<PAGE>
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
AND RECAPITALIZATION
between
WM ACQUISITION, INC.
and
WILMAR INDUSTRIES, INC.
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TABLE OF CONTENTS
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Page
----
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..................................... 3
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.... 6
Section 3.2 Certificate of Incorporation and By-Laws........ 6
Section 3.3 Capitalization.................................. 7
Section 3.4 Authority....................................... 8
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...........12
Section 3.11 Contracts; Debt Instruments.....................14
Section 3.12 Litigation......................................15
Section 3.13 Environmental Matters...........................15
Section 3.14 Intellectual Property...........................15
Section 3.15 Taxes...........................................17
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Section 3.16 Non-Competition Agreements......................17
Section 3.17 Assets..........................................17
Section 3.18 Opinion of Financial Advisor....................18
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..............................................................19
Section 4.1 Organization....................................19
Section 4.2 Binding Obligation..............................19
Section 4.3 No Authorization or Consents Required...........19
Section 4.4 Financing Commitments...........................20
Section 4.5 No Conflict.....................................20
Section 4.6 Information.....................................20
Section 4.7 Brokers.........................................21
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
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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
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
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ARTICLE 8
MISCELLANEOUS..............................................................38
Section 8.1 Certain Definitions.............................38
Section 8.2 Non-Survival of Representations,
Warranties and Agreements......................39
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
Section 8.10 Assignment......................................42
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INDEX OF DEFINED TERMS
----------------------
Term Section
---- -------
Acquisition Agreement......................... 5.7(e)(ii)
affiliate..................................... 8.1(a)
Agreement..................................... Title
Benefit Plan.................................. 3.10(a)
business day.................................. 8.1(b)
Certificate of Merger......................... 1.3
Class C Preferred Stock....................... Recitals
Claims........................................ 3.12
Closing....................................... 1.2
Closing Date.................................. 1.2
COBRA......................................... 3.10(a)
Common Stock.................................. Recitals
Company....................................... Title
Company Benefit Plan.......................... 3.10(a)
Company Charter Documents..................... 3.2
Company Disclosure Letter..................... Article 3 (introduction)
Company Financial Advisor..................... 3.18
Company Permits............................... 3.7
Company Principal............................. Recitals
Company SEC Reports........................... 3.8(a)
Company Stockholders Meeting.................. 5.4
Company Subsidiaries.......................... 3.1(a)
Company Voting Agreement...................... Recitals
Confidentiality Agreement..................... 5.6
control....................................... 8.1(a)
controlled by................................. 8.1(a)
controlling................................... 8.1(a)
Debt Financing Commitments.................... 4.4
Effective Time................................ 1.3
Employee...................................... 3.10(a)
Environmental Law............................. 3.13
Equity Financing Commitments.................. 4.4
ERISA......................................... 3.10(a)
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Term Section
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Exchange Act.................................. 3.6
Expenses...................................... 7.5(a)
GAAP.......................................... 3.8(b)
Governmental Entity........................... 3.6
group......................................... 8.1(e)
Hazardous Substance........................... 3.13
HSR Act....................................... 3.6
including..................................... 8.1(c)
Indemnified Parties........................... 5.8(a)
Intellectual Property......................... 3.14(a)
knowledge..................................... 8.1(d)
Law........................................... 3.5(a)(ii)
Liens......................................... 3.3
Material Adverse Effect on the Company........ 3.1(a)
Material Assets............................... 3.17(a)
Merger........................................ Recitals
Merger Consideration.......................... 2.1(a)
Merger Sub.................................... Title
Merger Sub Material Adverse Effect............ 4.1
NASD.......................................... 5.4(a)
NJBC.......................................... Recitals
Option........................................ 2.4
Option Plans.................................. 2.4
Other Filings................................. 5.4(a)
Paying Agent.................................. 2.2
PBGC.......................................... 3.10(a)
Permitted Liens............................... 3.17
person........................................ 8.1(e)
Preferred Stock............................... 3.3(a)
Proxy Statement............................... 5.4(a)
Representatives............................... 5.6
Requisite Company Vote........................ 3.4(a)
Retiree Welfare Plan.......................... 3.10(a)
SEC........................................... 3.8
Securities Act................................ 3.8
Senior Preferred Stock........................ 2.1(b)
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Term Section
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Shares........................................ 2.1(a)
Software...................................... 3.14(a)
subsidiary.................................... 8.1(f)
subsidiaries.................................. 8.1(f)
Superior Proposal............................. 5.7(e)(i)
Surviving By-Laws............................. 1.5
Surviving Charter............................. 1.4
Surviving Corporation......................... 1.1
Systems....................................... 3.14(c)
Takeover Proposal............................. 5.7(a)
Takeover Statute.............................. 3.20
Taxes......................................... 3.15
Technology.................................... 3.14(a)
Terminating Company Breach.................... 7.1(f)
Terminating Merger Sub Breach................. 7.1(g)
Termination Amount............................ 7.5(b)
under common control with..................... 8.1(a)
Welfare Plan.................................. 3.10(a)
Year 2000 Compliant........................... 3.14(c)
<PAGE>
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER AND RECAPITALIZATION
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER AND
RECAPITALIZATION (the "Agreement"), dated as of March 27, 2000 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, Merger Sub and the Company have previously entered
into an Agreement and Plan of Merger and Recapitalization, dated December 22,
1999 (the "Original Agreement").
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 the Original
Agreement, as a condition to the willingness of Merger Sub to enter into the
Original Agreement, (i) Mr. William Green (the "Company Principal") entered into
a Voting and Exchange Agreement with Merger Sub and the Company (the "Company
Voting Agreement"), which provided 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 thereof in favor of
approval and adoption of the Original 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 delivered
to the Merger Sub an irrevocable proxy to vote such shares as described above.
WHEREAS, Merger Sub and the Company wish to amend and restate
the Original Agreement as provided herein in order to reflect the statutory
requirement of shareholder approval necessary for the Merger.
<PAGE>
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:
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
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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 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:
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(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 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
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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 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
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Option which is then outstanding shall be 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 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
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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, non
assessable 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.
(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
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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 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 affirmative vote of a majority of the votes cast by the holders
of shares of Common Stock entitled to vote at the Company Stockholders Meeting
(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
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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
(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,
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"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
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
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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 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
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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 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).
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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);
(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
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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.
(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.
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(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.
(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 operations occur.
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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.
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.
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Section 3.14 Intellectual Property.
(a)
Definitions. For purposes of this Agreement, "Intellectual
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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, "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
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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 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.
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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 (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 Permitted 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.
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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 ss. 14A:11-1
of the NJBC or otherwise.
Section 3.21 Information. None of the information to be
supplied by 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
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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
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.
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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:
(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.
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ARTICLE 5
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;
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(d) split, combine, subdivide, reclassify or
redeem, purchase or otherwise acquire, or propose to redeem or purchase or
otherwise acquire, any 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, assume or prepay
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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 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
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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.
(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,
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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 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
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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 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").
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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.
(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
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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 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.
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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 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.
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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 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
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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 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
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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 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.
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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 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
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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 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.
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(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.
(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.
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<PAGE>
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;
(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;
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<PAGE>
(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 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
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<PAGE>
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 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
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<PAGE>
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.
(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.
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<PAGE>
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.
(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
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<PAGE>
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
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
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<PAGE>
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 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:
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<PAGE>
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
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
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<PAGE>
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 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
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<PAGE>
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]
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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:/s/ Drew Sawyer
-----------------------------
Name: Drew Sawyer
Title: Vice President
WILMAR INDUSTRIES, INC.
By:/s/ Fred B. Gross
-----------------------------
Name: Fred B. Gross
Title: Vice President
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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.
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