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AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
SFC MERGER COMPANY
AND
▇▇▇▇▇▇ FURNITURE COMPANY, INC.
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DATED AS OF AUGUST 13, 1997
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TABLE OF CONTENTS
Page
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1. The Merger.............................................................. 1
1.1 The Merger......................................................... 1
1.2 The Closing........................................................ 1
1.3 Effective Time..................................................... 2
1.4 Company Actions.. 2
2. Certificate of Incorporation, By-laws, Directors
and Officers of the Surviving Corporation............................... 2
2.1 Certificate of Incorporation and By-laws of Surviving Corporation.. 2
2.2 Directors and Officers of Surviving Corporation.................... 3
3. Conversion of Securities................................................ 3
3.1 Conversion of Securities........................................... 3
3.2 Dissenting Stockholders............................................ 5
3.3 Payment for and Surrender of Company Common Shares................. 6
3.4 Stock Transfer Books............................................... 7
4. Representations and Warranties of the Company.......................... 7
4.1 Existence; Good Standing; Corporate Authority..................... 7
4.2 Authorization, Validity and Effect of Agreement................... 8
4.3 Capitalization.................................................... 8
4.4 Subsidiaries...................................................... 8
4.5 No Conflict; Required Filings and Consents........................ 9
4.6 No Brokers........................................................ 9
4.7 State Takeover Statutes........................................... 10
4.8 Opinion of Financial Advisor...................................... 10
5. Representations and Warranties of Newco................................ 10
5.1 Existence; Good Standing; Corporate Authority..................... 10
5.2 Authorization, Validity and Effect of Agreement................... 10
5.3 Subsidiaries...................................................... 10
5.4 No Conflict; Required Filings and Consents........................ 10
5.5 No Brokers........................................................ 11
5.6 Newco............................................................. 11
6. Covenants.............................................................. 12
6.1 Alternative Proposals............................................. 12
6.2 Conduct of Business by the Company................................ 12
6.3 Conduct of Business by Newco...................................... 14
6.4 Meeting of Stockholders........................................... 15
6.5 Filings, Other Action............................................. 15
6.6 Access to Information; Confidentiality............................ 15
6.7 Publicity......................................................... 16
6.8 Further Action.................................................... 16
6.9 Expenses........................................................... 16
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6.10 Insurance; Indemnity............................................... 16
6.11 Employee Benefits.................................................. 17
6.12 Conveyance Taxes................................................... 18
7. Conditions............................................................... 18
7.1 Conditions to Each Party's Obligation To Effect the Merger......... 18
7.2 Conditions to Obligation of Company To Effect the Merger........... 19
7.3 Conditions to Obligation of Newco To Effect the Merger............. 19
8. Termination.............................................................. 20
8.1 Termination........................................................ 20
8.2 Effect of Termination.............................................. 21
8.3 Extension; Waiver.................................................. 21
8.4 Payment of Fees and Expenses....................................... 22
9. General Provisions....................................................... 22
9.1 Nonsurvival of Representations, Warranties and Agreements.......... 22
9.2 Notices............................................................ 22
9.3 Assignment; Binding Effect......................................... 23
9.4 Entire Agreement................................................... 23
9.5 Amendment.......................................................... 23
9.6 Governing Law...................................................... 23
9.7 Counterparts....................................................... 23
9.8 Headings........................................................... 23
9.9 Interpretation..................................................... 23
9.10 Waivers............................................................ 24
9.11 Incorporation of Schedules......................................... 24
9.12 Severability....................................................... 24
9.13 Enforcement of Agreement........................................... 24
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LIST OF SCHEDULES
Schedule 3.1(f) - Options
Schedule 3.1(f)(ii) - Members of Middle Management
Schedule 4.4 - Company Subsidiaries
LIST OF EXHIBITS
Exhibit A - Form of Amended and Restated Certificate of Incorporation
Exhibit B - Form of Amended and Restated By-Laws
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INDEX OF DEFINED TERMS
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Action................................................................... 16
Agreement................................................................ 1
Blue Sky Laws............................................................ 9
Cap...................................................................... 17
Cash Payment............................................................. 4
Certificate of Merger.................................................... 2
Certificates............................................................. 6
Closing.................................................................. 1
Closing Date............................................................. 2
Code..................................................................... 9
Company.................................................................. 1
Company Common Share..................................................... 3
Company Equity Rights.................................................... 8
Company Material Adverse Effect.......................................... 9
Company Preferred Shares................................................. 8
Company Stock Plans...................................................... 8
Consideration............................................................ 3
DGCL..................................................................... 1
Dissenting Stockholders.................................................. 5
Effective Time........................................................... 2
Exchange Act............................................................. 2
Governmental Entity...................................................... 9
▇▇▇▇▇▇................................................................... 14
Household................................................................ 14
In-the-Money............................................................. 4
Indemnification Agreements............................................... 16
Indemnified Party........................................................ 16
Merger................................................................... 1
Mid-Management........................................................... 4
Newco.................................................................... 1
Newco Material Adverse Effect............................................ 11
Option................................................................... 4
Paying Agent............................................................. 6
Payment Fund............................................................. 6
Proxy Statement.......................................................... 2
SEC...................................................................... 2
Securities Act........................................................... 9
Senior Management Ownership.............................................. 4
Stockholders' Meeting.................................................... 15
Subsidiary............................................................... 7
Surviving Common Shares.................................................. 4
Surviving Corporation.................................................... 1
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AGREEMENT AND PLAN OF MERGER
Agreement and Plan of Merger (this "Agreement"), dated as of August 13,
1997, by and between SFC MERGER COMPANY, a Delaware corporation ("Newco"), and
▇▇▇▇▇▇ FURNITURE COMPANY, INC., a Delaware corporation (the "Company").
RECITALS
A. M.D. Sass Associates, Inc., ▇. ▇▇▇▇ Price Recovery Fund, L.P. and ▇▇▇▇
▇▇▇▇▇ Management Co., majority stockholders of the Company, and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, members of executive management of the Company
(collectively, each being a member of the "Buyout Group"), have formed Newco.
B. Each of the Boards of Directors of the Company and Newco (in the case
of the Company, based upon the recommendation of a special committee of its
independent directors) has determined that a business combination between the
Company and Newco is in the best interests of its respective companies and
stockholders, whereby Newco will merge with and into the Company (the "Merger"),
with the Company being the surviving corporation, all upon the terms and subject
to the conditions of this Agreement.
C. Each of the Company and Newco desires to provide for the consummation
of the Merger and certain other transactions relating thereto, on the terms and
subject to the conditions set forth herein.
1. THE MERGER
1.1 The Merger. (a) On the terms and subject to the conditions of this
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Agreement, at the Effective Time (as defined below), Newco will be merged with
and into the Company in accordance with the applicable provisions of the General
Corporation Law of the State of Delaware (the "DGCL"), and the separate
corporate existence of Newco will thereupon cease. The Company will be the
surviving corporation in the Merger (as such, the "Surviving Corporation") under
the corporate name it possesses immediately prior to the Effective Time.
(b) At the Effective Time, the corporate existence of the Company with all
its rights, privileges, powers and franchises will continue unaffected and
unimpaired by the Merger. The Merger will have the effects specified in the
relevant provisions of the DGCL.
1.2 The Closing. (a) Unless this Agreement shall have been terminated
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pursuant to the provisions of Article 8, the closing of the transactions
contemplated by this Agreement (the "Closing") will take place at the offices of
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00
a.m., local time, within two business days following the date on which the last
of the conditions (excluding conditions that by their terms cannot be satisfied
until the Closing Date (as defined below)) set forth in Article 7 is satisfied
or waived in accordance herewith, or at such other place, time or date as the
parties may agree, but in any case will occur on the last day of a calendar
month. The date on which the Closing occurs is hereinafter referred to as the
"Closing Date".
(b) Notwithstanding any approval of this Agreement by the stockholders of
the Company and Newco, no agreement between the parties hereto to change the
place, time or date of the Closing will require the approval of the stockholders
of the Company.
1.3 Effective Time. On the Closing Date, Newco and the Company will cause
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a certificate of merger (the "Certificate of Merger"), executed in accordance
with the relevant provisions of the DGCL, to be filed with the Secretary of
State of the State of Delaware as provided in Section 251 of the DGCL. Upon
completion of such filing, the Merger will become effective in accordance with
the DGCL. The time and date on which the Merger becomes effective is herein
referred to as the "Effective Time."
1.4 Company Actions. The Company hereby consents to the Merger and
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represents that (a) its Board of Directors (at a meeting duly called and held),
based upon the recommendation of a special committee of independent directors,
has (i) determined by the unanimous vote of the directors (with all Buyout
Group-affiliated directors abstaining upon advice of Buyout Group's counsel)
that the Merger is fair to, and in the best interests of, the holders of Company
Common Shares (as defined below), (ii) approved this Agreement and the
transactions contemplated hereby, including the Merger, and (iii) determined to
recommend approval and adoption of this Agreement to the stockholders of the
Company and (b) ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Inc. ("WP") has delivered to the
special committee of the Board of Directors of the Company its opinion that the
consideration to be received by the holders of Company Common Shares pursuant to
the Merger is fair to the holders of Company Common Shares (other than Newco and
members of the Buyout Group) from a financial point of view, subject to the
assumptions and qualifications contained in such opinion. The Company shall
file with the Securities and Exchange Commission (the "SEC"), a preliminary and
final definitive proxy statement (including certain information described in
Schedule 13E-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and required to be set forth in such proxy statements (such
preliminary and final definitive proxy statement, collectively, the "Proxy
Statement") pursuant to Rule 13e-3(e)(1) under the Exchange Act). The Company
agrees to provide Newco and its counsel with any comments the Company or its
counsel may receive from the SEC with respect to such Proxy Statement promptly
after the receipt of such comments and shall provide Newco and its counsel an
opportunity to participate, including by way of discussions with the SEC, in the
response of the Company to such comments.
2. CERTIFICATE OF INCORPORATION, BY-LAWS, DIRECTORS
AND OFFICERS OF THE SURVIVING CORPORATION
2.1 Certificate of Incorporation and By-laws of Surviving Corporation.
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(a) The certificate of incorporation of the Surviving Corporation to be in
effect from and after the Effective Time until amended in accordance with its
terms and the DGCL will be the certificate of incorporation of the Company
immediately prior to the Effective Time, as amended and restated in the form of
Exhibit A.
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(b) The by-laws of the Surviving Corporation to be in effect from and after
the Effective Time until amended in accordance with their terms and the DGCL
will be the by-laws of the Company immediately prior to the Effective Time, as
amended and restated in the form of Exhibit B.
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2
2.2 Directors and Officers of Surviving Corporation. (a) The members of
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the initial Board of Directors of the Surviving Corporation will be the members
of the Board of Directors of the Company immediately prior to the Effective
Time, each of whom will serve on the Board of Directors of the Surviving
Corporation in accordance with the certificate of incorporation and by-laws of
the Surviving Corporation until his/her successor has been duly elected or
appointed and qualified or until his/her earlier death, resignation or removal
in accordance with the certificate of incorporation and the by-laws of the
Surviving Corporation.
(b) The officers of the Surviving Corporation as of the Effective Time will
be the officers of the Company immediately prior to the Effective Time. Each
such person will continue in such office of the Surviving Corporation until
his/her successor has been duly elected or appointed and qualified or until
his/her earlier death, resignation or removal in accordance with the certificate
of incorporation and the by-laws of the Surviving Corporation.
3. CONVERSION OF SECURITIES
3.1 Conversion of Securities. (a) At the Effective Time, each share of
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Common Stock, par value $0.01 per share, of the Company (each a "Company Common
Share" and collectively, the "Company Common Shares") issued and outstanding
immediately prior to the Effective Time, other than as described in Sections
3.1(c) and 3.2 hereof, will, by virtue of the Merger and without any action on
the part of the holders thereof, be converted into the right to receive $25.05
per share in cash (the "Consideration").
(b) At the Effective Time, all Company Common Shares to be converted into
the Consideration pursuant to this Section 3.1 will, by virtue of the Merger and
without any action on the part of the holders thereof, cease to be outstanding,
be cancelled and retired and cease to exist, and each holder of a certificate
previously representing any such Company Common Shares will thereafter cease to
have any rights with respect to such Company Common Shares, except the right to
receive for each of the Company Common Shares, upon the surrender of such
certificate in accordance with Section 3.3, the Consideration, without any
interest thereon.
(c) At the Effective Time, each Company Common Share issued and outstanding
and owned by the Company as treasury stock or owned by any of Newco or any of
the Company's Subsidiaries immediately prior to the Effective Time will, by
virtue of the Merger and without any action on the part of the holder thereof,
cease to be outstanding, be cancelled and retired without payment of any
Consideration therefor and cease to exist.
(d) At the Effective Time, each share of Class A common stock, par value
$0.01 per share, and Class B common stock, par value $0.01 per share, or any
fraction of a share of such class of common stock, of Newco issued and
outstanding immediately prior to the Effective Time will, by virtue of the
Merger and without any action on the part of Newco or the holder
thereof, be converted into one share of common stock, par value $0.01 per share,
of the Surviving Corporation, or any fraction thereof ("Surviving Common
Shares").
(e) All notes and other debt instruments of the Company which are
outstanding at the Effective Time shall continue to be outstanding subsequent to
the Effective Time as debt instruments of the Surviving Corporation, subject to
their respective terms and provisions.
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(f) Subject to the satisfaction of the obligations of the Company with
respect thereto in Section 7.3(f), at the Effective Time, each outstanding
option, whether exercisable or unexercisable, to purchase Company Common Shares
(each, an "Option") described in Schedule 3.1(f) shall be treated as follows:
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(i) Each unexpired Option to purchase Company Common Shares that is
outstanding and exercisable at the Effective Time and has an exercise price of
$25.05 or less ("In-the-Money"), other than those held by Messrs. ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇, will no longer be exercisable for the purchase of
Company Common Shares but shall entitle each holder thereof, in cancellation and
in settlement therefor, to payment in cash (subject to applicable withholding
payments, the "Cash Payment") at the Effective Time equal to the product of (x)
the total number of Company Common Shares subject to such Option which is vested
and (y) the excess of the Consideration over the exercise price per Company
Common Share subject to such Option.
(ii) Each unexpired Option to purchase Company Common Shares that is
outstanding and In-the-Money but not exercisable at the Effective Time, held by
members of middle management set forth on Schedule 3.1(f)(ii) ("Mid-
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Management"), will no longer be exercisable for the purchase of Company Common
Shares but shall entitle each holder thereof, in cancellation and in settlement
therefor, to the Cash Payment at the Effective Time equal to the product of (x)
the total number of Company Common Shares subject to such Option and (y) the
excess of the Consideration over the exercise price per Company Common Share
subject to such Option.
(iii) Each unexpired Option to purchase Company Common Shares that is
outstanding and In-the-Money but not exercisable at the Effective Time, other
than those held by Messrs. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ and by members of Mid-
Management, will no longer be exercisable for the purchase of Company Common
Shares but shall entitle the holder thereof, in cancellation and settlement
therefor, to the issuance of immediately exercisable options to acquire, on
substantially the same terms and conditions as were applicable under such Option
immediately prior to the Effective Time, options to purchase a number of the
Surviving Common Shares equal to the product of (x) the total number of Company
Common Shares subject to such Option and (y) the excess of the Consideration
over the exercise price per Company Common Share subject to such Option; which
product, divided by the total equity required by Newco to consummate the Merger
and expressed as a percentage, will equal a percentage of the equity ownership
in the Surviving Corporation (the "Senior Management Ownership"). Options in the
Surviving Corporation with an exercise price per Surviving Common Share of $1.00
will be issued in an amount such that the number of Surviving Common Shares
issuable upon exercise of such options will equal the product of (A) the total
number of issued shares in the Surviving Corporation immediately after the
Effective Time and (B) the Senior Management Ownership.
(iv) Each unexpired Option to purchase Company Common Shares that is
outstanding and In-the-Money, whether or not exercisable at the Effective Time,
held by Messrs. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇, will no longer be exercisable
for the purchase of Company Common Shares but shall entitle each of Messrs.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇, in cancellation and in settlement thereof at the
Effective Time, to the In-the-Money Value (as
4
defined below) of such Options through (A) the issuance of an immediately
exercisable option (the "New Option"), with an exercise price per Surviving
Common Share of $1.00, to acquire a number of the Surviving Common Shares
representing approximately 15.9% of the total equity of the Surviving
Corporation (on a fully diluted basis including the issuance of the New Options)
as of the Effective Time (taking into account the payment of the distribution
occurring promptly after the Effective Time) and (B) the Cash Payment for the
remainder of the In-the-Money Value. The In-the-Money Value will be calculated
by taking the product of (x) the total number of Company Common Shares subject
to such Option and (y) the excess of the Consideration over the exercise price
per Company Common Shares subject to such Option.
(v) Each unexpired Option to purchase Company Common Shares that is
outstanding and not In-the-Money, whether or not then exercisable, will no
longer be exercisable for the purchase of Company Common Shares but shall
entitle the holder thereof, in cancellation and settlement therefor, to the
issuance of an option to acquire, on substantially the same terms and
conditions, including vesting schedule, as were applicable under such Option
immediately prior to the Effective Time, a number of the Surviving Common
Shares, including any fractional shares issuable in consideration thereof, equal
to the same fully-diluted percentage ownership of the Surviving Corporation that
was represented by such Option for Company Common Shares immediately prior to
the Effective Time, at a price per share equal to (x) the per-share exercise
price divided by the Consideration multiplied by (y) the per-share value of a
share of Surviving Common Stock immediately after the Effective Time.
(vi) Each Cash Payment to be paid to each holder of an outstanding
Option pursuant to this Section will be paid at the Effective Time. The
Surviving Corporation will not issue any fractional Surviving Common Shares upon
the exercise of any Option and any right in respect thereof will, without
further action, be forfeited.
(vii) After the Effective Time, Newco will issue to each holder of an
Option to be issued pursuant to the terms of this Section 3.1 a document
evidencing the foregoing agreement.
3.2 Dissenting Stockholders. Notwithstanding any other provisions of this
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Agreement to the contrary, shares of Company Common Stock that are outstanding
immediately prior to the Effective Time and which are held by stockholders who
shall have not voted in favor of the Merger or consented thereto in writing and
who shall have demanded properly in writing appraisal for such shares in
accordance with Section 262 of the DGCL (collectively, the "Dissenting
Stockholders") shall not be converted into or represent the right to receive the
Consideration. Such Dissenting Stockholders instead shall be entitled to receive
payment of the appraised value of such Company Common Shares held by them in
accordance with the provisions of such Section 262, except that shares of
Company Common Stock that are held by a Dissenting Stockholder who shall have
failed to perfect or who effectively shall have withdrawn or lost his or her
rights to appraisal of such shares of Company Common Shares under such Section
262 shall thereupon be deemed to have been converted into and to have become
exchangeable, as of the Effective Time, for the right to receive, without any
interest thereon, the Consideration upon surrender in the manner provided in
Section 3.3, of the Certificate or Certificates that, immediately prior to the
Effective Time, evidenced such Company Common Shares. The Company shall give
Newco (A) prompt notice of any written
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demands for appraisal, withdrawals of demands for appraisal and any
other related instruments received by the Company, and (B) the opportunity to
direct all negotiations and proceedings with respect to demands for appraisal.
The Company will not voluntarily make any payment with respect to any demands
for appraisal and will not, except with the prior written consent of Newco,
settle or offer to settle any demand.
3.3 Payment for and Surrender of Company Common Shares. (a) At the
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Effective Time, Newco or the Surviving Corporation, as the case may be, will
deposit with such bank or trust company designated by Newco and reasonably
acceptable to the Company (the "Paying Agent"), for the benefit of the holders
of Company Common Shares and holders of Options, cash equal to the total
aggregate Consideration referred to in Section 3.1 (being hereinafter referred
to as the "Payment Fund"). The Paying Agent will, pursuant to irrevocable
instructions, deliver the Consideration contemplated by Section 3.1 out of the
Payment Fund, and, except as provided in this Section 3.3, the Payment Fund will
not be used for any other purpose.
(b) Promptly after the Effective Time, the Paying Agent will mail to each
holder of record (other than holders of certificates for Company Common Shares
referred to in Section 3.1) of a certificate or certificates which immediately
prior to the Effective Time represented outstanding Company Common Shares (the
"Certificates") (i) a form of letter of transmittal (which will specify that
delivery will be effected, and risk of loss and title to the Certificates will
pass, only upon proper delivery of the Certificates to the Paying Agent) and
(ii) instructions for use in effecting the surrender of the Certificates for
payment therefor. Upon surrender of Certificates for cancellation to the Paying
Agent, together with such letter of transmittal duly executed and any other
required documents, the holder of such Certificates will be entitled to receive
for each of the Company Common Shares represented by such Certificates the
Consideration, and the Certificates so surrendered will promptly be cancelled.
Until so surrendered, Certificates will represent solely the right to receive
the Consideration. No dividends or other distributions that are payable, if
any, after the Effective Time to holders of record of Certificates will be paid
to persons entitled by reason of the Merger to receive the Consideration until
such persons surrender their Certificates. Upon such surrender, there will be
paid to the registered holders of Certificates surrendered such dividends or
other distributions, if any, on the appropriate payment date. In no event will
the persons entitled to receive such dividends or other distributions be
entitled to receive interest on such dividends or other distributions. If any
Consideration is to be paid to a person whose name is a name other than that in
which the Certificate surrendered in exchange therefor is registered, it will be
a condition of such exchange that the Certificate so surrendered be properly
endorsed and otherwise in proper form for transfer and that the person
requesting such exchange pay to the Paying Agent any transfer or other taxes
required by reason of the payment of such Consideration in a name
other than that of the registered holder of the Certificate surrendered, or
establish to the satisfaction of the Paying Agent that such tax has been paid or
is not applicable. In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed, the Paying Agent will issue in
exchange for such lost, stolen or destroyed Certificate the Consideration
deliverable in respect thereof as determined in accordance with this Agreement,
provided that the person to whom the Consideration is paid shall, as a condition
precedent to the payment thereof, give the Surviving Corporation a bond in such
sum as it may direct or otherwise indemnify the Surviving
6
Corporation in a manner satisfactory to it against any claim that may be made
against the Surviving Corporation with respect to the Certificate claimed to
have been lost, stolen or destroyed.
(c) Any portion of the Payment Fund or the cash made available to the Paying
Agent pursuant to Section 3.3(a) which remains unclaimed by the former
stockholders of the Company for 180 days after the Effective Time will be
delivered to the Surviving Corporation and any former stockholders of the
Company will thereafter look only to the Surviving Corporation for payment of
their claim for the Consideration for the Company Common Shares.
(d) Neither Newco, the Surviving Corporation nor the Paying Agent shall be
liable to any holder of Company Common Shares for such shares (or dividends or
distributions with respect thereto) or cash from the Payment Fund (or from the
Surviving Corporation after the Payment Fund has terminated) delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law. At such time as any amounts remaining unclaimed by holders of any
such shares would otherwise escheat to or become property of any Governmental
Entity (as defined below), such amounts shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation free and clear
of any claims or interest of any such holders or their successors, assigns or
personal representatives previously entitled thereto.
(e) The Paying Agent shall invest any cash included in the Payment Fund, as
directed by the Surviving Corporation, on a daily basis. Any interest and other
income resulting from such investments shall be paid to the Surviving
Corporation.
3.4 Stock Transfer Books. At the Effective Time, the stock transfer books
--------------------
of the Company will be closed and there shall be no further registration of
transfers of shares of Company Common Stock thereafter or on the records of the
Company.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Newco as follows:
4.1 Existence; Good Standing; Corporate Authority. The Company is a
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corporation duly incorporated, validly existing and in good standing under the
laws of Delaware. The Company has all requisite corporate power and authority to
own, operate and lease its properties and carry on its business as now
conducted. As used in this Agreement, the word "Subsidiary" when used with
respect to any party means any corporation or other organization, whether
incorporated or unincorporated, of which such party directly or indirectly owns
or controls at least a majority of the securities or other interests having by
their terms ordinary voting power to elect a majority of the board of directors
or others performing similar functions.
4.2 Authorization, Validity and Effect of Agreement. The Company has the
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requisite corporate power and authority to execute and deliver this Agreement
and all agreements and documents contemplated hereby to be executed and
delivered by it, and, subject to receipt of necessary stockholder approval, to
consummate the transactions contemplated hereby and thereby. Subject only to
the approval of this Agreement, the Merger and the transactions
7
contemplated hereby by the holders of a majority of the outstanding Company
Common Shares, this Agreement, the Merger and the consummation by the Company of
the transactions contemplated hereby have been duly authorized by all requisite
corporate action. This Agreement has been duly and validly executed by the
Company and constitutes, and all agreements and documents contemplated hereby to
be executed and delivered by the Company (when executed and delivered pursuant
hereto) will constitute, the valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to creditors' rights generally and (ii) the
availability of injunctive relief and other equitable remedies.
4.3 Capitalization. The authorized capital stock of the Company consists
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of 15,000,000 Company Common Shares and 1,000,000 shares of preferred stock, par
value $0.01 per share (the "Company Preferred Shares"). As of July 1, 1997, (a)
4,536,839 Company Common Shares were issued and outstanding and 467,736 shares
were held in the Company's treasury, (b) no Company Preferred Shares were
outstanding or held in the Company's treasury, (c) no Company Common Shares or
Company Preferred Shares were held by Subsidiaries of the Company, (d) 1,500,000
Company Common Shares were reserved for future issuance pursuant to outstanding
stock options granted under the Company's Amended and Restated 1992 Stock Option
Plan (the "Company Stock Plan") and 1,017,095 shares were reserved for future
grants under such plans, and (e) Schedule 3.1(f) is a true and complete list of
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persons who have received options granted pursuant to Company Stock Plan, the
amounts of such grants and the grant prices thereof. Except as set forth in
this Section 4.3, there are no outstanding options, warrants, calls,
subscriptions, bonds, debentures, notes or other obligations the holders of
which have the right to vote or which are convertible into or exercisable for
securities having the right to vote with the stockholders of the Company on any
matter. Since such date, (i) no additional shares of capital stock of the
Company have been issued, except pursuant to the Company Stock Plan or pursuant
to the exercise of options thereunder and (ii) no options, warrants or other
rights to subscribe for, securities or rights convertible into or exchangeable
for, or contracts, commitments or arrangements by which the Company is or may be
required to issue or sell additional shares of the Company's capital stock
(collectively, "Company Equity Rights") have been granted.
4.4 Subsidiaries. Schedule 4.4 sets forth a complete and accurate list of
------------ ------------
the Subsidiaries of the Company and indicates for each such Subsidiary the
jurisdiction of incorporation or organization. The Company owns, directly or
indirectly, each of the outstanding shares of capital stock (or other ownership
interests having by their terms ordinary voting power to elect a majority of
directors or others performing similar functions with respect to such
Subsidiary) of each of the Company's Subsidiaries (except for directors'
qualifying shares).
4.5 No Conflict; Required Filings and Consents. (a) The execution and
------------------------------------------
delivery of this Agreement by the Company do not, and the consummation by the
Company of the transactions contemplated hereby will not, (i) conflict with or
violate the certificate of incorporation or by-laws or equivalent organizational
documents of the Company or any of its Subsidiaries, or (ii) subject to making
the filings and obtaining the approvals identified in Section 4.5(b), conflict
with or violate any law, rule, regulation, order, judgment or decree (whether
8
United States or foreign) applicable to the Company or any of its Subsidiaries
or by which any property or asset of the Company or any of its Subsidiaries is
bound or affected, except, in the case of clause (ii), for any such conflicts or
violations which would not prevent or delay consummation of any of the
transactions contemplated hereby in any material respect, or otherwise prevent
the Company from performing its obligations under this Agreement in any material
respect, and would not, individually or in the aggregate, have a material
adverse effect on the business, assets, results of operations or financial
condition of the Company and its Subsidiaries taken as a whole (a "Company
Material Adverse Effect").
(b) The execution and delivery of this Agreement by the Company do not, and
the performance of this Agreement and the consummation by the Company of the
transactions contemplated hereby will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, domestic or foreign (each a "Governmental Entity") by
either the Company or any of its Subsidiaries, except (i) for (A) applicable
requirements, if any, of the Exchange Act, the Securities Act of 1933, as
amended (the "Securities Act"), and state securities or "blue sky" laws ("Blue
Sky Laws"), (B) the filing of the Certificate of Merger pursuant to the DGCL,
(C) filings and consents as may be required under any environmental, health or
safety law or regulation pertaining to any notification, disclosure or required
approval, triggered by the Merger or the other transactions contemplated by this
Agreement, and (D) applicable requirements, if any, of the Internal Revenue Code
of 1986, as amended (the "Code"), and state, local and foreign tax laws, and
(ii) where failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent the Company
from performing its obligations under this Agreement in any material respect,
and would not, individually or in the aggregate, have a Company Material Adverse
Effect.
(c) The affirmative vote of the holders of a majority of the outstanding
Company Common Shares is the only vote of the holders of any class or series of
capital stock of the Company necessary to approve this Agreement and the
transactions contemplated hereby on behalf of the Company.
4.6 No Brokers. The Company has not entered into any contract,
----------
arrangement or understanding with any person or firm which may result in the
obligation of the Company or Newco to pay any finder's fees, brokerage or
agent's commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby, except that the Company has retained WP as its financial advisors, the
arrangements with which have been disclosed in writing to Newco prior to the
date hereof. Other than the foregoing arrangements, none of the executive
officers of the Company is aware of any claim for payment of any finder's fees,
brokerage or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby.
4.7 State Takeover Statutes. The provisions of Section 203 of the DGCL
-----------------------
are inapplicable to the Merger, this Agreement and the transactions contemplated
hereby.
4.8 Opinion of Financial Advisor. The Company has received the opinion of
----------------------------
WP to the effect that, as of the date hereof, the consideration to be received
by the holders of Company
9
Common Shares in the Merger is fair to such holders (other than Newco and the
Buyout Group) from a financial point of view and a complete and correct signed
copy of such opinion has been, or promptly upon receipt thereof will be,
delivered to Newco.
5. REPRESENTATIONS AND WARRANTIES OF NEWCO
Newco represents and warrants to the Company as of the date of this
Agreement as follows:
5.1 Existence; Good Standing; Corporate Authority. Newco is a corporation
---------------------------------------------
duly incorporated, validly existing and in good standing under the laws of
Delaware. The copies of the certificate of incorporation and by-laws of Newco
previously made available to the Company are true and correct.
5.2 Authorization, Validity and Effect of Agreement. Newco has the
-----------------------------------------------
requisite corporate power and authority to execute and deliver this Agreement
and all agreements and documents contemplated hereby to be executed and
delivered by it and to consummate the transactions contemplated hereby and
thereby. This Agreement, the Merger and the consummation by Newco of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Newco and by the stockholders of Newco, and no other
corporate action on the part of Newco is necessary to authorize this Agreement
or the Merger or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed by Newco and constitutes, and all
agreements and documents contemplated hereby to be executed and delivered by
Newco (when executed and delivered pursuant hereto) will constitute, the valid
and binding obligations of Newco enforceable against it in accordance with their
respective terms, subject to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to creditors' rights
generally and (ii) the availability of injunctive relief and other equitable
remedies.
5.3 Subsidiaries. Newco does not own any Subsidiaries.
------------
5.4 No Conflict; Required Filings and Consents. (a) The execution and
------------------------------------------
delivery of this Agreement by Newco do not, and the consummation by Newco of the
transactions contemplated hereby will not, (i) conflict with or violate the
certificate of incorporation or by-laws of Newco, (ii) conflict with or violate
any law, rule, regulation, order, judgment or decree (whether United States or
foreign) applicable to Newco or by which any property or asset of Newco is bound
or affected, or (iii) result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
result in the loss of a material benefit under, or give to others any right of
termination, amendment, acceleration, increased payments or cancellation of, or
result in the creation of a lien or other encumbrance on any property or asset
of Newco pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Newco is a party or by which Newco or any property or asset of Newco is bound or
affected, except in the case of clauses (ii) and (iii), for any such conflicts,
violations, breaches, defaults or other occurrences which would not prevent or
delay consummation of any of the transactions contemplated hereby in any
material respect, or otherwise prevent Newco from performing its obligations
under this Agreement in any material respect, and would not, individually or in
the
10
aggregate, have a material adverse effect on the business, assets, results of
operations or financial condition of Newco (a "Newco Material Adverse Effect").
(b) The execution and delivery of this Agreement by Newco do not, and the
performance of this Agreement and the consummation of the transactions
contemplated hereby by it will not, require any consent, approval, authorization
or permit of, or filing with or notification to, any Governmental Entity, except
(i) for (A) applicable requirements, if any, of the Exchange Act, the Securities
Act and Blue Sky Laws, and required approvals and consents of other Governmental
Entities (whether domestic or foreign) and the rules and regulations thereunder,
(B) the filing of a certificate of merger pursuant to the DGCL, (C) such filings
and consents as may be required under any environmental, health or safety law or
regulation pertaining to any notification, disclosure or required approval
triggered by the Merger or the transactions contemplated by this Agreement, and
(D) applicable requirements, if any, of the Code and state, local and foreign
tax laws, and (ii) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or delay consummation of any of the transactions contemplated hereby in
any material respect, or otherwise prevent Newco from performing its obligations
under this Agreement in any material respect, and would not, individually or in
the aggregate, have a Newco Material Adverse Effect.
5.5 No Brokers. Newco has not entered into any contract, arrangement or
----------
understanding with any person or firm which may result in the obligation of the
Company or Newco to pay any finder's fees, brokerage or agent's commissions or
other like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby, except
that Newco has retained Wheat, First Securities, Inc. as its financial advisers.
Other than the foregoing arrangements, none of the executive officers of the
Company is aware of any claim for payment of any finder's fees, brokerage or
agent's commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby.
5.6 Newco. Newco was formed solely for the purpose of engaging in the
-----
transactions contemplated hereby. Except for obligations or liabilities
incurred in connection with its incorporation or organization and the
transactions contemplated hereby, Newco has not incurred any obligations or
liabilities or engaged in any business or activities of any type or kind
whatsoever or entered into any agreements or arrangements with any person or
entity.
6. COVENANTS
6.1 Alternative Proposals. Upon execution of this Agreement, the Company
---------------------
will immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore. Prior to the
Effective Time, the Company agrees (a) that neither it nor any of its
Subsidiaries will, nor will it or any of its Subsidiaries permit their
respective officers, directors, employees, agents and representatives
(including, without limitation, any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) to, initiate, solicit or encourage,
directly or indirectly, any Alternative Proposal (as defined below) or, except
as set forth below, engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions with, any person
11
relating to an Alternative Proposal, or otherwise facilitate any effort or
attempt to make or implement an Alternative Proposal. An "Alternative Proposal"
means, other than the transactions contemplated hereby, the receipt by the
Company of any inquiries or the making or implementation of any proposal or
offer (including without limitation any proposal or offer to its stockholders)
with respect to a merger, acquisition, consolidation or similar transaction
involving any purchase of all or any significant portion of the assets of the
Company or any of its Subsidiaries. Notwithstanding the foregoing, in the event
the Company receives an unsolicited written proposal or written offer with
respect to an Alternative Proposal, the Board of Directors of the Company shall
be entitled, solely to the extent it has been advised (i) by its outside counsel
that a failure to do so would violate its fiduciary obligations under applicable
law and (ii) by its financial advisor that the Alternative Proposal is
financially superior to the Merger and the transactions contemplated thereby, to
review and participate in negotiations concerning such proposal and furnish
relevant information concerning the Company to the offeror; provided that (A)
the Company shall have furnished, or concurrently with the provision of such
information to such offeror shall furnish, Newco with all such information
provided to such offeror and (B) the offeror executes a confidentiality
agreement with the Company. The Company shall notify Newco promptly of any such
unsolicited Alternative Proposal, or any inquiry or contact with any person with
respect thereto. In addition, in the event (i) the Company enters into
negotiations with respect to an unsolicited Alternative Proposal or (ii) the
Company's Board of Directors shall withdraw its approval of this Agreement and
the transactions contemplated hereby or its recommendation to the stockholders
of the Company to approve the same, then the Company shall immediately deliver
an additional notice of such events to Newco. Nothing in this Section 6.1 will
(x) permit the Company to terminate this Agreement, (y) permit the Company to
enter into any agreement with respect to an Alternative Proposal for as long as
this Agreement remains in effect (it being agreed that for as long as this
Agreement remains in effect, the Company will not enter into any agreement with
any person that provides for, or in any way facilitates, an Alternative Proposal
except as otherwise permitted herein), or (z) affect any other obligation of the
Company under this Agreement.
6.2 Conduct of Business by the Company. Prior to the Effective Time,
----------------------------------
except as contemplated by any other provision of this Agreement, unless Newco
has previously consented in writing thereto, the Company:
(a) will, and will cause each of its Subsidiaries to, conduct its operations
in the ordinary and normal course, consistent with past practice;
(b) will use its reasonable best efforts, and will cause each of its
Subsidiaries to use its reasonable best efforts, to preserve intact their
business organizations and goodwill, keep available the services of their
respective officers and employees and maintain satisfactory relationships with
those persons having business relationships with them;
(c) will not amend its certificate of incorporation or by-laws or comparable
governing instruments;
(d) will, upon the occurrence of any event or change in circumstances as a
result of which any representation or warranty of the Company contained in
Article 4 would be untrue or incorrect if such representation or warranty were
made immediately following the occurrence
12
of such event or change in circumstance, promptly (and in any event within two
business days of an executive officer of the Company obtaining knowledge
thereof) notify Newco thereof;
(e) will promptly deliver to Newco true and correct copies of any report,
statement or schedule filed with the SEC subsequent to the date of this
Agreement;
(f) will not (i) except pursuant to the exercise of Company Equity Rights
and other contractual rights existing on the date hereof and disclosed pursuant
to this Agreement, issue any shares of its capital stock, effect any stock split
or otherwise change its capitalization as it existed on the date hereof, (ii)
grant, confer or award any option, warrant, conversion right or other Company
Equity Rights not existing on the date hereof to acquire any shares of its
capital stock, (iii) grant, confer or award any bonuses or other forms of
incentive compensation to any officer, director or employee, except for cash
bonuses or incentives consistent with past practice or under any existing
agreement, (iv) increase any compensation under any employment agreement with
any of its present or future officers, directors or employees, except for normal
increases for officers and employees consistent with past practice or the terms
of such employment agreement, (v) grant any severance or termination pay to, or
enter into any employment, severance or termination agreement with any officer,
director or employee or amend any such agreement in any material respect, except
for severance arrangements consistent with past practice with respect to
officers and employees terminated by the Company, or (vi) adopt any new employee
benefit plan or program (including any stock option, stock benefit or stock
purchase plan) or amend any existing employee benefit plan or program in any
material respect;
(g) will not (i) declare, set aside or pay any dividend or make any other
distribution or payment with respect to any shares of its capital stock or other
ownership interests or (ii) directly or indirectly redeem, purchase or otherwise
acquire any shares of its capital stock or capital stock of any of its
Subsidiaries, or make any commitment for any such action;
(h) will not, and will not permit any of its Subsidiaries to, sell, lease or
otherwise dispose of any of its assets (including capital stock of Subsidiaries)
or to acquire any business or assets, except for (i) any purchase of inventory
undertaken in the ordinary course of business, (ii) a sale of a portion or all
of the approximately 16 acres of undeveloped land located in Bridgeport, New
Jersey, or (iii) in the ordinary course of business and for an amount not
exceeding $1,000,000 in the aggregate;
(i) will not incur any material amount of indebtedness for borrowed money or
make any loans, advances or capital contributions to, or investments (other than
non-controlling investments in the ordinary course of business) in, any other
person other than a wholly owned Subsidiary of the Company, or issue or sell any
debt securities, other than borrowings under existing lines of credit in the
ordinary course of business other than the senior credit facility being
negotiated with ▇▇▇▇▇▇ Business Credit, a division of ▇▇▇▇▇▇ Financial, Inc.
("▇▇▇▇▇▇"), in the aggregate principal amount of up to $35,000,000;
(j) will not, except pursuant to and in accordance with the capital budget
previously disclosed in writing to Newco, authorize, commit to or make capital
expenditures;
13
(k) will not mortgage or otherwise encumber or subject to any lien any
properties or assets except for such of the foregoing as are in the ordinary
course of business and would not be reasonably likely to have, individually or
in the aggregate, a Company Material Adverse Effect;
(l) will not enter into or agree to enter into any contract without the
prior written consent of Newco unless such contract is entered into by the
Company for (i) the sale of the Company's accounts receivable to Household Bank
(Nevada), N.A. ("Household"), (ii) any purchase of inventory undertaken in the
ordinary course of business, (iii) the sale of accounts receivable that are more
than 180 days past due; or (iv) any other contract in the ordinary course of
business and the total payments by the Company contemplated thereby do not
exceed $1,000,000 and have a term of no longer than one year;
(m) will maintain insurance consistent with past practices for its
businesses and properties;
(n) will not make any change in its accounting (including tax accounting)
methods, principles or practices, except as may be required by generally
accepted accounting principles and except, in the case of tax accounting
methods, principles or practices, in the ordinary course of business of the
Company or any of its Subsidiaries; and
(o) will not take or agree in writing or otherwise to take any action which
would make any of the representations or warranties of the Company contained in
this Agreement untrue or incorrect or prevent the Company from performing or
cause the Company not to perform its covenants hereunder.
6.3 Conduct of Business by Newco. Prior to the Effective Time, except as
----------------------------
contemplated by any other provision of this Agreement, unless the Company has
previously consented in writing thereto, Newco:
(a) will not amend its certificate of incorporation or by-laws (other than
by-law amendments which are not material to Newco or to the consummation of the
transactions contemplated by this Agreement);
(b) will, upon the occurrence of any event or change in circumstances as a
result of which any representation or warranty of any of Newco contained in
Article 5 would be untrue or incorrect if such representation or warranty were
made immediately following the occurrence of such event or change in
circumstance, promptly (and in any event within two business days of an
executive officer of Newco obtaining knowledge thereof) notify the Company
thereof; and
(c) will not take or agree in writing or otherwise to take any action which
would make any of the representations or warranties of Newco contained in this
Agreement untrue or incorrect or prevent Newco from performing or cause Newco
not to perform its covenants hereunder.
6.4 Meeting of Stockholders. The Company will take all action necessary
-----------------------
in accordance with applicable law and its certificate of incorporation and by-
laws to convene a
14
meeting of its stockholders (the "Stockholders' Meeting") as promptly as
practicable after the date hereof to consider and vote upon the adoption of this
Agreement and the approval of the Merger, the other transactions contemplated
hereby and such other related matters as it deems appropriate. The Board of
Directors of the Company will recommend such adoption and approval and the
Company and the Board will each take all lawful action to solicit such approval,
including, without limitation, timely mailing the Proxy Statement; provided,
--------
however, that the Board of Directors of the Company may withdraw, modify or
-------
change such recommendation if the Company receives an Alternative Proposal and
the Board believes based upon consultation with its outside counsel and its
financial advisor that a failure to do so would violate its fiduciary duties to
the stockholders of the Company imposed by law.
6.5 Filings, Other Action. Subject to the terms and conditions herein
---------------------
provided, the parties will: (a) use all reasonable efforts to cooperate with
one another in (i) determining which filings are required to be made prior to
the Effective Time with, and which consents, approvals, permits or
authorizations are required to be obtained prior to the Effective Time from,
governmental or regulatory authorities of the United States, the several states
and foreign jurisdictions in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and (ii)
timely making all such filings and timely seeking all such consents, approvals,
permits or authorizations, including the Proxy Statement and information
required by Schedule 13E-3; and (b) use all reasonable efforts to take, or cause
to be taken, all other action and do, or cause to be done, all other things
necessary, proper or appropriate to consummate and make effective the
transactions contemplated by this Agreement. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purpose of this Agreement, the proper officers and directors of the parties will
take all such necessary action.
6.6 Access to Information; Confidentiality. From the date hereof to the
--------------------------------------
Effective Time, the Company will (a) allow all designated officers, attorneys,
accountants and other representatives of Newco reasonable access at all
reasonable times upon reasonable notice to the offices, records and files,
correspondence, audits and properties, as well as to all information relating to
commitments, contracts, titles and financial position, or otherwise pertaining
to the business and affairs, of the Company and its Subsidiaries, as the case
may be, (b) furnish to Newco, Newco's counsel, financial advisors, auditors and
other authorized representatives such financial and operating data and other
information as such persons may reasonably request, (c) instruct the employees,
counsel and financial advisors of the Company to cooperate with the other in the
other's investigation of the business of it and its Subsidiaries and (d) keep
Newco fully apprised and informed of all significant developments with respect
to the assets, business activities, financial condition, earnings and prospects
of the Company and its Subsidiaries. Newco will be permitted to make extracts
from or to make copies of such books and records as may be reasonably necessary.
Newco shall keep such information confidential, subject to the requirements of
any governmental or other authorities, except with respect to information that
is ascertainable from public or published information or trade sources.
6.7 Publicity. The initial press release relating to the execution of
---------
this Agreement will be a joint press release and thereafter the Company and
Newco will, subject to their respective legal obligations (including
requirements of stock exchanges and other similar regulatory bodies), consult
with each other, and use reasonable efforts to agree upon the text of any press
release,
15
before issuing any such press release or otherwise making public statements with
respect to the transactions contemplated hereby and in making any filings with
any Governmental Entity or with any national securities exchange with respect
thereto.
6.8 Further Action. Each party hereto will, subject to the fulfillment at
--------------
or before the Effective Time of each of the conditions of performance set forth
herein or the waiver thereof, perform such further acts and execute such
documents as may be reasonably required to effect the Merger.
6.9 Expenses. Except as provided in Article 8, whether or not the Merger
--------
is consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby will be paid by the party
incurring such expenses except as expressly provided herein and except that the
expenses incurred in connection with printing and mailing the Proxy Statement,
will be shared equally by the Company and Newco.
6.10 Insurance; Indemnity. (a) From and after the Effective Time, the
--------------------
Surviving Corporation will indemnify, defend and hold harmless, to the fullest
extent that the Company would be required under its certificate of
incorporation, by-laws, indemnification agreements with its officers and
directors (the "Indemnification Agreements") and applicable law, each person who
is now or was during the past six months prior to the date hereof an officer or
director of the Company (individually, an "Indemnified Party" and collectively,
the "Indemnified Parties"), against all losses, claims, damages, liabilities,
costs or expenses (including attorneys' fees), judgments, fines, penalties and
amounts paid in settlement in connection with any claim, action, suit,
proceeding or investigation arising out of or pertaining to acts or omissions,
or alleged acts or omissions, by them in their capacities as such occurring at
or prior to the Effective Time. In the event of any such claim, action, suit,
proceeding or investigation (an "Action"), any Indemnified Party wishing to
claim indemnification will promptly notify the Surviving Corporation thereof
(provided that failure to so notify the Surviving Corporation will not affect
the obligations of the Surviving Corporation to provide indemnification except
to the extent that the Surviving Corporation shall have been prejudiced as a
result of such failure). With respect to any Action for which indemnification is
requested, the Surviving Corporation will be entitled to participate therein at
its own expense and, except as otherwise provided below, to the extent that it
may wish, the Surviving Corporation may assume the defense thereof, with counsel
reasonably satisfactory to the Indemnified Party. After notice from the
Surviving Corporation to the Indemnified Party of its election to assume the
defense of an Action, the Surviving Corporation will not be liable to the
Indemnified Party for any legal or other expenses subsequently incurred by the
Indemnified Party in connection with the defense thereof, other than as provided
below. The Surviving Corporation will not settle any Actions without the consent
of the Indemnified Party where such settlement includes an admission of civil or
criminal liability on behalf of an officer or director or requires any payment
to be made by the Indemnified Party. The Indemnified Party will have the right
to employ counsel in any Action, but the fees and expenses of such counsel
incurred after notice from the Surviving Corporation of its assumption of the
defense thereof will be at the expense of the Indemnified Party, unless (i) the
employment of counsel by the Indemnified Party has been authorized by the
Surviving Corporation in writing, (ii) the Indemnified Party will have
reasonably concluded upon the advice of counsel that there may be a conflict of
interest between the Indemnified Party and the Surviving Corporation in the
conduct of the defense of an Action, or (iii) the Surviving
16
Corporation shall not in fact have employed counsel to assume the defense of an
Action, in each of which cases the reasonable fees and expenses of counsel
selected by the Indemnified Party will be at the expense of the Surviving
Corporation. Notwithstanding the foregoing, the Surviving Corporation will not
be liable for any settlement effected without its written consent and the
Surviving Corporation will not be obligated pursuant to this Section 6.10(a) to
pay the fees and disbursements of more than one counsel (including local
counsel) for all Indemnified Parties in any single Action, except to the extent
two or more of such Indemnified Parties have conflicting interests in the
outcome of such action. In the event of any conflict between the provisions of
the Indemnification Agreements and this Section 6.10, the provisions of the
Indemnification Agreements shall prevail.
(b) For a period of four years after the Effective Time, the Surviving
Corporation will maintain officers' and directors' liability insurance covering
the Indemnified Parties who are currently covered, in their capacities as
officers and directors, by the Company's existing officers' and directors'
liability insurance policies on terms substantially no less advantageous to the
Indemnified Parties than such existing insurance; provided, however, that the
-------- -------
Surviving Corporation will not be required in order to maintain or procure such
coverage to pay premiums on an annualized basis in excess of 200% of the current
annual premium paid by the Company for its existing coverage (the "Cap") (which
current annual premium the Company represents and warrants to be approximately
$135,000); and provided, further, that if equivalent coverage cannot be
obtained, or can be obtained only by paying an annual premium in excess of the
Cap, the Surviving Corporation will only be required to obtain as much coverage
as can be obtained by paying premiums on an annualized basis equal to the Cap.
(c) The provisions of this Section 6.10 will survive the consummation of the
Merger and expressly are intended to benefit each of the Indemnified Parties.
6.11 Employee Benefits. Notwithstanding anything to the contrary contained
-----------------
herein, from and after the Effective Time, the Surviving Corporation will have
sole discretion over the hiring, promotion, retention and firing of employees of
the Surviving Corporation. Notwithstanding the immediately preceding sentence,
the Surviving Corporation will (i) satisfy all obligations of the Company or any
of its Subsidiaries under any existing severance agreement between the Company
or any of its Subsidiaries and any of their officers or employees and (ii) until
the expiration of one year after the Effective Time, satisfy all obligations of
the Company or any of its Subsidiaries under their current respective severance
policies. The Surviving Corporation will provide for the benefit of employees of
the Surviving Corporation who were employees of the Company immediately prior to
the Effective Time "employee benefit plans" within the meaning of Section 3(3)
of ERISA (a) until the expiration of one year after the Effective Time, that
are, in the aggregate, substantially comparable to the "employee benefit plans"
provided to such individuals by the Company or any Subsidiary on the date
hereof, and (b) thereafter that are, at the election of the Surviving
Corporation, either (i) in the aggregate, substantially comparable to the
"employee benefit plans" provided to such individuals by the Company or any
Subsidiary on the date hereof or (ii) in the aggregate, substantially comparable
to the "employee benefit plans" provided to similarly situated employees of the
Surviving Corporation or its Subsidiaries who were not employees of the Company
or any Subsidiary immediately prior to the Effective Time; provided, however,
-------- -------
that notwithstanding the foregoing (A) nothing herein will be deemed to require
the Surviving Corporation to modify the benefit
17
formulas under any pension, profit sharing or savings plan of the Company or any
Subsidiary in a manner that increases the aggregate expenses thereof as of the
date hereof in order to comply with the requirements of ERISA or the Code, (B)
employee stock ownership, stock bonus, stock option and similar equity-based
plans, programs and arrangements of the Company or any of its Subsidiaries are
not encompassed within the meaning of the term "employee benefit plans"
hereunder, and (C) nothing herein will obligate the Surviving Corporation to
continue any particular "employee benefit plan" for any period after the
Effective Time.
6.12 Conveyance Taxes. The Company and Newco will cooperate in the
----------------
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees and any similar taxes which become payable in
connection with the transactions contemplated by this Agreement that are
required or permitted to be filed on or before the Effective Time and each party
will pay any such tax or fee which becomes payable by it on or before the
Effective Time.
7. CONDITIONS
7.1 Conditions to Each Party's Obligation To Effect the Merger. The
----------------------------------------------------------
respective obligations of each party to effect the Merger will be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) This Agreement and the transactions contemplated hereby shall have been
approved in the manner required by applicable law by the holders of the issued
and outstanding shares of capital stock of the Company.
(b) Neither of the parties hereto shall be subject to any order or
injunction of a court of competent jurisdiction which prohibits the consummation
of the transactions contemplated by this Agreement. In the event any such order
or injunction shall have been issued, each party agrees to use its reasonable
best efforts to have any such injunction lifted.
(c) The Company shall have (i) consummated the sale of its accounts
receivable to Household and (ii) executed definitive documentation in connection
with the senior credit facility with ▇▇▇▇▇▇ and shall have sufficient
availability thereunder to consummate the Merger.
(d) All consents, authorizations, orders and approvals of (or filings or
registrations with) any Governmental Entity required in connection with the
execution, delivery and performance of this Agreement shall have been obtained
or made, except for filings in connection with the Merger and any other
documents required to be filed after the Effective Time and except where the
failure to have obtained or made any such consent, authorization, order,
approval, filing or registration would not have a material adverse effect on the
business, financial condition or results of operations of the Surviving
Corporation following the Effective Time.
18
7.2 Conditions to Obligation of Company To Effect the Merger. The
--------------------------------------------------------
obligation of the Company to effect the Merger will be subject to the
fulfillment at or prior to the Closing Date of the following additional
conditions:
(a) (i) The representations and warranties of Newco contained in this
Agreement shall have been true and correct in all material respects as of the
date hereof and (ii) the representations and warranties of Newco contained in
this Agreement and in any document delivered in connection herewith shall be
true and correct in all material respects as of the Closing Date, except (A) for
changes specifically permitted by this Agreement and (B) that those
representations and warranties which address matters only as of a particular
date shall remain true and correct in all material respects as of such date.
(b) Newco shall have performed or complied in all material respects with all
agreements and conditions contained in this Agreement required to be performed
or complied with by it on or prior to the Closing Date.
(c) Newco shall have delivered to the Company a certificate, dated the date
of the Closing, signed by the President or any Vice President of Newco,
certifying as to the fulfillment of the conditions specified in Section 7.2(a)
and (b).
(d) Newco shall have obtained all material consents, waivers, approvals,
authorizations or orders and made all filings required in connection with the
authorization, execution and delivery of this Agreement by Newco and the
consummation by each of the transactions contemplated hereby.
7.3 Conditions to Obligation of Newco To Effect the Merger. The
------------------------------------------------------
obligation of Newco to effect the Merger will be subject to the fulfillment at
or prior to the Closing Date (or such other date as may be specified below) of
the following additional conditions:
(a) (i) The representations and warranties of the Company contained in this
Agreement shall have been true and correct in all material respects as of the
date hereof and (ii) the representations and warranties of the Company contained
in this Agreement and in any document delivered in connection herewith shall be
true and correct in all material respects as of the Closing Date, except (A) for
changes specifically permitted by this Agreement and (B) that those
representations and warranties which address matters only as of a particular
date shall remain true and correct in all material respects as of such date.
(b) The Company shall have performed or complied in all material respects
with all agreements and conditions contained in this Agreement required to be
performed or complied with by it on or prior to the Closing Date, unless such
failure to perform or comply is due to any act by, or omission of, any member of
the Buyout Group.
(c) The Company shall have delivered to Newco a certificate, dated the date
of the Closing, signed by the President or any Vice President of the Company,
certifying as to the fulfillment of the conditions specified in Section 7.3(a)
and (b).
19
(d) From the date of this Agreement through the Effective Time, there shall
not have occurred any material adverse change in the business, properties,
financial condition or results of operation of the Company or any of its
Subsidiaries.
(e) The Company shall have obtained all material consents, waivers,
approvals, authorizations or orders and made all filings required in connection
with the authorization, execution and delivery of this Agreement by the Company
and the consummation by it of the transactions contemplated hereby.
(f) The Company or the Board of Directors of the Company shall have taken
any action needed to be taken to provide that options issued pursuant to the
Company Stock Plan will be treated as provided in Section 3.1(f) hereof.
8. TERMINATION
8.1 Termination. Notwithstanding the provisions of Article 7, this
-----------
Agreement may be terminated and the Merger may be abandoned at any time prior to
the Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of the Company or Newco:
(a) by mutual written consent of the Company and Newco, or by mutual action
of their respective Boards of Directors;
(b) by either the Company or Newco if (i) any Governmental Entity shall have
issued any injunction or taken any other action permanently restraining,
enjoining or otherwise prohibiting the consummation of the Merger or such
injunction or other action shall have become final and nonappealable, or (ii)
any required approval of the stockholders of the Company shall not have been
obtained by reason of the failure to obtain the required vote upon a vote held
at a duly held meeting of stockholders or at any adjournment thereof;
(c) by either the Company or Newco, so long as such party has not breached
its obligations hereunder, if the Merger shall not have been consummated on or
before December 31, 1997; provided, that the right to terminate this Agreement
under this Section 8.1(c) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of or resulted in
the failure of the Merger to occur on or before such date;
(d) by the Company if there has been a material breach of this Agreement on
the part of Newco with respect to any of its covenants, representations or
warranties contained herein and such breach has not been cured within 10
business days after written notice thereof from the Company;
(e) by Newco if there has been a material breach of this Agreement on the
part of the Company with respect to any of its covenants, representations or
warranties contained herein and such breach has not been cured within 10
business days after written notice thereof from Newco;
20
(f) by the Company as required to discharge the fiduciary obligations of its
Board of Directors under applicable law as advised in writing by counsel and/or
its financial advisor;
(g) by Newco if the Board of Directors of the Company (i) shall have
withdrawn or modified, in any manner which is adverse to Newco, its
recommendation or approval of the Merger or this Agreement or shall have
resolved to do so or (ii) shall have recommended to the stockholders of the
Company any Alternative Proposal or any transaction described in the definition
of Alternative Proposal, or shall have resolved to do so.
8.2 Effect of Termination. (a) In the event of termination of this
---------------------
Agreement by either the Company or Newco as provided in Section 8.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Newco or the Company or their respective affiliates,
officers, directors or stockholders except (i) with respect to this Section 8.2,
Section 8.3, 8.4 and Section 6.9 and except for the provisions of Sections 9.3,
9.4, 9.6, 9.8, 9.9, 9.12, and 9.13 and (ii) to the extent that such termination
results from the willful breach by a party hereto of any of its representations
or warranties, or of any of its covenants or agreements, in each case, as set
forth in this Agreement.
(b) If this Agreement is terminated pursuant to Sections 8.1(e) (due to any
act by, or omission of, any member of the special committee), (f) or (g), and
such termination was not due to any act by, or omission of, any member of the
Buyout Group (not including the act of termination), then the Company shall pay
(or reimburse) all fees, costs and expenses (including fees and expenses of
accountants, attorneys and other advisors to Newco) incurred by or on behalf of
Newco in connection with the Merger, this Agreement and the transactions
contemplated thereby and hereby.
(c) The parties agree that the agreements contained in this Section 8.2 are
an integral part of the transactions contemplated by this Agreement and
constitute liquidated damages and not a penalty. If one party fails to promptly
pay to the other any fee due under Section 8.2(b), in addition to any amounts
paid or payable pursuant to such section, the defaulting party shall pay the
costs and expenses (including legal fees and expenses) in connection with any
action, including the filing of any lawsuit or other legal action, taken to
collect payment, together with interest on the amount of any unpaid fee at the
publicly announced prime rate of Citibank, N.A. from the date such fee was
required to be paid.
8.3 Extension; Waiver. At any time prior to the Effective Time, and
-----------------
subject to applicable law, the parties hereto, by action taken or authorized by
their respective Boards of Directors, may, to the extent legally allowed: (i)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto; (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto; and
(iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed on behalf
of such party. The failure of any party hereto to assert any of its rights
hereunder shall not constitute a waiver of such rights.
8.4 Payment of Fees and Expenses. In the event that this Agreement is
----------------------------
terminated by Newco because the Company has breached any of its representations
or warranties hereunder
21
and/or failed to fulfill or perform any of its covenants or agreements
hereunder, and such breach or failure is due to any act by, or omission of, any
member of the Buyout Group, then Newco shall pay (or reimburse) all fees, costs
and expenses (including fees and expenses of accountants, attorneys and other
advisors to the Company) incurred by the Company in connection with the Merger,
this Agreement and the transactions contemplated thereby and hereby.
9. GENERAL PROVISIONS
9.1 Nonsurvival of Representations, Warranties and Agreements. All
---------------------------------------------------------
representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement will be deemed to the extent
expressly provided herein to be conditions to the Merger and will not survive
the Merger, provided, however, that the agreements contained in Article 3,
-------- -------
Section 6.9 and this Article 9 will survive the Merger and Sections 6.10, 6.11,
8.2 and 8.4 will survive termination.
9.2 Notices. Any notice required to be given hereunder will be sufficient
-------
if in writing, and sent by facsimile transmission or by courier service (with
proof of service), hand delivery or certified or registered mail (return receipt
requested and first-class postage prepaid), addressed as follows:
If to Newco: If to the Company:
SFC Merger Company ▇▇▇▇▇▇ Furniture Company
c/o Resurgence Asset Management ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
1185 Avenue of the Americas - 18th Fl. ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇ Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax No.: 212/▇▇▇-▇▇▇▇ Fax No.: 516/▇▇▇-▇▇▇▇
With copies to: With copies to:
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇ Shereff, Friedman, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq. ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax No.: 212/▇▇▇-▇▇▇▇ Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax No.: 212/▇▇▇-▇▇▇▇
or to such other address as any party will specify by written notice so given,
and such notice will be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
9.3 Assignment; Binding Effect. 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 parties. Subject to the preceding sentence, this
Agreement will be binding upon and will inure to the benefit of the parties
hereto and their respective successors and assigns. Notwithstanding anything
22
contained in this Agreement to the contrary, except for the provisions of
Section 6.10 and 6.11, nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective heirs, successors, executors, administrators and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
9.4 Entire Agreement. This Agreement, the Exhibits, the Schedules and any
----------------
documents delivered by the parties in connection herewith constitute the entire
agreement between the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings between the parties with
respect thereto. No addition to or modification of any provision of this
Agreement will be binding upon any party hereto unless made in writing and
signed by all parties hereto.
9.5 Amendment. This Agreement may be amended by the parties hereto at any
---------
time before or after approval of matters presented in connection with the Merger
by the stockholders of the Company but after any such stockholder approval, no
amendment will be made which by law requires the further approval of such
stockholders without obtaining such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
9.6 Governing Law. This Agreement will be governed by and construed in
-------------
accordance with the laws of the State of Delaware without regard to its rules of
conflict of laws.
9.7 Counterparts. This Agreement may be executed by the parties hereto in
------------
separate counterparts, each of which when so executed and delivered will be an
original, but all such counterparts will together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto.
9.8 Headings. Headings of the Articles and Sections of this Agreement are
--------
for the convenience of the parties only, and will be given no substantive or
interpretive effect whatsoever.
9.9 Interpretation. In this Agreement, unless the context otherwise
--------------
requires, words describing the singular number will include the plural and vice
versa, and words denoting any gender will include all genders and words denoting
natural persons will include corporations and partnerships and vice versa.
9.10 Waivers. Except as provided in this Agreement, no action taken
-------
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, will be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder will not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
9.11 Incorporation of Schedules. The Schedules attached hereto and
--------------------------
referred to herein are hereby incorporated herein and made a part hereof for all
purposes as if fully set forth herein.
23
9.12 Severability. Any term or provision of this Agreement which is
------------
invalid or unenforceable in any jurisdiction will, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision will be
interpreted to be only so broad as is enforceable.
9.13 Enforcement of Agreement. The parties hereto agree that irreparable
------------------------
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the parties will be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any Delaware Court, this being in addition to
any other remedy to which they are entitled at law or in equity.
24
IN WITNESS WHEREOF, the parties have executed this Agreement and caused the
same to be duly delivered on their behalf on the day and year first written
above.
▇▇▇▇▇▇ FURNITURE COMPANY, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
SFC MERGER COMPANY
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
25
Exhibit A
---------
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
▇▇▇▇▇▇ FURNITURE COMPANY, INC.
The undersigned, being the President of ▇▇▇▇▇▇ Furniture Company,
Inc., does hereby certify that this Amended and Restated Certificate of
Incorporation was duly adopted in accordance with Sections 242 and 245 of the
General Corporation Law of the State of Delaware and that the date of filing the
original certificate of incorporation with the Secretary of State of Delaware
was June 3, 1985 and further certifies as follows:
ARTICLE I
NAME
Section 1.1. Name. The name of the corporation is ▇▇▇▇▇▇ Furniture
----
Company, Inc. (the "Company").
ARTICLE II
REGISTERED OFFICE AND REGISTERED AGENT
Section 2.1. Office and Agent. The address of the Company's
----------------
registered office in the State of Delaware is Corporation Trust Center, ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
The name of the Company's registered agent at such address is The Corporation
Trust Company.
ARTICLE III
CORPORATE PURPOSE
Section 3.1. Purpose. The purpose of the Company is to engage in any
-------
lawful act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
ARTICLE IV
CAPITALIZATION
Section 4.1. Authorized Capital Stock. The Company is authorized to
------------------------
issue two classes of capital stock, designated Class A Voting Common Stock and
Class B Non-Voting Common Stock. The total number of shares of capital stock
that the Company is authorized to issue is 10,000 shares, consisting of 5,000
shares of Class A Common Stock, par value $0.01 per share, and 5,000 shares of
Class B Common Stock, par value $0.01 per share.
Section 4.2. Class A Common Stock. The holders of Class A Common
--------------------
Stock will be entitled to one vote on each matter submitted to a vote at a
meeting of stockholders for each share of Common Stock held of record by such
holder as of the record date for such meeting.
Section 4.3. Class B Common Stock. The holders of Class B Common
--------------------
Stock will not be entitled to vote at any meeting.
ARTICLE V
AMENDMENTS TO BY-LAWS
Section 5.1. Amendments to By-Laws. Except as otherwise provided by
---------------------
law or by the By-Laws or this Certificate of Incorporation, the By-Laws may be
amended in any respect or repealed at any time, either (a) by the holders of a
majority of the stock issued and outstanding and entitled to vote, or (b) at any
meeting of the Board, provided that no amendment adopted by the Board may vary
or conflict with any amendment adopted by the stockholders.
ARTICLE VI
MEETINGS OF STOCKHOLDERS
Section 6.1. Elections of Directors. Elections of directors need not
----------------------
be by written ballot except and to the extent provided in the By-Laws of the
Company.
ARTICLE VII
LIABILITY OF A DIRECTOR
Section 7.1. Director Liability. To the full extent permitted by the
------------------
Delaware General Corporation Law or any other applicable laws currently or
hereafter in effect, no Director of the Company will be personally liable to the
Company or its stockholders for or with respect to any acts or omissions in the
performance of his or her duties as a Director of the Company. Any repeal or
modification of this Article VII will not adversely affect any right or
protection of a Director of the Company existing prior to such repeal or
modification.
-2-
ARTICLE VIII
INDEMNIFICATION
Section 8.1. Indemnification. Each person who is or was or had
---------------
agreed to become a Director or officer of the Company, and each such person who
is or was serving or who had agreed to serve at the request of the Board or an
officer of the Company as an employee or agent of the Company or as a director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust, or other entity, whether for profit or not for profit (including the
heirs, executors, administrators, or estate of such person), will be indemnified
by the Company to the full extent permitted by the Delaware General Corporation
Law or any other applicable law as currently or hereafter in effect and will be
entitled to advancement of expenses in connection therewith. The right of
indemnification and of advancement of expenses provided in this Article VIII (a)
will not be exclusive of any other rights to which any person seeking
indemnification or advancement of expenses may otherwise be entitled, including
without limitation pursuant to any contract approved by a majority of the Whole
Board (whether or not the Directors approving such contract are or are to be
parties to such contract or similar contracts), and (b) will be applicable to
matters otherwise within its scope whether or not such matters arose or arise
before or after the adoption of this Article VIII. Without limiting the
generality or the effect of the foregoing, the Company may adopt By-Laws, or
enter into one or more agreements with any person, which provide for
indemnification and/or advancement of expenses greater or different than that
provided in this Article VIII or the Delaware General Corporation Law. Any
amendment or repeal of, or adoption of any provision inconsistent with, this
Article VIII will not adversely affect any right or protection existing
hereunder, or arising out of the facts occurring, prior to such amendment,
repeal, or adoption and no such amendment, repeal, or adoption will affect the
legality, validity, or enforceability of any contract entered into or right
granted prior to the effective date of such amendment, repeal, or adoption.
IN WITNESS WHEREOF, the undersigned has executed this Amended and
Restated Certificate of Incorporation and affirmed that the statements made
herein are true under penalties of perjury this ______ day of _________, 1997.
--------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
President
-------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
Vice President
-3-
Exhibit B
---------
================================================================================
AMENDED AND RESTATED
BY-LAWS
OF
▇▇▇▇▇▇ FURNITURE COMPANY, INC.
AS OF ________ __, 1997
================================================================================
TABLE OF CONTENTS
=================
Page
----
ARTICLE I
OFFICES
1.01 Registered Office...................................... 1
1.02 Other Offices.......................................... 1
ARTICLE II
MEETING OF STOCKHOLDERS
2.01 Time and Place of Meetings............................... 1
2.02 Annual Meeting........................................... 1
2.03 Special Meetings......................................... 1
2.04 Notice of Meetings....................................... 2
2.05 Quorum................................................... 2
2.06 Voting................................................... 2
2.07 Stockholders' Consent in Lieu of Meeting................. 3
ARTICLE III
BOARD OF DIRECTORS
3.01 Function................................................. 3
3.02 Number, Election, and Terms.............................. 3
3.03 Vacancies and Newly Created Directorships................ 3
3.04 Removal.................................................. 4
3.05 Resignation.............................................. 4
3.06 Regular Meetings......................................... 4
3.07 Special Meetings......................................... 4
3.08 Quorum................................................... 4
3.09 Written Action........................................... 4
3.10 Participation in Meetings by Telephone Conference........ 5
3.11 Compensation............................................. 5
3.12 Rules.................................................... 5
(i)
TABLE OF CONTENTS (cont'd)
ARTICLE IV
NOTICES
Page
----
4.01 Generally................................................ 5
4.02 Waivers.................................................. 5
ARTICLE V
OFFICERS
5.01 Generally................................................ 6
5.02 Compensation............................................. 6
5.03 Term of Office, Resignation and Removal.................. 6
5.04 Authority and Duties..................................... 6
ARTICLE VI
STOCK
6.01 Certificates............................................. 7
6.02 Transfers................................................ 7
6.03 Lost, Stolen, or Destroyed Certificates.................. 7
6.04 Record Dates............................................. 7
ARTICLE VII
INDEMNIFICATION
7.01 Damages and Expenses..................................... 8
7.02 Insurance, Contracts, and Funding........................ 9
ARTICLE VIII
GENERAL
8.01 Fiscal Year.............................................. 9
8.02 Seal..................................................... 9
8.03 Reliance upon Books, Reports, and Records................ 9
8.04 Time Periods............................................. 9
(ii)
TABLE OF CONTENTS (cont'd)
Page
----
8.05 Amendments............................................... 10
8.06 Certain Defined Terms.................................... 10
(iii)
AMENDED AND RESTATED
BY-LAWS
OF
▇▇▇▇▇▇ FURNITURE COMPANY, INC.
ARTICLE I
OFFICES
SECTION 1.01. Registered Office. The registered office of ▇▇▇▇▇▇
------------------
Furniture Company, Inc. in the State of Delaware shall be at the principal
office of The Corporation Trust Company in the City of Wilmington, County of New
Castle, and the registered agent in charge thereof shall be The Corporation
Trust Company.
SECTION 1.02. Other Offices. The Company may also have an office or
--------------
offices at any other place or places within or without the State of Delaware as
the Board may from time to time determine or the business of the Company may
from time to time require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 2.01. Time and Place of Meetings. All meetings of the
--------------------------
stockholders for the election of Directors or for any other purpose will be held
at such time and place, within or without the State of Delaware, as may be
designated by the Board or, in the absence of a designation by the Board, the
President, or the Secretary, and stated in the notice of meeting. The Board may
postpone and reschedule any previously scheduled annual or special meeting of
the stockholders.
SECTION 2.02. Annual Meeting. An annual meeting of the stockholders
--------------
will be held in the third week of September or on such other date and time as
may be designated from time to time by the Board, at which meeting the
stockholders will elect by a plurality vote the Directors to succeed those whose
terms expire and will transact such other business as may properly be brought
before the meeting.
SECTION 2.03. Special Meetings. Special meetings of the stockholders
----------------
may be called by the Board, and may be called by (a) the President, or (b) the
Secretary within 10 calendar days after receipt of the written request of the
holders of a majority of the stock issued and outstanding and entitled to vote.
Any such request must be sent to the President or the Secretary and must state
the purpose or purposes of the proposed meeting.
SECTION 2.04. Notice of Meetings. Written notice of every meeting of
------------------
the stockholders, stating the place, date, and hour of the meeting and, in the
case of a special
meeting, the purpose or purposes for which the meeting is called, will be given
not less than 10 nor more than 60 calendar days before the date of the meeting
to each stockholder of record entitled to vote at such meeting, except as
otherwise provided herein or by law. When a meeting is adjourned to another
place, date, or time, written notice need not be given of the adjourned meeting
if the place, date, and time thereof are announced at the meeting at which the
adjournment is taken; provided, however, that if the adjournment is for more
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than 30 calendar days, or if after the adjournment a new record date is fixed
for the adjourned meeting, written notice of the place, date, and time of the
adjourned meeting must be given in conformity herewith. At any adjourned
meeting, any business may be transacted which properly could have been
transacted at the original meeting.
SECTION 2.05. Quorum. Except as otherwise provided by law, the
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holders of a majority of the stock issued and outstanding and entitled to vote
thereat, present in person or represented by proxy, will constitute a quorum at
all meetings of the stockholders for the transaction of business thereat. If,
however, such quorum is not present or represented at any meeting of the
stockholders, the stockholders entitled to vote thereat, present in person or
represented by proxy, will have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum is
present or represented.
SECTION 2.06. Voting. Except as otherwise provided by law or by the
------
Certificate of Incorporation, each stockholder will be entitled at every meeting
of the stockholders to one vote for each share of stock having voting power
standing in the name of such stockholder on the books of the Company on the
record date for the meeting and such votes may be cast either in person or by
written proxy. Every proxy must be duly executed and filed with the Secretary.
A stockholder may revoke any proxy that is not irrevocable by attending the
meeting and voting in person or by filing an instrument in writing revoking the
proxy or another duly executed proxy bearing a later date with the Secretary.
The vote upon any question brought before a meeting of the stockholders may be
by voice vote, unless otherwise required by the Certificate of Incorporation or
these By-Laws or unless the President or the holders of a majority of the
outstanding shares of all classes of stock entitled to vote thereon present in
person or by proxy at such meeting otherwise determine. Every vote taken by
written ballot will be counted by the inspectors of election. When a quorum is
present at any meeting, the affirmative vote of the holders of a majority of the
stock present in person or represented by proxy at the meeting and entitled to
vote on the subject matter and which has actually been voted will be the act of
the stockholders, except in the election of Directors or when a different vote
is required as otherwise provided in these By-Laws, the Certificate of
Incorporation, or by law.
SECTION 2.07. Stockholders' Consent in Lieu of Meeting. Any action
----------------------------------------
required by the General Corporation Law of the State of Delaware to be taken at
any annual or special meeting of stockholders, and any action which may be taken
at any annual or special meeting of stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the recordholders of
shares having not less than the minimum number of votes necessary to authorize
or take such action at a meeting at which the recordholders of all shares
entitled to vote thereon were present and voted.
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ARTICLE III
BOARD OF DIRECTORS
SECTION 3.01. Function. The business and affairs of the Company will
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be managed under the direction of its Board.
SECTION 3.02. Number, Election, and Terms. (a) The Board shall
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consist of three or more members. The authorized number of Directors may be
determined from time to time only by a vote of a majority of the Whole Board.
The Directors shall be elected at the annual meeting of the stockholders, except
as provided in Section 3.03 of this Article, and each Director elected shall
hold office until his successor is elected and qualified, except as required by
law.
(b) Notwithstanding anything contained in the Certificate of Incorporation
or these By-Laws to the contrary, the term of any Director who is also an
officer of the Company will terminate automatically, without any further action
on the part of the Board or such Director, upon the termination for any reason
of such Director in his or her capacity as an officer of the Company.
SECTION 3.03. Vacancies and Newly Created Directorships. Newly
-----------------------------------------
created directorships resulting from any increase in the number of Directors and
any vacancies on the Board resulting from death, resignation, disqualification,
removal, or other cause which occur between annual meetings of the stockholders
will be filled by the affirmative vote of a majority of the remaining Directors
then in office, even though less than a quorum of the Board, by a sole remaining
Director or by the holders of a majority of the stock issued and outstanding and
entitled to vote. Any Director elected in accordance with the preceding
sentence will hold office for the remainder of the full term of the class of
Directors in which the new directorship was created or the vacancy occurred and
until such Director's successor is elected and qualified or such Director's
earlier death, resignation, disqualification, or removal. No decrease in the
number of Directors constituting the Board will shorten the term of an incumbent
Director.
SECTION 3.04. Removal. Any Director may be removed from office with
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or without cause by the holders of a majority of the voting stock or by the
affirmative vote of the Whole Board and only for cause.
SECTION 3.05. Resignation. Any Director may resign at any time by
-----------
giving written notice of his or her resignation to the President or the
Secretary. Any resignation will be effective upon actual receipt by any such
person or, if later, as of the date and time specified in such written notice.
SECTION 3.06. Regular Meetings. Regular meetings of the Board may be
----------------
held immediately after the annual meeting of the stockholders and at such other
time and place either within or without the State of Delaware as may from time
to time be determined by the Board. Notice of regular meetings of the Board
need not be given.
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SECTION 3.07. Special Meetings. Special meetings of the Board may be
----------------
called by the President on one day's notice to each Director by whom such notice
is not waived, given either personally or by mail, telephone, telegram, telex,
facsimile, or similar medium of communication, and will be called by the
President in like manner and on like notice on the written request of a majority
of the total number of Directors then in office. Special meetings of the Board
may be held at such time and place either within or without the State of
Delaware as is determined by the Board or specified in the notice of any such
meeting.
SECTION 3.08. Quorum. At all meetings of the Board, a majority of
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the total number of Directors then in office will constitute a quorum for the
transaction of business. Except for the designation of committees as
hereinafter provided and except for actions required by these By-Laws or the
Certificate of Incorporation to be taken by a majority of the Whole Board, the
act of a majority of the Directors present at any meeting at which there is a
quorum will be the act of the Board. If a quorum is not present at any meeting
of the Board, the Directors present thereat may adjourn the meeting from time to
time to another place, time, or date, without notice other than announcement at
the meeting, until a quorum is present.
SECTION 3.09. Written Action. Any action required or permitted to be
--------------
taken at any meeting of the Board of Directors or of any committee thereof may
be taken without a meeting if all members of the Board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes or proceedings of the Board or Committee.
SECTION 3.10. Participation in Meetings by Telephone Conference.
-------------------------------------------------
Members of the Board or any committee designated by the Board may participate in
a meeting of the Board or any such committee, as the case may be, by means of
telephone conference or similar means by which all persons participating in the
meeting can hear each other, and such participation in a meeting will constitute
presence in person at the meeting.
SECTION 3.11. Compensation. The Board may establish the compensation
------------
for, and reimbursement of the expenses of, Directors for membership on the Board
and on committees of the Board, attendance at meetings of the Board or
committees of the Board, and for other services by Directors to the Company or
any of its majority-owned subsidiaries.
SECTION 3.12. Rules. The Board may adopt rules and regulations for
-----
the conduct of meetings and the oversight of the management of the affairs of
the Company.
ARTICLE IV
NOTICES
SECTION 4.01. Generally. Except as otherwise provided by law, these
---------
By-Laws, or the Certificate of Incorporation, whenever by law or under the
provisions of the Certificate of Incorporation or these By-Laws, notice is
required to be given to any Director or stockholder, it will not be construed to
require personal notice, but such notice may be given
4
in writing, by mail, addressed to such Director or stockholder, at the address
of such Director or stockholder as it appears on the records of the Company,
with postage thereon prepaid, and such notice will be deemed to be given at the
time when the same is deposited in the United States mail. Notice to Directors
may also be given by telephone, telegram, telex, facsimile, or similar medium of
communication or as otherwise may be permitted by these By-Laws.
SECTION 4.02. Waivers. Whenever any notice is required to be given
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by law or under the provisions of the Certificate of Incorporation or these By-
Laws, a waiver thereof in writing, signed by the person or persons entitled to
such notice, whether before or after the time of the event for which notice is
to be given, will be deemed equivalent to such notice. Attendance of a person
at a meeting will constitute a waiver of notice of such meeting, except when the
person attends a meeting for the express purpose of objecting, at the beginning
of the meeting, to the transaction of any business because the meeting is not
lawfully called or convened.
ARTICLE V
OFFICERS
SECTION 5.01. Generally. The officers of the Company will be elected
---------
by the Board and will consist of a President (who, if the Board so specifies,
may but will not be required to be also the Chief Executive Officer), a
Secretary, and a Treasurer. The Board of Directors may also choose any or all
of the following: one or more Vice Presidents (who may be given particular
designations with respect to authority, function, or seniority), and such other
officers as the Board may from time to time determine. Notwithstanding the
foregoing, by specific action the Board may authorize the President to appoint
any person to any office other than President, Secretary, or Treasurer. Any
number of offices may be held by the same person. Any of the offices may be
left vacant from time to time as the Board may determine. In the case of the
absence or disability of any officer of the Company or for any other reason
deemed sufficient by a majority of the Board, the Board may delegate the absent
or disabled officer's powers or duties to any other officer or to any Director.
SECTION 5.02. Compensation. The compensation of all officers and
------------
agents of the Company who are also Directors of the Company will be fixed by the
Board or by a committee of the Board. The Board may fix, or delegate the power
to fix, the compensation to an officer of other officers and agents of the
Company to an officer of the Company.
SECTION 5.03. Term of Office, Resignation and Removal. The officers
---------------------------------------
of the Company will hold office until their successors are elected and qualified
or their earlier death, resignation or removal. Any officer may resign at any
time by giving written notice of his or her resignation to the President or the
Secretary. Any resignation will be effective upon actual receipt by any such
person or, if later, as of the date and time specified in such written notice.
Any officer may be removed at any time by the affirmative vote of a majority of
the Whole Board. Any vacancy occurring in any office of the Company may be
filled by the Board or by the President as provided in By-Law 5.01.
5
SECTION 5.04. Authority and Duties. Each of the officers of the
--------------------
Company will have such authority and will perform such duties as are customarily
incident to their respective offices or as may be specified from time to time by
the Board.
ARTICLE VI
STOCK
SECTION 6.01. Certificates. Certificates representing shares of
------------
stock of the Company will be in such form as from time to time may be determined
by the Board, subject to applicable legal requirements. Each such certificate
will be numbered and its issuance recorded in the books of the Company, and such
certificate will exhibit the holder's name and the number of shares and will be
signed by, or in the name of, the Company by the President and the Secretary or
an Assistant Secretary, or the Treasurer or an Assistant Treasurer, and will
also be signed by, or bear the facsimile signature of, a duly authorized officer
or agent of any properly designated transfer agent of the Company. Any or all
of the signatures and the seal of the Company, if any, upon such certificates
may be facsimiles, engraved, or printed. Such certificates may be issued and
delivered notwithstanding that the person whose facsimile signature appears
thereon may have ceased to be such officer at the time the certificates are
issued and delivered.
SECTION 6.02. Transfers. Upon surrender to the Company or the
---------
transfer agent of the Company of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment, or authority to
transfer, it will be the duty of the Company to issue, or to cause its transfer
agent to issue, a new certificate to the person entitled thereto, cancel the old
certificate, and record the transaction upon its books.
SECTION 6.03. Lost, Stolen, or Destroyed Certificates. The Secretary
---------------------------------------
may direct a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the Company alleged to have
been lost, stolen, or destroyed, upon the making of an affidavit of that fact,
satisfactory to the Secretary, by the person claiming the certificate of stock
to be lost, stolen, or destroyed. As a condition precedent to the issuance of a
new certificate or certificates, the Secretary may require the owners of such
lost, stolen, or destroyed certificate or certificates to give the Company a
bond in such sum and with such surety or sureties as the Secretary may direct as
indemnity against any claims that may be made against the Company with respect
to the certificate alleged to have been lost, stolen, or destroyed or the
issuance of the new certificate.
SECTION 6.04. Record Dates. (a) In order that the Company may
------------
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board may fix a record date, which
will not be more than 60 nor less than 10 calendar days before the date of such
meeting. If no record date is fixed by the Board, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders will be at the close of business on the calendar day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the calendar day next preceding the day on which the
meeting is held. A determination of stockholders of record
6
entitled to notice of or to vote at a meeting of the stockholders will apply to
any adjournment of the meeting; provided, however, that the Board may fix a new
record date for the adjourned meeting.
(b) In order that the Company may determine the stockholders entitled to
receive payment of any dividend or other distribution or allotment of any rights
or the stockholders entitled to exercise any rights in respect of any change,
conversion, or exchange of stock, or for the purpose of any other lawful action,
the Board may fix a record date, which record date will not be more than 60
calendar days prior to such action. If no record date is fixed, the record date
for determining stockholders for any such purpose will be at the close of
business on the calendar day on which the Board adopts the resolution relating
thereto.
ARTICLE VII
INDEMNIFICATION
SECTION 7.01. Damages and Expenses. (a) Without limiting the
--------------------
generality or effect of Article VIII of the Certificate of Incorporation, the
Company will to the fullest extent permitted by applicable law as then in effect
indemnify any person (an "Indemnitee") who is or was involved in any manner
(including without limitation as a party or a witness) or is threatened to be
made so involved in any threatened, pending, or completed investigation, claim,
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative (including without limitation any action, suit, or proceeding by
or in the right of the Company to procure a judgment in its favor) (a
"Proceeding") by reason of the fact that such person is or was or had agreed to
become a Director, officer, employee, or agent of the Company, or is or was
serving at the request of the Board or an officer of the Company as a director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise, whether for profit or not for profit, or anything
done or not by such person in any such capacity, against all expenses (including
attorneys' fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred by such person in connection with such Proceeding. Such
indemnification will be a contract right and will include the right to receive
payment in advance of any expenses incurred by an Indemnitee in connection with
such Proceeding upon receipt of an undertaking by or on behalf of such person to
repay such amount if it shall ultimately be determined that he or she is not
entitled to be indemnified by the Company as authorized by this By-Law 7.01 or
otherwise.
(b) The right of indemnification provided in this By-Law 7.01 will not be
exclusive of any other rights to which any person seeking indemnification may
otherwise be entitled, and will be applicable to Proceedings commenced or
continuing after the adoption of this By-Law 7.01, whether arising from acts or
omissions occurring before or after such adoption.
(c) The indemnification and advancement of expenses provided by, or
granted pursuant to, this By-Law 7.01 shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee, or agent and shall inure to the benefit of the heirs,
executors, and administrators of such person.
7
SECTION 7.02. Insurance, Contracts, and Funding. The Company may
---------------------------------
purchase and maintain insurance to protect itself and any Indemnitee against any
expenses, judgments, fines, and amounts paid in settlement or incurred by any
Indemnitee in connection with any Proceeding referred to in By-Law 7.01 or
otherwise, to the fullest extent permitted by applicable law as then in effect.
The Company may enter into contracts with any person entitled to indemnification
under By-Law 7.01 or otherwise, and may create a trust fund, grant a security
interest, or use other means (including without limitation a letter of credit)
to ensure the payment of such amounts as may be necessary to effect
indemnification as provided in By-Law 7.01.
ARTICLE VIII
GENERAL
SECTION 8.01. Fiscal Year. The fiscal year of the Company shall be
-----------
fixed from time to time by the Board.
SECTION 8.02. Seal. The Board may adopt a corporate seal and use the
----
same by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
SECTION 8.03. Reliance upon Books, Reports, and Records. Each
-----------------------------------------
Director, each member of a committee designated by the Board, and each officer
of the Company will, in the performance of his or her duties, be fully protected
in relying in good faith upon the records of the Company and upon such
information, opinions, reports, or statements presented to the Company by any of
the Company's officers or employees, or committees of the Board, or by any other
person or entity as to matters the Director, committee member, or officer
believes are within such other person's professional or expert competence and
who has been selected with reasonable care by or on behalf of the Company.
SECTION 8.04. Time Periods. In applying any provision of these By-
------------
Laws that requires that an act be done or not be done a specified number of days
prior to an event or that an act be done during a period of a specified number
of days prior to an event, calendar days will be used unless otherwise
specified, the day of the doing of the act will be excluded, and the day of the
event will be included.
SECTION 8.05. Amendments. Except as otherwise provided by law or by
----------
the Certificate of Incorporation or these By-Laws, these By-Laws may be amended
in any respect or repealed at any time, either (a) by the holders of a majority
of the stock issued and outstanding and entitled to vote, or (b) at any meeting
of the Board, provided that no amendment adopted by the Board may vary or
conflict with any amendment adopted by the stockholders.
SECTION 8.06. Certain Defined Terms. Terms used herein with initial
---------------------
capital letters that are not otherwise defined are used herein as defined in the
Certificate of Incorporation.
8