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EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
BY
AND AMONG
VISTA GROUP HOLDINGS, LLC,
VISTA ACQUISITION CORP.
AND
OUTLOOK GROUP CORP.
DATED AS OF MARCH 20, 2006
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TABLE OF CONTENTS
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ARTICLE I THE
MERGER.....................................................
1
1.01.
The
Merger...................................................
1
1.02.
Closing......................................................
2
1.03.
Effective
Time............................................... 2
1.04.
Effect of
the Merger; Further Actions........................ 2
1.05.
Articles
of Incorporation; Bylaws............................ 2
1.06.
Directors
and Officers....................................... 3
ARTICLE II CONVERSION OF SECURITIES; EXCHANGE OF
CERTIFICATES............ 3
2.01.
Conversion
of Securities..................................... 3
2.02.
Exchange
of Certificates..................................... 4
2.03.
Stock
Transfer Books.........................................
6
2.04.
Company
Stock Options........................................ 6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE
COMPANY................ 7
3.01.
Organization and Qualification...............................
7
3.02.
Authority
to Execute and Perform Agreement................... 8
3.03.
Capitalization and Title to Shares...........................
8
3.04.
Subsidiaries.................................................
10
3.05.
No
Conflict; Required Filings and Consents...................
10
3.06.
Compliance
with Laws......................................... 11
3.07.
Company
SEC Reports.......................................... 13
3.08.
Financial
Statements; Debt................................... 14
3.09.
Absence of
Undisclosed Liabilities........................... 14
3.10.
Absence of
Adverse Changes................................... 15
3.11.
Actions
and Proceedings...................................... 15
3.12.
Employee
Benefit Plans....................................... 16
3.13.
Tax
Matters..................................................
18
3.14.
Employee
Relations........................................... 19
3.15.
Property
and Assets.......................................... 20
3.16.
Intellectual Property........................................
21
3.17.
Environmental and Safety Laws................................
24
3.18.
Material
Contracts........................................... 25
3.19.
Insurance....................................................
28
3.20.
Board
Approvals..............................................
28
3.21.
Interested
Party Transactions................................ 28
3.22.
Financial
Advisor; Transaction Fees.......................... 29
3.23.
Commercial
Relationships..................................... 29
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER
SUB........ 30
4.01.
Organization and Qualification; Subsidiaries.................
30
4.02.
Authority
Relative to this Agreement......................... 30
4.03.
No
Conflict; Required Filings and Consents...................
30
4.04.
Brokers......................................................
31
4.05.
Financing....................................................
31
4.06.
Absence of
Litigation........................................ 32
4.07.
Operations
of Buyer and Merger Sub........................... 32
4.08.
Ownership
of Company Common Stock............................ 32
ARTICLE V COVENANTS AND
AGREEMENTS....................................... 32
5.01.
Conduct of
Business.......................................... 32
5.02.
Corporate
Examinations and Investigations.................... 36
5.03.
Further
Action; Consents; Filings............................ 37
5.04.
Preparation of Proxy Statement; Shareholders Meeting.........
38
5.05.
Public
Announcements......................................... 40
5.06.
No
Solicitation..............................................
40
5.07.
Notification of Certain Matters..............................
43
5.08.
Employee
Matters............................................. 44
5.09.
Indemnification..............................................
44
5.10.
Certain
Actions and Proceedings.............................. 46
5.11.
Solvency
Letter.............................................. 46
5.12.
Resignations.................................................
46
5.13.
Financial
Information........................................ 47
5.14.
Banking
Facilities........................................... 47
5.15.
Buyer
Financing..............................................
47
ARTICLE VI CONDITIONS PRECEDENT TO THE OBLIGATIONS OF EACH PARTY
TO
CONSUMMATE THE MERGER.........................................
48
6.01.
Shareholder Approval.........................................
48
6.02.
Absence of
Order............................................. 48
6.03.
Regulatory
Approvals......................................... 48
6.04.
HSR
Act......................................................
48
6.05.
Solvency
Letter.............................................. 49
ARTICLE VII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER AND
MERGER
SUB TO CONSUMMATE THE MERGER.................................
49
7.01.
Representations, Warranties and Covenants....................
49
7.02.
Financing....................................................
50
7.03.
Pending
Litigation........................................... 50
7.04.
Consents
and Amendments Relating to Certain Contracts........ 50
7.05.
Banking
Facilities........................................... 50
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ARTICLE VIII CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY
TO
CONSUMMATE THE MERGER.......................................
50
8.01.
Representations, Warranties and Covenants....................
50
ARTICLE IX TERMINATION, AMENDMENT AND
WAIVER............................. 51
9.01.
Termination..................................................
51
9.02.
Effect of
Termination........................................ 52
9.03.
Fees and
Expenses............................................ 52
ARTICLE X
MISCELLANEOUS..................................................
54
10.01.
No
Survival..................................................
54
10.02.
Notices......................................................
55
10.03.
Entire
Agreement............................................. 56
10.04.
Governing
Law................................................ 56
10.05.
Binding Effect;
No Assignment; No Third-Party Beneficiaries.. 56
10.06.
Amendments and
Waivers....................................... 57
10.07.
Schedules;
Listed Documents, etc............................. 57
10.08.
Construction.................................................
57
10.09.
Certain
Definitions.......................................... 58
10.10.
Section
Headings............................................. 59
10.11.
Counterparts.................................................
59
10.12.
Severability.................................................
59
10.13.
Jurisdiction;
Venue; Service of Process...................... 59
10.14.
Specific
Performance......................................... 60
10.15.
Waiver of Jury
Trial......................................... 60
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EXHIBIT
Exhibit A Surviving Corporation Articles of Incorporation
(iv)
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TABLE OF DEFINED TERMS
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DEFINED TERMS
SECTION
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Action...................................................
Section
10.09(a)
Acquisition Proposal.....................................
Section
5.06(e)
Affiliate................................................
Section
10.09(b)
Agreement................................................
Preamble
Articles of Merger.......................................
Section 1.03
Assets...................................................
Section 3.15
Business.................................................
Section
3.16(b)
Buyer....................................................
Preamble
Buyer Disclosure Schedule................................
Article IV
Buyer Material Adverse Effect............................
Section 4.01
Certificates.............................................
Section
2.02(b)
Change of Recommendation.................................
Section
5.06(c)
Closing..................................................
Section 1.02
Closing Date.............................................
Section 1.02
Code.....................................................
Section
3.12(a)
Commitment Letters.......................................
Section 4.05
Company..................................................
Preamble
Company 10-K.............................................
Section
3.07(a)
Company 10-Qs............................................
Section
3.08(a)
Company Balance Sheet....................................
Section 3.09
Company Board............................................
Preamble
Company Board Recommendation.............................
Section
3.20(a)
Company Common Stock.....................................
Preamble
Company Disclosure Schedule..............................
Article III
Company Material Adverse Effect..........................
Section
3.01(a)
Company Options..........................................
Section
2.04(a)
Company Preferred Stock..................................
Section
3.03(d)
Company SEC Reports......................................
Section
3.07(a)
Company Shareholders' Meeting............................
Section
5.04(b)
Company Stock Option Plans...............................
Section
2.04(a)
Company Technology.......................................
Section
3.16(h)
Confidentiality Agreement................................
Section
5.06(a)
Consent..................................................
Section
3.05(b)
Contract.................................................
Section
3.05(a)
control..................................................
Section
10.09(c)
Damages..................................................
Section 7.01
Debt Financing...........................................
Section 4.05
DOJ......................................................
Section
5.03(b)
Effective Time...........................................
Section 1.03
Employee.................................................
Section 5.08
Employee Plan............................................
Section
10.09(d)
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Encumbrance..............................................
Section
10.09(e)
Environmental Laws.......................................
Section
3.17(b)
ERISA....................................................
Section
10.09(f)
ERISA Affiliate..........................................
Section
3.12(c)
Expenses.................................................
Section
9.03(a)
Exchange Act.............................................
Section
3.06(c)(i)
Exchange Fund............................................
Section
2.02(a)
FASB.....................................................
Section
5.01(b)(xii)
Financing................................................
Section 4.05
Foreign Benefit Plan.....................................
Section
3.12(j)
FTC......................................................
Section
5.03(b)
GAAP.....................................................
Section
3.08(a)
Governmental Authority...................................
Section
2.02(d)
Hancock Commitment Letter................................
Section 4.05
Hancock Financing........................................
Section 4.05
Hazardous Substance......................................
Section
3.17(a)
HSR Act..................................................
Section
3.05(b)
Indemnified Parties......................................
Section 5.09(a)
Intellectual Property....................................
Section
3.16(h)
internal controls........................................
Section
3.06(c)(ii)
IRS......................................................
Section
3.12(a)
Judgment.................................................
Section
3.05(a)
Key Customer.............................................
Section 3.23
Key Supplier.............................................
Section 3.23
knowledge of the Buyer...................................
Section
10.09(g)
knowledge of the Company.................................
Section
10.09(h)
Laws.....................................................
Section 1.05
Lender...................................................
Section 4.05
Licenses.................................................
Section
3.16(d)
Material Contract........................................
Section
3.18(b)
Merger...................................................
Preamble
Merger Consideration.....................................
Section
2.01(a)
Merger Sub...............................................
Preamble
Milestone Commitment Letters.............................
Section 4.05
Milestone Financing......................................
Section 4.05
Notice of Superior Proposal..............................
Section
5.06(c)
November 10-Q............................................
Section
3.06(c)(ii)
Option Amount............................................
Section
2.04(a)
Other Filings............................................
Section
5.04(a)
Outside Date.............................................
Section
9.01(b)
Paying Agent.............................................
Section
2.02(a)
PCBs.....................................................
Section
3.17(a)
Pension Plan.............................................
Section
10.09(d)
Permits..................................................
Section
3.06(a)
Person...................................................
Section
10.09(j)
Proxy Statement..........................................
Section
3.05(b)
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Real Property............................................
Section 3.15
Representatives..........................................
Section
5.06(a)
Sarbanes-Oxley Act.......................................
Section
3.06(c)(i)
SEC......................................................
Section
3.05(b)
SEC Documents............................................
Section
3.07(a)
Section 409A.............................................
Section
3.12(i)
Securities Act...........................................
Section
3.07(a)
Senior Debt Letter.......................................
Section 4.05
Share(s).................................................
Section
2.01(a)
Solvency Letter..........................................
Section 5.12
Special Committee........................................
Preamble
Subsidiary...............................................
Section
3.04(a)
Superior Proposal........................................
Section
5.06(f)
Surviving Corporation....................................
Section 1.01
Surviving Corporation Welfare Benefit Plan...............
Section 5.08
Takeover Transaction.....................................
Section
9.03(b)
Tax Return(s)............................................
Section
3.13(a)
Tax(es)..................................................
Section
3.13(a)
Technology...............................................
Section
3.16(h)
Termination Expenses.....................................
Section
9.03(i)
Termination Fee..........................................
Section
9.03(h)
Trademarks...............................................
Section
3.16(h)
Transactions.............................................
Preamble
Triggering Event.........................................
Section 9.01
WBCL.....................................................
Section 1.01
Welfare Plan.............................................
Section
10.09(d)
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AGREEMENT AND PLAN OF MERGER
This
Agreement and Plan of Merger, dated as of March 20, 2006 (this
"Agreement"), is entered into by and among Vista Group Holdings,
LLC, a Delaware
limited liability company ("Buyer"), Vista Acquisition Corp., a
Delaware
corporation and a wholly-owned subsidiary of Buyer ("Merger Sub"),
and Outlook
Group Corp., a Wisconsin corporation (the "Company").
WHEREAS, a special committee of the Board of Directors of the
Company (the
"Company Board") consisting solely of disinterested directors (the
"Special
Committee"), subject to the terms and conditions set forth herein,
has
unanimously (i) determined that (A) the merger (the "Merger") of
Merger Sub with
and into the Company, in which the Company would become a wholly
owned
subsidiary of Buyer, is advisable and in the best interests of the
Company and
its shareholders, and (B) the cash consideration to be received for
outstanding
shares of common stock, par value $.01 per share, of the Company
("Company
Common Stock") in the Merger is fair to the shareholders of the
Company; (ii)
recommended that the Company Board approve and adopt this
Agreement, the Merger
and the other transactions contemplated hereby (collectively,
the
"Transactions"); and (iii) recommended approval and adoption by the
shareholders
of the Company of this Agreement and the Transactions;
WHEREAS, the Company Board, subject to the terms and conditions set
forth
herein, has unanimously (i) determined that (A) the Merger is
advisable and in
the best interests of the Company and its shareholders, and (B) the
cash
consideration to be received for outstanding shares of Company
Common Stock in
the Merger is fair to the shareholders of the Company; (ii)
approved and adopted
this Agreement and the Transactions; and (iii) recommended approval
and adoption
by the shareholders of the Company of this Agreement and the
Transactions;
WHEREAS, the respective Boards of Directors of Buyer and Merger Sub
have
unanimously approved this Agreement and the Transactions;
WHEREAS, Buyer, Merger Sub and the Company desire to make
certain
representations, warranties, covenants and agreements in connection
with the
Merger and also to prescribe various conditions to the Merger;
and
WHEREAS, upon consummation of the Merger, each issued and
outstanding share
of Company Common Stock will be converted into the right to receive
$13.50 per
share in cash, upon the terms and subject to the conditions of this
Agreement.
NOW,
THEREFORE, in consideration of the foregoing and the mutual
covenants
and agreements herein contained, and intending to be legally bound
hereby,
Buyer, Merger Sub and the Company hereby agree as follows:
ARTICLE I
THE MERGER
1.01. The Merger. Upon the terms and subject to the conditions set
forth in
this Agreement, and in accordance with Sections 180.1101 and
180.1106 of the
Wisconsin Business Corporation Law (the "WBCL"), at the Effective
Time (as
defined below), Merger Sub shall be
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merged with and into the Company. At the Effective Time, the
separate corporate
existence of Merger Sub shall cease and the Company shall continue
as the
surviving corporation of the Merger (the "Surviving
Corporation").
1.02. Closing. Unless this Agreement shall have been terminated
in
accordance with Section 9.01, the closing of the Merger (the
"Closing") will
take place at 10:00 a.m., Milwaukee time, on the next business day
following the
satisfaction or waiver of the conditions set forth in Articles VI,
VII and VIII
(other than those that by their terms are to be satisfied or waived
at the
Closing), at the offices of Quarles & Brady LLP, 411 East
Wisconsin Avenue,
Milwaukee, Wisconsin 53202, unless another time, date and/or place
is agreed to
in writing by Buyer and the Company (the date on which the Closing
occurs, the
"Closing Date").
1.03. Effective Time. Upon the terms and subject to the conditions
set
forth in this Agreement, on the Closing Date, the parties hereto
shall (a) file
articles of merger (the "Articles of Merger") in such form as is
required by,
and executed and acknowledged in accordance with, the relevant
provisions of the
WBCL, and (b) make all other filings or recordings required under
the WBCL to
effect the Merger. The Merger shall become effective at such date
and time as
the Articles of Merger is duly filed in accordance with Section
180.1105 of WBCL
or at such subsequent date and time as Buyer and the Company shall
agree and
specify in the Articles of Merger. The date and time at which the
Merger becomes
effective is referred to in this Agreement as the "Effective
Time".
1.04. Effect of the Merger; Further Actions. At the Effective Time,
the
effect of the Merger shall be as provided in Section 180.1106 of
the WBCL.
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. If at
any time after
the Effective Time any further action is necessary to vest in the
Surviving
Corporation the title to property or rights of Merger Sub or the
Company, the
authorized officers and directors of the Surviving Corporation will
be fully
authorized in the name of Merger Sub or the Company, as the case
may be, to
take, and shall take, any and all such lawful action.
1.05. Articles of Incorporation; Bylaws. The Articles of Merger
shall
provide that, at the Effective Time, the Articles of Incorporation
of the
Surviving Corporation shall be amended and restated at the
Effective Time to
read in the form of Exhibit A, and as so amended, such Articles of
Incorporation
shall be the Articles of Incorporation of the Surviving Corporation
until
thereafter changed or amended as provided therein or by applicable
laws,
statutes, regulations, rules, ordinances and judgments, decrees,
orders, writs
and injunctions, of any court or Governmental Authority
(collectively, "Laws").
At the Effective Time, the Bylaws of Merger Sub, as in effect
immediately prior
to the Effective Time, shall be the Bylaws of the Surviving
Corporation until
thereafter amended as provided by Law, the Articles of
Incorporation of the
Surviving Corporation and such Bylaws.
1.06. Directors and Officers. The directors of Merger Sub
immediately prior
to the Effective Time shall be the initial directors of the
Surviving
Corporation, each to hold office in
2
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accordance with the Articles of Incorporation and Bylaws of the
Surviving
Corporation, and the officers of the Company immediately prior to
the Effective
Time shall be the initial officers of the Surviving Corporation, in
each case
until their respective successors are duly elected or appointed and
qualified or
until the earliest of their death, resignation and removal.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
2.01. Conversion of Securities. At the Effective Time, by virtue of
the
Merger and without any action on the part of Merger Sub, the
Company or the
holders of any of the following securities:
(a) Conversion of Company Common Stock. Each share of Company
Common
Stock (all issued and outstanding shares of Company Common Stock
being
hereinafter collectively referred to as the "Shares"; each a
"Share") issued and
outstanding immediately prior to the Effective Time (including any
Shares
subject to restrictions on transfer, vesting or otherwise under the
Company
Stock Option Plans, but excluding any Shares to be canceled
pursuant to Section
2.01(b)) shall be canceled and shall be converted automatically
into the right
to receive $13.50 in cash, without interest (the "Merger
Consideration"),
payable upon surrender of the certificate that formerly evidenced
such Share in
the manner and on such terms as provided in Section 2.02.
(b) Cancellation of Treasury Stock. Each Share held in the treasury
of
the Company and each Share owned by any direct or indirect
subsidiary of the
Company immediately prior to the Effective Time shall automatically
be canceled
without any conversion thereof into the right to receive Merger
Consideration
and no payment or distribution shall be made with respect
thereto.
(c) Capital Stock of Merger Sub. Each share of common stock, par
value
$.01 per share, of Merger Sub issued and outstanding immediately
prior to the
Effective Time shall be converted into and become one validly
issued, fully paid
and nonassessable share of common stock, par value $.01 per share,
of the
Surviving Corporation (except as otherwise provided in Section
180.0622(2)(b) of
the WBCL and its predecessor statutes as judicially interpreted).
Following the
Effective Time, each certificate evidencing ownership of shares of
Merger Sub
common stock shall be deemed to evidence ownership of such shares
of the
Surviving Corporation.
(d) Adjustments. If, between the date of this Agreement and the
Effective Time, there is a reclassification, recapitalization,
stock split,
stock dividend, subdivision, combination or exchange of shares with
respect to,
or rights issued in respect of, the Shares, the Merger
Consideration shall be
adjusted accordingly, to provide the holders of Shares the same
economic effect
as was contemplated by this Agreement prior to giving effect to
such event.
2.02. Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Buyer shall (i)
appoint
American Stock Transfer & Trust Company or another bank or
trust company
reasonably
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acceptable to the Company (the "Paying Agent"), and (ii) enter into
a paying
agent agreement, in form and substance reasonably acceptable to the
Company,
with such Paying Agent for the payment of the Merger Consideration
in accordance
with this Article II. At the Effective Time, Buyer shall deposit,
or cause the
Surviving Corporation to deposit, with the Paying Agent, for the
benefit of the
holders of Shares, cash in an amount sufficient to pay the
aggregate Merger
Consideration required to be paid pursuant to Section 2.01(a) (such
cash being
hereinafter referred to as the "Exchange Fund"). The Exchange Fund
shall not be
used for any other purpose. The Exchange Fund shall be invested by
the Paying
Agent as directed by Buyer; provided, however, that such
investments shall be in
obligations of or guaranteed by the United States of America or any
agency or
instrumentality thereof and backed by the full faith and credit of
the United
States of America, in commercial paper obligations rated A-1 or P-1
or better by
Moody's Investors Service, Inc. or Standard & Poor's
Corporation, respectively,
or in certificates of deposit, bank repurchase agreements or
banker's
acceptances of commercial banks with capital exceeding $1 billion
(based on the
most recent financial statements of such bank which are then
publicly
available). Any net profit resulting from, or interest or income
produced by,
such investments shall be the property of and payable to the
Surviving
Corporation.
(b) Exchange Procedures. As promptly as practicable after the
Effective Time, Buyer shall cause the Paying Agent to mail to each
Person who
was, at the Effective Time, a holder of record of Shares entitled
to receive the
Merger Consideration pursuant to Section 2.01(a): (i) a letter of
transmittal
(which shall be in customary form and shall specify that delivery
shall be
effected, and risk of loss and title to the certificates evidencing
such Shares
(the "Certificates") shall pass, only upon proper delivery of the
Certificates
to the Paying Agent) and (ii) instructions for use in effecting the
surrender of
the Certificates in exchange for the Merger Consideration. Upon
surrender to the
Paying Agent of a Certificate for cancellation, together with such
letter of
transmittal duly completed and validly executed in accordance with
the
instructions thereto, and such other documents as may be required
pursuant to
such instructions, the holder of such Certificate shall be entitled
to receive
in exchange therefor the amount of cash that such holder has the
right to
receive in respect of the Shares formerly represented by such
Certificate
pursuant to Section 2.02(a), and the Certificate so surrendered
shall forthwith
be cancelled. In the event of a transfer of ownership of Shares
that is not
registered in the transfer records of the Company, payment of the
Merger
Consideration may be made to a Person other than the Person in
whose name the
Certificate so surrendered is registered only if the Certificate
representing
such Shares shall be properly endorsed or otherwise be in proper
form for
transfer and the Person requesting such payment shall pay any
transfer or other
Taxes required by reason of the payment of the Merger Consideration
to a Person
other than the registered holder of such Certificate or establish
to the
reasonable satisfaction of Buyer that such Tax has been paid or is
not
applicable. Until surrendered as contemplated by this Section 2.02,
each
Certificate shall be deemed at all times after the Effective Time
to represent
only the right to receive upon such surrender the Merger
Consideration to which
the holder of such Certificate is entitled pursuant to this Article
II. No
interest shall be paid or will accrue on any cash payable to
holders of
Certificates pursuant to the provisions of this Article II.
(c) No Further Rights. From and after the Effective Time, holders
of
Certificates shall cease to have any rights as shareholders of the
Company,
except as provided herein or by Law.
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(d) Termination of Exchange Fund. Any portion of the Exchange
Fund
that remains undistributed to the holders of Shares for one year
after the
Effective Time shall be delivered to the Surviving Corporation,
upon demand, and
any holders of Shares who have not theretofore complied with this
Article II
shall thereafter look only to the Surviving Corporation for payment
of their
claim for the Merger Consideration. Any portion of the Exchange
Fund remaining
unclaimed by holders of Shares as of a date which is immediately
prior to such
time as such amounts would otherwise escheat to or become property
of any United
States federal, state or local or any foreign government, or
political
subdivision thereof, or any multinational organization or authority
or any
authority, agency or commission entitled to exercise any
administrative,
executive, judicial, legislative, police, regulatory or taxing
authority or
power, any court or tribunal (or any department, bureau or division
thereof), or
any arbitrator or arbitral body (each a "Governmental Authority")
shall, to the
extent permitted by applicable Law, become the property of the
Surviving
Corporation free and clear of any claims or interest of any Person
previously
entitled thereto.
(e) No Liability. None of the Paying Agent, the Company, Buyer,
Merger
Sub or the Surviving Corporation shall be liable to any holder of
Shares for any
Merger Consideration delivered to a public official pursuant to any
abandoned
property, escheat or similar Law.
(f) Withholding Rights. Each of the Paying Agent, the Surviving
Corporation and Buyer shall be entitled to deduct and withhold from
the
consideration otherwise payable pursuant to this Agreement to any
holder of
Shares such amounts, if any, as may be required with respect to
such payment
under all applicable Tax Laws and pay such withholding amount over
to the
appropriate taxing authority. To the extent that amounts are so
properly
withheld by the Paying Agent, the Surviving Corporation or Buyer,
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 in
respect of which
such deduction and withholding was made by the Paying Agent, the
Surviving
Corporation or Buyer, as the case may be.
(g) 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 or the Paying Agent, the posting by such
Person of a
bond in such amount as the Surviving Corporation or the Paying
Agent, as the
case may be, may reasonably direct as indemnity against any claim
that may be
made with respect to such Certificate, the Paying Agent shall pay
in respect of
such lost, stolen or destroyed Certificate the Merger Consideration
to which the
holder thereof is entitled pursuant to Section 2.01(a).
2.03. Stock Transfer Books. At the Effective Time, the stock
transfer books
of the Company shall be closed and there shall be no further
registration of
transfers of Shares thereafter on the records of the Company. From
and after the
Effective Time, the holders of Certificates representing Shares
outstanding
immediately prior to the Effective Time shall cease to have any
rights with
respect to such Shares, except as otherwise provided in this
Agreement or by
Law. On or after the Effective Time, any Certificates presented to
the Paying
Agent or the Surviving Corporation for any reason shall be canceled
against
delivery of the Merger
5
<PAGE>
Consideration to which the holders thereof are entitled pursuant to
Section
2.01(a), subject to the provisions of Section 2.02.
2.04. Company Stock Options.
(a) Immediately prior to the Effective Time, all options then
outstanding to purchase shares of Company Common Stock (the
"Company Options")
granted under any plan, arrangement or agreement set forth in
Section 3.03(a)(i)
of the Company Disclosure Schedule (collectively, the "Company
Stock Option
Plans") shall become fully vested and exercisable (whether or not
then vested or
subject to any performance condition that has not been satisfied).
At the
Effective Time, each Company Option not theretofore exercised shall
be cancelled
and, in exchange therefor, each holder of any such cancelled
Company Option
shall be entitled to receive, as promptly as practicable
thereafter, an amount
of cash (without interest) (the "Option Amount") equal to the
product of (x) the
total number of shares of Company Common Stock subject to such
Company Option
multiplied by (y) the excess of the amount of the per share Merger
Consideration
over the exercise price per share of Company Common Stock under
such Company
Option (with the aggregate amount of such payment rounded to the
nearest cent)
less applicable Taxes, if any, required to be withheld with respect
to such
payment. After the Effective Time, any such cancelled Company
Option shall no
longer be exercisable by the former holder thereof, but shall only
entitle such
holder to the payment described in the preceding sentences.
(b) At the Effective Time, Buyer shall deliver, or cause to be
delivered, the aggregate Option Amount to the Surviving Corporation
for payment
to holders of Company Options as directed by the Company prior to
the Effective
Time.
(c) The Board of Directors of the Company, or, where appropriate,
the
applicable committee thereof under each Company Stock Option Plan,
shall take
all such actions (including the adoption of amendments and the
obtaining of
consents) and make all such determinations with respect to the
Company Options
and each Company Stock Option Plan as may be necessary to implement
the
foregoing provisions of this Section 2.04.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule delivered by the
Company to
Buyer and Merger Sub concurrently with the execution and delivery
of this
Agreement (the "Company Disclosure Schedule"), which references the
particular
sections set forth below, the Company hereby represents and
warrants to Buyer
and Merger Sub as follows:
3.01. Organization and Qualification.
(a) Each of the Company and each Subsidiary (as defined in
Section
3.04(a)) is a corporation duly organized and validly existing with
active status
under the laws of Wisconsin and has the corporate power and
authority to own,
lease and operate its assets and to carry on its business as now
being and as
heretofore conducted. Each of the Company and each Subsidiary is
qualified or
otherwise authorized to transact business as a foreign corporation
or
6
<PAGE>
other organization in all jurisdictions in which such qualification
or
authorization is required by law, except for jurisdictions in which
the failure
to be so qualified or authorized, has not had and would not
reasonably be
expected to have, individually or in the aggregate, a Company
Material Adverse
Effect. As used in this Agreement, "Company Material Adverse
Effect" means any
change or effect that (i) materially and adversely affects the
business,
operations, condition (financial or otherwise), assets (tangible or
intangible),
liabilities, results of operations or prospects of the Company and
the
Subsidiaries taken as a whole, or (ii) prevents or materially
delays the
consummation of the Merger; provided, however, that for purposes of
determining
whether there has been, or will be, a "Company Material Adverse
Effect" in no
event shall there be taken into account any event, circumstance,
change or
effect resulting from or relating to a change in general economic
or financial
market conditions, except to the extent such event, circumstance,
change or
effect has had, or would reasonably be expected to have, a
disproportionate
effect on the Company and the Subsidiaries, taken as a whole.
(b) The Company has previously provided to Buyer true and
complete
copies of the articles of incorporation and bylaws or other
organizational
documents of the Company and each Subsidiary as presently in
effect. Neither the
Company nor any Subsidiary is in violation of any of the provisions
of its
articles of incorporation or bylaws, nor has the Company or any
Subsidiary been
in violation of any of the provisions of its charter or bylaws
(which violation
has not been subsequently remedied). Except as disclosed in Section
3.01(b) of
the Company Disclosure Schedule, the Company has provided to Buyer
complete and
correct copies of the minutes of all meetings of the Company Board
(and each
committee thereof), the governing body of each Subsidiary, the
shareholders of
the Company, and the equity holders of each Subsidiary, in each
case since
January 1, 2003. Immediately upon execution hereof, the Company
shall provide to
Buyer complete and correct copies of the minutes of all meetings of
the Company
Board (and each committee thereof), the governing body of each
Subsidiary, the
shareholders of the Company, and the equity holders of each
Subsidiary, in each
case listed in Section 3.01(b) of the Company Disclosure
Schedule.
3.02. Authority to Execute and Perform Agreement. The Company has
the
corporate power and authority to enter into, execute and deliver
this Agreement
and, subject, in the case of consummation of the Merger to the
approval of this
Agreement by the holders of Company Common Stock, to perform fully
its
obligations hereunder. The execution and delivery of this Agreement
and the
consummation of the transactions contemplated hereby have been duly
and
unanimously authorized by the Company Board. No other action on the
part of the
Company or the Subsidiaries is necessary to consummate the
transactions
contemplated hereby (other than approval of this Agreement by the
holders of
Company Common Stock). This Agreement has been duly executed and
delivered by
the Company and constitutes, assuming due authorization, execution
and delivery
of this Agreement by Buyer and Merger Sub, a valid and binding
obligation of the
Company, enforceable in accordance with its terms, except to the
extent that
enforcement of the rights and remedies created thereby is subject
to bankruptcy,
insolvency, reorganization, moratorium and other similar laws of
general
application affecting the rights and remedies of creditors and to
general
principles of equity (regardless of whether enforceability is
considered in a
proceeding in equity or at law). Each of the Company Board and the
Special
Committee, in each case at a meeting duly called and held, duly and
unanimously
adopted resolutions (i) approving this Agreement and the Merger,
(ii)
determining that the terms of the
7
<PAGE>
Merger are fair to and in the best interests of the Company and
its
shareholders, (iii) determining that the Merger Agreement is fair
to the
shareholders of the Company and (iv) recommending that the
Company's
shareholders approve this Agreement and directing that this
Agreement and the
Merger be submitted for consideration by the Company's shareholders
at the
Company Shareholders' Meeting. The affirmative approval of the
holders of a
majority of the shares of Company Common Stock outstanding is the
only vote of
holders of Company capital stock required to adopt and approve this
Agreement
and the Merger.
3.03. Capitalization and Title to Shares.
(a) The Company is authorized to issue 15,000,000 shares of
Company
Common Stock, of which 3,395,977 shares were issued and outstanding
as of
February 25, 2006. All of the issued and outstanding shares of
Company Common
Stock are duly authorized, validly issued, fully paid,
nonassessable (except as
otherwise provided in Section 180.0622(2)(b) of the WBCL and its
predecessor
statutes as judicially interpreted) and free of pre-emptive rights.
As of
February 25, 2006, there were 1,856,905 shares of Company Common
Stock held in
the Company's treasury.
(b) Company Options to purchase 131,000 shares of Company Common
Stock
were outstanding as of February 25, 2006. Section 3.03(b) of the
Company
Disclosure Schedule includes a true and complete list of all
Company Options
outstanding as of February 25, 2006, which schedule shows the
underlying shares
that have vested, the applicable vesting and acceleration
provisions and the
expiration date. True and complete copies of all instruments (or
the forms of
such instruments) referred to in this 3.03(b)have been furnished to
Buyer. All
stock option plans (including all amendments requiring approval)
have been duly
approved by the Company's shareholders. No Company Options have
been granted or
issued since February 25, 2006.
(c) The Company is authorized to issue 1,000,000 shares of
Cumulative
Preferred Stock, par value $.01 per share ("Company Preferred
Stock"), none of
which are issued and outstanding and none of which have been
reserved for
issuance.
(d) Except for (i) shares indicated as issued and outstanding
on
February 25, 2006 in Section 3.03(a), and (ii) shares issued after
such date
upon the exercise of outstanding Company Options listed in Section
3.03(b) of
the Company Disclosure Schedule, there are not as of the date
hereof, and at the
Effective Time there will not be, any shares of Company Common
Stock or Company
Preferred Stock issued and outstanding or otherwise reserved for
issuance.
(e) The Company's authorized capital stock consists solely of
the
Company Common Stock described in Section 3.03(a) and the Company
Preferred
Stock described in Section 3.03(c). There are not as of the date
hereof, and at
the Effective Time there will not be, authorized or outstanding
any
subscriptions, options, conversion or exchange rights, warrants,
rights
(including without limitation, pursuant to a so-called "poison
pill"),
repurchase or redemption agreements, or other agreements, claims or
commitments
of any nature whatsoever obligating the Company to issue, transfer,
deliver or
sell, or cause to be issued, transferred, delivered, sold,
repurchased or
redeemed, additional shares of the capital stock or other
securities
8
<PAGE>
of the Company or obligating the Company to grant, extend or enter
into any such
agreement, other than Company Options listed in Section 3.03(b) of
the Company
Disclosure Schedule. To the knowledge of the Company, there are no
shareholder
agreements, voting trusts, proxies or other agreements, instruments
or
understandings with respect to the voting of the capital stock of
the Company.
No dividends on the Company Common Stock have been declared or have
accrued
since January 19, 2006. All of the outstanding equity securities of
the Company
have been offered and issued in compliance with all applicable
securities laws,
including the Securities Act and "blue sky" laws.
(f) Each outstanding share of capital stock or other ownership
interest of each Subsidiary is duly authorized, validly issued,
fully paid and
nonassessable (except as otherwise provided in Section
180.0622(2)(b) of the
WBCL and its predecessor statutes, as judicially interpreted) and
was issued
free of preemptive (or similar) rights, and each such share is
owned by the
Company or another Subsidiary free and clear of all options, rights
of first
refusal, agreements, limitations on the Company's or any
Subsidiary's voting,
dividend or transfer rights, charges and other Encumbrances of any
nature
whatsoever.
(g) There are not any bonds, debentures, notes or other
indebtedness
of the Company having the right to vote on any matters on which
holders of the
Company capital stock may vote.
(h) There are not any outstanding Contracts of the Company or of
any
Subsidiary, contingent or otherwise, to repurchase, redeem or
otherwise acquire
any shares of capital stock of the Company or any Subsidiary. There
are no
issued and outstanding shares of capital stock of the Company that
constitute
restricted stock or that are otherwise subject to a repurchase or
redemption
right in favor of the Company.
3.04. Subsidiaries.
(a) Section 3.04(a) of the Company Disclosure Schedule sets forth
a
true and complete list of the names, jurisdictions of organization
and
capitalization of each Subsidiary and, for the Company and each
Subsidiary, the
jurisdictions in which it is qualified to do business. Section
3.04(a) of the
Company Disclosure Schedule also sets forth for each such
Subsidiary, the
individuals who comprise the board of directors or comparable body
for each such
entity. Except as disclosed in Section 3.04(a) of the Company
Disclosure
Schedule, all issued and outstanding shares or other equity
interests of each
Subsidiary are owned directly by the Company free and clear of any
Encumbrances,
security interests or adverse claims. As used in this Agreement,
"Subsidiary"
means any corporation, partnership or other organization, whether
incorporated
or unincorporated, (i) of which the Company or any Subsidiary is a
general
partner or (ii) at least 50% of the securities or other interests
having voting
power to elect a majority of the board of directors or others
performing similar
functions with respect to such corporation, partnership or other
organization
are directly or indirectly owned or controlled by the Company or by
any
Subsidiary, or by the Company and one or more Subsidiary.
(b) There are not as of the date hereof, and at the Effective
Time
there will not be, any subscriptions, options, conversion or
exchange rights,
warrants, repurchase or
9
<PAGE>
redemption agreements, or other agreements, claims or commitments
of any nature
whatsoever obligating any Subsidiary to issue, transfer, deliver or
sell, or
cause to be issued, transferred, delivered, sold, repurchased or
redeemed,
shares of the capital stock or other securities of the Company or
any Subsidiary
or obligating the Company or any Subsidiary to grant, extend or
enter into any
such agreement. There are no shareholder agreements, voting trusts,
proxies or
other agreements, instruments or understandings with respect to the
voting of
the capital stock of any Subsidiary.
(c) Other than the Subsidiaries or as disclosed in Section 3.04(c)
of
the Company Disclosure Schedule, the Company and the Subsidiaries
own no equity
interest in any other Person.
3.05. No Conflict; Required Filings and Consents.
(a) Except as set forth in Section 3.05 of the Company
Disclosure
Schedule, and assuming the adoption of this Agreement by the
holders of the
Company Common Stock and that all Consents described in this
Section 3.05 have
been obtained and all filings and notifications described in this
Section 3.05
have been made and any waiting periods thereunder have terminated
or expired,
the execution and delivery by the Company of this Agreement do not,
and the
consummation of the transactions contemplated hereby and compliance
with the
terms hereof will not, result in any violation of or default (with
or without
notice or lapse of time, or both) under, or give rise to a right of
termination,
cancellation or acceleration of any obligation or to 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 any
Encumbrance
upon any of the properties or assets of the Company or any
Subsidiary under, any
provision of (i) the Company's articles of incorporation, the
Company's By-Laws
or the comparable articles of incorporation or organizational
documents of any
Subsidiary, (ii) any contract, agreement, deed, mortgage, lease or
license, or
any commitment, promise, undertaking, arrangement or understanding,
whether
written or oral and whether express or implied, that constitutes a
binding
contract, or other document or instrument, including any document
or instrument
evidencing or otherwise relating to any debt (each of the foregoing
items in
this clause (ii), a "Contract"), to which or by which the Company
or any
Subsidiary is a party or otherwise subject or bound or to which or
by which any
property, business, operation or right of the Company or any
Subsidiary is
subject or bound or (iii) subject to the filings and other matters
referred to
in Section 3.05(b), any judgment, order, injunction or decree,
domestic or
foreign ("Judgment"), or Law, applicable to the Company or any
Subsidiary or
their respective properties or assets, other than, in the case of
clause (ii)
and (iii) above, any such items that have not had and would not
reasonably be
expected to have, individually or in the aggregate, a Company
Material Adverse
Effect.
(b) No consent, approval, license, permit, order or
authorization
("Consent") of, or registration, declaration or filing with, any
third party or
Governmental Authority is required to be obtained or made by or
with respect to
the Company or any Subsidiary in connection with the execution,
delivery and
performance of this Agreement or the consummation of the
transactions
contemplated hereby, other than (i) if required, compliance with
and filing of a
pre-merger notification report under the Hart-Scott-Rodino
Antitrust
Improvements Act of
10
<PAGE>
1976, as amended (the "HSR Act"), (ii) the filing with the U.S.
Securities and
Exchange Commission (the "SEC") of a proxy statement of the Company
relating to
the approval of this Agreement by the Company's shareholders (the
"Proxy
Statement") relating to the Merger and this Agreement, as amended
or
supplemented, (iii) the filing of the Articles of Merger with the
Secretary of
State of the State of Wisconsin Department of Financial
Institutions,
respectively, and appropriate documents with the relevant
authorities of the
other jurisdictions in which the Company is qualified to do
business, (iv)
compliance with and filings under the Laws of any foreign
jurisdictions, if and
to the extent required, and (v) such other items that are listed in
Section
3.05(b) of the Company Disclosure Schedule.
3.06. Compliance with Laws.
(a) Permits. The Company and the Subsidiaries including their
respective employees (to the extent applicable) have obtained each
material
federal, state, county, local or foreign governmental consent,
license, permit,
grant or other authorization of a Governmental Authority (each, a
"Permit") (i)
pursuant to which the Company or any Subsidiary currently operates
or holds any
interest in any of its properties or (ii) that is required for the
operation of
the business of the Company or any Subsidiaries or the holding of
any such
interest, and all of such Permits are in full force and effect; and
no
proceeding is pending or, to the knowledge of the Company,
threatened to revoke,
suspend or adversely modify any such Permit.
(b) General Laws. The Company and the Subsidiaries have complied in
a
timely manner and in all material respects with all Laws relating
to any of the
property owned, leased or used by them, or applicable to their
respective
businesses, including, but not limited to, (i) the Foreign Corrupt
Practices Act
of 1977 and any other Laws regarding use of funds for political
activity or
commercial bribery and (ii) laws relating to interstate commerce,
anti-kickback
and antitrust; provided, however, that this Section 3.06(b) does
not apply to
(A) employee-benefits matters, which are the subject of and covered
by Section
3.12, (B) tax matters, which are the subject of and covered by
Section 3.13, (C)
labor and employment matters, which are the subject of and covered
by Section
3.14, or (D) environmental and health and safety matters, which are
the subject
of and covered by Section 3.17.
(c) Sarbanes Oxley Compliance.
(i) The Company and each of its directors and officers are in
compliance with, and have complied, in all material respects with
(A) the
applicable provisions of the Sarbanes-Oxley Act of 2002 and the
related
rules and regulations promulgated under such Act (the
"Sarbanes-Oxley Act")
and
the Securities Exchange Act of 1934, as amended and the related
rules
and
regulations promulgated under such Act (the "Exchange Act") and (B)
the
applicable listing and corporate governance rules and regulations
of
NASDAQ. The Company has established and maintains disclosure
controls and
procedures (as defined in Rule 13a-15 under the Exchange Act).
Such
disclosure controls and procedures are designed to ensure that
material
information relating to the Company, including its consolidated
Subsidiaries, is made known to the Company's principal executive
officer
and
its principal financial officer by others within those
entities,
particularly during the periods in which the periodic reports
required
under
11
<PAGE>
the
Exchange Act are being prepared. The Company's disclosure controls
and
procedures are effective for the purposes set forth in Rule 13a-15
under
the
Exchange Act.
(ii) The Company has established and maintains a system of
internal control over financial reporting (as defined in Rule
13a-15 under
the
Exchange Act) ("internal controls"). Such internal controls are
sufficient to provide reasonable assurance regarding the
reliability of the
Company's financial reporting and the preparation of the Company
financial
statements for external purposes in accordance with GAAP. In
connection
with
the Company's Form 10-Q for the quarter ended November 26, 2005,
as
filed with the SEC (the "November 10-Q"), the Company's principal
executive
officer and principal financial officer disclosed, based on their
then-most
recent evaluation of internal control over financial reporting, to
the
Company's auditors and the audit committee of the Company Board (or
persons
performing the equivalent functions): (i) all significant
deficiencies and
material weaknesses in the design or operation of internal control
over
financial reporting which are reasonably likely to adversely affect
the
Company's ability to record, process, summarize and report
financial
information; and (ii) any material fraud that involves management
or other
employees who have a significant role in the Company's internal
control
over
financial reporting. In connection with such evaluation: (i) no
significant deficiencies or material weaknesses in the design or
operation
of
internal control over financial reporting reasonably likely to
adversely
affect the Company's ability to record, process, summarize and
report
financial information were found to exist; nor (ii) was any
material fraud
that
involved management or other employees who had a significant role
in
the
Company's internal control over financial reporting found to
exist.
(d) Except as disclosed in Section 3.06(d) of the Company
Disclosure
Schedule, there are no outstanding loans made by the Company or any
of the
Subsidiaries to any executive officer (as defined in Rule 3b-7
under the
Exchange Act) or director of the Company.
3.07. Company SEC Reports.
(a) The Company previously has made available to Buyer (i) its
Annual
Report on Form 10-K for the year ended May 31, 2005 (the "Company
10-K"), as
filed with the SEC, (ii) all proxy statements relating to the
Company's meetings
of shareholders held or to be held after May 31, 2005 and (iii) all
other
documents filed by the Company with, or furnished by the Company
to, the SEC
under the Exchange Act since January 1, 2003 and prior to the date
of this
Agreement (the "Company SEC Reports"). The Company SEC Reports were
prepared in
accordance with the applicable requirements of the Securities Act
of 1933, as
amended (the "Securities Act"), the Exchange Act, the
Sarbanes-Oxley Act (to the
extent applicable) and, in each case, the rules and regulations
promulgated
thereunder. As of their respective dates, such documents complied
in all
material respects, and all documents filed by the Company with the
SEC (the "SEC
Documents") under the Exchange Act between the date of this
Agreement and the
Closing Date shall comply, in all material respects, with
applicable SEC
requirements and did not, or in the case of documents filed on or
after the date
hereof will not, contain any untrue statement of a material fact or
omit to
state a material fact required to be stated therein or
12
<PAGE>
necessary to make the statements therein, in light of the
circumstances under
which they were made, not misleading. The parties agree that any
failure of the
Company's chief executive officer or chief financial officer to
provide any
certification required to be filed with any document filed with the
SEC shall
constitute an event that has a Company Material Adverse Effect. On
and since
January 1, 2003, the Company has timely filed, and between the date
of this
Agreement and the Closing Date shall timely file, with the SEC all
documents
required to be filed by it under the Exchange Act. No Subsidiary is
required to
file any form, report or other document with the SEC.
(b) The Company has made available to Buyer a complete and
correct
copy of any amendments or modifications which are required to be
filed with the
SEC, but have not yet been filed with the SEC, if any, to (i)
Contracts which
have been filed by the Company with the SEC since January 1, 2003
pursuant to
the Securities Act and Exchange Act and (ii) the Company SEC
Reports filed prior
to the date hereof. The Company has timely responded to all comment
letters and
other correspondence of the SEC relating to the SEC Documents, and
the SEC has
not notified the Company that any final responses are inadequate,
insufficient
or otherwise non-responsive. The Company has provided to Buyer
true, correct and
complete copies of all correspondence between the SEC, on the one
hand, and the
Company and any of the Subsidiaries, on the other, occurring since
January 1,
2003 and prior to the date hereof and shall, reasonably promptly
following the
receipt thereof, provide to Buyer any such correspondence sent or
received after
the date hereof. None of the SEC Documents is the subject of
ongoing SEC review
or outstanding SEC comment.
3.08. Financial Statements; Debt.
(a) The consolidated financial statements contained in the
Company
10-K, the November 10-Q and in the Company's quarterly report on
Form 10-Q for
the quarter ended August 27, 2005 (together with the November 10-Q,
the "Company
10-Qs") have been prepared from, and are in accordance with, the
books and
records of the Company and the Subsidiaries and present fairly, in
all material
respects, the consolidated financial condition and results of
operations of the
Company and the Subsidiaries as of and for the periods presented
therein, all in
conformity with United Stated generally accepted accounting
principles ("GAAP")
applied on a consistent basis, except as otherwise indicated
therein and subject
in the case of the unaudited financial statements included in the
Company 10-Qs,
to normal year-end adjustments, which in the aggregate are not
material, and the
absence of notes in the unaudited financial statements. Since May
31, 2005,
there has been no material change in the Company's accounting
methods or
principles that would be required to be disclosed in the Company's
financial
statements in accordance with GAAP, except as described in the
notes to such
Company financial statements.
(b) Section 3.08(b) of the Company Disclosure Schedule sets forth,
as
of the date hereof, all of the outstanding indebtedness of the
Company and the
Subsidiaries, including, without limitation, (i) the aggregate
principal amount
of borrowings under the revolving credit facility of the Second
Amended and
Restated Loan and Security Agreement dated August 11, 2004, as
amended, among
the Company, Outlook Label Systems, Inc. and Bank of America, N.A.
and (ii)
outstanding capital lease obligations. As of the date hereof there
is not, and
as of the Effective Time there will not be, any indebtedness of the
Company
except as set forth in
13
<PAGE>
Section 3.08(b) of the Company Disclosure Schedule and as may be
incurred in
accordance with Section 5.01(b)(vi)(B) hereof. Neither the Company
nor any
Subsidiary guaranties any indebtedness of any Person other than of
the Company
or any Subsidiary, other than letters of credit, bonds and other
similar
instruments supporting performance obligations, in each case, as
listed on
Section 3.08(b) of the Company Disclosure Schedule.
3.09. Absence of Undisclosed Liabilities. The Company and the
Subsidiaries
have no liabilities of any nature, whether accrued, absolute,
contingent or
otherwise (including, without limitation, liabilities as guarantor
or otherwise
with respect to obligations of others or liabilities for taxes due
or then
accrued or to become due or liabilities under Environmental Laws),
other than
liabilities (i) to the extent set forth in the balance sheet dated
May 31, 2005
(or the notes thereto) included in the Company 10-K (the "Company
Balance
Sheet") or the Company's unaudited balance sheet dated November 26,
2005 (or the
notes thereto) included in the November 10-Q, (ii) incurred since
November 26,
2005 in the ordinary course of business and consistent with past
practice, in
each case in amounts that are not material to the Company and its
Subsidiaries,
taken as a whole, (iii) arising in the ordinary course of business
and
consistent with past practice under the Material Contracts (other
than any
liabilities arising out of or relating to a breach of, default
under or
termination of any Material Contract) or (v) included in Section
3.09 of the
Company Disclosure Schedule.
3.10. Absence of Adverse Changes.
(a) Since May 31, 2005, except as disclosed in the November
10-Q,
there has not been any change, event or circumstance that has had
or would
reasonably be expected to have, individually or in the aggregate, a
Company
Material Adverse Effect.
(b) Except as set forth in Section 3.10(b)(iii) of the Company
Disclosure Schedule or as disclosed in the November 10-Q, there has
not been any
action taken by Company or any Subsidiary during the period from
May 31, 2005
through the date of this Agreement that, if taken during the period
from the
date of this Agreement through the Effective Time, would constitute
a breach of
Section 5.01(b).
3.11. Actions and Proceedings.
(a) There are no outstanding orders, judgments, injunctions,
decrees
or other requirements of any court, arbitrator or Governmental
Authority against
the Company, any Subsidiary or any of their securities, assets or
properties.
Except as listed on Section 3.11(a) of the Company Disclosure
Schedule or
summarized in the Company SEC Reports filed prior to the date
hereof, (i) there
are no Actions pending or, to the knowledge of the Company,
threatened against
the Company, any Subsidiary or any of their respective securities,
assets or
properties; and (ii) to the knowledge of the Company, there are no
Actions
pending or threatened against any of the directors or officers of
the Company or
of any of the Subsidiaries. No such Action has had, or would be
reasonably
expected to have, individually or in the aggregate, a Company
Material Adverse
Effect and, to the knowledge of the Company, there is no fact,
event or
circumstance that reasonably would be expected to give rise to any
Action
against the Company, any Subsidiary, any of their respective
officers or
directors or any of their respective securities,
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<PAGE>
assets or properties that could have, alone or in combination with
any other
fact, event or circumstance, a Company Material Adverse Effect.
(b) There are no pending nor, to the knowledge of the Company,
threatened civil, criminal or administrative actions, suits,
demands, claims,
hearings, notices of violation, investigations, proceedings or
demand letters
relating to any alleged hazard or alleged defect in design,
manufacture,
materials or workmanship, including any failure to warn or alleged
breach of
express or implied warranty or representation, relating to any
product
manufactured, distributed or sold by or on behalf of the Company or
any
Subsidiary, which if adversely determined, would have or would be
reasonably
expected to have, individually or in the aggregate, a Company
Material Adverse
Effect. Except as set forth on Section 3.11(b) of the Company
Disclosure
Schedule, neither the Company nor any Subsidiary is subject to any
pending, or
to the knowledge of the Company threatened, product liability
claims.
3.12. Employee Benefit Plans.
(a) Section 3.12(a) of the Company Disclosure Schedule contains a
true
and complete list of all Employee Plans established or maintained
by the Company
or any Subsidiary, or to which the Company or any Subsidiary makes
contributions
or premium payments, or under which the Company or any Subsidiary
may have any
liability (contingent or otherwise for the making of contributions
or premiums
or the payment of compensation or benefits). The Company has
provided to Buyer
accurate, current and complete copies of each of the following: (1)
where the
material Employee Plan has been reduced to writing, the plan
document, together
with all amendments; (2) where the material Employee Plan has not
been reduced
to writing, a written summary of all material plan terms; (3) all
material trust
agreements, custodial agreements, insurance policies, annuity
contracts,
administration agreements and similar agreements, investment
management or
investment advisory agreements related to the Employee Plans; (4)
summary plan
descriptions and similar summaries, and employee handbooks, (5) in
the case of
any Employee Plan that is intended to be qualified under Section
401(a) of the
Internal Revenue Code of 1986 (as amended, the "Code"), a copy of
the most
recent determination letter from the United States Internal Revenue
Service
("IRS"), (6) in the case of any funding arrangement intended to
qualify as a
VEBA under Section 501(c)(9) of the Code, a copy of the IRS letter
determining
that it so qualifies; (7) in case of any plan for which Forms 5500
are required
to be filed, the three most recently filed Forms 5500 (with
schedules, financial
statements and auditor's opinion attached). Except as provided
under the
Employee Plans, neither the Company nor any Subsidiary has made any
commitments
to any of its employees, former employees or any of their
respective
beneficiaries under which the Company or Subsidiary is obligated to
provide any
material benefit or payment (other than compensation paid in the
ordinary course
of business, consistent with past practice).
(b) Each Employee Plan has been established and administered in
all
material respects (i) in accordance with its terms and (ii) in
compliance with
applicable Laws, including without limitation ERISA and the Code,
and nothing
has occurred that has subjected or could subject the Company or any
Subsidiary
(directly or indirectly) to a penalty under Section 502 of ERISA or
to a tax or
liability under Sections 4972, 4975, 4976, or 4979 of the Code.
15
<PAGE>
(c)
Neither the Company nor any corporate, trust, partnership or
other
entity that would be considered as a single employer with the
Company or any
Subsidiary under Section 4001(1)(b) of ERISA or Sections 414(b),
(c), (m) or (o)
of the Code (each, together with the Company and any Subsidiary, an
"ERISA
Affiliate") has ever maintained or been required to contribute to
any Employee
Plan subject to Title IV of ERISA during the six year period ending
on the last
day of the most recent plan year ended prior to the date of this
Agreement nor
does any ERISA Affiliate have any liability (contingent or
otherwise) with
respect to a "multi employer plan" within the meaning of Section
2(37) or
4001(a)(3) of ERISA. No event has occurred that could subject the
Company or any
Subsidiary to liability under Section 4062, 4063 or 4064 of
ERISA.
(d) Each Employee Plan that is intended to be qualified under
Section
401(a) of the Code has received a favorable determination letter as
to its
qualification, and each trust established in connection with any
Employee Plan
which is intended to be exempt from federal income taxation under
Section 501(a)
of the Code has received a determination letter from the IRS that
it is so
exempt, and no fact or circumstance exists that could reasonably be
expected to
result in the revocation of such letter. No administrative
investigation, audit
or other administrative proceeding by the IRS, Department of Labor
or other
governmental authority is pending or, to the knowledge of the
Company,
threatened.
(e) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been
made timely to
each Pension Plan, and to the extent not due have been
appropriately accrued on
the financial statements of the Company and the Subsidiaries in
accordance with
GAAP. All premiums or other payments which are due have been paid
with respect
to each Welfare Plan or fringe benefit plan, and to the extent that
such amounts
are owed with respect to periods prior to the Closing Date but are
not yet
payable, have been appropriately accrued on the financial
statements of the
Company and the Subsidiaries in accordance with GAAP.
(f) There is no pending or, to the knowledge of the Company,
threatened lawsuit, claim or other controversy relating to any
Employee Plan
that, if adversely determined, individually or in the aggregate
would be
reasonably expected to have a Company Material Adverse Effect.
(g) Other than as required under Section 601 et seq. of ERISA,
no
Employee Plan that is a Welfare Plan provides for benefits or
coverage following
retirement or other termination of employment. Nothing has occurred
with respect
to any Employee Plan described in Section 4980B of the Code that
could subject
the Company or any Subsidiary to a Tax under Section 4980B of the
Code.
(h) Except as disclosed in Section 3.12(h) of the Company
Disclosure
Schedule, (i) there is no contract, plan or arrangement (written or
otherwise)
covering any current or former employee, director or consultant of
the Company
or any Subsidiary that, individually or collectively, would give
rise to the
payment of any amount that would not be deductible pursuant to the
terms of
Section 280G of the Code; and (ii) the transactions
16
<PAGE>
contemplated by this Agreement will not cause or result in the
payment or
acceleration of the vesting or payment of any compensation or
benefits under any
Employee Plan.
(i) No
Employee Plan that is a material nonqualified deferred
compensation plan subject to Section 409A of the Code ("Section
409A") has been
materially modified (as defined under Section 409A) on or after
October 3, 2004
and all such nonqualified deferred compensation plans have been
operated and
administered in good faith compliance with Section 409A since
January 1, 2005.
(j) No Employee Plan owns any shares of Company Common Stock or
other
equity securities of the Company.
(k) Each Employee Plan ever maintained by the Company has been
maintained in compliance with all applicable requirements of
federal and state
securities laws including (without limitation, if applicable) the
requirements
that the offering of interests in such Employee Plan be registered
under the
Securities Act and state "blue sky" laws.
(l) No "partial termination" (within the meaning of Section
411(d)(3)
of the Code) has occurred with respect to any Employee Plan.
3.13. Tax Matters.
(a) For purposes of
this Agreement, the term "Tax" (and, with
correlative meaning, "Taxes" and "Taxable") means any and all
United States
federal, state and local, and all foreign, income, profits,
franchise, gross
receipts, payroll, transfer, sales, employment, social security,
unemployment
insurance, workers' compensation, use, property, excise, value
added, ad
valorem, estimated, stamp, alternative or add-on minimum,
recapture,
environmental, capital, withholding and any other taxes, charges,
duties,
impositions or assessments, together with all interest, penalties
and additions
imposed on or with respect to such amounts, including any liability
for taxes of
a predecessor entity. "Tax Return" (and, with correlative meaning,
"Tax
Returns") means any return, declaration, report, claim for refund,
tax shelter
disclosure statements or information return or statement filed or
required to be
filed with any taxing authority, including any attachments and
schedules thereto
with respect to the Company and the Subsidiaries any amendments
thereof.
(b) All Tax Returns required to be filed by or with respect to
the
Company and the Subsidiaries have been filed or will be filed
within the time
and in the manner prescribed by Law. All such Tax Returns are true,
correct and
complete in all material respects. All Taxes due and payable by the
Company or
the Subsidiaries, whether or not shown on any Tax Return, have been
timely paid
or will be timely paid.
(c) No deficiency for any Tax has been asserted or assessed in
writing
against the Company or any Subsidiary (or, to the knowledge of the
Company or
any Subsidiary, threatened or proposed by any taxing authority),
except for
deficiencies which have been satisfied by payment, settled or been
withdrawn or
which are being contested in good faith and for which the Company
or the
appropriate Subsidiary has set aside adequate reserves in
accordance with GAAP.
There are no Encumbrances with respect to Taxes upon any of the
17
<PAGE>
assets or properties of the Company or the Subsidiaries, other than
with respect
to Taxes not yet due and payable.
(d) There is no audit, examination, investigation or other
proceeding
in respect of Taxes of the Company or Subsidiaries currently
pending, nor is the
Company aware of any information which causes them to believe that
any such
audit, examination, investigation or other proceeding in respect of
any material
Taxes or the Company or the Subsidiaries is threatened.
(e) There
are no outstanding agreements, waivers or arrangements
extending the statutory period of limitation applicable to any
claim for, or the
period for the collection or assessment of, any Taxes due from or
with respect
to the Company or the Subsidiaries for any taxable period. No power
of attorney
granted by or with respect to the Company or the Subsidiaries
relating to Taxes
is currently in force.
(f) The Company and the Subsidiaries have not been and are not
currently in violation (or, with or without notice or lapse of time
or both,
would be in violation) in any material respect of any applicable
Law or
regulation relating to the payment or withholding of Taxes, and all
withholding
and payroll Tax requirements required to be complied with by the
Company and the
Subsidiaries (including requirements to deduct, withhold and pay
over amounts to
any Governmental Authority and to comply with any record keeping
and reporting
requirements in connection with amounts paid or owing to any
employee,
independent contractor, creditor, shareholder or other third party)
have been
satisfied in all material respects.
(g) The Company and the Subsidiaries are not bound by and do not
have
any current obligation under any Tax indemnification, allocation or
sharing
agreement or similar contract or arrangement (other than agreements
among the
Company and Subsidiaries that are listed in Section 3.13(g) of the
Company
Disclosure Schedule).
(h) Except as disclosed in Section 3.13(h) of the Company
Disclosure
Schedule, neither the Company nor any Subsidiary has made or is
obliged to make
any payment that would not be deductible pursuant to Section 162(m)
of the Code.
(i) During the six year period immediately preceding the date of
this
Agreement, neither the Company nor any Subsidiary has distributed
stock of
another corporation, or has had its stock distributed by another
corporation, in
a transaction that was governed, or purported or intended to be
governed, in
whole or in part, by Code Section 355 or 361.
(j) The Company has provided to Buyer complete and correct copies
of
all income and all other material Tax Returns for the Company or
any Subsidiary
with respect to the prior three taxable years (the "Specified
Returns").
(k) Except as set forth in the Specified Returns, neither the
Company
nor any of the Subsidiaries was required to make any disclosure to
the Internal
Revenue Service pursuant to Section 6111 of the Code or Section
1.6011-4 of the
Treasury Regulations promulgated thereunder.
18
<PAGE>
3.14. Employee Relations.
(a) None of the Company, the Subsidiaries, nor the Surviving
Corporation shall be liable, by reason of the Merger, to any of
employees of the
Company or the Subsidiaries for severance pay or any other similar
payments
(other than accrued salary, vacation or sick pay in accordance with
the normal
policies of the Company and the Subsidiaries). True and complete
information as
to the name, current job title and compensation for each of the
last three years
of all current directors, executive officers and key employees of
the Company
and the Subsidiaries has been provided to Buyer. To the knowledge
of the
Company, no executive or key employee has any plan to terminate
employment with
the Company or the Subsidiaries.
(b) The Company and each Subsidiary (i) is in compliance in all
material respects with all applicable foreign, federal, state and
local laws,
rules and regulations respecting employment, employment practices,
terms and
conditions of employment and wages and hours, in each case, with
respect to
employees, (ii) has withheld all amounts required by Law or by
agreement to be
withheld from the wages, salaries and other payments to employees,
(iii) is not
liable for any arrears of wages, salaries, commissions, bonuses or
other direct
compensation for any services performed or amounts required to be
reimbursed to
any employees or consultants or any taxes or any penalty for
failure to comply
with any of the foregoing, and (iv) is not liable for any payment
to any trust
or other fund or to any Governmental Authority, with respect to
unemployment
compensation benefits, social security or other benefits or
obligations for
employees (other than routine payments to be made in the ordinary
course of
business and consistent with past practice), except for matters
that,
individually or in the aggregate, could not reasonably be expected
to result in
material liability to the Company or any Subsidiary.
(c) No work stoppage or labor strike against Company or any
Subsidiary
is pending or, to the knowledge of the Company, threatened. Neither
Company nor
any Subsidiary is involved in or, to the knowledge of the Company,
threatened
with, any labor dispute, grievance, or litigation relating to
labor, safety or
discrimination matters involving any employee, including without
limitation
charges of unfair labor practices or discrimination complaints,
that, if
adversely determined, could reasonably be expected to result in
material
liability to the Company or any Subsidiary. Neither the Company nor
any
Subsidiary has engaged in any unfair labor practices within the
meaning of the
National Labor Relations Act that could reasonably be expected to
result in
material liability to the Company or any Subsidiary. Neither
Company nor any
Subsidiary is presently, nor been in the past, a party to or bound
by any
collective bargaining agreement or union contract with respect to
employees
other than as set forth in Section 3.14(c) of the Company
Disclosure Schedule,
and no collective bargaining agreement is being negotiated with the
Company or
any Subsidiary. To the knowledge of the Company, no union
organizing campaign or
activity with respect to non-union employees of the Company or any
Subsidiary is
ongoing, pending or threatened.
3.15. Property and Assets. The Company and each Subsidiary has good
and
marketable title to, or, in the case of property held under a
license, lease or
other Contract, an Enforceable leasehold interest in, or right to
use, all of
its properties, rights and assets, whether real or personal and
whether tangible
or intangible, including all assets reflected in the Company
Balance Sheet or
acquired after the date of the Company Balance Sheet (except for
such assets
19
<PAGE>
which have been sold or otherwise disposed of since the date of the
Company
Balance Sheet in the ordinary course of business consistent with
past practice
or in a transaction disclosed in the November 10-Q) (collectively,
the
"Assets"). The Assets comprise all of the material assets,
properties and rights
of every type and description, whether real or personal, tangible
or intangible,
used or necessary to the conduct of the business of the Company and
the
Subsidiaries and are adequate to conduct such business. Except as
disclosed in
Section 3.15 of the Company Disclosure Schedule, none of the Assets
is subject
to any Encumbrance other than (i) liens for current Taxes not yet
due and
payable, (ii) such imperfections of title, restrictions,
encroachments, liens
and easements as do not and could not reasonably be expected to
materially
detract from or interfere with the use or value of the properties
subject
thereto or affected thereby, or otherwise materially impair
business operations
involving such properties and (iii) liens securing debt which are
reflected on
the Company Balance Sheet. Except as disclosed in Section 3.15 of
the Company
Disclosure Schedule, there are no written or oral subleases,
licenses, occupancy
agreements or other Contracts that grant the right of use or
occupancy of any
real property owned or leased by Company or any Subsidiary
(collectively, the
"Real Property"), and there is no Person in possession of the Real
Property
other than Company and the Subsidiaries. There is no pending, or,
to the
knowledge of the Company, threatened eminent domain, condemnation
or similar
proceeding affecting any Real Property. The property and equipment
of the
Company and each Subsid
