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Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
Dated as of September 26, 2005
by and among
AMSCAN HOLDINGS, INC.,
BWP ACQUISITION, INC.
AND
PARTY CITY CORPORATION
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Exhibit 2.1
TABLE OF CONTENTS
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Page
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ARTICLE 1. DEFINITIONS AND
INTERPRETATION................................ 2
Section 1.1
Definitions..............................................
2
Section 1.2
Interpretation...........................................
9
ARTICLE 2. MERGER AND
ORGANIZATION....................................... 10
Section 2.1 The
Merger............................................... 10
Section 2.2 Effective
Time........................................... 10
Section 2.3 Effect of
Merger......................................... 11
Section 2.4 Certificate of Incorporation;
By-laws.................... 11
Section 2.5 Directors and
Officers................................... 11
ARTICLE 3. CONVERSION OF SECURITIES;
EXCHANGE OF CERTIFICATES............ 11
Section 3.1 Conversion of
Securities................................. 11
Section 3.2 Payment of Cash for Company Common
Stock................. 12
Section 3.3 Exchange of Merger Sub Common
Stock Certificate.......... 14
Section 3.4 Stock Transfer
Books..................................... 15
Section 3.5 Stock
Options............................................ 15
Section 3.6
Warrants.................................................
16
ARTICLE 4. ADDITIONAL AGREEMENTS IN
CONNECTION WITH THE MERGER........... 16
Section 4.1 Stockholders'
Approval................................... 16
Section 4.2 Proxy
Materials.......................................... 16
Section 4.3 Commercially Reasonable Efforts;
Consents;
Other Filings............................................
18
Section 4.4
Financing................................................
19
Section 4.5 Conduct of Business by Company
Pending the Merger........ 20
Section 4.6 Access to Company's Books and
Records.................... 24
Section 4.7 Takeover
Proposals....................................... 24
Section 4.8 Director and Officer
Protection.......................... 26
Section 4.9 Payment of
Expenses...................................... 27
Section 4.10 Employee
Benefits........................................ 27
Section 4.11 Public
Announcements..................................... 28
Section 4.12 Certain Actions
and Proceedings.......................... 28
Section 4.13 Director
Resignations.................................... 28
Section 4.14 Conduct of
Business by Parent............................ 28
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
OF COMPANY..................... 29
Section 5.1 Organization and Good
Standing........................... 29
Section 5.2 Subsidiaries and
Investments............................. 29
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Section 5.3 Authorization; Binding
Agreement......................... 30
Section 5.4
Capitalization...........................................
30
Section 5.5 Financial
Statements..................................... 31
Section 5.6 Absence of Certain Changes or
Events..................... 32
Section 5.7 Company SEC
Documents.................................... 32
Section 5.8 Governmental and Other Consents
and Approvals............ 33
Section 5.9 No
Violation............................................. 33
Section 5.10
Litigation...............................................
34
Section 5.11 Employment and
Labor Matters............................. 34
Section 5.12 Governmental
Approvals; Compliance with Law.............. 34
Section 5.13 Brokers and
Finders...................................... 34
Section 5.14
Taxes....................................................
35
Section 5.15 Employee
Benefits........................................ 36
Section 5.16 Intellectual
Property.................................... 38
Section 5.17 Environmental
Matters.................................... 39
Section 5.18 Required
Vote............................................ 40
Section 5.19 State Takeover
Statutes.................................. 40
Section 5.20 Material
Contracts....................................... 40
Section 5.21 Information in
Proxy Statement........................... 41
Section 5.22
Properties...............................................
41
Section 5.23 Opinion of
Financial Advisor............................. 42
Section 5.24 Affiliate
Transactions................................... 42
Section 5.25
Insurance................................................
42
Section 5.26 Commercial
Relationships................................. 42
Section 5.27 Fees and
Expenses........................................ 43
ARTICLE 6. REPRESENTATIONS AND WARRANTIES
OF MERGER SUB AND PARENT....... 43
Section 6.1 Organization and Good
Standing........................... 43
Section 6.2 Authorization; Binding
Agreement......................... 43
Section 6.3
Capitalization...........................................
44
Section 6.4 No
Violation............................................. 44
Section 6.5 Governmental and Other Consents
and Approvals............ 45
Section 6.6
Proxy....................................................
45
Section 6.7
Financing................................................
45
Section 6.8 Brokers and
Finders...................................... 46
Section 6.9 No Prior
Activities...................................... 46
Section 6.10
Litigation...............................................
46
ARTICLE 7.
CONDITIONS....................................................
46
Section 7.1 Conditions to Each Party's
Obligation to Effect the
Merger...................................................
46
Section 7.2 Conditions to Obligation of the
Company to Effect the
Merger...................................................
47
Section 7.3 Conditions to Obligations of
Parent and Merger Sub to
Effect the Merger........................................
47
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ARTICLE 8. TERMINATION; NON-SURVIVAL OF
REPRESENTATIONS, WARRANTIES AND
COVENANTS; WAIVER AND
AMENDMENT....................................... 49
Section 8.1
Termination..............................................
49
Section 8.2 Non-Survival of Representations,
Warranties and
Covenants................................................
50
Section 8.3
Amendment................................................
50
Section 8.4
Waiver...................................................
51
Section 8.5 Effect of
Termination.................................... 51
Section 8.6 Certain
Payments......................................... 51
ARTICLE 9. GENERAL
AGREEMENTS............................................ 52
Section 9.1
Notice...................................................
52
Section 9.2 Entire
Agreement......................................... 54
Section 9.3 Parties in
Interest...................................... 54
Section 9.4
Headings.................................................
54
Section 9.5
Severability.............................................
54
Section 9.6 Successors and
Assigns................................... 54
Section 9.7 Governing
Law............................................ 55
Section 9.8 Costs and
Expenses....................................... 55
Section 9.9
Counterparts.............................................
55
Section 9.10 Specific
Performance..................................... 55
Section 9.11
Assignments..............................................
55
Section 9.12
Jurisdiction.............................................
55
Section 9.13 Waiver of Jury
Trial..................................... 56
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Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND
PLAN OF MERGER (this "Agreement") dated as of September 26,
2005 by and among Amscan Holdings, Inc., a
Delaware corporation ("Parent"), BWP
Acquisition, Inc., a Delaware corporation
and a wholly owned subsidiary of
Parent ("Merger Sub"), and Party City
Corporation, a Delaware corporation (the
"Company"). Parent, Merger Sub and the
Company may be referred to herein
collectively as the "Parties" and
individually as a "Party." Capitalized terms
not otherwise defined herein shall have the
meaning ascribed to such terms in
Article I hereof.
RECITALS
WHEREAS, the
respective Boards of Directors of Parent, Merger Sub and the
Company have approved and declared
advisable the merger of Merger Sub with and
into the Company (the "Merger") upon the
terms and subject to the conditions set
forth herein and in the Certificate of
Merger in substantially the form attached
hereto as Exhibit A (the "Certificate of
Merger"), and in accordance with the
Delaware General Corporation Law (the
"DGCL");
WHEREAS, the
respective Boards of Directors of the Parent and Merger Sub
have approved and adopted this
Agreement;
WHEREAS, the
Board of Directors and a special committee of the Board of
Directors of the Company (the "Special
Committee") have unanimously determined
that the Merger is advisable and in the
best interests of the Company and its
public shareholders, (ii) approved and
adopted this Agreement, and (iii) have
recommended to the stockholders of the
Company to vote to approve this Agreement
and the Merger; and
WHEREAS,
concurrently with the execution and delivery of this Agreement
and
as a condition to Parent's and Merger Sub's
willingness to enter into this
Agreement, each of Michael E. Tennenbaum,
Tennenbaum Capital Partners, LLC,
Tennenbaum & Co., LLC, Special Value
Bond Fund, LLC, Special Value Absolute
Return Fund, LLC and Special Value Bond
Fund II, LLC (the "Principal
Stockholders"), Parent and Merger Sub will
enter into a voting and stock sale
agreement, in the form attached hereto as
Exhibit B (the "Voting Agreement"),
pursuant to which, among other things, such
Principal Stockholder will agree to
vote its Shares (as defined herein) in
favor of approval and adoption of this
Agreement and the transactions contemplated
hereby (including the Merger), upon
the terms and subject to the conditions set
forth in the Voting Agreement.
NOW, THEREFORE,
in consideration of the foregoing and the respective
representations, warranties, covenants and
agreements set forth in this
Agreement and intending to be legally bound
hereby, the Parties agree as
follows:
<PAGE>
ARTICLE 1.
DEFINITIONS AND INTERPRETATION
SECTION 1.1 DEFINITIONS.
For all purposes
of this Agreement, except as otherwise expressly provided
or unless the context clearly requires
otherwise:
"Affiliate"
means, with respect to any Person, another Person that directly
or indirectly through one or more
intermediaries controls, is controlled by, or
is under common control with, the first
Person. For purposes of this definition,
a Subsidiary of a Person shall be deemed to
be an Affiliate of such Person and
the term "control", "controlled by" or
"under common control with" means the
power, direct or indirect, to direct or
cause the direction of the management
and policies of a Person, whether through
the ownership of voting capital stock,
by contract, as trustee or executor, or
otherwise.
"Agreement"
shall have the meaning set forth in the Preamble.
"Annual Period"
shall have the meaning set forth in Section 8.6(c).
"Breakup Fee"
shall have the meaning set forth in Section 8.6(a).
"Business Day"
means a day other than Saturday, Sunday or other day on
which commercial banks in New York, New
York are authorized or required by Law
to be closed.
"Cash Merger
Consideration" shall have the meaning set forth in Section
3.1(a).
"Certificate(s)"
shall have the meaning set forth in Section 3.2(b).
"Certificate of
Merger" shall have the meaning set forth in the Recitals.
"Closing" shall
have the meaning set forth in Section 2.2.
"Closing Date"
means the day of the Closing.
"Code" means the
United States Internal Revenue Code of 1986, as amended.
"Commitments"
shall have the meaning set forth in Section 6.7.
"Company" shall
have the meaning set forth in the Preamble.
"Company Adverse
Recommendation Change" shall have the meaning set forth in
Section 4.7(b).
"Company Benefit
Plans" shall have the meaning set forth in Section
5.15(a).
"Company
By-laws" means the by-laws of the Company, as amended to the
date
of this Agreement.
2
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"Company
Charter" means the certificate of incorporation of the Company,
as
amended to the date of this Agreement.
"Company Common
Stock" shall have the meaning set forth in Section 3.1(a).
"Company
Employees" shall have the meaning set forth in Section 4.10(a).
"Company ERISA
Affiliate" shall have the meaning set forth in Section
5.15(c).
"Company
Material Adverse Change" or "Company Material Adverse Effect"
means any event, change, effect,
development, occurrence or state of fact that
either individually or in the aggregate,
when taken together with all other
events, changes, effects, developments,
occurrences or states of facts (i) is
materially adverse to the business, assets,
operations, properties, condition
(financial or otherwise), liabilities or
results of operations of the Company
and its Subsidiaries taken as a whole, or
(ii) materially and adversely affects
the ability of the Company to consummate
the Merger or prevent or delay the
consummation of the Merger; provided,
however, that none of the following shall
be deemed, either alone or in combination,
to constitute, and none of the
following shall be taken into account in
determining whether there has been or
will be, a Company Material Adverse Effect:
(a) any adverse change, effect,
event, occurrence, state of facts or
development to the extent primarily
attributable to (I) the announcement or
pendency of this Agreement or the
Merger, (II) the identity of Parent or
Merger Sub or (III) any actions taken in
compliance herewith or otherwise with the
consent of Parent, including, without
limitation, the impact on the relationships
of the Company with any customer,
vendor, distributor, supplier, franchisee,
landlord, tenant, consultant,
employee or independent contractor with
whom the Company has any relationship;
(b) any adverse change, effect, event,
occurrence, state of facts or development
attributable to conditions generally
affecting (I) the retail party supply
industry or (II) the United States or world
economy as a whole including, but
not limited to, changes in economic,
financial market, regulatory or political
conditions, whether resulting from acts of
terrorism, war or otherwise, except
in each case, any adverse change, effect,
event, occurrence, state of facts or
development that has had or is reasonably
likely to have a disproportionate
effect on the Company and its Subsidiaries
taken as a whole as compared to other
Persons in the industry in which the
Company and its Subsidiaries conduct their
business; or (c) any adverse change,
effect, event, occurrence, state of facts
or development arising from or relating to
any change in GAAP or any change in
applicable Laws, in each case, proposed,
adopted or enacted after the date
hereof or the interpretation or enforcement
thereof.
"Company
Options" shall have the meaning set forth in Section 3.5(a).
"Company
Recommendation" shall have the meaning set forth in Section
4.1.
"Company SEC
Documents" means all forms, schedules, statements, reports and
other documents filed by the Company or any
of its Subsidiaries under the
Securities Act or the Exchange Act or
otherwise filed by the Company or any of
its Subsidiaries with, or furnished by the
Company or any of its Subsidiaries
to, the SEC, in each case since June 30,
2002 and prior to the Effective Time,
collectively, as the same may been amended
or restated and including all
exhibits and schedules thereto and
documents incorporated by reference therein.
3
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"Company Share"
or "Company Shares" shall have the meaning set forth in
Section 3.1(a).
"Company
Stockholder Approval" shall have the meaning set forth in
Section
5.3(a).
"Company Stock
Option Plans" shall have the meaning set forth in Section
3.5(a).
"Company Warrant
Agreement" shall have the meaning set forth in Section
3.6.
"Company
Warrants" shall have the meaning set forth in Section 3.6.
"Confidentiality
Agreement" shall have the meaning set forth in Section
4.6.
"Constituent
Corporations" shall have the meaning set forth in Section 2.1.
"Contract" means
any contract, lease, license, indenture, note, bond,
mortgage, agreement, permission, consent,
sales order, purchase order,
quotation, entitlement, concession,
franchise, instrument, undertaking,
commitment, understanding or other
arrangement (whether written or oral).
"Debt Financing"
shall have the meaning set forth in Section 6.7.
"D&O
Insurance" shall have the meaning set forth in Section 4.8(b).
"DGCL" shall
have the meaning set forth in the Recitals.
"Definitive
Proxy Statement" shall have the meaning set forth in Section
4.2(a).
"Disclosure
Schedules" shall have the meaning set forth in the Preamble to
Article 5.
"Dissenting
Shares" shall have the meaning set forth in Section 3.1(e).
"Effective Time"
shall have the meaning set forth in Section 2.2.
"Environmental
Laws" means all Laws relating to the protection of the
environment or to occupational health and
safety.
"Environmental
Permits" means all permits, licenses, registrations and
other governmental authorizations required
for the Company and the operations of
Company's facilities and otherwise to
conduct its business under Environmental
Laws.
"ERISA" shall
have the meaning set forth in Section 5.15(a).
"Exchange" means
the Nasdaq National Market.
"Exchange Act"
means the Securities Exchange Act of 1934, as amended.
"Exchange Agent"
shall have the meaning set forth in Section 3.2(a).
4
<PAGE>
"Expenses" shall
mean all reasonable and documented out-of-pocket expenses
(including, without limitation, all
reasonable fees and expenses of counsel,
accountants, investment bankers, experts
and consultants to a Party hereto)
incurred by a Party or on its behalf in
connection with or related to the sale
of the Company, including, without
limitation, expenses in connection with due
diligence, the auction of the Company and
the authorization, preparation,
negotiation, execution and performance of
this Agreement and the transactions
contemplated hereby, the preparation,
printing, filing and mailing of the
Definitive Proxy Statement and the
solicitation of stockholder approval, and any
fees paid in connection with any required
filings with any Governmental Entity.
"Financial
Statements" shall have the meaning set forth in Section 5.5.
"Financing"
shall have the meaning set forth in Section 6.7.
"Financing
Withdrawal Date" shall have the meaning set forth in Section
8.1(i).
"GAAP" means
accounting principles generally accepted in the United States
of America.
"Governmental
Approvals" shall have the meaning set forth in Section 5.12.
"Governmental
Entity" means any domestic (federal, state or local) or
foreign governmental (or political
subdivision thereof), administrative,
executive, judicial, legislative, police,
taxing or regulatory authority, agency
or commission, or any court or tribunal,
arbitrator or arbitral body.
"HSR Act" shall
have the meaning set forth in Section 4.3.
"Indebtedness"
means, with respect to any Person at any date, without
duplication: all liabilities or
obligations, whether primary or secondary or
absolute or contingent of such Person (a)
for borrowed money or in respect of
loans or advances, (b) evidenced by bonds,
debentures, notes or other similar
instruments or debt securities, (c) in
respect of letters of credit and bankers'
acceptances issued for the account of such
Person, (d) in the nature of
guarantees of such Person in connection
with any of the foregoing or the
following, (e) under capital lease
obligations of such Person, (f) for the
deferred purchase price of property or
services with respect to which such
Person is liable, contingently or
otherwise, as obligor or otherwise (other than
trade payables incurred in the ordinary
course of business), and (g) the extent
secured by any property of such Person
(other than any (i) security interest on
trade payables imposed in the ordinary
course of business solely by the
operation of Law, (ii) Liens for current
taxes and assessments not yet past due,
(iii) inchoate mechanics' and materialmen's
Liens for construction in progress
or (iv) workmen's, repairmen's,
warehousemen's and carriers' Liens arising in
the ordinary course of business consistent
with past practice).
"Information
Technology" shall have the meaning set forth in Section
4.5(s).
"Intellectual
Property" means the entire right, title and interest in and
to all proprietary rights of every kind and
nature, pertaining to or deriving
from (i) patents, copyrights, mask work
rights, technology, know-how, processes,
trade secrets, algorithms, inventions,
works,
5
<PAGE>
proprietary data, databases, formulae,
research and development data and
computer software or firmware; (ii)
trademarks, trade names, service marks,
service names, brands, domain names, trade
dress and logos, and the goodwill and
activities associated therewith
("Trademarks"); (iii) rights of privacy and
publicity, moral rights, and proprietary
rights of any kind or nature, however
denominated, throughout the world in all
media now known or hereafter created;
and (iv) any and all registrations,
applications, recordings, licenses,
common-law rights and contractual
obligations relating to any of the foregoing.
"Investment"
means, with respect to any Person, any corporation,
association, general or limited
partnership, company, limited liability company,
trust, joint venture, organization or other
entity in which such Person owns,
directly or indirectly, an equity or
similar interest, or an interest
convertible into or exchangeable or
exercisable for an equity or similar
interest, of less than 50%.
"knowledge"
shall have the meaning set forth in Section 1.2(j).
"Law" means any
foreign or domestic law, statute, code, ordinance, rule,
regulation, judgment, decree, writ,
injunction or order of any Governmental
Entity.
"Liens" means
pledges, liens, charges, mortgages, encumbrances and security
interests of any kind or nature
whatsoever.
"Material
Contracts" shall have the meaning set forth in Section 5.20.
"Merger" shall
have the meaning set forth in the Recitals.
"Merger Sub"
shall have the meaning set forth in the Recitals.
"Merger Sub
Common Stock" shall have the meaning set forth in Section
3.1(c).
"Option Payment" shall have
the meaning set forth in Section 3.5(a).
"Owned
Intellectual Property" shall have the meaning set forth in
Section
5.16(e).
"Parent" shall
have the meaning set forth in the Preamble.
"Parent Material
Adverse Effect" means an event, change, effect,
development, state of fact or occurrence
that individually or in the aggregate,
when taken with all other events, changes,
effects, developments, states of
facts and occurrences, is or would
reasonably be expected to materially and
adversely affect the ability of the Parent
or Merger Sub to consummate the
Merger; provided, that no change or effect
resulting from any of the following
shall be deemed, either alone or in
combination, to constitute a Parent Material
Adverse Effect: (a) any adverse change,
effect, event, occurrence, state of
facts or development attributable to
conditions generally affecting (I) the
retail party supply industry or (II) the
United States or world economy as a
whole including, but not limited to,
changes in economic, financial market,
regulatory or political conditions, whether
resulting from acts of terrorism,
war or otherwise, except in each case, any
adverse change, effect, event,
occurrence, state of facts or development
that has had or is reasonably likely
to have a disproportionate effect on Parent
and its
6
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Subsidiaries taken as a whole as compared
to other Persons in the industry in
which Parent and its Subsidiaries conduct
their business; or (b) any adverse
change, effect, event, occurrence, state of
facts or development arising from or
relating to any change in GAAP or any
change in applicable Laws, in each case,
proposed, adopted or enacted after the date
hereof or the interpretation or
enforcement thereof.
"Party" and
"Parties" shall have the meanings set forth in the Preamble.
"Permit" means
licenses, franchises, permits, consents, approvals, orders,
certificates, authorizations, declarations
and filings.
"Permitted
Investments" shall have the meaning set forth in Section
3.2(a).
"Permitted
Liens" means (i) Liens for current taxes and assessments not
yet
past due, (ii) inchoate mechanics' and
materialmen's Liens for construction in
progress, (iii) workmen's, repairmen's,
warehousemen's and carriers' Liens
arising in the ordinary course of business
of the Company or such Subsidiary
consistent with past practice, and (iv) all
Liens and other imperfections of
title (including matters of record) and
encumbrances that do not materially
interfere with the conduct of the business
of the Company and the Subsidiaries,
taken as a whole.
"Person" means a
natural person, partnership, limited partnership,
corporation, limited liability company,
business trust, joint stock company,
trust, unincorporated association, joint
venture, Governmental Entity or other
entity or organization.
"Preliminary
Proxy Statement" shall have the meaning set forth in Section
4.2(a).
"Prime Rate"
means the prime rate of interest published in the "Money
Rates" column of the Eastern Edition of The
Wall Street Journal (or the average
of such rates if more than one rate is
indicated) on the date of termination of
this Agreement pursuant to Section 8.1.
"Principal
Stockholders" shall have the meaning set forth in the Recitals.
"Proxy
Statement" shall have the meaning set forth in Section 4.2(b).
"Real Property"
shall have the meaning set forth in Section 5.22(b).
"Real Property
Leases" shall have the meaning set forth in Section 5.22(b).
"Representatives" shall have the meaning set forth in Section
4.7(a).
"Sarbanes-Oxley
Act" shall have the meaning set forth in Section 5.7(a).
"Scheduled
Intellectual Property" shall have the meaning set forth in
Section 5.16(a).
"Section 409A"
shall have the meaning set forth in Section 5.15(g).
"SEC" shall have
the meaning set forth in Section 4.2(a).
"Securities Act"
means the Securities Act of 1933, as amended.
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"Special
Committee" shall have the meaning set forth in the Recitals.
"Special
Meeting" shall have the meaning set forth in Section 4.1.
"Subsidiary"
means, with respect to any Person, any corporation or other
entity, whether incorporated or
unincorporated, of which (a) 50% or more of the
securities or other interests having by
their terms ordinary voting power to
elect a majority of the Board of Directors
or other similar supervising body is
directly or indirectly owned or controlled
by such Person or by any one or more
of its Subsidiaries, or by such Person and
one or more of its Subsidiaries or
(b) such Person or any other Subsidiary of
such Person is a general partner
(including any such partnership where such
Person or any Subsidiary of such
Person does not have a majority of the
voting interest in such partnership).
"Superior
Proposal" means a bona fide written Takeover Proposal (with all
of the percentages included in the
definition of Takeover Proposal increased to
80%) not solicited or initiated in
violation of this Agreement, which the
Company's Board of Directors or Special
Committee determines in good faith
(after consultation with a financial
advisor of nationally recognized reputation
and its outside legal counsel) (i) to be
more favorable (taking into account,
among other things, the Person or group of
Persons making such Takeover Proposal
and all legal, financial, regulatory,
fiduciary and other aspects of this
Agreement and such Takeover Proposal,
including any conditions relating to
financing, regulatory approvals or other
events or circumstances beyond the
control of the Party invoking the condition
and taking into account any
revisions made or proposed in writing by
Parent or Merger Sub prior to the time
of determination) to the holders of Company
Common Stock from a financial point
of view than the transactions provided for
in this Agreement, (ii) is reasonably
capable of being consummated, and (iii) for
which third party financing, to the
extent required, is then committed
consistent with market standards under
similar circumstances determined using the
proper exercise of the Company's
Board of Directors' fiduciary duties to the
shareholders of the Company under
applicable Law.
"Surviving
Corporation" shall have the meaning set forth in Section 2.1.
"Takeover
Proposal" means any inquiry, proposal or offer relating to (A)
any business combination with or any direct
or indirect acquisition, in a single
transaction or a series of transactions and
whether by way of a merger,
consolidation, business combination,
reorganization, share exchange, sale of
assets, recapitalization, liquidation,
dissolution or similar transaction or
otherwise, of (i) the Company, (ii)
twenty-five (25) percent or more of any
class of the Company's outstanding shares
of capital stock or any other voting
securities of the Company or its
Subsidiaries (iii) 25% or more of the fair
market value of the assets of the Company
and its Subsidiaries taken as a whole;
(B) any tender offer (including a
self-tender offer) or exchange offer, as
defined pursuant to the Exchange Act, that,
if consummated, would result in any
Person or group beneficially owning 25% or
more of any class of the capital
stock of the Company or the filing with the
SEC of a Schedule TO or a
registration statement under the Securities
Act in connection therewith, or (C)
any combination of the foregoing.
"Tax" or "Taxes"
means (a) any and all federal, state, local and foreign
income, gross receipts, payroll,
employment, excise, stamp, customs duties,
capital stock, franchise, profits,
8
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withholding, social security, unemployment,
real property, personal property,
sales, use, transfer, value added,
alternative or add-on minimum, estimated, or
other taxes (together with interest,
penalties and additions to tax imposed with
respect thereto) imposed by any
Governmental Entity (whether or not measured in
whole or in part by net income and
including any fee, assessment or other charge
in the nature of or in lieu of any tax),
whether disputed or not, and (b) any
liability for the payment of any amount of
the type described in clause (a) as a
result of the Company or of its
Subsidiaries being a successor to or transferee
of any other corporation at any time on or
prior to the date of the Closing, and
any interest, penalties, additions to tax
(whether imposed by law, contractual
agreement or otherwise) and any liability
in respect of any tax as a result of
being a member of any affiliated,
consolidated, combined, unitary or similar
group.
"Tax Returns"
means any report or return (including any information return)
or statement or other documents (including
any attachment thereto and any
amendment thereof) required to be filed
with any Governmental Entity with
respect to Taxes.
"Termination
Date" means March 31, 2005.
"Voting
Agreement" shall have the meaning set forth in the Recitals.
"Warrant
Payment" shall have the meaning set forth in Section 3.6.
SECTION 1.2 INTERPRETATION.
(a) The headings contained in this Agreement are for reference
purposes only and shall not affect in any
way the meaning or interpretation of
this Agreement.
(b) Whenever the words "include," "includes" or "including" are
used
in this Agreement, they shall be deemed to
be followed by the words "without
limitation."
(c) The words "hereof," "herein" and "herewith" and words of
similar
import shall, unless otherwise stated, be
construed to refer to this Agreement
as a whole and not to any particular
provision of this Agreement, and article,
section, recitals, paragraph, exhibit and
schedule references are to the
articles, sections, recitals, paragraphs,
exhibits and schedules of this
Agreement unless otherwise specified.
(d) The meaning assigned to each term defined herein shall be
equally
applicable to both the singular and the
plural forms of such term, and words
denoting any gender shall include all
genders. Where a word or phrase is defined
herein, each of its other grammatical forms
shall have a corresponding meaning.
(e) A reference to any Party or to any party to any other contract
or
document shall include such party's
successors and permitted assigns.
(f) A reference to any legislation or to any provision of any
legislation shall include any amendment to,
and any modification or re-enactment
thereof, any legislative provision
substituted therefore and all rules,
regulations and statutory instruments
issued thereunder or pursuant thereto.
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(g) The Parties have participated jointly in the negotiation
and
drafting of this Agreement. In the event an
ambiguity or question of intent or
interpretation arises, this Agreement shall
be construed as if drafted jointly
by the Parties, and no presumption or
burden of proof shall arise favoring or
disfavoring any Party by virtue of the
authorship of any provisions of this
Agreement.
(h) The words "ordinary course of business" shall be construed to
mean
consistent in nature, scope and magnitude
with past practices.
(i) The words "currently", "presently" and words of similar
meaning
shall mean as of the date hereof and as of
the Effective Time.
(j) As used herein, "knowledge" (or words to such effect) of
the
Company shall mean actual knowledge of the
executive officers of the Company, as
the case may be, after reasonable inquiry,
and "knowledge" (or words to such
effect) of the Parent or Merger Sub shall
mean the actual knowledge of their
executive officers, after reasonable
inquiry.
ARTICLE 2.
MERGER AND ORGANIZATION
SECTION 2.1 THE MERGER.
Upon the terms
and subject to satisfaction or waiver of the conditions set
forth in this Agreement and in accordance
with the DGCL, at the Effective Time,
Merger Sub shall be merged with and into
the Company. As a result of the Merger,
the separate corporate existence of Merger
Sub shall cease and the Company shall
continue as the surviving corporation of
the Merger (the "Surviving
Corporation"). Merger Sub and the Company
are herein sometimes referred to as
the "Constituent Corporations."
SECTION 2.2 EFFECTIVE TIME.
If this
Agreement is not terminated pursuant to Article 8 hereof, the
closing of the Merger (the "Closing") shall
take place at the offices of Latham
& Watkins LLP, 885 Third Avenue, Suite
1000, New York, New York 10022 at 10:00
a.m., New York City time, as soon as
practicable, but in no event later than the
second Business Day after the satisfaction
or waiver of the conditions set forth
in Article 7 (other than (a) those
conditions that are waived in accordance with
the terms of this Agreement by the Party or
Parties for whose benefit such
conditions exist and (b) any such
conditions, which by their terms, are not
capable of being satisfied until the
Closing), or at such other place or at such
other date as the Parties may mutually
agree. Upon the terms and subject to the
conditions set forth in this Agreement, at
the Closing, the Parties shall cause
the Merger to be consummated by filing the
Certificate of Merger with the
Secretary of State of the State of
Delaware, in such form as required by, and
executed in accordance with, the relevant
provisions of the DGCL (the date and
time of the filing of the Certificate of
Merger with the Secretary of State of
the State of Delaware, or such later time
as is specified in the Certificate of
Merger and as is agreed to by the Parties
hereto, being the "Effective Time")
and shall make all other filings or
recordings required under the DGCL in
connection with the Merger.
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SECTION 2.3 EFFECT OF MERGER.
At the Effective
Time, the effect of the Merger shall be as provided in
Section 259 of the DGCL. Without limiting
the generality of the foregoing, at
the Effective Time, except as otherwise
provided herein, all the property,
rights, privileges, powers and franchises
of the Company and Merger Sub shall
vest in the Surviving Corporation, and all
debts, liabilities and duties of the
Company and Merger Sub shall become the
debts, liabilities and duties of the
Surviving Corporation. If at any time after
the Effective Time any further
action is necessary to vest in the
Surviving Corporation the title to all
property or rights of Merger Sub or the
Company, the authorized officers and
directors of the Surviving Corporation are
fully authorized in the name of
Merger Sub or the Company, as the case may
be, to take, and shall take, any and
all such lawful action.
SECTION 2.4 CERTIFICATE OF INCORPORATION;
BY-LAWS.
The Certificate
of Merger shall provide that, at the Effective Time, the
certificate of incorporation and the
by-laws of the Surviving Corporation shall
be amended in their entirety to contain the
provisions set forth in the
certificate of incorporation and the
by-laws of Merger Sub, each as in effect
immediately prior to the Effective Time,
until thereafter changed or amended as
provided therein or by applicable Law.
SECTION 2.5 DIRECTORS AND OFFICERS.
The directors of
Merger Sub immediately prior to the Effective Time shall
be the initial directors of the Surviving
Corporation, each to hold office in
accordance with the certificate of
incorporation and by-laws of the Surviving
Corporation. The officers of the Company
immediately prior to the Effective Time
shall be the initial officers of the
Surviving Corporation, each to hold office
in accordance with the certificate of
incorporation and by-laws of the Surviving
Corporation.
ARTICLE 3.
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.1 CONVERSION OF SECURITIES.
At the Effective
Time, pursuant to this Agreement and by virtue of the
Merger and without any action on the part
of Merger Sub, the Company or the
holders of any of the following
securities:
(a) Each share of common stock, par value $.01 per share, of
the
Company ("Company Common Stock") (shares of
Company Common Stock being
hereinafter collectively referred to as
"Company Shares" and individually as a
"Company Share") issued and outstanding
immediately prior to the Effective Time
(other than any Company Shares to be
cancelled pursuant to Section 3.1(b) and
any Dissenting Shares shall be cancelled,
extinguished and shall be converted
automatically into the right to receive an
amount equal to $17.50 in cash,
without interest (the "Cash Merger
Consideration"), payable to the holder
thereof, as provided in Section 3.2, upon
surrender of the certificate formerly
representing the Company Shares being
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converted into the right to receive the
Cash Merger Consideration, less any
required withholding Taxes.
(b) Each Company Share held in the treasury of Company, each
Company
Share owned by any direct or indirect
subsidiary of the Company and each Company
Share owned by Parent, Merger Sub or any
wholly-owned subsidiary of Parent or
Merger Sub, if any, immediately prior to
the Effective Time shall be cancelled
and extinguished without any conversion
thereof and no payment or distribution
shall be made with respect thereto.
(c) Each share of Merger Sub's common stock, $.01 par value
("Merger
Sub Common Stock"), issued and outstanding
immediately prior to the Effective
Time shall be converted into and be
exchanged for one newly issued, fully paid
and nonassessable share of common stock of
the Surviving Corporation.
(d) If between the date of this Agreement and the Effective Time
the
outstanding shares of Company Common Stock
shall have been changed into a
different number of shares or a different
class, by reason of any stock
dividend, subdivision, reclassification,
recapitalization, split, combination or
exchange of shares, or rights issued in
respect of the Company Shares, the Cash
Merger Consideration shall be
correspondingly adjusted to reflect such stock
dividend, subdivision, reclassification,
recapitalization, split, combination or
exchange of shares or the rights issued in
respect thereof.
(e) Notwithstanding anything in this Agreement to the contrary,
Company Shares that are issued and
outstanding immediately prior to the
Effective Time and which are held by
holders of Company Shares who have not
voted in favor of or consented to the
Merger and who have properly demanded and
perfected their rights to be paid the fair
value of such Company Shares in
accordance with Section 262 of the DGCL
(the "Dissenting Shares") shall not be
converted into or exchangeable for the
right to receive the Cash Merger
Consideration, and the holders thereof
shall be entitled to only such rights as
are granted by Section 262 of the DGCL;
provided, however, that if any such
stockholder of Company shall fail to
perfect or shall effectively waive,
withdraw or lose such stockholder's rights
under Section 262 of the DGCL, such
stockholder's Company Shares in respect of
which the stockholder would otherwise
be entitled to receive fair value under
Section 262 of the DGCL shall be treated
as a share that had been converted as of
the Effective Time into the right to
receive the Cash Merger Consideration in
accordance with this Section 3.1. The
Company shall give prompt notice to Merger
Sub of any notices of dissent,
demands for payment of fair value or other
communications or actions received by
the Company with respect to shares of
Company Common Stock, and Merger Sub shall
have the right to participate in and
approve all negotiations and proceedings
with respect thereto. The Company shall
not, except with the prior written
consent of Merger Sub, make any payment
with respect to, or settle or offer to
settle, any such demands.
SECTION 3.2 PAYMENT OF CASH FOR COMPANY
COMMON STOCK.
(a)
At the Effective Time, Parent or Merger Sub shall irrevocably
deposit or cause to be deposited with a
bank or trust company designated by
Parent and reasonably satisfactory to the
Company (the "Exchange Agent"), as
agent for the holders of shares of Company
Common Stock, cash in the aggregate
amount required to effect conversion of
shares
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<PAGE>
of Company Common Stock into the Cash
Merger Consideration at the Effective Time
pursuant to Section 3.1(a) hereof. Pending
distribution pursuant to Section
3.2(b) hereof of the cash deposited with
the Exchange Agent, such cash shall be
held in trust for the benefit of the
holders of Company Common Stock and the
fund shall not be used for any other
purposes, and Parent and the Surviving
Corporation may direct the Exchange Agent
to invest such cash, provided that
such investments (i) shall be obligations
of or guaranteed by the United States
of America, commercial paper obligations
receiving the highest rating from
either Moody's Investors Services, Inc. or
Standard & Poor's Corporation, or
certificates of deposit, bank repurchase
agreements or bankers acceptances of
domestic commercial banks with capital
exceeding $250,000,000 (collectively
"Permitted Investments") or money market
funds which are invested solely in
Permitted Investments and (ii) shall have
maturities that will not prevent or
delay payments to be made pursuant to
Section 3.2(b) hereof. Each holder of a
certificate or certificates representing
shares of Company Common Stock
cancelled on the Effective Time pursuant to
Section 3.1(a) hereof may thereafter
surrender such certificate or certificates
to the Exchange Agent, as agent for
such holder of shares of Company Common
Stock, which shall effect the exchange
of such certificate or certificates on such
holder's behalf for a period ending
six months after the Effective Time. Any
interest and other income resulting
from such investments shall be paid to
Parent.
(b) Promptly after the Effective Time, Parent shall instruct
the
Exchange Agent to mail to each holder of
record of a certificate or certificates
which immediately prior to the Effective
Time represented outstanding shares of
Company Common Stock (the "Certificates")
(i) a letter of transmittal (which
shall specify that delivery shall be
effected, and risk of loss and title to the
Certificates shall pass, only upon proper
delivery of the Certificates to the
Exchange Agent and shall be in customary
form) and (ii) instructions for use in
effecting the surrender of the Certificates
in exchange for the Cash Merger
Consideration. Upon surrender of a
Certificate for cancellation to the Exchange
Agent together with such letter of
transmittal, properly completed and duly
executed, and such other documents as may
be required pursuant to such
instructions, the holder of such
Certificate shall be entitled to receive in
exchange therefor the Cash Merger
Consideration which such holder has the right
to receive in respect of the shares of
Company Common Stock formerly represented
by such Certificate, and the Certificate so
surrendered shall forthwith be
canceled. Until surrendered as contemplated
by this Section 3.2(b), each
Certificate shall be deemed at any time
after the Effective Time to represent
only the right to receive upon such
surrender the Cash Merger Consideration. No
interest shall be paid or will accrue on
any cash payable to holders of
Certificates pursuant to the provisions of
this Article 3.
(c) If any cash deposited with the Exchange Agent for purposes
of
payment in exchange for shares of Company
Common Stock remains unclaimed
following the expiration of six (6) months
after the Effective Time, such cash
shall be delivered to the Surviving
Corporation by the Exchange Agent, and
thereafter the Exchange Agent shall not be
liable to any Persons claiming any
amount of such cash, and the surrender and
exchange shall be effected directly
with the Surviving Corporation (subject to
applicable abandoned property,
escheat and similar Laws). No interest
shall accrue or be payable with respect
to any amounts which any such holder shall
be so entitled to receive. The
Surviving Corporation or the Exchange Agent
shall be authorized to pay the cash
attributable to any Certificate theretofore
issued which has been lost or
destroyed, upon receipt of satisfactory
evidence of ownership of the shares of
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<PAGE>
Company Common Stock represented thereby
and of appropriate indemnification
(including, if required by the Surviving
Corporation, the posting by such Person
of a bond).
(d) None of Parent, the Surviving Corporation or the Exchange
Agent
shall be liable to any Person in respect of
any shares of retained Company
Common Stock (or dividends or distributions
with respect thereto) or cash
delivered to a public official pursuant to
any applicable abandoned property,
escheat or similar Law.
(e) If payment is to be made to a Person other than the Person
in
whose name a surrendered certificate, which
prior to the Effective Time shall
have represented any shares of Company
Common Stock, is registered, it shall be
a condition to such payment that the
certificate so surrendered shall be
endorsed or shall otherwise be in proper
form for transfer, and that the Person
requesting such payment shall have paid any
transfer and other Taxes required by
reason of such payment in a name other than
that of the registered holder of the
certificate surrendered or shall have
established to the satisfaction of the
Surviving Corporation or the Exchange Agent
that such Tax either has been paid
or is not payable.
(f) From and after the Effective Time, the holders of shares of
Company Common Stock outstanding
immediately prior to the Effective Time shall
cease to have any rights with respect to
such shares of Company Common Stock
except as otherwise provided herein or by
Law. All Cash Merger Consideration
paid in accordance with the terms hereof
shall be deemed to have been issued in
full satisfaction of all rights pertaining
to such shares of Company Common
Stock.
(g) After the Effective Time, there shall be no transfers on the
stock
transfer books of the Surviving Corporation
of any shares of Company Common
Stock which were outstanding immediately
prior to the Effective Time. If, after
the Effective Time, certificates for shares
of Company Common Stock are
presented to the Surviving Corporation,
they shall be cancelled and promptly
exchanged for the Cash Merger Consideration
except as provided in Section
3.2(e).
(h) Parent, the Surviving Corporation or the Exchange Agent shall
be
entitled to deduct and withhold from the
consideration otherwise payable
pursuant to this Agreement to any holder of
Company Common Stock such amounts as
Parent, the Surviving Corporation or the
Exchange Agent are required to deduct
and withhold under the Code, or any
provision of state, local or foreign tax
Law, with respect to the making of such
payment. To the extent that amounts are
so withheld by Parent, the Surviving
Corporation or the Exchange Agent, such
withheld amounts shall be treated for all
purposes of this Agreement as having
been paid to the holder of Company Common
Stock in respect of whom such
deduction and withholding was made by
Parent, the Surviving Corporation or the
Exchange Agent.
SECTION 3.3 EXCHANGE OF MERGER SUB COMMON
STOCK CERTIFICATE.
Immediately
after the Effective Time, upon surrender by the record holder
of the certificate, duly endorsed in blank,
representing the shares of Merger
Sub Common Stock outstanding immediately
prior to the Effective Time, the
Surviving Corporation shall deliver to such
record holder a stock certificate,
registered in such holder's name,
representing the number
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<PAGE>
of shares of common stock of the Surviving
Corporation to which such record
holder is so entitled by virtue of Section
3.1(c). Such certificate will bear a
legend restricting the transferability of
such shares of the Surviving
Corporation except in accordance with
applicable federal and state securities
Laws.
SECTION 3.4 STOCK TRANSFER BOOKS.
At the Effective
Time, the stock transfer books of the Company shall be
closed and thereafter, there shall be no
further registration of transfers of
shares of Company Common Stock theretofore
outstanding on the records of the
Company. From and after the Effective Time,
the holders of certificates
representing shares of Company Common Stock
outstanding immediately prior to the
Effective Time shall cease to have any
rights with respect to such shares of
Company Common Stock except as otherwise
provided herein or by Law. On or after
the Effective Time, any Certificates
presented to the Exchange Agent or Parent
for any reason shall be converted into the
Cash Merger Consideration.
SECTION 3.5 STOCK OPTIONS.
(a) Prior to the Effective Time, the Board of Directors of the
Company
(or, if appropriate, any committee thereof)
shall adopt appropriate resolutions
and take all other actions necessary and
appropriate to provide that,
immediately prior to the Effective Time,
each unexpired and unexercised option,
restricted stock units or similar rights to
purchase Company Common Stock (the
"Company Options"), under any equity
compensation plan of the Company, including
the Amended and Restated 1994 Stock Option
Plan, the Amended and Restated 1999
Stock Incentive Plan, the Management Stock
Purchase Plan or the Employee Stock
Purchase Plan (the "Company Stock Option
Plans"), whether or not then
exercisable or vested, shall be cancelled
and, in exchange therefor, each former
holder of any such cancelled Company Option
shall be entitled to receive, in
consideration of the cancellation of such
Company Option and in settlement
therefor, a payment in cash (subject to any
applicable withholding or other
taxes required by applicable Law to be
withheld) of an amount equal to the
product of (i) the total number of shares
of Company Common Stock that were
subject to such Company Option immediately
prior to the Effective Time and (ii)
the excess, if any, of the Cash Merger
Consideration over the exercise price per
share of such Company Common Stock that
were subject to such Company Option
(such amounts payable hereunder being
referred to as the "Option Payment"). From
and after the Effective Time, any such
cancelled Company Option shall no longer
be exercisable by the former holder
thereof, but shall only entitle such holder
to the payment of the Option Payment, and
the Company will use commercially
reasonable efforts to obtain all necessary
consents to ensure that former
holders of Company Options will have no
rights other than the right to receive
the Option Payment. After the Effective
Time, all Company Stock Option Plans
shall be terminated and no further Company
Options shall be granted thereunder.
(b) On and after the date hereof, no future offering periods will
be
commenced under the Company's Employee
Stock Purchase Plan. Any offering period
in progress on the date hereof shall
terminate on the earlier of December 30,
2005 and the Effective Time, and the
Company shall terminate the Employee Stock
Purchase Plan as of the Effective Time. Any
accumulated contributions that are
required in accordance with the terms
of
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the Employee Stock Purchase Plan to be
applied to the purchase of Company Common
Stock shall be so applied no later than the
Effective Time.
SECTION 3.6 WARRANTS.
Prior to the
Effective Time, the Board of Directors of the Company (or, if
appropriate, any committee thereof) shall
adopt appropriate resolutions and take
all other actions necessary and appropriate
to provide that, immediately prior
to the Effective Time, each unexpired and
unexercised warrant or similar rights
to purchase Company Common Stock (the
"Company Warrants"), under the that
certain Warrant to Purchase Common Stock,
dated August 16, 1999, issued to
Special Value Bond Fund, LLC (the "Company
Warrant Agreement"), whether or not
then exercisable, shall be cancelled and,
in exchange therefor, each former
holder of any such cancelled Company
Warrants shall be entitled to receive, in
consideration of the cancellation of such
Company Warrants and in settlement
therefor, a payment in cash (subject to any
applicable withholding or other
taxes required by applicable Law to be
withheld) of an amount equal to the
product of (A) the total number of shares
of Company Common Stock that were
subject to such Company Warrants
immediately prior to the Effective Time and (B)
the excess, if any, of the Cash Merger
Consideration over the exercise price per
share of such Company Common Stock that
were subject to such Company Warrants
(such amounts payable hereunder being
referred to as the "Warrant Payment").
From and after the Effective Time, any such
cancelled Company Warrants shall no
longer be exercisable by the former holder
thereof, but shall only entitle such
holder to the payment of the Warrant
Payment.
ARTICLE 4.
ADDITIONAL AGREEMENTS IN CONNECTION WITH THE MERGER
SECTION 4.1 STOCKHOLDERS' APPROVAL.
The Company
shall take all actions reasonably necessary in accordance with
applicable Law and its certificate of
incorporation and bylaws to convene a
meeting of its stockholders as promptly as
practicable for the purpose of
considering and approving this Agreement
and the Merger (the "Special Meeting").
Unless this Agreement shall have been
terminated in accordance with Section 8.1,
nothing contained herein shall limit the
Company's obligation to convene and
hold the Special Meeting. Subject to
Section 4.7, the Company shall, through its
Board of Directors or the Special
Committee, recommend that the stockholders of
the Company vote to approve this Agreement
and the Merger and shall include such
recommendation in the Preliminary Proxy
Statement and the Definitive Proxy
Statement (the "Company
Recommendation").
SECTION 4.2 PROXY MATERIALS.
(a) In connection with the Special Meeting, as promptly as
practicable
following the date of this Agreement, the
Company shall prepare and file a
preliminary proxy statement relating to the
transactions contemplated by this
Agreement and the Merger (the "Preliminary
Proxy Statement") with the United
States Securities and Exchange Commission
(the "SEC") and shall use commercially
reasonable efforts to respond to the
comments of the
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SEC and to cause a definitive proxy
statement to be mailed to the Company's
stockholders (the "Definitive Proxy
Statement") all as soon as reasonably
practicable; provided, that prior to the
filing of each of the Preliminary Proxy
Statement and the Definitive Proxy
Statement, the Company shall consult with
Merger Sub with respect to such filings and
shall afford Merger Sub reasonable
opportunity to comment thereon. Merger Sub
shall provide the Company with any
information for inclusion in the
Preliminary Proxy Statement and the Definitive
Proxy Statement which may be required under
applicable Law and which is
reasonably requested by the Company.
(b) Each of the Company and Parent shall furnish all
information
concerning itself and its Affiliates that
is required to be included in any
Preliminary Proxy Statement or in the
Definitive Proxy Statement (collectively,
the "Proxy Statement") or that is
customarily included in proxy statements
prepared in connection with transactions of
the type contemplated by this
Agreement. Each of the Company and Parent
shall use its reasonable best efforts
to respond as promptly as practicable to
any comments of the SEC with respect to
the Proxy Statement. Each party shall
promptly notify the other party upon the
receipt of any comments from the SEC or its
staff or any request from the SEC or
its staff for amendments or supplements to
the Proxy Statement and shall provide
the other party with copies of all
correspondence between it and its
representatives, on the one hand, and the
SEC and its staff, on the other hand
relating to the Proxy Statement. If at any
time prior to the Special Meeting,
any information relating to the Company,
Parent or any of their respective
Affiliates, officers or directors, should
be discovered by the Company or Parent
which should be set forth in an amendment
or supplement to the Proxy Statement,
so that the Proxy Statement shall not
contain any untrue statement of a material
fact or omit to state any material fact
required to be stated therein or
necessary in order to make the statements
therein, in light of the circumstances
under which they are made, not misleading,
the party which discovers such
information shall promptly notify the other
party, and an appropriate amendment
or supplement describing such information
shall be filed with the SEC and, to
the extent required by applicable Law,
disseminated to the shareholders of the
Company. Notwithstanding anything to the
contrary stated above, prior to filing
or mailing the Proxy Statement (or, in each
case, any amendment or supplement
thereto) or responding to any comments of
the SEC with respect thereto, the
party responsible for filing or mailing
such document shall provide the other
party an opportunity to review and comment
on such document or response and
shall include in such document or response
comments reasonably proposed by the
other party. Subject to Section 4.7(b), the
Proxy Statement shall contain the
recommendation of the Board of Directors or
the Special Committee that the
shareholders of the Company vote to adopt
and approve this Agreement and the
Merger.
(c) The Company will use reasonable best efforts to solicit from
its
shareholders proxies in favor of the
adoption of this Agreement and will take
all other action necessary or advisable to
secure the vote or consent of its
shareholders required by applicable Law to
obtain such approvals.
(d) The information supplied by Parent for inclusion in the
Proxy
Statement shall not, at (i) the time filed
with the SEC, (ii) the time the Proxy
Statement (or any amendment thereof or
supplement thereto) is first mailed to
the shareholders of the Company, (iii) the
time of the Special Meeting and (iv)
the Effective Time, contain any untrue
statement of a material fact or fail to
state any material fact required to be
stated therein or necessary in order to
make the
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statements therein, in light of the
circumstances under which they were made,
not misleading. If, at any time prior to
the Effective Time, any event or
circumstance relating to Parent, or its
officers or directors, that should be
set forth in an amendment or a supplement
to the Proxy Statement should be
discovered by Parent, Parent shall promptly
inform the Company thereof. All
documents that Parent is responsible for
filing with the SEC in connection with
the transactions contemplated by this
Agreement will comply as to form and
substance in all material respects with the
applicable requirements of the
Securities Act and the rules and
regulations thereunder and the Exchange Act and
the rules and regulations thereunder.
(e)
The information supplied by the Company for inclusion in the
Proxy
Statement or shall not, at (i) the time
filed with the SEC, (ii) the time the
Proxy Statement (or any amendment thereof
or supplement thereto) is first mailed
to the shareholders of the Company, (iii)
the time of the Special Meeting and
(iv) the Effective Time, contain any untrue
statement of a material fact or fail
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
were made, not misleading. If, at any time
prior to the Effective Time, any
event or circumstance relating to the
Company or any Subsidiary of the Company,
or their respective officers or directors,
that should be set forth in an
amendment or a supplement to the Proxy
Statement should be discovered by the
Company, the Company shall promptly inform
Parent. All documents that the
Company is responsible for filing with the
SEC in connection with the
transactions contemplated hereby will
comply as to form and substance in all
material respects with the applicable
requirements of the Securities Act and the
rules and regulations thereunder and the
Exchange Act and the rules and
regulations thereunder.
SECTION 4.3 COMMERCIALLY REASONABLE
EFFORTS; CONSENTS; OTHER FILINGS.
Upon the terms
and subject to the conditions herein provided, and subject
to the terms hereof, each Party hereto
shall use commercially reasonable efforts
to take, or cause to be taken, all actions,
and to do, or cause to be done, and
to assist and cooperate with the other
Parties hereto in doing, all things
necessary, proper or advisable under
applicable Laws and regulations and their
respective certificates of incorporation
and bylaws to consummate and make
effective, as soon as reasonably
practicable, the transactions contemplated by
this Agreement, subject, however, to
Company Stockholder Approval. Such actions
shall include, without limitation, using
commercially reasonable efforts to (i)
defend any lawsuits or other legal
proceedings, whether judicial or
administrative and whether brought
derivatively or on behalf of third parties
(including Governmental Entities),
challenging this Agreement, or the
consummation of the transactions
contemplated thereby or hereby and (ii) effect
all necessary registrations and filings,
including but not limited to any
filings required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations
promulgated thereunder (the "HSR
Act"), and submissions of information
requested by Governmental Entities. Upon
the terms and subject to the conditions
hereof, each of the Parties shall use
commercially reasonable efforts to take, or
cause to be taken, all reasonable
actions and to do, or cause to be done, all
things necessary to satisfy the
other conditions of Closing set forth
herein and to cooperate with all
reasonable requests made by the other
Parties. Without limiting the generality
of the foregoing, and notwithstanding
anything in this Agreement to the
contrary, the Company shall use
commercially reasonable efforts to obtain all
consents, amendments to or waivers from
other parties under the terms of all
leases and other agreements between the
Company and such parties
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required as a result of the transactions
contemplated by this Agreement and
obtain all necessary consents, approvals
and authorizations as are required to
be obtained under any federal or state Law.
The Parties shall consult regularly
with each other in advance and from time to
time regarding the conduct and
status of any filings with Governmental
Entities. In connection with and without
limiting the foregoing, the Company and the
Board of Directors of the Company
shall, at the request of Parent: (i) take
all action within its power reasonably
requested by Parent as necessary to ensure
that no state takeover statute or
similar statute or regulation is or becomes
applicable to this Agreement and the
transactions contemplated hereby, and (ii)
if any state takeover statute or
similar statute or regulation becomes
applicable to this Agreement or the
transactions contemplated hereby, take all
action within its power reasonably
requested by Parent as necessary to ensure
that the transactions contemplated
hereby may be consummated as promptly as
practicable on the terms contemplated
by this Agreement and otherwise to minimize
the effect of such statute or
regulation on the transactions contemplated
hereby. Nothing in this Agreement
shall be deemed to require any party to
waive any provision of this Agreement or
any other substantial rights or agree to
any substantial limitation on its
operations or to dispose of any significant
asset or collection of assets.
Between the date hereof and the Closing,
the Company shall give prompt notice to
Parent, and Parent shall give prompt notice
to the Company, of (a) the
occurrence or non-occurrence of any event
or circumstance the occurrence or
non-occurrence of which would be likely to
cause any representation or warranty
of such party contained in this Agreement
to be untrue or inaccurate if made at
such time and (b) any failure of the
Company or Parent, as the case may be, to
comply with or satisfy any of such party's
covenants, conditions or agreements
to be complied with or satisfied by it
hereunder; provided, however, that the
delivery or non-delivery of any notice
required to be sent pursuant to this
Section 4.3 shall not limit or otherwise
affect the remedies available hereunder
to the party receiving such notice.
SECTION 4.4 FINANCING.
At the cost and
expense of the Merger Sub, the Company shall use
commercially reasonable efforts to
cooperate and assist Merger Sub with respect
to the Financing (as defined in Section
6.7). The Company agrees to provide, and
shall cause its Subsidiaries and its and
their representatives to provide on a
timely basis, all reasonable cooperation in
connection with the arrangement of
the Debt Financing as may be requested by
Parent (provided, that such requested
cooperation does not unreasonably interfere
with the ongoing operations of the
Company and its Subsidiaries), including
(i) participation in meetings, drafting
sessions and due diligence sessions, (ii)
furnishing Parent and its financing
sources with financial and other pertinent
information regarding the Company as
may be reasonably requested by Parent,
including all financial statements and
financial data of the type required by
Regulation S-X and Regulation S-K under
the Securities Act, (iii) assisting Parent
and its financing sources in the
preparation of (A) an offering document for
any of the Debt Financing and (B)
materials for rating agency presentations,
(iv) reasonably cooperating with the
marketing efforts of Parent and its
financing sources for any of the Debt
Financing and (v) providing and executing
documents as may be reasonably
requested by Parent, including a
certificate of the chief financial officer of
the Company or any of its Subsidiaries with
respect to solvency matters, comfort
letters of accountants, consents of
accountants for use of their reports in any
materials relating to the Debt Financing,
surveys and title insurance; provided,
that none of the Company or any of its
Subsidiaries shall be required to pay any
commitment or other similar fee or incur
any other liability in connection with
the Debt Financing prior to the Effective
Time. All non-public or
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otherwise confidential information
regarding the Company obtained by Parent or
its representatives pursuant to this
Section 4.4 shall be kept confidential in
accordance with the Confidentiality
Agreement; provided, that Parent and its
representatives shall be permitted to
disclose information as necessary and
consistent with customary practices in
connection with the Debt Financing.
Parent shall promptly upon request by the
Company reimburse the Company for all
Expenses incurred by the Company and its
Subsidiaries in connection with such
cooperation.
SECTION 4.5 CONDUCT OF BUSINESS BY COMPANY
PENDING THE MERGER.
The Company
covenants and agrees that, from the date hereof to immediately
prior to the Effective Time or earlier
termination of this Agreement as provided
herein, except as set forth in Section 4.5
of the Disclosure Schedules, as
otherwise contemplated by this Agreement,
or as Parent otherwise consents in
writing, it shall, and shall cause its
Subsidiaries to, act and carry on their
respective businesses in the ordinary
course of business consistent with past
practice and use commercially reasonable
efforts to preserve intact their
respective businesses, properties and
assets and their current material business
organizations, keep available the services
of their current officers and
employees (except for terminations of
employees in the ordinary course of
business) and preserve their material
relationships with others having
significant business dealings with them. In
addition, and without limiting the
generality of the foregoing, except as
otherwise contemplated by this Agreement
or as set forth in Section 4.5 of the
Disclosure Schedules, from the date of
this Agreement to the Effective Time, the
Company shall not, and shall not
permit any of its Subsidiaries to, do any
of the following without the prior
written consent of Parent:
(a) (i) amend or otherwise change its certificate of incorporation
or
bylaws; (ii) increase the number of
directors constituting the Board of
Directors of the Company; (iii) elect or
appoint new directors or officers, or
hire any new officers, other than (A) to
fill any vacancies on the board or in
any officer position, in each case, as
required by applicable Law (including
requirements to maintain listing under the
Exchange or maintain reporting
company status under SEC rules and
regulations) to be filled, (B) in the case of
vacancies in officer positions, to fill any
such vacancies at the District
Manager level that the Board of Directors
of the Company determines should be
filled in order for the Company to operate
in the ordinary course of business
consistent with past practice, or (C) in
the case of other vacancies in officer
positions, to fill any such vacancies that
the Board of Directors of the Company
determines should be filled in order for
the Company to operate in the ordinary
course of business consistent with past
practice at total compensation levels of
less than $100,000 per year; provided, that
(I) any such election or appointment
of directors shall not result in a majority
of new directors being elected or
appointed to the Board of Directors as
compared to those directors serving on
the Board of Directors as of the date
hereof, and (II) any new employment,
compensation, severance or benefit
arrangements for new officers or directors be
approved by Parent; or (iv) declare, set
aside or pay any dividend or other
distribution or payment in cash, stock or
property in respect of any of its
shares of capital stock;
(b) (i) issue, grant, sell, pledge, dispose of, transfer, grant
or
encumber or agree or propose to issue,
grant, sell, pledge, dispose of,
transfer, grant or encumber (A) any shares
of capital stock, stock options,
warrants, securities, rights of any kind or
ownership
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interest (including phantom interests) or
rights to acquire any such shares,
securities or rights or ownership interest
of the Company or its Subsidiaries
(except for the issuance of (x) Company
Shares issuable pursuant to employee
stock options and warrants outstanding on
the date of this Agreement in
accordance with the terms of such
securities or options, and (y) new employee
stock options to acquire not more than
50,000 Company Shares issued to new
employees hired by the Company after the
date hereof in the ordinary course of
business consistent with past practice;
provided, that such new options have a
per share exercise price equal to or
greater than the Cash Merger Consideration,
are issued pursuant to the Company's
Amended and Restated 1999 Stock Incentive
Plan, and have terms that provide for the
automatic cancellation of such options
in the Merger at no cost to the Purchaser)
or (B) any material assets of the
Company or any of its Subsidiaries, except
for dispositions of inventory in the
ordinary course of business and in a manner
consistent with past practice, or
(ii) enter into or modify any contract,
agreement, commitment or arrangement
with respect to any of the foregoing;
(c) make any change in the number of shares of its capital
stock
authorized, issued or outstanding (other
than issuances of shares in connection
with the exercise of Company Options or
Warrants outstanding on the date hereof)
or grant or accelerate the exercisability
of any option, warrant or other right
to purchase shares of its capital stock,
other than in the case of options,
acceleration in accordance with the terms
of such options in effect as of the
date hereof in connection with the
transactions contemplated hereby;
(d) repurchase, repay, cancel or incur any Indebtedness, except
for
borrowings in the ordinary course of
business consistent with past practice
incurred under existing Indebtedness
agreements.
(e) make any material Tax election, file any amended Tax Returns
or
settle, compromise any material federal,
state, local or foreign income Tax
liability, or make any change in any
material method of Tax accounting, or waive
any statute of limitations in respect of a
material amount of Taxes or agree to
any extension of time with respect to an
assessment or deficiency for a material
amount of Taxes other than pursuant to
extensions of time to file Tax Returns
obtained in the ordinary course of
business;
(f) make any material change in its accounting principles or
methods
except insofar as may be required by a
change in GAAP;
(g) (i) split, combine, subdivide or reclassify any capital stock
or
issue or authorize the issuance of any
other securities in respect of, in lieu
of or substitution for shares of its
capital stock or (ii) redeem, purchase or
otherwise acquire, directly or indirectly,
any capital stock, other equity
interest or other securities of the Company
or any of its Subsidiaries;
(h) acquire or agree to acquire by merging or consolidating with,
or
by purchasing a substantial portion of the
stock or assets of, or by any other
manner, or enter into any memorandum of
understanding, letter of intent or other
agreement, arrangement or understanding to
acquire any business or any
corporation, partnership, joint venture,
association or other business
organization or division thereof;
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(i) adopt or amend (except as may be required by Law or to
avoid
adverse Tax consequences) any bonus, profit
sharing, compensation, stock option,
pension, retirement, deferred compensation,
employment or other employee benefit
plan, agreement, trust, fund or other
arrangement for the benefit or welfare of
any employee, director or form
