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AGREEMENT AND PLAN OF MERGER
DATED AS OF MARCH 1, 1999
AMONG
▇▇▇▇▇ APPAREL GROUP, INC.
▇▇▇▇ ACQUISITION SUB INC.
and
NINE WEST GROUP INC.
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TABLE OF CONTENTS
ARTICLE I
Page
THE MERGER................................................................2
1.1 The Merger...........................................................2
1.2 Closing..............................................................2
1.3 Effective Time.......................................................2
1.4 Effects of the Merger................................................3
1.5 Certificate of Incorporation.........................................3
1.6 By-Laws..............................................................3
1.7 Officers and Directors of Surviving Corporation......................3
1.8 Effect on Capital Stock..............................................3
1.9 Treatment of Convertible Notes........................................5
1.10 Treatment of Options.................................................5
ARTICLE II
EXCHANGE OF CERTIFICATES..................................................7
2.1 Exchange Fund........................................................7
2.2 Exchange Procedures..................................................7
2.3 Distributions with Respect to Unexchanged Shares.....................8
2.4 No Further Ownership Rights in Company Common Stock..................8
2.5 No Fractional Shares of Parent Common Stock..........................8
2.6 Termination of Exchange Fund.........................................9
2.7 No Liability.........................................................9
2.8 Investment of the Exchange Fund......................................9
2.9 Lost Certificates....................................................9
2.10 Withholding Rights.................................................10
2.11 Further Assurances.................................................10
2.12 Stock Transfer Books...............................................10
ARTICLE III
REPRESENTATIONS AND WARRANTIES...........................................10
3.1 Representations and Warranties of the Company.......................10
(a) Organization, Standing and Power...........................11
(b) Capital Structure..........................................11
(c) Authority; No Conflicts....................................12
(d) Reports and Financial Statements...........................14
(e) Information Supplied.......................................14
(f) Board Approval.............................................15
(g) Vote Required..............................................15
(h) Rights Agreement...........................................15
(i) Absence of Certain Changes or Events.......................16
(j) Litigation.................................................16
(k) Compliance with Laws.......................................16
Page
(l) Taxes.......................................... ...........16
(m) Employee Benefits..........................................17
(n) Environmental Matters......................................18
(o) Liabilities................................................20
(p) Brokers or Finders.........................................20
(q) Opinion of Financial Advisor...............................20
(r) Certain Agreements.........................................20
(s) Intellectual Property......................................21
(t) Antitrust Matters..........................................21
(u) Year 2000 Compliance.......................................22
3.2 Representations and Warranties of Parent............................22
(a) Organization, Standing and Power...........................22
(b) Capital Structure..........................................23
(c) Authority; No Conflicts....................................23
(d) Reports and Financial Statements...........................24
(e) Information Supplied.......................................25
(f) Vote Required..............................................25
(g) Absence of Certain Changes or Events.......................25
(h) Litigation.................................................25
(i) Compliance with Laws.......................................25
(j) Taxes......................................................26
(k) Employee Benefits..........................................26
(l) Liabilities................................................26
(m) Brokers or Finders.........................................26
(n) No Business Activities.....................................27
(o) Financing..................................................27
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS................................27
4.1 Covenants of the Company............................................27
(a) Ordinary Course............................................27
(b) Dividends; Changes in Share Capital........................28
(c) Issuance of Securities.....................................28
(d) Governing Documents........................................28
(e) No Acquisitions............................................29
(f) No Dispositions............................................29
(g) Investments; Indebtedness..................................29
(h) Accounting Methods; Income Tax Elections...................30
(i) Company Rights Agreement...................................30
(j) Compensation...............................................30
(k) Claims.....................................................30
(l) Other Actions..............................................30
(m) No General Authorization...................................30
Page
4.2 Covenants of Parent.................................................31
(a) Conduct of Business........................................31
(b) Dividends; Changes in Share Capital........................31
(c) Liquidation................................................31
(d) Governing Documents........................................31
(e) No Acquisitions............................................31
(f) Other Actions..............................................32
(g) No General Authorization...................................32
4.3 Advice of Changes; Governmental Filings.............................32
4.4 Specified Matters...................................................32
4.5 Notification of Certain Matters.....................................33
ARTICLE V
ADDITIONAL AGREEMENTS....................................................33
5.1 Preparation of Form S-4 and Proxy Statement/Prospectus;
Company Stockholders Meeting............................................33
5.2 Access to Information...............................................35
5.3 Reasonable Best Efforts.............................................36
5.4 Acquisition Proposals...............................................38
5.5 Employee Benefits Matters...........................................39
5.6 Fees and Expenses...................................................41
5.7 Directors' and Officers' Insurance..................................41
5.8 Rights Agreement....................................................42
5.9 Public Announcements................................................42
5.10 Accountants' Letters...............................................43
5.11 Listing of Shares of Parent Common Stock...........................43
5.12 Affiliate Letter...................................................43
5.13 Parent Board of Directors..........................................43
5.14 Stockholder Litigation.............................................43
ARTICLE VI
CONDITIONS PRECEDENT.....................................................44
6.1 Conditions to Each Party's Obligation to Effect the Merger..........44
(a) Stockholder Approval.......................................44
(b) No Injunctions or Restraints, Illegality...................44
(c) HSR Act....................................................44
(d) NYSE Listing...............................................44
(e) Effectiveness of the Form S-4..............................44
6.2 Additional Conditions to Obligations of Parent and Merger Sub.......44
(a) Representations and Warranties.............................44
(b) Performance of Obligations of the Company..................45
(c) Tax Opinion................................................45
Page
(d) No Litigation...............................................45
(e) Consents. .................................................45
(f) Material Adverse Effect. ..................................46
6.3 Additional Conditions to Obligations of the Company.................46
(a) Representations and Warranties.............................46
(b) Performance of Obligations of Parent.......................46
(c) Tax Opinion................................................46
(d) Material Adverse Effect.....................................47
ARTICLE VII
TERMINATION AND AMENDMENT................................................47
7.1 Termination.........................................................47
7.2 Effect of Termination...............................................49
7.3 Amendment...........................................................50
7.4 Extension; Waiver...................................................50
ARTICLE VIII
GENERAL PROVISIONS.......................................................51
8.1 Non-Survival of Representations, Warranties and Agreements..........51
8.2 Notices.............................................................51
8.3 Interpretation......................................................52
8.4 Counterparts........................................................52
8.5 Entire Agreement; No Third Party Beneficiaries......................53
8.6 Governing Law.......................................................53
8.7 Severability........................................................53
8.8 Assignment..........................................................53
8.9 Submission to Jurisdiction; Waivers.................................53
8.10 Enforcement........................................................54
8.11 Definitions........................................................54
8.12 Other Agreements...................................................55
LIST OF EXHIBITS
Exhibit Title
5.12 Form of Company Affiliate Letter
6.2(c)(1) Form of tax opinion of Cravath, Swaine & ▇▇▇▇▇
6.3(c)(1) Form of tax opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
AGREEMENT AND PLAN OF MERGER, dated as of March 1, 1999 (this
"Agreement"), among ▇▇▇▇▇ APPAREL GROUP, INC., a Pennsylvania corporation
("Parent"), ▇▇▇▇ ACQUISITION SUB INC., a Delaware corporation and a direct
wholly-owned subsidiary of Parent ("Merger Sub"), and NINE WEST GROUP INC.,
a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Merger Sub
and the Company have determined that the merger of the Company with Merger
Sub on the terms set forth in this Agreement (the "Merger") is in the best
interests of their respective stockholders, and such Boards of Directors
have approved such Merger (and, in the case of the Board of Directors of
the Company, recommended that it be adopted by the Company's stockholders),
upon the terms and subject to the conditions set forth in this Agreement,
pursuant to which each outstanding share of common stock, par value $.01
per share, of the Company (the "Company Common Stock") issued and
outstanding immediately prior to the Effective Time (as defined in Section
1.3) (together with each associated Right (as defined in Section 3.1(b)),
other than shares owned or held directly by Parent, Merger Sub or by the
Company and other than Dissenting Shares (as defined in Section 1.8(e)),
will be converted into the right to receive a unit consisting of a fraction
of a fully paid and nonassessable share of common stock, par value $.01 per
share, of Parent ("Parent Common Stock") and an amount in cash;
WHEREAS, as a condition and inducement to Parent's and Merger
Sub's entering into this Agreement and incurring the obligations set forth
herein, contemporaneously with the execution and delivery of this
Agreement, Parent is entering into a stockholder agreement (the
"Stockholder Agreement") with certain beneficial and record stockholders of
the Company pursuant to which, among other things, such stockholders,
severally and not jointly, have agreed to vote the shares of Company Common
Stock then owned by them in favor of the Merger and to take certain other
actions in support of the Merger, and such Stockholder Agreement and the
transactions consummated thereby have been approved by the Board of
Directors of the Company;
WHEREAS, Parent, Merger Sub and the Company desire to make
certain representations, warranties, covenants and agreements in connection
with the transactions contemplated hereby and also to prescribe various
conditions to the transactions contemplated hereby; and
WHEREAS, Parent, Merger Sub and the Company intend, by approving
resolutions authorizing this Agreement, to adopt this Agreement as a plan
of reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), and the regulations
promulgated thereunder (subject to the election provided for in Section
1.1).
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NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, and intending to be legally bound hereby, the parties hereto agree
as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the Delaware General
Corporation Law (the "DGCL"), the Company shall be merged with and into
Merger Sub at the Effective Time (as defined in Section 1.3). Following the
Merger, the separate corporate existence of the Company shall cease and
Merger Sub shall continue as the surviving corporation (the "Surviving
Corporation") under the name "Nine West Group Inc.". In lieu of the Company
being merged with and into Merger Sub, if all of the conditions set forth
in Article VI (excluding conditions that, by their terms, cannot be
satisfied until the Closing Date (as defined in Section 1.2)) have been
satisfied or waived other than the condition set forth in Section 6.2(c) or
6.3(c) (relating to the receipt of opinions that the Merger is a
reorganization under Section 368(a) of the Code), the Company shall have
the right to irrevocably elect (the "Reverse Merger Election") by notice
delivered to Parent, and upon the terms and subject to the conditions set
forth in this Agreement, to cause the "Merger" to be a merger of Merger Sub
with and into the Company at the Effective Time, in which case, following
the Merger, the separate corporate existence of Merger Sub shall cease and
the Company shall continue as the Surviving Corporation.
1.2 Closing. The closing of the Merger (the "Closing") will take
place on the second Business Day after the satisfaction or, subject to
applicable law, waiver of the conditions (excluding conditions that, by
their terms, cannot be satisfied until the Closing Date) set forth in
Article VI (the "Closing Date"), unless another time or date is agreed to
in writing by the parties hereto. The Closing shall be held at the offices
of Cravath, Swaine & ▇▇▇▇▇, Worldwide Plaza, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ unless another place is agreed to in writing by the parties
hereto; provided, however, that if the Parent Common Stock Price is less
than $21.00, then the Closing shall not occur until the fifth Business Day
after the Determination Date (as defined below) unless the Company shall
have terminated this Agreement pursuant to Section 7.1(i). The date on
which the conditions set forth in Article VI have been satisfied or,
subject to applicable law, waived (excluding conditions that, by their
terms, cannot be satisfied until the Closing Date) is hereinafter referred
to as the "Determination Date".
1.3 Effective Time. As soon as practicable following the Closing,
the parties shall (i) file a certificate of merger (the "Certificate of
Merger") in such form as is required by and executed and acknowledged in
accordance with the relevant provisions of the DGCL and (ii) make all other
filings or recordings required under the DGCL to effect the Merger. The
Merger shall become effective at such time as the Certificate of Merger is
duly filed with the
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Delaware Secretary of State or at such subsequent time as Parent and the
Company shall agree and be specified in the Certificate of Merger (the date
and time the Merger becomes effective being the "Effective Time").
1.4 Effects of the Merger. At and after the Effective Time, the
Merger will have the effects set forth in the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all
the property, rights, privileges, powers and franchises of the Company and
Merger Sub shall be vested in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Merger Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
1.5 Certificate of Incorporation. Unless the Reverse Merger
Election is made, the certificate of incorporation of Merger Sub, as in
effect immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law, except that Article I of
the certificate of incorporation of the Surviving Corporation shall be
amended to read in its entirety as follows: "The name of this Corporation
is 'Nine West Group Inc.'". If the Reverse Merger Election is made, the
certificate of incorporation of the Company shall be the certificate of
incorporation of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
1.6 By-Laws. The by-laws of Merger Sub as in effect immediately
prior to the Effective Time shall be the by-laws of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law.
1.7 Officers and Directors of Surviving Corporation. The officers
of the Company as of the Effective Time shall be the officers of the
Surviving Corporation, until the earlier of their resignation or removal or
otherwise ceasing to be an officer or until their respective successors are
duly elected and qualified, as the case may be. The directors of Merger Sub
as of the Effective Time shall be the directors of the Surviving
Corporation until the earlier of their resignation or removal or otherwise
ceasing to be a director or until their respective successors are duly
elected and qualified.
1.8 Effect on Capital Stock. At the Effective Time by virtue of
the Merger and without any action on the part of the holder thereof,
(a) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares of Company
Common Stock owned by Parent or Merger Sub or held by the Company, all of
which shall be canceled as provided in Section 1.8(c), and other than any
Dissenting Shares (as defined in Section 1.8(e)) shall be converted into
the right to receive (i) cash in an amount equal to $13.00; and (ii) a
fraction of a fully paid and nonassessable share of Parent Common Stock
equal to the Exchange Ratio (as defined below) (collectively, the "Merger
Consideration"). For purposes of this Agreement, "Exchange Ratio"
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means .5011 shares of Parent Common Stock; provided that if the Parent
Common Stock Price (as defined below) is (1) less than $24.00, the Exchange
Ratio shall be equal to $12.00 divided by the Parent Common Stock Price,
rounded to the nearest 1/10,000 or (2) more than $34.00, the Exchange Ratio
shall be equal to $17.00 divided by the Parent Common Stock Price, rounded
to the nearest 1/10,000; provided, further, that if the Parent Common Stock
Price is less than $21.00, the Exchange Ratio shall be .5714 and if the
Parent Common Stock Price is greater than $36.00, the Exchange Ratio shall
be .4722. "Parent Common Stock Price" means the average of the closing
sales prices of Parent Common Stock on the New York Stock Exchange ("NYSE")
Composite Transactions Tape (as reported in The Wall Street Journal or, if
not reported therein, in another authoritative source mutually selected by
Parent and the Company) on each of the 15 consecutive NYSE trading days
immediately preceding the Determination Date.
(b) As a result of the Merger and without any action on the part
of the holders thereof, at the Effective Time, all shares of Company Common
Stock (other than shares referred to in Sections 1.8(c) and (e)) shall
cease to be outstanding and shall be canceled and retired and shall cease
to exist, and each holder of a certificate which immediately prior to the
Effective Time represented any such shares of Company Common Stock (a
"Certificate") shall thereafter cease to have any rights with respect to
such shares of Company Common Stock, except the right to receive the
applicable Merger Consideration and any cash in lieu of fractional shares
of Parent Common Stock to be issued or paid in consideration therefor and
any dividends or other distributions to which holders become entitled all
in accordance with Article II upon the surrender of such certificate.
(c) Each share of Company Common Stock issued and owned or held
by Parent, Merger Sub or the Company at the Effective Time shall, by virtue
of the Merger, cease to be outstanding and shall be canceled and retired
and no stock of Parent or other consideration shall be delivered in
exchange therefor.
(d) Each share of common stock, par value $.01 per share, of
Merger Sub issued and outstanding immediately prior to the Effective Time,
shall remain issued, outstanding and unchanged as a validly issued, fully
paid and nonassessable share of common stock, par value $.01 per share, of
the Surviving Corporation as of the Effective Time.
(e) Notwithstanding anything in this Agreement to the contrary,
shares of Company Common Stock issued and outstanding immediately prior to
the Effective Time held by a holder (if any) who has the right to demand
payment for and an appraisal of such shares in accordance with Section 262
of the DGCL (or any successor provision) ("Dissenting Shares") shall not be
converted into a right to receive Merger Consideration or any cash in lieu
of fractional shares of Parent Common Stock (but shall have the rights set
forth in Section 262 of the DGCL (or any successor provision)) unless such
holder fails to perfect or otherwise loses such holder's right to such
payment or appraisal, if any. If, after the Effective Time, such holder
fails to perfect or loses any such right to appraisal, each such share of
such holder shall be treated as a share of Company Common Stock that had
been converted as of the Effective Time into the
5
right to receive Merger Consideration in accordance with this Section 1.8.
The Company shall give prompt notice to Parent of any demands received by
the Company for appraisal of shares of Company Common Stock, withdrawals of
such demands and any other instruments served pursuant to the DGCL received
by the Company, and Parent shall have the right to participate in and
direct all negotiations and proceedings with respect to such demands. The
Company shall not, except with the prior written consent of Parent, make
any payment with respect to, or settle or offer to settle, any such demands
or agree to do or commit to do any of the foregoing.
(f) If prior to the Effective Time, Parent or the Company, as the
case may be, should (after obtaining the consent required by Section 4.1 or
4.2, as the case may be, hereof) split, combine or otherwise reclassify the
Parent Common Stock or the Company Common Stock, or pay a stock dividend or
other stock distribution in Parent Common Stock or Company Common Stock, or
otherwise change the Parent Common Stock or Company Common Stock into any
other securities, or make any other such stock dividend or distribution in
capital stock of Parent or the Company in respect of the Parent Common
Stock or the Company Common Stock, respectively, then any number or amount
contained herein which is based upon the Parent Common Stock Price or the
number of shares of Company Common Stock or Parent Common Stock, as the
case may be, will be appropriately adjusted to reflect such split,
combination, dividend or other distribution or change.
1.9 Treatment of Convertible Notes. (a) Pursuant to Section 14.6
of the Indenture, dated as of June 26, 1996 (the "Convertible Notes
Indenture"), between the Company and Chemical Bank, as trustee, relating to
the Company's 5-1/2% Convertible Subordinated Notes Due 2003 (the
"Convertible Notes"), prior to the Effective Time, the Company, Merger Sub
and Parent shall enter into a supplemental indenture in accordance with
Section 14.6 of the Convertible Notes Indenture.
(b) As soon as practicable after the Effective Time, Parent shall
deliver to the holders of Convertible Notes appropriate notices setting
forth such holders' rights pursuant to the Convertible Notes Indenture with
respect thereto to the extent required by the terms thereof.
(c) Parent shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of Parent Common Stock for
delivery upon conversion of the Convertible Notes and file a registration
statement on Form S-3 (or any successor or other appropriate form) with
respect to such shares and shall use its reasonable best efforts to
maintain the effectiveness of such registration statement for so long as
the Convertible Notes remain outstanding.
1.10 Treatment of Options. (a) (i) Immediately prior to the
Effective Time, each outstanding stock option granted to present and former
employees and non-employee directors of the Company and its Subsidiaries
(together, an "Option"), whether or not then exercisable, which Option has
an exercise price per share that is less than the value of the per share
Merger Consideration on the Closing Date (based on the closing sales price
on the Closing Date of
6
Parent Common Stock on the NYSE Composite Transactions Tape (as reported in
The Wall Street Journal or, if not reported therein, in another
authoritative source mutually selected by Parent and the Company) (the
"Closing Consideration Value"), shall be canceled by the Company, and the
holder thereof shall be entitled to receive at the Effective Time or as
soon as practicable thereafter from the Company in consideration for such
cancellation an amount in cash equal to the product of (i) the number of
shares of Company Common Stock previously subject to such Option and (ii)
the excess of the Merger Consideration over the exercise price per share of
Company Common Stock previously subject to such Option.
(ii) Immediately prior to the Effective Time, each outstanding
Option, whether or not then exercisable, which Option has an exercise price
per share that is greater than the per share Closing Consideration Value
(each, an "Underwater Option"), shall be converted into an option to
acquire, on the same terms and conditions (including exercise price) as
previously applicable to such Underwater Options, the per share Closing
Consideration Value for each share of Company Common Stock previously
subject to such Underwater Option (after any such adjustment, a "Parent
Option"); provided, however, that the Parent Option shall be further
adjusted to (i) reduce the exercise price of the Parent Option by the value
of the cash portion of the Closing Consideration Value, (ii) eliminate the
requirement that the cash portion of the Closing Consideration Value be
delivered upon exercise of the Parent Option, and (iii) with respect to
each Parent Option having the same exercise price, the number of any
fractional shares of Parent Common Stock shall be added together to create
whole shares of Parent Common Stock, and the per share exercise price of
each Parent Option shall be appropriately adjusted. The aggregate number of
shares of Parent Common Stock delivered pursuant to the Parent Option shall
be rounded down to the nearest whole share.
(b) As soon as practicable after the Effective Time, Parent shall
deliver to the holders of Company Options appropriate notices setting forth
such holders' rights pursuant to the Company Stock Option Plans after
giving effect to the transaction and the provisions set forth above. In
addition, Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery
upon exercise of a Parent Option. As soon as practicable after the
Effective Time, Parent shall file a registration statement on Form S-3 or
Form S-8, as the case may be (or any successor or other appropriate forms),
or another appropriate form, with respect to the shares of Parent Common
Stock subject to such Parent Options and shall use its reasonable 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 Parent Options
remain outstanding.
(c) The Company shall use its reasonable best efforts to take
such actions as are reasonably necessary to provide that (i) other than as
contemplated hereunder no further issuance, transfer or grant of any
capital stock of the Company or any interest in respect of any capital
stock of the Company shall be made on or after the Effective Time under any
Company Stock Plan and (ii) following the Effective Time, no holder of an
Option or any participant in any
7
Company Stock Option Plan or other Company Plan shall have the right
thereunder to acquire any capital stock of the Company or the Surviving
Corporation.
ARTICLE II
EXCHANGE OF CERTIFICATES
2.1 Exchange Fund. At or prior to the Effective Time, Parent
shall deposit with the Exchange Agent, in trust for the benefit of holders
of shares of Company Common Stock, for exchange in accordance with Section
1.8, all the cash and certificates representing shares of Parent Common
Stock to be paid or issued pursuant to this Agreement in exchange for
outstanding Company Common Stock and cash sufficient to pay cash in lieu of
fractional shares required to be paid pursuant to Section 2.5. Parent
agrees to make available to the Exchange Agent from time to time as needed,
cash sufficient to pay any dividends and other distributions pursuant to
Section 2.3. Any cash and certificates of Parent Common Stock deposited
with the Exchange Agent shall hereinafter be referred to as the "Exchange
Fund".
2.2 Exchange Procedures. As promptly as practicable after the
Effective Time, the Exchange Agent will send to each record holder of a
Certificate other than Certificates to be canceled pursuant to Section
1.8(c), (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 to the Exchange Agent and
shall be in a form and have such other provisions as Parent may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration. As soon as
reasonably practicable after the Effective Time, each holder of a
Certificate, upon surrender of a Certificate to the Exchange Agent together
with such letter of transmittal, duly executed, and such other documents as
may reasonably be required by the Exchange Agent, shall be entitled to
receive in exchange therefor a certificate or certificates representing the
number of whole shares of Parent Common Stock and the amount of cash
(including amounts to be paid pursuant to Section 1.8(a)(i), in lieu of
fractional shares of Parent Common Stock pursuant to Section 2.5 and in
respect of any dividends or other distributions to which holders are
entitled pursuant to Section 2.3), if any, into which the aggregate number
of shares of Company Common Stock previously represented by such
Certificate shall have been converted pursuant to this Agreement. The
Exchange Agent shall accept such Certificates upon compliance with such
reasonable terms and conditions as the Exchange Agent may impose to effect
an orderly exchange thereof in accordance with normal exchange practices.
No interest will be paid or will accrue on any cash payable pursuant to
Section 1.8, Section 2.3 or Section 2.5. In the event of a transfer of
ownership of Company Common Stock which is not registered in the transfer
records of the Company, one or more shares of Parent Common Stock
evidencing, in the aggregate, the proper number of shares of Parent Common
Stock, a check in the proper amount of cash pursuant to Section 1.8(a) and
cash in lieu of any fractional shares of Parent Common Stock pursuant to
Section 2.5 and any dividends or other distributions to which such holder
is entitled pursuant to Section 2.3, may be
8
issued with respect to such Company Common Stock to a Person other than the
Person in whose name the Certificate surrendered is registered if such
Certificate is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and to evidence
that any applicable stock transfer or other taxes have been paid. Until
surrendered as contemplated by this Section 2.2, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the Merger Consideration which the holder
thereof has the right to receive in respect of such Certificate pursuant to
the other provisions of this Article II.
2.3 Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made with respect to shares of
Parent Common Stock with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Certificate with respect to the
shares of Parent Common Stock that such holder would be entitled to receive
upon surrender of such Certificate and no cash payment in lieu of
fractional shares of Parent Common Stock shall be paid to any such holder
pursuant to Section 2.5 until such holder shall surrender such Certificate
in accordance with Section 2.2. Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be paid to such
holder of shares of Parent Common Stock issuable in exchange therefor,
without interest, (a) promptly after the time of such surrender, the amount
of any cash payable in lieu of fractional shares of Parent Common Stock to
which such holder is entitled pursuant to Section 2.5 and the amount of
dividends or other distributions with a record date after the Effective
Time theretofore paid with respect to such whole shares of Parent Common
Stock, and (b) at the appropriate payment date, the amount of dividends or
other distributions with a record date after the Effective Time but prior
to such surrender and a payment date subsequent to such surrender payable
with respect to such shares of Parent Common Stock.
2.4 No Further Ownership Rights in Company Common Stock. All
shares of Parent Common Stock issued and cash paid upon conversion of
shares of Company Common Stock in accordance with the terms of Article I
and this Article II (including any cash paid pursuant to Section 1.8(a),
2.3 or 2.5) shall be deemed to have been issued or paid in full
satisfaction of all rights pertaining to the shares of Company Common
Stock. If, after the Effective Time, such Certificates are presented to the
Surviving Corporation or the Exchange Agent for transfer, they shall be
canceled and exchanged as provided in this Article II.
2.5 No Fractional Shares of Parent Common Stock. (a) No
certificates or scrip or shares of Parent Common Stock representing
fractional shares of Parent Common Stock shall be issued upon the surrender
for exchange of Certificates and such fractional share interests will not
entitle the owner thereof to vote or to have any rights of a shareholder of
Parent or a holder of shares of Parent Common Stock. For purposes of this
Section 2.5, all fractional shares to which a single record holder would be
entitled shall be aggregated and calculations shall be rounded to three
decimal places.
9
(b) Notwithstanding any other provision of this Agreement, each
holder of shares of Company Common Stock exchanged pursuant to the Merger
who would otherwise have been entitled to receive a fraction of a share of
Parent Common Stock (after taking into account all Certificates delivered
by such holder) shall receive, in lieu thereof, cash (without interest) in
an amount equal to the product of (i) such fractional part of a share of
Parent Common Stock multiplied by (ii) the last sales price per share of
Parent Common Stock quoted on the NYSE on the Closing Date. As promptly as
practicable after the determination of the amount of cash, if any, to be
paid to holders of fractional interests, the Exchange Agent shall so notify
Parent, and Parent shall cause the Exchange Agent to forward payments to
such holders of fractional interests subject to and in accordance with the
terms hereof.
2.6 Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of Certificates for twelve
months after the Effective Time shall be delivered to the Surviving
Corporation or otherwise on the instruction of the Surviving Corporation,
and any holders of Certificates who have not theretofore complied with this
Article II shall thereafter look only to the Surviving Corporation and
Parent (subject to abandoned property, escheat or other similar laws) for
the Merger Consideration with respect to the shares of Company Common Stock
formerly represented thereby to which such holders are entitled pursuant to
Section 1.8 and Section 2.2, any cash in lieu of fractional shares of
Parent Common Stock to which such holders are entitled pursuant to Section
2.5 and any dividends or distributions with respect to shares of Parent
Common Stock to which such holders are entitled pursuant to Section 2.3.
2.7 No Liability. None of Parent, Merger Sub, the Company, the
Surviving Corporation or the Exchange Agent shall be liable to any Person
in respect of any Merger Consideration from the Exchange Fund delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law.
2.8 Investment of the Exchange Fund. Any funds included in the
Exchange Fund may be invested by the Exchange Agent, as directed by Parent;
provided that such investments shall be in obligations of or guaranteed by
the United States of America and backed by the full faith and credit of the
United States of America or in commercial paper obligations rated A-1 or
P-1 or better by ▇▇▇▇▇'▇ Investors Service, Inc. or Standard & Poor's
Corporation, respectively. Any interest and other income resulting from
such investments shall promptly be paid to the Surviving Corporation.
2.9 Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a bond
in such reasonable amount as the Surviving Corporation may direct as
indemnity against any claim that may be made against it with respect to
such Certificate, the Exchange Agent will deliver in exchange for such
lost, stolen or destroyed Certificate the applicable Merger Consideration
with respect to the shares of Company Common Stock formerly represented
10
thereby, any cash in lieu of fractional shares of Parent Common Stock, and
unpaid dividends and distributions on shares of Parent Common Stock
deliverable in respect thereof, pursuant to this Agreement.
2.10 Withholding Rights. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of shares of
Company Common Stock such amounts as it is required to deduct and withhold
with respect to the making of such payment under the Code and the rules and
regulations promulgated thereunder, or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by the
Surviving Corporation or Parent, as the case may be, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to
the holder of the shares of Company Common Stock in respect of which such
deduction and withholding was made by the Surviving Corporation or Parent,
as the case may be.
2.11 Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger
Sub, any deeds, bills of sale, assignments or assurances and to take and
do, in the name and on behalf of the Company or Merger Sub, any other
actions and things to vest, perfect or confirm of record or otherwise in
the Surviving Corporation any and all right, title and interest in, to and
under any of the rights, properties or assets acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the
Merger.
2.12 Stock Transfer Books. At the close of business, New York
City time, on the day the Effective Time occurs, the stock transfer books
of the Company shall be closed and there shall be no further registration
of transfers of shares of Company Common Stock thereafter on the records of
the Company. From and after the Effective Time, the holders of Certificates
shall cease to have any rights with respect to such shares of Company
Common Stock formerly represented thereby, except as otherwise provided
herein or by law. On or after the Effective Time, any Certificates
presented to the Exchange Agent or Parent for any reason shall be converted
into the Merger Consideration with respect to the shares of Company Common
Stock formerly represented thereby, any cash in lieu of fractional shares
of Parent Common Stock to which the holders thereof are entitled pursuant
to Section 2.5 and any dividends or other distributions to which the
holders thereof are entitled pursuant to Section 2.3.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. Except as set
forth in the Company Disclosure Schedule delivered by the Company to Parent
prior to the execution of this Agreement (the "Company Disclosure
Schedule") (each section of which qualifies the correspondingly numbered
representation and warranty or covenant to the extent specified
11
therein and such other representations and warranties or covenants to the
extent a matter in such section is disclosed in such a way as to make its
relevance to the information called for by such other representation and
warranty or covenant readily apparent), the Company represents and warrants
to Parent as follows:
(a) Organization, Standing and Power. Each of the Company and
each of its Subsidiaries is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted
and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary other than in
such jurisdictions where the failure so to qualify would not, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect (as defined in Section 8.11(d)) on the Company. The copies
of the restated certificate of incorporation and the second amended and
restated by-laws of the Company which were previously furnished to Parent
are true, complete and correct copies of such documents as in effect on the
date of this Agreement.
(b) Capital Structure. (i) The authorized capital stock of the
Company consists of (A) 100,000,000 shares of Company Common Stock, of
which 33,985,098 shares were outstanding as of February 26, 1999 and (B)
25,000,000 shares of preferred stock, par value $.01 per share, of which,
as of the date hereof, 70,000 shares of Series A Junior Participating
Preferred Stock have been designated and reserved for issuance upon
exercise of the rights (the "Rights") distributed to the holders of Company
Common Stock pursuant to the Rights Agreement, dated as of February 17,
1998, between the Company and The Bank of New York, as rights agent (the
"Rights Agreement"), and as of February 26, 1999, there were no other
shares of capital stock of the Company outstanding. As of February 26,
1999, 1,952,900 shares of Company Common Stock were held by the Company in
its treasury. Since February 26, 1999 to the date of this Agreement, there
have been no issuances of shares of the capital stock of the Company or any
other securities of the Company other than issuances of shares (and
associated Rights) pursuant to options or rights outstanding as of February
26, 1999 under the Benefit Plans (as defined in Section 8.11(a)) of the
Company and issuances of shares (and associated Rights) upon conversion of
the Convertible Notes. All issued and outstanding shares of the capital
stock of the Company are, and any shares of Company Common Stock which may
be issued upon the exercise of options when issued will be, duly
authorized, validly issued, fully paid and nonassessable, and no class of
capital stock is entitled to preemptive rights. There were outstanding, as
of February 26, 1999, no options, warrants or other rights to acquire
(including through the conversion or exchange of securities) capital stock
from the Company other than (x) the Rights, (y) Options (other than
Underwater Options), representing in the aggregate the right to purchase
248,422 shares of Company Common Stock and Underwater Options representing
in the aggregate the right to purchase 5,458,852 shares of Company Common
Stock, in each case under the Company's Second Amended and Restated Stock
Option Plan, 1993 Directors' Stock Option Plan and First Amended and
Restated 1994 Long-Term Performance Plan (collectively, the "Company Stock
Option Plans"), and (z) the Convertible
12
Notes representing in the aggregate the right to convert into 3,055,958
shares of Company Common Stock. Other than the associated Rights issued
with the shares issued as described above, no options or warrants or other
rights to acquire capital stock from the Company have been issued or
granted since February 26, 1999 to the date of this Agreement. As of
February 26, 1999, the weighted average exercise price of the Underwater
Options and the Options (other than the Underwater Options) was
approximately $31.79 and $16.55, respectively.
(ii) No bonds, debentures, notes or other indebtedness of the
Company having the right to vote (whether currently or upon the occurrence
of an event) on any matters on which stockholders of the Company or any of
its Subsidiaries may vote ("Company Voting Debt") are issued or outstanding
or subject to issuance.
(iii) Except as otherwise set forth in this Section 3.1(b) and as
contemplated by Section 4.1, as of the date of this Agreement, there are no
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the Company or any of its
Subsidiaries is a party or by which any of them is bound obligating the
Company or any of its Subsidiaries to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of capital stock or other
voting securities of the Company or any of its Subsidiaries or obligating
the Company or any of its Subsidiaries to issue, grant, extend or enter
into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. There are no outstanding obligations
of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of the Company or any of its
Subsidiaries.
(iv) All the outstanding shares of capital stock of, or other
equity interests in, each Subsidiary of the Company have been validly
issued, are fully paid and nonassessable and are owned by the Company or a
wholly owned Subsidiary of the Company free and clear of all claims, liens,
charges, mortgages, encumbrances, pledges, security interests or other
restrictions of any kind or nature whatsoever ("Liens"), except for Liens
which would not reasonably be expected to have a Material Adverse Effect on
the Company. Except for the capital stock of its Subsidiaries, the Company
does not own, directly or indirectly, any capital stock or other ownership
interest in any Person that is material to the business of the Company and
its Subsidiaries, taken as a whole.
(c) Authority; No Conflicts. (i) The Company has all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby, subject in the case of the
consummation of the Merger to the adoption of this Agreement by the
Required Company Vote (as defined in Section 3.1(g)). The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of the Company, subject in the case of the consummation
of the Merger, to the adoption of this Agreement by the Required Company
Vote. This Agreement has been duly executed and delivered by the Company
and constitutes a valid and binding agreement of the Company, enforceable
against it in accordance with its terms,
13
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or affecting
creditors generally, by general equity principles (regardless of whether
such enforceability is considered in a proceeding in equity or at law) or
by an implied covenant of good faith and fair dealing.
(ii) The execution and delivery of this Agreement do not, and the
consummation of the Merger and the other transactions contemplated hereby
will not, conflict with, or result in any breach or violation of, or
constitute a default (with or without notice or lapse of time, or both)
under, or result in the termination of, or give rise to a right of
termination, amendment, cancellation or acceleration of any obligation or
the loss of a material benefit under, or to increased, additional,
accelerated or guaranteed rights or entitlements of any Person under, or
result in the creation of a Lien on any assets of the Company or any of its
Subsidiaries (any such conflict, breach, violation, default, right of
termination, amendment, cancellation, acceleration, guarantee,
entitlements, liens or other occurrence, loss or creation, a "Violation")
pursuant to: (A) any provision of the certificate of incorporation or
by-laws of the Company or the governing documents of any Subsidiary of the
Company, or (B) except as would not reasonably be expected to have a
Material Adverse Effect on the Company or to prevent or materially impede
or delay the consummation of the transactions contemplated hereby and,
subject to obtaining or making the consents, approvals, orders,
authorizations, registrations, declarations and filings referred to in
paragraph (iii) below, any loan or credit agreement, note, mortgage, bond,
indenture, lease, benefit plan or other agreement, obligation, instrument,
permit, concession, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to the Company or any
Subsidiary of the Company or their respective properties or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any government, court,
administrative agency or commission or other governmental authority or
instrumentality, domestic, foreign or supranational, or any
quasi-governmental or private body exercising any regulatory, taxing,
importing or other governmental or quasi-governmental authority (a
"Governmental Entity"), is required by or with respect to the Company or
any Subsidiary of the Company in connection with the execution and delivery
of this Agreement by the Company or the consummation of the Merger and the
other transactions contemplated hereby, except for those required under or
in relation to (A) the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended , and the rules and regulations promulgated thereunder
(the "HSR Act"), (B) state securities or "blue sky" laws (the "Blue Sky
Laws"), (C) the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "Securities Act"), (D) the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "Exchange Act"), (E) the DGCL with respect to
the filing of the Delaware Certificate of Merger, (F) rules and regulations
of the NYSE, (G) antitrust or other competition laws of any jurisdiction,
and (H) such consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to make or obtain would not
reasonably be expected to have a Material Adverse Effect on the Company or
to prevent or materially impede or delay the consummation of the
transactions contemplated hereby. Consents, approvals, orders,
authorizations, registrations, declarations and filings
14
required under or in relation to any of the foregoing clauses (A) through
(G) are hereinafter referred to as "Required Consents."
(d) Reports and Financial Statements. The Company has filed all
required reports, schedules, forms, statements and other documents required
to be filed by it with the Securities and Exchange Commission (the "SEC")
since February 1, 1997 (collectively, including all exhibits thereto, the
"Company SEC Reports"). No Subsidiary of the Company is required to file
any form, report or other document with the SEC. None of the Company SEC
Reports filed prior to the date of this Agreement (as of their respective
dates or, if amended or superseded by a filing prior to the date of this
Agreement, then instead, as of the date of such filing), contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Each of the financial statements (including the related notes)
included in the Company SEC Reports presents fairly, in all material
respects, the consolidated financial position and consolidated results of
operations and cash flows of the Company and its Subsidiaries as of the
respective dates or for the respective periods set forth therein, all in
conformity with (and prepared in all material respects in accordance with)
United States generally accepted accounting principles ("U.S. GAAP")
consistently applied during the periods involved except as otherwise noted
therein, and subject, in the case of the unaudited interim financial
statements, to normal and recurring year-end adjustments which are not
expected to be material. All of such Company SEC Reports, as of their
respective dates (and as of the date of any amendment to the respective
Company SEC Report), complied as to form in all material respects with the
applicable requirements of the Securities Act and the Exchange Act.
(e) Information Supplied. (i) None of the information supplied or
to be supplied by the Company for inclusion or incorporation by reference
in (A) the registration statement on Form S-4 to be filed with the SEC by
Parent in connection with the issuance of the Parent Common Stock in the
Merger will, at the time the Form S-4 (as defined in Section 5.1) is filed
with the SEC, at any time it is amended or supplemented or at the time it
becomes effective under the Securities Act, contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and (B)
the Proxy Statement/Prospectus (as defined in Section 5.1) included in the
Form S-4 related to the Company Stockholders Meeting (as defined in Section
5.1) and the Parent Common Stock to be issued in the Merger will, on the
date it is first mailed to stockholders of the Company or at the time of
the Company Stockholders Meeting, (x) 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, in light of the
circumstances under which they were made, not misleading or (y) be false or
misleading with respect to any material fact, or omit to state any material
fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they
are made, not misleading. The Proxy Statement/Prospectus will comply as to
form in all material respects with the requirements of the Exchange Act.
15
(ii) Notwithstanding the foregoing provisions of this Section
3.1(e), no representation or warranty is made by the Company with respect
to statements made or incorporated by reference in the Form S-4 or the
Proxy Statement/Prospectus based on information supplied by Parent for
inclusion or incorporation by reference therein.
(f) Board Approval. The Board of Directors of the Company, by
resolutions duly adopted at a meeting duly called and held and not
subsequently rescinded or modified in any way (the "Board Approval"), has
duly (i) determined that this Agreement, the Merger and the other
transactions contemplated hereby are advisable and in the best interests of
the Company and its stockholders, (ii) approved the Stockholder Agreement
and the transactions contemplated thereby and this Agreement, the Merger
and the other transactions contemplated hereby and (iii) recommended that
the stockholders of the Company adopt and approve this Agreement and the
Merger. The Board Approval constitutes approval of the Stockholder
Agreement and the transactions contemplated thereby and of this Agreement
and the Merger for purposes of Section 203 of the DGCL and represents all
the action necessary to ensure that such Section 203 does not apply to
Parent or any of its affiliates in connection with the Stockholder
Agreement, the Merger and the other transactions contemplated by this
Agreement and the Stockholder Agreement (assuming that Parent is not an
"interested stockholder" of the Company under Section 203 of the DGCL
immediately before the execution and delivery of this Agreement and the
Stockholder Agreement and does not take any other actions (other than
actions relating to the Stockholder Agreement) to become an "interested
stockholder" thereunder). To the knowledge on the date of this Agreement of
the Company, no other state takeover statute or similar statute or
regulation applies to this Agreement, the Stockholder Agreement or the
transactions contemplated hereby or thereby except for those that would not
reasonably be expected to prevent or materially impede or delay the
consummation of the transactions contemplated hereby.
(g) Vote Required. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock entitled to vote
(the "Required Company Vote") is the only vote or approval of the holders
of any class or series of Company capital stock necessary to adopt this
Agreement and approve the transactions contemplated hereby (assuming that
Parent is not an "interested stockholder" of the Company under Section 203
of the DGCL immediately before the execution and delivery of this Agreement
and the Stockholder Agreement).
(h) Rights Agreement. The Board of Directors of the Company has
approved an amendment to the Rights Agreement to the effect that neither
Parent nor Merger Sub will become an "Acquiring Person," and that no "Stock
Acquisition Date" or "Distribution Date" (as such terms are defined in the
Rights Agreement) will occur, as a result of the approval, execution or
delivery of this Agreement or the Stockholder Agreement or the consummation
of the transactions contemplated hereby or thereby.
16
(i) Absence of Certain Changes or Events. Except as set forth in
the Company SEC Reports filed and publicly available prior to the date of
this Agreement (the "Filed Company SEC Reports"), since January 31, 1998,
(i) the Company and its Subsidiaries have conducted their business in all
material respects in the ordinary course of business consistent with past
practice (except, after the date of this Agreement, to the extent permitted
or expressly contemplated by Section 4.1), (ii) there has not been any
Material Adverse Effect on the Company or, to the knowledge of the Company,
any change, event, circumstance or effect that would, in the reasonably
foreseeable future, have a Material Adverse Effect on the Company and (iii)
there has not occurred (A) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property) with
respect to any capital stock of the Company or any repurchase, redemption
or other acquisition by the Company of any capital stock of the Company;
(B) any material change in financial or tax accounting methods, principles
or practices by the Company or any Subsidiary of the Company, except
insofar as may have been required by a change in GAAP or the Code; or (C)
any material elections with respect to Taxes (as defined in Section 3.1(1))
by the Company or any Subsidiary thereof or any settlement or compromise by
the Company or any Subsidiary thereof of any material Tax liability or
refund.
(j) Litigation. There are no claims, actions, suits, proceedings
or investigations (collectively, "Claims") pending or, to the knowledge of
the Company, threatened against the Company or any of its Subsidiaries, or
any properties or rights of the Company or any of its Subsidiaries, before
any Governmental Entity nor is there any judgment, decree, injunction, rule
or order of any Governmental Entity or arbitrator (collectively, "Orders")
outstanding against the Company or any of its Subsidiaries, except for such
Claims or Orders set forth in the Filed Company SEC Reports or as would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Company.
(k) Compliance with Laws. The Company and its Subsidiaries hold
all permits, licenses, variances, exemptions, authorizations, operating
certificates, orders and approvals of all Governmental Entities (the
"Company Permits"), that are required for them to own, lease or operate
their assets and to carry on their businesses as presently conducted,
except as set forth in the Filed Company SEC Reports or except where the
failure to hold Company Permits would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company. There has occurred no default under or violation of any such
Company Permit, except as set forth in the Filed Company SEC Reports or
except for such violations or defaults that would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on
the Company. The businesses of the Company and its Subsidiaries have not
been and are not being conducted in violation of any law, ordinance or
regulation of any Governmental Entity, except for such violations set forth
in the Filed Company SEC Reports or as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company.
(l) Taxes. The Company and each of its Subsidiaries, and any
consolidated, combined, unitary or aggregate group for tax purposes of
which the Company or any of its
17
Subsidiaries is or has been a member, has timely filed all material Tax
Returns (as defined below) required to be filed by it in the manner
provided by law and has paid all Taxes (as defined below) shown thereon to
be due. All assessments for Taxes due with respect to federal income Tax
Returns of the Company and each of its Subsidiaries that have been examined
by and settled with the United States Internal Revenue Service have been
fully paid, adequately provided for or are being contested in good faith,
except as set forth in the Filed Company SEC Reports or where the failure
to be fully paid, adequately provided for, or contested would not
reasonably be expected to have a Material Adverse Effect on the Company.
For purposes of this Agreement, "Taxes" shall mean any taxes of any kind,
including but not limited to those on or measured by or referred to as
income, gross receipts, capital, sales, use, ad valorem, franchise,
profits, license, withholding, payroll, employment, excise, severance,
stamp, occupation, premium, value added, property or windfall profits
taxes, customs, duties or similar fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax
or additional amounts imposed by any governmental authority, domestic or
foreign. For purposes of this Agreement, "Tax Return" shall mean any
return, report or statement required to be filed with any governmental
authority with respect to Taxes, including any schedule or attachment
thereto or amendment thereof.
(m) Employee Benefits. (i) Section 3.1(m)(i) of the Company
Disclosure Schedule sets forth a list of each material Benefit Plan of the
Company or its Subsidiaries sponsored or maintained by the Company or its
Subsidiaries, in which present or former employees of the Company or any of
its Subsidiaries ("Company Employees") participate (collectively, the
"Company Plans"), which list shall exclude (A) all Benefit Plans of the
Company or its Subsidiaries in which Company Employees employed outside the
United States participate and (B) any employment, termination or severance
contracts or agreements, which individually or in the aggregate, would not
result in liability that would be material to the Company. The Company has
made available to Parent true and correct copies of (i) each Company Plan,
(ii) the most recent Forms 5500 filed with respect to each Company Plan,
(iii) the most recent actuarial valuations prepared with respect to each
Company Plan and (iv) the most recent determination letter issued by the
Internal Revenue Service with respect to each Company Plan. The Company
Plans are in compliance in all respects with all applicable requirements of
ERISA, the Code, and other applicable laws and have been administered in
all respects in accordance with their terms and such laws, except where the
failure to so comply or be administered would not reasonably be expected to
have a Material Adverse Effect on the Company. Each Company Plan which is
intended to be qualified within the meaning of Section 401 of the Code has
received a favorable determination letter as to its qualification, and, to
the knowledge of the Company, nothing has occurred that would reasonably be
expected to cause the loss of such favorable determination.
(ii) No Company Plan is a "multiemployer plan" (as defined in
Section 4001(a)(3) of ERISA) and neither the Company nor any ERISA
Affiliate (defined as any corporation or trade or business (whether or not
incorporated) which would be treated as a member of a controlled group
including the Company under Section 4001(a)(14)) has sponsored
18
or contributed to any "multiemployer plan". No event or condition has
occurred in connection with which the Company or any of its ERISA
Affiliates would be reasonably likely to be subject to any material
liability, encumbrance or lien with respect to any Company Plan under
ERISA, the Code or any other applicable law or under any agreement or
arrangement pursuant to or under which the Company or any of its ERISA
Affiliates are required to indemnify any person against such liability,
where such liability, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect on the Company. Except as would
not reasonably be expected to have a Material Adverse Effect on the
Company, (i) there are no pending or, to the knowledge of the Company,
threatened claims, suits, audits or investigations related to any Company
Plan and (ii) no Company Plan provides post-retirement welfare benefits to
any Company Employees other than as required by law.
(iii) Except as would not be reasonably likely to result in
material liability, the consummation of the transactions contemplated by
this Agreement (alone or in connection with any subsequent event, including
a termination of employment) will not (A) accelerate the vesting or payment
of any economic benefit provided or made available to any Company
Employees, (B) increase the amount of any economic benefit provided or made
available to any Company Employees or (C) accelerate or increase the
funding obligation of the Company or its Subsidiaries with respect to any
Company Plan.
(iv) Since September 30, 1998, there has not occurred any
amendment to, or adoption of, any Company Benefit Plan that increases the
obligations of the Company or its Subsidiaries or any granting by the
Company or any Subsidiaries thereof to a current or former director or
officer of any increase in compensation or bonus, except in the ordinary
course of business consistent with past practice, as was required under
then-existing employment agreements or as would not, individually or in the
aggregate, be reasonably likely to result in an increase in liability to
the Company or any of its Subsidiaries that would be material to the
Company and its Subsidiaries, taken as a whole.
(n) Environmental Matters. (i) Except as disclosed in the Filed
Company SEC Reports or except where the failure to obtain or timely apply
for Environmental Permits (as defined below) would not reasonably be
expected to have a Material Adverse Effect on the Company, the Company and
its Subsidiaries have obtained, or have timely applied for, all
environmental, health and safety permits, licenses and governmental
authorizations (collectively, "Environmental Permits") necessary under
applicable Environmental Laws to conduct their business and operations as
currently conducted.
(ii) Except as would not reasonably be expected to have a
Material Adverse Effect on the Company or except as disclosed in the Filed
Company SEC Reports, the Company and its Subsidiaries are in compliance
with all applicable Environmental Laws (as defined in Section 3.1(n)(vi))
and Environmental Permits, and neither the Company nor any of its
Subsidiaries has received any written communication from any Person or
Governmental Entity that alleges that the Company or any of its
Subsidiaries is not in such compliance.
19
(iii) Except as would not reasonably be expected to have a
Material Adverse Effect on the Company or except as disclosed in the Filed
Company SEC Reports, there are no Environmental Claims (as defined in
Section 3.1(n)) pending or, to the knowledge of the Company, threatened,
against the Company or any of its Subsidiaries, in either case arising out
of (A) any real property currently or formerly owned, leased or operated by
the Company or any of its Subsidiaries or (B) any current or former
operations of the Company or any of its Subsidiaries.
(iv) Except as would not reasonably be expected to have a
Material Adverse Effect on the Company, or except as disclosed in the Filed
Company SEC Reports, neither the Company nor any of its Subsidiaries has
retained, or assumed, either contractually or by operation of law, any
liabilities of which the Company has knowledge arising under applicable
Environmental Laws.
(v) Except as disclosed in the Filed Company SEC Reports and
except to the extent that the failure to be in compliance would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company, the Company and its Subsidiaries are in
compliance with all applicable Environmental Laws governing the
investigation, remediation and monitoring of a facility at the time of its
transfer, including the New Jersey Industrial Site Recovery Act and the
Connecticut Transfer Act, to the extent required to consummate the
transactions contemplated by this Agreement.
(vi) (A) "Environmental Claims" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, investigations, proceedings or notices of noncompliance or
violation (in each case in writing) by any Person or entity (including any
Governmental Entity), alleging noncompliance, violation or potential
liability (including potential responsibility or liability for costs of
enforcement, investigation, cleanup, governmental response, removal or
remediation, for natural resources damages, property damage, personal
injuries or penalties or for contribution, indemnification, cost recovery,
compensation or injunctive relief) arising out of, or related to (x) the
presence, Release (as defined in Section 3.1(n)) or threatened Release of
any Hazardous Materials at any location, whether or not owned or operated
by the Company or any of its Subsidiaries or (y) circumstances forming the
basis of any violation or alleged violation of, or liability under, any
Environmental Law or Environmental Permit.
(B) "Environmental Laws" means all foreign, federal, state and
local laws, rules, regulations, orders, decrees, common law, judgments or
binding agreements issued, promulgated or entered into by or with any
Governmental Entity, relating to pollution, the environment (including
ambient air, surface water, groundwater, land surface or subsurface strata)
or protection of human health as it related to the environment, including
laws and regulations relating to Releases or threatened Releases of
Hazardous Materials, or otherwise relating to the generation, manufacture,
processing, distribution, use, treatment, storage, transport, handling of
or exposure to Hazardous Materials.
20
(C) "Hazardous Materials" means (x) any petroleum or petroleum
products, fractions or wastes, radioactive materials or wastes, friable
asbestos and polychlorinated biphenyls; and (y) any other chemical,
material, substance or waste the generation, manufacture, processing,
distribution, possession, use, treatment, storage or Release of which is
prohibited, limited or regulated under any applicable Environmental Law.
(D) "Release" means any release, spill, emission, leaking,
dumping, injection, pouring, deposit, disposal, discharge, dispersal,
leaching or migration into the environment (including ambient air, surface
water, groundwater, land surface or subsurface strata) or within any
building, structure, facility or fixture.
(o) Liabilities. Except for (i) liabilities (other than those
incurred pursuant to contracts) incurred in the ordinary course of business
consistent with past practice since January 31, 1998, (ii) liabilities
under contracts incurred in the ordinary course of business consistent with
past practice, (iii) liabilities arising from this Agreement and
transaction expenses incurred in connection with this Agreement, (iv)
liabilities which individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect on the Company and (v)
liabilities set forth on any balance sheet (including the notes thereto)
included in the Filed Company SEC Reports, to the knowledge as of the date
hereof of the Company neither the Company nor any of its Subsidiaries has
any liabilities.
(p) Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any
broker's or finder's fee or any other similar commission or fee in
connection with any of the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company or any of its
Subsidiaries, except Bear, ▇▇▇▇▇▇▇ & Co. Inc. (the "Financial Advisor"),
whose fees and expenses will be paid by the Company in accordance with the
Company's agreement with such firm previously provided to Parent.
(q) Opinion of Financial Advisor. The Company has received the
opinion of the Financial Advisor, dated the date of this Agreement, to the
effect that, as of such date, the Merger Consideration is fair, from a
financial point of view, to the holders of the Company Common Stock (the
"Fairness Opinion").
(r) Certain Agreements. (i) Except as disclosed in the Filed
Company SEC Reports and, with respect to contracts entered into after
January 31, 1998, except as would not reasonably be expected to have a
Material Adverse Effect on the Company, as of the date hereof there are no
contracts to which the Company or any of its Subsidiaries is a party or by
which it is bound which are or would be required to be filed as an exhibit
to the Company SEC Reports (any contracts so filed or required to be so
filed collectively, the "Material Contracts"). Section 3.1(r)(i) of the
Company Disclosure Schedule lists all contracts to which the Company or any
of its Subsidiaries is a party or by which they are bound which contain
provisions restricting or limiting the Company's or its affiliates' ability
to compete or otherwise engage in specified
21
lines of business, except those which would not reasonably be expected to
have a Material Adverse Effect on Parent.
(ii) To the knowledge as of the date hereof of the Company, the
aggregate principal amount of indebtedness for borrowed money of the
Company and its Subsidiaries (including any indebtedness for borrowed money
under the Trade Receivables Master Trust Pooling and Servicing Agreement of
the Company) outstanding as of the date hereof is approximately $674
million.
(iii) Neither the Company nor any of its Subsidiaries is in
default under any Material Contract, and there has not occurred any event
that, with the giving of notice or the lapse of time or both, would
constitute such a default by the Company or any of its Subsidiaries or, to
the knowledge of the Company, a default thereunder by any other party
thereto, except as set forth in the Filed Company SEC Reports or for such
defaults as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company.
(s) Intellectual Property. The Company and its Subsidiaries own,
or are licensed or otherwise have the right to use, all United States and
foreign issued patents, patent rights, patent applications, registered
trademarks, trademark applications, registered service marks, service ▇▇▇▇
applications, trade names, copyrights, software and know-how (the
"Intellectual Property") currently used by the Company and its Subsidiaries
in their business, except where the failure to so own, license or otherwise
have the right to use such Intellectual Property would not reasonably be
expected to have a Material Adverse Effect on the Company. Except as would
not reasonably be expected to have a Material Adverse Effect on the
Company:
(i) the use of the Intellectual Property by the Company and its
Subsidiaries does not interfere with, infringe upon, misappropriate or
otherwise come into conflict with any patent, trademark, service ▇▇▇▇,
trade name, copyright, brand name, logo, symbol or other intellectual
property or proprietary information of any other Person; and
(ii) to the knowledge of the Company, no other Person is
interfering with, infringing upon, misappropriating or otherwise coming
into conflict with any Intellectual Property of the Company or any of its
Subsidiaries.
(t) Antitrust Matters. In connection with all pending or
threatened antitrust and related investigations by Governmental Entities
and purported class action lawsuits involving the Company and its
Subsidiaries and the related resale pricing policies of all the branded
wholesale divisions of the Company and its Subsidiaries (collectively, the
"Antitrust Matters"), and subject in all respects to the terms of the
Agreement Concerning the Disclosure of Materials Subject to the
Attorney-Client Privilege, Work Product and Other Disclosures dated as of
February 21, 1999 (the "Disclosure Agreement") between Parent, the Company
and the respective legal counsel to Parent and the Company parties thereto,
and the Company's rights generally to assert attorney client, work product
or similar privilege, the Company has made available to Parent
22
and/or its counsel certain information which is relevant to the Antitrust
Matters. To the knowledge of the Company as of the date of this Agreement,
there is no factual information which is relevant to the Antitrust Matters
which has not been made available to Parent and/or its counsel, and there
are no inaccuracies in the factual information which has so been made
available to Parent and/or its counsel, which in each case, if considered
in the context of the Antitrust Matters and the information that has so
been made available to Parent and/or its counsel, would, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on
the Company.
(u) Year 2000 Compliance. All computer software and other
applicable technology used by the Company and/or any of its Subsidiaries is
currently (or will in sufficient time so as to avoid causing a Material
Adverse Effect on the Company be) designed to operate consistently after
December 31, 1999 to accurately process, provide and receive date data
(including calculating, comparing and sequencing) from, into and between
the Twentieth and Twenty-First centuries, including the years 1999 and
2000, and making leap-year calculations, and is otherwise currently "Year
2000 compliant" (or will be "Year 2000 complaint" so as to avoid causing a
Material Adverse Effect on the Company), except where the failure to
operate consistently or be "Year 2000 compliant" would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect
on the Company or except as disclosed in the Filed Company SEC Reports.
3.2 Representations and Warranties of Parent. Except as set forth
in the Parent Disclosure Schedule delivered by Parent to the Company prior
to the execution of this Agreement (the "Parent Disclosure Schedule") (each
section of which qualifies the correspondingly numbered representation and
warranty or covenant to the extent specified therein and such other
representations and warranties or covenants to the extent a matter in such
section is disclosed in such a way as to make its relevance to the
information called for by such other representation and warranty or
covenant readily apparent), Parent represents and warrants to the Company
as follows:
(a) Organization, Standing and Power. Each of Parent and each of
its Subsidiaries, including Merger Sub, is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted
and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary other than in
such jurisdictions where the failure so to qualify or to be in good
standing would not, either individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Parent. The copies of the
articles of incorporation and by-laws of Parent which were previously
furnished to the Company are true, complete and correct copies of such
documents as in effect on the date of this Agreement. Merger Sub is a
wholly-owned subsidiary of Parent.
23
(b) Capital Structure. (i) The authorized capital stock of Parent
consists of (A) 200,000,000 shares of Parent Common Stock of which
103,617,379 shares were outstanding as of February 26, 1999 and (B)
1,000,000 shares of preferred stock, par value $.01 per share, of which no
shares were issued or outstanding as of February 26, 1999. As of February
26, 1999, 11,917,970 shares of Parent Common Stock were held by Parent in
its treasury. Since February 26, 1999 to the date of this Agreement, there
have been no issuances of shares of the capital stock of Parent or any
other securities of Parent other than issuances of shares pursuant to
options or rights outstanding, as of February 26, 1999, under the Benefit
Plans (as defined in Section 8.11(a)) of Parent. All issued and outstanding
shares of the capital stock of Parent are, and any shares of Parent Common
Stock which may be issued upon the exercise of options when issued will be,
duly authorized, validly issued, fully paid and nonassessable, and no class
of capital stock is entitled to preemptive rights. There were outstanding
as of February 26, 1999 no options, warrants or other rights to acquire
capital stock from Parent other than options representing in the aggregate
the right to purchase 10,841,609 shares of Parent Common Stock under
Parent's 1991 Stock Option Plan and 1996 Stock Option Plan (collectively,
the "Parent Stock Option Plans"). No options or warrants or other rights to
acquire capital stock from Parent have been issued or granted since
February 26, 1999 to the date of this Agreement.
(ii) No bonds, debentures, notes or other indebtedness of Parent
having the right to vote (whether currently or upon the occurrence of an
event) on any matters on which stockholders of Parent or any of its
Subsidiaries may vote ("Parent Voting Debt") are issued or outstanding or
subject to issuance.
(iii) Except as otherwise set forth in this Section 3.2(b) and as
contemplated by Section 4.2, as of the date of this Agreement, there are no
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which Parent or any of its
Subsidiaries is a party or by which any of them is bound obligating Parent
or any of its Subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other
voting securities of Parent or any of its Subsidiaries or obligating Parent
or any of its Subsidiaries to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement, arrangement
or undertaking. There are no outstanding obligations of Parent or any of
its Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of Parent or any of its Subsidiaries.
(c) Authority; No Conflicts. (i) Each of Parent and Merger Sub
has all requisite corporate power and authority to enter into this
Agreement and Parent has all requisite corporate power and authority to
issue the shares of Parent Common Stock to be issued in the Merger (the
"Share Issuance"). The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and
Merger Sub. This Agreement has been duly executed and delivered by Parent
and Merger Sub and constitutes a valid and binding agreement of Parent and
Merger Sub, enforceable against each of them in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or
24
affecting creditors generally, by general equity principles (regardless of
whether such enforceability is considered in a proceeding in equity or at
law) or by an implied covenant of good faith and fair dealing.
(ii) The execution and delivery of this Agreement do not, and the
consummation of the Merger and the other transactions contemplated hereby
will not, conflict with, or result in a Violation pursuant to: (A) any
provision of the certificate of incorporation or by-laws of Parent or the
governing documents of any Subsidiary of Parent, or (B) except as would not
reasonably be expected to have a Material Adverse Effect on Parent or to
prevent or materially impede or delay the consummation of the transactions
contemplated hereby and, subject to obtaining or making the consents,
approvals, orders, authorizations, registrations, declarations and filings
referred to in paragraph (iii) below, any loan or credit agreement, note,
mortgage, bond, indenture, lease, benefit plan or other agreement,
obligation, instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
Parent or any Subsidiary of Parent or their respective properties or
assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is
required by or with respect to Parent or any Subsidiary of Parent in
connection with the execution and delivery of this Agreement by Parent or
the consummation of the Merger and the other transactions contemplated
hereby, except for the Required Consents and such consents, approvals,
orders, authorizations, registrations, declarations and filings the failure
of which to make or obtain would not reasonably be expected to have a
Material Adverse Effect on Parent or to prevent or materially impede or
delay the consummation of the transactions contemplated hereby.
(d) Reports and Financial Statements. Parent has filed all
required reports, schedules, forms, statements and other documents required
to be filed by it with the SEC since January 1, 1997 (collectively,
including all exhibits thereto, the "Parent SEC Reports"). No Subsidiary of
Parent is required to file any form, report or other document with the SEC.
None of the Parent SEC Reports filed prior to the date of this Agreement
(as of their respective dates or, if amended or superseded by a filing
prior to the date of this Agreement, then instead, as of the date of such
filing), contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they were made, not misleading. Each of the financial statements (including
the related notes) included in the Parent SEC Reports presents fairly, in
all material respects, the consolidated financial position and consolidated
results of operations and cash flows of Parent and its Subsidiaries as of
the respective dates or for the respective periods set forth therein, all
in conformity with (and prepared in all material respects in accordance
with) U.S. GAAP consistently applied during the periods involved except as
otherwise noted therein, and subject, in the case of the unaudited interim
financial statements, to normal and recurring year-end adjustments which
are not expected to be material. All of such Parent SEC Reports, as of
their respective dates (and as of the date of any amendment to the
respective Parent SEC
25
Report), complied as to form in all material respects with the applicable
requirements of the Securities Act and the Exchange Act.
(e) Information Supplied. (i) None of the information supplied or
to be supplied by Parent for inclusion or incorporation by reference in (A)
the Form S-4 will, at the time the Form S-4 is filed with the SEC, at any
time it is amended or supplemented or at the time it becomes effective
under the Securities Act, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and (B) the Proxy
Statement/Prospectus will, on the date it is first mailed to stockholders
of the Company or at the time of the Company Stockholders Meeting, (x)
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, in light of the circumstances under which they were
made, not misleading or (y) be false or misleading with respect to any
material fact, or omit to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they are made, not misleading. The
Form S-4 and the Proxy Statement/Prospectus will comply as to form in all
material respects with the requirements of the Exchange Act and the
Securities Act.
(ii) Notwithstanding the foregoing provisions of this Section
3.2(e), no representation or warranty is made by Parent with respect to
statements made or incorporated by reference in the Form S-4 or the Proxy
Statement/Prospectus based on information supplied by the Company for
inclusion or incorporation by reference therein.
(f) Vote Required. No vote of holders of any shares of any class
or series of the capital stock of Parent is necessary to approve the Share
Issuance, this Agreement or the Merger.
(g) Absence of Certain Changes or Events. Except as set forth in
the Parent SEC Reports filed and publicly available prior to the date of
this Agreement (the "Filed Parent SEC Reports"), (i) since September 30,
1998 and prior to the date hereof, Parent has conducted its business in all
material respects in the ordinary course of business consistent with past
practice and (ii) since September 30, 1998, there has not been any Material
Adverse Effect on Parent or, to the knowledge of Parent, any change, event,
circumstance or effect that would, in the reasonably foreseeable future,
have a Material Adverse Effect on Parent.
(h) Litigation. There are no Claims pending or, to the knowledge
of Parent, threatened against Parent or any of its Subsidiaries, or any
properties or rights of Parent or any of its Subsidiaries, before any
Governmental Entity nor is there any Order outstanding against Parent or
any of its Subsidiaries, except for such Claims or Orders set forth in the
Filed Parent SEC Reports or as would not, individually or in the aggregate
reasonably be expected to have a Material Adverse Effect on Parent.
(i) Compliance with Laws. The businesses of Parent and its
Subsidiaries have not been and are not being conducted in violation of any
law, ordinance or regulation of any
26
Governmental Entity, except for violations set forth in the Filed Parent
SEC Reports or as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on Parent.
(j) Taxes. Parent and each of its Subsidiaries, and any
consolidated, combined, unitary or aggregate group for tax purposes of
which Parent or any of its Subsidiaries is or has been a member, has timely
filed all material Tax Returns required to be filed by it in the manner
provided by law and has paid all Taxes shown thereon to be due.
(k) Employee Benefits. (i) "Parent Plans" means each material
"employee benefit plan" (within the meaning of Section 3(3) of ERISA),
severance, change in control or employment plan, program or agreement, and
vacation, incentive, bonus, stock option, stock purchase, and restricted
stock plan, program or policy sponsored or maintained by the Parent, in
which present or former employees of the Parent or any of its Subsidiaries
("Parent Employees") participate. The Parent Plans are in compliance in all
material respects with all applicable requirements of ERISA, the Code, and
other applicable laws and have been administered in all respects in
accordance with their terms and such laws, in each case except where the
failure to so comply or be administered would not reasonably be expected to
have a Material Adverse Effect on Parent.
(ii) No event or condition has occurred, to the knowledge of
Parent, in connection with which Parent or any of its ERISA Affiliates
would be reasonably likely to be subject to any liability, encumbrance or
lien with respect to any Parent Plan under ERISA, the Code or any other
applicable law or under any agreement or arrangement pursuant to or under
which Parent or any of its ERISA Affiliates are required to indemnify any
person against such liability where such liability, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect
on Parent. There are no pending or, to the knowledge of Parent, threatened
claims, suits, audits or investigations related to any Parent Plan, except
for such claims, suits, audits or investigations which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Parent.
(l) Liabilities. Except for (i) liabilities (other than those
incurred pursuant to contracts) incurred in the ordinary course of business
consistent with past practice since December 31, 1997, (ii) liabilities
under contracts incurred in the ordinary course of business consistent with
past practice, (iii) liabilities arising from this Agreement and
transaction expenses incurred in connection with this Agreement, (iv)
liabilities which, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect on Parent and (v) liabilities
set forth on any balance sheet (including the notes thereto) included in
the Filed Parent SEC Reports, to the knowledge as of the date hereof of
Parent, neither Parent nor any of its Subsidiaries has any liabilities.
(m) Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any
broker's or finder's fee or any other similar
27
commission or fee in connection with any of the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of Parent or
Merger Sub, except Palladin Capital Group, Inc., whose fees and expenses
will be paid by Parent in accordance with Parent's agreement with such firm
based upon arrangements made by or on behalf of Parent and previously
disclosed to the Company.
(n) No Business Activities. Merger Sub has not conducted any
activities other than in connection with the organization of Merger Sub,
the negotiation and execution of this Agreement and the consummation of the
transactions contemplated hereby. Merger Sub has no Subsidiaries.
(o) Financing. Parent (i) has, as of the date hereof, financing
commitments for sufficient funds to pay the Merger Consideration and any
other payments required to be made pursuant to Article II at the Effective
Time or (ii) shall have, at the Effective Time, sufficient funds available
to pay the Merger Consideration and any other payments required to be made
pursuant to Article II.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Covenants of the Company. During the period from the date of
this Agreement and continuing until the Effective Time, the Company agrees
as to itself and its Subsidiaries that (except as expressly contemplated or
permitted by this Agreement (other than, except as set forth in clause (a)
below, Section 5.3) or as set forth on the Company Disclosure Schedule or
to the extent that Parent shall otherwise consent in writing, which consent
shall not be withheld or delayed unless Parent determines in good faith
that such action would be detrimental in any material respect to Parent or
the Company following the consummation of the Merger):
(a) Ordinary Course. (i) Except as contemplated by and consistent
with Section 5.3 the Company shall, and shall cause each of its
Subsidiaries to, carry on its business in the usual, regular and ordinary
course (including with respect to promotional sales or discounting
activities , receivables collections, payables activities and inventory
stocking and management) in all material respects, in substantially the
same manner as heretofore conducted, and shall use its reasonable best
efforts to preserve intact its present lines of business, maintain its
rights and franchises and preserve its relationships with customers,
suppliers and others having business dealings with them to the end that
their ongoing businesses shall not be impaired in any material respect at
the Effective Time; provided that in no event shall the Company or any of
its Subsidiaries take any action outside the ordinary course of business
consistent with past practice pursuant to Section 5.3 which would,
individually or in the aggregate, reasonably be expected to
28
materially diminish the value of the transaction contemplated hereby to
Parent and its Subsidiaries.
(ii) The Company shall not, and shall not permit any of its
Subsidiaries to, (A) enter into any new material line of business or (B)
incur or commit to any capital expenditures other than capital expenditures
incurred or committed to in the ordinary course of business consistent with
past practice and which, together with all such expenditures incurred or
committed to during any fiscal year, are not in excess of the respective
amounts by category or in the aggregate set forth in the Company's 1999
capital expenditure budget, a true and complete copy of which has been
previously provided to Parent.
(b) Dividends; Changes in Share Capital. The Company shall not,
and shall not permit any of its Subsidiaries to, and shall not propose to,
(i) declare, set aside or pay any dividends on or make any other
distributions in respect of any of its capital stock, except dividends by
wholly owned Subsidiaries of the Company to its parent or joint venture
entities in which the Company holds an equity interest, (ii) split, combine
or reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in
substitution for, shares of its capital stock, except for any such
transaction by a wholly owned Subsidiary of the Company which remains a
wholly owned Subsidiary after consummation of such transaction, (iii)
purchase, repurchase, redeem or otherwise acquire any shares of its capital
stock or any securities convertible into or exercisable for any shares of
its capital stock except for the purchase from time to time by the Company
of Company Common Stock (and the associated Rights) in the ordinary course
of business consistent with past practice (including with respect to amount
and timing) in connection with the Company Plans or (iv) take any other
action having the effects set forth in clause (i), (ii) or (iii) above.
(c) Issuance of Securities. The Company shall not, and shall not
permit any of its Subsidiaries to, issue, deliver, sell , pledge, dispose
of, encumber or grant any Lien on, or authorize or propose the issuance,
delivery, sale, pledge, disposition of, encumbrance or grant of any Lien
on, any shares of the capital stock of any class of the Company or any of
its Subsidiaries, any Company Voting Debt or other voting securities or any
securities convertible into or exercisable for, or any rights, warrants or
options to acquire, any such securities or Company Voting Debt or voting
securities or any other ownership interest (or interest the value of which
is derived by reference to any of the foregoing), or enter into any
agreement with respect to any of the foregoing, other than (i) the issuance
of Company Common Stock (and the associated Rights) upon the exercise of
stock options outstanding on the date hereof in accordance with their
present terms, (ii) issuances by a wholly owned Subsidiary of the Company
of capital stock to such Subsidiary's parent, (iii) issuances in accordance
with the Rights Agreement, or (iv) issuances of Company Common Stock (and
the associated Rights) upon the conversion of the Convertible Notes.
(d) Governing Documents. Except to the extent required to comply
with their respective obligations hereunder, required by law or required by
the rules and regulations of the
29
NYSE, the Company and its Subsidiaries shall not amend, in the case of
Subsidiaries, in any material respect, or propose to amend their respective
certificates of incorporation, by-laws or other governing documents.
(e) No Acquisitions. The Company shall not, and shall not permit
any of its Subsidiaries to, acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business
or any corporation, partnership, association or other business organization
or division thereof or otherwise acquire or agree to acquire any assets
(other than the acquisition of assets which, taken together, do not
constitute a business and which are of the type currently used in the
operations of the business of the Company and its Subsidiaries in the
ordinary course of business consistent with past practice); provided,
however, that the foregoing shall not prohibit the creation of new
Subsidiaries of the Company organized to conduct or continue activities
otherwise permitted by this Agreement. Notwithstanding anything to the
contrary in Section 4.1(a), any acquisition transaction not prohibited by
this paragraph (e) shall not be deemed to violate the provisions of Section
4.1(a).
(f) No Dispositions. Other than (i) dispositions required to be
made pursuant to an agreement or contract to which the Company or any
Subsidiary is a party or by which it is bound as of the date of this
Agreement and (ii) dispositions of inventory and excess or obsolete assets
in the ordinary course of the business consistent with past practice, the
Company shall not, and shall not permit any Subsidiary of the Company to,
sell, lease, encumber, license or otherwise dispose of, or agree to sell,
lease, encumber, license or otherwise dispose of, any of its assets.
Notwithstanding anything to the contrary in Section 4.1(a), any disposition
transaction not prohibited by this paragraph (f) shall not be deemed to
violate the provisions of Section 4.1(a).
(g) Investments; Indebtedness. The Company shall not, and shall
not permit any of its Subsidiaries to, (i) make any loans, advances or
capital contributions to, or investments in (other than acquisitions
permitted by Section 4.1(e)(i)), any other Person, other than (x) by the
Company or a Subsidiary of the Company to or in the Company or any direct
or indirect wholly owned Subsidiary of the Company or (y) pursuant to and
in accordance with the terms of any contract or other legal obligation of
the Company or any of its Subsidiaries existing at the date of this
Agreement or (z) in the ordinary course of business consistent with past
practice in an aggregate amount not in excess of $5 million or (ii) create,
incur, assume or suffer to exist any indebtedness, issuances of debt
securities, guarantees, loans, advances or other non-equity securities not
in existence as of the date of this Agreement except (x) pursuant to the
credit facilities, indentures and other arrangements in existence on the
date of this Agreement, (y) for short-term borrowings (1) in the ordinary
course of business consistent with past practice or (2) the proceeds of
which are used to refund existing or maturing indebtedness or fund any
acquisition transaction permitted by Section 4.1(e) or (z) intercompany
indebtedness between the Company and any of its wholly owned Subsidiaries
or between such wholly owned Subsidiaries.
30
(h) Accounting Methods; Income Tax Elections. Except as disclosed
in the Filed Company SEC Reports, or as required by a Governmental Entity,
the Company shall not change its methods of accounting except as required
by changes in U.S. GAAP as concurred in by the Company's independent
accountants. The Company shall not (i) change its fiscal year or (ii) make
any material Tax election, other than in the ordinary course of business
consistent with past practice.
(i) Company Rights Agreement. Except as provided in Section 5.8,
the Company shall not (i) amend, modify or waive any provision of the
Rights Agreement or (ii) take any action to redeem the Rights or render the
Rights inapplicable to any transaction.
(j) Compensation. (i) The Company shall not, nor shall it permit
any of its Subsidiaries to, materially increase the amount of compensation
or benefits of any director, officer or employee except in the ordinary
course of business consistent with past practice or as required by an
agreement existing on the date hereof, provided that with respect to
officers, such increases shall not exceed 5% of the current compensation of
any such officer and such increases shall not be made without consultation
with Parent, (ii) materially increase or commit or agree to materially
increase any employee benefits, (iii) issue any additional Company Options,
(iv) adopt or make any commitment to adopt any additional employee benefit
plan or (v) make or agree to make any contribution, other than regularly
scheduled contributions, to any Company Plan, except, in each case, as
required by law.
(k) Claims. The Company shall not, nor shall it permit any of its
Subsidiaries to, (i) pay, discharge or satisfy any material claims
(including claims of stockholders), liabilities or obligations (whether
absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction of liabilities or obligations
in the ordinary course of business consistent with past practice or as
required by their terms as in effect on the date hereof, (ii) waive,
release, grant or transfer any rights of material value outside the
ordinary course of business consistent with past practice or (iii) settle
or compromise any material litigation (whether or not commenced prior to
the date of this Agreement); provided, however, that the Company and its
Subsidiaries may enter into settlements or compromises of material
litigation not involving any obligation of the Company other than the
payment of money if the relevant litigation has been the subject of a
reserve and the amount paid or to be paid in settlement or compromise does
not exceed such reserve.
(l) Other Actions. The Company shall not, nor shall it permit any
of its Subsidiaries to, take any action with knowledge that such action
would reasonably be expected to result in any of the conditions contained
in Section 6.2(a) not being satisfied.
(m) No General Authorization. The Company shall not, nor shall it
permit any of its Subsidiaries to, authorize any of, or commit, resolve or
agree to take any of, the actions prohibited by paragraphs (a) through (l)
of this Section 4.1.
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4.2 Covenants of Parent. During the period from the date of this
Agreement and continuing until the Effective Time, Parent agrees as to
itself and its Subsidiaries that (except as expressly contemplated or
permitted by this Agreement or as otherwise indicated on the Parent
Disclosure Schedule or to the extent that the Company shall otherwise
consent in writing, which consent shall not be withheld or delayed unless
the Company determines in good faith that such action would be detrimental
in any material respect to the Company or its stockholders following the
consummation of the Merger):
(a) Conduct of Business. Parent shall, to the extent consistent
with Parent's reasonable commercial judgment and to the extent material,
use its reasonable best efforts to preserve intact its and its
Subsidiaries' current business organizations, keep available the services
of their current officers and employees and preserve their relationships
with customers, suppliers, licensors, licensees, advertisers, distributors
and others having business dealings with them to the end that their
goodwill and ongoing businesses shall be materially unimpaired at the
Effective Time of the Merger.
(b) Dividends; Changes in Share Capital. Parent shall not, and
shall not permit any of its Subsidiaries to, and shall not propose to, (i)
declare or pay any dividends on or make other distributions in respect of
any of its capital stock, except dividends by wholly owned Subsidiaries of
Parent, (ii) split, combine or reclassify any of its capital stock or issue
or authorize or propose the issuance of any other securities in respect of,
in lieu of or in substitution for, shares of its capital stock, except for
any such transaction by a wholly owned Subsidiary of Parent which remains a
wholly owned Subsidiary after consummation of such transaction, or (iii)
acquire any shares of its capital stock or any securities convertible into
or exercisable for any shares of its capital stock through a self-tender
offer.
(c) Liquidation. Parent shall not, without the prior written
consent of the Company, adopt a plan of complete or partial liquidation
with respect to Parent or resolutions providing for or authorizing such a
liquidation or a dissolution.
(d) Governing Documents. Except to the extent required to comply
with their respective obligations hereunder, required by law or required by
the rules and regulations of the NYSE, Parent and its material Subsidiaries
shall not amend, in the case of Subsidiaries, in any material respect, or
propose to amend their respective certificates of incorporation, by-laws or
other governing documents in such a manner as would cause holders of Parent
Common Stock that receive Parent Common Stock pursuant to the Merger to be
treated differently than other holders of Parent Common Stock.
(e) No Acquisitions. Parent shall not, and shall not permit any
of its Subsidiaries to, acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business
or any corporation, partnership, association or other business organization
or division thereof or otherwise acquire or agree to acquire any assets
that would, individually or in the aggregate,
32
reasonably be expected to (i) prevent or materially delay the consummation
of the transactions contemplated hereby, or (ii) fundamentally change the
character of the business of Parent and its Subsidiaries, taken as a whole.
(f) Other Actions. Parent shall not, nor shall it permit any of
its Subsidiaries to, take any action with knowledge that such action would
reasonably be expected to result in any of the conditions contained in
Section 6.3(a) not being satisfied.
(g) No General Authorization. Parent shall not, nor shall it
permit any of its Subsidiaries to, authorize any of, or commit, resolve or
agree to take any of, the actions prohibited by paragraphs (a) through (f)
of this Section 4.2.
Notwithstanding anything set forth in this Agreement to the contrary,
during the 15 consecutive NYSE trading days immediately preceding the
second NYSE trading day prior to the date on which the Effective Time
occurs, Parent shall not (i) acquire any Parent Common Stock in the open
market, (ii) sell (or announce any intention to sell) any shares of Parent
Common Stock, (iii) take any other action prohibited under Regulation M
promulgated under the Securities Act, or (iv) except as required by
applicable law or by obligations pursuant to any listing agreement with or
rules of any securities exchange, make any announcement outside the
ordinary course of business which would reasonably be expected to have the
effect of resulting in a change in the sales prices of the Parent Common
Stock.
4.3 Advice of Changes; Governmental Filings. Each party shall (a)
confer on a regular and frequent basis with the other and (b) report (to
the extent (i) not prohibited by law or regulation or (ii) any privilege
would not be waived or otherwise lost as a result of such action) on
operational matters. The Company and Parent shall file all reports required
to be filed by each of them with the SEC (and all other Governmental
Entities) between the date of this Agreement and the Effective Time and
shall (to the extent (i) not prohibited by law or regulation or (ii) any
privilege would not be waived or otherwise lost as a result of such action)
deliver to the other party copies of all such reports, announcements and
publications promptly after the same are filed. Subject to applicable laws
relating to the exchange of information, each of the Company and Parent
shall have the right to review in advance, and will consult with the other
with respect to, all the information relating to the other party and each
of their respective Subsidiaries, which appears in any filings,
announcements or publications made with, or written materials submitted to,
any third party or any Governmental Entity in connection with the
transactions contemplated by this Agreement. In exercising the foregoing
right, each of the parties hereto agrees to act reasonably and as promptly
as practicable.
4.4 Specified Matters. The Company shall, and shall cause its
Subsidiaries to, afford to Parent and its Representatives reasonable full
access to any information (regardless of the form thereof and regardless of
whether such information is held by the Company or any of its Subsidiaries
or any of their Representatives) which materially relates to the Specified
Matters (as defined below) (and, upon request of Parent, all information
reasonably available which relates
33
to the Specified Matters), including access to any officers or employees
who would reasonably be expected to have access to or knowledge of any such
information, and will reasonably fully consult Parent and keep Parent
reasonably fully informed (in each case on a reasonably prompt basis) as to
all material events and developments which, to the knowledge of the
Company, materially relate to Specified Matters, and the Company shall, and
shall cause its Subsidiaries and counsel to, provide Parent and its counsel
with as full an opportunity as practicable to share its views on material
actions with respect to the Specified Matters to be taken by the Company or
its Subsidiaries or their counsel, to the fullest extent practicable prior
to the time such actions are taken, provided, however, that the foregoing
obligations and all such information shall be subject in all respects to
the terms of the Disclosure Agreement and the Company's right generally to
assert attorney client, work product or similar privilege, it being
understood that the Company will use its reasonable best efforts to achieve
a result in which such obligations may be followed and such information
provided without causing any such privilege, whether under the Disclosure
Agreement or otherwise, to be waived, and in any event, the Company shall
provide to Parent, and update on a reasonably prompt basis, a "privilege
log" listing all information as to which access is not permitted by reason
of the assertion by the Company of any of the foregoing privileges. As used
in this Agreement, the term "Specified Matters" means the Antitrust
Matters, and any future investigations, claims, actions, proceedings, or
lawsuits relating to or based upon the same or similar facts or
circumstances as are alleged in, or form the basis for, the Antitrust
Matters.
4.5 Notification of Certain Matters. Parent shall give reasonably
prompt notice to the Company, and the Company shall give reasonably prompt
notice to Parent, if Parent, on the one hand, or the Company, on the other
hand, has knowledge of any of its respective material representations or
warranties becoming untrue or incorrect or any of its respective material
covenants having been breached where such untruth or incorrectness or such
breach (without regard to any cure thereof that cannot be made prior to the
time that such party is required to give notice hereunder) would result in
the condition set forth in Section 6.3(a) or (b) (in the case of notice by
Parent to the Company by Parent) or Section 6.2(a) or (b) (in the case of
notice by the Company to Parent) failing to be satisfied.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Preparation of Form S-4 and Proxy Statement/Prospectus;
Company Stockholders Meeting. (a) As promptly as practicable following the
date hereof, Parent and Company shall prepare and file with the SEC
preliminary proxy materials which shall constitute the Proxy
Statement/Prospectus (such proxy statement/prospectus, and any amendments
or supplements thereto, the "Proxy Statement/Prospectus") and Parent shall
prepare and file with the SEC a registration statement on Form S-4 with
respect to the issuance of Parent Common Stock in the Merger (the "Form
S-4"). The Proxy Statement/Prospectus will be included in the
34
Form S-4 as Parent's prospectus. The Form S-4 and the Proxy
Statement/Prospectus shall comply as to form in all material respects with
the applicable provisions of the Securities Act and the Exchange Act. Each
of Parent and the Company shall use its reasonable best efforts to have the
Form S-4 declared effective under the Securities Act as promptly as
practicable after filing with the SEC and to keep the Form S-4 effective as
long as is necessary to consummate the Merger. Parent and the Company
shall, as promptly as practicable after receipt thereof, provide copies of
any written comments received from the SEC with respect to the Proxy
Statement/ Prospectus to the other party and advise the other party of any
oral comments with respect to the Proxy Statement/Prospectus received from
the SEC. The Company shall use its reasonable best efforts to cause the
Proxy Statement/Prospectus to be mailed to the Company's stockholders as
promptly as practicable after the Form S-4 is declared effective under the
Securities Act. Parent shall also take any action (other than qualifying to
do business in any jurisdiction in which it is not now so qualified or
filing a general consent to service of process) required to be taken under
any applicable state securities laws in connection with the Share Issuance
and the Company shall furnish all information concerning the Company and
the holders of Company Common Stock as may be reasonably requested in
connection with any such action. Each of the Company and Parent will inform
the other party, promptly after it receives notice thereof, of any request
by the SEC for the amendment of the Form S-4 or the Proxy
Statement/Prospectus, as the case may be, or requests by the SEC for
additional information. If at any time prior to the Effective Time any
information relating to the Company or Parent, or any of their respective
affiliates, officers or directors, should be discovered by the Company or
Parent which should be set forth in an amendment or supplement to any of
the Form S-4 or the Proxy Statement/Prospectus, so that any of such
documents would not include any misstatement of a material fact or omit to
state any material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, the party
which discovers such information shall promptly notify the other parties
hereto and an appropriate amendment or supplement describing such
information shall be promptly filed with the SEC and, to the extent
required by law, disseminated to the stockholders of the Company. Parent
agrees that none of the information supplied or to be supplied by Parent
for inclusion or incorporation by reference in the Proxy
Statement/Prospectus and each amendment or supplement thereto, at the time
of mailing thereof and at the time of the Company Stockholders Meeting,
will contain an 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 the circumstances under which they were
made, not misleading or be false or misleading with respect to any material
fact, or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they are made, not misleading or necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies for the Company Stockholders Meeting which has
become false or misleading. The Company agrees that none of the information
supplied or to be supplied by the Company for inclusion or incorporation by
reference in the Proxy Statement/Prospectus and each amendment or
supplement thereto, at the time of mailing thereof and at the time of the
Company Stockholders Meeting, will contain an 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 the
circumstances under which they were made, not
35
misleading or be false or misleading with respect to any material fact, or
omit to state any material fact required to be stated therein or necessary
in order to make the statements made therein, in the light of circumstances
under which they are made, not misleading or necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Company Stockholders Meeting which has become false or
misleading. For purposes of the foregoing, it is understood and agreed that
information concerning or related to Parent will be deemed to have been
supplied by Parent and information concerning or related to the Company and
the Company Stockholders Meeting shall be deemed to have been supplied by
the Company. Each of the Company and Parent will provide Parent or the
Company, respectively, with a reasonable opportunity to review and comment
on any amendment or supplement to the Proxy Statement/Prospectus and the
Form S-4, respectively, prior to filing such with the SEC, and will provide
the other party with a reasonable number of copies of all such filings made
with the SEC. No amendment or supplement to the information supplied by
Parent or the Company for inclusion in the Proxy Statement/Prospectus shall
be made without the approval of Parent or the Company, which approval shall
not be unreasonably withheld or delayed.
(b) The Company shall, as promptly as practicable following the
execution of this Agreement, duly call, give notice of, convene and hold a
meeting of its stockholders (the "Company Stockholders Meeting") for the
purpose of obtaining the Required Company Vote with respect to the adoption
of this Agreement (provided that it is understood that it is the intention
of the Company that the Company Stockholder Meeting will, to the extent
reasonably practicable, be scheduled such that it shall occur reasonably
proximate to the Effective Time), and shall take all lawful action to
solicit the adoption of this Agreement by the Required Company Vote, and
subject to Section 5.4 and without limiting its rights under Section
7.1(f), the Board of Directors of the Company shall recommend adoption of
this Agreement by the stockholders of the Company. Without limiting the
generality of the foregoing and without limiting its rights pursuant to
Sections 5.4 and 7.1(f), the Company agrees that its obligations pursuant
to the first sentence of this Section 5.1(b) shall not be affected by the
commencement, public proposal, public disclosure or communication to the
Company of any Acquisition Proposal (as defined in Section 5.4(b)).
5.2 Access to Information. Upon reasonable notice, each party
hereto shall (and shall cause its Subsidiaries to) afford to the officers,
employees, accountants, counsel, financial advisors and other
representatives (collectively, the "Representatives") of the other party
reasonable access during normal business hours, during the period prior to
the Effective Time, to all its properties, books, contracts, officers,
employees, commitments and records and, during such period, each party
hereto shall (and shall cause its Subsidiaries to) furnish promptly to the
other party (a) a copy of each report, schedule, registration statement and
other document filed, published, announced or received by it during such
period pursuant to the requirements of Federal or state securities laws, as
applicable, and (b) all other information concerning its business,
properties and personnel as such other party may reasonably request;
provided, however, that each party may restrict the foregoing access or
disclosure to the extent that (i) such access or disclosure would
contravene any law, treaty, rule or regulation of any Governmental
36
Entity applicable to the Company or (ii) providing such access would result
in the Company waiving or otherwise losing any privilege with respect to
any such information. The parties hereto will hold, and will use their best
efforts to cause their respective Representatives to hold, any such
information which is non-public in confidence to the extent required by,
and in accordance with, the provisions of the letter dated November 12,
1998 between the Company and Parent (the "Confidentiality Agreement"). Any
investigation by Parent or the Company shall not affect the representations
and warranties of the Company or Parent, as the case may be.
5.3 Reasonable Best Efforts. (a) Subject to the terms and
conditions of this Agreement, each party hereto will use its reasonable
best efforts to take, or cause to be taken, all actions and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws
and regulations to consummate the Merger and the other transactions
contemplated by this Agreement as soon as practicable after the date
hereof. In furtherance and not in limitation of the foregoing, each party
hereto agrees to make an appropriate filing of a Notification and Report
Form pursuant to the HSR Act with respect to the transactions contemplated
hereby as promptly as practicable and to supply as promptly as practicable
any additional information and documentary material that may be requested
pursuant to the HSR Act and to otherwise use its reasonable best efforts to
cause the expiration or termination of the applicable waiting periods under
the HSR Act as soon as practicable.
(b) Each of Parent and the Company shall, in connection with the
efforts referenced in this Section 5.3 to obtain all requisite approvals
and authorizations for the transactions contemplated by this Agreement
under the HSR Act or any other Regulatory Law (as defined below), use its
reasonable best efforts to (i) cooperate in all respects with each other in
connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by a
private party; (ii) promptly inform the other party of any communication
received by such party from, or given by such party to, the Antitrust
Division of the Department of Justice (the "DOJ"), the Federal Trade
Commission (the "FTC") or any other Governmental Entity and of any material
communication received or given in connection with any proceeding by a
private party, in each case regarding any of the transactions contemplated
hereby, and (iii) permit the other party to review any communication given
by it to, and consult with each other in advance of any meeting or
conference with, the DOJ or any such other Governmental Entity or, in
connection with any proceeding by a private party, with any other Person,
and to the extent permitted by the DOJ or such other applicable
Governmental Entity or other Person, give the other party the opportunity
to attend and participate in such meetings and conferences. For purposes of
this Agreement, "Regulatory Law" means the ▇▇▇▇▇▇▇ Act, as amended, the
▇▇▇▇▇▇▇ Act, as amended, the HSR Act, the Federal Trade Commission Act, as
amended, and all other federal, state and foreign, if any, statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines and
other laws that are designed or intended to prohibit, restrict or regulate
actions having the purpose or effect of monopolization or restraint of
trade or lessening of competition through merger or acquisition.
37
(c) In furtherance and not in limitation of the covenants of the
parties contained in this Section 5.3, if any administrative or judicial
action or proceeding, including any proceeding by a private party, is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Regulatory Law, each of
Parent and the Company shall reasonably cooperate in all respects with each
other and use its respective reasonable best efforts to contest and resist
any such action or proceeding and to have vacated, lifted, reversed or
overturned any decree, judgment, injunction or other order, whether
temporary, preliminary or permanent, that is in effect and that prohibits,
prevents or restricts consummation of the transactions contemplated by this
Agreement. Notwithstanding the foregoing or any other provision of this
Agreement, nothing in this Section 5.3 shall limit a party's right to
terminate this Agreement pursuant to Section 7.1(b) or 7.1(c) so long as
such party has up to then complied in all material respects with its
obligations under this Section 5.3.
(d) If any objections are asserted with respect to the
transactions contemplated hereby under any Regulatory Law or if any suit is
instituted by any Governmental Entity (including any foreign governmental
entity) or any private party challenging any of the transactions
contemplated hereby as violative of any Regulatory Law, each of Parent and
the Company shall use its reasonable best efforts to resolve (through
litigation, settlement or otherwise as Parent shall reasonably determine)
any such objections or challenge as such Governmental Entity or private
party may have to such transactions under such Regulatory Law so as to
permit consummation of the transactions contemplated by this Agreement.
(e) Each of Parent, Merger Sub and the Company shall use its
reasonable best efforts to (i) cause the Merger to qualify, and will not
(both before and after consummation of the Merger) take any actions which
to its knowledge would reasonably be expected to prevent, the Merger from
qualifying, as a reorganization under the provisions of Section 368 of the
Code and (ii) obtain the opinions of counsel referred to in Sections 6.2(c)
and 6.3(c).
(f) Each party hereto will consult with, and use its reasonable
best efforts to take, or cause to be taken, all actions and to do, or cause
to be done, all things necessary, proper or advisable (including using its
reasonable best efforts to provide all appropriate and necessary assistance
to the other party) with respect to the obtaining of all permits, consents,
approvals and authorizations of all third parties and Governmental Entities
necessary or advisable in order to consummate the transactions contemplated
by this Agreement and each party will keep the other party apprised of the
status of matters relating to completion of the transactions contemplated
hereby.
(g) Nothing in this Section 5.3 shall require any of Parent and
its Subsidiaries or the Company and its Subsidiaries to sell, hold separate
or otherwise dispose of or conduct their business in a specified manner, or
permit the sale, holding separate or other disposition of, any assets of
Parent or its Subsidiaries or the Company and its Subsidiaries or the
conduct of their business in a specified manner, or agree to payments or
modifications to contractual arrangements, whether as a condition to
obtaining any approval from a Governmental Entity or
38
any permits, consents, approvals or authorization of any other Person or
for any other reason, if such sale, holding separate or other disposition
or the conduct of their business in a specified manner or agreement or
modification would reasonably be expected to materially diminish the value
of the transactions contemplated hereby to Parent and its Subsidiaries.
5.4 Acquisition Proposals. (a) The Company agrees that neither it
nor any of its Subsidiaries nor any of the officers and directors of it or
its Subsidiaries shall, and that it shall direct and use its best efforts
to cause its and its Subsidiaries' employees, agents and representatives
(including any investment banker, attorney or accountant retained by it or
any of its Subsidiaries) not to, directly or indirectly, initiate, solicit
or knowingly encourage any inquiries or the making of any proposal or offer
with respect to a merger, reorganization, share exchange, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving, or any purchase or sale of all or any significant
portion of the assets (other than dispositions of assets in connection with
any transaction permitted under Section 4.1(f)) or 20% or more of the
equity securities of, it or any of it Subsidiaries (any such proposal or
offer (other than a proposal or offer made by Parent or an affiliate
thereof) being hereinafter referred to as an "Acquisition Proposal"). The
Company further agrees that neither it nor any of its Subsidiaries nor any
of the officers and directors of it or its Subsidiaries shall, and that it
shall direct and use its best efforts to cause its and its Subsidiaries'
employees, agents and representatives (including any investment banker,
attorney or accountant retained by it or any of its Subsidiaries) not to,
directly or indirectly, (i) have any discussion with or provide any
confidential information or data to any Person relating to an Acquisition
Proposal or (ii) engage in any negotiations concerning an Acquisition
Proposal, or otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal or (iii) accept an Acquisition Proposal,
or execute or enter into any letter of intent, agreement in principle,
merger agreement, acquisition agreement, option agreement or other material
agreement (other than a confidentiality agreement referred to below)
relating to any Acquisition Proposal or propose, agree or resolve to do any
of the foregoing. Notwithstanding the foregoing, the Company or its Board
of Directors shall be permitted to (A) to the extent applicable, comply
with Rule 14d-9 and Rule 14e-2(a) promulgated under the Exchange Act with
regard to an Acquisition Proposal (provided that the Board of Directors of
the Company shall not withdraw or modify in any adverse manner its approval
or recommendation of this Agreement or the Merger except as set forth
below), (B) in response to an unsolicited bona fide written Acquisition
Proposal by any Person, recommend such an unsolicited bona fide written
Acquisition Proposal to the stockholders of the Company, or withdraw or
modify in any adverse manner its approval or recommendation of this
Agreement or (C) engage in any discussions or negotiations with, or provide
any information to, any Person in response to an unsolicited bona fide
written Acquisition Proposal by such Person, if and only to the extent
that, in any such case as is referred to in clause (B) or (C), (i) the
Company Stockholders Meeting shall not have occurred, (ii) the Board of
Directors of the Company concludes in good faith that such Acquisition
Proposal (x) in the case of clause (B) above constitutes a Superior
Proposal or (y) in the case of clause (C) above would reasonably be
expected to result in a Superior Proposal, (iii) prior to providing any
information or data to any Person in connection with an Acquisition
Proposal by any such Person, the Company Board of
39
Directors receives from such Person an executed confidentiality agreement
on terms substantially similar to those contained in the Confidentiality
Agreement (except for such changes as are necessary in order to permit the
Company to comply with its obligations under this Agreement) and (iv) prior
to providing any information or data to any Person or entering into
discussions or negotiations with any Person, the Board of Directors of the
Company notifies Parent promptly of such inquiries, proposals or offers
received by, any such information requested from, or any such discussions
or negotiations sought to be initiated or continued with, the Company or
any of its representatives indicating, in connection with such notice, the
name of such Person and the material terms and conditions of such
inquiries, proposals or offers. The Company agrees that it will keep Parent
informed, on a reasonably current basis, of the status and terms of any
such proposals or offers or any other Acquisition Proposal or inquiry or
communication with respect to or which would reasonably be expected to lead
to an Acquisition Proposal (including any material change to the details of
any such terms) and the status of any such material discussions or
negotiations. The Company agrees that it will immediately cease and cause
to be terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any Acquisition Proposal.
The Company agrees that it will take the necessary steps to promptly inform
the individuals or entities referred to in the first sentence of this
Section 5.4 of the obligations undertaken in this Section 5.4. Nothing in
this Section 5.4 shall (x) permit the Company to terminate this Agreement
(except as specifically provided in Article VII hereof) or (y) affect any
other obligation of the Company under this Agreement.
(b) The term "Superior Proposal" means any bona fide written
offer not solicited by or on behalf of the Company or any Subsidiary
thereof made by a third party to consummate an Acquisition Proposal which
would result in such third party (including its affiliates and/or
stockholders) owning, directly or indirectly, shares of Company Common
Stock representing more than 50% of the voting interests and the equity
interests in the Company then outstanding or more than 50% of the assets of
the Company and its Subsidiaries, taken together (including through a
merger of such third party (including its affiliates) and the Company),
which the Board of Directors of the Company determines in good faith is
more favorable to the Company's stockholders (in their capacities as
stockholders), from a financial point of view than the transactions
contemplated by this Agreement (taking into account any changes to the
terms of this Agreement proposed by Parent in response to such offer or
otherwise) and is reasonably capable of being completed.
5.5 Employee Benefits Matters. (a) As of the Closing Date, the
Surviving Corporation shall assume and perform in accordance with its
terms, including any reserved right to amend or terminate, each Company
Plan (including any indemnification agreements existing on the date
hereof); provided, however, that for a period commencing on the Closing
Date and ending eight months after the Closing Date, Parent shall, or shall
cause the Surviving Corporation to, maintain the Company Plans as in effect
immediately prior to the Effective Time (other than such changes as are
required by applicable law) or provide benefits that are no less favorable,
in the aggregate, than the benefits provided to the Company Employees by
the Company prior to the Effective Time. For a period of at least 24 months
thereafter, Parent shall,
40
or shall cause the Surviving Corporation to, provide the Company Employees
with benefits that are substantially similar or no less favorable in the
aggregate than the benefits provided to similarly situated employees of
Parent.
(b) Parent will, or will cause the Surviving Corporation to: (A)
waive all limitations as to preexisting conditions, exclusions and waiting
periods with respect to participation and coverage requirements applicable
to the Company Employees under any welfare plan that such employees may be
eligible to participate in after the Effective Time; (B) provide each
Company Employee with credit for any co-payments and deductibles paid prior
to the Effective Time in satisfying any applicable deductible or
out-of-pocket requirements under any welfare plans that such employees are
eligible to participate in after the Effective Time; and (C) provide each
Company Employee with credit for all purposes for all service with the
Company and its affiliates under each employee benefit plan, program, or
arrangement of the Parent or its affiliates in which such employees are
eligible to participate to the extent such service was credited for similar
purposes under similar plans of the Company or its Subsidiaries; provided,
however, that in no event shall the Company Employees be entitled to any
credit to the extent that it would result in a duplication of benefits with
respect to the same period of service.
(c) With respect to any officer or employee who is covered by a
severance policy or plan separate from the standard severance policy for
the Company Employees and set forth in Section 5.5 of the Company
Disclosure Schedule, Parent shall maintain or cause to be maintained such
separate policy or plan as in effect as of the date hereof, and as to all
other officers and employees, Parent shall maintain or cause to be
maintained the Company's standard severance plans or policies (as set forth
in Section 3.1(m) of the Company Disclosure Schedules), as in effect as of
the date hereof and previously disclosed in writing to Parent, in each case
for a period of at least 12 months from the Effective Time, whether or not
such plans or policies would by their terms otherwise expire prior to the
end of such 12 month period. Parent shall honor or cause to be honored all
employment, severance, and change in control agreements with the Company's
directors, officers and employees and, with respect to any such agreements
which by their terms would expire prior to the first anniversary of the
Effective Time, shall, or shall cause, such agreements to be continued for
at least 12 months after the Effective Time.
(d) With respect to the split-dollar life insurance policies (set
forth in Section 3.1(m)(i) of the Company Disclosure Schedule) with respect
to those persons who have elected coverage thereunder as of the date
hereof, the Surviving Corporation shall continue to pay, or cause to
continue to be paid, the "employer paid" portion of premiums due with
respect to such policies, and shall continue to pay such premiums until the
earlier of the second year following the Effective Time or the date on
which the cash surrender value of such policies exceeds the paid-in
premiums. In addition, the Surviving Corporation shall cause all Company
Employees on whose lives such policies are written to be indemnified from
any claims for premium payments that may arise in connection with any
termination of employment by the Surviving Corporation without cause, up to
the amounts otherwise payable pursuant to the preceding sentence.
41
(e) With respect to the Company's Supplemental Executive
Retirement Plan (the "SERP") (set forth in Section 3.1(m)(i) of the Company
Disclosure Schedule), after the Effective Time, the Surviving Corporation
shall permit the participants therein to elect to receive the present value
of their payments otherwise provided under to the terms of the SERP. Upon
the Surviving Corporation's receipt of notice by a participant of his or
her election to receive his or her SERP payment, the Surviving Corporation
shall, as soon as practicable thereafter, make payment thereof.
5.6 Fees and Expenses. Whether or not the Merger is consummated,
all Expenses (as defined below) shall be paid by the party incurring such
Expenses, except that (a) if the Merger is consummated, the Surviving
Corporation shall pay, or cause to be paid, any and all property or
transfer taxes imposed on the Company or its Subsidiaries and any real
property transfer tax imposed on any holder of shares of capital stock of
the Company resulting from the Merger, (b) Expenses incurred in connection
with the filing, printing and mailing of the Form S- 4 and the Proxy
Statement/Prospectus (including the SEC filing fees) and the fees required
to be paid in connection with the HSR Act, which shall be shared equally by
Parent and the Company and (c) as provided in Section 7.2. As used in this
Agreement, "Expenses" includes all out-of-pocket expenses (including all
fees and expenses of counsel, accountants, investment bankers, commercial
bankers, experts and consultants to a party hereto and its affiliates)
incurred by a party or on its behalf in connection with or related to the
authorization, preparation, negotiation, execution, financing and
performance of this Agreement and the transactions contemplated hereby,
including the preparation, printing, filing and mailing of the Form S-4 and
Proxy Statement/Prospectus and the solicitation of stockholder approvals
and all other matters related to the transactions contemplated hereby.
5.7 Directors' and Officers' Insurance. Parent shall cause the
Surviving Corporation to and the Surviving Corporation shall (i) include
and maintain in effect in its certificate of incorporation and by-laws, the
same provisions regarding elimination of liability of directors and
indemnification of and advancement of expenses to officers, directors,
employees and other persons contained in the certificate of incorporation
and by-laws of the Company and (ii) maintain for a period of at least six
years, the current policies of directors' and officers' liability insurance
and fiduciary liability insurance maintained by the Company (provided that
the Surviving Corporation may substitute therefor policies of at least the
same coverage and amounts containing terms and conditions which are, in the
aggregate, no less advantageous in any material respect to the insured)
with respect to claims arising from facts or events that occurred on or
before the Effective Time; including in respect of the transactions
contemplated by this Agreement; provided, however, that in no event shall
the Surviving Corporation be required to expend in any one year an amount
in excess of 225% of the annual premiums currently paid by the Company for
such insurance (such 225% amount, the "Maximum Premium"); provided,
further, that if the annual premiums of such insurance coverage exceed such
amount, the Surviving Corporation shall be obligated to obtain a policy
with the greatest coverage available for a cost not exceeding the Maximum
Premium. The provisions of the immediately preceding sentence shall be
deemed to have been satisfied if prepaid policies have
42
been obtained by the Company prior to the Closing for purposes of this
Section 5.7, which policies provide such directors and officers with
coverage for an aggregate period of six years with respect to claims
arising from facts or events that occurred on or before the Effective Time,
including, without limitation, in respect of the transactions contemplated
by this Agreement; provided that the maximum amount of the premium to be
paid for such policies shall not exceed $2,225,000. If such prepaid
policies have been obtained by the Company prior to the Closing, Parent
shall and shall cause the Surviving Corporation to maintain such policies
in full force and effect, and continue to honor the Company's obligations
thereunder. If the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges with or into any other Person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially
all of its properties and assets to any Person, then, and in each such
case, to the extent necessary, proper provision shall be made so that the
successors and assigns of the Surviving Corporation assume the obligations
set forth in this Section 5.7. Parent agrees to cause the Surviving
Corporation to comply with its obligations under this Section 5.7,
including by providing any funds to the Surviving Corporation necessary to
enable the Surviving Corporation to fulfill its obligations hereunder. The
Company represents and warrants that the Maximum Premium is equal to
approximately $731,250.
5.8 Rights Agreement. The Board of Directors of the Company shall
take all further action (in addition to that referred to in Section 3.1(h))
necessary or desirable (including redeeming the Rights immediately prior to
the Effective Time or amending the Rights Agreement if reasonably requested
by Parent) in order to render the Rights inapplicable to the Merger and the
other transactions contemplated by this Agreement and the Stockholder
Agreement. If any "Distribution Date" or "Stock Acquisition Date" occurs
under the Rights Agreement at any time during the period from the date of
this Agreement to the Effective Time, the Company and Parent shall make
such adjustment to the Merger Consideration as the Company and Parent shall
mutually agree so as to preserve the economic benefits that the Company and
Parent each reasonably expected on the date of this Agreement to receive as
a result of the consummation of the Merger and the other transactions
contemplated hereby.
5.9 Public Announcements. The Company and Parent shall use all
reasonable efforts to develop a joint communications plan and each party
shall use all reasonable best efforts to ensure that all press releases and
other public statements with respect to the transactions contemplated
hereby shall be consistent with such joint communications plan. Unless
otherwise required by applicable law or by obligations pursuant to any
listing agreement with or rules of any securities exchange, the Company and
Parent shall consult with each other before issuing any press release or
otherwise making any public statement with respect to this Agreement or the
transactions contemplated hereby and shall not issue any press release or
make any such public statement without the prior consent of the other
party, which consent shall not be unreasonably withheld or delayed. The
parties hereto agree that the initial press release to be issued with
respect to the transactions contemplated by this Agreement shall be in the
form heretofore agreed to by the parties hereto.
43
5.10 Accountants' Letters. Upon reasonable notice from Parent,
the Company shall use its reasonable best efforts to cause Deloitte &
Touche LLP to deliver to Parent a letter, dated within two business days of
the effective time of the Form S-4 covering such matters as are requested
by Parent and as are customarily addressed in accountant's "comfort"
letters. In connection with the Company's efforts to obtain such letter, if
requested by Deloitte & Touche LLP, Parent shall provide a representation
letter to Deloitte & Touche LLP complying with Statement on Auditing
Standards No. 72 ("SAS 72"), if then required. Upon reasonable notice from
the Company, Parent shall use its reasonable best efforts to cause Deloitte
& Touche LLP or BDO ▇▇▇▇▇▇▇, LLP to deliver to the Company a letter, dated
within two business days of the effective time of the Form S-4 covering
such matters as are requested by the Company and as are customarily
addressed in accountant's "comfort" letters. In connection with Parent's
efforts to obtain such letter, if requested by Deloitte & Touche LLP or BDO
▇▇▇▇▇▇▇, LLP, the Company shall provide a representation letter to Deloitte
& Touche LLP or BDO ▇▇▇▇▇▇▇, LLP complying with the SAS 72, if then
required.
5.11 Listing of Shares of Parent Common Stock. Parent shall use
its reasonable best efforts to cause the shares of Parent Common Stock to
be issued in the Merger and the shares of Parent Common Stock to be
reserved for issuance upon exercise of Company Options and upon conversion
of the Convertible Notes to be approved for listing, subject to official
notice of issuance, on the NYSE.
5.12 Affiliate Letter. On or prior to the date of the Company
Stockholders Meeting, the Company will deliver to Parent a letter (the
"Company Affiliate Letter") identifying all persons who are, at the time
this Agreement is submitted for adoption by the stockholders of the
Company, "affiliates" of the Company for purposes of Rule 145 under the
Securities Act ("Rule 145"). On or prior to the Closing Date, the Company
will use all reasonable efforts to cause each person identified as an
"affiliate" in the Company Affiliate Letter to deliver to Parent a written
agreement (an "Affiliate Agreement"), substantially in the form of Exhibit
5.12 hereto, in connection with restrictions on affiliates under Rule 145.
5.13 Parent Board of Directors. At or prior to the Effective
Time, the Board of Directors of Parent shall take all action necessary to
elect ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ as a member of the Board of Directors of Parent to
become effective immediately after the Effective Time.
5.14 Stockholder Litigation. The Company shall give Parent the
reasonable opportunity to participate in the defense or settlement of any
stockholder litigation against the Company and/or its directors relating to
the transactions contemplated by this Agreement, and no such settlement
shall be agreed to without Parent's prior written consent, which consent
shall not be unreasonably withheld or delayed.
44
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the Merger.
The obligations of the Company, Parent and Merger Sub to effect the Merger
are subject to the satisfaction or waiver on or prior to the Closing Date
of the following conditions:
(a) Stockholder Approval. The Company shall have obtained the
Required Company Vote in connection with the adoption of this Agreement by
the stockholders of the Company.
(b) No Injunctions or Restraints, Illegality. No Laws shall have
been adopted or promulgated, and no temporary restraining order,
preliminary or permanent injunction or other order issued by a court or
other Governmental Entity of competent jurisdiction (each, a "Legal
Restraint") shall be in effect, having the effect of making the Merger
illegal or otherwise prohibiting consummation of the Merger.
(c) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or
shall have expired.
(d) NYSE Listing. The shares of Parent Common Stock to be issued
in the Merger and reserved for issuance upon exercise of Company Options
and upon conversion of the Convertible Notes shall have been approved for
listing on the NYSE, subject to official notice of issuance.
(e) Effectiveness of the Form S-4. The Form S-4 shall have been
declared effective by the SEC under the Securities Act. No stop order
suspending the effectiveness of the Form S-4 shall have been issued by the
SEC and no proceedings for that purpose shall have been initiated or
threatened by the SEC.
6.2 Additional Conditions to Obligations of Parent and Merger
Sub. The obligations of Parent and Merger Sub to effect the Merger are
subject to the satisfaction of, or waiver by Parent, on or prior to the
Closing Date of the following additional conditions:
(a) Representations and Warranties. (x) Each of the
representations and warranties of the Company set forth in this Agreement
that is qualified as to Material Adverse Effect shall have been true and
correct as of the date of this Agreement and as of the Closing Date as if
made at and as of the Closing Date, and (y) each of such representations
and warranties of the Company that is not so qualified shall have been true
and correct in all material respects as of the date of this Agreement and
as of the Closing Date as if made at and as of the Closing Date (except, in
each case, for those representations and warranties which address matters
only as of a particular date, in which case, they shall be true and
correct, or true and correct in all material
45
respects, as applicable, as of such date), provided that clause (y) of this
paragraph (a) shall be deemed satisfied so long as all failures of such
representations and warranties referred to therein to be so true and
correct, taken together, (i) would not reasonably be expected to have a
Material Adverse Effect on the Company and (ii) would not reasonably be
expected to materially diminish the value of the transactions contemplated
by this Agreement to Parent and its Subsidiaries; and Parent shall have
received a certificate of the chief executive officer and the chief
financial officer of the Company to the effect of the foregoing.
(b) Performance of Obligations of the Company. The Company shall
have performed or complied with all agreements and covenants required to be
performed or complied with by it under this Agreement at or prior to the
Closing Date that are qualified as to materiality and shall have performed
or complied in all material respects with all other agreements and
covenants required to be performed or complied with by it under this
Agreement at or prior to the Closing Date that are not so qualified as to
materiality, and Parent shall have received a certificate of the chief
executive officer and the chief financial officer of the Company to such
effect.
(c) Tax Opinion. Unless the Company shall have made the Reverse
Merger Election, Parent shall have received from Cravath, Swaine & ▇▇▇▇▇,
counsel to Parent, on the Closing Date, a written opinion dated as of such
date substantially in the form of Exhibit 6.2(c)(1). In rendering such
opinion, counsel to Parent shall be entitled to rely upon representations
of officers of Parent and the Company substantially in the form of the
representations set forth in Section 6.2(c) of the Company Disclosure
Schedule and 6.2(c) of the Parent Disclosure Schedule.
(d) No Litigation. There shall not be pending by any Governmental
Entity any action, suit, claim or proceeding (other than those which have
no reasonable chance of success) seeking (i) a Legal Restraint, (ii) a
judgment, damages or other remedy which would have a Material Adverse
Effect on Parent (assuming the consummation of the Merger) or (iii) to
prohibit or limit the ownership or operation by the Company, Parent, Merger
Sub or any of their respective affiliates of any material portion of the
business or assets of the Company and its Subsidiaries, taken as a whole,
or Parent and its Subsidiaries, taken as a whole, or to require any of them
to dispose of or hold separate any material portion of the business or
assets of the Company and its Subsidiaries, taken as a whole, or Parent and
its Subsidiaries, taken as a whole, as a result of the Merger or to impose
material limitations on the ability of Parent, Merger Sub or any of their
affiliates to acquire or hold, or exercise full rights of ownership of, any
shares of Company Common Stock, including the right to vote any or all
shares of Company Common Stock on all matters properly presented to the
stockholders of the Company.
(e) Consents. Parent shall have received evidence, in form and
substance reasonably satisfactory to it, that such consents, approvals,
authorizations, qualifications and orders of Governmental Entities and
other third parties applicable to the Company and its Subsidiaries as are
necessary to permit the occurrence of the transactions contemplated hereby
46
have been obtained, other than those with respect to any retail store
leases and other than those the failure of which to have been obtained,
individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect on the Company; provided that if Parent takes
actions that cause the net worth of the Surviving Corporation to be
materially diminished this condition shall be inapplicable with respect to
any consent the requirement of which to obtain is caused by such actions or
the ability of which to obtain has been materially adversely affected by
such actions.
(f) Material Adverse Effect. Subject to the exceptions applicable
to Section 3.1(i)(ii) (other than the qualification as to knowledge
contained in such Section 3.1(i)(ii)), since January 31, 1998, there has
not been any Material Adverse Effect on the Company or any change, event,
circumstance or effect that would in the reasonably foreseeable future have
a Material Adverse Effect on the Company.
6.3 Additional Conditions to Obligations of the Company. The
obligations of the Company to effect the Merger are subject to the
satisfaction of, or waiver by the Company, on or prior to the Closing Date
of the following additional conditions:
(a) Representations and Warranties. (x) Each of the
representations and warranties of Parent and Merger Sub set forth in this
Agreement that is qualified as to Material Adverse Effect shall have been
true and correct at and as of the Closing Date as if made as of the date of
this Agreement and as of the Closing Date, and (y) each of such
representations and warranties of each of Parent and Merger Sub that is not
so qualified shall have been true and correct in all material respects as
of the date of this Agreement and as of the Closing Date as if made at and
as of the Closing Date (except, in each case, for those representations and
warranties which address matters only as of a particular date, in which
case, they shall be true and correct, or true and correct in all material
respects, as applicable, as of such date), provided that clause (y) of this
paragraph (a) shall be deemed satisfied so long as all failures of such
representations and warranties referred to therein to be so true and
correct, taken together, would not reasonably be expected to have a
Material Adverse Effect on Parent; and the Company shall have received a
certificate of the chief executive officer and the chief financial officer
of Parent to the effect of the foregoing.
(b) Performance of Obligations of Parent. Parent shall have
performed or complied with all agreements and covenants required to be
performed by or complied with it under this Agreement at or prior to the
Closing Date that are qualified as to materiality and shall have performed
or complied with or complied in all material respects with all agreements
and covenants required to be performed by it under this Agreement at or
prior to the Closing Date that are not so qualified as to materiality, and
the Company shall have received a certificate of the chief executive
officer and the chief financial officer of Parent to such effect.
(c) Tax Opinion. Unless the Company shall have made the Reverse
Merger Election, the Company shall have received from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, counsel to the
47
Company, on the Closing Date, a written opinion dated as of such date
substantially in the form of Exhibit 6.3(c)(1). In rendering such opinion,
counsel to the Company shall be entitled to rely upon representations of
officers of Parent and the Company substantially in the form of the
representations set forth in Section 6.2(c) of the Company Disclosure
Schedule and 6.2(c) of the Parent Disclosure Schedule.
(d) Material Adverse Effect. Subject to the exceptions applicable
to Section 3.2(g)(ii) (other than the qualification as to knowledge
contained in such Section 3.2(g)(ii)), since September 30, 1998, there has
not been any Material Adverse effect on Parent or any change, event,
circumstance or effect that would in the reasonably foreseeable future have
a Material Adverse Effect on Parent.
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, by action taken or authorized by the Board of
Directors of the terminating party or parties, and except as provided
below, whether before or after the Required Company Vote has been obtained:
(a) By mutual written consent of Parent and the Company, by
action of their respective Boards of Directors;
(b) By either the Company or Parent if the Effective Time shall
not have occurred on or before October 31, 1999 (the "Termination Date");
provided, however, that the right to terminate this Agreement under this
Section 7.1(b) shall not be available to any party whose failure to fulfill
any obligation under this Agreement (including Section 5.3) has been the
primary cause of the failure of the Effective Time to occur on or before
the Termination Date;
(c) By either the Company or Parent if any Legal Restraint (which
the parties shall have used their reasonable best efforts to resist,
resolve or lift, as applicable, in accordance with Section 5.3) having any
of the effects set forth in Section 6.1(b) shall be in effect and shall
have become permanent, final and nonappealable; provided, however, that the
right to terminate this Agreement under this Section 7.1(c) shall not be
available to any party whose failure to comply with Section 5.3 has been
the primary cause of such action or inaction;
(d) By either the Company or Parent if the approval by the
stockholders of the Company required to adopt the Merger Agreement shall
not have been obtained by reason of the failure to obtain the Required
Company Vote at a duly held meeting of stockholders of the Company or at
any adjournment or postponement thereof;
48
(e) By Parent if the Board of Directors of the Company, prior to
the Company Stockholders Meeting (i) shall withdraw or modify in any
adverse manner its approval or recommendation of this Agreement pursuant to
Section 5.4, (ii) shall approve or recommend a Superior Proposal pursuant
to Section 5.4 or (iii) shall resolve to take any of the actions specified
in clauses (i) or (ii) above;
(f) By the Company at any time prior to the Company Stockholders
Meeting if the Board of Directors of the Company shall concurrently with
such termination enter into an agreement with respect to a Superior
Proposal; provided, however, that (i) the Company shall have complied in
all material respects with Section 5.4, and (ii) the Board of Directors of
the Company shall have concluded in good faith, after giving effect to any
changes to the terms of this Agreement which are offered by Parent during
the three-Business Day or two-Business Day period referred to below, as the
case may be, on the basis of the advice of its financial advisors and
outside counsel, that such proposal is a Superior Proposal; provided,
however, that it shall be a condition to termination by the Company
pursuant to this Section 7.l(f) that the Company shall have made the
payment to Parent of the Termination Fee to Parent required by Section
7.2(b); provided further, however, that the Company may only exercise its
right to terminate this Agreement pursuant to this Section 7,1(f) after the
third Business Day (or, in the circumstances described in the parenthetical
below, the second Business Day) following Parent's receipt of written
notice advising Parent that the Board of Directors of the Company is
prepared, subject to any action taken by Parent pursuant to this sentence,
to cause the Company to accept a Superior Proposal, specifying the material
economic terms and conditions of such Superior Proposal and identifying the
Person making such Superior Proposal (it being understood and agreed that
if such Person changes the material economic terms of such Superior
Proposal, such changes in economic terms shall result in a new Superior
Proposal for which a new two Business Day period following a new notice of
such Superior Proposal referred to above shall be required; provided,
however, that such changes shall not result in a new Superior Proposal from
a third party if, prior to the time such changes were made, Parent had not
taken action to cause a Superior Proposal from such third party to no
longer be a Superior Proposal within the applicable three or two Business
Day period);
(g) by Parent if the Company breaches in a material respect any
of its material representations, warranties or covenants contained in this
Agreement and such breach (i) would give rise to the failure of a condition
set forth in Section 6.2(a) or 6.2(b) and (ii) cannot be cured;
(h) by the Company if Parent breaches in a material respect of
any of its material representations, warranties or covenants contained in
this Agreement and such breach (i) would give rise to the failure of a
condition set forth in Section 6.3(a) or 6.3(b) and (ii) cannot be cured;
or
(i) by the Company, if its Board of Directors so determines by a
vote of the majority of the members of its entire Board, if the Parent
Common Stock Price is less than $21.00; provided that the Company cannot
terminate this Agreement pursuant to this
49
Section 7.1(i) on any date on which the average closing sales prices of
Parent Common Stock on the NYSE Composite Transactions Tape (as reported in
The Wall Street Journal or, if not reported therein, in another
authoritative source mutually selected by Parent and the Company) on each
of the 15 consecutive NYSE trading days immediately preceding the date on
which the termination is proposed to be made is greater than or equal to
$21.00; provided, further, that if the Company has the right to terminate
under this Section 7.1(i), the Company may, at its election, give Parent
the opportunity to increase the Merger Consideration (by increasing the
amount of cash and/or the number of shares of Parent Common Stock which
holders of shares of Company Common Stock would have the right to receive
pursuant to Section 1.8) and in the event that the Company so elects and
Parent agrees to make such increase, the parties agree that the term
"Merger Consideration" shall thereafter refer to the Merger Consideration
provided in Section 1.8, as so increased.
7.2 Effect of Termination. (a) In the event of termination of
this Agreement by either the Company or Parent as provided in Section 7.1,
this Agreement shall forthwith become void and there shall be no liability
or obligation on the part of Parent or the Company or their respective
officers or directors except with respect to Section 3.1(o), Section
3.2(n), the second sentence of Section 5.2, Section 5.6, this Section 7.2
and Article VIII, provided that the termination of this Agreement shall not
relieve any party from any liability for any intentional material breach of
any representation, warranty, covenant or agreement in this Agreement
occurring prior to termination.
(b) Parent and the Company agree that (i) if the Company shall
terminate this Agreement pursuant to Section 7.1(f), (ii) if Parent shall
terminate this Agreement pursuant to Section 7.1(e), (iii) if (x) the
Company or Parent shall terminate this Agreement pursuant to Section
7.1(d), (y) prior to such termination an Acquisition Proposal shall have
been made or any Person shall have announced an intention (whether or not
conditional) to make an Acquisition Proposal and (z) within 12 months of
such termination, the Company or any of its Subsidiaries either consummates
a transaction which, if proposed, would constitute an Acquisition Proposal
or enters into a definitive agreement with respect to an Acquisition
Proposal or (iv) if (w) Parent shall terminate this Agreement pursuant to
Section 7.1(b), (x) prior to such termination an Acquisition Proposal shall
have been made or any Person shall have announced an intention (whether or
not conditional) to make an Acquisition Proposal; (y) the Company
Stockholders Meeting shall not have occurred prior to the Termination Date
other than as a result of a breach of this Agreement by Parent and (z)
within 12 months of such termination, the Company or any of its
Subsidiaries consummates a transaction which, if proposed, would constitute
an Acquisition Proposal or enters into a definitive agreement with respect
to an Acquisition Proposal, then the Company shall pay to Parent an amount
in cash equal to $35 million (the "Termination Fee").
(c) The Termination Fee required to be paid pursuant to Section
7.2(b)(i) or 7.2(b)(ii) shall be paid prior to, and shall be a
pre-condition to the effectiveness of termination of this Agreement
pursuant to such Section. Any other payment required to be made pursuant to
50
Section 7.2(b) shall be made to Parent not later than two Business Days
after the prerequisites for payment of such fee have been fulfilled. All
payments under this Section 7.2 shall be made by wire transfer of
immediately available funds to an account designated by the party entitled
to receive payment. In no event shall the Company be obligated to pay more
than one Termination Fee pursuant to this Agreement.
(d) Parent and the Company agree that if the Company shall
terminate this Agreement pursuant to Section 7.1(i), then (A) prior to such
termination, the Company shall pay to Parent an amount in cash without
interest equal to $10 million, provided that the Company shall only be
required to pay such amount to the extent that such payment (i) would not
result in the Company not having the ability in the ordinary course to
incur $10 million of additional indebtedness under the Company's revolving
credit agreement or similar facility after giving effect to such payment
and (ii) would not result in a breach of any of the Company's agreements
(the "Company Debt Agreements") relating to borrowed money (any amount so
paid, the "Paid Amount"), provided that, in the event that at any time the
Paid Amount is less than $10 million, the Company shall pay to Parent in
cash without interest the difference between $10 million and the Paid
Amount (the "Owed Amount"), solely at such time or times as and to the
extent that the requirements contained in clauses (i) and (ii) above are
satisfied at such time or times; and (B) if within 12 months of such
termination, the Company or any of its Subsidiaries consummates a
transaction which, if proposed, would constitute an Alternative Transaction
(as defined below) then, upon consummation of such Alternative Transaction,
the Company shall pay to Parent without interest an amount in cash equal to
$10 million plus the Owed Amount, if any. For purposes of this Agreement,
the term "Alternative Transaction" shall mean a transaction which, if
proposed, would constitute an Acquisition Proposal which would result in a
third party (including its affiliates and/or stockholders) owning, directly
or indirectly, shares of Company Common Stock representing more than 50% of
the voting interests and the equity interests in the Company then
outstanding or more than 50% of the assets of the Company and its
Subsidiaries, taken together (including through a merger of such third
party (including its affiliates)and the Company). The Company shall not
agree to any covenant or amend any existing covenant in any Company Debt
Agreement the principal purpose of which covenant or amendment is to
prevent or materially delay the Company from being able to make any payment
to Parent pursuant to this Section 7.2(d).
7.3 Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of
Directors, at any time before or after approval of the matters presented in
connection with the Merger by the stockholders of the Company, but, after
any such approval, no amendment shall be made which by law or in accordance
with the rules of any relevant stock exchange requires further approval by
such stockholders without such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
7.4 Extension; Waiver. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective
Boards of Directors, may, to the extent
51
legally allowed, (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto and (iii) waive compliance with any
of the agreements or conditions contained herein. Any agreement on the part
of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party. The
failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of those rights.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations, Warranties and Agreements.
None of the representations, warranties, covenants and other agreements in
this Agreement or in any instrument delivered pursuant to this Agreement,
including any rights arising out of any breach of such representations,
warranties, covenants and other agreements, shall survive the Effective
Time, except for those covenants and agreements contained herein and
therein that by their terms apply or are to be performed in whole or in
part after the Effective Time and this Article VIII.
8.2 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed duly given (a) on the date of delivery if
delivered personally, or by telecopy or telefacsimile, upon confirmation of
receipt or (b) on the first Business Day following the date of dispatch if
delivered by a recognized next-day courier service. All notices hereunder
shall be delivered in the manner described above to the addresses set forth
below, or pursuant to such other instructions as may be designated in
writing by the party to receive such notice:
(a) if to Parent or Merger Sub, to
▇▇▇▇▇ Apparel Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇ Apparel Group, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. Card
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
52
with a copy to
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company to
Nine West Group Inc.
Nine West Plaza
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
8.3 Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table
of contents, glossary of defined terms and headings contained in this
Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall
be deemed to be followed by the words "without limitation". The words
"hereof", "herein" and "hereunder" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. The term "or" is not exclusive.
8.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed
by each of the parties and delivered (including by facsimile transmission )
to the other parties hereto, it being understood that all parties need not
sign the same counterpart.
53
8.5 Entire Agreement; No Third Party Beneficiaries. (a) This
Agreement constitutes the entire agreement and supersedes, except as set
forth in Section 5.2, all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof,
other than the Confidentiality Agreement, which shall survive the execution
and delivery of this Agreement.
(b) Nothing in this Agreement, express or implied, is intended to
or shall confer upon any other Person any right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement, other than Section
5.7 (which is intended to be for the benefit of the beneficiaries specified
therein and may be enforced by such Persons).
8.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
8.7 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in
any manner materially adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions
contemplated hereby are consummated as originally contemplated to the
greatest extent possible.
8.8 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, in whole or in part (whether by operation of law or otherwise),
without the prior written consent of the other parties, and any attempt to
make any such assignment without such consent shall be null and void,
except that Merger Sub may assign, in its sole discretion, any or all of
its rights, interests and obligations under this Agreement to any direct
wholly owned Subsidiary of Parent without the consent of the Company, but
no such assignment shall relieve Parent or Merger Sub of any of its
obligations under this Agreement. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns.
8.9 Submission to Jurisdiction; Waivers. Each of Parent and the
Company irrevocably agrees that any legal action or proceeding with respect
to this Agreement or for recognition and enforcement of any judgment in
respect hereof brought by the other party hereto or its successors or
assigns may be brought and determined in the Chancery or other Courts of
the State of Delaware, and each of Parent and the Company hereby
irrevocably submits with regard to any such action or proceeding for itself
and in respect to its property, generally and unconditionally, to the
exclusive jurisdiction of the aforesaid courts. Each of Parent and the
Company hereby irrevocably waives, and agrees not to assert, by way of
motion, as a defense,
54
counterclaim or otherwise, in any action or proceeding with respect to this
Agreement, (a) any claim that it is not personally subject to the
jurisdiction of the above-named courts for any reason other than the
failure to serve process in accordance with this Section 8.9, (b) that it
or its property is exempt or immune from jurisdiction of any such court or
from any legal process commenced in such courts (whether through service of
notice, attachment prior to judgment, attachment in aid of execution of
judgment, execution of judgment or otherwise), and (c) to the fullest
extent permitted by applicable law, that (i) the suit, action or proceeding
in any such court is brought in an inconvenient forum, (ii) the venue of
such suit, action or proceeding is improper and (iii) this Agreement, or
the subject matter hereof, may not be enforced in or by such courts. This
Agreement does not involve less than $100,000 and the parties intend that 6
Del.C. ss.2708 shall apply to this Agreement.
8.10 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed
that the parties shall be entitled to specific performance of the terms
hereof, this being in addition to any other remedy to which they are
entitled at law or in equity.
8.11 Definitions. As used in this Agreement:
(a) "Benefit Plans" means, with respect to any Person, each
employee benefit plan, program, arrangement and contract (including,
without limitation, any "employee benefit plan," as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") and any bonus, incentive, deferred compensation, stock bonus,
stock purchase, restricted stock, stock option, employment, termination,
stay agreement or bonus, change in control and severance plan, program,
arrangement and contract) all of the foregoing in effect on the date of
this Agreement, to which such Person is a party and which is maintained or
contributed to by such Person (excluding any plans or programs required to
be maintained or contributed to under the local law of the jurisdiction in
which such person is employed).
(b) "Board of Directors" means the Board of Directors of any
specified Person and any committees thereof.
(c) "Business Day" means any day on which banks are not required
or authorized to close in the City of New York.
(d) "Material Adverse Effect" means, with respect to any entity,
any change, event, circumstance or effect that is materially adverse to the
business (including any material adverse change, event, circumstance or
effect on assets that has such effect on the business), financial condition
or results of operations of such entity and its Subsidiaries taken as a
whole, other than any change, event, circumstance or effect relating
principally to (i) the economy or securities markets in general or (ii) the
industries in which Parent or the Company operate and not specifically
relating to Parent or the Company, as the case may be, and provided that,
for all
55
purposes under this Agreement (other than Section 3.1(t)), Material Adverse
Effect as it applies to the Company shall not include any matter relating
to, arising out of or in connection with the Specified Matters or any
change or development in connection therewith.
(e) "Person" means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization,
other entity or group (as defined in the Exchange Act).
(f) "Subsidiary" when used with respect to any party means any
corporation or other organization, whether incorporated or unincorporated,
(i) of which such party or any other Subsidiary of such party is a general
partner (excluding partnerships, the general partnership interests of which
held by such party or any Subsidiary of such party do not have a majority
of the voting interests in such partnership) or (ii) at least a majority of
the securities or other interests of which having by their terms ordinary
voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or
by any one or more of its Subsidiaries, or by such party and one or more of
its Subsidiaries.
(g) "the other party" means, with respect to the Company, Parent
and means, with respect to Parent, the Company.
(h) "knowledge" or "known"of or as to the Company or Parent means
(i) in the case of Sections 4.4 and 4.5, the actual knowledge of such
entity's executive officers without any obligation of inquiry, (ii) in the
case of Section 3.1(t), the actual knowledge of such entity's executive
officers without any obligation of inquiry, except for an obligation of
reasonable inquiry of the Division Presidents of the branded wholesale
divisions of the Company and its Subsidiaries and of its counsel for the
relevant matters, and (iii) otherwise, the actual knowledge of such
entity's executive officers, after reasonable inquiry of the executive or
senior managerial employees responsible for the relevant matters.
8.12 Other Agreements. The parties hereto acknowledge and agree
that, except as otherwise expressly set forth in this Agreement, the rights
and obligations of the Company and Parent under any other agreement between
the parties shall not be affected by any provision of this Agreement.
56
IN WITNESS WHEREOF, Parent, the Company and Merger Sub have
caused this Agreement to be signed by their respective officers thereunto
duly authorized, all as of the date first above-written.
▇▇▇▇▇ APPAREL GROUP, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman
▇▇▇▇ ACQUISITION SUB INC.
By: /s/ ▇▇▇▇▇▇ ▇. Card
------------------------
Name: ▇▇▇▇▇▇ ▇. Card
Title: President and Treasurer
NINE WEST GROUP INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
EXHIBIT 5.12
Form of Company Affiliate Letter
Gentlemen:
The undersigned, a holder of shares of Common Stock, par value
$1.00 per share ("Company Stock"), of Nine West Group Inc., a Delaware
corporation (the "Company"), will be entitled to receive in connection with
the merger (the "Merger") of the Company with and into ▇▇▇▇ Acquisition Sub
Inc., a Delaware corporation, securities (the "Parent Securities") of ▇▇▇▇▇
Apparel Group, Inc., a Pennsylvania corporation ("Parent"), into which the
shares of Company Stock owned by the undersigned are converted at the
effective time of the Merger. The undersigned acknowledges that the
undersigned may be deemed an "affiliate" of the Company within the meaning
of Rule 145 ("Rule 145") promulgated under the Securities Act of 1933
(together with the rules and regulations thereunder, the "Act"), although
nothing contained herein should be construed as an admission of such fact.
If in fact the undersigned were an affiliate under the Act, the
undersigned's ability to sell, assign or transfer the Parent Securities
received by the undersigned in exchange for any shares of Company Stock
pursuant to the Merger may be restricted unless such transaction is
registered under the Act or an exemption from such registration is
available. The undersigned understands that such exemptions are limited and
the undersigned has obtained advice of counsel as to the nature and
conditions of such exemptions, including information with respect to the
applicability to the sale of such securities of Rules 144 and 145(d)
promulgated under the Act. The undersigned understands that Parent will not
be required to maintain the effectiveness of any registration statement
under the Act for the purposes of resale of Parent Securities by the
undersigned.
The undersigned hereby represents to and covenants with Parent
that the undersigned will not sell, assign or transfer any of the Parent
Securities received by the undersigned in exchange for any shares of
Company Stock pursuant to the Merger except (i) pursuant to an effective
registration statement under the Act, (ii) in conformity with the volume
and other limitations of Rule 145 or (iii) in a transaction which, in the
opinion of counsel reasonably satisfactory to Parent or as described in a
"no-action" or interpretive letter from the Staff of the Securities and
Exchange Commission (the "SEC"), is not required to be registered under the
Act.
In the event of a sale or other disposition by the undersigned of
Parent Securities pursuant to Rule 145, the undersigned will supply Parent
with evidence of compliance with such Rule, in the form of a letter in the
form of Annex I hereto. The undersigned understands that Parent may
instruct its transfer agent to withhold the transfer of any Parent
Securities disposed of by the undersigned, but that upon receipt of such
evidence of compliance the transfer agent shall effectuate the transfer of
the Parent Securities sold as indicated in the letter (issuing certificates
without any restrictive legend to the transferee).
2
The undersigned acknowledges and agrees that Parent reserves the
right to place the following legend on certificates representing Parent
Securities received by the undersigned in the Merger:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES
ACT OF 1933 APPLIES AND MAY BE SOLD OR OTHERWISE TRANSFERRED ONLY
IN COMPLIANCE WITH THE REQUIREMENTS OF RULE 145 OR PURSUANT TO A
REGISTRATION STATEMENT UNDER SAID ACT OR AN EXEMPTION FROM SUCH
REGISTRATION."
The undersigned also acknowledged and agrees that unless a sale
or transfer of the Parent Securities received by the undersigned in
connection with the Merger is made in conformity with the provisions of
Rule 145 or pursuant to a registration statement (in which case
certificates issued to the transferee shall not contain any restrictive
legend), Parent reserves the right to place the following legend (or other
appropriate legend) on the certificates issued to any transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED
FROM A PERSON WHO RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH
RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933 APPLIES.
THE SHARES HAVE BEEN ACQUIRED BY THE HOLDER NOT WITH A VIEW TO,
OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN
THE MEANING OF THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT OF 1933."
It is understood and agreed that such legends will be substituted by
delivery of certificates without such legends if (i) one year shall have
elapsed from the date of the effective time of the Merger and the
provisions of Rule 145(d)(2) under the Act are then available to the
undersigned or (ii) Parent shall have received an opinion in form and
substance reasonably satisfactory to Parent from independent counsel
reasonably satisfactory to Parent or a "no-action" or interpretive letter
from the Staff of the SEC to the effect that such legends are not required
for purposes of the Act.
The undersigned acknowledges that (i) the undersigned has
carefully read this letter and understands the requirements hereof and the
limitations imposed upon the distribution, sale, transfer or other
disposition of Parent Securities and (ii) the receipt by Parent of this
letter is an inducement and a condition to Parent's obligations to
consummate the Merger.
3
By Parent's acceptance of this letter, Parent agrees with the
undersigned that, if the undersigned receives any Parent Securities in the
Merger: (i) for so long as and to the extent necessary to permit the
undersigned to sell such Parent Securities pursuant to Rule 145 and, to the
extent applicable, Rule 144 under the Act, Parent shall take all such
actions as may be reasonably available to it to file, on a timely basis,
all reports and data required to be filed with the SEC by it pursuant to
Section 13 of the Securities and Exchange Act of 1934, as amended, and
furnish to the undersigned upon request a written statement as to whether
Parent has complied with such reporting requirements during the 12 months
preceding any proposed sale of Parent Securities by the undersigned under
Rule 145, and Parent shall otherwise take all such actions as may be
reasonably available to it to permit such sales pursuant to Rule 145 and
Rule 144.
Very truly yours,
------------------------
Name:
ACCEPTED AND AGREED:
▇▇▇▇▇ APPAREL GROUP, INC.
By:
----------------------------
Name:
Title:
Date:
ANNEX I
TO EXHIBIT 5.12
[Name] [Date]
On __________________ the undersigned sold the securities
("Securities") of ▇▇▇▇▇ Apparel Group, Inc. ("Parent") described below in
the space provided for that purpose (the "Securities"). The Securities were
received by the undersigned in connection with the merger of ▇▇▇▇
Acquisition Sub Inc. with Nine West Group Inc.
Based upon the most recent report or statement filed by Parent
with the Securities and Exchange Commission, the Securities sold by the
undersigned were within the prescribed limitations set forth in paragraph
(e) of Rule 144 promulgated under the Securities Act of 1933, as amended
(the "Act").
The undersigned hereby represents that the Securities were sold
in "brokers' transactions" within the meaning of Section 4(4) of the Act or
in transactions directly with a "market maker" as that term is defined in
Section 3(a)(38) of the Securities Exchange Act of 1934, as amended. The
undersigned further represents that the undersigned has not solicited or
arranged for the solicitation of orders to buy the Securities, and that the
undersigned has not made any payment in connection with the offer or sale
of the Securities to any person other than to the broker who executed the
order in respect of such sale.
Very truly yours,
[Space to be provided for description of securities]
