EXHIBIT 2.1
AGREEMENT AND PLAN OF RECAPITALIZATION AND MERGER
BY AND BETWEEN
SPECIALTY ACQUISITION CORP.
AND
SPECIALTY CATALOG CORP.
DATED MAY 4, 2001
TABLE OF CONTENTS
TABLE OF DEFINED TERMS...................................................... 1
AGREEMENT AND PLAN OF RECAPITALIZATION AND MERGER......................... 1
RECITALS.................................................................... 1
ARTICLE I................................................................... 2
THE MERGER.................................................................. 2
1.1 The Merger............................................................ 2
1.2 Company Action........................................................ 2
1.3 Effects of the Recapitalization and Merger............................ 2
1.4 Consummation of the Recapitalization and Merger....................... 2
1.5 Certificate of Incorporation; Bylaws; Directors and Officers.......... 3
1.6 Conversion of Securities.............................................. 3
1.7 Company Stock Options................................................. 4
1.8 Dissenting Shares..................................................... 4
1.9 Exchange of Certificates.............................................. 4
1.10 Supplementary Action.................................................. 6
1.11 Lost, Stolen or Destroyed Company Certificates........................ 6
ARTICLE II.................................................................. 6
REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................... 6
2.1 Organization and Qualification........................................ 6
2.2 Certificate of Incorporation; Bylaws; and Stock Transfer Records...... 7
2.3 Capitalization of the Company......................................... 7
2.4 Corporate Power, Authorization and Enforceability..................... 7
2.5 No Conflict; Required Filings and Consents............................ 8
2.6 SEC Reports; Financial Statements..................................... 9
2.7 No Default; Violation; Dispute........................................ 9
2.8 Compliance with Law................................................... 10
2.9 Absence of Certain Changes............................................ 10
2.10 No Undisclosed Liabilities............................................ 10
2.11 Litigation; Claims.................................................... 10
2.12 INTENTIONALLY OMITTED................................................. 11
2.13 Disclosure Documents.................................................. 11
2.14 INTENTIONALLY OMITTED................................................. 11
2.15 Environmental Matters................................................. 11
2.16 Takeover Laws......................................................... 12
2.17 Board Recommendation; Fairness Opinion................................ 12
2.18 INTENTIONALLY OMITTED................................................. 12
2.19 Brokers and Finders................................................... 13
ARTICLE III................................................................. 13
REPRESENTATIONS AND WARRANTIES OF PURCHASER................................. 13
3.1 Organization and Qualification........................................ 13
3.2 Corporate Power, Authorization and Enforceability..................... 13
3.3 No Conflict; Required Filings and Consents............................ 13
3.4 Board and Stockholder Approval........................................ 14
3.5 Brokers and Finders................................................... 14
3.6 Disclosure Documents.................................................. 14
ARTICLE IV COVENANTS........................................................ 15
4.1 Conduct of Business by the Company.................................... 15
4.2 Access to Information; Confidentiality................................ 16
4.3 Preparation of Proxy Statement; Stockholders Meeting; Schedule 13E-3.. 17
4.4 Regulatory Filings.................................................... 18
4.5 Acquisition Proposals................................................. 18
4.6 Public Announcements.................................................. 19
4.7 Notification of Certain Matters....................................... 20
4.8 Officers' and Directors' Indemnification; Insurance................... 20
4.9 Additional Agreements................................................. 21
4.10 Company Indebtedness.................................................. 22
4.11 Other Actions by the Company.......................................... 22
4.12 Litigation Cooperation................................................ 22
4.13 Future Filings........................................................ 22
4.14 Board Action Relating to Stock Option Plans........................... 22
4.15 Knowledge of Inaccuracies............................................. 22
4.16 Financing Matters..................................................... 23
4.17 Voting................................................................ 24
4.18 Exemption from Liability Under Section 16(B).......................... 24
4.19 Delisting............................................................. 24
ARTICLE V................................................................... 24
CONDITIONS OF MERGER........................................................ 24
5.1 Conditions to the Obligations of Each Party to Effect the Merger...... 24
5.2 Conditions Precedent to Purchaser's Obligations....................... 25
5.3 Conditions to Obligations of the Company.............................. 25
ARTICLE VI.................................................................. 26
TERMINATION, AMENDMENT AND WAIVER........................................... 26
6.1 Termination........................................................... 26
6.2 Procedure and Effect of Termination................................... 27
6.3 Expenses.............................................................. 27
6.4 Amendment............................................................. 28
6.5 Waiver................................................................ 28
6.6 Termination decisions by the Company.................................. 28
ARTICLE VII DEFINITIONS..................................................... 28
ARTICLE VIII MISCELLANEOUS.................................................. 30
8.1 Severability.......................................................... 30
8.2 Notices............................................................... 30
8.3 Headings.............................................................. 31
8.4 Representations and Warranties, etc................................... 31
8.5 Miscellaneous......................................................... 31
8.6 Attorneys Fees........................................................ 31
8.7 Governing Law......................................................... 31
8.8 Jurisdiction and Venue................................................ 31
8.9 Binding Effect........................................................ 32
8.10 Assignment............................................................ 32
8.11 Further Assurances.................................................... 32
8.12 Publicity............................................................. 32
TABLE OF DEFINED TERMS
Section
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2000 10-K................................................................ 2.3(b)
Acquisition Proposal..................................................... 4.5(a)
Affiliate........................................................... Article VII
Agreement.......................................................... Introduction
Board.................................................................. Recitals
Board of Directors..................................................... Recitals
CERCLA.................................................................. 2.15(a)
Certificate.............................................................. 1.6(a)
Closing..................................................................... 1.4
Closing Date................................................................ 1.4
Commitments................................................................ 4.16
Common Stock........................................................... Recitals
Company............................................................ Introduction
Company Acquisition Agreement............................................ 4.5(a)
Company Disclosure Documents............................................ 2.13(a)
Company Disclosure Letter................................................... 1.7
Company Notice........................................................... 4.5(b)
Company Proxy Statement.................................................. 4.3(b)
Company Requisite Vote...................................................... 2.4
Company Rights Plan................................................. Article VII
Company Stock Option Plan................................................... 1.7
Confidential Information......................................... 4.2(d). 4.2(b)
Constituent Corporations.................................................... 1.3
D&O Insurance............................................................ 4.8(f)
Deposit Amount........................................................... 1.9(a)
DGCL........................................................................ 1.1
Dissenting Shares........................................................... 1.8
Dissenting Stockholder...................................................... 1.8
Effective Time.............................................................. 1.4
Eligible Shares............................................................. 1.7
Engagement Letter.......................................................... 2.19
Environmental Laws...................................................... 2.15(a)
Exchange Act............................................................. 2.5(b)
Exchange Agent........................................................... 1.9(a)
Expenses................................................................. 6.3(b)
Fairness Opinion........................................................ 2.17(b)
Financial Advisor...................................................... Recitals
Financial Statements........................................................ 2.6
Financing Condition...................................................... 5.2(a)
GAAP........................................................................ 2.6
Golub Engagement Letter................................................. 4.16(c)
Governmental Entities.................................................... 2.5(b)
Hazardous Substances.................................................... 2.15(b)
HSR Act.................................................................. 2.5(b)
Indebtedness........................................................ Article VII
Lending Sources......................................................... 4.16(a)
Material Adverse Effect............................................... Article V
Maximum Premium.......................................................... 4.8(f)
Merger...................................................................... 1.1
Option...................................................................... 1.7
Per Share Merger Consideration........................................... 1.6(a)
Permitted Investments.................................................... 1.9(a)
Person.............................................................. Article VII
Preliminary Proxy Statement.............................................. 4.3(b)
Purchaser.......................................................... Introduction
Purchaser Disclosure Documents........................................... 3.6(a)
RCRA.................................................................... 2.15(a)
Regulatory Consents...................................................... 2.5(b)
Representatives.......................................................... 4.2(a)
Rights Plan.............................................................. 2.3(a)
SARA.................................................................... 2.15(a)
Schedule 13E-3........................................................... 4.3(b)
SEC......................................................................... 2.6
SEC Reports................................................................. 2.6
Securities Act.............................................................. 2.6
Shares................................................................... 1.6(a)
Special Committee...................................................... Recitals
Subsidiary.......................................................... Article VII
Superior Proposal........................................................ 4.5(a)
Surviving Corporation....................................................... 1.1
Tax or Taxes........................................................ Article VII
AGREEMENT AND PLAN OF RECAPITALIZATION AND MERGER
THIS AGREEMENT AND PLAN OF RECAPITALIZATION AND MERGER (the "Agreement") is
made and entered into as of this 4th day of May, 2001, by and between SPECIALTY
ACQUISITION CORP., a Delaware corporation ("Purchaser"), and SPECIALTY CATOLOG
CORP., a Delaware corporation (the "Company").
RECITALS
WHEREAS, Purchaser desires to acquire the entire equity interest in the
Company and to provide for the payment of $3.75 per share in cash for all shares
of the common stock, par value $.01 per share, of the Company (the "Common
Stock") not held by Purchaser; and
WHEREAS, the stockholders of Purchaser intend to contribute shares of
Common Stock held by them to the Purchaser and to acquire in exchange therefor
common stock of the Purchaser; and
WHEREAS, the Special Committee (the "Special Committe") of the Board of
Directors of the Company (the "Board of Directors" or the "Board") has approved
this Agreement, determined that this Agreement, the Merger and the other
transactions contemplated hereby are fair to, advisable, and in the best
interests of, the Company's stockholders (other than the Purchaser and its
current and future stockholders) and adopted the Merger as set forth herein and
has recommended approval of the Merger and adoption of the Agreement by the
Board of Directors and the stockholders of the Company;
WHEREAS, the Special Committee has received the opinion of Burnham
Securities Inc. (the "Financial Advisor"), dated as of the date of this
Agreement, to the effect that, based on, and subject to, the various assumptions
and qualifications set forth therein, as of the date of such opinion, the Per
Share Merger Consideration (as hereinafter defined) to be received by the
holders of the Common Stock (other than the Purchaser and its current and future
stockholders) pursuant to the Merger (as hereinafter defined) is fair from a
financial point of view to such holders;
WHEREAS, the Board of Directors, after receiving the recommendation of
the Special Committee, has approved this Agreement, determined that this
Agreement, the Merger and the other transactions contemplated hereby are fair
to, advisable and in the best interests of the Company's stockholders (other
than the Purchaser and its current and future stockholders) and has adopted the
Merger as set forth herein and has recommended approval of the Merger and
adoption of this Agreement by the stockholders of the Company;
WHEREAS, the Board of Directors of the Purchaser has approved this
Agreement, determined that this Agreement, the Merger and the other transactions
contemplated hereby are fair to, advisable and in the best interests of the
Purchaser's stockholders and adopted the Merger as set forth herein and has
recommended approval of the Merger and adoption of this Agreement by the
stockholders of the Company; and
WHEREAS, the stockholders of Purchaser have, by unanimous written consent,
approved the Merger and adoption of this Agreement by the Purchaser;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Purchaser and Company hereby agree
as follows:
THE MERGER
The Merger.
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At the Effective Time (as defined in Section 1.4 hereof), in accordance with
this Agreement and Section 251 of the Delaware General Corporation Law (the
"DGCL"), Purchaser shall be merged with and into the Company, the separate
existence of the Purchaser (except as may be continued by operation of law)
shall cease, and the Company shall continue as the surviving corporation
under the corporate name it possesses immediately prior to the Effective
Time (the "Merger"). The Company after the Merger sometimes is referred to
hereinafter as the Surviving Corporation (the "Surviving Corporation").
Company Action.
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The Company hereby consents to the Merger and represents that each of the
Special Committee and the Board of Directors, upon the recommendation of
the Special Committee, each at meetings duly called and held, have
determined, that this Agreement, the Merger and the other transactions
contemplated hereby are fair to, advisable and in the best interests of the
Company's stockholders (other than Purchaser and its current and future
stockholders), (ii) approved this Agreement, and the transactions
contemplated hereby, including the Merger, which approvals, and prior
actions taken by such Board immediately prior to the execution of this
Agreement, are sufficient to render entirely inapplicable to the Merger and
Purchaser and its Affiliates, as of the date hereof, the provisions of
Section 203 of the DGCL, (iii) resolved to recommend approval of this
Agreement and adoption of the Merger by its stockholders and (iv) resolved
to amend the Company Rights Plan (as hereinafter defined) so as to render
it inapplicable to the Merger and Purchaser, or to redeem all of the
outstanding rights under the Company Rights Plan.
Effects of the Recapitalization and Merger.
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At the Effective Time, the effect of the Merger shall be as provided in the
applicable provisions of this Agreement and as set forth in Section 251 of
the DGCL. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the rights and property of the Company
and the Purchaser (the "Constituent Corporations") shall vest in the
Surviving Corporation, and all debts and liabilities of the Company and the
Purchaser shall become the debts and liabilities of the Surviving
Corporation.
1.1 Consummation of the Recapitalization and Merger.
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Unless this Agreement shall have been terminated and the transactions herein
contemplated shall have been abandoned pursuant to Section 6.1 hereof, in
the event of, and as soon as is practicable after,
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the satisfaction or waiver of the conditions set forth in Article V hereof,
the parties hereto will cause the Merger to be consummated by filing with
the Secretary of State of the State of Delaware, a certificate of merger or
other appropriate documents, executed in accordance with the relevant
provisions of the DGCL (the time of confirmation of such filing or such
later time as is specified in such certificate of merger being the
"Effective Time"). Contemporaneous with the filing referred to in this
Section 1.4, a closing (the "Closing") will be held at the offices of Kane
Kessler, P.C., 1350 Avenue of the Americas, New York, NY 10019 or at such
other location as the parties may establish for the purpose of confirming
all the foregoing. The date and time of such Closing is referred to as the
"Closing Date."
1.2 Certificate of Incorporation; Bylaws; Directors and Officers.
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The Certificate of Incorporation and Bylaws of the Surviving Corporation shall
be the Certificate of Incorporation and Bylaws of the Company, as in effect
immediately prior to the Effective Time, until thereafter amended as
provided therein and under the DGCL. The directors of Purchaser
immediately prior to the Effective Time will be the initial directors of
the Surviving Corporation, and the officers of the Company immediately
prior to the Effective Time will be the initial officers of the Surviving
Corporation, in each case until the earlier of their resignation or removal
or until their respective successors are duly elected and qualified, as the
case may be.
1.3 Conversion of Securities.
------------------------
At the Effective Time, by virtue of the Merger and without any action on the
part of the Purchaser, the Company, the Surviving Corporation or the holder
of any of the following securities:
(a) Each share of Common Stock, $.01 par value per share of the
Company (the "Shares"), issued and outstanding immediately prior to the
Effective Time (other than Shares to be cancelled pursuant to Section
1.6(b) hereof, and, subject to Section 1.6(d) and Section 1.8 hereof, any
Dissenting Shares (as hereinafter defined)), shall be cancelled and
extinguished and be automatically converted into and become a right to
receive $3.75 per share in cash (the "Per Share Merger Consideration") upon
surrender in the manner provided in Section 1.9 of the certificate that
evidenced the Shares (the "Certificate").
(b) Each Share which is issued and held in the treasury of the Company
immediately prior to the Effective Time or issued and outstanding and owned
by the Company or by the Purchaser, shall be cancelled and retired, and no
payment shall be made with respect thereto.
(c) Each share of capital stock of the Purchaser issued and
outstanding immediately prior to the Effective Time shall be converted into
capital stock of the Surviving Corporation with the same rights and terms
as immediately prior to the Merger.
(d) The holders of Dissenting Shares (as hereinafter defined), if any,
shall be entitled to payment for such Shares only to the extent permitted
by and in accordance with the provisions of the DGCL; provided, however,
that if, in accordance with the applicable provisions of the DGCL, any
holder of Dissenting Shares shall forfeit such right to payment of the fair
cash value of such Shares, such Shares shall thereupon be deemed to have
been converted into and to have become exchangeable for, as of the
Effective Time, the right to receive the Per Share Merger Consideration
provided in Section 1.6(a), without interest.
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1.4 Company Stock Options.
---------------------
Immediately prior to the Effective Time, and except as may be set forth on
Schedule 1.7 of the Company's Disclosure Letter annexed hereto (the
------------
"Company Disclosure Letter") or otherwise consented to by the Purchaser,
each outstanding, unexercised option, warrant or other right to purchase
the Company's Common Stock (an "Option"), including but not limited to
Options to purchase Shares heretofore granted under each of the Company's
1996 Stock Incentive Plan, as amended, and the Company's 2000 Stock
Incentive Plan (collectively, the "Company Stock Option Plan"), whether or
not exercisable, shall be cancelled by the Company in consideration of a
cash payment, if applicable, from the Surviving Corporation in an amount
equal to the product of multiplying (a) the excess, if any, of (x) the Per
Share Merger Consideration over (y) the per Share exercise price of such
Option, by (b) the number of Eligible Shares (as defined below) subject to
such Option. Such cash payment shall be net of any required withholding
taxes. The term "Eligible Shares shall mean the aggregate number of Shares
that shall then be subject to purchase under any option which shall be
vested and exercisable as of the Effective Time. The obligation to make any
such cash payment (1) shall be subject to the obtaining of any necessary
consents of optionees to the cancellation of such Options, in form and
substance reasonably satisfactory to Purchaser, and (2) shall not require
any action which violates the Company Stock Option Plan. Options with an
exercise price equal to or greater than the Per Share Merger Consideration
will be cancelled without any consideration. The Company shall, at
Purchaser's request, use its commercially reasonable efforts to effectuate
the provisions of this Section 1.7. From and after the Effective Time,
other than as expressly set forth in this Section 1.7, no holder of an
Option shall have any other rights in respect thereof other than to receive
payment for his or Options as set forth in this Section 1.7. The Company
shall, at Purchaser's request, take all necessary actions to terminate
effective as of the Effective Time the Company Stock Option Plans, stock
option agreements and similar arrangements.
1.5 Dissenting Shares.
-----------------
Notwithstanding anything in this Agreement to the contrary, Shares issued and
outstanding immediately prior to the Effective Time and held by a holder (a
"Dissenting Stockholder"), if any, who has the right to demand, and who
properly demand, an appraisal of such shares in accordance with Section 262
of the DGCL or any successor provision ("Dissenting Shares") shall not be
converted into a right to receive the Per Share Merger Consideration unless
such Dissenting Stockholder fails to perfect or otherwise loses or
withdraws such Dissenting Stockholder's right to such appraisal, if any.
Provided the holder of any Dissenting Shares complies with the provisions
of the DGCL, such holder shall have with respect thereto solely the
appraisal rights provided under Section 262 of the DGCL. If, after the
Effective Time, such Dissenting Stockholder fails to perfect or otherwise
loses or withdraws any such right to appraisal, each such share of such
Dissenting Stockholder shall be treated as a share that had been converted
as of the Effective Time into the right to receive the Per Share Merger
Consideration in accordance with this Section 1.8. The Company shall give
prompt notice to Purchaser of any demands received by the Company for
appraisal of any Dissenting Shares, and Purchaser shall have the right to
participate in and direct all negotiations and proceedings with respect to
such demands. The Company shall not, except with the prior written consent
of Purchaser, which consent shall not be unreasonably withheld, make any
payment with respect to, or settle or offer to settle, any such demands.
1.6 Exchange of Certificates.
------------------------
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(a) Prior to the Effective Time, a bank or trust company to be
designated by the Purchaser (the "Exchange Agent") shall act as exchange
agent in effecting the exchange of the Per Share Merger Consideration for
Certificates which, prior to the Effective Time, represented Shares
entitled to payment pursuant to Section 1.6 hereof. Prior to the Effective
Time, the Purchaser shall deposit with the Exchange Agent the aggregate Per
Share Merger Consideration necessary to make the payments contemplated
hereby on a timely basis (the "Deposit Amount") in trust for the benefit of
the holders of Certificates. Pending distribution pursuant to this Section
1.9(a) of the Deposit Amount deposited with the Exchange Agent, the
Surviving Corporation may direct the Exchange Agent to invest such Deposit
Amount, provided that such investments (i) shall be obligations of or
guaranteed by the United States of America, in commercial paper obligations
receiving the highest rating from either Moody's Investors Services, Inc.
or Standard & Poor's Ratings Services, a division of The McGraw Hill
Companies, Inc., or in certificates of deposit, bank repurchase agreements
or bankers acceptances of commercial banks with capital exceeding
$500,000,000 (collectively "Permitted Investments") or in money market
funds which are invested solely in Permitted Investments and (ii) shall
have maturities that will not prevent or delay payments to be made pursuant
to this Section 1.9(a). Upon the surrender of each such Certificate and the
issuance and delivery by the Exchange Agent of the Per Share Merger
Consideration in exchange therefor, such Certificate shall forthwith be
cancelled. Until so surrendered and exchanged, each such Certificate (other
than Certificates representing Shares held by the Company or the Purchaser
and by Dissenting Shares) shall represent solely the right to receive the
Per Share Merger Consideration, without interest, multiplied by the number
of Shares represented by such Certificate. Promptly after the Effective
Time, the Exchange Agent shall mail to each record holder of Certificates
which immediately prior to the Effective Time represented Shares a form of
letter of transmittal and instructions for use in surrendering such
Certificates and receiving the Per Share Merger Consideration therefor.
Upon the surrender to the Exchange Agent of such an outstanding Certificate
together with such letter of transmittal, duly completed and validly
executed in accordance with the instructions thereto, and such other
documents as may be required pursuant to such instructions, the holder
shall receive the Per Share Merger Consideration, without any interest
thereon. If any Per Share Merger Consideration is to be paid to a name
other than the name in which the Certificate representing Shares
surrendered in exchange therefor is registered, it shall be a condition to
such payment or exchange that the Person requesting such payment or
exchange shall pay to the Exchange Agent any transfer or other taxes
required by reason of the payment of such Per Share Merger Consideration to
a name other than that of the registered holder of the Certificate
surrendered, or such Person shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not applicable.
Notwithstanding the foregoing, neither the Exchange Agent nor any party
hereto shall be liable to a holder of Shares for any Per Share Merger
Consideration delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(b) The Surviving Corporation shall not be entitled to the return of
any amount in the possession of the Exchange Agent relating to the
transactions described in this Agreement until the date which is 180 days
after the Effective Time. Thereafter, each holder of a Certificate
representing a Share may surrender such Certificate to the Surviving
Corporation and (subject to applicable abandoned property, escheat and
similar laws) receive in exchange therefor the Per Share Merger
Consideration, without any interest thereon, but shall have no greater
rights against the Surviving Corporation than may be accorded to general
creditors of the Surviving Corporation.
(c) At and after the Effective Time, the holders of Certificates to be
exchanged for the Per Share Merger Consideration pursuant to this Agreement
shall cease to have any rights as stockholders of the Company except for
the right to surrender such holder's Certificates in
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exchange for payment of the Per Share Merger Consideration, and after the
Effective Time there shall be no transfers on the stock transfer books of
the Surviving Corporation of the Shares which were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation or the Exchange Agent, they shall be
cancelled and exchanged for the Per Share Merger Consideration, as provided
in this Article I, subject to applicable law in the case of Dissenting
Shares.
(d) The provisions of this Section 1.9 shall also apply to Dissenting
Shares that lose their status as such, except that the obligations of the
Exchange Agent under this Section 1.9 shall commence on the date of loss of
such status.
1.7 Supplementary Action.
--------------------
If at any time after the Effective Time, any further assignments or assurances
in law or any other things are necessary or desirable to vest or to perfect
or confirm of record in the Surviving Corporation the title to any property
or rights of either the Company or Purchaser, or otherwise to carry out the
provisions of this Agreement, the officers and directors of the Surviving
Corporation are hereby authorized and empowered, in the name of and on
behalf of the Company and Purchaser, to execute and deliver any and all
things necessary or proper to vest or to perfect or confirm title to such
property or rights in the Surviving Corporation, and otherwise to carry out
the purposes and provisions of this Agreement.
1.8 Lost, Stolen or Destroyed Company Certificates.
----------------------------------------------
In the event any Certificates shall have been lost, stolen or destroyed, the
Exchange Agent shall issue in exchange for such lost, stolen or destroyed
Certificates, upon making of an affidavit of the fact by the holder
thereof, certificates representing such shares of Company Common Stock to
be exchanged in the manner described in this Article I; provided, however,
that Purchaser may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
Certificates to indemnify Purchaser against any claim that may be made
against Purchaser the Surviving Corporation or the Exchange Agent with
respect to the Certificates alleged to have been lost, stolen or destroyed.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser that:
1.9 Organization and Qualification.
------------------------------
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Each Subsidiary of the
Company is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. The
Company and its Subsidiaries have all requisite corporate power and
authority to own, operate and lease their properties and to carry on their
business in all material respects as it is now being conducted. Each of the
Company and its Subsidiaries is duly qualified as a foreign corporation,
and is in good standing, in each jurisdiction where the character of its
properties owned or held under lease or the nature of its activities makes
such qualification necessary, other than in jurisdictions where the failure
to be so qualified, individually and in the aggregate, has not had
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and would not reasonably be expected to have a Material Adverse Effect.
Other than the Company's ownership interest in its Subsidiaries, and except
as set forth on Schedule 2.1 to the Company Disclosure Letter, the Company
------------
has no direct or indirect equity interest in any partnership, corporation,
limited liability company, joint venture, business association or other
entity.
1.10 Certificate of Incorporation; Bylaws; and Stock Transfer Records.
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The Company has made available to the Purchaser prior to the date of this
Agreement complete and correct copies of (i) the Certificate of
Incorporation (or other charter document) and By-laws of the Company and
each of its Subsidiaries, and (ii) a shareholder list of each of the
Company and each of its Subsidiaries.
1.11 Capitalization of the Company.
-----------------------------
(a) As of the date of this Agreement, the authorized capital stock of the
Company consists of (i) 1,000,000 shares of Preferred Stock, par value
$.01 per share, of which none are issued and outstanding, and (ii)
10,000,000 shares of Common Stock, par value $.01 per share, of which
5,239,774 Shares are issued and 4,337,886 Shares are outstanding. Except
for (i) the rights created pursuant to this Agreement, the Company Stock
Option Plan and the Company Rights Plan and (ii) as set forth in Schedule
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1.7 and Schedule 2.3(a) of the Company Disclosure Letter, there are no
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other options, warrants, calls, rights, commitments or agreements of any
character to which the Company is a party or by which it is bound
obligating the Company to issue, sell, deliver, repurchase or redeem or
cause to be issued, sold, delivered, repurchased or redeemed any shares of
capital stock of, or equity interests in, the Company. All outstanding
Shares are, and all Shares subject to issuance as aforesaid, upon issuance
on the terms and conditions specified in the instruments pursuant to which
they are issuable, will be, duly authorized, validly issued, fully paid
and nonassessable and free of preemptive rights or rights of first
refusal. None of the Company or any of its Subsidiaries is required to
redeem, repurchase or otherwise acquire shares of capital stock of the
Company or any of its Subsidiaries, respectively, as a result of the
transactions contemplated by this Agreement. Except as set forth in
Schedule 2.3(a) of the Company Disclosure Letter or other than the Company
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Rights Plan, the Company has no stockholder rights plan or agreement in
force providing for the issuance to holders of Shares of rights to
purchase or receive stock, cash or other assets upon the acquisition or
proposed acquisition of Shares by a Person (a "Rights Plan"), nor has the
Company's Board of Directors or stockholders ever adopted a Rights Plan.
(b) All of the Company's Subsidiaries are listed in Schedule 2.3(b) of the
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Company Disclosure Letter. Except as set forth in the Company's Annual
Report on Form 10-K for the fiscal year ended December 30, 2000 (the "2000
10-K") or Schedule 2.3(b) of the Company Disclosure Letter, the Company
---------------
owns all of the outstanding capital stock of its Subsidiaries.
1.12 Corporate Power, Authorization and Enforceability.
-------------------------------------------------
The Company has all requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder and to consummate all
the transactions contemplated hereby. The execution and delivery of this
Agreement by the Company, the performance by the Company of its obligations
hereunder and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors and no other corporate action on the part of the Company is
necessary to authorize this Agreement or to
7
consummate the transactions contemplated hereby (other than, with respect
to the Merger, the approval and adoption of this Agreement by stockholders
holding a majority of the outstanding Shares entitled to vote thereon (the
"Company Requisite Vote")). This Agreement has been duly executed and
delivered by the Company and is a legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
subject to the effect of any applicable bankruptcy, moratorium, insolvency,
reorganization or other similar law affecting the enforceability of
creditors' rights generally and to the effect of general principles of
equity which may limit the availability of remedies (whether in a
proceeding at law or in equity). The Company Requisite Vote is the only
vote of the holders of any class or series of capital stock of the Company
necessary to adopt this Agreement and approve the transactions contemplated
hereby, including the Merger. No other vote or consent of the stockholders
of the Company is required by law, the Certificate of Incorporation or
Bylaws of the Company or otherwise in order for the Company to adopt this
Agreement or to approve the transactions contemplated hereby, including the
Merger.
1.13 No Conflict; Required Filings and Consents.
------------------------------------------
(a) Except as set forth on Schedule 2.5 of the Company Disclosure Letter, and
------------
assuming satisfaction of any applicable requirements referred to in Section
2.5(b) below, the execution and delivery by the Company of this Agreement,
the compliance by the Company with the provisions hereof and the
consummation by the Company of the transactions contemplated hereby:
(A) will not conflict with or violate any statute, law,
ordinance, rule, regulation, order, writ, judgment, award, injunction,
decree or ruling applicable to the Company or any of its Subsidiaries
or any of their properties, or conflict with, violate or result in any
breach of or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, cancellation or acceleration of,
or the loss of a benefit under, or result in the creation of a lien,
security interest, charge or encumbrance on any of the properties or
assets of the Company or any of its Subsidiaries, including pursuant
to (i) the Certificate of Incorporation (or other charter document) or
Bylaws of the Company or any of its Subsidiaries, or (ii) any
contract, lease, agreement, note, bond, mortgage, indenture, deed of
trust, or other instrument or obligation, or any license,
authorization, permit, certificate or other franchise, other than such
conflicts, violations, breaches, defaults, losses, rights of
termination, amendment, cancellation or acceleration, liens, security
interests, charges or encumbrances as to which requisite waivers have
been obtained or which in either case individually or in the aggregate
have not had and would not reasonably be expected to have a Material
Adverse Effect; and
(B) subject to shareholder dissenters' rights, do not and will
not result in any grant of rights to any other party under the
Certificate of Incorporation (or other charter document) or Bylaws of
the Company or any of its Subsidiaries or restrict or impair the
ability of the Purchaser or any of its Subsidiaries to vote, or
otherwise exercise the rights of a stockholder with respect to shares
of the Company or any of its Subsidiaries that may be directly or
indirectly acquired or controlled by them.
(b) Other than in connection with or in compliance with the provisions of the
DGCL, the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
the "blue sky" laws of various states, approvals, registrations, permits,
licenses, authorizations, waivers or consents required to be obtained under
applicable state or local laws, including but not limited to NASDAQ rules,
applicable state takeover laws, the premerger notification requirement of
the Hart-Scott-Rodino
8
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), if
applicable to the transactions contemplated hereby, and the filing and
recordation of the Certificate of merger as required under the DGCL
(collectively, "Regulatory Consents"), (i) the Company is not required to
submit any notice, report, registration, declaration or other filing with
any federal, state or local government, court, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign (collectively, "Governmental Entities"), in connection with the
execution or delivery of this Agreement by the Company or the performance
by the Company of its obligations hereunder or the consummation by the
Company of the transactions contemplated by this Agreement and (ii) no
waiver, consent, approval, order or authorization of any Governmental
Entity is required to be obtained in connection with the execution or
delivery of this Agreement by the Company or the performance by the Company
of its obligations hereunder or the consummation by the Company of the
transactions contemplated by this Agreement, other than such notices,
reports, registrations, declarations, filings, waivers, consents,
approvals, orders, or authorizations, the absence of which would not,
individually and in the aggregate, subject the Company or its Subsidiaries
to any criminal penalties or otherwise reasonably be expected to have a
Material Adverse Effect.
1.14 SEC Reports; Financial Statements.
---------------------------------
The Company has filed all required reports, schedules, forms, statements and
other documents with the Securities and Exchange Commission (the "SEC")
from January 1, 1998 through the date hereof (collectively, the "SEC
Reports"). The financial statements contained in the SEC Reports (or
incorporated therein by reference) and the consolidated financial
statements of the Company and its Subsidiaries for the fiscal year ended
December 30, 2000 included in the 2000 10-K (collectively, the "Financial
Statements"), were prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved ("GAAP") (except as may be indicated in the notes or schedules
thereto and except, in the case of the unaudited interim statements, as may
be permitted under Form 10-Q of the Exchange Act) and present fairly 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 cash flows as of the dates and for the
fiscal periods indicated therein (subject, in the case of unaudited interim
financial statements, to normal year-end adjustments). On the date of
filing thereof, and as of the date hereof, each SEC Report filed with the
SEC complied in all material respects with the then applicable requirements
of the Exchange Act and the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations of the SEC promulgated
thereunder and do 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. None of the Company's Subsidiaries is required
to file any statements or reports with the SEC.
1.15 No Default; Violation; Dispute.
------------------------------
Neither the Company nor any of its Subsidiaries is in default or violation,
and, to the Company's knowledge, no claims exist with respect to (and no
event has occurred which with or without notice, the lapse of time or the
happening or occurrence of any other event would constitute a default or
violation or claim) any term, condition or provision of (i) its Certificate
of Incorporation (or other charter document) or Bylaws, or (ii) except as
set forth in Schedule 2.7 of the Company Disclosure Letter, any contract,
------------
lease, agreement, license, note, bond, employee benefit agreement or plan,
arrangement under which it owns or leases real or personal property,
mortgage, indenture, deed of trust or other instrument or obligation to
which the Company or any
9
of its Subsidiaries is a party or by which the Company or its Subsidiaries
or any of their properties or assets may be bound (nor to the knowledge of
the Company is any other party thereto in breach thereof or default
thereunder), except in the case of this clause (ii) for any defaults,
violations or claims that individually and in the aggregate would not have
a Material Adverse Effect.
1.16 Compliance with Law.
-------------------
Except as set forth in Schedule 2.8 of the Company Disclosure Letter, each of
------------
the Company and its Subsidiaries is in compliance, and has conducted its
respective businesses so as to comply with, all statutes, laws, ordinances,
rules, regulations, permits and approvals applicable to its operations,
except for violations which, individually and in the aggregate, do not and
insofar as reasonably can be foreseen in the future would not have a
Material Adverse Effect. Except as disclosed in the SEC Reports, as of the
date hereof no investigation or review by any Governmental Entity with
respect to the Company, any of its Subsidiaries or any property owned or
leased by the Company or any of its Subsidiaries is pending or, to the
knowledge of the Company, threatened, except for any investigation or
review that would not individually and in the aggregate have a Material
Adverse Effect.
1.17 Absence of Certain Changes.
--------------------------
As of the date of this Agreement, except as disclosed in Schedule 2.9 of the
------------
Company Disclosure Letter, or in the 2000 10-K, since December 30, 2000,
the Company and its Subsidiaries have conducted their business in the
ordinary course consistent with past practice and have not taken any of the
actions set forth in paragraphs (i) through (vi) of Section 4.1, and there
has not been any occurrence, including the commencement or to the knowledge
of the Company, threat of any action, suit, investigation or proceeding
against the Company or its Subsidiaries, that has had or would reasonably
be expected to have a Material Adverse Effect, other than occurrences
relating to or arising out of the economy in general or the industries of
the Company and its Subsidiaries in general and not specifically relating
to the Company or any of its Subsidiaries, occurrences related to the
execution of this Agreement and the announcement of the transactions
contemplated hereby, or occurrences otherwise agreed to in writing by
Purchaser.
1.18 No Undisclosed Liabilities.
--------------------------
Except for liabilities and obligations incurred since December 30, 2000 in the
ordinary course of business, liabilities and obligations incurred in
connection with this Agreement or any of the agreements to be entered into
pursuant to this Agreement, and liabilities and obligations identified in
Schedule 2.10 of the Company Disclosure Letter, neither the Company nor any
-------------
of its Subsidiaries has any liabilities or obligations of any nature
whatsoever, including guarantees or other similar obligations, (whether
absolute, accrued, fixed, contingent, liquidated, unliquidated or
otherwise), other than liabilities or obligations recognized or disclosed
in the Financial Statements or disclosed in the 2000 10-K, or which
individually or in the aggregate would not have a Material Adverse Effect.
1.19 Litigation; Claims.
------------------
There are no actions, suits or proceedings pending or, to the knowledge of the
Company, threatened against the Company arising out of or in any way
related to this Agreement, the Merger or any of the transactions
contemplated hereby or thereby.
10
1.20 INTENTIONALLY OMITTED.
1.21 Disclosure Documents.
--------------------
(a) Each document required to be filed by the Company with the SEC in
connection with the transactions contemplated by this Agreement, including
on Schedule 13E-3, (the "Company Disclosure Documents") and any amendments
or supplements thereto, will, when filed, comply as to form with the
applicable requirements of the Exchange Act and the rules and regulations
thereunder.
(b) At the time any Company Disclosure Document or any amendment or supplement
thereto is first mailed to stockholders of the Company, it will not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the light of the
filing of any Company Disclosure Documents or any amendment or supplement
thereto, not misleading, and from the time of any distribution thereof
through the Effective Time each such Company Disclosure Document will not
contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not misleading. The
representations and warranties contained in paragraphs (a) and (b) of this
Section 2.13 will not apply to statements or omissions included in the
Company Disclosure Documents, if any, based upon information furnished to
the Company in writing by Purchaser specifically for use therein.
(c) The information with respect to the Company or any Subsidiary that the
Company furnishes to Purchaser in writing specifically for use in the
Schedule 13E-3 (as defined herein), the Preliminary Proxy Statement and the
Company Proxy Statement will not, at the time of the filing thereof, and
from the time of any distribution thereof through the Effective Time,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements made therein, in the light of the circumstances under which
they were made, not misleading. The representations and warranties
contained in this Section 2.13(c) will not apply to statements or omissions
included in the Schedule 13E-3, the Preliminary Proxy Statement (as
hereinafter defined) and Company Proxy Statement (as hereinafter defined),
if any, based upon information furnished by Purchaser, or its Affiliates
specifically for use therein.
1.22 INTENTIONALLY OMITTED.
1.23 Environmental Matters.
---------------------
Except as would not individually or in the aggregate have a Material
Adverse Effect:
(a) Neither the Company nor any of its Subsidiaries nor to the knowledge of
the Company as of the date of this Agreement any operator or owner of
their respective past or present properties is in violation, or alleged
violation, of any judgment, decree, order, law, license, rule or
regulation pertaining to environmental matters, including without
limitation, those arising under the Resource Conservation and Recovery Act
("RCRA") the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), the Super fund Amendments
and Reauthorization Act of 1986 ("SARA") the Federal Water Pollution
Control Act, the Solid Waste Disposal Act, as amended, the Federal Clean
Water Act, the Federal Clean Air Act, the Toxic Substances Control Act,
the Occupational Safety and Health Act of 1970, as amended, or any state
or local statute, regulation, ordinance, order or decree relating to
health, safety or the environment (hereinafter "Environmental Laws").
11
(b) There have been no releases (i.e., any past or present releasing,
spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, disposing or dumping) or threatened releases of any
hazardous waste as defined by 42 U.S.C. (S)6903(5), any hazardous
substances as defined by 42 U.S.C.(S)9601(33) or any toxic substance, oil
or hazardous materials or other chemicals or substances regulated by any
Environmental Laws ("Hazardous Substances") on, upon, into or from any
properties of the Company or its Subsidiaries.
(c) As of the date of this Agreement, no amounts of Hazardous Substance has
been discharged, generated, treated, manufactured, handled, stored,
transported, emitted, released or is present at any property now or
previously owned, leased or operated by the Company except in compliance
with all applicable Environmental Laws.
1.24 Takeover Laws.
-------------
The provisions of Sections 203 of the DGCL either does not apply to the
execution, delivery and performance of this Agreement and the consummation
of the Merger or has been rendered inapplicable because of a vote of the
Board of Directors approving the consummation of the Merger and the
transactions contemplated by this Agreement. No "fair price," "control
share acquisition" or other similar anti-take over statute or regulation
enacted in any jurisdiction other than Delaware is applicable to the
execution, delivery and performance of this Agreement, or the consummation
of the Merger.
1.25 Board Recommendation; Fairness Opinion.
--------------------------------------
(a) The Company represents that each of the Special Committee and the Board of
Directors, upon the recommendation of the Special Committee, each at
meetings duly called and held, have (i) determined, that this Agreement,
the Merger and the other transactions contemplated hereby are fair to,
advisable and in the best interests of the Company's stockholders (other
than Purchaser and its current and future stockholders), (ii) approved
this Agreement, and the transactions contemplated hereby, including the
Merger, which approvals, and prior actions taken by such Board immediately
prior to the execution of this Agreement, are sufficient to render
entirely inapplicable to the Merger and Purchaser and its Affiliates, as
of the date hereof, the provisions of Section 203 of the DGCL, (iii)
resolved to recommend approval of this Agreement and adoption of the
Merger by its stockholders and (iv) resolved to amend the Company Rights
Plan so as to render it inapplicable to the Merger and Purchaser, or to
redeem all of the outstanding rights under the Company Rights Plan.
(b) The Special Committee has received the written opinion of its Financial
Advisor, dated as of the date of this Agreement, to the effect that, based
on, and subject to, the various assumptions and qualifications set forth
therein, as of the date of such opinion, the Per Share Merger
Consideration to be received by holders of Shares (other than Purchaser
and its current and future stockholders) pursuant to the Merger is fair
from a financial point of view to such holders (the "Fairness Opinion").
The Company has delivered to the Purchaser a copy of the Fairness Opinion,
together with the Financial Advisor's written consent to the inclusion of
or reference to the Fairness Opinion in the Schedule 13E-3, the
Preliminary Proxy Statement and the Company Proxy Statement.
1.26 INTENTIONALLY OMITTED.
12
1.27 Brokers and Finders.
-------------------
The Special Committee has furnished to Purchaser or its counsel a true and
complete copy of the letter agreement (the "Engagement Letter") between
the Company and the Financial Advisor, such Engagement Letter being the
only agreement pursuant to which such firm would be entitled to any payment
relating to the transactions contemplated hereunder. Other than as set
forth herein or in Schedule 2.19 of the Company Disclosure Letter, no
-------------
broker, financial advisor or investment banker or other person is entitled
to any brokerage, finder's or other fee or commission in connection with
the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company or any of its Subsidiaries.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Company that:
1.28 Organization and Qualification.
------------------------------
The Purchaser is a corporation or other entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, and has all requisite power and authority to own, operate
and lease its properties and to carry on its business in all material
respects as it is now being conducted. Purchaser is a new corporation that
was formed for the purpose of consummating the transactions contemplated by
this Agreement. Purchaser has not conducted any business or engaged in any
activities unrelated to the transactions contemplated by this Agreement.
Purchaser has no material liabilities other than in connection with the
transactions contemplated by this Agreement and the financing arrangements
with the Lending Sources.
1.29 Corporate Power, Authorization and Enforceability.
-------------------------------------------------
The Purchaser has all requisite power and authority to enter into this
Agreement and to perform its obligations hereunder and to consummate all
the transactions contemplated hereby. The execution and delivery of this
Agreement by Purchaser, the performance by the Purchaser of its obligations
hereunder and the consummation by Purchaser of the transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors of Purchaser and the stockholders of the Purchaser, and no other
corporate action on the part of Purchaser is necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly executed and delivered by the Purchaser and is a
legal, valid and binding obligation of the Purchaser, enforceable against
the Purchaser in accordance with its terms.
1.30 No Conflict; Required Filings and Consents.
------------------------------------------
(a) Assuming satisfaction of all applicable requirements referred to in
Section 3.3(b) below, the execution and delivery of this Agreement by the
Purchaser, the compliance by the Purchaser with the provisions hereof and
the consummation by the Purchaser of the transactions contemplated hereby
will not conflict with or violate any statute, law, ordinance, rule,
regulation, order, writ, judgment, award, injunction, decree or ruling
applicable to the Purchaser or any of its properties, or conflict with,
violate or result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, cancellation or
acceleration of, or the loss of a benefit under, or result in the creation
of a lien, security interest, charge or encumbrance on any of the
properties or assets of Purchaser pursuant to (i) the organizational
documents of the Purchaser or (ii) any contract,
13
lease, agreement, note, bond, mortgage, indenture, deed of trust, or other
instrument or obligation, or any license, authorization, permit,
certificate or other franchise, other than such conflicts, violations,
breaches, defaults, losses, rights of termination, amendment, cancellation
or acceleration, liens, security interests, charges or encumbrances as to
which requisite waivers have been obtained or which individually and in
the aggregate would not have a material adverse effect on the ability of
the Purchaser to perform its obligations under this Agreement.
(b) Other than in connection with or in compliance with the provisions of the
DGCL, the Exchange Act, the "blue sky" laws of various states and the HSR
Act, if applicable (i) the Purchaser is not required to submit any notice,
report, registration, declaration or other filing with any Governmental
Entity in connection with the execution or delivery of this Agreement by
Purchaser or the performance by Purchaser of its obligations hereunder or
the consummation by Purchaser of the transactions contemplated by this
Agreement and (ii) no waiver, consent, approval, order or authorization of
any Governmental Entity is required to be obtained by the Purchaser in
connection with the execution or delivery of this Agreement by Purchaser
or the performance by the Purchaser of its obligations hereunder or the
consummation by the Purchaser of the transactions contemplated by this
Agreement.
1.31 Board and Stockholder Approval.
------------------------------
The Board of Directors and stockholders of the Purchaser has approved this
Agreement and the Merger and has authorized the proper officers to execute
and deliver this Agreement and all necessary action has been taken in
connection therewith.
1.32 Brokers and Finders.
-------------------
No broker, finder or investment banker, other than any whose fees and expenses
will be paid by the Purchaser, is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the
Purchaser.
1.33 Disclosure Documents.
--------------------
(a) Each document required to be filed by the Purchaser with the SEC in
connection with the transactions contemplated by this Agreement, including
on Schedule 13E-3 (the "Purchaser Disclosure Documents") and any
amendments or supplements thereto, will, when filed, comply as to form
with the applicable requirements of the Exchange Act and the rules and
regulations thereunder.
(b) The information with respect to the Purchaser that Purchaser furnishes to
the Company in writing specifically for use in any Company Disclosure
Documents will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the
circumstances under which they made, not misleading; provided that no
representation is made by Purchaser with respect to statements or
omissions in the Company Disclosure Documents based upon information
furnished to Purchaser by the Company specifically for use therein.
(c) The Schedule 13E-3, the Preliminary Proxy Statement and Company Proxy
Statement will comply with the applicable requirements of the Exchange Act
and will not, at the time of the filing thereof, or from the time of any
distribution thereof through the Effective Time contain any untrue
statement of material fact or omit to state any material fact required to
be stated therein or
14
necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading; provided, that
no representation is made by the Purchaser with respect to the statements
or omissions in the Schedule 13E-3, the Preliminary Proxy Statement or the
Company Proxy Statement based upon information furnished to Purchaser in
writing by the Company specifically for use therein.
(d) The information contained in the Schedule 13D and the amendments thereto
filed by the current stockholders of Purchaser is true and accurate in all
material respects. In addition, neither Purchaser nor any of its
Affiliates were, prior to the execution of this Agreement, subject to the
prohibitions on transactions generally applicable to "interested
stockholders" within the meaning of Section 203 of the DGCL.
COVENANTS
1.34 Conduct of Business by the Company.
----------------------------------
Except as required or permitted by this Agreement, during the period from the
date of this Agreement until the Effective Time, the Company agrees as to
itself and its Subsidiaries that (except to the extent that Purchaser shall
otherwise consent in writing) the Company and its Subsidiaries shall
conduct their respective operations in the ordinary course of business
consistent with past practice, and each of the Company and its Subsidiaries
will use its commercially reasonable efforts to preserve intact its present
business organization, to keep available the services of its present
officers and employees and to maintain satisfactory relationships with
licensors, licensees, suppliers, contractors, distributors, customers and
others having business relationships with it and to maintain insurance on
the same terms as are in effect on the date of this Agreement. Without
limiting the generality of the foregoing, during the period from the date
of this Agreement to the Effective Time, neither the Company nor any of its
Subsidiaries shall, without the prior written consent of Purchaser:
(i) amend its Certificate of Incorporation or other charter document
or Bylaws;
(ii) authorize for issuance, issue, sell, deliver, pledge or agree or
commit to issue, sell, deliver or pledge (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to
purchase or otherwise) any capital stock of any class or any debt or other
securities convertible into capital stock or equivalents (including,
without limitation, stock appreciation rights), or amend any of the terms
of any of the foregoing, other than the issuance of shares of capital stock
upon the exercise of outstanding options under the Company Stock Option
Plan;
(iii) (A) split, combine or reclassify any shares of its capital
stock, or authorize or propose the issuance or authorization of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, or declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of its capital stock, adopt or approve any Rights Plan,
or repurchase, redeem or otherwise acquire any of its securities or any
securities of its Subsidiaries, or (B) declare or pay any dividend of any
kind, make any payment of cash or other property to shareholders or to
terminate, cancel or otherwise settle any outstanding Options under the
Company Stock Option Plan, other than in the case of clauses (A) or (B)
above for the issuance of Shares in connection with the exercise of options
or the repurchase of Shares to the extent contractually required pursuant
to the terms of existing employee stock repurchase agreements or this
Agreement, or the cancellation of non-
15
vested options of terminated employees; or issue any new Options or
equivalent instruments of any kind;
(iv) without prior consultation with the Purchaser (in addition to the
consent requirement described above) commence any litigation or arbitration
other than in accordance with past practice or settle any litigation or
arbitration for money damages or other relief in excess of $50,000 or if as
part of such settlement the Company or any Subsidiary would agree to any
restrictions on its operations;
(v) waive, release or amend its rights under any confidentiality,
"standstill" or similar agreement that the Company entered into in
connection with its consideration of a potential strategic transaction;
provided, however, that the Company may waive, release or amend its rights
under any such confidentiality, "standstill" or similar agreement if the
Company's Board determines, after consultation with its independent legal
counsel, that failure to do so would be reasonably likely to constitute a
breach of its fiduciary duties to the Company's stockholders under
applicable law; or
(vi) take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.1(i) through 4.1(v).
1.35 Access to Information; Confidentiality.
--------------------------------------
(a) From the date of this Agreement to the Effective Time, the Company shall,
and shall cause its Subsidiaries, officers, directors, employees and
agents to, afford the officers, employees and agents of Purchaser and its
Affiliates and the attorneys, accountants, banks, other financial
institutions and investment banks working with Purchaser, and its
respective officers, employees and agents ("Representatives") reasonable
access, at all reasonable times upon reasonable notice and in such manner
as will not unreasonably interfere with the conduct of the Company's
business, to its officers, employees, agents, properties, books, records
and contracts, and shall furnish, Purchaser and its Affiliates and the
attorneys, banks, other financial institutions and investment banks
working with Purchaser, all financial, operating and other data and
information as they reasonably request.
(b) Any information heretofore or hereafter furnished by the Company which is
non-public, confidential or proprietary in nature is referred to in this
Agreement as "Confidential Information". The Purchaser agrees that the
Confidential Information will be used solely for the purpose of
consummating the transactions contemplated by this Agreement, and until
the Effective Time, such information will be kept confidential by the
Purchaser and its Representatives (as defined below), except that the
Confidential Information or portions thereof may be disclosed to those
Representatives of the Purchaser who need to know such information solely
for the purpose of evaluating the transactions contemplated by this
Agreement.
(c) In the event that the Purchaser or any of its Representatives become
legally compelled (by deposition, interrogatory, request for documents,
subpoena, civil investigative demand or similar process) to disclose any
of the Confidential Information, the Purchaser shall provide the Company
with prompt prior written notice of such requirement so that the Company
may seek a protective order or other appropriate remedy and/or waive
compliance with the terms of this Section 4.2. In the event that such
protective order or other remedy is not obtained, or that the Company
waives compliance with the provisions hereof, the Purchaser agree, to
furnish only that portion of the Confidential Information which the
Purchaser is advised by counsel is legally
16
required and to exercise commercially reasonable efforts to obtain
assurance that confidential treatment will be accorded such Confidential
Information.
(d) The term "Confidential Information" does not include any information
that the Purchaser can demonstrate that at the time of disclosure or
thereafter is generally available to the public (other than as a result of
its disclosure directly or indirectly by the Purchaser or its
Representatives).
(e) If this Agreement is terminated pursuant to Article VI, upon the Company's
request, the Purchaser will promptly return to the Company any and all
copies of the Confidential Information in its possession or in the
possession of its Representatives, and the Purchaser and its
Representatives will promptly destroy all copies of any analyses,
compilations, studies or other documents prepared by or for the Purchaser
which reflect or contain any Confidential Information, except for any of
the foregoing which Purchaser or its counsel deems advisable to retain in
connection with pending or future litigation, provided that such
Confidential Information is retained by the Purchaser's counsel and only
for so long as considered advisable in light of any pending or future
litigation.
(f) No investigation pursuant to this Section 4.2 shall affect any
representations or warranties of the parties herein or the conditions to
the obligations of the parties hereto.
1.36 Preparation of Proxy Statement; Stockholders Meeting;
-----------------------------------------------------
Schedule 13E-3.
--------------
(a) The Company will, as promptly as practicable following the date of this
Agreement and in consultation with Purchaser, duly call, give notice of,
convene and hold a meeting of its stockholders (the "Stockholders'
Meeting") for the purpose of approving this Agreement, the Merger and the
transaction contemplated by this Agreement, except as otherwise provided
in Section 4.3(f) below. Nothing herein shall prevent the company from
adjourning or postponing the Company's stockholders meeting if there are
insufficient shares of Company Common Stock necessary to conduct business
at its meeting of the Stockholders. Subject to Section 4.5, the Company
will, through the Board of Directors and the Special Committee, recommend
to its stockholders approval of the foregoing matters and seek to obtain
all necessary votes and approvals thereof by the stockholders required to
approve the Merger.
(b) In connection with the Stockholders' Meeting contemplated hereby, the
Company will promptly prepare and file, and Purchaser will cooperate with
the Company in the preparation and filing of, a preliminary proxy
statement (the "Preliminary Proxy Statement") with the SEC and will use
its commercially reasonable efforts to respond to the comments of the SEC
concerning the Preliminary Proxy Statement and to cause a final proxy
statement (the "Company Proxy Statement") to be mailed to the Company's
stockholders, in each case as soon as reasonably practicable. The
Purchaser will promptly prepare, and the Company will cooperate with the
Purchaser in the preparation and filing of the Rule 13E-3 Transaction
Statement on Schedule 13E-3 (the "Schedule 13E-3") with the SEC and will
use its commercially reasonable efforts to respond to comments by the SEC
concerning the Schedule 13E-3. Purchaser shall be given a reasonable
opportunity to review and comment on all filings with the SEC and all
mailings to the Company's stockholders in connection with the Merger prior
to the filing or mailing thereof, and the Company shall use its
commercially reasonable efforts to reflect all such comments. The Company
shall pay the filing fees for any Company Schedule 13E-3 and the
Preliminary Proxy Statement. Each party to this Agreement will notify the
other parties promptly of the receipt of the comments of the SEC, if any,
notification of SEC approval of the Company Proxy Statement and of any
request by the SEC for amendments or supplements to the Schedule 13E-3,
the Preliminary Proxy Statement or the Company Proxy Statement or for
additional information, and
17
will promptly supply the other parties with copies of all correspondence
between such party or its representatives, on the one hand, and the SEC
or members of its staff, on the other hand, with respect to the Schedule
13E-3, the Preliminary Proxy Statement, the Company Proxy Statement or the
Merger.
(c) If at any time prior to the Stockholders' Meeting, any event should occur
relating to the Company or any of the Subsidiaries which should be set
forth in an amendment of, or a supplement to, the Schedule 13E-3 or the
Company Proxy Statement, the Company will promptly inform Purchaser. If at
any time prior to the Stockholders' Meeting, any event should occur
relating to Purchaser or any of its Associates or Affiliates, or relating
to the plans of any such persons for the Surviving Corporation after the
Effective Time of the Merger, or relating to the Financing, that should be
set forth in an amendment of, or a supplement to, the Schedule 13E-3 or
the Company Proxy Statement, the Purchaser, with the cooperation of
Company, will, upon learning of such event, promptly prepare, file and, if
required, mail such amendment or supplement to the Company's stockholders;
provided that, prior to such filing or mailing, the Company shall consult
with Purchaser with respect to such amendment or supplement and shall
afford Purchaser reasonable opportunity to comment thereon.
(d) Purchaser shall furnish to the Company the information relating to
Purchaser and its Affiliates and the plans of such persons for the
Surviving Corporation after the Effective Time of the Merger, and relating
to any financing matters, which is required to be set forth in the
Preliminary Proxy Statement or the Company Proxy Statement under the
Exchange Act and the rules and regulations of the SEC thereunder. The
Company shall cause, to the extent available, to be included as an exhibit
to the Preliminary Proxy Statement and the Company Proxy Statement, the
written Fairness Opinion as an exhibit to the Schedule 13E-3, and any
reports or opinion delivered to the Board of Directors or the Special
Committee by the Financial Advisor in connection with the delivery of the
Fairness Opinion which are required under Schedule 13E-3 to be filed as
exhibits.
(e) The Company will cause its transfer agent to make stock transfer records
relating to the Company available to the extent reasonably necessary to
effectuate the intent of this Agreement.
(f) The parties hereto understand and agree that if the Special Committee
withdraws its approval or recommendation of the Merger pursuant to and in
compliance with the provisions of Section 4.5 below, the Company will not
convene or hold a Stockholder Meeting without obtaining the prior consent
of the Special Committee.
1.37 Regulatory Filings.
------------------
Promptly after the delivery of the Commitments, the parties will cooperate in
making any filings necessary under any government regulatory requirements
that may be applicable to the Merger, including filings, if any, necessary
under the HSR Act.
1.38 Acquisition Proposals.
---------------------
(a) Except as expressly permitted by this Section 4.5, neither the Board of
Directors nor the Special Committee shall (i) withdraw or modify, or
propose publicly to withdraw or modify, in a manner adverse to the
Purchaser, its approval or recommendation of the Merger or this Agreement,
(ii) approve or recommend, or propose publicly to approve or recommend,
any Acquisition Proposal, or (iii) cause the Company to enter into any
outline, letter of intent, agreement in principle, acquisition agreement
or other similar agreement, whether or not binding on the parties, (each,
a "Company Acquisition Agreement") related to any Acquisition Proposal
(as hereinafter defined).
18
Notwithstanding the foregoing, if at anytime the Board of Directors or the
Special Committee determines in good faith, after consultation with and
receipt of advice from outside counsel or its financial advisor, that it
is necessary to do so in order to act in a manner consistent with its
fiduciary duties to the Company's stockholders under applicable law,
subject to compliance with paragraph (b) below, (x) either the Board of
Directors or the Special Committee may withdraw or modify, or propose
publicly to withdraw or modify, its approval or recommendation of the
Merger or this Agreement, (y) the Board of Directors may approve or
recommend, or propose publicly to approve or recommend, a Superior
Proposal, and (z) the Board of Directors may cause the Company to enter
into a Company Acquisition Agreement upon termination of this Agreement
pursuant to Section 6.1(d) and accept such Superior Proposal. For purposes
of this Agreement, a "Superior Proposal" means an Acquisition Proposal
that the Special Committee of the Board of Directors of the Company, in
good faith, after consultation with its outside counsel and its financial
advisor, and taking into account the proposed financing thereof,
determines to be of a higher price per Share and more favorable to the
stockholders of the Company than the transaction contemplated hereunder.
For purposes of this Agreement, an "Acquisition Proposal" means any
inquiry or the making of any proposal or offer from any third party, other
than the Purchaser or its Affiliates regarding any merger, consolidation,
share exchange, recapitalization, business combination, the sale of
substantial assets (other than in the ordinary course of business), the
sale or purchase of (or right to sell or purchase) shares of capital stock
(other than pursuant to the exercise of stock options outstanding on the
date of this Agreement), tender offer or similar transactions, whether in
a single transaction or a series of transactions, involving the Company or
any of its Subsidiaries.
(b) In addition to the obligations of the Company as set forth in Section
4.5(a), the Company promptly shall advise the Purchaser orally and in
writing of any request for non-public information, any Acquisition
Proposal, including all of the material proposed terms of such Acquisition
Proposal, the identity of the third party, or any decision by the Company
to take any actions with respect to any of the foregoing (with any such
notice referred to as a "Company Notice". Any such Company Notice will be
delivered promptly after (and in no event later than 24 hours after)
receipt of any request for non-public information or of any Acquisition
Proposal and prior to the Company taking any of such actions. In addition,
in the event the Company intends to enter into a Company Acquisition
Agreement, the Company will deliver a Company Notice at least twenty-four
(24) hours (but Company Notices given on a non-business day, or after 6:00
p.m. on a business day, shall take effect on the first business day
thereafter) prior to entering into such Company Acquisition Agreement,
which Company Notice will identify the third party and the material
proposed terms of such Company Acquisition Agreement. Subject to
confidentiality agreement requirements imposed by any such third party
which shall be substantially similar to those set forth in Section 4.2
hereof and which the Board of Directors determines in good faith, after
consultation with its outside counsel, are necessary to enter into in
order to act in a manner consistent with its fiduciary duties to the
Company's stockholders under applicable law, the Company will update the
information required to be provided in the Company Notice upon the request
of the Purchaser.
1.39 Public Announcements.
--------------------
Purchaser on the one hand, and the Company on the other hand, will consult
with each other before, and obtain the other party's consent with respect
to, issuing any press release, any filing with the SEC on Form 8-K or
otherwise making any public statements with respect to this Agreement or
the Merger or the other transactions contemplated hereby, and shall not
issue any such press release, SEC Form 8-K filing or make any such public
statement prior to such consultation and consent, except to the extent that
compliance with legal requirements and NASDAQ rules require
19
a party to issue a press release or public announcement or make an 8-K
filing. Any consent required pursuant to the preceding sentence shall not
be unreasonably withheld or delayed.
1.40 Notification of Certain Matters.
-------------------------------
(a) The Company shall give prompt notice (which notice shall state that it is
delivered pursuant to Section 4.7 of this Agreement) in writing to
Purchaser, and Purchaser shall give prompt notice in writing to the
Company, of (i) the occurrence, or failure to occur, of any event which
occurrence or failure would be likely to cause any representation or
warranty of such party contained in this Agreement to be untrue or
inaccurate in any material respect as of the time such representation or
warranty is made and (ii) any material failure of the Company, Purchaser,
as the case may be, or of any officer, director, employee or agent
thereof, to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement; provided,
however, no such notification shall affect the representations or
warranties of the parties or the conditions to the obligations of the
parties hereunder.
(b) The Company shall give reasonably prompt notice (which notice shall state
that it is delivered pursuant to Section 4.7 of this Agreement) in writing
to Purchaser, of any occurrence that has had or may reasonably be expected
to have a Material Adverse Effect, other than occurrences relating to or
arising out of the economy in general or the industries of the Company and
its Subsidiaries in general and not specifically relating to the Company
or any of its Subsidiaries and occurrences related to the execution of
this Agreement and the announcement of the transactions contemplated
hereby.
1.41 Officers' and Directors' Indemnification; Insurance.
---------------------------------------------------
(a) The Purchaser and Surviving Corporation agree that for a period ending on
the sixth anniversary of the Effective Time, the Surviving Corporation
will maintain all rights to indemnification (including with respect to the
advancement of expenses incurred in the defense of any action or suit)
existing on the date of this Agreement in favor of the present and former
directors, officers, employees and agents of the Company as provided in
the Company's Certificate of Incorporation and Bylaws, in each case as in
effect on the date of this Agreement, and that during such period, neither
the Certificate of Incorporation nor the Bylaws of the Surviving
Corporation shall be amended to reduce or limit the rights of indemnity
afforded to the present and former directors, officers, employees and
agents of the Company, or the ability of the Surviving Corporation to
indemnify them, nor to hinder, delay or make more difficult the exercise
of such rights or indemnity or the ability to indemnify; provided;
however, that in the event any claim or claims are asserted or made within
such six-year period, all rights to indemnification in respect to any such
claim or claims shall continue until the disposition of any and all such
claims.
(b) The Purchaser and Surviving Corporation agree to cause the Surviving
Corporation to indemnify to the fullest extent permitted under its
Certificate of Incorporation, its Bylaws and applicable law the present
and former directors, officers, employees and agents of the Company
against all losses, damages, liabilities or claims made against them
arising from their service in such capacities prior to and including the
Effective Time, to at least the same extent as such persons are currently
permitted to be indemnified pursuant to the Company's Certificate of
Incorporation and Bylaws, for a period ending on the sixth anniversary of
the Effective Time.
(c) Should any claim or claims be made against any present or former director,
officer, employee or agent of the Company, on or prior to the sixth
anniversary of the Effective Time, arising from
20
such person's service as such at any time prior to the Effective Time, the
provisions of this Section 4.8 respecting the Certificate of Incorporation
and Bylaws and the obligation of indemnity of the Surviving Corporation
shall continue in effect until the final disposition of all such claims.
(d) The Company and the Purchaser agree that in the event that the Surviving
Corporation or any of its successors or assigns consolidates with or
merges into any other Person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger, then and in each
such case, proper provisions shall be made so that the successors and
assigns of the Surviving Corporation shall assume the obligations of the
surviving Corporation, set forth in this Section 4.8. The provisions of
this Section 4.8(d) are in addition to, and not substitution for, any
other rights or indemnification that any such person may have by contract
or otherwise.
(e) The provisions of this Section 4.8 are intended to be for the benefit of,
and shall be enforceable by, each indemnified party and such party's heirs
and representatives.
(f) The Surviving Corporation shall maintain for a period of six years from
the Effective Time the Company's current directors' and officers'
insurance and indemnification policy to the extent that it provides
coverage for events occurring prior to the Effective Time (the "D&O
Insurance") for all persons who are directors and officers of the Company
on the date of this Agreement, so long as such insurance is available on
commercially reasonable terms and the annual premium therefor would not be
in excess of 200% of the last annual premium paid prior to the date of
this Agreement (the "Maximum Premium").
If the existing D&O Insurance expires, is terminated or cancelled during such
six-year period, the Purchaser will use all reasonable efforts to cause to
be obtained as much D&O Insurance as can be obtained for the remainder of
such period for an annualized premium not in excess of the Maximum Premium,
on terms and conditions no less advantageous than the existing D&O
Insurance.
1.42 Additional Agreements.
---------------------
(a) Subject to the terms and conditions hereof, each of the parties to this
Agreement agrees to use commercially reasonable efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement (including consummation of the Merger) and
to cooperate with each other in connection with the foregoing.
(b) Subject to the terms and conditions hereof, each of the parties to this
Agreement agrees to use commercially reasonable efforts to: (i) obtain all
necessary waivers, consents and approvals from other parties to loan
agreements, leases, licenses and other contracts, (ii) obtain all
necessary consents, approvals and authorizations as required to be
obtained under any federal, state or foreign law or regulations,
including, but not limited to, those required under the HSR Act, if
required, (iii) defend all lawsuits or other legal proceedings challenging
this Agreement or the consummation of the transactions contemplated
hereby, (iv) lift or rescind any injunction or restraining order or other
order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby, (v) effect all necessary registrations
and filings, including, but not limited to, filings under the HSR Act and
submissions of information requested by Governmental Entities, and (vi)
fulfill all conditions to this Agreement.
21
1.43 Company Indebtedness.
--------------------
Prior to the Effective Time, the Company and Purchaser shall cooperate with
each other in taking such actions requested by the Purchaser as are
reasonably appropriate or necessary in connection with obtaining the prior
written consent of Fleet National Bank, N.A. prior to the Effective Time.
1.44 Other Actions by the Company.
----------------------------
If any "fair price," "control share acquisition," "shareholder protection" or
other form of anti-takeover statute, regulation or charter provision or
contract is or shall become applicable to the Merger or the transactions
contemplated hereby, the Company, the Special Committee and the Board of
Directors shall, promptly upon the request of the Purchaser, grant such
approvals and take such actions as are necessary under such laws and
provisions so that the transactions contemplated hereby may be consummated
as promptly as practicable on the terms contemplated hereby and otherwise
act to the extent allowable to eliminate or minimize the effects of such
statute, regulation, provision or contract on the transactions contemplated
hereby. The Board of Directors and the Company have taken and shall
continue to take such actions as are necessary to either amend the Company
Rights Plan or redeem any outstanding rights under the Company Rights Plan,
so that the transactions contemplated by this Agreement may be consummated
as promptly as practicable on the terms contemplated by this Agreement, and
otherwise act to eliminate or minimize the effects of such Company Rights
Plan on such transaction.
1.45 Litigation Cooperation.
----------------------
Promptly upon execution of this Agreement and until the Effective Time, each
of the Company and Purchaser shall cooperate with each other in connection
with any litigation by a third party arising out of or in connection with
this Agreement or any of the transactions contemplated by this Agreement.
1.46 Future Filings.
--------------
The Company will deliver to the Purchaser as soon as they become available
true and complete copies of any report or statement mailed by it to its
stockholders generally or filed by it with the SEC subsequent to the date
of this Agreement and prior to the Effective Time. The Purchaser shall
deliver to the Company as soon as they become available, true and complete
copies of any report or statement mailed by it to the Company's
stockholders generally or filed by it with the SEC subsequent to the date
of this Agreement and prior to the Effective Time.
1.47 Board Action Relating to Stock Option Plans.
-------------------------------------------
As soon as practicable following the date of this Agreement, the Board of
Directors of the Company (or, if appropriate, any committee administering a
Company Stock Option Plan) shall adopt such resolutions or take such
actions as may be required to adjust the terms of all outstanding Company
Stock Options in accordance with Section 1.7 and shall make such other
changes to the Company Stock Option Plan in accordance with the terms of
the Company Stock Option Plan as the Purchaser, the Special Committee and
the Company deem appropriate to give effect to the Merger, and, at
Purchaser's request, to terminate such plans as of the Effective Time.
1.48 Knowledge of Inaccuracies.
-------------------------
22
In the event that Purchaser, its stockholders or any senior executive officer
of the Company shall have knowledge on or prior to the date of this
Agreement of the existence or occurrence of any fact, circumstance, or
event the failure of the Company to disclose which in this Agreement or the
Company Disclosure Schedule otherwise would cause, or be reasonably likely
to cause, any inaccuracy or breach by the Company of any representation,
warranty, covenant or other obligation hereunder, then such fact,
circumstance or event shall be deemed to have been disclosed by the Company
to the Purchaser in this Agreement or Company Disclosure Letter.
1.49 Financing Matters.
-----------------
(a) Purchaser has had discussions with one or more banks, financial
institutions or other public or private financing sources (the "Lending
Sources") to determine the available terms of financing and reasonably
expects that such commitments regarding junior or subordinated debt
financing, together with equity contributions to the Purchaser made or to
be made by certain stockholders of the Purchaser (collectively, the
"Commitments"), sufficient to consummate the transactions contemplated by
the Merger Agreement, will be obtainable from such Lending Sources and
stockholders of the Purchaser, as the case may be. The Company
acknowledges that the Lending Sources have not had the opportunity to
complete due diligence on all aspects of the Company's operations,
agreements and finances, including with respect to the Company's
operations for the period ended December 30, 2000, and that the results of
such investigation may result in the Commitments being unavailable or
available only in amounts and on terms not acceptable to the Purchaser.
(b) The Company agrees to provide, and will cause its Subsidiaries and its and
their respective officers, employees and advisors to provide, all
cooperation reasonably necessary in connection with the arrangement of any
financing to be consummated contemporaneously with or at or after the
expiration of the Effective Time in respect of the transactions
contemplated by this Agreement, including participation in meetings and,
due diligence sessions, the execution and delivery of any commitment
letters, underwriting or placement agreements, pledge and security
documents, other definitive financing documents, or other requested
certificates or documents, including a certificate of the chief financial
officer of the Company, comfort letters of accountants and legal opinions
as may be reasonably requested by Purchaser and taking such other actions
as are reasonably required to be taken by the Company in the Commitments,
provided that Purchaser shall use reasonable efforts not to materially
interfere with the duties of such officers, employees and advisors such
that the Company's business and results of operations would be materially
adversely affected thereby.
(c) The Company has entered into or agrees to enter into the engagement letter
agreement (the "Golub Engagement Letter") among Golub Associates
Incorporated, LEG Partners III SBIC, L.P., LEG Partners Debentures SBIC,
L.P. the Purchaser and the Company.
(d) Notwithstanding anything to the contrary contained in this Agreement, the
Company shall not enter into any Commitments or any other letters,
agreements or other documents contemplated by Sections 4.16(b), 4.16(c) or
5.2(f) if, in the aggregate, such Commitments, letters, agreements or
other documents obligate the Company to pay more than $400,000.00 of fees,
costs and expenses (excluding contingent liabilities such as
indemnification obligations), without the prior consent of the Special
Committee.
23
1.50 Voting.
------
Each of the Purchaser and its stockholders will vote any and all shares of the
Company's Common Stock held by them, or which they have the right to vote,
in favor of approval of the Merger, in person, or by proxy.
1.51 Exemption from Liability Under Section 16(B).
--------------------------------------------
Purchaser and the Company shall take all such steps as may be required or
reasonably requested to cause the transactions contemplated by this
Agreement and any other dispositions of Company equity securities
(including derivative securities) in connection with this Agreement by each
individual who is a director, officer or ten (10%) percent stockholder of
the Company to be exempt under Rule 16b-2 promulgated under the Exchange
Act and the rules and regulations promulgated thereunder, such steps to be
taken in accordance with the No-Action Letter dated January 12, 1999,
issued by the SEC to Skadden, Arps, Slate, Meagher & Flom LLP, or as may
otherwise be reasonably requested by the Company.
1.52 Delisting.
---------
Each of the parties agrees to cooperate with each other in taking, or causing
to be taken, all actions necessary to delist the Company Common Stock from
NASDAQ and to terminate registration under the Exchange Act, provided that
such delisting and termination shall not be effective until after the
Effective Time of the Merger.
CONDITIONS OF MERGER
1.53 Conditions to the Obligations of Each Party to Effect the Merger.
----------------------------------------------------------------
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of each of the
following conditions:
(a) This Agreement and the Merger shall have been approved and adopted by the
affirmative vote of a majority of Shares held by the stockholders of the
Company, as required under the laws of the State of Delaware;
(b) No temporary restraining order, preliminary or permanent injunction,
judgment or other order, decree or ruling nor any statute, rule,
regulation, SEC stop order or other order shall be in effect which would
make the acquisition or holding by Purchaser or its Affiliates of Shares
or shares of Common Stock of the Surviving Corporation illegal or
otherwise prevent the consummation of the Merger; and
(c) Upon the written request of either the Purchaser or the Special Committee
prior to the Closing, the Company shall have delivered to the Purchaser or
the Special Committee, as applicable, (i) a pro forma balance sheet of the
Surviving Corporation, on a consolidated basis, as of the Effective Time
(and reflecting any debt incurred by the Surviving Corporation to finance
the Merger), (ii) projections for the Surviving Corporation's operations,
on a consolidated basis, for such period reasonably necessary to deliver
the certificate described in clause (iii) below, and (iii) a Solvency
Certificate (as hereinafter defined), duly executed by the Company's Chief
Financial Officer or
24
such other mutually acceptable person, in form and substance reasonably
satisfactory to the Purchaser or the Special Committee, as applicable.
1.54 Conditions Precedent to Purchaser's Obligations.
-----------------------------------------------
In addition to the conditions set forth in Section 5.1, the Purchaser shall be
obligated to perform the acts contemplated for performance by them under
Article I only if each of the following conditions is satisfied at or prior
to the Closing Date, unless any such condition is waived in writing by
Purchaser:
(a) The receipt of cash proceeds from debt and equity financings sufficient to
consummate the transactions contemplated by this Agreement ("Financing
Condition").
(b) The representations and warranties of the Company set forth in Article 2
shall be true and correct in all material respects as of the Closing Date
with the same force and effect as though made again at and as of the
Closing Date, except for any representations and warranties that address
matters only as of a particular date specifically set forth in such
representation, other than the date hereof, (which shall remain true and
correct as of such date).
(c) The Company shall have performed and complied in all material respects,
individually or in the aggregate, (without giving duplicative effect to
any materiality qualification contained in the applicable obligation) with
all other covenants and agreements contained in this Agreement required to
be performed or complied with by it on or before the Closing Date.
(d) Since the date of this Agreement, there shall not have been the occurrence
of any event or condition, or series of events or conditions, that has had
or would reasonably be expected to have a Material Adverse Effect.
(e) The Company shall have executed and delivered to Purchaser at and as of
the Closing a certificate, duly executed by the Company's Chief Financial
Officer, in form and substance reasonably satisfactory to Purchaser and
Purchaser's counsel, certifying that to such officers' knowledge, the
conditions specified in (b), (c) and (d) have been satisfied.
(f) The Company shall have obtained the material third party consents
necessary to consummate the Merger including the consent of Fleet National
Bank, N.A..
(g) As of the Effective Time, the effects of the Company Rights Plan shall
have been eliminated to the Purchaser's reasonable satisfaction.
(h) Shareholders holding Common Stock representing more than five percent (5%)
of the Company's outstanding stock shall not have dissented from the
Merger and exercised their rights under Section 262 of the DGCL.
1.55 Conditions to Obligations of the Company.
----------------------------------------
In addition to the conditions set forth in Section 5.1, the Company shall be
obligated to perform the acts contemplated for performance by it under
Article I only if each of the following conditions is satisfied at or prior
to the Closing Date, unless any such condition is waived in writing by the
Company:
25
(a) The representations and warranties of the Purchaser set forth in Article
III shall be true and correct in all material respects as of the Closing
Date with the same force and effect as though made again at and as of the
Closing Date, except for any representations and warranties that address
matters only as of a particular date specifically set forth in the
particular representation or warranty which shall remain true and correct
as of such particular date.
(b) The Purchaser shall have performed and complied in all material respects,
individually or in the aggregate, (without giving duplicative effect to
any materiality qualification contained in the applicable obligation) with
all covenants and agreements contained in this Agreement required to be
performed or complied with by them on or before the Closing Date.
(c) The Purchaser shall have deposited with the Exchange Agent the Deposit
Amount in trust for the benefit of the holders of certificates.
(d) The Purchaser shall have executed and delivered to the Company at and as
of the Closing a certificate, duly executed by the Purchaser's President
and/or Chief Financial Officer, in form and substance reasonably
satisfactory to the Company and the Company's counsel, certifying that to
such officers' knowledge, the conditions specified in (a), (b) and (c)
have been satisfied.
TERMINATION, AMENDMENT AND WAIVER
1.56 Termination.
-----------
This Agreement may be terminated, at any time prior to the Effective Time,
whether before or after approval by the stockholders of the Company:
(a) by mutual written agreement of the boards of directors of Purchaser and
the Company; or
(b) by either Purchaser or Company:
(i) if any court of competent jurisdiction or other governmental body
shall have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Merger and such order,
decree, ruling or other action shall have become final and non appealable;
or
(ii) if there has been a material breach by the other party of any
representation or warranty set forth in this Agreement unless such breach
is capable of being cured and is cured within 20 days after the giving of
written notice of the material breach.
(iii) if there has been a material breach by the other party of any
covenant or agreement set forth in this Agreement unless such breach is
capable of being cured and is cured within 20 days after the giving of
written notice of the material breach.
(c) by Company, in the case of (i), (ii) or (iii) below, or by Purchaser, (i)
if the Board of Directors shall have approved or recommended or proposed
publicly to approve or recommend an Acquisition Proposal by a third party,
or (ii) the Board of Directors or the Special Committee shall have
withdrawn or modified in a manner adverse to Purchaser its approval or
recommendation of this Agreement or the transactions contemplated hereby,
or (iii) the Board of Directors or the Special Committee shall have failed
to include in the Company Proxy Statement
26
such recommendation (including the recommendation that the stockholders
of the Company vote in favor of the Merger) or publicly announced an
intention to do any of the foregoing, (iv) if the Company enters into a
Company Acquisition Agreement, or (v) if there has been a material breach
by the Company of any covenant or agreement set forth in this Agreement
including, a material breach of Section 4.5 hereof, which breach arises
primarily from the actions taken, or the failure to act, by the Special
Committee, unless such breach is capable of being cured and is cured
within 20 days after the giving of written notice of the material breach;
(d) by the Company, pursuant to Section 4.5, in the event the Company has
complied with all the provisions of Section 4.5 and has determined to
enter into a Company Acquisition Agreement.
(e) by either Purchaser or Company, if the Effective Time shall not have
occurred on or before August 31, 2001, or it becomes manifestly evident
that the conditions to the transaction shall not be satisfied by such
date; provided, however, that the right to terminate this agreement under
this Section 6.1(e) shall not be available to any party whose failure to
fulfill any obligation under this Agreement shall have principally caused,
or resulted in, the failure of the Effective Time to occur on or before
such date.
1.57 Procedure and Effect of Termination.
-----------------------------------
In the event of the termination of this Agreement by the Company or Purchaser
or both of them pursuant to Section 6.1, the terminating party shall
provide written notice of such termination to the other party and this
Agreement shall forthwith become void and there shall be no liability on
the part of Purchaser or the Company, except as set forth in this Section
6.2 and in Sections 4.2(b)-(f) and 6.3 of this Agreement. The foregoing
shall be an exclusive remedy and shall relieve any party for liability for
any and all damages actually incurred as a result of any breach of this
Agreement or otherwise, except for any deliberate and wilful breach of this
Agreement. Sections 4.2(b)-(f), 6.2, 6.3 and Article VIII of this
Agreement shall survive the termination of this Agreement.
1.58 Expenses.
--------
(a) Except as otherwise provided in this Agreement and whether or not the
transactions contemplated by this Agreement are consummated, all costs and
expenses incurred in connection with the transactions contemplated by this
Agreement shall be paid by the party incurring such expenses.
(b) In the event that the Company or Purchaser terminates this Agreement
pursuant to Section 6.1(c) or the Company terminates this Agreement
pursuant to Section 6.1(d), then the Company shall reimburse Purchaser for
all of the Purchaser's reasonable Expenses (as defined below) as
liquidated damages; provided, that such Expenses for which Purchaser is
entitled to reimbursement shall not exceed an amount equal to $400,000.00
less the aggregate amount of Company obligations paid by the Company
contemplated by Section 4.16(d) hereof; and provided, however, that such
limitation of $400,000 shall not be applicable in the event that the
Company consummates an Acquisition Proposal that was inquired or made
prior to the termination of this Agreement. Any such payment shall be made
within five (5) business days after a termination by the Purchaser
pursuant to Section 6.1(c) or at the time of any termination by the
Company pursuant to Sections 6.1(c) or 6.1(d). For purposes of this
Agreement, "Expenses" shall mean out-of-pocket expenses incurred by the
Purchaser or on its behalf (other than by the Company) in connection with
the Merger and the consummation of the transactions contemplated by this
Agreement, (including, reasonable attorneys' fees and disbursements,
depository fees and expenses, fees payable to the Lending Sources, the
fees of accountants and
27
financial advisors, and filing fees and printing costs). Notwithstanding
anything to the contrary contained above, in the event that this Agreement
and the Merger shall not have been approved and adopted by the affirmative
vote of a majority of the Shares held by the stockholders of the Company
at a duly called Stockholders' Meeting, then in such event the Purchaser
shall not be entitled to reimbursement by the Company of any Expenses.
1.59 Amendment.
---------
This Agreement may be amended by each of the parties by action taken by or on
behalf of their respective boards of directors at any time prior to the
Effective Time; provided, however, that (i) such amendment shall be in
writing signed by all of the parties, and (ii) after adoption of this
Agreement and the Merger by the stockholders of the Company, no amendment
may be made without the further approval of the stockholders of the Company
to the extent such approval is required by applicable law; provided,
however, that any modification or amendment hereto shall have been approved
by the Special Committee.
1.60 Waiver.
------
Subject to the requirements of applicable law, at any time prior to the
Effective Time, whether before or after the Special Meeting, any party
hereto, by action taken by its Board of Directors, may (i) extend the time
for the performance of any of the obligations or other acts of any other
party hereto or (ii) waive compliance with any of the agreements of any
other party or with any conditions to its own obligations; provided,
however, that any waiver by the Company shall have been approved by the
Special Committee. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party by a duly authorized officer of such
party. Notwithstanding the above, any waiver given shall not apply to any
subsequent failure of compliance with agreements of the other party or
conditions to its own obligations.
1.61 Termination decisions by the Company.
------------------------------------
The Board of Directors shall terminate this Agreement in connection with any
action by the Special Committee contemplated by Section 6.1(c)(ii) or (iii)
hereof upon, and only upon, the recommendation of the Special Committee.
ARTICLE II
DEFINITIONS
As used herein the following terms not otherwise defined have the following
respective meanings:
"Affiliate" means, with respect to any specified Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person. As used
in this definition the term "control" (including the terms "controlled by" and
"under common control with") means, with respect to the relationship between or
among two or more Persons, the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the affairs or
management of a Person, whether through the ownership of voting securities, as
trustee or executor, by contract or otherwise, including, without limitation,
the ownership,
28
directly or indirectly, of securities having the power to elect a majority of
the board of directors or similar body governing the affairs of such Person.
"Company Rights Plan" means the Company's stockholder rights plan pursuant
to a Rights Agreement dated as of April 11, 2000, between the Company and
Continental Stock Transfer and Trust Company as Rights Agreement.
"Indebtedness" means (i) all indebtedness of the Company or any of its
Subsidiaries for borrowed money, whether current or funded, or secured or
unsecured, (ii) all indebtedness of the Company or any of its Subsidiaries for
the deferred purchase price of property or services represented by a note or
other security, (iii) all indebtedness of the Company created or arising under
any conditional sale or other title retention agreement with respect to property
acquired by the Company or any of its Subsidiaries (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), (iv) all indebtedness of
the Company or any of its Subsidiaries secured by a purchase money mortgage or
other lien to secure all or part of the purchase price of property subject to
such mortgage or lien, (v) all obligations under leases which shall have been or
must be, in accordance with generally accepted accounting principles, recorded
as capital leases in respect of which the Company or any of its Subsidiaries is
liable as lessee,(vi) any liability of the Company or any of its Subsidiaries in
respect of banker's acceptances or letters of credit, and (vii) all indebtedness
referred to in clause (i), (ii), (iii), (iv), (v) or (vi) above which is
directly or indirectly guaranteed by the Company or any of its Subsidiaries or
which the Company or any of its Subsidiaries has agreed (contingently or
otherwise) to purchase or otherwise acquire or in respect of which it has
otherwise assured a creditor against loss.
"Material Adverse Effect" means any material adverse effect on the
business, properties, assets, results of operations or financial condition of
the Company and its Subsidiaries taken as a whole.
"Person" means any corporation, association, partnership, limited liability
company, organization, business, individual, government or political subdivision
thereof or governmental agency.
"Solvency Certificate" shall mean a certificate of the Chief Financial
Officer of the Company regarding solvency matters of the Company in
substantially the form previously delivered by the Company to the Purchaser.
"Subsidiary" means, with respect to any Person, any corporation a majority
(by number of votes) of the outstanding shares of any class or classes of which
shall at the time be owned by such Person or by a Subsidiary of such Person, if
the holders of the shares of such class or classes (a) are ordinarily, in the
absence of contingencies, entitled to vote for the election of a majority of the
directors (or persons performing similar functions) of the issuer thereof, even
though the right so to vote has been suspended by the happening of such a
contingency, or (b) are at the time entitled, as such holders, to vote for the
election of a majority of the directors (or persons performing similar
functions) of the issuer thereof, whether or not the right so to vote exists by
reason of the happening of a contingency.
"Tax" or "Taxes" means any federal, state, local, or foreign income, gross
receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use,
transfer, registration, value added, excise, natural resources, severance,
stamp, occupation, premium, windfall profit, environmental, customs, duties,
real property, personal property, capital stock, intangibles, social security,
unemployment, disability, payroll, license, employee, or other tax or levy, of
any kind whatsoever, including any interest, penalties, or additions to tax in
respect of the foregoing.
29
MISCELLANEOUS
2.1 Severability.
------------
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to
the extent possible.
2.2 Notices.
-------
All notices and other communications given or made pursuant hereto shall be in
writing and shall be deemed to have been duly given or made as of the date
delivered if sent via telecopier or delivered personally(including, without
limitation, delivery by commercial carrier warranting next-day delivery) to
the parties at the following addresses (or at such other address for a
party as shall be specified by similar notice, except that notices of
changes of address shall be effective upon receipt):
(a) If to Company:
Specialty Catalog Corp.
21 Bristol Drive
South Easton, MA 02375
Attention: Special Committee
Fax: (508) 238-3305
With copies to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Stephen Kotran, Esq.
Fax: (212) 558-3588
If to Purchaser:
Specialty Acquisition Corp.
c/o Kane Kessler, P.C.
1350 Avenue of the Americas
26th Floor
New York, New York 10019
Attn: Guy Naggar and
Jeffrey S. Tullman, Esq.
Fax: (212) 245-3009
With copies to:
Kane Kessler, P.C.
1350 Avenue of the Americas
New York, New York 10019
30
Attention: Robert L. Lawrence, Esq.
Fax: (212) 245-3009
2.3 Headings.
--------
The headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement. Any reference in this Agreement to a section, exhibit or
schedule shall, unless otherwise expressly indicated, refer to a section of
or an exhibit or schedule to this Agreement.
2.4 Representations and Warranties, etc.
-----------------------------------
The respective representations and warranties of the Company and Purchaser
contained herein shall survive until, and shall expire with, and be
terminated and extinguished upon the earlier to occur of (a) the
termination of this Agreement pursuant to Section 6.1 and (b) the Effective
Time. This Section 8.4 shall have no effect upon any other obligation of
the parties hereto, whether to be performed before or after the
consummation of the Merger.
2.5 Miscellaneous.
-------------
This Agreement and the documents delivered pursuant hereto or in connection
herewith (i) constitute the entire agreement and supersede all other prior
agreements and undertakings, both written and oral (including, without
limitation, any agreement or proposed agreement relating to the timing of
execution of this Agreement and the payment of any amount in connection
therewith), among the parties, or any of them, with respect to the subject
matter hereof, (ii) are not intended to confer upon any Person other than
the parties hereto any rights or remedies hereunder, other than Sections
4.8 (which is intended for the benefit of the present and former directors,
officers, employees and agents of the Company and may be enforced by any
such indemnified persons), and (iii) the Purchaser may assign this
Agreement to its lenders as collateral security; provided, however, that no
such assignment shall relieve the assignor of its obligations hereunder.
This Agreement may be executed in one or more counterparts which together
shall constitute a single agreement.
2.6 Attorneys Fees.
--------------
If any legal proceeding is initiated by any party to enforce this Agreement
or otherwise with respect to the subject matter of this Agreement, the
prevailing party or parties shall be entitled to recover reasonable
attorney's fees incurred in connection with such proceedings.
2.7 Governing Law.
-------------
This Agreement shall be governed by, and construed in accordance with, the
laws of Delaware, regardless of the laws that might otherwise governs under
applicable principals of conflicts of laws thereof.
2.8 Jurisdiction and Venue.
----------------------
This Agreement shall be subject to the exclusive jurisdiction of the state or
federal courts sitting in New York County, New York. The parties to this
Agreement agree that any breach of any term or condition of this Agreement
shall be deemed to be a breach occurring in the State of New York by virtue
of a failure to perform an act required to be performed in the State of New
York and
31
irrevocably and expressly agree to submit to the jurisdiction of the United
States District Court for the Southern District of New York or courts of
the State of New York for the purpose of resolving any disputes among the
parties relating to this Agreement or the transactions contemplated hereby.
The parties irrevocably waive, to the fullest extent permitted by law, any
objection which they may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this
Agreement, or any judgment entered by any court in respect hereof brought
in New York County, New York, and further irrevocably waive any claim that
any suit, action or proceeding brought in New York County, New York has
been brought in an inconvenient forum. The parties hereto agree to service
of process by certified or registered United States mail, postage prepaid,
addressed to the party in question.
2.9 Binding Effect.
--------------
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
2.10 Assignment.
----------
This Agreement may not be assigned by any party without the written consent of
the other party; provided, that the Purchaser may assign this Agreement to
a corporation, partnership, or limited liability company of which the
stockholders of the Purchaser maintain majority control.
2.11 Further Assurances.
------------------
The parties hereto shall deliver any and all other instruments or documents
reasonably requested by the other party in order to give effect to all of
the terms and provisions of this Agreement.
2.12 Publicity.
---------
No public announcement or other publicity regarding this Agreement or the
transactions contemplated hereby shall be made without the prior written
consent of the Purchaser and the Company as to form, content, timing and
manner of distribution. Notwithstanding the foregoing, nothing in this
Agreement shall preclude the Company from making any public announcement or
filing required pursuant to any federal or state securities laws or stock
exchange rules; provided that prior to such filing Purchaser shall be given
a reasonable opportunity to review and comment on such public announcement
or filing.
[SIGNATURE PAGE FOLLOWS]
32
IN WITNESS WHEREOF, Purchaser and the Company have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
SPECIALTY ACQUISITION CORP.
By: /s/ Guy Naggar
-----------------------------------
Name: Guy Naggar
Title: President
SPECIALTY CATALOG CORP.
By: /s/ Thomas McCain
-----------------------------------
Name: Thomas McCain
Title: Senior Vice President and
Chief Financial Officer
33