<PAGE>
EXHIBIT 99.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SALTON, INC.,
SFP MERGER SUB, INC.
AND
APN HOLDING COMPANY, INC.
-----------------------------
DATED AS OF FEBRUARY 7, 2007
-----------------------------
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TABLE OF CONTENTS
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I.
DEFINITIONS
................................................................
2
1.1
Definitions
..........................................................
2
1.2
Interpretation
.......................................................
9
II.
MERGER
.....................................................................
9
2.1
The Merger
...........................................................
9
2.2
Certificate of
Incorporation and Bylaws ..............................
10
2.3
Directors
............................................................
10
2.4
Officers
.............................................................
10
III.
CONVERSION OF SHARES AND OTHER MATTERS
.....................................
11
3.1
Conversion of
Capital Stock ..........................................
11
3.2
Adjustments to
Prevent Dilution ......................................
11
3.3 Exchange of Certificates
.............................................
12
3.4
Treatment of
Strawberry Stock Options and Other Equity Based Awards...
12
3.5
No Further
Rights; Stock Transfer Books ..............................
13
3.6
Tax Consequences
.....................................................
13
3.7
Securities Act
Exemption and Compliance; Registration Rights .........
13
IV.
REPRESENTATIONS AND WARRANTIES OF PARENT
...................................
14
4.1
Due
Organization, Good Standing and Corporate Power ..................
14
4.2
Authorization
and Validity of Agreement ..............................
14
4.3
Consents and
Approvals; No Violations ................................
15
4.4
Information to
be Supplied ...........................................
15
4.5
Capitalization
of Parent and MergerSub ...............................
16
4.6
Absence of
Certain Events ............................................
18
4.7
Litigation
...........................................................
18
4.8
Title to
Properties; Encumbrances ....................................
18
4.9
Strawberry SEC
Reports; Financial Statements .........................
19
4.10
No Undisclosed
Liabilities ...........................................
20
4.11
Compliance with Law
..................................................
20
4.12
Insurance
............................................................
20
4.13
Regulatory Matters
...................................................
21
4.14
Broker's or Finder's
Fee .............................................
21
4.15
Taxes, Tax Returns,
Tax Treatment ....................................
22
4.16
Employee Benefit
Matters .............................................
22
4.17
Intellectual Property
................................................
25
4.18
Environmental
Liability ..............................................
25
4.19
Material Contracts
...................................................
26
4.20
Labor Relations
......................................................
26
4.21
State Takeover Laws
..................................................
26
4.22
Voting Requirements;
Approval; Board Approval ........................
27
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4.23
Opinion of Parent
Financial Advisor ..................................
27
4.24
Transactions with
Related Parties ....................................
27
4.25
Customers
............................................................
28
4.26
Strawberry Rights
Agreements .........................................
28
4.27
MergerSub Formation
..................................................
29
V.
REPRESENTATIONS AND WARRANTIES OF APPLE HOLDCO
.............................
29
5.1
Due
Organization, Good Standing and Corporate Power ..................
29
5.2
Authorization
and Validity of Agreement ..............................
29
5.3
Consents and
Approvals; No Violations ................................
30
5.4
Information to
be Supplied ...........................................
30
5.5
Capitalization
of Apple Holdco and Apple .............................
31
5.6
Absence of
Certain Events ............................................
32
5.7
Litigation
...........................................................
32
5.8
Title to
Properties; Encumbrances ....................................
32
5.9
Apple SEC
Reports; Financial Statements ..............................
33
5.10
No Undisclosed
Liabilities. ..........................................
34
5.11
Compliance with Law
..................................................
34
5.12
Insurance
............................................................
34
5.13
Regulatory Matters
...................................................
35
5.14
Broker's or Finder's
Fee .............................................
35
5.15
Taxes, Tax Returns,
Tax Treatment ....................................
36
5.16
Employee Benefit
Matters .............................................
36
5.17
Intellectual Property
................................................
39
5.18
Environmental
Liability ..............................................
39
5.19
Material Contracts
...................................................
40
5.20
Labor Relations
......................................................
40
5.21
State Takeover Laws
..................................................
40
5.22
Voting Requirements;
Approval; Board Approval ........................
41
5.23
Transactions with
Related Parties ....................................
41
5.24
Customers
............................................................
41
5.25
Apple Holdco
.........................................................
42
VI.
COVENANTS
..................................................................
42
6.1
Covenants of
Parent ..................................................
42
6.2
Covenants of
Apple Holdco ............................................
45
6.3
Antitrust
Clearance ..................................................
47
6.4
Efforts to Close
.....................................................
48
6.5
Confidentiality
......................................................
49
6.6
Access
...............................................................
49
6.7
Public
Announcements .................................................
49
6.8
Board
Recommendation; Strawberry Stockholders Meeting ................
50
6.9
Preparation of
Proxy Statement and Additional Filings ................
50
6.10
No Solicitation; Other
Offers ........................................
51
6.11
Notification of
Certain Matters ......................................
53
6.12
Fees and Expenses
....................................................
54
6.13
Directors' and
Officers' Indemnification and Insurance ...............
54
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6.14
Financing
............................................................
55
6.15
Litigation
...........................................................
57
6.16
Director Resignations;
Appointments ..................................
58
6.17
Post Closing
Governance of Parent ....................................
58
6.18
Apple Deregistration
.................................................
58
6.19
Transaction Documents
................................................
58
VII. CONDITIONS TO THE
MERGER.....................................................
58
7.1
Conditions to
the Merger .............................................
58
7.2
Conditions to
the Obligations of Apple Holdco ........................
59
7.3
Conditions to
the Obligations of Parent and MergerSub ................
61
VIII. TERMINATION AND
ABANDONMENT ................................................
62
8.1
Termination
..........................................................
62
8.2
Effect of
Termination ................................................
63
8.3
Fees and
Expenses ....................................................
64
IX.
MISCELLANEOUS
..............................................................
65
9.1
Nonsurvival of
Representations, Warranties and Covenants .............
65
9.2
Amendment and
Modification ...........................................
65
9.3
Waiver of
Compliance .................................................
65
9.4
Notices
..............................................................
66
9.5
Third Party
Beneficiaries ............................................
67
9.6
Successors and
Assigns ...............................................
67
9.7
Severability
.........................................................
67
9.8
Governing Law
........................................................
67
9.9
Submission to
Jurisdiction; Waivers ..................................
67
9.10
Specific Performance
.................................................
68
9.11
Counterparts
.........................................................
68
9.12
Entire Agreement
.....................................................
68
9.13
Waiver of Jury Trial
.................................................
68
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EXHIBITS
Exhibit A
Amended Strawberry Certificate of Incorporation
Exhibit B
Commitment Agreement
Exhibit C
Surviving Corporation Certificate of Incorporation
Exhibit D
Surviving Corporation Bylaws
Exhibit E
Registration Rights Agreement
Exhibit F
Apple Holdco Stockholder Agreement
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<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS
AGREEMENT AND PLAN OF MERGER (this "Agreement"), is dated as of
February 7, 2007, by and among Salton, Inc., a Delaware corporation
("Parent"),
SFP Merger Sub, Inc., a Delaware corporation ("MergerSub") and a
wholly owned
direct subsidiary of Parent, and APN Holding Company, Inc., a
Delaware
corporation ("Apple Holdco") and the direct parent of Applica
Incorporated, a
Florida corporation ("Apple").
RECITALS
A. Each of
the boards of directors of Parent (acting upon the unanimous
recommendation of the Special Committee), MergerSub and Apple
Holdco has
approved and declared advisable the business combination
transaction
contemplated by this Agreement in which MergerSub will merge with
and into Apple
Holdco (the "Merger"), with Apple Holdco being the surviving
corporation (as
such, the "Surviving Corporation"), all on the terms and subject to
the
conditions set forth in this Agreement.
B. By
virtue of the Merger, all of the issued and outstanding shares
of
common stock, par value $0.01 per share, of Apple Holdco (the
"Apple Holdco
Common Stock") will be converted into the right to receive fully
paid and non
assessable shares of common stock, par value $0.01 per share, of
Parent (the
"Strawberry Common Stock").
C.
Parent's board of directors (acting upon the unanimous
recommendation
of the Special Committee) has approved and has resolved to
recommend to Parent's
stockholders that they approve (i) the issuance of Strawberry
Common Stock to be
issued to the stockholders of Apple Holdco in connection with the
Merger (the
"Share Issuance") and (ii) an amendment of the Certificate of
Incorporation of
Parent to be effected contemporaneously with the consummation of
the Merger such
that, after giving effect thereto, the Certificate of Incorporation
of Parent
shall be substantially in the form attached hereto as Exhibit A
(the "Strawberry
Charter Amendment").
D.
Concurrently with the execution of this Agreement, and as a
condition
to the willingness of Parent to enter into this Agreement, Apple
Holdco and each
of the Apple Holdco Stockholders will enter into a commitment
agreement in the
form attached hereto as Exhibit B, pursuant to which the Apple
Holdco
Stockholders will, among other things, agree (i) to execute and
deliver, and not
to revoke or modify, the unanimous written consent of the Apple
Holdco
Stockholders approving the Transactions and (ii) not to transfer
any of their
shares of Apple Holdco Common Stock (the "Commitment
Agreement");
E.
Contemporaneously with, and as a condition to Closing, Parent and
each
of the Apple Holdco Stockholders will enter into an agreement in
the form
attached hereto as Exhibit F, pursuant to which the Apple Holdco
Stockholders
will agree to restrictions on certain activities in respect of the
shares of
Strawberry Common Stock issued in the Merger, corporate governance
and other
related corporate matters (the "Apple Holdco Stockholder
Agreement"); and
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F. For
federal income tax purposes, the Merger will constitute a
reorganization within the meaning of Section 368(a)(1)(A) and
368(a)(2)(E) of
the Code and the exchange of Apple Holdco Common Stock for
Strawberry Common
Stock pursuant to the Merger will constitute an exchange of
securities in
pursuance of a plan of reorganization within the meaning of Section
354(a) of
the Code.
Accordingly, the parties agree as follows:
I. DEFINITIONS
1.1
Definitions. (a) In addition to the terms defined elsewhere herein,
as
used in this Agreement, the following terms have the meanings
specified below
when used in this Agreement with initial capital letters:
"Action"
means any controversy, claim, action, litigation, arbitration,
mediation or any other proceeding by or before any Governmental
Entity,
arbitrator, mediator or other Person acting in a dispute resolution
capacity, or
any investigation, subpoena or demand preliminary to any of the
foregoing.
"Adverse
Recommendation Change" means either (i) any failure by the
board
of directors of Parent to make, or any withdrawal, qualification,
amendment or
modification in a manner adverse to Apple Holdco of, the Strawberry
Board
Recommendation or (ii) any approval, endorsement or recommendation
by Parent's
board of directors of a Strawberry Competing Transaction.
"Affiliate" means, with respect to a Person, another Person that
directly,
or indirectly through one or more intermediaries, controls, or is
controlled by,
or is under common control with, such Person. For purposes of this
Agreement,
(i) Apple Holdco and its Subsidiaries shall not be considered
Affiliates of
Parent, MergerSub or their respective Affiliates and (ii) Parent,
MergerSub and
their respective Affiliates shall not be considered Affiliates of
Apple Holdco
or any of its Subsidiaries.
"Antitrust
Laws" means the Sherman Antitrust Act, as amended, the Clayton
Act of 1914, as amended, the HSR Act, the Federal Trade Commission
Act of 1914,
as amended, and all other Laws and Orders that are designed or
intended to
prohibit, restrict or regulate actions having the purpose or effect
of
monopolization or restraint of trade.
"Apple
Confidentiality Agreement" means the confidentiality agreement
entered into by and among Apple and Parent, dated as of November
11, 2005, as
the same may be amended from time to time in accordance with its
terms.
"Apple
Material Adverse Effect" means a material adverse effect on (i)
the
business, financial condition or results of operations of Apple
Holdco and its
Subsidiaries taken as a whole or (ii) the ability of Apple Holdco
to consummate
the Merger or to perform its obligations under this Agreement on a
timely basis
or to consummate the Transactions on a timely basis; provided,
however, that in
no event shall
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any of the following be deemed to constitute an Apple Material
Adverse Effect:
any event, circumstance, change or effect resulting from or
relating to (i) a
change in general political, economic or financial market
conditions, (ii)
changes affecting the industries generally in which Apple or its
Subsidiaries
conduct business, (iii) seasonal fluctuations in the business of
Apple and its
Subsidiaries, (iv) any acts of terrorism or war or (v) compliance
with the terms
of, or the taking of any action required by, this Agreement; except
in the case
of each of clauses (i), (ii), (iii) and (iv) to the extent such
event,
circumstance, change or effect has had a disproportionate effect on
Apple and
its Subsidiaries as compared to other Persons in the industry in
which Apple and
its Subsidiaries conduct their business.
"Apple
Holdco Stockholders" means the holders of record of Apple
Holdco
Common Stock.
"Authorization" means any legally required consent or Permit of or
from,
or declaration or filing with, any Governmental Entity, including
any legally
required filing with any Governmental Entity and the subsequent
expiration of
any legally required waiting period under any Antitrust Laws.
"Business
Day" means any day on which commercial banks in New York, New
York are not required or authorized to be closed by Law or
executive order.
"Code"
means the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreements" means the Apple Confidentiality
Agreement and
the Harbinger Confidentiality Agreement.
"Contract"
means any legally binding instrument or legal obligation of any
kind, whether written or oral.
"control"
(including the terms "controlled by" and "under common control
with") means the possession, directly or indirectly, of the power
to direct or
cause the direction of the management and policies of a Person,
whether through
the ownership of voting securities, as a trustee or executor, by
Contract or
credit arrangement or otherwise.
"Encumbrance" means any lien, security interest, pledge, mortgage,
deed of
trust, charge, option or other encumbrance attaching to title to
any tangible or
intangible property or right.
"Environment" means any land, soil, substrata, groundwater, surface
water,
drinking water, sediment, air or terrestrial or aquatic biota.
"Environmental Laws" means all Laws and Orders in effect on and
after the
date hereof relating to the protection of human health and the
Environment,
including Laws relating to Releases or threatened Releases of
Hazardous
Materials, or otherwise relating to the manufacture, processing,
distribution,
use, treatment, storage, disposal, transport or handling of
Hazardous Materials.
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"ERISA"
means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder.
"Exchange
Act" means the Securities Exchange Act of 1934, as amended.
"Expenses"
means all out of pocket costs and expenses (including all fees
and expenses of counsel, accountants, investment bankers, experts
and
consultants to a party to this Agreement or such party's
Affiliates) incurred at
or prior to the Effective Time by a party to this Agreement or on
its behalf in
connection with or related to the authorization, preparation,
negotiation,
execution or performance of this Agreement and the Transactions,
excluding all
costs and expenses that constitute ongoing business expenses (as
opposed to
Transaction related expenses) of such party, or such party's
Affiliates,
including, salary and benefits of a party's, or such party's
Affiliates',
employees or similar overhead costs that a party, or such party's
Affiliates,
would have regardless of pursuit of the Transactions.
"GAAP"
means United States generally accepted accounting principles as
in
effect from time to time, consistently applied.
"Governmental Entity" means any arbitrator, court, judicial,
legislative,
administrative or regulatory agency, commission, department, board,
bureau, body
or other governmental authority or instrumentality or any Person
exercising
executive, legislative, judicial, regulatory or administrative
functions of or
pertaining to government, whether foreign, federal, state or
local.
"Harbinger
Confidentiality Agreement" means the confidentiality agreement
entered into by and between Harbinger Capital Partners Master Fund
I, Ltd. and
Parent, dated as of October 25, 2006 an amended November 3, 2006,
as the same
may be amended from time to time in accordance with its terms.
"Hazardous
Materials" means any material, substance, chemical, waste,
hazardous waste, pollutant, contaminant or hazardous or toxic
substance as to
which liabilities, restrictions or standards of conduct are imposed
pursuant to
any Environmental Laws, including asbestos, formaldehyde,
polychlorinated
biphenyls, lead based paint, radioactive materials, waste oil and
other
petroleum products.
"IRS"
means the Internal Revenue Service.
"Indebtedness" means without duplication, (i) indebtedness for
borrowed
money (excluding any interest thereon), secured or unsecured, (ii)
obligations
under conditional sale or other title retention Contracts relating
to purchased
property, (iii) capitalized lease obligations, (iv) obligations
under interest
rate cap, swap, collar or similar transactions or currency hedging,
transactions
and (v) guarantees of any Indebtedness of the foregoing of any
other Person.
"Knowledge" (and any variation thereof) means (i) in the case of
Apple
Holdco, the actual knowledge after due inquiry of the individuals
listed on
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Section 1.1(a)(i) of the Apple Disclosure Schedule as of the date
of the
applicable representation or warranty, and (ii) in the case of
Parent, the
actual knowledge after due inquiry of the individuals listed on
Section
1.1(a)(ii) of the Strawberry Disclosure Schedule as of the date of
the
applicable representation or warranty.
"Law"
means any statute, law, ordinance, rule or regulation of any
Governmental Entity.
"Merger
Consideration" shall mean 75,048,737 fully paid and
non-assessable
shares of Strawberry Common Stock; provided, however, that for each
share of
Strawberry Common Stock issued upon any exercise of the Common
Stock Purchase
Warrant, dated August 15, 2006, the Merger Consideration shall be
increased by
an additional 4.8823529 shares of fully paid and non-assessable
shares of
Strawberry Common Stock.
"MergerSub
Common Stock" means the MergerSub Common Stock, par value $0.01
per share.
"NYSE"
means the New York Stock Exchange.
"NYSE
Compliance Plan" means Parent's Presentation to the NYSE, dated
July
3, 2006, together with the letter agreement between the NYSE and
Parent, dated
August 18, 2006 and any subsequent correspondence from the NYSE to
Parent
related thereto.
"Order"
means any order, judgment, ruling, decree, writ, permit,
license
or other requirement of any Governmental Entity.
"Permit"
means any permit, approval, license, authorization,
certificate,
right, exemption or Order from any Governmental Entity.
"Person"
means any individual or legal entity, including any
partnership,
joint venture, corporation, trust, unincorporated organization,
limited
liability company or Governmental Entity.
"Release"
means any release, spill, emission, leaking, pumping,
injection,
deposit, disposal, discharge, dispersal, leaching or migration into
the indoor
or outdoor Environment, including the movement of Hazardous
Materials through
ambient air, soil, surface water, sewer system, groundwater,
wetlands, or land
surface strata.
"SEC"
means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A
Certificate of Designation" shall mean the Certificate of
Designation of Series A Voting Convertible Preferred Stock of the
Company.
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"Series C
Certificate of Designation" shall mean the Certificate of
Designation of Series C Preferred Stock of the Company.
"Special
Committee" means a committee of Parent's board of directors,
the
members of which are not affiliated with Parent and are not members
of Parent's
management, formed for the reasons set forth in the resolution
establishing such
committee.
"Strawberry Material Adverse Effect" means a material adverse
effect on
(i) the business, financial condition or results of operations of
Parent and its
Subsidiaries taken as a whole or (ii) the ability of Parent and/or
Merger Sub to
consummate the Merger or to perform their respective obligations
under this
Agreement on a timely basis or to consummate the Transactions on a
timely basis;
provided, however, that in no event shall any of the following be
deemed to
constitute a Strawberry Material Adverse Effect: any event,
circumstance, change
or effect resulting from or relating to (i) a change in general
political,
economic or financial market conditions, (ii) changes affecting the
industries
generally in which Parent or its Subsidiaries conduct business,
(iii) seasonal
fluctuations in the business of Parent and its Subsidiaries, (iv)
any acts of
terrorism or war, (v) compliance with the terms of, or the taking
of any action
required by, this Agreement or (vi) any matter listed on Schedule
1.1 (provided
that the underlying causes of such matters shall not be excluded
from the
determination of a Strawberry Material Adverse Effect); except in
the case of
each of clauses (i), (ii), (iii) and (iv) to the extent such
event,
circumstance, change or effect has had a disproportionate effect on
Parent and
its Subsidiaries as compared to other Persons in the industry in
which Parent
and its Subsidiaries conduct their business.
"Strawberry Option Plans" means (i) the Salton/Maxim Housewares,
Inc.
Stock Option Plan, (ii) the Salton/Maxim Housewares, Inc.
Non-Employee Directors
Stock Option Plan, (iii) the Salton/Maxim Housewares, Inc. 1995
Employee Stock
Option Plan, (iv) the Salton/Maxim Housewares, Inc. 1998 Stock
Option Plan, (v)
the Salton, Inc. 1999 Employee Stock Option Plan, (vi) the Salton,
Inc. 2001
Employee Stock Option Plan, and (vii) the Salton, Inc. 2002 Stock
Option Plan.
"Strawberry Stockholders" means the holders of record of Strawberry
Common
Stock.
"Subsidiary" of any Person means any Person whose financial
condition is
required to be consolidated with the financial condition of the
first Person in
the preparation of the first Person's financial statements under
GAAP.
"Tax"
means (i) any federal, state, local or foreign income, excise,
gross
receipts, gross income, ad valorem, profits, gains, property,
capital, sales,
transfer, use, payroll, employment, severance, withholding,
intangibles,
franchise, backup withholding, or other tax, charge, levy, duty or
like
assessment imposed by a Tax Authority together with all penalties
and additions
and interest thereon and (ii) any liability for Taxes described in
clause (i)
under Treasury Regulation Section 1.1502 6 (or any similar
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provision of state, local or foreign Law) or pursuant to agreement,
successor
liability or otherwise.
"Tax
Authority" means, with respect to any Tax, the governmental entity
or
political subdivision thereof that imposes such Tax and agency (if
any) charged
with the collection of such Tax for such entity or subdivision.
"Tax
Return" means a report, return, statement or other information
(including any attached schedules or any amendments to such report,
return or
other information) required to be supplied to or filed with a Tax
Authority with
respect to any Tax, including an information return, claim for
refund, amended
return or declaration of estimated Tax.
"Transaction Documents" means this Agreement, the Commitment
Agreement and
the Apple Holdco Stockholder Agreement.
"Transactions" means the Merger, the Share Issuance, the
Strawberry
Charter Amendment and the other transactions contemplated by this
Agreement.
(b) The following terms have the meanings specified in the
indicated
Sections:
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TERM
SECTION
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Acquiring Person
............................................................
4.26(b)
ACT
.........................................................................
3.7(b)
Additional Filings
..........................................................
6.9(a)
Agreement
...................................................................
Preamble
Alternate Financing
.........................................................
6.14(c)
Apple
.......................................................................
Preamble
Apple 2006 Financial Statements
............................................. 6.9(d)
Apple Benefit Plans
.........................................................
5.16(a)
Apple Certificates
..........................................................
3.1(a)
Apple Disclosure Schedule
................................................... 4.27
Apple ERISA Affiliate
.......................................................
5.16(a)
Apple Financial Statements
.................................................. 5.9(b)
Apple Foreign Plan
..........................................................
5.16(a)
Apple Holdco
................................................................
Preamble
Apple Holdco Common Stock
................................................... Recitals
Apple Holdco Equity Interests
............................................... 5.5(a)
Apple Holdco Stockholder Agreement
.......................................... Recitals
Apple Holdco Stockholder Commitment
......................................... 6.14(b)
Apple Intellectual Property
................................................. 5.17
Apple Merger Agreement
...................................................... 5.25
Apple SEC Reports
...........................................................
5.9(a)
ARC Notice
..................................................................
6.10(e)
Certificate of Merger
.......................................................
2.1
Closing
.....................................................................
2.1
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Closing Date
................................................................
2.1
Commitment Agreement
........................................................
Recitals
Contingent Workers
..........................................................
4.16(e)
DGCL
........................................................................
2.1
Distribution Date
...........................................................
4.26(b)
Effective Time
..............................................................
2.1
Financing
...................................................................
6.14(a)
Financing Commitment Deadline
............................................... 6.14(a)
Financing Commitments
.......................................................
6.14(a)
FIRPTA
......................................................................
7.2(f)
HSR Act
.....................................................................
4.3
Indemnified Parties
.........................................................
6.13(a)
Indemnifying Party
..........................................................
6.13(a)
Maximum Premium
.............................................................
6.13(b)
Measurement Date
............................................................
IV
Merger
......................................................................
Recitals
MergerSub
...................................................................
Preamble
Outside Date
................................................................
8.1(e)
Parent
......................................................................
Preamble
Proxy Statement
.............................................................
4.3
Redemptions
.................................................................
7.2(k)
Registration Rights Agreement
............................................... 3.7(c)
Reverse Termination Fee
..................................................... 8.3(b)
Series A Redemption
.........................................................
7.2(k)
Share Issuance
..............................................................
Recitals
Shares Acquisition Date
..................................................... 4.26(b)
Strawberry Benefit Plans
.................................................... 4.16(a)
Strawberry Board Recommendation
............................................. 4.22(c)
Strawberry Certificates
..................................................... 3.1(a)
Strawberry Charter Amendment
................................................ Recitals
Strawberry Common Stock
..................................................... Recitals
Strawberry Competing Transaction
............................................ 6.10(b)
Strawberry Disclosure Schedule
.............................................. IV
Strawberry Equity Interests
................................................. 4.5(a)
Strawberry ERISA Affiliate
.................................................. 4.16(a)
Strawberry Financial Statements
............................................. 4.9(b)
Strawberry Foreign Plan
..................................................... 4.16(a)
Strawberry Intellectual Property
............................................ 4.17
Strawberry Options
..........................................................
4.5(a)
Strawberry Preferred
........................................................
4.5(a)
Strawberry Restricted Share
................................................. 3.4
Strawberry Rights
...........................................................
4.5(a)
Strawberry Rights Agreement
................................................. 4.5(a)
Strawberry SEC Reports
...................................................... 4.9(a)
Strawberry Series A Preferred
............................................... 4.5(a)
</TABLE>
-8-
<PAGE>
<TABLE>
<CAPTION>
TERM
SECTION
----
-------
<S>
<C>
Strawberry Series B Preferred
............................................... 4.5(a)
Strawberry Series C Preferred
............................................... 4.5(a)
Strawberry Stock
............................................................
4.5(a)
Strawberry Stockholder Approval
............................................. 4.22(a)
Strawberry Stockholders Meeting
............................................. 6.8
Strawberry Superior Proposal
................................................ 6.10(f)
Strawberry Warrants
.........................................................
4.5(a)
Surviving Corporation
.......................................................
Recitals
Triggering Event
............................................................
4.26(b)
</TABLE>
1.2
Interpretation. (a) When a reference is made in this Agreement
to
Articles, Sections, Exhibits or Schedules, such reference will be
to an Article
or Section or Exhibit or Schedule to this Agreement unless
otherwise indicated.
The table of contents and headings contained in this Agreement are
for reference
purposes only and will 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 will be deemed to be followed by the words
"without
limitation." Unless the context otherwise requires, (i) "or" is
disjunctive but
not necessarily exclusive, (ii) words in the singular include the
plural and
vice versa, (iii) the use in this Agreement of a pronoun in
reference to a party
hereto includes the masculine, feminine or neuter, as the context
may require,
and (iv) unless otherwise defined herein, terms used herein which
are defined in
GAAP have the meanings ascribed to them therein. This Agreement
will not be
interpreted or construed to require any Person to take any action,
or fail to
take any action, that would violate any applicable Law. The Apple
Disclosure
Schedule, the Strawberry Disclosure Schedule, as well as all other
Schedules and
all Exhibits hereto, will be deemed part of this Agreement and
included in any
reference to this Agreement. Notwithstanding anything in this
Agreement to the
contrary, the mere inclusion of an item in any Schedule or Exhibit
hereto as an
exception to a representation or warranty will not be deemed an
admission that
such item represents a material exception or material fact, event
or
circumstance or that such item has had or would, individually or in
the
aggregate, have a Strawberry Material Adverse Effect or an Apple
Material
Adverse Effect, as the case may be.
(b) The
parties have participated jointly in negotiating and drafting
this
Agreement. In the event that an ambiguity or a question of intent
or
interpretation arises, this Agreement will be construed as if
drafted jointly by
the parties, and no presumption or burden of proof will arise
favoring or
disfavoring any party by virtue of the authorship of any provision
of this
Agreement.
II. MERGER
2.1 The
Merger. (a) On the terms and subject to the conditions of this
Agreement and in accordance with the provisions of the General
Corporation Law
of the State of Delaware (the "DGCL"), at the Effective Time,
MergerSub will
merge with and
-9-
<PAGE>
into Apple Holdco. Following the Merger, Apple Holdco will continue
as the
Surviving Corporation and the separate corporate existence of
MergerSub will
cease.
(b) On the
terms and subject to the conditions of this Agreement, the
closing of the Merger (the "Closing") will take place at the
offices of Paul,
Weiss, Rifkind, Wharton & Garrison LLP, 1285 Avenue of the
Americas, New York,
New York at 10:00 a.m., New York City time, as soon as practicable,
but in no
event later than the third Business Day, following satisfaction or
waiver of the
conditions set forth in Article VII hereof (other than those
conditions that by
their nature or pursuant to the terms of this Agreement are to be
satisfied or
waived at or immediately prior to the Closing, but subject to the
satisfaction
or, where permitted, the waiver of those conditions), or at such
other date,
time or place as Parent and Apple Holdco may agree. The date on
which the
Closing occurs is referred to as the "Closing Date."
(c) The
Merger will become effective as set forth in the certificate of
merger relating thereto (the "Certificate of Merger") that will be
filed on the
Closing Date with the Secretary of State of the State of Delaware
in accordance
with Section 251 of the DGCL and that will state, unless the
parties otherwise
agree, that the effective time of the Merger will occur upon
filing. The time
that the Merger becomes effective in accordance with Section 251 of
the DGCL is
referred to in this Agreement as the "Effective Time."
(d) The
Merger will have the effects set forth in Section 259 of the
DGCL.
Without limiting the generality or effect of the foregoing, as of
the Effective
Time, all properties, rights, privileges, powers and franchises of
MergerSub and
Apple Holdco will vest in the Surviving Corporation and all debts,
liabilities
and duties of MergerSub and Apple Holdco will become debts,
liabilities and
duties of the Surviving Corporation.
2.2
Certificate of Incorporation and Bylaws. The certificate of
incorporation and the bylaws of Apple Holdco as in effect
immediately prior to
the Effective Time, attached as Exhibit C and D, respectively, will
be the
certificate of incorporation and bylaws of the Surviving
Corporation at the
Effective Time until thereafter amended further in compliance with
the DGCL.
2.3
Directors. Apple Holdco shall take all requisite action so that,
at
the Effective Time, the board of directors of the Surviving
Corporation will
consist of individuals identified or designated by Apple Holdco who
will hold
office until their respective successors are duly elected or
appointed and
qualified, or their earlier death, resignation or removal, in
accordance with
the certificate of incorporation and bylaws of the Surviving
Corporation and the
DGCL.
2.4
Officers. At the Effective Time, the officers of Apple Holdco
shall
resign and the board of directors of the Surviving Corporation
shall appoint
officers of the Surviving Corporation to hold office until their
respective
successors are duly appointed and qualified, or their earlier
death, resignation
or removal, in accordance with the certificate of incorporation and
bylaws of
the Surviving Corporation and the DGCL.
-10-
<PAGE>
III. CONVERSION OF SHARES AND OTHER MATTERS
3.1
Conversion of Capital Stock. At the Effective Time, by virtue of
the
Merger and without any action on the part of Parent, MergerSub,
Apple Holdco or
the holders of the following securities:
(a) Conversion of Apple Holdco Common Stock. Each share of
Apple
Holdco Common Stock issued and outstanding immediately prior to the
Effective
Time shall be converted into the right to receive an amount of
fully paid and
non assessable shares of Strawberry Common Stock equal to the
quotient of (x)
the Merger Consideration divided by (y) the number of Shares of
Apple Holdco
Common Stock issued and outstanding immediately prior to the
Effective Time,
subject to (A) the anti dilution adjustments provided in Section
3.2 and (B) the
payment of cash in lieu of fractional shares of Parent Common Stock
as provided
in Section 3.1(c). All shares of Apple Holdco Common Stock that
have been so
converted into the right to receive shares of Strawberry Common
Stock shall be
canceled automatically and shall cease to exist, and the holders
of
certificates, which immediately prior to the Effective Time
represented those
shares ("Apple Certificates"), shall cease to have any rights with
respect to
those shares, other than the right to receive certificates
representing shares
of Strawberry Common Stock ("Strawberry Certificates") and cash in
lieu of
fractional shares of Parent Common Stock as provided in Section
3.1(c) upon
surrender of Apple Certificates in accordance with Section
3.3(a).
(b) Conversion of MergerSub Capital Stock. Each share of
MergerSub
Common Stock issued and outstanding immediately prior to the
Effective Time
shall, by virtue of the Merger and without any action on the part
of Parent,
MergerSub or Apple Holdco, be converted into one share of common
stock of the
Surviving Corporation.
(c) Fractional Shares. No fractional shares of Strawberry
Common
Stock shall be issued in connection with the Merger, and no
certificates or
scrip for any such fractional shares shall be issued. Any Apple
Holdco
Stockholder who would otherwise be entitled to receive a fraction
of a share of
Strawberry Common Stock (after aggregating all fractional shares of
Strawberry
Common Stock issuable to such holder) shall, in lieu of such
fraction of a share
and upon surrender of such holder's certificates that formerly
evidenced shares
of Apple Holdco Common Stock, be paid in cash the dollar amount
(rounded to the
nearest whole cent), without interest, determined by multiplying
such fraction
by the closing price of a share of Strawberry Common Stock on the
NYSE on the
date that the Merger becomes effective.
3.2
Adjustments to Prevent Dilution. If, after the date hereof and
prior
to the Effective Time, Parent (i) declares a stock dividend or
other
distribution payable in shares of Strawberry Common Stock or
securities
convertible or exchangeable into or exercisable for shares of
Strawberry Common
Stock or (ii) effects a stock split (including a reverse stock
split),
reclassification, combination or other similar change with respect
to the
Strawberry Common Stock, then the Merger Consideration shall be
equitably
-11-
<PAGE>
adjusted to eliminate the effects of that stock dividend,
distribution, stock
split, reclassification, combination or other change.
3.3
Exchange of Certificates.
(a) Exchange Procedures. At the Closing, in exchange for
Strawberry
Certificates and cash in lieu of fractional shares pursuant to
Section 3.1(c),
each Apple Holdco Stockholder shall deliver to Parent Apple
Certificates
representing the Apple Holdco Common Stock owned by such holder,
duly endorsed
in blank or accompanied by stock powers duly endorsed in blank in
proper form
for transfer. Upon surrender to Parent of an Apple Certificate for
cancellation,
the holder of such Apple Certificate shall be entitled to receive
in exchange
therefor a certificate representing that number of whole shares of
Strawberry
Common Stock (after taking into account all Apple Certificates
surrendered by
such holder) to which such holder is entitled pursuant to Section
3.1(a) and
payment in lieu of fractional shares to which such holder is
entitled pursuant
to Section 3.1(c), and the Apple Certificate so surrendered shall
forthwith be
cancelled. Until surrendered as contemplated by this Section
3.3(a), each Apple
Certificate shall be deemed at all times after the Effective Time
to represent
only the right to receive upon such surrender shares of Strawberry
Common Stock
pursuant to Section 3.1(a) and cash in lieu of fractional shares
pursuant to
Section 3.1(c). No interest shall be paid or will accrue on any
cash payable in
lieu of fractional shares to Apple Holdco Stockholders pursuant to
the
provisions of this Article III.
(b) Withholding Rights. Each of Parent and the Surviving
Company
shall be entitled to deduct and withhold from any consideration
otherwise
payable pursuant to this Agreement to any Apple Holdco Stockholder
such amounts
as it is required to deduct and withhold 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 Parent
or the Surviving Company, as the case may be, such withheld amounts
shall be
treated for all purposes of this Agreement as having been paid to
the Apple
Holdco Stockholder in respect of which such deduction and
withholding was made
by Parent or the Surviving Company, as the case may be.
(c) Lost, Stolen or Damaged Certificates. If any Apple
Certificate
shall have been lost, stolen, defaced or destroyed, Parent may, in
its
reasonable discretion and as a condition to the issuance of any
Strawberry
Certificate, require the owner of such lost, stolen, defaced or
destroyed Apple
Certificate to make an affidavit of that fact and provide an
indemnity against
any claim that may be made against it or the Surviving Company with
respect to
such Apple Certificate.
3.4
Treatment of Strawberry Stock Options and Other Equity Based
Awards.
The Strawberry Option Plans shall remain outstanding and governed
by the terms
of the existing Strawberry Option Plans. Notwithstanding anything
to the
contrary in this Agreement, each share of Strawberry Common Stock
which is
unvested or is subject to any conditions or restrictions under any
applicable
restricted stock agreement or other Contract (a "Strawberry
Restricted Share")
shall continue to be governed by the
-12-
<PAGE>
terms of the restrictions applicable to such Strawberry Restricted
Share and the
restrictions shall not lapse as a result of the transactions
contemplated by
this Agreement.
3.5 No
Further Rights; Stock Transfer Books. At the Effective Time,
the
stock transfer books of Apple Holdco shall be closed, and there
shall be no
further registration of transfers of Apple Holdco Common Stock
issued and
outstanding immediately prior to the Effective Time thereafter on
the records of
Parent. From and after the Effective Time, the Apple Holdco
Stockholders shall
cease to have any rights with respect to any shares of Apple Holdco
Common Stock
outstanding immediately prior to the Effective Time, except as
otherwise
provided in this Agreement or by Law. On or after the Effective
Time, any Apple
Certificates presented to Parent for any reason shall be canceled
against
delivery of the consideration to which the holders thereof are
entitled pursuant
to Section 3.1(a) and Section 3.1(c), without interest.
3.6 Tax
Consequences. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of
Section 368 of the
Code. The parties hereby adopt this Agreement as a "plan of
reorganization"
within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States
Treasury Regulations.
3.7
Securities Act Exemption and Compliance; Registration Rights.
(a) Private Placement. The Strawberry Common Stock to be issued
pursuant to this Agreement initially will not be registered under
the Securities
Act in reliance on the exemptions from the registration
requirements of Section
5 of the Securities Act set forth in Section 4(2) thereof and
Regulation D
promulgated thereunder.
(b) Legends. In addition to any legend imposed by applicable
state
securities laws or by any contract which continues in effect after
the Effective
Time, the certificates representing the shares of Strawberry Common
Stock issued
pursuant to this Agreement shall bear a restrictive legend (and
stop transfer
orders shall be placed against the transfer thereof with Parent's
transfer
agent), stating substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE
"ACT"). THEY MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, OR
HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, OR,
AN OPINION
OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS
NOT REQUIRED
UNDER THE ACT."
(c) Registration Rights. The Apple Holdco Stockholders shall be
entitled to the registration rights set forth in the Registration
Rights
Agreement to be executed and delivered by Parent and each of the
Apple Holdco
Stockholders at Closing in the form attached hereto as Exhibit E
(the
"Registration Rights Agreement"), in each case on the terms and
subject to the
conditions set forth therein.
-13-
<PAGE>
IV. REPRESENTATIONS AND WARRANTIES OF PARENT
Except as
disclosed in (x) the Strawberry SEC Reports filed prior to the
close of business on February 7, 2007 (the "Measurement Date"), but
excluding
any risk factor disclosure contained in any such Strawberry SEC
Reports under
the heading "Risk Factors" or "Cautionary Statement Regarding
Forward Looking
Statements" or otherwise or (y) the disclosure schedule (the
"Strawberry
Disclosure Schedule") delivered by Parent to Apple Holdco in
connection with the
execution of this Agreement (which schedule sets forth, among other
things,
items the disclosure of which is necessary or appropriate either in
response to
an express disclosure requirement contained in a provision hereof
or as an
exception to one or more representations or warranties contained in
this Article
IV), Parent hereby represents and warrants to Apple Holdco as
follows:
4.1 Due
Organization, Good Standing and Corporate Power. Parent is a
corporation duly organized, validly existing and in good standing
under the laws
of the State of Delaware and has all requisite corporate power and
authority to
own, lease and operate its properties and to conduct its business
as now being
conducted. Each of Parent's Subsidiaries is a corporation or other
entity duly
organized, validly existing and in good standing or has equivalent
status under
the laws of its jurisdiction of organization and has all requisite
corporate
power and authority to own, lease and operate its properties and to
conduct its
business as now being conducted. Each of Parent and its
Subsidiaries is duly
qualified or licensed to do business and is in good standing or has
equivalent
status in each jurisdiction in which the property owned, leased or
operated by
it or the nature of the business conducted by it makes such
qualification
necessary, except in such jurisdictions where the failure to be so
qualified or
licensed and in good standing or to have equivalent status would
not,
individually or in the aggregate, reasonably be expected to have a
Strawberry
Material Adverse Effect.
4.2
Authorization and Validity of Agreement. Each of Parent and
MergerSub
has the requisite corporate power and authority to execute and
deliver this
Agreement and to perform its obligations hereunder. The execution
and delivery
of this Agreement by each of Parent and MergerSub, the consummation
by Parent of
the Share Issuance and the Strawberry Charter Amendment and the
consummation by
Parent and MergerSub of the Merger, have been duly authorized and
approved by
their respective boards of directors (in the case of Parent, acting
upon the
unanimous written consent of the Special Committee), and except for
the
Strawberry Stockholder Approval and approval by Parent in its
capacity as sole
stockholder of MergerSub, no other corporate action on the part of
Parent or
MergerSub is necessary to authorize the execution and delivery of
this Agreement
or the consummation of the Merger, the Share Issuance and the
Strawberry Charter
Amendment. This Agreement has been, and each of the other
Transaction Documents
to which it is a party will be when executed and delivered, duly
executed and
delivered by each of Parent and MergerSub, and, to the extent it is
a party
thereto, each is, or will be when executed and delivered, a valid
and binding
obligation of each of Parent and MergerSub enforceable against each
of Parent
and MergerSub in accordance with its terms, except to the extent
that its
enforceability may be subject to applicable bankruptcy,
insolvency,
reorganization, moratorium and similar Laws
-14-
<PAGE>
affecting the enforcement of creditors' rights generally and by
general
equitable principles.
4.3
Consents and Approvals; No Violations. Assuming (a) the filings
required under the Hart-Scott Rodino Antitrust Improvement Act of
1976, as
amended (the "HSR Act") and any other applicable Antitrust Law, are
made and the
waiting periods thereunder (if applicable) have been terminated or
expired, (b)
the applicable requirements of the Securities Act and state
securities or "blue
sky" laws and the Exchange Act are met, including the filing with
the SEC of a
proxy statement in definitive form that will be mailed to
Strawberry
Stockholders in connection with the Strawberry Stockholders Meeting
(the "Proxy
Statement"), (c) the required notices to the NYSE related to the
Transactions
are delivered, (d) compliance with applicable foreign competition
laws, (e) the
filing of the Certificate of Merger and other appropriate merger
documents, if
any, as required by the DGCL, are made, (f) the filing of the
Strawberry Charter
Amendment and (g) the Strawberry Stockholder Approval and approval
by Parent in
its capacity as sole stockholder of MergerSub is obtained, the
execution and
delivery of this Agreement and the other Transaction Documents to
which it is a
Party by Parent and MergerSub and the consummation by each of
Parent and
MergerSub of the Transactions, do not and will not (i) violate or
conflict with
any provision of their respective certificates of incorporation or
bylaws or the
comparable governing documents of any of its Subsidiaries, (ii)
violate or
conflict with any Law or Order applicable to Parent or any of its
Subsidiaries
or by which any of their respective properties or assets may be
bound, (iii)
require any filing with, or Permit, consent or approval of, or the
giving of any
notice to, any Governmental Entity, or (iv) result in a violation
or breach of,
conflict with, constitute (with or without due notice or lapse of
time or both)
a default under, or give rise to any right of termination,
cancellation or
acceleration of, or result in the creation of any Encumbrance upon
any of the
properties or assets of Parent or any of its Subsidiaries under, or
give rise to
any obligation, right of termination, cancellation, acceleration or
increase of
any obligation or a loss of a material benefit under, any of the
terms,
conditions or provisions of any Contract to which Parent or any of
its
Subsidiaries is a party, or by which Parent or any of its
Subsidiaries may be
bound, excluding in the case of clauses (iii) and (iv) above,
conflicts,
violations, breaches, defaults, rights of termination,
cancellations,
accelerations, increases, losses, creations and impositions of
Encumbrances
which would not, individually or in the aggregate, reasonably be
expected to
have a Strawberry Material Adverse Effect.
4.4
Information to be Supplied. None of the information included or
incorporated by reference in the Proxy Statement or any Additional
Filings will,
in the case of the Proxy Statement, at the date it is first mailed
to Strawberry
Stockholders or at the time of the Strawberry Stockholders Meeting
or at the
time of any amendment or supplement thereof, or, in the case of any
Additional
Filing, at the date it is first mailed to Strawberry Stockholders
or at the date
it is first filed with the SEC or applicable Governmental Entity,
contain any
untrue statement of a material fact or omit to state any material
fact required
to be stated therein or necessary in order to make the statements
therein, in
light of the circumstances under which they are made, not
misleading in any
material respect, except that no representation is made by Parent
and MergerSub
with respect to statements made or incorporated by reference
therein based on
information
-15-
<PAGE>
supplied in writing by Apple Holdco, its stockholders or any
Affiliate of Apple
Holdco or its stockholders in connection with the preparation of
the Proxy
Statement or the Additional Filings for inclusion or incorporation
by reference
therein. The Proxy Statement and the Additional Filings that are
filed by Parent
with the SEC will comply as to form in all material respects with
the
requirements of the Exchange Act and the rules and regulations
promulgated
thereunder.
4.5
Capitalization of Parent and MergerSub.
(a) The authorized capital stock of (i) Parent consists of
40,000,000 shares of Strawberry Common Stock, (ii) 2,000,000 shares
of Preferred
Stock, 40,000 of which are designated Series A Voting Convertible
Preferred
Stock, $0.01 par value per share and convertible into shares of
Strawberry
Common Stock (the "Strawberry Series A Preferred"), 500,000 of
which are
designated Series B Junior Participating Preferred Stock, $0.01 par
value per
share (the "Strawberry Series B Preferred"), 150,000 of which are
designated
Series C Preferred Stock, $0.01 par value per share (the
"Strawberry Series C
Preferred"), and 1,310,000 of which are designated Preferred Stock,
$0.01 par
value per share (the "Strawberry Preferred" and together with the
Strawberry
Common Stock, the Strawberry Series A Preferred, the Strawberry
Series B
Preferred and the Strawberry Series C Preferred, the "Strawberry
Stock"). As of
the Measurement Date, there were 15,084,990 shares of Strawberry
Common Stock
(of which 189,750 were Strawberry Restricted Shares) issued and
outstanding,
40,000 shares of Strawberry Series A Preferred issued and
outstanding, no shares
of Strawberry Series B Preferred issued and outstanding, 135,217
shares of
Strawberry Series C Preferred issued and outstanding, and no shares
of
Strawberry Preferred issued and outstanding. As of the Measurement
Date, no
shares of Strawberry Common Stock were reserved for issuance except
for (a)
2,150,795 shares of Strawberry Common Stock that were reserved for
issuance upon
the exercise of outstanding options (the "Strawberry Options"), (b)
719,320
shares of Strawberry Common Stock reserved for issuance upon the
exercise of
outstanding warrants (the "Strawberry Warrants") and (c) 3,529,412
shares of
Strawberry Common Stock reserved for issuance upon the conversion
of the
Strawberry Series A Preferred for Strawberry Common Stock. Between
the
Measurement Date and the date hereof, Parent has not issued any
shares of
Strawberry Common Stock (other than pursuant to the exercise of
Strawberry
Options outstanding as of the Measurement Date) or awarded any
Strawberry
Options. The Strawberry Series B Preferred are issuable in
connection with the
rights to purchase those shares (the "Strawberry Rights") issued
under the
Rights Agreement, dated as of June 28, 2004 and as amended on June
7, 2006 (the
"Strawberry Rights Agreement"), by and between Parent and UMB Bank
N.A., as
rights agent. All issued and outstanding shares of Strawberry Stock
have been
duly authorized and validly issued and are fully paid and
nonassessable. As of
the date hereof, except as set forth above and except for shares of
Strawberry
Common Stock issuable pursuant to the Strawberry Options,
Strawberry Warrants
and the Strawberry Series A Preferred outstanding as of the
Measurement Date,
there are no outstanding or authorized options, warrants, rights,
calls,
commitments, preemptive rights, subscriptions, claims of any
character,
convertible or exchangeable securities, or other Contracts,
contingent or
otherwise, relating to Strawberry Common Stock or any capital stock
or capital
stock equivalent or other nominal interest in Parent or any of its
Subsidiaries
-16-
<PAGE>
which relate to Parent (collectively, "Strawberry Equity
Interests") pursuant to
which Parent or any of its Subsidiaries is or may become obligated
to issue or
sell shares of its capital stock or other equity interests or any
securities
convertible into, or exchangeable for, or evidencing the right to
subscribe for,
any Strawberry Equity Interests. There are no outstanding
obligations of Parent
to repurchase, redeem or otherwise acquire any outstanding
securities of Parent
or any Strawberry Equity Interests. There are no Contracts to which
Parent is a
party relating to the issuance, sale, transfer, registration or
voting of any
equity securities or other securities of Parent. No bonds,
debentures, notes or
other indebtedness having the right to vote on any matters on which
Strawberry
Stockholders may vote are issued or outstanding as of the date
hereof.
(b) When issued in accordance with the terms of this Agreement,
the
Strawberry Common Stock to be issued in connection with the Share
Issuance will
be duly authorized, validly issued, fully paid and non assessable
free and clear
of all Encumbrances (other than as imposed by federal or state
securities laws).
(c) Exhibit 21.1 to Parent's Annual Report on Form 10 K for the
fiscal year ended July 1, 2006 includes all the Subsidiaries of
Parent that
constitute "significant subsidiaries" as defined in Rule 1-02(w) of
Regulation
S-X in existence as of the date hereof. All of the issued and
outstanding shares
of capital stock or other equity ownership interests of each
Subsidiary of
Parent are owned by Parent, directly or indirectly, free and clear
of any
Encumbrances, and all of such shares or equity ownership interests
are duly
authorized and validly issued and are fully paid, nonassessable and
free of
preemptive rights. No such Subsidiary has or is bound by any
outstanding or
authorized subscriptions, options, rights, preemptive rights,
warrants, calls,
commitments, claims of any character, convertible or exchangeable
securities, or
Contracts, contingent or otherwise, of any nature relating to the
purchase or
issuance of any shares of capital stock or any other security of
such Subsidiary
or any securities representing the right to purchase or otherwise
receive any
shares of capital stock or any other security of such Subsidiary.
There are no
outstanding obligations to repurchase, redeem or otherwise acquire
any
outstanding securities of any such Subsidiary and there are no
Contracts to
which any Subsidiary of Parent is a party relating to the issuance,
sale,
transfer, registration or voting of any equity securities or other
securities of
Parent or any of its Subsidiaries.
(d) All Strawberry Options have an exercise price per share that
was
not less than the "fair market value" of a share of Strawberry
Common Stock on
the date of grant, as determined in accordance with the terms of
the applicable
Strawberry Option Plan and, to the extent applicable, Sections
162(m), 409A and
422 of the Code. All Strawberry Options have been properly
accounted for by
Parent in accordance with GAAP, and no change is expected in
respect of any
prior Strawberry Financial Statement relating to expenses for
stock
compensation. There is no pending audit, investigation or inquiry
by Parent, or
to the Knowledge of Parent, any governmental agency with respect to
the Parent's
stock option granting practices or other equity compensation
practices. Except
as set forth in Section 4.5(d) of the Strawberry Disclosure
Schedule, the terms
of each of the option agreements for each optionee are
substantially similar to
the forms of such option agreement attached to Section 4.5(d) of
the Strawberry
Disclosure Schedule,
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<PAGE>
and no such option agreement or Strawberry Option Plan provides for
any payment
or other transfer from Parent or any Affiliate of Parent or for any
adjustment
to the terms of the option in connection with the Transactions
contemplated by
this Agreement that is not provided for in such forms.
(e) Each subsidiary of Parent constitutes a Subsidiary of Parent
as
defined in this Agreement.
(f) The authorized capital stock of MergerSub consists of
10,000
shares of common stock, $0.01 par value per share, 1,000 of which
have been duly
authorized and validly issued, are fully paid and nonassessable and
are owned by
Parent free and clear of any Encumbrance.
4.6
Absence of Certain Events. Except as required or expressly
permitted
by this Agreement or as reflected in the Strawberry Financial
Statements filed
on or prior to the Measurement Date, since July 1, 2006, Parent and
its
Subsidiaries have operated their respective businesses only in the
ordinary
course of business and there has not occurred any event, occurrence
or condition
which (i) would have been a breach of Section 6.1 had such Section
6.1 been in
effect since July 1, 2006, or (ii) would, individually or in the
aggregate,
reasonably be expected to have a Strawberry Material Adverse
Effect.
4.7
Litigation. There are no Actions pending against Parent or any of
its
Subsidiaries or, to the Knowledge of Parent, threatened against
Parent or any of
its Subsidiaries (or any of their respective properties, rights or
franchises),
at law or in equity, or before or by any Governmental Entity, that
would,
individually or in the aggregate, reasonably be expected to have a
Strawberry
Material Adverse Effect, and, to the Knowledge of Parent, no
development has
occurred with respect to any pending or threatened Action that,
individually or
in the aggregate, would reasonably be expected to have a Strawberry
Material
Adverse Effect. Neither Parent nor any of its Subsidiaries are
subject to any
Orders that, individually or in the aggregate, would reasonably be
expected to
have a Strawberry Material Adverse Effect.
4.8 Title
to Properties; Encumbrances. Each of Parent and its
Subsidiaries
has good and valid title to, or, in the case of leased properties
and assets,
valid leasehold interests in, all of its tangible properties and
assets, except
where the failure to have such good and valid title or valid
leasehold
interests, as applicable, would not, individually or in the
aggregate,
reasonably be expected to have a Strawberry Material Adverse
Effect, in each
case subject to no Encumbrances, except for (a) Encumbrances
consisting of
zoning or planning restrictions, easements, permits and other
restrictions or
limitations on the use of real property or irregularities in title
thereto which
do not materially detract from the value of, or impair the use of,
such property
by Parent or any of its Subsidiaries, (b) Encumbrances for current
Taxes,
assessments or governmental charges or levies on property not yet
due or which
are being contested in good faith and for which appropriate
reserves in
accordance with GAAP have been created, (c) Encumbrances which
would not,
individually or in the aggregate, reasonably be expected to have a
Strawberry
Material Adverse Effect.
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<PAGE>
4.9
Strawberry SEC Reports; Financial Statements.
(a) Each of Parent and its Subsidiaries has timely filed with
the
SEC all registration statements, prospectuses, reports, schedules,
forms, proxy
statements, certifications and other documents (including exhibits
and all other
information incorporated by reference therein) required to be filed
by Parent
since June 28, 2003 (the "Strawberry SEC Reports"). The Strawberry
SEC Reports
(i) were prepared and will be prepared (when filed after the date
of this
Agreement) in all material respects in accordance with the
requirements of the
Securities Act or the Exchange Act, as the case may be, and (ii)
did not at the
time they were filed and will not, when filed after the date of
this Agreement,
contain any untrue statement of a material fact or omit to state a
material fact
required to be stated therein or necessary in order to make the
statements made
therein, in the light of the circumstances under which they were
made, not
misleading, except to the extent corrected by a subsequent
Strawberry SEC Report
filed with the SEC prior to the date of this Agreement. No
Subsidiary of Parent
is subject to the periodic reporting requirements of the Exchange
Act by Law or
Contract.
(b) Each of the consolidated financial statements of Parent
(including, in each case, any notes thereto) contained in the
Strawberry SEC
Reports (the "Strawberry Financial Statements") was prepared and
will be
prepared (when filed after the date of this Agreement) in
accordance with GAAP
(except as may be indicated in the notes thereto) and presented
fairly and will
present fairly (when filed after the date of this Agreement) in all
material
respects the consolidated financial position and consolidated
results of
operations of Parent and its Subsidiaries as of the respective
dates thereof and
for the respective periods indicated therein, except as otherwise
noted therein
and subject, in the case of unaudited statements, to normal year
end audit
adjustments in amounts that are immaterial in nature and amounts
consistent with
past experience. The books and records of Parent and its
Subsidiaries (i) have
been, and are being, maintained in accordance with GAAP and any
other applicable
legal and accounting requirements, (ii) reflect only actual
transactions, (iii)
are complete and accurate in all material respects, and (iv)
reflect in
reasonable detail all material transactions to which Parent and its
Subsidiaries
are a party.
(c) The records, systems, controls, data and information of
Parent
and its Subsidiaries are recorded, stored, maintained and operated
under means
(including any electronic, mechanical or photographic process,
whether
computerized or not) that are under the exclusive ownership and
direct control
of Parent or its Subsidiaries, except for any non exclusive
ownership and non
direct control that would not have a material adverse effect on the
system of
internal accounting controls described in the following sentence.
Parent and its
Subsidiaries have devised and maintain a system of internal
controls over
financial reporting sufficient to provide reasonable assurance
regarding the
reliability of financial reporting and the preparation of financial
statements
in accordance with GAAP. Parent (i) has designed disclosure
controls and
procedures to ensure that material information relating to Parent,
including its
consolidated Subsidiaries, is made known to its management by
others within
those entities and (ii) has disclosed, based on its most recent
evaluation prior
to the date hereof, to Parent's auditors and the audit committee of
Parent's
board of directors (A) any
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<PAGE>
significant deficiencies in the design or operation of internal
controls which
could adversely affect in any material respect Parent's ability to
record,
process, summarize and report financial data and have identified
for Parent's
auditors any material weaknesses in internal controls and (B) any
fraud, whether
or not material, that involves management or other employees who
have a
significant role in Parent's internal controls. Parent has made
available to
Apple Holdco a summary of each such disclosure made by management
to its
auditors and audit committee since July 2, 2005.
4.10 No
Undisclosed Liabilities. Except for those liabilities that are
reflected or reserved against on the consolidated financial
statements of Parent
as of and for the period ended September 30, 2006 included in
Parent's Form 10 Q
for the quarter ended September 30, 2006, including the notes
thereto, since
such date, neither Parent nor any of its Subsidiaries has incurred
any liability
of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and
whether due or to become due and including any off balance sheet
financings,
loans, indebtedness, make whole or similar liabilities or
obligations) whether
or not required to be reflected in a consolidated balance sheet of
Parent
prepared in accordance with GAAP, except for liabilities incurred
in the
ordinary course of business that would not, individually or in the
aggregate,
reasonably be expected to have a Strawberry Material Adverse
Effect.
4.11
Compliance with Law.
(a) Each of Parent and its Subsidiaries is, and since July 2,
2005,
has been, in compliance with all Laws and Orders applicable to it,
except where
the failure to so comply would not, individually or in the
aggregate, reasonably
be expected to have a Strawberry Material Adverse Effect.
(b) Each of Parent and its Subsidiaries holds, to the extent
legally
required, all Permits that are required for the lawful operation of
its business
as now conducted, except where the failure to hold any such Permit
would not,
individually or in the aggregate, reasonably be expected to have a
Strawberry
Material Adverse Effect, and there has not occurred any default
under any such
Permit, except to the extent that such default would not,
individually or in the
aggregate, reasonably be expected to have a Strawberry Material
Adverse Effect.
4.12
Insurance. Parent and its Subsidiaries maintain insurance
coverage
with reputable insurers in such amounts and covering such risks as
are in
accordance with normal industry practice for companies engaged in
businesses
similar to that of Parent and its Subsidiaries. Except as set forth
on Section
4.12 of the Strawberry Disclosure Schedule, each insurance policy
of Parent
and/or its Subsidiaries shall survive the Closing and continue in
full force and
effect as policies of the Parent and/or its Subsidiaries.
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<PAGE>
4.13 Regulatory
Matters.
(a) Except for such of the following as would not, individually
or
in the aggregate, reasonably be expected to have a Strawberry
Material Adverse
Effect, there are no facts:
(i) which would furnish a substantial basis for the recall,
withdrawal or suspension of any products of Parent or its
Subsidiaries by any
competent Governmental Entity; or
(ii) which would otherwise reasonably be expected to cause
Parent or its Subsidiaries to withdraw, recall or suspend any
products of Parent
or its Subsidiaries from the market or to change the marketing
classification of
any products of Parent or its Subsidiaries or to terminate or
suspend testing of
any products of Parent or its Subsidiaries.
(b) There are no:
(i) products which have been recalled by Parent or its
Subsidiaries (whether voluntarily or otherwise) at any time since
June 28, 2003;
or
(ii) Actions pending, or to the Knowledge of Parent,
contemplated or threatened, and no such Actions have been settled
or resolved
since July 3, 2004, seeking the recall, suspension or seizure of
any products of
Parent or its Subsidiaries.
(c) Since July 3, 2004, Parent and each of its Subsidiaries has
timely filed or submitted all reports, filings, applications and
notifications
required by statutes or regulations administered by the U.S.
Consumer Products
Safety Commission including, without limitation, 15 U.S.C. Sections
2064(b) and
2084) and any other Governmental Entity with respect to the
manufacture,
distribution and safety of any products manufactured, imported,
distributed or
sold by Parent or any of its Subsidiaries. Each such report,
filing, application
and notification complied, at the time of such filing or
submission, in all
material respects, with the requirements for such report, filing,
application
and notification, and has been supplemented to the extent required
by applicable
law or regulation.
4.14
Broker's or Finder's Fee. Except for Houlihan Lokey Howard &
Zukin
Capital, Inc., to which only Parent has any liability or obligation
as set forth
on Section 4.14 of the Strawberry Disclosure Schedule, no Person
acting on
behalf of Parent or any of its Subsidiaries is, or will be,
entitled to any
investment banking, broker's, finder's or similar fee for which
Parent,
MergerSub, Apple Holdco, Apple or any of their respective
Affiliates or the
Surviving Corporation after the Effective Time could have any
liabilities in
connection with this Agreement or any of the Transactions.
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<PAGE>
4.15
Taxes, Tax Returns, Tax Treatment.
(a) Parent and each of its subsidiaries has duly filed all Tax
Returns required to be filed by it on or prior to the date of this
Agreement
(all such returns being accurate and complete in all material
respects) and has
duly paid or made provision for the payment of all Taxes that have
been incurred
or are due or claimed to be due from it by federal, state, foreign
or local Tax
Authorities other than (i) Taxes that (a) are not yet delinquent or
(b) are
being contested in good faith, have not been finally determined and
have been
adequately reserved against or (ii) Tax Returns or Taxes as to
which the failure
to file, pay or make provision for would not, individually or in
the aggregate,
reasonably be expected to have a Strawberry Material Adverse
Effect. The period
(including any extensions) within which the IRS may assess federal
income Taxes
against Parent and its subsidiaries has closed with respect to all
taxable years
through and including the fiscal year ended June 30, 1999 and any
liability with
respect thereto has been satisfied. There are no disputes pending,
or claims
asserted, for Taxes or assessments upon Parent or any of its
subsidiaries for
which Parent does not have adequate reserves that would,
individually or in the
aggregate, reasonably be expected to have a Strawberry Material
Adverse Effect.
Neither Parent nor any of its Subsidiaries joins or has joined in
the filing of
any affiliated, aggregate, consolidated, combined or unitary
federal, state,
local and foreign Tax Return other than consolidated Tax Returns
for the
affiliated group of its corporations of which Parent is the common
parent, and
neither Parent nor any of its Subsidiaries is a party to any
agreement providing
for the allocation or sharing of Taxes with any person that is not
a member of
such affiliated group. Neither Parent nor any of its subsidiaries
is a party to
or is bound by any Tax sharing, allocation or indemnification
agreement or
arrangement (other than such an agreement or arrangement
exclusively between or
among Parent and its subsidiaries). Within the past two years,
neither Parent
nor any of its subsidiaries has been a "distributing corporation"
or a
"controlled corporation" in a distribution intended to qualify
under Section
355(a) of the Code. No disallowance of a deduction under Sections
162(m) or 280G
of the Code for employee remuneration of any amount paid or payable
by Parent or
any of its subsidiaries under any contract, plan, program or
arrangement or
understanding would, individually or in the aggregate, reasonably
be expected to
have a Strawberry Material Adverse Effect. Parent and its
subsidiaries have
complied with the requirements of Code Section 409A (and its
related reporting
and withholding requirements), for all amounts paid or payable
under any
contract, plan, program or arrangement or understanding except
where such
failure to comply would not, individually or in the aggregate,
reasonably be
expected to have a Strawberry Material Adverse Effect.
4.16
Employee Benefit Matters.
(a) Section 4.16 of the Strawberry Disclosure Schedule sets forth
a
true and complete list of each benefit or compensation plan,
arrangement or
agreement, and any bonus, incentive, deferred compensation,
vacation, stock
purchase, stock option, severance, employment, change of control or
fringe
benefit plan, program or agreement, whether written or oral, that
is maintained,
or contributed to, for the benefit of current or former officers,
directors,
Contingent Workers or employees of Parent and
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<PAGE>
its Subsidiaries, with respect to which Parent or its Subsidiaries
may, directly
or indirectly, have any liability (whether contingent or
otherwise), as of the
date of this Agreement or as of the Closing Date, including all
material plans
of any Strawberry ERISA Affiliate that are subject to Title IV of
ERISA (the
"Strawberry Benefit Plans"). For purposes of this Agreement, (i) a
"Strawberry
ERISA Affiliate" is any trade or business, whether or not
incorporated, all of
which together with Parent would be deemed a "single employer"
within the
meaning of Section 4001(a) or (b) of ERISA or Section 414 of the
Code and (ii) a
"Strawberry Foreign Plan" means any Strawberry Benefit Plan that is
maintained
outside of the United States (and each such Strawberry Foreign Plan
is
separately identified on Section 4.16(a) of the Strawberry
Disclosure Schedule).
(b) Except with respect to clauses (i), (iii), (v), (vii),
(ix),
(x), and (xi) below (as would not, either individually or in the
aggregate,
reasonably be expected to have a Strawberry Material Adverse
Effect) (i) each of
the Strawberry Benefit Plans has been operated and administered in
compliance in
all material respects with its terms and applicable Laws, including
ERISA and
the Code, (ii) each of the Strawberry Benefit Plans intended to be
"qualified"
within the meaning of Section 401(a) of the Code has received or
timely filed
for a favorable determination letter from the IRS with respect to
all changes in
applicable Law for which certain qualified plans were required to
be amended,
and there are no existing circumstances or any events that have
occurred that
will adversely affect the qualified status of any such Strawberry
Benefit Plan,
(iii) no Strawberry Benefit Plan is a "defined benefit plan" as
defined in
Section 3(35) of ERISA, (iv) no Strawberry Benefit Plan provides
benefits
coverage, including death or medical benefits coverage (whether or
not insured),
with respect to current or former officers, employees, Contingent
Workers or
directors of Parent or its Subsidiaries beyond their retirement or
other
termination of service, other than (A) coverage mandated by
applicable Law, (B)
death benefits or retirement benefits under any "employee pension
plan" (as such
term is defined in Section 3(2) of ERISA), (C) benefits the full
cost of which
is borne by the current or former employee, consultant, leased
employee or
director (or his beneficiary) or (D) coverage through the last day
of the
calendar month in which retirement or other termination of service
occurs, (v)
no Strawberry Benefit Plan is or was a "multiemployer pension plan"
(as such
term is defined in Section 3(37) of ERISA) or a "multiple employer
plan" (as
such term is defined Section 210(a) of ERISA or Section 413(c) of
the Code),
(vi) none of Parent or its Subsidiaries or, to the Knowledge of
Parent, any
other person, including any fiduciary, has engaged in a transaction
in
connection with which Parent, its Subsidiaries or any Strawberry
Benefit Plan
would reasonably be expected to be subject to either a material
civil penalty
assessed pursuant to Section 409 or 502(i) of ERISA or a material
Tax imposed
pursuant to Section 4975 or 4976 of the Code, (vii) to the
Knowledge of Parent,
(A) there are no pending, threatened or anticipated claims (other
than routine
claims for benefits) by, on behalf of or against any of the
Strawberry Benefit
Plans or any trusts or other funding vehicles related thereto and
(B) no
administrative investigation, audit or proceeding is pending or in
progress with
respect to the Strawberry Benefit Plans, (viii) all contributions
or other
amounts payable by Parent or its Subsidiaries as of the Effective
Time with
respect to each Strawberry Benefit Plan in respect of current or
former plan
years have been paid or accrued in accordance with GAAP and Section
412
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<PAGE>
of the Code and, other than transfers incident to an incentive
stock option plan
within the meaning of Section 422 of the Code or as restricted
under Section
162(m) of the Code, have been or are fully deductible under the
Code, (ix) with
respect to any insurance policy providing funding for benefits
under any
Strawberry Benefit Plan, (A) there is no liability of Parent or
its
Subsidiaries, in the nature of a retroactive rate adjustment, loss
sharing
arrangement or other actual or contingent liability, nor would
there be any such
liability if such insurance policy was terminated at or after the
Closing Date
and (B) no insurance company issuing any such policy is in
receivership,
conservatorship, liquidation or similar proceeding and, to the
Knowledge of
Parent, no such proceedings with respect to any insurer are
imminent, (x) Parent
and its Subsidiaries have reserved all rights necessary to amend or
terminate
each of the Strawberry Benefit Plans, without the consent of any
other Person,
and (xi) no Strawberry Benefit Plan provides benefits to any
individual who is
not a current or former employee of Parent or its Subsidiaries, or
the
dependents or other beneficiaries of any such current or former
employee.
(c) In addition to the representation contained in Subsection
(b)
above (if applicable), except as would not, either individually or
in the
aggregate, reasonably be expected to have a Strawberry Material
Adverse Effect,
(i) each Strawberry Foreign Plan complies with all applicable Laws
(including,
without limitation, applicable Laws regarding the funding, form and
operation of
the Strawberry Foreign Plan); (ii) the Strawberry Financial
Statements
accurately reflect the Strawberry Foreign Plan liabilities and
accruals for
contributions required to be paid to the Strawberry Foreign Plans,
in accordance
with GAAP, (iii) there have not occurred, nor are there continuing
any
transactions or breaches of fiduciary duty under applicable Law,
and (iv) no
administrative investigation, audit or other proceeding by any
Governmental
Authority is pending or in progress or, to the Knowledge of Parent
and its
Subsidiaries, threatened, with respect to any Strawberry Foreign
Plan.
(d) Neither the execution and delivery of this Agreement nor
the
consummation of the Transactions will (either alone or in
conjunction with any
other event) (i) result in any payment (including severance,
unemployment
compensation, "excess parachute payment" (within the meaning of
Section 280G of
the Code), forgiveness of indebtedness or otherwise) becoming due
to any
director, consultant, employee or former employee of Parent or any
of its
Subsidiaries from Parent or any of its Subsidiaries under any
Strawberry Benefit
Plan or otherwise, (ii) increase any benefits otherwise payable
under any
Strawberry Benefit Plan or otherwise, or (iii) result in any
acceleration of the
time of funding, payment or vesting of any such benefits.
(e) Except as would not reasonably be expected to have a
Strawberry
Material Adverse Effect, with respect to independent contractors,
consultants
and leased employees (collectively, "Contingent Workers") who are
located within
the United States, (i) all Persons so classified satisfy and have
at all times
satisfied in all material respects the requirements of applicable
Law to be so
classified, (ii) Parent and its Subsidiaries have fully and
accurately reported
such persons' compensation on IRS Form 1099 when required to do so,
(iii)
neither Parent or its Subsidiaries has or had any obligations to
provide
benefits with respect to such persons under any Strawberry
Benefit
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<PAGE>
Plan or otherwise and (iv) Parent and its Subsidiaries have no
material
liability with respect to the misclassification of any Contingent
Worker.
4.17
Intellectual Property. Section 4.17 of the Strawberry
Disclosure
Schedule identifies (i) all applied for and registered trademarks
and service
marks, trade names, domain names, registered copyrights, pending
and issued
patents owned, used or licensed by or to Parent or any of its
Subsidiaries that
are material to the conduct of the business of Parent and its
Subsidiaries, and
(ii) all agreements and licenses relating to trademarks,
technology, know how or
processes that Parent or its Subsidiaries is licensed or authorized
to use, or
which it licenses or authorizes others to use, that is material to
the conduct
of the business of Parent and its Subsidiaries (collectively, the
"Strawberry
Intellectual Property"). Parent and its Subsidiaries own and
possess all rights,
title and interest in and to, or as of the Closing, will own and
possess all
rights, title and interest in and to, free and clear of all
Encumbrances, all of
the Strawberry Intellectual Property and, as of the Closing, all of
the
Strawberry Intellectual Property will be in the name of Parent or
its
Subsidiaries. Parent and its Subsidiaries own or have the right to
use the
Strawberry Intellectual Property without infringing or violating
the rights of
any third parties, except where such infringement or violation
would not,
individually or in the aggregate, reasonably be expected to have a
Strawberry
Material Adverse Effect. No consent of any third party will be
required for the
use by the Parent or its Subsidiaries of the Strawberry
Intellectual Property
after the Effective Time. There are no Actions pending or claims
asserted in
writing by any Person against Parent or any of its Subsidiaries
regarding the
ownership of or the right to use any Strawberry Intellectual
Property or
challenging the rights of Parent or any of its Subsidiaries with
respect to any
of the Strawberry Intellectual Property which would, individually
or in the
aggregate, reasonably be expected to have a Strawberry Material
Adverse Effect.
To the Knowledge of Parent as of the date hereof, there is no
infringement or
misappropriation of the Strawberry Intellectual Property by any
Person.
4.18
Environmental Liability. Except for such of the following as
would
not, individually or in the aggregate, reasonably be expected to
have a
Strawberry Material Adverse Effect, (i) the operations of Parent
and its
Subsidiaries are and have been in compliance with all applicable
Environmental
Laws, (ii) each of Parent and its Subsidiaries possess and
maintains in effect
all environmental permits, licenses, authorizations and approvals
required under
Environmental Law with respect to the properties and business of
Parent and its
Subsidiaries, (iii) to the Knowledge of Parent, there has been no
release of any
Hazardous Materials which would reasonably be expected to result in
liability to
Parent or any of its Subsidiaries, (iv) there are no legal,
administrative or
arbitral bodies seeking to impose, nor are there Actions of any
nature
reasonably likely to result in the imposition of, on Parent or any
of its
Subsidiaries, any liability or obligation arising under common law
relating to
the Environment or under any Environmental Law, nor are there any
such
liabilities or obligations pending or, to the Knowledge of Parent,
threatened
against Parent or its Subsidiaries and (v) neither Parent nor any
of its
Subsidiaries is subject to any Order by or with any Governmental
Entity or third
party imposing any liability or obligation with respect to the
foregoing. To the
Knowledge of Parent, as of the date of this Agreement, the
Strawberry Financial
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<PAGE>
Statements contain an adequate reserve as determined in accordance
with GAAP for
Environmental liabilities and obligations.
4.19
Material Contracts. Neither Parent nor any of its Subsidiaries is
a
party to or bound by (a) any "material contract" as defined in Item
601(b)(10)
of Regulation S K promulgated by the SEC or any Contract that would
be such a
"material contract" but for the exception for Contracts entered
into in the
ordinary course of business or (b) any non competition or other
Contract that
materially limits or will materially limit Parent or any of its
Subsidiaries
from engaging in the business currently conducted by it. Each of
the "material
contracts" (as defined above) of Parent and its Subsidiaries is
valid and in
full force and effect and neither Parent nor any of its
Subsidiaries has
violated any provisions of, or committed or failed to perform any
act that, with
or without notice, lapse of time, or both, would constitute a
default under the
provisions of any such "material contract." To Parent's Knowledge,
the other
party to any "material contract" described in this Section 4.19 is
not in
material breach of or default under such "material contract."
4.20 Labor
Relations.
(a) As of the date of this Agreement and during the preceding
three
(3) years, (i) none of Parent, its Subsidiaries or any of their
controlled
Affiliates or Strawberry ERISA Affiliates are a party to any
collective
bargaining agreement, works council or workers' association or
similar
arrangements, (ii) except as would not, individually or in the
aggregate,
reasonably be expected to have a Strawberry Material Adverse
Effect, no labor
organization or group of employees of Parent or any of its
Subsidiaries has made
a pending demand for recognition or certification, and there are
no
representation or certification proceedings or petitions seeking
a
representation proceeding presently pending or, to the Knowledge of
Parent,
threatened to be brought or filed, with the National Labor
Relations Board or
any oth
