving Corporation until the earlier of
their resignation or removal or until their respective
successors are duly elected and qualified, as the case may
be.
SECTION 1.07. Officers. The officers of the Company
immediately prior to the Effective Time shall be the officers
of the Surviving Corporation until the earlier of their
resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
ARTICLE II
Conversion of Securities; Exchange of Certificates
SECTION 2.01. Conversion of Capital Stock. (a) At
the Effective Time, by virtue of the Merger and without any
action on the part of the holder of any shares of capital
stock of the Company, Parent or Sub:
(i) Capital Stock of Sub. Each issued and
outstanding share of common stock of Sub shall remain
outstanding as one fully paid and nonassessable share of
common stock of the Surviving Corporation.
(ii) Cancelation of Treasury Stock and Parent-
Owned Stock. Each share of Company Common Stock that is
directly owned by the Company (as treasury stock), Parent or
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Sub immediately prior to the Effective Time shall
automatically be canceled and shall cease to exist and no
consideration shall be delivered in exchange therefor.
(iii) Conversion of Company Common Stock. Each
share of Company Common Stock that is issued and outstanding
immediately prior to the Effective Time (other than shares to
be canceled in accordance with Section 2.01(a)(ii) and
Appraisal Shares) shall be converted into the right to
receive the following (A) cash in an amount equal to $10.50
(the "Cash Portion") and (B) a number of a fully paid and
nonassessable shares of Common Stock, par value of $0.01 per
share (the "Parent Common Stock"), of Parent equal to the
Exchange Ratio (as defined below) (the "Stock Portion", and
together with the Cash Portion, the "Merger Consideration").
At the Effective Time, all such shares of Company Common
Stock shall no longer be outstanding and shall automatically
be canceled and shall cease to exist, and each holder of a
certificate that immediately prior to the Effective Time
represented any such shares of Company Common Stock shall
cease to have any rights with respect thereto, except the
right to receive the Merger Consideration, certain dividends
or other distributions in accordance with Section 2.03(c) and
any cash in lieu of any fractional share of Parent Common
Stock in accordance with Section 2.03(e), in each case upon
the surrender of such certificate in accordance with Section
2.03, without interest.
"Exchange Ratio" means 0.2820, provided that if the
Average Closing Price (as defined below) is (i) less than
$29.78, then "Exchange Ratio" means the quotient (rounded to
the nearest 1/10,000th, or if there shall not be a nearest
1/10,000th, the next higher 1/10,000th) obtained by dividing
$8.40 by the Average Closing Price or (ii) greater than
$44.68, then "Exchange Ratio" means the quotient (rounded to
the nearest 1/10,000th, or if there shall not be a nearest
1/10,000th, the next higher 1/10,000th) obtained by dividing
$12.60 by the Average Closing Price.
"Average Closing Price" means the average (rounded
to the nearest 1/100th, or if there shall not be a nearest
1/100th, the next higher 1/100th) of the closing sale prices
per share of Parent Common Stock on the New York Stock
Exchange (the "NYSE") Composite Transactions Tape as reported
in The Wall Street Journal (Northeast Edition) or, if not
reported therein, an another authoritative source selected by
Parent, for the five consecutive trading days on the NYSE
ending with the second trading day on the NYSE prior to the
Closing Date (excluding the Closing Date).
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(b) Appraisal Rights. Notwithstanding anything in
this Agreement to the contrary, shares (the "Appraisal
Shares") of Company Common Stock issued and outstanding
immediately prior to the Effective Time that are held by any
holder who is entitled to demand and properly demands
appraisal of such shares pursuant to, and who complies in all
respects with, the provisions of Section 262 of the DGCL
("Section 262") shall not be converted into the right to
receive the Merger Consideration as provided in Section
2.01(a)(iii), but instead such holder shall be entitled to
payment of the fair value of such shares in accordance with
the provisions of Section 262. At the Effective Time, all
Appraisal Shares shall automatically be canceled and shall
cease to exist or be outstanding, and each holder of
Appraisal Shares shall cease to have any rights with respect
thereto, except the right to receive the fair value of such
shares in accordance with the provisions of Section 262.
Notwithstanding the foregoing, if any such holder shall fail
to perfect or otherwise shall waive, withdraw or lose the
right to appraisal under Section 262 or a court of competent
jurisdiction shall determine that such holder is not entitled
to the relief provided by Section 262, then the right of such
holder to be paid the fair value of such holder's Appraisal
Shares under Section 262 shall cease to exist and such
Appraisal Shares shall be deemed to have been converted at
the Effective Time into, and shall have become, the right to
receive the Merger Consideration as provided in Section
2.01(a)(iii). The Company shall serve prompt notice to Parent
of any demands for appraisal of any shares of Company Common
Stock, and Parent shall have the right to participate in and,
subject to applicable law, direct all negotiations and
proceedings with respect to such demands. The Company shall
not, without the prior written consent of Parent, make any
payment with respect to, or settle or offer to settle, any
such demands, or agree to do any of the foregoing.
SECTION 2.02. Anti-Dilution Provisions. In the
event Parent changes (or establishes a record date for
changing) the number of shares of Parent Common Stock issued
and outstanding prior to the Effective Time as a result of a
stock split, stock dividend, recapitalization, subdivision,
reclassification, combination, exchange of shares or similar
transaction with respect to the outstanding Parent Common
Stock and the record date therefor shall be prior to the
Effective Time, Parent Common Stock payable as part of the
Merger Consideration shall be appropriately adjusted to
reflect such stock split, stock dividend, recapitalization,
subdivision, reclassification, combination, exchange of
shares or similar transaction.
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SECTION 2.03. Exchange of Certificates. (a)
Exchange Agent. Prior to the Effective Time, Parent shall
designate a bank or trust company reasonably acceptable to
the Company to act as exchange agent (the "Exchange Agent")
for the payment of the Merger Consideration and shall (i)
deposit in trust with the Exchange Agent as of the Effective
Time, for the benefit of the holders of shares of Company
Common Stock, for exchange in accordance with this Article
II, through the Exchange Agent, certificates representing the
shares of Parent Common Stock issuable as the Stock Portion
of the Merger Consideration pursuant to Section 2.01(a)(iii)
upon surrender of Certificates (as defined in Section
2.03(b)) and (ii) deposit, or cause the Surviving Corporation
to deposit, in trust with the Exchange Agent, on a timely
basis, as and when needed after the Effective Time, cash
necessary to pay the Cash Portion of the Merger
Consideration, together with certain dividends or other
distributions to be paid in accordance with Section 2.03(c)
and any cash in lieu of any fractional share of Parent Common
Stock to be paid in accordance with Section 2.03(e), upon
surrender of Certificates (such shares of Parent Common Stock
and cash being hereinafter referred to as the "Exchange
Fund").
(b) Exchange Procedure. As soon as reasonably
practicable after the Effective Time, the Exchange Agent
shall mail to each holder of record of an outstanding
certificate or outstanding certificates ("Certificates")
which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock whose shares were
converted into the right to receive the Merger Consideration
with respect thereto pursuant to Section 2.01, (i) a form of
letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the
Certificates held by such person shall pass, only upon proper
delivery of the Certificates to the Exchange Agent and shall
be in customary form and have such other provisions as Parent
may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for
the Merger Consideration with respect thereto. Upon surrender
of a Certificate for cancelation to the Exchange Agent or to
such other agent or agents as may be appointed by Parent,
together with such letter of transmittal, duly completed and
validly executed, and such other documents as may reasonably
be required by the Exchange Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor
(A) the amount of cash and a certificate or certificates
representing the number of whole shares of Parent Common
Stock that such holder has the right to receive pursuant to
Article II, (B)
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certain dividends and other distributions in respect of
Parent Common Stock in accordance with Section 2.03(c) and
(C) cash in lieu of any fractional share of Parent Common
Stock in accordance with Section 2.03(e), and the Certificate
so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Company Common Stock that is not
registered in the transfer records of the Company, the proper
amount of cash and a certificate or certificates representing
the proper number of shares of Parent Common Stock may be
issued and paid as described in the previous sentence in
exchange therefor to a person other than the person in whose
name the Certificate so surrendered is registered if such
Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such
issuance shall pay any transfer or other taxes required by
reason of the payment of cash and issuance of shares of
Parent Common Stock to a person other than the registered
holder of such Certificate or establish to the satisfaction
of Parent that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 2.03(b),
each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon
such surrender the Merger Consideration that the holder
thereof has the right to receive pursuant to the provisions
of this Article II, certain dividends or other distributions
in accordance with Section 2.03(c) and any cash in lieu of
any fractional share of Parent Common Stock in accordance
with Section 2.03(e). No interest shall be paid or shall
accrue on any cash payable upon surrender of any Certificate.
(c) Distributions with Respect to Unexchanged
Shares. No dividends or other distributions declared or made
with respect to shares of Parent Common Stock with a record
date after the Effective Time shall be paid to the holder of
any unsurrendered Certificate with respect to the shares of
Parent Common Stock that such holder has the right to receive
upon surrender of such Certificate, and no cash in lieu of
any fractional share of Parent Common Stock shall be paid in
accordance with Section 2.03(e) to the holder of any
unsurrendered Certificate. Subject to the effect of
applicable escheat or similar laws, following surrender of
any such Certificate there shall be paid to the record holder
of any certificate representing whole shares of Parent Common
Stock representing the Stock Portion of the Merger
Consideration issued in exchange therefor, without interest,
(i) promptly after the time of such surrender, the amount of
dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole
shares of Parent Common Stock and the amount of any cash in
lieu of any fractional share of Parent Common
8
Stock to which such holder is entitled in accordance with
Section 2.03(e) and (ii) at the appropriate payment date, the
amount of dividends or other distributions with a record date
after the Effective Time but prior to such surrender and with
a payment date subsequent to such surrender payable with
respect to such whole shares of Parent Common Stock.
(d) No Further Ownership Rights in Company Common
Stock. All cash paid and shares of Parent Common Stock issued
upon the surrender for exchange of Certificates in accordance
with the terms of this Article II (including any cash paid
pursuant to Section 2.03(c) or 2.03(e)) shall be deemed to
have been issued and paid in full satisfaction of all rights
pertaining to the shares of Company Common Stock formerly
represented by such Certificates. At the close of business on
the day on which the Effective Time occurs the stock transfer
books of the Company shall be closed, and there shall be no
further registration of transfers on the stock transfer books
of the Surviving Corporation of the shares of Company Common
Stock that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates
are presented to the Surviving Corporation or the Exchange
Agent for transfer or any other reason, they shall be
canceled and exchanged as provided in this Article II.
(e) No Fractional Shares. Notwithstanding any other
provision of this Agreement, Parent shall pay each holder of
shares of Company Common Stock exchanged pursuant to the
Merger who would otherwise have been entitled to receive a
fraction of a share of Parent Common Stock (after taking into
account all such shares held by such holder), in lieu
thereof, cash (without interest) in an amount (less the
amount of any withholding taxes which may be required
thereon) equal to such fractional part of a share of Parent
Common Stock multiplied by the average (rounded to the
nearest 1/100th, or if there shall not be a nearest 1/100th,
the next higher 1/100th) of the closing prices per share of
Parent Common stock on the NYSE Composite Transactions Tape
as reported in The Wall Street Journal (Northeast Edition)
or, if not reported therein, an another authoritative source
selected by Parent, for the five consecutive trading days on
the NYSE immediately preceding the Closing Date.
(f) Termination of Exchange Fund. Any portion of
the Exchange Fund that remains undistributed to the holders
of the Certificates for twelve months after the Effective
Time shall be delivered to Parent, upon demand, and any
holders of the Certificates who have not theretofore complied
with this Article II shall thereafter look only to Parent
for, and, subject to Section 2.03(g), Parent shall
9
remain liable for, payment of their claim for Merger
Consideration, certain dividends and other distributions in
accordance with Section 2.03(c) and cash in lieu of any
fractional share of Parent Common Stock in accordance with
Section 2.03(e).
(g) No Liability. None of Parent, Sub, the Company
or the Exchange Agent shall be liable to any person in
respect of any shares of Parent Common Stock (or dividends or
other distributions with respect thereto) or cash from the
Exchange Fund in each case delivered to a public official
pursuant to any applicable abandoned property, escheat or
similar law. If any Certificates shall not have been
surrendered prior to two years after the Effective Time (or
immediately prior to such earlier date on which any Merger
Consideration would otherwise escheat to or became the
property of any Governmental Entity (as defined in Section
3.01(d)), any such Merger Consideration in respect thereof
shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all
claims or interest of any person previously entitled thereto.
(h) Investment of Exchange Fund. The Exchange Agent
shall invest any cash included in the Exchange Fund, as
directed by Parent, on a daily basis; provided, however, that
such investments shall be in (i) obligations of or guaranteed
by the United States of America and backed by the full faith
and credit of the Unites States of America or (ii) commercial
paper obligations rated A-1 or P-1 or better by ▇▇▇▇▇'▇
Investors Service, Inc. or Standard & Poor's Corporation,
respectively. Any interest or other income resulting from
such investments shall be paid to Parent.
(i) Lost Certificates. If any Certificate shall
have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required
by the Surviving Corporation, the posting by such person of a
bond in such reasonable amount as the Surviving Corporation
may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange
Agent will issue in exchange for such lost, stolen or
destroyed Certificate the Merger Consideration, certain
dividends and other distributions in accordance with Section
2.03(c) and cash in lieu of any fractional share of Parent
Common Stock in accordance with Section 2.03(e).
(j) Withholding Rights. Parent, Sub or the Exchange
Agent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this
10
Agreement to any holder of shares of Company Common Stock
such amounts as Parent, Sub or the Exchange Agent is required
to deduct and withhold with respect to the making of such
payment under the Code, or any other provision of domestic or
foreign (whether national, federal, state, provincial, local
or otherwise) tax law. To the extent that amounts are so
withheld and paid over to the appropriate taxing authority by
Parent, Sub or the Exchange Agent, such withheld amounts
shall be treated for all purposes of this Agreement as having
been paid to the holder of the shares of Company Common Stock
in respect of which such deduction and withholding was made
by Parent, Sub or the Exchange Agent.
SECTION 2.04. Adjustment. Notwithstanding anything
in this Agreement to the contrary, if, by reason of the
amount of cash to be paid to holders of shares of Company
Common Stock pursuant to this Article II, the opinions of
counsel referred to in Sections 6.02(g) and 6.03(c) would not
be delivered, then:
(a) the Cash Portion shall be reduced by the
minimum amount necessary to enable such opinions of
counsel to be delivered, and all references in this
Agreement to "Cash Portion" shall mean the Cash Portion
as so decreased; and
(b) the Exchange Ratio shall be increased by the
quotient of (A) the reduction of the Cash Portion
pursuant to clause (i) of this Section 2.04 and (B) the
volume weighted average (rounded to the nearest 1/100th,
or if there shall not be a nearest 1/100th, the next
higher 1/100th) of the trading prices per share of
Parent Common Stock on the NYSE Composite Transactions
Tape as reported in The Wall Street Journal (Northeast
Edition) or, if not reported therein, an another
authoritative source selected by Parent, for the trading
day on the NYSE immediately preceding the Closing Date,
and all references in this Agreement to "Exchange Ratio"
shall mean the Exchange Ratio as so increased.
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of the
Company. Except as set forth on the disclosure schedule (with
specific reference to the Section or Subsection of this
Agreement to which the information stated in such disclosure
relates, with such disclosure to be applicable to
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other Sections or Subsections of this Agreement to the extent
a matter is disclosed in such a way as to make its relevance
to the information called for by such other Section or
Subsections readily apparent) delivered by the Company to
Parent prior to the execution of this Agreement (the "Company
Disclosure Schedule"), the Company represents and warrants to
Parent and Sub as follows:
(a) Organization, Standing and Power. Each of the
Company and its subsidiaries (as defined in Section 8.03) (i)
is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, (ii)
has all requisite corporate, company or partnership power and
authority to carry on its business as now being conducted and
(iii) is duly qualified or licensed to do business (in the
case of Miss ▇▇▇▇▇, Inc. in the State of New Jersey, under
the name ME Acquisition Corp.) and is in good standing in
each jurisdiction in which the nature of its business or the
ownership, leasing or operation of its properties makes such
qualification or licensing necessary, other than (except in
the case of clause (i) above with respect to the Company)
where the failure to be so organized, existing, qualified or
licensed or in good standing individually or in the aggregate
could not reasonably be expected to have a material adverse
effect (as defined in Section 8.03) on the Company. The
Company has made available to Parent true and complete copies
of its Certificate of Incorporation and By-laws and the
certificate of incorporation and by-laws (or similar
organizational documents) of each of its subsidiaries, in
each case as amended to the date of this Agreement. The
Company has made available to Parent and its representatives
true and complete copies of the minutes (or, in the case of
minutes that have not yet been finalized, drafts thereof) of
all meetings of the stockholders, the Board of Directors and
each committee of the Board of Directors of the Company and
each of its subsidiaries held since January 1, 1998.
(b) Subsidiaries. Section 3.01(b) of the Company
Disclosure Schedule lists each subsidiary of the Company. All
the outstanding shares of capital stock or other equity or
voting interests of each such subsidiary are owned by the
Company, by another wholly owned subsidiary of the Company or
by the Company and another wholly owned subsidiary of the
Company, free and clear of all pledges, claims, liens,
charges, encumbrances and security interests of any kind or
nature whatsoever (collectively, "Liens"), except Liens in
favor of the lenders arising under the Second Amended and
Restated Financing Agreement dated as of November 29, 2000
(the "Financing Agreement") among the Company, certain of its
subsidiaries, The CIT Group/Commercial Services Inc., as
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administrative agent, and certain other agents and lenders
party thereto, and are duly authorized, validly issued, fully
paid and nonassessable. Except for the capital stock of, or
other equity or voting interests in, its subsidiaries, the
Company does not own, directly or indirectly, any capital
stock of, or other equity or voting interests in, any person.
(c) Capital Structure. The authorized capital stock
of the Company consists of 30,000,000 shares of Company
Common Stock and 1,000,000 shares of preferred stock, par
value $1.00 per share (the "Company Preferred Stock"). As of
the close of business on April 9, 2001, (i) 9,878,895 shares
of Company Common Stock (excluding treasury shares) were
issued and outstanding, none of which were held by any
subsidiary of the Company, (ii) 868,800 shares of Company
Common Stock were held by the Company in its treasury, (iii)
7,183,929 shares of Company Common Stock were reserved for
issuance pursuant to the 1994 Stock Option Plan, the Stock
Option Plan for Non-Employee Directors, the 1998 Long Term
Incentive Plan, the ME Acquisition Corp. Bonus Plan for
Senior Executives, the Option Bonus Plan for Senior
Executives of JJ Acquisition Corp., the Executive Stock
Option Plan and the Incentive Bonus Plan for Senior Officers
(such plans, collectively, the "Company Stock Plans") (of
which 5,796,441 shares were subject to outstanding Company
Stock Options (as defined below)), (iv) 27,642 shares of
Company Common Stock were reserved and available for issuance
pursuant to the 1994 Employee Stock Purchase Plan (the
"ESPP"), (v) no shares of Company Common Stock were reserved
for issuance upon the exercise of the rights (the "Rights")
distributed to the holders of Company Common Stock pursuant
to the Rights Agreement dated as of January 19, 1996, as
amended as of August 2, 2000, between the Company and
American Stock Transfer & Trust Company, as rights agent (the
"Rights Agreement") and (vi) no shares of Company Preferred
Stock were issued and outstanding or were held by the Company
in its treasury. Section 3.01(c) of the Company Disclosure
Schedule sets forth a true and complete list, as of the close
of business on April 9, 2001, of all outstanding options to
purchase Company Common Stock (collectively, the "Company
Stock Options") and all other rights, if any, to purchase or
receive Company Common Stock granted under the Company Stock
Plans, the number of shares of Company Common Stock subject
to each such Company Stock Option or other purchase right,
the grant dates and exercise prices and vesting schedule of
each such Company Stock Option or other purchase right and
the names of the holder thereof. Other than the Company Stock
Options or pursuant to the ESPP, the ME Acquisition Corp.
Bonus Plan for Senior Executives, the Incentive Bonus Plan
for Senior Officers,
13
the Rights Agreement and the Company's Subordinated
Promissory Notes in the aggregate principal amount of
$69,000,000 issued to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (the "Subordinated
Notes") upon the occurrence of an event of default
thereunder, there are no outstanding rights of any person to
receive Company Common Stock, whether on a deferred basis or
otherwise. There are no outstanding stock appreciation rights
or other rights (other than the Rights, rights that may have
arisen under the ESPP or pursuant to the Subordinated Notes
upon the occurrence of an event of default thereunder) that
are in any way linked to the price of Company Common Stock
that were not granted in tandem with a related Company Stock
Option. As of the close of business on April 9, 2001, there
were outstanding Company Stock Options to purchase 5,796,441
shares of Company Common Stock with exercise prices on a per
share basis lower than the Merger Consideration (determined
based on the closing price per share of Parent Common Stock
on the NYSE trading day immediately preceding the date of
this Agreement), and the weighted average exercise price of
such Company Stock Options was equal to $9.429. Except as set
forth above, as of the close of business on April 9, 2001, no
shares of capital stock of, or other equity or voting
interests in, the Company, or options, warrants or other
rights to acquire any such stock or securities were issued,
reserved for issuance or outstanding. The maximum amount of
payroll deductions that could be accumulated under the ESPP
through June 30, 2001 is $48,378.39.
During the period from April 9, 2001, to the date
of this Agreement, (x) there have been no issuances by the
Company of shares of capital stock of, or other equity or
voting interests in, the Company other than issuances of
shares of Company Common Stock pursuant to the exercise of
Company Stock Options or rights under the ESPP outstanding on
such date as required by their terms as in effect on the date
of this Agreement and (y) there have been no issuances by the
Company or any of its subsidiaries of options, warrants or
other rights to acquire shares of capital stock of, or other
equity or voting interests in, the Company, other than for
rights that may have arisen under the ESPP. All outstanding
shares of capital stock of the Company are, and all shares
that may be issued pursuant to the Company Stock Plans and
the ESPP will be, when issued in accordance with the terms
thereof, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. Except
the Subordinated Notes, there are no bonds, debentures, notes
or other indebtedness of the Company or any of it
subsidiaries, and no securities or other instruments or
obligations of the Company or any of its
14
subsidiaries, the value of which is in any way based upon or
derived from any capital or voting stock of the Company or
having the right to vote (or convertible into, or exchange
able for, securities having the right to vote) on any matters
on which stockholders of the Company may vote. Except as set
forth above, there are no Contracts (as defined in Section
3.01(d)) of any kind to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound obligating the Company or any of its
subsidiaries to issue, grant, deliver or sell, or cause to be
issued, granted, delivered or sold, additional shares of
capital stock of, or securities convertible into, or
exchangeable or exercisable for, shares of capital stock of,
or other equity or voting interests in, the Company or any of
its subsidiaries or obligating the Company or any of its
subsidiaries to issue, grant, deliver, sell or enter into any
such shares, securities, equity or voting interests or
Contracts. There are not any outstanding contractual
obligations of the Company or any of its subsidiaries to (i)
repurchase, redeem or otherwise acquire any shares of capital
stock of, or other equity or voting interests in, the Company
or any of its subsidiaries or (ii) vote or dispose of any
shares of the capital stock of, or other equity or voting
interests in, any of its subsidiaries. To the knowledge of
the Company as of the date of this Agreement, there are no
irrevocable proxies and no voting agreements with respect to
any shares of the capital stock or other voting securities of
the Company or any of its subsidiaries.
As of the date of this Agreement, (i) the only
outstanding indebtedness for borrowed money of the Company
and its subsidiaries is (A) $125,000,000 in aggregate
principal amount of the Company's 12-1/2% Series A Senior
Notes due 2005 and 12-1/2% Series B Senior Notes due 2005
(collectively, the "Senior Notes") issued pursuant to the
12-1/2% Senior Notes Indenture dated as of June 18, 1998, as
supplemented (the "Indenture"), between the Company and
United States Trust Company of New York, as trustee, (B)
$117,429,000 in aggregate principal amount of loans under the
Financing Agreement and (C) $69,000,000 in aggregate
principal amount of Subordinated Notes and (ii) there are no
guarantees by the Company or any of its subsidiaries of
indebtedness of third parties for borrowed money. The
Subordinated Notes are each prepayable in full in accordance
with their terms and without any penalty or premium in
connection therewith.
(d) Authority; Noncontravention. The Company has
the requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions
15
contemplated by this Agreement, subject, in the case of the
consummation of the Merger, to obtaining the Stockholder
Approval (as defined in Section 3.01(r)). The execution and
delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated
by this Agreement have been duly authorized by all necessary
corporate action on the part of the Company and no other
corporate proceedings on the part of the Company are
necessary to approve this Agreement or to consummate the
transactions contemplated by this Agreement, subject, in the
case of the consummation of the Merger, to obtaining the
Stockholder Approval. This Agreement has been duly executed
and delivered by the Company and constitutes a valid and
binding obligation of the Company, enforceable against the
Company in accordance with its terms subject to (i)
applicable bankruptcy, insolvency, fraudulent transfer and
conveyance, moratorium, reorganization, receivership and
similar laws relating to or affecting the enforcement of the
rights and remedies of creditors generally, (ii) principles
of equity (regardless of whether considered and applied in a
proceeding in equity or at law) and (iii) an implied covenant
of good faith and fair dealing. The Board of Directors of the
Company, at a meeting duly called and held at which all
directors of the Company were present, duly and unanimously
adopted resolutions (i) approving and declaring advisable
this Agreement, the Merger and the other transactions
contemplated hereby, (ii) declaring that it is in the best
interests of the Company's stockholders that the Company
enter into this Agreement and consummate the Merger on the
terms and subject to the conditions set forth in this
Agreement, (iii) declaring that this Agreement is fair to the
Company's stockholders, (iv) directing that this Agreement be
submitted to a vote at a meeting of the Company's
stockholders to be held as promptly as practicable and (v)
recommending that the Company's stockholders adopt this
Agreement, which resolutions have not been subsequently
rescinded, modified or withdrawn in any way except as
permitted by Section 4.03(b). The execution and delivery of
this Agreement by the Company and the consummation of the
transactions contemplated hereby and compliance by the
Company with the provisions hereof do not and will not
conflict with, or result in any violation or breach of, or
default (with or without notice or lapse of time, or both)
under, or give rise to a right of, or result in, termination,
cancelation or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any Lien
in or upon any of the properties or assets of the Company or
any of its subsidiaries under, or give rise to any increased,
additional, accelerated or guaranteed rights or entitlements
under, any provision of (i) the Certificate of Incorporation
or By-laws of the
16
Company or the certificate of incorporation or by-laws (or
similar organizational documents) of any of its subsidiaries,
(ii) any loan or credit agreement, bond, debenture, note,
mortgage, indenture, guarantee, lease or other contract,
commitment, agreement, instrument, obligation, binding
arrangement, binding understanding, binding undertaking,
permit, franchise or license, whether oral or written (each,
including all amendments thereto, a "Contract"), to which the
Company or any of its subsidiaries is a party or any of their
respective properties or assets is subject or (iii) subject
to the governmental filings and other matters referred to in
the following sentence, any (A) statute, law, ordinance, rule
or regulation or (B) judgment, order or decree, in each case,
applicable to the Company or any of its subsidiaries or their
respective properties or assets, other than, in the case of
clauses (ii) and (iii), any such conflicts, violations,
breaches, defaults, rights, results, losses, Liens or
entitlements that individually or in the aggregate could not
reasonably be expected to have a material adverse effect on
the Company. No consent, approval, order or authorization of,
or registration, declaration or filing with, any domestic or
foreign (whether national, federal, state, provincial, local
or otherwise) government or any court, administrative agency
or commission or other governmental or regulatory authority
or agency, domestic, foreign or supranational (each, a
"Governmental Entity"), is required by or with respect to the
Company or any of its subsidiaries in connection with the
execution and delivery of this Agreement by the Company or
the consummation by the Company of the transactions
contemplated hereby or compliance with the provisions hereof,
except for (1) the filing of a premerger notification and
report form by the Company under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the "HSR
Act") or any other applicable competition, merger control,
antitrust or similar law or regulation, (2) the filing with
the Securities and Exchange Commission (the "SEC") of a proxy
statement relating to the approval by the Company's
stockholders of this Agreement (as amended or supplemented
from time to time, the "Proxy Statement/Prospectus") and such
reports under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as may be required in connection with
this Agreement, the Merger and the other transactions
contemplated hereby, (3) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware
and appropriate documents with the relevant authorities of
other states in which the Company or any of its subsidiaries
is qualified to do business, (4) any filings required under
the rules and regulations of The Nasdaq Stock Market Inc.
("Nasdaq") and (5) such other consents, approvals, orders,
authorizations,
17
registrations, declarations and filings the failure of which
to be obtained or made individually or in the aggregate could
not reasonably be expected to have a material adverse effect
on the Company.
(e) SEC Documents. The Company has filed with the
SEC, and has heretofore made available to Parent true and
complete copies of, all forms, reports, schedules, statements
and other documents required to be filed with the SEC by the
Company since January 1, 1998 (together with all information
incorporated therein by reference, the "Company SEC
Documents"). No subsidiary of the Company is required to file
any form, report, schedule, statement or other document with
the SEC. As of their respective dates, the Company SEC
Documents complied as to form in all material respects with
the requirements of the Securities Act of 1933, as amended
(the "Securities Act"), or the Exchange Act, as the case may
be, and the rules and regulations of the SEC promulgated
thereunder applicable to such Company SEC Documents, and none
of the Company SEC Documents at the time they were filed
contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light
of the circumstances under which they were made, not
misleading. The financial statements (including the related
notes) included in the Company SEC Documents comply as to
form in all material respects with applicable accounting
requirements and the published rules and regulations of the
SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles ("GAAP")
(except, in the case of 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 in the notes
thereto) and fairly present in all material respects the
consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and their
respective consolidated results of operations and cash flows
for the periods then ended (subject, in the case of unaudited
statements, to normal and recurring year-end audit adjust
ments). Except as set forth in the Company SEC Documents
filed and publicly available prior to the date of this
Agreement (the "Company Filed SEC Documents") (including the
financial statements included therein) and except as arising
hereunder, the Company and its subsidiaries have no
liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise), other than liabilities
and obligations that individually or in the aggregate could
not reasonably be expected to have a material adverse effect
on the Company.
18
(f) Absence of Certain Changes or Events. Since
November 4, 2000, and, other than with respect to clause
(ii)(A) below, except as set forth in the Company Filed SEC
Documents (i) through the date of this Agreement, the Company
and its subsidiaries have conducted their respective
businesses only in the ordinary course consistent with past
practice and (ii) there has not been (A) any state of facts,
change, development, effect, condition or occurrence that
individually or in the aggregate constitutes, has had, or
could reasonably be expected to have a material adverse
effect on the Company, (B) prior to the date of this
Agreement, any declaration, setting aside or payment of any
dividend on, or other distribution (whether in cash, stock or
property) in respect of, any of the Company's or any of its
subsidiaries' capital stock except for dividends by a wholly
owned subsidiary of the Company to its parent, (C) prior to
the date of this Agreement, any purchase, redemption or other
acquisition of any shares of capital stock or any other
securities of the Company or any of its subsidiaries or any
options, warrants, calls or rights to acquire such shares or
other securities, (D) prior to the date of this Agreement,
any split, combination or reclassification of any of the
Company's or any of its subsidiaries' capital stock or any
issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for
shares of capital stock or other securities of the Company or
any of its subsidiaries, (E) (1) any granting by the Company
or any of its subsidiaries to any current or former director,
officer, employee or consultant of any increase in
compensation, bonus or other benefits or any such granting of
any type of compensation or benefits to any current or former
director, officer, employee or consultant not previously
receiving or entitled to receive such type of compensation or
benefit, except for increases of cash compensation in the
ordinary course of business consistent with past practice or
as was required under any Company Benefit Agreement or
Company Benefit Plan (each as defined in Section 3.01(j)) in
effect as of November 4, 2000, (2) any granting by the
Company or any of its subsidiaries to any current or former
director, officer, employee or consultant of the right to
receive any severance or termination pay, or increases
therein, or (3) any entry by the Company or any of its
subsidiaries into, or any amendment or termination of, any
Company Benefit Agreement or any Company Benefit Plan, (F)
any payment of any benefit or the grant or amendment of any
award (including in respect of stock options, stock
appreciation rights, performance units, restricted stock or
other stock-based or stock- related awards or the removal or
modification of any restrictions in any Company Benefit
Agreement or Company
19
Benefit Plan or awards made thereunder) except as required to
comply with any applicable law or any Company Benefit
Agreement or Company Benefit Plan existing on such date, (G)
any damage, destruction or loss, whether or not covered by
insurance, that individually or in the aggregate could
reasonably be expected to have a material adverse effect on
the Company, (H) any material change in financial or tax
accounting methods, principles or practices by the Company or
any of its subsidiaries, except insofar as may have been
required by a change in GAAP or applicable law, (I) any
material election with respect to taxes by the Company or any
of its subsidiaries or any settlement or compromise of any
material tax liability or refund or (J) any revaluation by
the Company or any of its subsidiaries of any of the material
assets of the Company or any of its subsidiaries.
(g) Litigation. There is no suit, claim, action,
investigation or proceeding pending or, to the knowledge of
the Company, threatened against or affecting the Company or
any of its subsidiaries or any of their respective assets
before or by any Governmental Entity that individually or in
the aggregate could reasonably be expected to have a material
adverse effect on the Company, nor is there any judgment,
order or decree of any Governmental Entity or arbitrator
outstanding against the Company or any of its subsidiaries
that individually or in the aggregate could reasonably be
expected to have a material adverse effect on the Company.
(h) Contracts. (i) Except for Contracts filed as
exhibits to the Company Filed SEC Documents, there are no
Contracts that are required to be filed as an exhibit to any
Company SEC Document under the Exchange Act and the rules and
regulations promulgated thereunder. Except for Contracts
filed in unredacted form as exhibits to the Company Filed SEC
Documents and purchase orders entered into in the ordinary
course of business, Section 3.01(h) of the Company Disclosure
Schedule sets forth a true and complete list as of the date
of this Agreement, and the Company has made available to
Parent true and correct copies, of:
(A) all Contracts of the Company or any of its
subsidiaries made in the ordinary course of business
having an aggregate value, or involving payments by or
to the Company, of more than $200,000;
(B) all Contracts of the Company or any of its
subsidiaries made outside the ordinary course of
business;
20
(C) all Contracts to which the Company or any of
its subsidiaries is a party, or that purport to be
binding upon the Company, any of its subsidiaries or any
of its affiliates, that contain a covenant restricting
the ability of the Company or any of its subsidiaries
(or which, following the consummation of the Merger,
could restrict the ability of Parent or any of its
subsidiaries, including the Company and its
subsidiaries) to compete in any business or with any
person or in any geographic area;
(D) all Contracts of the Company or any of its
subsidiaries with any affiliate of the Company (other
than any of its subsidiaries);
(E) all Contracts to which the Company or any of
its subsidiaries is party granting any license to any
material property, asset or right;
(F) all confidentiality, standstill or similar
agreements to which the Company or any of its
subsidiaries is a party;
(G) all joint venture, partnership or other similar
agreements (including all amendments thereto); and
(H) except as set forth in Section 3.01(c), all
loan agreements, credit agreements, notes, debentures,
bonds, mortgages, indentures and other Contracts
(collectively, "debt obligations") pursuant to which any
indebtedness of the Company or any of its subsidiaries
is outstanding or may be incurred and all guarantees of
or by the Company or any of its subsidiaries of any debt
obligations of any other person (other than the Company
or any of its subsidiaries) (except for such
indebtedness or guarantees the aggregate principal
amount of which does not exceed $200,000), including the
respective aggregate principal amounts outstanding as of
the date of this Agreement.
None of the Company or any of its subsidiaries is in
violation or breach of or default (with or without notice or
lapse of time or both) under, or has waived or failed to
enforce any rights or benefits under, any Contract to which
it is a party or any of its properties or assets is subject,
and, to the knowledge of the Company or such subsidiary, no
other party to any of its Contracts is in violation or breach
of or default (with or without notice or lapse of time or
both) under, or has waived or failed to enforce any
21
rights or benefits under, and there has occurred no event
giving to others any right of termination, amendment or
cancelation of, with or without notice or lapse of time or
both, any such Contract except, in each case, for violations,
breaches, defaults, waivers or failures to enforce material
rights or benefits that individually or in the aggregate
could not reasonably be expected to have a material adverse
effect on the Company.
(ii) Each of the Contracts between the Company or
any of its subsidiaries, on the one hand, and any affiliate
of the Company (other than any of its subsidiaries), on the
other hand, was entered into on an arm's length basis.
(i) Compliance with Laws. Except with respect to
Environmental Laws (as defined in Section 3.01(l)(v)) and
taxes (as defined in Section 3.01(n)(v)), which are the
subject of Sections 3.01(l) and 3.01(n), respectively, the
Company and its subsidiaries and their relevant personnel and
operations are and, since January 1, 1998, have been, in
compliance with all statutes, laws, ordinances, rules,
regulations, judgments, orders and decrees of any Govern
mental Entity applicable to their businesses or operations
except for failures to be in compliance that individually or
in the aggregate could not reasonably be expected to have a
material adverse effect on the Company. None of the Company
or any of its subsidiaries has received, since January 1,
1998, a notice or other written communication alleging or
relating to a possible material violation of any material
statute, law, ordinance, rule, regulation, judgment, order or
decree of any Governmental Entity applicable to its
businesses or operations. The Company and its subsidiaries
have in effect all material permits, licenses, variances,
exemptions, authorizations, operating certificates,
franchises, orders and approvals of all Governmental Entities
(collectively, "Permits") necessary or advisable for them to
own, lease or operate their properties and assets and to
carry on their businesses as now conducted, and there has
occurred no violation of, default (with or without notice or
lapse of time or both) under, or event giving to others any
right of termination, amendment or cancelation of, with or
without notice or lapse of time or both, any Permit except
for violations, defaults or events that individually or in
the aggregate could not reasonably be expected to have a
material adverse effect on the Company. There is no event
which has occurred that, to the knowledge of the Company,
could reasonably be expected to result in the revocation,
cancelation, non-renewal or adverse modification of any such
Permit.
22
(j) Absence of Changes in Benefit Plans; Employ
ment Agreements. Except as disclosed in the Company Filed SEC
Documents, since November 4, 2000, none of the Company or any
of its subsidiaries has terminated, adopted, amended in any
material respect or agreed to amend in any material respect
any bonus, pension, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase,
stock appreciation, restricted stock, stock option, phantom
stock, performance, retirement, thrift, savings, stock bonus,
cafeteria, paid time off, perquisite, fringe benefit,
vacation, severance, disability, death benefit,
hospitalization, medical, welfare benefit or other plan,
program, policy, arrangement or understanding (whether or not
legally binding) maintained, contributed to, or required to
be maintained or contributed to by the Company or any other
person or entity that, together with the Company, is treated
as a single employer under Section 414(b), (c), (m) or (o) of
the Code (each, a "Commonly Controlled Entity"), in each case
providing benefits to any current or former directors,
officers, employees or consultants of the Company or any of
its subsidiaries (collectively, "Company Benefit Plans") or
has made any change in any actuarial or other assumption used
to calculate funding obligations with respect to any Company
Pension Plan (as defined in Section 3.01(m)) or any material
change in the manner in which contributions to any Company
Pension Plans are made or the basis on which such
contributions are determined. Except as disclosed in the
Company Filed SEC Documents, there exist no (i) employment
(except employment at will), consulting, deferred
compensation, severance, termination or indemnification
agreements or arrangements between the Company or any of its
subsidiaries, on the one hand, and any current or former
director, officer, employee or consultant of the Company or
any of its subsidiaries, on the other hand or (ii) agreements
or arrangements between the Company or any of its
subsidiaries, on the one hand, and any current or former
director, officer, employee or consultant of the Company or
any of its subsidiaries, on the other hand, the benefits of
which are contingent, or the terms of which are materially
altered, upon the occurrence of a transaction involving the
Company of the nature contemplated by this Agreement (all
such agreements and arrangements described in clauses (i) and
(ii), collectively, "Company Benefit Agreements").
(k) Labor Matters. There are no collective
bargaining agreements or other labor union contracts
applicable to any employees of the Company or any of its
subsidiaries. There is no labor dispute, strike, work
stoppage or lockout, or, to the knowledge of the Company,
23
threat thereof, by or with respect to any employee of the
Company or any of its subsidiaries, except where such
dispute, strike, work stoppage or lockout individually or in
the aggregate could not reasonably be expected to have a
material adverse effect on the Company.
(l) Environmental Matters. (i) Permits and
Authorizations. Each of the Company and its subsidiaries
possesses all material Environmental Permits (as defined
below) necessary to conduct its businesses and operations as
now being conducted.
(ii) Compliance. Each of the Company and its
subsidiaries is in compliance with all applicable
Environmental Laws (as defined below) and all Environmental
Permits except for failures to be in compliance that
individually or in the aggregate could not reasonably be
expected to have a material adverse effect on the Company.
None of the Company or its subsidiaries has received any
written communication from any Governmental Entity or other
person that alleges that the Company or any of its
subsidiaries has violated or is, or may be, liable under any
Environmental Law.
(iii) Environmental Claims. There are no material
Environmental Claims (as defined below) pending or, to the
knowledge of the Company, threatened (A) against the Company
or any of its subsidiaries or (B) against any person whose
liability for any Environmental Claim the Company or any of
its subsidiaries has retained or assumed, either
contractually or by operation of law, and none of the Company
or its subsidiaries has contractually retained or assumed any
liabilities or obligations that could reasonably be expected
to provide the basis for any material Environmental Claim.
(iv) Releases. There have been no Releases (as
defined below) of any Hazardous Materials (as defined below)
that could reasonably be expected to form the basis of any
material Environmental Claim against the Company or any of
its subsidiaries.
(v) Definitions. (A) "Environmental Claims" means
any and all actions, orders, decrees, suits, demands,
directives, claims, liens, investigations, proceedings or
notices of violation by any Governmental Entity or other
person alleging potential responsibility or liability arising
out of, based on or related to (x) the presence, Release or
threatened Release of, or exposure to, any Hazardous
Materials at any location or (y) circumstances
24
forming the basis of any violation or alleged violation of
any Environmental Law.
(B) "Environmental Laws" means all laws, rules,
regulations, orders, decrees, common law, judgments or
binding agreements issued, promulgated or entered into by or
with any Governmental Entity relating to pollution or
protection of the environment or human health.
(C) "Environmental Permits" means all permits,
licenses, registrations and other authorizations required
under applicable Environmental Laws.
(D) "Hazardous Materials" means all hazardous,
toxic, explosive or radioactive substances, wastes or other
pollutants, including petroleum or petroleum distillates,
asbestos, polychlorinated biphenyls, radon gas and all other
substances or wastes of any nature regulated pursuant to any
Environmental Law.
(E) "Release" means any release, spill, emission,
leaking, dumping, injection, pouring, deposit, disposal,
discharge, dispersal, leaching or migration into the
environment or within any building, structure, facility or
fixture.
(m) ERISA Compliance; Excess Parachute Payments.
(i) Section 3.01(m) of the Company Disclosure Schedule
contains a true, complete and correct list of all Company
Benefit Plans, including each "employee pension benefit plan"
(as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) (sometimes
referred to herein as a "Company Pension Plan"), and
"employee welfare benefit plan" (as defined in Section 3(1)
of ERISA), and all Company Benefit Agreements. The Company
has made available to Parent true, complete and correct
copies of (A) each Company Benefit Plan and Company Benefit
Agreement (or, in the case of any unwritten Company Benefit
Plan or Company Benefit Agreement, a description thereof),
(B) the most recent annual reports on Form 5500 filed with
the Internal Revenue Service with respect to each Company
Benefit Plan (if any such report was required), (C) the most
recent summary plan description for each Company Benefit Plan
for which such summary plan description is required, (D) each
trust agreement and group annuity contract relating to any
Company Benefit Plan and (E) the most recent Internal Revenue
Service determination letter for each Company Pension Plan
intended to be tax-qualified under Section 401(a) of the
Code.
25
(ii) Each Company Benefit Plan has been
administered in all material respects in accordance with its
terms. The Company, its subsidiaries and each Company Benefit
Plan are in compliance in all material respects with the
applicable provisions of ERISA and the Code, and all other
domestic or foreign (whether national, federal, state,
provincial, local or otherwise) laws. There is no pending or,
to the knowledge of the Company, threatened, suit, claim
(other than claims for benefits in the ordinary course of
business), action, investigation or proceeding relating to
Company Benefit Plans.
(iii) All Company Pension Plans intended to be
qualified have received favorable determination letters from
the Internal Revenue Service with respect to "TRA" (as
defined in Section 1 of Rev. Proc. 93-39), to the effect that
such Company Pension Plans are qualified and exempt from
federal income taxes under Sections 401(a) and 501(a),
respectively, of the Code, and no such determination letter
has been revoked nor, to the knowledge of the Company, has
any such revocation been threatened, nor has any such Company
Pension Plan been amended since the date of its most recent
determination letter or application therefor in any respect
that would adversely affect its qualification or materially
increase its costs or require security under Section 307 of
ERISA. No Company Pension Plan, other than any Company
Pension Plan that is a "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA (a "Company
Multiemployer Pension Plan"), had, as of the respective last
annual valuation date for such Company Pension Plan, any
"unfunded benefit liabilities" (as such term is defined in
Section 4001(a)(18) of ERISA) based on actuarial assumptions
that have been furnished to Parent, and, as of the date of
this Agreement, there has been no material adverse change in
the financial condition of any Company Pension Plan since its
last such annual valuation date.
(iv) No material liability under Subtitle C or D of
Title IV of ERISA has been or is reasonably expected to be
incurred by the Company or any of its subsidiaries with
respect to any ongoing, frozen or terminated "single-
employer plan" (within the meaning of Section 4001(a)(15) of
ERISA) currently or formerly maintained by any of them, or
the single-employer plan of any Commonly Controlled Entity.
None of the Company, any of its subsidiaries, any officer of
the Company or any of its subsidiaries, any of the Company
Benefit Plans which are subject to ERISA, including the
Company Pension Plans, or any trusts created thereunder or
any trustee or administrator thereof has engaged in a
"prohibited transaction" (as such term is defined in
26
Section 406 of ERISA or Section 4975 of the Code) or any
other material breach of fiduciary responsibility that could
subject the Company, any of its subsidiaries or any officer
of the Company or any of its subsidiaries to any material tax
or penalty on prohibited transactions imposed by such Section
4975 or to any liability under Section 502(i) or 502(l) of
ERISA. None of such Company Benefit Plans and trusts has been
terminated, nor has there been any "reportable event" (as
that term is defined in Section 4043 of ERISA) for which the
30-day reporting requirement has not been waived, with
respect to any Company Benefit Plan during the last five
years, and no notice of a reportable event will be required
to be filed in connection with this Agreement, the Merger or
any other transaction contemplated hereby. Neither the
Company nor any of its subsidiaries has incurred a "complete
withdrawal" or a "partial withdrawal" (as such terms are
defined in Sections 4203 and 4205, respectively, of ERISA)
since the effective date of such Sections 4203 and 4205 with
respect to any Company Multiemployer Pension Plan. All
contributions and premiums required to be made under the
terms of any Company Benefit Plan as of the date of this
Agreement have been timely made or have been reflected on the
most recent consolidated balance sheet filed or incorporated
by reference in the Company Filed SEC Documents. Neither any
Company Pension Plan nor any single-employer plan of any
Commonly Controlled Entity has an "accumulated funding
deficiency" (as such term is defined in Section 302 of ERISA
or Section 412 of the Code), whether or not waived.
(v) With respect to each Company Benefit Plan that
is an employee welfare benefit plan, (A) such Company Benefit
Plan is not funded through a "welfare benefit fund" (as such
term is defined in Section 419(e) of the Code), (B) such
Company Benefit Plan that is a "group health plan" (as such
term is defined in Section 5000(b)(1) of the Code) complies
in all material respects with the applicable requirements of
Section 4980B(f) of the Code and (C) such Company Benefit
Plan (including any such plan covering retirees or other
former employees) may be amended or terminated on or at any
time after the Effective Time without the imposition
individually or in the aggregate of any material liability on
the Company or any of its subsidiaries. Neither the Company
nor any of its subsidiaries has any obligations for retiree
health or life benefits under any Company Benefit Plan or
Company Benefit Agreement.
(vi) Neither the execution and delivery of this
Agreement by the Company nor the obtaining of the Stockholder
Approval nor the consummation of the Merger or
27
any other transaction contemplated by this Agreement will (A)
entitle any current or former director, officer, employee or
consultant of the Company or any of its subsidiaries to
severance pay, (B) except pursuant to the Company Stock Plans
which provide for Company Stock Options, accelerate the time
of payment or vesting or trigger any payment or funding
(through a grantor trust or otherwise) of compensation or
benefits under, or increase the amount payable or trigger any
other material obligation pursuant to, any Company Benefit
Plan or Company Benefit Agreement or (C) result in any breach
or violation of, or a default under, any Company Benefit Plan
or Company Benefit Agreement.
(vii) Other than payments that may be made to the
persons listed in Section 3.01(m)(vii) of the Company
Disclosure Schedule, any amount or economic benefit that
could be received (whether in cash or property or the vesting
of property) as a result of the execution and delivery of
this Agreement by the Company, the obtaining of the
Stockholder Approval or the consummation of the Merger or any
other transaction contemplated by this Agreement (including
as a result of termination of employment on or following the
Effective Time) by any current or former director, officer,
employee or consultant of the Company or any of its
affiliates who is a "disqualified individual" (as such term
is defined in proposed Treasury Regulation Section 1.280G-1)
under any Company Benefit Plan or Company Benefit Agreement
or otherwise would not be characterized as an "excess
parachute payment" (as defined in Sec tion 280G(b)(1) of the
Code), and no disqualified individual is entitled to receive
any additional payment from the Company or any of its
subsidiaries or any other person in the event that the excise
tax under Section 4999 of the Code is imposed on such
disqualified individual. Set forth in Section 3.01(m)(vii) of
the Company Disclosure Schedule is the "base amount" (as
defined in Section 280G(b)(3) of the Code) as of the date of
this Agreement for each person listed in Section 3.01(m)(vii)
of the Company Disclosure Schedule.
(viii) The Company and its subsidiaries do not have
any material liability or obligations, including under or
pursuant to any Company Benefit Plan or Company Benefit
Agreement, arising out of the hiring of persons to provide
services to the Company or any of its subsidiaries and
treating such persons as consultants or independent
contractors and not as employees of the Company or its
subsidiaries.
28
(n) Taxes. (i) Except for matters that individually
or in the aggregate could not reasonably be expected to have
a material adverse effect on the Company:
(A) Each of the Company and its subsidiaries has
timely filed all tax returns (as defined below in clause
(v)) required to be filed by it. Each of the Company and
each of its subsidiaries has timely paid or caused to be
timely paid all taxes due with respect to the taxable
periods covered by such tax returns and all other taxes
as are due, and the most recent financial statements
contained in the Company Filed SEC Documents reflect an
adequate reserve (in addition to any reserve for
deferred taxes established to reflect timing differences
between book and tax income) for all taxes payable by
the Company and its subsidiaries for all taxable periods
and portions thereof through the date of such financial
statements.
(B) Except in respect of the Internal Revenue
Service audit for the 1998 taxable year, no tax return
of the Company or any of its subsidiaries is under audit
or examination by any taxing authority, and no notice of
such an audit or examination has been received by the
Company or any of its subsidiaries. There is no
deficiency, refund litigation, proposed adjustment or
matter in controversy with respect to any taxes due and
owing by the Company or any of its subsidiaries. Each
deficiency resulting from any completed audit or
examination relating to taxes by any taxing authority
has been timely paid. No issues relating to taxes were
raised by the relevant taxing authority in any completed
audit or examination that could reasonably be expected
to recur in a later taxable period. The United States
federal income tax returns of the Company and its
subsidiaries have either been examined and settled with
the Internal Revenue Service or closed by virtue of the
expiration of the applicable statute of limitations for
all years through 1996.
(C) Except in respect of the Internal Revenue
Service audit for the 1998 taxable year, there is no
currently effective agreement or other document
extending, or having the effect of extending, the period
of assessment or collection of any taxes and no power of
attorney (other than powers of attorney authorizing
employees of the Company to act on behalf of the
Company) with respect to any taxes has been executed or
filed with any taxing authority.
29
(D) No Liens for taxes exist with respect to any
assets or properties of the Company or any of its
subsidiaries, except for statutory Liens for taxes not
yet due.
(E) Neither the Company nor any of its subsidiaries
will be required to include in a taxable period ending
after the Effective Time taxable income attributable to
income that accrued (for purposes of the financial
statements of the Company included in the Company Filed
SEC Documents) in a prior taxable period but was not
recognized for tax purposes in any prior taxable period
as a result of the installment method of accounting, the
completed contract method of accounting, the long-term
contract method of accounting, the cash method of
accounting or Section 481 of the Code or comparable
provisions of any other, domestic or foreign (whether
national, federal, state, provincial, local or
otherwise) tax laws, or for any other reason.
(F) The Company and its subsidiaries have complied
with all applicable statutes, laws, ordinances, rules
and regulations relating to the payment and withholding
of taxes (including withholding of taxes pursuant to
Sections 1441, 1442, 3121 and 3402 of the Code and
similar provisions under any other domestic or foreign
(whether national, federal, state, provincial, local or
otherwise) tax laws) and have, within the time and the
manner prescribed by law, withheld from and paid over to
the proper Governmental Entities all amounts required to
be so withheld and paid over under applicable laws.
(ii) None of the Company or any of its subsidiaries
has constituted either a "distributing corporation" or a
"controlled corporation" (in each case, 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(e) of the
Code (A) in the two years prior to the date of this Agreement
or (B) 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 Merger.
(iii) The Company was not, at any time during the
period specified in Section 897(c)(1)(A)(ii) of the Code, a
United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code.
30
(iv) None of the Company or any of its subsidiaries
has taken any action, or failed to take any action, or has
knowledge of any fact, agreement, plan or other circumstance
that could reasonably prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the
Code.
(v) As used in this Agreement, (A) "taxes" shall
include (1) all forms of taxation, whenever created or
imposed, and whether domestic or foreign, and whether imposed
by a national, federal, state, provincial, local or other
Governmental Entity, including all interest, penalties and
additions imposed with respect to such amounts, (2) liability
for the payment of any amounts of the type described in
clause (1) as a result of being a member of an affiliated,
consolidated, combined or unitary group and (3) liability for
the payment of any amounts as a result of being party to any
tax sharing agreement or as a result of any express or
implied obligation to indemnify any other person with respect
to the payment of any amount described in clause (1) or (2)
and (B) "tax returns" shall mean all domestic or foreign
(whether national, federal, state, provincial, local or
otherwise) returns, declarations, statements, reports,
schedules, forms and information returns relating to taxes
and any amended tax return.
(o) Title to Properties. (i) Each of the Company
and its subsidiaries has good and marketable title to, or
valid leasehold interests in, all of its properties and
assets except for such as are no longer used or useful in the
conduct of its businesses or as have been disposed of in the
ordinary course of business and except for defects in title,
easements, restrictive covenants and similar encumbrances
that individually or in the aggregate could not reasonably be
expected to have a material adverse effect on the Company.
All such properties and assets, other than properties and
assets in which the Company or any of its subsidiaries has a
leasehold interest, are free and clear of all Liens, except
for Liens arising under the Financing Agreement and Liens
that individually or in the aggregate could not reasonably be
expected to have a material adverse effect on the Company.
(ii) Each of the Company and its subsidiaries has
complied with the terms of all leases to which it is a party
and under which it is in occupancy, and all such leases are
in full force and effect, except for such noncompliances or
failures to be in full force and effect that individually or
in the aggregate could not reasonably be expected to have a
material adverse effect on the Company. The Company and its
subsidiaries enjoy peaceful and undisturbed possession under
31
all such leases, except for failures to do so that
individually or in the aggregate could not reasonably be
expected to have a material adverse effect on the Company.
(p) Intellectual Property. (i) Section 3.01(p) of
the Company Disclosure Schedule lists all material registered
trademarks, tradenames, service marks, registered copyrights
and applications therefor, patents and patent applications,
if any, owned by or licensed to the Company or any of its
subsidiaries as of the date of this Agreement. Each of the
Company and its subsidiaries owns, or is validly licensed or
otherwise has the right to use, in each case free and clear
of any Liens other than Liens arising under the Financing
Agreement, all Intellectual Property (as defined below in
clause (iv)) used or necessary to carry on its business as
now being conducted except for Intellectual Property the
failure of which to own or have the right to use could not
reasonably be expected to have a material adverse effect on
the Company. The Company has made available to Parent true,
complete and correct copies of all license agreements
relating to Intellectual Property to which the Company or any
of its subsidiaries is a party as of the date of this
Agreement.
(ii) None of the Company or any of its subsidiaries
has infringed upon, misappropriated or otherwise come into
conflict with any Intellectual Property or other proprietary
information of any other person, except for any such
infringement, misappropriation or other conflict that
individually or in the aggregate could not reasonably be
expected to have a material adverse effect on the Company.
None of the Company or any of its subsidiaries has received
any written material charge, complaint, claim, demand or
notice alleging any such infringement, misappropriation or
other conflict (including any claim that the Company or any
of its subsidiaries must license or refrain from using any
Intellectual Property or other proprietary information of any
other person), or is party to or the subject of any pending
or, to the knowledge of the Company, threatened, material
suit, claim, action, investigation or proceeding before or by
any Governmental Entity with respect to any such
infringement, misappropriation or conflict, that has not been
settled or otherwise fully resolved. To the Company's
knowledge, no other person has infringed upon,
misappropriated or otherwise come into conflict with any
Intellectual Property owned by, licensed to or otherwise used
by the Company or any of its subsidiaries, except for any
such infringement, misappropriation or other conflict that
individually or in the aggregate could not reasonably be
expected to have a material adverse effect on the Company.
32
(iii) Each of the Company and its subsidiaries has
taken all reasonable and necessary steps to protect its
material Intellectual Property and rights thereunder, and to
the knowledge of the Company no such rights to material
Intellectual Property have been lost or are in jeopardy of
being lost as a result of any act or omission by the Company
or any of its subsidiaries.
(iv) As used in this Agreement, "Intellectual
Property" shall mean trademarks (registered or unregistered),
service marks, brand names, certification marks, trade dress,
assumed names, trade names and other indications of origin,
the goodwill associated with the foregoing and registrations
in any jurisdiction of, and applications in any jurisdiction
to register, the foregoing, including any extension,
modification or renewal of any such registration or
application; trade secrets and confidential information and
rights in any jurisdiction to limit the use or disclosure
thereof by any person; registration or applications for
registration of copyrights in any jurisdiction, and any
renewals or extensions thereof; any similar intellectual
property or proprietary rights similar to any of the
foregoing; licenses, immunities, covenants not to ▇▇▇ and the
like relating to any of the foregoing; and any claims or
causes of action arising out of or related to any
infringement, misuse or misappropriation of any of the
foregoing.
(q) State Takeover Statutes. Assuming the accuracy
of the representations and warranties of Parent and Sub set
forth in Section 3.02(l), the approval of the Merger by the
Board of Directors of the Company referred to in Section
3.01(d) constitutes approval of the Merger for purposes of
Section 203 of the DGCL and represents the only action
necessary to ensure that the restrictions on business
combinations (as such term is defined therein) set forth in
Section 203 of the DGCL does not and will not apply to the
execution or delivery of this Agreement or the consummation
of the Merger and the other transactions contemplated hereby.
To the knowledge of the Company, no other state takeover or
similar statute or regulation is applicable to this
Agreement, the Merger or the other transactions contemplated
hereby.
(r) Voting Requirements. Assuming the accuracy of
the representations and warranties of Parent and Sub set
forth in Section 3.02(l), the affirmative vote at the
Stockholders Meeting (as defined in Section 5.01(b)) or any
adjournment or postponement thereof of the holders of a
majority of the votes represented by all the outstanding
shares of Company Common Stock in favor of adopting this
33
Agreement (the "Stockholder Approval") is the only vote of
the holders of any class or series of the Company's capital
stock necessary to approve or adopt this Agreement or the
Merger. Assuming the accuracy of the representations and
warranties of Parent and Sub set forth in Section 3.02(l),
the affirmative vote of the holders of any class or series of
the Company's capital stock is not necessary to approve any
transaction contemplated by this Agreement (other than the
adoption of this Agreement).
(s) Brokers; Schedule of Fees and Expenses. No
broker, investment banker, financial advisor or other person,
other ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., the fees and expenses of
which will be paid by the Company, is entitled to any
broker's, finder's, financial advisor's or other similar fee
or commission in connection with the trans actions
contemplated by this Agreement based upon arrange ments made
by or on behalf of the Company. The Company has delivered to
Parent true and complete copies of all agree ments under
which any such fees or expenses are payable and all
indemnification and other agreements related to the
engagement of the persons to whom such fees are payable. The
fees and expenses of any accountant, broker, financial
advisor, consultant, legal counsel or other person retained
by the Company in connection with this Agreement or the
transactions contemplated hereby or incurred or to be
incurred by the Company in connection with this Agreement or
the transactions contemplated hereby will not exceed the fees
and expenses set forth in Section 3.01(s) of the Company
Disclosure Schedule without the consent of Parent (such
consent not to be unreasonably withheld or delayed).
(t) Opinion of Financial Advisor. The Company has
received the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., in customary
form, to the effect that, as of the date of this Agreement,
the consideration to be received in the Merger by the
Company's stockholders (other then Parent and its affiliates)
is fair to the Company's stockholders from a financial point
of view, a copy of which opinion will be delivered to Parent
by the Company promptly after receipt by the Company.
(u) Rights Agreement. The Board of Directors of the
Company has approved an amendment to the Rights Agreement to
the effect that (i) no "Shares Acquisition Date" or
"Distribution Date" (as such terms are defined in the Rights
Agreement) will occur as a result of the approval, execution
or delivery of this Agreement or the consummation of the
Merger and the other transactions contemplated hereby, (ii)
neither Parent nor Sub will be an "Acquiring Person" (as such
term is defined in the Rights
34
Agreement), (iii) the Rights will expire immediately prior to
the Effective Time and (iv) the Rights Agreement will
otherwise be inapplicable to Parent while this Agreement is
in effect.
SECTION 3.02. Representations and Warranties of
Parent and Sub. Except as set forth on the disclosure
schedule (with specific reference to the Section or
Subsection of this Agreement to which the information stated
in such disclosure relates, with such disclosure to be
applicable to other Sections or Subsections of this Agreement
to the extent a matter is disclosed in such a way as to make
its relevance to the information called for by such other
Section or Subsection readily apparent) delivered by Parent
to the Company prior to the execution of this Agreement (the
"Parent Disclosure Schedule"), Parent and Sub represent and
warrant to the Company as follows:
(a) Organization, Standing and Corporate Power.
Each of Parent and Sub (i) is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated, (ii) has all
requisite corporate power and authority to carry on its
business as now being conducted and (iii) is duly qualified
or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the
ownership, leasing or operation of its properties makes such
qualification or licensing necessary, other than where the
failure to be so organized, existing, qualified or licensed
or in good standing individually or in the aggregate could
not reasonably be expected to have a material adverse effect
on Parent. Parent has made available to the Company true and
complete copies of its Restated Articles of Incorporation and
By-laws and the Certificate of Incorporation and By-laws of
Sub, in each case as amended to the date of this Agreement.
(b) Capital Structure. As of the date of this
Agreement, the authorized capital stock of Parent consists of
200,000,000 shares of Parent Common Stock and 1,000,000
shares of preferred stock, par value $0.01 per share (the
"Parent Preferred Stock"). As of the close of business on
April 9, 2001, (i) 119,845,655 shares of Parent Common Stock
(excluding treasury shares) were issued and outstanding, (ii)
19,336,845 shares of Parent Common Stock were held by Parent
in its treasury, (iii) 13,882,690 shares of Parent Common
Stock were reserved for issuance pursuant to outstanding
unexercised employee stock options granted pursuant to
Parent's stock option plans or otherwise and (iv) no shares
of Parent Preferred Stock were issued and outstanding. As of
the date of this Agreement, there are no
35
bonds, debentures, notes or other indebtedness of Parent, and
no securities or other instruments or obligations of Parent
the value of which is in any way based upon or derived from
any capital or voting stock of Parent, having the right to
vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which
stockholders of Parent may vote. Except as set forth above,
as of the date of this Agreement, there are no material
Contracts of any kind to which Parent is a party or by which
Parent is bound obligating Parent to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares
of capital stock of, or other equity or voting interests in,
or securities convertible into, or exchangeable or
exercisable for, shares of capital stock of, or other equity
or voting interests in, Parent or obligating Parent to issue,
grant, extend or enter into any such security, option,
warrant, call, right or Contract. As of the date of this
Agreement, there are not any outstanding material contractual
obligations of Parent to repurchase, redeem or otherwise
acquire any shares of capital stock of, or other equity or
voting interests in, Parent.
(c) Authority; Noncontravention. Parent and Sub
have the requisite corporate power and authority to execute
and deliver this Agreement and to consummate the trans
actions contemplated by this Agreement. The execution and
delivery of this Agreement by Parent and Sub and the
consummation by Parent and Sub of the transactions
contemplated by this Agreement have been duly authorized by
all necessary corporate action on the part of Parent and Sub
and no other corporate proceedings on the part of Parent or
Sub are necessary to approve this Agreement or to consummate
the transactions contemplated by this Agreement. This
Agreement has been duly executed and delivered by Parent and
Sub, as applicable, and constitutes a valid and binding
obligation of Parent and Sub, as applicable, enforceable
against Parent and Sub, as applicable, in accordance with its
terms subject to (i) applicable bankruptcy, insolvency,
fraudulent transfer and conveyance, moratorium,
reorganization, receivership and similar laws relating to or
affecting the enforcement of the rights and remedies of
creditors generally, (ii) principles of equity (regardless of
whether considered and applied in a proceeding in equity or
at law) and (iii) an implied covenant of good faith and fair
dealing. The execution and delivery of this Agreement by
Parent and Sub and the consummation of the transactions
contemplated hereby and the compliance by Parent and Sub with
the provisions of this Agreement do not and will not conflict
with, or result in any violation or breach of, or default
(with or without notice or lapse of time, or both) under, or
give rise to a right of, or result in,
36
termination, cancelation or acceleration of any obligation or
to loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of
Parent under, or give rise to any increased, additional,
accelerated or guaranteed rights or entitlements under, any
provision of (i) the Restated Articles of Incorporation or
By-laws of Parent or the Certificate of incorporation or By-
laws of Sub, (ii) any Contract to which Parent or Sub is a
party or any of their respective properties or assets is
subject or (iii) subject to the governmental filings and
other matters referred to in the following sentence, any (A)
statute, law, ordinance, rule or regulation or (B) judgment,
order or decree, in each case, applicable to Parent or Sub or
their respective properties or assets, other than, in the
case of clauses (ii) and (iii), any such conflicts,
violations, defaults, rights, results, losses, Liens or
entitlements that individually or in the aggregate could not
reasonably be expected to prevent or materially impede or
delay the consummation of the Merger or the other
transactions contemplated by this Agreement. No consent,
approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is
required by or with respect to Parent or Sub in connection
with the execution and delivery of this Agreement by Parent
and Sub or the consummation by Parent and Sub of the
transactions contemplated hereby or the compliance with the
provisions of this Agreement, except for (1) the filing of a
premerger notification and report form under the HSR Act or
any other applicable competition, merger control, antitrust
or similar law or regulation, (2) the filing with the SEC of
the registration statement on Form S-4 to be filed with the
SEC by Parent in connection with the issuance of Parent
Common Stock in the Merger (the "Form S-4") and such reports
under the Exchange Act as may be required in connection with
this Agreement, the Merger and the other transactions
contemplated hereby, (3) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware
and appropriate documents with the relevant authorities of
other states in which the Company is qualified to do
business, (4) filings with the NYSE and (5) such other
consents, approvals, orders, authorizations, registrations,
declarations and filings (i) as may be required under the
"blue sky" laws of various states or (ii) the failure of
which to be obtained or made individually or in the aggregate
could not reasonably be expected to prevent or materially
impede or delay the consummation of the Merger or the other
transactions contemplated by this Agreement.
(d) Parent SEC Documents. Parent has filed with the
SEC all forms, reports, schedules, statements and other
documents required to be filed with the SEC by Parent since
37
January 1, 1998 (together with all information incorporated
therein by reference, the "Parent SEC Documents"). As of
their respective dates, the Parent SEC Documents complied as
to form in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the SEC promulgated thereunder
applicable to such Parent SEC Documents, and none of the
Parent SEC Documents at the time they were filed contained
any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The
financial statements (including the related notes) of Parent
included in the Parent SEC Documents comply as to form in all
material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with GAAP (except,
in the case of 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 in the notes
thereto) and fairly present in all material respects the
consolidated financial position of Parent and its
consolidated subsidiaries as of the dates thereof and their
consolidated results of operations and cash flows for the
periods then ended (subject, in the case of unaudited
statements, to normal and recurring year-end audit
adjustments).
(e) Absence of Certain Changes or Events. Since
December 31, 2000, there has not been any state of facts,
change, development, effect, condition or occurrence that
individually or in the aggregate constitutes, has had, or
could reasonably be expected to have, a material adverse
effect on Parent.
(f) Voting Requirements. No vote of the holders of
shares of Parent Common Stock or any other class or series of
capital stock of Parent is necessary to approve or adopt this
Agreement, the Merger or the other transactions contemplated
hereby.
(g) Taxes. None of Parent or any of its
subsidiaries has taken any action, or failed to take any
action, or has knowledge of any fact, agreement, plan or
other circumstance that could reasonably prevent the Merger
from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
(h) Litigation. As of the date of this Agreement,
there is no suit, claim, action, investigation or proceeding
pending against or affecting Parent or any of its
38
subsidiaries or any of their respective assets before or by
any Governmental Entity that individually or in the aggre
gate could reasonably be expected to prevent or materially
impede or delay the consummation of the Merger and the other
transaction contemplated by this Agreement nor is there any
judgment, order or decree of any Governmental Entity or
arbitrator outstanding against Parent or any of its
subsidiaries that individually or in the aggregate could
reasonably be expected to prevent or materially impede or
delay the consummation of the Merger and the other
transactions contemplated by this Agreement.
(i) Brokers. No broker, investment banker,
financial advisor or other person, other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
& Co. Incorporated, the fees and expenses of which will be
paid by Parent, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of
Parent.
(j) Interim Operations of Sub. Sub was formed
solely for the purpose of engaging in the transactions
contemplated hereby and has engaged in no business other than
in connection with the transactions contemplated by this
Agreement.
(k) Parent Common Stock. The shares of Parent
Common Stock to be issued in connection with the Merger
(including pursuant to the Adjusted Options), when issued in
accordance with the terms and provisions of this Agreement,
will be duly authorized, validly issued, fully paid and non-
assessable and will not be subject to any preemptive or other
statutory right of stockholders and will be issued in
compliance with applicable United States federal and state
securities laws.
(l) Company Capital Stock. Each of Parent and Sub
is not, nor at any time during the last three years has
either been, an "interested stockholder" of the Company as
defined in Section 203 of the DGCL. Each of Parent and Sub
does not own (directly or indirectly, beneficially or of
record) and is not a party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting
or disposing of, any shares of capital stock of the Company
(other than as contemplated by this Agreement).
(m) Financing. Parent has all funds, either from
its available cash and cash equivalents or from borrowings
currently available to be made under its existing credit
facilities, necessary to consummate the Merger and the other
39
transactions contemplated hereby on the terms and subject to
the conditions contemplated hereby.
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business. (a) Conduct of
Business. During the period from the date of this Agreement
to the Effective Time, except as consented to in writing by
Parent or as specifically required or permitted by this
Agreement, the Company shall, and shall cause its
subsidiaries to, carry on their respective businesses, and
continue all pricing, sales, receivables and payables
practices, in the ordinary course consistent with past
practice and comply with all applicable laws, rules and
regulations in all material respects and use all commercially
reasonable efforts to preserve their assets, brands, licenses
and technology and their relationships with customers,
suppliers, licensors, licensees, distributors and others
having material business dealings with them. Without limiting
the generality of the foregoing, during the period from the
date of this Agreement to the Effective Time, except as
consented to in writing by Parent, as set forth in Section
4.01(a) of the Company Disclosure Schedule or as specifically
required or permitted by this Agreement, the Company shall
not, and shall not permit any of its subsidiaries to:
(i) (A) declare, set aside or pay any dividends on,
or make any other distributions (whether in cash, stock
or property) in respect of, any of its capital stock,
except for dividends by a direct or indirect wholly
owned subsidiary of the Company to its parent, (B)
purchase, redeem or otherwise acquire any shares of
capital stock or any other securities of the Company or
its subsidiaries or any options, warrants, calls or
rights to acquire any such shares or other securities or
(C) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution
for shares of its capital stock or any of its other
securities;
(ii) issue, deliver, sell, pledge or otherwise
encumber any shares of its capital stock, any other
equity or voting interests or any securities convertible
into, or exchangeable for, or any options, warrants,
calls or rights to acquire, any such shares, voting
securities or convertible or exchangeable
40
securities or any stock appreciation rights or other
rights that are linked in any way to the price of
Company Common Stock (other than pursuant to the ME
Acquisition Corp. Bonus Plan for Senior Executives, the
Rights and the issuance of shares of Company Common
Stock upon the exercise of Company Stock Options or
rights under the ESPP, in each case in accordance with
their terms as in effect on the date of this Agreement);
(iii) amend or propose to amend its certificate of
incorporation or by-laws (or similar organizational
documents);
(iv) directly or indirectly acquire or agree to
acquire (A) by merging or consolidating with, or by
purchasing all or a substantial portion of the assets
of, or by any other manner, any assets constituting a
business or any corporation, partnership, limited
liability company, joint venture or association or other
entity or division thereof, or any direct or indirect
interest in any of the foregoing, or (B) any assets
other than Inventory or other immaterial assets in each
case in the ordinary course of business consistent with
past practice;
(v) directly or indirectly sell, lease, license,
sell and leaseback, mortgage or otherwise encumber or
subject to any Lien (other than Liens arising under the
Financing Agreement) or otherwise dispose of any of its
properties or assets or any interest therein, except
sales of Inventory, factoring of its accounts receivable
and sales of immaterial assets, in each case in the
ordinary course of business consistent with past
practice;
(vi) (x) repurchase, prepay or incur any
indebtedness or guarantee any indebtedness of another
person or issue or sell any debt securities or options,
warrants, calls or other rights to acquire any debt
securities of the Company or any of its subsidiaries,
guarantee any debt securities of another person, enter
into any "keep well" or other agreement to maintain any
financial statement condition of another person or enter
into any arrangement having the economic effect of any
of the foregoing, except for short-term borrowings
incurred and letters of credit opened, in each case in
the ordinary course of business consistent with past
practice or (y) make any loans, advances (other than in
respect of travel expenses advanced to employees in the
ordinary course of business) or
41
capital contributions to, or investments in, any other
person, other than the Company or any direct or indirect
wholly owned subsidiary of the Company;
(vii) incur or commit to incur any capital
expenditures, or any obligations or liabilities in
connection therewith, in any manner inconsistent in any
material respect with the Company's capital budget for
2001, a true and complete copy of which (including all
back-up materials) has been provided to Parent prior to
the date of this Agreement;
(viii) pay, discharge, settle or satisfy any
material claims (including claims of stockholders),
liabilities or obligations (whether absolute, accrued,
asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction in the
ordinary course of business consistent with past
practice or as required by their terms as in effect on
the date of this Agreement of claims, liabilities or
obligations reflected or reserved against in the most
recent audited financial statements (or the notes
thereto) of the Company included in the Company Filed
SEC Documents (for amounts not in excess of such
reserves) or incurred since the date of such financial
statements in the ordinary course of business consistent
with past practice, or waive, release, grant or transfer
any right of material value, other than in the ordinary
course of business consistent with past practice, or
waive any material benefits of, or agree to modify in
any adverse respect, or, subject to the terms hereof,
fail to enforce, or consent to any matter with respect
to which its consent is required under, any
confidentiality, standstill or similar agreement to
which the Company or any of its subsidiaries is a party;
(ix) enter into, modify, amend or terminate (A) any
Contract which if so entered into, modified, amended or
terminated could be reasonably likely to (x) have a
material adverse effect on the Company, (y) impair in
any material respect the ability of the Company to
perform its obligations under this Agreement or (z)
prevent or materially delay the consummation of the
transactions contemplated by this Agreement or (B)
except in the ordinary course of business consistent
with past practice, any other material Contract to which
the Company or any subsidiary thereof is a party;
42
(x) enter into any Contract to the extent
consummation of the transactions contemplated by this
Agreement or compliance by the Company with the
provisions of this Agreement could reasonably be
expected to conflict with, or result in a violation or
breach of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of, or
result in, termination, cancelation or acceleration of
any obligation or to a loss of a benefit under, or
result in the creation of any Lien in or upon any of the
properties or assets of the Company or any of its
subsidiaries under, or give rise to any increased,
additional, accelerated, or guaranteed right or
entitlements of any third party under, or result in any
material alteration of, any provision of such Contract;
(xi) enter into any Contract containing any
restriction on the ability of the Company or any of its
subsidiaries to assign its rights, interests or
obligations thereunder, unless such restriction
expressly excludes any assignment to Parent or any of
its subsidiaries in connection with or following the
consummation of the Merger and the other transactions
contemplated by this Agreement;
(xii) (A) except as otherwise contemplated by this
Agreement or as required to comply with applicable law
or any Contract, Company Benefit Plan or Company Benefit
Agreement existing on the date of this Agreement, pay
any material benefit not provided for as of the date of
this Agreement under any Contract, Company Benefit
Agreement or Company Benefit Plan or (B) adopt or enter
into any collective bargaining agreement or other labor
union contract applicable to the employees of the
Company or any subsidiary thereof;
(xiii) except as required to comply with applicable
law or any provision of any Company Benefit Plan,
Company Benefit Agreement or other Contract as in effect
on the date of this Agreement, (A) take any action to
fund or in any other way secure the payment of
compensation or benefits under any Company Benefit Plan,
Company Benefit Agreement or other Contract or (B) take
any action to accelerate the vesting or payment of any
compensation or benefit under any Company Benefit Plan
or Company Benefit Agreement or other Contract;
(xiv) maintain insurance at less than current
levels or otherwise in a manner inconsistent with past
practice;
43
(xv) take any action (or omit to take any action)
if such action (or omission) would or could reasonably
be expected to result in (A) any representation and
warranty of the Company set forth in this Agreement that
is qualified as to materiality becoming untrue, (B) any
such representation and warranty that is not so
qualified becoming untrue in any material respect or (C)
any condition to the Merger set forth in Article VI not
being satisfied;
(xvi) commence any suit, action or proceeding
(other than a suit, claim, action or proceeding in
connection with the collection of accounts receivable,
to enforce the terms of this Agreement or as a result of
a suit, action or proceeding commenced against the
Company or any of its subsidiaries);
(xvii) change its fiscal year, revalue any of its
material assets or, except as required by generally
accepted accounting principles, make any changes in
accounting methods, principles or practices;
(xviii) engage in (A) any trade loading practices
or any other promotional sales or discount activity with
any customers or distributors with the effect of
accelerating to pre-Closing periods sales to the trade
or otherwise that would otherwise be expected (based on
past practice) to occur in post-Closing periods, (B) any
practice which would have the effect of accelerating to
pre-Closing periods collections of receivables that
would otherwise be expected (based on past practice) to
be made in post-Closing periods, (C) any practice which
would have the effect of postponing to post-Closing
periods payments by the Company or any of its
subsidiaries that would otherwise be expected (based on
past practice) to be made in pre- Closing periods or (D)
any other promotional sales, discount activity or
inventory overstocking or understocking, in each case in
this clause (D) in a manner outside the ordinary course
of business; or
(xix) authorize any of, or commit, resolve or agree
to take any of, the foregoing actions.
(b) Certain Tax Matters. During the period from the
date of this Agreement to the Effective Time, the Company
shall, and shall cause each of its subsidiaries to, (i)
timely file all tax returns ("Post-Signing Returns") required
to be filed by it, (ii) timely pay all taxes due and payable
in respect of such Post-Signing Returns that are so filed,
(iii) accrue a reserve in its books and records
44
and financial statements in accordance with past practice for
all taxes payable by it for which no Post-Signing Return is
due prior to the Effective Time, (iv) promptly notify Parent
of any suit, claim, action, investigation, proceeding or
audit (collectively, "Actions") pending against or with
respect to the Company or any of its subsidiaries in respect
of any tax and not settle or compromise any such Action
without Parent's consent, (v) not make any material tax
election without Parent's consent, and (vi) cause any and all
existing tax sharing agreements, tax indemnity obligations
and similar agreements, arrangements and practices with
respect to taxes to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is otherwise bound to be terminated as of the
Closing Date so that after such date neither the Company nor
any of its subsidiaries shall have any further rights or
liabilities thereunder.
(c) Advice of Changes; Filings. The Company shall
(i) at the request of Parent, confer with Parent on a regular
and frequent basis to report on operational matters and other
matters requested by Parent and (ii) promptly advise Parent
orally and in writing of any change or event that could
reasonably be expected to have a material adverse effect on
the Company. Upon obtaining knowledge thereof, the Company
shall give prompt notice to Parent of any representation or
warranty made by it contained in this Agreement becoming
untrue or inaccurate such that the condition set forth in
Section 6.02(a) would not be satisfied; provided, however,
that no such notification shall affect the representations,
warranties, covenants or agreements of the parties or the
conditions to the obli gations of the parties under this
Agreement. The Company and Parent shall each promptly provide
the other copies of all filings made by such party with any
Governmental Entity in connection with this Agreement and the
transactions contemplated hereby, other than the portions of
such filings that include confidential information not
directly related to the transactions contemplated by this
Agreement.
(d) Litigation. The Company shall provide to Parent
immediate written notice and copies of all pleadings and
correspondence in connection with any suit, claim, action,
investigation or proceeding before or by a Governmental
Entity against the Company and/or its directors relating to
the transactions contemplated by this Agreement.
SECTION 4.02. Conduct of Business by Parent. During
the period from the date of this Agreement to the Effective
Time, Parent agrees that, except as consented to
45
in writing by the Company or as specifically required or
permitted by this Agreement:
(a) Conduct of Business. Parent shall use its
reasonable best efforts to preserve intact its business
in all material respects and preserve its relationships
with customers, suppliers, licensors, licensees,
distributors and others having material business
dealings with it.
(b) Dividends; Changes in Share Capital. Parent
shall not, and shall not permit any of its subsidiaries
to (i) declare or pay any dividends on or make other
distributions in respect of any of its capital stock,
except dividends by a direct or indirect wholly owned
subsidiary of Parent to its parent or (ii) acquire any
shares of its capital stock or any securities
convertible into or exercisable for any shares of its
capital stock through a self-tender offer.
(c) Liquidation. Parent shall not adopt a plan of
complete or partial liquidation with respect to Parent
or resolutions providing for or authorizing such a
liquidation or a dissolution.
(d) Governing Documents. Except to the extent
required to comply with its obligations hereunder,
required by law or required by the rules and regulations
of the NYSE, Parent shall not amend or propose to amend
its amended and restated articles of incorporation or
by-laws in such a manner as would cause holders of
Company Common Stock that receive Parent Common Stock
pursuant to the Merger to be treated differently than
other holders of Parent Common Stock after the Closing
Date.
(e) No General Authorization. Parent shall not, nor
shall it permit any of its subsidiaries to, authorize
any of, or commit, resolve or agree to take any of, the
actions prohibited by paragraphs (a) through (d) of this
Section 4.02.
(f) Advice of Changes. Parent shall promptly advise
the Company orally and in writing of any change or event
known to Parent that could reasonably be expected to
have a material adverse effect on Parent.
SECTION 4.03. No Solicitation. (a) The Company
shall not, nor shall it permit any of its subsidiaries to, or
authorize or permit any director, officer or employee of the
Company or any of its subsidiaries or any investment
46
banker, attorney, accountant or other advisor or
representative of the Company or any of its subsidiaries to,
directly or indirectly, (i) solicit, initiate or knowingly
encourage, or take any other action knowingly to facilitate,
any Takeover Proposal (as defined below) or any inquiries or
the making of any proposal that constitutes or could
reasonably be expected to lead to a Takeover Proposal or (ii)
enter into, continue or otherwise participate in any
discussions or negotiations regarding, or furnish to any
person any information with respect to, or otherwise
cooperate in any way with, any Takeover Proposal; provided,
however, that at any time prior to obtaining the Stockholder
Approval, the Board of Directors of the Company may, in
response to a bona fide written Takeover Proposal that such
Board of Directors determines in good faith constitutes or is
reasonably likely to lead to a Superior Proposal (as defined
below), and which Takeover Proposal was unsolicited and did
not otherwise result from a breach of this Section 4.03, and
subject to compliance with Section 4.03(c) and (d), (x)
furnish information with respect to the Company and its
subsidiaries to the person making such Takeover Proposal (and
its representatives) pursuant to a customary confidentiality
agreement, provided that all such information is provided or
made available on a prior or substantially concurrent basis
to Parent, and (y) participate in discussions or negotiations
with the person making such Takeover Proposal (and its
representatives) regarding such Takeover Proposal. Without
limiting the foregoing, it is understood that any violation
of the restrictions set forth in the preceding sentence by
any director, officer or employee of the Company or any of
its subsidiaries or any investment banker, attorney,
accountant or other advisor or representative of the Company
or any of its subsidiaries shall be deemed to be a breach of
this Section 4.02(a) by the Company.
The term "Takeover Proposal" means any inquiry,
proposal or offer from any person relating to, or that is
reasonably likely to lead to, any direct or indirect
acquisition, in one transaction or a series of transactions,
including any merger, consolidation, tender offer, exchange
offer, stock acquisition, asset acquisition, binding share
exchange, business combination, recapitalization,
liquidation, dissolution, joint venture or similar
transaction, of (A) assets or businesses that constitute or
represent 20% or more of the total revenue, operating income,
EBITDA or assets of the Company and its subsidiaries, taken
as a whole, or (B) 20% or more of the outstanding shares of
Company Common Stock or capital stock of, or other equity or
voting interests in, any of the Company's subsidiaries
directly or indirectly holding,
47
individually or taken together, the assets or businesses
referred to in clause (A) above, in each case other than the
transactions contemplated by this Agreement.
(b) Neither the Board of Directors of the Company
nor any committee thereof shall (i) (A) withdraw (or modify
in a manner adverse to Parent or Sub) the recommendation by
such Board of Directors or any such committee of this
Agreement or the Merger, (B) determine that this Agreement or
the Merger is no longer advisable, (C) recommend that the
stockholders of the Company reject this Agreement or the
Merger, (D) recommend the approval or adoption of any
Takeover Proposal or (E) resolve, agree or propose publicly
to take any such actions, in each case unless the Board of
Directors or a committee thereof determines in good faith,
after consulting with legal counsel, that the failure to take
any such action set forth in this Section 4.03(b)(i) would be
reasonably likely to result in a breach of its fiduciary
duties under applicable law (each such action set forth in
this Section 4.03(b)(i) being referred to herein as an
"Adverse Recommendation Change"), (ii) adopt or approve any
Takeover Proposal, or withdraw its approval of this
Agreement, or resolve or agree to take any such actions,
(iii) without limiting Section 4.03(b)(i), propose publicly
to adopt or approve any Takeover Proposal or propose publicly
to withdraw its approval of this Agreement, or resolve or
agree to take any such actions, or (iv) cause or permit the
Company to enter into any letter of intent, memorandum of
understanding, agreement in principle, acquisition agreement,
merger agreement, option agreement, joint venture agreement,
partnership agreement or other agreement (each, an
"Acquisition Agreement") constituting or related to, or which
is intended to or is reasonably likely to lead to, any
Takeover Proposal (other than a confidentiality agreement
referred to in Section 4.03(a)), or resolve or agree to take
any such actions. Notwithstanding anything in this Section
4.03 to the contrary, at any time prior to obtaining the
Stockholder Approval, the Board of Directors of the Company
may, in response to a Superior Proposal that was unsolicited
and that did not otherwise result from a breach of Section
4.03(a), cause the Company to terminate this Agreement
pursuant to Section 7.01(f) and concurrently enter into a
binding Acquisition Agreement containing the terms of a
Superior Proposal; provided, however, that the Company shall
not terminate this Agreement pursuant to Section 7.01(f), and
any purported termination pursuant to Section 7.01(f) shall
be void and of no force or effect, unless the Company shall
have complied with all provisions of this Section 4.03,
including the notification provisions in this Section 4.03,
and with all applicable requirements
48
of Sections 5.08(b) (including the payment of the Termination
Fee (as defined in Section 5.08(b)) prior to or
simultaneously with such termination); and provided further,
however, that the Company shall not exercise its right to
terminate this Agreement pursuant to Section 7.01(f) until
after the fourth business day following Parent's receipt of
written notice (a "Notice of Superior Proposal") from the
Company advising Parent that the Board of Directors of the
Company has received a Superior Proposal and that such Board
of Directors will, subject to any action taken by Parent
pursuant to this sentence, cause the Company to accept such
Superior Proposal, specifying the terms and conditions of the
Superior Proposal and identifying the person making such
Superior Proposal (it being understood and agreed that any
amendment to the price or any other material term of a
Superior Proposal shall require a new Notice of Superior
Proposal and a new four business day period).
The term "Superior Proposal" means any bona fide
binding written offer not solicited by or on behalf of the
Company made by a third party that if consummated would
result in such third party (or in the case of a direct merger
between such third party and the Company, the stockholders of
such third party) acquiring, directly or indirectly, more
than 50% of the voting power of the Company Common Stock or
all or substantially all the assets of the Company and its
subsidiaries, taken as a whole, for consideration consisting
of cash and/or securities that the Board of Directors of the
Company determines in its good faith judgment (after
consultation with a financial advisor of nationally
recognized reputation) to have a higher value than the
consideration to be received by the Company's stockholders in
connection with the Merger, taking into account, among other
things, any changes to the terms of this Agreement offered by
Parent in response to such Superior Proposal or otherwise.
(c) In addition to the obligations of the Company
set forth in paragraphs (a) and (b) of this Section 4.03, the
Company promptly shall advise Parent in writing of any
request for information that the Company reasonably believes
could lead to or contemplates a Takeover Proposal or of any
Takeover Proposal, or any inquiry the Company reasonably
believes could lead to any Takeover Proposal, the terms and
conditions of such request, Takeover Proposal or inquiry
(including any subsequent material amendment or modification
to such terms and conditions) and the identity of the person
making any such request, Takeover Proposal or inquiry. The
Company shall keep Parent informed in all material respects
on a timely basis of the status and details (including
49
material amendments or proposed amendments) of any such
request, Takeover Proposal or inquiry.
(d) Nothing contained in this Section 4.03 or
elsewhere in this Agreement shall prohibit the Company from
(i) taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) and Rule 14d-9 promulgated
under the Exchange Act or (ii) making any disclosure to the
Company's stockholders if, in the good faith judgment of the
Board of Directors of the Company, after consultation with
outside counsel, failure so to disclose would be inconsistent
with applicable law; provided, however, that in no event
shall the Company or its Board of Directors or any committee
thereof take, agree or resolve to take any action prohibited
by Section 4.03(b)(i) or 4.03(b)(ii).
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Form S-4 and the
Proxy Statement/Prospectus; Stockholders Meeting. (a) As
promptly as practicable following the date of this Agreement,
the Company and Parent shall prepare and the Company shall
file with the SEC the Proxy Statement/Prospectus and Parent
shall prepare and file with the SEC the Form S-4, in which
the Proxy Statement/Prospectus shall be included as a
prospectus. Each of the Company and Parent shall use all
commercially reasonable efforts to have the Form S-4 declared
effective under the Securities Act as promptly as practicable
after such filing. Each of the Company and Parent shall use
all commercially reasonable efforts to respond as promptly as
practicable to any comments of the SEC with respect thereto
and to cause the Proxy Statement/Prospectus to be mailed to
the Company's stockholders as promptly as practicable after
the Form S-4 is declared effective under the Securities Act.
Parent shall use all commercially reasonable efforts to take
any action required to be taken under any applicable state
securities laws in connection with the issuance of Parent
Common Stock in connection with the Merger and under the
Company Stock Plans. Each of the Company and Parent shall
furnish all information concerning it to the other as may be
reasonably requested in connection with any such action and
the preparation, filing and distribution of the Proxy
Statement/Prospectus. Each of the Company and Parent shall
promptly notify the other upon the receipt of any comments
from the SEC or its staff or any request from the SEC or its
staff for amendments or supplements to the Form S-4 or the
Proxy Statement/Prospectus and shall promptly provide the
50
other with copies of all correspondence between it and its
representatives, on the one hand, and the SEC and its staff,
on the other hand. Notwithstanding the foregoing, prior to
filing the Form S-4 (or any amendment or supplement thereto)
or filing or mailing the Proxy Statement/Prospectus (or any
amendment or supplement thereto) or responding to any
comments of the SEC with respect thereto, each of the Company
and Parent, as the case may be, (i) shall provide the other
party with a reasonable opportunity to review and comment on
such document or response, (ii) shall include in such
document or response all comments reasonably proposed by such
other party and (iii) shall not file or mail such document or
respond to the SEC prior to receiving such other party's
approval, which approval shall not be unreasonably withheld
or delayed.
(b) The Company shall, as promptly as practicable
following the date of this Agreement, establish a record date
(which will be as promptly as reasonably practicable
following the date of this Agreement) for, duly call, give
notice of, convene and hold a meeting of its stockholders
(the "Stockholders Meeting") for the purpose of obtaining the
Stockholder Approval, regardless of whether the Board of
Directors of the Company determines at any time that this
Agreement or the Merger is no longer advisable or recommends
that the stockholders of the Company reject this Agreement or
the Merger. The Company shall cause the Stockholders Meeting
to be held as promptly as practicable following the date of
this Agreement. The Company shall, through its Board of
Directors, recommend to its stockholders that they adopt this
Agreement, and shall include such recommendation in the Proxy
Statement/Prospectus, in each case subject to its rights
under Section 4.03(b)(i). Without limiting the generality of
the foregoing, the Company agrees that its obligations
pursuant to this Section 5.01(b) shall not be affected by the
commencement, public proposal, public disclosure or
communication to the Company or any other person of any
Takeover Proposal.
SECTION 5.02. Letters of the Company's Accountants.
The Company shall use all commercially reasonable efforts to
cause to be delivered to Parent two "comfort" letters in
customary form from Ernst & Young LLP, the Company's
independent public accountants, one dated a date within two
business days before the date on which the Form S-4 shall
become effective and one dated a date within two business
days before the Closing Date, each addressed to Parent.
SECTION 5.03. Letters of Parent's Accountants.
Parent shall use all commercially reasonable efforts to
51
cause to be delivered to the Company two "comfort" letters in
customary form from BDO ▇▇▇▇▇▇▇, LLP, Parent's independent
public accountants, one dated a date within two business days
before the date on which the Form S-4 shall become effective
and one dated a date within two business days before the
Closing Date, each addressed to the Company.
SECTION 5.04. Access to Information;
Confidentiality. (a) The Company shall, and shall cause each
of its subsidiaries to, afford to Parent and to Parent's
officers, employees, investment bankers, attorneys,
accountants and other advisors and representatives reasonable
and prompt access during normal business hours during the
period prior to the Effective Time or the termination of this
Agreement to all their respective properties, assets, books,
contracts, commitments, directors, officers, employees,
attorneys, accountants, auditors, other advisors and
representatives and records and, during such period, the
Company shall, and shall cause each of its subsidiaries to,
make available to Parent on a prompt basis (i) a copy of each
report, schedule, form, statement and other document filed or
received by it during such period pursuant to the
requirements of domestic or foreign (whether national,
federal, state, provincial, local or otherwise) laws and (ii)
all other information concerning its business, properties and
personnel as Parent may reasonably request (including the
work papers of Ernst & Young LLP). Except as required by law,
Parent will hold, and will direct its officers, employees,
investment bankers, attorneys, accountants and other advisors
and representatives to hold any and all information received
from the Company, directly or indirectly, in confidence in
accordance with the Confidentiality Agreement among Parent
and the Company dated as of November 9, 2000 (the
"Confidentiality Agreement").
(b) Parent shall afford to the Company and to the
Company's officers and employees access to its officers,
banks and records during normal business hours during the
period prior to the Effective Time or the termination of this
Agreement at a level consistent with such access provided for
due diligence purposes prior to the date of this Agreement.
SECTION 5.05. Commercially Reasonable Efforts;
Notification. (a) Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties
agrees to use all commercially reasonable efforts to take, or
cause to be taken, all actions, that are necessary, proper or
advisable to consummate and make effective the Merger and the
other transactions contemplated by this
52
Agreement, including using all commercially reasonable
efforts to accomplish the following: (i) the taking of all
reasonable acts necessary to cause the conditions precedent
set forth in Article VI to be satisfied, (ii) the obtaining
of all necessary actions or nonactions, waivers, consents,
approvals, orders and authorizations from Governmental
Entities and the making of all necessary registrations,
declarations and filings and the taking of all reasonable
steps as may be necessary to obtain an approval or waiver
from, or to avoid an action or proceeding by, any
Governmental Entity and (iii) the obtaining of all necessary
consents, approvals or waivers from third parties. In
connection with and without limiting the foregoing, the
Company and its Board of Directors shall, if any state
takeover statute or similar statute or regulation is or
becomes applicable to this Agreement, the Merger or any of
the other transactions contemplated hereby, use all
commercially reasonable efforts to ensure that the Merger and
the other transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize the
effect of such statute or regulation on this Agreement, the
Merger and the other transactions contemplated hereby.
Notwithstanding the foregoing or any other provision of this
Agreement to the contrary, in no event shall any party hereto
be required to agree or proffer to divest or hold separate,
or take any other action with respect to, any of the material
assets (whether tangible or intangible) or businesses of
Parent and its subsidiaries, taken as a whole, or the Company
and subsidiaries, taken as a whole, and the Company shall
not, and shall not permit any of its subsidiaries to, take
any such action with respect to any such assets or businesses
without the express written consent of Parent. The Company
and Parent shall provide such assistance, information and
cooperation to each other as is reasonably requested in
connection with the foregoing and, in connection therewith,
shall notify the other person promptly following the receipt
of any comments from any Governmental Entity and of any
request by any Governmental Entity for amendments,
supplements or additional information in respect of any
registration, declaration or filing with such Governmental
Entity and shall supply the other person with copies of all
correspondence between such person or any of its
representatives, on the one hand, and any Governmental
Entity, on the other hand.
(b) The Company, without limiting Section 3.02(m),
agrees to provide, and will cause its subsidiaries and its
and their respective officers, employees and advisors to
provide, all cooperation reasonably necessary in connection
with (i) the arrangement of any financing to be
53
consummated contemporaneous with or at or after the Closing
in respect of the transactions contemplated by this Agreement
and (ii) the matters set forth in Section 5.05(b) of the
Company Disclosure Schedule. In addition, in conjunction with
the obtaining of any such financing or otherwise, the Company
agrees, at the request of Parent, to call for prepayment or
redemption, or to prepay, repurchase, redeem and/or seek to
renegotiate, as the case may be, any then existing
indebtedness for borrowed money of the Company; provided,
however, that (x) no such prepayment, repurchase or
redemption shall be required to be effective prior to the
Effective Time and (y) Parent and its subsidiaries (other
than the Company and its subsidiaries) shall provide to the
Company on a timely basis all the consideration used in
connection with such prepayment, repurchase or redemption.
SECTION 5.06. Company Stock Options. (a) As soon as
practicable following the date of this Agreement, the Board
of Directors of the Company (or, if appropriate, any
committee administering the Company Stock Plans) and the
Board of Directors of Parent shall adopt such resolutions or
take such other actions (if any) as may be required to effect
the following:
(i) each Company Stock Option in respect of a share
of Company Common Stock outstanding immediately prior to
the Effective Time which has an exercise price per share
of Company Common Stock that is equal to or less than
the Closing Consideration Value (as defined below) shall
be amended and converted into (A) an option to acquire,
on the same terms and conditions as were applicable
under such Company Stock Option, a number of shares of
Parent Common Stock equal to the Exchange Ratio, at an
exercise price per share of Parent Common Stock (rounded
to the nearest whole cent) equal to the quotient
obtained by dividing (1) the product of (x) 1.0 minus
the Fraction (as defined below) and (y) the per share
exercise price for such share of Company Common Stock
subject to such Company Stock Option, by (2) the
Exchange Ratio (each, as so adjusted, an "Adjusted
In-the-Money Option"; provided, however, that all
Adjusted In-the-Money Options that result from the
conversion (on a share-by-share basis as described
above) of a single Company Stock Option to acquire two
or more shares of Company Common Stock held by a single
holder shall be aggregated and treated as a single
Adjusted In-the-Money Option to purchase the aggregate
number of shares (including any fractional shares) of
Parent Common Stock subject to all such Adjusted
In-the-Money Options (with such result rounded
54
to the nearest whole share)), and (B) the right to
receive from Parent a cash payment net of all applicable
withholding taxes as soon as practicable following the
Effective Time in an amount equal to the excess, if any,
of the Cash Portion over the product of (1) the Fraction
and (2) the per share exercise price for such share of
Company Common Stock subject to such Company Stock
Option; "Closing Consideration Value" means the sum of
(I) the Cash Portion and (II) the product of the
Exchange Ratio and the Average Closing Price, and
"Fraction" means a fraction, the numerator of which is
the Cash Portion and the denominator of which is the
Closing Consideration Value;
(ii) each Company Stock Option in respect of a
share of Company Common Stock outstanding immediately
prior to the Effective Time which has an exercise price
per share of Company Common Stock that is greater than
the Closing Consideration Value shall be amended and
converted into an option to acquire, on the same terms
and conditions as were applicable under such Company
Stock Option, a number of shares of Parent Common Stock
equal to the Underwater Option Exchange Ratio (as
defined below), at an exercise price per share of Parent
Common Stock (rounded to the nearest whole cent) equal
to the quotient obtained by dividing (A) the per share
exercise price for such share of Company Common Stock
subject to such Company Stock Option, by (B) the
Underwater Option Exchange Ratio (each, as so adjusted,
an "Adjusted Underwater Option" and, together with the
Adjusted In the-Money Options, the "Adjusted Options";
provided, however, that all Adjusted Underwater Options
that result from the conversion (on a share-by-share
basis as described above) of a single Company Stock
Option to acquire two or more shares of Company Common
Stock held by a single holder shall be aggregated and
treated as a single Adjusted Underwater Option to
purchase the aggregate number of shares (including
fractional shares) of Parent Common Stock subject to all
such Adjusted Underwater Options (with such result
rounded to the nearest whole share)); "Underwater Option
Exchange Ratio" means the quotient obtained by dividing
the Closing Consideration Value by the Average Closing
Price; and
(iii) make such other changes to the Company Stock
Plans as Parent and the Company may agree are appro
priate to give effect to the Merger.
(b) The adjustments provided herein with respect to
any Company Stock Options that are "incentive stock
55
options" as defined in Section 422 of the Code shall be and
are intended to be effected in a manner which is consistent
with Section 424(a) of the Code.
(c) At the Effective Time, Parent shall assume the
Company Stock Plans, with the result that all obligations of
the Company under the Company Stock Plans, including with
respect to Company Stock Options outstanding at the Effective
Time, shall be obligations of Parent following the Effective
Time.
(d) At or prior to the Effective Time, Parent shall
prepare and file with the SEC a registration statement on
Form S-8 (or another appropriate form) registering a number
of shares of Parent Common Stock equal to the number of
shares subject to the Adjusted Options. Such registration
statement shall be kept effective (and the current status of
the prospectus or prospectuses required thereby shall be
maintained) as long as any Adjusted Options may remain
outstanding.
(e) Except as otherwise specifically provided by
this Section 5.06 and except to the extent required under the
respective terms as in effect on the date of this Agreement
of the Company Stock Options, all restrictions or limitations
on transfer with respect to Company Stock Options awarded
under the Company Stock Plans or any other plan, program or
arrangement of the Company or any of its subsidiaries, to the
extent that such restrictions or limitations shall not have
already lapsed, and all other terms thereof, shall remain in
full force and effect with respect to such options after
giving effect to the Merger and the assumption by Parent as
set forth above. Notwithstanding the foregoing or anything to
the contrary in the terms of any Company Stock Option awarded
under the Company Stock Plans or any other plan, program or
arrangement of the Company or any of its subsidiaries, each
Adjusted Option, after giving effect to the Merger and the
assumption by Parent as set forth above, shall be fully
vested and immediately exercisable.
(f) In addition to any method of exercise permitted
under the applicable Company Stock Option, a holder of an
Adjusted Option may exercise such Adjusted Option in whole or
in part in accordance with its terms by delivering a properly
executed notice of exercise to Parent, together with the
consideration therefor and the federal withholding tax
information, if any, required in accordance with the related
Company Stock Plan.
56
SECTION 5.07. Indemnification, Exculpation and
Insurance. (a) Parent and Sub agree that all rights to
indemnification, advancement of expenses and exculpation from
liabilities for acts or omissions occurring at or prior to
the Effective Time now existing in favor of the current or
former directors, officers, employees and agents of the
Company and its subsidiaries as provided in their respective
certificates of incorporation or by-laws (or similar
organizational documents) shall be assumed and performed by
the Surviving Corporation, without further action, at the
Effective Time and shall survive the Merger and shall
continue in full force and effect in accordance with their
terms. Parent and Sub agree that any existing indemnification
agreements between the Company and any current or former
director, officer, employee or agent of the Company or any of
its subsidiaries shall be assumed and performed by the
Surviving Corporation, without any further action, at the
Effective Time and shall survive the Merger and continue in
full force and effect in accordance with their terms.
(b) In the event that Parent, the Surviving
Corporation or any of its successors or assigns (i)
consolidates with or merges into any other person and is not
the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or
substantially all its properties and assets to any person,
then, and in each such case, Parent shall cause proper
provision to be made so that the successor and assign of
Parent or the Surviving Corporation assumes the obligations
set forth in this Section 5.07, and in such event all
references to the Surviving Corporation in this Section 5.07
shall be deemed a reference to such successor and assign.
(c) For six years after the Effective Time, Parent
shall maintain in effect the Company's current directors' and
officers' liability insurance covering each person currently
covered by the Company's directors' and officers' liability
insurance policy for acts or omissions occurring prior to the
Effective Time on terms with respect to such coverage and
amounts no less favorable in any material respect to such
directors and officers than those of such policy as in effect
on the date of this Agreement; provided that Parent may
substitute therefor policies of a reputable insurance company
the material terms of which, including coverage and amount,
are no less favorable in any material respect to such
directors and officers than the insurance coverage otherwise
required under this Section 5.07(c); provided, however, that
in no event shall Parent be required to pay aggregate
premiums for insurance
57
under this Section 5.07(c) in excess of 225% of the amount of
the aggregate premiums paid by the Company for fiscal year
2001 for such purpose (which fiscal year 2001 premiums are
hereby represented and warranted by the Company to be
$151,750); provided that Parent shall nevertheless be
obligated to provide such coverage as may be obtained for
such 225% amount.
(d) The provisions of this Section 5.07 shall
survive consummation of the Merger and are intended to be for
the benefit of, and will be enforceable by, each indemnified
party, his or her heirs and his or her representatives.
Parent shall cause the Surviving Corporation to comply with
its obligations set forth in this Section 5.07.
SECTION 5.08. Fees and Expenses. (a) All fees and
expenses incurred in connection with this Agreement, the
Merger and the other transactions contemplated hereby shall
be paid by the party incurring such fees or expenses, whether
or not the Merger is consummated, except that expenses
incurred in connection with filing, printing and mailing the
Proxy Statement/Prospectus and the Form S-4 shall be shared
equally by Parent and the Company.
(b) In the event that (i) (A) a Takeover Proposal
has been made to the Company or its stockholders or any
person has announced an intention (whether or not conditional
and whether or not withdrawn) to make a Takeover Proposal,
(B) thereafter this Agreement is terminated by either Parent
or the Company pursuant to Section 7.01(b)(i) (but only if
the Stockholders Meeting has not been held by the date that
is five business days prior to the date of such termination)
or 7.01(b)(iii) and (C) within 12 months after such
termination, the Company or any of its subsidiaries enters
into any Acquisition Agreement with respect to, or
consummates, any Takeover Proposal (solely for purposes of
this Section 5.08(b)(i)(C), the term "Takeover Proposal"
shall have the meaning set forth in the definition of
Takeover Proposal contained in Section 4.03(a) except that
all references in such definition to 20% shall be deemed
references to 35%), (ii) this Agreement is terminated by the
Company pursuant to Section 7.01(f) or (iii) this Agreement
is terminated by Parent pursuant to Section 7.01(c), then the
Company shall pay Parent a fee equal to $10,000,000 (the
"Termination Fee") by wire transfer of same day funds to an
account designated by Parent (x) in the case of a termination
by the Company pursuant to Section 7.01(f), prior to or
simultaneously with such termination, (y) in the case of a
termination by Parent pursuant to Section 7.01(c), within two
business days after
58
such termination and (z) in the case of a payment as a result
of any event referred to in Section 5.08(b)(i)(C), upon the
first to occur of such events. The Company acknowledges that
the agreements contained in this Section 5.08(b) are an
integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Parent would
not enter into this Agreement; accordingly, if the Company
fails promptly to pay the amounts due pursuant to this
Section 5.08(b), and, in order to obtain such payment, Parent
commences a suit that results in a judgment against the
Company for the amounts set forth in this Section 5.08(b),
the Company shall pay to Parent interest on the amounts set
forth in this Section 5.06 at a rate per annum equal to
three-month LIBOR (as reported in The Wall Street Journal
(Northeast edition) or, if not reported therein, in another
authoritative source selected by Parent) on the date such
payment was required to be made (or if no quotation for
three-month LIBOR is available for such date, on the next
preceding date for which such a quotation is available) plus
1.5%.
SECTION 5.09. Information Supplied. (a) The Company
agrees that none of the information included or incorporated
by reference in the Proxy Statement/Prospectus will (except
to the extent revised or superseded by amendments or
supplements contemplated hereby), at the date the Proxy
Statement/Prospectus is filed with the SEC or mailed to the
Company's stockholders or at the time of the Stockholders
Meeting, or at the time of any amendment or supplement
thereof, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not
misleading, except that no covenant is made by the Company
with respect to statements made or incorporated by reference
therein based on information supplied by Parent or Sub
specifically for inclusion or incorporation by reference
therein. The Proxy Statement/Prospectus will comply as to
form in all material respects with the requirements of the
Exchange Act and the rules and regulations promulgated
thereunder.
(b) Parent and Sub agree that none of the
information included or incorporated by reference in the Form
S-4 will (except to the extent revised or superseded by
amendments or supplements contemplated hereby), at the time
the Form S-4 is filed with the SEC, at any time it is amended
or supplemented or at the time it becomes effective under the
Securities Act, 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
59
statements therein not misleading, except that no covenant is
made by Parent or Sub with respect to statements made or
incorporated by reference therein based on information
supplied by the Company specifically for inclusion or
incorporation by reference therein. The Form S-4 will comply
as to form in all material respects with the requirements of
the Securities Act and the rules and regulations promulgated
thereunder.
SECTION 5.10. Employee Benefit Matters. (a) As of
the Closing Date, the Surviving Corporation shall assume and
perform in accordance with its terms, including any reserved
right to amend or terminate, each Company Benefit Plan
(including any indemnification agreements existing on the
date hereof); provided, however, that for a period (the
"Initial Period") commencing on the Closing Date and ending
12 months after the Closing Date, Parent shall, or shall
cause the Surviving Corporation to, maintain for the benefit
of the employees of the Company and its subsidiaries
immediately prior to the Effective Time (the "Affected
Employees") the Company Benefit Plans as in effect
immediately prior to the Effective Time (other than such
changes as are required by applicable law and other than the
Company Stock Plans or other equity or equity based plans and
programs) or provide the Affected Employees with employee
benefits (other than equity or equity-based plans and
programs) that are no less favorable, in the aggregate, than
the employee benefits provided to the Affected Employees by
the Company immediately prior to the Effective Time (other
than the Company Stock Plans or other equity or equity-based
plans and programs). For a period of at least 24 months
following the Initial Period, Parent shall, or shall cause
the Surviving Corporation to, provide the Affected Employees
with employee benefits (other than equity or equity-based
plans and programs) that are substantially similar in the
aggregate to the benefits provided to similarly situated
employees of Parent (other than equity or equity-based plans
and programs).
(b) Parent will, or will cause the Surviving
Corporation to: (i) waive all limitations as to preexisting
conditions, exclusions and waiting periods with respect to
participation and coverage requirements applicable to the
Affected Employees under any welfare plan that the Affected
Employees may be eligible to participate in after the
Effective Time to the extent waived or satisfied under the
applicable corresponding Company Benefit Plan immediately
prior to the Effective Time; (ii) provide each Affected
Employee with credit for purposes of satisfying any
applicable deductible or out-of-pocket requirements under any
welfare plans that such Affected Employee is eligible to
60
participate in after the Effective Time for any co-payments
and deductibles paid under a corresponding Company Benefit
Plan for the year in which the Effective Time occurs; and
(iii) provide each Affected Employee with credit for all
purposes for all service with the Company and its affiliates
under each employee benefit plan, program, or arrangement of
the Parent or its affiliates in which such Affected Employee
is eligible to participate to the extent such service was
credited for similar purposes under similar Company Benefit
Plans; provided, however, that in no event shall the Affected
Employees be entitled to any credit (A) under any defined
benefit pension plan of Parent or its subsidiaries (other
than the Surviving Corporation and its subsidiaries) or (B)
to the extent that it would result in a duplication of
benefits with respect to the same period of service.
(c) The Company shall cause the ESPP (and any then
outstanding offering period thereunder) to terminate at the
Effective Time in accordance with the terms of the ESPP as in
effect on the date of this Agreement and shall promptly
refund to each participant the entire amount credited to the
Stock Purchase Account (as defined in the ESPP) as of the
Effective Time.
SECTION 5.11. Public Announcements. Unless
otherwise required by applicable law, Parent and Sub, on the
one hand, and the Company, on the other hand, shall, to the
extent reasonably practicable, consult with each other before
issuing, and give each other a reasonable opportunity to
review and comment upon, any press release or other public
statements with respect to this Agreement, the Merger and the
other transactions contemplated hereby. The parties agree
that the initial press release to be issued with respect to
the transactions contemplated by this Agreement shall be in
the form heretofore agreed to by the parties.
SECTION 5.12. Affiliates. Prior to the date of the
Stockholders Meeting, the Company shall deliver to Parent a
letter identifying all persons who are, at the time this
Agreement is submitted for adoption by the stockholders of
the Company, "affiliates" of the Company for purposes of Rule
145 under the Securities Act. The Company shall use all
commercially reasonable efforts to cause each such person to
deliver to Parent on or prior to the Closing Date a written
agreement substantially in the form attached as Exhibit A
hereto.
SECTION 5.13. Stock Exchange Listings. To the
extent Parent does not issue treasury shares in connection
with the Merger or under the Company Stock Plans which are
already listed, Parent shall use all commercially reasonable
61
efforts to cause the shares of Parent Common Stock to be
issued in connection with the Merger and which are issuable
pursuant to Adjusted Options to be approved for listing on
the NYSE, subject to official notice of issuance, prior to
the Closing Date.
SECTION 5.14. Tax Treatment. The parties intend the
Merger to qualify as a reorganization under Section 368(a) of
the Code. Neither Parent nor the Company shall take any
action which would prevent, or would be reasonably likely to
prevent, the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code, and each of
Parent and the Company shall use all commercially reasonable
efforts to cause the Merger to so qualify and to obtain the
opinions of counsel referred to in Sections 6.02(g) and
6.03(c) and to cause similar opinions to be provided at the
date of the filing of the Proxy Statement/Prospectus.
SECTION 5.15. Rights Agreement. The Board of
Directors of the Company shall take all further action (in
addition to that referred to in Section 3.01(u)) necessary or
desirable (including redeeming the Rights immediately prior
to the Effective Time or amending the Rights Agreement if
reasonably requested by Parent) in order to render the Rights
inapplicable to the Merger and the other transactions
contemplated by this Agreement. If any "Distribution Date" or
"Shares Acquisition Date" occurs under the Rights Agreement
at any time during the period from the date of this Agreement
to the Effective Time, the Company and Parent shall make such
adjustment to the Merger Consideration as the Company and
Parent shall mutually agree so as to preserve the economic
benefits that the Company and Parent each reasonably expected
on the date of this Agreement to receive as a result of the
consummation of the Merger and the other transactions
contemplated hereby. Except as provided in this Section 5.15,
the Company shall not (i) amend, modify or waive any
provision of the Rights Agreement or (ii) take any action to
redeem the Rights or render the Rights inapplicable to any
transaction.
Section 5.16. Transfer Taxes. All stock transfer,
real estate transfer, documentary, stamp, recording and other
similar taxes (including interest, penalties and additions to
any such taxes) incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the
Company out of its own funds.
SECTION 5.17. Parent Board of Directors. The Board
of Directors of Parent shall take such action as may
62
be necessary to appoint ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ to the Board of
Directors of Parent as of the Effective Time.
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation
to Effect the Merger. The obligation of each party to effect
the Merger is subject to the satisfaction, or to the waiver
by such party, on or prior to the Closing Date of the
following conditions:
(a) Stockholder Approval. The Stockholder Approval
shall have been obtained.
(b) NYSE Listing. The shares of Parent Common Stock
issuable to the Company's stockholders in connection with the
Merger and pursuant to the Adjusted Options shall have been
approved for listing on the NYSE, subject to official notice
of issuance.
(c) Antitrust. Any waiting period (and any
extension thereof) applicable to the Merger under the HSR Act
or any other applicable competition, merger control,
antitrust or similar law or regulation shall have been
terminated or shall have expired.
(d) No Injunctions or Legal Restraints. No
temporary restraining order, preliminary or permanent
injunction or other order or decree issued by any court of
competent jurisdiction or other legal restraint or
prohibition (collectively, "Legal Restraints") that has the
effect of preventing the consummation of the Merger shall be
in effect.
(e) Form S-4. The Form S-4 shall have become
effective under the Securities Act and shall not be the
subject of any stop order or proceedings seeking a stop
order.
SECTION 6.02. Conditions to Obligations of Parent
and Sub. The obligation of Parent and Sub to effect the
Merger are further subject to the satisfaction or waiver on
or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. The
representations and warranties of the Company contained
herein that are qualified as to materiality or material
adverse effect shall be true and correct, and the
63
representations and warranties of the Company contained
herein that are not so qualified shall be true and correct in
all material respects, in each case as of the date of this
Agreement and as of the Closing Date with the same effect as
though made as of the Closing Date, except that the accuracy
of representations and warranties that by their terms speak
as of a specified date will be determined as of such date.
Parent shall have received a certificate signed on behalf of
the Company by the chief executive officer or chief financial
officer of the Company to such effect.
(b) Performance of Obligations of the Company. The
Company shall have performed in all material respects all
obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and Parent shall
have received a certificate signed on behalf of the Company
by the chief executive officer or the chief financial officer
of the Company to such effect.
(c) Letters from Company Affiliates. Parent shall
have received from each person named in the letter referred
to in Section 5.12 an executed copy of an agreement
substantially in the form of Exhibit A hereto.
(d) No Litigation. (i) There shall not be pending
any suit, action or proceeding brought by any Governmental
Entity seeking (A) to restrain or prohibit the consummation
of the Merger, (B) to prohibit or limit in any material
respect the ownership or operation by the Company, Parent or
any of their respective affiliates of a material portion of
the business or assets of the Company and its subsidiaries,
taken as a whole, or Parent and its subsidiaries, taken as a
whole, or to require any such person to dispose of or hold
separate any material portion of the business or assets of
the Company and its subsidiaries, taken as a whole, or Parent
and its subsidiaries, taken as a whole, as a result of the
Merger, (C) to prohibit Parent or any of its affiliates from
effectively controlling in any material respect a material
portion of the business or operations of the Company or its
subsidiaries, or (D) to impose material limitations on the
ability of Parent or any of its affiliates to acquire or
hold, or exercise full rights of ownership of, any shares of
Company Common Stock, including the right to vote the Company
Common Stock on all matters properly presented to the
stockholders of the Company.
(ii) Subject to Section 6.02(d)(ii) of the Company
Disclosure Schedule, there shall not be pending any suit,
action or proceeding brought by any third party (other than a
Governmental Entity) against the Company or any of
64
its subsidiaries that could reasonably be expected to succeed
except for suits, actions or proceedings that individually or
in the aggregate could not reasonably be expected to have a
material adverse effect on the Company.
(e) Legal Restraint. No Legal Restraint that has
the effect of granting or implementing any relief referred to
in clauses (ii), (iii) or (iv) of paragraph (d) of this
Section 6.02 shall be in effect.
(f) Consents. Parent shall have received evidence,
in form and substance reasonably satisfactory to it, that
Parent or the Company shall have obtained all consents,
approvals, authorizations, qualifications and orders of
Governmental Entities required in connection with this
Agreement and the transactions contemplated by this Agreement
(including consents to assignments of material contracts and
material Intellectual Property) except for those the failure
of which to be obtained individually or in the aggregate
could not reasonably be expected to (A) restrain or prohibit
the consummation of the Merger or (B) prohibit or limit in
any material respect the ownership or operation or effective
control by Parent of a material portion of the business,
operations or assets of the Company and its subsidiaries,
taken as a whole as in existence on the date of this
Agreement (other than with respect to assets disposed of in
the ordinary course of business consistent with past practice
after the date of this Agreement).
(g) Tax Opinion. Parent shall have received from
Cravath, Swaine & ▇▇▇▇▇, special counsel to Parent, on the
date on which the Form S-4 is filed with the SEC and on the
Closing Date, an opinion, in form and substance reasonably
satisfactory to Parent, in each case dated as of such date
and to the effect that (i) the Merger will be treated for
United States federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code and (ii)
Parent, Sub and the Company will each be a party to that
reorganization within the meaning of Section 368(b) of the
Code. In rendering such opinions, such counsel shall be
entitled to rely upon customary representations reasonably
requested by such counsel and made by Parent, Sub and the
Company.
SECTION 6.03. Conditions to Obligation of the
Company. The obligation of the Company to effect the Merger
is further subject to the satisfaction or waiver on or prior
to the Closing Date of the following conditions:
65
(a) Representations and Warranties. The repre
sentations and warranties of Parent and Sub contained herein
that are qualified as to materiality or material adverse
effect shall be true and correct, and the representations and
warranties of the Company contained herein that are not so
qualified shall be true and correct in all material respects,
in each case as of the date of this Agreement and as of the
Closing Date with the same effect as though made as of the
Closing Date, except that the accuracy of representations and
warranties that by their terms speak as of a specified date
will be determined as of such date. The Company shall have
received a certificate signed on behalf of Parent by the
chief executive officer or chief financial officer of Parent
to such effect.
(b) Performance of Obligations of Parent and Sub.
Parent and Sub shall have performed in all material respects
all obligations required to be performed by them under this
Agreement at or prior to the Closing Date, and the Company
shall have received a certificate signed on behalf of Parent
by the chief executive officer or chief financial officer of
Parent to such effect.
(c) Tax Opinion. The Company shall have received
from Torys, counsel to the Company, on the date on which the
Form S-4 is filed with the SEC and on the Closing Date, an
opinion, in form and substance reasonably satisfactory to the
Company, in each case dated as of such date and to the effect
that (i) the Merger will be treated for United States federal
income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code and (ii) Parent, Sub and the
Company will each be a party to that reorganization within
the meaning of Section 368(b) of the Code. In rendering such
opinions, such counsel shall be entitled to rely upon
customary representations reasonably requested by such
counsel and made by Parent, Sub and the Company.
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination. This Agreement may be
terminated, and the Merger contemplated hereby may be
abandoned, at any time prior to the Effective Time, whether
before or after the Stockholder Approval has been obtained
and whether before or after adoption of this Agreement by the
stockholder of Sub:
(a) by mutual written consent of Parent, Sub and
the Company;
66
(b) by either Parent or the Company:
(i) if the Merger shall not have been
consummated by November 30, 2001;
(ii) if any Legal Restraint set forth in
Section 6.01(d) shall be in effect and shall have
become final and nonappealable; or
(iii) if the Stockholder Approval shall not
have been obtained at the Stockholders Meeting duly
convened therefor;
(c) by Parent in the event (i) an Adverse
Recommendation Change has occurred in accordance with
Section 4.03(b)(i) or (ii) the Board of Directors of the
Company or any committee thereof shall have failed to
confirm its recommendation and declaration of
advisability of this Agreement and the Merger within 15
business days after a written request by Parent that it
do so if such request is made following the making of a
Takeover Proposal;
(d) by Parent (i) if the Company shall have
breached any of its representations, warranties or
covenants contained in this Agreement, which breach
would give rise to the failure of a condition set forth
in Section 6.02(a) or 6.02(b), and has not been or is
incapable of being cured by the Company within ten
business days after its receipt of written notice
thereof from Parent; or (ii) if any Legal Restraint
having the effect of granting or implementing any relief
referred to in clauses (ii), (iii) or (iv) of Section
6.02(d) shall be in effect and shall have become final
and nonappealable;
(e) by the Company if Parent shall have breached
any of its representations, warranties or covenants
contained in this Agreement, which breach would give
rise to the failure of a condition set forth in Section
6.03(a) or 6.03(b), and has not been or is incapable of
being cured by Parent within ten business days after its
receipt of written notice thereof from the Company; or
(f) by the Company in accordance with, and subject
to the terms and conditions of, Section 4.03(b).
SECTION 7.02. Effect of Termination. In the event
of termination of this Agreement by either the Company or
Parent as provided in Section 7.01, this Agreement shall
67
forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Sub or the
Company, other than the provisions of Section 3.01(s),
Section 3.02(i), the last sentence of Section 5.04(a),
Section 5.08, this Section 7.02 and Article VIII; provided,
however, that no such termination shall relieve any party
hereto from any liability or damages resulting from a
material and intentional breach by a party of any of its
representations, warranties or covenants set forth in this
Agreement.
SECTION 7.03. Amendment. This Agreement may be
amended by the parties hereto at any time, whether before or
after the Stockholder Approval has been obtained and whether
before or after adoption of this Agreement by the stockholder
of Sub; provided, however, that after such approval or
adoption has been obtained, there shall be made no amendment
that by law requires further approval or adoption by
stockholders without such further approval or adoption. This
Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
SECTION 7.04. Extension; Waiver. At any time prior
to the Effective Time, the parties may (a) extend the time
for the performance of any of the obligations or other acts
of the other parties, (b) waive any inaccuracies in the
representations and warranties contained herein or in any
document delivered pursuant hereto or (c) waive compliance
with any of the agreements or conditions contained herein;
provided, however, that after the Stockholder Approval has
been obtained or after adoption of this Agreement by the
stockholder of Sub, there shall be made no waiver that by law
requires further approval or adoption by stockholders without
such further approval or adoption. Any agreement on the part
of a party to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on
behalf of such party. The failure or delay by any party to
this Agreement to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of such
rights nor shall any single or partial exercise by any party
to this Agreement of any of its rights under this Agreement
preclude any other or further exercise of such rights or any
other rights under this Agreement.
68
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and
Warranties. None of the representations and warranties in
this Agreement or in any certificate or instrument delivered
pursuant to this Agreement, including any rights arising out
of any breach of such representations or warranties, shall
survive the Effective Time. This Section 8.01 shall not limit
this Article VIII or any covenant or agreement of the parties
which by its terms applies, or is to be performed in whole or
in part, after the Effective Time.
SECTION 8.02. Notices. All notices, requests,
claims, demands and other communications hereunder shall be
in writing and shall be deemed given if delivered personally
or sent by overnight courier (providing proof of delivery) to
the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
if to Parent or Sub, to:
▇▇▇▇▇ Apparel Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
and
▇▇▇▇▇ Apparel Group, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. Card
with copies to:
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
if to the Company, to:
▇▇▇▇▇▇▇▇▇▇ Apparel Group Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
69
with a copy to:
Torys
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. Cost, Esq.
SECTION 8.03. Definitions. For purposes of this
Agreement:
(a) an "affiliate" of any person means another
person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under
common control with, such first person;
(b) "material adverse effect" means, when used in
connection with the Company or Parent, as the case may
be, any state of facts, change, development, effect,
condition or occurrence that could reasonably be
expected to be material and adverse to the business,
assets, properties, condition (financial or otherwise)
or results of operations of such party and its
subsidiaries, taken as a whole, or to prevent or
materially impede or delay the consummation of the
Merger or the other transactions contemplated by this
Agreement, other than, in any case, any state of facts,
change, development, event, effect, condition or
occurrence (i) resulting from changes in the United
States economy or the United States securities markets
in general or (ii) resulting from changes in the
industries in which the Company or Parent, as the case
may be, operates and not specifically relating to the
Company or Parent, as the case may be;
(c) "person" means an individual, corporation,
partnership, joint venture, association, trust, limited
liability company, Governmental Entity, unincorporated
organization or other entity; and
(d) a "subsidiary" of any person means another
person, an amount of the voting securities or other
voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its
Board of Directors or other governing body (or, if there
are no such voting interests, more than 50% of the
equity interests of which) is owned directly or
indirectly by such first person.
SECTION 8.04. Interpretation. When a reference is
made in this Agreement to a Section, Subsection, Exhibits
70
or Schedule, such reference shall be to a Section or
Subsection of, or an Exhibit or Schedule to, this Agreement
unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words
"without limitation". 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. The words "date
hereof" shall refer to the date of this Agreement. The term
"or" is not exclusive. The word "extent" in the phrase "to
the extent" shall mean the degree to which a subject or other
thing extends, and such phrase shall not mean simply "if".
The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms. Any
agreement or instrument defined or referred to herein or in
any agreement or instrument that is referred to herein means
such agreement or instrument as from time to time amended,
modified or supplemented. References to a person are also to
its permitted successors and assigns.
SECTION 8.05. Counterparts. This Agreement may be
executed in one or more counterparts (including telecopy),
all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other
parties.
SECTION 8.06. Entire Agreement; No Third-Party
Beneficiaries. This Agreement and the Confidentiality
Agreement (a) constitute the entire agreement, and supersede
all prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter of
this Agreement and the Confidentiality Agreement and (b)
except for the provisions of Sections 5.06, 5.07 and 5.17 of
this Agreement, are not intended to confer upon any person
other than the parties hereto and thereto (and their
respective successors and assigns) any rights or remedies.
SECTION 8.07. 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 conflicts of
laws thereof.
SECTION 8.08. Assignment. Neither this Agreement
nor any of the rights, interests or obligations hereunder
71
shall be assigned, in whole or in part (except by operation
of law), by any of the parties hereto without the prior
written consent of the other parties hereto, except that Sub
may assign, in its sole discretion, any of or all its rights,
interests and obligations under this Agreement to Parent or
to any direct wholly owned subsidiary of Parent, but no such
assignment shall relieve Sub of any of its obligations
hereunder. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of and be
enforceable by, the parties hereto and their respective
successors and assigns.
SECTION 8.09. Consent to Jurisdiction. Each of the
parties hereto irrevocably and unconditionally submits to the
exclusive jurisdiction of (a) any Delaware State court and
(b) any Federal court of the United States of America sitting
in the State of Delaware, for the purposes of any suit,
action or other proceeding arising out of this Agreement or
any transaction contemplated hereby (and each agrees that no
such action, suit or proceeding relating to this Agreement
shall be brought by it or any of its affiliates except in
such courts). Each of the parties hereto further agrees that,
to the fullest extent permitted by applicable law, service of
any process, summons, notice or document by U.S. registered
mail to such person's respective address set forth above
shall be effective service of process for any action, suit or
proceeding in Delaware with respect to any matters to which
it has submitted to jurisdiction as set forth above in the
immediately preceding sentence. Each of the parties hereto
irrevocably and unconditionally waives (and agrees not to
plead or claim) any objection to the laying of venue of any
action, suit or proceeding arising out of this Agreement or
the transactions contemplated hereby in (a) any Delaware
State court or (b) any Federal court of the United State of
America sitting in the State of Delaware, or that any such
action, suit or proceeding brought in any such court has been
brought in an inconvenient forum.
SECTION 8.10. Waiver of Jury Trial. Each party
hereto hereby waives, to the fullest extent permitted by
applicable law, any right it may have to a trial by jury in
respect of any suit, action or other proceeding directly or
indirectly arising out of, under or in connection with this
Agreement. Each party hereto (a) certifies that no
representative, agent or attorney of any other party has
represented, expressly or otherwise, that such party would
not, in the event of any action, suit or proceeding, seek to
enforce the foregoing waiver and (b) acknowledges that it and
the other parties hereto have been induced to enter into
72
this Agreement, by, among other things, the mutual waiver and
certifications in this Section 8.10.
SECTION 8.11. Enforcement. The parties agree that
irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and
provisions of this Agreement in any Delaware State court or
any Federal court of the United States of America sitting in
the State of Delaware, this being in addition to any other
remedy to which they are entitled at law or in equity.
73
IN WITNESS WHEREOF, Parent, Sub and the Company
have caused this Agreement to be signed by their respective
officers thereunto duly authorized, all as of the date first
written above.
▇▇▇▇▇ APPAREL GROUP, INC.,
by /s/ ▇▇▇▇▇▇ ▇. Card
----------------------------
Name: ▇▇▇▇▇▇ ▇. Card
Title: Chief Financial Officer
MCN ACQUISITION CORP.,
by /s/ ▇▇▇▇▇▇ ▇. Card
----------------------------
Name: ▇▇▇▇▇▇ ▇. Card
Title: President
▇▇▇▇▇▇▇▇▇▇ APPAREL GROUP INC.,
by /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
EXHIBIT A
TO THE MERGER AGREEMENT
Form of Affiliate Letter
Dear Sirs:
The undersigned, a holder of shares of common
stock, par value $0.01 per share ("Company Common Stock"), of
▇▇▇▇▇▇▇▇▇▇ Apparel Group Inc., a Delaware corporation (the
"Company"), acknowledges that the undersigned may be deemed
an "affiliate" of the Company within the meaning of Rule 145
("Rule 145") promulgated under the Securities Act of 1933, as
amended (the "Securities Act"), by the Securities and
Exchange Commission (the "SEC"), although nothing contained
herein should be construed as an admission of such fact.
Pursuant to the terms of the Agreement and Plan of Merger,
dated as of April 13, 2001 (the "Merger Agreement"), among
▇▇▇▇▇ Apparel Group, Inc., a Pennsylvania corporation
("Parent"), MCN Acquisition Corp., a Delaware corporation and
a direct wholly owned subsidiary of Parent ("Sub"), and the
Company, the Company will be merged with and into Sub (the
"Merger"), and in connection with the Merger, the undersigned
is entitled to receive Parent Common Stock (as defined in the
Merger Agreement).
If in fact the undersigned were an affiliate under
the Securities Act, the undersigned's ability to sell, assign
or transfer the Parent Common Stock received by the
undersigned in exchange for any shares of Company Common
Stock in connection with the Merger may be restricted unless
such transaction is registered under the Securities Act or an
exemption from such registration is available. The
undersigned understands that such exemptions are limited and
the undersigned has obtained or will obtain advice of counsel
as to the nature and conditions of such exemptions, including
information with respect to the applicability to the sale of
such securities of Rules 144 and 145(d) promulgated under the
Securities Act. The undersigned understands that Parent will
not be required to maintain the effectiveness of any
registration statement under the Securities Act for the
purposes of resale of Parent Common Stock by the undersigned.
The undersigned hereby represents to and covenants
with Parent that the undersigned will not sell, assign or
transfer any of the Parent Common Stock received by the
undersigned in exchange for shares of Company Common Stock in
connection with the Merger except (i) pursuant to an
effective registration statement under the Securities Act,
(ii) in conformity with the volume and other limitations of
Rule 145 or (iii) in a transaction which, in the opinion of
the general counsel of Parent or other counsel reasonably
satisfactory to Parent or as described in a "no-action" or
2
interpretive letter from the Staff of the SEC specifically
issued with respect to a transaction to be engaged in by the
undersigned, is not required to be registered under the
Securities Act.
In the event of a sale or other disposition by the
undersigned of Parent Common Stock pursuant to Rule 145, the
undersigned will supply Parent with evidence of compliance
with such Rule, in the form of a letter in the form of Annex
I hereto (or other reasonably satisfactory documentation
evidencing compliance with Rule 145) and the opinion of
counsel or no-action letter referred to above. The
undersigned understands that Parent may instruct its transfer
agent to withhold the transfer of any Parent Common Stock
disposed of by the undersigned, but that (provided such
transfer is not prohibited by any other provision of this
letter agreement) upon receipt of such evidence of
compliance, Parent shall cause the transfer agent to
effectuate the transfer of the Parent Common Stock sold as
indicated in such letter.
The undersigned acknowledges and agrees that the
legends set forth below will be placed on certificates
representing Parent Common Stock received by the undersigned
in connection with the Merger or held by a transferee
thereof, which legends will be removed by delivery of
substitute certificates upon receipt of an opinion in form
and substance reasonably satisfactory to Parent from counsel
reasonably satisfactory to Parent to the effect that such
legends are no longer required for purposes of the Securities
Act.
There will be placed on the certificates for Parent
Common Stock issued to the undersigned, or any substitutions
therefor, a legend stating in substance:
"The shares represented by this certificate were
issued pursuant to transaction to which Rule 145
promulgated under the Securities Act of 1933 applies.
The shares have not been acquired by the holder with a
view to, or for resale in connection with, any
distribution thereof within the meaning of the
Securities Act of 1933. The shares may not be sold,
pledged or otherwise transferred except in accordance
with an exemption from the registration requirements of
the Securities Act of 1933."
The undersigned acknowledges that (i) the
undersigned has carefully read this letter and understands
the requirements hereof and the limitations imposed upon the
distribution, sale, transfer or other disposition of Parent
3
Common Stock and (ii) the receipt by Parent of this letter is
an inducement to Parent's obligations to consummate the
Merger.
Very truly yours,
Dated:
ANNEX I
TO EXHIBIT A
[Name] [Date]
On ____________________, the undersigned sold the
securities of ▇▇▇▇▇ Apparel Group, Inc. ("Parent") described
below in the space provided for that purpose (the
"Securities"). The Securities were received by the
undersigned in connection with the merger of ▇▇▇▇▇▇▇▇▇▇
Apparel Group Inc. with and into MCN Acquisition Corp., a
Delaware corporation.
Based upon the most recent report or statement
filed by Parent with the Securities and Exchange Commission,
the Securities sold by the undersigned were within the
prescribed limitations set forth in paragraph (e) of Rule 144
promulgated under the Securities Act of 1933, as amended (the
"Securities Act").
The undersigned hereby represents that the
Securities were sold in "brokers' transactions" within the
meaning of Section 4(4) of the Securities Act or in
transactions directly with a "market maker" as that term is
defined in Section 3(a)(38) of the Securities Exchange Act of
1934, as amended. The undersigned further represents that the
undersigned has not solicited or arranged for the
solicitation of orders to buy the Securities, and that the
undersigned has not made any payment in connection with the
offer or sale of the Securities to any person other than to
the broker who executed the order in respect of such sale.
Very truly yours,
[Space to be provided for description of the Securities.]