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EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
DATED AS OF APRIL 26, 1998
BETWEEN
CORPORATEFAMILY SOLUTIONS, INC.
AND
BRIGHT HORIZONS, INC.
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TABLE OF CONTENTS
ARTICLE 1
THE MERGER...............................................................................................1
1.1 The Merger.............................................................................1
1.2 Effective Time.........................................................................2
1.3 Closing of the Merger..................................................................2
1.4 Effects of the Merger..................................................................2
1.5 Formation of Newco and Merger Subs; Certificate of Incorporation and
Bylaws.................................................................................2
1.6 Board of Directors and Officers of Newco, Merger Sub A and Merger Sub B ...............3
1.7 Conversion of Shares...................................................................4
1.8 Exchange of Certificates...............................................................5
1.9 Stock Options..........................................................................7
1.10 Taking of Necessary Action; Further Action.............................................9
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF BRHZ...................................................................9
2.1 Organization and Qualification.........................................................9
2.2 Capitalization of BRHZ................................................................10
2.3 Authority Relative to this Agreement; Recommendation..................................11
2.4 SEC Reports; Financial Statements.....................................................11
2.5 Information Supplied..................................................................12
2.6 Consents and Approvals; No Violations.................................................12
2.7 No Default............................................................................13
2.8 No Undisclosed Liabilities; Absence of Changes........................................13
2.9 Litigation............................................................................14
2.10 Compliance with Applicable Law........................................................14
2.11 Employee Benefit Plans; Labor Matters.................................................15
2.12 Environmental Laws and Regulations....................................................16
2.13 Tax Matters...........................................................................17
2.14 Title to Property.....................................................................18
2.15 Intellectual Property.................................................................18
2.16 Insurance.............................................................................19
2.17 Material Contracts....................................................................19
2.18 Vote Required. .......................................................................20
2.19 Tax and Accounting Treatment..........................................................20
2.20 Affiliates............................................................................20
2.21 Certain Business Practices............................................................20
2.22 Insider Interests.....................................................................20
2.23 Opinion of Financial Adviser..........................................................21
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2.24 Brokers...............................................................................21
2.25 Disclosure............................................................................21
2.26 No Existing Discussions...............................................................21
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF CFAM..................................................................21
3.1 Organization and Qualification........................................................21
3.2 Capitalization of CFAM................................................................22
3.3 Authority Relative to this Agreement; Recommendation..................................23
3.4 SEC Reports; Financial Statements.....................................................23
3.5 Information Supplied..................................................................24
3.6 Consents and Approvals; No Violations.................................................24
3.7 No Default............................................................................25
3.8 No Undisclosed Liabilities; Absence of Changes........................................25
3.9 Litigation............................................................................26
3.10 Compliance with Applicable Law........................................................26
3.11 Employee Benefit Plans; Labor Matters.................................................27
3.12 Environmental Laws and Regulations....................................................29
3.13 Tax Matters...........................................................................29
3.14 Title to Property.....................................................................30
3.15 Intellectual Property.................................................................30
3.16 Insurance.............................................................................31
3.17 Material Contracts....................................................................31
3.18 Vote Required. .......................................................................32
3.19 Tax and Accounting Treatment..........................................................32
3.20 Affiliates............................................................................32
3.21 Certain Business Practices............................................................32
3.22 Insider Interests.....................................................................32
3.23 Opinion of Financial Adviser..........................................................32
3.24 Brokers...............................................................................32
3.25 Disclosure............................................................................32
3.26 No Existing Discussions...............................................................33
ARTICLE 4
COVENANTS...............................................................................................33
4.1 Conduct of Business of BRHZ...........................................................33
4.2 Conduct of Business of CFAM...........................................................35
4.3 Preparation of S-4 and the Proxy Statement............................................37
4.4 No Solicitation by BRHZ...............................................................38
4.5 No Solicitation by CFAM...............................................................39
4.6 Meetings of Stockholders..............................................................41
4.7 Nasdaq Listing........................................................................42
4.8 Access to Information.................................................................42
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4.9 Additional Agreements; Reasonable Efforts.............................................42
4.10 Employee Benefit Plans................................................................43
4.11 Public Announcements..................................................................43
4.12 Indemnification.......................................................................43
4.13 Notification of Certain Matters.......................................................45
4.14 Affiliates............................................................................45
4.15 Tax and Accounting Treatment..........................................................45
4.16 Employment Agreements.................................................................45
4.17 Pooling of Interests..................................................................46
ARTICLE 5
CONDITIONS TO CONSUMMATION OF THE MERGER................................................................46
5.1 Conditions to Each Party's Obligations to Effect the Merger...........................46
5.2 Conditions to the Obligations of BRHZ.................................................47
5.3 Conditions to the Obligations of CFAM.................................................48
ARTICLE 6
TERMINATION; AMENDMENT; WAIVER .........................................................................49
6.1 Termination...........................................................................49
6.2 Effect of Termination.................................................................50
6.3 Fees and Expenses.....................................................................51
6.4 Amendment.............................................................................51
6.5 Extension; Waiver.....................................................................51
ARTICLE 7
MISCELLANEOUS...........................................................................................51
7.1 Nonsurvival of Representations and Warranties.........................................51
7.2 Entire Agreement; Assignment..........................................................52
7.3 Validity..............................................................................52
7.4 Notices...............................................................................52
7.5 Governing Law.........................................................................53
7.6 Descriptive Headings..................................................................53
7.7 Parties in Interest...................................................................53
7.8 Certain Definitions...................................................................53
7.9 Personal Liability....................................................................53
7.10 Specific Performance..................................................................54
7.11 Counterparts..........................................................................54
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EXHIBITS:
A. Stock Option Agreements
B. Form of Certificate of Incorporation of Newco
C. Form of Bylaws of Newco
D. Forms of Employment Agreements
SCHEDULES:
BRHZ Disclosure Schedule
CFAM Disclosure Schedule
Schedule 4.16 List of Persons to whom Newco shall offer employment agreements
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of April
26, 1998, is between CORPORATEFAMILY Solutions, Inc., a Tennessee corporation
("CFAM"), and Bright Horizons, Inc., a Delaware corporation ("BRHZ").
WHEREAS, the Boards of Directors of CFAM and BRHZ each have, in light
of and subject to the terms and conditions set forth herein, (i) determined that
the Merger (as defined below) is fair to their respective stockholders and in
the best interests of such stockholders and (ii) approved the Merger in
accordance with this Agreement;
WHEREAS, concurrently with the execution and delivery of this
Agreement, as a condition and inducement to CFAM's and BRHZ's willingness to
enter into this Agreement, CFAM and BRHZ have each entered into a Stock Option
Agreement dated as of the date hereof in the form of Exhibit A (collectively,
the "Stock Option Agreements"), pursuant to which CFAM has granted to BRHZ an
option to purchase CFAM Shares (as defined below) and pursuant to which BRHZ has
granted to CFAM an option to purchase BRHZ Shares (as defined below);
WHEREAS, it is intended that the Merger be treated as (i) a
reorganization, for Federal income tax purposes, under the provisions of Section
368(a)(2)(E) the Internal Revenue Code of 1986, as amended (the "Code"), and
(ii) a "pooling of interests" for accounting purposes.
WHEREAS, CFAM and BRHZ desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, CFAM and BRHZ hereby agree as follows:
ARTICLE 1
THE MERGER
1.1 The Merger. At the Effective Time (as defined below) and upon the
terms and subject to the conditions of this Agreement and in accordance with the
Tennessee Business Corporation Act (the "TBCA") and the General Corporation Law
of the State of Delaware (the "DGCL"), two wholly owned subsidiaries, Merger Sub
A, a Tennessee corporation and wholly owned subsidiary of Newco (defined below)
("Merger Sub A"), and Merger Sub B, a Delaware corporation and wholly owned
subsidiary of Newco ("Merger Sub B"), shall be merged with and into CFAM (the
"CFAM Merger") and BRHZ (the "BRHZ Merger", collectively the CFAM Merger and
BRHZ Merger shall be referred to herein as the "Merger"), respectively, with
each of CFAM and BRHZ continuing as the surviving corporations (each, a
"Surviving Corporation"), wholly owned by Newco, and the separate corporate
existence of each of Merger Sub A and Merger Sub B shall cease. Newco shall
continue as the parent corporation, shall continue to be governed by the laws of
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the State of Delaware and shall be called "Bright Horizons Family Solutions,
Inc." The Merger is intended to qualify as a tax-free reorganization under
Section 368(a)(2)(E) of the Code.
1.2 Effective Time. Subject to the terms and conditions set forth in
this Agreement, Articles of Merger (the "Articles of Merger") and Certificates
of Merger (each, a "Merger Certificate") shall be duly executed and acknowledged
by each of CFAM, BRHZ, Merger Sub A and Merger Sub B, as applicable and
thereafter the Articles of Merger reflecting the CFAM Merger shall be delivered
to the Secretary of State of the State of Tennessee for filing pursuant to the
TBCA on the Closing Date and the Merger Certificates reflecting the BRHZ Merger
shall be delivered to the Secretary of State of the State of Delaware for filing
pursuant to the DGCL on the Closing Date (as defined in Section 1.3). The Merger
shall become effective at such time as a properly executed and certified copy of
the Articles of Merger are duly filed by the Secretary of State of the State of
Tennessee in accordance with the TBCA and the Merger Certificate is duly filed
by the Secretary of State of the State of Delaware in accordance with the DGCL
or such later time as the parties may agree upon and set forth in the Articles
of Merger and the Merger Certificate (the time at which the Merger becomes
effective shall be referred to herein as the "Effective Time").
1.3 Closing of the Merger. The closing of the Merger (the "Closing")
will take place at a time and on a date to be specified by the parties, which
shall be no later than the second business day after satisfaction of the latest
to occur of the conditions set forth in Article 5 (the "Closing Date"), at the
offices of Bass, ▇▇▇▇▇ & ▇▇▇▇ PLC, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇,
unless another time, date or place is agreed to in writing by the parties
hereto.
1.4 Effects of the Merger. The Merger shall have the effects set forth
in the TBCA and the DGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the properties, rights, privileges,
powers and franchises of each of Merger Sub A and Merger Sub B shall vest in the
respective Surviving Corporations, and all debts, liabilities and duties of each
of Merger Sub A and Merger Sub B shall become the debts, liabilities and duties
of the respective Surviving Corporations.
1.5 Formation of Newco and Merger Subs; Certificate of Incorporation
and Bylaws.
(a) Prior to the Effective Time, CFAM and BRHZ agree to take
such action as is necessary to (i) form a new corporation under the
laws of the State of Delaware ("Newco") that will be owned equally by
CFAM and BRHZ; (ii) form two new corporations that are wholly owned
subsidiaries of Newco to be Merger Sub A and Merger Sub B; and (iii)
amend this Agreement to add each of Newco, Merger Sub A and Merger Sub
B as a party. CFAM and BRHZ agree to take such action as is necessary
to cause Newco, Merger Sub A and Merger Sub B to perform the various
covenants and agreements contained herein which are contemplated herein
to be performed by Newco, Merger Sub A and Merger Sub B. Any covenants
or agreements of Newco, Merger Sub A and Merger Sub B contained herein
shall be binding on such entity as of the time such entity becomes a
party to this Agreement.
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(b) The Certificate of Incorporation, in substantially the
form attached hereto as Exhibit B, shall be the Certificate of
Incorporation of Newco as of the Effective Time.
(c) The Bylaws of Newco, in substantially the form attached
hereto as Exhibit C, shall be the Bylaws of Newco after the Effective
Time.
(d) The Charter of Merger Sub A and the Certificate of
Incorporation of Merger Sub B as in effect immediately prior to the
Effective Time shall be the Charter and Certificate of Incorporation of
the Surviving Corporations, respectively.
(e) The Bylaws of Merger Sub A and Merger Sub B immediately
prior to the Effective Time shall be the Bylaws of the Surviving
Corporations, respectively.
1.6 Board of Directors and Officers of Newco, Merger Sub A and Merger
Sub B
(a) At or prior to the Effective Time, each of CFAM and BRHZ
agrees to take such action as is necessary (i) to cause the number of
directors comprising the full Board of Directors of Newco to be eleven
(11) persons, (ii) to cause ▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
(collectively, the "CFAM Designees") and ▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇.
▇▇▇▇▇ (collectively, the "BRHZ Designees") to be elected as directors
of Newco (iii) to allow the CFAM and BRHZ Boards of Directors to
respectively designate two director nominees, such nominees subject to
the approval of the other party's Board of Directors, to be elected as
directors of Newco (the "Board Designees") and (iv) to mutually agree
to the selection of three persons to be elected as directors of Newco
(the "Joint Designees"). In addition, CFAM and BRHZ, as the
stockholders of Newco prior to the Effective Time, shall take all
action necessary to cause, to the greatest extent practicable, the CFAM
Designees, the BRHZ Designees, the Board Designees and the Joint
Designees to serve in equal numbers in each of Newco's three classes of
directors until the 1999 Annual Meeting, 2000 Annual Meeting and 2001
Annual Meeting. If any of the CFAM Designees, the BRHZ Designees or the
Board Designees, respectively, shall decline or be unable to serve as a
director prior to the Effective Time, CFAM (if such person was a CFAM
Designee or a CFAM selected Board Designee) or BRHZ (if such person was
a BRHZ Designee or a BRHZ selected Board Designee), as the case may be,
shall nominate another person to serve in such person's stead which
such person shall be subject to approval of the other party. If any of
the Joint Designees shall decline or be unable to serve as a director
prior to the Effective Time, both CFAM and BRHZ shall mutually agree
upon another person to serve in such person's stead, such agreement to
be in writing executed by an executive officer of each of CFAM and
BRHZ. If any of the CFAM Designees, the BRHZ Designees or the Board
Designees, respectively, shall decline or be unable to serve as a
director during his or her initial term following the Effective Time,
the remaining CFAM Designees (if such person was a CFAM Designee or a
CFAM selected Board Designee), the BRHZ Designees (if such person was a
BRHZ Designee or a BRHZ selected Board Designee), or the remaining
members of the Board of Directors (if such person was a Joint
Designee), as the case may be, shall nominate
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another person to serve in such person's stead, which such person shall
be subject to the approval of the other party's designees.
(b) Prior to or at the Effective Time, the Newco Board shall
take action to establish a Compensation Committee, an Audit Committee
and a Nominating Committee of Newco as mutually proposed by the CFAM
Designees and BRHZ Designees and approved by the Board of Directors of
Newco.
(c) From and after the Effective Time, until successors are
duly elected or appointed and qualified in accordance with applicable
law, (i) the directors of CFAM and BRHZ shall be the same as those of
Newco, and (ii) the directors of subsidiaries of BRHZ and CFAM shall be
such persons who were serving in such capacities immediately prior to
the Effective Time.
(d) From and after the Effective Time, and until successors
are duly elected or appointed and qualified in accordance with
applicable law, ▇▇▇▇▇ ▇. ▇▇▇▇▇ shall be Chairman of Newco, ▇▇▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇ shall be Chief Executive Officer of Newco, ▇▇▇▇▇ ▇. ▇▇▇▇▇
shall be President of Newco, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ shall be Chief Operating
Officer of Newco, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall be Chief Financial Officer
of Newco and ▇▇▇▇▇ ▇▇▇▇▇▇ shall be Chief Administrative Officer and
Secretary of Newco. The above shall also hold such offices in Merger
Sub A and Merger Sub B. The officers of Merger Sub A and Merger Sub B
shall be the officers of the Surviving Corporations. Subject to the
exercise of the fiduciary duties of the directors of Newco, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ shall serve as the Chief Executive Officer for two and one-half
years after the Effective Time, at which time ▇▇▇▇▇ ▇▇▇▇▇ will be named
Chief Executive Officer, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall continue to serve as a
senior executive in the position of Chairman of the Board of Directors
and ▇▇▇▇▇ ▇▇▇▇▇ will be named President and Vice Chairman.
(e) From and after the Effective Time, the existing officers
of the subsidiaries of the surviving corporations shall continue to
serve in such capacities at the pleasure of their respective boards of
directors.
1.7 Conversion of Shares.
(a) At the Effective Time, each share of common stock, no par
value per share of CFAM (individually a "CFAM Share" and collectively,
the "CFAM Shares") issued and outstanding immediately prior to the
Effective Time shall, by virtue of the CFAM Merger and without any
action on the part of CFAM, BRHZ, Newco or the holder thereof, be
converted into and shall become 1.0 fully paid and nonassessable share
of common stock, par value $0.01 per share, of Newco (individually a
"Newco Share" and collectively, the "Newco Shares").
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(b) At the Effective Time, each share of common stock, par
value $.01 per share, of BRHZ (individually a "BRHZ Share" and
collectively, the "BRHZ Shares") issued and outstanding immediately
prior to the Effective Time (other than BRHZ Shares held in BRHZ's
treasury) shall, by virtue of the BRHZ Merger and without any action on
the part of CFAM, Newco, BRHZ or the holder thereof, be converted into
and shall become 1.15022 fully paid and nonassessable Newco Shares.
CFAM Shares and BRHZ Shares are sometimes referred to collectively
herein as "Shares."
(c) At the Effective Time, each outstanding share of the
common stock of any subsidiaries of CFAM and BRHZ shall remain
outstanding.
(d) At the Effective Time, each BRHZ Share held in the
treasury of BRHZ and each Newco Share held by CFAM or BRHZ immediately
prior to the Effective Time shall, by virtue of the Merger and without
any action on the part of Newco, CFAM or BRHZ be canceled, retired and
cease to exist and no payment shall be made with respect thereto.
(e) At the Effective Time, (i) each share of common stock, no
par value per share, of Merger Sub A issued and outstanding immediately
prior to the Effective Time shall, by virtue of the CFAM Merger and
without any action on the part of Newco, CFAM or Merger Sub A, be
converted into and shall become 1.0 fully paid and nonassessable CFAM
Share and (ii) each share of common stock, par value $.01 per share, of
Merger Sub B issued and outstanding immediately prior to the Effective
Time shall, by virtue of the BRHZ Merger and without any action on the
part of Newco, BRHZ or Merger Sub B, be converted into and shall become
1.0 fully paid and nonassessable BRHZ Share.
1.8 Exchange of Certificates.
(a) Prior to the Effective Time, Newco shall enter into an
agreement with, and shall deposit with such agent or agents as may be
satisfactory to CFAM and BRHZ (the "Exchange Agent"), for the benefit
of the holders of CFAM Shares and BRHZ Shares, for exchange through the
Exchange Agent in accordance with this Article 1: (i) certificates
representing the appropriate number of Newco Shares to be issued to
holders of CFAM Shares and to holders of BRHZ Shares and (ii) cash to
be paid in lieu of fractional Newco Shares (such Newco Shares and such
cash is hereinafter referred to as the "Exchange Fund") issuable
pursuant to Section 1.7 in exchange for outstanding CFAM Shares and
BRHZ Shares.
(b) As soon as reasonably practicable after the Effective
Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective
Time represented outstanding CFAM Shares or BRHZ Shares (the
"Certificates") whose shares were converted into the right to receive
Newco Shares pursuant to Section 1.7: (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss
and title to the Certificates shall pass, only upon delivery of the
Certificates
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to the Exchange Agent and shall be in such form and have such other
provisions as CFAM and BRHZ may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing Newco Shares. Upon surrender of
a Certificate to the Exchange Agent, together with such letter of
transmittal, duly executed, and any other required documents, the
holder of such Certificate shall be entitled to receive in exchange
therefor a certificate representing that number of whole Newco Shares
and, if applicable, a check representing the cash consideration to
which such holder may be entitled on account of a fractional Newco
Share, which such holder has the right to receive pursuant to the
provisions of this Article 1, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of CFAM
Shares or BRHZ Shares which is not registered in the transfer records
of either CFAM or BRHZ, a certificate representing the proper number of
Newco Shares may be issued to a transferee if the Certificate
representing such CFAM Shares or BRHZ Shares is presented to the
Exchange Agent, accompanied by all documents required by the Exchange
Agent or Newco to evidence and effect such transfer and by evidence
that any applicable stock transfer or other taxes have been paid. Until
surrendered as contemplated by this Section 1.8, each Certificate shall
be deemed at any time after the Effective Time to represent only the
right to receive upon such surrender the certificate representing Newco
Shares and cash in lieu of any fractional Newco Shares as contemplated
by this Section 1.8.
(c) No dividends or other distributions declared or made after
the Effective Time with respect to Newco Shares with a record date
after the Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to the Newco Shares represented
thereby and no cash payment in lieu of fractional shares shall be paid
to any such holder pursuant to Section 1.8(f) until the holder of
record of such Certificate shall surrender such Certificate. Subject to
the effect of applicable laws, following surrender of any such
Certificate, there shall be paid to the record holder of the
certificates representing whole Newco Shares issued in exchange
therefor, without interest, (i) at the time of such surrender, the
amount of any cash payable in lieu of a fractional Newco Share to which
such holder is entitled pursuant to Section 1.8(f) and the amount of
dividends or other distributions with a record date after the Effective
Time theretofore paid with respect to such whole Newco Shares, and (ii)
at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with
respect to such whole Newco Shares.
(d) In the event that any Certificate for CFAM Shares or BRHZ
Shares shall have been lost, stolen or destroyed, the Exchange Agent
shall issue in exchange therefor, upon the making of an affidavit of
that fact by the holder thereof such Newco Shares and cash in lieu of
fractional Newco Shares, if any, as may be required pursuant to this
Agreement; provided, however, that Newco or the Exchange Agent, may, in
its respective discretion, require the delivery of a suitable bond,
opinion or indemnity.
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(e) All Newco Shares issued upon the surrender for exchange of
CFAM Shares or BRHZ Shares in accordance with the terms hereof
(including any cash paid pursuant to Section 1.8(c) or 1.8(f)) shall be
deemed to have been issued in full satisfaction of all rights
pertaining to such CFAM Shares or BRHZ Shares. There shall be no
further registration of transfers on the stock transfer books of either
of CFAM or BRHZ of the CFAM Shares or BRHZ Shares which were
outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to Newco for any reason,
they shall be canceled and exchanged as provided in this Article 1.
(f) No fractional Newco Shares shall be issued in the Merger,
but in lieu thereof each holder of CFAM Shares or BRHZ Shares otherwise
entitled to a fractional Newco Share shall, upon surrender of its, his
or her Certificate or Certificates, be entitled to receive an amount of
cash rounded to the nearest cent (without interest) determined by
multiplying the fair market value of a Newco Share as determined by the
Newco Board of Directors by the fractional share interest to which such
holder would otherwise be entitled. The parties acknowledge that
payment of the cash consideration in lieu of issuing fractional shares
was not separately bargained for consideration but merely represents a
mechanical rounding off for purposes of simplifying the corporate and
accounting complexities which would otherwise be caused by the issuance
of fractional shares.
(g) Any portion of the Exchange Fund which remains
undistributed to the stockholders of either CFAM or BRHZ for six months
after the Effective Time shall be delivered to Newco, upon demand, and
any stockholders of either CFAM or BRHZ who have not theretofore
complied with this Article 1 shall thereafter look only to Newco for
payment of their claim for Newco Shares, any cash in lieu of fractional
Newco Shares and any applicable dividends or distributions with respect
to Newco Shares, as the case may be.
(h) Neither Newco, CFAM nor BRHZ shall be liable to any holder
of CFAM Shares, BRHZ Shares or Newco Shares, as the case may be, for
such shares (or dividends or distributions with respect thereto) or
cash from the Exchange Fund delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
1.9 Stock Options.
(a) At the Effective Time, each outstanding option to purchase
CFAM Shares (a "CFAM Stock Option" or collectively, "CFAM Stock
Options") issued pursuant to the CFAM 1987 Stock Option Plan, the CFAM
1996 Stock Incentive Plan, the CFAM 1997 Stock Incentive Plan, the CFAM
1997 Outside Directors' Stock Incentive Plan and all other contractual
grants, whether vested or unvested, shall be assumed by Newco (all of
such plans or agreements pursuant to which any CFAM Stock Option has
been issued or may be issued are referred to collectively as the "CFAM
Plans"). Each CFAM Stock Option shall be deemed to constitute an option
to acquire, on the same terms and conditions as were applicable under
such CFAM Stock Option, the same number of Newco Shares as the holder
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of such CFAM Stock Option would have been entitled to receive pursuant
to the Merger had such holder exercised such option in full immediately
prior to the Effective Time, at a price per share equal to (y) the
aggregate exercise price for the CFAM Shares otherwise purchasable
pursuant to such CFAM Stock Option divided by (z) the number of Newco
Shares deemed purchasable pursuant to such CFAM Stock Option; provided,
however, that in the case of any option to which section 421 of the
Code applies by reason of its qualification under section 422 of the
Code ("incentive stock options" or "ISOs"), the option price, the
number of shares purchasable pursuant to such option and the terms and
conditions of exercise of such option shall be determined in order to
comply with section 424(a) of the Code.
(b) At the Effective Time, each outstanding option to purchase
BRHZ Shares (a "BRHZ Stock Option" or collectively, "BRHZ Stock
Options") issued pursuant to the BRHZ 1987 Stock Option and Incentive
Plan, the BRHZ 1996 Equity Incentive Plan and the BRHZ 1997 Equity
Incentive Plan, whether vested or unvested, shall be assumed by Newco
(all of such plans or agreements pursuant to which any BRHZ Stock
Option has been issued or may be issued are referred to collectively as
the "BRHZ Plans"). Each BRHZ Stock Option shall be deemed to constitute
an option to acquire, on the same terms and conditions as were
applicable under such BRHZ Stock Option, the same number of Newco
Shares (rounded down to the nearest whole share) as the holder of such
BRHZ Stock Option would have been entitled to receive pursuant to the
Merger had such holder exercised such option in full immediately prior
to the Effective Time, at a price per share (rounded down to the
nearest whole cent) equal to (y) the aggregate exercise price for the
BRHZ Shares otherwise purchasable pursuant to such BRHZ Stock Option
divided by (z) the number of full Newco Shares deemed purchasable
pursuant to such BRHZ Stock Option; provided, however, that in the case
of any ISO, the option price, the number of shares purchasable pursuant
to such option and the terms and conditions of exercise of such option
shall be determined in order to comply with section 424(a) of the Code.
(c) As soon as practicable after the Effective Time, Newco
shall deliver to the holders of CFAM Stock Options and BRHZ Stock
Options appropriate notices setting forth such holders' rights pursuant
to the respective CFAM Plans and BRHZ Plans and the agreements
evidencing the grants of such CFAM Options and BRHZ Options shall
continue in effect on the same terms and conditions (subject to the
adjustments required by this Section 1.9 after giving effect to the
Merger). Newco shall comply with the terms of the CFAM Plans and BRHZ
Plans and ensure, to the extent required by, and subject to the
provisions of, such Plans, that CFAM Stock Options and BRHZ Stock
Options which qualified as incentive stock options immediately prior to
the Effective Time continue to qualify as incentive stock options of
Newco after the Effective Time.
(d) Newco shall take all corporate action necessary to reserve
for issuance a sufficient number of Newco Shares for delivery upon
exercise of CFAM Stock Options and BRHZ Stock Options assumed in
accordance with this Section 1.9. As soon as practicable
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after the Effective Time, Newco shall file a registration statement on
Form S-8 (or any successor or other appropriate forms) with respect to
the Newco Shares subject to any CFAM Stock Options and BRHZ Stock
Options held by persons who are or were directors, officers or
employees of CFAM or BRHZ or their subsidiaries and shall use its best
efforts to maintain the effectiveness of such registration statement or
registration statements (and maintain the current status of the
prospectus or prospectuses contained therein) for so long as such
options remain outstanding. With respect to those individuals who
subsequent to the Merger will be subject to the reporting requirements
under Section 16(a) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), where applicable, Newco shall administer CFAM
Plans and BRHZ Plans assumed pursuant to this Section 1.9 in a manner
that complies with Rule 16b-3 promulgated under the Exchange Act, as it
may be amended from time to time, to the extent the applicable CFAM
Plan and BRHZ Plan complied with such rule immediately prior to the
Merger.
1.10 Taking of Necessary Action; Further Action. If, at any time after
the Effective Time, Newco, CFAM or BRHZ reasonably determines that any deeds,
assignments, or instruments or confirmations of transfer are necessary or
desirable to carry out the purposes of this Agreement and to vest Newco with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of CFAM or BRHZ, the officers and directors of Newco, CFAM
and BRHZ are fully authorized in the name of their respective corporations or
otherwise to take, and will take, all such lawful and necessary or desirable
action.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF BRHZ
Except as set forth on the Disclosure Schedule delivered by BRHZ to
CFAM (the "BRHZ Disclosure Schedule"), BRHZ hereby represents and warrants to
CFAM as follows:
2.1 Organization and Qualification.
(a) Each of BRHZ and its subsidiaries is duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has all requisite
power and authority to own, lease and operate its properties and to
carry on its businesses as now being conducted, except where the
failure to be so organized, existing and in good standing or to have
such power and authority would not have a Material Adverse Effect (as
defined below) on BRHZ. When used in connection with BRHZ, the term
"Material Adverse Effect" means any change or effect (i) that is or is
reasonably likely to be materially adverse to the business, results of
operations, condition (financial or otherwise) or prospects of BRHZ and
its subsidiaries, taken as a whole, other than any change or effect
arising out of general economic conditions unrelated to any businesses
in which BRHZ and its subsidiaries are engaged, or (ii) that may impair
the ability of BRHZ to perform its obligations hereunder or to
consummate the transactions contemplated hereby.
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(b) BRHZ has heretofore delivered to CFAM accurate and
complete copies of the Certificate of Incorporation and Bylaws (or
similar governing documents), as currently in effect, of BRHZ. Each of
BRHZ and its subsidiaries is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and
in good standing would not have a Material Adverse Effect on BRHZ.
Section 2.1 of the BRHZ Disclosure Schedule sets forth a list of the
BRHZ subsidiaries.
2.2 Capitalization of BRHZ.
(a) As of March 31, 1998, the authorized capital stock of BRHZ
consists of: (i) Twelve Million (12,000,000) BRHZ Shares, of which
5,600,738 BRHZ Shares were issued and outstanding and (ii) Three
Million (3,000,000) shares of Preferred Stock, par value $.01 per
share, no shares of which are outstanding. All of the outstanding BRHZ
Shares have been duly authorized and validly issued, and are fully
paid, nonassessable and free of preemptive rights. As of March 31,
1998, 793,340 BRHZ Shares were reserved for issuance and issuable upon
or otherwise deliverable in connection with the exercise of outstanding
BRHZ Stock Options issued pursuant to the BRHZ Plans.
(b) BRHZ is the record and beneficial owner of all of the
issued and outstanding shares of capital stock of its subsidiaries.
(c) Between March 31, 1998 and the date hereof, no shares of
BRHZ's capital stock have been issued other than pursuant to BRHZ Stock
Options already in existence on such date, and, between March 31, 1998
and the date hereof, no BRHZ Stock Options have been granted. Except as
set forth in Section 2.2(a) above, as of the date hereof, there are no
outstanding (i) shares of capital stock or other voting securities of
BRHZ, (ii) securities of BRHZ convertible into or exchangeable for
shares of capital stock or voting securities of BRHZ, (iii) options or
other rights to acquire from BRHZ or its subsidiaries, or obligations
of BRHZ or its subsidiaries to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital
stock or voting securities of BRHZ, or (iv) equity equivalents,
interests in the ownership or earnings of BRHZ or its subsidiaries or
other similar rights (collectively, "BRHZ Securities"). As of the date
hereof there are no outstanding obligations of BRHZ or any of its
subsidiaries to repurchase, redeem or otherwise acquire any BRHZ
Securities or stockholder agreements, voting trusts or other agreements
or understandings to which BRHZ is a party or by which it is bound
relating to the voting or registration of any shares of capital stock
of BRHZ.
(d) There are no securities of BRHZ convertible into or
exchangeable for, no options or other rights to acquire from BRHZ, and
no other contract, understanding, arrangement or obligation (whether or
not contingent) providing for the issuance or sale,
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directly or indirectly, of any capital stock or other ownership
interests in, or any other securities of, any subsidiary of BRHZ.
(e) The BRHZ Shares constitute the only class of equity
securities of BRHZ registered or required to be registered under the
Exchange Act.
(f) BRHZ does not own directly or indirectly more than fifty
percent (50%) of the outstanding voting securities or interests
(including membership interests) of any entity other than the BRHZ
subsidiaries reflected in Section 2.1 of the BRHZ Disclosure Schedule.
2.3 Authority Relative to this Agreement; Recommendation.
(a) BRHZ has all necessary corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
and validly authorized by the Board of Directors of BRHZ (the "BRHZ
Board"), and no other corporate proceedings on the part of BRHZ are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby, except, as referred to in Section 2.18, the
approval and adoption of this Agreement by the holders of at least a
majority of the then outstanding BRHZ Shares. This Agreement has been
duly and validly executed and delivered by BRHZ and constitutes a
valid, legal and binding agreement of BRHZ, enforceable against BRHZ in
accordance with its terms.
(b) The BRHZ Board has resolved to recommend that the
stockholders of BRHZ approve and adopt this Agreement.
2.4 SEC Reports; Financial Statements.
(a) BRHZ has filed all required forms, reports and documents
with the Securities and Exchange Commission (the "SEC") since November
7, 1997, each of which has complied in all material respects with all
applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the Exchange Act (and the rules and regulations
promulgated thereunder, respectively), each as in effect on the dates
such forms, reports and documents were filed. BRHZ has heretofore
delivered or promptly will deliver prior to the Effective Date to Newco
and CFAM, in the form filed with the SEC (including any amendments
thereto but excluding any exhibits), (i) all definitive proxy
statements relating to BRHZ's meetings of stockholders (whether annual
or special) held since November 7, 1997 and (ii) all other reports or
registration statements filed by BRHZ with the SEC since November 7,
1997 (all of the foregoing, collectively, the "BRHZ SEC Reports"). None
of such BRHZ SEC Reports, including, without limitation, any financial
statements or schedules included or incorporated by reference therein,
contained, when filed, any untrue statement of a material fact or
omitted to state a material fact required to be stated or incorporated
by reference therein or necessary in order to make the statements
therein, in
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light of the circumstances under which they were made, not misleading.
The consolidated financial statements of BRHZ included in the BRHZ SEC
Reports were prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as may be indicated in
the notes thereto), and fairly present the consolidated financial
position of BRHZ and its consolidated subsidiaries as of the dates
thereof and their consolidated results of operations and changes in
financial position for the periods then ended, subject in the case of
interim financial statements to the absence of footnotes and to normal
year-end audit adjustments. All material agreements, contracts and
other documents required to be filed as exhibits to any of the BRHZ SEC
Reports have been so filed. These representations shall be deemed to be
made with respect to the BRHZ SEC Reports filed subsequent to the date
hereof at the time of their filing.
(b) BRHZ has heretofore made available or promptly will make
available to Newco and CFAM a complete and correct copy of any
amendments or modifications, which are required to be filed with the
SEC but have not yet been filed with the SEC, to agreements, documents
or other instruments which previously had been filed by BRHZ with the
SEC pursuant to the Exchange Act.
2.5 Information Supplied. None of the information supplied or to be
supplied by BRHZ for inclusion or incorporation by reference in (i) the
registration statement on Form S-4 to be filed with the SEC by Newco in
connection with the issuance of Newco Shares in the Merger (the "S-4") will, at
the time the S-4 is filed with the SEC and at the time it becomes effective
under the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and (ii) the proxy statement
relating to the meeting of BRHZ's stockholders and the meeting of CFAM's
stockholders to be held in connection with the Merger (the "Proxy Statement")
will, at the date mailed to stockholders of BRHZ and CFAM and at the times of
the meeting or meetings of stockholders of BRHZ and CFAM to be held in
connection with the Merger, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Proxy Statement, insofar as it relates to the
meeting of BRHZ's stockholders to vote on the Merger, will comply as to form in
all material respects with the provisions of the Exchange Act and the rules and
regulations thereunder, and the S-4 will comply as to form in all material
respects with the provisions of the Securities Act and the rules and regulations
thereunder.
2.6 Consents and Approvals; No Violations. Except for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended (the "HSR Act"), the rules of the National Association of
Securities Dealers, Inc. ("NASD"), the filing and recordation of the Merger
Certificate, the Articles of Merger as required by the DGCL and TBCA and state
and/or local governmental entities regarding licensure for child care
operations, respectively, no filing with or notice to, and no permit,
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authorization, consent or approval of, any court or tribunal or administrative,
governmental or regulatory body, agency or authority (a "Governmental Entity")
is necessary for the execution and delivery by BRHZ of this Agreement or the
consummation by BRHZ of the transactions contemplated hereby, except where the
failure to obtain such permits, authorizations, consents or approvals or to make
such filings or give such notice would not have a Material Adverse Effect on
BRHZ.
Neither the execution, delivery and performance of this Agreement by
BRHZ nor the consummation by BRHZ of the transactions contemplated hereby will
(i) conflict with or result in any breach of any provision of the respective
Certificate of Incorporation or Bylaws (or similar governing documents) of BRHZ
or any of BRHZ's subsidiaries, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration
or Lien (as defined below)) under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which BRHZ or any of BRHZ's subsidiaries is a
party or by which any of them or any of their respective properties or assets
may be bound, or (iii) violate any order, writ, injunction, decree, law,
statute, rule or regulation applicable to BRHZ or any of BRHZ's subsidiaries or
any of their respective properties or assets, except in the case of (ii) or
(iii) for violations, breaches or defaults listed on Schedule 2.6 to the BRHZ
Disclosure Schedule or which would not have a Material Adverse Effect on BRHZ.
For purposes of this Agreement, "Lien" means, with respect to any asset
(including, without limitation, any security) any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
2.7 No Default. None of BRHZ or any of its subsidiaries is in breach,
default or violation (and no event has occurred which with notice or the lapse
of time or both would constitute a breach, default or violation) of any term,
condition or provision of (i) its Certificate of Incorporation or Bylaws (or
similar governing documents), (ii) any note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument or obligation to which BRHZ or
any of its subsidiaries is now a party or by which any of them or any of their
respective properties or assets may be bound or (iii) any order, writ,
injunction, decree, law, statute, rule or regulation applicable to BRHZ, its
subsidiaries or any of their respective properties or assets, except in the case
of (ii) or (iii) for violations, breaches or defaults that would not have a
Material Adverse Effect on BRHZ. Each note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument or obligation to which BRHZ or
any of its subsidiaries is now a party or by which any of them or any of their
respective properties or assets may be bound that is material to BRHZ and its
subsidiaries, taken as a whole, and that has not expired is in full force and
effect and is not subject to any material default thereunder of which BRHZ is
aware by any party obligated to BRHZ or any subsidiary thereunder.
2.8 No Undisclosed Liabilities; Absence of Changes. Except as and to
the extent publicly disclosed by BRHZ in the BRHZ SEC Reports filed prior to the
date hereof, as of June 30, 1997, none of BRHZ or its subsidiaries had any
liabilities or obligations of any nature, whether or not accrued, contingent or
otherwise, that would be required by generally accepted accounting principles to
be reflected on a consolidated balance sheet of BRHZ and its consolidated
subsidiaries (including
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the notes thereto) or which would have a Material Adverse Effect on BRHZ. Except
as publicly disclosed by BRHZ in the BRHZ SEC Reports filed prior to the date
hereof, since June 30, 1997, none of BRHZ or its subsidiaries has incurred any
liabilities of any nature, whether or not accrued, contingent or otherwise,
which could reasonably be expected to have, and there have been no events,
changes or effects with respect to BRHZ or its subsidiaries having or which
could reasonably be expected to have, a Material Adverse Effect on BRHZ. Except
as and to the extent publicly disclosed by BRHZ in the BRHZ SEC Reports filed
prior to the date hereof, since June 30, 1997, there has not been (i) any
material change by BRHZ in its accounting methods, principles or practices
(other than as required after the date hereof by concurrent changes in generally
accepted accounting principles), (ii) any revaluation by BRHZ of any of its
assets having a Material Adverse Effect on BRHZ, including, without limitation,
any write-down of the value of any assets other than in the ordinary course of
business or (iii) any other action or event that would have required the consent
of any other party hereto pursuant to Section 4.1 of this Agreement had such
action or event occurred after the date of this Agreement.
2.9 Litigation. Except as publicly disclosed by BRHZ in the BRHZ SEC
Reports filed prior to the date hereof, there is no suit, claim, action,
proceeding or investigation pending or, to the knowledge of BRHZ, threatened
against BRHZ or any of its subsidiaries or any of their respective properties or
assets before any Governmental Entity which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect on BRHZ or could
reasonably be expected to prevent or delay the consummation of the transactions
contemplated by this Agreement. Except as publicly disclosed by BRHZ in the BRHZ
SEC Reports filed prior to the date hereof, none of BRHZ or its subsidiaries is
subject to any outstanding order, writ, injunction or decree which, insofar as
can be reasonably foreseen in the future, could reasonably be expected to have a
Material Adverse Effect on BRHZ or could reasonably be expected to prevent or
delay the consummation of the transactions contemplated hereby.
2.10 Compliance with Applicable Law. Except as publicly disclosed by
BRHZ in the BRHZ SEC Reports filed prior to the date hereof, BRHZ and its
subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for the lawful conduct of their
respective businesses (the "BRHZ Permits"), except for failures to hold such
permits, licenses, variances, exemptions, orders and approvals which would not
have a Material Adverse Effect on BRHZ. Except as publicly disclosed by BRHZ in
the BRHZ SEC Reports filed prior to the date hereof, BRHZ and its subsidiaries
are in compliance with the terms of the BRHZ Permits, except where the failure
so to comply would not have a Material Adverse Effect on BRHZ. Except as
publicly disclosed by BRHZ in the BRHZ SEC Reports filed prior to the date
hereof, the businesses of BRHZ and its subsidiaries are not being conducted in
violation of any law, ordinance or regulation of any Governmental Entity and
except for violations or possible violations which do not, and, insofar as
reasonably can be foreseen, in the future cannot reasonably be expected to, have
a Material Adverse Effect on BRHZ. Except as publicly disclosed by BRHZ in the
BRHZ SEC Reports filed prior to the date hereof, no investigation or review by
any Governmental Entity with respect to BRHZ or its subsidiaries is pending or,
to the knowledge of BRHZ, threatened, nor, to the knowledge of BRHZ, has any
Governmental Entity indicated an intention to conduct the same, other
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than, in each case, those which BRHZ reasonably believes will not have a
Material Adverse Effect on BRHZ.
2.11 Employee Benefit Plans; Labor Matters.
(a) The BRHZ Disclosure Schedule lists each employment, bonus, deferred
compensation, pension, stock option, stock appreciation right, profit-sharing or
retirement plan, arrangement or practice, each medical, vacation, retiree
medical, severance pay plan, and each other agreement or fringe benefit plan,
arrangement or practice, of BRHZ, whether formal or informal, which affects one
or more of its employees, including all "employee benefit plans" as defined by
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (collectively, the "BRHZ Plans").
(b) Copies of each such BRHZ Plan requested by CFAM have heretofore
been delivered to CFAM. For each BRHZ Plan which is an "employee benefit plan"
under Section 3(3) of ERISA, BRHZ has made available to CFAM correct and
complete copies of the plan documents and summary plan descriptions, the most
recent determination letter received from the Internal Revenue Service, the most
recent Form 5500 Annual Report (including all applicable schedules), and all
related trust agreements, insurance contracts and funding agreements which
implement each such BRHZ Plan.
(c) BRHZ does not have any commitment, whether formal or informal, (i)
to create any additional such BRHZ Plan; (ii) to modify or change any such BRHZ
Plan; or (iii) to maintain for any period of time any such BRHZ Plan.
(d) There are no BRHZ Plans which are subject to Title IV of ERISA or
the minimum funding standards of Section 412 of the Code. Neither BRHZ nor any
BRHZ Plan nor any trustee, administrator, fiduciary or sponsor of any BRHZ Plan
has engaged in any prohibited transactions as defined in Section 406 of ERISA or
Section 4975 of the Code for which there is no statutory exemption in Section
408 of ERISA or Section 4975 of the Code; all filings, reports and descriptions
as to such BRHZ Plans (including Form 5500 Annual Reports, Summary Plan
Descriptions, PBCG-1's and Summary Annual Reports) required to have been made
or distributed to participants, the Internal Revenue Service, the United States
Department of Labor and other governmental agencies have been made in a timely
manner or will be made on or prior to the Closing Date; there is no material
litigation, disputed claim, governmental proceeding or investigation pending or
threatened with respect to any of such BRHZ Plans, the related trusts, or any
fiduciary, trustee, administrator or sponsor of such BRHZ Plans; such BRHZ Plans
have been established, maintained and administered in all material respects in
accordance with their governing documents and applicable provisions of ERISA and
the Code and Treasury Regulations promulgated thereunder; there has been no
"Reportable Event" as defined in Section 4043 of ERISA with respect to any BRHZ
Pension plan that has not been waived by the Pension Benefit Guaranty
Corporation; and each BRHZ Pension plan and each BRHZ Plan which is intended to
be a qualified plan under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service.
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(e) The consummation of the transactions on the part of BRHZ
contemplated by this Agreement will not (i) result in the payment or series of
payments by BRHZ to any employee or other person of an "excess parachute
payment" within the meaning of Section 280G of the Code, (ii) entitle any
employee or former employee of BRHZ to severance pay, unemployment compensation
or any other payment, and (iii) accelerate the time of payment or vesting of any
stock option, stock appreciation right, deferred compensation or other employee
benefits under any BRHZ Plan (including vacation and sick pay).
(f) None of the BRHZ Plans which are "welfare benefit plans," within
the meaning of Section 3(1) of ERISA, provide for continuing benefits or
coverage after termination or retirement from employment, except for COBRA
rights under a "group health plan" as defined in Code Section 4980B(g) and ERISA
Section 607.
(g) Neither BRHZ nor any other entity required to be aggregated with
BRHZ under Code Section 414(b), (c), (m) or (n) ("ERISA Affiliate") has ever
participated in or withdrawn from a multi-employer plan as defined in Section
4001(a)(3) of Title IV of ERISA, and neither BRHZ nor any ERISA Affiliate has
incurred and does not presently owe any liability as a result of any partial or
complete withdrawal by any employer from such a multi-employer plan as described
under Sections 4201, 4203, or 4205 of ERISA.
(h) There are no collective bargaining agreements in effect between
BRHZ and labor unions or organizations representing any of BRHZ's employees.
During the past seven years, there has been no request for collective bargaining
or for an employee election from any employee, union or the National Labor
Relations Board. In addition, (i) BRHZ is in compliance with all federal, state
and local laws, rules and regulations relating to employees' employment and/or
employment relationships, including, without limitation, wage related laws,
anti-discrimination laws, employee safety laws and COBRA (defined herein to mean
the requirements of Code Section 4980B, Proposed Treasury Regulation Section
1.162-26 and Part 6 of Subtitle B of Title I of ERISA), and is not engaged in
any unfair labor practice; (ii) there is no unfair labor practice complaint
against BRHZ pending or threatened before the National Labor Relations Board or
the United States Department of Labor; (iii) there is no labor strike, dispute,
slowdown or stoppage in progress or threatened against or involving BRHZ; (iv)
no question concerning representation has been raised or is threatened
respecting the employees of BRHZ; (v) no grievance or arbitration proceeding is
pending and no claim therefor exists; (vi) no private agreement restricts BRHZ
from relocating, closing or terminating any of its operations or facilities; and
(vii) BRHZ has not in the past five years experienced any labor strike, dispute,
slowdown, stoppage or other labor difficulty.
2.12 Environmental Laws and Regulations.
(a) Except as publicly disclosed by BRHZ in the BRHZ SEC
Reports filed prior to the date hereof, (i) BRHZ is in material
compliance with all applicable federal, state, local and foreign laws
and regulations relating to pollution or protection of human health or
the environment (including, without limitation, ambient air, surface
water, ground water, land
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surface or subsurface strata) (collectively, "Environmental Laws"),
except for non-compliances that would not reasonably be expected to
have a Material Adverse Effect on BRHZ, which compliance includes, but
is not limited to, the possession by BRHZ of all material permits and
other governmental authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions
thereof; (ii) BRHZ has not received written notice of, or, to the
knowledge of BRHZ, is the subject of, any action, cause of action,
claim, investigation, demand or notice by any person or entity alleging
liability under or non-compliance with any Environmental Law (an
"Environmental Claim") that could reasonably be expected to have a
Material Adverse Effect on BRHZ; and (iii) to the knowledge of BRHZ,
there are no circumstances that are reasonably likely to prevent or
interfere with such material compliance in the future.
(b) Except as publicly disclosed by BRHZ, there are no
Environmental Claims which could reasonably be expected to have a
Material Adverse Effect on BRHZ that are pending or, to the knowledge
of BRHZ, threatened against BRHZ or, to the knowledge of BRHZ, against
any person or entity whose liability for any Environmental Claim BRHZ
has or may have retained or assumed either contractually or by
operation of law.
(c) BRHZ is not presently and has not in the past owned any
real property on which any above ground or underground storage tanks
are located, on which any such tanks were located during BRHZ's
ownership of such real property.
(d) To the knowledge of BRHZ, no materials listed in Section
101(14) of the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. ▇▇.▇▇. 9601 et seq.
("CERCLA"), nor any other substance, material or waste defined as toxic
or hazardous under any Environmental Law, including, but not limited to
asbestos ("Hazardous Materials"), have been disposed on any real
property or affixed to any improvements on any real property owned or
operated by BRHZ.
(e) BRHZ does not and has not at any time generated, used,
treated, or otherwise handled any Hazardous Materials except for de
minimis amounts of Hazardous Materials handled in the normal course of
a typical office operation.
2.13 Tax Matters.
(a) (i) BRHZ and each of its subsidiaries has filed or has had
filed on its behalf in a timely manner (within any applicable extension
periods) with the appropriate Governmental Entity all income and other
material Tax Returns (as defined herein) with respect to Taxes (as
defined herein) of BRHZ and each of its subsidiaries, and all Tax
Returns were in all material respects true, complete and correct; (ii)
all material Taxes with respect to BRHZ and each of its subsidiaries
have been paid in full or have been provided for in accordance with
GAAP on BRHZ's most recent balance sheet which is part of the BRHZ SEC
Documents; (iii) there are no outstanding agreements or waivers
extending the
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statutory period of limitations applicable to any federal, state, local
or foreign income or other material Tax Returns required to be filed by
or with respect to BRHZ or its subsidiaries; (iv) to the knowledge of
BRHZ none of the Tax Returns of or with respect to BRHZ or any of its
subsidiaries is currently being audited or examined by any Governmental
Entity; (v) no deficiency for any income or other material Taxes has
been assessed with respect to BRHZ or any of its subsidiaries which has
not been abated or paid in full; (vi) no claim has ever been made by an
authority in a jurisdiction where any of BRHZ or its subsidiaries does
not file Tax Returns that it is or may be subject to taxation by such
jurisdiction; and (vii) each of BRHZ and its subsidiaries has withheld
and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent
contractor, stockholder, or other third party.
(b) For purposes of this Agreement, (i) "Taxes" shall mean all
taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, sales, use, ad valorem, goods and
services, capital, transfer, franchise, profits, license, withholding,
payroll, employment, employer health, excise, estimated, severance,
stamp, occupation, property or other taxes, customs duties, fees,
assessments or charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts
imposed by any taxing authority and (ii) "Tax Return" shall mean any
report, return, documents, declaration or other information or filing
required to be supplied to any taxing authority or jurisdiction with
respect to Taxes.
2.14 Title to Property. BRHZ and each of its subsidiaries have good and
defensible title to all of its properties and assets, free and clear of all
liens, charges and encumbrances except liens for taxes not yet due and payable
and such liens or other imperfections of title, if any, as do not materially
detract from the value of or interfere with the present use of the property
affected thereby or which, individually or in the aggregate, would not have a
Material Adverse Effect on BRHZ; and, to BRHZ's knowledge, all leases pursuant
to which BRHZ or any of its subsidiaries lease from others real or personal
property are in good standing, valid and effective in accordance with their
respective terms, and there is not, to the knowledge of BRHZ, under any of such
leases, any existing material default or event of default (or event which with
notice or lapse of time, or both, would constitute a material default and in
respect of which BRHZ or such subsidiary has not taken adequate steps to prevent
such a default from occurring) except where the lack of such good standing,
validity and effectiveness, or the existence of such default or event of default
would not have a Material Adverse Effect on BRHZ.
2.15 Intellectual Property.
(a) All of BRHZ's and its subsidiaries' interests in all of
BRHZ's and its subsidiaries' rights, title and interest in and to all
existing United States and foreign patents, trademarks, trade names,
service marks, copyrights, trade secrets, know how, methods or
processes and other intellectual properties and proprietary information
and any applications therefor that are material to its business as
currently conducted (the "BRHZ Intellectual
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Property Rights") are free and clear of all liens and encumbrances
(except for such liens and encumbrances that would not result in a BRHZ
Material Adverse Effect) and the validity of the BRHZ Intellectual
Property Rights and the title thereto of BRHZ or any subsidiary, as the
case may be, is not being questioned in any litigation or
administrative proceeding before any court or government agency.
(b) The conduct of the business of BRHZ and its subsidiaries
as now conducted does not, to BRHZ's knowledge, infringe any valid
patents, trademarks, trade names, service marks or copyrights or makes
any unauthorized use of any trade secret, know how, methods or
processes and any other intellectual properties or proprietary
information of others. The consummation of the transactions completed
hereby will not result in the loss or impairment of any BRHZ
Intellectual Property Rights.
(c) Each of BRHZ and its subsidiaries has taken steps it
believes appropriate to protect and maintain its trade secrets, know
how, methods or processes as such, except in cases where BRHZ has
elected to rely on patent or copyright protection in lieu of trade
secret protection.
(d) No current licenses for the use of any BRHZ Intellectual
Property Rights have been granted by BRHZ or any of its subsidiaries,
as the case may be, to any third parties.
2.16 Insurance. BRHZ and its subsidiaries maintain general liability
and other business insurance that BRHZ believes to be reasonably prudent for its
business.
2.17 Material Contracts.
(a) BRHZ has delivered or otherwise will make available to
CFAM true, correct and complete copies of all contracts and agreements
(and all amendments, modifications and supplements thereto and all side
letters to which BRHZ is a party affecting the obligations of any party
thereunder) to which BRHZ or any of its subsidiaries is a party or by
which any of their properties or assets are bound that are, material to
the business, properties or assets of BRHZ and its subsidiaries taken
as a whole, including, without limitation, to the extent any of the
following are, individually or in the aggregate, material to the
business, properties or assets of BRHZ and its subsidiaries taken as a
whole, all: (i) Material Contracts as set forth in Item 601(b)(10) of
Regulation S-K of the SEC; (ii) written and oral agreements, contracts
and commitments to which BRHZ is a party, together with all amendments
thereto, for the operation and/or management of child care centers (the
"Management Contracts"); and (iii) written and oral agreements,
contacts and commitments to which BRHZ is a party, together with all
amendments thereto, to provide consulting services, technical or other
activities (other than Management Contracts) (collectively, together
with any such contracts entered into in accordance with Section 4.1
hereof, the "BRHZ Contracts"). Neither BRHZ nor any of its subsidiaries
is a party to or bound by any severance, golden parachute or other
agreement with any employee or consultant pursuant
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to which such person would be entitled to receive any additional
compensation or an accelerated payment of compensation as a result of
the consummation of the transactions contemplated hereby.
(b) Each of the BRHZ Contracts is valid and enforceable in
accordance with its terms, and there is no default under any BRHZ
Contract so listed either by BRHZ or, to the knowledge of BRHZ, by any
other party thereto, and no event has occurred that with the lapse of
time or the giving of notice or both would constitute a default
thereunder by BRHZ or, to the knowledge of BRHZ, any other party, in
any such case in which such default or event could reasonably be
expected to have a Material Adverse Effect on BRHZ.
(c) No party to any such BRHZ Contract has given notice to
BRHZ of or made a claim against BRHZ with respect to any breach or
default thereunder, in any such case in which such breach or default
could reasonably be expected to have a Material Adverse Effect on BRHZ.
2.18 Vote Required. The affirmative vote of the holders of at least a
majority of the outstanding BRHZ Shares is the only vote of the holders of any
class or series of BRHZ's capital stock necessary to approve and adopt this
Agreement and the Merger.
2.19 Tax and Accounting Treatment. Neither BRHZ nor, to the knowledge
of BRHZ, any of its affiliates has taken or agreed to take any action that would
prevent the Merger from (i) constituting a reorganization qualifying under the
provisions of Section 368(a) of the Code, or (ii) being accounted for as a
pooling of interests in accordance with Accounting Principles Board Opinion No.
16, the interpretive releases issued pursuant thereto, and the pronouncements of
the SEC. Price Waterhouse LLP has delivered to BRHZ a letter confirming that
BRHZ is a poolable entity.
2.20 Affiliates. Except for the directors and executive officers of
BRHZ, there are no persons who, to the knowledge of BRHZ, may be deemed to be
affiliates of BRHZ under Rule 1-02(b) of Regulation S-X of the SEC (the "BRHZ
Affiliates").
2.21 Certain Business Practices. None of BRHZ, any of its subsidiaries
or any directors, officers, agents or employees of BRHZ or any of its
subsidiaries has (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended (the
"FCPA"), or (iii) made any other unlawful payment.
2.22 Insider Interests. No officer, director or other affiliate of BRHZ
has any interest in any material property, real or personal, tangible or
intangible, including without limitation, any computer software or BRHZ
Intellectual Property Rights, used in or pertaining to the business of
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BRHZ or any subsidiary, except for the ordinary rights of a stockholder or
employee stock option holder.
2.23 Opinion of Financial Adviser. BT Alex. ▇▇▇▇▇ Incorporated (the
"BRHZ Financial Adviser") has delivered to the BRHZ Board its written opinion,
dated as of the date of this Agreement, to the effect that, as of such date, the
exchange ratio contemplated by the Merger is fair to the holders of BRHZ Shares
from a financial point of view.
2.24 Brokers. No broker, finder or investment banker (other than the
BRHZ Financial Adviser, a true and correct copy of whose engagement agreement
has been provided to CFAM) is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of BRHZ.
2.25 Disclosure. No representation or warranty of BRHZ in this
Agreement or any certificate, schedule, document or other instrument furnished
or to be furnished to CFAM pursuant hereto or in connection herewith contains,
as of the date of such representation, warranty or instrument, or will contain
any untrue statement of a material fact or, at the date thereof, omits or will
omit to state a material fact necessary to make any statement herein or therein,
in light of the circumstances under which such statement is or will be made, not
misleading.
2.26 No Existing Discussions. As of the date hereof, BRHZ is not
engaged, directly or indirectly, in any discussions or negotiations with any
other party with respect to any BRHZ Takeover Proposal (as defined in Section
4.4).
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF CFAM
Except as set forth on the Disclosure Schedule delivered by CFAM to
BRHZ (the "CFAM Disclosure Schedule"), CFAM hereby represents and warrants to
BRHZ as follows:
3.1 Organization and Qualification.
(a) Each of CFAM and its subsidiaries is duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has all requisite
power and authority to own, lease and operate its properties and to
carry on its businesses as now being conducted, except where the
failure to be so organized, existing and in good standing or to have
such power and authority would not have a Material Adverse Effect (as
defined below) on CFAM. When used in connection with CFAM, the term
"Material Adverse Effect" means any change or effect (i) that is or is
reasonably likely to be materially adverse to the business, results of
operations, condition (financial or otherwise) or prospects of CFAM and
its subsidiaries, taken as a whole, other than any change or effect
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arising out of general economic conditions unrelated to any businesses
in which CFAM and its subsidiaries are engaged, or (ii) that may impair
the ability of CFAM to perform its obligations hereunder or to
consummate the transactions contemplated hereby.
(b) CFAM has heretofore delivered to BRHZ accurate and
complete copies of the Charter and Bylaws (or similar governing
documents), as currently in effect, of CFAM. Each of CFAM and its
subsidiaries is duly qualified or licensed and in good standing to do
business in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except in such jurisdictions
where the failure to be so duly qualified or licensed and in good
standing would not have a Material Adverse Effect on CFAM. Section 3.1
of the CFAM Disclosure Schedule sets forth a list of the CFAM
subsidiaries.
3.2 Capitalization of CFAM.
(a) As of April 3, 1998, the authorized capital stock of CFAM
consists of (i) One Hundred Million (100,000,000) CFAM Shares, of which
4,608,280 CFAM Shares were issued and outstanding, and (ii) Ten Million
(10,000,000) shares of Preferred Stock, no par value per share, no
shares of which are outstanding. All of the outstanding CFAM Shares
have been duly authorized and validly issued, and are fully paid,
nonassessable and free of preemptive rights. As of April 3, 1998,
1,368,935 CFAM Shares were reserved for issuance and issuable upon or
otherwise deliverable in connection with the exercise of outstanding
CFAM Stock Options issued pursuant to the CFAM Plans. As of April 3,
1998, 100,000 CFAM Shares were reserved for issuance pursuant to the
CFAM Employee Stock Purchase Plan.
(b) CFAM is the record and beneficial owner of all of the
issued and outstanding shares of capital stock of its subsidiaries.
(c) Between April 3, 1998 and the date hereof, no shares of
CFAM's capital stock have been issued other than pursuant to CFAM Stock
Options already in existence on such date, and, between April 3, 1998
and the date hereof, no CFAM Stock Options have been granted. Except as
set forth in Section 3.2(a) above, as of the date hereof, there are no
outstanding (i) shares of capital stock or other voting securities of
CFAM, (ii) securities of CFAM convertible into or exchangeable for
shares of capital stock or voting securities of CFAM, (iii) options or
other rights to acquire from CFAM or its subsidiaries, or obligations
of CFAM or its subsidiaries to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital
stock or voting securities of CFAM, or (iv) equity equivalents,
interests in the ownership or earnings of CFAM or its subsidiaries or
other similar rights (collectively, "CFAM Securities"). As of the date
hereof there are no outstanding obligations of CFAM or any of its
subsidiaries to repurchase, redeem or otherwise acquire any CFAM
Securities or stockholder agreements, voting trusts or other
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agreements or understandings to which CFAM is a party or by which it is
bound relating to the voting or registration of any shares of capital
stock of CFAM.
(d) There are no securities of CFAM convertible into or
exchangeable for, no options or other rights to acquire from CFAM, and
no other contract, understanding, arrangement or obligation (whether or
not contingent) providing for the issuance or sale, directly or
indirectly, of any capital stock or other ownership interests in, or
any other securities of, any subsidiary of CFAM.
(e) The CFAM Shares constitute the only class of equity
securities of CFAM registered or required to be registered under the
Exchange Act.
(f) CFAM does not own directly or indirectly more than fifty
percent (50%) of the outstanding voting securities or interests
(including membership interests) of any entity other than the CFAM
subsidiaries reflected in Section 3.1 of the CFAM Disclosure Schedule.
3.3 Authority Relative to this Agreement; Recommendation.
(a) CFAM has all necessary corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
and validly authorized by the Board of Directors of CFAM (the "CFAM
Board"), and no other corporate proceedings on the part of CFAM are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby, except, as referred to in Section 3.18, the
approval and adoption of this Agreement by the holders of at least a
majority of the then outstanding CFAM Shares. This Agreement has been
duly and validly executed and delivered by CFAM and constitutes a
valid, legal and binding agreement of CFAM, enforceable against CFAM in
accordance with its terms.
(b) The CFAM Board has resolved to recommend that the
stockholders of CFAM approve and adopt this Agreement.
3.4 SEC Reports; Financial Statements.
(a) CFAM has filed all required forms, reports and documents
with the SEC since August 13, 1997, each of which has complied in all
material respects with all applicable requirements of the Securities
Act and the Exchange Act (and the rules and regulations promulgated
thereunder, respectively), each as in effect on the dates such forms,
reports and documents were filed. CFAM has heretofore delivered or
promptly will deliver prior to the Effective Date to Newco and BRHZ, in
the form filed with the SEC (including any amendments thereto but
excluding any exhibits), (i) its Annual Report on Form 10-K for the
fiscal year ended January 2, 1998, (ii) all definitive proxy statements
relating to CFAM's meetings of stockholders (whether annual or special)
held since August 13, 1997 and (iii) all
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other reports or registration statements filed by CFAM with the SEC
since August 13, 1997 (all of the foregoing, collectively, the "CFAM
SEC Reports"). None of such CFAM SEC Reports, including, without
limitation, any financial statements or schedules included or
incorporated by reference therein, contained, when filed, any untrue
statement of a material fact or omitted to state a material fact
required to be stated or incorporated by reference therein or necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The consolidated financial
statements of CFAM included in the CFAM SEC Reports were prepared in
accordance with generally accepted accounting principles applied on a
consistent basis (except as may be indicated in the notes thereto), and
fairly present the consolidated financial position of CFAM and its
consolidated subsidiaries as of the dates thereof and their
consolidated results of operations and changes in financial position
for the periods then ended, subject in the case of interim financial
statements to the absence of footnotes and to normal year-end audit
adjustments. All material agreements, contracts and other documents
required to be filed as exhibits to any of the CFAM SEC Reports have
been so filed. These representations shall be deemed to be made with
respect to the CFAM SEC Reports filed subsequent to the date hereof at
the time of their filing.
(b) CFAM has heretofore made available or promptly will make
available to Newco and BRHZ a complete and correct copy of any
amendments or modifications, which are required to be filed with the
SEC but have not yet been filed with the SEC, to agreements, documents
or other instruments which previously had been filed by CFAM with the
SEC pursuant to the Exchange Act.
3.5 Information Supplied. None of the information supplied or to be
supplied by CFAM for inclusion or incorporation by reference in (i) the S-4
will, at the time the S-4 is filed with the SEC and at the time it becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and (ii) the Proxy
Statement will, at the date mailed to stockholders of CFAM and BRHZ and at the
times of the meeting or meetings of stockholders of CFAM and BRHZ to be held in
connection with the Merger, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Proxy Statement, insofar as it relates to the
meeting of CFAM's stockholders to vote on the Merger, will comply as to form in
all material respects with the provisions of the Exchange Act and the rules and
regulations thereunder, and the S-4 will comply as to form in all material
respects with the provisions of the Securities Act and the rules and regulations
thereunder.
3.6 Consents and Approvals; No Violations. Except for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, the HSR Act, the rules of the NASD, and the filing
and recordation of the Merger Certificate and the Articles of Merger as required
by the DGCL and TBCA and state and/or local governmental entities regarding
licensure
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for child care operations, respectively, no filing with or notice to, and no
permit, authorization, consent or approval of, any Governmental Entity is
necessary for the execution and delivery by CFAM of this Agreement or the
consummation by CFAM of the transactions contemplated hereby, except where the
failure to obtain such permits, authorizations, consents or approvals or to make
such filings or give such notice would not have a Material Adverse Effect on
CFAM.
Neither the execution, delivery and performance of this Agreement by
CFAM nor the consummation by CFAM of the transactions contemplated hereby will
(i) conflict with or result in any breach of any provision of the respective
Charter or Bylaws (or similar governing documents) of CFAM or any of CFAM's
subsidiaries, (ii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration or Lien) under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which CFAM or any of CFAM's subsidiaries is a party or by which any of them
or any of their respective properties or assets may be bound or (iii) violate
any order, writ, injunction, decree, law, statute, rule or regulation applicable
to CFAM or any of CFAM's subsidiaries or any of their respective properties or
assets, except in the case of (ii) or (iii) for violations, breaches or defaults
listed on Schedule 3.6 to the CFAM Disclosure Schedule or which would not have a
Material Adverse Effect on CFAM.
3.7 No Default. None of CFAM or any of its subsidiaries is in breach,
default or violation (and no event has occurred which with notice or the lapse
of time or both would constitute a breach, default or violation) of any term,
condition or provision of (i) its Charter or Bylaws (or similar governing
documents), (ii) any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which CFAM or any of its
subsidiaries is now a party or by which any of them or any of their respective
properties or assets may be bound or (iii) any order, writ, injunction, decree,
law, statute, rule or regulation applicable to CFAM, its subsidiaries or any of
their respective properties or assets, except in the case of (ii) or (iii) for
violations, breaches or defaults that would not have a Material Adverse Effect
on CFAM. Each note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which CFAM or any of its
subsidiaries is now a party or by which any of them or any of their respective
properties or assets may be bound that is material to CFAM and its subsidiaries
taken as a whole and that has not expired is in full force and effect and is not
subject to any material default thereunder of which CFAM is aware by any party
obligated to CFAM or any subsidiary thereunder.
3.8 No Undisclosed Liabilities; Absence of Changes. Except as and to
the extent publicly disclosed by CFAM in the CFAM SEC Reports filed prior to the
date hereof, as of January 2, 1998, none of CFAM or its subsidiaries had any
liabilities or obligations of any nature, whether or not accrued, contingent or
otherwise, that would be required by generally accepted accounting principles to
be reflected on a consolidated balance sheet of CFAM and its consolidated
subsidiaries (including the notes thereto) or which would have a Material
Adverse Effect on CFAM. Except as publicly disclosed by CFAM in the CFAM SEC
Reports filed prior to the date hereof, since January 2, 1998, none of CFAM or
its subsidiaries has incurred any liabilities of any nature, whether or not
accrued,
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contingent or otherwise, which could reasonably be expected to have, and there
have been no events, changes or effects with respect to CFAM or its subsidiaries
having or which could reasonably be expected to have, a Material Adverse Effect
on CFAM. Except as and to the extent publicly disclosed by CFAM in the CFAM SEC
Reports filed prior to the date hereof, since January 2, 1998, there has not
been (i) any material change by CFAM in its accounting methods, principles or
practices (other than as required after the date hereof by concurrent changes in
generally accepted accounting principles), (ii) any revaluation by CFAM of any
of its assets having a Material Adverse Effect on CFAM, including, without
limitation, any write-down of the value of any assets other than in the ordinary
course of business or (iii) any other action or event that would have required
the consent of any other party hereto pursuant to Section 4.2 of this Agreement
had such action or event occurred after the date of this Agreement.
3.9 Litigation. Except as publicly disclosed by CFAM in the CFAM SEC
Reports filed prior to the date hereof, there is no suit, claim, action,
proceeding or investigation pending or, to the knowledge of CFAM, threatened
against CFAM or any of its subsidiaries or any of their respective properties or
assets before any Governmental Entity which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect on CFAM or could
reasonably be expected to prevent or delay the consummation of the transactions
contemplated by this Agreement. Except as publicly disclosed by CFAM in the CFAM
SEC Reports filed prior to the date hereof, none of CFAM or its subsidiaries is
subject to any outstanding order, writ, injunction or decree which, insofar as
can be reasonably foreseen in the future, could reasonably be expected to have a
Material Adverse Effect on CFAM or could reasonably be expected to prevent or
delay the consummation of the transactions contemplated hereby.
3.10 Compliance with Applicable Law. Except as publicly disclosed by
CFAM in the CFAM SEC Reports filed prior to the date hereof, CFAM and its
subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for the lawful conduct of their
respective businesses (the "CFAM Permits"), except for failures to hold such
permits, licenses, variances, exemptions, orders and approvals which would not
have a Material Adverse Effect on CFAM. Except as publicly disclosed by CFAM in
the CFAM SEC Reports filed prior to the date hereof, CFAM and its subsidiaries
are in compliance with the terms of the CFAM Permits, except where the failure
so to comply would not have a Material Adverse Effect on CFAM. Except as
publicly disclosed by CFAM in the CFAM SEC Reports filed prior to the date
hereof, the businesses of CFAM and its subsidiaries are not being conducted in
violation of any law, ordinance or regulation of any Governmental Entity and
except for violations or possible violations which do not, and, insofar as
reasonably can be foreseen, in the future cannot reasonably be expected to, have
a Material Adverse Effect on CFAM. Except as publicly disclosed by CFAM in the
CFAM SEC Reports filed prior to the date hereof, no investigation or review by
any Governmental Entity with respect to CFAM or its subsidiaries is pending or,
to the knowledge of CFAM, threatened, nor, to the knowledge of CFAM, has any
Governmental Entity indicated an intention to conduct the same, other than, in
each case, those which CFAM reasonably believes will not have a Material Adverse
Effect on CFAM.
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3.11 Employee Benefit Plans; Labor Matters.
(a) The CFAM Disclosure Schedule lists each employment, bonus, deferred
compensation, pension, stock option, stock appreciation right, profit-sharing or
retirement plan, arrangement or practice, each medical, vacation, retiree
medical, severance pay plan, and each other agreement or fringe benefit plan,
arrangement or practice, of CFAM, whether formal or informal, which affects one
or more of its employees, including all "employee benefit plans" as defined by
Section 3(3) of ERISA (collectively, the "CFAM Plans"). All CFAM Plans which are
subject to Title IV of ERISA or the minimum funding standards of Section 412 of
the Code shall be referred to as the "CFAM Pension Plans."
(b) Copies of each such CFAM Plan requested by BRHZ have heretofore
been delivered to BRHZ. For each CFAM Plan which is an "employee benefit plan"
under Section 3(3) of ERISA, CFAM has made available to BRHZ correct and
complete copies of the plan documents and summary plan descriptions, the most
recent determination letter received from the Internal Revenue Service, the most
recent Form 5500 Annual Report (including all applicable schedules), and all
related trust agreements, insurance contracts and funding agreements which
implement each such CFAM Plan.
(c) CFAM does not have any commitment, whether formal or informal, (i)
to create any additional such CFAM Plan; (ii) to modify or change any such CFAM
Plan; or (iii) to maintain for any period of time any such CFAM Plan. The CFAM
Disclosure Schedule contains an accurate and complete description of the funding
policies (and commitments, if any) of CFAM with respect to each such existing
CFAM Plan.
(d) CFAM has no unfunded past service liability in respect of any of
its CFAM Plans; the actuarially computed value of vested benefits under any CFAM
Pension Plan (determined in accordance with methods and assumptions utilized by
the Pension Benefit Guaranty Corporation ("PBGC") applicable to a plan
terminating on the date of determination) does not exceed the fair market value
of the fund assets relating to such CFAM Pension Plan; neither CFAM nor any CFAM
Plan nor any trustee, administrator, fiduciary or sponsor of any CFAM Plan has
engaged in any prohibited transactions as defined in Section 406 of ERISA or
Section 4975 of the Code for which there is no statutory exemption in Section
408 of ERISA or Section 4975 of the Code; all filings, reports and descriptions
as to such CFAM Plans (including Form 5500 Annual Reports, Summary Plan
Descriptions, PBCG-1's and Summary Annual Reports) required to have been made or
distributed to participants, the Internal Revenue Service, the United States
Department of Labor and other governmental agencies have been made in a timely
manner or will be made on or prior to the Closing Date; there is no material
litigation, disputed claim, governmental proceeding or investigation pending or
threatened with respect to any of such CFAM Plans, the related trusts, or any
fiduciary, trustee, administrator or sponsor of such CFAM Plans; such CFAM Plans
have been established, maintained and administered in all material respects in
accordance with their governing documents and applicable provisions of ERISA and
the Code and Treasury Regulations promulgated
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thereunder; there has been no "Reportable Event" as defined in Section 4043 of
ERISA with respect to any CFAM Pension Plan that has not been waived by the
Pension Benefit Guaranty Corporation; and each CFAM Pension Plan and each CFAM
Plan which is intended to be a qualified plan under Section 401(a) of the Code
has received a favorable determination letter from the Internal Revenue Service.
(e) The consummation of the transactions on the part of CFAM
contemplated by this Agreement will not (i) result in the payment or series of
payments by CFAM to any employee or other person of an "excess parachute
payment" within the meaning of Section 280G of the Code, (ii) entitle any
employee or former employee of CFAM to severance pay, unemployment compensation
or any other payment, and (iii) accelerate the time of payment or vesting of any
stock option, stock appreciation right, deferred compensation or other employee
benefits under any CFAM Plan (including vacation and sick pay).
(f) None of the CFAM Plans which are "welfare benefit plans," within
the meaning of Section 3(1) of ERISA, provide for continuing benefits or
coverage after termination or retirement from employment, except for COBRA
rights under a "group health plan" as defined in Code Section 4980B(g) and ERISA
Section 607.
(g) Neither CFAM nor any ERISA Affiliate has ever participated in or
withdrawn from a multi-employer plan as defined in Section 4001(a)(3) of Title
IV of ERISA, and neither CFAM nor any ERISA Affiliate has incurred and does not
presently owe any liability as a result of any partial or complete withdrawal by
any employer from such a multi-employer plan as described under Sections 4201,
4203, or 4205 of ERISA.
(h) No CFAM Pension Plan has been completely or partially terminated,
nor to the knowledge of CFAM has any proceeding been instituted by the PBGC to
terminate any such CFAM Pension Plan; neither CFAM nor any ERISA Affiliate has
incurred, or presently owes, any liability to the PBGC or the Internal Revenue
Service with respect to any CFAM Pension Plan including, but not by way of
limitation, any liability for PBGC premiums or excise taxes under Code Section
4971.
(i) There are no collective bargaining agreements in effect between
CFAM and labor unions or organizations representing any of CFAM's employees.
During the past seven years, there has been no request for collective bargaining
or for an employee election from any employee, union or the National Labor
Relations Board. In addition, (i) CFAM is in compliance with all federal, state
and local laws, rules and regulations relating to employees' employment and/or
employment relationships, including, without limitation, wage related laws,
anti-discrimination laws, employee safety laws and COBRA, and is not engaged in
any unfair labor practice; (ii) there is no unfair labor practice complaint
against CFAM pending or threatened before the National Labor Relations Board or
the United States Department of Labor; (iii) there is no labor strike, dispute,
slowdown or stoppage in progress or threatened against or involving CFAM; (iv)
no question concerning representation has been raised or is threatened
respecting the employees of CFAM; (v) no grievance or arbitration proceeding is
pending and no claim therefor exists; (vi) no private agreement restricts
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CFAM from relocating, closing or terminating any of its operations or
facilities; and (vii) CFAM has not in the past five years experienced any labor
strike, dispute, slowdown, stoppage or other labor difficulty.
3.12 Environmental Laws and Regulations.
(a) Except as publicly disclosed by CFAM in the CFAM SEC
Reports filed prior to the date hereof, (i) CFAM is in material
compliance with all applicable Environmental Laws, except for
non-compliances that would not reasonably be expected to have a
Material Adverse Effect on CFAM, which compliance includes, but is not
limited to, the possession by CFAM of all material permits and other
governmental authorizations required under applicable Environmental
Laws, and compliance with the terms and conditions thereof; (ii) CFAM
has not received written notice of, or, to the knowledge of CFAM, is
the subject of, any Environmental Claim that could reasonably be
expected to have a Material Adverse Effect on CFAM; and (iii) to the
knowledge of CFAM, there are no circumstances that are reasonably
likely to prevent or interfere with such material compliance in the
future.
(b) Except as publicly disclosed by CFAM, there are no
Environmental Claims which could reasonably be expected to have a
Material Adverse Effect on CFAM that are pending or, to the knowledge
of CFAM, threatened against CFAM or, to the knowledge of CFAM, against
any person or entity whose liability for any Environmental Claim CFAM
has or may have retained or assumed either contractually or by
operation of law.
(c) CFAM is not presently and has not in the past owned any
real property on which any above ground or underground storage tanks
are located, or on which any such tanks were located during CFAM's
ownership of such real property.
(d) To the knowledge of CFAM, no Hazardous Materials have been
disposed on any real property or affixed to any improvements on any
real property owned or operated by CFAM.
(e) CFAM does not and has not at any time generated, used,
treated, or otherwise handled any Hazardous Materials except for de
minimis amounts of Hazardous Materials handled in the normal course of
a typical office operation.
3.13 Tax Matters. (i) CFAM and each of its subsidiaries has filed or
has had filed on its behalf in a timely manner (within any applicable extension
periods) with the appropriate Governmental Entity all income and other material
Tax Returns with respect to Taxes of CFAM and each of its subsidiaries, and all
Tax Returns were in all material respects true, complete and correct; (ii) all
material Taxes with respect to CFAM and each of its subsidiaries have been paid
in full or have been provided for in accordance with GAAP on CFAM's most recent
balance sheet which is part of the CFAM SEC Documents; (iii) there are no
outstanding agreements or waivers extending the statutory period of limitations
applicable to any federal, state, local or foreign income or other
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material Tax Returns required to be filed by or with respect to CFAM or its
subsidiaries; (iv) to the knowledge of CFAM none of the Tax Returns of or with
respect to CFAM or any of its subsidiaries is currently being audited or
examined by any Governmental Entity; (v) no deficiency for any income or other
material Taxes has been assessed with respect to CFAM or any of its subsidiaries
which has not been abated or paid in full; (vi) no claim has ever been made by
an authority in a jurisdiction where any of CFAM or its subsidiaries does not
file Tax Returns that it is or may be subject to taxation by such jurisdiction;
and (vii) each of CFAM and its subsidiaries has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, stockholder, or other third party. .
3.14 Title to Property. CFAM and each of its subsidiaries have good and
defensible title to all of its properties and assets, free and clear of all
liens, charges and encumbrances except liens for taxes not yet due and payable
and such liens or other imperfections of title, if any, as do not materially
detract from the value of or interfere with the present use of the property
affected thereby or which, individually or in the aggregate, would not have a
Material Adverse Effect on CFAM; and, to CFAM's knowledge, all leases pursuant
to which CFAM or any of its subsidiaries lease from others real or personal
property are in good standing, valid and effective in accordance with their
respective terms, and there is not, to the knowledge of CFAM, under any of such
leases, any existing material default or event of default (or event which with
notice or lapse of time, or both, would constitute a material default and in
respect of which CFAM or such subsidiary has not taken adequate steps to prevent
such a default from occurring) except where the lack of such good standing,
validity and effectiveness, or the existence of such default or event of default
would not have a Material Adverse Effect on CFAM.
3.15 Intellectual Property.
(a) All of CFAM's and its subsidiaries' interests in all of
CFAM's and its subsidiaries' rights, title and interest in and to all
existing United States and foreign patents, trademarks, trade names,
service marks, copyrights, trade secrets, know how, methods or
processes and other intellectual properties and proprietary information
and any applications therefor that are material to its business as
currently conducted (the "CFAM Intellectual Property Rights") are free
and clear of all liens and encumbrances (except for such liens and
encumbrances that would not result in a CFAM Material Adverse Effect)
and the validity of the CFAM Intellectual Property Rights and the title
thereto of CFAM or any subsidiary, as the case may be, is not being
questioned in any litigation or administrative proceeding before any
court or government agency.
(b) The conduct of the business of CFAM and its subsidiaries
as now conducted does not, to CFAM's knowledge, infringe any valid
patents, trademarks, trade names, service marks or copyrights or makes
any unauthorized use of any trade secret, know how, methods or
processes and any other intellectual properties or proprietary
information of others. The consummation of the transactions completed
hereby will not result in the loss or impairment of any CFAM
Intellectual Property Rights.
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(c) Each of CFAM and its subsidiaries has taken steps it
believes appropriate to protect and maintain its trade secrets, know
how, methods or processes as such, except in cases where CFAM has
elected to rely on patent or copyright protection in lieu of trade
secret protection.
(d) No current licenses for the use of any CFAM Intellectual
Property Rights have been granted by CFAM or any of its subsidiaries,
as the case may be, to any third parties.
3.16 Insurance. CFAM and its subsidiaries maintain general liability
and other business insurance that CFAM believes to be reasonably prudent for its
business.
3.17 Material Contracts.
(a) CFAM has delivered or otherwise will make available to
BRHZ true, correct and complete copies of all contracts and agreements
(and all amendments, modifications and supplements thereto and all side
letters to which CFAM is a party affecting the obligations of any party
thereunder) to which CFAM or any of its subsidiaries is a party or by
which any of their properties or assets are bound that are, material to
the business, properties or assets of CFAM and its subsidiaries taken
as a whole, including, without limitation, to the extent any of the
following are, individually or in the aggregate, material to the
business, properties or assets of CFAM and its subsidiaries taken as a
whole, all: (i) Material Contracts as set forth in Item 601(b)(10) of
Regulation S-K of the SEC; (ii) Management Contracts; and (iii) written
and oral agreements, contacts and commitments to which CFAM is a party,
together with all amendments thereto, to provide consulting services,
technical or other activities (other than Management Contracts)
(collectively, together with any such contracts entered into in
accordance with Section 4.2 hereof, the "CFAM Contracts"). Neither CFAM
nor any of its subsidiaries is a party to or bound by any severance,
golden parachute or other agreement with any employee or consultant
pursuant to which such person would be entitled to receive any
additional compensation or an accelerated payment of compensation as a
result of the consummation of the transactions contemplated hereby.
(b) Each of the CFAM Contracts is valid and enforceable in
accordance with its terms, and there is no default under any CFAM
Contract so listed either by CFAM or, to the knowledge of CFAM, by any
other party thereto, and no event has occurred that with the lapse of
time or the giving of notice or both would constitute a default
thereunder by CFAM or, to the knowledge of CFAM, any other party, in
any such case in which such default or event could reasonably be
expected to have a Material Adverse Effect on CFAM.
(c) No party to any such CFAM Contract has given notice to
CFAM of or made a claim against CFAM with respect to any breach or
default thereunder, in any such case in which such breach or default
could reasonably be expected to have a Material Adverse Effect on CFAM.
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3.18 Vote Required. The affirmative vote of the holders of at least a
majority of the outstanding CFAM Shares is the only vote of the holders of any
class or series of CFAM's capital stock necessary to approve and adopt this
Agreement and the Merger.
3.19 Tax and Accounting Treatment. Neither CFAM nor, to the knowledge
of CFAM, any of its affiliates has taken or agreed to take any action that would
prevent the Merger from (i) constituting a reorganization qualifying under the
provisions of Section 368(a) of the Code, or (ii) being accounted for as a
pooling of interests in accordance with Accounting Principles Board Opinion No.
16, the interpretive releases issued pursuant thereto, and the pronouncements of
the SEC. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP has delivered to CFAM a letter confirming the
transaction being accounted for as a pooling of interests.
3.20 Affiliates. Except for the directors and executive officers of
CFAM, there are no persons who, to the knowledge of CFAM, may be deemed to be
affiliates of CFAM under Rule 1-02(b) of Regulation S-X of the SEC (the "CFAM
Affiliates").
3.21 Certain Business Practices. None of CFAM, any of its subsidiaries
or any directors, officers, agents or employees of CFAM or any of its
subsidiaries has (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or violated
any provision of the FCPA, or (iii) made any other unlawful payment.
3.22 Insider Interests. No officer, director or other affiliate of CFAM
has any interest in any material property, real or personal, tangible or
intangible, including without limitation, any computer software or CFAM
Intellectual Property Rights, used in or pertaining to the business of CFAM or
any subsidiary, except for the ordinary rights of a stockholder or employee
stock option holder.
3.23 Opinion of Financial Adviser. NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities
LLC (the "CFAM Financial Adviser") has delivered to the CFAM Board its written
opinion, dated as of the date of this Agreement, to the effect that, as of such
date, the exchange ratio contemplated by the Merger is fair to the holders of
CFAM Shares from a financial point of view.
3.24 Brokers. No broker, finder or investment banker (other than the
CFAM Financial Adviser, a true and correct copy of whose engagement agreement
has been provided to BRHZ) is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of CFAM.
3.25 Disclosure. No representation or warranty of CFAM in this
Agreement or any certificate, schedule, document or other instrument furnished
or to be furnished to BRHZ pursuant hereto or in connection herewith contains,
as of the date of such representation, warranty or instrument, or will contain
any untrue statement of a material fact or, at the date thereof, omits or
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will omit to state a material fact necessary to make any statement herein or
therein, in light of the circumstances under which such statement is or will be
made, not misleading.
3.26 No Existing Discussions. As of the date hereof, CFAM is not
engaged, directly or indirectly, in any discussions or negotiations with any
other party with respect to any CFAM Takeover Proposal (as defined in Section
4.5).
ARTICLE 4
COVENANTS
4.1 Conduct of Business of BRHZ. Except as contemplated by this
Agreement or as described in Section 4.1 of the BRHZ Disclosure Schedule, during
the period from the date hereof to the Effective Time, BRHZ will conduct its
operations in the ordinary course of business consistent with past practice and,
to the extent consistent therewith, with no less diligence and effort than would
be applied in the absence of this Agreement, seek to preserve intact its current
business organization, keep available the service of its current officers and
employees and preserve its relationships with customers, suppliers and others
having business dealings with it to the end that goodwill and ongoing businesses
shall be unimpaired at the Effective Time. Without limiting the generality of
the foregoing, except as otherwise expressly provided in this Agreement or as
described in Section 4.1 of the BRHZ Disclosure Schedule, prior to the Effective
Time, BRHZ will not, without the prior written consent of CFAM:
(a) amend its Certificate of Incorporation or Bylaws (or other
similar governing instrument);
(b) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to
purchase or otherwise) any stock of any class or any other securities
(except bank loans) or equity equivalents (including, without
limitation, any stock options or stock appreciation rights), except for
(i) the issuance and sale of BRHZ Shares pursuant to options previously
granted under the BRHZ Plans; and (ii) the granting of stock options to
employees in the ordinary course of business and consistent with past
practices of BRHZ, provided that the aggregate number of BRHZ Shares
issuable pursuant to such options shall not exceed 25,000;
(c) split, combine or reclassify any shares of its capital
stock, declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in
respect of its capital stock, make any other actual, constructive or
deemed distribution in respect of its capital stock or otherwise make
any payments to stockholders in their capacity as such, or redeem or
otherwise acquire any of its securities;
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(d) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of BRHZ (other than the Merger);
(e) (i) incur or assume any long-term or short-term debt other
than in the ordinary course or issue any debt securities; (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other
person; (iii) make any loans, advances or capital contributions to, or
investments in, any other person other than in the ordinary course;
(iv) pledge or otherwise encumber shares of capital stock of BRHZ or
its subsidiaries; or (v) mortgage or pledge any of its material assets,
tangible or intangible, or create or suffer to exist any material Lien
thereupon (other than tax Liens for taxes not yet due or Liens in the
ordinary course of business consistent with past practice);
(f) except as may be required by law, enter into, adopt or
amend or terminate any bonus, profit sharing, compensation (except for
salary adjustments for nonofficer employees in the ordinary course),
severance, termination, stock option (except as contemplated by Section
4.1(b) above), stock appreciation right, restricted stock, performance
unit, stock equivalent, stock purchase agreement, pension, retirement,
deferred compensation, employment (except for entering into
employment-at-will relationships for nonofficer employees), severance
or other employee benefit agreement, trust, plan, fund or other
arrangement for the benefit or welfare of any director, officer or
employee in any manner, or increase in any manner the compensation or
fringe benefits of any director, officer or employee or pay any benefit
not required by any plan and arrangement as in effect as of the date
hereof (including, without limitation, the granting of stock
appreciation rights or performance units);
(g) acquire, sell, lease or dispose of any assets in any
single transaction or series of related transactions (other than in the
ordinary course of business);
(h) except as may be required as a result of a change in law
or in generally accepted accounting principles, change any of the
accounting principles or practices used by it;
(i) revalue in any material respect any of its assets,
including, without limitation, writing down the value of inventory or
writing-off notes or accounts receivable other than in the ordinary
course of business;
(j) (i) acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, partnership, or other business
organization or division thereof or any equity interest therein which,
individually, is in excess of $750,000; (ii) enter into any contract or
agreement, other than in the ordinary course of business consistent
with past practice, which would be material to BRHZ; (iii) authorize
any new capital expenditure or expenditures
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which, individually, is in excess of $250,000 or, in the aggregate, are
in excess of $1,000,000, except for such planned capital expenditures
set forth on Schedule 4.1(j); provided, however that none of the
foregoing shall limit any capital expenditure required pursuant to
existing contracts;
(k) make any tax election or settle or compromise any income
tax liability material to BRHZ and its subsidiaries taken as a whole;
(l) settle or compromise any pending or threatened suit,
action or claim which (i) relates to the transactions contemplated
hereby or (ii) the settlement or compromise of which could have a
Material Adverse Effect on BRHZ;
(m) make any amendments (other than such amendments effected
in the ordinary course of business that will not materially adversely
affect the contractual arrangement in question) or cause any breach of
any BRHZ Contract; or
(n) take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.1(a) through 4.1(m) or any action which
would make any of the representations or warranties of BRHZ contained
in this Agreement untrue or incorrect.
4.2 Conduct of Business of CFAM. Except as contemplated by this
Agreement or as described in Section 4.2 of the CFAM Disclosure Schedule, during
the period from the date hereof to the Effective Time, CFAM will conduct its
operations in the ordinary course of business consistent with past practice and,
to the extent consistent therewith, with no less diligence and effort than would
be applied in the absence of this Agreement, seek to preserve intact its current
business organization, keep available the service of its current officers and
employees and preserve its relationships with customers, suppliers and others
having business dealings with it to the end that goodwill and ongoing businesses
shall be unimpaired at the Effective Time. Without limiting the generality of
the foregoing, except as otherwise expressly provided in this Agreement or as
described in Section 4.2 of the CFAM Disclosure Schedule, prior to the Effective
Time, CFAM will not, without the prior written consent of BRHZ:
(a) amend its Charter or Bylaws (or other similar governing
instrument);
(b) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to
purchase or otherwise) any stock of any class or any other securities
(except bank loans) or equity equivalents (including, without
limitation, any stock options or stock appreciation rights), except for
(i) the issuance and sale of CFAM Shares pursuant to options previously
granted under the CFAM Plans and (ii) the granting of stock options to
employees in the ordinary course of business and consistent with past
practices of CFAM, provided that the aggregate number of CFAM Shares
issuable pursuant to such options shall not exceed 25,000;
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(c) split, combine or reclassify any shares of its capital
stock, declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in
respect of its capital stock, make any other actual, constructive or
deemed distribution in respect of its capital stock or otherwise make
any payments to stockholders in their capacity as such, or redeem or
otherwise acquire any of its securities;
(d) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of CFAM (other than the Merger);
(e) (i) incur or assume any long-term or short-term debt other
than in the ordinary course or issue any debt securities; (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other
person; (iii) make any loans, advances or capital contributions to, or
investments in, any other person other than in the ordinary course;
(iv) pledge or otherwise encumber shares of capital stock of CFAM or
its subsidiaries; or (v) mortgage or pledge any of its material assets,
tangible or intangible, or create or suffer to exist any material Lien
thereupon (other than tax Liens for taxes not yet due or Liens in the
ordinary course of business consistent with past practice);
(f) except as may be required by law, enter into, adopt or
amend or terminate any bonus, profit sharing, compensation (except for
salary adjustments for nonofficer employees in the ordinary course),
severance, termination, stock option (except as contemplated by Section
4.2(b) above), stock appreciation right, restricted stock, performance
unit, stock equivalent, stock purchase agreement, pension, retirement,
deferred compensation, employment (except for entering into
employment-at-will relationships for nonofficer employees), severance
or other employee benefit agreement, trust, plan, fund or other
arrangement for the benefit or welfare of any director, officer or
employee in any manner, or increase in any manner the compensation or
fringe benefits of any director, officer or employee or pay any benefit
not required by any plan and arrangement as in effect as of the date
hereof (including, without limitation, the granting of stock
appreciation rights or performance units);
(g) acquire, sell, lease or dispose of any assets in any
single transaction or series of related transactions (other than in the
ordinary course of business);
(h) except as may be required as a result of a change in law
or in generally accepted accounting principles, change any of the
accounting principles or practices used by it;
(i) revalue in any material respect any of its assets,
including, without limitation, writing down the value of inventory or
writing-off notes or accounts receivable other than in the ordinary
course of business;
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(j) (i) acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, partnership, or other business
organization or division thereof or any equity interest therein which,
individually, is in excess of $750,000; (ii) enter into any contract or
agreement, other than in the ordinary course of business consistent
with past practice, which would be material to CFAM; (iii) authorize
any new capital expenditure or expenditures which, individually, is in
excess of $250,000 or, in the aggregate, are in excess of $1,000,000;
provided, however that none of the foregoing shall limit any capital
expenditure required pursuant to existing contracts;
(k) make any tax election or settle or compromise any income
tax liability material to CFAM and its subsidiaries taken as a whole;
(l) settle or compromise any pending or threatened suit,
action or claim which (i) relates to the transactions contemplated
hereby or (ii) the settlement or compromise of which could have a
Material Adverse Effect on CFAM;
(m) make any amendments (other than such amendments effected
in the ordinary course of business that will not materially adversely
affect the contractual arrangement in question) or cause any breach of
any CFAM Contract; or
(n) take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.2(a) through 4.2(m) or any action which
would make any of the representations or warranties of CFAM contained
in this Agreement untrue or incorrect.
4.3 Preparation of S-4 and the Proxy Statement. CFAM and BRHZ shall
promptly prepare and file with the SEC the Proxy Statement, and the parties
shall prepare and file with the SEC the S-4, in which the Proxy Statement will
be included as a prospectus. Each of the parties shall use its best efforts to
have the S-4 declared effective under the Securities Act as promptly as
practicable after such filing. The parties shall also use all reasonable efforts
to take any action (other than qualifying to do business in any jurisdiction in
which it is now not so qualified) required to be taken under any applicable
state securities laws in connection with the issuance of Newco Shares in the
Merger and upon the exercise of CFAM Stock Options and BRHZ Stock Options. Each
party shall furnish all information concerning such party and the stockholders
and holders of stock options of such party as may be reasonably requested in
connection with any such action. CFAM and BRHZ agree that the information
supplied or to be supplied by it for inclusion or incorporation by reference in
the Proxy Statement and each amendment or supplement thereto at the time of
mailing thereof and at the time of the respective meetings of shareholders of
CFAM and BRHZ, or, in the case of the Form S-4 and each amendment or supplement
thereto, at the time it is filed or becomes effective, will not include any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
circumstances under which they were made, not misleading.
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4.4 No Solicitation by BRHZ.
(a) BRHZ shall not, nor shall it permit any of its
subsidiaries to, nor shall it authorize or permit any of its directors,
officers or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of
its subsidiaries to, directly or indirectly through another person, (i)
solicit, initiate or encourage (including by way of furnishing
information), or take any other action designed to facilitate, any
inquiries or the making of any proposal which constitutes any BRHZ
Takeover Proposal (as defined below) or (ii) participate in any
discussions or negotiations regarding any BRHZ Takeover Proposal;
provided, however, that if, at any time, the Board of Directors of BRHZ
determines in good faith, after consultation with outside counsel, that
it is necessary to do so in order to comply with its fiduciary duties
to BRHZ's stockholders under applicable law, BRHZ may, in response to a
BRHZ Superior Proposal (as defined in Section 4.4(b)) and subject to
providing prior written notice of its decision to take such action to
CFAM (the "BRHZ Notice") and compliance with Section 4.4(c), following
delivery of the BRHZ Notice (x) furnish information with respect to
BRHZ and its subsidiaries to any person making a BRHZ Superior Proposal
pursuant to a customary confidentiality agreement (as determined by
BRHZ after consultation with its outside counsel) and (y) participate
in discussions or negotiations regarding such BRHZ Superior Proposal.
For purposes of this Agreement, "BRHZ Takeover Proposal" means any
inquiry, proposal or offer from any person relating to any BRHZ
Takeover Event, and "BRHZ Takeover Event" means any (w) direct or
indirect acquisition or purchase of a business that constitutes 30% or
more of the net revenues, net income or the assets of BRHZ and its
subsidiaries, taken as a whole, (x) direct or indirect acquisition or
purchase of 30% or more of any class of equity securities of BRHZ or
any of its subsidiaries whose business constitutes 30% or more of the
net revenues, net income or assets of BRHZ and its subsidiaries, taken
as a whole, (y) tender offer or exchange offer that if consummated
would result in any person beneficially owning 30% or more of any class
of equity securities of BRHZ or any of its subsidiaries whose business
constitutes 30% or more of the net revenues, net income or assets of
BRHZ and its subsidiaries, taken as a whole, or (z) merger,
consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving BRHZ or any of its
subsidiaries whose business constitutes 30% or more of the net
revenues, net income or assets of BRHZ and its subsidiaries, taken as a
whole, other than the transactions contemplated by this Agreement.
(b) Except as expressly permitted by this Section 4.4, neither
the Board of Directors of BRHZ nor any committee thereof shall (i)
withdraw or modify, or propose publicly to withdraw or modify, in a
manner adverse to CFAM, the approval or recommendation by such Board of
Directors or such committee of the Merger or this Agreement, (ii)
approve or recommend, or propose publicly to approve or recommend, any
BRHZ Takeover Proposal or (iii) cause BRHZ to enter into any letter of
intent, agreement in principle, acquisition agreement or other similar
agreement (each, a "BRHZ Acquisition Agreement") related to any BRHZ
Takeover Proposal. Notwithstanding the foregoing, in the event that the
Board of Directors of BRHZ determines in good faith, after consultation
with
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outside counsel, that in light of a BRHZ Superior Proposal it is
necessary to do so in order to act in a manner consistent with its
fiduciary duties to BRHZ's stockholders under applicable law, the Board
of Directors of BRHZ may (subject to this and the following sentences)
enter into a BRHZ Acquisition Agreement with respect to any BRHZ
Superior Proposal, but only after the fifth business day following
CFAM's receipt of written notice advising CFAM that the Board of
Directors of BRHZ is prepared to accept a BRHZ Superior Proposal and
only if, during such five-day period, BRHZ and its advisors shall have
negotiated in good faith with CFAM to make such adjustments in the
terms and conditions of this Agreement as would enable CFAM to proceed
with the transactions contemplated herein on such adjusted terms; it
being understood and agreed that should CFAM not seek to proceed with
the transactions contemplated herein on such adjusted terms, BRHZ may
solicit additional BRHZ Takeover Proposals, including by conducting an
auction. For purposes of this Agreement, a "BRHZ Superior Proposal"
means any proposal made by a third party to acquire, directly or
indirectly, including pursuant to a tender offer, exchange offer,
merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction, for consideration
consisting of cash and/or securities, more than 50% of the combined
voting power of the shares of BRHZ Common Stock then outstanding or all
or substantially all the assets of BRHZ and otherwise on terms which
the Board of Directors of BRHZ determines in its good faith judgment to
be more favorable to BRHZ's stockholders than the merger and for which
financing, to the extent required, is then committed or which, in the
good faith judgment of the Board of Directors of BRHZ, is reasonably
capable of being obtained by such third party.
(c) In addition to the obligations of BRHZ set forth in
paragraphs (a) and (b) of this Section 4.4, BRHZ shall immediately
advise CFAM orally and in writing of any request for information or of
any BRHZ Takeover Proposal. BRHZ will keep CFAM reasonably informed of
the status of any such request or BRHZ Takeover Proposal.
(d) Nothing contained in this Section 4.4 shall prohibit BRHZ
from taking and disclosing to its stockholders a position contemplated
by Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to BRHZ's stockholders if, in the good faith judgment of the
Board of Directors of BRHZ, after consultation with outside counsel,
failure so to disclose would be inconsistent with its obligations under
applicable law; provided, however, that, except in connection with a
BRHZ Superior Proposal, neither BRHZ nor its Board of Directors nor any
committee thereof shall withdraw or modify, or propose publicly to
withdraw or modify, its position with respect to this Agreement or the
Merger or approve or recommend, or propose publicly to approve or
recommend, a BRHZ Takeover Proposal.
4.5 No Solicitation by CFAM.
(a) CFAM shall not, nor shall it permit any of its
subsidiaries to, nor shall it authorize or permit any of its directors,
officers or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of
its
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subsidiaries to, directly or indirectly through another person, (i)
solicit, initiate or encourage (including by way of furnishing
information), or take any other action designed to facilitate, any
inquiries or the making of any proposal which constitutes any CFAM
Takeover Proposal (as defined below) or (ii) participate in any
discussions or negotiations regarding any CFAM Takeover Proposal;
provided, however, that if, at any time, the Board of Directors of CFAM
determines in good faith, after consultation with outside counsel, that
it is necessary to do so in order to comply with its fiduciary duties
to CFAM's stockholders under applicable law, CFAM may, in response to a
CFAM Superior Proposal (as defined in Section 4.5(b)) and subject to
providing prior written notice of its decision to take such action to
BRHZ (the "CFAM Notice") and compliance with Section 4.5(c), following
delivery of the CFAM Notice (x) furnish information with respect to
CFAM and its subsidiaries to any person making a CFAM Superior Proposal
pursuant to a customary confidentiality agreement (as determined by
CFAM after consultation with its outside counsel) and (y) participate
in discussions or negotiations regarding such CFAM Superior Proposal.
For purposes of this Agreement, "CFAM Takeover Proposal" means any
inquiry, proposal or offer from any person relating to any CFAM
Takeover Event, and "CFAM Takeover Event" means any (w) direct or
indirect acquisition or purchase of a business that constitutes 30% or
more of the net revenues, net income or the assets of CFAM and its
subsidiaries, taken as a whole, (x) direct or indirect acquisition or
purchase of 30% or more of any class of equity securities of CFAM or
any of its subsidiaries whose business constitutes 30% or more of the
net revenues, net income or assets of CFAM and its subsidiaries, taken
as a whole, (y) tender offer or exchange offer that if consummated
would result in any person beneficially owning 30% or more of any class
of equity securities of CFAM or any of its subsidiaries whose business
constitutes 30% or more of the net revenues, net income or assets of
CFAM and its subsidiaries, taken as a whole, or (z) merger,
consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving CFAM or any of its
subsidiaries whose business constitutes 30% or more of the net
revenues, net income or assets of CFAM and its subsidiaries, taken as a
whole, other than the transactions contemplated by this Agreement.
(b) Except as expressly permitted by this Section 4.5, neither
the Board of Directors of CFAM nor any committee thereof shall (i)
withdraw or modify, or propose publicly to withdraw or modify, in a
manner adverse to BRHZ, the approval or recommendation by such Board of
Directors or such committee of the Merger or this Agreement, (ii)
approve or recommend, or propose publicly to approve or recommend, any
CFAM Takeover Proposal or (iii) cause CFAM to enter into any letter of
intent, agreement in principle, acquisition agreement or other similar
agreement (each, a "CFAM Acquisition Agreement") related to any CFAM
Takeover Proposal. Notwithstanding the foregoing, in the event that the
Board of Directors of CFAM determines in good faith, after consultation
with outside counsel, that in light of a CFAM Superior Proposal it is
necessary to do so in order to act in a manner consistent with its
fiduciary duties to CFAM's stockholders under applicable law, the Board
of Directors of CFAM may (subject to this and the following sentences)
enter into a CFAM Acquisition Agreement with respect to any CFAM
Superior
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Proposal, but only after the fifth business day following BRHZ's
receipt of written notice advising BRHZ that the Board of Directors of
CFAM is prepared to accept a CFAM Superior Proposal and only if, during
such five-day period, CFAM and its advisors shall have negotiated in
good faith with BRHZ to make such adjustments in the terms and
conditions of this Agreement as would enable BRHZ to proceed with the
transactions contemplated herein on such adjusted terms; it being
understood and agreed that should BRHZ not seek to proceed with the
transactions contemplated herein on such adjusted terms, CFAM may
solicit additional CFAM Takeover Proposals, including by conducting an
auction. For purposes of this Agreement, a "CFAM Superior Proposal"
means any proposal made by a third party to acquire, directly or
indirectly, including pursuant to a tender offer, exchange offer,
merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction, for consideration
consisting of cash and/or securities, more than 50% of the combined
voting power of the shares of CFAM Common Stock then outstanding or all
or substantially all the assets of CFAM and otherwise on terms which
the Board of Directors of CFAM determines in its good faith judgment to
be more favorable to CFAM's stockholders than the merger and for which
financing, to the extent required, is then committed or which, in the
good faith judgment of the Board of Directors of CFAM, is reasonably
capable of being obtained by such third party.
(c) In addition to the obligations of CFAM set forth in
paragraphs (a) and (b) of this Section 4.5, CFAM shall immediately
advise BRHZ orally and in writing of any request for information or of
any CFAM Takeover Proposal. CFAM will keep BRHZ reasonably informed of
the status of any such request or CFAM Takeover Proposal.
(d) Nothing contained in this Section 4.5 shall prohibit CFAM
from taking and disclosing to its stockholders a position contemplated
by Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to CFAM's stockholders if, in the good faith judgment of the
Board of Directors of CFAM, after consultation with outside counsel,
failure so to disclose would be inconsistent with its obligations under
applicable law; provided, however, that, except in connection with a
CFAM Superior Proposal, neither CFAM nor its Board of Directors nor any
committee thereof shall withdraw or modify, or propose publicly to
withdraw or modify, its position with respect to this Agreement or the
Merger or approve or recommend, or propose publicly to approve or
recommend, a CFAM Takeover Proposal.
4.6 Meetings of Stockholders. Each of CFAM and BRHZ shall take all
action necessary, in accordance with the TBCA and DGCL, respectively, and its
respective Charter/Certificate of Incorporation and Bylaws, to duly call, give
notice of, convene and hold a meeting of its stockholders as promptly as
practicable, to consider and vote upon the adoption and approval of this
Agreement and the transactions contemplated hereby. The stockholder votes
required for the adoption and approval of the transactions contemplated by this
Agreement shall be the vote required by the TBCA and its Charter and Bylaws, in
the case of CFAM, and the DGCL and its Certificate of Incorporation and Bylaws,
in the case of BRHZ. CFAM and BRHZ will, through their respective
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Boards of Directors, recommend to their respective stockholders approval of such
matters; provided, however, that the CFAM Board or the BRHZ Board may withdraw
its recommendation if (i) CFAM or BRHZ, as the case may be, receives a CFAM
Superior Proposal or a BRHZ Superior Proposal, respectively, and (ii) after
complying with the provisions of Section 4.4, and Section 4.5 above,
respectively, the CFAM Board or the BRHZ Board by a majority vote determines in
its good faith judgment, after consultation with and based upon the advice of
independent legal counsel, that it is required, in order to comply with its
fiduciary duties, to recommend the CFAM Superior Proposal or BRHZ Superior
Proposal; provided further, however, that neither CFAM nor BRHZ, respectively,
if such party shall have received a CFAM Superior Proposal or BRHZ Superior
Proposal, shall, in any event, be permitted to terminate this Agreement as a
result of the occurrence of the events described in clauses (i) and (ii) of this
sentence. CFAM and BRHZ shall coordinate and cooperate with respect to the
timing of such meetings and shall use their best efforts to hold such meetings
on the same day and as soon as practicable after the date hereof.
4.7 Nasdaq Listing. The parties shall use all reasonable efforts to
cause the Newco Shares to be issued in the Merger and the Newco Shares to be
reserved for issuance upon exercise of CFAM Stock Options or BRHZ Stock Options
to be approved for listing on the Nasdaq National Market ("Nasdaq"), subject to
official notice of issuance, prior to the Effective Time.
4.8 Access to Information.
(a) Between the date hereof and the Effective Time, BRHZ will
give CFAM and its authorized representatives, and CFAM will give BRHZ
and its authorized representatives, reasonable access to all employees,
offices, family centers, and other facilities and to all books and
records of itself and its subsidiaries, will permit the other party to
make such inspections as such party may reasonably require and will
cause its officers and those of its subsidiaries to furnish the other
party with such financial and operating data and other information with
respect to the business and properties of itself and its subsidiaries
as the other party may from time to time reasonably request.
(b) Each of the parties hereto will hold and will cause its
consultants and advisers to hold in confidence all confidential
documents and information furnished to it in connection with the
transactions contemplated by this Agreement pursuant to the terms of
that certain Confidentiality Agreement entered into between CFAM and
BRHZ dated February 25, 1998.
4.9 Additional Agreements; Reasonable Efforts. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things reasonably necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation, (i)
cooperating in the preparation and filing of the Proxy Statement and the S-4,
any filings that may be required under the HSR Act, and any amendments to any
thereof; (ii) obtaining consents of all third parties and Governmental Entities
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necessary, proper or advisable for the consummation of the transactions
contemplated by this Agreement; (iii) obtaining consents of all client companies
that are parties to contracts with CFAM and/or BRHZ; (iv) contesting any legal
proceeding relating to the Merger and (v) the execution of any additional
instruments necessary to consummate the transactions contemplated hereby.
Subject to the terms and conditions of this Agreement, CFAM, Newco and BRHZ
agree to use all reasonable efforts to cause the Effective Time to occur as soon
as practicable after the stockholder votes with respect to the Merger. In case
at any time after the Effective Time any further action is necessary to carry
out the purposes of this Agreement, the proper officers and directors of each
party hereto shall take all such necessary action.
4.10 Employee Benefit Plans.
(a) It is the parties' present intent to provide after the
Effective Time to employees of CFAM and BRHZ and their subsidiaries
employee benefit plans (other than stock option or other plans
involving the potential issuance of securities of Newco) which, in the
aggregate, are not less favorable than those currently provided by CFAM
and BRHZ, respectively. Notwithstanding the foregoing, nothing
contained herein shall be construed as requiring the parties to
continue any specific employee benefit plans.
(b) The parties agree to work together prior to the Effective
Time to develop and design such plans, programs and arrangements and to
prepare for the implementation of such plans, programs and arrangements
described in this Section 4.10 following the Effective Time.
4.11 Public Announcements. CFAM and BRHZ will consult with one another
before issuing any press release or otherwise making any public statements with
respect to the transactions contemplated by this Agreement, including, without
limitation, the Merger, and shall not issue any such press release or make any
such public statement prior to such consultation, except as may be required by
applicable law or by obligations pursuant to any listing agreement with the
Nasdaq as determined by CFAM or BRHZ.
4.12 Indemnification.
(a) To the extent, if any, not provided by an existing right
under one of the parties' directors and officers liability insurance
policies, from and after the Effective Time, Newco shall, to the
fullest extent permitted by applicable law, indemnify, defend and hold
harmless each person who is now, or has been at any time prior to the
date hereof, or who becomes prior to the Effective Time, a director,
officer or employee of the parties hereto or any subsidiary thereof
(each an "Indemnified Party" and, collectively, the "Indemnified
Parties") against all losses, expenses (including reasonable attorneys'
fees and expenses), claims, damages or liabilities or, subject to the
proviso of the next succeeding sentence, amounts paid in settlement,
arising out of actions or omissions occurring at or prior to the
Effective Time and whether asserted or claimed prior to, at or after
the Effective Time) that
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are in whole or in part (i) based on, or arising out of the fact that
such person is or was a director, officer or employee of such party or
a subsidiary of such party or (ii) based on, arising out of or
pertaining to the transactions contemplated by this Agreement. In the
event of any such loss, expense, claim, damage or liability (whether or
not arising before the Effective Time), (i) Newco shall pay the
reasonable fees and expenses of counsel selected by the Indemnified
Parties, which counsel shall be reasonably satisfactory to Newco,
promptly after statements therefor are received and otherwise advance
to such Indemnified Party upon request reimbursement of documented
expenses reasonably incurred, in either case to the extent not
prohibited by the DGCL or its Certificate of Incorporation or Bylaws,
(ii) Newco will cooperate in the defense of any such matter and (iii)
any determination required to be made with respect to whether an
Indemnified Party's conduct complies with the standards set forth under
the DGCL and Newco's Certificate of Incorporation or Bylaws shall be
made by independent counsel mutually acceptable to Newco and the
Indemnified Party; provided, however, that Newco shall not be liable
for any settlement effected without its written consent (which consent
shall not be unreasonably withheld). The Indemnified Parties as a group
may retain only one law firm with respect to each related matter except
to the extent there is, in the opinion of counsel to an Indemnified
Party, under applicable standards of professional conduct, a conflict
on any significant issue between positions of any two or more
Indemnified Parties.
(b) For a period of six years after the Effective Time, Newco
shall cause to be maintained in effect the policies of directors' and
officers' liability insurance maintained by CFAM and BRHZ for the
benefit of those persons who are covered by such policies at the
Effective Time (or Newco may substitute therefor policies of at least
the same coverage with respect to matters occurring prior to the
Effective Time) unless such coverage is not available at commercially
reasonable rates in which case Newco shall purchase such coverage as
(i) may be obtained at commercially reasonable rates and (ii) is no
less broad than coverage purchased for persons who are then serving as
directors and/or officers of Newco.
(c) In the event Newco or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity or such consolidation or
merger or (ii) transfers all or substantially all of its properties and
assets to any person, then and in either such case, proper provision
shall be made so that the successors and assigns of Newco shall assume
the obligations set forth in this Section 4.12.
(d) To the fullest extent permitted by law, from and after the
Effective Time, all rights to indemnification now existing in favor of
the employees, agents, directors or officers of CFAM and BRHZ and their
subsidiaries with respect to their activities as such prior to the
Effective Time, as provided in CFAM's and BRHZ's Charter/Certificate of
Incorporation or Bylaws, in effect on the date thereof or otherwise in
effect on the date hereof, shall survive the Merger and shall continue
in full force and effect for a period of not less than six years from
the Effective Time.
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(e) The provisions of this Section 4.12 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party,
his or her heirs and his or her representatives.
4.13 Notification of Certain Matters. The parties hereto shall give
prompt notice to the other parties, of (i) the occurrence or nonoccurrence of
any event the occurrence or nonoccurrence of which would be likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Effective Time, (ii) any
material failure of such party to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder, (iii) any notice
of, or other communication relating to, a default or event which, with notice or
lapse of time or both, would become a default, received by such party or any of
its subsidiaries subsequent to the date of this Agreement and prior to the
Effective Time, under any contract or agreement material to the financial
condition, properties, businesses or results of operations of such party and its
subsidiaries taken as a whole to which such party or any of its subsidiaries is
a party or is subject, (iv) any notice or other communication from any third
party alleging that the consent of such third party is or may be required in
connection with the transactions contemplated by this Agreement, or (v) any
material adverse change in their respective financial condition, properties,
businesses, results of operations or prospects, taken as a whole, other than
changes resulting from general economic conditions; provided, however, that the
delivery of any notice pursuant to this Section 4.13 shall not cure such breach
or non-compliance or limit or otherwise affect the remedies available hereunder
to the party receiving such notice.
4.14 Affiliates.
(a) CFAM and BRHZ shall use all reasonable efforts to obtain
from any CFAM Affiliate or BRHZ Affiliate who has not previously
executed such letter agreement and from any person who may be deemed to
have become a CFAM Affiliate or BRHZ Affiliate after the date of this
Agreement and on or prior to the Effective Time, a letter agreement
substantially in the form of Exhibit B hereto as soon as practicable.
(b) Newco shall not be required to maintain the effectiveness
of the S-4 for the purpose of resale of Newco Shares by stockholders of
CFAM or BRHZ who may be affiliates of CFAM or BRHZ or Newco pursuant to
Rule 145 under the Securities Act.
4.15 Tax and Accounting Treatment. From and after the date hereof and
until the Effective Time, neither CFAM nor BRHZ shall (i) take any action, or
fail to take any action, that it knows would jeopardize the treatment of the
Merger as a "pooling of interests" for accounting purposes; (ii) take any
action, or fail to take any action, that it knows would jeopardize qualification
of the Merger as a reorganization within the meaning of Section 368(a) of the
Code; or (iii) enter into any contract, agreement, commitment or arrangement
with respect to either of the foregoing.
4.16 Employment Agreements. Newco will offer to enter into employment
agreements with each of the persons set forth on Schedule 4.16 at or prior to
the Closing Date. The forms of
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employment agreements shall be substantially in the forms attached hereto as
Exhibits D-1 through D-5.
4.17 Pooling of Interests. Each of BRHZ and CFAM shall use best efforts
to cause the transactions contemplated by this Agreement, including the Merger,
to be accounted for as a pooling of interests under Opinion 16 of the Accounting
Principles Board and applicable SEC rules and regulations, and such accounting
treatment to be accepted by the SEC, and each of BRHZ and CFAM agrees that it
shall take no action that would cause such accounting treatment not to be
obtained.
ARTICLE 5
CONDITIONS TO CONSUMMATION OF THE MERGER
5.1 Conditions to Each Party's Obligations to Effect the Merger. The
respective obligations of each party hereto to effect the Merger are subject to
the satisfaction at or prior to the Effective Time of the following conditions:
(a) this Agreement shall have been approved and adopted by the
requisite vote of the stockholders of CFAM and BRHZ;
(b) no statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or
enforced by any United States court or United States governmental
authority which prohibits, restrains, enjoins or restricts the
consummation of the Merger;
(c) any waiting period applicable to the Merger under the HSR
Act shall have terminated or expired, and any other governmental or
regulatory notices or approvals required with respect to the
transactions contemplated hereby shall have been either filed or
received; and
(d) the S-4 shall have become effective under the Securities
Act and shall not be the subject of any stop order or proceedings
seeking a stop order, and all state securities laws or "blue sky"
permits and authorizations necessary to issue Newco Shares in exchange
for CFAM Shares and BRHZ Shares in the Merger shall have been obtained.
(e) BRHZ and CFAM shall have received from Price Waterhouse
LLP, BRHZ's independent auditors, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP, CFAM's
independent auditors, "comfort" letters, in form and substance
satisfactory to each of them, the kind contemplated by the Statement of
Auditing Standards with respect to Letters to Underwriters promulgated
by the American Institute of Certified Public Accountants (the "AICPA
Statement") with respect to the procedures undertaken by them through a
date which is not earlier than five business
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days prior to the dates specified in (i) and (ii) below relating to the
financial statements of BRHZ and CFAM, respectively, contained in the
S-4 and the other matters contemplated by the AICPA statement and
customarily included in comfort letters relating to transactions
similar to the Merger, (i) dated immediately prior to the date of
mailing of the Proxy Statement, and (ii) dated immediately prior to the
Closing Date, a bringdown of the letter provided in subparagraph (i).
(f) BRHZ shall have received the opinion of Price Waterhouse
LLP, BRHZ's independent auditors, dated the Closing Date and addressed
to BRHZ and available for use by CFAM and its representatives, to the
effect that BRHZ is a poolable entity, and CFAM shall have received the
opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, CFAM's independent auditors, dated the
Closing Date and addressed to CFAM and available for use by BRHZ and
its representatives, to the effect that the Merger will be treated as a
"pooling of interests" in accordance with Generally Accepted Accounting
Principles ("GAAP") and all published rules, regulations and policies
of the SEC.
5.2 Conditions to the Obligations of BRHZ. The obligation of BRHZ to
effect the Merger is subject to the satisfaction at or prior to the Effective
Time of the following conditions:
(a) the representations of CFAM and Newco contained in this
Agreement or in any other document delivered pursuant hereto shall be
true and correct (except to the extent that the breach thereof would
not have a Material Adverse Effect on CFAM or Newco) at and as of the
Effective Time with the same effect as if made at and as of the
Effective Time (except to the extent such representations specifically
related to an earlier date, in which case such representations shall be
true and correct as of such earlier date), and at the Closing CFAM and
Newco shall have delivered to BRHZ a certificate to that effect;
(b) each of the covenants and obligations of CFAM and Newco to
be performed at or before the Effective Time pursuant to the terms of
this Agreement shall have been duly performed in all material respects
at or before the Effective Time, and at the Closing CFAM and Newco
shall have delivered to BRHZ a certificate to that effect;
(c) the Newco Shares issuable to the BRHZ stockholders
pursuant to this Agreement and such other shares required to be
reserved for issuance in connection with the Merger shall have been
authorized for listing on the Nasdaq upon official notice of issuance;
(d) the opinion of Ropes & ▇▇▇▇, counsel to BRHZ, dated the
Closing Date and addressed to BRHZ, to the effect that (i) the merger
of Merger Sub B into BRHZ will be treated for Federal income tax
purposes as a reorganization within the meaning of Section 368(a) of
the Code; (ii) each of Merger Sub B and BRHZ will be a party to the
reorganization within the meaning of Section 368(b) of the Code; and
(iii) no gain or loss for Federal income tax purposes will be
recognized by Newco, Merger Sub B, BRHZ or a stockholder of BRHZ as a
result of the Merger (other than with respect to cash received by a
stockholder
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in lieu of a fractional Newco Share), and such opinion shall not have
been withdrawn or modified in any material respect. Such opinion may be
conditioned upon the receipt of representations of BRHZ, CFAM and
Newco, all in form and substance reasonably satisfactory to such
counsel and other reasonable assumptions set forth therein;
(e) CFAM shall have obtained the consent or approval of each
person whose consent or approval shall be required in order to permit
the succession by Newco pursuant to the Merger to any obligation, right
or interest of CFAM under any loan or credit agreement, note, mortgage,
indenture, lease or other agreement or instrument, except those for
which failure to obtain such consents and approvals would not, in the
reasonable opinion of BRHZ, individually or in the aggregate, have a
Material Adverse Effect on CFAM; and
(f) there shall have been no events, changes or effects with
respect to CFAM or its subsidiaries having a Material Adverse Effect on
CFAM.
5.3 Conditions to the Obligations of CFAM. The respective obligations
of CFAM to effect the Merger are subject to the satisfaction at or prior to the
Effective Time of the following conditions:
(a) the representations of BRHZ and Newco contained in this
Agreement or in any other document delivered pursuant hereto shall be
true and correct (except to the extent that the breach thereof would
not have a Material Adverse Effect on BRHZ or Newco) at and as of the
Effective Time with the same effect as if made at and as of the
Effective Time (except to the extent such representations specifically
related to an earlier date, in which case such representations shall be
true and correct as of such earlier date), and at the Closing BRHZ and
Newco shall have delivered to CFAM a certificate to that effect;
(b) each of the covenants and obligations of BRHZ and Newco to
be performed at or before the Effective Time pursuant to the terms of
this Agreement shall have been duly performed in all material respects
at or before the Effective Time and at the Closing BRHZ and Newco shall
have delivered to CFAM a certificate to that effect;
(c) the Newco Shares issuable to the CFAM stockholders
pursuant to this Agreement and such other shares to be reserved for
issuance in connection with the Merger shall have been authorized for
listing on Nasdaq upon official notice of issuance;
(d) the opinion of Bass, ▇▇▇▇▇ & ▇▇▇▇ PLC, counsel to CFAM,
dated the Closing Date and addressed to CFAM, to the effect that (i)
the merger of Merger Sub A into CFAM will be treated for Federal income
tax purposes as a reorganization within the meaning of Section 368(a)
of the Code; (ii) each of Merger Sub A and CFAM will be a party to the
reorganization within the meaning of Section 368(b) of the Code; and
(iii) no gain or loss for Federal income tax purposes will be
recognized by Newco, Merger Sub A, CFAM or a stockholder of CFAM as a
result of the Merger (other than with respect to cash received by
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a stockholder of CFAM in lieu of a fractional Newco Share), and such
opinion shall not have been withdrawn or modified in any material
respect. Such opinion may be conditioned upon the receipt of
representations of BRHZ, CFAM and Newco, all in form and substance
reasonably satisfactory to such counsel and other reasonable
assumptions set forth therein;
(e) BRHZ shall have obtained the consent or approval of each
person whose consent or approval shall be required in order to permit
the succession by Newco pursuant to the Merger to any obligation, right
or interest of BRHZ under any loan or credit agreement, note, mortgage,
indenture, lease or other agreement or instrument, except for those for
which failure to obtain such consents and approvals would not, in the
reasonable opinion of CFAM, individually or in the aggregate, have a
Material Adverse Effect on BRHZ; and
(f) there shall have been no events, changes or effects with
respect to BRHZ or its subsidiaries having a Material Adverse Effect on
BRHZ.
ARTICLE 6
TERMINATION; AMENDMENT; WAIVER
6.1 Termination. This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
approval and adoption of this Agreement by CFAM's or BRHZ's stockholders:
(a) by mutual written consent of CFAM and BRHZ;
(b) by CFAM or BRHZ if (i) any court of competent jurisdiction
in the United States or other United States Governmental Entity shall
have issued a final order, decree or ruling or taken any other final
action restraining, enjoining or otherwise prohibiting the Merger and
such order, decree, ruling or other action is or shall have become
nonappealable or (ii) the Merger has not been consummated by November
30, 1998; provided, however, that no party may terminate this Agreement
pursuant to this clause (ii) if such party's failure to fulfill any of
its obligations under this Agreement shall have been the reason that
the Effective Time shall not have occurred on or before said date;
(c) by BRHZ if (i) there shall have been a breach of any
representation or warranty on the part of CFAM or Newco set forth in
this Agreement, or if any representation or warranty of CFAM or Newco
shall have become untrue, in either case such that the conditions set
forth in Section 5.2(a) would be incapable of being satisfied by
November 30, 1998 (or as otherwise extended), (ii) there shall have
been a breach by CFAM or Newco of any of their respective covenants or
agreements hereunder having a Material Adverse Effect on CFAM or Newco
or materially adversely affecting (or materially delaying) the
consummation of the Merger, and CFAM or Newco, as the case may be, has
not cured such
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breach within twenty business days after notice by BRHZ thereof,
provided that BRHZ has not breached any of its obligations hereunder,
(iii) the CFAM Board shall have recommended to CFAM's stockholders a
CFAM Superior Proposal, (iv) the CFAM Board shall have withdrawn,
modified or changed its approval or recommendation of this Agreement or
the Merger or shall have failed to call, give notice of, convene or
hold a stockholders' meeting to vote upon the Merger, or shall have
adopted any resolution to effect any of the foregoing, (v) CFAM shall
have convened a meeting of its stockholders to vote upon the Merger and
shall have failed to obtain the requisite vote of its stockholders;
(vi) BRHZ shall have convened a meeting of its stockholders to vote
upon the Merger and shall have failed to obtain the requisite vote of
its stockholders; or (vii) a tender or exchange offer for outstanding
shares of capital stock of CFAM then representing 30% or more of the
combined power to vote generally for the election of CFAM directors is
commenced, and the Board of Directors of CFAM does not recommend that
shareholders not tender their shares into such tender or exchange
offer.
(d) by CFAM if (i) there shall have been a breach of any
representation or warranty on the part of BRHZ or Newco set forth in
this Agreement, or if any representation or warranty of BRHZ or Newco
shall have become untrue, in either case such that the conditions set
forth in Section 5.3(a) would be incapable of being satisfied by
November 30, 1998 (or as otherwise extended), (ii) there shall have
been a breach by BRHZ or Newco of any of their respective covenants or
agreements hereunder having a Material Adverse Effect on BRHZ or Newco
or materially adversely affecting (or materially delaying) the
consummation of the Merger, and BRHZ or Newco, as the case may be, has
not cured such breach within twenty business days after notice by CFAM
thereof, provided that CFAM has not breached any of its obligations
hereunder, (iii) the BRHZ Board shall have recommended to BRHZ's
stockholders a BRHZ Superior Proposal, (iv) the BRHZ Board shall have
withdrawn, modified or changed its approval or recommendation of this
Agreement or the Merger or shall have failed to call, give notice of,
convene or hold a stockholders' meeting to vote upon the Merger, or
shall have adopted any resolution to effect any of the foregoing, (v)
CFAM shall have convened a meeting of its stockholders to vote upon the
Merger and shall have failed to obtain the requisite vote of its
stockholders, (vi) BRHZ shall have convened a meeting of its
stockholders to vote upon the Merger and shall have failed to obtain
the requisite vote of its stockholders, or (vii) a tender offer or
exchange offer for outstanding shares of capital stock of BRHZ then
representing 30% or more of the combined power to vote generally for
the election of BRHZ directors is commenced, and the Board of Directors
of BRHZ does not recommend that stockholders not tender their shares
into such tender or exchange offer.
6.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 6.1, this Agreement shall
forthwith become void and have no effect, without any liability on the part of
any party hereto or its affiliates, directors, officers or stockholders, other
than the provisions of this Section 6.2 and Sections 4.8(b) and 6.3 hereof.
Nothing contained in this Section 6.2 shall relieve any party from liability for
any breach of this Agreement.
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6.3 Fees and Expenses. Each party shall bear its own expenses in
connection with this Agreement and the transactions contemplated hereby except
that:
(a) BRHZ shall pay to CFAM by wire transfer $4.0 million (the
"BRHZ Termination Fee"), upon demand, if (i) this Agreement is
terminated pursuant to Section 6.1(c)(vi) or any subsection of Section
6.1(d) (other than Section 6.1(d)(v)), (ii) prior to the time this
Agreement is terminated or the time of the BRHZ Special Meeting, a BRHZ
Takeover Proposal shall have been publicly announced or shall have
become publicly known and (iii) during the term of this Agreement or
within twelve months after the termination of this Agreement a BHRZ
Takeover Event shall occur. Such payment shall be made in immediately
available funds.
(b) CFAM shall pay to BRHZ by wire transfer $4.0 million (the
"CFAM Termination Fee"), upon demand, if (i) this Agreement is
terminated pursuant to Section 6.1(d)(v) or any subsection of Section
6.1(c) (other than Section 6.1(c)(vi)), (ii) prior to the time this
Agreement is terminated or the time of the CFAM Special Meeting, a CFAM
Takeover Proposal shall have been publicly announced or shall have
become publicly known and (iii) during the term of this Agreement or
within twelve months after the termination of this Agreement a CFAM
Takeover Event shall occur. Such payment shall be made in immediately
available funds.
6.4 Amendment. This Agreement may be amended by action taken by CFAM
and BRHZ at any time before or after approval of the Merger by the stockholders
of CFAM and BRHZ (if required by applicable law) but, after any such approval,
no amendment shall be made which requires the approval of such stockholders
under applicable law without such approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of the parties hereto.
6.5 Extension; Waiver. At any time prior to the Effective Time, each
party hereto may (i) extend the time for the performance of any of the
obligations or other acts of any other party, (ii) waive any inaccuracies in the
representations and warranties of any other party contained herein or in any
document, certificate or writing delivered pursuant hereto or (iii) waive
compliance by any other party with any of the agreements or conditions contained
herein. Any agreement on the part of any party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party hereto to assert any of its
rights hereunder shall not constitute a waiver of such rights.
ARTICLE 7
MISCELLANEOUS
7.1 Nonsurvival of Representations and Warranties. The representations
and warranties made herein shall not survive beyond the Effective Time or a
termination of this Agreement. This
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Section 7.1 shall not limit any covenant or agreement of the parties hereto
which by its terms requires performance after the Effective Time.
7.2 Entire Agreement; Assignment. This Agreement (a) constitutes the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof
and (b) shall not be assigned by operation of law or otherwise.
7.3 Validity. If any provision of this Agreement, or the application
thereof to any person or circumstance, is held invalid or unenforceable, the
remainder of this Agreement, and the application of such provision to other
persons or circumstances, shall not be affected thereby, and to such end, the
provisions of this Agreement are agreed to be severable.
7.4 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by facsimile
or by registered or certified mail (postage prepaid, return receipt requested),
to each other party as follows:
If to CFAM: CorporateFamily Solutions, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Bass, ▇▇▇▇▇ & ▇▇▇▇ PLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, III, Esq
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to BRHZ: Bright Horizons, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
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7.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the
principles of conflicts of law thereof.
7.6 Descriptive Headings. The descriptive headings herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
7.7 Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto and its successors and permitted
assigns, and except as provided in Section 4.12 nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
rights, benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
7.8 Certain Definitions. For the purposes of this Agreement, the term:
(a) "affiliate" means (except as otherwise provided in
Sections 2.20, 3.20 and 4.13) a person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is
under common control with, the first mentioned person;
(b) "business day" means any day other than a day on which
Nasdaq is closed;
(c) "capital stock" means common stock, preferred stock,
partnership interests, limited liability company interests or other
ownership interests entitling the holder thereof to vote with respect
to matters involving the issuer thereof;
(d) "knowledge" or "known" means, with respect to any matter
in question, if an executive officer of CFAM or BRHZ or their
respective subsidiaries, as the case may be, has actual knowledge of
such matter;
(e) "person" means an individual, corporation, partnership,
limited liability company, association, trust, unincorporated
organization or other legal entity; and
(f) "subsidiary" or "subsidiaries" of Newco, CFAM, BRHZ or any
other person, means any corporation, partnership, limited liability
company, association, trust, unincorporated association or other legal
entity of which Newco, CFAM, BRHZ or any such other person, as the case
may be (either alone or through or together with any other subsidiary),
owns, directly or indirectly, 50% or more of the capital stock, the
holders of which are generally entitled to vote for the election of the
board of directors or other governing body of such corporation or other
legal entity.
7.9 Personal Liability. This Agreement shall not create or be deemed to
create or permit any personal liability or obligation on the part of any direct
or indirect stockholder of CFAM, BRHZ or Newco or any officer, director,
employee, agent, representative or investor of any party hereto.
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7.10 Specific Performance. The parties hereby acknowledge and agree
that the failure of any party to perform its agreements and covenants hereunder,
including its failure to take all actions as are necessary on its part to the
consummation of the Merger, will cause irreparable injury to the other parties
for which damages, even if available, will not be an adequate remedy.
Accordingly, each party hereby consents to the issuance of injunctive relief by
any court of competent jurisdiction to compel performance of such party's
obligations and to the granting by any court of the remedy of specific
performance of its obligations hereunder.
7.11 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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In Witness Whereof, each of the parties has caused this Agreement to be duly
executed on its behalf as of the day and year first above written.
CORPORATEFAMILY SOLUTIONS, INC.
By: /s/ ▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Executive Officer
BRIGHT HORIZONS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
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