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EXHIBIT 2.1
APPENDIX A
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Agreement and Plan of Merger
by and among
Ground Round Restaurants, Inc.,
GRR, Inc.
and
GRR Acquisition Corp.
dated as of
August 23, 1994
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 23, 1994 ("Agreement"
or "Merger Agreement"), by and among GRR, Inc., a Delaware corporation
("Parent"), GRR Acquisition Corp., a New York corporation and a wholly owned
subsidiary of Parent ("Purchaser"), and Ground Round Restaurants, Inc., a New
York corporation (the "Company").
ARTICLE I
THE MERGER
1.1 Merger.
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1.1.1 MERGER. Subject to the terms and conditions hereof and
in accordance with the applicable provisions of the New York Business
Corporation Law (the "NYBCL"), (a) Purchaser will be merged with and into the
Company at the Effective Time (as defined in Section 1.1.2) and the separate
corporate existence of Purchaser will thereupon cease (the "Merger") and (b)
each of the Company and Parent will use its best efforts to cause the Merger to
be consummated as soon as practicable after satisfaction, or waiver if
permitted, of the conditions hereof.
1.1.2 EFFECTIVE TIME. As soon as practicable following
fulfillment or waiver of the conditions specified in Article V, and provided
that this Agreement has not been terminated pursuant to Section 6.1, the
Company and Purchaser (the "Constituent Corporations") will cause a Certificate
of Merger (the "Certificate of Merger") to be filed with the Secretary of State
of the State of New York as provided in Section 904 of the NYBCL. The Merger
will become effective at the time that the Certificate of Merger has been filed
with the Secretary of State of the State of New York in accordance with Section
104 of the NYBCL (the "Effective Time").
1.1.3 EFFECT OF MERGER. The Company will be the surviving
corporation in the Merger (sometimes hereinafter referred to as the "Surviving
Corporation"), and the separate corporate existence of Purchaser will cease.
The Certificate of Incorporation (the "Certificate") and the By-laws (the
"By-laws") of the Company in effect at the Effective Time will be amended at
the Effective Time by incorporating the language from Purchaser's certificate
of incorporation and by-laws, which by-laws shall contain the provisions
required by Section 4.6.1. The directors of Purchaser immediately prior to the
Effective Time will be the directors of the Surviving Corporation, and unless
the Company and Parent otherwise agree, the officers of Purchaser immediately
prior to the Effective Time will be the officers of the Surviving Corporation,
from and after the Effective Time, to serve in accordance with the NYBCL and
the terms of the Surviving Corporation's certificate of incorporation and
by-laws. The consummation of the Merger will have the effects provided in the
NYBCL with respect to mergers of two domestic corporations.
1.1.4 CONVERSION OF SHARES. At the Effective Time, (a) each
then-outstanding share of Company common stock, par value $.16-2/3 per share (a
"Share"), not owned by
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Parent, Purchaser or any other direct or indirect subsidiary of Parent and
other than any Shares held in the treasury of the Company and Dissenting
Shares, as defined in Section 1.6, will be cancelled and retired and will be
converted into a right only to receive in cash an amount per Share in U.S.
dollars equal to nine dollars ($9.00) (the "Merger Price"), (b) each
then-outstanding Share owned by Parent, Purchaser or any other direct or
indirect subsidiary of Parent will be cancelled and retired, and no payment
will be made with respect thereto, (c) each Share issued and held in the
Company's treasury will be cancelled and retired, and no payment will be made
with respect thereto, and (d) each then-outstanding share of common stock of
Purchaser will be converted into and become a share of common stock of the
Surviving Corporation, which thereafter will constitute all of the issued and
outstanding shares of capital stock of the Surviving Corporation.
1.2 CONSUMMATION OF THE MERGER. The closing of the Merger (the
"Closing") will take place (a) at the Boston offices of Nutter, McClennen &
Fish as promptly as practicable after the later of (i) the day of (and
immediately following) adoption and approval of this Agreement by the Company's
shareholders and (ii) the day on which the last of the conditions set forth in
Article V hereof is satisfied or, if permitted, duly waived, or (b) at such
other time and place and on such other date as Purchaser and the Company may
agree.
1.3 PAYMENT FOR SHARES. Purchaser will authorize the depositary
for the Offer (or one or more commercial banks organized under the laws of the
United States or any state thereof with capital, surplus and undivided profits
of at least $100,000,000) to act as Paying Agent hereunder with respect to the
Merger (the "Paying Agent"). Each holder (other than Parent, Purchaser or any
other direct or indirect subsidiary of Parent) of a certificate or certificates
which prior to the Effective Time represented outstanding Shares will be
entitled to receive, upon surrender to the Paying Agent of such certificate or
certificates for cancellation and subject to any required withholding of taxes,
the aggregate amount of cash into which the Shares previously represented by
such certificate or certificates will have been converted in the Merger.
Immediately prior to the Closing, Parent and Purchaser will make available to
the Paying Agent sufficient funds to make all payments pursuant to the
immediately preceding sentence, and the Paying Agent shall certify to the
Company receipt of such funds. Pending payment of such funds to the holders of
Shares, such funds shall be held and invested by the Paying Agent as Parent
directs. Any net profit resulting from, or interest or income produced by,
such investments will be payable to the Surviving Corporation or Parent, as
Parent directs. Parent will promptly replace any monies lost through any
investment made pursuant to this Section 1.4. Following the Effective Time,
each certificate which immediately prior to the Effective Time represented
outstanding Shares (other than Dissenting Shares and Shares owned by Parent,
Purchaser or any other direct or indirect subsidiary of Parent) will be deemed
for all corporate purposes to evidence only the right to receive upon such
surrender the aggregate amount of cash into which the Shares represented
thereby will have been converted in the Merger as set forth in Section 1.1.4,
subject to any required withholding of taxes. No interest will be paid on the
cash payable upon the surrender of the certificates. Any cash delivered or
made available to the Paying Agent pursuant to this Section 1.4 and not
exchanged for certificates representing Shares
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within one hundred eighty (180) days after the Effective Time will be returned
by the Paying Agent to the Surviving Corporation which thereafter will act as
Paying Agent, subject to the rights of holders of unsurrendered certificates
representing Shares under this Article I, and any former shareholders of the
Company who have not theretofore complied with the instructions for exchanging
their certificates representing Shares will thereafter look only to the
Surviving Corporation for payment of their claim for the consideration set
forth in Section 1.1, without any interest thereon, but will have no greater
rights against the Surviving Corporation (or either Constituent Corporation)
than may be accorded to general creditors thereof under applicable law.
Notwithstanding the foregoing, neither the Paying Agent nor any party hereto
will be liable to a holder of Shares for any cash or interest thereon delivered
to a public official pursuant to applicable abandoned property laws. Promptly
after the Effective Time (but in any event no later than the next business day
after the Effective Time), the Paying Agent will mail to each record holder of
certificates which immediately prior to the Effective Time represented Shares
(the "Certificates") a form of letter of transmittal (the "Transmittal Letter")
and instructions for use thereof in surrendering such Certificates which will
specify that delivery will be effected, and risk of loss and title to the
Certificates will pass, only upon proper delivery of the Certificates to the
Paying Agent in accordance with the terms of delivery specified in the
Transmittal Letter and instructions for use thereof in surrendering such
Certificates and receiving the Merger Price for each Share previously
represented thereby.
1.4 CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the Effective
Time, the stock transfer books of the Company will be closed and no transfer of
Shares will thereafter be made. If, after the Effective Time, Certificates are
presented to the Surviving Corporation, they will be cancelled, retired and
exchanged for cash as provided in Section 1.3, subject to applicable law in the
case of Dissenting Shares.
1.5 STOCK OPTIONS AND RELATED MATTERS. Immediately prior to the
Effective Time, each outstanding stock option (a "Company Option") granted
under the Company's 1989 Stock Option Plan or 1992 Equity Incentive Plan
(collectively referred to as the "Option Plans"), whether or not then
exercisable, shall be cancelled by the Company and each holder of a cancelled
Company Option shall be entitled to receive from the Company, in cancellation
and settlement of the Company Option, an amount equal to the product of (i) the
number of Shares previously subject to the Company Option and (ii) the excess,
if any, of the Merger Price over the exercise price per Share previously
subject to the Company Option (the "Option Consideration"). Unless on at least
five (5) business days' advance notice Purchaser requests and the holder of a
Company Option agrees for no consideration to either amend or terminate such
Company Option effective as of the Effective Time, as of the Effective Time,
each holder of a Company Option will be entitled to receive only an amount
equal to the applicable Option Consideration.
1.6 DISSENTERS' RIGHTS. Notwithstanding anything in this
Agreement seemingly to the contrary, any Shares which are issued and
outstanding immediately prior to the Effective Time and which are held by
shareholders of the Company who have not voted such Shares in
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favor of the adoption of this Agreement and who have delivered a written demand
for the payment of the fair cash value of such Shares in the manner provided in
Section 623 of the NYBCL ("Dissenting Shares") will not be converted as
described in Section 1.1.4 but will thereafter constitute only the right to
receive payment of the fair cash value of such Shares in accordance with the
provisions of Section 623 of the NYBCL; PROVIDED, HOWEVER, that (i) if any
holder of Dissenting Shares subsequently withdraws such holder's demand for
payment of the fair cash value of such Shares, (ii) if any holder fails to
comply with such Section 623, or (iii) if the Surviving Corporation and any
holder of Dissenting Shares have not come to an agreement as to the fair cash
value of such holder's Dissenting Shares, and neither such holder of Dissenting
Shares nor the Surviving Corporation has filed or joined in a petition
demanding a determination of the value of all Dissenting Shares within the
period provided in Section 623 of the NYBCL, the right of each such holder to
receive such fair cash value will terminate, and upon the expiration of the
rights of such holder pursuant to Section 623 of the NYBCL, such Shares will
thereupon be deemed to have been extinguished and to have been converted, as of
the Effective Time, into the right to receive the Merger Price, without
interest. Persons who have perfected statutory rights with respect to
Dissenting Shares as aforesaid will not be paid by the Surviving Corporation as
provided in this Agreement and will have only such rights as are provided by
Section 623 of the NYBCL with respect to such Shares. Notwithstanding anything
in this Agreement to the contrary, if Parent or Purchaser abandons or is
finally enjoined or prevented from carrying out this Agreement, the right of
each holder of Dissenting Shares to receive the fair cash value of such
Dissenting Shares in accordance with Section 623 of the NYBCL will terminate,
effective as of the time of such abandonment, injunction, prevention or
rescission.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser hereby jointly and severally represent and
warrant to the Company that:
2.1 ORGANIZATION. Parent is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization and has all requisite power and authority to own, lease and
operate its properties and assets and to carry on its business as it is now
being conducted. Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation and
has all requisite corporate power and authority to own, lease and operate its
properties and assets and to carry on its business as it is now being
conducted. Parent is the sole legal and beneficial owner of all of the
outstanding capital stock of Purchaser.
2.2 AUTHORITY. Each of Parent and Purchaser has the requisite
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
approved by each of the Boards of Directors of Parent and Purchaser and by
Parent as the sole shareholder of Purchaser and no
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other proceedings on the part of Parent or Purchaser are necessary to
consummate the transactions so contemplated. This Agreement has been duly
executed and delivered by each of Parent and Purchaser and constitutes a valid
and binding obligation of each of Parent and Purchaser, enforceable against
Parent and Purchaser in accordance with its terms.
2.3 MERGER PROXY STATEMENT. None of the information supplied in
writing by Parent, Purchaser or any other affiliate of Purchaser expressly for
inclusion in any proxy or information statement of the Company required to be
mailed to the Company's shareholders in connection with the Merger (the "Merger
Proxy Statement"), or in any amendments or supplements thereto, will, at the
time of (a) the first mailing thereof and (b) the meeting of shareholders to be
held in connection with the Merger, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
2.4 FEES. Neither Parent nor Purchaser nor any other direct or
indirect subsidiary of Parent has paid or become obligated to pay any fee or
commission to any broker or finder in connection with the transactions
contemplated hereby.
2.5 CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution
and delivery of this Agreement by Parent and Purchaser nor the consummation by
Parent and Purchaser of the transactions contemplated hereby will (a) conflict
with, or result in any breach or violation of, any provision of their
respective certificates of incorporation or by-laws (or comparable governing
instruments), or (b) violate, conflict with, breach, constitute a default (or
an event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, or result in the creation of any lien or other encumbrance upon
any of the properties or assets of Parent or any of its subsidiaries under, any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument or obligation to
which Parent or any such subsidiary is a party or to which they or any of their
respective properties or assets are subject, except for such violations,
conflicts, breaches, defaults, terminations, accelerations or creations of
liens or other encumbrances, that, individually or in the aggregate, will not
have a material adverse effect on the business or financial condition of Parent
and its subsidiaries, taken as a whole, or (c) require any consent, approval,
authorization or permit of or from, or filing with or notification to, any
court, governmental authority or other regulatory or administrative agency or
commission, domestic or foreign ("Governmental Entity"), except (i) pursuant to
the Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (the "Exchange Act"), (ii) filing the Certificate of Merger, (iii)
filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), or (iv) consents, approvals, authorizations, permits,
filings or notifications which, if not obtained or made, will not have a
material adverse effect, individually or in the aggregate, on the business or
financial condition of Parent and its subsidiaries, taken as a whole.
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2.6 FINANCING. The letter from Bear Stearns & Co. Inc. ("Bear
Stearns") dated August 22, 1994 and set forth as SCHEDULE 2.6(A) (the "Bear
Stearns Letter") regarding (i) up to one hundred million dollars ($100,000,000)
of senior unsecured notes (the "Senior Note Financing") and (ii) up to forty
million dollars ($40,000,000) of subordinated discount notes (the "Discount
Note Letter" and "Discount Note Financing") has not been withdrawn, amended,
modified or qualified as of the date hereof. The letter from 399 Ventures,
Inc. dated August 22, 1994 and set forth as SCHEDULE 2.6(B) (the "399 Ventures
Letter") regarding certain equity and subordinated debt financing (the "Parent
Financing") has not been withdrawn, amended, modified or qualified as of the
date hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each of Parent and
Purchaser that, except as otherwise disclosed to Parent and Purchaser prior to
the execution hereof:
3.1 CORPORATE ORGANIZATION. The Company and each of its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation and is in good standing
as a foreign corporation in each jurisdiction where failure to so qualify or be
in good standing is reasonably likely to have a material adverse effect on the
business or financial condition of the Company and its subsidiaries, taken as a
whole. The Company and each of its subsidiaries has the requisite corporate
power to own, lease and operate their respective properties and assets and to
carry on their respective businesses as they are now being conducted. The
subsidiaries listed on SCHEDULE 3.1 are all of the subsidiaries of the Company,
and each subsidiary listed on SCHEDULE 3.1 is a direct or indirect wholly owned
subsidiary of the Company. The Company has filed with the Securities and
Exchange Commission (the "Commission") pursuant to the Exchange Act true and
correct copies of its Certificate and By-laws, as amended to the date hereof.
The Company's Certificate and By-laws as so filed are in full force and effect.
3.2 CAPITALIZATION. As of the date hereof, the authorized capital
stock of the Company consists of (i) 35,000,000 Shares and (ii) 30,000 shares
of Cumulative Preferred Stock, par value $100 per share ("Preferred Shares").
As of the close of business on the date hereof, (a) 11,113,269 Shares were
issued and outstanding, (b) no Preferred Shares were issued and outstanding and
(c) Company Options to purchase an aggregate of 628,461 Shares were outstanding
pursuant to the Option Plans. All issued and outstanding Shares are validly
issued, fully paid and nonassessable and are not subject to preemptive rights.
Since the close of business on the date hereof, the Company has not issued any
additional Shares or any Preferred Shares other than pursuant to the exercise
of Company Options, has not granted any additional Company Options, and has not
modified outstanding Company Options, except as expressly contemplated in this
Agreement. As of the date hereof, except for Shares and Preferred Shares,
there are no shares of capital stock of the Company authorized, issued or
outstanding, and except for the Company Options, there are no outstanding
subscriptions, options, warrants, puts, calls, rights, convertible securities,
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exchangeable securities or any other agreements or commitments of any character
relating to the issued or unissued capital stock or other securities of the
Company obligating the Company to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock of the Company or
obligating the Company to grant, extend or enter into any subscription, option,
warrant, right, convertible security or other similar agreement or commitment,
except as disclosed on SCHEDULE 3.2. There are no voting trusts or other
agreements or understandings to which the Company or, to best of the Company's
knowledge, any other person is a party with respect to the voting of the
capital stock of the Company, except as disclosed on SCHEDULE 3.2. There are
no stock appreciation rights, phantom stock or other similar arrangements or
understandings to which the Company is a party.
3.3 AUTHORITY. The Company has the requisite corporate power and
authority to execute and deliver this Agreement and, except for any required
vote of the Company's shareholders, to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly approved by
the Board of Directors of the Company and no other corporate proceedings on the
part of the Company are necessary to authorize the execution and delivery of
this Agreement or to consummate the transactions so contemplated, subject to
the extent required with respect to the consummation of the Merger, to the
adoption and approval of this Agreement by the shareholders of the Company.
This Agreement has been duly executed and delivered by, and constitutes a
legal, valid and binding obligation of, the Company, enforceable against the
Company in accordance with its terms.
3.4 CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution,
delivery nor performance of this Agreement by the Company nor the consummation
by the Company of the transactions contemplated hereby will (a) conflict with,
violate, result in any breach, termination, acceleration or violation of any
obligation under, or constitute a default under, any provision of the
Certificate or By-laws, or (b) violate, conflict with, breach, constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in the creation of any lien or other
encumbrance upon any of the properties or assets of the Company under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument or obligation to
which the Company or any of its subsidiaries is a party or to which they or any
of their respective properties or assets are subject, except for such
violations, conflicts, breaches, defaults, terminations, accelerations or
creations of liens or other encumbrances that, individually or in the
aggregate, will not have a material adverse effect on the business or financial
condition of the Company and its subsidiaries, taken as a whole, or that are
described on SCHEDULE 3.4, or (c) require any consent, waiver, approval,
authorization or permit of or from, or filing with or notification to, any
Governmental Entity, except (i) pursuant to the Exchange Act, (ii) filing the
Certificate of Merger, (iii) filings under the HSR Act, (iv) consents,
approvals, waivers, authorizations, permits, filings or notifications which, if
not obtained or made will not have a material adverse effect, individually or
in the aggregate, on the business or
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financial condition of the Company and its subsidiaries, taken as a whole, or
(v) as disclosed on SCHEDULE 3.4 hereto.
3.5 COMMISSION FILINGS AND FINANCIAL STATEMENTS. The Company has
heretofore filed all reports, registration statements and other documents
including, without limitation, any financial statements and schedules included
therein, with the Commission required to be filed with the Commission under the
rules and regulations of the Commission since September 29, 1991 (the "SEC
Documents"). The SEC Documents (a) did not (as of their respective filing
dates) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading and (b) complied as to form in all material respects with
the requirements of the Securities Act of 1933, as amended (the "Securities
Act"), and the Exchange Act, as applicable. The audited and unaudited
consolidated financial statements, together with the notes thereto, of the
Company included (or incorporated by reference) in the SEC Documents complied
in all material respects with Commission requirements as of the respective
dates thereof and fairly presented the financial position of the Company and
its consolidated subsidiaries, in each case as of the dates thereof, and the
results of their operations and changes in financial position for the periods
then ended in accordance with, and have been prepared in accordance with,
generally accepted accounting principles applied on a consistent basis (except
as stated in such financial statements), subject, in the case of the unaudited
financial statements, to year-end adjustments and to the disclaimers contained
in footnote 1 to the financial statements contained in the Company's Quarterly
Reports on Form 10-Q previously filed with the Commission.
3.6 GOVERNMENTAL AUTHORIZATIONS. The Company and each of its
subsidiaries has all licenses, permits, approvals, and other authorizations
(collectively, "Governmental Authorizations") from all Governmental Entities as
are necessary for the conduct of its business and operations, except for
Governmental Authorizations where the failure to obtain such would not have a
material adverse effect, either individually or in the aggregate, on the
Company's consolidated financial condition or business, and all Governmental
Authorizations which the Company or any of its subsidiaries has are in full
force and effect and are not subject to any material condition, qualification
or limitation. Neither the Company nor any of its subsidiaries has received
any notification from any agency, department or instrumentality (or the staff
thereof) of any Governmental Entity asserting noncompliance in any material
respect with any of the laws, rules, regulations or orders that such
governmental authority enforces or threatening to revoke any Governmental
Authorization.
3.7 OWNED REAL ESTATE. Except as disclosed in the SEC Documents
filed prior to the date of this Agreement, the Company or one of its
subsidiaries has good, clear and marketable title to all the properties and
assets either reflected in the latest audited balance sheet included in such
SEC Documents as being owned by the Company or one of its subsidiaries or
acquired after the date thereof, which are material to the Company's business
on a consolidated basis (except properties sold or otherwise disposed of since
the date thereof
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in the ordinary course of business), free and clear of all claims, liens,
charges, security interests or encumbrances of any nature whatsoever, except
(i) as set forth on SCHEDULE 3.7, (ii) statutory liens securing payments not
yet due and (iii) such imperfections or irregularities in title or such claims,
liens, charges, security interests or encumbrances as do not materially affect
the use of the properties or assets subject thereto or affected thereby or
otherwise materially affect the Company's business operations at such
properties.
3.8 REAL ESTATE LEASES. SCHEDULE 3.8 hereof sets forth a list of
(a) all leases and subleases under which the Company or its subsidiaries is
lessor or lessee of any real property together with all amendments,
supplements, nondisturbance agreements and other agreements that are in effect
as of the date of this Agreement; (b) all material options held by the Company
or its subsidiaries or contractual obligations on the part of the Company or
its subsidiaries to purchase or acquire any interest in real property; and (c)
all options granted by the Company or its subsidiaries or contractual
obligations on the part of the Company or its subsidiaries to sell or dispose
of any material interest in real property. There exists no default or event of
default, violation, occurrence, condition or act on the part of the Company or
any subsidiary, or, to the best knowledge of the Company, on the part of any
other party thereto, which, with or without the giving of notice or lapse of
time or both, would have a material adverse effect upon the condition
(financial or otherwise), properties, assets, business, results of operations
or prospects of the Company and its subsidiaries, taken as a whole. The
Company has not granted any liens on any of the leasehold interests set forth
on SCHEDULE 3.8 except for (i) liens reflected in the balance sheet included in
the July 3, 1994 Form 10-Q, (ii) liens consisting of zoning or planning
restrictions, easements, permits and other restrictions or limitations on the
use of real property which do not materially detract from the value of, or
materially impair the use of, such property by the Company or its subsidiaries
in the operation of their respective businesses, (iii) liens for current taxes,
assessments or governmental charges or levies on property not yet delinquent,
(iv) statutory liens securing payments not yet due and (v) liens which do not
materially affect the operation of the business of the Company and any
subsidiaries, taken as a whole, or as may be set forth on SCHEDULE 3.8.
3.9 COMPLIANCE WITH LAWS. The Company and its subsidiaries have
complied with and are not in violation of applicable federal, state or local
statutes, laws and regulations, including, without limitation, any applicable
building, zoning, health, sanitation, safety, labor relations or other law,
ordinance or regulation, other than violations, if any, which would not have a
material adverse effect on the condition (financial or otherwise), properties,
assets, business, results of operations or prospects of the Company and its
subsidiaries, taken as a whole. Neither the Company nor any subsidiary has
failed to obtain any license, permit, franchise or other governmental
authorization which is applicable to its respective operations, except for
licenses, permits, franchises or other governmental authorizations the failure
of which to obtain would not have a material adverse effect on the condition
(financial or otherwise), properties, assets, business, results of operation or
prospects of the Company and its subsidiaries, taken as a whole.
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3.10 ENVIRONMENTAL PROTECTION. There are no pending or, to the
best knowledge of the Company, threatened, actions or claims against the
Company or any of its current or, to the best knowledge of the Company, former
subsidiaries arising out of the presence or release into the environment of any
chemicals, pollutants or contaminants related to the operations of the Company
or its current or former subsidiaries or arising in connection with any of the
properties owned by them or as to which the Company or any subsidiary or former
subsidiary of the Company is or could be a potentially responsible party under
applicable law, except for such matters which would not have a material adverse
effect on the condition (financial or otherwise), properties, assets, business,
results of operation or prospects of the Company and its subsidiaries, taken as
a whole.
3.11 NO UNDISCLOSED LIABILITIES. There is no liability or
obligation of the Company or any subsidiary of any nature, whether absolute,
accrued, contingent or otherwise, which, individually or in the aggregate, is
material to the Company and its subsidiaries, taken as a whole, other than (i)
the liabilities and obligations reflected on the balance sheet contained in the
July 3, 1994 Form 10-Q and (ii) all liabilities and obligations of the Company
incurred since July 3, 1994 in the ordinary course of business. There is no
prepayment premium with respect to any of the Company's outstanding
indebtedness for borrowed money.
3.12 FEES. Except as described on SCHEDULE 3.12 hereto, neither
the Company nor any of its subsidiaries has paid or become obligated to pay any
fee or commission to any broker or finder in connection with the transactions
contemplated hereby.
3.13 ABSENCE OF MATERIAL ADVERSE CHANGES. Since July 3, 1994,
neither the Company nor any of its subsidiaries has undergone or suffered any
changes in its condition (financial or otherwise), properties, assets,
business, results of operations or prospects which have been, or may reasonably
be anticipated to be, individually or in the aggregate, adverse to the Company,
except for such changes which, individually or in the aggregate, would not have
a material adverse effect on the condition (financial or otherwise),
properties, assets, business or results of operation of the Company and its
subsidiaries, taken as a whole.
3.14 FAIRNESS OPINION. The Board of Directors of the Company has
received an opinion from Smith Barney Inc. ("Smith Barney") to the effect that,
as of the date hereof, the Merger Price is fair, from a financial point of
view, to the holders of the Shares (the "Fairness Opinion").
3.15 SHAREHOLDER AGREEMENT. A majority of the members of the
Company's Board of Directors that have not been designated by HM Holdings, Inc.
("HMH") have taken all action necessary to approve, including in accordance
with Section 3.2(b) of that certain Stockholder Agreement between HMH and the
Company dated as of August 1, 1991, (i) HMH's grant of an option and
irrevocable proxy to Parent and Purchaser pursuant to that Shareholder
Agreement by and among Parent, Purchaser and HMH dated as of the date hereof
and as set forth as SCHEDULE 3.15 (the "Shareholder Agreement") and (ii) the
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performance by HMH of its obligations under the terms and conditions of the
Shareholder Agreement in effect as of the date hereof.
ARTICLE IV
COVENANTS
4.1 CONDUCT OF THE BUSINESS OF THE COMPANY PRIOR TO THE EFFECTIVE
TIME. The Company agrees that, prior to the Effective Time and except as
described on SCHEDULE 4.1, otherwise consented to or approved in writing by
Purchaser or expressly permitted by this Agreement:
(a) the businesses of the Company and its
subsidiaries shall be conducted in all material respects only in, the
Company and its subsidiaries shall not take any action except in, and
the Company and its subsidiaries shall maintain their facilities in,
the ordinary course of business and consistent with immediate past
practice;
(b) the Company shall not (i) amend its Certificate
or By-Laws, (ii) issue or sell any securities (including any options,
warrants, convertible or exchangeable securities, stock appreciation
rights, phantom stock or similar rights) or otherwise change the
number of authorized, issued or outstanding shares of its capital
stock other than the issuance of Shares upon exercise of any Company
Options, (iii) declare, set aside or pay any dividend or other
distribution or payment (whether in cash, stock or property) with
respect to, or make any direct or indirect redemption, retirement,
purchase or other acquisition of any shares of capital stock or
options issued by, the Company (except as contemplated by Section
1.5); or (iv) enter into any arrangement or contract with respect to
the purchase or voting of shares of its capital stock, or adjust,
split, combine or reclassify any of its capital stock or other
securities;
(c) the Company shall, and shall cause each of its
subsidiaries to, (i) use its best efforts to preserve intact its
business organization and operations, keep available the services of
its operating personnel, and preserve the goodwill of those having
business relationships with each of them, (ii) make whatever repairs
and maintenance that may be necessary to maintain their properties in
substantially their present condition and (iii) conduct relations with
its employees, including, without limitation, termination and hiring
practices, only in the ordinary course of business and consistent in
all material respects with immediate past practice; PROVIDED, however,
that any inability of the Company or any of its subsidiaries to keep
available the services of such operating personnel or to maintain any
such business relationship despite its aforesaid best efforts to do so
shall not constitute a breach of this Section 4.1(c);
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(d) the Company or any of its subsidiaries will not,
directly or indirectly, (i) increase the compensation payable or to
become payable by it to any of its officers, directors or employees
(except increases for non-officer employees in the ordinary course of
business consistent in all material respects with immediate past
practice or as required by collective bargaining agreements), (ii)
make any payment or provision (except as required by existing plans or
agreements, disclosed on SCHEDULE 4.1(d) or contemplated by Section
1.5) with respect to, or adopt or amend, any bonus, profit sharing,
pension, retirement, severance (including "golden parachutes"),
deferred compensation, employment or other payment plan, agreement or
arrangement for the benefit of employees of the Company or any of its
subsidiaries, (iii) grant any stock options or stock appreciation
rights, (iv) enter into or amend any employment or consulting
agreement, except that nothing contained in this clause (iv) shall
prohibit the Company from terminating a consulting agreement with any
person who is not a senior management employee of the Company, (v)
make any loan or advance to, or enter into any written contract, lease
or commitment with, any officer or director of the Company or its
subsidiaries, other than routine advances to employees in the ordinary
course of business and consistent in all material respects with
immediate past practice, (vi) encumber or pledge any of the respective
assets of the Company or any of the subsidiaries, or make any
acquisition of assets or securities, except in the ordinary course of
business and consistent in all material respects with immediate past
practice, (vii) incur any long-term or short-term debt for borrowed
money from any bank or lending institution, except pursuant to
existing credit agreements in the ordinary course of business and
consistent in all material respects with immediate past practice,
(viii) assume, guarantee, endorse or otherwise become responsible for
the obligations of any other individual, firm or corporation or make
any loans or advances to any individual, firm or corporation, except
in the ordinary course of business and consistent in all material
respects with immediate past practice, (ix) enter into any contract or
agreement or effect any transaction or commitment relating to the
assets or business (including the acquisition or disposition of any
substantial assets) of the Company or relinquish any contract or other
right which, in each case, is material to the Company, other than the
transactions, commitments and relinquishments disclosed on SCHEDULE
4.1 or contemplated by this Agreement, (x) enter into any material new
leases for real property or terminate any of the lease agreements
identified on SCHEDULE 3.8 except in the ordinary course of business
and consistent in all material respects with immediate past practice
or (xi) make any loan, or make any distribution or other transfer of
assets to or from the Company or any of its subsidiaries from or to
any shareholder or Affiliate (which term for purposes of this
Agreement shall have the meaning set forth in Rule 405 of the
Commission promulgated under the Securities Act) of the Company or of
any subsidiary, except for any distribution or transfer to or from the
Company or any of its wholly owned subsidiaries from or to any wholly
owned subsidiary;
(e) the Company shall use its best efforts to cause
its current insurance (or reinsurance) policies not to be cancelled or
terminated or any of the coverage
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thereunder to lapse, unless simultaneously with such termination,
cancellation or lapse replacement policies providing coverage
substantially similar to the coverage under the cancelled, terminated
or lapsed policies for substantially similar premiums are in full
force and effect; or
(f) authorize or enter into an agreement to do any of
the things not permitted under this Section 4.1.
Notwithstanding the foregoing, the Company may incur costs, expenses,
obligations or liabilities in connection with any Qualifying
Acquisition Proposal (as defined in Section 4.9) including, without
limitation, costs, expenses, obligations or liabilities incurred in
the prosecution of, or defense against, any cause of action related
thereto or any costs, expenses, obligations or liabilities incurred
from activities permitted by Section 4.9.
4.2 ACCESS AND INFORMATION. The Company will afford to Parent and
its agents, accountants, representatives and representatives of its potential
financing sources such access during normal business hours throughout the
period prior to the Effective Time to the Company's properties, contracts,
commitments, books, records, personnel and to such other information concerning
its business as Parent reasonably requests. Parent shall, and shall cause
each of its agents, accountants and representatives of its potential financing
sources to, hold in confidence all such non-public information in accordance
with the provisions of the Letter Agreement between Smith Barney Inc., as agent
for the Company, and Parent, dated June 21, 1994 (the "Letter Agreement"), and
if this Agreement is terminated, Parent and its agents, accountants and
representatives of its potential financing sources shall redeliver or otherwise
provide for all such information and other materials as required pursuant to
the Letter Agreement.
4.3 CERTAIN FILINGS, CONSENTS AND ARRANGEMENTS. Parent, Purchaser
and the Company will (a) promptly, but in any event within fifteen (15) days,
make their respective filings, and will thereafter use their best efforts
promptly to make any required submissions, under the HSR Act with respect to
the Merger and the other transactions contemplated by this Agreement and (b)
cooperate with one another (i) in promptly determining whether any filings are
required to be made or consents, approvals, permits or authorizations are
required to be obtained under any other federal, state or foreign law or
regulation and (ii) in promptly making any such filings, furnishing information
required in connection therewith and seeking timely to obtain any such
consents, approvals, permits or authorizations.
4.4 ACTIONS OF DIRECTORS AND SHAREHOLDERS. The Company shall take
all action necessary in accordance with the NYBCL and its Certificate and
By-Laws to convene promptly a special meeting of its shareholders (the "Special
Meeting") to consider and vote upon this Agreement and the Merger, subject to
the exercise by the Board of Directors of the Company of its fiduciary duties
consistent with the provisions of Section 4.9. The Merger Proxy Statement
shall contain the recommendation of the Board of Directors of the Company
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in favor of the Merger and the adoption and approval of this Agreement, subject
to the Board of Directors' exercise of its fiduciary duties consistent with the
provisions of Section 4.9. The Company shall, if and to the extent requested
by Purchaser, use all reasonable efforts to solicit from shareholders of the
Company proxies in favor of such adoption and approval and shall take any other
reasonable action. The Company shall use its best efforts to take all action
necessary for the Merger not to be subject to any state anti-takeover statute.
At the Special Meeting, all of the Shares then owned by Parent, Purchaser or
any other direct or indirect subsidiary of Parent, if any, will be voted in
favor of adoption of this Agreement.
4.5 MERGER PROXY STATEMENT. The Company shall use all reasonable
efforts to prepare and file with the Commission as promptly as practicable, and
in any event within fifteen (15) business days after the date of this
Agreement, and have cleared by the Commission and promptly thereafter mail to
its shareholders the Merger Proxy Statement, which shall include, subject to
the exercise by the Board of Directors of the Company of its fiduciary duties
consistent with the provisions of Section 4.9, a recommendation by the Board of
Directors that the Company's shareholders adopt and approve this Agreement and
which shall include all information required under applicable laws to be
furnished to the stockholders of the Company in connection with the
transactions contemplated hereby, shall comply as to form in all material
respects with all applicable requirements of federal securities laws and shall
be in form reasonably satisfactory to Purchaser and its counsel. The Company
shall request Smith Barney to prepare and, subject to Smith Barney's consent,
shall include in the Merger Proxy Statement a letter from Smith Barney, dated
the date of the Merger Proxy Statement, confirming its Fairness Opinion. The
Merger Proxy Statement shall include all information and statements which the
Company or the Purchaser reasonably believes to be necessary for inclusion
therein but shall not, in the reasonable opinion of the Company or the
Purchaser, include any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. The Company shall notify Purchaser promptly of the
receipt by it of any comments of the Commission and of any requests for
supplements to the Merger Proxy Statement and will supply Purchaser with copies
of all correspondence between it and its representatives, on the one hand, and
the Commission or the members of its staff, on the other hand, with respect to
the Merger Proxy Statement. The Company shall use its best efforts to obtain
and furnish the information required to be included in the Merger Proxy
Statement, and the Company, after consultation with Purchaser, shall use its
best efforts to respond promptly to any comments made by the Commission with
respect to the Merger Proxy Statement and any preliminary version thereof.
Parent, Purchaser and the Company will cooperate with each other in the
preparation of the Merger Proxy Statement; without limiting the generality of
the foregoing, Parent and Purchaser will furnish to the Company in writing the
information relating to Parent and Purchaser required by the Exchange Act to be
set forth in the Merger Proxy Statement.
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4.6 Indemnification and Insurance.
-----------------------------
4.6.1 BY-LAWS. The by-laws of the Surviving Corporation will
contain the provisions with respect to indemnification set forth in Article
Ninth of the Certificate and Article XI of the By-laws, as in effect on the
date hereof, which provisions will not be amended for a period of six years
from the Effective Time in any manner that would adversely affect the rights
thereunder of any person who, immediately prior to the Effective Time, is a
current or former director, officer, employee or agent of the Company, except
if such amendment is required by law.
4.6.2 PARENT INDEMNITY. From and after the Effective Time,
Parent shall indemnify, defend and hold harmless each person who, immediately
prior to the Effective Time, is a current or former officer or director of the
Company or any of its subsidiaries or who prior to the Effective Time acted as
a fiduciary under any employee benefit plan (each an "Indemnified Party")
against all losses, claims, damages or liabilities arising out of acts or
omissions occurring at or prior to the Effective Time to the fullest extent
permitted under the NYBCL and the Certificate or By-laws (to the extent
consistent with applicable law), including, without limitation, provisions
relating to advances of expenses incurred in the defense of any action or suit;
PROVIDED, HOWEVER, that such Indemnified Parties as a group may retain only one
law firm to represent them in any jurisdiction with respect to each such matter
unless there is, under applicable standards of professional conduct, a conflict
on any significant issues between the positions of any two or more Indemnified
Parties. Without limiting the foregoing, Parent shall periodically advance
expenses as incurred with respect to the foregoing to the fullest extent
permitted under applicable law provided that the Indemnified Party to whom the
expenses are advanced provides an undertaking to repay such advance if it is
ultimately determined that such person is not entitled to indemnification.
4.6.3 INSURANCE. Prior to the Effective Time, Parent or
Purchaser shall have purchased a noncancellable run-off policy for officers'
and directors' liability insurance (the "D&O Policy") providing such coverage
for persons who, immediately prior to the Effective Time, were current or
former directors or officers of the Company, which insurance shall commence as
of, and continue for a period of six years after, the Effective Time and shall
be no less favorable in scope and amount of coverage than the Company's
existing officers' and directors' liability insurance and provided by an
insurer of no lesser financial standing than the Company's existing insurer;
PROVIDED, HOWEVER, that Parent and Purchaser shall have no obligation under
this Section to pay more than two hundred twenty-five thousand dollars
($225,000) (the "D&O Limit"), and PROVIDED FURTHER that if the cost of the D&O
Policy exceeds the D&O Limit, the Company will be entitled to modify, in its
sole discretion, the terms and conditions of the D&O Policy such that the cost
of the D&O Policy does not exceed the D&O Limit.
4.6.4 DETERMINATION. Any determination which is required to
be made with respect to whether an Indemnified Party's conduct complies with
the standards set forth under New York law, the Certificate or the By-laws and
any decision which is made as to
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the necessity for such determination shall be made by independent counsel
approved by the Indemnified Party; PROVIDED, HOWEVER, that the Indemnified
Parties as a group shall designate one independent counsel with respect to each
such matter. The fees and expenses of such counsel will be paid by Parent or
the Surviving Corporation promptly after the submission of invoices by such
counsel in accordance with its standard practices.
4.7 EMPLOYEE BENEFIT MATTERS. (a) Parent will provide, or cause
the Surviving Corporation to provide, employees of the Company with pension,
health, medical, disability, life insurance, severance and other similar
employee benefits under employee benefit plans (as such term is defined under
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended), immediately following the Effective Time, which are competitive with
industry practice. Notwithstanding the foregoing, except as otherwise
expressly contemplated by this Agreement, nothing herein shall require the
Surviving Corporation to maintain any particular plan or arrangement following
the Effective Time or shall be construed to obligate Parent or the Surviving
Corporation to issue to employees of the Company, or adopt any plans or
arrangements to provide for the issuance of, any shares of its capital stock or
any options, warrants, stock appreciation rights or other rights in respect of
any shares of its capital stock or any securities convertible into or
exchangeable for such shares.
(b) From and after the Effective Time, Parent agrees
to cause the Surviving Corporation to honor in accordance with the terms
thereof the employment, severance, consulting, retirement and deferred
compensation agreements or arrangements existing on the date hereof to which
the Company or any subsidiary is a party, including, without limitation, the
Company's non-qualified deferred compensation plan and its non-qualified
retirement plan. Prior to the Effective Time, Parent agrees not to take or to
permit Purchaser or any other affiliate of Parent to take any action
inconsistent with the immediately preceding sentence.
(c) The Company will terminate or amend, in a manner
satisfactory to Parent and certain holders of Company Option, the Company
Options held by such persons; PROVIDED, HOWEVER, that such termination or
amendment will take effect immediately prior to Effective Time. The Company
agrees to take all action necessary to fully vest the restricted stock held by
the Company's Chief Executive Officer and all Company Options issued and
outstanding as of the date hereof, in each case effective no later than
immediately prior to the Effective Time.
4.8 ADDITIONAL AGREEMENTS. Upon the terms and subject to the
conditions herein provided, each of the parties hereto agrees to use its best
efforts to take or cause to be taken all action, to do or cause to be done, and
to assist and cooperate with the other party hereto in doing, all things
necessary, proper or advisable under applicable laws and regulations, to
consummate and make effective, in the most expeditious manner practicable, the
transactions contemplated hereby, including, but not limited to, (i) the
obtaining of all necessary actions or inactions, waivers, consents and
approvals from the applicable Governmental Entities and the making of all
necessary registrations and filings, (ii) the obtaining of all necessary
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consents, approvals or waivers from third parties, (iii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
hereby and (iv) the execution and delivery of such instruments, and the taking
of such other actions as the other party hereto may reasonably require in order
to carry out the intent of this Agreement and any agreements entered into
between the parties pursuant to this Agreement. If, at any time after the
Effective Time, the Surviving Corporation considers or is advised that any
deeds, bills of sale, assignments, assurances or any other actions or things
are necessary or desirable to vest, perfect or confirm of record or otherwise
in the Surviving Corporation its right, title or interest in, to or under any
of the rights, properties or assets of either of the Constituent Corporations
acquired or to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger or otherwise to carry out the purposes of this
Agreement, the officers and directors of the Surviving Corporation will be
authorized to execute and deliver, in the name and on behalf of each of the
Constituent Corporations or otherwise, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of
each of the Constituent Corporations or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under such rights, properties or assets in
the Surviving Corporation or otherwise to carry out the purposes of this
Agreement.
4.9 NO SOLICITATION. The Company shall immediately cease, and
cause each of its, and its subsidiaries', representatives, agents and advisors
to terminate, any existing activities, discussions or negotiations previously
conducted with any parties other than Parent and Purchaser with respect to any
Alternative Transaction (as defined in Section 6.10); and the Company shall
not, and shall cause each of its, and its subsidiaries', officers, directors,
representatives, agents and advisors not to, solicit or encourage inquiries or
proposals with respect to, or furnish any non-public information relating to or
participate in any negotiations or discussions concerning, any proposal
regarding an acquisition or purchase of all or a substantial portion of the
assets of, or a substantial equity interest in, the Company or any of its
subsidiaries or any merger or other business combination with the Company or
any of its subsidiaries or any recapitalization involving the Company or any of
its subsidiaries resulting in an extraordinary dividend or distribution to the
Company's shareholders or a self-tender for or the redemption of some or all of
the Shares (hereinafter collectively referred to as an "Acquisition Proposal")
other than as contemplated by this Section 4.9. Notwithstanding the
immediately preceding sentence, neither the Company nor its Board of Directors
shall be prohibited from (i) engaging in discussions or negotiations with a
third party which has made in writing a bona fide Acquisition Proposal which
satisfies the conditions set forth in the proviso of this sentence (a
"Qualifying Acquisition Proposal") and thereafter providing to such third party
information previously provided or made available to Parent, provided the third
party shall have entered into a confidentiality agreement substantially similar
to the Letter Agreement, (ii) following receipt of a Qualifying Acquisition
Proposal, taking and disclosing to its shareholders a position contemplated by
Rule 14e-2(a) under the Exchange Act or otherwise making disclosure of the
Qualifying Acquisition Proposal to its shareholders or (iii) following receipt
of a Qualifying Acquisition Proposal, withdrawing its
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recommendation referred to in Section 4.4 or adjourning or otherwise postponing
the Special Meeting; PROVIDED, HOWEVER, that the Company shall engage, and
shall permit its, and its subsidiaries', officers, directors, representatives,
agents and advisors to engage, in any of the activities referred to in clauses
(i) through (iii) of this sentence only to the extent that the Board of
Directors of the Company (or an authorized committee thereof) shall have
determined in good faith that such action is required under the fiduciary
duties owed by the Board of Directors of the Company to the shareholders of the
Company on the basis of a written opinion from the Company's counsel and a
written analysis of the Acquisition Proposal by its financial advisor Smith
Barney which analysis shall include a comparison of the financial terms of such
Acquisition Proposal and the transactions contemplated in this Agreement. The
Company shall notify Parent promptly if any Acquisition Proposal is received
by, or any such negotiations or discussions are sought to be initiated with,
the Company or any of its subsidiaries regarding an Acquisition Proposal and
shall disclose to Parent the identity of the third party making such
Acquisition Proposal and the terms and conditions thereof.
4.10 FINANCING. Parent and Purchaser shall each use its best
efforts to obtain within ten (10) business days after the date of this
Agreement a commitment letter from Chemical Bank, N.A. or other lender
reasonably satisfactory to Parent (the "Revolving Credit Facility Letter")
regarding between twenty million dollars ($20,000,000) to twenty-five million
dollars ($25,000,000) under a revolving credit facility (the "Revolving Credit
Facility" and together with the Senior Note Financing, the Discount Note
Financing and the Parent Financing, the "Financing"). Parent and Purchaser
shall each use its best efforts to complete the negotiation of definitive
agreements (collectively, the "Definitive Financing Agreements") relating to
the Financing and containing customary terms and conditions; and Parent or
Purchaser shall deliver to the Company copies of such agreements promptly after
they have been executed. In the event that Parent or Purchaser learns that any
portion of the financing to be made available by any party which has committed
to provide financing to Parent or Purchaser becomes unavailable or is likely to
become unavailable, regardless of the reason therefor, Parent and Purchaser
will each as promptly as practicable so notify the Company in writing and will
use its best efforts to obtain alternative financing from other sources. Each
of Parent and Purchaser shall use its best efforts to satisfy, as promptly as
practicable, all requirements of its agreements relating to the Financing that
are conditions to consummating the Financing and to drawing down the cash
proceeds thereunder. The Company covenants and agrees to cooperate with Parent
and Purchaser in negotiating (to the extent requested by Parent and Purchaser)
the Definitive Financing Agreements and in furnishing all information
reasonably required in connection with the negotiation and implementation
thereof.
4.11 NOTICE OF ADVERSE CHANGES. The Company will promptly advise
Parent and Purchaser in writing, and keep Parent and Purchaser fully informed,
of (i) any inability or perceived inability by the Company to perform or comply
with the terms or conditions of this Agreement or (ii) any event which may
reasonably be expected to result in any of its representations and warranties
set forth in this Agreement being or becoming untrue, or in
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any of the conditions to the Merger set forth in Article V not being satisfied,
or in a violation of any provision of this Agreement.
4.12 PUBLICITY. The initial press release announcing this
Agreement will be a joint press release substantially in the form set forth on
SCHEDULE 4.12, and thereafter the Company and Parent will consult with each
other prior to issuing any press releases or otherwise making public statements
with respect to the transactions contemplated hereby and in making any filings
with any Governmental Entity or with any national securities exchange with
respect thereto.
ARTICLE V
CONDITIONS
5.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The obligations of
Parent, Purchaser and the Company to consummate the Merger are subject to the
satisfaction of the following conditions, none of which may be waived:
5.1.1 SHAREHOLDER APPROVAL. Holders of at least two-thirds
of the Shares shall have voted in favor of the adoption of this Agreement in
accordance with the applicable provisions of the NYBCL.
5.1.2 INJUNCTIONS; ILLEGALITY. The consummation of the
Merger shall not be prohibited by any order, injunction, decree or ruling of a
court of competent jurisdiction or any domestic Governmental Entity (each party
agreeing to use its respective best efforts to obtain the stay or removal of
any of the foregoing), and there shall not have been any statute, rule or
regulation enacted, promulgated or deemed applicable to the Merger by any
Governmental Entity which would prevent the consummation of the Merger.
5.1.3 GOVERNMENTAL APPROVALS AND CONSENTS. All approvals of
or filings with any Governmental Entity required to permit the consummation of
the Merger shall have been obtained.
5.1.4 NOTICE FROM PAYING AGENT. Notice shall have been
received by the Company from the Paying Agent stating that the necessary funds
for payment of Shares shall have been made available to the Paying Agent, as
required by Section 1.4.
5.2 CONDITIONS TO THE OBLIGATIONS OF PARENT AND PURCHASER. The
obligations of Parent and Purchaser to consummate the Merger are further
subject to the satisfaction, at or prior to the Closing, of the following
conditions, any one or more of which may be waived by Parent and Purchaser:
5.2.1 FINANCING. Parent and Purchaser shall have obtained
the proceeds of the financing necessary to consummate the transactions
contemplated by this Agreement on terms and conditions reasonably satisfactory
to Parent. With respect to the Senior Note Financing,
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the Discount Note Financing, the Revolving Credit Facility and the Parent
Financing, the condition set forth in this Section 5.2.1 shall be satisfied if
Parent and Purchaser shall be able to obtain such financing on terms and
conditions substantially similar to those set forth in the Bear Stearns Letter,
the Revolving Credit Facility Letter and the 399 Ventures Letter, respectively.
5.2.2 ACCURACY OF THE COMPANY'S REPRESENTATIONS. The
representations and warranties of the Company contained herein shall be true
and correct in all material respects as of the date hereof and as of the
Closing with the same effect as though all such representations and warranties
had been made as of the Closing, except (x) for any such representations and
warranties made as of a specified date, which shall be true and correct as of
such date, or (y) as expressly contemplated by this Agreement.
5.2.3 ABSENCE OF CERTAIN CHANGES. Since July 3, 1994, there
shall not have been any material adverse change in the business, assets,
financial condition or results of operations of the Company and its
subsidiaries, considered as a whole.
5.2.4 SATISFACTION OF THE COMPANY'S COVENANTS. Each and all
of the agreements and covenants of the Company to be performed and complied
with pursuant to this Agreement prior to the Closing shall have been duly
performed and complied with in all material respects.
5.2.5 CERTAIN THIRD PARTY AND GOVERNMENTAL APPROVALS AND
CONSENTS. All approvals or consents of, waivers by or filings with third
parties, including without limitation Governmental Entities, required to permit
the Company to operate its business in the ordinary course immediately after
the Effective Time substantially as it shall have been operated prior to the
Effective Time, shall have been obtained, except for those approvals or filings
which, if not obtained or made prior to the Effective Time, would not have a
material adverse effect on the Company and its subsidiaries, taken as a whole.
For purposes of this provision, the inability to transfer or otherwise retain
liquor licenses for restaurants which, during the fiscal year ending October 2,
1994, provided in the aggregate six percent (6%) or more of the consolidated
revenue of the Company and its subsidiaries, taken as a whole, constitutes a
material adverse effect.
5.2.6 DISSENTING SHARES. There shall not be more than
587,000 Dissenting Shares as of the Closing.
5.2.7 CERTIFICATES. The Company will furnish Parent and
Purchaser with such certificates of its officers or others and such other
documents to evidence fulfillment of the conditions set forth in this Section
5.2 as Parent and Purchaser may reasonably request.
5.3 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligations
of the Company to consummate the Merger are further subject to the
satisfaction, at or prior to the
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Closing, of the following conditions, any one or more of which may be waived by
the Company:
5.3.1 FAIRNESS OPINION. The Company shall have received
written confirmation from Smith Barney, dated as of the date the Merger Proxy
Statement, which satisfies the criteria set forth in Section 4.5, is first to
be mailed to the Company's shareholders, that Smith Barney has not withdrawn
or, in any material respect, amended or modified the Fairness Opinion;
PROVIDED, HOWEVER, that the Company shall be deemed to waive the condition set
forth in this Section by mailing the Merger Proxy Statement without such
confirmation from Smith Barney.
5.3.2 ACCURACY OF PARENT AND PURCHASER'S REPRESENTATIONS.
The representations and warranties of Parent and Purchaser contained herein
shall be true and correct in all material respects as of the date hereof and as
of the Closing with the same effect as though all such representations and
warranties had been made as of the Closing, except (x) for any such
representations and warranties made as of a specified date, which shall be true
and correct as of such date, or (y) as expressly contemplated by this
Agreement.
5.3.3 SATISFACTION OF PARENT AND PURCHASER'S COVENANTS. Each
and all of the agreements and covenants of Parent and Purchaser to be performed
and complied with pursuant to this Agreement prior to the Closing shall have
been duly performed and complied with in all material respects.
5.3.4 CERTIFICATES. Parent and Purchaser will furnish the
Company with such certificates of its officers or others and such other
documents to evidence fulfillment of the conditions set forth in this Section
5.3 as the Company may reasonably request.
ARTICLE VI
MISCELLANEOUS
6.1 TERMINATION. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned (a) by the mutual consent of the boards of
directors of Parent, Purchaser and the Company; (b) by the Company, if Parent
or Purchaser is in material breach of any of the representations and
warranties, covenants or obligations contained in this Agreement or the Letter
Agreement and, in the case of a material breach of any covenant or obligation,
such breach has not been cured within ten (10) business days after the Company
has notified Parent of such breach; (c) by the Parent or Purchaser, if the
Company is in material breach of any representations and warranties, covenants
or obligations contained in this Agreement and, in the case of a material
breach of any covenant or obligation, such breach has not been cured within ten
(10) business days after Parent has notified the Company of such breach; (d) by
either Parent and Purchaser, on the one hand, or the Company, on the other
hand, if the Merger is not consummated prior to December 31, 1994 (the
"Expiration Date"); PROVIDED, HOWEVER, that the right to terminate this
Agreement under this Section 6.1(d) shall not be available to any party whose
failure to fulfill any
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obligation under this Agreement has been the primary cause of, or primarily
results in, the failure of the Merger to have been consummated within such
period; (e) by either Parent and Purchaser, on the one hand, or the Company, on
the other hand, if the holders of at least two-thirds of the Shares fail to
adopt this Agreement at the Special Meeting as required by applicable law; (f)
by either Parent and Purchaser, on the one hand, or the Company, on the other
hand, if either one is prohibited by an order or injunction (other than an
order or injunction issued on a temporary or preliminary basis) of a court of
competent jurisdiction from consummating the Merger and all means of appeal and
all appeals from such order or injunction have been finally exhausted; (g) by
the Company, if the Company receives a Qualifying Acquisition Proposal prior to
shareholder adoption of this Agreement; PROVIDED, HOWEVER, that a condition to
the effectiveness of the termination of this Agreement and the abandonment of
the Merger pursuant to clause (g) of this sentence is the payment of the Fee
and Expenses (each as defined in Section 6.10); (h) by the Parent or Purchaser
upon at least five (5) business days' notice, if within ten (10) business days
after the Board of Directors of the Company (x) withdraws or modifies its
recommendation referred to in Section 4.4 or (y) adjourns or otherwise
postpones the Special Meeting, the Board of Directors of the Company has not
renewed its recommendation in favor of the Merger and the adoption and approval
of this Agreement; or (i) by the Company, if the condition set forth in Section
5.3.1 shall not have been satisfied. In the event of any termination and
abandonment pursuant to this Section 6.1, no party hereto (or any of its
directors or officers) will have any liability or further obligation to any
other party to this Agreement, except for obligations in this Section 6.1, 6.10
and under the last sentence of Section 4.2 and except that nothing herein will
relieve any party from liability for any breach of this Agreement.
Notwithstanding clause (d) of the second preceding sentence, if the conditions
set forth in Sections 5.1.2, 5.2.2, 5.2.3 and 5.2.4 have been satisfied, either
the Company or Parent may extend the Expiration Date by up to thirty (30) days
if the condition set forth in Section 5.2.5 has not been satisfied due to the
inability to transfer or otherwise retain liquor licenses.
6.2 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
The representations and warranties or agreements in this Agreement will
terminate at the Effective Time or upon the earlier termination of this
Agreement pursuant to Section 6.1, as the case may be; PROVIDED, HOWEVER, that
if the Merger is consummated, Sections 1.5, 2.4, 4.6, 4.7 and 4.8 will survive
the Effective Time to the extent contemplated by such Sections, and PROVIDED
FURTHER that Section 6.10, the Letter Agreement, the first sentence of Section
6.9 and the last sentences of Sections 4.2 and 6.12 will in all events survive
any termination of this Agreement.
6.3 WAIVER AND AMENDMENT. Subject to the applicable provisions of
the NYBCL, any provision of this Agreement may be waived at any time by the
party which is, or whose shareholders are, entitled to the benefits thereof,
and this Agreement may be amended or supplemented at any time, provided that no
amendment will be made after any shareholder adoption of this Agreement which
(i) alters or changes the Merger Price, (ii) alters or changes any term of the
certificate of the Surviving Corporation, or (iii) alters or changes any of the
terms or conditions of this Agreement, if such alteration or change would
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adversely affect the holders of any class or series of securities of either
Constituent Corporation, without further shareholder adoption. No such waiver,
amendment or supplement will be effective unless in a writing which makes
express reference to this Section 6.3 and is signed by the party or parties
sought to be bound thereby.
6.4 ENTIRE AGREEMENT. This Agreement contains the entire
agreement by and among Parent, Purchaser and the Company with respect to the
Merger and the other transactions contemplated hereby, and supersedes any prior
agreements among the parties with respect to such matters, other than the
Letter Agreement which remains in full force and effect.
6.5 APPLICABLE LAW. This Agreement will be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to the principles of conflict of laws thereof.
6.6 INTERPRETATION. For purposes of this Agreement, (a) a
"subsidiary" of a corporation means any corporation more than 50% of the
outstanding voting securities of which are directly or indirectly owned by such
other corporation, (b) the descriptive headings contained herein are for
convenience and reference only and will not affect in any way the meaning or
interpretation of this Agreement, (c) words in the singular include the plural
and vice versa, (d) masculine pronouns include feminine and neuter versions
thereof, and (e) references to Sections (other than Sections of the Exchange
Act and the NYBCL) and Schedules are references to Sections in and Schedules to
this Agreement.
6.7 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or sent by
overnight courier (providing proof of delivery) or by facsimile (with a copy
provided by overnight courier) to the parties as follows (or to such other
addresses and facsimile numbers as shall be specified by the parties by like
notice):
If to the Company to:
Ground Round Restaurants, Inc.
35 Braintree Office Hill Park
Braintree, MA 02184-9078
Fax: (617) 380-3207
Attention: Chairman, President and Chief Executive Officer
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With copies to:
Ground Round Restaurants, Inc.
35 Braintree Office Hill Park
Braintree, MA 02184-9078
Fax: (617) 380-3207
Attention: Frank M. Puthoff, Senior Vice President,
General Counsel and Secretary
and
Nutter, McClennen & Fish
One International Place
Boston, Massachusetts 02110-2699
Fax: (617) 973-9748
Attention: Constantine Alexander, Esq.
If to Parent or Purchaser to:
NEWCO
c/o 399 Ventures, Inc.
399 Park Avenue
New York, New York 10022
Fax: (212) 888-2940
Attention: Harold Rosser
With a copy to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022
Fax: (212) 446-4900
Attention: Kirk A. Radke, Esq.
6.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original but all of which
together will constitute but one agreement, and shall become effective when one
or more counterparts have been signed by each party and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart.
6.9 PARTIES IN INTEREST; ASSIGNMENT. Except for Sections 1.5,
4.1(d), 4.6 and 4.7 (which are intended to be for the benefit of the persons
referred to therein and their beneficiaries, and may be enforced by such
persons as intended third-party beneficiaries),
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this Agreement is not intended to nor will it confer upon any other person
(other than the parties hereto) any rights or remedies, and this Agreement is
binding upon and is solely for the benefit of the parties hereto and their
respective successors, legal representatives and assigns. Purchaser will have
the right (a) to assign to Parent or any direct or indirect wholly owned
subsidiary of Parent any and all rights and obligations of Purchaser under this
Agreement, including without limitation the right to substitute in its place
Parent or such a subsidiary as one of the Constituent Corporations in the
Merger (such subsidiary assuming all of the obligations of Purchaser in
connection with the Merger), provided that any such assignment will not relieve
Parent or Purchaser from any of its obligations hereunder, and (b) to transfer
to Parent or to any direct or indirect wholly owned subsidiary of Parent the
right to purchase Shares tendered pursuant to the Offer, provided that any such
transfer will not relieve Purchaser from any of its obligations hereunder.
6.10 EXPENSES. (a) The Company shall pay Parent a fee of three
million dollars ($3,000,000) (the "Fee") (i) if the Merger does not occur and
the Company consummates an Alternative Transaction (as hereinafter defined)
pursuant to a definitive agreement entered into within one year from the date
of this Agreement or (ii) prior to the Company's termination of this Agreement
pursuant to Section 6.1(g) or the Parent's or Purchaser's termination of the
Agreement pursuant to Section 6.1(h). As used herein, the term Alternative
Transaction means either (i) a transaction pursuant to which a person other
than Parent or its affiliates (a "Third Party") acquires more than 50% of the
Shares then outstanding, whether from the Company or pursuant to a tender offer
or exchange offer or otherwise, (ii) a merger or other business combination
involving the Company pursuant to which any Third Party acquires more than 50%
of the outstanding equity securities of the Company or the entity surviving
such merger or business combination, (iii) any other transaction pursuant to
which any Third Party acquires control of all or substantially all of the
Company's assets, (iv) a recapitalization of the Company resulting in
extraordinary dividends or distributions to the Company's shareholders or (v) a
self-tender for, or redemption of, in the aggregate during such one-year period
of more than ten percent of the Shares outstanding immediately prior to the
commencement of such initial tender or redemption; PROVIDED, HOWEVER, that the
term "Alternative Transaction" shall not include any acquisition of securities
by a broker-dealer in connection with a bona fide public offering of such
securities. The Fee shall be paid (x) within five (5) business days after the
consummation of an Alternative Transaction which satisfies the criteria set
forth in clause (i) of the first sentence of this Section 6.10(a) or (y)
immediately prior to the termination of this Agreement pursuant to Section
6.1(g) or Section 6.1(h). Notwithstanding any other provision of this Section
6.10(a), the Company shall have no obligation to pay Parent the Fee which would
otherwise be due pursuant to clause (i) of the first sentence of Section
6.10(a)(i) in the event that (x) this Agreement is terminated pursuant to
Section 6.1(a), (b) or (d) (but only if terminated by the Company under
circumstances in which (I) Parent's or Purchaser's failure to fulfill any
obligation under this Agreement, or the failure of the condition in Section
5.2.1 to be satisfied, has been the primary cause of, or primarily resulted in,
the failure of the Effective Time to occur on or before the date specified
therein, (II) as of the date of such termination, the conditions set forth in
Sections 5.2.2, 5.2.3 and 5.2.4 were
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satisfied, and (III) as of such date, Smith Barney has not withdrawn or, in any
material respect, amended or modified the Fairness Opinion) or (y) Parent and
Purchaser have elected not to consummate the Merger because of the failure of
the condition in Section 5.2.1 to be satisfied, PROVIDED that at such time
there was no reasonable basis to conclude that the other conditions set forth
in Sections 5.1 and 5.2 would not have been satisfied on or before the
Expiration Date.
(b) In the event that this Agreement is terminated,
the Company shall be responsible for its own expenses incurred in connection
with the transactions contemplated hereby. Except as otherwise provided in
Section 6.10(c), the Company will reimburse Purchaser for its expenses incurred
in connection with the transactions contemplated hereby ("Expenses") up to a
maximum of one million five hundred thousand dollars ($1,500,000) unless this
Agreement has been terminated under the circumstances delineated in the last
sentence of Section 6.10(a).
(c) Under the circumstances set forth in the next
following sentence, the Company and Parent shall bear responsibility for
Expenses as follows: (i) Parent shall be responsible for the first five
hundred thousand dollars ($500,000) of Expenses, (ii) the Company shall be
responsible to reimburse Parent for the next five hundred thousand dollars
($500,000) of Expenses, and (iii) the Company shall be responsible to reimburse
Parent for fifty percent (50%) of the next two million dollars ($2,000,000) of
Expenses; PROVIDED, HOWEVER, that under no circumstances shall the Company be
responsible to reimburse Parent for more than one million five hundred thousand
dollars ($1,500,000) of Expenses. The allocation of responsibility for
Expenses set forth in the immediately preceding sentence shall be applicable if
this Agreement is terminated pursuant to (x) Section 6.1(f) or (y) Section
6.1(d), PROVIDED, with respect to this clause (y), that the failure of the
Merger to be consummated prior to the Expiration Date has primarily resulted
from (I) the failure of the conditions set forth in either Section 5.1.1 or
Section 5.2.6 to be satisfied or waived, and in each case Smith Barney has not
withdrawn or, in any material respect, amended or modified the Fairness
Opinion, or (II) the failure of the condition set forth in Section 5.2.5 to be
satisfied is due to the inability to transfer or otherwise retain liquor
licenses as contemplated by Section 5.2.5 unless waived.
6.11 OBLIGATION OF PARENT. Whenever this Agreement requires
Purchaser to take any action, such requirement will be deemed to include an
undertaking on the part of Parent to cause Purchaser to take such action.
6.12 ENFORCEMENT OF THE AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties hereto (and
intended third-party beneficiaries as provided for herein) will be entitled to
an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the
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United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
6.13 SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other terms and provisions of this Agreement will nevertheless
remain in full force and effect. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
6.14 TAXES. If the Merger is consummated, any liability for any
tax imposed by any domestic or foreign taxing authority with respect to the
property of the Company due with respect to or as a result of the Merger shall
be borne by Parent and expressly shall not be a liability of the shareholders
of the Company.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in counterparts by their duly authorized officers all as of the day
and year first written above.
ATTEST: GRR, INC.
By /s/ Kirk A. Radke By /s/ Joseph Silvestri
--------------------------------- ---------------------------------------
Kirk A. Radke Joseph Silvestri
Assistant Secretary Vice President
GRR ACQUISITION CORP.
By /s/ Kirk A. Radke By /s/ Joseph Silvestri
--------------------------------- ---------------------------------------
Kirk A. Radke Joseph Silvestri
Assistant Secretary Vice President
GROUND ROUND RESTAURANTS, INC.
By /s/ Frank M. Puthoff By /s/ Michael P. O'Donnell
-------------------------------- -----------------------------------
Frank M. Puthoff Michael P. O'Donnell
Secretary Chairman, President and
Chief Executive Office
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TABLE OF CONTENTS
ARTICLE I THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1.1 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1.2 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1.3 Effect of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1.4 Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Consummation of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Payment for Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Closing of the Company's Transfer Books . . . . . . . . . . . . . . . . . . . . . 3
1.5 Stock Options and Related Matters . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6 Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER . . . . . . . . . . . 4
2.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Merger Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Consents and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . . 5
2.6 Financing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE
COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.4 Consents and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . . 7
3.5 Commission Filings and Financial Statements . . . . . . . . . . . . . . . . . . . 8
3.6 Governmental Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.7 Owned Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.8 Real Estate Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.9 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.10 Environmental Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.11 No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.12 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.13 Absence of Material Adverse Changes . . . . . . . . . . . . . . . . . . . . . . . 10
3.14 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.15 Shareholder Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(i)
31
ARTICLE IV COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.1 Conduct of the Business of the Company Prior to the Effective Time . . . . . . . . . . . . 11
4.2 Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.3 Certain Filings, Consents and Arrangements . . . . . . . . . . . . . . . . . . . . . . . . 13
4.4 Actions of Directors and Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.5 Merger Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.6 Indemnification and Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.6.1 By-laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.6.2 Parent Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.6.3 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.6.4 Determination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.7 Employee Benefit Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.8 Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.9 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.10 Financing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.11 Notice of Adverse Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.12 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE V CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.1 Conditions to Each Party's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.1.1 Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.1.2 Injunctions; Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.1.3 Governmental Approvals and Consents . . . . . . . . . . . . . . . . . . . . . . . . 19
5.1.4 Notice from Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.2 Conditions to the Obligations of Parent and Purchaser . . . . . . . . . . . . . . . . . . 19
5.2.1 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.2.2 Accuracy of the Company's Representations . . . . . . . . . . . . . . . . . . . . . 20
5.2.3 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.2.4 Satisfaction of the Company's Covenants . . . . . . . . . . . . . . . . . . . . . . 20
5.2.5 Certain Third Party and Governmental Approvals and Consents . . . . . . . . . . . . 20
5.2.6 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.2.7 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.3 Conditions to the Obligations of the Company . . . . . . . . . . . . . . . . . . . . . . . 20
5.3.1 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.3.2 Accuracy of Parent and Purchaser's Representations . . . . . . . . . . . . . . . . 21
5.3.3 Satisfaction of Parent and Purchaser's Covenants . . . . . . . . . . . . . . . . . 21
5.3.4 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE VI MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.2 Non-Survival of Representations, Warranties and Agreements . . . . . . . . . . . . . . . . 22
6.3 Waiver and Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.5 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(ii)
32
6.6 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.9 Parties in Interest; Assignment. . . . . . . . . . . . . . . . . . . . . . . 24
6.10 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.11 Obligation of Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.12 Enforcement of the Agreement . . . . . . . . . . . . . . . . . . . . . . . . 26
6.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(iii)