<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 22, 1999
-----------------
WILMAR INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant specified in its charter)
NEW JERSEY 0-27424 22-2232386
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(State or other (Commission (IRS Employee
jurisdiction of File Number) Identification No.)
incorporation)
303 Harper Drive
Moorestown, NJ 08057
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(Address of principal executive offices) (Zip Code)
Registrant's telephone, including area code: (856) 533-3104
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- --------------------------------------------------------------------------------
(Former name and former address, if changed since last report)
<PAGE>
Item 5. Other Events
------------
On December 22, 1999, Wilmar Industries, Inc., a New Jersey corporation
("Wilmar" or the "Company") entered into an Agreement and Plan of Merger and
Recapitalization (the "Merger Agreement") with WM Acquisition, Inc., a New
Jersey corporation and a subsidiary of an investor group led by Parthenon
Capital and Chase Capital Partners.
Pursuant to and subject to the terms and conditions of the Merger
Agreement, in the merger contemplated by the Merger Agreement (the "Merger"), WM
Acquisition will be merged with and into the Company, and the Company shall
remain as the surviving corporation. Each outstanding share of common stock of
the Company (the "Common Stock") (other than a number of shares held by William
S. Green, as described below) will be converted into the right to receive $18.25
in cash, without interest.
The investor group includes Parthenon Capital, Chase Capital Partners, and
General Motors Pension Fund. In addition, the Company's Chairman, William S.
Green and other members of management will contribute approximately $4.0 million
of the $134.0 million of committed equity capital required to finance the
transaction. As part of this $4.0 million contribution, Mr. Green will exchange
$3.0 million of his common shares for a new series of preferred stock which will
be converted as part of the merger into shares of senior preferred stock and
common stock of the acquiring company. Mr. Green, who owns approximately 15% of
the outstanding common stock of the Company, has agreed to vote his shares in
favor of the Merger.
Completion of the Merger is subject to customary conditions including
Wilmar shareholder approval, receipt of regulatory approvals and receipt of debt
financing pursuant to commitment letters.
It is anticipated that the common stock of the Company will be delisted
from the NASDAQ National Market System as a result of the Merger.
Following the public announcement of the Merger, a purported shareholders
class action complaint was filed against the Company, the Company's directors
and Parthenon Capital in the Superior Court of New Jersey, Chancery Division.
The complaint alleges, among other things, that the Company's directors have
breached their fiduciary duties and seeks to enjoin the Merger and also seeks
damages. The Company denies all allegations of wrongdoing and the Company
intends to defend itself vigorously against such claims.
A copy of the Merger Agreement is attached hereto as Exhibit 2.1 and is
incorporated by reference.
A copy of the press release announcing the signing of the Merger Agreement,
issued by the Company on December 22, 1999, is attached hereto as Exhibit 99.1
and is incorporated by reference.
The foregoing description of the Merger and related transactions does not
purport to be complete and is qualified in its entirety by reference to the
Merger Agreement and the Press Release, which are attached hereto and
incorporated herein by reference.
Item 7. Financial Statements and Exhibits
---------------------------------
(c) Exhibits.
(2.1) Agreement and Plan of Merger by and between WM Acquisition,
Inc. and Wilmar Industries, Inc. dated December 22, 1999. In accordance with the
instructions to Item 601(b)(2) of Regulation S-K, the Schedules and Exhibits to
the Merger Agreement are not being filed as a part of this Exhibit 2. The
Company agrees to furnish supplementally a copy of any such Schedules and
Exhibits to the Securities and Exchange Commission upon request.
(99.1) Press Release dated December 22, 1999, issued by Wilmar
Industries, Inc.
(99.2) Voting and Exchange Agreement, dated December 22, 1999,
between William S. Green and WM Acquisition, Inc.
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WILMAR INDUSTRIES, INC.
(Registrant)
By /s/ William S. Sanford
-----------------------------------------
William S. Sanford
Senior Vice President and
Chief Financial Officer
Dated: December 29, 1999
<PAGE>
Exhibit Index
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Exhibit Page
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Exhibit 2.1 Agreement and Plan of Merger by and between WM
Acquisition, Inc. and Wilmar Industries, Inc. dated
December 22, 1999. In accordance with the instructions
to Item 601(b)(2) of Regulation S-K, the Schedules and
Exhibits to the Merger Agreement are not being filed as a
part of this Exhibit 2. The Company agrees to furnish
supplementally a copy of any such Schedules and
Exhibits to the Securities and Exchange Commission
upon request.
Exhibit 99.1 Press Release dated December 22, 1999, issued by
Wilmar Industries, Inc.
Exhibit 99.2 Voting and Exchange Agreement, dated December 22,
1999, between William S. Green and WM Acquisition,
Inc.
<PAGE>
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AND RECAPITALIZATION
between
WM ACQUISITION, INC.
and
WILMAR INDUSTRIES, INC.
Dated as of December 22, 1999
<PAGE>
TABLE OF CONTENTS
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<TABLE>
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<S> <C>
RECITALS 1
ARTICLE 1 THE MERGER 2
Section 1.1 The Merger 2
Section 1.2 Closing 2
Section 1.3 Effective Time 2
Section 1.4 The Certificate of Incorporation 2
Section 1.5 The By-Laws 2
Section 1.6 Directors of Surviving Corporation 3
Section 1.7 Officers of Surviving Corporation 3
CONVERSION OR CANCELLATION OF SHARES IN THE MERGER AND THE
RECAPITALIZATION EXCHANGE 3
Section 2.1 Conversion or Cancellation of Shares and the Recapitalization
Exchange 3
Section 2.2 Payment for Shares 4
Section 2.3 Transfer of Shares After the Effective Time 5
Section 2.4 Stock Options. 5
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY 5
Section 3.1 Organization and Qualification; Subsidiaries 5
Section 3.2 Certificate of Incorporation and By-Laws 6
Section 3.3 Capitalization 6
Section 3.4 Authority 7
Section 3.5 No Conflict 8
Section 3.6 Required Filings and Consents 9
Section 3.7 Permits; Compliance with Law 9
Section 3.8 SEC Filings; Financial Statements 10
Section 3.9 Absence of Certain Changes or Events 11
Section 3.10 Employee Benefit Plans; Labor Matters 11
Section 3.11 Contracts; Debt Instruments 14
Section 3.12 Litigation 14
Section 3.13 Environmental Matters 15
Section 3.14 Intellectual Property 15
</TABLE>
<PAGE>
<TABLE>
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<S> <C>
Section 3.15 Taxes 16
Section 3.16 Non-Competition Agreements 17
Section 3.17 Assets. 17
Section 3.18 Opinion of Financial Advisor 17
Section 3.19 Brokers 18
Section 3.20 Certain Statutes 18
Section 3.21 Information 18
Section 3.22 Vote Required 18
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF MERGER SUB 18
Section 4.1 Organization 18
Section 4.2 Binding Obligation 19
Section 4.3 No Authorization or Consents Required 19
Section 4.4 Financing Commitments 19
Section 4.5 No Conflict 20
Section 4.6 Information. 20
Section 4.7 Brokers 20
ARTICLE 5 COVENANTS 21
Section 5.1 Conduct of Business of the Company 21
Section 5.2 Other Actions 23
Section 5.3 Notification of Certain Matters. 23
Section 5.4 Proxy Statement 24
Section 5.5 Stockholders' Meeting 25
Section 5.6 Access to Information; Confidentiality 26
Section 5.7 No Solicitation 26
Section 5.8 Directors' and Officers' Indemnification and Insurance 28
Section 5.9 Reasonable Best Efforts 29
Section 5.10 Consents; Filings; Further Action 29
Section 5.11 Public Announcements 30
Section 5.12 Stock Exchange Listings and De-Listings 30
Section 5.13 Expenses 30
Section 5.14 Takeover Statutes 30
Section 5.15 Employee Benefit Arrangements. 31
Section 5.16 Issuance of Class C Preferred Stock. 31
Section 5.17 Solvency Matters 31
</TABLE>
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<TABLE>
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<S> <C>
ARTICLE 6 CONDITIONS 32
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger 32
(a) Stockholder Approval 32
(b) Governmental Consents 32
(c) Litigation 32
Section 6.2 Conditions to Obligations of Merger Sub 32
(a) Representations and Warranties 32
(b) Performance of Obligations of the Company 33
(c) Material Adverse Effect 33
(d) Financing 33
(e) Consents Under Agreements 33
(f) Company Voting Agreement 33
Section 6.3 Conditions to Obligation of the Company 33
(a) Representations and Warranties 33
(b) Performance of Obligations of Merger Sub 34
(c) Material Adverse Effect 34
(d) Consents Under Agreements 34
ARTICLE 7 TERMINATION 34
Section 7.1 Termination 34
Section 7.2 Effect of Termination 36
Section 7.3 Amendment 36
Section 7.4 Waiver 36
Section 7.5 Expenses following Termination 36
ARTICLE 8 MISCELLANEOUS 38
Section 8.1 Certain Definitions 38
Section 8.2 Non-Survival of Representations, Warranties and Agreements 38
Section 8.3 Counterparts 39
Section 8.4 Governing Law and Venue; Waiver of Jury Trial 39
Section 8.5 Notices 40
Section 8.6 Entire Agreement 41
Section 8.7 No Third Party Beneficiaries 41
Section 8.8 Severability 42
Section 8.9 Interpretation 42
</TABLE>
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<S> <C>
Section 8.10 Assignment 42
</TABLE>
<PAGE>
INDEX OF DEFINED TERMS
----------------------
- ----------------------------------------------------------------------------
Term Section
- ----- -------
- ----------------------------------------------------------------------------
Acquisition Agreement 5.7(e)(ii)
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affiliate 8.1(a)
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Agreement Title
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Benefit Plan 3.10(a)
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business day 8.1(b)
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Certificate of Merger 1.3
Class C Preferred Stock Recitals
- ----------------------------------------------------------------------------
Claims 3.12
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Closing 1.2
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Closing Date 1.2
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COBRA 3.10(a)
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Common Stock Recitals
- ----------------------------------------------------------------------------
Company Title
- ----------------------------------------------------------------------------
Company Benefit Plan 3.10(a)
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Company Charter Documents 3.2
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Company Disclosure Letter Article 3 (introduction)
- ----------------------------------------------------------------------------
Company Financial Advisor 3.18
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Company Permits 3.7
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Company Principal Recitals
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Company SEC Reports 3.8(a)
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Company Stockholders Meeting 5.4
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Company Subsidiaries 3.1(a)
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Company Voting Agreement Recitals
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Confidentiality Agreement 5.6
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control 8.1(a)
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controlled by 8.1(a)
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controlling 8.1(a)
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Debt Financing Commitments 4.4
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Effective Time 1.3
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Employee 3.10(a)
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Environmental Law 3.13
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Equity Financing Commitments 4.4
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ERISA 3.10(a)
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Exchange Act 3.6
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Expenses 7.5(a)
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GAAP 3.8(b)
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Governmental Entity 3.6
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<PAGE>
- ----------------------------------------------------------------------------
group 8.1(e)
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Hazardous Substance 3.13
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HSR Act 3.6
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including 8.1(c)
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Indemnified Parties 5.8(a)
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Intellectual Property 3.14(a)
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knowledge 8.1(d)
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Law 3.5(a)(ii)
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Liens 3.3
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Material Adverse Effect on the Company 3.1(a)
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Material Assets 3.17(a)
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Merger Recitals
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Merger Consideration 2.1(a)
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Merger Sub Title
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Merger Sub Material Adverse Effect 4.1
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NASD 5.4(a)
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NJBC Recitals
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Option 2.4
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Option Plans 2.4
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Other Filings 5.4(a)
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Paying Agent 2.2
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PBGC 3.10(a)
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Permitted Liens 3.17
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person 8.1(e)
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Preferred Stock 3.3(a)
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Proxy Statement 5.4(a)
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Representatives 5.6
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Requisite Company Vote 3.4(a)
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Retiree Welfare Plan 3.10(a)
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SEC 3.8
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Securities Act 3.8
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Senior Preferred Stock 2.1(b)
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Shares 2.1(a)
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Software 3.14(a)
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subsidiary 8.1(f)
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subsidiaries 8.1(f)
- ----------------------------------------------------------------------------
Superior Proposal 5.7(e)(i)
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Surviving By-Laws 1.5
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Surviving Charter 1.4
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<PAGE>
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Surviving Corporation 1.1
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Systems 3.14(c)
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Takeover Proposal 5.7(a)
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Takeover Statute 3.20
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Taxes 3.15
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Technology 3.14(a)
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Terminating Company Breach 7.1(f)
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Terminating Merger Sub Breach 7.1(g)
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Termination Amount 7.5(b)
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under common control with 8.1(a)
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Welfare Plan 3.10(a)
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Year 2000 Compliant 3.14(c)
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<PAGE>
AGREEMENT AND PLAN OF MERGER AND RECAPITALIZATION
AGREEMENT AND PLAN OF MERGER AND RECAPITALIZATION (the "Agreement"), dated
---------
as of December 22, 1999 by and between WM Acquisition, Inc., a New Jersey
corporation (the "Merger Sub"), and Wilmar Industries, Inc., a New Jersey
----------
corporation (the "Company").
-------
RECITALS:
WHEREAS, the respective boards of directors of each of the Merger Sub and
the Company each have approved this Agreement pursuant to which, among other
things, Merger Sub will be merged with and into the Company (the "Merger") on
------
the terms and conditions contained herein and in accordance with the New Jersey
Business Corporation Act (the "NJBC").
----
WHEREAS, concurrently with the execution of this Agreement, as a condition
to the willingness of Merger Sub to enter into this Agreement, (i) Mr. William
Green (the "Company Principal") is entering into a Voting and Exchange Agreement
-----------------
with Merger Sub and the Company (the "Company Voting Agreement"), providing for,
------------------------
among other things, the agreement of the Company Principal to vote all shares of
the Company's common stock, no par value (the "Common Stock"), beneficially
------------
owned by him on the date hereof in favor of approval and adoption of this
Agreement and the Merger, and to exchange certain shares of Common Stock owned
by him for newly issued shares of Class C Preferred Stock, par value $.10 per
share, of the Company (the "Class C Preferred Stock") prior to the Merger, and
-----------------------
(ii) the Company Principal has delivered to the Merger Sub an irrevocable proxy
to vote such shares as described above.
WHEREAS, certain terms used in this Agreement which are not capitalized
have the meanings specified in Section 8.1.
WHEREAS, the Company and Merger Sub desire to make certain representations,
warranties, covenants and agreements in connection with this Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained in this
Agreement, the parties agree as follows:
<PAGE>
2
ARTICLE 1
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, at the Effective Time (as defined in Section 1.3),
Merger Sub shall be merged with and into the Company and the separate corporate
existence of Merger Sub shall cease. The Company shall be the surviving
corporation in the Merger (sometimes referred to as the "Surviving Corporation")
---------------------
and shall continue to be governed by the laws of New Jersey, and the separate
corporate existence of the Company with all its rights, privileges, immunities,
powers, purposes and franchises, both public and private, shall continue
unaffected by the Merger. The Merger shall have the effects set forth in
Section 14A:10-6 of the NJBC.
Section 1.2 Closing. The closing of the Merger (the "Closing") shall
-------
take place (a) at the offices of Paul, Weiss, Rifkind, Wharton & Garrison, New
York, New York at 10:00 a.m. on the third business day after the last to be
fulfilled or waived of the conditions set forth in Article 6 (other than those
conditions that by their nature are to be satisfied at the Closing, but subject
to the fulfillment or waiver of those conditions) shall be satisfied or waived
in accordance with this Agreement or (b) at such other place and time and/or on
such other date as the Company and the Merger Sub may agree in writing (the
"Closing Date").
------------
Section 1.3 Effective Time. As soon as practicable following the Closing,
the Company and Merger Sub will cause a Certificate of Merger (the "Certificate
-----------
of Merger") to be signed, acknowledged and delivered for filing with the
- ---------
Secretary of the State of New Jersey as provided in Section 14A:10-4.1 of the
NJBC. The Merger shall become effective at the time when a Certificate of
Merger has been duly filed with the Secretary of State of the State of New
Jersey or such other time as shall be agreed upon by the parties and set forth
in the Certificate of Merger (the "Effective Time").
--------------
Section 1.4 The Certificate of Incorporation. The certificate of
incorporation of the Surviving Corporation shall be amended and restated in the
form of the certificate of incorporation of Merger Sub in effect immediately
prior to the
<PAGE>
3
Effective Time (the "Surviving Charter"), until duly amended as provided in the
-----------------
Surviving Charter or by applicable law, except that, as of the Effective Time,
Article I of such certificate of incorporation shall be amended to read as
follows: "The name of the corporation is Wilmar Industries, Inc."
Section 1.5 The By-Laws. The by-laws of the Surviving Corporation shall
be amended and restated in the form of the by-laws of Merger Sub in effect at
the Effective Time (the "Surviving By-Laws"), until duly amended as provided in
-----------------
the Surviving By-Laws or by applicable law.
Section 1.6 Directors of Surviving Corporation. The directors of Merger
Sub at the Effective Time shall, from and after the Effective Time, be the
directors of the Surviving Corporation until their successors have been duly
elected or appointed and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Charter and the Surviving By-Laws.
Section 1.7 Officers of Surviving Corporation. The officers of the Company
at the Effective Time shall, from and after the Effective Time, be the officers
of the Surviving Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Surviving Charter and the Surviving By-Laws.
ARTICLE 2
CONVERSION OR CANCELLATION OF SHARES
IN THE MERGER AND THE RECAPITALIZATION EXCHANGE
Section 2.1 Conversion or Cancellation of Shares and the Recapitalization
Exchange. The manner of converting, retaining or canceling shares of the Company
and Merger Sub in the Merger shall be as follows:
(a) At the Effective Time, except as otherwise provided in Section
2.1(c), each share of Common Stock issued and outstanding immediately prior to
the Effective Time (other than Shares owned by Merger Sub, collectively, the
"Shares"), shall by virtue of the Merger and without any action on the part of
------
the holder thereof, be converted into the right to receive, without interest, an
amount in cash (the "Merger Consideration") equal to $18.25. All such Shares, by
--------------------
virtue of the Merger
<PAGE>
4
and without any action on the part of the holders thereof, shall no longer be
outstanding and shall be canceled and retired and shall cease to exist, and each
holder of a certificate representing any such Shares shall thereafter cease to
have any rights with respect to such Shares, except the right to receive the
Merger Consideration for such Shares upon the surrender of such certificate in
accordance with Section 2.2.
(b) At the Effective Time, each share of Class C Preferred Stock
issued and outstanding immediately prior to the Effective Time shall, by virtue
of the Merger and without any action on the part of the holder thereof, shall be
converted into (i) .5486558 shares of Common Stock and (ii) 1.7701344 shares of
Cumulative Senior Preferred Stock, par value $0.01 per share of the Company (the
"Senior Preferred Stock").
----------------------
(c) At the Effective Time, each share of Common Stock issued and
outstanding at the Effective Time and owned by Merger Sub, and each Share issued
and held in the Company's treasury at the Effective Time, shall, by virtue of
the Merger and without any action on the part of the holder thereof, cease to be
outstanding, shall be canceled and retired without payment of any consideration
therefor and shall cease to exist.
(d) At the Effective Time, (i) each share of common stock, no par
value, of Merger Sub issued and outstanding immediately prior to the Effective
Time shall, by virtue of the Merger and without any action on the part of Merger
Sub or the holders of such shares, be converted into one share of Common Stock
and (ii) each share of preferred stock, par value $0.01 per share, of Merger Sub
issued and outstanding immediately prior to the Effective Time shall, by virtue
of the Merger and without any action on the part of Merger Sub or the holders of
such shares, be converted into one share of Senior Preferred Stock.
Section 2.2 Payment for Shares. The Surviving Corporation shall make
available or cause to be made available to the paying agent appointed by Merger
Sub with the Company's prior approval (the "Paying Agent") amounts sufficient in
------------
the aggregate to provide all funds necessary for the Paying Agent to make
payments pursuant to Section 2.1(a) hereof to holders of Shares issued and
outstanding immediately prior to the Effective Time. At the Effective Time, the
Surviving Corporation shall instruct the Paying Agent to promptly, and in any
event not later than three business days following the Effective Time, mail to
each person who was, at the Effective Time, a holder of record (other than
Merger Sub) of issued and outstanding
<PAGE>
5
Shares a form (mutually agreed to by Merger Sub and the Company) of letter of
transmittal and instructions for use in effecting the surrender of the
certificates which, immediately prior to the Effective Time, represented any of
such Shares in exchange for payment therefor. Upon surrender to the Paying Agent
of such certificates, together with such letter of transmittal, duly executed
and completed in accordance with the instructions thereto, the Surviving
Corporation shall instruct the Paying Agent to promptly, and in any event not
later than three business days following receipt of properly tendered
certificates and letters of transmittal, pay to the persons entitled thereto a
check in the amount to which such persons are entitled, after giving effect to
any required tax withholdings. No interest will be paid or will accrue on the
amount payable upon the surrender of any such certificate. If payment is to be
made to a person other than the registered holder of the certificate
surrendered, it shall be a condition of such payment that the certificate so
surrendered shall be properly endorsed or otherwise in proper form for transfer
and that the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of the certificate surrendered or establish to the satisfaction of the
Surviving Corporation or the Paying Agent that such tax has been paid or is not
applicable. One hundred and eighty days following the Effective Time, the
Surviving Corporation shall be entitled to cause the Paying Agent to deliver to
it any funds (including any interest received with respect thereto) made
available to the Paying Agent which have not been disbursed to holders of
certificates formerly representing Shares outstanding on the Effective Time, and
thereafter such holders shall be entitled to look to the Surviving Corporation
only as general creditors thereof with respect to the Merger Consideration
payable upon due surrender of their certificates. Notwithstanding the foregoing,
neither the Paying Agent nor any party hereto shall be liable to any holder of
certificates formerly representing Shares for any amount paid to a public
official pursuant to any applicable abandoned property, escheat or similar law.
Section 2.3 Transfer of Shares After the Effective Time. No transfer of
Shares shall be made on the stock transfer books of the Surviving Corporation at
or after the Effective Time.
Section 2.4 Stock Options. Immediately prior to the Effective Time, each
outstanding option to purchase shares of Common Stock (an "Option") granted
------
under the Company's Amended and Restated 1995 Stock Option Plan and any similar
plan or arrangement providing for the issuance of options (collectively, the
"Option Plans"), whether or not then exercisable or vested, shall become fully
------------
exercisable and vested. At the Effective Time (A) each Option which is then
outstanding shall be
<PAGE>
6
canceled and (B) in consideration of such cancellation, and except to the extent
that Merger Sub and the holder of any such Option otherwise agree, immediately
following consummation of the Offer, the Company shall pay to such holders of
Options an amount in respect thereof equal to the product of (x) the excess of
the Merger Consideration over the exercise price thereof, if any, and (y) the
number of shares of Common Stock subject thereto (such payment to be net of
taxes required by law to be withheld with respect thereto). No payment shall be
made with respect to any Option having a per share exercise price, as in effect
at the Effective Time, equal to or greater than the Merger Consideration.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Merger Sub that, except as set forth
in the corresponding sections of the Disclosure Letter delivered to Merger Sub
by the Company prior to the execution of this Agreement (the "Company Disclosure
------------------
Letter"):
- ------
Section 3.1 Organization and Qualification; Subsidiaries .
(a) Each of the Company and each subsidiary of the Company
(collectively, the "Company Subsidiaries") is a corporation duly incorporated,
--------------------
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, as the case may be, and has the requisite power
and authority and all necessary governmental approvals to own, lease and operate
its properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals, individually or in the
aggregate, have not resulted and could not reasonably be expected to result in a
Material Adverse Effect on the Company. Each of the Company and each Company
Subsidiary is duly qualified or licensed to do business, and is in good
standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary, except for such failures to be so qualified or licensed
and in good standing that, individually or in the aggregate, have not resulted
and could not reasonably be expected to result in a Material Adverse Effect on
the Company. For purposes of this Agreement, "Material Adverse Effect on the
------------------------------
<PAGE>
7
Company" means any change in or effect on the business, assets, properties,
- -------
results of operations or condition (financial or otherwise) of the Company or
any Company Subsidiary that is or could reasonably be expected to be materially
adverse to the Company and the Company Subsidiaries, taken as a whole, or that
could reasonably be expected to materially impair the ability of the Company to
perform its obligations under this Agreement or consummate the Merger and the
other transactions contemplated hereby.
(b) The Company Disclosure Letter sets forth a complete and
correct list of all of the Company Subsidiaries, their respective jurisdictions
of organization and percentage ownership by the Company. Neither the Company nor
any Company Subsidiary holds any interest in any person other than the Company
Subsidiaries so listed.
Section 3.2 Certificate of Incorporation and By-Laws. The copies of the
Company's certificate of incorporation and by-laws, each as amended through the
date of this Agreement (collectively, the "Company Charter Documents") that are
-------------------------
incorporated by reference in, as exhibits to the Company's annual report on Form
10-K for the year ended December 25, 1998 are complete and correct copies of
those documents. The Company Charter Documents and all comparable corporate
organizational documents of the Company Subsidiaries are in full force and
effect. The Company is not in violation of any of the provisions of the Company
Charter Documents.
Section 3.3 Capitalization.
(a) The authorized capital stock of the Company consists of
50,000,000 shares of Common Stock, 5,000,000 shares of Preferred Stock, par
value $0.01 per share, 129,450 shares of Series A Senior Preferred Stock, par
value $0.01 per share and 105,914 shares of Series B Senior Preferred Stock, par
value $0.01 per share (collectively, the "Preferred Stock"). As of the date of
---------------
this Agreement, (i) 12,407,826 shares of Common Stock were issued and
outstanding, all of which were validly issued and are fully paid, nonassessable
and not subject to preemptive rights, (ii) 1,000,000 shares of Company Common
Stock were held in the treasury of the Company and (iii) 1,502,166 shares of
Common Stock were reserved for issuance upon exercise of Options that are
outstanding or available for grant. As of the date of this Agreement, no shares
of Preferred Stock are issued and outstanding.
<PAGE>
8
(b) As of the date of this Agreement, an aggregate of 1,135,376
Options granted by the Company under the Option Plans are issued and
outstanding. Except for the Options, there are no options, warrants, conversion
rights, stock appreciation rights, redemption rights, repurchase rights or other
rights, agreements, arrangements or commitments of any character to which the
Company is a party or by which the Company is bound relating to the issued or
unissued capital stock of the Company or any Company Subsidiary or obligating
the Company or any Company Subsidiary to issue or sell any shares of capital
stock of, or other equity interests in, the Company or any Company Subsidiary.
The Company Disclosure Letter sets forth, as of the date of this Agreement, (x)
the persons to whom Options have been granted and (y) the exercise price for the
Options held by each such person. No consent of the holder of any Options is
required in connection with the cancellation thereof pursuant to Section 2.4.
(c) All shares of Common Stock subject to issuance, upon issuance
prior to the Effective Time on the terms and conditions specified in the
instruments under which they are issuable, will be duly authorized, validly
issued, fully paid, nonassessable and will not be subject to preemptive rights.
There are no outstanding contractual obligations of the Company or any Company
Subsidiary to repurchase, redeem or otherwise acquire any shares of Common Stock
or any capital stock of any Company Subsidiary. Each outstanding share of
capital stock of each Company Subsidiary is duly authorized, validly issued,
fully paid, nonassessable and not subject to preemptive rights and each such
share owned by the Company or a Company Subsidiary is free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on the Company's or such other Company Subsidiary's
voting rights, charges and other encumbrances or any nature whatsoever
(collectively, "Liens"). There are no outstanding contractual obligations of the
-----
Company or any Company Subsidiary to provide funds to, or make any investment
(in the form of a loan, capital contribution or otherwise) in, any Company
Subsidiary that is not wholly owned by the Company or in any other person.
Section 3.4 Authority.
(a) The Company has all necessary corporate power and authority to
execute and deliver this Agreement, to perform its obligations under this
Agreement and to consummate the Merger and the other transactions contemplated
by this Agreement to be consummated by the Company. The execution and delivery
of this Agreement by the Company and the consummation by the Company of such
<PAGE>
9
transactions have been duly and validly authorized by all necessary corporate
action and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate such transactions, other
than, with respect to the Merger, the adoption of this Agreement by the holders
of a majority of the outstanding shares of Common Stock (the "Requisite Company
-----------------
Vote"). This Agreement has been duly authorized and validly executed and
- ----
delivered by the Company and, assuming that this Agreement constitutes a valid
and binding obligation of the other party, constitutes a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws affecting
creditors' rights generally and by equitable principles of general
applicability.
(b) The Special Committee of the Board of Directors of the Company
and the full Board of Directors of the Company (i) has unanimously adopted the
plan of merger set forth in Articles I and II of this Agreement and approved
this Agreement and the other transactions contemplated by this Agreement and
(ii) has unanimously agreed to recommend to the stockholders the approval of
this Agreement, the Merger, and the other transactions contemplated hereby.
Section 3.5 No Conflict.
(a) The execution and delivery of this Agreement by the Company do
not, and the performance of this Agreement by the Company will not:
(i) conflict with or violate any provision of any Company
Charter Document or any equivalent organizational documents of any Company
Subsidiary;
(ii) assuming that all consents, approvals, authorizations
and other actions described in Section 3.6 have been obtained and all filings
and obligations described in Section 3.6 have been made, conflict with or
violate any foreign or domestic law, statute, ordinance, rule, regulation,
order, judgment or decree ("Law") applicable to the Company or any Company
---
Subsidiary or by which any property or asset of the Company or any Company
Subsidiary is or may be bound or affected, except for any such conflicts or
violations that, individually or in the aggregate, have not resulted and could
not reasonably be expected to result in a Material Adverse Effect on the
Company; or
<PAGE>
10
(iii) result in any breach of or constitute a default (or
an event which with or without notice or lapse of time or both would become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a Lien on any
property or asset of the Company or any Company Subsidiary under any note, bond,
mortgage, indenture, contract, agreement, commitment, lease, license, permit,
franchise or other instrument or obligation (collectively, "Contracts") to which
---------
the Company or any Company Subsidiary is a party or by which any of them or
their assets or properties is or may be bound or affected, except for any such
breaches, defaults, rights or Liens that, individually or in the aggregate, have
not resulted and could not reasonably be expected to result in a Material
Adverse Effect on the Company.
(b) The Company Disclosure Letter sets forth a correct and
complete list of all material Contracts to which the Company or any Company
Subsidiaries are a party or by which they or their assets or properties is or
may be bound or affected under which consents or waivers are or may be required
prior to consummation of the transactions contemplated by this Agreement.
Section 3.6 Required Filings and Consents. The execution and delivery of
this Agreement by the Company do not, and the performance of this Agreement by
the Company will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any domestic or foreign national, federal,
state, provincial or local governmental, regulatory or administrative authority,
agency, commission, court, tribunal or arbitral body or self-regulated entity
(each, a "Governmental Entity"), other than (i) compliance with applicable
-------------------
requirements of the Securities Exchange Act of 1934, as amended (together with
the rules and regulations promulgated thereunder, the "Exchange Act"), (ii)
------------
compliance with the pre-merger notification requirements of the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended, and the rules and
regulations promulgated thereunder (the "HSR Act"), (iii) the filing of a
-------
Certificate of Designation relating to the Series C Preferred Stock; (iv) the
filing of the Certificate of Merger in accordance with the NJBC; and (v) where
the failure to obtain such consent, approval, authorization or permit, or to
provide such notice or make such filing, individually or in the aggregate, has
not and could not reasonably be expected to result in a Material Adverse Effect.
Section 3.7 Permits; Compliance with Law. Each of the Company
<PAGE>
11
and the Company Subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances, exceptions, consents,
certificates, approvals and orders of any Governmental Entity necessary for the
Company or any Company Subsidiary to own, lease and operate its properties or to
carry on its business as it is now being conducted (collectively, the
"Company Permits"), except where the failure to have, or the suspension or
---------------
cancellation of, any of the Company Permits, individually or in the aggregate,
has not resulted and could not reasonably be expected to result in a Material
Adverse Effect on the Company, and, as of the date of this Agreement, no
suspension or cancellation of any of the Company Permits is pending or, to the
knowledge of the Company, threatened, except where the failure to have, or the
suspension or cancellation of, any of the Company Permits, individually or in
the aggregate, has not resulted and could not reasonably be expected to result
in a Material Adverse Effect on the Company. Neither the Company nor any Company
Subsidiary is in conflict with, or in default or violation of, (i) any Law
applicable to the Company or any Company Subsidiary or by which any property or
asset of the Company or any Company Subsidiary is or may be bound or affected or
(ii) any Company Permits, except for any such conflicts, defaults or violations
that, individually or in the aggregate, have not resulted and could not
reasonably be expected to result in a Material Adverse Effect on the Company.
Section 3.8 SEC Filings; Financial Statements.
(a) The Company has filed all forms, reports, statements and other
documents (including all exhibits, annexes, supplements and amendments to such
documents) required to be filed by it under the Exchange Act and the Securities
Act since January 1, 1998 (collectively, including any such documents filed
subsequent to the date of this Agreement, the "Company SEC Reports") and the
-------------------
Company has made available to the Merger Sub each Company SEC Report filed with
the Securities and Exchange Commission (the "SEC"). The Company SEC Reports,
---
including any financial statements or schedules included or incorporated by
reference, (i) comply in all material respects with the requirements of the
Exchange Act or the Securities Act of 1933, as amended (the "Securities Act") or
--------------
both, as the case may be, applicable to those Company SEC Reports and (ii) did
not at the time they were filed contain any untrue statement of a material fact
or omit to state a material fact required to be stated or necessary in order to
make the statements made in those Company SEC Reports, in the light of the
circumstances under which they were made, not misleading. No Company Subsidiary
is subject to the periodic reporting requirements of the Exchange Act or is
otherwise required to file any documents with the SEC or any national
<PAGE>
12
securities exchange or quotation service or comparable Governmental Entity.
(b) Each of the consolidated balance sheets included in or
incorporated by reference into the Company SEC Reports (including the related
notes and schedules) fairly presented or will fairly present, in all material
respects, the consolidated financial position of the Company or a Company
Subsidiary as the case may be, as of the dates set forth in those consolidated
balance sheets. Each of the consolidated statements of income and of cash flows
included in or incorporated by reference into the Company SEC Reports (including
any related notes and schedules), fairly presented or will fairly present, in
all material respects, the consolidated results of operations and cash flows, as
the case may be, of the Company and the consolidated Company Subsidiaries (or of
any Company Subsidiary, as the case may be) for the periods set forth in those
consolidated statements of income and of cash flows (subject, in the case of
unaudited quarterly statements, to notes and normal year-end audit adjustments
that will not be material in amount or effect), in each case in conformity with
United States generally accepted accounting principles ("GAAP") (except, in the
----
case of unaudited quarterly statements, as permitted by Form 10-Q of the SEC)
consistently applied throughout the periods indicated.
(c) Except as and to the extent set forth on the consolidated
balance sheet of the Company and the consolidated Company Subsidiaries as of
December 25, 1998, including the related notes, neither the Company nor any
Company Subsidiary has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that would be required to be
reflected on a balance sheet or in the related notes prepared in accordance with
GAAP, except for liabilities or obligations incurred in the ordinary course of
business since December 25, 1998, that, individually or in the aggregate, have
not resulted and could not reasonably be expected to result in a Material
Adverse Effect on the Company.
Section 3.9 Absence of Certain Changes or Events. Since December 25,
1998, the Company and the Company Subsidiaries have conducted their businesses
only in the ordinary course and in a manner consistent with past practice and,
since such date, there has not been:
(a) any Material Adverse Effect on the Company;
(b) any damage, destruction or other casualty loss with respect to
any asset or property owned, leased or otherwise used by it or any Company
<PAGE>
13
Subsidiaries, whether or not covered by insurance, which damage, destruction or
loss, individually or in the aggregate, has resulted or could reasonably be
expected to result in a Material Adverse Effect on the Company;
(c) any material change by the Company in its or any Company
Subsidiary's accounting methods, principles or practices;
(d) any declaration, setting aside or payment of any dividend or
distribution in respect of Company Shares or any redemption, purchase or other
acquisition of any of the Company's securities;
(e) any event, occurrence or action described in Section 5.1
(a)-(l).
Section 3.10 Employee Benefit Plans; Labor Matters.
(a) For purposes of this Agreement:
(i) "Benefit Plan" means any employee benefit plan,
------------
arrangement, policy or commitment, including, without limitation, any
employment, consulting or deferred compensation agreement, executive
compensation, bonus, incentive, pension, profit-sharing, savings,
retirement, stock option, stock purchase or severance pay plan, any life,
health, disability or accidental death and dismemberment insurance plan,
any holiday or vacation practice or any other employee benefit plan within
the meaning of section 3(3) of ERISA, as to which the Company has any
direct or indirect, actual or contingent liability;
(ii) "Company Benefit Plan" means any Benefit Plan that
--------------------
provides benefits with respect to current or former Employees;
(iii) "Welfare Plan" means and Benefit Plan that is a
------------
welfare plan within the meaning of and subject to ERISA section 3(1);
(iv) "Retiree Welfare Plan" means any Welfare Plan that
--------------------
provides benefits to current or former employees beyond their retirement or
other termination of service (other than coverage mandated by COBRA, the
cost of which is fully paid by the current or former employee or his
dependents);
<PAGE>
14
(v) "ERISA" means the Employee Retirement Income
-----
Security Act of 1974, as amended;
(vi) "COBRA" means the provisions of Code section
-----
4980B and Part 6 of Title I of ERISA;
(vii) "Employee" means any individual employed by the
--------
Company or any of its subsidiaries; and
(viii) "PBGC" means the Pension Benefit Guaranty
----
Corporation.
(b) The Company Disclosure Letter sets forth all Company Benefit
Plans. With respect to each such plan, the Company has delivered to the Merger
Sub correct and complete copies of: (i) all plan texts and agreements and
related trust agreements or annuity contracts; (ii) all summary plan
descriptions and material Employee communications; (iii) the most recent annual
report (including all schedules thereto); (iv) the most recent annual audited
financial statement and opinion applicable to a plan intended to qualify under
Code section 401(a) or 403(a); (v) if the plan is intended to qualify under Code
section 401(a) or 403(a), the most recent determination letter, if any, received
from the IRS; and (vi) all material communications with any governmental entity
or agency (including, without limitation, the PBGC and the IRS).
(c) The Company has no direct or indirect, actual or contingent
liability with respect to any Benefit Plan other than to make payments pursuant
to Company Benefit Plans in accordance with the terms of such plans.
(d) Each of the Company and its subsidiaries has made all
material payments due from it to date with respect to each Benefit Plan.
(e) All material amounts properly accrued as liabilities to, or
expenses of, any Benefit Plan that have not been paid have been properly
reflected on the Financial Statements.
(f) There are no Benefit Plans that are subject to any of Code
section 412, ERISA section 302 or Title IV or ERISA.
<PAGE>
15
(g) Each Benefit Plan conforms in all material respects to, and
its administration is in all material respects in compliance with, all
applicable laws and regulations.
(h) There are no actions, liens, suits or claims pending or
threatened (other than routine claims for benefits) with respect to any Benefit
Plan.
(i) Each Benefit Plan which is intended to qualify under Code
section 401(a) or 403(a) so qualifies.
(j) Each Benefit Plan which is a "group health plan" (as defined
in ERISA section 607(1)) has been operated in all material respects in
compliance with the provisions of COBRA and any applicable, similar state law.
(k) There is no contract or arrangement in existence with respect
to any Employee that would result in the payment of any amount that by operation
of Code section 280G would not be deductible to the Company or any of its
subsidiaries.
(l) No assets of the Company are allocated to or held in a "rabbi
trust" or similar funding vehicle.
(m) Except as disclosed on Schedule 3.10, there are no: (i)
unfunded benefit obligations with respect to any Employee that are not fairly
reflected by reserves shown on the Financial Statements, (ii) reserves, assets,
surpluses or prepaid premiums with respect to any Welfare Plan or (iii) Retiree
Welfare Plans.
(n) The consummation of the transactions contemplated by this
Agreement will not: (i) entitle any current or former Employee to severance pay,
unemployment compensation or any similar payment; (ii) accelerate the time of
payment or vesting, or increase the amount of any compensation due to, any
current or former Employee; or (iii) constitute or involve a prohibited
transaction (as defined in ERISA section 406 or Code section 4975), constitute
or involve a breach of fiduciary responsibility within the meaning of ERISA
section 502(1) or otherwise violate Part 4 of Title I of ERISA.
(o) No Benefit Plan is a "multiple employer plan" or a
"multiemployer plan" within the meaning of the Code or ERISA.
<PAGE>
16
(p) The Company does not and has not maintained a plan that is or
was subject to Title IV of ERISA, and has no liability in respect of any such
plan; no filing of a notice of intent to terminate such a Benefit Plan has been
made; and the PBGC has not initiated any proceeding to terminate any such
Benefit Plan. No event has occurred, and no condition or circumstance exists,
that presents a material risk that any Benefit Plan has or is likely to
experience a "partial termination" (within the meaning of Code section
411(d)(3)).
(q) As of the Effective Time, the Company, its subsidiaries and
any entity under common control with the Company within the meaning of Code
section 414(b), (c), (m) or (o) has not incurred any liability or obligation
under the Worker Adjustment and Retraining Notification Act, as it may be
amended from time to time, and within six-month period immediately following the
Effective Time, will not incur any such liability or obligation if, during such
six-month period, only terminations of employment in the normal course of
operati ons occur.
Section 3.11 Contracts; Debt Instruments. Neither the Company nor any
Company Subsidiary is in violation of or in default under (nor does there exist
any condition which with the passage of time or the giving of notice would cause
such a violation of or default under) any Contract to which it is a party or by
which it or any of its properties or assets is or may be bound or affected,
except for violations or defaults that, individually or in the aggregate, have
not resulted and could not reasonably be expected to result in a Material
Adverse Effect on the Company. Set forth in the Company Disclosure Letter is a
description of any material changes to the amount and terms of the indebtedness
of the Company and the consolidated Company Subsidiaries as described in the
notes to the financial statements set forth as incorporated by reference in the
Company's quarterly report on Form 10-Q for the period ended September 24, 1999.
Section 3.12 Litigation. There is no suit, claim, action, proceeding
or investigation (collectively, "Claims") pending or, to the knowledge of the
------
Company, threatened against the Company or any Company Subsidiary before any
Governmental Entity that, if adversely determined, individually or in the
aggregate, has resulted or could reasonably be expected to result in a Material
Adverse Effect on the Company. Neither the Company nor any Company Subsidiary is
subject to any outstanding order, writ, injunction or decree which, individually
or in the aggregate, has resulted or could reasonably be expected to result in a
Material Adverse Effect on the Company.
<PAGE>
17
Section 3.13 Environmental Matters. Except as set forth in Section
3.13 of the Disclosure Schedule, (i) no real property currently or, to the
Company's knowledge, formerly owned or operated by the Company or any Subsidiary
is contaminated with any Hazardous Substances (as defined herein) to an extent
or in a manner or condition now requiring remediation under any Environmental
Law (as defined herein), (ii) no judicial or administrative proceeding is
pending or, to the knowledge of the Company, threatened relating to liability
for any off-site disposal or contamination and (iii) the Company and its
Subsidiaries have not received in writing any claims or notices alleging
liability under any Environmental Law. Neither the Company nor any Subsidiary is
in violation of any applicable Environmental Law and no condition or event has
occurred with respect to the Company or any Subsidiary that would constitute a
violation of such Environmental Law, excluding in any event, such violations,
conditions and events that would not have a Material Adverse Effect.
"Environmental Law" means any applicable federal, state or local law,
-----------------
regulation, order, decree or judicial opinion or other agency requirement having
the force and effect of law and relating to Hazardous Substances or the
protection of the environment. "Hazardous Substance" means any toxic or
-------------------
hazardous substance that is regulated by or under authority of any Environmental
Law.
Section 3.14 Intellectual Property.
(a) Definitions. For purposes of this Agreement,
"Intellectual Property" means all of the following as they exist in all
- ---------------------
jurisdictions throughout the world, in each case, to the extent owned by,
licensed to, or otherwise used by the Company or the Merger Sub: (A) patents,
patent applications, and other patent rights (including any divisions,
continuations, continuations-in-part, substitutions, or reissues thereof,
whether or not patents are issued on any such applications and whether or not
any such applications are modified, withdrawn, or resubmitted); (B) registered
and material unregistered trademarks, service marks, trade dress, trade names,
brand names, Internet domain names, designs, logos, or corporate names, whether
registered or unregistered, and all registrations and applications for
registration thereof; (C) copyrights, including all renewals and extensions,
copyright registrations and applications for registration, and material non-
registered copyrights; (D) trade secrets, concepts, ideas, designs, research,
processes, procedures, techniques, methods, know-how, data, mask works,
discoveries, inventions, modifications, extensions, improvements, and other
proprietary rights (whether or not patentable or subject to copyright, mask
work, or trade secret protection) (collectively, "
<PAGE>
18
"Technology"); and (E) computer software programs, including all source code,
- -----------
object code, and documentation related thereto (the "Software").
--------
(b) Ownership and Claims. The Company owns, free and clear of all
Liens, and has the unrestricted right to use, sell, or license, all Intellectual
Property, except for failures that, individually or in the aggregate, have not
resulted and could not reasonably be expected to result in a Material Adverse
Effect on the Company. The Company has not been, during the three years
preceding the date of this Agreement, a party to any Claim, nor, to the
knowledge of the Company, is any Claim threatened, that challenges the validity,
enforceability, ownership, or right to use, sell, or license any Intellectual
Property, except for Claims that, individually or in the aggregate, have not
resulted and could not reasonably be expected to result in a Material Adverse
Effect on the Company. To the knowledge of the Company, no third party is
infringing upon any Intellectual Property, except for infringements that,
individually or in the aggregate, have not resulted and could not reasonably be
expected to result in a Material Adverse Effect on the Company.
(c) Year 2000 Compliance. All Software, hardware, databases, and
embedded control systems (collectively, the "Systems") used by the Company are
-------
Year 2000 Compliant, except for failures to be Year 2000 Compliant that,
individually or in the aggregate, have not resulted and could not reasonably be
expected to result in a Material Adverse Effect on the Company. For purposes of
this Agreement, "Year 2000 Compliant" means that the Systems (i) accurately
-------------------
process date and time data (including calculating, comparing, and sequencing)
from, into, and between the twentieth and twenty-first centuries, the years 1999
and 2000, and leap year calculations and (ii) operate accurately with other
software and hardware that use standard date format for representation of the
year.
(d) Effect of Transaction. The Company is not, nor, as a result
of the execution and delivery of this Agreement or the performance of its
obligations under this Agreement, will be, in violation of any agreement
relating to any Intellectual Property, except for violations that, individually
or in the aggregate, have not resulted and could not reasonably be expected to
result in a Material Adverse Effect on the Company. After the completion of the
transactions contemplated by this Agreement, the Merger Sub will own all right,
title, and interest in and to or have a license to use all Intellectual Property
on identical terms and conditions as the Company enjoyed immediately prior to
such transactions, except for failures to own or have available for use that,
individually or in the aggregate, have not resulted and could not
<PAGE>
19
reasonably be expected to result in a Material Adverse Effect on the Company.
Section 3.15 Taxes. Except to the extent that failure to do so,
individually or in the aggregate, has not resulted and could not reasonably be
expected to result in a Material Adverse Effect on the Company, the Company and
the Company Subsidiaries have filed all Tax returns and reports to be filed by
them and have paid, or established adequate reserves for, all Taxes required to
be paid by them. Except as, individually or in the aggregate, has not resulted
and could not reasonably be expected to result in a Material Adverse Effect on
the Company, no deficiencies for any Taxes have been proposed, asserted or
assessed against the Company or any Company Subsidiaries, and no requests for
waivers of the time to assess any such Taxes are pending. As used in this
Agreement, "Taxes" shall mean all federal, state, local and foreign income,
-----
property, sales, excise and other taxes, tariffs or governmental charges of any
nature whatsoever.
Section 3.16 Non-Competition Agreements. Neither the Company nor
any Company Subsidiary is a party to any agreement which purports to restrict or
prohibit in any material respect the Company and the Company Subsidiaries
collectively from, directly or indirectly, engaging in any business currently
engaged in by the Company, any Company Subsidiary. None of the Company's
officers, directors or key employees is a party to any agreement which, by
virtue of such person's relationship with the Company, restricts in any material
respect the Company or any Company Subsidiary from, directly or indirectly,
engaging in any of such businesses.
Section 3.17 Assets.
(a) The Company and its Subsidiaries own, or otherwise have
sufficient and legally enforceable rights to use, all of the properties and
assets (real, personal or mixed, tangible or intangible), reasonably necessary
for the conduct of, or otherwise material to, their business and operations (the
"Material Assets"). The Company and its Subsidiaries have good, valid and
---------------
marketable title to, or in the case of leased property have good and valid
leasehold interests in, all Material Assets, including but not limited to all
such Material Assets reflected in the balance sheet dated as of September 24,
1999, constituting a portion of the Company's Quarterly Report on Form 10-Q for
the period ended September 24, 1999 or acquired since the date thereof
<PAGE>
20
(except as may have been disposed of in the ordinary course of business
consistent with past practices prior to the date hereof or in accordance
herewith), in each case free and clear of any Lien (as defined below), except
Liens. "Permitted Liens" means (a) Liens reserved against in the
---------------
September 24, 1999 Balance Sheet, to the extent so reserved, (b) Liens for Taxes
not yet due and payable or that are being contested in good faith by appropriate
proceedings and for which adequate reserves have been provided in accordance
with GAAP or that are statutory Liens for Taxes not yet delinquent, (c) those
Liens that are set forth in Schedule 3.17 of the Company Disclosure Letter and
(d) those Liens that, in the aggregate with all other Permitted Liens, do not
and will not materially detract from the value of the properties and assets of
any of the Company and its Subsidiaries or materially interfere with the present
use thereof.
Section 3.18 Opinion of Financial Advisor. William Blair &
Company L.L.C. (the "Company Financial Advisor") has delivered to the Board of
-------------------------
Directors of the Company its opinion to the effect that, as of the date of this
Agreement, the Merger Consideration is fair to the Company's stockholders from a
financial point of view (other than the Company Principal), accompanied by an
authorization to include a copy of such opinion in the Proxy Materials.
Section 3.19 Brokers. No broker, finder or investment banker
other than the Company Financial Advisor is entitled to any brokerage, finder's
or other fee or commission in connection with the Merger or the other
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. Prior to the date of this Agreement, the Company has
made available to the Merger Sub a complete and correct copy of all agreements
between the Company and the Company Financial Advisor under which the Company
Financial Advisor would be entitled to any payment relating to the Merger or any
other transactions.
Section 3.20 Certain Statutes . No "interested shareholder,"
"fair price," "moratorium," "control share acquisition" or other similar state
or federal anti-takeover statute or regulation (each a "Takeover Statute") is,
----------------
as of the date of this Agreement, applicable to the Merger or any other
transactions contemplated by this Agreement. No holder of shares of Common Stock
is entitled to exercise dissenters' or appraisal rights pursuant to (S) 14A:11-1
of the NJBC or otherwise.
Section 3.21 Information. None of the information to be supplied
by
<PAGE>
21
the Company for inclusion or incorporation by reference in the Proxy
Statement (as defined in Section 5.4) will, at the time of the mailing of the
Proxy Statement and any amendments or supplements of the Proxy Statement and at
the time of the Company Stockholders Meeting (as defined in Section 5.4),
contain any untrue statement of a material fact or omit to state any material
fact required to be stated in that Proxy Statement or necessary in order to make
the statements in that Proxy Statement, in light of the circumstances under
which they are made, not misleading. The Proxy Statement (except for those
portions of the Proxy Statement that relate only to Merger Sub or subsidiaries
or affiliates of the Merger Sub) will comply as to form in all material respects
with the provisions of the Exchange Act.
Section 3.22 Vote Required. The Requisite Company Vote is the only vote
of the holders of any class or series of the Company's capital stock necessary
(under the Company Charter Documents, the NJBC, other applicable Law or
otherwise) to approve this Agreement, the Merger or the other transactions
contemplated by this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF MERGER SUB
Merger Sub represents and warrants to the Company as follows:
Section 4.1 Organization. Merger Sub is a corporation duly
incorporated, validly existing and in good standing under the laws of New
Jersey. Since the date of its incorporation, Merger Sub has not engaged in any
activities other than in connection with arranging any financing required to
consummate the transaction contemplated hereby. For purposes of this Agreement,
"Merger Sub Material Adverse Effect" means any change in or effect on the
----------------------------------
business, assets, properties, results of operations or condition (financial or
otherwise) of Merger Sub that is or could reasonably be expected to be
materially adverse to Merger Sub, taken as a whole, or that could reasonably be
expected to materially impair the ability of Merger Sub to perform their
respective obligations under this Agreement or consummate the Merger and the
other transactions contemplated hereby.
Section 4.2 Binding Obligation. Merger Sub has all necessary
<PAGE>
22
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the Merger and the other
transactions contemplated by this Agreement to be consummated by it. This
Agreement has been duly authorized, executed and delivered by Merger Sub and,
assuming this Agreement constitutes a valid and binding obligation of the other
party hereto, constitutes the legal, valid and binding obligation of Merger Sub,
enforceable against Merger Sub in accordance with its terms, except as may be
limited by bankruptcy, insolvency, fraudulent, fraudulent conveyance,
reorganization, moratorium or similar laws from time to time in effect affecting
generally the enforcement of creditors' rights and remedies and by equitable
principles of general applicability.
Section 4.3 No Authorization or Consents Required. No
authorization or approval or other action by, and no notice to or filing with,
any Governmental Entity will be required to be obtained or made by Merger Sub in
connection with the due execution and delivery by Merger Sub of this Agreement
and the consummation by Merger Sub of the Merger as contemplated hereby other
than (i) compliance with applicable requirements of the Exchange Act, (ii)
compliance with the HSR Act, (iii) filings with the Secretary of State of New
Jersey to effect a recapitalization of Merger Sub prior to the Effective Time,
(iv) the filing of the Certificate of Merger in accordance with the NJBC, and
(v) where the failure to obtain such authorization, approval or action, or to
provide such notice or make such filing, individually or in the aggregate, has
not resulted and could not reasonably be expected to result in a Merger Sub
Material Adverse Effect.
Section 4.4 Financing Commitments. Merger Sub has delivered to
the Company true and complete copies of written commitments of (a) Parthenon
Investors, L.P., Chase Capital Partners and The Chase Manhattan Bank, as Trustee
for First Plaza Group Trust to provide equity financing in connection with the
transactions contemplated hereby (the "Equity Financing Commitments") and (b)
----------------------------
Fleet Boston Robertson Stephens Inc. and Fleet National Bank to provide debt
financing in connection with the transactions contemplated hereby (the "Debt
----
Financing Commitments"), each in amounts sufficient to consummate the
- ---------------------
transactions contemplated hereby. The commitment fees set forth in such
financing documents which are due and payable as of the date hereof have been
paid.
Section 4.5 No Conflict. The execution and delivery of this
Agreement by Merger Sub do not, and the performance of this Agreement by each of
Merger Sub will not:
<PAGE>
23
(a) conflict with or violate any provision of any Merger Sub
Charter Document;
(b) assuming that all consents, approvals, authorizations and
other actions described in Section 4.3 have been obtained and all filings and
obligations described in Section 4.3 have been made, conflict with or violate
any foreign or domestic Law applicable to Merger Sub or by which any property or
asset of Merger Sub is or may be bound or affected, except for any such
conflicts or violations which, individually or in the aggregate, have not
resulted and could not reasonably be expected to result in a Merger Sub Material
Adverse Effect; or
(c) result in any breach of or constitute a default (or an event
which with or without notice or lapse of time or both would become a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of Merger Sub under, any Contract to which Merger Sub is a
party or by which it or its assets or Properties is or may be bound or affected,
except for any such breaches, defaults or other occurrences which, individually
or in the aggregate, have not resulted and could not reasonably be expected to
result in a Merger Sub Material Adverse Effect;
Section 4.6 Information. None of the information to be supplied
by Merger Sub for inclusion or incorporation by reference in the Proxy Statement
(as defined in Section 5.4) will, at the time of the mailing of the Proxy
Statement and any amendments or supplements of the Proxy Statement and at the
time of the Company Stockholders Meeting (as defined in Section 5.4), contain
any untrue statement of a material fact or omit to state any material fact
required to be stated in that Proxy Statement or necessary in order to make the
statements in that Proxy Statement, in light of the circumstances under which
they are made, not misleading.
Section 4.7 Brokers. No broker, finder or investment banker other
than PaineWebber is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger or the other transactions contemplated
hereby based upon arrangements made by or on behalf of Merger Sub.
ARTICLE 5
<PAGE>
24
COVENANTS
Section 5.1 Conduct of Business of the Company. Except as
contemplated by this Agreement or with the prior written consent of Merger Sub,
during the period from the date of this Agreement to the Effective Time, the
Company will, and will cause each of the Company Subsidiaries to, conduct its
operations only in the ordinary course of business consistent with past practice
and will use its commercially reasonable efforts to, and to cause each Company
Subsidiary to, preserve intact the business organization of the Company and each
of the Company Subsidiaries, to keep available the services of the present
officers and key employees of the Company and the Company Subsidiaries, and to
preserve the good will of customers, suppliers and all other persons having
business relationships with the Company and the Company Subsidiaries. Without
limiting the generality of the foregoing, and except as otherwise contemplated
by this Agreement or disclosed in the Company Disclosure Letter, prior to the
Effective Time, the Company will not, and will not permit any Company Subsidiary
to, without the prior written consent of Merger Sub:
(a) adopt any amendment to the Company Charter Documents or the
comparable organizational documents of any Company Subsidiary;
(b) except for issuances of capital stock of Company Subsidiaries
to the Company or a wholly owned Company Subsidiary, issue, reissue or sell, or
authorize the issuance, reissuance or sale of (i) additional shares of capital
stock of any class, or securities convertible into capital stock of any class,
or any rights, warrants or options to acquire any convertible securities or
capital stock, other than the issue of Company Shares, in accordance with the
terms of the instruments governing such issuance on the date hereof, pursuant to
the exercise of Company Stock Options outstanding on the date hereof, or (ii)
any other securities in respect of, in lieu of, or in substitution for, Company
Shares outstanding on the date hereof;
(c) declare, set aside or pay any dividend or other distribution
(whether in cash, securities or property or any combination thereof) in respect
of any class or series of its capital stock other than between the Company and
any wholly owned Company Subsidiary;
(d) split, combine, subdivide, reclassify or redeem, purchase or
otherwise acquire, or propose to redeem or purchase or otherwise acquire, any
shares
<PAGE>
25
shares of its capital stock, or any of its other securities;
(e) except for (i) increases in salary, wages and benefits of
officers or employees of the Company or the Company Subsidiaries in accordance
with past practice, (ii) increases in salary, wages and benefits granted to
officers and employees of the Company or the Company Subsidiaries in conjunction
with new hires, promotions or other changes in job status or increases in
salary, wages and benefits to employees of the Company or the Company
Subsidiaries pursuant to collective bargaining agreements entered into in the
ordinary course of business, increase the compensation or fringe benefits
payable or to become payable to its directors, officers or employees (whether
from the Company or any Company Subsidiaries) except for year-end bonuses in
accordance with past practice, or pay any benefit not required by any existing
plan or arrangement (including the granting of stock options, stock appreciation
rights, shares of restricted stock or performance units) or grant any severance
or termination pay to (except pursuant to existing agreements, plans or
policies), or enter into any employment or severance agreement with, any
director, officer or other employee of the Company or any Company Subsidiaries
or establish, adopt, enter into, or materially amend any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, savings, welfare, deferred compensation, employment,
termination, severance or other employee benefit plan, agreement, trust, fund,
policy or arrangement for the benefit or welfare of any directors, officers or
current or former employees, except in each case to the extent required by
applicable Law; provided, however, that nothing in this Agreement will be deemed
to prohibit the payment of benefits as they become payable;
(f) acquire, sell, lease, license, transfer, pledge, encumber,
grant or dispose of (whether by merger, consolidation, purchase, sale or
otherwise) any material assets, including capital stock of Company Subsidiaries
(other than the acquisition and sale of inventory or the disposition of used or
excess equipment and the purchase of supplies and equipment, in either case in
the ordinary course of business consistent with past practice), or enter into
any material commitment or transaction outside the ordinary course of business,
other than transactions between a wholly owned Company Subsidiary and the
Company or another wholly owned Company Subsidiary;
(g) (i) incur, assume or prepay any long-term indebtedness or
incur or assume any short-term indebtedness (including, in either case, by
issuance of debt securities), except that the Company and the Company
Subsidiaries may incur,
<PAGE>
26
assume or prepay indebtedness in the ordinary course of business consistent with
past practice under existing lines of credit and pursuant to the Credit
Agreement, dated as of December 6, 1999, between the Company and certain other
parties thereto, (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other person except in the ordinary course of business, or (iii) make any
loans, advances or capital contributions to, or investments in, any other
person; or
(h) terminate, cancel or request any material change in, or
agree to any material change in any Contract which is material to the Company
and the Company Subsidiaries taken as a whole, or enter into any Contract which
would be material to the Company and the Company Subsidiaries taken as a whole,
in either case other than in the ordinary course of business consistent with
past practice; or make or authorize any capital expenditure or acquisition,
other than capital expenditures that are provided for in the Company's budget
for the Company and the Company Subsidiaries taken as a whole for such fiscal
year (a copy of which budget has been provided to Merger Sub);
(i) take any action with respect to accounting policies or
procedures, other than actions in the ordinary course of business and consistent
with past practice or as required pursuant to applicable Law or GAAP;
(j) waive, release, assign, settle or compromise any
material rights, claims or litigation;
(k) make any Tax election or settle or compromise any
material federal, state, local or foreign income Tax liability; or
(l) authorize or enter into any formal or informal written
or other agreement or otherwise make any commitment to do any of the foregoing.
Section 5.2 Other Actions. During the period from the date hereof
to the Effective Time, the Company and Merger Sub shall not, and shall not
permit any of their respective subsidiaries to, take any action that would, or
that could reasonably be expected to, result in any of the conditions to the
Merger set forth in Article 6 hereof not being satisfied.
Section 5.3 Notification of Certain Matters. Merger Sub and the
<PAGE>
27
Company shall promptly notify each other of (a) the occurrence or non-occurrence
of any fact or event which could reasonably be expected (i) to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Effective Time, (ii) to cause any material covenant, condition or agreement
hereunder not to be complied with or satisfied in all material respects or (iii)
to result in, in the case of Merger Sub, a Merger Sub Material Adverse Effect;
and, in the case of the Company, a Material Adverse Effect on the Company, (b)
any failure of the Company or Merger Sub, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder in any material respect; provided, however, that no such
notification shall affect the representations or warranties of any party or the
conditions to the obligations of any party hereunder, (c) any notice or other
material communications from any Governmental Entity in connection with the
transactions contemplated by this Agreement and (d) the commencement of any
suit, action or proceeding that seeks to prevent or seek damages in respect of,
or otherwise relates to, the consummation of the transactions contemplated by
this Agreement.
Section 5.4 Proxy Statement.
(a) As promptly as practicable after the execution of this
Agreement, Merger Sub and the Company shall jointly prepare and the Company
shall file with the SEC the proxy statement of the Company (the "Proxy
-----
Statement") relating to the special meeting of the Company's stockholders (the
- ---------
"Company Stockholders Meeting") to be held to consider approval and adoption of
----------------------------
this Agreement and the Merger. Substantially contemporaneously with the filing
of the Proxy Statement with the SEC, copies of the Proxy Statement shall be
provided to the National Association of Securities Dealers, Inc. ("NASD").
----
Merger Sub or the Company, as the case may be, shall furnish all information
concerning Merger Sub or the Company as the other party may reasonably request
in connection with such actions and the preparation of the Proxy Statement and
any other filings required to be made in connection within this Agreement and
the transactions contemplated hereby, including, without limitation, a
Transaction Statement on Schedule 13E-3 (collectively, the "Other Filings"). As
-------------
promptly as practicable the Proxy Statement will be mailed to the stockholders
of the Company. The Company shall cause the Proxy Statement and the Other
Filings to be filed by it to comply as to form and substance in all material
respects with the applicable requirements of (i) the Exchange Act, including
Sections 14(a) and 14(d) thereof and the respective regulations promulgated
thereunder, (ii) the Securities Act, (iii) the rules and regulations of the NASD
and (iv) the NJBC.
<PAGE>
28
(b) The Proxy Statement shall include the recommendation of the
Board of Directors of the Company to the stockholders of the Company that they
vote in favor of the adoption of this Agreement and the Merger; provided,
however, that subject to Section 7.5(b), the Board of Directors of the Company
may, at any time prior to the Effective Time, withdraw, modify or change any
such recommendation if the Board of Directors of the Company determines in good
faith that failure to so withdraw, modify or change its recommendation would
cause the Board of Directors of the Company to breach its fiduciary duties to
the Company's stockholders under applicable Laws after receipt of advice to such
effect from independent legal counsel (who may be the Company's regularly
engaged independent legal counsel). In addition, the Proxy Statement and the
Proxy Materials will include a copy of the written opinion of the Company
Financial Advisor referred to in Section 3.18.
(c) No amendment or supplement to the Proxy Statement will be
made without the approval of each of Merger Sub and the Company, which approval
shall not be unreasonably withheld or delayed, unless such amendment or
supplement to the Proxy Statement is required to be made by the Company under
applicable Laws. Each of Merger Sub and the Company will advise the other,
promptly after it receives notice thereof, or of any request by the SEC or the
NASD for amendment of the Proxy Statement and the Other Filings or comments
thereon and responses thereto or requests by the SEC for additional information.
(d) The information supplied by the Company for inclusion in the
Proxy Statement shall not, at (i) the time the Proxy Materials (or any amendment
thereof or supplement thereto) is first mailed to the stockholders of the
Company, (ii) the time of the Company Stockholders' Meeting, and (iii) the
Effective Time, contain any untrue statement of a material fact or fails to
state any material fact required to be stated in the Proxy Statement or
necessary in order to make the statements in the Proxy Statement not misleading.
If at any time prior to the Effective Time any event or circumstance relating to
the Company or any Company Subsidiary, or their respective officers or
directors, should be discovered by the Company that should be set forth in an
amendment or a supplement to the Proxy Statement, the Company shall promptly
inform Merger Sub. All documents that the Company is responsible for filing with
the SEC in connection with the transactions contemplated hereby will comply as
to form and substance in all material respects with the applicable requirements
of the NJBC, the Securities Act and the Exchange Act.
(e) The information supplied by Merger Sub for inclusion in
<PAGE>
29
the Proxy Statement shall not, at (i) the time the Proxy Materials (or any
amendment of or supplement to the Proxy Materials) are first mailed to the
stockholders the Company, (ii) the time of the Company Stockholders Meeting, and
(iii) the Effective Time, contain any untrue statement of a material fact or
fail to state any material fact required to be stated in the Proxy Statement or
necessary in order to make the statements in the Proxy Statement not misleading.
If, at any time prior to the Effective Time, any event or circumstance relating
to Merger Sub or any Merger Sub Subsidiary, or their respective officers or
directors, should be discovered by Merger Sub that should be set forth in an
amendment or a supplement to the Proxy Statement, Merger Sub shall promptly
inform the Company. All documents that Merger Sub is responsible for filing in
connection with the transactions contemplated by this Agreement will comply as
to form and substance in all material aspects with the applicable requirements
of NJBC, the Securities Act and the Exchange Act.
(f) The information supplied by any party for inclusion in
another party's Other Filing will be true and correct in all material respects.
Section 5.5 Stockholders' Meeting. The Company shall call and hold
the Company Stockholders Meeting as promptly as practicable for the purpose of
voting upon the adoption of this Agreement and Merger Sub and the Company will
cooperate with each other to cause the Company Stockholders Meeting to be held
as soon as practicable following the mailing of the Proxy Materials to the
stockholders of the Company. The Company shall use its best efforts (through its
agents or otherwise) to solicit from its stockholders proxies in favor of the
adoption of this Agreement, and shall take all other action necessary or
advisable to secure Requisite Company Vote, except, subject to 7.5(b), to the
extent that the Board of Directors of the Company determines in good faith that
doing so would cause the Board of Directors of the Company to breach its
fiduciary duties to the Company's stockholders under applicable Law after
receipt of advice to such effect from independent legal counsel (who may be the
Company's regularly engaged independent legal counsel).
Section 5.6 Access to Information; Confidentiality. From the date
of this Agreement to the Effective Time, the Company shall (and shall cause
subsidiaries to): (i) provide to Merger Sub and Merger Sub (and its respective
officers, directors, employees, accountants, consultants, legal counsel,
financial advisors, investment bankers, financing sources and their respective
advisors, agents and other representatives (collectively, "Representatives"))
---------------
access at reasonable times upon prior notice to the officers, employees, agents,
properties, offices and other facilities of the
<PAGE>
30
Company and its subsidiaries and to the books and records thereof; and (ii)
furnish promptly such information concerning the business, properties,
Contracts, assets, liabilities, personnel and other aspects of the Company and
its subsidiaries as Merger Sub or its Representatives may reasonably request. No
investigation conducted under this Section 5.6 shall affect or be deemed to
modify any representation or warranty made in this Agreement. Merger Sub agrees
that any information furnished pursuant to this Section 5.6 will be subject to
the letter agreement, dated July 29, 1999, between the Company and Parthenon
Capital (the "Confidentiality Agreement").
-------------------------
Section 5.7 No Solicitation.
(a) The Company agrees that, prior to the Effective Time,
it shall not, and shall not authorize or permit any Company Subsidiaries or any
of its or the Company Subsidiaries' directors, officers, employees, investment
bankers, attorneys or other agents or representatives, directly or indirectly,
to solicit, initiate or encourage any inquiries or the making of any proposal or
provide any information about the Company or the Company Subsidiaries with
respect to any merger, consolidation or other business combination involving the
Company or the Company Subsidiaries or their respective assets or capital stock
(a "Takeover Proposal") or negotiate, explore or otherwise engage in discussions
-----------------
with any person (other than Merger Sub or its directors, officers, employees,
agents and representatives) with respect to any Takeover Proposal or enter into
any agreement, arrangement or understanding requiring it to abandon, terminate
or fail to consummate the Merger or any other transactions contemplated by this
Agreement; provided, however, that if the Board of Directors of the Company
determines in good faith, after consultation with outside counsel, that it is
necessary to do so in order to act in a manner consistent with its fiduciary
duties to the Company's stockholders under applicable law, the Company may, in
response to any Superior Proposal (as defined below), which proposal was not
solicited by it and which did not otherwise result from a breach of this Section
5.7, and subject to providing prior written notice of its decision to take such
action to Merger Sub and compliance with the other requirements of this Section
5.7, (i) furnish information with respect to the Company and the Company
Subsidiaries to any person making a Superior Proposal pursuant to a customary
confidentiality agreement no less favorable to the Company than the
confidentiality agreement previously entered into by the Company and Merger Sub
(as determined in good faith by the Company based on the advice of its outside
counsel) and (ii) participate in discussions or negotiations regarding such
Superior Proposal.
<PAGE>
31
(b) Except as expressly permitted by this Agreement, neither the
Board of Directors of the Company nor any committee thereof shall (i) withdraw
or modify, or propose publicly to withdraw or modify, in a manner adverse to
Merger Sub, the approval or recommendation by the Board of Directors of the
Company or such committee of the Merger or this Agreement, (ii) approve or
recommend, or propose publicly to approve or recommend, any Takeover Proposal,
or (iii) cause the Company to enter into any Acquisition Agreement.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 5.7, the Company shall promptly advise
Merger Sub orally and in writing of any request for information or any Takeover
Proposal, the material terms and conditions of such request or Takeover Proposal
(and any amendments or proposed amendments thereto) and the identity of the
person making such request or Takeover Proposal.
(d) Nothing contained in this Section 5.7 shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to the Company's stockholders if, in the good faith judgment of the
Board of Directors of the Company, after consultation with outside counsel and
based as to legal matters on the written advice of the Company's independent
legal counsel, failure so to disclose would be inconsistent with its obligations
under applicable law; provided, however, that, except as contemplated by clause
(b) of this Section 5.7, neither the Company nor the Board of Directors of the
Company nor any committee thereof shall withdraw or modify, or propose publicly
to withdraw or modify, its position with respect to this Agreement or the Merger
or approve or recommend, or propose publicly to approve or recommend, a Takeover
Proposal.
(e) For purposes of this Agreement:
(i) "Superior Proposal" means any proposal made by a third
-----------------
party to acquire, directly or indirectly, including pursuant to a tender
offer, exchange offer, merger, consolidation, business combination,
recapitalization, reorganization, liquidation, dissolution or similar
transaction, for consideration to the Company's stockholders consisting of
cash and/or securities, all of the shares of the Company's capital stock
then outstanding or all or substantially all the assets of the Company, on
terms which the Board of Directors of the Company determines in its good
faith judgment to be more
<PAGE>
32
favorable to the Company's stockholders than the Merger and for which
financing, to the extent required, is then committed or which, in the good
faith judgment of the Board of Directors of the Company, is reasonably
capable of being obtained by such third party.
(ii) "Acquisition Agreement" means any letter of intent,
---------------------
agreement in principle, acquisition agreement or other similar agreement,
contract or commitment related to any Takeover Proposal.
Section 5.8 Directors' and Officers' Indemnification and Insurance.
(a) Merger Sub agrees that all rights to indemnification
now existing in favor of any employee, agent, director or officer of the Company
and the Company Subsidiaries (the "Indemnified Parties") as provided in their
-------------------
respective charters or by-laws, in an agreement between an Indemnified Party and
the Company or one of the Company Subsidiaries, or otherwise in effect on the
date hereof shall survive the Merger and shall continue in full force and effect
for a period of not less than six years from the Effective Time; provided that
in the event any claim or claims are asserted or made within such six-year
period, all rights to indemnification in respect of any such claim or claims
shall continue until final disposition of any and all such claims. Merger Sub
also agrees that the Surviving Corporation shall indemnify all Indemnified
Parties to the fullest extent permitted by applicable law with respect to all
acts and omissions arising out of such individuals' services as officers,
directors, employees or agents of the Company or any of the Company Subsidiaries
or as trustees or fiduciaries of any plan for the benefit of employees, or
otherwise on behalf of, the Company or any of the Company Subsidiaries,
occurring prior to the Effective Time including the transactions contemplated by
this Agreement. Without limiting of the foregoing, in the event any such
Indemnified Party is or becomes involved in any capacity in any action,
proceeding or investigation in connection with any matter, including the
transactions contemplated by this Agreement, occurring prior to, and including,
the Effective Time, the Surviving Corporation will pay as incurred such
Indemnified Party's legal and other expenses (including the cost of any
investigation and preparation) incurred in connection therewith.
(b) Merger Sub agrees that from and after the Effective
Time, the Surviving Corporation shall cause to be maintained in effect for not
less than six years from the Effective Time the current policies of the
directors' and officers' liability insurance maintained by the Company; provided
that the Surviving Corporation
<PAGE>
33
may substitute therefor policies of at least the same coverage containing terms
and conditions which are no less advantageous and provided that such
substitution shall not result in any gaps or lapses in coverage with respect to
matters occurring prior to the Effective Time; and provided, further, that the
Surviving Corporation shall not be required to pay an annual premium in excess
of 150% of the last annual premium paid by the Company prior to the date hereof
and if the Surviving Corporation is unable to obtain the insurance required by
this Section 5.8(b) it shall obtain as much comparable insurance as possible for
an annual premium equal to such maximum amount.
Section 5.9 Reasonable Best Efforts. Subject to the terms and
conditions provided in this Agreement and to applicable legal requirements, each
of the parties hereto agrees to use its reasonable best efforts to take, or
cause to be taken, all action, and to do, or cause to be done, in the case of
the Company, consistent with the fiduciary duties of the Company's Board of
Directors, and to assist and cooperate with the other parties hereto in doing,
as promptly as practicable, (i) all things necessary, proper or advisable under
applicable laws and regulations to ensure that the conditions set forth in
Article 6 are satisfied; (ii) to consummate and make effective the transactions
contemplated by this Agreement; and (iv) cause the Effective Time to take place
promptly following shareholder approval of the Merger and in no instance later
than the date referred to in Section 7.1(b). If at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, including the execution of additional instruments, the proper
officers and directors of each party to this Agreement shall take all such
necessary action.
Section 5.10 Consents; Filings; Further Action.
(a) Upon the terms and subject to the conditions hereof,
each of the parties hereto shall use its reasonable best efforts to (i) take, or
cause to be taken, all appropriate action, and do, or cause to be done, all
things necessary, proper or advisable under applicable Law or otherwise to
consummate and make effective the Merger and the other transactions contemplated
hereby, (ii) obtain from Governmental Entities any consents, licenses, permits,
waivers, approvals, authorizations or orders required to be obtained or made by
Merger Sub or the Company or any of their subsidiaries in connection with the
authorization, execution and delivery of this Agreement and the consummation of
the Merger and the other transactions contemplated hereby, (iii) make all
necessary filings, and thereafter make any other submissions either required or
deemed appropriate by each of the parties, with respect to this Agreement and
the Merger and the other transactions contemplated hereby
<PAGE>
34
required under (A) the Securities Act, the Exchange Act and any other applicable
federal or Blue Sky Laws, (B) the HSR Act, (C) the NJBC, (D) any other
applicable Law and (E) the rules and regulations of NASD. The parties hereto
shall cooperate and consult with each other in connection with the making of all
such filings, including by providing copies of all such documents to the
nonfiling party and its advisors prior to filing, and none of the parties will
file any such document if any of the other parties shall have reasonably
objected to the filing of such document. No party to this Agreement shall
consent to any voluntary extension of any statutory deadline or waiting party or
to any voluntary delay of the consummation of the Merger and the other
transactions contemplated hereby at the behest of any Governmental Entity
without the consent and agreement of the other parties to this Agreement, which
consent shall not be unreasonably withheld or delayed.
(b) Notwithstanding the foregoing, nothing in this Section
5.10 shall require, or be construed to require, Merger Sub or the Company, in
connection with the receipt of any regulatory approval, to proffer to, or agree
to (A) sell or hold separate and agree to sell, divest or to discontinue to or
limit, before or after the Effective Time, any assets, businesses, or interest
in any assets or businesses of Merger Sub, the Company or any of their
respective affiliates (or to the consent to any sale, or agreement to sell, or
discontinuance or limitation by Merger Sub or the Company, as the case may be,
of any of its assets or businesses) or (B) agree to any conditions relating to,
or changes or restriction in, the operations of any such asset or businesses
which, in either case, could reasonably be expected to result in a Merger Sub
Material Adverse Effect or a Material Adverse Effect on the Company or to
materially and adversely impact the economic or business benefits to such party
of the transactions contemplated by this Agreement.
Section 5.11 Public Announcements. The initial press release
concerning the Merger shall be a joint press release and, thereafter, Merger Sub
and the Company shall consult with each other before issuing any press release
or otherwise making any public statements with respect to this Agreement or any
of the transactions contemplated hereby and shall not issue any such press
release or make any such public statement prior to such consultation, except to
the extent required by applicable Law or the requirements of NASD, in which case
the issuing party shall use its reasonable best efforts to consult with the
other parties before issuing any such release or making any such public
statement.
Section 5.12 Stock Exchange Listings and De-Listings. The parties
shall use their reasonable best efforts to cause the Surviving Corporation to
cause the
<PAGE>
35
Company Common Stock to be de-listed from NASD and de-registered under the
Exchange Act as soon as practicable following the Effective Time.
Section 5.13 Expenses. Except as otherwise provided in Section 7.5
(b) and (d), whether or not the Merger is consummated, all Expenses incurred in
connection with this Agreement and the Merger and the other transactions
contemplated hereby shall be paid by the party incurring those Expenses.
Section 5.14 Takeover Statutes. If any Takeover Statute is or may
become applicable to the Merger or the other transactions contemplated hereby,
each of Merger Sub and the Company and its board of directors shall grant such
approvals and take such actions as are necessary so that such transactions may
be consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise act to eliminate or minimize the effects of such statute
or regulation on such transactions.
Section 5.15 Employee Benefit Arrangements.
(a) Merger Sub agrees that the Company and the Company
Subsidiaries will honor, and, from and after the Effective Time, the Surviving
Corporation will honor, in accordance with their respective terms as in effect
on the date hereof, the employment, severance and bonus agreements and
arrangements to which the Company and the Company Subsidiaries, as applicable,
are a party and which are set forth on Schedule 3.10.
(b) Merger Sub agrees that for a period of one year
following the Effective Time, the Surviving Corporation shall continue the (i)
compensation (including bonus and incentive awards) programs and plans and (ii)
employee benefit and welfare plans, programs, contracts, agreements and policies
(including insurance and pension plans but not including stock option or any
other equity-based plan or program), fringe benefits and vacation policies which
are currently provided by the Company; provided that notwithstanding anything in
--------
this Agreement to the contrary the Surviving Corporation shall not be required
to maintain any individual plan or program so long as the benefit plan and
agreements maintained by the Surviving Corporation are, in the aggregate, not
materially less favorable than those provided by the Company immediately prior
to the date of this Agreement; and, provided, further, that nothing in this
-------- -------
sentence shall be deemed to limit or otherwise affect the right of the Surviving
Corporation to terminate employment or change the place of work,
responsibilities, status or designation of any employee or group of employees as
the Surviving
<PAGE>
36
Corporation may determine in the exercise of its business judgment and in
compliance with applicable laws.
Section 5.16 Issuance of Class C Preferred Stock. The Company shall
promptly adopt and file with the Secretary of State of New Jersey a resolution
establishing and designating 200,000 shares of the Class C Preferred Stock
having the relative rights, preferences and limitations set forth in Exhibit A
hereto. As part of the Company's plan of recapitalization, upon the surrender of
shares of Common Stock by the Principal Stockholder, the Company shall promptly
issue an equal number of shares of Class C Preferred Stock, without any
additional consideration therefor, such shares of Class C Preferred Stock to be
validly issued, fully paid and non-assessable. The shares of Common Stock so
exchanged shall be treasury shares.
Section 5.17 Solvency Matters. The Company shall provide to its
Board of Directors and Merger Sub any reports or opinions relating to the
solvency of the Surviving Corporation that are prepared in connection with the
financing pursuant to the Debt Financing Commitments and shall cause such
reports and opinions to be addressed to the Board of Directors of the Company.
ARTICLE 6
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger and
consummate the other transactions contemplated hereby to be consummated on the
Closing Date is subject to the satisfaction or waiver at or prior to the
Effective Time of each of the following conditions:
(a) Stockholder Approval. This Agreement and consummation
of the Merger shall have been duly approved and adopted by the holders of
outstanding Common Stock by the Requisite Company Vote.
(b) Governmental Consents. The waiting period applicable to
the consummation of the Merger under the HSR Act shall have expired or been
<PAGE>
37
terminated.
(c) Litigation. No court or Governmental Entity of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any Law, order injunction or decree (whether temporary, preliminary
or permanent) that is in effect and restrains, enjoins or otherwise
prohibits consummation of the Merger or the other transactions contemplated
hereby or that, individually or in the aggregate with all other such Laws,
orders injunctions or decrees, could reasonably be expected to result in a
Merger Sub Material Adverse Effect or a Material Adverse Effect on the
Company, and no Governmental Entity shall have instituted any proceeding or
threatened to institute any proceeding seeking any such Law, order
injunction or decree.
Section 6.2 Conditions to Obligations of Merger Sub. The
obligation of Merger Sub to effect the Merger and consummate the other
transactions contemplated hereby to be consummated on the Closing Date are
also subject to the satisfaction or waiver by Merger Sub at or prior to the
Effective Time of the following conditions:
(a) Representations and Warranties. The
representations and warranties of the Company set forth in this Agreement
that are qualified as to materiality shall be true and correct in all
respects, and the representations and warranties of the Company set forth
in this Agreement that are not so qualified shall be true and correct in
all material respects, in each case as of the date of this Agreement and as
of the Closing Date, as though made on and as of the Closing Date, except
to the extent the representation or warranty is expressly limited by its
terms to another date, and Merger Sub shall have received a certificate
(which certificate may be qualified by knowledge to the same extent as the
representations and warranties of the Company contained in this Agreement
are so qualified) signed on behalf of the Company by an executive officer
of the Company to such effect.
(b) Performance of Obligations of the Company. The
Company shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the
Closing Date, and the Merger Sub shall have received a certificate signed
on behalf of the Company by an executive officer of the Company to such
effect.
(c) Material Adverse Effect. Since the date of this
<PAGE>
38
Agreement, there shall have been no Material Adverse Effect on the Company
and Merger Sub shall have received a certificate of an executive officer of
the Company to such effect.
(d) Financing. The Surviving Corporation shall have
obtained the debt financing necessary to consummate the Merger, to pay all
fees and expenses in connection therewith, refinance existing indebtedness
of the Company and to provide working capital for the Surviving Corporation
pursuant to the Debt Financing Commitments or other substantially
equivalent financing.
(e) Consents Under Agreements. The Company shall have
obtained the consent, approval or waiver of each person whose consent,
approval or waiver shall be required in order to consummate the
transactions contemplated by this Agreement, except those for which the
failure to obtain such consent, approval or waiver, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect on the Company.
(f) Company Voting Agreement. The Company Principal
shall have performed in all material respects all obligations required to
be performed by him under the Company Voting Agreement prior to the Closing
Date.
Section 6.3 Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger and consummate the other
transactions contemplated hereby to be consummated on the Closing Date is
also subject to the satisfaction or waiver by the Company at or prior to
the Effective Time of the following conditions:
(a) Representations and Warranties. The
representations and warranties of Merger Sub set forth in this Agreement
that are qualified as to materiality shall be true and correct in all
respects, and the representations and warranties of Merger Sub set forth in
this Agreement that are not so qualified shall be true and correct in all
material respects, in each case as of the date of this Agreement and as of
the Closing Date, as though made on and as of the Closing Date, except to
the extent the representation or warranty is expressly limited by its terms
to another date, and the Company shall have received a certificate (which
certificate may be qualified by knowledge to the same extent as the
representations and warranties of Merger Sub contained in this Agreement
are so qualified) signed on behalf of Merger Sub by an executive officer of
Merger Sub to such effect.
<PAGE>
39
(b) Performance of Obligations of Merger Sub. Merger
Sub shall have performed in all material respects all obligations required
to be performed by it under this Agreement at or prior to the Closing Date,
and the Company shall have received a certificate signed on behalf of
Merger Sub by an executive officer of Merger Sub to such effect.
(c) Material Adverse Effect. Since the date of this
Agreement, there shall have been no Merger Sub Material Adverse Effect and
the Company shall have received a certificate of an executive officer of
Merger Sub to such effect.
(d) Consents Under Agreements. Merger Sub shall have
obtained the consent, approval or waiver of each person whose consent,
approval or waiver shall be required in order to consummate the
transactions contemplated by this Agreement, except those for which failure
to obtain such consents, approval or waiver, individually or in the
aggregate, could not reasonably be expected to result in a Merger Sub
Material Adverse Effect.
ARTICLE 7
TERMINATION
Section 7.1 Termination. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time,
notwithstanding any requisite approval and adoption of this Agreement, as
follows:
(a) by mutual written consent of Merger Sub and the
Company duly authorized by their respective boards of directors;
(b) by either Merger Sub or the Company, if the
Effective Time shall not have occurred on or before June 30, 2000;
provided, however, that the right to terminate this Agreement under this
Section 7.1(b) shall not be available to the party whose failure to fulfill
any obligation under this Agreement shall have been the cause of, or
resulted in, the failure of the Effective Time to occur on or before such
date;
<PAGE>
40
(c) by either Merger Sub or the Company, if any order
injunction or decree preventing the consummation of the Merger shall have
been entered by any court of competent jurisdiction or Governmental Entity
and shall have become final and nonappealable;
(d) by Merger Sub, if (i) the Board of Directors of
the Company withdraws, modifies or changes its approval or recommendation
of this Agreement in a manner adverse to Merger Sub or shall have resolved
to do so, (ii) the Board of Directors of the Company shall have recommended
to the stockholders of the Company a Takeover Proposal or shall have
resolved to do so, or (iii) a tender offer or exchange offer for any
outstanding shares of capital stock of the Company is commenced and the
Board of Directors of the Company fails to recommend against acceptance of
such tender offer or exchange offer by its stockholders (including by
taking no position with respect to the acceptance of such tender offer or
exchange offer by its stockholders); or (iv) the Company fails to promptly
mail the Proxy to the stockholders after receiving SEC approval;
(e) by Merger Sub or the Company, if this Agreement
shall fail to receive the Requisite Vote for adoption at the Company
Stockholders Meeting or any adjournment or postponement thereof;
(f) by Merger Sub, upon a breach of any material
representation, warranty, covenant or agreement on the part of the Company
set forth in this Agreement, or if any representation or warranty of the
Company shall have become untrue, in either case such that the conditions
set forth in either of Section 6.2(a) or 6.2(b) would not be satisfied (a
"Terminating Company Breach"); provided, however, that, if such Terminating
--------------------------
Company Breach is curable by the Company through the exercise of its
reasonable best efforts and for so long as the Company continues to
exercise such reasonable best efforts, the Merger Sub may not terminate
this Agreement under this Section 7.1(f);
(g) by the Company, upon breach of any material
representation, warranty, covenant or agreement on the part of Merger Sub
set forth in this Agreement, or if any representation or warranty of Merger
Sub shall have become untrue, in either case such that the conditions set
forth in either of Section 6.3(a) or 6.3(b) would not be satisfied (a
"Terminating Merger Sub Breach"); provided, however, that, if such
-----------------------------
Terminating Merger Sub Breach is curable by Merger Sub through its
reasonable best efforts and for so long as Merger Sub continues to exercise
such reasonable best efforts, the Company may not terminate this Agreement
under this
<PAGE>
41
Section 7.1(g);
(h) by the Company, if the Board of Directors of the
Company shall, following receipt of advice of independent legal counsel
(who may be the Company's regularly engaged independent legal counsel) that
failure to so terminate would cause the Board of Directors of the Company
to breach its fiduciary duties under applicable Laws and, on or prior to
such date, any person or group (other than Merger Sub) shall have made a
public announcement or otherwise communicated to the Company and its
stockholders with respect to a Superior Proposal; provided, however, that
the Company may not terminate this Agreement pursuant to this Section
7.1(h) until five business days have elapsed following delivery to Merger
Sub of written notice of such determination of the Company (which written
notice will inform Merger Sub of the material terms and conditions of the
Superior Proposal); provided, further, however, that such termination under
this Section 7.1(h) shall not be effective until the Company has made
payment to Merger Sub of the amounts required to be paid pursuant to
Section 7.5(b).
Section 7.2 Effect of Termination. Except as provided in
Section 8.2, in the event of termination of this Agreement pursuant to
Section 7.1, this Agreement shall forthwith become void, there shall be no
liability under this Agreement on the part of Merger Sub or the Company or
any of their respective Representatives, and all rights and obligations of
each party hereto shall cease, subject to the remedies of the parties set
forth in Sections 7.5(b) and (c); provided, however, that nothing in this
Agreement shall relieve any party from liability for the breach of any of
its representations and warranties or any of its covenants or agreements
set forth in this Agreement.
Section 7.3 Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards
of Directors at any time prior to the Effective Time; provided that, after
the approval of this Agreement by the stockholders of the Company, no
amendment may be made that would reduce the amount or change the type of
consideration into which each Company Share shall be converted upon
consummation of the Merger. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
Section 7.4 Waiver. At any time prior to the Effective Time,
any party hereto may (a) extend the time for the performance of any
obligation or other act of any other party hereto, (b) waive any inaccuracy
in the representations and
<PAGE>
42
warranties contained in this Agreement or in any document delivered
pursuant hereto, and (c) waive compliance with any agreement or condition
contained in this Agreement. Any waiver of a condition set forth in Section
6.1, or any determination that such a condition has been satisfied, will be
effective only if made in writing by each of the Company and Merger Sub
and, unless otherwise specified in such writing, shall thereafter operate
as a waiver (or satisfaction) of such conditions for any and all purposes
of this Agreement. Any such extension or waiver shall be valid if set forth
in an instrument in writing signed by the party or parties to be bound
thereby.
Section 7.5 Expenses following Termination.
(a) Except as set forth in this Section 7.5, all
Expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid in accordance with the provisions of
Section 5.13. For purposes of this Agreement, "Expenses" consist of all
--------
out-of-pocket expenses (including all fees, commitment fees and expenses of
counsel, accountants, commercial and investment bankers, lenders, experts
and consultants to a party hereto and its affiliates) incurred by a party
or on its behalf to the extent directly related to the authorization,
preparation, negotiation, execution and performance of this Agreement, the
preparation, printing, filing and mailing of the Proxy Statement, the
solicitation of stockholder approvals and all other matters related to the
closing of the transactions contemplated hereby up to a maximum of
$1,000,000.
(b) The Company agrees that, if (i) the Company shall
terminate this Agreement pursuant to Section 7.1(h), (ii) Merger Sub shall
terminate this Agreement pursuant to Section 7.1(d), or (iii) (A) Merger
Sub shall terminate this Agreement pursuant to Section 7.1(e) due to the
failure to obtain the approval of the Company's stockholders at the Company
Stockholders' Meeting and (B) at the time of such failure, any person shall
have made a public announcement or otherwise communicated to the Company
and its stockholders with respect to a Takeover Proposal with respect to
the Company, then in accordance with Section 7.5(c), after such
termination, or in the case of clause (iii) after the consummation of such
Takeover Proposal, the Company shall pay to Merger Sub an amount equal to
Merger Sub's documented Expenses in connection with this Agreement and the
transactions contemplated hereby and a termination fee in the amount of
$7,000,000 (collectively, such Expenses and such fee, the
"Termination Amount"), which Termination Amount shall be exclusive of any
------------------
Expenses paid pursuant to Section 5.13.
<PAGE>
43
(c) Any payment required to be made pursuant to
Section 7.5(b) shall be made to Merger Sub by the Company not later than
two business days after delivery to the Company by Merger Sub of notice of
demand for payment and shall be made by wire transfer of immediately
available funds to an account designated by Merger Sub.
(d) The Company agrees that it shall pay to Merger Sub
an amount equal to Merger Sub's documented Expenses directly related to
this Agreement and the transactions contemplated hereby if this Agreement
is terminated pursuant to 7.1(e) or 7.1(f), and Merger Sub agrees that it
shall pay to the Company an amount equal to the Company's documented
Expenses directly related to this Agreement and the transactions
contemplated hereby if this Agreement is terminated pursuant to Section
7.1(g).
(e) The Company acknowledges that the agreements
contained in this Section 7.5 are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Merger
Sub would not enter into this Agreement; accordingly, if the Company fails
to pay promptly the Termination Amount, and, in order to obtain such
payment, Merger Sub commences a suit which results in a judgment against
the Company for the Termination Amount, the Company shall pay to Merger
Sub's Expenses in connection with such suit, together with interest on the
amount of the Termination Amount at the prime rate of Fleet National Bank
in effect on the date such payment was required to be made.
ARTICLE 8
MISCELLANEOUS
Section 8.1 Certain Definitions. For purposes of this
Agreement:
(a) The term "affiliate," as applied to any person,
---------
means any other person directly or indirectly controlling, controlled by,
or under common control with, that person. For the purposes of this
definition, "control" (including, with correlative meanings, the terms
-------
"controlling," "controlled by" and "under common control with"), as applied
----------- ------------- -------------------------
to any person, means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of that
person, whether through the ownership of voting securities, by contract or
otherwise.
<PAGE>
44
(b) The term "business day" means any day, other than
------------
Saturday, Sunday or a federal holiday, and shall consist of the time period from
12:01 a.m. through 12:00 midnight Eastern time. In computing any time period
under this Agreement, the date of the event which begins the running of such
time period shall be included except that if such event occurs on other than a
business day such period shall begin to run on and shall include the first
business day thereafter.
(c) The term "including" means, unless the context clearly
---------
requires otherwise, including but not limited to the things or matters named or
listed after that term.
(d) The term "knowledge," as applied to the Company or the
---------
Merger Sub, means the knowledge of the executive officers of the Company or the
Merger Sub, as the case may be.
(e) The term "person" shall include individuals,
------
corporations, limited and general partnerships, trusts, limited liability
companies, associations, joint ventures, Governmental Entities and other
entities and groups (which term shall include a "group" as such term is defined
-----
in Section 13(d)(3) of the Exchange Act).
(f) The term "subsidiary" or "subsidiaries" means, with
---------- ------------
respect to the Merger Sub, the Company or any other person, any entity of which
the Merger Sub, the Company or such other person, as the case may be (either
alone or through or together with any other subsidiary), owns, directly or
indirectly, stock or other equity interests constituting more than 50% of the
voting or economic interest in such entity.
Section 8.2 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
and in any certificate delivered under this Agreement shall terminate at the
Effective Time or upon the termination of this Agreement under Section 7.1, as
the case may be, except that the agreements set forth in Articles 1 and 2 and
Sections 5.8 and 5.13 shall survive the Effective Time, those set forth in
Sections 5.6, 7.2 and 7.5 and this Article 8 shall survive termination of this
Agreement and those set forth in Section 5.13 shall survive for a period of one
year after termination of this Agreement. Each party agrees that, except for the
representations and warranties contained in this Agreement and the Company
Disclosure Letter, no party to this Agreement has made any other representations
and warranties, and each party disclaims any other representations and
<PAGE>
45
warranties, made by itself or any of its officers, directors, employees, agents,
financial and legal advisors or other Representatives with respect to the
execution and delivery of this Agreement or the transactions contemplated by
this Agreement, notwithstanding the delivery of disclosure to any other party or
any party's representatives of any documentation or other information with
respect to any one or more of the foregoing.
Section 8.3 Counterparts. This Agreement may be executed in any
number of counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts shall together constitute the same
agreement.
Section 8.4 Governing Law and Venue; Waiver of Jury Trial.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL
RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH
THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW
PRINCIPLES, EXCEPT THAT NEW JERSEY LAW SHALL APPLY TO THE EXTENT REQUIRED IN
CONNECTION WITH THE EFFECTUATION OF THE MERGER. The parties irrevocably submit
to the jurisdiction of the federal courts of the United States of America
located in the State of New York solely in respect of the interpretation and
enforcement of the provisions of this Agreement and of the documents referred to
in this Agreement, and in respect of the transactions contemplated by this
Agreement and by those documents, and hereby waive, and agree not to assert, as
a defense in any action, suit or proceeding for the interpretation or
enforcement of this Agreement or of any such document, that it is not subject to
this Agreement or that such action, suit or proceeding may not be brought or is
not maintainable in said courts or that the venue thereof may not be appropriate
or that this Agreement or any such document may not be enforced in or by such
courts, and the parties hereto irrevocably agree that all claims with respect to
such action or proceeding shall be heard and determined in such a federal court.
The parties hereby consent to and grant any such court jurisdiction over the
person of such parties and over the subject matter of such dispute and agree
that mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 8.5 or in such other manner as may
be permitted by law, shall be valid and sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND
<PAGE>
46
THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 8.4.
Section 8.5 Notices. Any notice, request, instruction or other
document to be given hereunder by any party to the others shall be in writing
and delivered personally or sent by registered or certified mail, postage
prepaid, or by facsimile:
if to Merger Sub:
WM Acquisition, Inc.
c/o Parthenon Capital
200 State Street
Boston, MA 02109
Attention: John Rutherford
Fax: (617) 478-7010
with copies to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: James M. Dubin, Esq.
Fax: (212) 757-3990
and
<PAGE>
47
<PAGE>
48
Chase Capital Partners
380 Madison Avenue
New York, New York 10017
Attention: Christopher C. Behrens
Fax: (212) 622-3755
with copies to:
O'Sullivan, Graev & Karabell
30 Rockefeller Plaza
New York, New York 10112
Attention: William B. Kuesel, Esq.
Fax: (212) 408-2420
if to the Company:
Fred B. Gross
333 Harper Drive
Moorestown, NJ 08057
Attention:
Fax: (856) 533-3104
with copies to:
Morgan, Lewis & Bockius, LLP
502 Carnegie Center
Princeton, New Jersey 08540
Attention: Steven M. Cohen, Esq.
Fax: (609) 919-6639
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
Section 8.6 Entire Agreement. This Agreement (including any
exhibits and annexes to this Agreement), the Company Disclosure Letter and the
Merger Sub Disclosure Letter constitute the entire agreement and supersede all
other prior agreements, understandings, representations and warranties, both
written and
<PAGE>
49
oral, among the parties, with respect to the subject matter of this Agreement.
Section 8.7 No Third Party Beneficiaries. Except as provided in
Section 5.8 this Agreement is not intended to confer upon any person other than
the parties to this Agreement any rights or remedies under this Agreement.
Section 8.8 Severability. The provisions of this Agreement shall
be deemed severable and the invalidity or unenforceability of any provision
shall not affect the validity or enforceability or the other provisions of this
Agreement. If any provision of this Agreement, or the application of that
provision to any person or any circumstance, is invalid or unenforceable, (a) a
suitable and equitable provision shall be substituted for that provision in
order to carry out, so far as may be valid and enforceable, the intent and
purpose of the invalid or unenforceable provision and (b) the remainder of this
Agreement and the application of the provision to other persons or circumstances
shall not be affected by such invalidity or unenforceability, nor shall such
invalidity or unenforceability affect the validity or enforceability of the
provision, or the application of that provision, in any other jurisdiction.
Section 8.9 Interpretation. The table of contents and headings in
this Agreement are for convenience of reference only, do not constitute part of
this Agreement and shall not be deemed to limit or otherwise affect any of the
provisions of this Agreement. Where a reference in this Agreement is made to a
section, exhibit or annex, that reference shall be to a section of or exhibit or
annex to this Agreement unless otherwise indicated. Wherever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation."
Section 8.10 Assignment. This Agreement shall not be assignable by
operation of law or otherwise without the prior written consent of the other
party hereto.
[The remainder of this page has been left intentionally blank]
<PAGE>
50
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties to this Agreement as of
the date first written above.
WM ACQUISITION, INC.
By:
Name:
Title:
WILMAR INDUSTRIES, INC.
By:
Name:
Title:
<PAGE>
EXHIBIT A
---------
Terms of Class C Preferred Stock
Liquidation Preference: $.10 per share
- ----------------------
Dividend: Shares pro rata with Common Stock
- -------- --------
Voting: On any matter submitted to stockholders, one vote
- ------
per share, voting with Common Stock, except as
otherwise required by the NJBC.
<PAGE>
Wilmar
For Immediate Release
Contact: William Sanford
Senior Vice President
Chief Financial Officer
(856) 533-3115
WILMAR TO BE ACQUIRED FOR $18.25 PER SHARE BY INVESTOR GROUP
LED BY PARTHENON CAPITAL AND CHASE CAPITAL PARTNERS
Moorestown, NJ, December 22, 1999 - Wilmar Industries, Inc. (Nasdaq: WLMR)
("Wilmar" or the "Company") today announced the signing of a definitive merger
and recapitalization agreement between the Company and an investor group led by
Parthenon Capital and Chase Capital Partners. Under the terms of the agreement,
the Company's stockholders will receive $18.25 in cash in exchange for their
shares. The transaction is valued at approximately $300 million including the
assumption of approximately $65 million in debt.
The Company's Board of Directors has approved the merger following the unanimous
recommendation by a Special Committee whose members are two of the Company's
outside directors, Donald Wilson and Martin Hanaka, both of whom are
unaffiliated with the investor group. William Blair & Company, L.L.C. was
retained by the Special Committee as its financial advisor and issued a fairness
opinion with respect to the transaction.
The investor group includes Parthenon Capital, Chase Capital, and General Motors
Investment Management Corp. (GMIMCo). In addition, the Company's Chairman,
William S. Green, and other members of management will contribute approximately
$4.0 million of the $134.0 million of committed equity capital required to
finance the transaction. As part of this $4.0 million contribution, Mr. Green
will exchange $3.0 million of his common shares for a new series of preferred
stock which will be converted as part of the merger into shares of the acquiring
company. Mr. Green, who owns approximately 15% of the outstanding common stock
of the Company, has agreed to vote his shares in favor of the merger
transaction.
The equity financing necessary for the transaction has been committed by
Parthenon Capital, Chase Capital, General Motors Investment Management Corp.,
and certain members of management. The investor group has obtained a commitment
letter for the debt financing for the transaction from FleetBoston Robertson
Stephens. Completion of this transaction is subject to customary conditions
including shareholder approval, receipt of regulatory approvals and receipt of
debt financing pursuant to commitment letters. Shareholder approval will be
solicited by means of a proxy statement, which will be mailed to shareholders
upon the completion of the required Securities and Exchange Commission filing
and review process. The Company currently anticipates completing the transaction
late in the first quarter of 2000.
The Company and the Special Committee are being advised by William Blair &
Company, L.L.C., and the investor group is being advised by PaineWebber
Incorporated.
Parthenon Capital is a Boston-based private equity firm specializing in
management led buyouts, going private transactions and recapitalizations of
public and private companies. The firm manages approximately $350 million of
private equity capital. Ernest Jacquet, a Managing Partner of Parthenon Capital,
is also a director of the Company.
Chase Capital Partners (CCP) is a global private equity partnership with
approximately $15 billion under management. CCP has been a leading provider of
private equity capital since its inception in 1984 and is a diversified investor
with significant interests in most major industries. CCP's primary limited
partner is The Chase Manhattan Corporation, one of the largest bank holding
companies in the United States.
Wilmar Industries, Inc. is a leading national distributor of maintenance,
repair, and operations (MRO) products, principally to the apartment housing and
institutional markets. The Company operates 25 distribution centers throughout
the United States and Canada.
Forward-looking statements in this news release, if any, are made under the
safe harbor provisions of the Private Securities Reform Act of 1995. Certain
important factors that could cause results to differ materially from those
anticipated by the forward-looking statements are discussed from time to time
in reports filed by the Company with the Securities and Exchange Commission
<PAGE>
EXHIBIT 99.2
VOTING AND EXCHANGE AGREEMENT
VOTING AND EXCHANGE AGREEMENT, dated as of December 22, 1999 (this
"Agreement"), by and between WM Acquisition, Inc., a New Jersey corporation (the
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"Merger Sub"), and Mr. William Green, a stockholder (the "Stockholder") of
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Wilmar Industries, Inc., a New Jersey corporation (the "Company").
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WHEREAS, the Company and Merger Sub propose to enter into an Agreement
and Plan of Merger and Recapitalization, dated as of the date hereof (the
"Merger Agreement"), which provides for, among other things, the merger of
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Merger Sub with and into the Company (the "Merger");
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WHEREAS, as of the date hereof, the Stockholder is a holder of record
or Beneficially Owns (as defined herein) shares of common stock, no par value
per share, of the Company ("Company Common Stock"); and
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WHEREAS, as a condition to the willingness of Merger Sub to enter into
the Merger Agreement, Merger Sub has required that the Stockholder agree, and in
order to induce Merger Sub to enter into the Merger Agreement, the Stockholder
has agreed to enter into this Agreement with respect to all of the shares of
Company Common Stock and shares of Class C Preferred Stock, par value $.10 per
share, of the Company now held of record or Beneficially Owned and which may
hereafter be acquired by such Stockholder (collectively, the "Shares").
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NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 General. Capitalized terms used and not defined herein
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have the respective meanings ascribed to them in the Merger Agreement.
Section 1.2 Beneficial Ownership. For purposes of this Agreement,
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"Beneficially Own" or "Beneficial Ownership" with respect to any securities
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shall mean
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2
"beneficial ownership" of such securities (as determined pursuant to Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
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including pursuant to any agreement, arrangement or understanding, whether or
not in writing.
ARTICLE II
VOTING
Section 2.1 Voting Agreement. The Stockholder hereby agrees as
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follows:
(a) to appear, or cause the holder of record on any applicable
record date with respect to any Shares Beneficially Owned by such
Stockholder (the "Record Holder") to appear, in person or by proxy, for the
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purpose of obtaining a quorum at any annual or special meeting of
stockholders of the Company and at any adjournment thereof at which matters
relating to the Merger, the Merger Agreement or any transaction
contemplated thereby are considered; and
(b) at any meeting of the stockholders of the Company, however
called, and in any action by consent of the stockholders of the Company, to
vote, or cause to be voted by the Record Holder, in person or by proxy, the
Shares held of record or Beneficially Owned by the Stockholder: (i) in
favor of the Merger, the Merger Agreement (as amended from time to time)
and the transactions contemplated by the Merger Agreement and (ii) against
any proposal for any extraordinary corporate transaction, such as a
recapitalization, dissolution, liquidation, or sale of assets of the
Company or any merger, consolidation or other business combination (other
than the Merger) between the Company and any Person (other than Merger Sub)
or any other action or agreement in each case that is intended or which
reasonably could be expected to (x) result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the
Company under the Merger Agreement, (y) result in any of the conditions to
the Company's obligations under the Merger Agreement not being fulfilled or
(z) impede, interfere with, delay, postpone or adversely affect the Merger
and the transactions contemplated by the Merger Agreement.
Section 2.2 Proxy. The Stockholder hereby revokes any and all prior
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proxies or powers-of-attorney in respect of any of the Shares and constitutes
and appoints Merger Sub or any nominee of Merger Sub, with full power of
substitution and resubstitution, at any time during the term of this Agreement,
as its true and lawful attorney and proxy (its "Proxy"), for
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3
and in its name, place and stead, to demand that the Secretary of the Company
call a special meeting of the stockholders of the Company for the purpose of
considering any matter referred to in Section 2.1 (if permitted under the
Company's Certificate of Incorporation or By-Laws) and to vote all of the
Stockholder's Shares as its Proxy, at every annual, special, adjourned or
postponed meeting of the stockholders of the Company, including the right to
sign his name (as Stockholder) to any consent, certificate or other document
relating to the Company that New Jersey law may permit or require as provided in
Section 2.1.
Section 2.3 No Ownership Interest. Except as set forth in Section
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2.1 and Section 2.2, nothing contained in this Voting Agreement shall be deemed
to vest in Merger Sub any direct or indirect ownership or incidence of ownership
of or with respect to any Shares. All rights, ownership and economic benefits
of and relating to the Shares shall remain and belong to the Stockholder.
Section 2.4 Evaluation of Investment. The Stockholder, by reason of
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his knowledge and experience in financial and business matters, believes himself
capable of evaluating the merits and risks of the investment in shares of the
Class C Preferred Stock of the Company and shares of preferred stock and common
stock of Surviving Corporation, contemplated by this Agreement and the Merger
Agreement. The Stockholder acknowledges receipt and review of a copy of the
Merger Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
The Stockholder hereby represents and warrants to Merger Sub as
follows:
Section 3.1 Authority Relative to This Agreement. The Stockholder
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has all necessary power and authority to execute and deliver this Agreement, to
perform his obligations hereunder and to consummate the transactions
contemplated hereby. Such Stockholder is an individual with the capacity to
enter into this Agreement. This Agreement has been duly and validly executed and
delivered by the Stockholder and, assuming the due authorization, execution and
delivery by the other parties hereto, constitutes a legal, valid and binding
obligation of the Stockholder, enforceable against the Stockholder in accordance
with its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting creditors'
rights generally or by general principles governing the availability of
equitable remedies.
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Section 3.2 No Conflict. (a) The execution and delivery of this
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Agreement by the Stockholder does not, and the performance of this Agreement by
the Stockholder shall not, (i) conflict with or violate any agreement,
arrangement, law, rule, regulation, order, judgment or decree to which the
Stockholder is a party or by which the Stockholder (or the Shares held of record
or Beneficially Owned by such Stockholder) is bound or affected or (ii) result
in any breach of or constitute a default (or an event that with notice or lapse
or time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the Shares held of record or
Beneficially Owned by the Stockholder pursuant to any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Stockholder is a party or by which the
Stockholder (or the Shares held of record or Beneficially Owned by the
Stockholder) is bound or affected.
(b) The execution and delivery of this Agreement by the
Stockholder does not, and the performance of this Agreement by the Stockholder
shall not, require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental entity except for applicable
requirements, if any, of federal or state securities and antitrust laws.
Section 3.3 Title to the Shares. As of the date hereof, the
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Stockholder is the record or Beneficial Owner of the Shares listed opposite the
name of the Stockholder on the signature page hereto. The Shares listed opposite
the name of the Stockholder on the Stockholder's signature page hereto are all
the securities of the Company either held of record or Beneficially Owned by the
Stockholder. Except as set forth in Section 2.2, the Stockholder has not
appointed or granted any proxy, which appointment or grant is still effective,
with respect to the Shares held of record or Beneficially owned by the
Stockholder. The Shares listed opposite the name of the Stockholder on the
signature page hereto are owned free and clear of all security interests, liens,
claims, pledges, options, rights of first refusal, limitations on the
Stockholder's voting rights, charges and other encumbrances of any nature
whatsoever.
ARTICLE IV
COVENANTS OF THE STOCKHOLDER
Section 4.1 No Inconsistent Agreements. The Stockholder hereby
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represents, warrants, covenants and agrees that, except as contemplated by this
Agreement and the Merger Agreement, the Stockholder has not and shall not enter
into any voting agreement or grant a
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proxy or power of attorney with respect to the Shares held of record or
Beneficially Owned by the Stockholder.
Section 4.2 Transfer of Title. The Stockholder hereby covenants
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and agrees that the Stockholder will not, prior to the termination of this
Agreement, either directly or indirectly, offer or otherwise agree to sell,
assign, pledge, hypothecate, transfer, exchange, or dispose of any Shares or
options, warrants or other convertible securities to acquire or purchase Company
Common Stock or Series C Preferred Stock (collectively, "Derivative Securities")
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or any other securities or rights convertible into or exchangeable for Company
Common Stock, owned either directly or indirectly by the Stockholder or with
respect to which the Stockholder has the power of disposition, whether now or
hereafter acquired without the prior written consent of Merger Sub (provided
nothing contained herein will be deemed to restrict the exercise or conversion
of Derivative Securities outstanding on the date hereof). The Stockholder hereby
agrees and consents to the entry of stop transfer instructions by the Company
against the transfer of any Shares inconsistent with the terms of this Section
4.2.
Section 4.3 Exchange of Shares. Prior to the Effective Time, the
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Stockholder shall exchange 164,384 shares of Common Stock for an equal number of
Shares of Class C Preferred Stock as contemplated by Section 5.16 of the Merger
Agreement pursuant to a plan of recapitalization adopted by the Company.
ARTICLE V
MISCELLANEOUS
Section 5.1 No Solicitation. From the date hereof until the
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Effective Time or, if earlier, the termination of the Merger Agreement in
accordance with its terms, the Stockholder (a) shall not have, or shall
immediately terminate any discussions with, any third party concerning a
Takeover Proposal and (b) shall not, and shall not authorize any officer,
director, employee, controlled affiliate, investment banker or other agents (in
such agency capacity), or the Stockholder to, directly or indirectly, (i)
solicit, engage in discussions or negotiate with any Person (whether such
discussions or negotiations are initiated by the Stockholder or otherwise) or
take any other action intended or designed to facilitate the efforts of any
Person, other than Merger Sub, relating to a Takeover Proposal, (ii) provide
information with respect to the Company or any of its subsidiaries to any
Person, other than Merger Sub, relating to a possible Takeover Proposal by any
person other than Merger Sub, (iii) enter into an agreement with any person,
other than Merger Sub, providing for a possible Takeover Proposal, or (iv) make
or authorize any statement, recommendation or solicitation in
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support of any possible Takeover Proposal by any Person, other than by Merger
Sub.
Section 5.2 Termination. This Agreement shall terminate upon the
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earlier to occur of (i) the Effective Time, (ii) the termination of the Merger
Agreement in accordance with its terms or (iii) unless extended by agreement of
each of the parties hereto, [June 30, 2000]. Upon such termination, no party
shall have any further obligations or liabilities hereunder; provided, however,
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that nothing in this Agreement shall relieve any party from liability for the
breach of any of its representations, warranties, covenants and agreements set
forth in this Agreement prior to such termination.
Section 5.3 Additional Shares. If, after the date hereof, the
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Stockholder acquires the right to vote any additional shares of the Common Stock
or Class C Preferred Stock (any such shares shall be referred to herein as
"Additional Shares"), including, without limitation, upon exercise or conversion
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of any Derivative Security or through any stock dividend or stock split, the
provisions of this Agreement applicable to the Shares shall be applicable to
such Additional Shares as if such Additional Shares had been outstanding Shares
as of the date hereof. The provisions of the immediately preceding sentence
shall be effective with respect to Additional Shares without action by any
Person immediately upon the acquisition by a Stockholder of record or Beneficial
Ownership of such Additional Shares.
Section 5.4 Specific Performance. The parties hereto agree that
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irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
Section 5.5 Entire Agreement. This Agreement, if an to the extent
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entered into by the Stockholder and Merger Sub, constitutes the entire agreement
between Merger Sub and the Stockholder with respect to the subject matter hereof
and supersedes all prior agreements and understandings, both written and oral,
between the Merger Sub and the Stockholder with respect to the subject matter
hereof.
Section 5.6 Amendment. This Agreement may not be amended except by
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an instrument in writing signed by the parties hereto.
Section 5.7 Severability. If any term or other provision of this
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Agreement is invalid, illegal or incapable of being enforced by any rule or law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of this Agreement is not affected in any manner
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materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereby
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in a mutually acceptable manner in order that the
terms of this Agreement remain as originally contemplated.
Section 5.8 Notices. All notices and other communications given or
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made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made and shall be effective upon receipt, if delivered personally, upon
receipt of a transmission confirmation if sent by facsimile (with a confirming
copy sent by overnight courier) and on the next business day if sent by Federal
Express, United Parcel Service, Express Mail or other reputable overnight
courier to the parties at the following addresses (or at such other address for
a party as shall be specified by notice):
If to the Stockholder to:
William Green
Wilmar Industries, Inc.
303 Harper Drive
Moorestown, New Jersey 08057
with a copy to:
Drinker, Biddle & Reath LLP
1345 Chestnut Street
Philadelphia, Pennsylvania 19107
Attention: William M. Goldstein, Esq.
Fax No.: 215-988-2757
If to Merger Sub, to:
WM Acquisition, Inc.
c/o Parthenon Capital
200 State Street
Boston, Massachusetts 02109
Attention: John Rutherford
Fax No.: (617) 478-7010
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with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019
Attention: James M. Dubin, Esq.
Fax No.: (617) 478-7010
and
Chase Capital Partners
380 Madison Avenue
New York, New York 10017
Attention: Christopher C. Behrens
Fax No.: (212) 622-3755
with copies to:
O'Sullivan, Graev & Karabell
30 Rockefeller Plaza
New York, New York 10112
Attention: William B. Kuesel, Esq.
Fax No.: (212) 408-2420
Section 5.9 Governing Law. This Agreement shall be governed by and
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construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such state without giving
effect to the provisions thereof relating to conflicts of law.
Section 5.1 Counterparts. This Agreement may be executed in one or
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more counterparts, each of which shall be an original and all of which, when
taken together, shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Stockholder and Merger Sub have caused this
Agreement to be duly executed on the date hereof.
WM ACQUISITION, INC.
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By:
Name:
Title:
____________________ Number of Shares: 2,013,536
William Green
