EXECUTION COPY
AGREEMENT AND PLAN OF
MERGER
by and among
THE DRESS BARN,
INC.,
THAILAND ACQUISITION
CORP.
and
TWEEN BRANDS, INC.
June 24, 2009
|
ARTICLE I
THE MERGER
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1
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1.1
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The
Merger
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1
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1.2
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Closing
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1
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1.3
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Effect of the
Merger
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2
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1.4
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Certificate of
Incorporation and Bylaws
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2
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1.5
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Directors and
Officers
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2
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1.6
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Tax
Consequences
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2
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|
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ARTICLE II
EFFECT ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS
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3
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2.1
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Conversion of
Securities
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3
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2.2
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Exchange of
Certificates
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4
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2.3
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Stock Transfer
Books
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6
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2.4
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Company Options
and Other Equity Awards
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7
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2.5
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Further
Assurances
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8
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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8
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3.1
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Organization
and Qualification
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8
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3.2
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Subsidiaries
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8
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3.3
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Authorization;
Valid and Binding Agreement
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9
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3.4
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Governmental
Filings; No Violations
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10
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3.5
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Capital
Stock
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10
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3.6
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Company SEC
Reports
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11
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3.7
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Absence of
Certain Changes or Events
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13
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3.8
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Properties
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14
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3.9
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Tax
Matters
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15
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3.10
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Material
Contracts
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16
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3.11
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Intellectual
Property
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17
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3.12
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Litigation
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18
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3.13
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Company
Employee Benefit Plans
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19
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3.14
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Insurance
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22
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3.15
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Compliance with
Laws; Permits
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22
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3.16
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Environmental
Matters
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23
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3.17
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Affiliated
Transactions
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24
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3.18
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Labor and
Employment Matters
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24
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3.19
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Bank
Accounts
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25
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3.20
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Suppliers
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26
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3.21
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Inventory
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26
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3.22
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Brokerage
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26
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3.23
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Fairness
Opinion
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26
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3.24
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Vote
Required
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26
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3.25
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Takeover
Statutes
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26
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3.26
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Company Rights
Agreement
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27
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3.27
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Article
Eleventh of Charter
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27
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3.28
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No Material
Misstatement or Omission
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27
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TABLE OF
CONTENTS
(continued)
Page
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUB
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27
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4.1
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Organization
and Qualification
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27
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4.2
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Subsidiaries
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28
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4.3
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Authorization;
Valid and Binding Agreement
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28
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4.4
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Governmental
Filings; No Violations
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29
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4.5
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Capital
Stock
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29
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4.6
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Parent SEC
Reports
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30
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4.7
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Absence of
Certain Changes or Events
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32
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4.8
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Title to
Properties
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32
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4.9
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Tax
Matters
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32
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4.10
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Material
Contracts
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33
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4.11
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Litigation
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33
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4.12
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Benefit
Plans
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33
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4.13
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Compliance with
Laws; Permits
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34
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4.14
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Environmental
Matters
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34
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4.15
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Brokerage
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35
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4.16
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Sufficient
Funds
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35
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4.17
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Operations of
Merger Sub
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35
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4.18
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No Material
Misstatement or Omission
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35
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4.19
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Ownership of
Company Common Stock
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35
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4.20
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Affiliated
Transactions
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35
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4.21
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Labor and
Employment Matters
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35
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4.22
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No Other
Representations and Warranties
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35
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ARTICLE V
CERTAIN PRE-CLOSING COVENANTS
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36
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5.1
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Conduct of the
Business of the Company
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36
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5.2
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No Control of
the Company’s Business
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38
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5.3
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Certificates
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38
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5.4
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Certain
Actions
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38
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ARTICLE VI
ADDITIONAL AGREEMENTS
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38
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6.1
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Registration
Statement; Proxy/Prospectus
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38
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6.2
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Meeting of
Company Stockholders; Board Recommendation
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40
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6.3
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Access to
Information; Confidentiality
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41
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6.4
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No
Solicitations of Transactions
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42
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6.5
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Reasonable Best
Efforts
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43
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6.6
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Regulatory
Filings
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44
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6.7
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Certain
Notices
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45
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6.8
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Public
Announcements
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45
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6.9
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Indemnification
of Directors and Officers
|
46
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TABLE OF
CONTENTS
(continued)
Page
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6.10
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Company 401(k)
Plans; Benefits
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47
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6.11
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Section 16
Matters
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48
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6.12
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Further
Assurances
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48
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6.13
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Stockholder
Litigation
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49
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6.14
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NASDAQ
Listing
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49
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6.15
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Pay-Off
Letter
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49
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6.16
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Resignations
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49
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6.17
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Board
Appointment
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50
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6.18
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Certain
Actions
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50
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ARTICLE VII
CONDITIONS
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50
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7.1
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Conditions to
Obligations of Each Party under this Agreement
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50
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7.2
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Conditions to
Parent’s and Merger Sub’s Obligations
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51
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7.3
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Conditions to
the Company’s Obligations
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52
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
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53
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8.1
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Termination
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53
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8.2
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Effect of
Termination
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54
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8.3
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Amendment
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55
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8.4
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Waiver
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55
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8.5
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Fees and
Expenses
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55
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ARTICLE IX
DEFINITIONS
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56
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9.1
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Definitions
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56
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9.2
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Construction
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65
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ARTICLE X
MISCELLANEOUS
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66
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10.1
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Non-Survival of
Representations and Warranties
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66
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10.2
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Notices
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66
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10.3
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Severability
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67
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10.4
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Entire
Agreement
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67
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10.5
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Assignment
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67
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10.6
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Third-Party
Beneficiaries
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68
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10.7
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No Strict
Construction
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68
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10.8
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Governing Law;
Consent to Jurisdiction and Venue.
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68
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10.9
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Disclosure
Letters
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68
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10.10
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Time of the
Essence
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69
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10.11
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Specific
Performance
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69
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10.12
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WAIVER OF TRIAL
BY JURY
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69
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10.13
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Counterparts
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69
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TABLE OF
CONTENTS
(continued)
Page
EXHIBITS
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Exhibit
A
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-
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Form of Amended
and Restated Certificate of Incorporation of
the Surviving
Corporation
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Exhibit
B
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-
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Form of Bylaws
of the Surviving Corporation
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Exhibit
C
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-
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Form of Tax
Certificate of the Company
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Exhibit
D
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-
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Form of Tax
Certificate of Parent and Merger Sub
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Exhibit
E
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-
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Form of Tax
Opinion of Proskauer Rose LLP
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Exhibit
F
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-
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Form of Tax
Opinion of O’Melveny & Myers LLP
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AGREEMENT AND PLAN OF
MERGER
THIS AGREEMENT
AND PLAN OF MERGER (this “ Agreement ”) is made
as of June 24, 2009, by and among The Dress Barn, Inc., a
Connecticut corporation (“ Parent ”), Thailand
Acquisition Corp., a Delaware corporation and a wholly owned
Subsidiary of Parent (“ Merger Sub ”), and Tween
Brands, Inc., a Delaware corporation (the “ Company
”). Capitalized terms used and not otherwise
defined in this Agreement have the meanings set forth in Article
IX.
RECITALS
WHEREAS, the Board of Directors of each of the
Company and Parent deems it advisable and in the best interests of
each such corporation and its stockholders that the Company and
Parent engage in a business combination;
WHEREAS, the respective Boards of Directors of
Parent, Merger Sub and the Company have approved and declared
advisable this Agreement, the merger of Merger Sub with and into
the Company (the “ Merger ”) and the other
transactions contemplated by this Agreement, upon the terms and
subject to the conditions set forth in this Agreement, and the
respective Boards of Directors of each of the Company and Merger
Sub have unanimously determined to recommend to their respective
stockholders the adoption of this Agreement, subject to the terms
and conditions hereof and in accordance with the provisions of the
General Corporation Law of the State of Delaware (as amended, the
“ DGCL ”); and
WHEREAS, the Merger is intended to qualify as a
“reorganization” as described in Section 368 of
the Code, and this Agreement is intended to constitute a
“plan of reorganization” within the meaning of the
Treasury Regulations promulgated under Section 368 of the
Code.
NOW, THEREFORE, in consideration of the
premises, representations and warranties and mutual covenants
contained in this Agreement and of other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, do
hereby agree as follows:
ARTICLE I
THE MERGER
1.1 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 after the
Merger (the “ Surviving Corporation
”).
1.2 Closing . The
closing of the Merger (the “ Closing ”) shall
take place on the second Business Day after the satisfaction or
waiver of the conditions (excluding conditions that, by their
nature, cannot be satisfied until the Effective Time and will in
fact be satisfied at the Effective Time) set forth in Article VII,
unless this Agreement has been theretofore terminated pursuant to
its terms or unless another time or date is agreed to in writing by
the parties hereto (the date and time of the Closing being referred
to in this Agreement as the “ Closing Date
”). The Closing shall be held at the offices
of Proskauer Rose LLP, 1585 Broadway, New York, New York
10036, unless another place is agreed to in writing by the parties
hereto. As soon as practicable on the Closing Date, the
Company shall cause the Merger to be consummated by filing a
certificate of merger relating to the Merger (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 such filing, or if a later date and time are specified
in such filing, such specified later date and time, being the
“ Effective Time ”).
1.3 Effect of the Merger
. At the Effective Time, the effect of the Merger shall
be as provided in the applicable provisions of the
DGCL. Without limiting the generality of the foregoing,
at the Effective Time, except as otherwise provided in this
Agreement, 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.
1.4 Certificate of Incorporation
and Bylaws . Subject to Section 6.9
hereof:
(a) At the Effective Time, the
Amended and Restated Certificate of Incorporation of the Company
shall be amended so as to read in its entirety as set forth in
Exhibit A hereto and, as so amended, shall be the Amended
and Restated Certificate of Incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein
or by applicable Law.
(b) At the Effective Time, the bylaws
of Merger Sub, as in effect immediately prior to the Effective
Time, shall be the bylaws of the Surviving Corporation and shall
read in their entirety as set forth in Exhibit B hereto
until thereafter changed or amended as provided therein or by
applicable Law.
1.5 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 bylaws 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 bylaws of the Surviving
Corporation.
1.6 Tax Consequences
. The parties hereto intend for the Merger to qualify as
a “reorganization” within the meaning of Section 368(a)
of the Code. The parties hereto adopt this Agreement as
a plan of reorganization within the meaning of Treasury Regulations
Section 1.368-2(g). Neither Parent, the Company nor any
other party to this Agreement shall take a position on any Tax
Return or other statement or report to any government or taxing
authority inconsistent with such intention unless required to do so
by applicable Tax Law.
ARTICLE II
EFFECT ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS
2.1 Conversion of Securities
. At the Effective Time, by virtue of the Merger and
without any action on the part of Parent, Merger Sub, the Company
or the holders of any of the following securities:
(a) Conversion Generally
. Subject to Section 2.2(e), each share of common stock,
par value $.01 per share, of the Company (“ Company Common
Stock ”), issued and outstanding immediately prior to the
Effective Time (other than any shares of Company Common Stock to be
cancelled pursuant to Section 2.1(b) or Section 2.1(e)) shall be
converted into the right to receive 0.47 (as may be adjusted
pursuant to this Section 2.1, the “ Exchange Ratio
”) validly issued, fully paid and nonassessable shares of
Parent Common Stock (unless the aggregate number of shares of
Parent Common Stock to be issued in the Merger pursuant to this
Section 2.1 would exceed 19.99% of Parent’s issued and
outstanding shares of Parent Common Stock immediately prior to the
Effective Time (19.99% of such issued and outstanding shares
rounded down to the nearest whole share, the “ Maximum
Share Number ”), in which case the Exchange Ratio shall
be reduced to the minimum extent necessary such that the number of
shares of Parent Common Stock issuable in the Merger pursuant to
this Section 2.1 equals the Maximum Share Number) (the “
Merger Consideration ”). Parent hereby
covenants and agrees that between the date of this Agreement and
the Effective Time or the earlier termination of this Agreement, it
will not redeem, repurchase or otherwise retire any previously
outstanding shares of Parent Common Stock. All such
shares of Company Common Stock shall no longer be outstanding and
shall automatically be cancelled and shall cease to exist, and each
certificate previously representing any such shares shall
thereafter represent the right to receive the Merger Consideration
payable in respect of such shares of Company Common
Stock.
(b) Parent-Owned Shares
. All shares of Company Common Stock owned by Parent or
Merger Sub or any of their respective wholly owned Subsidiaries, if
any, shall be cancelled and shall cease to exist and no Merger
Consideration or other consideration shall be delivered in exchange
therefor.
(c) Merger Sub
. Each share of common stock, par value $.01 per share,
of Merger Sub issued and outstanding immediately prior to the
Effective Time shall continue as one share of common stock, par
value $.01 per share, of the Surviving Corporation, which shall
constitute the only shares of common stock of the Surviving
Corporation.
(d) Change in Shares
. If, between the date of this Agreement and the
Effective Time, the outstanding shares of Company Common Stock or
Parent Common Stock shall have been changed into, or exchanged for,
a different number of shares or a different class, by reason of any
stock dividend, subdivision, reclassification, reorganization,
recapitalization, split, combination, contribution or exchange of
shares, the Merger Consideration and any adjustments or payments to
be made under Section 2.4 and any other number or amount contained
herein that is based upon the price of Parent Common Stock,
including the Measurement Price, or the number of shares of Company
Common Stock or Parent Common Stock, as the case may be, shall be
correspondingly adjusted to provide the holders of Company Common
Stock, Company Options and other awards under the Company Equity
Plans, the same economic effect as contemplated by this Agreement
prior to such event; provided that with respect to outstanding
Company Options and other awards made under the Company Equity
Plans, any such adjustments shall be made only to the extent
required under the applicable Company Equity Plan.
(e) Cancellation of Treasury
Shares . Each share of Company Common Stock held in
the Company treasury and each share of Company Common Stock, if
any, owned by any wholly owned Subsidiary of the Company
immediately prior to the Effective Time shall be cancelled and
extinguished without any conversion thereof.
2.2 Exchange of Certificates
.
(a) Exchange Agent
. Parent and/or Merger Sub shall deposit, or shall cause
to be deposited, with American Stock Transfer & Trust Co. or
another bank or trust company designated by Parent and reasonably
acceptable to the Company (the “ Exchange Agent
”), for the benefit of the holders of shares of Company
Common Stock, for exchange, in accordance with this Article II,
through the Exchange Agent, (i) at or prior to the Effective Time,
the Merger Consideration, including sufficient certificates
representing shares of Parent Common Stock pursuant to Section
2.1(a) and (ii) from time to time after the Effective Time, cash
sufficient to make payments in lieu of fractional shares in
accordance with Section 2.2(e), in respect of shares of Company
Common Stock for which Certificates have been properly delivered to
the Exchange Agent. The shares of Parent Common Stock
and cash amounts so deposited with the Exchange Agent, together
with any dividends or distributions received by the Exchange Agent
with respect to such shares, are referred to collectively as the
“ Exchange Fund .” Any portion of the
Exchange Fund that remains unclaimed by the former stockholders of
the Company 180 days after the Effective Time shall be returned to
Parent and such security holders shall thereafter look only to
Parent for payment of the Merger Consideration, cash in lieu of
fractional shares of Parent Common Stock and any dividends or
distributions with respect to such shares of Parent Common Stock
after the Effective Time, without any interest thereon.
(b) Exchange Procedures
. Promptly (and in any event no more than five Business
Days) 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 be in customary form and 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 (ii) instructions for use in effecting the surrender of
the Certificates in exchange for the Merger Consideration payable
in respect of the shares of Company Common Stock formerly
represented by such Certificates. 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 reasonably required pursuant to
such instructions, (1) the holder of such Certificate shall be
entitled to receive in exchange therefor the Merger Consideration
payable in respect of the shares of Company Common Stock formerly
represented by such Certificate and cash in lieu of any fractional
share of Parent Common Stock, and (2) the Certificate so
surrendered shall forthwith be cancelled. In the event
of a transfer of ownership of shares of Company Common Stock that
is not registered in the transfer records of the Company, the
Merger Consideration payable in respect of such shares of Company
Common Stock may be paid to a transferee if the Certificate
formerly representing such shares of Company Common Stock is
presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and by evidence that
any applicable stock transfer Taxes have been
paid. Until surrendered as contemplated by this Section
2.2, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such
surrender the Merger Consideration payable in respect of the shares
of Company Common Stock formerly represented by such Certificate,
cash in lieu of any fractional shares of Parent Common Stock to
which such holder is entitled pursuant to Section 2.2(e) and any
dividends or other distributions to which such holder is entitled
pursuant to Section 2.2(c), in each case, without any interest
thereon.
(c) Distributions with Respect to
Unexchanged Shares of Parent Common Stock . No
dividends or other distributions declared or made with respect to
shares of Parent Common Stock, with a record date after the
Effective Time, shall be paid to the holder of any unsurrendered
Certificate, unless and until the holder of such Certificate shall
surrender such Certificate. Subject to the effect of
abandoned property, escheat or other applicable Laws, following
surrender of any such Certificate, there shall be paid to such
holder of the certificates representing whole shares of Parent
Common Stock issuable in exchange therefor, without interest, (i)
promptly, the amount of dividends or other distributions with a
record date at or after the Effective Time theretofore paid with
respect to such whole shares of Parent Common Stock and (ii) at the
appropriate payment date, the amount of dividends or other
distributions, with a record date at or after the Effective Time
but prior to such surrender and a payment date subsequent to such
surrender, payable with respect to such whole shares of Parent
Common Stock.
(d) Further Rights in Company
Common Stock . The Merger Consideration issued upon
conversion of a share of Company Common Stock in accordance with
the terms of this Agreement together with cash in lieu of any
fractional shares of Parent Common Stock and any dividends or other
distributions with a record date at or after the Effective Time to
which each holder is entitled shall be deemed to have been issued
in full satisfaction of all rights pertaining to such share of
Company Common Stock.
(e) Fractional Shares
. No certificates or scrip representing fractional
shares of Parent Common Stock will be issued upon the surrender for
exchange of Certificates, but in lieu thereof each holder of
Company Common Stock who would otherwise be entitled to a fraction
of a share of Parent Common Stock upon surrender for exchange of
Company Common Stock (after aggregating all fractional shares of
Parent Common Stock to be received by such holder) shall receive an
amount of cash (rounded down to the nearest whole cent), without
interest, equal to the product of such fraction multiplied by the
Measurement Price. Such payment shall occur as soon as
practicable after the determination of the amount of cash, if any,
to be paid to each holder of Company Common Stock with respect to
any fractional shares and following compliance by such holder with
the exchange procedures set forth in Section 2.2(b) and in the
letter of transmittal. No dividend or distribution with
respect to Parent Common Stock shall be payable on or with respect
to any fractional share and such fractional share interests shall
not entitle the owner thereof to any rights of a stockholder of
Parent.
(f) No Liability
. None of Parent, the Surviving Corporation or the
Company shall be liable to any holder of shares of Company Common
Stock for the Merger Consideration (or dividends or distributions
with respect thereto) or any cash amounts from the Exchange Fund
delivered to a public official pursuant to any abandoned property,
escheat or other applicable Law.
(g) Lost Certificates
. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed
and, if required by Parent, the posting by such Person of a bond,
in such reasonable amount as Parent may direct, as indemnity
against any claim that may be made against it with respect to such
Certificate, the Exchange Agent shall pay in exchange for such
lost, stolen or destroyed Certificate the Merger Consideration
payable in respect of the shares of Company Common Stock formerly
represented by such Certificate and any cash in lieu of fractional
shares of Parent Common Stock to which the holder thereof is
entitled pursuant to Section 2.2(e) and any dividends or other
distributions to which such holder is entitled pursuant to Section
2.2(c), in each case, without any interest thereon.
(h) Withholding
. 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, any holder of a Company Option or
any holder of a Company Restricted Share such amounts as Parent,
the Surviving Corporation or the Exchange Agent are required to
deduct and withhold under the Code, or any Tax Law, with respect to
the making of such payment. In accordance with the terms
of the Company Equity Plans, Parent, the Surviving Corporation or
the Exchange Agent shall permit holders of Company Restricted
Shares to satisfy applicable withholding amounts under the Code by
having Parent, the Surviving Corporation or the Exchange Agent
withhold such amounts from the consideration otherwise payable in
respect of the Company Restricted Shares pursuant to this
Agreement. To the extent that amounts are so withheld by
Parent, the Surviving Corporation or the Exchange Agent, such
withheld amounts (or the value thereof) shall be promptly remitted
to the applicable taxing authorities in accordance with the Code or
other applicable Tax Law and shall be treated for all purposes of
this Agreement as having been paid to the holder of Company Common
Stock, the holder of a Company Option or the holder of a Company
Restricted Share, as applicable, in respect of whom such deduction
and withholding was made by Parent, the Surviving Corporation or
the Exchange Agent.
2.3 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 in this Agreement or by
Law. On or after the Effective Time, any Certificates
presented to the Exchange Agent or Parent for any reason shall
solely represent the right to receive the Merger Consideration
payable in respect of the shares of Company Common Stock formerly
represented by such Certificates, any cash in lieu of fractional
shares of Parent Common Stock to which the holders thereof are
entitled pursuant to Section 2.2(e) and any dividends or other
distributions to which the holders thereof are entitled pursuant to
Section 2.2(c), in each case, without any interest
thereon.
2.4 Company Options and Other
Equity Awards .
(a) (i) Each outstanding and
unexercised employee and director option granted by the Company to
purchase shares of Company Common Stock (each, a “ Company
Option ”) shall be cancelled as of the Effective Time in
exchange for the right of the holder thereof to receive from Parent
or the Surviving Corporation, in accordance with this
Section 2.4, a lump sum cash payment (without interest) in the
amount of the consideration described below, if any, with respect
to each such Company Option and shall no longer represent the right
to purchase Common Stock or any other equity securities of the
Company, Merger Sub, Parent, the Surviving Corporation or any other
Person or to purchase any other securities or assets, and
(ii) as of the Effective Time, the Company Equity Plans shall
be terminated. As used in this Agreement, the term
“ Company Equity Plans ” means the plans set
forth in Section 2.4(a) of the Company Disclosure
Letter. At the Effective Time, each Company Option
issued by the Company that is outstanding and remains unexercised
at that time will be cancelled and converted into the right to
receive an amount in cash equal to (A) the amount, if any, by
which (x) the Exchange Ratio multiplied by the Measurement Price
(the “ Measurement Value ”) exceeds (y) the per
share exercise price of such Company Option, multiplied by
(B) the number of shares of Common Stock issuable upon
exercise of such Company Option in full (whether such Company
Option is vested or unvested, but not to the extent it has
theretofore been exercised) (with the aggregate amount of such
payment rounded to the nearest cent). After the
Effective Time, any such cancelled Company Option shall no longer
be exercisable by the former holder thereof, but shall only entitle
such holder to the payment described in the preceding
sentence. As of the Effective Time, any Company Option
with an exercise price equal to or greater than an amount equal to
the Measurement Value shall be cancelled without consideration and
be of no further force and effect. Parent and the
Surviving Corporation shall use their reasonable best efforts to
provide the lump sum cash payments required pursuant to this
Section 2.4(a) within 10 Business Days following the Effective
Time.
(b) Each share of Company Common
Stock, or outstanding restricted share unit representing the right
to receive a share of Company Common Stock, subject to vesting or
other lapse restrictions pursuant to any of the Company Equity
Plans (each, a “ Company Restricted Share ”)
that is outstanding immediately prior to the Effective Time shall
vest in full and become free of such restrictions as of the
Effective Time in accordance with the terms of the Company Equity
Plans and, at the Effective Time, the holder thereof shall be
entitled to receive the Merger Consideration with respect to each
such Company Restricted Share in accordance with Section 2.1, cash
in lieu of fractional shares of Parent Common Stock to which such
holder is entitled pursuant to Section 2.2(e) and any dividend or
other distributions to which such holder is entitled. To
the extent shares of Company Common Stock have not previously been
issued in respect of outstanding restricted share unit awards that
are Company Restricted Shares, such shares of Company Common Stock
shall be issued no later than immediately prior to the Effective
Time.
(c) Prior to the Effective Time, the
Company and its Subsidiaries, as applicable, shall use their
reasonable best efforts to take any and all actions necessary,
including obtaining necessary consents and/or amending and/or
interpreting any provisions of the Company Equity Plans or
agreements governing the terms and conditions of the Company
Options, to effectuate the provisions of this Section 2.4
(including approval of the Board of Directors of the Company or an
authorized committee thereof).
2.5 Further Assurances
. After the Effective Time, the officers and directors
of the Surviving Corporation will be authorized to execute and
deliver, in the name and on behalf of the Company or Merger Sub,
any deeds, bills of sale, assignments or assurances and to take and
do, in the name and on behalf of the Company or Merger Sub, any
other actions and things to vest, perfect or confirm of record or
otherwise in the Surviving Corporation any and all right, title and
interest in, to and under any of the rights, properties or assets
acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY
Except as set forth on the disclosure letter
delivered to Parent and Merger Sub by the Company on or prior to
the date of the execution of this Agreement (the “ Company
Disclosure Letter ”) and except as disclosed in the
Annual Report on Form 10-K of the Company for the year ended
January 31, 2009 (the “ Company Form 10-K ”) and
the Quarterly Reports on Form 10-Q and the Current Reports on Form
8-K, in each case, filed from the date of the filing of the Company
Form 10-K to the date of this Agreement (other than disclosures in
the “Risk Factors” or “Safe Harbor Statement
under the Private Securities Litigation Reform Act of 1995”
sections of such reports and except as expressly provided in
Section 3.6 of the Company Disclosure Letter), the Company hereby
represents and warrants to Parent and Merger Sub that:
3.1 Organization and
Qualification . The Company is a corporation duly
organized, validly existing and in good standing under the Laws of
the State of Delaware, and the Company has all requisite corporate
power and authority and all authorizations, licenses and Permits
necessary to own and operate its properties and to carry on its
businesses as now conducted. Except as set forth on
Section 3.1 of the Company Disclosure Letter, the Company is
qualified to do business and in good standing in every jurisdiction
in which its ownership of property or the conduct of its businesses
as now conducted requires it to qualify, except where the failure
to be so qualified as a foreign corporation would not have, either
individually or in the aggregate, a Company Material Adverse
Effect, and all such jurisdictions are set forth on Section 3.1 of
the Company Disclosure Letter. The Company has made
available to Parent a complete and correct copy of the certificate
or articles of incorporation and bylaws, each as amended to date,
of the Company and each of its Subsidiaries. Neither the
Company nor any of its Subsidiaries is in violation of any of the
provisions of their respective certificate or articles of
incorporation or bylaws (or equivalent organizational
documents).
3.2 Subsidiaries
. Neither the Company nor any of its Subsidiaries owns
or holds the right to acquire any stock, partnership interest,
joint venture interest or other equity ownership interest in any
other Person. There are no contractual obligations of
the Company or any of its Subsidiaries to make any loan to, or any
investment (in the form of a capital contribution or otherwise) in,
any Subsidiary of the Company or any other Person. Each
Subsidiary of the Company is either wholly owned by the Company or
a Subsidiary or Subsidiaries of the Company as indicated on Section
3.2 of the Company Disclosure Letter. Each outstanding
share of capital stock of or other equity interest in each of the
Company’s Subsidiaries is owned by the Company or a wholly
owned Subsidiary of the Company, free and clear of any Liens,
except Permitted Liens. Section 3.2 of the Company
Disclosure Letter sets forth the name, jurisdiction of
incorporation or formation, jurisdictions of qualification as a
foreign corporation and the authorized and outstanding capital
stock of each Subsidiary of the Company. Except as set
forth on Section 3.2 of the Company Disclosure Letter, each
Subsidiary of the Company is duly organized, validly existing and
in good standing under the Laws of the jurisdiction of its
incorporation or organization, has all requisite corporate power
and authority and all authorizations, licenses and Permits
necessary to own its properties and to carry on its businesses and
is qualified to do business and in good standing in every
jurisdiction in which its ownership of property or the conduct of
its businesses requires it to qualify, except where the failure to
be qualified as a foreign corporation would not have, either
individually or in the aggregate, a Company Material Adverse
Effect.
3.3 Authorization; Valid and
Binding Agreement .
(a) The Company has all necessary
corporate power and authority to execute and deliver this Agreement
and each other certificate, agreement, document and instrument to
be executed and delivered by the Company in connection with the
transactions contemplated by this Agreement (collectively, the
“ Company Transaction Documents ”) and to
perform its obligations hereunder and thereunder and to consummate,
on the terms and subject to the conditions hereof and thereof, the
transactions contemplated hereby and thereby, subject in the case
of the consummation of the Merger to the adoption of this Agreement
by the holders of a majority of the outstanding shares of Company
Common Stock on the record date for the Stockholders’ Meeting
(the “ Company Stockholder Approval
”). All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement and each of
the Company Transaction Documents and the performance of all
obligations of the Company hereunder and thereunder has been taken,
subject only to obtaining the Company Stockholder
Approval. This Agreement and each of the Company
Transaction Documents have been duly executed and delivered by the
Company or, in the case of any Company Transaction Document to be
executed and delivered hereafter, each such Company Transaction
Document will have been duly executed and delivered as of the
Closing Date. This Agreement and each of the Company
Transaction Documents each constitute or, in the case of any
Company Transaction Documents to be executed hereafter, each such
Company Transaction Document will constitute a legal, valid and
binding obligation of the Company and, assuming due authorization,
execution and delivery by Parent and Merger Sub, will be
enforceable against the Company in accordance with its terms,
except as enforceability may be limited by bankruptcy Laws, other
similar Laws affecting creditors’ rights and general
principles of equity affecting the availability of specific
performance and other equitable remedies. As of the date
of this Agreement, the Board of Directors of the Company, subject
to Section 6.2, has unanimously approved and declared advisable
this Agreement and recommended that the Company’s
stockholders adopt this Agreement (the “ Board
Recommendation ”).
(b) Except as set forth on Section
3.3(b) of the Company Disclosure Letter, neither the execution,
delivery or performance of this Agreement and the Company
Transaction Documents by the Company nor the consummation of the
Merger by the Company or any of its Subsidiaries will, directly or
indirectly (with or without the giving of notice or the passage of
time or both), (i) require any consent, approval or
other action of any Person under any Company Contract or any lease
governing any material Company Leased Real Property, (ii)
(A) violate, result in a breach of, conflict with or entitle
any Governmental Entity or any other Person to accelerate the
maturity or performance under, amend, call a default under,
exercise any remedy under, modify, rescind, suspend or terminate or
(B) create any material obligation on the part of the Company or
any of its Subsidiaries that it was not obligated to perform
immediately before such Company Transaction Document was executed
under, any term of any such Company Contract or any Law (assuming,
as to the Surviving Corporation, that it was a party thereto
immediately before this Agreement was executed), (iii) violate or
result in the material breach of any term of the certificate or
articles of incorporation or bylaws or other organizational
documents or resolution of the Board of Directors, any committee of
the Board of Directors, stockholders or comparable bodies of the
Company or any of its Subsidiaries or (iv) result in the amendment,
creation, imposition or modification of any Lien other than a
Permitted Lien upon or with respect to any of the material
properties or assets that the Company or any of its Subsidiaries
owns, uses or purports to own or use.
3.4 Governmental
Filings; No Violations . Except for (a)
the applicable requirements, if any, of state securities or
“blue sky” laws (“ Blue Sky Laws ”),
(b) the pre-merger notification requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and the rules and regulations thereunder (the “ HSR
Act ”), (c) filings under the Exchange Act and the
Securities Act, (d) any filings required under the rules and
regulations of the NYSE and (e) the filing of the Certificate of
Merger pursuant to the DGCL, the execution and delivery of this
Agreement and each of the Company Transaction Documents by the
Company and the consummation of the transactions contemplated
hereby and thereby do not (i) require any material authorization,
consent, approval, exemption or other action by or notice to any
court or Governmental Entity, (ii) conflict with or result in a
material breach of the provisions of the Company’s or any of
its Subsidiary’s certificate or articles of incorporation or
bylaws or other organizational documents, or (iii) conflict with or
result in a material breach of any Law to which the Company or any
of its Subsidiaries is subject.
3.5 Capital Stock
. The authorized capital stock of the Company consists
of (a) 50,000,000 shares of preferred stock, of which, as of the
date of this Agreement, no shares are issued and outstanding and
(b) 100,000,000 shares of Company Common Stock, of which, as of the
date of this Agreement, 24,822,019 shares are issued and
outstanding and there are outstanding restricted share units
representing 358,181 shares of Company Common Stock,
which shares shall be issued and outstanding immediately prior to
the Effective Time. As of the date of this Agreement,
there are outstanding Company Options to purchase an aggregate of
1,889,840 shares of Company Common Stock. All issued
shares of Company Common Stock have been duly authorized and are
validly issued, fully paid and nonassessable. Other than
pursuant to the Company Equity Plans, there is no outstanding, and
there has not been reserved for issuance any: (i) share of capital
stock or other voting securities of the Company or its
Subsidiaries; (ii) security of the Company or its Subsidiaries
convertible into or exchangeable for shares of capital stock or
voting securities of the Company or its Subsidiaries; (iii) Company
Option or other right or option to acquire from the Company or its
Subsidiaries, or obligation of the Company or its Subsidiaries to
issue, any shares of capital stock, voting securities or security
convertible into or exchangeable for shares of capital stock or
voting securities of the Company or its Subsidiaries, as the case
may be; or (iv) equity equivalent interest in the ownership or
earnings of the Company or its Subsidiaries or other similar right
(the items in clauses (i) through (iv) collectively, “
Company Securities ”). There is no
outstanding obligation of the Company or its Subsidiaries to
repurchase, redeem or otherwise acquire any Company
Security. There is no stockholder agreement, voting
trust or other agreement or understanding to which the Company or
any of its Subsidiaries is a party or by which the Company or any
of its Subsidiaries are bound relating to the voting, purchase,
transfer or registration of any shares of capital stock of the
Company or any of its Subsidiaries or preemptive rights with
respect thereto.
3.6 Company SEC Reports
.
(a) The Company has timely filed with
or otherwise furnished (as applicable) to the Securities and
Exchange Commission (the “ SEC ”) all forms,
reports, schedules, statements, certifications and other documents
required to be filed or furnished by it under the Securities Act or
the Exchange Act since February 2, 2008 (such documents, as
supplemented or amended since the time of filing, and together with
all information incorporated by reference therein, the “
Company SEC Reports ”). No Subsidiary of
the Company is required to make any filings with the
SEC. As of their respective dates, the Company SEC
Reports, including any financial statements or schedules included
or incorporated by reference therein, at the time filed (i)
complied as to form in all material respects with the applicable
requirements of the Securities Act and the Exchange Act, and the
rules and regulations of the SEC promulgated thereunder applicable
to such Company SEC Reports, and (ii) did not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading.
(b) The Company maintains a system of
internal control over financial reporting (as defined in Rule
13a-15 under the Exchange Act) that has been designed to provide
reasonable assurance that: (i) transactions are executed
in accordance with management’s general or specific
authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP
and to maintain asset accountability; (iii) access to assets is
permitted only in accordance with management’s general or
specific authorization; and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any
differences.
(c) The Company maintains a system of
“disclosure controls and procedures” (as defined in
Rules 13a-15(e) and 15d-15(e) of the Exchange Act) necessary in
order for the Chief Executive Officer and Chief Financial Officer
of the Company to engage in the review and evaluation process
mandated by the Exchange Act and the rules promulgated
thereunder. The Company’s “disclosure
controls and procedures” are reasonably designed to ensure
that all information (both financial and non-financial) required to
be disclosed by the Company in the reports that it files or submits
under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the rules and forms
of the SEC, and that all such information is accumulated and
communicated to the Company’s management as appropriate to
allow timely decisions regarding required disclosure and to make
the certifications of the Chief Executive Officer and Chief
Financial Officer of the Company required under the Exchange Act
with respect to such reports.
(d) Since February 2, 2008, the
Company has not received any oral or written notification of a (x)
“significant deficiency” or (y) “material
weakness” in the Company’s internal controls over
financial reporting. The terms “significant
deficiency” and “material weakness” shall have
the meanings assigned to them in the Statements of Auditing
Standards 112, as in effect on the date hereof.
(e) The Company has provided or made
available to Parent copies of all correspondence sent to or
received from the SEC by the Company or its Subsidiaries or their
respective counsel or accountants since February 2,
2008. As of the date hereof, there are no outstanding or
unresolved comments in comment letters received from the SEC staff
with respect to any Company SEC Reports.
(f) The audited consolidated
financial statements included in the Company Form 10-K and the
unaudited consolidated interim financial statements included in the
Company’s quarterly report on Form 10-Q for the quarter ended
May 2, 2009 (including any related notes and schedules) and the
other financial statements included in the Company SEC Reports
fairly present, in all material respects, the consolidated
financial position of the Company and its consolidated Subsidiaries
as of the dates thereof and the consolidated results of their
operations and their consolidated cash flows for the periods set
forth therein, and in each case were prepared in accordance with
GAAP consistently applied during the periods involved (except as
otherwise disclosed in the notes thereto and subject, in the case
of financial statements for quarterly periods, to normal year-end
adjustments not material in amount). The books of
account and other financial records of the Company and each of its
Subsidiaries are true and complete in all material respects,
reflect only actual transactions and are maintained in accordance
with GAAP.
(g) Since February 2, 2008, no
attorney representing the Company or any of its Subsidiaries,
whether or not employed by the Company or any Subsidiary of the
Company, has reported to the Company’s chief legal counsel or
Chief Executive Officer evidence of a material violation of
securities Laws, breach of fiduciary duty or similar violation by
the Company or any of its officers, directors, employees or agents
pursuant to Section 307 of the Sarbanes-Oxley Act.
(h) Since February 2, 2008, to the
knowledge of the Company, no employee of the Company or any of its
Subsidiaries has provided or is providing information to any law
enforcement agency or Governmental Entity regarding the commission
or possible commission of any crime or the violation or possible
violation of any applicable legal requirements of the type
described in Section 806 of the Sarbanes-Oxley Act by the Company
or any of its Subsidiaries.
(i) There is no liability or
obligation of the Company or any of its Subsidiaries (whether
accrued, contingent, absolute, determined or determinable) other
than: (i) liabilities or obligations disclosed or provided for in
the unaudited consolidated balance sheet of the Company as of May
2, 2009 or disclosed in the notes thereto (the “ Company
Current Balance Sheet ”); (ii) liabilities or obligations
incurred after May 2, 2009 in the ordinary course of the
Company’s business; (iii) liabilities incurred in connection
with the transactions contemplated by this Agreement and the
Company Transaction Documents or disclosed on Section 3.6 of the
Company Disclosure Letter; (iv) liabilities under any agreement,
lease, note, mortgage, indenture or other obligation of the Company
or any of its Subsidiaries, which is not in violation of the terms
of this Agreement and which is disclosed on the Company Disclosure
Letter if required hereby; and (v) other liabilities that are not,
either individually or in the aggregate, material to the Company
and its Subsidiaries, taken as a whole.
(j) The consolidated
financial statements of the Company for all periods commencing
after February 4, 2007 are in material compliance with the
requirements of the Financial Accounting Standards Board’s
Interpretation 48 (Accounting for Uncertainty in Income Taxes)
(“ FIN 48 ”) and the Company and its
Subsidiaries have provided or made available to Parent any and all
of their respective accounting work papers with respect to
compliance with the FIN 48 that Parent or its Representatives have
reasonably requested.
3.7 Absence of Certain Changes or
Events . Since January 31, 2009, the business of the
Company and its Subsidiaries has been conducted in all material
respects in the ordinary course consistent with past
practice. From January 31, 2009 thru the date of this
Agreement, (a) there has not been any event, occurrence or
development that has had, either individually or in the aggregate,
a Company Material Adverse Effect and (b) none of the Company or
any of its Subsidiaries has taken any action that, if taken after
the date of this Agreement, would constitute a breach of any of the
covenants set forth in Section 5.1.
3.8 Properties
. The Company or one of its Subsidiaries, as the case
may be, (i) holds good and valid fee simple title to all of the
properties and assets reflected in the Company Current Balance
Sheet as being owned by the Company or one of its Subsidiaries or
acquired after the date thereof (collectively, with respect to real
property, the “ Company Owned Real Property ”)
(except for assets (other than Company Owned Real Property) sold or
otherwise disposed of since the date thereof in the ordinary course
of business), free and clear of all Liens, except for Permitted
Liens, (ii) holds the Company Owned Real Property, and each portion
thereof or interest therein, free of any outstanding options or
rights of first refusal or any offers to sell, purchase or lease or
any Occupancy Agreements, except as set forth on Section 3.8 of the
Company Disclosure Letter, (iii) except as set forth on Section 3.8
of the Company Disclosure Letter, is the lessee of all leasehold
estates reflected in the Company Current Balance Sheet or acquired
after the date thereof (except for leases that have expired by
their terms since the date thereof), each of which, by address and
store number, is set forth on Section 3.8 of the Company Disclosure
Letter (collectively, with respect to real property, the “
Company Leased Real Property ”) (including those
stores that have been approved for closing as noted therein) and
(w) with respect to each Company Ground Leased Property, holds good
and valid leasehold interest therein, free and clear of all Liens
(except for Permitted Liens) and Occupancy Agreements, (x) is in
possession of the properties purported to be leased thereunder and
none of such properties is affected by any Occupancy Agreements,
and each such lease is valid and in full force and effect,
constitutes a valid and binding obligation of the Company or the
applicable Subsidiary of the Company, and to the Company’s
knowledge, each other party thereto, enforceable against the
Company or the applicable Subsidiary of the Company and, to the
Company’s knowledge, each other party thereto, except as
enforceability may be limited by bankruptcy Laws, other similar
Laws affecting creditors’ rights and general principles of
equity affecting the availability of specific performance and other
equitable remedies, (y) except as set forth on Section 3.8 of the
Company Disclosure Letter, the Company has not received any written
notice of termination or cancellation of or of a breach or default
under any such lease, and (z) except as set forth on Section 3.8 of
the Company Disclosure Letter, neither the Company nor the
applicable Subsidiary of the Company, nor, to the Company’s
knowledge, any other party thereto, is or is alleged to be in
material violation thereof or in material default in respect
thereof, nor has there occurred any event or condition which (with
or without notice or lapse of time or both) would constitute a
material violation thereof or a material default
thereunder. The Company has provided Parent with (or
made available to Parent on the Company’s Virtual Premises
data site prior to the date hereof) true, complete and correct
copies of each of the leases for the Company Leased Real Property,
including all amendments and supplements thereto and all material
notices delivered or received by the Company or its Subsidiaries in
connection therewith. For purposes of the preceding
sentence, each notice delivered or received by the Company or a
Subsidiary thereof in connection with a lease of the Company Leased
Real Property shall be deemed a material notice unless such notice
(i) does not affect the substantive rights and/or obligations of
the parties to the related lease, (ii) has been superseded by a
subsequent amendment, supplement or notice made available to Parent
on the Company’s Virtual Premises data site prior to the date
hereof, (iii) is no longer in effect by being either withdrawn or
abandoned, or through the passage of time, or relates to a default
under the related lease that has been cured, (iv) discloses a
matter of public record otherwise disclosed in the Company
Disclosure Letter, or (v) is related to a matter otherwise
disclosed in the Company Disclosure Letter. Except as
set forth on Section 3.8 of the Company Disclosure Letter, none of
the leases of the Company Leased Real Property is guaranteed by any
third party, none of the rights of the Company or any of its
Subsidiaries under any leases for Company Leased Real Property will
be subject to termination or modification as the result of the
consummation of the transactions contemplated by this Agreement and
the Company Transaction Documents, and upon consummation of the
Merger, the Surviving Corporation will have succeeded to all of the
rights, title and interest of the Company or its Subsidiaries
either directly or indirectly by ownership of the Company’s
Subsidiaries under each of such leases. Section 3.8 of
the Company Disclosure Letter sets forth a true, correct and
complete list of the Company Owned Real Property and a true,
correct and complete list of the most recent title insurance
policies or reports relating to the Company Owned Real Property and
the Company Ground Leased Property. The Company Leased
Real Property and Company Owned Real Property comprise all of the
real property owned or leased by the Company and/or its
Subsidiaries and used in the business of the Company and its
Subsidiaries as currently operated. All material
personal property shown to be owned by the Company and its
Subsidiaries on the Company Current Balance Sheet have been
maintained in accordance with the Company’s and its
Subsidiaries’ normal practices and are in usable condition
for the operation of the Company’s and its
Subsidiaries’ businesses, ordinary wear and tear
excepted. To the Company’s knowledge, there are no
tax abatements or exemptions specifically affecting any Company
Owned Real Property or any Company Ground Leased Property and
neither the Company nor any of its Subsidiaries has received any
written notice of any proposed increase in the assessed valuation
of any Company Owned Real Property or Company Ground Leased
Property or of any proposed public improvement
assessments. The Company has provided Parent with (or
made available to Parent on the Company’s Virtual Premises
data site prior to the date hereof) true, complete and correct
copies of the most recent tax bills for each Company Owned Real
Property and each Company Ground Leased Property. No
Company Owned Real Property or Company Ground Leased Property is
comprised of a tax lot that also encompasses property that is not
such Company Owned Real Property or Company Ground Leased
Property. There is no pending, or, to the
Company’s knowledge, threatened or contemplated condemnation,
eminent domain or similar Proceeding affecting any Company Owned
Real Property or any portion thereof or any Company Ground Leased
Property or any portion thereof. To the Company’s
knowledge, there exists no fact or condition that is reasonably
likely to result in the termination of the existing access to any
Company Owned Real Property, Company Leased Real Property or
Company Ground Leased Property.
3.9 Tax Matters
. Each of the Company and its Subsidiaries has timely
filed all Tax Returns that it was required to file. All
such Tax Returns are true, correct and complete in all material
respects. Except as set forth on Section 3.9 of the
Company Disclosure Letter, all Taxes due and payable by the Company
or any of its Subsidiaries (whether or not shown on such Tax
Returns) have been fully paid or properly accrued in accordance
with GAAP. The provision for Taxes on the Company
Current Balance Sheet is sufficient for all accrued and unpaid
Taxes as of the date thereof and all Taxes that the Company or any
Subsidiary of the Company is obligated to withhold from amounts
owing to any employee, creditor or third party have been fully and
timely paid or properly accrued. Since the date of the
Company Current Balance Sheet, no Taxes have accrued with respect
to the Company or any of its Subsidiaries other than Taxes arising
in the ordinary course of business. There are no Liens
with respect to any Taxes upon any of the Company’s or its
Subsidiaries’ assets, other than Permitted
Liens. The Company and its Subsidiaries have complied in
all material respects with all Laws, rules and regulations relating
to the payment and withholding of Taxes, and are not liable for any
such Taxes or for failure to comply with such Laws, rules and
regulations. There are no audits, claims, deficiencies,
assessments, levies, administrative or judicial Proceedings
pending, or to the Company’s knowledge threatened, against
the Company or any of its Subsidiaries by any taxing
authority. Neither the Company nor any of its
Subsidiaries has received written notice of any claim made by any
Governmental Entity in a jurisdiction where the Company or such
Subsidiary does not file Tax Returns that the Company or such
Subsidiary is or may be subject to taxation by that
jurisdiction. There is no outstanding agreement, waiver
or consent providing for an extension of the statutory period of
limitations with respect to any Taxes or Tax Returns of the Company
or any of its Subsidiaries. Other than the Tax
Separation Agreement, neither the Company nor any of its
Subsidiaries is a party to or is otherwise bound by any agreement
or understanding providing for the allocation or sharing of Taxes,
or has any obligation or liability under any such agreement or
understanding to which it was once a party or otherwise bound, that
could affect their liability for Taxes for any period after the
Closing Date. Neither the Company nor any of its
Subsidiaries has any obligation or liability under the Tax
Separation Agreement that would affect their liability for Taxes
for any period after the Closing Date. Neither the
Company nor any of its Subsidiaries has been or is required to make
any adjustment pursuant to Section 481(a) of the Code or any
similar provision of state, local or foreign Tax law by reason of
any change in any accounting method, there is no application
pending with any taxing authority requesting permission for any
change in any accounting method for Tax purposes and no taxing
authority has proposed any such adjustment or change in accounting
method, in any case, that could affect their liability for Taxes
for any period after the Closing Date. Neither the
Company nor any of its Subsidiaries (i) has been a member of an
affiliated or similar group filing a consolidated, combined,
unitary or similar income Tax Return, other than the affiliated
groups of which the Company is the common parent corporation and
the affiliated group of which The Limited, Inc. is the parent
corporation, or (ii) has any liability for Taxes of any person
(other than the Company and its Subsidiaries) under Treasury
Regulations Section 1.1502-6 (or any similar provision of state,
local or foreign law), as a transferee or successor, by agreement
or otherwise. There are no Tax rulings, requests for
rulings or closing agreements relating to the Company or any of its
Subsidiaries that could affect their liability for Taxes for any
period after the Closing Date. The Company and each of
its Subsidiaries has fully complied with all statutes and
regulations relating to the accounting for and paying over of
unclaimed or abandoned funds and other property. The
Company has furnished Parent with, or otherwise made available to
Parent, true and complete copies of all filed federal, state and
local income or franchise Tax Returns and state and local sales and
use Tax Returns for or including the Company and each of its
Subsidiaries for all periods after December 31,
2005. Neither the Company nor any of its Subsidiaries
has constituted either a “distributing corporation” or
a “controlled corporation” (within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution of stock
qualifying for tax-free treatment under Section 355 of the Code (i)
in the two years prior to the date of this Agreement or (ii) in a
distribution which could otherwise constitute part of a
“plan” or “series of related transactions”
(within the meaning of Section 355(e) of the Code) in conjunction
with the transactions contemplated by this Agreement. As
of the date hereof, neither the Company nor any of its Subsidiaries
has taken or agreed to take any action, nor does the Company have
knowledge of any fact or circumstance, that would prevent the
Merger from qualifying as a “reorganization” within the
meaning of Section 368(a) of the Code.
3.10 Material Contracts
.
(a) Section 3.10 of the Company
Disclosure Letter contains a true, complete and correct list of the
Company Contracts as of the date hereof, copies of which have been
made available to Parent. All of the Company Contracts
that are required to be described in the Company SEC Reports or
required to be filed as exhibits thereto have been described or
filed as required.
(b) Each of the Company Contracts is
a valid and binding obligation of the Company (or the Subsidiaries
of the Company party thereto), and to the Company’s
knowledge, the other parties thereto, enforceable against the
Company and its Subsidiaries and, to the Company’s knowledge,
the other parties thereto in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium,
reorganization, arrangement or similar Laws affecting
creditors’ rights generally and by general principles of
equity.
(c) Neither the Company nor any of
its Subsidiaries is, nor to the Company’s knowledge is any
other party, in breach, default or violation (and no event has
occurred or not occurred through the Company’s or any of its
Subsidiaries’ action or inaction or, to the Company’s
knowledge, through the action or inaction of any third party, that
with notice or the lapse of time or both would constitute a breach,
default or violation) of any term, condition or provision of any
Company Contract to which the Company or any of its Subsidiaries is
now a party, or by which any of them or any of their respective
properties or assets may be bound, except for breaches, defaults or
violations that would not have, either individually or in the
aggregate, a Company Material Adverse Effect.
3.11 Intellectual Property
.
(a) Section 3.11(a) of the Company
Disclosure Letter sets forth a true, correct, and complete list of
all registered Company-Owned Intellectual Property Rights, and all
applications for such registration. The Company or one
of its Subsidiaries is the sole and exclusive beneficial and record
owner of all such Company-Owned Intellectual Property Rights. All
such Company-Owned Intellectual Property Rights have been properly
maintained by all requisite filings, renewals and payments, except
for any such failures to maintain that would not reasonably be
expected to have a Company Material Adverse Effect. All
such issued or registered Company-Owned Intellectual Property
Rights are subsisting and are valid and, to the Company’s
knowledge, enforceable.
(b) To the Company’s knowledge,
the Company and each of its Subsidiaries owns, or is licensed or
has been granted covenants or otherwise possesses sufficient
legally enforceable rights to use all Company Intellectual Property
Rights, free and clear of all Liens, except for any such failures
to own, be licensed, or otherwise possess rights that would not
have a Company Material Adverse Effect.
(c) To the Company’s knowledge,
neither the use of any Company Intellectual Property Rights by the
Company or its Subsidiaries nor the conduct of the businesses of
the Company or its Subsidiaries conflicts with, infringes upon,
violates or interferes with, or constitutes a misappropriation of
any right, title, interest or goodwill associated with any patent,
copyright, trademark, trade name, service mark, trade secret or
other intellectual property right of any other Person, except for
any such conflict, infringement, violation or interference that
would not have a Company Material Adverse Effect. Except
as set forth on Section 3.11(c) of the Company Disclosure Letter,
there are no pending or, to the knowledge of the Company,
threatened proceedings or litigation or other adverse claims or
communications by any Person to or against Company or any of its
Subsidiaries alleging any such conflict, infringement, violation,
interference or misappropriation.
(d) There are no Proceedings
(including, without limitation, interference, reexamination,
opposition, nullity or cancellation proceedings) pending or, to the
Company’s knowledge, threatened (or any basis therefor known
to the Company) against the Company or any of its Subsidiaries
challenging the ownership rights of the Company or any of its
Subsidiaries in, or the right of the Company or any of its
Subsidiaries to use, or the validity or enforceability of, any of
the Company-Owned Intellectual Property Rights.
(e) To the Company’s knowledge,
except as set forth on Schedule 3.11(e), no Person materially
conflicts with, infringes upon, violates or interferes with, or
otherwise misappropriates any Company-Owned Intellectual Property
Rights, and there is no Proceeding relating to any such conflict,
infringement, violation or interference threatened or pending by
the Company or any of its Subsidiaries.
(f) The consummation of the
transactions contemplated by this Agreement and the Company
Transaction Documents will not result in the loss or impairment of
any Company-Owned Intellectual Property Right or payment of any
additional amounts with respect to any Company Intellectual
Property Right, nor will the consummation of such transactions
require the consent of any other Person in respect of any
Company-Owned Intellectual Property Right.
(g) Neither the Company nor any of
its Subsidiaries is subject to any settlement agreement, covenant
not to sue, outstanding order, decree, judgment or stipulation
limiting or restricting in any manner the right of the Company or
any of its Subsidiaries to use, license, transfer or enforce any of
the Company-Owned Intellectual Property Rights.
(h) The Company has taken
commercially reasonable action to maintain and protect the secrecy
and confidentiality of all trade secrets and other confidential
information used in the Company’s and its Subsidiaries’
businesses, including requiring all employees, consultants,
contractors and other Persons with access to trade secrets or other
confidential information of the Company or its Subsidiaries to
execute binding confidentiality agreements and, to the knowledge of
the Company, no such employee, consultant, contractor or other
Person is in breach of any such confidentiality
agreement. The Company and its Subsidiaries have secured
from all employees, consultants, contractors and other Persons who
have contributed to the creation or development of any material
Company-Owned Intellectual Property Rights valid and binding
written assignments of all rights to such contributions.
(i) Neither the Company nor any of
its Subsidiaries has granted to any Person an exclusive license or
equivalent exclusive right with respect to any of the Company-Owned
Intellectual Property Rights, or assigned or conveyed to any Person
any ownership interest (including joint ownership rights) therein,
and no third party owns or holds any such right, license or
interest.
3.12 Litigation
. Except as set forth and summarized in Section 3.12 of
the Company Disclosure Letter, there is no action, suit, hearing,
claim, investigation, arbitration, inquiry or proceeding (“
Proceeding ”) pending or, to the Company’s
knowledge, threatened (or any basis therefor known to the Company)
against the Company or any of its Subsidiaries or any of their
respective assets or properties, or their respective officers and
directors, in their capacity as such, before or by any court,
arbitrator or Governmental Entity that, if settled or adversely
determined, might reasonably be expected to result in a settlement
or judgment in an amount in excess (including reasonable
attorneys’ fees) of $250,000 or which challenges this
Agreement or the Company Transaction Documents or the transactions
contemplated hereby or thereby. There is no unsatisfied
judgment or award, decision, decree, injunction, rule or order of
any Governmental Entity, court or arbitrator outstanding against
the Company or any of its Subsidiaries that might materially and
adversely affect the Company’s ability to consummate the
transactions contemplated by this Agreement and the Company
Transaction Documents. There is no Proceeding by the
Company or any of its Subsidiaries currently pending or which the
Company or any of its Subsidiaries intends to initiate.
3.13 Company Employee Benefit
Plans .
(a) Section 3.13(a) of the Company
Disclosure Letter sets forth a true and complete list of all
“employee benefit plans” within the meaning of Section
3(3) of ERISA and all other material medical, dental, life
insurance, equity, bonus or other incentive compensation,
disability, salary continuation, severance, retention, retirement,
pension, deferred compensation, vacation, sick pay or paid time off
plans or policies, and any other material plans, agreements
(including employment, consulting and collective bargaining
agreements), policies, trust funds or arrangements (whether written
or unwritten, insured or self-insured) (i) established, maintained,
sponsored or contributed to (or with respect to which any
obligation to contribute has been undertaken) by the Company, any
of its Subsidiaries or any of their respective current ERISA
Affiliates on behalf of any employee, officer, director,
stockholder or other service provider of the Company or its
Subsidiaries (whether current, former or retired) or their
beneficiaries, or (ii) with respect to which the Company, its
Subsidiaries or any of their respective current ERISA Affiliates
has any material liability (whether contingent or actual) as to any
such employee, officer, director, stockholder or other service
provider or beneficiary (each a “ Company Plan
,” and collectively, the “ Company Plans
”).
(b) The Company has made available to
Parent: (i) copies of all material documents setting
forth the terms of each Company Plan, including all amendments
thereto and all related trust documents; (ii) the three most recent
annual reports (Form Series 5500), if any, required under ERISA or
the Code in connection with each Company Plan; (iii) the most
recent actuarial report (if any) for all Company Plans; (iv) the
most recent summary plan description, if any, required under ERISA
with respect to each Company Plan; (v) all material written
administrative service agreements and group insurance contracts (if
any) with respect to each Company Plan; (vi) the most recent IRS
determination or opinion letter (if any) issued with respect to
each Company Plan intended to be qualified under Section 401(a) of
the Code; and (vii) any and all filings pending or made within the
past three years under the IRS’ Employee Plans Compliance
Resolution System Program or any of its predecessors or the
Department of Labor Delinquent Filer Program with respect to any
Company Plan.
(c) None of the Company, its
Subsidiaries, any of their respective ERISA Affiliates or any of
their respective predecessors currently, or at any time in the past
six years, contributed to, contributes to, has been required to
contribute to, participated in or participates in or in any way,
directly or indirectly, has or had any liability with respect to
any plan subject to the minimum funding standards of Section 412 of
the Code or Section 302 of ERISA, or subject to Title IV of ERISA,
including any “multiemployer plan” (within the meaning
of Section 3(37) or 4001(a)(3) of ERISA or Section 414(f) of the
Code) or any “single-employer plan” (within the meaning
of Section 4001(a)(15) of ERISA) that is subject to Section 4063,
4064 or 4069 of ERISA.
(d) With respect to each of the
Company Plans: (i) each Company Plan intended to qualify
under Section 401(a) of the Code has received a determination
letter from the IRS regarding its qualified status under the Code
for all statutory and regulatory changes with respect to plan
qualification requirements for which the IRS will issue such a
letter and nothing has occurred, whether by action or by failure to
act, that caused or could reasonably cause the loss of such
qualification; (ii) in all material respects, all payments required
by each Company Plan, any collective bargaining agreement or other
agreement, or by Law (including all contributions, insurance
premiums or intercompany charges) with respect to all prior periods
have been made or provided for by the Company or its Subsidiaries
in accordance with the provisions of each of the Company Plans,
applicable Law and GAAP; (iii) no Proceeding has been asserted,
instituted or, to the Company’s knowledge, has been
threatened or anticipated against any of the Company Plans or any
of the assets of any trust of any of the Company Plans (other than
routine claims for benefits and appeals of such claims), or, with
respect to their capacities in relation to the Company Plans only
and other than routine claims for benefits and appeals of such
claims, against any trustee or fiduciaries of the Company Plans
thereof, any of the Company’s or its Subsidiaries’
ERISA Affiliates, or any employee, officer, director, stockholder
or other service provider of the Company or its Subsidiaries
(whether current, former or retired); (iv) each Company Plan
complies in form and has been maintained and operated in all
material respects in accordance with its terms and applicable Law,
including ERISA and the Code; (v) no non-exempt “prohibited
transaction,” within the meaning of Section 4975 of the Code
and Section 406 of ERISA, has occurred with respect to the Company
Plans which could reasonably be expected to give rise to a material
liability; (vi) no Company Plan is under, and neither the Company
nor any of its Subsidiaries has received any notice of, an audit or
investigation by the IRS, Department of Labor or any other
Governmental Entity, and no such completed audit, if any, has
resulted in the imposition of any material Tax or penalty; (vii)
with respect to each Company Plan that is funded mostly or
partially through an insurance policy, none of the Company, its
Subsidiaries or any of their respective ERISA Affiliates currently
has any material liability in the nature of retroactive rate
adjustment, loss sharing arrangement or other actual or contingent
material liability arising wholly or partially out of events
occurring on or before the date of this Agreement or is reasonably
expected to have such liability with respect to periods through the
Effective Time; (viii) no Company Plan
provides post-retirement health and welfare benefits to any current
or former employee of the Company or its Subsidiaries,
except as disclosed on Section 3.13(d) of the Company Disclosure
Letter or as required under Section 4980B of the Code, Part 6 of
Title I of ERISA or any other applicable Law; and (ix) there are no
loans by the Company or any of its Subsidiaries to any of their
respective executive officers or directors.
(e) The consummation of the Merger
alone, or in combination with any other event, including, without
limitation, a termination of any employee, officer, director,
stockholder or other service provider of the Company or its
Subsidiaries (whether current, former or retired) or their
beneficiaries, will not give rise to any liability under any
Company Plan, including liability for severance pay, unemployment
compensation, termination pay or withdrawal liability, or
accelerate the time of payment or vesting or increase the amount of
compensation or benefits due to any employee, officer, director,
stockholder or other service provider of the Company or its
Subsidiaries (whether current, former or retired) or their
beneficiaries. No amount that could be received (whether
in cash or property or the vesting of property) as a result of the
consummation of the Merger by any employee, officer, director,
stockholder or other service provider of the Company or its
Subsidiaries under any Company Plan or otherwise would not be
deductible by reason of Section 162(m) or Section 280G of the Code
or would be subject to an excise tax under Section 4999 of the
Code. Neither the Company nor any of its Subsidiaries
has any indemnity obligation on or after the Effective Time for any
Taxes imposed under Section 4999 or 409A of the
Code. The Company has provided materially correct
estimates (based on the assumptions stated in such estimates) of
the following to Parent: (i) the maximum amount that
could be paid to each individual who could reasonably be a
“disqualified individual” (as such term is defined in
Treasury Regulations Section 1.280G–1) entitled to receive a
“parachute payment” (as such term is defined in
Treasury Regulations Section 1.280G-1) in connection with the
Merger under all employment, severance and termination agreements
currently in effect and under all other compensation arrangements
and Company Plans currently in effect, assuming that the
individual’s employment with the Company or its Subsidiaries
is terminated immediately following the Effective Time, (ii) the
“base amount” (as defined in Section 280G(b)(e) of the
Code) for each such individual as of the date of this Agreement,
and (iii) the vesting schedule (including any acceleration
provisions with respect thereto) for each outstanding Company
Option, Company Restricted Share or other equity award held by each
such individual as of the date of this Agreement.
(f) Except as provided in the Company
Plans, neither the Company nor any of its Subsidiaries has made any
promises or commitments to create any additional Company Plan or to
modify or change in any material way any existing Company
Plan.
(g) Neither the Company nor any of
its Subsidiaries has unfunded liabilities pursuant to any Company
Plan that is not intended to be qualified under Section 401(a) of
the Code and is either an “account balance plan” or
“nonaccount balance plan” within the meaning of Section
409A of the Code and the plan aggregation rules
thereunder. Each Company Plan that is a
“nonqualified deferred compensation plan” (as defined
under Section 409A(d)(1) of the Code) has been operated and
administered in good faith compliance with Section 409A of the Code
from the period beginning January 1, 2005 through December 31,
2008, and, if any amendments were reasonably necessary, has been
amended prior to January 1, 2009 to comply in all material respects
with Section 409A of the Code.
(h) Except as would not be expected
to give rise to a material liability, individually or in the
aggregate, (i) any individual who performs services for the Company
or any of its Subsidiaries and who is not treated as an employee
for federal income Tax purposes by the Company or its Subsidiaries
is not an employee under applicable Law or for any purpose
including for Tax withholding purposes or Company Plan purposes;
(ii) the Company and its Subsidiaries have no liability by reason
of an individual who performs or performed services for the Company
or its Subsidiaries in any capacity being improperly excluded from
participating in a Company Plan; and (iii) each employee of the
Company and its Subsidiaries has been properly classified as
“exempt” or “non-exempt” under applicable
Law.
(i) Each Company Option (i) has an
exercise price at least equal to the fair market value of Company
Common Stock on a date no earlier than the date of the corporate
action authorizing the grant, (ii) no Company Option has had its
exercise date or grant date delayed or “back-dated” and
(iii) all Company Options have been issued in compliance with all
applicable Laws and properly accounted for in all material respects
in accordance with GAAP. Section 3.13(i) of the Company
Disclosure Letter sets forth a complete and accurate list, as of
the date of this Agreement, of: (x) all Company Equity
Plans, indicating for each Company Equity Plan the number of shares
of Company Common Stock issued to date under such Company Equity
Plans, the number of shares of Company Common Stock subject to
outstanding Company Options and other equity awards and the number
of shares of Company Common Stock reserved for future issuance
under such Company Equity Plan and (y) all holders of outstanding
Company Options or other equity awards, indicating with respect to
each Company Option or other award the Company Equity Plan under
which it was granted, the number of shares of Company Common Stock
subject to such Company Option or other award, the exercise price
and the date of grant, as applicable. The Company has
provided or made available to Parent complete and accurate copies
of all Company Equity Plans and forms of all award agreements
evidencing Company Options and other equity awards.
(j) With respect to each Company Plan
that is mandated by a government other than the United States or
subject to the Laws of a jurisdiction outside of the United States
(a “ Foreign Company Plan ”), the fair market
value of the assets of each funded Foreign Company Plan, the
liability of each insurer for any Foreign Company Plan funded
through insurance or the book reserve established for any Foreign
Company Plan, together with any accrued contributions, is
sufficient in all material respects to procure or provide for the
accrued benefit obligations, as of the date of this Agreement, with
respect to all current and former participants in such Foreign
Company Plan according to the actuarial assumptions and valuations
most recently used to determine employer contributions to such
Foreign Company Plan, and no transaction contemplated by this
Agreement shall cause such assets or insurance obligations to be
less than such benefit obligations in any material
respect. Each Foreign Company Plan has been maintained
and operated in all material respects in accordance with the
applicable plan document and all applicable Laws and other
requirements, and if intended to qualify for special Tax treatment,
satisfies all requirements for such treatment in all material
respects.
3.14 Insurance
. Section 3.14 of the Company Disclosure Letter contains
a true, complete and correct list of all policies of insurance
existing on the date hereof relating to the assets of the Company
and its Subsidiaries and the business and employees of the Company
and its Subsidiaries (except for any such policies maintained to
provide benefits to employees under a benefit plan or arrangement
described in Section 3.13 hereof). All of such insurance
policies are in full force and effect, and neither the Company nor
any of its Subsidiaries is in default with respect to its material
obligations under any of such insurance policies. All
premiums and other payments due from the Company and its
Subsidiaries prior to the date of this Agreement under or on
account of any such insurance policies have been paid as of the
date hereof. Such insurance policies are of the kinds,
in the amounts and against the risks maintained by the Company and
its Subsidiaries consistent with past practice.
3.15 Compliance with Laws;
Permits .
(a) Each of the Company and its
Subsidiaries is in compliance in all material respects with all
Laws applicable to the Company and its Subsidiaries or applicable
to any Company Owned Real Property or any Company Ground Leased
Property. To the Company’s knowledge, neither the
Company nor any of its Subsidiaries is under investigation with
respect to, nor has the Company nor any of its Subsidiaries been
threatened to be charged with or been given notice of any violation
of, any applicable Law.
(b) (i) Except as would not
reasonably be expected to have, either individually or in the
aggregate, a Company Material Adverse Effect, each of the Company
and its Subsidiaries has and maintains in full force and effect,
and is in compliance with, all Permits necessary for each of the
Company and its Subsidiaries to carry on their respective
businesses as currently conducted and (ii) neither the Company nor
any of its Subsidiaries has received notice that the Person issuing
or authorizing any such Permit intends to terminate, or will refuse
to renew or reissue, any such Permit upon its
expiration.
(c) Since January 31, 2009, each of
the Company and its Subsidiaries has been and are in compliance in
all material respects with the applicable provisions of the
Sarbanes-Oxley Act and the rules and regulations promulgated
thereunder.
3.16 Environmental Matters
.
(a) All references in this Section
3.16 to the Company shall include each entity comprising the
Company, any Subsidiaries thereof and all predecessors thereto, and
any Person or entity to the liabilities of which, pursuant to the
Environmental Laws, contractually, by common law or by operation of
law, the Company or any of its Subsidiaries have
succeeded.
(b) All of the operations of the
Company, its Subsidiaries and their respective assets, including
any operations at or from any Company Owned Real Property and any
Company Leased Real Property (collectively, the “ Company
Real Property ”) or any real property formerly owned,
used, leased, occupied, managed or operated by the Company or any
of its Subsidiaries (the “ Former Company Real
Property ”), comply and have at all times been in
material compliance with all applicable Environmental
Laws. Neither the Company nor any of its Subsidiaries
nor, to the knowledge of the Company, any other Person has engaged
in, authorized, allowed or suffered any operations or activities
upon any of the Company Real Property or Former Company Real
Property for the purpose of or in any way involving the handling,
manufacture, treatment, processing, storage, use, generation,
release, discharge, emission, dumping or disposal of any Hazardous
Substances at, on or under the Company Real Property or the Former
Company Real Property, except in material compliance with all
applicable Environmental Laws.
(c) Neither the Company Real Property
nor, to the knowledge of the Company, the Former Company Real
Property contains any Hazardous Substances in, on, over, under or
at it in concentrations that would currently violate Environmental
Laws or impose liability or obligations on the Company or any
Subsidiary under the Environmental Laws for any investigation,
corrective action, remediation or monitoring of Hazardous
Substances in, on, over, under or at such Company Real Property or
Former Company Real Property. None of such Company Real
Property nor, to the knowledge of the Company, any Former Company
Real Property is listed or proposed for listing on the National
Priorities List pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. § 9601
et seq ., or any similar inventory of sites requiring
investigation or remediation maintained by any
state. Neither the Company nor any of the
Company’s Subsidiaries has received any notice, whether oral
or written, from any Governmental Entity or other Person of any
actual or threatened material Environmental Liabilities with
respect to the Company, its Subsidiaries, the Company Real Property
or the conduct of the businesses of the Company or any of its
Subsidiaries.
(d) There are no conditions existing
at any Company Real Property that constitute, or which with the
giving of notice or the passage of time or both may constitute
material Environmental Liabilities requiring remedial or corrective
action, removal or closure pursuant to the Environmental
Laws. To the knowledge of the Company, there are no
conditions existing at any Former Company Real Property that
constitute, or which with the giving of notice or the passage of
time or both may constitute material Environmental Liabilities
requiring remedial or corrective action, removal or closure
pursuant to the Environmental Laws for which the Company, any
Subsidiary of the Company or the Surviving Corporation could be
liable.
(e) Each of the Company and its
Subsidiaries has all the material Permits necessary for the conduct
of its businesses and operations that are required under applicable
Environmental Laws and is in material compliance with the terms and
conditions of all such Permits.
(f) The Company has provided to
Parent all material environmental reports, assessments, audits,
studies, investigations, data and other written environmental
information in its custody, possession or control concerning the
Company, its Subsidiaries and their respective assets and the
Company Real Property and Former Company Real Property.
(g) Neither the Company nor any of
its Subsidiaries has contractually, by operation of law, by the
Environmental Laws, by common law or otherwise assumed or succeeded
to any material Environmental Liabilities of any predecessors or
any other Person.
(h) None of the transactions
contemplated by this Agreement or the Company Transaction Documents
will trigger any filing requirement or other action under any
applicable Environmental Law, including, without limitation, any
environmental transfer law, including, without limitation, the New
Jersey Industrial Site Recovery Act (N.J.S.A. §§13:1L-6
et seq. ) and the Connecticut Real Property Transfer Act
(C.G.S.A. 22a-134 et seq. ).
(i) The Company, its Subsidiaries,
their businesses and their products are and have been in compliance
with all applicable requirements under California’s Safe
Drinking Water and Toxic Enforcement Act of 1986 (Proposition
65).
(j) None of the matters disclosed on
the Company Disclosure Letter or in the Company SEC Reports with
respect to this Section 3.16, individually or in the aggregate, is
reasonably likely to have a Parent Material Adverse Effect or a
Company Material Adverse Effect.
3.17 Affiliated Transactions
. The Company has no knowledge that any current or
former officer, director, stockholder or Affiliate of the Company
or any of its Subsidiaries is a party to any material agreement,
contract, commitment or transaction with the Company or any of its
Subsidiaries or has any material interest in any material property
used by the Company or any of its Subsidiaries or in a Person that
is a party to any material Company Contract.
3.18 Labor and Employment
Matters .
(a) Section 3.18(a) of the Company
Disclosure Letter sets forth a true, complete and correct list of
the name, job position and current annual base rate of salary of
all employees of the Company and its Subsidiaries whose current
annual base rate of salary is in excess of $100,000. To
the knowledge of the Company, no such employee has indicated an
intention to resign or retire. Except for obligations
set forth on Section 3.18(a) of the Company Disclosure Letter, the
Company has accrued by adequate reserves on the Company Current
Balance Sheet, in accordance with GAAP, all wages, salaries,
bonuses, vacation pay and other direct, indirect and deferred
compensation earned by, or accrued for the benefit of, all
employees of the Company and its Subsidiaries. Parent
has been supplied with true, complete and correct copies of all
currently in effect written employment codes, procedures, policies
and employee manuals. Except as described on Section
3.18(a) of the Company Disclosure Letter, there are no material
non-written employee policies or procedures that are binding on the
Company or its Subsidiaries or that would be binding on Parent,
Merger Sub or the Surviving Corporation.
(b) Neither the Company nor any of
its Subsidiaries is a party to or bound by any collective
bargaining agreement and there are no labor unions, works councils
or other organizations representing, purporting to represent or, to
the knowledge of the Company, attempting to represent any employee
of the Company or any of its Subsidiaries. In the three
years prior to the Closing Date, there has not been any actual or
threatened strike, slowdown, picketing or work stoppage with
respect to employees of the Company or any of its Subsidiaries and,
to the knowledge of the Company, no such activity is
anticipated. There are no labor disputes currently
subject to any grievance procedure, arbitration or litigation and
there is no representation petition with any Governmental Entity
pending, threatened or, to the knowledge of the Company,
anticipated with respect to any employee of the Company or any of
its Subsidiaries. In the three years prior to the
Closing Date, neither the Company nor any of its Subsidiaries has
engaged in any unfair labor practices for which a claim has been
made to the Company or any Governmental Entity and, to the
knowledge of the Company, no facts exist that could reasonably be
expected to give rise to an unfair labor practice charge within the
meaning of the National Labor Relations Act. The Company
and its Subsidiaries are in compliance in all material respects
with the Worker Adjustment and Retraining Notification Act, 29
U.S.C. §2109 et seq. and the regulations promulgated
thereunder (the “ WARN Act ”) and any comparable
state statute or regulation and, to the knowledge of the Company.
the Company and its Subsidiaries are in compliance in all material
respects with all applicable Laws relating to employment and
employment practices, workers’ compensation, terms and
conditions of employment, worker safety, wages and hours, civil
rights, discrimination, immigration, and collective
bargaining. There have been no material claims of
harassment, discrimination, retaliatory act or similar actions
against any employee, officer or director of the Company or any of
its Subsidiaries at any time during the past three years, no such
claims are pending or threatened, and, to the knowledge of the
Company, no such claim is anticipated. The Company and
its Subsidiaries are not required to have, and do not have, any
affirmative action plans or programs. To the
Company’s knowledge, no employees of the Company or any of
its Subsidiaries are in any material respect in violation of any
term of any employment contract, non-disclosure agreement,
non-competition agreement or any restrictive covenant to a former
employer relating to the right of any such employee to be employed
by the Company or any of its Subsidiaries because of the nature of
the business conducted or presently proposed to be conducted by the
Company or any of its Subsidiaries or to the use of trade secrets
or proprietary information of others.
3.19 Bank Accounts
. Section 3.19 of the Company Disclosure Letter sets
forth a true, correct and complete list of the (a) name of
each bank, savings and loan or other financial institution in which
the Company and its Subsidiaries has an account, and the account
numbers and names of all persons authorized to draw thereon or
having access thereto, and (b) locations of all lock boxes and
safe deposit boxes of the Company and its Subsidiaries and the
names of all persons authorized to draw thereon or having access
thereto.
3.20 Suppliers
. Section 3.20 of the Company Disclosure Letter sets
forth a true, correct and complete list that (a) sets forth
the names of the 20 largest suppliers by cost dollar volume of
merchandise inventory purchased by the Company and its Subsidiaries
during the most recent full fiscal year and (b) indicates the
cost dollar volume purchased by the Company and its Subsidiaries
from each such supplier during such fiscal year. Except
for letters of credit for outstanding purchase orders, neither the
Company nor any of its Subsidiaries is required to provide any
bonding or other financial security arrangements in connection with
any transactions with any supplier in the ordinary course of its
respective business. Since December 31, 2008, there has
been no termination, cancellation or material curtailment of the
business relationship of the Company or any of its Subsidiaries
with any such supplier, nor has any such supplier provided the
Company with written notice of an intent to so terminate, cancel or
materially curtail its business relationship with the Company or
any of its Subsidiaries.
3.21 Inventory
. Section 3.21 of the Company Disclosure Letter sets
forth true, complete and correct lists of (i) all domestic and
international stores operated by the Company or any Affiliate or
licensee thereof which, as of the date hereof, display the Signage
on the exterior or interior thereof, along with the anticipated
date for removal of the Signage from such store or closing of such
store, (ii) all sublicenses pursuant to which the Company licenses
any licensed Intellectual Property to any Person, (iii) all
Inventory (A) on order from suppliers, (B) on hand and available
for sale in any store operated by a Company or any Affiliate or
licensee thereof, and (C) located at a distribution, storage or
similar facility, and in the case of (A), (B) and (C), the value of
such Inventory.
3.22 Brokerage
. Except for Peter J. Solomon Company (the “
Company Financial Advisor ”), no Person is entitled to
any brokerage, finder’s or similar compensation in connection
with the transactions contemplated by this Agreement based on any
arrangement or agreement made by or on behalf of the Company for
which Parent or Company could become liable or
obligated. A true and complete copy of the agreement
between the Company and the Company Financial Advisor setting forth
all of the fees payable to the Company Financial Advisor and other
terms of the retention of the Company Financial Advisor have been
provided or made available to Parent.
3.23 Fairness Opinion
. The Company’s Board of Directors has received an
opinion from the Company Financial Advisor to the effect that, as
of the date of such opinion, the Merger Consideration to be
received by the holders of the Company Common Stock pursuant to
this Agreement is fair from a financial point of view to the
holders of the Company Common Stock.
3.24 Vote Required
. Based upon the accuracy of the representation in
Section 4.19 hereof, the Company Stockholder Approval is the only
vote of any class or series of the capital stock of the Company
required to adopt this Agreement and the transactions contemplated
by this Agreement.
3.25 Takeover Statutes
. Based upon the accuracy of the representation in
Section 4.19 hereof, the Board of Directors of the Company has
taken all actions so that the restrictions contained in Section 203
of the DGCL (“ Section 203 ”) applicable to a
“business combination” (as defined in such Section 203)
or any other similar Law will not apply to Parent in connection
with the execution and delivery of this Agreement, the consummation
of the Merger or the other transactions contemplated by this
Agreement.
3.26 Company Rights Agreement
. The Company has taken all actions necessary to (a)
render the Rights Agreement inapplicable to this Agreement, the
Merger and the other transactions contemplated by this Agreement,
(b) ensure that neither Parent nor Merger Sub is deemed to be a 15%
Stockholder (as defined in the Rights Agreement) for purposes of
the Rights Agreement, (c) ensure that none of a Distribution Date,
a Section 13(a) Event, a 15% Ownership Date or a Section 11(a)(ii)
Event (as such terms are defined in the Rights Agreement) will
occur solely by reason of the execution or delivery of this
Agreement or the consummation of the Merger and the other
transactions contemplated by this Agreement, and (d) provide that
the Expiration Date (as defined in the Rights Agreement) shall
occur immediately prior to the Effective Time.
3.27 Article Eleventh of
Charter . Based upon the accuracy of the
representation in Section 4.19 hereof, the Board of Directors of
the Company has taken all actions so that the restrictions on
“Business Combinations” contained in Article Eleventh
of the Amended and Restated Certificate of Incorporation of the
Company (“ Article Eleventh ”) will not apply to
Parent, this Agreement or any of the transactions contemplated
hereby, including by having a majority of the “Article 11
Continuing Directors” approve this Agreement and the
transactions contemplated hereby.
3.28 No Material Misstatement or
Omission . No representation or warranty by the
Company in this Agreement and no information contained in the
Company Disclosure Letter contains any untrue statement of a
material fact or omits to state any material fact necessary in
order to make the statement made herein or therein, in light of the
circumstances under which they were made, not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB
Except as set forth on the disclosure letter
delivered to the Company by Parent and Merger Sub on or prior to
the date of the execution of this Agreement (the “ Parent
Disclosure Letter ”) and except as disclosed in the
Annual Report on Form 10-K of Parent for the year ended July 26,
2008 (the “ Parent Form 10-K ”) and the
Quarterly Reports on Form 10-Q and the Current Reports on Form 8-K
of Parent, in each case, filed from the date of the filing of the
Parent Form 10-K to the date of this Agreement (other than
disclosures in the “Risk Factors” or “Forward
Looking Statements” sections of such reports and except as
expressly provided in Section 4.6 of the Parent Disclosure Letter),
Parent and Merger Sub hereby jointly and severally represent and
warrant to the Company that:
4.1 Organization and
Qualification . Parent is a corporation duly
organized, validly existing and in good standing under the Laws of
the State of Connecticut and Merger Sub is a corporation duly
organized, validly existing and in good standing under the Laws of
the State of Delaware, and each of Parent and Merger Sub has all
requisite corporate power and authority and all authorizations,
licenses and Permits necessary to own and operate its properties
and to carry on its businesses as now conducted. Each of
Parent and Merger Sub is qualified to do business in every
jurisdiction in which its ownership of property or the conduct of
its businesses as now conducted requires it to qualify, except
where the failure to be so qualified as a foreign corporation would
not have, either individually or in the aggregate, a Parent
Material Adverse Effect. Parent has made available to
the Company a complete and correct copy of the certificate or
articles of incorporation and bylaws, each as amended to date, of
Parent and Merger Sub. Neither Parent nor Merger Sub is
in violation of any of the provisions of its certificate or
articles of incorporation or bylaws.
4.2 Subsidiaries . Except as
set forth in Section 4.2 of the Parent Disclosure Letter, neither
Parent nor any of its Subsidiaries owns or holds the right to
acquire any stock, partnership interest, joint venture interest or
other equity ownership interest in any other
Person. Except as set forth in Section 4.2 of the Parent
Disclosure Letter, there are no contractual obligations of Parent
or any of its Subsidiaries to make any loan to, or any investment
(in the form of a capital contribution or otherwise) in, any
Subsidiary of Parent or any other Person. Each
Subsidiary of Parent is either wholly owned by Parent or a
Subsidiary or Subsidiaries of Parent as indicated on Section 4.2 of
the Parent Disclosure Letter. Each outstanding share of
capital stock of or other equity interest in each of Parent’s
Subsidiaries is owned by Parent or a wholly owned Subsidiary of
Parent, free and clear of any Liens, except Permitted
Liens. Each Subsidiary of Parent is validly existing and
in good standing under the Laws of the jurisdiction of its
incorporation or organization, has all requisite corporate power
and authority and all authorizations, licenses and Permits
necessary to own its properties and to carry on its businesses and
is qualified to do business in every jurisdiction in which its
ownership of property or the conduct of its businesses requires it
to qualify, except where the failure to be qualified as a foreign
corporation would not have, either individually or in the
aggregate, a Parent Material Adverse Effect.
4.3 Authorization; Valid and
Binding Agreement .
(a) Each of Parent and Merger Sub has
all necessary corporate power and authority to execute and deliver
this Agreement and each other certificate, agreement, document and
instrument to be executed and delivered by the Parent or Merger Sub
in connection with the transactions contemplated by this Agreement
(collectively, the “ Parent Transaction Documents
”) and to perform its obligations hereunder and thereunder
and to consummate, on the terms and subject to the conditions
hereof and thereof, the transactions contemplated hereby and
thereby, subject in the case of the consummation of the Merger to
the adoption of this Agreement by Parent as the sole stockholder of
Merger Sub (which shall occur immediately after the execution and
delivery of this Agreement). All corporate action on the
part of Parent, its officers, directors and stockholders necessary
for the authorization, execution and delivery of this Agreement and
each of the Parent Transactions Documents and the performance of
all obligations of Parent hereunder and thereunder has been taken,
subject only to the adoption of this Agreement by Parent as the
sole stockholder of Merger Sub (which shall occur immediately after
the execution and delivery of this Agreement). This
Agreement and each of the Parent Transaction Documents have been
duly executed and delivered by Parent and Merger Sub or, in the
case of the Parent Transaction Document to be executed and
delivered hereafter, each such Parent Transaction Document will
have been duly executed and delivered as of the Closing
Date. This Agreement and each of the Parent Transaction
Documents each constitute or, in the case of any Parent Transaction
Documents to be executed hereafter, each such Parent Transaction
Document will constitute a legal valid and binding obligation of
Parent and Merger Sub and, assuming due authorization, execution
and delivery by the Company, will be enforceable against Parent and
Merger Sub in accordance with its terms, except as enforceability
may be limited by bankruptcy Laws, other similar Laws affecting
creditors’ rights and general principles of equity affecting
the availability of specific performance and other equitable
remedies. As of the date of this Agreement, the Board of
Directors of each of Parent and Merger Sub has approved, adopted
and declared advisable the execution, delivery and performance of
this Agreement and consummation by each of Parent and Merger Sub of
the transactions contemplated by this Agreement.
(b) Except as set forth on Section
4.3(b) of the Parent Disclosure Letter, neither the execution,
delivery or performance of this Agreement and the Parent
Transaction Documents by Parent or Merger Sub nor the consummation
of the Merger by Parent, Merger Sub or any of their respective
Subsidiaries will, directly or indirectly (with or without the
giving of notice or the passage of time or both),
(i) require any consent, approval or other action of any
Person under any Parent Contract, (ii) (A) violate, result in
a breach of, conflict with or entitle any Governmental Entity or
any other Person to accelerate the maturity or performance under,
amend, call a default under, exercise any remedy under, modify,
rescind, suspend or terminate or (B) create any material obligation
on the part of Parent or Merger Sub that it was not obligated to
perform immediately before such Parent Transaction Document was
executed under, any term of any such Parent Contract or any Law,
(iii) violate or result in the material breach of any term of the
certificate or articles of incorporation or bylaws or other
organizational documents or resolution of the Board of Directors,
any committee of the Board of Directors, stockholders or comparable
bodies of Parent, Merger Sub or any of their respective
Subsidiaries or (iv) result in the amendment, creation, imposition
or modification of any Lien other than a Permitted Lien upon or
with respect to any of the material properties or assets that
Parent, Merger Sub or any of their respective Subsidiaries owns,
uses or purports to own or use.
4.4 Governmental
Filings; No Violations . Except for (a)
the applicable requirements, if any, of Blue Sky Laws, (b) the
pre-merger notification requirements of the HSR Act, (c) filings
under the Exchange Act and the Securities Act, (d) any filings
required under the rules and regulations of the NASDAQ and (e) the
filing of the Certificate of Merger pursuant to the DGCL, the
execution and delivery of this Agreement and each of the Parent
Transaction Documents by Parent and Merger Sub and the consummation
of the transactions contemplated hereby and thereby do not (i)
require any material authorization, consent, approval, exemption or
other action by or notice to any court or Governmental Entity, (ii)
conflict with or result in a material breach of the provisions of
Parent’s or any of its Subsidiary’s certificate or
articles of incorporation or bylaws or other organizational
documents, or (iii) conflict with or result in a material breach of
any Law to which Parent or any of its Subsidiaries is
subject.
4.5 Capital Stock
. The authorized capital stock of Parent consists of (a)
100,000 shares of preferred stock, par value $.05 per share, of
which, as of the date of this Agreement, no shares are issued and
outstanding and (b) 165,000,000 shares of Parent Common Stock, of
which, as of the date of this Agreement, 60,191,619 shares are
issued and outstanding. As of the date of this
Agreement, there are outstanding options to purchase an aggregate
of 7,240,153 shares of Parent Common Stock. All
outstanding shares of Parent Common Stock and the shares of Parent
Common Stock constituting the Merger Consideration have been duly
authorized and all outstanding shares of Parent Common Stock are,
and the shares of Parent Common Stock constituting the Merger
Consideration, upon issuance in accordance with the terms hereof,
will be, validly issued, fully paid and
nonassessable. Except as set forth on Section 4.5 of the
Parent Disclosure Letter and other than pursuant to the
Parent’s equity compensation plans, there are no outstanding,
and there have not been reserved for issuance any: (i)
shares of capital stock or other voting securities of Parent or its
Subsidiaries; (ii) securities of Parent or its Subsidiaries
convertible into or exchangeable for shares of capital stock or
voting securities of Parent or its Subsidiaries; (iii) options or
other rights to acquire from Parent or its Subsidiaries, or
obligations of Parent or its Subsidiaries to issue, any shares of
capital stock, voting securities or securities convertible into or
exchangeable for shares of capital stock or voting securities of
Parent or its Subsidiaries, as the case may be; or (iv) equity
equivalent interests in the ownership or earnings of Parent or its
Subsidiaries or other similar rights (the items in clauses (i)
through (iv) collectively, “ Parent Securities
”). There are no outstanding obligations of Parent
or its Subsidiaries to repurchase, redeem or otherwise acquire any
Parent Securities. There are no stockholder agreements,
voting trusts or other agreements or understandings to which Parent
or any of its Subsidiaries is a party or by which Parent or any of
its Subsidiaries are bound relating to the voting, purchase,
transfer or registration of any shares of capital stock of Parent
or any of its Subsidiaries or preemptive rights with respect
thereto.
4.6 Parent SEC Reports
.
(a) Parent has timely filed with or
otherwise furnished (as applicable) to the SEC all forms, reports,
schedules, statements, certifications and other documents required
to be filed or furnished by it under the Securities Act or the
Exchange Act since July 26, 2008 (such documents, as supplemented
or amended since the time of filing, and together with all
information incorporated by reference therein, the “
Parent SEC Reports ”). No Subsidiary of
Parent is required to make any filings with the SEC. As
of their respective dates, the Parent SEC Reports, including any
financial statements or schedules included or incorporated by
reference therein, at the time filed (i) complied as to form in all
material respects with the applicable requirements of the
Securities Act and the Exchange Act, and the rules and regulations
of the SEC promulgated thereunder applicable to such Parent SEC
Reports, and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading.
(b) Parent maintains a system of
internal control over financial reporting (as defined in Rule
13a-15 under the Exchange Act) that has been designed to provide
reasonable assurance that: (i) transactions are executed
in accordance with management’s general or specific
authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP
and to maintain asset accountability; (iii) access to assets is
permitted only in accordance with management’s general or
specific authorization; and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any
differences.
(c) Parent maintains a system of
“disclosure controls and procedures” (as defined in
Rules 13a-15(e) and 15d-15(e) of the Exchange Act) necessary in
order for the Chief Executive Officer and Chief Financial Officer
of Parent to engage in the review and evaluation process mandated
by the Exchange Act and the rules promulgated
thereunder. Parent’s “disclosure controls
and procedures” are reasonably designed to ensure that all
information (both financial and non-financial) required to be
disclosed by Parent in the reports that it files or submits under
the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the rules and forms of the
SEC, and that all such information is accumulated and communicated
to Parent’s management as appropriate to allow timely
decisions regarding required disclosure and to make the
certifications of the Chief Executive Officer and Chief Financial
Officer of Parent required under the Exchange Act with respect to
such reports.
(d) Since July 26, 2008, Parent has
not received any oral or written notification of a (x)
“significant deficiency” or (y) “material
weakness” in Parent’s internal controls over financial
reporting. The terms “significant
deficiency” and “material weakness” shall have
the meanings assigned to them in the Statements of Auditing
Standards 112, as in effect on the date hereof.
(e) Parent has provided or made
available to the Company copies of all correspondence sent to or
received from the SEC by Parent or its Subsidiaries or their
respective counsel or accountants since July 26,
2008. As of the date hereof, there are no outstanding or
unresolved comments in comment letters received from the SEC staff
with respect to any Parent SEC Reports.
(f) The audited consolidated
financial statements included in the Parent Form 10-K and the
unaudited consolidated interim financial statements included in
Parent’s quarterly report on Form 10-Q for the quarter ended
April 25, 2009 (including any related notes and schedules) and the
other financial statements included in Parent SEC Reports fairly
present, in all material respects, the consolidated financial
position of Parent and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and
their consolidated cash flows for the periods set forth therein,
and in each case were prepared in accordance with GAAP consistently
applied during the periods involved (except as otherwise disclosed
in the notes thereto and subject, in the case of financial
statements for quarterly periods, to normal year-end adjustments
not material in amount). The books of account and other
financial records of Parent and each of its Subsidiaries are true
and complete in all material respects, reflect only actual
transactions and are maintained in accordance with GAAP.
(g) Since July 26, 2008, no attorney
representing Parent or any of its Subsidiaries, whether or not
employed by Parent or any Subsidiary of Parent, has reported to
Parent’s chief legal counsel or Chief Executive Officer
evidence of a material violation of securities Laws, breach of
fiduciary duty or similar violation by Parent or any of its
officers, directors, employees or agents pursuant to Section 307 of
the Sarbanes-Oxley Act.
(h) Since July 26, 2008, to the
knowledge of Parent, no employee of Parent or any of its
Subsidiaries has provided or is providing information to any law
enforcement agency or Governmental Entity regarding the commission
or possible commission of any crime or the violation or possible
violation of any applicable legal requirements of the type
described in Section 806 of the Sarbanes-Oxley Act by Parent or any
of its Subsidiaries.
(i) There are no liabilities or
obligations of Parent or any of its Subsidiaries (whether accrued,
contingent, absolute, determined or determinable) other than: (i)
liabilities or obligations disclosed or provided for in the
unaudited consolidated balance sheet of the Company as of April 25,
2009 or disclosed in the notes thereto (the “ Parent
Current Balance Sheet ”); (ii) liabilities or obligations
incurred after April 25, 2009 in the ordinary course of
Parent’s business that are not individually or in the
aggregate material to Parent and its Subsidiaries, taken as a
whole; (iii) liabilities incurred in connection with the
transactions contemplated by this Agreement or disclosed on Section
4.6 of the Parent Disclosure Letter; (iv) liabilities under any
agreement, lease, note, mortgage, indenture or other obligation of
Parent or any of its Subsidiaries, which is not in violation of the
terms of this Agreement; and (v) other liabilities that are not,
either individually or in the aggregate, material to Parent and its
Subsidiaries, taken as a whole.
(j) The consolidated financial
statements of Parent for all periods commencing after February 4,
2007 are in material compliance with the requirements of the FIN 48
and Parent and its Subsidiaries have provided or made available to
the Company any and all of their respective accounting work papers
with respect to compliance with the FIN 48 that the Company or its
Representatives have reasonably requested.
4.7 Absence of Certain Changes or
Events . Since July 26, 2008, the business of Parent
and its Subsidiaries has been conducted in all material respects in
the ordinary course consistent with past practice. From
July 26, 2008 thru the date of this Agreement, there has not been
any event, occurrence or development that has had, either
individually or in the aggregate, a Parent Material Adverse
Effect.
4.8 Title to Properties
. Parent or one of its Subsidiaries owns good and
marketable title to, or holds pursuant to valid and enforceable
leases, all of the material personal and real property shown to be
owned by them on the Parent Current Balance Sheet, free and clear
of all Liens, except for Permitted Liens or other imperfections of
title, if any, that, individually or in the aggregate, would not be
reasonably expected to have a Parent Material Adverse
Effect. All material personal property shown to be owned
by Parent and its Subsidiaries on the Parent Current Balance Sheet
have been maintained in accordance with Parent’s and its
Subsidiaries’ normal practices and are in usable condition
for the operation of Parent’s and its Subsidiaries’
businesses, ordinary wear and tear excepted.
4.9 Tax Matters
. Parent has timely filed all Tax Returns that it was
required to file. All such Tax Returns are true, correct
and complete in all material respects. Except as set
forth on Section 4.9 of the Parent Disclosure Letter, all material
Taxes due and payable by Parent (whether or not shown on such Tax
Returns) have been fully paid or properly accrued in accordance
with GAAP. There are no audits, claims, deficiencies,
assessments, levies, administrative or judicial Proceedings
pending, or to Parent’s knowledge threatened, against Parent
by any taxing authority. As of the date hereof, neither
Parent nor any of its Affiliates has taken or agreed to take any
action, nor does Parent have knowledge of any fact or circumstance,
that would prevent the Merger from qualifying as a
“reorganization” within the meaning of
Section 368(a) of the Code.
4.10 Material Contracts
.
(a) All agreements,
