AGREEMENT AND PLAN OF MERGER
dated as of May 2, 2007
by and among
MITY ENTERPRISES, INC.,
FP MERGER SUB, INC.,
and
MLE HOLDINGS, INC.
TABLE OF CONTENTS
Page
ARTICLE 1 THE MERGER 2
1.01 The Merger 2
1.02 Effective Time 2
1.03 Effects of the Merger 2
1.04 Articles of Incorporation and Bylaws of the Surviving
Corporation 2
1.05 Directors 2
1.06 Officers 2
1.07 Closing 2
1.08 Additional Actions 3
ARTICLE 2 EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
COMPANY AND MERGER SUB 3
2.01 Effect on Shares of Capital Stock 3
2.02 Options 4
2.03 Payment for Common Shares in the Merger 5
2.04 Adjustment of the Merger Consideration and the Cash Pay
Option Consideration 8
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY 8
3.01 Organization and Qualification 8
3.02 Charter Documents and Bylaws 9
3.03 Capitalization 9
3.04 Authority Relative to this Agreement 10
3.05 Company Subsidiaries 11
3.06 No Violation; Required Filings and Consents 11
3.07 SEC Reports and Financial Statements 12
3.08 Compliance with Applicable Laws 13
3.09 Absence of Certain Changes or Events 13
3.10 Change of Control 14
3.11 Litigation 15
3.12 Information in Proxy Statement 15
3.13 Benefit Plans 15
3.14 Taxes 17
3.15 Intellectual Property 19
3.16 Licenses and Permits 21
3.17 Material Contracts 22
3.18 Environmental Laws 23
3.19 State Takeover Statutes 23
3.20 Opinion of Financial Advisor 23
3.21 Brokers 24
3.22 Related Party Transactions 24
3.23 Properties and Assets 24
3.24 Labor Matters 25
3.25 Insurance 25
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF MERGER SUB AND
PARENT 26
4.01 Organization and Qualification 26
4.02 Charter Documents and Bylaws 26
4.03 Authority Relative to this Agreement 26
4.04 No Violation; Required Filings and Consents 27
4.05 Financing 27
4.06 Brokers 28
4.07 Proxy Statement 28
ARTICLE 5 COVENANTS 28
5.01 Interim Operations 28
5.02 Shareholders Meeting 32
5.03 Filings; Consents, etc. 33
5.04 Access to Information 33
5.05 Notification of Certain Matters 34
5.06 Public Announcements 34
5.07 Indemnification; etc 35
5.08 Further Assurances; Commercially Reasonable Efforts 36
5.09 Third Party Standstill Agreements 36
5.10 No Solicitation 36
5.11 SEC Reports 39
5.12 Termination of ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇
5.13 Financing 39
5.14 Special Meeting 40
5.15 Shareholder Litigation 40
5.16 Transition Assistance 40
ARTICLE 6 CONDITIONS TO CONSUMMATION OF THE MERGER 41
6.01 Conditions to the Obligations of Each Party 41
6.02 Conditions to Obligations of Merger Sub and Parent 41
6.03 Conditions to Obligation of the Company 44
ARTICLE 7 TERMINATION 44
7.01 Termination by Mutual Consent 44
7.02 Termination by Merger Sub, Parent or the Company 45
7.03 Termination by Merger Sub and Parent 45
7.04 Termination by the Company 46
7.05 Effect of Termination 46
ARTICLE 8 MISCELLANEOUS 46
8.01 Payment of Fees and Expenses 46
8.02 Guarantee 48
8.03 No Survival 48
8.04 Modification or Amendment 49
8.05 Entire Agreement; Assignment 49
8.06 Severability 49
8.07 Notices 49
8.08 Governing Law 50
8.09 Descriptive Headings 51
8.10 Counterparts 51
8.11 Certain Definitions 51
8.12 Specific Performance 52
8.13 Extension; Waiver 52
8.14 Third-Party Beneficiaries 52
8.15 Submission to Jurisdiction 52
8.16 Incorporation of Exhibits 53
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of May 2, 2007,
is entered into by and among MITY Enterprises, Inc., a Utah corporation (the
"Company"), FP Merger Sub, Inc., a Utah corporation ("Merger Sub"), and MLE
Holdings, Inc., a Delaware corporation ("Parent").
RECITALS
WHEREAS, the board of directors of the Company (the "Company Board"), subject
to the terms and conditions set forth herein, has (i) declared the
advisability of this Agreement and approved this Agreement, (ii) resolved to
recommend approval and adoption of this Agreement by the shareholders of the
Company and (iii) received a written opinion of the Financial Advisor (as
defined in Section 3.20) as set forth in Section 3.20 herein;
WHEREAS, the board of directors of Merger Sub has (i) declared the
advisability of this Agreement and (ii) approved this Agreement;
WHEREAS, Parent has adopted this Agreement in its capacity as the sole
shareholder of Merger Sub;
WHEREAS, the Company Board and the board of directors of Merger Sub have
approved the merger of Merger Sub with and into the Company, with the Company
as the surviving corporation, upon the terms and subject to the conditions set
forth in this Agreement and the Utah Revised Business Corporation Act (the
"UBCA"), whereby (i) each issued and outstanding share of the common stock,
par value $0.01 per share (the "Common Shares"), of the Company (other than
Common Shares to be canceled pursuant to Section 2.01(b) and Dissenting Shares
(as defined in Section 2.01(d))), shall be converted into the right to receive
the Merger Consideration (as defined in Section 2.01(a)) and (ii) each
Cash-Pay Option (as defined in Section 2.02(b)) shall be converted into the
right to receive the Cash-Pay Option Consideration (as defined in Section
2.02(b));
WHEREAS, concurrently with the execution of this Agreement, and as a condition
and inducement to Parent's willingness to enter into this Agreement, certain
shareholders of the Company are entering into voting agreements with Parent;
and
WHEREAS, the Company, Merger Sub, and Parent 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 respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE 1
THE MERGER
1.01 The Merger. At the Effective Time (as defined in Section 1.02),
subject to the terms and conditions of this Agreement and in accordance with
the provisions of the UBCA, Merger Sub shall be merged (the "Merger") with and
into the Company. Following the Merger, the separate corporate existence of
Merger Sub shall cease, and the Company shall continue as the surviving
corporation (sometimes hereinafter referred to as the "Surviving Corporation")
and shall continue to be governed by the laws of the State of Utah.
1.02 Effective Time. Subject to the provisions of this Agreement, on the
Closing Date the parties shall file with the Utah Department of Commerce,
Division of Corporations and Commercial Code (the "Division") articles of
merger (the "Articles of Merger"), executed in accordance with the relevant
provisions of the UBCA. The Merger shall become effective upon the filing of
the Articles of Merger with the Division or at such later time as is agreed to
by the parties hereto and specified in the Articles of Merger (the time at
which the Merger becomes effective is herein referred to as the "Effective
Time").
1.03 Effects of the Merger. The Merger shall have the effects set forth
herein, in the Articles of Merger and in the UBCA. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all
the properties, rights, privileges, powers and franchises of the Company and
the Merger Sub shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and the Merger Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
1.04 Articles of Incorporation and Bylaws of the Surviving Corporation.
The articles of incorporation of Merger Sub, as in effect immediately prior to
the Effective Time, shall be the articles of incorporation of the Surviving
Corporation until duly amended; provided that such articles of incorporation
shall be amended to reflect that the name of the Surviving Corporation shall
be "MITY Enterprises, Inc."
(a) The bylaws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be the bylaws of the Surviving Corporation, until duly
amended.
1.05 Directors. The directors of Merger Sub immediately prior to the
Effective Time shall be the initial directors of the Surviving Corporation and
shall hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal in accordance with
applicable law and the Surviving Corporation's articles of incorporation and
bylaws.
1.06 Officers. The officers of the Company immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation and
shall hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal.
1.07 Closing. Subject to the conditions contained in this Agreement, the
closing of the Merger (the "Closing") shall take place (a) at the offices of
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
on the later of (i) the date which is most promptly practicable following the
date of the satisfaction (or waiver if permissible) of all of the conditions
set forth in Article 6 (other than those conditions that by their nature are
to be satisfied at the Closing, but subject to the satisfaction or waiver of
such conditions), but in no event later than the fifth (5th) business day
following such date and (ii) August 2, 2007 (the "Target Closing Date") or (b)
at such other place and time and/or on such other date as the Company and
Parent may agree in writing. The date on which the Closing occurs is
hereinafter referred to as the "Closing Date."
1.08 Additional Actions. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments or assurances in law or any other acts are necessary or
desirable to vest, perfect or confirm, of record or otherwise, in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of the Company or Merger Sub, the Company and its
officers and directors shall be deemed to have granted to the Surviving
Corporation an irrevocable power of attorney to execute and deliver all such
deeds, assignments and assurances in law and to take all acts necessary,
proper or desirable to vest, perfect or confirm title to and possession of
such rights, properties or assets in the Surviving Corporation, and the
officers and directors of the Surviving Corporation are authorized in the name
of the Company to take any and all such action.
ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE COMPANY AND MERGER SUB
2.01 Effect on Shares of Capital Stock
(a) Common Shares of the Company. As of the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any Common
Shares, the Company or Merger Sub, each Common Share that is issued and
outstanding immediately prior to the Effective Time (other than (i) Dissenting
Shares, and (ii) those Common Shares to be canceled pursuant to Section
2.01(b)) shall be canceled and extinguished and converted into the right to
receive $21.50 in cash (the "Merger Consideration"), payable to the holder
thereof, without interest or dividends thereon, less any applicable
withholding of taxes, in the manner provided in Section 2.03. All such
Common Shares, when so converted, shall no longer be outstanding and shall
automatically be canceled and each holder of a certificate or certificates
representing any such Common Shares shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration.
(b) Cancellation of Certain Common Shares. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
Common Shares, the Company or Merger Sub, each Common Share that is owned by
the Company or any wholly owned subsidiary as treasury stock or otherwise or
owned by Merger Sub or Parent or any of their respective subsidiaries
immediately prior to the Effective Time shall automatically be canceled and
shall cease to exist, and no cash or other consideration shall be delivered or
deliverable in exchange therefor.
(c) Capital Stock of Merger Sub. As of the Effective Time, each share of
common stock, par value $.01 per share, of Merger Sub ("Merger Sub Common
Stock") issued and outstanding immediately prior to the Effective Time shall,
by virtue of the Merger and without any action on the part of the holders of
Merger Sub Common Stock, the Company or Merger Sub, be converted into one
validly issued, fully paid and non-assessable share of common stock, par value
$.01 per share, of the Surviving Corporation ("Surviving Corporation Common
Stock"). Each certificate that, immediately prior to the Effective Time,
represented issued and outstanding shares of Merger Sub Common Stock shall,
from and after the Effective Time, automatically and without the necessity of
presenting the same for exchange, represent the shares of the Surviving
Corporation capital stock into which such shares have been converted pursuant
to the terms hereof; provided, however, that the record holder thereof shall
receive, upon surrender of any such certificate, a certificate representing
the shares of Surviving Corporation Common Stock into which the shares of
Merger Sub Common Stock formerly represented thereby shall have been converted
pursuant to the terms hereof.
(d) Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, any Common Shares issued and outstanding immediately prior to the
Effective Time and held by a holder (a "Dissenting Shareholder") who held such
Common Shares as of the date of approval of the Merger by the Shareholders of
the Company but has not voted in favor of the Merger or consented thereto in
writing and who has properly demanded appraisal for such Common Shares in
accordance with the UBCA ("Dissenting Shares") shall not be converted into a
right to receive the Merger Consideration at the Effective Time in accordance
with Section 2.01(a) hereof, but shall represent and become the right to
receive such consideration as may be determined to be due to such Dissenting
Shareholder pursuant to the laws of the State of Utah, unless and until such
holder fails to perfect or withdraws or otherwise loses such holder's right to
appraisal and payment under the UBCA. If a Dissenting Shareholder fails to
perfect appraisal rights in accordance with the UBCA, or if such holder
withdraws or otherwise loses such holder's right to appraisal, such former
Dissenting Shares held by such holder shall be treated as if they had been
converted as of the Effective Time into a right to receive, upon surrender as
provided above, the Merger Consideration, without any interest or dividends
thereon, in accordance with Section 2.01(a). The Company shall give Merger
Sub prompt notice of any demands received by the Company for appraisal of
Common Shares, withdrawals of such demands and any other instruments served
pursuant to the UBCA and received by the Company, and Merger Sub shall have
the right to participate in and, after the Effective Time, to direct, all
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Parent, make any payment with
respect to any demands for appraisal or offer to settle or settle any such
demands.
2.02 Options.
(a) For purposes of this Agreement, the term "Option" means each
outstanding unexercised option to purchase Common Shares, whether or not then
vested or fully exercisable, granted on or prior to the date hereof to any
current or former employee or director of the Company or any subsidiary of the
Company or any other person, whether under any stock option plan or otherwise
(including, without limitation, under the Company's 1997 Stock Incentive Plan
and 2006 Stock Incentive Plan, each as amended) (together, the "Stock Plans").
(b) The Company shall take all actions necessary so that (i) immediately
prior to the Effective Time, each outstanding Option that has a per-share
exercise price less than the Merger Consideration (the "Cash-Pay Options")
shall become immediately vested and exercisable in full and (ii) at the
Effective Time, all Options shall be canceled, in each case, in accordance
with and pursuant to the terms of the Stock Plans under which such Options
were granted. In consideration of such cancellation, each holder of a
Cash-Pay Option canceled in accordance with this Section 2.02(b) will be
entitled to receive in settlement of such Cash-Pay Option as promptly as
practicable following the Effective Time, but in no event later than 10
business days after the Effective Time, a cash payment from the Surviving
Corporation, subject to any required withholding of taxes, equal to the
product of (i) the total number of Common Shares otherwise issuable upon
exercise of such Cash-Pay Option and (ii) the Merger Consideration per Common
Share less the applicable exercise price per Common Share otherwise issuable
upon exercise of such Cash-Pay Option (the "Cash-Pay Option Consideration");
provided, however, that with respect to any person subject to Section 16 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), any such
amount shall be paid as soon as practicable after the first date payment can
be made without liability to such person under Section 16(b) of the Exchange
Act. The Company Board will fully accelerate the vesting schedule of the
Options issued under the Stock Plans.
(c) Promptly following the Effective Time, Parent or Merger Sub shall
deposit, or Parent or Merger Sub shall otherwise take all steps necessary to
cause to be deposited, by wire transfer of immediately available funds, with
the Surviving Corporation, cash in an aggregate amount equal to the aggregate
Cash-Pay Option Consideration payable to all holders of vested Options
pursuant to Section 2.01(b) (the "Option Fund" and, together with the Payment
Fund, the "Closing Funds"). The Option Fund shall not be used for any other
purpose except as provided in this Agreement.
(d) Following the Effective Time and as a prerequisite to receiving their
Cash-Pay Option Consideration, each holder of an Option whose exercise price
is less than the Merger Consideration per Common Share shall be required to
execute a written acknowledgment to the effect that (i) the payment of the
Cash-Pay Option Consideration, if any, will satisfy in full the Company's
obligation to such person pursuant to such Option and (ii) subject to the
payment of the Cash-Pay Option Consideration, if any, such Option held by such
holder shall, without any action on the part of the Company or the holder, be
deemed terminated, canceled, void and of no further force and effect as
between the Company and the holder and neither party shall have any further
rights or obligations with respect thereto. Such written acknowledgment shall
be substantially in the form attached hereto as Exhibit 2.02(d).
(e) Prior to the Effective Time, the Company shall take all actions that
are necessary to give effect to the transactions contemplated by this Section
2.02.
2.03 Payment for Common Shares in the Merger.
(a) Prior to the Effective Time, Merger Sub shall appoint a commercial
bank or trust company reasonably acceptable to the Company to act as exchange
and paying agent, registrar and transfer agent (the "Agent") for the purpose
of exchanging certificates representing, immediately prior to the Effective
Time, Common Shares for the aggregate Merger Consideration. Promptly
following the Effective Time, Parent or Merger Sub shall deposit, or Parent or
Merger Sub shall otherwise take all steps necessary to cause to be deposited,
by wire transfer of immediately available funds, in trust with the Agent for
the benefit of the holders of Common Shares, cash in an aggregate amount equal
to (i) the product of (A) the number of Common Shares issued and outstanding
immediately prior to the Effective Time and entitled to receive the Merger
Consideration in accordance with Section 2.01(a) and (B) the Merger
Consideration (the "Payment Fund"). The Agent shall, pursuant to instructions
provided by Merger Sub, make the payments provided for in Section 2.01 of this
Agreement out of the Payment Fund (it being understood that any and all
interest earned on funds made available to the Agent pursuant to this
Agreement shall be turned over to the Surviving Corporation). The Agent shall
be directed to invest the funds deposited in the Payment Fund only in
obligations of the United States government or money market accounts and/or
money market mutual funds reasonably acceptable to the Company. The Payment
Fund shall not be used for any other purpose except as provided in this
Agreement.
(b) As soon as reasonably practicable after the Effective Time, but in no
event later than 10 business days after the Effective Time, the Surviving
Corporation shall cause the Agent to mail to each record holder of
certificates (the "Certificates") that immediately prior to the Effective Time
represented Common Shares (i) a notice of the effectiveness of the Merger,
(ii) a form letter of transmittal which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Agent, and (iii) instructions for
use in surrendering such Certificates and receiving the Merger Consideration
in respect thereof.
(c) Upon surrender to the Agent of a Certificate, together with such
letter of transmittal duly executed and completed in accordance with the
instructions thereto, the holder of such Certificate shall be entitled to
receive, within 10 business days after such surrender, in exchange therefor,
in the case of Common Shares (other than Common Shares to be canceled pursuant
to Section 2.01(b)), cash in an amount equal to the product of (i) the number
of Common Shares formerly represented by such Certificate and (ii) the Merger
Consideration, which amounts shall be paid by Agent by check or wire transfer
in accordance with the instructions provided by such holder. No interest or
dividends will be paid or accrued on the consideration payable upon the
surrender of any Certificate. If the consideration provided for herein is to
be delivered in the name of a person other than the person in whose name the
Certificate surrendered is registered, it shall be a condition of such
delivery that the Certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer and that the person requesting such
delivery shall pay any transfer or other taxes required by reason of such
delivery to a person other than the registered holder of the Certificate, or
that such person shall establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 2.03, each
Certificate (other than Certificates representing Dissenting Shares or Common
Shares to be canceled pursuant to Section 2.01(b)) shall represent, for all
purposes, in the case of Certificates representing Common Shares (other than
Common Shares to be canceled pursuant to Section 2.01(b)), only the right to
receive an amount in cash equal to the Merger Consideration multiplied by the
number of Common Shares formerly evidenced by such Certificate without any
interest or dividends thereon.
(d) The consideration issued upon the surrender of Certificates in
accordance with this Agreement shall be deemed to have been issued in full
satisfaction of all rights pertaining to such Common Shares formerly
represented thereby. After the Effective Time, there shall be no transfers on
the stock transfer books of the Surviving Corporation of any Common Shares
that were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation, they
shall be canceled and exchanged as provided in this Article 2.
(e) Any portion of the Payment Fund (including any amounts that may be
payable to the former shareholders of the Company in accordance with the terms
of this Agreement) which remains unclaimed by the former shareholders of the
Company upon the 180th day immediately following the Closing Date shall be
returned to the Surviving Corporation, upon demand, and any former
shareholders of the Company who have not theretofore complied with this
Article 2 shall, subject to Section 2.03(f), thereafter look to the Surviving
Corporation only as general unsecured creditors thereof for payment of any
Merger Consideration, without any interest or dividends thereon, that may be
payable in respect of each Common Share held by such shareholder. Following
the Closing, the Agent shall retain the right to invest and reinvest the
Payment Fund on behalf of the Surviving Corporation in securities listed or
guaranteed by the United States government or as otherwise reasonably directed
by the Surviving Corporation, and the Surviving Corporation shall receive the
interest earned thereon.
(f) None of Merger Sub, the Company or Agent shall be liable to a holder
of Certificates or any other person in respect of any cash delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law. If any Certificates shall not have been surrendered by the sixth
anniversary of the Closing Date (or immediately prior to such earlier date on
which any Merger Consideration, dividends (whether in cash, stock or property)
or other distributions with respect to Common Shares in respect of such
Certificate would otherwise escheat to or become the property of any
Governmental Authority (as defined in Section 3.06(b)), any such shares, cash,
dividends or distributions in respect of such Certificate shall, to the extent
permitted by applicable law, become the property of the Surviving Corporation,
free and clear of all claims or interests of any person previously entitled
thereto.
(g) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit (in form and substance acceptable
to the Surviving Corporation) of that fact by the person (who shall be the
record owner of such Certificate) 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 amount as the Surviving Corporation may direct
as indemnity against any claim that may be made against it with respect to
such Certificate, the Agent will issue in exchange for such lost, stolen or
destroyed Certificate the Merger Consideration deliverable in respect thereof
pursuant to this Agreement.
(h) Each of the Agent, the Surviving Corporation and Parent shall be
entitled to deduct and withhold from the consideration otherwise payable to
any holder of Common Shares or Options pursuant to this Agreement such amounts
as may be required to be deducted or withheld with respect to the making of
such payment under the Internal Revenue Code of 1986, as amended (the "Code"),
or any applicable provision of state, local or foreign tax law. To the extent
that amounts are so deducted or withheld and paid over to the appropriate
taxing authority by Agent, the Surviving Corporation or Parent, such amounts
shall be treated for all purposes of this Agreement as having been paid to
such former holder of Common Shares or Options, provided that the withheld
amounts are actually remitted to the appropriate taxing authority.
2.04 Adjustment of the Merger Consideration and the Cash Pay Option
Consideration.
The Merger Consideration and the Cash-Pay Option Consideration, each payable
pursuant to this Article 2, have been calculated based upon the
representations and warranties made by the Company in Section 3.03. In the
event that, at the Effective Time, the actual number of Common Shares
outstanding and/or the actual number of Common Shares issuable upon the
exercise of Options, or similar agreements or upon conversion of securities
(including without limitation, as a result of any stock split,
reclassification, stock dividend (including any dividend or distribution of
securities convertible into Common Shares) or recapitalization) is more than
as described in Section 3.03 or if the weighted average exercise price of the
Options is lower than described in Section 3.03 hereof, the Merger
Consideration and the Cash-Pay Option Consideration shall be equitably
adjusted downward. The provisions of this Section 2.04 shall not, in any
event, adversely affect, constitute a waiver of or otherwise impair any of
Merger Sub's rights under this Agreement (including any of Merger Sub's rights
arising from any misrepresentation or breach of the representations and
warranties set forth in Section 3.03 hereof).
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company Disclosure Schedule (the "Company
Disclosure Schedule") delivered to Parent on the date of this Agreement (it
being agreed that disclosure of any item on the Company Disclosure Schedule
shall be deemed to be a disclosure with respect to any other Section or
subsection of this Article 3 to the extent the applicability of such
disclosure to such other Section or subsection of this Article 3 is reasonably
apparent on the face of such disclosure notwithstanding the omission of any
cross-references to such other Section or subsection of this Article 3), the
Company represents and warrants to each of Parent and Merger Sub as follows:
3.01 Organization and Qualification. The Company and each of its
subsidiaries (as described in Section 3.05) is a corporation or limited
liability company, as the case may be, duly organized or formed, as the case
may be, validly existing and in good standing (to the extent applicable) under
the laws of its state or jurisdiction of incorporation or formation, as the
case may be, and has the requisite power and authority to carry on its
business as now being conducted, except where the failure to be in good
standing (to the extent applicable) would not, individually or in the
aggregate, have a Company Material Adverse Effect (as defined below). Except
as set forth on Section 3.01 of the Company Disclosure Schedule, the Company
and each of its subsidiaries is duly qualified or licensed as a foreign
corporation to do business, and is in good standing (to the extent
applicable), in each jurisdiction where the nature of its business makes such
qualification or licensing necessary, except where the failure to be so
qualified or licensed and in good standing (to the extent applicable) would
not, individually or in the aggregate, have a Company Material Adverse Effect.
As used in this Agreement, the term "Company Material Adverse Effect" means
any circumstance, effect, event, or change that, individually or in the
aggregate (i) is, or is reasonably likely to be, materially adverse to the
business, assets, condition (financial or otherwise) or results of operations
of the Company and its subsidiaries, taken as a whole, other than resulting
from any Excluded Matter or (ii) prevents or materially delays the ability of
the Company and its subsidiaries to perform their obligations under this
Agreement or to consummate the transactions contemplated hereby (the
"Transactions") in accordance with the terms hereof. As used in this
Agreement, "Excluded Matter" means any one or more of the following: (a) any
change or effect relating to local, regional, national or foreign political,
economic or financial conditions or resulting from or arising out of
developments or conditions in credit, financial or securities markets,
including without limitation, conditions caused by acts of terrorism or war
(whether or not declared) or any material worsening of such conditions
existing as of the date of this Agreement, in each case, which does not
materially, disproportionately affect the Company and its subsidiaries taken
as a whole relative to other industry participants, (b) any change or effect
generally affecting the industries, geographic areas or business segments in
which the Company and its subsidiaries operate, including without limitation,
any increase in the prices of raw materials, in each case, which does not
materially, disproportionately affect the Company and its subsidiaries taken
as a whole relative to other industry participants, (c) any change or effect
resulting from any hurricane, earthquake or other natural disasters, (d) any
change, in and of itself (as opposed to the facts underlying such change), in
the share price or trading volume of the Common Shares on The Nasdaq Stock
Market, (e) any change or effect resulting from a change after the date of
this Agreement in accounting rules or procedures announced by the Financial
Accounting Standards Board with respect to U.S. generally accepted accounting
principles, (f) any failure, in and of itself (as opposed to the facts
underlying such failure), to meet any internal budgets, plans, projections or
forecasts of the Company's revenue, earnings or other financial performance or
results of operations, or any published financial forecasts or analyst
estimates of the Company's revenue, earnings or other financial performance or
results of operations or any change in analyst recommendations, for any
period, (g) any cancellation or delay in customer orders or any loss of
customers resulting from the public announcement of the Transactions or (h)
changes resulting from or arising out of any change in any Law applicable to
the Company.
3.02 Charter Documents and Bylaws. The Company has heretofore made
available to Merger Sub a complete and correct copy of the articles of
incorporation and the bylaws of the Company in full force and effect as of the
date hereof. The Company is not in violation of any of the provisions of its
articles of incorporation or bylaws. The Company has heretofore made
available to Merger Sub a complete and correct copy of the articles of
incorporation and the bylaws (or equivalent organizational documents) of each
subsidiary of the Company in full force and effect as of the date hereof. No
subsidiary of the Company is in violation of any of the provisions of its
articles of incorporation or bylaws (or equivalent organizational documents).
3.03 Capitalization.
(a) The authorized capital stock of the Company consists of 10,000,000
Common Shares and 3,000,000 shares of preferred stock, par value $0.10 per
share (the "Preferred Stock"). As of the date of this Agreement (including
any Options or other rights exercisable or convertible for capital stock of
the Company granted by the Company on or prior to the date of this Agreement),
(i) 3,335,698 Common Shares were issued and outstanding, (ii) no shares of
Preferred Stock were issued and outstanding and (iii) 1,200,000 Common Shares
were reserved for issuance pursuant to the Stock Plans, of which 442,589
Common Shares are subject to outstanding Options. The Company has outstanding
Cash-Pay Options pursuant to which an aggregate of 442,589 Common Shares are
issuable and the weighted average exercise price for such Cash-Pay Options is
$13.22. Except as set forth in this Section 3.03, there are not now, and at
the Effective Time there will not be, any options, warrants, calls,
subscriptions, or other rights, or other agreements or commitments of any
character (including without limitation pursuant to any employee stock
purchase plan) relating to the issued or unissued capital stock of the Company
or obligating the Company to issue, transfer or sell any shares of capital
stock of, or other equity interests in, the Company or any subsidiary of the
Company. Section 3.03(a) of the Company Disclosure Schedule sets forth the
name of each holder of an Option, together with the grant date, exercise price
and number of Common Shares issuable upon exercise of each such Option. All
issued and outstanding Common Shares are duly authorized, validly issued,
fully paid, nonassessable and free of preemptive rights. All of the
outstanding shares of capital stock of, or other equity interests in, each
subsidiary of the Company have been duly authorized and validly issued and are
fully paid and non-assessable and, except as set forth on Section 3.03(a) of
the Company Disclosure Schedule, are owned by either the Company or another of
its wholly-owned subsidiaries, free and clear of all liens, charges, claims or
encumbrances. There are no outstanding options, warrants, calls,
subscriptions, convertible securities or other rights, or other agreements or
commitments, obligating any subsidiary of the Company to issue, transfer or
sell any shares of its capital stock or other equity interests. There are no
outstanding obligations of the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of, or
other equity interests in, the Company or any subsidiary of the Company.
(b) Other than the voting agreements referred to in the recitals hereto or
as set forth on Section 3.03(b) of the Company Disclosure Schedule, to the
knowledge of the Company, there are no shareholders agreements, voting trusts
or other agreements or understandings relating to voting or disposition of any
shares of capital stock of the Company or granting to any person or group of
persons the right to elect, or to designate or nominate for election, a
director to the Company Board.
3.04 Authority Relative to this Agreement. The Company has the requisite
corporate power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and, subject to the adoption of this
Agreement and the Merger by the holders of a majority of the outstanding
Common Shares entitled to vote thereon, to consummate the Transactions
pursuant to the UBCA. The Company Board, at a meeting duly called and held,
has unanimously (i) declared the advisability of this Agreement and approved
this Agreement and (ii) resolved to recommend that the shareholders of the
Company approve and adopt this Agreement. The execution and delivery of this
Agreement and the consummation of the Merger and the other Transactions have
been duly and validly authorized by all necessary corporate action and no
other corporate proceedings on the part of the Company are necessary to
authorize the Company's execution and delivery of this Agreement or to
consummate the Transactions (other than the adoption of this Agreement and the
Merger by the holders of a majority of the outstanding Common Shares entitled
to vote thereon (the "Shareholder Approval") and the filing or recordation of
appropriate merger documents as required by the UBCA). This Agreement has
been duly and validly executed and delivered by the Company, and (assuming
this Agreement constitutes a valid and binding obligation of Merger Sub and
Parent) constitutes the valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to creditors' rights generally and to general principles of
equity. The Company has no reason to believe that it will be unable to
satisfy, on a timely basis, any material term or condition to be satisfied by
it or any of its affiliates relating to the sale-leaseback of the real
property of the Company described in the Debt Commitment Letters (as defined
in Section 4.05) (the "Sale-Leaseback").
3.05 Company Subsidiaries. Section 3.05 of the Company Disclosure
Schedule contains a correct and complete list of each subsidiary of the
Company and the jurisdiction in which each such subsidiary is incorporated or
organized. Section 3.05 of the Company Disclosure Schedule sets forth for
each subsidiary of the Company: (i) its authorized capital stock or share
capital; (ii) the number of issued and outstanding shares of capital stock or
share capital; and (iii) the Company's direct or indirect equity interest
therein. Except for equity interest in its subsidiaries, the Company does not
own, directly or indirectly, any capital stock or other ownership interest in
any Person. No subsidiary of the Company owns, directly or indirectly, any
capital stock or other ownership interest in any Person, except for the
capital stock and/or other ownership interest in another wholly-owned
subsidiary of the Company.
3.06 No Violation; Required Filings and Consents.
(a) The execution and delivery by the Company of this Agreement does not,
and the performance of this Agreement by the Company and the consummation of
the Transactions will not, (i) conflict with or violate any provision of the
Company's articles of incorporation or bylaws or conflict with or violate any
provision of the articles of incorporation or bylaws or equivalent
organization documents of any subsidiary of the Company, (ii) assuming that
all consents, approvals, authorizations and other actions described in Section
3.06(b) have been obtained and all filings and obligations described in
Section 3.06(b) have been made or complied with, conflict with or violate any
foreign or domestic (federal, state or local) law, statute, ordinance, rule,
regulation, permit, license, injunction, writ, judgment, decree or order
(each, a "Law" and, collectively, "Laws") applicable to the Company or any of
its subsidiaries or by which any asset of the Company or any of its
subsidiaries is bound or affected, (iii) except as set forth in Section
3.06(a) of the Company Disclosure Schedule, conflict with, result in any
breach of or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or require any
payment under, or give rise to a loss of any benefit to which the Company or
any subsidiary of the Company is entitled under any provision of any contract,
instrument, permit, concession, franchise, license, loan or credit agreement,
note, bond, mortgage, indenture, lease or other property agreement,
partnership or joint venture agreement or other legally binding agreement,
whether oral or written (each, a "Contract" and, collectively, "Contracts"),
applicable to the Company or any such subsidiary or their respective
properties or assets or (iv) to the Company's knowledge, result in the
creation or imposition of a lien, claim, security interest or other charge,
title imperfection or encumbrance (each, a "Lien" and, collectively, "Liens")
on any asset of the Company or any subsidiary of the Company, except in the
case of clauses (ii), (iii) and (iv) of this Section 3.06(a), to the extent
that any such conflict, violation, breach, default, right, loss or Lien would
not, individually or in the aggregate, have a Company Material Adverse Effect.
(b) The execution and delivery by the Company of this Agreement does not,
and the performance of this Agreement and the consummation by the Company of
the Transactions will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any domestic (federal, state or
local) or foreign government or governmental, regulatory or administrative
authority, agency, commission, board, bureau, court or instrumentality or
arbitrator of any kind ("Governmental Authority"), except (i) for applicable
requirements, if any, of the Exchange Act, the Securities Act of 1933, as
amended (the "Securities Act"), the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), and the rules and regulations
thereunder, any required consent, approval, authorization, permit, filing or
notification pursuant to applicable foreign merger control or competition laws
and regulations and filing and recordation of appropriate documents for the
Merger as required by the UBCA, (ii) for any applicable notification
requirement with respect to the various transactions contemplated under
Section 2.02 and Section 2.03 with respect to the Stock Plans and (iii) where
the failure to obtain such consents, approvals, authorizations or permits, or
to make such filings or notifications, would not, individually or in the
aggregate, have a Company Material Adverse Effect.
3.07 SEC Reports and Financial Statements.
(a) Since April 1, 2004, the Company has filed all forms, reports,
statements, schedules and other documents (the "SEC Reports") with the
Securities and Exchange Commission (the "SEC") required to be filed by it
pursuant to the federal securities laws and the SEC rules and regulations
thereunder. The SEC Reports (i) were prepared in all material respects in
accordance with the requirements of the Securities Act, the Exchange Act and
the published rules and regulations of the SEC thereunder, each as applicable
to such SEC Reports and (ii) did not as of the time they were filed contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except to the extent corrected prior to the date hereof by a
subsequently filed SEC Report. No subsidiary of the Company is subject to the
periodic reporting requirements of the Exchange Act. As of the date hereof,
there are no material unresolved comments issued by the staff of the SEC with
respect to any of the SEC Reports.
(b) Each of the consolidated financial statements (including, in each
case, any notes thereto) of the Company included in the SEC Reports has been
prepared in all material respects in accordance with the published rules and
regulations of the SEC (including Regulation S-X) as at the date of the filing
of such reports, and in accordance with United States generally accepted
accounting principles applied on a consistent basis throughout the periods
indicated (except as otherwise stated in such financial statements, including
the related notes) and each fairly presents, in all material respects, the
consolidated financial position, results of operations and cash flows of the
Company and its consolidated subsidiaries as at the respective dates thereof
and for the respective periods indicated therein, except as otherwise set
forth in the notes thereto (subject, in the case of unaudited statements, to
the absence of complete footnote disclosure and to normal and recurring
year-end adjustments, none of which, would differ materially from the notes to
the audited financial statements included in the Company's applicable annual
report). Except as set forth on Section 3.07(b) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries have any
Indebtedness.
(c) Except as disclosed in Section 3.07(c) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is subject to any
liabilities or obligations of any kind or nature (whether accrued, absolute,
contingent, determinable or otherwise), except (i) liabilities set forth on
the face of the December 31, 2006 unaudited balance sheet included in the
Company's report on Form 10-Q for the quarter ended December 31, 2006, (ii)
liabilities incurred in the ordinary course of business and consistent with
past practice since December 31, 2006, (iii) liabilities incurred in
connection with the Transactions and (iv) liabilities that have not had and
would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect.
(d) Except as set forth in Section 3.07(d) of the Company Disclosure
Schedule, none of the Company or any of its subsidiaries is indebted to any
director or officer of the Company or any of its subsidiaries (except for
amounts due as normal salaries and bonuses or in reimbursement of ordinary
business expenses and directors' fees) and no such person is indebted to the
Company or any of its subsidiaries, and there have been no other transactions
of the type required to be disclosed pursuant to Items 402 or 404 of
Regulation S-K promulgated by the SEC other than those disclosed in the SEC
Reports.
(e) The Company has heretofore furnished or made available to Merger Sub a
complete and correct copy of any amendments or modifications which have not
yet been filed with the SEC to SEC Reports which previously have been filed by
the Company with the SEC pursuant to the Securities Act and the rules and
regulations promulgated thereunder or the Exchange Act and the rules and
regulations promulgated thereunder.
3.08 Compliance with Applicable Laws. Except as set forth on Section 3.08
of the Company Disclosure Schedule and except in each case for possible
violations which would not, individually or in the aggregate, have a Company
Material Adverse Effect, (i) neither the Company nor any of its subsidiaries
is in violation of any Order (as defined in Section 6.01(b)) of any
Governmental Authority or any Law of any Governmental Authority applicable to
the Company or any subsidiary of the Company or any of their respective
properties or assets and (ii) the business operations of the Company and its
subsidiaries have been conducted in compliance with all Laws of each
Governmental Authority.
3.09 Absence of Certain Changes or Events. Except as set forth in Section
3.09 of the Company Disclosure Schedule or as contemplated by this Agreement,
since December 31, 2006, the Company and its subsidiaries have conducted their
businesses in all material respects only in the ordinary course of business
and in a manner consistent with past practice in all material respects and
there has not been:
(a) any material change in any method of accounting or accounting practice
by the Company or any of its subsidiaries, except for any such change required
by reason of a concurrent change in United States generally accepted
accounting principles;
(b) any declaration, setting aside or payment of any dividend (whether in
cash, stock or other property) or other distribution in respect of the
Company's securities or any redemption, purchase or other acquisition by the
Company of any of the Company's securities;
(c) any issuance or the authorization of any issuance of any securities in
respect of, in lieu of or in substitution for shares of its capital stock;
(d) any amendment of any material term of any outstanding security of the
Company or any of its subsidiaries;
(e) any issuance by the Company or any of its subsidiaries of any notes,
bonds or other debt securities or any capital stock or other equity securities
or any securities convertible, exchangeable or exercisable into any capital
stock or other equity securities, except for (i) the granting of Options and
(ii) the issuance of any Common Shares pursuant to the exercise of any
Options;
(f) any incurrence, assumption or guarantee by the Company or any of its
subsidiaries of any Indebtedness;
(g) any making of any loan, advance or capital contributions to or
investment in any entity or person, other than loans, advances or capital
contributions to or investments in wholly owned subsidiaries;
(h) any entry into any contract related to the acquisition or disposition
of any business or any material assets, including any Company Proprietary
Rights;
(i) any effect, event or change that has had or is reasonably likely to
have a Company Material Adverse Effect;
(j) any material increase in the benefits under, or the establishment,
material amendment or termination of, any Benefit Plan (as defined in Section
3.13(b)) covering current or former employees, officers or directors of the
Company or any of its subsidiaries, or any material increase in the
compensation payable or to become payable to or any other material change in
the employment terms for any directors or officers of the Company or any of
its subsidiaries or any other employee earning noncontingent cash compensation
in excess of $100,000 per year;
(k) any entry by the Company or any of its subsidiaries into any
employment, consulting, severance, termination, change-of-control or
indemnification agreement with any director or officer of the Company or any
of its subsidiaries or entry into any such agreement with any person for a
noncontingent cash amount in excess of $100,000 per year or outside the
ordinary course of business; or
(l) any authorization of, or agreement by the Company or any of its
subsidiaries to take, any of the actions described in this Section 3.09,
except as expressly contemplated by this Agreement.
3.10 Change of Control. Section 3.10 of the Company Disclosure Schedule
sets forth the amount of any compensation or remuneration of any kind or
nature which is or may become payable to any Employee (as defined in Section
3.13(a)), in whole or in part, by reason of the execution and delivery of this
Agreement or the consummation of the Transactions (the "Change of Control
Payments").
3.11 Litigation. Section 3.11 of the Company Disclosure Schedule sets
forth, as of the date hereof, each suit, claim, action, proceeding or
investigation pending or, to the knowledge of the Company, threatened against
the Company or any of its subsidiaries, at law or in equity. There is no
suit, claim, action, proceeding or investigation pending or, to the knowledge
of the Company, threatened against the Company or any of its subsidiaries, at
law or in equity, that, individually or in the aggregate, would reasonably be
expected to have a Company Material Adverse Effect. As of the date hereof,
neither the Company nor any of its subsidiaries is subject to any outstanding
order, writ, injunction or decree.
3.12 Information in Proxy Statement.
(a) Each document required to be filed by the Company with the SEC in
connection with the Transactions (the "Company Disclosure Documents"),
including, without limitation, the proxy or information statement of the
Company containing information required by Regulation 14A under the Exchange
Act, and, if applicable, Rule 13e-3 and Schedule 13E-3 under the Exchange Act
(together with all amendments and supplements thereto, the "Proxy Statement"),
to be filed with the SEC in connection with the Merger, will, when filed,
comply as to form in all material respects with the applicable requirements of
the Exchange Act. The representations and warranties contained in this Section
3.12(a) will not apply to statements or omissions included in the Company
Disclosure Documents based upon information furnished to the Company in
writing by Merger Sub or Parent or any of their representatives specifically
for use therein.
(b) At the time the Proxy Statement or any amendment or supplement thereto
is first mailed to shareholders of the Company and at the time such
shareholders vote on adoption of this Agreement and the Merger, the Proxy
Statement, as supplemented or amended, if applicable, will not contain any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. At the time of the
filing of any Company Disclosure Document other than the Proxy Statement and
at the time of any distribution thereof, such Company Disclosure Document will
not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. The
representations and warranties contained in this Section 3.12(b) will not
apply to statements or omissions included in the Company Disclosure Documents
based upon information furnished to the Company in writing by Merger Sub or
Parent or any of their representatives specifically for use therein.
3.13 Benefit Plans.
(a) Except as disclosed in Section 3.13(a) of the Company Disclosure
Schedule, there exist no employment, consulting, severance, retention,
termination or change-of-control agreements, arrangements or understandings
between the Company or any of its subsidiaries and any individual current or
former employee, independent contractor, officer or director (or any
dependent, beneficiary or relative of any of the foregoing) of the Company or
any of its subsidiaries (collectively, the "Employees") with respect to which
the annual cash, noncontingent payments thereunder exceed $100,000 or where
the contingent and noncontingent annual compensation is reasonably likely to
exceed $150,000.
(b) Section 3.13(b) of the Company Disclosure Schedule contains a
complete list of all (i) "employee pension benefit plans" (as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) (collectively, the "Pension Plans"), including any such
Pension Plans that are "multiemployer plans" (as such term is defined in
Section 4001(a)(3) of ERISA) (collectively, the "Multiemployer Pension
Plans"), (ii) "employee welfare benefit plans" (as defined in Section 3(1) of
ERISA) and (iii) other bonus, deferred compensation, severance pay, pension,
profit-sharing, retirement, insurance, stock purchase, stock option, vacation
pay, sick pay or other fringe benefit plan, arrangement or practice
maintained, or contributed to, by the Company or any of its subsidiaries for
the benefit of any of the Employees or with respect to which the Company has
any liability (the foregoing clauses (i), (ii) and (iii) collectively, the
"Benefit Plans"). The Company has delivered to Merger Sub correct and
complete copies of (i) each Benefit Plan, (ii) the three most recent annual
reports on Form 5500 filed with the Internal Revenue Service with respect to
each Benefit Plan (and all attachments thereto), (iii) the most recent summary
plan description for each Benefit Plan for which such summary plan description
is required and (iv) each trust agreement and group annuity contract relating
to any Benefit Plan.
(c) Except as disclosed in Section 3.13(c) of the Company Disclosure
Schedule, all Pension Plans intended to be qualified plans may either rely on
opinion letters issued for the form of plan or have been the subject of
favorable determination letters from the Internal Revenue Service to the
effect that such Pension Plans are qualified and exempt from Federal income
taxes under Section 401(a) and 501(a), respectively, of the Code (taking into
account the laws commonly referred to as "GUST"), and no such determination
letter has been revoked. There is no reasonable basis for the revocation of
any such determination letter.
(d) None of the Benefit Plans is, and none of the Company or any of its
subsidiaries has ever maintained or had an obligation to contribute to (i) a
"single employer plan" (as such term is defined in Section 4001(a)(15) of
ERISA) subject to Section 412 of the Code or Section 302 of Title I of ERISA
or Title IV of ERISA, (ii) a "multiple employer plan" (as such term is defined
in ERISA), (iii) a Multiemployer Pension Plan or (iv) a funded welfare benefit
plan (as such term is defined in Section 419 of the Code). Each Benefit Plan
and all related trusts, insurance contracts and funds has been maintained,
funded and administered in all material respects in accordance with the terms
of such Benefit Plan and in compliance in all material respects with the
applicable provisions of ERISA, the Code and other applicable laws. There are
no unpaid contributions, premiums or other payments due prior to the date
hereof with respect to any Benefit Plan that are required to have been made
under the terms of such Benefit Plan, any related insurance contract or any
applicable law. None of the Company or any of its subsidiaries has incurred
any liability or taken any action, and the Company does not have any knowledge
of, any action or event that could reasonably be expected to cause any one of
them to incur any liability (i) under Section 412 of the Code or Section 302
of Title I of ERISA or Title IV of ERISA with respect to any "single-employer
plan" (as such term is defined in Section 4001(a)(15) of ERISA), (ii) on
account of a partial or complete withdrawal (as such term is defined in
Sections 4203 and 4205 of ERISA, respectively) with respect to any
Multiemployer Pension Plan, or (iii) on account of unpaid contributions to any
Multiemployer Pension Plan. Neither the Company nor any of its subsidiaries
has any unfunded liabilities with respect to any deferred compensation,
retirement or other Benefit Plan.
(e) None of the Company nor any of its subsidiaries has engaged in a
"prohibited transaction" (as such term is defined in Section 406 of ERISA and
Section 4975 of the Code) or any other breach of fiduciary responsibility with
respect to any Benefit Plan subject to ERISA that reasonably could be expected
to subject the Company or any of its subsidiaries or any Employee to (i) any
material tax or penalty on prohibited transactions imposed by Section 4975 or
(ii) any liability under Section 502(i) or Section 502(l) of ERISA. As of the
date of this Agreement, with respect to any Benefit Plan: (i) no filing,
application or other matter is pending with the Internal Revenue Service, the
Pension Benefit Guaranty Corporation, the United States Department of Labor or
any other governmental body and (ii) there is no action, suit, investigation,
inquiry or claim pending, other than routine claims for benefits.
(f) None of the Company or any of its subsidiaries has any obligation to
provide any health benefits or other welfare benefits to retired or other
former employees, except as specifically required by Part 6 of Title I of
ERISA ("COBRA"). Except as disclosed in Section 3.13(f) of the Company
Disclosure Schedule, each Benefit Plan that provides health or welfare
benefits is fully insured. Incurred but not reported claims under each such
Benefit Plan that is not fully insured have been properly accrued.
(g) Neither the Benefit Plans nor any other arrangement obligates the
Company or any of its subsidiaries to pay any separation, severance,
termination or similar benefit, accelerate any vesting schedule, or alter the
timing of any benefit payment, in whole or in part, as a result of any
transaction contemplated by this Agreement or, in whole or in part, as a
result of a change in control or ownership within the meaning of any Benefit
Plan (or any other arrangement) or Section 280G of the Code.
(h) Except as set forth in Section 3.13(h) of the Company Disclosure
Schedule, no Benefit Plan is subject to Section 409A of the Code (each such
plan required to be listed in Section 3.13(h) of the Company Disclosure
Schedule, a "Deferred Compensation Plan"). Each Deferred Compensation Plan
materially complies in good faith with Section 409A of the Code and the
regulations issued thereunder as of the time of this Agreement. Neither the
Company nor any of its subsidiaries has (i) granted to any person an interest
in any Deferred Compensation Plan which interest has been or, upon the lapse
of a substantial risk of forfeiture with respect to such interest, will be
subject to the Tax imposed by Section 409A(a)(1)(B) or (b)(4)(A) of the Code,
or (ii) materially modified the terms of any Deferred Compensation Plan in a
manner that could cause an interest previously granted under such plan to
become subject to the Tax imposed by Section 409A(a)(1)(B) or (b)(4) of the
Code.
(i) Neither the Company nor any subsidiary has any liability (potential
or otherwise) with respect to any "employee benefit plan" (as defined in
Section 3(3) of ERISA) solely by reason of being treated as a single employer
under Section 414 of the Code with any other entity.
3.14 Taxes.
(a) Except as set forth in Section 3.14(a) of the Company Disclosure
Schedule: (i) the Company and each of its subsidiaries has timely filed or
caused to be filed all material Tax Returns required to be filed by it, and
each such Tax Return has been prepared in substantial compliance with all
applicable laws and regulations and is true and correct in all material
respects; (ii) the Company and each of its subsidiaries has paid (or the
Company has paid on behalf of its subsidiaries) all material Taxes (as
hereinafter defined) required to be paid in respect of the periods covered by
such returns and has made adequate provision in the Company's financial
statements for payment of all material Taxes that have not been paid, whether
or not shown as due and payable on any Tax Return, in respect of all taxable
periods or portions thereof ending on or before the date of such financial
statements; and (iii) neither the Company nor any of its subsidiaries has
incurred any material liability for Taxes subsequent to the date of the most
recent financial statements contained in the SEC Reports other than in the
ordinary course of the Company's or such subsidiary's business.
(b) Except as set forth in Section 3.14(b) of the Company Disclosure
Schedule: (i) no material Tax Return of the Company or any of its subsidiaries
is under audit or examination by any taxing authority, and no written notice
of such an audit or examination or any other audit or examination with respect
to material Taxes has been received by the Company or any of its subsidiaries;
(ii) each material deficiency resulting from any audit or examination relating
to Taxes by any taxing authority has been paid, except for deficiencies
currently being contested in good faith and for which adequate reserves, as
applicable, have been established in the Company's financial statements in
accordance with United States generally accepted accounting principles; (iii)
there are no material Liens for Taxes upon the assets of the Company or any of
its subsidiaries, except Liens relating to current Taxes not yet due and
payable or otherwise being contested in good faith as to which appropriate
reserves have been established in the Company's financial statements in
accordance with United States generally accepted accounting principles; (iv)
all material Taxes which the Company or any of its subsidiaries are required
by law to withhold or to collect for payment have been duly withheld and
collected or are in the process of being withheld and collected; (v) none of
the Company or any of its subsidiaries has consented to extend the time in
which any Tax may be assessed or collected by any taxing authority; and (vi)
to the knowledge of the Company, no written claim has been made by any taxing
authority in a jurisdiction where the Company and its subsidiaries do not file
Tax Returns that the Company or any of its subsidiaries is or may be subject
to taxation in that jurisdiction, other than such claims which would not
reasonably be expected to have a Company Material Adverse Effect.
(c) Except as set forth in Section 3.14(c) of the Company Disclosure
Schedule, there is no Contract or other arrangement, plan or agreement by or
with the Company or any of its subsidiaries covering any person that,
individually or collectively, could give rise to the payment of any amount by
the Company or any of its subsidiaries that would not be deductible by the
Company or such subsidiary by reason of Sections 280G or 162(m) of the Code
(or any corresponding provision of state, local or foreign law).
(d) Except as set forth in Section 3.14(d) of the Company Disclosure
Schedule, each of the Company and its subsidiaries has made available to
Merger Sub and Parent true, correct and complete copies of all material income
Tax Returns, and all examination reports and statements of deficiencies
assessed against or agreed to by any of the Company or any of its subsidiaries
that have been filed by or submitted to any of the Company or any of its
subsidiaries for all taxable years not barred by the statute of limitations.
(e) Except as set forth in Section 3.14(e) of the Company Disclosure
Schedule, none of the Company or any of its subsidiaries (i) has been a member
of an affiliated group filing a consolidated federal income Tax Return (other
than a group the common parent of which was the Company), (ii) is a party to
or bound by any Tax allocation or Tax sharing agreement with any persons or
entity other than the Company and its subsidiaries, (iii) has any liability
for the Taxes of any Person (other than any of the Company or any of its
subsidiaries) under Treas. Reg. Section 1.1502-6 (or any similar provision of
state, local or foreign law), as a transferee or successor, by contract, or
otherwise or (iv) has any material liability for the Taxes of any Person other
than the Company, the subsidiaries of the Company or in connection with the
acquisition, directly or indirectly, of any Person acquired by the Company or
any of its subsidiaries.
(f) Except as set forth in Section 3.14(f) of the Company Disclosure
Schedule, none of the Company or any of its subsidiaries will be required to
include any item of income in, or exclude any item of deduction from, taxable
income for any taxable period (or portion thereof) ending after the Closing
Date as a result of any (i) change in method of accounting for a taxable
period ending on or prior to the Closing Date under Code Section 481(c) (or
any corresponding or similar provision of state, local or foreign income Tax
Law); (ii) "closing agreement" as described in Code Section 7121 (or any
corresponding or similar provision of state, local or foreign income Tax Law);
(iii) deferred intercompany gain or any excess loss account described in
Treasury Regulations under Code Section 1502 (or any corresponding or similar
provision of state, local or foreign income Tax Law); (iv) installment sale
made prior to the Closing Date; or (v) repaid amount received on or prior to
the Closing Date.
(g) None of the Company or any of its subsidiaries has been a U.S. real
property holding corporation within the meaning of Section 897(c)(2) of the
Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code.
(h) Except as set forth in Section 3.14(h) of the Company Disclosure
Schedule, none of the Company or any of its subsidiaries has distributed stock
of another Person, or had its stock distributed by another Person, in a
transaction that was purported or intended to be governed in whole or in part
by Code Sections 355 or 361.
(i) As used in this Section 3.14, the terms (i) "Tax" (and, with
correlative meaning, "Taxes") means: (A) any federal, state, local or foreign
net income, gross income, gross receipts, windfall profit, severance,
property, production, sales, use, license, excise, franchise, employment,
payroll, withholding, alternative or add-on minimum, ad valorem, value added,
transfer, stamp or environmental tax, or any other tax of any kind whatsoever,
together with any interest or penalty or addition to tax imposed by any
Governmental Authority and (B) any liability of the Company or any of its
subsidiaries for payments of a type described in clause (A) as a result of (I)
any obligation of the Company or any of its subsidiaries under any tax sharing
agreement or tax indemnity agreement or (II) the Company or any of its
subsidiaries being a member of an affiliated group (other than one of which
the Company is the parent); and (ii) "Tax Return" means any report, return or
other information or document required to be supplied to or filed with a
taxing authority in connection with Taxes.
3.15 Intellectual Property.
(a) Schedule 3.15(a) attached hereto sets forth a complete and correct
list of: (i) all patented or registered Proprietary Rights owned by the
Company or its subsidiaries, including, without limitation, Internet domain
name registrations; (ii) all pending patent applications or other applications
for registration of Proprietary Rights owned by the Company or its
subsidiaries and (iii) all trade names and corporate names used by the Company
or its subsidiaries.
(b) Other than commercially-available off-the-shelf software with a total
replacement cost of less than $25,000, Schedule 3.15(b) attached hereto sets
forth a complete and correct list of: (i) technology used in the operations of
the Company or any of its subsidiaries for which the Company or its
subsidiaries paid more than $10,000 in the aggregate in license fees or pays
more than $5,000 in annual support fees; (ii) all other licenses or similar
agreements or arrangements, in effect as of the date hereof, in which the
Company or any of its subsidiaries is a licensee of Proprietary Rights; (iii)
other than customer contracts entered into in the ordinary course of business,
all licenses or similar agreements or arrangements in which the Company or any
of its subsidiaries is a licensor of Proprietary Rights, including, without
limitation, reseller agreements; and (iv) all other agreements or similar
arrangements, in effect as of the date hereof, relating to the use of
Proprietary Rights by the Company or any of its subsidiaries.
(c) The Company and its subsidiaries own and possess all right, title and
interest in and to the registered Proprietary Rights set forth in Schedule
3.15(a), have a valid and enforceable right to use pursuant to the agreements
set forth in Schedule 3.15(b), and otherwise have the right to use all other
Proprietary Rights necessary for the operation of the Company's and each of
its subsidiaries businesses as currently conducted, free and clear of all
Liens (collectively, the "Company Proprietary Rights").
(d) Except as set forth on Schedule 3.15(d), (i) to the Company's
knowledge, neither the Company nor any of its subsidiaries has infringed,
misappropriated and the operation of the Company's and each of its
subsidiaries businesses as currently conducted do not infringe,
misappropriate, any Proprietary Rights of any third party; (ii) neither the
Company nor any of its subsidiaries are aware of any facts which indicate a
likelihood of any of the foregoing; and (iii) neither the Company nor any of
its subsidiaries has received any notices regarding any of the foregoing
(including, without limitation, any demands or offers to license any
Proprietary Rights from any third party or any requests for indemnification
from customers).
(e) Except as set forth on Schedule 3.15(e), (i) no loss or expiration of
any of the Company Proprietary Rights is threatened, pending or reasonably
foreseeable, except for patents expiring at the end of their statutory terms
(and not as a result of any act or omission by the Company); (ii) all
registrations for (and applications for registration of) Company Proprietary
Rights are valid and enforceable; (iii) no claim by any third party contesting
the validity, enforceability, use or ownership of any of the Company
Proprietary Rights has been made, is currently outstanding or is to the
Knowledge of the Company threatened, and there are no grounds for the same;
(iv) the Company and its subsidiaries have taken all commercially reasonable
action to maintain and protect all of the Company Proprietary Rights and will
continue to maintain and protect all of the Company Proprietary Rights prior
to the Closing so as not to adversely affect the validity or enforceability
thereof; (v) neither the Company nor its subsidiaries has disclosed or allowed
to be disclosed any of its trade secrets or confidential information to any
third party and (vi) to the Company's knowledge, no third party has infringed,
misappropriated, diluted or otherwise conflicted with any of the Company
Proprietary Rights and neither the Company nor any of its subsidiaries is
aware of any facts that indicate a likelihood of any of the foregoing.
(f) To the Company's knowledge, the Company's proprietary software (the
"Company Software") does not contain any open source or freeware and the sale
or licensing of the Company Software in the ordinary course of business is not
governed, in whole or in part, by the terms of the GNU General Public License
or any other license requiring the Company or any of its subsidiaries to
disclose source code to any of the Company Software and any other software for
which a reasonably prudent Person would hold in confidence. The computer
software, computer firmware, computer hardware (whether general purpose or
special purpose), and other similar or related items of automated,
computerized and/or software system(s) that are used or relied on by the
Company and its subsidiaries in the conduct of its business is sufficient in
all material respects for the current needs of such business.
(g) The Company and its subsidiaries have collected, used, imported,
exported and protected all personally identifiable information, and other
information relating to individuals protected by law, in accordance with the
privacy policies of the Company and its subsidiaries and in accordance with
applicable law, including by entering into agreements, where applicable,
governing the flow of such information across national borders. The
transactions contemplated by this Agreement shall have no adverse effect on
the Company's or any of its subsidiaries right, title and interest in and to
any of the Company Proprietary Rights.
(h) As used in this Agreement, the term "Proprietary Rights" means all of
the following in any jurisdiction throughout the world: (i) patents, patent
applications and patent disclosures; (ii) trademarks, service marks, trade
dress, trade names, corporate names, logos and slogans (and all translations,
adaptations, derivations and combinations of the foregoing) and Internet
domain names, together with all goodwill associated with each of the
foregoing; (iii) copyrights and copyrightable works; (iv) registrations and
applications for any of the foregoing; (v) trade secrets and confidential
information (including, without limitation, inventions, ideas, formulae,
compositions, know how, manufacturing and production processes and techniques,
research and development information, drawings, specifications, designs,
plans, proposals, technical data, financial, business and marketing plans, and
customer and supplier lists and related information); (vi) computer software
and software systems (including, without limitation, data, source code and
object code, databases and related documentation); and (vi) all other
intellectual property.
3.16 Licenses and Permits. The Company and its subsidiaries are in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exceptions, consents, certificates, approvals and orders
of any Governmental Authority ("Permits") necessary for the Company and its
subsidiaries to own, lease and operate its properties and carry on its
business as it is now being conducted (the "Company Permits"), except where
the failure to have any of the Company Permits, individually or in the
aggregate, would not have a Company Material Adverse Effect. As of the date
hereof, all of the Company Permits are in full force and effect and no
violation, suspension or cancellation of any of the Company Permits is pending
or, to the knowledge of the Company, threatened, except where not being in
full force and effect or the violation, suspension or cancellation of such
Company Permits, individually or in the aggregate, would not have a Company
Material Adverse Effect. Except as disclosed in Section 3.16 of the Company
Disclosure Schedule and except where the failure of the following to be true
would not reasonably be expected to have, either individually or in the
aggregate, a Company Material Adverse Effect, none of the Company Permits will
be terminated or impaired or become terminable, in whole or in part, as a
result of the Transactions.
3.17 Material Contracts.
(a) Section 3.17(a) of the Company Disclosure Schedule sets forth a list
(as of the date of this Agreement) of the following (except for those
contracts that have expired or have been terminated in accordance with their
terms): (i) each Contract which is likely to involve payment or receipt of
annual consideration of more than $100,000, in the aggregate, over the
remaining term of such Contract, (ii) all Contracts or indentures relating to
borrowed money or other Indebtedness or the mortgaging, pledging or otherwise
placing a Lien on any material asset or material group of assets of the
Company or any of its subsidiaries, including the amount of funded
Indebtedness for borrowed money outstanding as of the date hereof under any
such Contract or indenture, (iii) all joint venture or other similar
agreements or other Contracts involving the purchase or disposition of any
business or any material assets to which the Company or any of its
subsidiaries is a party, (iv) all lease agreements to which the Company or any
of its subsidiaries is a party with annual lease payments in excess of
$50,000, (v) Contracts under which the Company or any of its subsidiaries has
advanced or loaned any third party an amount in excess of $100,000 (excluding,
for avoidance of doubt, trade accounts receivable incurred in the ordinary
course of business), (vi) Contracts or groups of related Contracts with the
same party or group of parties requiring the payment or receipt of $50,000 or
more per year which are not cancelable by the Company on 30-days-or-less
notice without premium or penalty or other cost of any kind or nature, (vii)
Contracts containing non-compete or non-solicitation covenants or most favored
nations provisions by the Company or any of its subsidiaries, and (viii)
warranty agreements with respect to the Company's or its subsidiaries'
services or products, other than warranties granted in the ordinary course of
business (the items listed in clauses (i) through (viii) hereof, together with
any Contract required to be disclosed pursuant to Section 3.15(b) hereof,
collectively, the "Material Contracts"). The Company has made available to
Merger Sub a correct and complete copy of each Material Contract listed in
Section 3.17(a) of the Company Disclosure Statement.
(b) Except as disclosed in Section 3.17(b) of the Company Disclosure
Schedule, (i) neither the Company nor any of its subsidiaries is, nor to the
Company's knowledge, is any other party, in default under any Material
Contract and (ii) to the Company's knowledge, there has not occurred any event
that, with the lapse of time or giving of notice or both, would constitute
such a default, except in either case, any such default which has not had, and
could not reasonably be expected to have, a Company Material Adverse Effect.
All Contracts to which the Company or any of its subsidiaries is a party, or
by which any of their respective assets are bound, are valid and binding, in
full force and effect and enforceable against the Company or any such
subsidiary, as the case may be, and to the Company's knowledge, the other
parties thereto in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to creditors' rights generally and to the general principles of
equity, and except with respect to any such failure to be valid and binding,
in full force and effect or enforceable which has not had, and could not
reasonably be expected to have, a Company Material Adverse Effect.
3.18 Environmental Laws. Except as disclosed in Section 3.18 of the
Company Disclosure Schedule and except to the extent it has not had, and could
not reasonably be expected to have, a Company Material Adverse Effect:
(a) The Company and its subsidiaries have complied and are in compliance
with all Environmental Laws in all material respects, including without
limitation all environmental permits required for the occupation of the
Company's or its subsidiaries' properties or facilities.
(b) Neither the Company nor any of its subsidiaries has received any
notice, report or other information regarding any material violation of, or
material liability under, Environmental Laws with respect to its past or
current operations, properties or facilities.
(c) None of the Company or any of its subsidiaries or affiliates or, to
the knowledge of the Company, any corporate predecessor in interest of the
Company or any of its subsidiaries or affiliates has treated, stored, disposed
of, arranged for or permitted the disposal of, transported, handled, or
released any substance, or operated its business or any property or facility
(and, to the knowledge of the Company, no such property or facility is
contaminated by any such substance) in a manner, that has given or would give
rise to any liabilities or investigative, corrective or remedial obligations
pursuant to CERCLA or to any other Environmental Laws.
(d) To the knowledge of the Company, the Company has furnished to Merger
Sub and Parent all environmental audits, reports and other material
environmental documents relating to the Company or any of its subsidiaries or
its or their past or current operations, properties or facilities which are in
its or their possession or under its or their reasonable control.
"Environmental Laws" shall mean all federal, state, local and foreign
(including without limitation United Kingdom and European Union) statutes,
regulations, ordinances and other requirements having the force or effect of
law, all judicial and administrative orders and determinations, and all common
law concerning public health and safety, worker health and safety, and
pollution or protection of the environment, as the foregoing are enacted or in
effect, on or prior to the Closing Date.
3.19 State Takeover Statutes. The Company Board has taken all actions so
that no "fair price", "moratorium", "control share acquisition", "business
combination" or other similar antitakeover statute or regulation enacted under
state or federal laws in the United States (including any such statute or
regulation under the UBCA) applicable to the Company shall be applicable to
the Merger or the other Transactions.
3.20 Opinion of Financial Advisor. The Company Board has received the
written opinion of ▇.▇. ▇▇▇▇▇▇▇▇ & Co. (the "Financial Advisor"), dated the
date of this Agreement, to the effect that, as of the date hereof and based
upon and subject to the factors and assumptions set forth therein, the Merger
Consideration to be received by the holders of Common Shares pursuant to the
Merger is fair to such holders from a financial point of view. The Company
has furnished a copy of such opinion to Parent solely for informational
purposes.
3.21 Brokers. Except for the engagement of the Financial Advisor, none of
the Company, any of its subsidiaries, or any of their respective officers,
directors or employees has employed any broker, finder or investment banker or
incurred any liability for any brokerage fees, commissions or finder's fees in
connection with the Transactions. Prior to the execution hereof, the Company
has furnished to Parent a complete and correct copy of all agreements between
the Company and any broker, finder or investment banker pursuant to which any
such Person would be entitled to any payment relating the Transactions.
3.22 Related Party Transactions. Except as set forth in Section 3.22 of
the Company Disclosure Schedule or otherwise disclosed in the SEC Reports, to
the Company's knowledge, no director, officer or "associate" (as such term is
defined in Rule 12b-2 under the Exchange Act) of the Company or any of its
subsidiaries owns any direct or indirect interest of any kind in, or is a
director, officer, employee, partner, affiliate or associate of, or consultant
or lender to, or borrower from, or has the right to participate in the
management, operations or profits of, any person or entity which is (i) a
competitor, supplier, customer, distributor, lessor, tenant, creditor or
debtor of the Company or any of its subsidiaries, (ii) participating in any
material transaction to which the Company or any of its subsidiaries is a
party or (iii) otherwise a party to any Material Contract, arrangement or
understanding with the Company or any of its subsidiaries, other than with
respect to at-will employment arrangements, written employment arrangements or
Benefit Plans, all as described in the Company Disclosure Schedule.
3.23 Properties and Assets. The Company and its subsidiaries have good
and valid title to, or, in the case of leased properties and assets, valid
leasehold interests in, all of their material tangible properties and assets,
real and personal, used or held for use in their businesses located on their
premises or shown on the consolidated balance sheet of the Company and its
subsidiaries as of December 31, 2006 or acquired thereafter, free and clear of
any Liens, except for such as are no longer used or useful in the conduct of
their 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 materially interfere with or impair the operation of
the business of the Company or any of its subsidiaries, except (i) as set
forth in Section 3.23 of the Company Disclosure Schedule, (ii) Liens for taxes
not yet due and payable or which are otherwise being contested in good faith
for which adequate reserves, as applicable, have been established in the
Company's financial statements in accordance with United States generally
accepted accounting principles, (iii) Liens which do not, individually or in
the aggregate, materially interfere with or materially impair the conduct of
the business of the Company or any of its subsidiaries and (iv) Liens which
have not had, and could not reasonably be expected to have, a Company Material
Adverse Effect. Except as set forth in Section 3.23 of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries owns any real
property. The real property listed in Section 3.23 of the Company Disclosure
Schedule constitutes all of the real property owned, used or occupied by the
Company or any of its subsidiaries as of the date hereof. The Company's and
each of its subsidiaries' buildings, equipment and other tangible assets are
in good operating condition (normal wear and tear excepted). All material
leases pursuant to which the Company or any of its subsidiaries are a party
are in good standing, valid and effective in accordance with their respective
terms, and there is not under any of such leases, to the Company's knowledge,
any existing default or event of default (or event which with notice or lapse
of time, or both, would constitute a default), except where the lack of such
good standing, validity and effectiveness or the existence of such default or
event of default could not reasonably be expected to materially interfere with
or impair the operation of the business of the Company or any of its
subsidiaries.
3.24 Labor Matters. Except as set forth in Section 3.24 of the Company
Disclosure Schedule, (a) there is no labor strike, dispute, slowdown, stoppage
or lockout actually pending, or, to the knowledge of the Company, threatened
against the Company or any of its subsidiaries, and during the past three
years there has not been any such action, (b) to the knowledge of the Company,
no union claims to represent the employees of the Company or any of its
subsidiaries, (c) neither the Company nor any of its subsidiaries is a party
to or bound by any collective bargaining or similar agreement with any labor
organization, or work rules or practices agreed to with any labor organization
or employee association applicable to employees of the Company or any of its
subsidiaries, (d) none of the employees of the Company or any of its
subsidiaries is represented by any labor organization and the Company does not
have any knowledge of any current union organizing activities among the
employees of the Company or any of its subsidiaries, nor does any question
concerning representation exist concerning such employees, (e) the Company and
its subsidiaries are in material compliance with all applicable Laws
respecting employment and employment practices, terms and conditions of
employment, wages, hours of work and occupational safety and health, and are
not engaged in any unfair labor practices as defined in the National Labor
Relations Act or other applicable Law, (f) there is no pending, or to the
knowledge of the Company, threatened unfair labor practice charge or complaint
against the Company or any of its subsidiaries before the National Labor
Relations Board or any similar state or foreign agency, (g) there is no
grievance arising out of any collective bargaining agreement, (h) no charges
with respect to or relating to the Company or any of its subsidiaries are
pending before the Equal Employment Opportunity Commission or any other agency
responsible for the prevention of unlawful employment practices, (i) neither
the Company nor any of its subsidiaries has received notice of the intent of
any federal, state, local or foreign agency responsible for the enforcement of
labor or employment laws to conduct an investigation with respect to or
relating to the Company or any of its subsidiaries and no such investigation
is in progress and (j) there are no material complaints, lawsuits or other
proceedings pending or to the knowledge of the Company threatened in any forum
by or on behalf of any present or former employee of the Company or any of its
subsidiaries alleging breach of any express or implied contract of employment,
any law or regulation governing employment or the termination thereof or other
discriminatory, wrongful or tortious conduct in connection with the employment
relationship. To the knowledge of the Company, as of the date hereof, no
executive officer or other key employee of the Company or any of its
subsidiaries is subject to any noncompete, nonsolicitation, employment,
consulting or similar agreement relating to, affecting or in conflict with the
present or proposed business activities of the Company and its subsidiaries,
except agreements between the Company or any subsidiary of the Company and its
present and former officers and employees.
3.25 Insurance. Set forth in Section 3.25 of the Company Disclosure
Schedule is a list of all insurance policies maintained by the Company and
each of its subsidiaries and a description of the type of insurance covered by
such policies, the dollar limit of the policies and the annual premiums for
such policies. All premiums due and payable under all such policies and bonds
have been paid and the Company and its subsidiaries are otherwise in
compliance in all material respects with the terms of such policies and bonds.
As of the date hereof, neither the Company nor any of its subsidiaries
maintains any material self-insurance or co-insurance programs. As of the
date hereof, neither the Company nor any of its subsidiaries has any disputed
claim or claims with any insurance provider relating to any claim for
insurance coverage under any policy or insurance maintained by the Company or
any of its subsidiaries.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF MERGER SUB AND PARENT
Each of Merger Sub and Parent represent and warrant to the Company as follows:
4.01 Organization and Qualification. Each of Merger Sub and Parent is a
corporation duly organized, validly existing and in good standing (to the
extent such concept is relevant in such jurisdiction) under the laws of its
jurisdiction of formation and has the requisite power and authority to carry
on its business as now being conducted, except where the failure to be in good
standing would not, individually or in the aggregate, have a Purchaser
Material Adverse Effect (as defined below). Each of Merger Sub and Parent is
duly qualified or licensed as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the nature of its business makes
such qualification or licensing necessary, except where the failure to be so
qualified or licensed and in good standing would not, individually or in the
aggregate, have a Purchaser Material Adverse Effect. As used in this
Agreement, the term "Purchaser Material Adverse Effect" means any effect,
event or change that prevents or materially delays, or is reasonably likely to
prevent or materially delay, the ability of Parent and Merger Sub to perform
in all material respects their obligations under this Agreement or to
consummate the Transactions in accordance with the terms hereof.
4.02 Charter Documents and Bylaws. Parent has heretofore made available
to the Company a complete and correct copy of the articles of incorporation
and the bylaws of Parent in full force and effect as of the date hereof.
Parent is not in violation of any of the provisions of its articles of
incorporation or bylaws. Parent has heretofore made available to the Company
a complete and correct copy of the articles of incorporation and the bylaws of
Merger Sub in full force and effect as of the date hereof. Merger Sub is not
in violation of any of the provisions of its articles of incorporation or
bylaws.
4.03 Authority Relative to this Agreement. Each of Merger Sub and Parent
has the requisite corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement and the
consummation of the Merger and the other Transactions have been duly and
validly authorized by all necessary corporate action and no other corporate
proceedings on the part of Merger Sub or Parent are necessary to authorize
their execution and delivery of this Agreement or to consummate the
Transactions (other than the filing and recordation of appropriate merger
documents as required by the UBCA). This Agreement has been duly and validly
executed and delivered by each of Merger Sub and Parent, and (assuming this
Agreement constitutes a valid and binding obligation of the Company)
constitutes the valid and binding obligations of each of Merger Sub and
Parent, enforceable against them in accordance with its respective terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to creditors' rights generally and to general
principles of equity.
4.04 No Violation; Required Filings and Consents.
(a) The execution and delivery by each of Merger Sub and Parent of this
Agreement does not, and the performance of this Agreement and the consummation
by each of Merger Sub and Parent of the Transactions will not, (i) conflict
with or violate any provision of Parent's articles of incorporation or bylaws
or conflict with or violate any provision of the articles of incorporation or
bylaws or equivalent organizational documents of any subsidiary of Parent
(including Merger Sub), (ii) assuming that all consents, approvals,
authorizations and other actions described in Section 4.04(b) have been
obtained and all filings and obligations described in Section 4.04(b) have
been made or complied with, conflict with or violate any Law applicable to
Parent or any of its subsidiaries or by which any asset of Parent or any of
its subsidiaries is bound or affected, (iii) conflict with, result in any
breach of or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or require any
payment under, or give rise to a loss of any benefit to which Parent or any
subsidiary of Parent is entitled under any provision of any Contract
applicable to any of them or their respective properties or assets or (iv)
result in the creation or imposition of a Lien on any asset of Parent or any
of its subsidiaries, except in the case of clauses (ii), (iii) and (iv) of
this Section 4.04(a), to the extent that any such conflict, violation, breach,
default, right, loss or Lien would not, individually or in the aggregate,
have a Purchaser Material Adverse Effect.
(b) The execution and delivery by each of Merger Sub and Parent of this
Agreement does not, and the performance of this Agreement and the consummation
by each of Merger Sub and Parent of the Transactions will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Authority, except (i) for applicable requirements, if
any, of the Exchange Act, the Securities Act, the HSR Act and the rules and
regulations thereunder, any required consent, approval, authorization, permit,
filing or notification pursuant to applicable foreign merger control or
competition laws and regulations and filing and recordation of appropriate
documents for the Merger as required by the UBCA and (ii) where the failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not, individually or in the aggregate, have a
Purchaser Material Adverse Effect.
4.05 Financing. Parent has provided to the Company true and complete
copies of (a) the executed commitment letters from the parties named therein
(the "Debt Commitment Letters") relating to the financing and Sale-Leaseback
to be provided in connection with the Transactions and (b) the executed
commitment letter from ▇▇▇▇▇▇▇▇ Capital Partners, L.P. relating to the equity
financing to be provided in connection with the Transactions (the "Equity
Commitment Letter") (together with the Debt Commitment Letters, the
"Commitment Letters"). As of the date hereof, (i) to the knowledge of Parent
each of the Commitment Letters is a legal, valid and binding obligation of the
parties thereto and (ii) Parent has no reason to believe that it will be
unable to satisfy, on a timely basis, any material term or condition of
funding to be satisfied by it or any of its affiliates contained in the Debt
Commitment Letters or Equity Commitment Letter, it being agreed, for the
avoidance of doubt, that no representation or warranty is made with respect to
any matter dependent upon the financial performance of, or otherwise
involving, the Company or any of its subsidiaries. All commitment fees
required to be paid under the Commitment Letters have been paid in full or
will be duly paid in full when due.
4.06 Brokers. No broker, finder, financial adviser or investment banker
is entitled to any brokerage, finder's or other fee or commission in
connection with the Transactions based upon arrangements made by, or on behalf
of, Parent or any of its subsidiaries.
4.07 Proxy Statement. None of the information supplied or to be supplied
in writing by Parent or Merger Sub expressly for inclusion or incorporation by
reference in the Proxy Statement at the time of the mailing of the Proxy
Statement and any amendments or supplements thereto and at the time of the
Shareholders Meeting, will contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they are made, not misleading, except that no representation is made by
Parent or Merger Sub with respect to information supplied by the Company for
inclusion in any of such documents.
ARTICLE 5
COVENANTS
5.01 Interim Operations. Except as otherwise expressly contemplated by
this Agreement or as set forth in Section 5.01 of the Company Disclosure
Schedule or as agreed to in writing by Parent, the Company covenants and
agrees that during the period from the date of this Agreement to the Effective
Time (or until termination of this Agreement in accordance with Article 7
hereof):
(a) the business and operations of the Company and its subsidiaries shall
be conducted only in the ordinary course of business and the Company and its
subsidiaries shall use their commercially reasonable efforts to preserve
intact their current business organizations, keep available the services of
their current officers and employees and preserve their relationships and
goodwill with their material distributors, customers and suppliers and any
other material third parties having business dealings with them.
(b) the Company shall not (i) authorize for issuance, issue, deliver, sell
or agree or commit to issue, sell or deliver (whether through the issuance or
granting of options, commitments, subscriptions, rights to purchase or
otherwise), pledge or otherwise encumber any shares of its capital stock or
the capital stock of any of its subsidiaries, any other securities or any
securities convertible into, or any rights, warrants or options to acquire,
any such shares, securities or convertible securities or any other securities
or equity equivalents (including without limitation stock appreciation rights
or phantom interests), except for issuances of Common Shares upon the exercise
of Options outstanding as of the date hereof, (ii) repurchase, redeem or
otherwise acquire, or permit any of its subsidiaries to repurchase, redeem or
otherwise acquire, any shares of capital stock or other equity interests of
the Company or any of its subsidiaries (including, without limitation,
securities exchangeable for, or options, warrants, calls, commitments or
rights of any kind to acquire, capital stock or other equity interests of the
Company or any of its subsidiaries), (iii) sell, transfer or pledge, or agree
to sell, transfer or pledge, any equity interest owned by it in any of its
subsidiaries or alter through merger, liquidation, reorganization,
restructuring or in any other fashion the corporate structure or ownership of
any of its subsidiaries, (iv) amend or otherwise change its articles of
incorporation or bylaws or permit any of its subsidiaries to amend its
articles of incorporation, bylaws or equivalent organizational documents or
(v) split, combine or reclassify any shares of its capital stock, and shall
not permit any of its subsidiaries to split, combine or reclassify any shares
of its capital stock;
(c) the Company shall not, and shall not permit any of its subsidiaries to
(i) declare, set aside or pay any dividends on (whether in cash, stock or
other property), or make any other distributions in respect of, any of its
capital stock (except for dividends paid by direct or indirect wholly owned
subsidiaries to the Company), (ii) acquire or agree to acquire, including,
without limitation, by merging or consolidating with, or purchasing the assets
(except raw materials, inventory or supplies in the ordinary course of
business) or capital stock or other equity interests of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, (iii) authorize or make any capital
expenditures in excess of $200,000 (the "Capital Expenditures Excess Amount")
in the aggregate in addition to the amount set forth in the Company's budget
for capital expenditures for the period of time between the date hereof and
the Effective Time (which capital budget is set forth in Section 5.01(c) of
the Company Disclosure Schedule), or (iv) enter into, amend, modify or
supplement any agreement, transaction, commitment or arrangement with any
current or former officer, director, employee or other affiliate of the
Company or any of its subsidiaries (or any affiliate of any of the foregoing)
other than as contemplated by this Agreement;
(d) neither the Company nor any of its subsidiaries shall (i) grant or
agree to any increase in any manner the compensation or fringe benefits of, or
pay any bonus to, any current or former director, officer or employee except
for (A) increases and bonuses expressly contemplated by or required under
existing employment agreements or (B) bonus plans and other agreements and
arrangements listed or described in Section 5.01(d) of the Company Disclosure
Schedule and except in connection with terminating the Options and the Stock
Plans, (ii) enter into any new or materially amend any existing employment,
consulting, severance, termination, change-of-control or indemnification
agreement with any current or former director, officer or employee of the
Company, (iii) except as may be required to comply with applicable Law and
except as provided or otherwise contemplated in this Agreement (including,
without limitation, Section 2.02 hereof), become obligated under any Benefit
Plan that was not in existence on the date hereof or amend, modify or
terminate any Benefit Plan or other employee benefit plan or any agreement,
arrangement, plan or policy for the benefit of any current or former director,
officer or employee in existence on the date hereof or (iv) except as may be
required to comply with applicable Law and except as provided or otherwise
contemplated in this Agreement (including, without limitation, Section 2.02
hereof), pay any benefit not required by any plan or arrangement as in effect
as of the date hereof (including, without limitation, the granting of,
acceleration of, exercisability of or vesting of stock options, stock
appreciation rights or restricted stock, except as otherwise contemplated by
this Agreement), except in connection with terminating the Options and the
Stock Plans and except for the payment of the employer match under the
Company's 401(k) plan;
(e) the Company shall not, and shall not permit any of its subsidiaries
to, sell, lease, license, mortgage or otherwise encumber or subject to any
Lien or otherwise dispose of, or agree to sell, lease, license, mortgage or
otherwise encumber or subject to any Lien or otherwise dispose of, any of its
properties or assets other than (i) immaterial properties or assets (or
immaterial portions of properties or assets), (ii) inventory in the ordinary
course of business consistent with past practice, (iii) licenses granted by
the Company in the ordinary course of business to customers for such
customers' use of the Company's products and services, (iv) Liens relating to
Taxes that are not yet due and payable or otherwise being contested in good
faith and as to which appropriate reserves have been established by the
Company in accordance with U.S. generally accepted accounting principles, (v)
Liens for assessments and other governmental charges or Encumbrances of
landlords, carriers, warehousemen, mechanics and repairmen incurred in the
ordinary course of business, in each case for sums not yet due and payable or
due but not delinquent or being contested in good faith and for which adequate
reserves have been established and (vi) Liens incurred in the ordinary course
of business in connection with workers' compensation, unemployment insurance
and other types of social security or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return of money bonds and similar obligations;
(f) the Company shall not, and shall not permit any of its subsidiaries to
(i) incur, assume or pre-pay any Indebtedness or enter into any agreement to
incur, assume or pre-pay any Indebtedness, or guarantee, or agree to
guarantee, any such Indebtedness or obligation of another person, or issue or
sell, or agree to issue or sell, any debt securities or options, warrants or
calls or rights to acquire any debt securities of the Company or any of its
subsidiaries, guarantee any debt securities of others, 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, (ii) make or forgive any loans, advances or capital
contributions to, guarantees for the benefit of, or investments in, any person
or entity, other than loans between or among the Company and any of its
wholly-owned subsidiaries and cash advances to the Company's or any such
subsidiary's employees for reimbursable travel and other business expenses
incurred in the ordinary course of business consistent with past practice or
(iii) assume, guarantee or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other Person,
except for the obligations of the subsidiaries of the Company permitted under
this Agreement;
(g) neither the Company nor any of its subsidiaries shall adopt or put
into effect a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any of its subsidiaries (other than any transaction specifically
contemplated by this Agreement);
(h) the Company shall not, and shall not permit any of its subsidiaries
to, (i) enter into, or materially amend, modify or supplement any Material
Contract outside the ordinary course of business consistent with past practice
(except as may be necessary for the Company to comply with its obligations
hereunder) or (ii) waive, release, grant, assign or transfer any of its
material rights or claims (whether such rights or claims arise under a
Material Contract or otherwise);
(i) except for customer contracts entered into in the ordinary course of
business, the Company shall not, and shall not permit its subsidiaries to,
renegotiate or enter into any new license, agreement or arrangement relating
to any Proprietary Rights;
(j) the Company and its subsidiaries (i) shall comply with their
obligations under the Material Contracts as such obligations become due, (ii)
shall continue in force insurance covering risks of such types and in such
amounts as are consistent with the Company's past practices and (iii) shall
not permit any insurance policy naming it as beneficiary or loss payable payee
to be canceled or terminated;
(k) the Company shall not, and shall not permit any of its subsidiaries
to, (i) establish or acquire any subsidiary other than wholly-owned
subsidiaries or subsidiaries organized outside of the United States and its
territorial possessions, (ii) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than (x) the payment, discharge or
satisfaction in the ordinary course of business and consistent with past
practice of liabilities reflected on or reserved in the financial statements
of the Company or incurred in the ordinary course of business and consistent
with past practice or (y) the payment of the Company's Expenses (as defined
herein); (iii) amend, modify or waive any term of any outstanding security of
the Company or any of its subsidiaries, except in connection with terminating
the Options and the Stock Plans;
(l) the Company shall, and shall cause its subsidiaries to, (i) maintain
any real property to which the Company and any of its subsidiaries have
ownership or a leasehold interest (including, without limitation, the
furniture, fixtures, equipment and systems therein) in its current condition,
subject to reasonable wear and tear and subject to any casualty or
condemnation, (ii) timely pay all material taxes, water and sewage rents,
assessments and insurance premiums affecting such real property other than
those it is validly contesting and (iii) timely comply in all material
respects with the terms and provisions of all leases, contracts and agreements
relating to such real property and the use and operation thereof;
(m) the Company shall not, and shall not permit any of its subsidiaries
to, (i) settle or compromise any pending or threatened suit, action, claim or
litigation, except with respect to the settlement or compromise of any such
matter which does not involve equitable or injunctive relief and does not
obligate the Company and its subsidiaries to make aggregate cash payments
exceeding $50,000, (ii) change any of the material accounting policies,
practices or procedures (including material tax accounting policies, practices
and procedures) used by the Company and its subsidiaries as of the date
hereof, except as may be required as a result of a change in applicable Law or
in U.S. generally accepted accounting principles, (iii) revalue in any
material respect any of its assets (including, without limitation, writing
down or writing off any notes or accounts receivable in any material manner),
except as required by U.S. generally accepted accounting principles or (iv)
make or change any material tax election, make or change any material method
of accounting with respect to Taxes except as may be required as a result of a
change in applicable Law, settle or compromise any material Tax liability or
file any material amended Tax Return;
(n) the Company shall not, and shall not permit any of its subsidiaries to
knowingly take, or knowingly agree or commit to take, any action that is
reasonably likely to, make any representation or warranty of the Company
contained in this Agreement inaccurate in any material respect at, or as of
any time prior to, the Effective Time or result in any of the conditions to
the Merger set forth in Article 6 not being satisfied, or knowingly omit, or
knowingly agree to omit, to take any action necessary to prevent any such
representation or warranty from being inaccurate in any material respect at
any such time or to prevent any such condition from not being satisfied; and
(o) the Company shall not, and shall not permit any of its subsidiaries
to, agree or commit to do any of the foregoing.
5.02 Shareholders Meeting.
(a) The Company, acting through the Company Board, shall, in accordance
with applicable law and its articles of incorporation and bylaws, duly call,
give notice of, convene and hold a special meeting of its shareholders (the
"Shareholders Meeting") as soon as reasonably practicable following the
clearance by the SEC of the Proxy Statement for the purpose of considering and
voting upon the approval and adoption of this Agreement, the Merger and such
other matters as may be necessary to effectuate the Transactions. The Company
Board shall (i) recommend to the shareholders of the Company the approval and
adoption of this Agreement and the Merger, (ii) include in the Proxy Statement
such favorable recommendation of the Company Board that the shareholders of
the Company vote in favor of the approval and adoption of this Agreement,
(iii) take all lawful actions to solicit such approval from the shareholders
of the Company and (iv) not withdraw or modify such favorable recommendation,
in each case, unless the Company Board, after consultation with outside legal
counsel, determines in good faith that failing to take such action could
reasonably result in the breach of its fiduciary duties to the Company's
shareholders under applicable law.
(b) As soon as reasonably practicable following the execution of this
Agreement and in connection with the Shareholders Meeting, the Company shall
(i) promptly prepare and file with the SEC, use its commercially reasonable
efforts to have cleared by the SEC and thereafter mail to its shareholders as
promptly as reasonably practicable the Proxy Statement and all other proxy
materials required in connection with such meeting, (ii) notify Merger Sub and
Parent of the receipt of any comments of the SEC with respect to the Proxy
Statement and of any requests by the SEC for any amendment or supplement
thereto or for additional information and shall promptly provide to Merger Sub
and Parent copies of all correspondence between the Company or any
representative of the Company and the SEC, (iii) give Merger Sub and Parent
and their counsel the opportunity to review the Proxy Statement prior to its
being filed with the SEC and shall give Merger Sub and Parent and their
counsel the opportunity to review all amendments and supplements to the Proxy
Statement and all responses to requests for additional information and replies
to comments prior to their being filed with, or sent to, the SEC, (iv) subject
to Section 5.02(a), use its commercially reasonable efforts to obtain the
necessary approvals by its shareholders of this Agreement and the Merger and
(v) use its commercially reasonable efforts otherwise to comply with all legal
requirements applicable to the Shareholders Meeting.
(c) Notwithstanding anything to the contrary contained in this Agreement,
the Company may adjourn or postpone the Shareholders Meeting to the extent
necessary to ensure that any required supplement or amendment to the Proxy
Statement is provided to the Company's shareholders, or, if as of the time for
which the Shareholders Meeting is originally scheduled there are insufficient
Common Shares represented (either in person or by proxy) to constitute a
quorum necessary to conduct the business to be conducted at the Shareholders
Meeting.
5.03 Filings; Consents, etc.
(a) Subject to the terms and conditions of this Agreement, each of
the parties hereto (i) shall use its commercially reasonable efforts to
cooperate with one another in determining which filings are required to be
made by each party prior to the Effective Time with, and which consents,
approvals, permits or authorizations are required to be obtained by each party
prior to the Effective Time from, Governmental Authorities or other third
parties in connection with the execution and delivery of this Agreement and
the consummation of the Transactions and (ii) shall use its commercially
reasonable efforts to assist the other parties hereto in timely making all
such filings and timely seeking all such consents, approvals, permits,
authorizations and waivers required to be made and obtained by the other
party. Without limiting the foregoing, each of the parties hereto shall (and
shall use its commercially reasonable efforts to cause their affiliates,
directors, officers, employees, agents, attorneys, accountants and
representatives to) consult and fully cooperate with and provide assistance to
each other in seeking early termination of any waiting period under the HSR
Act or any foreign merger control or competition laws and regulations, if
applicable; it being agreed that no party shall be under any obligation to
divest of any assets or hold separate any assets or take any other similar
measures in connection with any demand therefor by any Governmental Authority
as a pre-condition to the approval of the Transactions by any such
Governmental Authority. Prior to making any application to or filing with any
Governmental Authority in connection with this Agreement, each party shall
provide the other party with drafts thereof (excluding any confidential
information included therein) and afford the other party a reasonable
opportunity to comment on such drafts. The Parent shall bear all of the fees
of any required filing to be made with any Governmental Authorities in
connection with the Transactions.
(b) The Company will timely file with the SEC all forms, reports,
schedules, statements and other documents required to be filed by it under the
Exchange Act or the Securities Act and such filings will comply in all
material respects with the applicable requirements of the Exchange Act and the
Securities Act, as the case may be, at the time of such filing.
(c) The Company shall file (or procure the filing of) appropriate
instruments with the United States Patent and Trademark Office such that the
official records for United States trademark registrations numbers 2,873,888
for the ▇▇▇▇ VERSIFOOT and 2,864,661 for the ▇▇▇▇ VERSIGLIDE, for which
equitable title is presently held in the name of Versipanel, LLC, reflect that
the Company is equitable title holder for both such registrations.
5.04 Access to Information. From the date of this Agreement until the
earlier of the Effective Time or the date this Agreement is validly terminated
in accordance with Article 7, and subject to the requirements of any Law,
including, without limitation, (i) any anti-trust Law and (ii) any applicable
Law protecting the privacy of employees and personnel files, the Company will,
and will cause each of its subsidiaries and its and their affiliates, and each
of their respective officers, directors, employees, agents, counsel,
accountants, investment bankers, financial advisors and representatives
(collectively, the "Company Representatives") to, give Merger Sub and Parent
and their respective officers, directors, employees, agents, counsel,
accountants, investment bankers, financial advisors, representatives,
consultants and financing sources (collectively, the "Purchaser
Representatives") access, upon reasonable notice and during the Company's
normal business hours, to the offices and other facilities, to the senior
officers and other Company Representatives, and to the books and records of
the Company and each of its subsidiaries and will cause the Company
Representatives and its subsidiaries to furnish or make available to Parent,
Merger Sub and the Purchaser Representatives such financial and operating data
and such other information with respect to the business and operations of the
Company or any of its subsidiaries as Parent, Merger Sub or the Purchaser
Representatives may from time to time reasonably request. Unless otherwise
required by Law, each of Parent and Merger Sub will, and will cause the
Purchaser Representatives to, hold any such information in confidence in
accordance with the terms of the Confidentiality Agreement (as defined below).
Except as otherwise agreed to by the Company, and notwithstanding termination
of this Agreement, the terms and provisions of the Confidentiality Agreement,
dated as of November 7, 2006 (the "Confidentiality Agreement"), between an
affiliate of Parent and the Company shall apply to all information furnished
to any Purchaser Representative by any Company Representative hereunder or
thereunder.
5.05 Notification of Certain Matters. Each of the parties hereto shall
promptly notify the others in writing of (a) receipt of any notice from any
third party alleging that the consent of such third party is or may be
required in connection with the Transactions, (b) any Company Material Adverse
Effect or Purchaser Material Adverse Effect, as the case may be, (c) any
material claims, actions, proceedings or governmental investigations commenced
or, to its knowledge, threatened, involving or affecting the Company or any of
its subsidiaries or any of their property or assets, (d) to the actual
knowledge of such party, any representation or warranty made by such party
contained in this Agreement becoming untrue or inaccurate in any material
respect and (e) to the actual knowledge of such party, any failure of the
Company, Merger Sub or Parent, as the case may be, to comply with or satisfy,
in any material respect, any covenant, condition or agreement to be complied
with or satisfied by it hereunder. Notwithstanding anything in this Agreement
to the contrary, no such notification or investigation by any party shall
affect the representations, warranties or covenants of any party or the
conditions to the obligations of any party hereunder, nor shall it limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
5.06 Public Announcements. Each of the parties hereto agrees that,
promptly following the execution of this Agreement, the Company shall (a)
issue a press release in a form mutually agreed to by Parent and Merger Sub
announcing the execution of this Agreement and the Transactions and (b) file a
current report with the SEC on Form 8-K attaching such press release and a
copy of this Agreement as exhibits. Thereafter, the parties hereto agree to
consult promptly with each other prior to issuing any press release or
otherwise making any public statement with respect to the Merger and the other
Transactions, agree to provide to each other for review a copy of any such
press release or statement, and shall not issue any such press release or make
any such public statement prior to such consultation and review, unless
required by applicable Law.
5.07 Indemnification; etc.
(a) The articles of incorporation and the bylaws of the Surviving
Corporation shall contain provisions with respect to indemnification,
advancement of expenses and director exculpation substantially similar to
those set forth in the Company's articles of incorporation and bylaws as in
effect at the date hereof (to the extent consistent with applicable Law),
which provisions shall not be amended, repealed or otherwise modified in any
manner that would adversely affect the rights thereunder of the persons who at
any time prior to the Effective Time were entitled to indemnification,
advancement of expenses or exculpation under the Company's articles of
incorporation or bylaws in respect of actions or omissions occurring at or
prior to the Effective Time (including, without limitation, the Transactions),
unless otherwise required by applicable Law.
(b) From and after the Effective Time and until the expiration of any
applicable statutes of limitation, the Surviving Corporation shall indemnify,
defend and hold harmless each person who is or has been prior to the date
hereof or who becomes prior to the Effective Time an officer, director,
employee or agent of the Company (collectively, the "Indemnified Parties")
against all losses, claims, damages, expenses, liabilities or amounts that are
paid in settlement of, or otherwise incurred ("Losses") (but only to the
extent such Losses are not otherwise covered by insurance and paid), in
connection with any claim, action, suit, demand, proceeding or investigation
(a "Claim"), to which any Indemnified Party is or may become a party to by
virtue of his or her service as a present or former director, officer,
employee or agent of the Company and arising out of actual or alleged events,
actions or omissions occurring or alleged to have occurred at or prior to the
Effective Time (including, without limitation, the Transactions), in each
case, to the fullest extent permitted and provided in the Company's articles
of incorporation and bylaws as in effect at the date hereof (and shall pay
expenses in advance of the final disposition of the claim(s) that are
reasonably incurred in defending any such action or proceeding to each
Indemnified Party to the fullest extent permitted under the UBCA as provided
in the Company's articles of incorporation and bylaws as in effect at the date
hereof, upon receipt from the Indemnified Party to whom expenses are advanced
of the undertaking to repay such advances contemplated by the UBCA).
(c) Any Indemnified Party wishing to claim indemnification under this
Section 5.07 after the Effective Time, upon learning of any such Claim, shall
notify the Surviving Corporation thereof (although the failure to so notify
the Surviving Corporation shall not relieve the Surviving Corporation from any
liability that the Surviving Corporation may have under this Section 5.07,
except to the extent such failure materially prejudices the Surviving
Corporation). The Surviving Corporation shall also retain all continuing
Company obligations under the indemnification agreements with current or
former directors and officers set forth on Section 5.07(c) of the Company
Disclosure Schedule. In the event of any such Claim, the Surviving
Corporation shall have the right to assume the defense thereof and the
Surviving Corporation shall not be liable to such Indemnified Party for any
legal expenses of other counsel or any other expenses subsequently incurred by
such Indemnified Party in connection with the defense thereof, except that if
the Surviving Corporation elects not to assume such defense or if there is an
actual or potential conflict of interest between, or different defenses exist
for the Surviving Corporation and the Indemnified Party, the Indemnified Party
may retain counsel reasonably satisfactory to him or her and the Surviving
Corporation shall pay all reasonable fees and expenses of such counsel for the
Indemnified Party promptly as statements therefor are received by the
Surviving Corporation; provided, however, that (i) the Surviving Corporation
shall not, in connection with any such action or proceeding or separate but
substantially similar actions or proceedings arising out of the same general
allegations, be liable for the fees and expenses of more than one separate
firm of attorneys at any time for all Indemnified Parties, (ii) the Surviving
Corporation and the Indemnified Parties will cooperate in the defense of any
such matter and (iii) the Surviving Corporation shall not be liable for any
settlement effected without its prior written consent, which consent will not
be unreasonably withheld, conditioned or delayed; and provided, further, that
the Surviving Corporation shall not have any obligation hereunder to any
Indemnified Party if and when a court of competent jurisdiction shall
ultimately determine that the indemnification of such Indemnified Party in the
manner contemplated hereby is prohibited by applicable Law.
(d) This Section 5.07 shall survive the consummation of the Merger and is
intended to be for the benefit of, and shall be enforceable by, the
Indemnified Parties referred to herein, their heirs, legal representatives,
successors, assigns and personal representatives and shall be binding on the
Surviving Corporation and its successors and assigns. The provisions of this
Section 5.07 are in addition to, and not in substitution for, any other rights
to indemnification that the Indemnified Parties, their heirs and personal
representatives may have by contract or otherwise.
(e) If the Surviving Corporation or any of its successors or assigns (i)
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger
or (ii) transfers or conveys all or substantially all of its properties and
assets to any Person, then, and in each case, as a condition to such
consolidation, merger, transfer or conveyance, proper provision shall be made
so that the successors and assigns of the Surviving Corporation shall assume
and agree to perform the obligations set forth in this Section 5.07.
5.08 Further Assurances; Commercially Reasonable Efforts. Except as
otherwise provided in this Agreement, prior to the Effective Time, the parties
hereto shall use their commercially reasonable efforts to take, or cause to be
taken, all such actions as may be necessary or appropriate in order to
effectuate, as expeditiously as practicable, the Merger and the other
Transactions on the terms and subject to the conditions set forth in this
Agreement.
5.09 Third Party Standstill Agreements. From the date of this Agreement
until the earlier of the termination of this Agreement pursuant to Article 7
or the Effective Time, the Company shall not terminate, amend, modify or waive
any material provision of any confidentiality or standstill agreement to which
the Company is a party (other than involving Parent or its affiliates).
During such period, the Company agrees to enforce, to the fullest extent
permitted under applicable Law, the provisions of any such agreements,
including, but not limited to, seeking injunctions to prevent any breaches of
such agreements or to enforce specifically the terms and provisions thereof in
a court in the United States or any state thereof having jurisdiction.
5.10 No Solicitation.
(a) From and after the date hereof until the earlier of the Effective Time
or the termination of this Agreement pursuant to Article 7, the Company and
its subsidiaries and their respective officers and directors shall not, and
shall use their reasonable best efforts to cause the Company Representatives
(other than such officers and directors) not to, directly or indirectly (i)
solicit, knowingly initiate or encourage (including by way of furnishing
information or assistance), or take any other action to knowingly facilitate,
any inquiry in connection with or the making of any proposal from any Person
that constitutes, or would reasonably be expected to lead to, an Acquisition
Proposal (as defined in Section 5.10(f)), (ii) enter into, maintain,
participate in or continue any discussion or negotiation with any Person
(other than Merger Sub, Parent or any of the Purchaser Representatives, as
applicable) regarding an Acquisition Proposal, or knowingly furnish to any
Person (other than Merger Sub, Parent or any of the Purchaser Representatives,
as applicable) any information or otherwise knowingly cooperate in any way
with, or knowingly assist or participate in, or knowingly facilitate or
encourage, any effort or attempt by any other Person (other than Merger Sub,
Parent or any of the Purchaser Representatives, as applicable) to make or
effect an Acquisition Proposal or (iii) enter into any agreement, arrangement
or understanding with respect to, or otherwise endorse, any Acquisition
Proposal; provided, however, that nothing contained in this Section 5.10 or
any other provision of this Agreement shall prohibit the Company Board, prior
to approval of this Agreement by the shareholders of the Company at the
Shareholders Meeting, from furnishing information to, or engaging in
discussions or negotiations with, any Person that makes an unsolicited
Acquisition Proposal (which did not result from a breach of this Section 5.10)
if (A) the Company Board determines in good faith after consultation with its
outside legal counsel, that failure to take such action is reasonably likely
to result in the breach of its fiduciary duties to the Company's shareholders
under applicable Law, (B) the Acquisition Proposal constitutes or is
reasonably likely to lead to a Superior Proposal (as defined in Section
5.10(g)) and (C) prior to furnishing any nonpublic information to, or engaging
in discussions or negotiations with, such Person, the Company receives from
such Person an executed confidentiality agreement (which agreement shall be
provided to Parent for information purposes) with terms no less favorable to
the Company, in all material respects, than those contained in the
Confidentiality Agreement.
(b) From and after the date hereof until the earlier of the Effective Time
and the termination of this Agreement pursuant to Article 7, if the Company
Board is entitled to furnish information to, or engage in discussions or
negotiations with, any Person pursuant to Section 5.10(a) in respect of any
Acquisition Proposal, the Company Board may, prior to the approval of this
Agreement by the shareholders of the Company at the Shareholders Meeting, (i)
withdraw or modify its approval or recommendation of the Merger and this
Agreement (without limiting any Company Board rights pursuant to Section
5.02), (ii) approve or recommend such Acquisition Proposal or (iii) terminate
this Agreement in accordance with Section 7.04(b) in order to enter into a
definitive agreement with respect to such Acquisition Proposal if (A) such
Acquisition Proposal constitutes a Superior Proposal and (B) the Company Board
determines in good faith after consultation with outside legal counsel, that
failure to take such action is reasonably likely to result in the breach of
its fiduciary duties to the Company's shareholders under applicable Law.
(c) The Company (i) will promptly (but in any event within one business
day) notify Parent orally and in writing of the receipt of any Acquisition
Proposal or any inquiry regarding the making of an Acquisition Proposal
including any request for information, the terms and conditions of such
request, Acquisition Proposal or inquiry and the identity of the Person making
such request, Acquisition Proposal or inquiry and (ii) to the extent actually
known by the Company, will keep Parent fully informed of the status and
material terms (which material terms shall include, without limitation, the
purchase price details of such Acquisition Proposal) including amendments and
proposed amendments to such material terms, of any such request, Acquisition
Proposal or inquiry. Prior to taking any of the actions referred to in
Section 5.10(a) with respect to an Acquisition Proposal (other than any action
of the Company Board relating to or contemplated by clauses (A) and (B) of the
proviso to Section 5.10(a)), the Company Board shall promptly (but in any
event within one business day) notify Parent orally and in writing of any
action it proposes to take with respect to such Acquisition Proposal. After
taking any such action, the Company Board shall promptly advise Parent orally
and in writing of the status of such action as material developments arise or
as requested by Parent. Without limiting the foregoing, at least two business
days prior to taking any of the actions referred to in Section 5.10(b), the
Company Board shall notify Parent of any such action it proposes to take and,
during such two business day period, the Company Board shall negotiate in good
faith with Parent with respect to any revised proposal to acquire the Common
Shares that Parent may make prior to or during such two business day period.
(d) Nothing contained in this Agreement shall prevent the Company Board
from (i) taking, and disclosing to the Company's shareholders, a position
contemplated by Rule 14d-9 or Rule 14e-2 promulgated under the Exchange Act
with regard to any tender offer or (ii) from making such disclosure to the
Company's shareholders which, in the judgment of the Company Board after
receiving advice of outside counsel, is required under applicable law;
provided, however, that none of the Company, the Company Board or any Company
Representative shall, except as permitted by Section 5.10(b), propose to
approve or recommend any Acquisition Proposal.
(e) The Company and each of its subsidiaries shall immediately cease and
cause its affiliates and the Company Representatives to cease any and all
existing activities, discussions or negotiations with any parties (other than
Merger Sub, Parent or any of the Purchaser Representatives, as applicable)
conducted heretofore with respect to any Acquisition Proposal, and shall use
its reasonable best efforts to cause any such parties in possession of
confidential information about the Company that was furnished by or on behalf
of the Company in connection with such Acquisition Proposal to return or
destroy all such information in the possession of any such party or its
representatives.
(f) For purposes of this Agreement, "Acquisition Proposal" shall mean any
offer or proposal for, or any indication of interest in, (i) any direct or
indirect acquisition or purchase of 15% or more of the total assets of the
Company or any of its subsidiaries, in a single transaction or series of
related transactions, (ii) any direct or indirect acquisition or purchase of
15% or more of any class of equity securities of the Company or any of its
subsidiaries, in a single transaction or series of related transactions, (iii)
any tender offer or exchange offer (including a self-tender offer) that if
consummated would result in any person beneficially owning 15% or more of any
class of equity securities of the Company or any of its subsidiaries, (iv) any
merger, consolidation, share exchange, business combination, recapitalization,
reclassification or other similar transaction involving the Company or any of
its subsidiaries or (v) any public announcement of an agreement, proposal or
plan to do any of the foregoing, other than the Transactions contemplated by
this Agreement.
(g) For purposes of this Agreement, "Superior Proposal" shall mean any
Acquisition Proposal by a Person that (i) the Company Board has determined in
good faith, after consultation with the Financial Advisor or other independent
financial advisor of nationally recognized reputation, is more favorable from
a financial point of view to the Company's shareholders than the Merger
(including any adjustment to the terms and conditions thereof proposed in
writing by Parent in response to any such Acquisition Proposal), (ii) the
Company Board has determined in good faith, after consultation with its
outside legal counsel, is of such a nature that failure to accept such
Acquisition Proposal is reasonably likely to result in the breach of Company
Board's fiduciary duties to the Company's shareholders under applicable Law
and (iii) is reasonably capable of being consummated.
5.11 SEC Reports. From the date of this Agreement until the earlier of
the termination of this Agreement pursuant to Article 7 or the Effective Time,
the Company shall use its commercially reasonable efforts to file on a timely
basis all SEC Reports required to be filed by it with the SEC under the
Exchange Act, the Securities Act and the published rules and regulations of
the SEC under either of the foregoing applicable to such SEC Reports, which
SEC Reports shall comply in all material respects with the requirements of the
Exchange Act, the Securities Act and the published rules and regulations of
the SEC thereunder, each as applicable to such SEC Reports.
5.12 Termination of Registration. Each of the parties hereto agrees to
cooperate with the other party in taking, or causing to be taken, all actions
reasonably necessary to terminate the registration of the Common Shares under
the Exchange Act; provided that such termination shall not be effective until
or after the Effective Time.
5.13 Financing.
(a) Parent shall use its commercially reasonable efforts to (i) maintain
in effect the Commitment Letters and to satisfy on a timely basis all the
conditions to obtaining the financing for the Transactions (the "Financing")
set forth therein (including by consummating the equity financing pursuant to
the terms and conditions of the Equity Commitment Letter), (ii) enter into
definitive financing agreements with respect to the Financing as contemplated
by the Debt Commitment Letter and (iii) consummate the Financing at the
Closing. Parent and Merger Sub shall not permit any amendment, modification
or waiver, in each case, that is materially adverse to the Company to be made
to the Commitment Letters without first consulting with the Company, and will
obtain the Company's prior written consent (which consent shall not be
unreasonably withheld, conditioned or delayed) prior to agreeing to any such
amendment, modification or waiver. To the extent actually known by Parent and
Merger Sub, Parent and Merger Sub will keep the Company (x) fully informed of
any material breaches by any party of the Commitment Letters or any
termination of the Commitment Letters and (y) upon the request of the Company
at any time, reasonably informed of the status of the financing process.
(b) The Company shall provide, and shall use its commercially reasonable
efforts to cause its subsidiaries and the Company Representatives to provide,
all reasonable cooperation in connection with the arrangement of the Financing
including, without limitation, (i) promptly providing to Parent's financing
sources all material financial information in their possession with respect to
the Company and the Transactions as reasonably requested by Parent or Parent's
financing sources, including, but not limited to, information and projections
prepared by the Company relating to the Company and the Transactions, provided
such financing sources shall be deemed to be one of Parent's "representatives"
under the Confidentiality Agreement and subject to all obligations imposed
therein upon a "representative," (ii) making the Company's senior officers and
other Company Representatives reasonably available to Parent's financing
sources in connection with such Financing, to reasonably participate in due
diligence sessions and to reasonably participate in presentations related to
the Financing, including, without limitation, presentations to rating agencies
and (iii) reasonably assisting in the preparation of one or more appropriate
offering documents and assisting Parent's financing sources in preparing other
appropriate marketing materials, in each case to be used in connection with
the Financing. The Company shall provide the same cooperation at Parent's
request in connection with the Sale-Leaseback or similar transaction with
respect to real property owned by the Company (it being understood that any
such transaction would not be consummated prior to the Closing without the
mutual agreement of the Company and Parent).
(c) If the Commitment Letters are terminated, Parent and Merger Sub shall
use commercially reasonable efforts to enter into commitments for alternative
financing with other persons or modify the capital structure set forth in the
Commitment Letters provided the total committed equity financing shall not be
materially less beneficial to Parent or the Company and shall not be less than
the amount set forth in the Equity Commitment Letter (it being understood that
Parent and Merger Sub shall provide prompt notice to the Company upon
obtaining any such alternative financing commitments); provided, that Parent
and Merger Sub shall be under no obligation to obtain or seek to obtain any
financing commitment containing terms or funding conditions less favorable to
Parent or Merger Sub than those included in the Commitment Letters.
5.14 Special Meeting. The Company shall take no action to call a special
meeting of shareholders of the Company without the prior consent of Parent
unless compelled by legal process, except in accordance with this Agreement
unless and until this Agreement has been terminated in accordance with its
terms.
5.15 Shareholder Litigation. Each of the parties hereto shall give the
others the reasonable opportunity to participate in the defense of any
shareholder litigation against the Company, Parent or Merger Sub, as
applicable, and their directors relating to the Transactions. The Company
agrees that it will not settle any litigation currently pending, or commenced
after the date hereof, against the Company or any of its directors by any
shareholder of the Company relating to this Agreement or the Merger, without
the prior written consent of Parent (which will not be unreasonably
conditioned, withheld or delayed). The Company will not voluntarily cooperate
with any third party which has sought or may hereafter seek to restrain or
prohibit or otherwise oppose the Merger and will cooperate with Parent to
resist any such effort to restrain or prohibit or otherwise oppose the Merger.
5.16 Transition Assistance. The parties hereto shall work cooperatively
to implement a transition plan to be developed mutually by Parent and Company
to integrate the businesses of the Company and Parent as seamlessly as
possible and as soon as reasonably practicable on or after the Effective Time.
Without limiting the generality of the foregoing, the Company will assist
Parent in an effort to integrate and rationalize the separate employee benefit
plans and arrangements maintained by each of the Company and Parent as soon as
possible on or after the Effective Time, and will take all commercially
reasonable actions requested by Parent in furtherance thereof.
ARTICLE 6
CONDITIONS TO CONSUMMATION OF THE MERGER
6.01 Conditions to the Obligations of Each Party. The respective
obligations of the Company, Parent and Merger Sub to consummate the Merger are
subject to the satisfaction, at or before the Effective Time, of each of the
following conditions:
(a) Company Shareholder Approval. The Company shall have obtained the
Shareholder Approval at the Shareholders Meeting in accordance with the UBCA,
the Company's articles of incorporation and its bylaws.
(b) No Orders and Injunctions. No Governmental Authority shall have
enacted, issued, promulgated, enforced or entered any Law, rule, regulation,
executive order or decree, judgment, injunction, ruling or other order,
whether temporary, preliminary or permanent (collectively, "Order"), that is
then in effect and has the effect of preventing or prohibiting consummation of
the Merger or otherwise imposing material limitations on the ability of Merger
Sub and Parent effectively to acquire or hold the business of the Company and
its subsidiaries; provided, however, that each of the parties hereto shall use
their commercially reasonable efforts to appeal any such Order or otherwise
have any such Order vacated or removed.
(c) Material Consents. All material consents, approvals, permits of,
authorizations from, notifications to and filings with any Governmental
Authorities required to be made or obtained prior to the consummation of the
Merger shall have been made or obtained.
(d) HSR Act. Any waiting period (and any extension thereof) under the HSR
Act or merger control or competition laws or regulations applicable to the
consummation of the Merger shall have expired or terminated.
6.02 Conditions to Obligations of Merger Sub and Parent. The obligations
of each of Merger Sub and Parent to consummate the Merger are subject to the
satisfaction, at or before the Effective Time, of each of the following
additional conditions, unless waived by Parent, acting under the direction of
its board of directors, in writing prior to the Effective Time:
(a) Representations and Warranties. The Identified Company
Representations (as defined below) shall be true and correct in all respects
and all other representations and warranties of the Company set forth in this
Agreement shall be true and correct in all material respects (ignoring for
purposes of a determination of any breach of such other representations and
warranties any qualification based upon "material", "materiality", "Company
Material Adverse Effect" or any similar qualification contained in such
representations and warranties) (i) as of the date of this Agreement and (ii)
as of the Closing Date as though then made on and as of the Closing Date,
except for those representations and warranties that address matters only as
of a particular date (in which case such Identified Company Representations
shall be true and correct as of such date and all other such representations
and warranties shall be true and correct in all material respects as of such
date); provided that, in the event of a breach of a representation or warranty
other than an Identified Company Representation, the condition set forth in
this Section 6.02(a) shall be deemed satisfied unless the effect of all such
breaches of representations and warranties taken together has had, or could
reasonably be expected to have, a Company Material Adverse Effect. "Identified
Company Representations" means (i) any representation or warranty of the
Company qualified by Company Material Adverse Effect, (ii) the representations
and warranties of the Company set forth in Sections 3.01, 3.04 and 3.05 and
(iii) the representations and warranties of the Company set forth in Section
3.03(a) (other than changes in such section relating to the exercise of
Options granted on or prior to the date hereof and the issuance of Common
Shares upon the exercise of Options granted on or prior to the date hereof),
Section 3.10, Section 3.14(c), Section 3.21 and the last sentence of Section
3.07(b).
(b) Covenants and Agreements. The Company shall have, in all material
respects, performed all obligations and complied with all agreements and
covenants (other than those set forth in Section 2.03) required to be
performed by it or complied with by it under this Agreement at or prior to the
Effective Time.
(c) Consents. All of the consents and approvals by any person or
Governmental Authority necessary for the consummation of the Sale-Leaseback
shall have been obtained without the requirement of any concession or payment
(other than any immaterial ministerial costs and expenses).
(d) Dissenters. The holders of not more than 10% of the outstanding
Common Shares shall have demanded appraisal of their Common Shares in
accordance with the UBCA.
(e) No Company Material Adverse Effect. No circumstance, effect, event or
change shall have occurred prior to the Effective Time which, individually or
in the aggregate, has had, or is reasonably likely to have, a Company Material
Adverse Effect at or after the Effective Time.
(f) No Litigation. There shall not be pending any (i) suit, action or
proceeding brought by a third party (other than a Governmental Authority) that
has a reasonable likelihood of resulting in an adverse judgment against the
Company, Parent or Merger Sub or (ii) suit, action or proceeding brought by a
Governmental Authority, in either case (A) challenging or seeking to restrain
or prohibit the consummation of the Merger or any of the other Transactions,
(B) seeking to prohibit or limit the ownership or operation by the Company or
any of its subsidiaries of any material portion of the business or assets of
the Company or any of its subsidiaries, to dispose of or hold separate any
material portion of the business or assets of the Company or any of its
subsidiaries, as a result of the Merger or any of the other Transactions or
(C) seeking to impose limitations on the ability of Parent, Merger Sub or any
of their respective affiliates, to acquire or hold, or exercise full rights of
ownership of, any Common Shares, including, without limitation, the right to
vote Common Shares on all matters properly presented to the shareholders of
the Company.
(g) Satisfaction of Debt Commitment Letter EBITDA Condition. The Company
shall have satisfied, in accordance with the terms of the Debt Commitment
Letter, the condition precedent set forth in the last item (minimum EBITDA) of
Annex C of the Debt Commitment Letter corresponding to the heading "Closing
Date Certificate".
(h) Net Debt. The Company and its subsidiaries shall have Net Debt of
less than $7,185,000.
(i) Access and Parking Space. With respect to the areas of access
and parking spaces (or portions thereof) used by the Company or its employees
outside of the Company's property at West 400 North in Orem, Utah (the "Access
and Parking Space"), the Company shall have either (i) obtained a valid
easement or other agreement of use reasonably acceptable to Parent and its
lenders with respect to the Access and Parking Space or (ii) purchased that
Access and Parking Space for (A) an amount not to exceed $100,000 in the
aggregate or (B) an amount in excess of $100,000 in the aggregate if (x) such
purchase price exceeds $100,000 with the prior written consent of Parent or
(y) the Company elects by written notice to Parent to allocate the purchase
price amount in excess of $100,000 as part of the Capital Expenditures Excess
Amount provided the Capital Expenditures Excess Amount available for use
pursuant to Section 5.01(c) exceeds such allocated amount.
(j) Termination of Right of Way and Easement. With respect to any
easement or right of way of any third party concerning a gas line over the
property of the Company or its subsidiaries in Orem, Utah (including the Right
of Way and Easement Agreement dated February 21, 1996 between ▇▇▇▇▇▇ ▇. and
▇▇▇▇▇ ▇▇▇▇▇ Family Trust and Mountain Fuel Supply Company recorded March 15,
1996 in Book 3914, page 678), the Company shall have caused such easement or
right of way to be terminated, abandoned or released as a matter of record
with any holder or beneficiary thereof and all applicable Governmental
Authorities.
(k) Officers' Certificate. At the Closing, the Company shall deliver an
Officers' Certificate, duly executed by the Company's Chief Executive Officer
and Chief Financial Officer and dated as of the Closing Date, stating that the
conditions to Closing set forth in Sections 6.02(a) and (b) above have been
satisfied.
(l) Certified Copies. At the Closing, the Company shall deliver certified
copies of (i) the resolutions duly adopted by the Company Board authorizing
the execution, delivery and performance of this Agreement and the
Transactions, (ii) the resolutions duly adopted by the Company's shareholders
adopting this Agreement and (iii) the articles of incorporation and the bylaws
of the Company as then in effect immediately prior to the Effective Time.
(m) Director Resignations. At the Closing, the Company shall deliver
signed letters of resignation from each director of the Company pursuant to
which each such director resigns from his or her position as a director of the
Company and makes such resignation effective at or prior to the Effective
Time.
6.03 Conditions to Obligation of the Company. The obligations of the
Company to consummate the Merger are subject to the satisfaction, at or before
the Effective Time, of each of the following additional conditions, unless
waived by the Company in writing prior to the Effective Time:
(a) Representations and Warranties. The Identified Purchaser
Representations (as defined below) shall be true and correct in all respects
and all other representations and warranties of Parent and Merger Sub set
forth in this Agreement shall be true and correct in all material respects (i)
as of the date of this Agreement and (ii) as of the Closing Date as though
then made on and as of the Closing Date, except for those representations and
warranties that address matters only as of a particular date (in which case
such Identified Purchaser Representations shall be true and correct as of such
date and all other such representations and warranties shall be true and
correct in all material respects as of such date); provided that, in the event
of a breach of a representation or warranty other than an Identified Purchaser
Representation, the condition set forth in this Section 6.03(a) shall be
deemed satisfied unless the effect of all such breaches of representations and
warranties taken together has had, or could reasonably be expected to have, a
Purchaser Material Adverse Effect. "Identified Purchaser Representations"
means (i) any representation or warranty of Parent or Merger Sub qualified by
Purchaser Material Adverse Effect and (ii) the representations and warranties
of Parent and Merger Sub set forth in Section 4.06.
(b) Covenants and Agreements. Each of Merger Sub and Parent shall have,
in all material respects, performed all obligations and complied with all
agreements and covenants required to be performed by them or complied with by
them under this Agreement at or prior to the Effective Time.
(c) Officers' Certificate. At the Closing, each of Merger Sub and Parent
shall deliver an Officers' Certificate, duly executed by their respective
Chief Executive Officer and Chief Financial Officer and dated as of the
Closing Date, stating that the conditions to Closing set forth in Sections
6.03(a) and (b) above have been satisfied.
(d) Certified Copies. At the Closing, Merger Sub and Parent shall deliver
certified copies of (i) the resolutions duly adopted by each of Merger Sub's
and Parent's boards of directors authorizing the execution, delivery and
performance of this Agreement and the Transactions, (ii) the resolutions duly
adopted by Merger Sub's shareholders approving this Agreement and the
Transactions and (iii) the amended and restated organizational documents of
each of Parent and Merger Sub as then in effect immediately prior to the
Effective Time.
ARTICLE 7
TERMINATION
7.01 Termination by Mutual Consent. This Agreement may be terminated and
the Merger and other Transactions may be abandoned at any time prior to the
Effective Time, before or after the approval of this Agreement by the
shareholders of the Company, by the mutual written consent of the Company,
acting under the direction of the Company Board, and Parent and Merger Sub,
acting under the direction of their respective boards of directors.
7.02 Termination by Merger Sub, Parent or the Company. This Agreement may
be terminated and the Merger and other Transactions may be abandoned at any
time prior to the Effective Time, before or after the approval of this
Agreement by the shareholders of the Company, by either Merger Sub and Parent,
on the one hand, by action of their respective boards of directors, or the
Company, on the other hand, by action of the Company Board, if:
(a) any Governmental Authority shall have enacted or issued an Order
(which has not been vacated, withdrawn or overturned) permanently restraining,
enjoining or otherwise prohibiting the consummation of the Merger and, if such
Order is a ruling of a court, such ruling shall have become final and
nonappealable; provided, however, that the right to terminate this Agreement
pursuant to this Section 7.02(a) shall not be available to any party that has
failed to perform in all material respects its obligations under Section 5.08
or the proviso contained in Section 6.01(b);
(b) the Merger shall not have been consummated on or before October 2,
2007 (the "Expiration Date"); provided, that the right to terminate this
Agreement under this Section 7.02(b) shall not be available to any party whose
failure to perform any covenant or obligation under this Agreement has been
the principal cause of or principally resulted in the failure of the Merger to
have been consummated on or before the Expiration Date; or
(c) the Shareholder Approval shall not have been obtained by the earlier
to occur of (i) the Shareholders Meeting or at any adjournment or postponement
thereof at which a vote on such approval was taken or (ii) the date that is
five (5) days prior to the Expiration Date.
7.03 Termination by Merger Sub and Parent. This Agreement may be
terminated and the Merger and other Transactions may be abandoned at any time
prior to the Effective Time, before or after the approval of this Agreement by
the shareholders of the Company, by action of the board of directors of Merger
Sub and the board of directors of Parent, if:
(a) the Company shall have breached any of its representations,
warranties, covenants (other than Section 5.10) or other agreements set forth
in this Agreement or any such representation or warranty shall have become
untrue after the date of this Agreement (in either case, a "Terminating
Company Breach") and such Terminating Company Breach (i) would give rise to
the failure of a condition set forth in Section 6.02(a) or Section 6.02(b)
and (ii) has not been cured within 30 days after notice thereof is received by
the Company; provided that Parent and Merger Sub shall have no right to
terminate this Agreement pursuant to this Section 7.03(a) if there is an
uncured Terminating Merger Sub Breach at the time of the Terminating Company
Breach;
(b) at any time prior to the approval of this Agreement by the
shareholders of the Company, (i) the Company Board publicly withdraws,
modifies or changes its approval or favorable recommendation of this Agreement
or the Merger, (ii) the Company Board fails to publicly reconfirm such
approval and favorable recommendation within ten business days after a written
request by Merger Sub and Parent to do so, (iii) the Company Board shall have
taken no position with respect to, or failed to publicly recommend against
acceptance of, any Acquisition Proposal within ten business days after the
public disclosure of such Acquisition Proposal, (iv) the Company Board shall
have approved or recommended to the shareholders of the Company any
Acquisition Proposal, (v) the Company fails to call the Shareholders Meeting
within 35 days of mailing the definitive Proxy Statement or fails to mail the
Proxy Statement within ten days after being cleared by the SEC or fails to
include in such statement the Company Board's favorable recommendation of this
Agreement and the Merger or (vi) the Company or the Company Board resolves to
do any of the foregoing; or
(c) the Company shall have breached any of its obligations under Section
5.10; provided any breach of Section 5.10(c) shall have been a material
breach.
7.04 Termination by the Company. This Agreement may be terminated by the
Company, acting under the direction of the Company Board, and the Merger and
other Transactions may be abandoned:
(a) if, at any time prior to the Effective Time, before or after the
approval of this Agreement by the shareholders of the Company, Merger Sub or
Parent shall have breached any of their respective representations,
warranties, covenants or other agreements set forth in this Agreement or any
such representation or warranty shall have become untrue after the date of
this Agreement (in either case, a "Terminating Merger Sub Breach") and such
Terminating Merger Sub Breach (i) would give rise to the failure of a
condition set forth in Section 6.03(a) or Section 6.03(b) and (ii) is not
cured within 30 days after written notice thereof is received by Merger Sub
and Parent; provided that the Company shall have no right to terminate this
Agreement pursuant to this Section 7.04(a) if there is an uncured Terminating
Company Breach at the time of the Terminating Merger Sub Breach; provided
further that, notwithstanding anything in this Agreement to the contrary, if
(A) all of the conditions set forth in Section 6.01 and Section 6.02 have been
satisfied (other than those conditions that by their nature are to be
satisfied at the Closing provided that the Company is then able to satisfy
such conditions) and (B) Merger Sub and Parent fail to consummate the Merger
on or before the Target Closing Date in accordance with Section 1.07 or
deposit the Closing Funds in accordance with Article 2, such failure shall
constitute a Terminating Merger Sub Breach; or
(b) at any time prior to the approval of this Agreement by the
shareholders of the Company, pursuant to and in accordance with Section
5.10(b); provided that, the Company shall have complied with the provisions of
Section 5.10 in all material respects, including, without limitation, the
notice provisions therein, and shall have concurrently with such termination
made all payments to Parent required by Section 8.01).
7.05 Effect of Termination. In the event of the termination of this
Agreement and abandonment of the Merger and other Transactions pursuant to
this Article 7, this Agreement shall forthwith become null and void and have
no effect, without any liability on the part of any party or its officers,
directors, shareholders, affiliates and agents, other than the provisions of
the last sentence of Section 5.04 and the provisions of Sections 5.06, 7.05,
8.01, 8.02, 8.03 and 8.08.
ARTICLE 8
MISCELLANEOUS
8.01 Payment of Fees and Expenses.
(a) Except as otherwise specified in this Agreement, each of the parties
hereto shall bear its own Expenses (as defined below) incurred by or on behalf
of such party in preparing for, entering into and carrying out this Agreement
and the consummation of the Merger and the financing of the Transactions.
"Expenses" as used in this Agreement shall include all out-of-pocket expenses
(including, without limitation, all fees and expenses of outside counsel,
investment bankers, banks, other financial institutions, accountants,
financial printers, experts and consultants to a party hereto) incurred by a
party or on its behalf in connection with or related to the investigation, due
diligence examination, authorization, preparation, negotiation, execution and
performance of this Agreement and the Transactions and the financing thereof
and all other matters contemplated by this Agreement and the closing thereof,
together with any out-of-pocket costs and expenses incurred by any party in
enforcing any of its rights set forth in this Agreement, whether pursuant to
litigation or otherwise.
(b) If this Agreement is terminated by the Company or by Parent pursuant
to Section 7.02(b) and prior to the Shareholders Meeting but after the date
hereof, an Acquisition Proposal (which, for purposes of this Section 8.01(b),
shall have the meaning set forth in the definition of Acquisition Proposal
contained in Section 5.10(f), except that all references to "15% or more"
shall be deemed references to "more than 50%") shall have been made (other
than by Parent or its Affiliates) to the Company or any of its affiliates or
any person shall have publicly announced an intention (whether or not
conditional) to make an Acquisition Proposal, then, if the Company enters into
a definitive agreement with respect to, or consummates, any transaction of the
type described in the definition of "Acquisition Proposal" at any time on or
prior to the date which is twelve months following such termination,
concurrently with the first to occur of the entry into a definitive agreement
with respect to, or the consummation of, any such transaction, the Company
shall pay Parent the Break Up Fee. "Break Up Fee" means cash in immediately
available funds in an amount equal to $1,450,000.
(c) If this Agreement is terminated by the Company or by Parent pursuant
to Section 7.02(c) and prior to the Shareholders Meeting but after the date
hereof, an Acquisition Proposal (which, for purposes of this Section 8.01(c),
shall have the meaning set forth in the definition of Acquisition Proposal
contained in Section 5.10(f), except that all references to "15% or more"
shall be deemed references to "more than 50%") shall have been made (other
than by Parent or its Affiliates) to the Company or any of its affiliates or
any person shall have publicly announced an intention (whether or not
conditional) to make an Acquisition Proposal, then, within two (2) business
days following the delivery by Parent and Merger Sub to the Company of an
invoice therefor, the Company shall pay Parent and Merger Sub all of the
reasonable documented out-of-pocket Expenses of Parent and Merger Sub incurred
in connection with this Agreement as reimbursement (the "Reimbursement
Amount"), provided such Reimbursement Amount shall not exceed, in the
aggregate, $700,000; provided further, that such Acquisition Proposal shall
have become publicly known and shall not have been publicly withdrawn at least
three business days prior to the Shareholders Meeting. If the Company enters
into a definitive agreement with respect to, or consummates, any transaction
of the type described in the definition of "Acquisition Proposal" at any time
on or prior to the date which is twelve months following such termination,
then, in addition to the payment contemplated by the preceding sentence,
concurrently with the first to occur of the entry into a definitive agreement
with respect to, or the consummation of, any such transaction, the Company
shall pay Parent the amount of the difference between the Break-Up Fee and the
Reimbursement Amount.
(d) If this Agreement is terminated (i) by Parent and Merger Sub pursuant
to Section 7.03(b) or Section 7.03(c) or (ii) by the Company pursuant to
Section 7.04(b), then the Company shall pay to Parent the Break-Up Fee, in the
case of clause (i) above, within two (2) business days following such
termination of this Agreement, and in case of clause (ii) above, concurrently
with such termination of this Agreement.
(e) If this Agreement is terminated pursuant to Section 7.03(a), or so
long as no Break-Up Fee is payable pursuant to Section 8.01(c) in connection
therewith, any termination of this Agreement pursuant to Section 7.02(c), the
Company shall pay the Reimbursement Amount to Parent and Merger Sub within two
(2) business days following the delivery by Parent and Merger Sub to the
Company of an invoice therefor.
(f) If this Agreement is terminated by the Company pursuant to Section
7.04(a), then Parent or Merger Sub shall pay to the Company a termination fee
of cash in immediately available funds in the amount of $815,000 within two
(2) business days after such termination.
(g) The parties agree that the agreements contained in this Section 8.01
are an integral part of the Transactions and constitute liquidated damages and
not a penalty. Notwithstanding any other provision in this Agreement to the
contrary, (i) the parties hereto agree that the payments contemplated by
Sections 8.01(b), (c), (d) and (e) represent the exclusive remedy of Parent
and Merger Sub in the circumstances described therein and that, except for the
payment expressly set forth in the circumstances described therein, none of
the Company or any of its respective affiliates shall have any liability or
obligation of any kind whatsoever arising out of the termination of this
Agreement, any breach by the Company giving rise to such termination, or the
failure of the Transactions to be consummated, whether arising in contract,
tort or otherwise and (ii) the parties hereto agree that the payment
contemplated by Section 8.01(f) represents the exclusive remedy of the Company
in the circumstances described herein and that, except for the payment
expressly set forth in the circumstances described herein, none of Parent,
Merger Sub or any of their respective affiliates shall have any liability or
obligation of any kind whatsoever arising out of the termination of this
Agreement, any breach by Parent or Merger Sub giving rise to such termination,
or the failure of the Transactions to be consummated, whether arising in
contract, tort or otherwise.
(h) All amounts payable by a party under this Section 8.01 shall be paid
in cash and in immediately available funds to such account as the other party
may designate in writing.
8.02 Guarantee. Parent hereby irrevocably and unconditionally guarantees
the due and punctual performance of Merger Sub's obligations, agreements and
covenants hereunder; provided, however, that such guaranty shall terminate
concurrently with the satisfaction of Merger Sub's obligation to deposit the
full amount of the Closing Funds with the Agent pursuant to Section 2.03.
8.03 No Survival. The representations, warranties and agreements made in
this Agreement shall not survive beyond the Effective Time or the termination
of this Agreement in accordance with Article 7 hereof. Notwithstanding the
foregoing, the agreements set forth in Articles 1 and 2, Section 5.07 and
Article 8 shall survive the Effective Time and those set forth in Section
7.05, Section 8.01 and Section 8.02 shall survive termination.
8.04 Modification or Amendment. This Agreement may be amended by the
parties hereto at any time before or after approval of this Agreement by the
shareholders of the Company; provided, however, that after any such approval,
there shall not be made any amendment that by law requires the further
approval by such shareholders without such further approval and provided
further, however, the provisions of Section 5.07 may not be amended or
modified without the prior written agreement of each of the Indemnified
Parties. Without limiting the foregoing, this Agreement may not be amended or
modified except by an instrument in writing signed by each of the parties
hereto.
8.05 Entire Agreement; Assignment. This Agreement (including the
documents and the instruments referred to herein) and the Confidentiality
Agreement constitute the entire agreement and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to
the subject matter hereof and thereof. Neither this Agreement nor any of the
rights, interests or obligations hereunder will be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other party (except that each of Parent and Merger Sub
may assign its rights, interests and obligations to any of their respective
affiliates or direct or indirect subsidiaries without the consent of the
Company, so long as they remain primarily obligated with respect to any such
delegated obligation). Subject to the preceding sentence, this Agreement will
be binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
8.06 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of Law or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party hereto. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by applicable Law in an acceptable
manner to the end that the Transactions are fulfilled to the extent possible.
8.07 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given and shall be
deemed to have been duly given upon receipt when delivered in person, by
facsimile or by overnight courier to the respective parties as follows:
If to Parent or Merger Sub:
MLE Holdings, Inc.
c/o Sorenson Capital
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, P.C.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company:
MITY Enterprises, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & Whitney LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above;
provided that notice of any change of address shall be effective only upon
receipt thereof.
8.08 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Utah, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws
thereof.
8.09 Descriptive Headings. The descriptive headings herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
8.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement, and any one of which may be
delivered by facsimile.
8.11 Certain Definitions. As used in this Agreement:
(a) "affiliate," as applied to any person, means any other person
directly or indirectly controlling, controlled by, or under common control
with, that person. For the purposes of this definition, "control" (including,
with correlative meanings, the terms "controlling," "controlled by" and "under
common control with"), as applied to any person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of that person, whether through the ownership of
voting securities, by contract or otherwise;
(b) "Freely Available Cash" means unrestricted cash of the Company that is
freely available for use to repay Indebtedness excluding any cash or
consideration in connection with the consummation of any sale-leaseback and
(A) the transfer of such cash to the Company (including from any subsidiaries
of the Company) or in connection with the repayment of any such Indebtedness
does not result in any Tax obligations to the Company or any of its
subsidiaries and (B) such cash can be distributed, contributed or otherwise
delivered to the Company (including from any subsidiaries of the Company) in
accordance with all applicable Laws, including those relating to solvency,
adequate surplus and similar capital adequacy tests; provided, that the
aggregate amount received by the Company between the date of this Agreement
and the Effective Time in connection with any and all Option exercise(s) shall
not be included in the calculation of what constitutes such freely available
cash.
(c) "Indebtedness" means, with respect to the Company and its
subsidiaries, (i) indebtedness for borrowed money or issued in substitution
for or exchange of indebtedness for borrowed money, (ii) obligations evidenced
by notes, bonds, debentures or other similar instruments, (iii) obligations
under leases (contingent or otherwise, as obligor, guarantor or otherwise)
required to be accounted for as capitalized leases pursuant to generally
agreed accounting principles, (iv) obligations for amounts drawn under
acceptances, letters of credit, contingent reimbursement liabilities with
respect to letters of credit or similar facilities, (v) any liability for the
deferred purchase price of property or services, contingent or otherwise, as
obligor or otherwise, (vi) any liability which is deemed a long-term liability
under generally agreed accounting principles excluding deferred income taxes,
(vii) guarantees and similar commitments relating to any of the foregoing
items, and (viii) any accrued and unpaid interest on, and any prepayment
premiums, penalties or similar contractual charges in respect of, any of the
foregoing.
(d) "Net Debt" means, in each case, as of immediately prior to the Closing
(i) the aggregate amount of the Company's and its subsidiaries' Indebtedness,
plus (ii) the aggregate amount of any unpaid Expenses of the Company or any of
its subsidiaries and any unpaid expenses of the Company or any of its
subsidiaries incurred in connection with the Company's sale process, plus
(iii) the aggregate amount of the Change of Control Payments, plus (iv) the
aggregate amount, as of immediately prior to the Closing, of (x) capital
expenditures, costs and expenses necessary to complete, in accordance with the
plans that have been previously provided to Parent, construction of the
buildings on the properties of the Company and (y) any unpaid capital
expenditures, costs and expenses that have been incurred in connection with
the construction of the buildings on the properties of the Company, less (v)
the amount of the Company's Freely Available Cash immediately prior to the
Closing.
(e) "Person" or "person" means any individual, corporation, partnership,
limited liability company, trust, or any other entity or group (which term
shall include a "group" as such term is defined in Section 13(d)(3) of the
Exchange Act); and
(f) "subsidiary" or "subsidiaries" means, with respect to any Person, any
corporation, partnership, limited liability company, joint venture or other
entity of which such Person (either alone or through or together with any
other subsidiary), owns, directly or indirectly, more than 50% of the stock or
other equity or beneficial interests, the holders of which are generally
entitled to vote for the election of the board of directors or other governing
body of such corporation, partnership, limited liability company, joint
venture or other entity.
8.12 Specific Performance. Except as specifically provided in Article 7
or Section 8.01 hereof, the parties hereto 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.
Accordingly, except as specifically provided in Article 7 or Section 8.01
hereof, it is 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 hereof in any court of the State of Utah or, if under
applicable law exclusive jurisdiction over such matter is vested in the
federal courts, any court of the United States located in the State of Utah,
this being in addition to any other remedy to which they are entitled at law
or in equity.
8.13 Extension; Waiver. At any time prior to the Effective Time, a party
may (a) extend the time for the performance of any of the obligations or other
acts of the other party, (b) waive any inaccuracies in the representations and
warranties of the other party contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) subject to the proviso in Section
8.04, waive compliance by the other party with any of the agreements or
conditions contained in this Agreement. Any agreement on the part of a party
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights.
8.14 Third-Party Beneficiaries. Except for the provisions of Section
5.07, this Agreement is not intended to confer upon any person other than the
parties hereto any rights or remedies.
8.15 Submission to Jurisdiction. Each of the parties hereto irrevocably
and unconditionally submits, for itself and its property, to the exclusive
jurisdiction of any state court or United States District Court, in each case,
in Salt Lake City, Utah, in any action or proceeding arising out of or
relating to this Agreement or the Transactions contemplated hereby. Each of
the parties hereto agrees that, subject to rights with respect to post-trial
motions and rights of appeal or other avenues of review, a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by Law.
Each of the parties hereto irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any state court or United
States District Court, in each case, in Salt Lake City, Utah. Each of the
parties hereto irrevocably and unconditionally waives, to the fullest extent
it may legally and effectively do so, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such court.
8.16 Incorporation of Exhibits. The Company Disclosure Schedule and
the Exhibits attached hereto and referred to herein are hereby incorporated
herein and made a part thereof for all purposes as if fully set forth herein.
* * * * *
IN WITNESS WHEREOF, each of the parties has caused this Agreement and Plan of
Merger to be executed on its behalf by its respective officer thereunto duly
authorized, all as of the day and year first above written.
MITY ENTERPRISES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman of the Board of Directors
FP MERGER SUB, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
MLE HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President