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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): MAY 21, 1998
STAPLES, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 0-17586 04-2896127
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation or Organization) File Number) Identification No.)
ONE RESEARCH DRIVE
WESTBOROUGH, MASSACHUSETTS 01581
(Address of Principal Executive Offices) (Zip Code)
508-370-8500
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On May 21, 1998, Staples, Inc. ("Staples") acquired Quill Corporation
("Quill"), a mail order distributor of office supplies to businesses in the
United States based in Lincolnshire, Illinois, by means of a merger of a
newly-formed subsidiary of Staples with and into Quill under an Agreement and
Plan of Merger entered into by Staples, the subsidiary, Quill and certain
stockholders of Quill on April 6, 1998.
As part of the same acquisition, Staples acquired certain entities
owning real estate leased by Quill in five locations in the United States,
including the acquisition of Quill's Lincolnshire, Illinois headquarters under
an Agreement and Plan of Merger entered into on May 21, 1998 by Staples, Milbro,
Inc. (owned by certain stockholders of Quill, "Milbro"), certain stockholders of
Milbro and a newly-formed subsidiary of Staples. The acquired real estate has
been used and will continue to be used for Quill's headquarters and for mail
order distribution centers.
The consideration for the acquisition was approximately $690,000,000,
consisting of the right to receive Staples common stock in exchange for the
equity and other interests held by the owners of the acquired entities. An
aggregate of approximately 26,000,000 shares of Staples common stock were issued
in the transaction. Staples has agreed to register approximately 13,000,000 of
the shares of common stock issued in the acquisition after July 20, 1998, and
has agreed to register the remainder of such shares after May 21, 1999.
The terms of all such agreements were determined through arm's length
negotiation between Staples and the parties to such agreements.
The acquisition is intended to qualify as a "pooling of interests" for
financial accounting purposes.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
See Index to Exhibits attached hereto.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
STAPLES, INC.
By: /s/ John J. Mahoney
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John J. Mahoney
Executive Vice President
and Chief Financial Officer
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EXHIBIT INDEX
Exhibit Description
2.1 Agreement and Plan of Merger dated April 6, 1998 by and among
Staples, Inc., Musketeer Acquisition Corp., Quill Corporation
and certain stockholders of Quill Corporation (the "Quill
Agreement")
2.2 Amendment No. 1 to Agreement and Plan of Merger dated May 21,
1998 by and among the parties to the Quill Agreement
2.3 Agreement and Plan of Merger dated May 21, 1998 by and among
Staples, Inc., Staples Illinois, Inc., Milbro, Inc. and
certain stockholders of Milbro, Inc.
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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
STAPLES, INC.,
MUSKETEER ACQUISITION CORP.,
QUILL CORPORATION
AND
CERTAIN STOCKHOLDERS OF QUILL CORPORATION
April 6, 1998
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TABLE OF CONTENTS
Page
----
ARTICLE I - THE MERGER........................................................1
1.1 The Merger..................................................1
1.2 The Closing.................................................1
1.3 Actions at the Closing......................................1
1.4 Additional Action...........................................2
1.5 Conversion of Shares........................................2
1.6 Fractional Shares...........................................4
1.7 Escrow......................................................4
1.8 Certificate of Incorporation................................4
1.9 By-laws.....................................................4
1.10 No Further Rights...........................................4
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
THE COMPANY STOCKHOLDERS........................................5
2.1 Organization, Qualification and Corporate Power.............5
2.2 Capitalization..............................................5
2.3 Authorization of Transaction................................6
2.4 Noncontravention............................................7
2.5 Subsidiaries................................................7
2.6 Financial Statements........................................7
2.7 Absence of Certain Changes..................................8
2.8 Undisclosed Liabilities.....................................8
2.9 Tax Matters.................................................8
2.10 Assets.....................................................10
2.11 Owned Real Property........................................10
2.12 Real Property Leases.......................................10
2.13 Inventory..................................................11
2.14 Intellectual Property......................................11
2.15 Material Contracts.........................................12
2.16 Accounts Receivable........................................14
2.17 Powers of Attorney.........................................14
2.18 Insurance..................................................14
2.19 Litigation.................................................14
2.20 Employees..................................................14
2.21 Employee Benefits..........................................15
2.22 Environmental Matters......................................17
2.23 Legal Compliance...........................................18
2.24 Permits....................................................18
2.25 Certain Business Relationships With Affiliates.............19
2.26 Brokers' Fees..............................................19
2.27 Books and Records..........................................19
2.28 Customers and Suppliers....................................19
2.29 Accounting and Tax Matters.................................19
2.30 Investment Representations.................................20
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2.31 Affiliates.................................................20
2.32 Disclosure.................................................20
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE
TRANSITORY SUBSIDIARY.........................................21
3.1 Organization...............................................21
3.2 Capitalization.............................................21
3.3 Authorization of Transaction...............................22
3.4 Noncontravention...........................................22
3.5 Reports and Financial Statements...........................23
3.6 Litigation.................................................23
3.7 Accounting and Tax Matters.................................23
3.8 Absence of Certain Changes.................................24
3.9 Taxes......................................................24
3.10 Environmental Matters......................................24
3.11 Employee Benefit Plans.....................................24
3.12 Compliance With Laws.......................................25
3.13 Interim Operations of the Transitory Subsidiary............25
3.14 Brokers' Fees..............................................25
3.15 Disclosure.................................................25
ARTICLE IV - COVENANTS.......................................................25
4.1 Reasonable Best Efforts; Notice and Consents;
Hart-Scott-Rodino Act......................................25
4.2 Operation of Business......................................27
4.3 Full Access................................................28
4.4 Exclusivity................................................28
4.5 Monthly Financial Statements...............................29
4.6 Pooling Accounting.........................................29
4.7 Nasdaq Listing.............................................30
4.8 Indemnification............................................30
4.9 Benefit Plans..............................................30
ARTICLE V - CONDITIONS TO CONSUMMATION OF MERGER.............................31
5.1 Conditions to Obligations of the Buyer and the
Transitory Subsidiary......................................31
5.2 Conditions to Obligations of the Company and the
Company Stockholders.......................................32
ARTICLE VI - INDEMNIFICATION.................................................33
6.1 Indemnification by the Company Stockholders................33
6.2 Indemnification Claims.....................................34
6.3 Survival...................................................37
6.4 Limitations................................................37
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ARTICLE VII - REGISTRATION RIGHTS............................................38
7.1 Demand Registration........................................38
7.2 Piggyback Registration.....................................39
7.3 Limitations on Registration Rights.........................40
7.4 Registration Procedures....................................40
7.5 Requirements of Company Stockholders.......................42
7.6 Indemnification............................................42
7.7 Underwriting Offer.........................................43
7.8 Assignment of Rights.......................................43
7.9 Rule 144...................................................43
7.10 No Inconsistent Agreements.................................43
ARTICLE VIII - TERMINATION...................................................44
8.1 Termination of Agreement...................................44
8.2 Effect of Termination......................................44
ARTICLE IX - OTHER AGREEMENTS................................................44
9.1 Press Releases and Announcements...........................44
9.2 No Third Party Beneficiaries...............................45
9.3 Entire Agreement...........................................45
9.4 Succession and Assignment..................................45
9.5 Counterparts; Facsimile Signature..........................45
9.6 Headings...................................................45
9.7 Notices....................................................45
9.8 Governing Law..............................................47
9.9 Amendments and Waivers.....................................47
9.10 Severability...............................................47
9.11 Expenses...................................................47
9.12 Construction...............................................47
9.13 Incorporation of Exhibits and Schedules....................48
EXHIBITS:
A. Company Stockholders
B. Escrow Agreement
C. Affiliate Agreement
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TABLE OF DEFINED TERMS
Each of the following terms is defined in the Section of this Agreement
indicated below.
Defined Term Section
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ADR Service 6.2(d)
ADR Procedure 6.2(d)
Affiliate 2.15(f)
Agreed Amount 6.2(c)
Agreement Introduction
Antitrust Law 4.1(b)
Antitrust Order 4.1(b)
Balance Sheet Date 2.6
Buyer Introduction
Buyer Certificate 5.2(d)
Buyer Common Stock 1.5
Buyer Disclosure Schedule Article III
Buyer Employee Plans 3.11(a)
Buyer Reports 3.5
Buyer Material Adverse Effect 3.4
CERCLA 2.22(a)
Certificate of Merger 1.1
Claim Notice 6.2(b)
Claimed Amount 6.2(b)
Closing 1.2
Closing Date 1.2
Code 2.9(c)
Company Introduction
Company Certificate 5.1(e)
Company Material Adverse Effect 2.1
Company Shares 1.5
Company Stockholders Introduction
Conversion Ratio 1.5
Costs 4.8(a)
Damages 6.1
Disclosure Schedule Article II
Dispute 6.2(c)
Dissenting Shares 1.5(iv)
Effective Time 1.1
Employee Benefit Plan 2.21(a)
Encumbrance 2.2(b)
Environmental Law 2.22(a)
ERISA 2.21(a)
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ERISA Affiliate 2.21(d)
Escrow Agreement 1.3
Escrow Agent 1.3
Escrow Shares 1.5
Exchange Act 2.15(f)
Executive Life Benefits 2.22(v)
Financial Statements 2.6
GAAP 2.6
Governmental Entity 2.4
Hart-Scott-Rodino Act 2.4
Incremental Amount 1.5(iv)
Indemnified Parties 6.1
Indemnified Persons 4.8(a)
Indemnifying Parties 6.1
Initial Shares 1.5
Initial Stockholder Registration Statement 7.1
Intellectual Property 2.14(a)
Lease 2.12
Materials of Environmental Concern 2.23(b)
Merger 1.1
Merger Shares 1.5
Most Recent Balance Sheet 2.8
Ordinary Course of Business 2.8
Parties Introduction
Pension Benefit Plan 2.21(a)
Permits 2.24
Purchase Price 1.5(a)
Real Estate Agreements 5.1(k)
Reasonable Best Efforts 4.1(a)
Registration Statement 7.4(a)
Related Party Transactions 2.25
Response 6.2(c)
SEC 7.1
Second Stockholder Registration Statement 7.1
Securities Act 2.2(a)
Stockholder Registration Statements 7.1
Stockholder Representatives 1.3
Subsidiary 2.4
Surviving Corporation 1.1
Taxes 2.9(a)
Tax Returns 2.9(a)
Transitory Subsidiary Introduction
Welfare Benefit Plan 2.21(a)
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "AGREEMENT") is entered into as
of April 6, 1998 by and among Staples, Inc., a Delaware corporation (the
"BUYER"), Musketeer Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of the Buyer (the "TRANSITORY SUBSIDIARY"), Quill Corporation, a
Delaware corporation (the "COMPANY"), and those stockholders of the Company
listed on EXHIBIT A hereto, each of which is a signatory hereto (the "COMPANY
STOCKHOLDERS"). The Buyer, the Transitory Subsidiary, the Company and the
Company Stockholders are referred to collectively herein as the "PARTIES".
This Agreement contemplates a tax-free merger of the Transitory
Subsidiary into the Company which will be accounted for as a
"pooling-of-interests". In such merger, the Company Stockholders will receive
capital stock of the Buyer in exchange for their capital stock of the Company.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements herein contained, the Parties agree as follows.
ARTICLE I
THE MERGER
1.1 THE MERGER. Upon and subject to the terms and conditions of
this Agreement, the Transitory Subsidiary shall merge with and into the Company
(with such merger referred to herein as the "MERGER") at the Effective Time (as
defined below). From and after the Effective Time, the separate corporate
existence of the Transitory Subsidiary shall cease and the Company shall
continue as the surviving corporation of the Merger (the "SURVIVING
CORPORATION"). The "EFFECTIVE TIME" shall be the time at which the Company and
the Transitory Subsidiary file a certificate of merger or other appropriate
documents prepared and executed in accordance with the relevant provisions of
the Delaware General Corporation Law (the "CERTIFICATE OF MERGER") with the
Secretary of State of the State of Delaware. The Merger shall have the effects
set forth in Section 259 of the Delaware General Corporation Law.
1.2 THE CLOSING. Subject to Sections 8.1(c) and 8.1(d), the
closing of the transactions contemplated by this Agreement (the "CLOSING") shall
take place at the offices of Hale and Dorr LLP in Boston, Massachusetts,
commencing at 9:00 a.m. local time, three business days (or such greater or
lesser number of days as may be agreed upon by the Stockholder Representatives
and the Buyer) after the satisfaction or waiver of all conditions (excluding the
delivery of any documents to be delivered at the Closing) set forth in Article V
hereof (the "CLOSING DATE").
1.3 ACTIONS AT THE CLOSING. At the Closing:
(i) the Company and the Company Stockholders
shall deliver to the Buyer and the Transitory Subsidiary the various
certificates, instruments and documents referred to in Section 5.1;
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(ii) the Buyer and the Transitory Subsidiary
shall deliver to the Company and the Company Stockholders the various
certificates, instruments and documents referred to in Section 5.2;
(iii) the Surviving Corporation shall file with
the Secretary of State of the State of Delaware the Certificate of Merger;
(iv) each Company Stockholder shall deliver to
the Buyer the certificate(s) representing its Company Shares (as defined below);
(v) the Buyer shall deliver certificates for the
Initial Shares (as defined below) to each Company Stockholder in accordance with
Section 1.5; and
(vi) Jack Miller, Harvey L. Miller and Arnold
Miller (the "STOCKHOLDER REPRESENTATIVES"), the Buyer and BankBoston, N.A., or
such other nationally recognized bank as may be selected by Buyer (the "ESCROW
AGENT") shall execute and deliver the Escrow Agreement substantially in the form
attached hereto as EXHIBIT B (the "ESCROW AGREEMENT") and the Buyer shall
deliver to the Escrow Agent a certificate for the Escrow Shares (as defined
below) being placed in escrow on the Closing Date pursuant to Section 1.7.
1.4 ADDITIONAL ACTION. The Surviving Corporation may, at any time
after the Effective Time, take any action, including executing and delivering
any document, in the name and on behalf of either the Company or the Transitory
Subsidiary, in order to consummate the transactions contemplated by this
Agreement.
1.5 CONVERSION OF SHARES. At the Effective Time, by virtue of the
Merger and without any action on the part of any Party or the holder of any of
the following securities:
(i) Each share (or fraction thereof) of voting
common stock, $.01 par value per share, and each share (or fraction thereof) of
non-voting common stock, $.01 par value per share, of the Company (collectively,
the "COMPANY SHARES") issued and outstanding immediately prior to the Effective
Time (other than Company Shares held in the Company's treasury and other than
Dissenting Shares (as defined below)), shall be converted into and represent the
right to receive (subject to the provisions of Sections 1.6 and 1.7) such number
of shares of common stock, $.0006 par value per share, of the Buyer (including
the associated 16/81sts of a right issuable pursuant to the Rights Agreement
dated as of February 3, 1994 between the Buyer and Bank Boston, N.A., as rights
agent, collectively, "BUYER COMMON STOCK") as is equal to the Conversion Ratio
(or, in the case of a fractional share, the Conversion Ratio multiplied by such
fraction). The "CONVERSION RATIO" shall be the result (rounded down to six
decimal places) obtained by adding $581,000,000 and the Incremental Amount (as
defined below) (such sum being referred to as the "Purchase Price") and then
dividing (1) the sum of (a) 50% of the Purchase Price divided by $24 plus (b)
the number determined by dividing (x) 50% of the Purchase Price by (y) the
average of the last reported sale prices per share of the Buyer Common Stock on
the
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Nasdaq National Market over the 20 consecutive trading days ending on the
trading day that is three trading days prior to the Closing Date, by (2) the
number of outstanding Company Shares immediately prior to the Effective Time;
PROVIDED that the Conversion Ratio shall be subject to equitable adjustment in
the event of any reclassification, recapitalization, stock split, stock
dividend, reverse stock split, exchange of shares or other similar events
affecting the Buyer Common Stock between the date hereof and the Closing. Ten
percent (10%) of the shares of Buyer Common Stock into which each Company
Stockholder's Company Shares are converted pursuant to this clause (i) of this
Section 1.5, rounded down to the nearest whole number (the "ESCROW SHARES")
shall be deposited in escrow pursuant to Section 1.7 and shall be held and
disbursed in accordance with the terms of the Escrow Agreement; and the Company
Stockholders shall be entitled to receive immediately the remaining shares of
Buyer Common Stock into which their Company Shares were converted pursuant to
this clause (i) of this Section 1.5 (the "INITIAL SHARES"). The Initial Shares
and the Escrow Shares shall together be referred to herein as the "MERGER
SHARES."
(ii) Each Company Share held in the Company's
treasury immediately prior to the Effective Time shall be cancelled and retired
without payment of any consideration therefor.
(iii) Each share of common stock, $.01 par value
per share, of the Transitory Subsidiary issued and outstanding immediately prior
to the Effective Time shall be converted into and thereafter evidence one share
of common stock, $.01 par value per share, of the Surviving Corporation.
(iv) "Incremental Amount" shall mean (i)
$51,772,749, (ii) plus the fair value, as of the date three business days prior
to the Closing Date (the "Pre-Closing Date"), of the equity securities included
in "Investments" on the audited balance sheet of the Company as of December 31,
1997 and held by the Company on the Closing Date, (iii) plus the net income of
the Company from January 1, 1998 to the Pre-Closing Date, determined in the same
manner as net income is determined for purposes of the Financial Statements
referred to in Section 2.6, as agreed upon by the Company and the Buyer, (iv)
less $12,500,000, and (v) less the amount of any cash distributions to
stockholders of the Company made from January 1, 1998 to the Closing Date (as
permitted by Section 4.2(b)). If the Buyer and the Company are unable to agree
upon the amount of net income of the Company from January 1, 1998 to the
Pre-Closing Date, such amount shall be determined by an independent accounting
firm selected by Buyer and the Company.
(v) "Dissenting Shares" shall mean Company
Shares held as of the date of this Agreement by any stockholder of the Company
(other than a Company Stockholder) who has not voted such Company Shares in
favor of the adoption of the Agreement and the Merger and with respect to which
appraisal shall have been duly demanded in accordance with Section 262 of the
Delaware General Corporation Law. The Company shall not, except with the prior
written consent of
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the Buyer, settle, or offer to settle, any demand for appraisal by a holder of
Dissenting Shares.
1.6 FRACTIONAL SHARES. No certificates or script representing
fractional Merger Shares shall be issued to Company Stockholders, and such
Company Stockholders shall not be entitled to any voting rights, rights to
receive any dividends or distributions or other rights as a stockholder of the
Buyer with respect to any fractional Merger Shares that would otherwise be
issued to such Company Stockholders. In lieu of any fractional Merger Shares
that would otherwise be issued, each Company Stockholder that would have been
entitled to receive a fractional Merger Share shall receive such whole number of
Merger Shares as is equal to the number of Merger Shares to which such person
would be entitled, rounded up or down to the nearest whole number (with a
fractional interest equal to .5 rounded to the nearest odd number).
1.7 ESCROW.
(a) On the Closing Date, the Buyer shall deliver to the Escrow
Agent a certificate (issued in the name of the Escrow Agent or its nominee)
representing the Escrow Shares, as described in clause (i) of Section 1.5, for
the purpose of securing the indemnification obligations of the Company
Stockholders set forth in this Agreement. The Escrow Shares shall be held by the
Escrow Agent under the Escrow Agreement pursuant to the terms thereof.
(b) Each Company Stockholder hereby irrevocably appoints each
of the Stockholder Representatives as its representative and attorney-in-fact
with respect to any actions and decisions required or permitted to be made by
the Stockholder Representatives pursuant to this Agreement and the Escrow
Agreement and agrees to be bound by any actions or decisions taken by the
Stockholder Representatives or any of them.
1.8 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation
of the Surviving Corporation immediately following the Effective Time shall be
the same as the Certificate of Incorporation of the Transitory Subsidiary
immediately prior to the Effective Time, except that the name of the corporation
set forth therein shall be changed to the name of the Company and the reference
therein to the identity of the sole incorporator shall be deleted.
1.9 BY-LAWS. The By-laws of the Surviving Corporation immediately
following the Effective Time shall be the same as the By-laws of the Transitory
Subsidiary immediately prior to the Effective Time, except that the name of the
corporation set forth therein shall be changed to the name of the Company.
1.10 NO FURTHER RIGHTS. From and after the Effective Time, no
Company Shares outstanding prior to the Effective Time shall be deemed to be
outstanding, and holders of certificates formerly representing Company Shares
shall cease to have any rights with respect thereto, except as provided herein
or by law.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE COMPANY STOCKHOLDERS
The Company and each of the Company Stockholders jointly and severally
represent and warrant to the Buyer and the Transitory Subsidiary that the
statements contained in this Article II are true and correct, except as set
forth in the disclosure schedule provided by the Company and the Company
Stockholders to the Buyer on the date hereof (the "DISCLOSURE SCHEDULE"). The
Disclosure Schedule shall be arranged in paragraphs corresponding to the
numbered and lettered paragraphs contained in this Article II, and the
disclosures in any paragraph of the Disclosure Schedule shall qualify other
paragraphs in this Article II only to the extent it is clear from a reading of
the disclosure that such disclosure is applicable to such other paragraphs.
2.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. The Company
is a corporation duly organized, validly existing and in corporate and franchise
tax good standing under the laws of the State of Delaware. The Company is duly
qualified to conduct business and is in corporate and franchise tax good
standing under the laws of each jurisdiction in which the nature of its
businesses or the ownership or leasing of its properties requires such
qualification, except for any such failure to be so qualified and in good
standing that would not, either individually or in the aggregate, have a Company
Material Adverse Effect (as defined below). The Company has all requisite
corporate power and authority to carry on the businesses in which it is engaged
and to own and use the properties owned and used by it. The Company has
furnished to the Buyer true and complete copies of its Certificate of
Incorporation and By-laws, each as amended and as in effect on the date hereof.
The Company is not in default under or in violation of any provision of its
Certificate of Incorporation or By-laws. When used in this Article II or
elsewhere in this Agreement in connection with the Company, the term "Company
Material Adverse Effect" means any change, event or effect that is materially
adverse to the business, financial condition or results of operations of the
Company, excluding any changes in general economic conditions in the general
economy as a whole, or that adversely affects the ability of the Company to
consummate the Merger.
2.2 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
(i) 70,000 shares of voting common stock, $.01 par value per share, of which
48,306.035 shares are issued and outstanding and no shares are held in the
treasury of the Company and (ii) 100,000 shares of non-voting common stock, $.01
par value per share, of which 61,663.795 shares are issued and outstanding and
no shares are held in the treasury of the Company. Section 2.2 of the Disclosure
Schedule sets forth a complete and accurate list of all stockholders of the
Company, indicating the number and class of Company Shares held by each
stockholder. All of the issued and
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outstanding Company Shares are duly authorized, validly issued, fully paid,
nonassessable and free of all preemptive rights that have not been, or will not
prior to the Effective Time be, duly waived. Except as set forth in this
Agreement, there are no (i) outstanding or authorized options, warrants, rights,
agreements or commitments to which the Company is a party or which are binding
upon the Company providing for the issuance, disposition or acquisition of any
of its capital stock, or (ii) stock appreciation, phantom stock or similar
rights with respect to the Company, or (iii) agreements, voting trusts, proxies,
or understandings with respect to the voting or registration under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), of any Company
Shares. All of the issued and outstanding Company Shares were issued in
compliance with applicable federal and state securities laws.
(b) Each Company Stockholder has good and marketable title to
the Company Shares listed in Section 2.2 of the Disclosure Schedule as being
owned by it, and at the Effective Time all such Company Shares will be free and
clear of any lien, mortgage, pledge, security interest, encumbrance, charge,
contractual restriction or covenant, option or other adverse claim, in each case
whether arising by contract or by operation of law (an "ENCUMBRANCE").
2.3 AUTHORIZATION OF TRANSACTION. The Company and each Company
Stockholder has all requisite power and authority to execute and deliver this
Agreement and to perform its or his respective obligations hereunder. The
execution and delivery of this Agreement by the Company and the consummation by
the Company of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of the Company. Without
limiting the generality of the foregoing: (a) the Board of Directors of the
Company, at a meeting duly called and held, by the unanimous vote of all
directors (i) determined that the Merger is fair and in the best interests of
the Company and its stockholders, (ii) adopted this Agreement in accordance with
the provisions of the Delaware General Corporation Law, and (iii) directed that
this Agreement and the Merger be submitted to the stockholders of the Company
for their adoption and approval and recommended that the stockholders of the
Company vote in favor of the adoption of this Agreement and the approval of the
Merger; (b) the Company provided to each holder of voting common stock of the
Company, prior to the vote by the stockholders of the Company with respect to
the Merger and this Agreement, copies of the Buyer Reports (as defined in
Section 3.5) and all information required under the Delaware General Corporation
Law concerning their appraisal rights; (c) the Company provided to each holder
of non-voting common stock of the Company all information required under the
Delaware General Corporation Law concerning their appraisal rights; (d) the
holders of voting common stock of the Company approved this Agreement and the
Merger, in accordance with the provisions of the Delaware General Corporation
Law, by unanimous written consent and holders of at least 91.08% of the
outstanding shares of non-voting common stock of the Company have waived their
appraisal rights with respect to, and otherwise consented to, this Agreement,
the Merger and each of the other transactions contemplated hereby; and (e) the
holders of common stock of the Company have waived their preemptive
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rights with respect to the Merger and other transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by the Company
and each Company Stockholder and constitutes a valid and binding obligation of
the Company and each Company Stockholder, enforceable against the Company and
each Company Stockholder in accordance with its terms, subject to (i)
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting or
relating to creditors' rights generally and (ii) the availability of injunctive
relief and other equitable remedies. The agreements set forth in Section 2.2 of
the Disclosure Schedule shall terminate on or prior to the Effective Date.
2.4 NONCONTRAVENTION. Subject to compliance with the applicable
requirements of the Securities Act and any applicable state securities laws, the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HART-SCOTT-RODINO ACT") and applicable foreign antitrust laws (if any) and the
filing of the Certificate of Merger as required by the Delaware General
Corporation Law, neither the execution and delivery of this Agreement by the
Company or any of the Company Stockholders, nor the consummation by the Company
or any of the Company Stockholders of the transactions contemplated hereby, will
(i) conflict with or violate any provision of the charter or By-laws of the
Company, (ii) require on the part of the Company or any of the Company
Stockholders any filing with, or any permit, authorization, consent or approval
of, any court, arbitrational tribunal, administrative agency or commission or
other governmental or regulatory authority or agency (a "GOVERNMENTAL ENTITY"),
(iii) conflict with, result in a breach of, constitute (with or without due
notice or lapse of time or both) a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify or cancel, or
require any notice, consent or waiver under, any Lease or Material Contract (as
such terms are defined herein), except to the extent any such conflict, breach,
default, acceleration, termination, modification or cancellation, or the failure
to give or obtain any such notice, consent or waiver, would not have a Company
Material Adverse Effect, (iv) result in the imposition of any Encumbrance upon
the Company Shares or any material assets or properties of the Company or (v)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company, any of the Company Stockholders or any of their
respective assets or properties, which violation could reasonably be expected to
have a Company Material Adverse Effect.
2.5 SUBSIDIARIES. The Company owns no equity interest in any
corporation, partnership, limited liability company or other entity.
2.6 FINANCIAL STATEMENTS. The Company has provided to the Buyer
(a) the audited balance sheets and statements of income, changes in
stockholders' equity and cash flows for each of the last five fiscal years for
the Company and (b) the unaudited balance sheet and statement of income as of
and for the two-months ended as of February 28, 1998 (the "BALANCE SHEET DATE").
Such financial statements inclusive of the notes thereto (collectively, the
"FINANCIAL STATEMENTS") have been prepared in accordance with United States
generally accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods covered thereby, fairly present in all material respects
the financial condition, results of operations and cash
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flows of the Company as of the respective dates thereof and for the periods
referred to therein and are materially consistent with the books and records of
the Company; PROVIDED, HOWEVER, that the Financial Statements referred to in
clause (b) above are subject to normal recurring year-end adjustments (which
will not be material) and do not include footnotes.
2.7 ABSENCE OF CERTAIN CHANGES. Since the Balance Sheet Date, (a)
there has occurred no event or development which has had, or could reasonably be
expected to have in the future, a Company Material Adverse Effect, and (b) the
Company has not taken any of the actions set forth in paragraphs (a) through (o)
of Section 4.2.
2.8 UNDISCLOSED LIABILITIES. The Company has no material liability
(whether known or unknown, whether absolute or contingent, whether liquidated or
unliquidated and whether due or to become due), except for (a) liabilities shown
on the balance sheet referred to in clause (b) of Section 2.6 (the "MOST RECENT
BALANCE SHEET"), (b) liabilities which have arisen since the Balance Sheet Date
in the ordinary course of business consistent with past custom and practice
("ORDINARY COURSE OF BUSINESS") and (c) contractual and other liabilities
incurred in the Ordinary Course of Business which are not required by GAAP to be
reflected on a balance sheet.
2.9 TAX MATTERS.
(a) The Company has filed on a timely basis all Tax Returns
(as defined below) that it was required to file and all such Tax Returns were
correct and complete in all material respects. The Company has paid, or will
pay, on a timely basis all Taxes (as defined below) due on or before the Closing
Date, whether or not shown to be due on any such Tax Returns. The unpaid Taxes
of the Company for tax periods through the date of the Most Recent Balance Sheet
do not materially exceed the accruals and reserves (excluding reserves for
deferred Taxes) for Taxes set forth on the Most Recent Balance Sheet. All Taxes
attributable to the period from and after the date of the Most Recent Balance
Sheet and continuing through the Closing Date are attributable to the conduct by
the Company of its operations in the Ordinary Course of Business. The Company
has no actual liability for any Tax obligation of any taxpayer (including
without limitation any affiliated group of corporations or other entities that
included the Company during a prior period). All Taxes that the Company is or
was required by law to withhold or collect have been duly withheld or collected
and, to the extent required, have been paid to the proper Governmental Entity.
For purposes of this Agreement, "TAXES" means all taxes, charges, fees, levies
or other similar assessments or liabilities, including without limitation
income, gross receipts, ad valorem, premium, value-added, excise, severance,
stamp, occupation, windfall profits, real property, personal property, sales,
use, transfer, withholding, employment, unemployment insurance, social security,
business license, business organization, environmental, payroll and franchise
taxes imposed by the United States of America or any state, local or foreign
government, or any agency thereof, or other political subdivision of the United
States or any such government, and any interest, fines, penalties, assessments
or additions to tax resulting from, attributable to or incurred in connection
with any tax or any contest
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<PAGE> 15
or dispute thereof. For purposes of this Agreement, "TAX RETURNS" means all
reports, returns, declarations, statements, forms or other information required
to be supplied to a taxing authority in connection with Taxes.
(b) The Company has delivered to the Buyer correct and
complete copies of all filed federal income Tax Returns, examination reports and
statements of deficiencies assessed against or agreed to by any of the Company
since December 31, 1995. The federal income Tax Returns of the Company are
currently being audited by the Internal Revenue Service for 1995. Except as set
forth in Section 2.9(b) of the Disclosure Schedule, no examination or audit of
any Tax Returns of the Company by any Governmental Entity is currently in
progress or, to the knowledge of any Company Stockholder, threatened or
contemplated. Except as set forth in Section 2.9(b) of the Disclosure Schedule,
the Company has not waived any statute of limitations with respect to taxes or
agreed to an extension of time with respect to an assessment of or deficiency in
Taxes.
(c) The Company is not a "consenting corporation" within the
meaning of Section 341(f) of the Internal Revenue Code of 1986, as amended (the
"CODE"), and none of the assets of the Company is subject to an election under
Section 341(f) of the Code. The Company has not been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the Code
during the applicable period specified in Section 897(c)(l)(A)(ii) of the Code.
(d) The Company is not a party to any Tax allocation or
sharing agreement or Tax indemnity agreement. The Company has never filed Tax
Returns on a combined, consolidated or unitary basis with any other business
entity in any jurisdiction or has otherwise been liable, by contract or
otherwise, for any Taxes of any other business entity. The Company has not
participated in or cooperated with, nor will it, prior to the Closing Date,
participate in or cooperate with, an international boycott within the meaning of
Section 999 of the Code. Except as set forth in Section 2.9(d) of the Disclosure
Schedule, the Company is not a party to any agreement, contract, arrangement or
plan that has resulted, or would result, separately or in the aggregate, in the
payment of any excess "parachute payments" within the meaning of Section 280G of
the Code.
(e) The Company is not and has never been a member of an
"affiliated group" of corporations (within the meaning of Section 1504 of the
Code).
(f) The Company is a not party to any tax litigation nor, to
the knowledge of the Company and any Company Stockholder, the subject of any tax
audit. The Company Stockholders have no reason to suspect any tax litigation
attributable to periods ended before or including the Closing Date.
Classifications, definitions, valuation and principles used in the accounts of
the Company are in accordance with classifications, definitions, valuations and
principles used in the Tax Returns of the Company. To the knowledge of the
Company and any Company Stockholder, the Company is not and has never been a
party to any transaction or
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agreement which is in conflict with the tax rules on transfer pricing in any
relevant jurisdiction.
(g) Since September 1983, the Company has been an S
corporation pursuant to an election validly made under Subchapter S of the Code
(which election has not been revoked or terminated) and the Company has not been
subject to federal income taxes for such periods.
(h) The Company is not required, and will not be required, to
include any adjustment in taxable income for any Tax period prior to the Closing
Date (or portion thereof) as a result of the Merger, a termination of the
Company's S corporation status or accounting methods employed prior to such
termination.
(i) The Company is not required, nor will it be required, to
make any adjustments under Section 481(a) of the Code by reason of a change in
accounting method, a termination of its S corporation status or otherwise.
2.10 ASSETS. The Company owns or leases all tangible assets
necessary for the conduct of its businesses as presently conducted and as
presently proposed by the Company to be conducted. Each such tangible asset is
free from material defects, has been maintained in accordance with normal
industry practice, is in good operating condition and repair (subject to normal
wear and tear) and is suitable for the purposes for which it presently is used.
No asset of the Company (tangible or intangible) is subject to any Encumbrance,
except (i) liens for current taxes not yet due and payable, and (ii) such
imperfections of title, liens and easements as do not and will not materially
detract from or interfere with the use or disposition of the property subject
thereto or otherwise materially impair business operations involving such
properties.
2.11 OWNED REAL PROPERTY. The Company owns no real property.
2.12 REAL PROPERTY LEASES. Section 2.12 of the Disclosure Schedule
lists, as of the date hereof, all real property leased or subleased to or by the
Company where (i) the term of such lease or sublease expires (without the
execution of a renewal option) after December 31, 1999, (ii) where such lease or
sublease provides an annual base rental of more than $100,000 or (iii) where
such property is leased or subleased from an Affiliate (as defined below) of the
Company or any Company Stockholder, and lists the term of such lease, any
extension and expansion options, and the rent payable thereunder. The Company
has delivered to the Buyer correct and complete copies of the leases and
subleases (as amended to date) listed in Section 2.12 of the Disclosure
Schedule. With respect to each lease and sublease required to be listed in
Section 2.12 of the Disclosure Schedule ("LEASES"):
(a) the lease or sublease is legal, valid, binding,
enforceable and in full force and effect with respect to the Company and, to the
knowledge of the Company and any Company Stockholder, with respect to each other
party thereto;
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<PAGE> 17
(b) the lease or sublease will continue to be legal, valid,
binding, enforceable and in full force and effect immediately following the
Closing in accordance with the terms thereof as in effect immediately prior to
the Closing;
(c) neither the Company nor, to the knowledge of the Company
and the Company Stockholders, any other party to the lease or sublease is in
breach or default, and no event has occurred which, with notice or lapse of
time, would constitute a breach or default by the Company or, to the knowledge
of the Company and the Company Stockholders, any other party thereto; and
(d) the Company has not assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in the leasehold or
subleasehold.
2.13 INVENTORY. All inventory of the Company, whether or not
reflected on the Most Recent Balance Sheet, consists of a quality and quantity
usable and saleable in the Ordinary Course of Business, except for items of
below-standard quality, and obsolete and other items, all of which have been
written-off or written-down to net realizable value on the Most Recent Balance
Sheet. All inventories not written-off have been priced at the lower of cost or
market on a first-in, first-out basis. The quantities of each type of inventory
are not excessive in the present circumstances of the Company.
2.14 INTELLECTUAL PROPERTY.
(a) The Company owns or has the right to use all Intellectual
Property (as defined below) used in the operation of its business or necessary
for the operation of its business as presently conducted or as presently
proposed by the Company to be conducted. Each material item of Intellectual
Property presently owned by or used in the operation of the business of the
Company will be owned or available for use by the Surviving Corporation on
identical terms and conditions immediately following the Closing. The Company
has taken all reasonable measures to protect the proprietary nature of each
material item of Intellectual Property, and to maintain in confidence all trade
secrets and confidential information, that it owns or uses. To the knowledge of
the Company and the Company Stockholders, and except as set forth in Section
2.14(a) of the Disclosure Schedule, no other person or entity has any rights to
any of the material Intellectual Property owned by the Company and no other
person or entity is infringing, violating or misappropriating any of the
material Intellectual Property that the Company owns. For purposes of this
Agreement, "INTELLECTUAL PROPERTY" means all (i) patents, patent applications,
patent disclosures and all related continuation, continuation-in-part,
divisional, reissue, reexamination, utility, model, certificate of invention and
design patents, patent applications, registrations and applications for
registrations, (ii) trademarks, service marks, trade drafts, logos, trade names
and corporate names and registrations and applications for registration thereof,
(iii) copyrights and registrations and applications for registration thereof,
(iv) computer software, data and documentation, (v) trade secrets and
confidential business information, whether patentable or unpatentable and
whether or not reduced to practice, know-how, manufacturing and production
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processes and techniques, research and development information, copyrightable
works, financial, marketing and business data, pricing and cost information,
business and marketing plans and customer and supplier lists, (vi) other
proprietary rights relating to any of the foregoing and (vii) copies and
tangible embodiments thereof.
(b) None of the activities or business conducted by the
Company, or conducted by the Company infringes or violates, or constitutes a
misappropriation of, any Intellectual Property rights of any other person or
entity. Since January 1, 1996, the Company has not received any complaint, claim
or notice alleging any such infringement, violation or misappropriation.
(c) Section 2.14 of the Disclosure Schedule lists each issued
patent, registered trademark or service mark which has been issued to the
Company with respect to any of its Intellectual Property, identifies each
pending patent application or application for trademark or service mark
registration which the Company has made with respect to any of its Intellectual
Property, and identifies each license, except with respect to commercially
available or so-called "off the shelf" software, or other agreement pursuant to
which the Company has granted any rights to, or has received any rights from,
any third party with respect to any of its Intellectual Property.
2.15 MATERIAL CONTRACTS. Section 2.15 of the Disclosure Schedule
lists, as of the date of this Agreement, the following agreements to which the
Company is a party ("MATERIAL CONTRACTS"):
(a) any agreement (or group of related agreements) for the
lease of personal property from or to third parties providing for payments in
excess of $75,000 per annum;
(b) any agreement (or group of related agreements), for the
purchase or sale of commodities, supplies, products or other personal property
or for the furnishing or receipt of services (other than with respect to
utilities and purchase orders (including, without limitation, blanket purchase
orders) or invoices with respect to commodities, supplies, products or other
personal property purchased or sold by the Company in the Ordinary Course of
Business), which is not cancelable without penalty in excess of $50,000 by the
Company upon less than one month's prior notice AND (i) which involved during
1997 (or is reasonably anticipated to involve during 1998), annual payments in
excess of $250,000; (ii) in which the Company agreed to purchase a minimum
quantity of goods or services (it being agreed that the foregoing shall not
include so called "back-end" or similar programs pursuant to which the Company
is entitled to, or grants, a rebate, reduced purchase price or similar discount
based on the volume of goods or services purchased), (iii) in which the Company
has agreed to purchase goods or services exclusively from a certain party, or
(iv) in which the Company has granted "most favored nation" pricing provisions
(it being agreed that the foregoing shall not include agreements pursuant to
which the Company has granted to certain parties (or their members or
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affiliates) the right to buy the Company's products at "end column" or similarly
discounted prices);
(c) any agreement establishing a partnership or joint venture;
(d) any agreement (or group of related agreements) under which
it has created, incurred, assumed, or guaranteed (or may create, incur, assume,
or guarantee) indebtedness for borrowed money (including capitalized lease
obligations) involving more than $100,000 or under which it has imposed (or may
impose) an Encumbrance (other than liens for Taxes not yet due) on any of its
assets, tangible or intangible;
(e) any agreement concerning non-solicitation or
noncompetition;
(f) any agreement involving any of the Company Stockholders or
their affiliates ("AFFILIATES"), as defined in Rule 12b-2 under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT");
(g) any agreement under which the consequences of a default or
termination could reasonably be expected to have a Company Material Adverse
Effect; and
(h) any agreement or group of related agreements (other than
purchase orders (including, without limitation, blanket purchase orders) or
invoices with respect to commodities, supplies, products or other personal
property purchased or sold by the Company in the Ordinary Course of Business),
which is not cancelable by the Company without penalty in excess of $50,000 upon
less than one month's prior notice AND (i) which involved during 1997 (or is
reasonably anticipated to involve during 1998), annual payments in excess of
$250,000; or (ii) was not entered into in the Ordinary Course of Business.
The Company has made available to the Buyer a correct and complete copy of each
Material Contract. With respect to each Material Contract listed and except as
set forth in Section 2.15 of the Disclosure Schedule: (i) the Material Contract
is legal, valid, binding and enforceable and in full force and effect with
respect to the Company, and to the knowledge of the Company and the Company
Stockholders, with respect to each other party thereto; (ii) the Material
Contract will continue to be legal, valid, binding and enforceable and in full
force and effect with respect to the Company, and to the knowledge of the
Company and the Company Stockholders, with respect to each other party thereto
prior to the Closing immediately following the Closing in accordance with the
terms thereof as in effect; and (iii) neither the Company nor, to the knowledge
of the Company Stockholders, any other party, is in breach or violation of, or
default under, any such Material Contract, and no event or action has occurred,
is pending or, to the knowledge of the Company and any Company Stockholder, is
threatened, which, after the giving of notice, with lapse of time, or otherwise,
would constitute a breach of default by the Company or, to the knowledge of the
Company and any Company Stockholder, any other party under
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such Material Contract. The Company is not a party to any oral contract,
agreement or other arrangement which, if reduced to written form, would be
required to be listed in Section 2.15 of the Disclosure Schedule under the terms
of this Section 2.15.
2.16 ACCOUNTS RECEIVABLE. All accounts receivable of the Company
reflected on the Most Recent Balance Sheet are valid receivables subject to no
material setoffs or counterclaims and are current and collectible, net of the
applicable reserves for bad debts, returns (including fiscal year-end credit
memos) and warranties on the Most Recent Balance Sheet. All accounts receivable
reflected in the financial or accounting records of the Company that have arisen
since the Balance Sheet Date are valid receivables subject to no setoffs or
counterclaims and are collectible, net of reserves for bad debts, returns and
warranties in an amount proportionate to the reserve shown on the Most Recent
Balance Sheet.
2.17 POWERS OF ATTORNEY. There are no outstanding powers of
attorney executed on behalf of the Company.
2.18 INSURANCE. Section 2.18 of the Disclosure Schedule sets forth
each insurance policy (including fire, theft, casualty, general liability,
workers compensation, business interruption, environmental, product liability
and automobile insurance policies and bond and surety arrangements) to which the
Company is a party or otherwise a named insured or the beneficiary. With respect
to each such insurance policy: (i) such policy is enforceable and in full force
and effect; (ii) such policy will continue to be enforceable and in full force
and effect immediately following the Closing in accordance with the terms
thereof as in effect prior to the Closing; (iii) the Company is not in breach or
default (including with respect to the payment of premiums or the giving of
notices) under such policy, and no event has occurred which, with notice or the
lapse of time, would constitute such a breach or default or permit termination,
modification or acceleration, under such policy; and the Company has not
received any notice from the insurer disclaiming coverage or reserving rights
with respect to a particular claim or such policy in general. The Company is
covered by insurance in scope and amount customary and reasonable for the
business in which it is engaged.
2.19 LITIGATION. Except as set forth in Schedule 2.19 of the
Disclosure Schedule, there is no action, suit, proceeding or claim before any
Governmental Entity or arbitrator pending, or, to the knowledge of the Company
and the Company Stockholders, threatened against the Company, or any of its
officers or directors (in their capacities as such) that, individually or in the
aggregate, is reasonably likely to have a Company Material Adverse Effect. There
is no judgement, injunction, decree or order against the Company that is
reasonably likely to have a Company Material Adverse Effect.
2.20 EMPLOYEES.
(a) Section 2.21 of the Disclosure Schedule contains a list of
all employees of the Company whose annual rate of compensation exceeds $75,000
per
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year, along with the position and the annual rate of compensation of each such
person. To the knowledge of the Company and the Company Stockholders and except
as set forth in Section 2.20 of the Disclosure Schedule, no such employee has
any plans to terminate employment with the Company.
(b) The Company is not a party to or bound by any collective
bargaining agreement. Neither Company nor any Company Stockholder have knowledge
of any material organizational effort made or threatened, either currently or
within the past two years, by or on behalf of any labor union with respect to
employees of the Company.
2.21 EMPLOYEE BENEFITS.
(a) Section 2.21(a) of the Disclosure Schedule contains a
complete and accurate list of all Employee Benefit Plans (as defined below)
maintained, or contributed to, by the Company. For purposes of this Agreement,
"EMPLOYEE BENEFIT PLAN" means any "employee pension benefit plan" (as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) (a "Pension Benefit Plan"), any "employee welfare benefit plan" (as
defined in Section 3(1) of ERISA) (a "Welfare Benefit Plan"), and any other
written or oral plan, agreement or arrangement involving direct or indirect
compensation, including without limitation insurance coverage, severance
benefits, disability benefits, sick pay, vacation pay (including any policy
concerning accrued vacation, sick days or earned time off), deferred
compensation, bonuses, stock options, stock purchase, phantom stock, stock
appreciation or other forms of incentive compensation or post-retirement
compensation. Complete and accurate copies of (i) all Employee Benefit Plans
which have been reduced to writing, (ii) written summaries of all unwritten
Employee Benefit Plans, (iii) all related trust agreements, insurance contracts
and summary plan descriptions, and (iv) all annual reports filed on IRS Form
5500, 5500C or 5500R for the last five plan years for each Employee Benefit
Plan, have been made available to the Buyer. Each Employee Benefit Plan has been
administered in all material respects in accordance with its terms and the
Company has in all material respects met its obligations with respect to such
Employee Benefit Plan and has made all required contributions thereto. The
Company and all Employee Benefit Plans are in compliance in all material
respects with the currently applicable provisions of ERISA and the Code and the
regulations thereunder.
(b) To the knowledge of the Company and the Company
Stockholders, there are no investigations by any Governmental Entity,
termination proceedings or other claims (except claims for benefits payable in
the normal operation of the Employee Benefit Plans and proceedings with respect
to qualified domestic relations orders), suits or proceedings against or
involving any Employee Benefit Plan or asserting any rights or claims to
benefits under any Employee Benefit Plan that could give rise to any material
liability.
(c) All the Employee Benefit Plans that are intended to be
qualified under Section 401(a) of the Code have received determination letters
from the
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Internal Revenue Service to the effect that such Employee Benefit Plans are
qualified and the plans and the trusts related thereto are exempt from federal
income taxes under Sections 401(a) and 501(a), respectively, of the Code, no
such determination letter has been revoked and revocation has not been
threatened, and no such Employee Benefit Plan has been amended or operated since
the date of its most recent determination letter or application therefor in any
respect, and no act or omission has occurred, that would adversely affect its
qualification or materially increase its cost.
(d) Neither the Company, nor any ERISA Affiliate has ever
maintained an Employee Benefit Plan subject to Section 412 of the Code or Title
IV of ERISA. For purposes of this Agreement, "ERISA AFFILIATE" means any entity
which is or at any applicable time was a member of (i) a controlled group of
corporations (as defined in Section 414(b) of the Code), (ii) a group of trades
or businesses under common control (as defined in Section 414(c) of the Code),
or (iii) an affiliated service group (as defined under Section 414(m) of the
Code), any of which includes the Company.
(e) At no time has the Company or any ERISA Affiliate been
obligated to contribute to any "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA).
(f) There are no unfunded obligations under any Employee
Benefit Plan providing benefits after termination of employment to any employee
of the Company (or to any beneficiary of any such employee), including but not
limited to retiree health coverage and deferred compensation, but excluding
continuation of health coverage required to be continued under Section 4980B of
the Code or other applicable law and insurance conversion privileges under state
law.
(g) The Company represents and warrants that and, to the
knowledge of the Company Stockholders, the Company Stockholders represent that
no act or omission has occurred and no condition exists with respect to any
Employee Benefit Plan maintained by the Company or any ERISA Affiliate that
would subject the Company or any ERISA Affiliate to (i) any material fine,
penalty, tax or liability of any kind imposed under ERISA or the Code or (ii)
any contractual indemnification or contribution obligation protecting any
fiduciary, insurer or service provider with respect to any Employee Benefit
Plan.
(h) No Welfare Benefit Plan is funded by, associated with, or
related to a "voluntary employee's beneficiary association" within the meaning
of Section 501(c)(9) of the Code.
(i) Each Employee Benefit Plan is amendable and terminable in
accordance with its terms.
(j) Except as disclosed on Section 2.21(j) of the Disclosure
Schedule, the execution and performance of this Agreement will not result in (i)
payments (or
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transfers of property) which may constitute "parachute payments" within the
meaning of Section 280G of the Code, (ii) the acceleration of any benefits,
vesting or calculation of benefits under any Employee Benefit Plan or any
agreement or plan providing stock options, restricted stock, stock appreciation
rights or stock purchase plan. In addition, set forth in Section 2.2(j) of the
Disclosure Schedule is each agreement with any stockholder, director, executive
officer or other key employees providing (i) any term of employment or
compensation guarantee or (ii) providing any severance benefits or other
benefits after termination of employment.
(k) All life insurance benefits provided to Seller's employees
other than (i) basic group term life insurance, or (ii) benefits provided to
Jack Miller, Harvey Miller or Arnold Miller ("Executive Life Benefits"), are
subject to the terms of the Executive Wealth Accumulation Plan and effective
upon the Closing, the Company will have no further obligation to pay premiums
for any such Executive Life Benefits and any collateral assignment agreements in
force with respect to such Executive Life Benefits will terminate by their terms
and any cash value in which the Company had an interest under such agreements
will be considered a taxable bonus to the insured employee. All life insurance
benefits provided to Jack Miller, Harvey Miller or Arnold Miller are set forth
in Section 2.21 of the Disclosure Schedule.
2.22 ENVIRONMENTAL MATTERS.
(a) To the knowledge of the Company and the Company
Stockholders, the Company has complied in all material respects with all
applicable Environmental Laws (as defined below). There is no pending or, to the
knowledge of the Company and the Company Stockholders, threatened civil or
criminal litigation, written notice of material violation, formal administrative
proceeding, or investigation, inquiry or information request by any Governmental
Entity, relating to any Environmental Law involving the Company. For purposes of
this Agreement, "ENVIRONMENTAL LAW" means any federal, state or local law,
statute, rule or regulation or the common law relating to the environment or
occupational health and safety, including without limitation any statute,
regulation or order pertaining to (i) treatment, storage, disposal, generation
and transportation of industrial, toxic or hazardous materials or substances or
solid or hazardous waste; (ii) air, water and noise pollution; (iii) groundwater
and soil contamination; (iv) the release or threatened release into the
environment of industrial, toxic or hazardous materials or substances, or solid
or hazardous waste, including without limitation emissions, discharges,
injections, spills, escapes or dumping of pollutants, contaminants or chemicals;
(v) the protection of wildlife, marine life and wetlands, including without
limitation all endangered and threatened species; (vi) storage tanks, vessels,
abandoned or discarded barrels, and other closed receptacles; (vii) health and
safety of employees and other persons; and (viii) manufacture, processing, use,
distribution, treatment, storage, disposal, transportation or handling of
pollutants, contaminants, toxic or hazardous materials or substances or oil or
petroleum products or solid or hazardous waste. As used above, the terms
"release" and "environment" shall have the meaning set forth in the federal
Comprehensive Environmental Response, Compensation and Liability and Response
Act of 1980 ("CERCLA").
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(b) To the knowledge of the Company and the Company
Stockholders, there have been no releases of any Materials of Environmental
Concern (as defined below) into the environment at any parcel of real property
or any facility formerly or currently owned, operated or controlled by the
Company, except in compliance with Environmental Laws. With respect to any such
releases of Materials of Environmental Concern, the Company has given all
required notices to Governmental Entities (copies of which have been made
available to the Buyer). Neither the Company nor any Company Stockholder is
aware of any releases of Materials of Environmental Concern at parcels of real
property or facilities other than those owned, operated or controlled by the
Company that could reasonably be expected to have an impact on the real property
or facilities owned, operated or controlled by the Company. For purposes of this
Agreement, "MATERIALS OF ENVIRONMENTAL CONCERN" means any chemicals, pollutants
or contaminants, hazardous substances (as such term is defined under CERCLA),
solid wastes and hazardous wastes (as such terms are defined under the federal
Resource Conservation and Recovery Act), toxic materials, oil or petroleum and
petroleum products, or any other material subject to regulation under any
Environmental Law.
(c) Set forth in Section 2.22(c) of the Disclosure Schedule is
a list of all environmental reports, investigations and audits known to the
Company or any Company Stockholder relating to premises currently or previously
owned or operated by the Company (whether conducted by or on behalf of the
Company or a third party, and whether done at the initiative of the Company or
directed by a Governmental Entity or other third party) which the Company has
possession of or access to. Complete and accurate copies of each such report, or
the results of each such investigation or audit, have been made available to the
Buyer.
(d) Neither the Company nor any Company Stockholder is aware
of any material environmental liability of any solid and hazardous waste
transporter or treatment, storage or disposal facilities that have been utilized
by the Company.
2.23 LEGAL COMPLIANCE. The Company, and the conduct and operations
of its business, are currently in compliance with each law (including rules and
regulations thereunder) of any federal, state, local or foreign government, or
any Governmental Entity, which (i) affects or relates to this Agreement or the
transactions contemplated hereby or (ii) is applicable to the Company or its
business, except for any violation of or default under a law referred to in
clause (ii) above which reasonably may be expected not to have a Company
Material Adverse Effect.
2.24 PERMITS. Section 2.24 of the Disclosure Schedule sets forth a
list of all material permits, licenses, registrations, certificates, orders or
approvals from any Governmental Entity (including without limitation those
issued or required under Environmental Laws and those relating to the occupancy
or use of owned or leased real property) ("PERMITS") issued to or held by the
Company. Such listed Permits are the only material Permits that are required for
the Company to conduct its business as presently conducted or as proposed to be
conducted by the Company, except for those the absence of which would not have a
Company Material Adverse Effect.
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Each such Permit is in full force and effect and, to the knowledge of the
Company and the Company Stockholders, no suspension or cancellation of such
Permit is threatened and there is no basis for believing that such Permit will
not be renewable upon expiration. Each such Permit will continue in full force
and effect immediately following the Closing.
2.25 CERTAIN BUSINESS RELATIONSHIPS WITH AFFILIATES. Except as set
forth in Sections 2.11, 2.15 or 2.25, or disclosed in the Disclosure Schedule,
no Affiliate of the Company (i) owns any property or right, tangible or
intangible, which is used in the business of the Company, (ii) has any claim or
cause of action against the Company, or (iii) owes any money to, or is owed
money by, the Company (the agreements, arrangements and relationships described
in this sentence are hereinafter referred to as "RELATED PARTY TRANSACTIONS").
Section 2.25 of the Disclosure Schedule describes any Related Party Transactions
which are reflected in the Financial Statements.
2.26 BROKERS' FEES. The Company has no liability or obligation to
pay any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement, other than the fees and expenses of
J.H. Chapman Group, L.L.C., as provided in a letter agreement, a copy of which
has been made available to the Buyer.
2.27 BOOKS AND RECORDS. The minute books and other similar records
of the Company contain true and complete records of all material actions taken
at any meetings of the Company's stockholders, Board of Directors or any
committee thereof and of all written consents executed in lieu of the holding of
any such meeting. The books and records of the Company accurately reflect in all
material respects the assets, liabilities, business, financial condition and
results of operations of the Company and have been maintained in accordance with
good business and bookkeeping practices.
2.28 CUSTOMERS AND SUPPLIERS. Section 2.28 of the Disclosure
Schedule sets forth a list of (a) each customer that accounted for more than 1%
of the revenues of the Company during the last full fiscal year or the interim
period through the Balance Sheet Date and the amount of revenues accounted for
by such customer during each such period and (b) each supplier that is the sole
supplier of any significant product to the Company, for which significant
product there does not exist, in the reasonable judgment of the Company
Stockholders, an alternate supplier from which the Company could acquire such
significant product on commercially reasonable terms. No such customer or
supplier has indicated within the past year that it will stop, or decrease the
rate of, buying products or supplying products, as applicable, to the Company.
2.29 ACCOUNTING AND TAX MATTERS. To the knowledge of the Company
Stockholders, after consulting with the Company's independent auditors, neither
the Company nor any of its Affiliates has through the date of this Agreement
taken or agreed to take any action that would (i) prevent the Company and the
Buyer from accounting for the business combination to be effected by the Merger
as a "pooling of
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interests" in conformity with GAAP or (ii) prevent the Merger from constituting
a transaction qualifying as a reorganization under Section 368(a) of the Code.
2.30 INVESTMENT REPRESENTATIONS.
(a) Each Company Stockholder is acquiring the Merger Shares
for its own account for investment only, and not with a view to, or for sale in
connection with, any distribution of the Merger Shares in violation of the
Securities Act or any rule or regulation under the Securities Act.
(b) Each Company Stockholder has had adequate opportunity to
obtain from representatives of the Buyer such information about the Buyer as is
necessary to evaluate the merits and risks of its investment in the Buyer.
(c) Each Company Stockholder has sufficient expertise in
business, financial and investment matters to be able to evaluate the risks
involved in the acquisition of the Merger Shares and to make an informed
investment decision with respect to such acquisition.
(d) Each Company Stockholder understands that the Merger
Shares have not been registered under the Securities Act and are "restricted
securities" within the meaning of Rule 144 under the Securities Act; and the
Merger Shares cannot be sold, transferred or otherwise disposed of unless they
are subsequently registered under the Securities Act or an exemption from
registration is then available.
(e) Each Company Stockholder understands that a legend
substantially in the following form will be placed on each certificate
representing the Merger Shares:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
may not be sold, transferred or otherwise disposed of in the
absence of an effective registration statement under such Act
or an opinion of counsel satisfactory to the corporation to
the effect that such registration is not required."
(f) Each Company Stockholder is an "accredited investor"
within the meaning of Regulation D under the Securities Act.
2.31 AFFILIATES. Section 2.31 of Disclosure Schedule sets forth
those persons who are, in the Company's reasonable judgment, Affiliates of the
Company.
2.32 DISCLOSURE. No representation or warranty by the Company or
any Company Stockholder contained in this Agreement, and no statement contained
in the Disclosure Schedule or any other document, certificate or other
instrument delivered to or to be delivered by or on behalf of the Company or any
Company
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Stockholder pursuant to this Agreement, contains or will contain any untrue
statement of a material fact or omits or will omit to state any material fact
necessary, in light of the circumstances under which it was or will be made, in
order to make the statements herein or therein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER
AND THE TRANSITORY SUBSIDIARY
Each of the Buyer and the Transitory Subsidiary jointly and severally
represents and warrants to the Company and the Company Stockholders that the
statements contained in this Article III are true and correct, except as set
forth in the disclosure schedule provided by Buyer to the Company on the date
hereof (the "Buyer Disclosure Schedule"). The Buyer Disclosure Schedule shall be
arranged in paragraphs corresponding to the numbered and lettered paragraphs
contained in this Article III, and the disclosures in any paragraph of the Buyer
Disclosure Schedule shall qualify other paragraphs in this Article III only to
the extent it is clear from a reading of the disclosure that such disclosure is
applicable to such other paragraphs.
3.1 ORGANIZATION. Each of the Buyer and the Transitory Subsidiary
is a corporation duly organized, validly existing and in good standing under the
laws of the state of its incorporation. Each of the Buyer and the Transitory
Subsidiary is duly qualified to conduct business and is in corporate and tax
good standing under the laws of each jurisdiction in which the nature of its
business or the ownership or leasing of its properties requires such
qualification, except for any such failure to be so qualified and in good
standing that would not, either individually or in the aggregate, have a Buyer
Material Adverse Effect. Each of the Buyer and the Transitory Subsidiary has all
requisite corporate power and authority to carry on the businesses in which it
is engaged and to own and use the properties owned and used by it. Each of the
Buyer and the Transitory Subsidiary has furnished to the Seller true and
complete copies of its Certificate of Incorporation and By-laws, each as amended
and as in effect on the date hereof. Neither the Buyer or the Transitory
Subsidiary is in default under or in violation of any provision of its
Certificate of Incorporation or By-laws.
3.2 CAPITALIZATION. The authorized capital stock of the Buyer
consists of (i) 500,000,000 shares of Buyer Common Stock, of which 252,154,564
shares were issued and outstanding and 59,149 shares were held in the treasury
of the Buyer as of March 1, 1998 and (ii) 5,000,000 shares of preferred stock,
$0.01 par value, none of which are outstanding. All of the issued and
outstanding shares of Buyer Common Stock are duly authorized, validly issued,
fully paid, nonassessable and free of all preemptive rights and are associated
with 16/81sts of a right issuable pursuant to the Rights Agreement referred to
in Section 1.5(i). All of the Merger Shares will be, when issued in accordance
with this Agreement, duly authorized, validly issued, fully paid, nonassessable
and free of all preemptive rights. Except as disclosed in
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Section 3.2 of the Buyer Disclosure Schedule or the Buyer Reports (as defined
below), as of March 1, 1998 there were no (i) outstanding or authorized options,
warrants, rights, agreements or commitments to which the Buyer is a party or
which are binding on the Buyer providing for the issuance, disposition or
acquisition of any of its capital stock, (ii) outstanding or authorized stock
appreciation, phantom stock or similar rights with respect to the Buyer, and
(iii) agreements, voting trusts, proxies or understandings with respect to the
voting, or registration under the Securities Act of any shares of the capital
stock (or rights related thereto) of the Buyer.
3.3 AUTHORIZATION OF TRANSACTION. Each of the Buyer and the
Transitory Subsidiary has all requisite power and authority to execute and
deliver this Agreement and (in the case of the Buyer) the Escrow Agreement and
to perform its obligations hereunder and thereunder. Without limiting the
generality of the foregoing: the Board of Directors of the Buyer and the
Transitory Subsidiary, at meetings duly called and held (or by written consent)
duly determined (in the case of the Buyer) that the Merger is fair and in the
best interests of the Buyer and its stockholders and adopted this Agreement in
accordance with the provisions of the Delaware General Corporation Law. The
execution and delivery of this Agreement and (in the case of the Buyer) the
Escrow Agreement by the Buyer and the Transitory Subsidiary and the consummation
by the Buyer and the Transitory Subsidiary of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary
corporate action on the part of the Buyer and Transitory Subsidiary. This
Agreement has been duly and validly executed and delivered by the Buyer and the
Transitory Subsidiary and constitutes a valid and binding obligation of the
Buyer and the Transitory Subsidiary, enforceable against them in accordance with
its terms, subject to (i) bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting or relating to creditors' rights generally and (ii) the
availability of injunctive relief and other equitable remedies.
3.4 NONCONTRAVENTION. Subject to compliance with the applicable
requirements of the Securities Act and any applicable state securities laws, the
Exchange Act, the Hart-Scott-Rodino Act and applicable foreign antitrust laws
(if any), and the filing of the Certificate of Merger as required by the
Delaware General Corporation Law, neither the execution and delivery of this
Agreement or (in the case of the Buyer) the Escrow Agreement by the Buyer or the
Transitory Subsidiary, nor the consummation by the Buyer or the Transitory
Subsidiary of the transactions contemplated hereby or (in the case of the Buyer)
thereby, will (i) conflict with or violate any provision of the charter or
By-laws of the Buyer or the Transitory Subsidiary, (ii) require on the part of
the Buyer or the Transitory Subsidiary any filing with, or any permit,
authorization, consent or approval of, any Governmental Entity, (iii) conflict
with, result in breach of, constitute (with or without due notice or lapse of
time or both) a default under, result in the acceleration of, create in any
party any right to accelerate, terminate, modify or cancel, or require any
notice, consent or waiver under, any material contract, lease, sublease,
license, sublicense, franchise, permit, indenture, agreement or mortgage for
borrowed money, instrument of indebtedness or other arrangement to which the
Buyer or Transitory Subsidiary is a party or by which either is bound or to
which any of their assets or properties are
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subject, except to the extent any such conflict, breach, default, acceleration,
termination, modification or cancellation, or the failure to give or obtain any
such notice, consent or waiver, would not have a Buyer Material Adverse Effect
(as defined below), or (iv) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Buyer or the Transitory Subsidiary
or any of their assets or properties. The term "BUYER MATERIAL ADVERSE EFFECT"
means any change, event or effect that is materially adverse to the business,
financial condition or results of operations of the Company, excluding any
changes in general economic conditions in the general economy as a whole, or
that adversely affects the ability of the Buyer to consummate the Merger.
3.5 REPORTS AND FINANCIAL STATEMENTS. The Buyer has previously
furnished to the Company and the Company Stockholders complete and accurate
copies, as amended or supplemented, of its (a) Annual Report on Form 10-K for
the fiscal year ended February 1, 1997, as filed with the Securities and
Exchange Commission (the "SEC"), and (b) all other reports filed by the Buyer
under Section 13 of the Exchange Act with the SEC since February 1, 1997 (such
reports are collectively referred to herein as the "BUYER REPORTS"). The Buyer
Reports constitute all of the documents required to be filed by the Buyer under
Section 13 of the Exchange Act with the SEC since February 1, 1997. As of their
respective dates, the Buyer Reports did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The audited financial statements and
unaudited interim financial statements of the Buyer included in the Buyer
Reports (i) comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, (ii) have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby (except as may be
indicated therein or in the notes thereto, and in the case of quarterly
financial statements, as permitted by Form 10-Q under the Exchange Act and
except for normal recurring year-end adjustments (which will not be material)),
(iii) fairly present the consolidated financial condition, results of operations
and cash flows of the Buyer and its subsidiaries as of the respective dates
thereof and for the periods referred to therein, and (iv) are consistent with
the books and records of the Buyer and its subsidiaries.
3.6 LITIGATION. There is no action, suit, proceeding, or claim
before any Government Entity or arbitrator pending, or, to the Buyer's
knowledge, threatened against, the Buyer or any of its officers or directors (in
their capacities as such) that, individually or in the aggregate, is reasonably
likely to have a Buyer Material Adverse Effect. There is no judgment,
injunction, decree or order against the Buyer that is reasonably likely to have
a Buyer Material Adverse Effect.
3.7 ACCOUNTING AND TAX MATTERS. To the knowledge of the Buyer,
after consulting with its independent auditors, neither the Buyer nor any of its
Affiliates has through the date of this Agreement taken or agreed to take any
action that would (i) prevent the Company and the Buyer from accounting for the
business combination
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to be effected by the Merger as a "pooling of interests" in conformity with GAAP
or (ii) prevent the Merger from constituting a transaction qualifying as a
reorganization under Section 368(a) of the Code.
3.8 ABSENCE OF CERTAIN CHANGES. Since January 31, 1998, there has
occurred no event or development which has had, or could reasonably be expected
to have in the future, a Buyer Material Adverse Effect.
3.9 TAXES. Buyer has (i) filed all federal, state, local and
foreign tax returns and reports required to be filed by it prior to the date of
this Agreement (taking into account extensions), (ii) paid or accrued all Taxes
due and payable, and (iii) paid or accrued all Taxes for which a notice of
assessment or collection has been received (other than amounts being contested
in good faith by appropriate proceedings), except in the case of clause (i),
(ii) or (iii) for any such filings, payments or accruals which are not
reasonably likely, individually or in the aggregate, to have a Buyer Material
Adverse Effect. Neither the Internal Revenue Service nor any other taxing
authority has asserted any claim for taxes, or to the knowledge of Buyer, is
threatening to assert any claim for Taxes, which claims, individually or in the
aggregate, are reasonably likely to have a Buyer Material Adverse Effect. There
are no liens for taxes upon the assets of Buyer (other than liens for Taxes that
are not yet due or that are being contested in good faith by appropriate
proceedings), except for liens which are not reasonably likely, individually or
in the aggregate, to have a Buyer Material Adverse Effect.
3.10 ENVIRONMENTAL MATTERS. The Buyer has complied in all material
respects with all applicable Environmental Laws. Except for such matters that,
individually or in the aggregate, are not reasonably likely to have a Buyer
Material Adverse Effect, (i) there is no pending or, to the knowledge of the
Buyer, threatened civil or criminal litigation, written notice of material
violation, formal administrative proceeding, or investigation, inquiry or
information request by any Governmental Entity, relating to any Environmental
Law involving the Buyer, and (ii) there have been no releases of any Materials
of Environmental Concern into the environment at any parcel of real property or
any facility formerly or currently owned, operated or controlled by the Company,
except in compliance with Environmental Law.
3.11 EMPLOYEE BENEFIT PLANS
(a) Buyer has listed in Section 3.11 of the Buyer Disclosure
Schedule all employee benefit plans (as defined in Section 3(3) of ERISA) for
the benefit of, or relating to, any employee of Buyer or any ERISA Affiliate of
Buyer (together, the "Buyer Employee Plans").
(b) With respect to the Buyer Employee Plans, individually and
in the aggregate, no event has occurred, and to the knowledge of Buyer, there
exists no condition or set of circumstances in connection with which Buyer could
be subject to any liability that is reasonably likely to have a Buyer Material
Adverse Effect under ERISA, the Code or any other applicable law.
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(c) With respect to the Buyer Employee Plans, individually and
in the aggregate, there are no funded benefit obligations for which
contributions have not been made or properly accrued and there are no unfunded
benefit obligations which have not been accounted for by reserves, or otherwise
properly footnoted in accordance with generally accepted accounting principles,
on the financial statements of Buyer, which obligations are reasonably likely to
have a Buyer Material Adverse Effect.
3.12 COMPLIANCE WITH LAWS. Buyer has complied with, is not in
violation of, and has not received any notices of violation with respect to, any
United States or foreign federal, state or local statute, law or regulation with
respect to the conduct of its business, or the ownership or operation of its
business, except for failures to comply or violations which, individually or in
the aggregate, have not had and are not reasonably likely to have a Buyer
Material Adverse Effect.
3.13 INTERIM OPERATIONS OF THE TRANSITORY SUBSIDIARY. The
Transitory Subsidiary was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement, has engaged in no other business
activities and has conducted its operations only as contemplated by this
Agreement.
3.14 BROKERS' FEES. Neither the Buyer nor the Transitory Subsidiary
has any liability or obligation to pay any fees or commissions to any broker,
finder or agent with respect to the transactions contemplated by this Agreement,
except for the fees and expenses of Goldman, Sachs & Co.
3.15 DISCLOSURE. The representations and warranties by the Buyer
contained in this Agreement, and any other document, certificate or other
instrument delivered by or on behalf of the Buyer pursuant to this Agreement,
including the Buyer Reports, taken together, do not contain any untrue statement
of a material fact or omit to state any material fact necessary, in light of the
circumstances under which they were made, in order to make the statements herein
or therein not misleading.
ARTICLE IV
COVENANTS
4.1 REASONABLE BEST EFFORTS; NOTICE AND CONSENTS;
HART-SCOTT-RODINO ACT.
(a) Each of the Company and the Buyer shall use its best
efforts, to the extent commercially reasonable ("REASONABLE BEST EFFORTS") (i)
to take, or cause to be taken, all appropriate action, and do, or cause to be
done, all things necessary and proper under applicable law to consummate and
make effective the transactions contemplated hereby as promptly as practicable,
(ii) to obtain from any Governmental Entity or any other third party any
consents, licenses, permits, waivers, approvals, authorizations, or orders
required to be obtained or made by the Parties or any of their Affiliates in
connection with the authorization, execution and delivery of
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this Agreement and the consummation of the transactions contemplated hereby
including, without limitation, the Merger, and (iii) as promptly as practicable,
to make all necessary filings, and thereafter make any other required
submissions, with respect to this Agreement and the Merger required under (A)
any applicable federal or state securities laws, (B) the Hart-Scott-Rodino Act
and any related governmental request thereunder, and (C) any other applicable
law. The Parties shall cooperate with each other in connection with the making
of all such filings, including providing copies of all such documents to the
non-filing Parties and its advisors prior to filing and, if requested, to accept
all reasonable additions, deletions or changes suggested in connection
therewith. Each of the Parties shall use its Reasonable Best Efforts to furnish
to the other Parties all information required for any application or other
filing to be made pursuant to the rules and regulations of any applicable law in
connection with the transactions contemplated by this Agreement.
(b) The Parties agree, and shall cause each of their
respective Affiliates, to cooperate and to use their respective Reasonable Best
Efforts to obtain any governmental clearances or approvals required for Closing
under the Hart-Scott-Rodino Act, the Sherman Act, as amended, the Clayton Act,
as amended, the Federal Trade Commission Act, as amended, and any other Federal,
state or foreign law or, regulation or decree designed to prohibit, restrict or
regulate actions for the purpose or effect of monopolization or restraint of
trade (collectively "ANTITRUST LAWS"), to respond to any government requests for
information under any Antitrust Law, and to contest and resist any action,
including any legislative, administrative or judicial action, and to have
vacated, lifted, reversed or overturned any decree, judgment injunction or other
order (an "ANTITRUST ORDER") that restricts, prevents or prohibits the
consummation of the Merger or any other transactions contemplated by this
Agreement under any Antitrust Law. The Parties hereto will consult and cooperate
with one another, in connection with any analyses, appearances, presentations,
memoranda, briefs, arguments, opinions and proposals made or submitted by or on
behalf of any Party hereto in connection with proceedings under or relating to
any Antitrust Law. The Buyer shall be entitled to direct any proceedings or
negotiations with any Governmental Entity relating to any of the foregoing,
provided that it shall afford the Company a reasonable opportunity to
participate therein. Notwithstanding the foregoing, no Party shall be required
to take any action under Section 4.1(a) or Section 4.1(b) if the U.S. Department
of Justice or U.S. Federal Trade Commission authorizes its staff to seek a
preliminary injunction or restraining order to enjoin consummation of the Merger
unless the Buyer agrees to pay all costs and expenses (including, without
limitation attorneys' fees and expenses) necessary to resist and defend against
any such order or injunction.
(c) Each of the Parties shall give (and shall use their
Reasonable Best Efforts to cause their respective Affiliates to give) any
notices to third parties, and use (and cause their respective Affiliates to use)
their Reasonable Best Efforts to obtain any third party consents related to or
required in connection with the Merger that are (A) necessary to consummate the
transactions contemplated hereby, (B) disclosed or required to be disclosed in
the Disclosure Schedule or (C) required to prevent a
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<PAGE> 33
Company Material Adverse Effect or a Buyer Material Adverse Effect from
occurring prior to or after the Effective Time.
(d) No Company Stockholder shall take any action to rescind or
modify the written consent of stockholders of the Company approving the Merger.
4.2 OPERATION OF BUSINESS. Except as contemplated by this
Agreement (including the Disclosure Schedule), during the period from the date
of this Agreement to the Effective Time, the Company shall conduct its
operations in the Ordinary Course of Business and in substantial compliance with
all applicable laws and regulations and, to the extent consistent therewith, use
its Reasonable Best Efforts to preserve intact its current business
organization, keep its physical assets in good working condition, normal wear
and tear excepted, keep available the services of its current officers and
employees and preserve its relationships with customers, suppliers and others
having business dealings with it to the end that its goodwill and ongoing
business shall not be impaired in any material respect. Without limiting the
generality of the foregoing, except as provided herein, prior to the Effective
Time, the Company shall not, without the written consent of the Buyer, which
consent, in the cases of clauses (c), (h), (k) or (n), shall not be unreasonably
withheld:
(a) issue, sell, deliver or agree or commit to issue, sell or
deliver (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise) or authorize the
issuance, sale or delivery of, or redeem or repurchase, any stock of any class
or any other securities or any rights, warrants or options to acquire any such
stock or other securities;
(b) split, combine or reclassify any shares of its capital
stock; declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock except for cash dividends that may be paid in the manner set forth in
Section 4.2 of the Disclosure Schedule;
(c) create, incur or assume any debt for borrowed money not
currently outstanding (including obligations in respect of capital leases);
assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other person or
entity (other than product warranties); or make any loans, advances or capital
contributions to, or investments in, any other person or entity;
(d) enter into, adopt or amend any Employee Benefit Plan or
any employment or severance agreement or arrangement of the type described in
Section 2.21(j) or (except for normal increases in the Ordinary Course of
Business or at the direction of the Buyer) increase in any manner the
compensation or fringe benefits of, or materially modify the employment terms
of, its directors, officers or employees, generally or individually, or pay any
benefit not required by the terms in effect on the date hereof of any existing
Employee Benefit Plan;
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(e) acquire, sell, lease, encumber or dispose of any assets or
property, other than purchases and sales of assets in the Ordinary Course of
Business or as contemplated by the capital expenditure budget of the Company, a
copy of which has been provided to Buyer;
(f) amend its charter or By-laws;
(g) change in any material respect its accounting methods,
principles or practices, except insofar as may be required by a generally
applicable change in GAAP;
(h) discharge or satisfy any Encumbrance or pay any obligation
or liability other than in the Ordinary Course of Business;
(i) mortgage or pledge any of its property or assets or
subject any such assets to any Encumbrance;
(j) enter into, amend, terminate, take or omit to take any
action that would constitute a material violation of or default under, or waive
any rights under, any material contract or agreement;
(k) make or commit to make any capital expenditure in excess
of $1,000,000 in the aggregate;
(l) take any action or fail to take any action permitted by
this Agreement with the knowledge that such action or failure to take action
would result in (i) any of the representations and warranties of the Company set
forth in this Agreement becoming untrue or (ii) any of the conditions to the
Merger set forth in Article V not being satisfied;
(m) take any action that would jeopardize the treatment of the
Merger as a "pooling of interests" for accounting purposes;
(n) initiate, compromise or settle any material litigation or
arbitration proceeding; or
(o) agree in writing or otherwise to take any of the foregoing
actions.
4.3 FULL ACCESS. The Company and Buyer shall each permit (and
Buyer shall cause each of its subsidiaries to) permit representatives of the
other Party to have full access (at all reasonable times, and in a manner so as
not to interfere with normal business operations) to all premises, properties,
financial and accounting records, contracts, other records and documents, and
personnel, of or pertaining to the Company and Buyer and its subsidiaries, as
the case may be.
4.4 EXCLUSIVITY.
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(a) Neither the Company nor any of the Company Stockholders
shall, and the Company shall use its Reasonable Best Efforts to cause its
Affiliates and each of its officers, directors, employees, representatives and
agents not to, directly or indirectly, (a) encourage, solicit, initiate, engage
or participate in discussions or negotiations with any person or entity (other
than the Buyer) concerning any merger, consolidation, sale of material assets,
sale of Company Shares, or other business combination involving the Company or
any division or business unit of the Company or (b) provide any non-public
information concerning the business, properties or assets of the Company to any
person or entity (other than the Buyer). The Company shall immediately notify
the Buyer of, and shall disclose to the Buyer all details of, any inquiries,
discussions or negotiations of the nature described in the first sentence of
this Section 4.4.
(b) Without the prior written consent of the Company, Buyer
shall not, and shall use its Reasonable Best Efforts to cause each of its
Affiliates and each of its officers, directors, representatives and agents not
to, encourage, solicit, initiate, engage or participate in discussions or
negotiations with any person or entity (other than the Company and the Company
Stockholders) concerning any acquisition (whether by means of a merger, stock or
asset purchase, partnership or affiliation agreement, or otherwise) of any
entity that is engaged primarily in the sale of delivered office products and
that has annual revenues in its most recently completed fiscal year in excess of
$200 million from such sales in the United States.
4.5 MONTHLY FINANCIAL STATEMENTS. Within 15 days after the end of
each month ending prior to the Closing, beginning with April 1998, the Company
shall furnish to the Buyer an unaudited income statement for such month and a
balance sheet as of the end of such month, prepared on a basis consistent with
the Financial Statements. Within 45 days after the end of each of its fiscal
quarters ending prior to the Closing, Buyer shall furnish to the Company its
Report on Form 10-Q for such quarter.
4.6 POOLING ACCOUNTING.
(a) From and after the date hereof and until the Effective
Time, none of the Parties shall knowingly take, and each Party shall use its
Reasonable Best Efforts to prevent its Affiliates from knowingly taking, any
action, or knowingly fail or failing to take any action, that is reasonably
likely to jeopardize the treatment of the Merger as a pooling of interests for
accounting purposes.
(b) Each Company Stockholder agrees that he will not sell,
transfer or otherwise dispose of, or reduce his interest in or risk relating to,
any shares of Buyer Common Stock until after such time as the Buyer has
published (within the meaning of Accounting Series Release No. 130, as amended,
of the Securities and Exchange Commission) financial results covering at least
30 days of combined operations of the Surviving Corporation and the Buyer. Until
the earlier of the Effective Time or the termination of this Agreement, each
Company Stockholder agrees that he or she will not sell, transfer or otherwise
dispose of, or reduce his
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interest in or risk relating to, any Company Shares presently owned by such
Company Stockholder.
4.7 NASDAQ LISTING. The Buyer shall use its Reasonable Best
Efforts to cause the Merger Shares to be approved for listing on the Nasdaq
National Market prior to or as of the Effective Time.
4.8 INDEMNIFICATION.
(a) From and after the Effective Time, Buyer agrees that it
will, and will cause the Surviving Corporation to, indemnify and hold harmless
each present and former director and officer of the Company (the "Indemnified
Persons"), against any costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages, liabilities or amounts paid in
settlement (collectively, "Costs") incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to matters
existing or occurring at or prior to the Effective Time, whether asserted or
claimed prior to, at or after the Effective Time, to the fullest extent that the
Company would have been permitted under Delaware law and its certificate of
incorporation and by-laws in effect on the date hereof to indemnify such
Indemnified Person (and Buyer and the Surviving Corporation shall also advance
expenses as incurred to the fullest extent permitted under applicable law
provided the Indemnified Person to whom expenses are advanced provides an
undertaking to repay such advances if it is ultimately determined that such
Indemnified Person is not entitled to indemnification).
(b) The provisions of this Section 4.8 are intended to be in
addition to the rights otherwise available to the current and former officers
and directors of the Company by law, charter, by-law or agreement, and shall
operate for the benefit of, and shall be enforceable by, each of the Indemnified
Persons, their heirs and their representatives.
(c) No Indemnified Person shall be indemnified by the Buyer or
the Surviving Corporation for any claim as to which the Buyer is entitled to be
indemnified by such Indemnified Person under Article VI hereof.
4.9 BENEFIT PLANS. The Buyer agrees that, during the period
commencing at the Effective Time and ending on December 31, 1998, it will, and
it will cause the Surviving Corporation to, continue to provide to the employees
of the Surviving Corporation with benefits under employee benefit plans
generally available to all employees which are no less favorable in the
aggregate than those currently provided by the Company to such employees (it
being agreed that Buyer shall be responsible for the payment of all bonuses and
other amounts earned, vested or accrued under such plans prior to December 31,
1998, regardless when such amounts are required to be paid).
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ARTICLE V
CONDITIONS TO CONSUMMATION OF MERGER
5.1 CONDITIONS TO OBLIGATIONS OF THE BUYER AND THE TRANSITORY
SUBSIDIARY. The obligation of each of the Buyer and the Transitory Subsidiary to
consummate the Merger is subject to the satisfaction or waiver by the Buyer of
the following conditions:
(a) GOVERNMENTAL APPROVALS. The Company shall have obtained
from each Governmental Entity all approvals, issuances, permits, consents and
other authorizations necessary for the consummation of the Merger.
(b) PENDING PROCEEDINGS AND ORDERS. No action, suit or
proceeding shall be pending by or before any Governmental Entity wherein an
unfavorable judgment, order, decree, stipulation or injunction would (i) prevent
consummation of the Merger, (ii) cause the Merger to be rescinded following
consummation or (iii) affect adversely the right of the Buyer to own, operate or
control any of the assets and operations of the Surviving Corporation following
the Merger, and no such judgment, order, decree, stipulation or injunction shall
be in effect.
(c) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company and the Company Stockholders set forth in this
Agreement that are qualified as to materiality shall be true and correct, and
the representations and warranties of the Company and the Company Stockholders
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 Effective Time as though made on and as of the Effective Time, except to
the extent such representations and warranties address matters only as of a
particular date (in which case such representations and warranties shall remain
true and correct or true and correct in all material respects, as the case may
be, as of such earlier date).
(d) COVENANTS. The Company shall have performed or complied in
all material respects with its agreements and covenants required to be performed
or complied with under this Agreement as of or prior to the Effective Time.
(e) CERTIFICATES. The Company and the Company Stockholders
shall have delivered to the Buyer and the Transitory Subsidiary a certificate
(the "COMPANY CERTIFICATE") to the effect that each of the conditions specified
in clauses (a) through (d) of this Section 5.1 is satisfied in all respects.
(f) HART-SCOTT-RODINO ACT. All applicable waiting periods (and
any extensions thereof) under the Hart-Scott-Rodino Act shall have expired or
otherwise been terminated.
(g) LEGAL OPINION. The Buyer and the Transitory Subsidiary
shall have received from Neal, Gerber & Eisenberg, counsel to the Company, an
opinion
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substantially in the form of EXHIBIT A attached to the Disclosure Schedule,
addressed to the Buyer and the Transitory Subsidiary and dated as of the Closing
Date.
(h) POOLING LETTER. The Buyer shall have received a letter
from Ernst & Young LLP, addressed to the Buyer, regarding its concurrence with
the Buyer's management's conclusions as to the appropriateness of the pooling of
interests accounting under Accounting Principles Board Opinion No. 16 for the
Merger, as contemplated to be effected as of the date of the letter, it being
agreed that the Company, the Company Stockholders and the Buyer shall each
provide reasonable cooperation to Ernst & Young LLP to enable them to issue such
a letter.
(i) THIRD PARTY CONSENTS. The Buyer shall have been furnished
with evidence satisfactory to it of the consent or approval of those third
parties whose consent or approval shall be required in connection with the
Merger under any Material Contract or Lease.
(j) AFFILIATE AGREEMENT. The Buyer shall have received from
each Affiliate of the Company an executed Affiliate Agreement in the form
attached hereto as EXHIBIT B.
(k) REAL ESTATE AGREEMENTS. The transactions contemplated by
the binding letters of interest of even date herewith relating to the sale,
directly or indirectly, to the Buyer of the properties leased to the Company in
Agawam, Massachusetts; Lebanon, Pennsylvania; Coppell, Texas; Lincolnshire,
Illinois and Canton, Georgia (the "Real Estate Agreements") shall have been
consummated prior to or concurrently with the consummation of the Merger.
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY AND THE COMPANY
STOCKHOLDERS. The obligation of each of the Company and the Company Stockholders
to consummate the Merger is subject to the satisfaction or waiver by the Company
of the following conditions:
(a) GOVERNMENTAL APPROVAL. The Buyer and the Transitory
Subsidiary shall have obtained from each Governmental Entity all approvals,
issuances, permits, consents and other authorizations necessary for the
consummation of the merger.
(b) PENDING PROCEEDINGS AND ORDERS. No action, suit or
proceeding shall be pending by or before any Governmental Entity wherein an
unfavorable judgment, order, decree, stipulation or injunction (i) would prevent
consummation of the Merger, or cause the Merger to be rescinded following
consummation or (ii) is reasonably likely to result in a Buyer Material Adverse
Effect after the Effective Time, and no such judgment, order, decree,
stipulation or injunction shall be in effect.
(c) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Buyer set forth in this Agreement that are qualified as to
materiality shall be true and correct, and the representations and warranties of
the Buyer set
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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 Effective Time as though made on and as of the Effective Time, except to the
extent such representations and warranties address matters only as of a
particular date (in which case such representations and warranties shall remain
true and correct or true and correct in all material respects, as the case may
be, as of such earlier date).
(d) COVENANTS. Each of the Buyer and the Transitory Subsidiary
shall have performed or complied in all material respects with its agreements
and covenants required to be performed or complied with under this Agreement as
of or prior to the Effective Time.
(e) CERTIFICATES. The Buyer shall have delivered to the
Company a certificate (the "BUYER CERTIFICATE") to the effect that each of the
conditions specified in clauses (a) through (d) of this Section 5.2 is satisfied
in all respects.
(f) HART-SCOTT-RODINO ACT. All applicable waiting periods (and
any extensions thereof) under the Hart-Scott-Rodino Act shall have expired or
otherwise been terminated.
(g) LEGAL OPINION. The Company Stockholders shall have
received from Hale and Dorr LLP, counsel to the Buyer and the Transitory
Subsidiary, an opinion substantially in the form of EXHIBIT A attached to the
Buyer Disclosure Schedule, addressed to the Company Stockholders and dated as of
the Closing Date.
(h) NASDAQ NATIONAL MARKET. The Merger Shares shall have been
authorized for listing on the Nasdaq National Market.
(i) POOLING LETTER. The Buyer shall have received a letter
from Ernst & Young LLP, addressed to the Buyer, regarding its concurrence with
the Buyer's management's conclusions as to the appropriateness of the pooling of
interests accounting under Accounting Principles Board Opinion No. 16 for the
Merger, as contemplated to be effected as of the date of the letter, it being
agreed that the Company, the Company Stockholders and the Buyer shall each
provide reasonable cooperation to Ernst & Young LLP to enable them to issue such
a letter.
(j) REAL ESTATE AGREEMENTS. The transactions contemplated by
the Real Estate Agreements shall have been consummated prior to or concurrently
with the consummation of the Merger.
ARTICLE VI
INDEMNIFICATION
6.1 INDEMNIFICATION BY THE COMPANY STOCKHOLDERS. The Company
Stockholders (the "INDEMNIFYING PARTIES") shall jointly and severally indemnify
the
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Surviving Corporation and the Buyer (the "Indemnified Parties"), without
duplication, in respect of, and hold them harmless against, any and all debts,
obligations and other liabilities, monetary damages, fines, fees, penalties,
interest obligations, deficiencies, losses, and reasonable costs and expenses
(including without limitation amounts paid in settlement, interest, court costs,
costs of investigators, fees and expenses of attorneys, accountants, financial
advisors and other experts, and other expenses of litigation) (collectively,
"DAMAGES") incurred or suffered by the Surviving Corporation or the Buyer
resulting from or relating to any (i) breach by the Company or Company
Stockholders of any representation, warranty, covenant or agreement of the
Company or Company Stockholders contained in Article II or Sections 4.2 or 4.6
of this Agreement (including representations and warranties in the Company
Certificate), other than any breach arising under Section 2.29(i), 4.2(m) or 4.6
as a result of transactions contemplated by this Agreement to occur prior to or
concurrently with the Merger, and (ii) any breach by any party (other than Buyer
or any subsidiary thereof) of any representation, warranty, covenant or
agreement contained in the definitive acquisition agreements to be entered into
pursuant to the Real Estate Agreements.
6.2 INDEMNIFICATION CLAIMS.
(a) An Indemnified Party seeking to assert rights to
indemnification under this Article VI shall give written notification to the
Stockholder Representatives of the commencement of any action, suit or
proceeding relating to a third party claim for which indemnification pursuant to
this Article VI may be sought. Such notification shall be given within 20
business days after receipt by the Indemnified Party of notice of such action,
suit or proceeding, and shall describe (to the extent known by the Indemnified
Party) the facts constituting the basis for such action, suit or proceeding and
the amount of the claimed damages; provided, however, that no delay on the part
of the Indemnified Party in notifying the Stockholder Representatives shall
relieve the Indemnifying Parties of any liability or obligation hereunder except
to the extent of any damage or liability caused by or arising out of such
failure. Within 20 days after delivery of such notification, the Stockholder
Representatives may, upon written notice thereof to the Indemnified Party,
assume control of the defense of such action, suit or proceeding with counsel
reasonably satisfactory to the Indemnified Party, provided the Stockholder
Representatives acknowledge in writing to the Indemnified Party that any
damages, fines, costs or other liabilities that may be assessed against the
Indemnified Party in connection with such action, suit or proceeding constitute
Damages for which the Indemnified Party shall, subject to the limitations set
forth in Section 6.4, be indemnified pursuant to this Article VI. If the
Stockholder Representatives do not so assume control of such defense, the
Indemnified Party shall control such defense. The Party not controlling such
defense (the "Non-Controlling Party") may participate therein at their own
expense; provided that if the Stockholder Representatives assume control of such
defense and the Indemnified Party reasonably concludes that the Indemnifying
Parties and the Indemnified Party have conflicting interests or different
defenses available with respect to such action, suit or proceeding, the
reasonable fees and expenses of one counsel to the Indemnified Party shall be
considered "Damages" for
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purposes of this Agreement. The Party controlling such defense (the "CONTROLLING
PARTY") shall keep the Non-Controlling Party reasonably advised of the status of
such action, suit or proceeding and the defense thereof and shall consider in
good faith recommendations made by the Non-Controlling Party with respect
thereto. The Non-Controlling Party shall furnish the Controlling Party such
information as it may have with respect to such action, suit or proceeding
(including copies of any summons, complaint or other pleadings which may have
been served on such party and any written claim, demand, invoice, billing or
other document evidencing or asserting the same) and shall otherwise cooperate
with and assist the Controlling Party in the defense of such action, suit or
proceeding and provide the Controlling Party and its counsel access to (and the
right to make copies of) the Surviving Corporation's books and records
pertaining to such matter. The Stockholder Representatives shall not agree to
any settlement of, or the entry of any judgment arising from, any such action,
suit or proceeding without the prior written consent of the Indemnified Party,
which shall not be unreasonably withheld, conditioned or delayed. The
Indemnified Party shall not agree to any settlement of, or the entry of any
judgment arising from, any such action, suit or proceeding without the prior
written consent of the Stockholder Representatives, which shall not be
unreasonably withheld, conditioned or delayed; provided that if the Stockholder
Representatives do not assume the defense of such action, suit or proceeding
pursuant to this Section 6.2(a), the Indemnified Party shall be entitled to
agree to a settlement of, or the entry of any judgment arising from, such
action, suit or proceeding, after giving notice of the same to the Stockholder
Representatives, on such terms as the Indemnified Party in good faith may deem
appropriate.
(b) In order to seek indemnification under this Article VI, an
Indemnified Party shall give a written notification (a "CLAIM NOTICE") to the
Stockholder Representatives and the Escrow Agent which contains (i) a
description and the amount (the "CLAIMED AMOUNT") of any Damages incurred as a
result of any final, unappealable judgment, settlement or acknowledgment of the
Stockholder Representatives or reasonably expected to be incurred by the
Indemnified Party as a result of such claim, (ii) a statement that the
Indemnified Party is entitled to indemnification under this Article VI for such
Damages and a reasonable explanation of the basis therefor, and (iii) a demand
for payment in the amount of such Damages.
(c) Within 20 days after delivery of a Claim Notice, the
Stockholder Representatives shall deliver to the Indemnified Party a written
response (the "RESPONSE") in which the Stockholder Representatives shall: (i)
agree that the Indemnified Party is entitled to receive all of the Claimed
Amount (in which case the Response shall be accompanied by a copy of
instructions to the Escrow Agent to release to the Indemnified Party Escrow
Shares having a Value (as defined in the Escrow Agreement) equal to the Claimed
Amount), (ii) agree that the Indemnified Party is entitled to receive part, but
not all, of the Claimed Amount (the "AGREED AMOUNT") (in which case the Response
shall be accompanied by a copy of instructions to the Escrow Agent to release to
the Indemnified Party Escrow Shares having a Value (as defined on the Escrow
Agreement) equal to the Agreed Amount or (iii) dispute that the Indemnified
Party is entitled to receive any of the Claimed
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Amount. If the Stockholder Representatives in the Response contest the payment
of all or part of the Claimed Amount, the Stockholder Representatives and the
Indemnified Party shall follow the procedures set forth in Section 6.2(d) for
the resolution of such dispute (a "DISPUTE").
(d) During the 60-day period following the delivery of a
Response that reflects a Dispute, the Stockholder Representatives and the
Indemnified Party shall use good faith efforts to resolve the Dispute. If the
Dispute is not resolved within such 60-day period, the Stockholder
Representatives and the Indemnified Party shall discuss in good faith the
submission of the Dispute to a mutually acceptable alternative dispute
resolution procedure (which may be non-binding or binding upon the parties, as
they agree in advance), including without limitation one administered by the
American Arbitration Association or the Center for Public Resources (the "ADR
PROCEDURE"). In the event the Stockholder Representatives and the Indemnified
Party agree upon an ADR Procedure, such parties shall, in consultation with the
chosen dispute resolution service (the "ADR SERVICE"), promptly agree upon a
format and timetable for the ADR Procedure, agree upon the rules applicable to
the ADR Procedure, and promptly undertake the ADR Procedure. The provisions of
this Section 6.2(d) shall not obligate the Stockholder Representatives and the
Indemnified Party to pursue an ADR Procedure or prevent either such party from
pursuing the Dispute in a court of competent jurisdiction; provided that, if the
Stockholder Representatives and the Indemnified Party agree to pursue an ADR
Procedure, neither the Stockholder Representatives nor the Indemnified Party may
commence litigation or seek other remedies with respect to the Dispute prior to
the completion of such ADR Procedure. Any ADR Procedure undertaken by the
Stockholder Representatives and the Indemnified Party shall be considered a
compromise negotiation for purposes of federal and state rules of evidence, and
all statements, offers, opinions and disclosures (whether written or oral) made
in the course of the ADR Procedure by or on behalf of the Stockholder
Representatives, the Indemnified Party or the ADR Service shall be treated as
confidential and, where appropriate, as privileged work product. Such
statements, offers, opinions and disclosures shall not be discoverable or
admissible for any purposes in any litigation or other proceeding relating to
the Dispute (provided that this sentence shall not be construed to exclude from
discovery or admission any matter that is otherwise discoverable or admissible).
The fees and expenses of any ADR Service used by the Stockholder Representatives
and the Indemnified Party shall be shared equally by the Indemnifying Parties
and the Indemnified Party.
(e) Each Company Stockholder irrevocably agrees that the
Stockholder Representatives shall have full power and authority on behalf of
each Company Stockholder to take any and all actions on behalf of, execute any
and all instruments on behalf of, and execute or waive any and all rights of,
the Company Stockholders under this Article VI, including, without limitation,
the power and authority to agree to, negotiate, enter into settlements of and
demand arbitration of any claim made under this Article VI. A written decision,
act, consent or instruction of a majority of the Stockholder Representatives
shall constitute a decision of the Stockholder Representatives and all Company
Stockholders and shall be final,
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binding and conclusive upon each such Company Stockholder, and the Escrow Agent
and Buyer may rely upon any written decision, act, consent or instruction of a
majority of the Stockholder Representatives as being the decision, act, consent
or instruction of the Stockholder Representatives and each and every such
Company Stockholder. The Buyer and Escrow Agent are hereby relieved from any
liability to any Company Stockholder for any acts done by them in accordance
with such decision, act, consent or instruction of the Stockholder
Representatives. The Stockholder Representatives shall have no liability to any
Company Stockholder for any action taken or omitted on behalf of the Company
Stockholders pursuant to this Article VI.
6.3 SURVIVAL. All representations and warranties contained in this
Agreement, the Company Certificate and the Buyer Certificate shall survive the
execution and delivery hereof and the Closing and continue until the first
anniversary of the Closing Date and shall not be affected by any examination
made for or on behalf of any Party or the knowledge of any of the Party's
officers, directors, stockholders, employees or agents. If an Indemnified Party
delivers to the Stockholder Representatives before expiration of a
representation or warranty, either a Claim Notice based upon a breach of such
representation or warranty, or a notice that, as a result a legal proceeding
instituted by or written claim made by a third party, the Indemnified Party
reasonably expects to incur Damages as a result of a breach of such
representation or warranty (an "EXPECTED CLAIM NOTICE"), then such
representation or warranty shall survive until, but only for purposes of, the
resolution of the matter covered by such notice. If the legal proceeding or
written claim with respect to which an Expected Claim Notice has been given is
definitely withdrawn or resolved in favor of the Indemnified Party, the
Indemnified Party shall promptly so notify the Stockholder Representatives; and
if the Indemnified Party has delivered a copy of the Expected Claim Notice to
the Escrow Agent and shares have been retained in escrow after the Termination
Date (as defined in the Escrow Agreement) with respect to such Expected Claim
Notice, the Indemnified Party and the Stockholder Representatives shall promptly
deliver to the Escrow Agent a written notice executed by both parties
instructing the Escrow Agent to distribute such retained shares to the Company
Stockholders in accordance with the terms of Section 4 of the Escrow Agreement.
6.4 LIMITATIONS.
(a) Notwithstanding anything to the contrary herein, the
Indemnifying Parties shall be liable under this Article VI for only that portion
of the aggregate Damages which exceeds $2,500,000, and the maximum liability of
the Company Stockholders hereunder shall not exceed the aggregate Value (as
defined in the Escrow Agreement) of the Escrow Shares. For purposes solely of
this Article VI, all representations and warranties in Article II (other than
Sections 2.15 and 2.32) shall be construed as if the terms "material" and
references to "Company Material Adverse Effect" (and variations thereof) were
omitted from such representations and warranties.
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(b) Except with respect to claims based on fraud on behalf of
the Company or the Company Stockholders, after the Closing, the rights of the
Indemnified Parties under this Article VI shall be the exclusive remedy of the
Indemnified Parties with respect to claims resulting from or relating to any
representation or warranty contained in this Agreement.
(c) Except with respect to claims based on fraud on behalf of
the Company or the Company Stockholders, the Parties agree that the sole
recourse of the Indemnified Parties in respect of any claims under this Article
VI shall be the Escrow Shares and, other than the Escrow Shares, no Company
Stockholders shall have any obligation to make any other payment or otherwise be
liable to the Buyer, the Transitory Subsidiary, Surviving Corporation or any of
the Indemnified Parties hereunder.
(d) No Company Stockholder, in its capacity as such, shall
have any right of contribution against the Company or the Surviving Corporation
with respect to any breach by the Company of any of its representations or
warranties contained in this Agreement.
(e) The amount of any Damages of any Indemnified Party shall
be determined net of any United States or foreign federal, state or local income
Tax benefit realized by the Indemnified Party as a result of the incurrence of
such Damages (net of any increased tax liability that results from the receipt
of such indemnity payment) and shall be reduced by any amount received by the
Indemnified Party under any insurance policy with respect to the matter giving
rise to such Damages.
ARTICLE VII
REGISTRATION RIGHTS
7.1 DEMAND REGISTRATION. The Buyer shall use its Reasonable Best
Efforts to file with the Securities and Exchange Commission (the "SEC"), (i)
within 60 days following the Closing, a registration statement on Form S-3 (or
its successors) (or Form S-1, if Form S-3 (or its successor) is then unavailable
to the Buyer) covering the resale to the public by the Company Stockholders of
up to 50% of the Merger Shares (the "INITIAL STOCKHOLDER REGISTRATION
STATEMENT"), and (ii) at the request of any of the Stockholder Representatives
after the first anniversary of the Closing, a second registration statement on
Form S-3 covering the resale to the public by the Company Stockholders of the
balance of the Merger Shares or any portion thereof (the "SECOND STOCKHOLDER
REGISTRATION STATEMENT" and, with the Initial Stockholder Registration
Statement, the "Stockholder Registration Statements"). The Buyer shall use its
Reasonable Best Efforts to cause each Stockholder Registration Statement to be
declared effective by the SEC as soon as practicable after the filing thereof,
PROVIDED that the Initial Stockholder Registration Statement shall not be
declared effective until after financial results covering at least 30 days of
combined operations of the Company and the Buyer after the Effective Time shall
have been publicly released.
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The Buyer shall use its Reasonable Best Efforts to cause the Stockholder
Registration Statements to remain effective until the second anniversary of the
Closing Date or such earlier time as all of the Merger Shares covered by the
Stockholder Registration Statements have been sold pursuant thereto.
7.2 PIGGYBACK REGISTRATION. If at any time the Buyer proposes to
file a registration statement with the SEC under the Securities Act for a public
offering of its Common Stock on a form and in a manner that would permit
registration of the Merger Shares for sale to the public under the Securities
Act (other than a registration statement on Form S-8 or S-4, or their respective
successors, and other than an offering of convertible notes or debentures or an
offering of Buyer Common Stock in connection with a standby commitment relating
to a call for redemption of outstanding convertible debentures), then:
(a) The Buyer in each case will notify in writing the
Stockholder Representatives of its intention to effect such a registration at
least 15 days prior to the proposed filing of the registration statement in
connection therewith (unless no Merger Shares may be included therein pursuant
to clause (d) below).
(b) Subject to the provisions of Section 7.2(c), the Buyer
shall offer each Company Stockholder the opportunity to include in such
registration all or such lesser amount of its Merger Shares (other than those
covered by a Stockholder Registration Statement then in effect) as each Company
Stockholder may request. Upon request of one or more such holders given in
writing within 10 days after receipt of the notice described under clause (a)
above, the Buyer, subject to the provisions of clause (d), shall cause any such
Merger Shares specified by such Company Stockholder to be included in the
registration statement.
(c) If the registration of which the Buyer gives written
notice under clause (a) above involves an underwriting, the right of any Company
Stockholder to include shares in such registration shall be conditioned upon
such Company Stockholder's execution of an Underwriting Agreement in customary
form with the Underwriter or Underwriters selected for the underwriting by the
Buyer except the indemnities of each of the Company Stockholders shall be
several and their respective liabilities shall be limited to the proceeds
received by them in the offering.
(d) Notwithstanding anything contained in this Section 7.2 to
the contrary, if and to the extent that the managing underwriter(s) of such
registration advise the Buyer that the inclusion of the Merger Shares requested
by the Company Stockholders to be included in the registration statement would
adversely affect the proposed offering, the Buyer may limit the number of Merger
Shares to be included in the registration and underwriting (and such limitation
may be to zero), provided that in the event of any such limitation, the number
of shares to be included in such registration and offering (in addition to any
shares to be sold by the Buyer) shall be allocated among the Company
Stockholders and any other stockholders entitled by contract to include shares
therein, in proportion, as nearly as practicable, to the respective number of
shares of Buyer Common Stock then held by them.
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<PAGE> 46
(e) If at any time after giving notice of its intention to
register any of its securities pursuant to clause (a) above and prior to the
effective date of the applicable registration statement filed in connection with
such registration, the Buyer shall determine for any reason not to register such
securities, the Buyer may, at its election, give written notice of such
determination to each Company Stockholder and thereupon shall be relieved of its
obligation to register any Merger Shares in connection with such registration.
7.3 LIMITATIONS ON REGISTRATION RIGHTS.
(a) The Buyer may, by written notice to the Company
Stockholders, (i) delay the filing or effectiveness of a Stockholder
Registration Statement or (ii) suspend a Stockholder Registration Statement
after effectiveness and require that the Company Stockholders immediately cease
sales of shares pursuant to a Stockholder Registration Statement, in the event
that the Buyer is engaged in any activity or transaction or preparations or
negotiations for any activity or transaction that the Buyer desires to keep
confidential for business reasons, if the Buyer determines in good faith that
the public disclosure requirements imposed on the Buyer under the Securities Act
in connection with such Stockholder Registration Statement would require
disclosure of such activity, transaction, preparations or negotiations, PROVIDED
that the period of any such delay or suspension shall not exceed 60 days in any
12-month period.
(b) If the Buyer delays or suspends a Stockholder Registration
Statement or requires the Company Stockholders to cease sales of shares pursuant
to paragraph (a) above, the Buyer shall, as promptly as practicable following
the termination of the circumstance which entitled the Buyer to do so, take such
actions as may be necessary to file or reinstate the effectiveness of the
Stockholder Registration Statement and/or give written notice to all Company
Stockholders authorizing them to resume sales pursuant to the Stockholder
Registration Statement. If as a result thereof the prospectus included in a
Stockholder Registration Statement has been amended to comply with the
requirements of the Securities Act, the Buyer shall enclose such revised
prospectus with the notice to Company Stockholders given pursuant to this
paragraph (b), and the Company Stockholders shall make no offers or sales of
shares pursuant to the Stockholder Registration Statement other than by means of
such revised prospectus.
7.4 REGISTRATION PROCEDURES.
(a) In connection with the filing by the Buyer of a
Stockholder Registration Statement or a registration statement under Section 7.2
(collectively, a "Registration Statement"), the Buyer shall furnish to each
Company Stockholder a copy of the prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act.
(b) The Buyer shall use its Reasonable Best Efforts to
register or qualify the Merger Shares covered by a Registration Statement under
the securities
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<PAGE> 47
laws of such states as the Company Stockholders shall reasonably request;
PROVIDED, HOWEVER, that the Buyer shall not be required in connection with this
paragraph (b) to qualify as a foreign corporation or execute a general consent
to service of process in any jurisdiction.
(c) If the Buyer has delivered preliminary or final
prospectuses to the Company Stockholders and after having done so the prospectus
is amended to comply with the requirements of the Securities Act, the Buyer
shall promptly notify the Company Stockholders and, if requested by the Buyer,
the Company Stockholders shall immediately cease making offers or sales of
shares under the Stockholder Registration Statement and return all prospectuses
to the Buyer. The Buyer shall promptly provide the Company Stockholders with
revised prospectuses and, following receipt of the revised prospectuses, the
Company Stockholders shall be free to resume making offers and sales under the
Registration Statement.
(d) The Buyer shall pay the expenses incurred by it in
complying with its obligations under this Article VII, including all
registration and filing fees, Nasdaq listing fees, fees and expenses of counsel
for the Buyer, and fees and expenses of accountants for the Buyer, but excluding
(i) any brokerage fees, selling commissions or underwriting discounts incurred
by the Company Stockholders in connection with sales under a Registration
Statement and (ii) the fees and expenses of any counsel retained by Company
Stockholders.
(e) During the period during which Buyer is obligated to use
its Reasonable Best Efforts to keep a Stockholder Registration Statement
effective pursuant to Section 7.1, the Buyer shall prepare and promptly file
with the SEC and promptly notify Company Stockholders named in such Stockholder
Registration Statement of the filing of any amendments or supplements to such
Registration Statement or prospectus as may be necessary to correct any
statements or omissions, if at any time when a prospectus relating to the Merger
Shares is required to be delivered under the Securities Act, any event with
respect to the Buyer shall have occurred as a result of which any such
prospectus forming a part of such Stockholder Registration Statement would
include an untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading; and, in addition,
during such period, prepare and file with the SEC promptly upon the reasonable
written request of the Stockholder Representatives, any amendments or
supplements to the Registration Statement or prospectus which may be necessary
or advisable in connection with the distribution of the Merger Shares;
(f) The Buyer shall prepare, promptly upon request of the
Company Stockholders or any underwriter(s) for the Company Stockholders made
during the period in which the Buyer is obligated to use its Reasonable Best
Efforts to keep a Stockholder Registration Statement effective, such amendment
or amendments to such Stockholder Registration Statement and such prospectus or
prospectuses as may be reasonably necessary to permit compliance with the
requirements of Section 10(a)(3) of the Securities Act;
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<PAGE> 48
(g) The Buyer shall advise the Company Stockholders promptly
after the Buyer shall receive notice or obtain knowledge of the issuance of any
stop order by the SEC suspending the effectiveness of any Registration Statement
or amendment thereto, or of the initiation or threatening of any proceeding for
that purpose, and promptly use its Reasonable Best Efforts to prevent the issue
of any stop order or obtain its withdrawal promptly as such stop order should be
issued;
(h) The Buyer shall furnish each Company Stockholder with
copies of such opinions of counsel and accountants' comfort letters (if any) as
are delivered (and addressed) to the Buyer in connection with the registration
of Merger Shares;
(i) The Buyer shall in connection with the preparation and
filing of each Registration Statement, give the holders of Merger Shares on
whose behalf such Merger Shares are to be registered, and their underwriter(s),
if any, and their respective counsel and accountants, the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein, and each amendment thereof and supplement thereto, and will
give each of them such access to its books and records and such opportunities to
discuss the business of Buyer with its officers and independent public
accountants who have certified its financial as shall be necessary, in the
opinion of such Company Stockholders and such underwriters, or their respective
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act; and
(j) The Buyer shall make senior executives of Buyer available
to assist the underwriters with respect to, and accompanying the underwriters on
so-called "road shows," in connection with marketing efforts for and the
distribution and sale of Merger Shares pursuant to a Stockholder Registration
Statement.
7.5 REQUIREMENTS OF COMPANY STOCKHOLDERS. The Buyer shall not be
required to include any Merger Shares in a Registration Statement unless the
Company Stockholder owning such shares furnishes to the Buyer in writing such
information regarding such Company Stockholder and the proposed sale of Merger
Shares by such Company Stockholder as the Buyer may reasonably request in
writing in connection with such Registration Statement or as shall be required
in connection therewith by the SEC or any state securities law authorities.
7.6 INDEMNIFICATION.
(a) The Buyer agrees to indemnify and hold harmless each
Company Stockholder whose shares are included in a Registration Statement, each
person who controls such Company Stockholder within the meaning of Section 15 of
the Securities Act, and each underwriter of the Merger Shares so registered and
each person who controls such underwriter, and their respective officers,
directors, partners, agents, employees and successors, against any losses,
claims, damages, expenses or liabilities to which such Company Stockholder may
become subject by reason of any untrue statement of a material fact contained in
such Registration Statement or any omission to state therein a fact required to
be stated therein or
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<PAGE> 49
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, expenses or liabilities arise out of or are based upon
information furnished to the Buyer by or on behalf of a Company Stockholder for
use in such Registration Statement. The Buyer shall have the right to assume the
defense and settlement of any claim or suit for which the Buyer may be
responsible for indemnification under this Section 7.6(a).
(b) Subject to the provisions of Section 7.2(c), each Company
Stockholder whose shares are included in a Registration Statement agrees to
indemnify and hold harmless the Buyer, each person who controls the Buyer within
the meaning of Section 15 of the Securities Act, each underwriter of any shares
of Buyer Common Stock so registered, each person who controls such underwriter
within the meaning of Section 15 of the Securities Act, and their respective
directors, officers, partners, agents, employees and successors, against any
losses, claims, damages, expenses or liabilities (including reasonable attorneys
fees) to which the Buyer or such directors and officers may become subject by
reason of any statement or omission in such Registration Statement made in
reliance upon, or in conformity with, a written statement by such Company
Stockholder furnished pursuant to Section 7.5.
7.7 UNDERWRITING OFFER. If a Stockholder Registration Statement
involves an underwritten public offering, the Buyer agrees to enter into an
underwriting agreement containing customary representations, warranties,
covenants, agreements and indemnities in connection therewith.
7.8 ASSIGNMENT OF RIGHTS. A Company Stockholder may not assign any
of its rights under this Article VII except in connection with the transfer of
some or all of his or her Merger Shares to a child or spouse, or trust for their
benefit, PROVIDED each such transferee agrees in a written instrument delivered
to the Buyer to be bound by the provisions of this Article VII.
7.9 RULE 144. To the extent that the Buyer is subject to the
filing and reporting requirements of the Securities Act and the Exchange Act,
the Buyer will file the reports required to be filed by it under those acts and
the rules and regulations adopted by the SEC thereunder, and will take such
further action as the Stockholder Representatives may reasonably request, all to
the extent required from time to time to enable the Company Stockholders to sell
Merger Shares without registration under the Securities Act within the
limitations and exemptions provided by Rule 144 under the Securities Act, as
such rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
7.10 NO INCONSISTENT AGREEMENTS. Buyer shall not, on or after the
date of this Agreement, enter into any agreement with respect to its securities
which is inconsistent with the rights granted to the Company Stockholders in
Article VII of this Agreement or otherwise conflicts with the provisions hereof.
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<PAGE> 50
ARTICLE VIII
TERMINATION
8.1 TERMINATION OF AGREEMENT. The Parties may terminate this
Agreement prior to the Effective Time as provided below:
(a) the Parties may terminate this Agreement by mutual written
consent; or
(b) the Buyer or the Company may terminate this Agreement if
there has been a breach of any misrepresentation, warranty, covenant or
agreement on the part of the other Party set forth in this Agreement, which
breach (i) causes the condition set forth in Sections 5.1(c) or (d) (in the case
of termination by the Buyer) or Section 5.2(b) or (c) (in the case of
termination by the Company) not to be satisfied and (ii) shall not have been
cured within 20 days following receipt by the breaching party of written notice
of such breach from the other party; or
(c) the Buyer or the Transitory Subsidiary may terminate this
Agreement by giving written notice to the Company if the Closing shall not have
occurred on or before September 30, 1998 by reason of the failure of any
condition precedent under Section 5.1 hereof (unless the failure results
primarily from a breach by the Buyer or the Transitory Subsidiary of any
representation, warranty, covenant or agreement contained in this Agreement); or
(d) the Company may terminate this Agreement by giving written
notice to the Buyer and the Transitory Subsidiary if the Closing shall not have
occurred on or before September 30, 1998 by reason of the failure of any
condition precedent under Section 5.2 hereof (unless the failure results
primarily from a breach by the Company or the Company Stockholders of any
representation, warranty, covenant or agreement contained in this Agreement).
8.2 EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to Section 8.1, all obligations of the Parties hereunder shall
terminate without any liability of any Party to any other Party (except for any
liability of any Party for a willful breach of this Agreement).
ARTICLE IX
OTHER AGREEMENTS
9.1 PRESS RELEASES AND ANNOUNCEMENTS. No Party shall issue any
press release or other public disclosure relating to the subject matter of this
Agreement without the prior written approval of the other Parties; PROVIDED,
HOWEVER, that the Buyer may make any public disclosure it believes in good faith
is required by law or regulation or stock market rules (in which case the Buyer
shall use its Reasonable
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<PAGE> 51
Best Efforts to advise the Company of the proposed disclosure prior to making
the disclosure).
9.2 NO THIRD PARTY BENEFICIARIES. This Agreement (other than
Section 4.8) shall not confer any rights or remedies upon any person other than
the Parties and their respective successors and permitted assigns.
9.3 ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, with respect to the subject matter hereof;
provided that the Agreement dated November 5, 1997 between the Buyer and the
Company shall remain in effect in accordance with its terms.
9.4 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests or obligations hereunder without the prior written
approval of the other Parties; provided that the Transitory Subsidiary may
assign its rights, interests and obligations hereunder to an Affiliate of the
Buyer.
9.5 COUNTERPARTS; FACSIMILE SIGNATURE. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same instrument. This
Agreement may be executed by facsimile signature.
9.6 HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.7 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly delivered two
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, or one business day after it is sent via a reputable
nationwide overnight courier service, in each case to the intended recipient as
set forth below:
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<PAGE> 52
If to the Company or a
Company Stockholder: Quill Corporation
100 Schelter Road
Lincolnshire, IL 60069-3621
Attention: Secretary
Copy to: Neal, Gerber & Eisenberg
Two North LaSalle Street
Chicago, Illinois 60602
Attn: Charles Evans Gerber, Esq.
If to the Stockholder
Representatives: Jack Miller
Harvey L. Miller
Arnold Miller
c/o Quill Corporation
100 Schelter Road
Lincolnshire, IL 60069-3621
Copy to: Neal, Gerber & Eisenberg
Two North LaSalle Street
Chicago, Illinois 60602
Attn: Charles Evans Gerber, Esq.
If to the Buyer: Staples, Inc.
One Research Drive
Westborough, MA 01581
Attention: Secretary
Copy to: Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attn: Mark G. Borden, Esq.
If to the Transitory
Subsidiary: Staples, Inc.
One Research Drive
Westborough, MA 01581
Attention: Secretary
Copy to: Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attn: Mark G. Borden, Esq.
Any Party may give any notice, request, demand, claim, or other communication
hereunder using any other means (including personal delivery, expedited courier,
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<PAGE> 53
messenger service, telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is received by the party for
whom it is intended. Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Parties notice in the manner herein set forth.
9.8 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application of
laws of any jurisdictions other than those of the State of Delaware.
9.9 AMENDMENTS AND WAIVERS. This Agreement may be amended at any
time prior to the Effective Time by written agreement of all of the Parties
hereto. No waiver by any Party of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
9.10 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
9.11 EXPENSES. Except as set forth in Article VI and the Escrow
Agreement, each of the Parties shall bear its own costs and expenses (including
legal fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby.
9.12 CONSTRUCTION. The language used in this Agreement shall be
deemed to be the language chosen by the Parties to express their mutual intent,
and no rule of strict construction shall be applied against any Party. Any
reference to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise.
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<PAGE> 54
9.13 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 55
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
STAPLES, INC.
By: /s/ John J. Mahoney
-----------------------------------
Title: Executive Vice President
--------------------------------
MUSKETEER ACQUISITION CORP.
By: /s/ John J. Mahoney
-----------------------------------
Title: Executive Vice President
--------------------------------
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<PAGE> 56
QUILL CORPORATION
By: /s/ Jack Miller
-----------------------------------
Title: President
--------------------------------
Jack Miller as trustee of the Jack
Miller Trust dated January 18, 1984
By: /s/ Jack Miller
-----------------------------------
Harvey L. Miller as trustee of the
Harvey L. Miller Trust dated
January 21, 1983
By: /s/ Harvey L. Miller
-----------------------------------
The Northern Trust Company, as
trustee of the Jack Miller Family
Trust #1 dated May 31, 1983 F/B/O
Judith N. Bernstein
By: /s/ Arthur W. Gergets
-----------------------------------
The Northern Trust Company, as
trustee of the Jack Miller Family
Trust #1 dated May 31, 1983 F/B/O
Sharon A. Ring
By: /s/ Arthur W. Gergets
-----------------------------------
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<PAGE> 57
The Northern Trust Company, as
trustee of the Jack Miller Family
Trust #2 dated May 31, 1983
By: /s/ Arthur W. Gergets
-----------------------------------
The Northern Trust Company, as
trustee of the Harvey L. Miller Family
Trust #1 dated May 31, 1983 F/B/O
Ronald Jeffrey Miller
By: /s/ Arthur W. Gergets
-----------------------------------
The Northern Trust Company, as
trustee of the Harvey L. Miller Family
Trust #1 dated May 31, 1983 F/B/O
Lori Susan Miller
By: /s/ Arthur W. Gergets
-----------------------------------
The Northern Trust Company, as
trustee of the Harvey L. Miller Family
Trust #1 dated May 31, 1983 F/B/O
Steven Neil Miller
By: /s/ Arthur W. Gergets
-----------------------------------
The Northern Trust Company, as
trustee of the Harvey L. Miller Family
Trust #2 dated May 31, 1983
By: /s/ Arthur W. Gergets
-----------------------------------
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<PAGE> 58
The Northern Trust Company, as
trustee of the Jack Miller 1991
Term Trust #3 dated July 31, 1991
By: /s/ Arthur W. Gergets
-----------------------------------
The Northern Trust Company, as
trustee of the Harvey L. Miller 1991
Term Trust #3 dated July 31, 1991
By: /s/ Arthur W. Gergets
-----------------------------------
The Northern Trust Company, as
trustee of the Jack Miller Family
Trust #2 dated May 31, 1983 F/B/O
Judith N. Bernstein
By: /s/ Arthur W. Gergets
-----------------------------------
The Northern Trust Company, as
trustee of the Jack Miller Family
Trust #2 dated May 31, 1983 F/B/O
Sharon A. Ring
By: /s/ Arthur W. Gergets
-----------------------------------
The Northern Trust Company, as
trustee of the Harvey L. Miller 1991
Family Trust #2 dated May 31, 1983
F/B/O Lori Susan Miller
By: /s/ Arthur W. Gergets
-----------------------------------
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<PAGE> 59
The Northern Trust Company, as
trustee of the Harvey L. Miller Family
Trust #2 dated May 31, 1983 F/B/O
Steven Neil Miller
By: /s/ Arthur W. Gergets
-----------------------------------
The Northern Trust, as trustee of the
Jack Miller Family Trust #2 dated
May 31, 1983 F/B/O Judith N.
Bernstein
By: /s/ Arthur W. Gergets
-----------------------------------_
The Northern Trust Company, as
trustee of the Jack Miller Family Trust
#2 dated May 31, 1983 F/B/O
Sharon A. Ring
By: /s/ Arthur W. Gergets
-----------------------------------
The Northern Trust Company, as
trustee of the Harvey L. Miller Family
Trust #2 dated May 31, 1983 F/B/O
Lori Susan Miller
By: /s/ Arthur W. Gergets
-----------------------------------
The Northern Trust Company, as
trustee of the Harvey L. Miller Family
Trust #2 dated May 31, 1983 F/B/O
Steven Neil Miller
By: /s/ Arthur W. Gergets
-----------------------------------
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<PAGE> 60
Jack Miller, as Trustee of the Jack
Miller Trust dated January 18, 1984
By: /s/ Jack Miller
-----------------------------------
The Northern Trust Company, as
trustee of the Jack Miller Family Trust
#4 dated July 31, 1991 F/B/O
Judith N. Bernstein
By: /s/ Arthur W. Gergets
-----------------------------------
The Northern Trust Company, as
trustee of the Jack Miller Family Trust
#4 dated July 31, 1991 F/B/O
Sharon A. Ring
By: /s/ Arthur W. Gergets
-----------------------------------
The Northern Trust Company, as
trustee of the Harvey L. Miller Family
Trust #4 dated July 31, 1991 F/B/O
Lori Susan Miller
By: /s/ Arthur W. Gergets
-----------------------------------
The Northern Trust Company, as
trustee of the Harvey L. Miller Family
Trust #4 dated July 31, 1991 F/B/O
Steven Neil Miller
By: /s/ Arthur W. Gergets
-----------------------------------
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<PAGE> 61
The Northern Trust Company, as
trustee of the Jack Miller Family Trust
#4 dated July 31, 1991 F/B/O Judith
N. Bernstein
By: /s/ Arthur W. Gergets
-----------------------------------
The Northern Trust Company, as
trustee of the Jack Miller Family Trust
#4 dated July 31, 1991 F/B/O Sharon
A. Ring
By: /s/ Arthur W. Gergets
-----------------------------------
The Northern Trust Company, as
trustee of the Harvey L. Miller Family
Trust #4 dated July 31, 1991 F/B/O
Lori Susan Miller
By: /s/ Arthur W. Gergets
-----------------------------------
The Northern Trust Company, as
trustee of the Harvey L. Miller Family
Trust #4 dated July 31, 1991 F/B/O
Steven Neil Miller
By: /s/ Arthur W. Gergets
-----------------------------------
The Northern Trust Company, as
trustee of the Harvey L. Miller Family
Trust #4 dated July 31, 1991 F/B/O
Ronald Jeffrey Miller
By: /s/ Arthur W. Gergets
-----------------------------------
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<PAGE> 62
The undersigned, being the duly elected Secretary of the Transitory
Subsidiary, hereby certifies that this Agreement has been adopted by a majority
of the votes represented by the outstanding shares of capital stock of the
Transitory Subsidiary entitled to vote on this Agreement.
/s/ Peter Schwarzenbach
----------------------------------
Secretary
The undersigned, being the duly elected Secretary of the Company,
hereby certifies that this Agreement has been adopted by a majority of the votes
represented by the outstanding Company Shares entitled to vote on this
Agreement.
/s/ Harvey L. Miller
----------------------------------
Secretary
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<PAGE> 1
EXHIBIT 2.2
AMENDMENT NO. 1
TO
AGREEMENT AND PLAN OF MERGER
This AMENDMENT NO. 1 is entered into as of May 21, 1998 for the purpose
of amending the Agreement and Plan of Merger dated as of April 6, 1998 (the
"Merger Agreement") by and among Staples, Inc., a Delaware corporation (the
"BUYER"), Musketeer Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of the Buyer (the "TRANSITORY SUBSIDIARY"), Quill Corporation, a
Delaware corporation (the "COMPANY"), and those stockholders of the Company
listed on EXHIBIT A hereto, each of which is a signatory hereto (the "COMPANY
STOCKHOLDERS"). Capitalized terms used herein which are not defined herein shall
have the meanings ascribed to them in the Merger Agreement.
In consideration of the covenants and agreements herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties amend the Merger Agreement as follows:
1. Article IV of the Merger Agreement is hereby amended to add
the following section:
"4.10 FUNDING OF SETTLEMENT AMOUNTS. The Buyer agrees that, at the
Closing, it shall cause to be paid by the Company, contribute to or otherwise
make available to the Company and/or the Surviving Corporation, immediately
available funds sufficient to satisfy the payment obligation to Arnold Miller,
as Trustee of the Arnold Miller Revocable Trust dated May 11, 1983, pursuant to
the Settlement Agreement between such stockholder and the Company dated April 6,
1998, as amended. The Parties agree that such payment is, and shall be, required
to be funded by the Buyer, the Company and/or the Surviving Corporation at or
following the Closing and shall not in any manner be deemed the obligation or
responsibility of any Company
<PAGE> 2
Stockholder or the Company prior to the Closing. Any amount paid by the Company
in respect of Dissenting Shares shall not reduce the Incremental Amount."
2. Section 7.1 of the Merger Agreement is hereby amended to read
in its entirety as follows:
"7.1 DEMAND REGISTRATION. The Buyer shall use its Reasonable Best
Efforts to file with the Securities and Exchange Commission (the "SEC"), (i)
within 60 days following the Closing, a registration statement on Form S-3 (or
its successors) (or Form S-1, if Form S-3 (or its successor) is then unavailable
to the Buyer) covering the resale to the public by the Rightsholders (as defined
below) of up to 50% of the Registrable Shares (as defined below) (the "INITIAL
STOCKHOLDER REGISTRATION STATEMENT"), and (ii) at the request of any of the
Stockholder Representatives after the first anniversary of the Closing, a second
registration statement on Form S-3 covering the resale to the public by the
Rightsholders of the balance of the Registrable Shares or any portion thereof
(the "SECOND STOCKHOLDER REGISTRATION STATEMENT" and, with the Initial
Stockholder Registration Statement, the "Stockholder Registration Statements").
The Buyer shall use its Reasonable Best Efforts to cause each Stockholder
Registration Statement to be declared effective by the SEC as soon as
practicable after the filing thereof, PROVIDED that the Initial Stockholder
Registration Statement shall not be declared effective until after financial
results covering at least 30 days of combined operations of the Company and the
Buyer after the Effective Time shall have been publicly released. The Buyer
shall use its Reasonable Best Efforts to cause the Stockholder Registration
Statements to remain effective until the second anniversary of the Closing Date
or such earlier time as all of the Registrable Shares covered by the Stockholder
Registration Statements have been sold pursuant thereto. For purposes of this
Agreement, "REGISTRABLE SHARES" shall mean (i) the Merger Shares and (ii) the
shares of Buyer Common Stock issued in the transactions contemplated by the Real
Estate Agreements."
3. Sections 7.2 through 7.10 of the Merger Agreement are hereby
amended by replacing the phrase "Merger Shares", wherever it appears, with the
phrase "Registrable Shares."
4. Section 7.2(b) of the Merger Agreement is hereby amended to
read in its entirety as follows:
"(b) Subject to the provisions of Section 7.2(c), the Buyer
shall offer each Company Stockholder and each person or entity acquiring shares
of Buyer Common Stock in the transactions contemplated by the Real Estate
Agreements
-2-
<PAGE> 3
(collectively, the "RIGHTSHOLDERS") the opportunity to include in such
registration all or such lesser amount of its Registrable Shares (other than
those covered by a Stockholder Registration Statement then in effect) as each
Rightsholder may request. Upon request of one or more such holders given in
writing within 10 days after receipt of the notice described under clause (a)
above, the Buyer, subject to the provisions of clause (d), shall cause any such
Registrable Shares specified by such Rightsholder to be included in the
registration statement."
5. Sections 7.2(c) through 7.10 of the Merger Agreement are
hereby amended by replacing the phrases "Company Stockholder" and "Company
Stockholders", wherever they appear, with the phrases "Rightsholder" and
"Rightsholders", respectively.
6. Section 9.2 of the Merger Agreement is hereby amended to read
in its entirety as follows:
"9.2. THIRD PARTY BENEFICIARIES. This Agreement (other than Sections
4.8 and 4.10 and Article VII) shall not confer any rights or remedies upon any
person other than the Parties and their respective successors, heirs,
representatives and permitted assigns."
7. Article IX of the Merger Agreement is hereby amended to add
the following section:
"9.14. TRUSTEE EXCULPATION. When this Agreement is executed by the
trustee of any trust, such execution is by the trustee, not individually but
solely as trustee in the exercise of and under the power and authority conferred
upon and invested in such trustee, and it is expressly understood and agreed
that nothing herein contained shall be construed as creating any liability on
any such trustee personally to pay any amounts required to be paid hereunder, or
to perform any covenant, either express or implied, contained herein, all such
liability, if any, being expressly waived by the Parties by their execution
hereof (provided that this shall not be construed to relieve the trust of any
such liability).
8. This Amendment may be executed in two or more counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument. This Agreement may be executed by
facsimile signature.
-3-
<PAGE> 4
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
STAPLES, INC.
By: /s/ John J. Mahoney
-------------------------------------
Title:
----------------------------------
MUSKETEER ACQUISITION CORP.
By: /s/ John J. Mahoney
-------------------------------------
Title:
----------------------------------
QUILL CORPORATION
By: /s/ Jack Miller
-------------------------------------
Title: President
----------------------------------
Jack Miller as trustee of the Jack Miller
Trust dated January 18, 1984
By: /s/ Jack Miller
-------------------------------------
-4-
<PAGE> 5
Harvey L. Miller as trustee of the
Harvey L. Miller Trust dated
January 21, 1983
By: /s/ Harvey L. Miller
-------------------------------------
THE NORTHERN TRUST
COMPANY, AS
TRUSTEE OF EACH OF
EACH OF THE TRUSTS
LISTED BELOW:
By: /s/ Arthur W. Gergets
-------------------------------------
Name: Arthur W. Gergets
-----------------------------------
Title: Vice President
----------------------------------
Jack Miller Family Trust #1 dated May
31, 1983 F/B/O Judith N. Bernstein
Jack Miller Family Trust #1 dated May
31, 1983 F/B/O Sharon A. Ring
Jack Miller Family Trust #2 dated May
31, 1983
Harvey L. Miller Family Trust #1 dated
May 21, 1983 F/B/O Ronald Jeffrey
Miller
Harvey L. Miller Family Trust #1 dated
May 21, 1983 F/B/O Lori Susan Miller
Harvey L. Miller Family Trust #1 dated
May 21, 1983 F/B/O Steven Neil Miller
-5-
<PAGE> 6
Harvey L. Miller Family Trust #2 dated
May 21, 1983
Jack Miller 1991 Term Trust #3 dated
July 31, 1991
Harvey L. Miller 1991 Term Trust #3
dated July 31, 1991
Jack Miller Family Trust #2 dated
May 31, 1983 F/B/O Judith N.
Bernstein
Jack Miller Family Trust #2 dated May
31, 1983 F/B/O Sharon A. Ring
Harvey L. Miller Family Trust #2 dated
May 31, 1983 F/B/O Lori Susan Miller
Harvey L. Miller Family Trust #2 dated
May 31, 1983 F/B/O Steven Neil Miller
Jack Miller Family Trust #4 dated July
31, 1991 F/B/O Judith N. Bernstein
Jack Miller Family Trust #4 dated July
31, 1991 F/B/O Sharon A. Ring
Harvey L. Miller Family Trust #4 dated
July 31, 1991 F/B/O Lori Susan Miller
Harvey L. Miller Family Trust #4 dated
July 31, 1991 F/B/O Steven Neil Miller
Harvey L. Miller Family Trust #4 dated
July 31, 1991 F/B/O Ronald Jeffrey
Miller
-6-
<PAGE> 1
EXHIBIT 2.3
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "AGREEMENT") is entered into as
of May 21, 1998 by and among Staples, Inc., a Delaware corporation (the
"BUYER"), Staples Illinois, Inc., a Delaware corporation and a wholly owned
subsidiary of the Buyer (the "TRANSITORY SUBSIDIARY"), Milbro, Inc., a Delaware
corporation (the "COMPANY"), and those stockholders of the Company listed on
EXHIBIT A hereto, each of which is a signatory hereto (the "COMPANY
STOCKHOLDERS"). The Buyer, the Transitory Subsidiary, the Company and the
Company Stockholders are referred to collectively herein as the "PARTIES".
This Agreement contemplates a tax-free merger of the Transitory
Subsidiary into the Company. In such merger, the Company Stockholders will
receive capital stock of the Buyer in exchange for their capital stock of the
Company.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements herein contained, the Parties agree as follows.
ARTICLE I
THE MERGER
1.1 THE MERGER. Upon and subject to the terms and conditions of
this Agreement, the Transitory Subsidiary shall merge with and into the Company
(with such merger referred to herein as the "MERGER") at the Effective Time (as
defined below). From and after the Effective Time, the separate corporate
existence of the Transitory Subsidiary shall cease and the Company shall
continue as the surviving corporation of the Merger (the "SURVIVING
CORPORATION"). The "EFFECTIVE TIME" shall be the time at which the Surviving
Corporation files a certificate of merger or other appropriate documents
prepared and executed in accordance with the relevant provisions of the Delaware
General Corporation Law (the "CERTIFICATE OF MERGER") with the Secretary of
State of the State of Delaware. The Merger shall have the effects set forth in
Section 259 of the Delaware General Corporation Law.
1.2 THE CLOSING. Subject to Sections 7.1(c) and 7.1(d), the
closing of the transactions contemplated by this Agreement (the "CLOSING") shall
take place at the offices of Hale and Dorr LLP in Boston, Massachusetts,
commencing at 9:00 a.m. local time on the Closing Date, as defined in the
Agreement and Plan of Merger dated as of April 6, 1998, as amended (the "MERGER
AGREEMENT"), by and among the Buyer, Quill Corporation ("QUILL"), Musketeer
Acquisition Corp. and certain stockholders of Quill, or at such other place and
time as the parties shall mutually agree in writing.
1.3 ACTIONS AT THE CLOSING. At the Closing:
(i) the Company and the Company Stockholders
shall deliver to the Buyer and the Transitory Subsidiary the various
certificates, instruments and documents referred to in Section 5.1;
<PAGE> 2
(ii) the Buyer and the Transitory Subsidiary
shall deliver to the Company and the Company Stockholders the various
certificates, instruments and documents referred to in Section 5.2;
(iii) the Surviving Corporation shall file with
the Secretary of State of the State of Delaware the Certificate of Merger;
(iv) each Company Stockholder shall deliver to
the Buyer the certificate(s) representing its Company Shares (as defined below);
(v) the Buyer shall deliver certificates for the
Merger Shares (as defined below) to each Company Stockholder in accordance with
Section 1.5; and (vi) the Buyer shall, on behalf of the Company, pay the Loan
Amount (as defined below) to the Lender.
1.4 ADDITIONAL ACTION. The Surviving Corporation may, at any time
after the Effective Time, take any action, including executing and delivering
any document, in the name and on behalf of either the Company or the Transitory
Subsidiary, in order to consummate the transactions contemplated by this
Agreement.
1.5 CONVERSION OF SHARES. At the Effective Time, by virtue of the
Merger and without any action on the part of any Party or the holder of any of
the following securities:
(i) Each share of common stock, without
par value, of the Company (the "COMPANY SHARES") issued and outstanding
immediately prior to the Effective Time (other than Company Shares held in the
Company's treasury and other than Dissenting Shares (as defined below)) shall be
converted into and represent the right to receive (subject to the provisions of
Sections 1.6 and 5.1(e)) such number of shares of common stock, $.0006 par value
per share, of the Buyer (including the associated 16/81sts of a right issuable
pursuant to the Rights Agreement dated as of February 3, 1994 between the Buyer
and BankBoston, N.A., as rights agent, collectively, "BUYER COMMON STOCK") as is
equal to the Conversion Ratio. The "CONVERSION RATIO" shall be the result
(rounded down to six decimal places) obtained by subtracting from $49,000,000
(the "PURCHASE PRICE") the Loan Amount (as defined in subparagraph (iv) below),
the Taxes and Utilities Amount (as defined in Section 8.1), the Rent Proration
Amount (as defined in Section 8.2) and the Expense Amount (as defined in Section
9.11) (the difference being referred to as the "NET PURCHASE PRICE") and then
dividing (1) the sum of (a) 50% of the Net Purchase Price divided by $22 plus
(b) the number determined by dividing (x) 50% of the Net Purchase Price by (y)
the average of the last reported sale prices per share of the Buyer Common Stock
on the Nasdaq National Market over the 20 consecutive trading days ending on the
trading day that is three trading days prior to the Closing Date, by (2) the
number of outstanding Company Shares immediately prior to the Effective Time;
PROVIDED that the Conversion Ratio shall be subject to equitable adjustment in
the event of any reclassification, recapitalization, stock split, stock
dividend, reverse stock split, exchange of shares or other similar events
affecting the
2
<PAGE> 3
Buyer Common Stock between the date hereof and the Closing. The shares of Buyer
Common Stock into which the Company Shares are converted pursuant to this
Section 1.5 shall be referred to herein as the "MERGER SHARES."
(ii) Each Company Share held in the
Company's treasury immediately prior to the Effective Time shall be cancelled
and retired without payment of any consideration therefor.
(iii) Each share of common stock, $.01 par
value per share, of the Transitory Subsidiary issued and outstanding immediately
prior to the Effective Time shall be converted into and thereafter evidence one
share of common stock, $.01 par value per share, of the Surviving Corporation.
(iv) "LOAN AMOUNT" shall mean all amounts
required to be paid by the Company to American National Bank and Trust Company
of Chicago ("LENDER") in order to satisfy all of the Company's obligations to
Lender as of the Effective Time under that certain loan in the original
principal amount of $6,000,000 (the "LOAN"), including without limitation the
principal outstanding, and all interest accrued thereon, as of the date of
Closing.
(v) "DISSENTING SHARES" shall mean
Company Shares held as of the date of this Agreement by any stockholder of the
Company (other than a Company Stockholder) who has not voted such Company Shares
in favor of the adoption of the Agreement and the Merger and with respect to
which appraisal shall have been duly demanded in accordance with Section 262 of
the Delaware General Corporation Law. The Company shall not, except with the
prior written consent of the Buyer, settle, or offer to settle, any demand for
appraisal by a holder of Dissenting Shares.
1.6 FRACTIONAL SHARES. No certificates or scrip representing
fractional Merger Shares shall be issued to Company Stockholders, and such
Company Stockholders shall not be entitled to any voting rights, rights to
receive any dividends or distributions or other rights as a stockholder of the
Buyer with respect to any fractional Merger Shares that would otherwise be
issued to such Company Stockholders. In lieu of any fractional Merger Shares
that would otherwise be issued, each Company Stockholder that would have been
entitled to receive a fractional Merger Share shall receive such whole number of
Merger Shares as is equal to the number of Merger Shares to which such person
would be entitled, rounded up or down to the nearest whole number (with a
fractional interest equal to .5 rounded to the nearest odd number).
1.7 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation
of the Surviving Corporation immediately following the Effective Time shall be
the same as the Certificate of Incorporation of the Transitory Subsidiary
immediately prior to the Effective Time, except that the reference therein to
the identity of the sole incorporator shall be deleted.
3
<PAGE> 4
1.8 BY-LAWS. The By-laws of the Surviving Corporation immediately
following the Effective Time shall be the same as the By-laws of the Transitory
Subsidiary immediately prior to the Effective Time.
1.9 NO FURTHER RIGHTS. From and after the Effective Time, no
Company Shares outstanding prior to the Effective Time shall be deemed to be
outstanding, and holders of certificates formerly representing Company Shares
shall cease to have any rights with respect thereto, except as provided herein
or by law.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE COMPANY STOCKHOLDERS
The Company and each of the Company Stockholders jointly and severally
represent and warrant to the Buyer and the Transitory Subsidiary that the
statements contained in this Article II are true and correct, except as set
forth in the disclosure schedule provided by the Company and the Company
Stockholders to the Buyer on the date hereof (the "DISCLOSURE SCHEDULE"). The
Disclosure Schedule shall be arranged in paragraphs corresponding to the
numbered and lettered paragraphs contained in this Article II, and the
disclosures in any paragraph of the Disclosure Schedule shall qualify other
paragraphs in this Article II only to the extent it is clear from a reading of
the disclosure that such disclosure is applicable to such other paragraphs.
2.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. The Company
is a corporation duly organized, validly existing and in corporate and franchise
tax good standing under the laws of the State of Delaware. The Company is duly
qualified to conduct business and is in corporate and franchise tax good
standing under the laws of each jurisdiction in which the nature of its
businesses or the ownership or leasing of its properties requires such
qualification, except for any such failure to be so qualified and in good
standing that would not, either individually or in the aggregate, have a Company
Material Adverse Effect (as defined below). The Company has all requisite
corporate power and authority to carry on the business in which it is engaged.
The Company has furnished to the Buyer true and complete copies of its
Certificate of Incorporation and By-laws, each as amended and as in effect on
the date hereof. The Company is not in default under or in violation of any
provision of its Certificate of Incorporation or By-laws. When used in this
Article II or elsewhere in this Agreement in connection with the Company, the
term "COMPANY MATERIAL ADVERSE EFFECT" means any change, event or effect that is
materially adverse to the value of the Property (as hereinafter defined) or the
ability to use the Property for the uses contemplated under the lease to Quill
dated as of May 15, 1981, as amended (the "QUILL LEASE"), excluding any changes
in general economic conditions in the general economy as a whole, or that
adversely affects the ability of the Company to consummate the Merger.
4
<PAGE> 5
2.2 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
1,000 shares of common stock, without par value, of which 300 shares are issued
and outstanding and no shares are held in the treasury of the Company. Section
2.2 of the Disclosure Schedule sets forth a complete and accurate list of all
stockholders of the Company, indicating the number and class of Company Shares
held by each stockholder. All of the issued and outstanding Company Shares are
duly authorized, validly issued, fully paid, nonassessable and free of all
preemptive rights that have not been, or will not prior to the Effective Time
be, duly waived. Except as set forth in this Agreement, there are no (i)
outstanding or authorized options, warrants, rights, agreements or commitments
to which the Company is a party or which are binding upon the Company providing
for the issuance, disposition or acquisition of any of its capital stock, or
(ii) stock appreciation, phantom stock or similar rights with respect to the
Company, or (iii) agreements, voting trusts, proxies, or understandings with
respect to the voting, or registration under the Securities Act of 1933, as
amended (the "SECURITIES ACT"), of any Company Shares. All of the issued and
outstanding Company Shares were issued in compliance with applicable federal and
state securities laws.
(b) Each Company Stockholder has good and marketable title to
the Company Shares listed in Section 2.2 of the Disclosure Schedule as being
owned by it, and at the Effective Time, all such Company Shares will be free and
clear of any lien, pledge, charge, claim, right, interest, mortgage, security
interest, contractual restriction or covenant, option or other encumbrance or
adverse claim, in each case whether arising by contract or by operation of law
(an "ENCUMBRANCE").
2.3 AUTHORIZATION OF TRANSACTION. The Company and each Company
Stockholder has all requisite power and authority to execute and deliver this
Agreement and to perform its respective obligations hereunder. The execution and
delivery of this Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of the Company. Without limiting the
generality of the foregoing: (a) the Board of Directors of the Company, at a
meeting duly called and held, by the unanimous vote of all directors, or by the
unanimous written consent of the directors, (i) determined that the Merger is
fair and in the best interests of the Company and its stockholders, (ii) adopted
this Agreement in accordance with the provisions of the Delaware General
Corporation Law, and (iii) directed that this Agreement and the Merger be
submitted to the stockholders of the Company for their adoption and approval and
recommended that the stockholders of the Company vote in favor of the adoption
of this Agreement and the approval of the Merger; (b) the Company provided to
each holder of common stock of the Company, prior to the vote by the
stockholders of the Company with respect to the Merger and this Agreement,
copies of the Buyer Reports (as defined in Section 3.5) and all information
required under the Delaware General Corporation Law concerning their appraisal
rights; and (c) the holders of the requisite percentage of the
5
<PAGE> 6
Company's outstanding common stock have duly approved this Agreement and the
Merger, in accordance with the provisions of the Delaware General Corporation
Law, by written consent, and otherwise consented to, this Agreement, the Merger
and each of the other transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Company and each Company
Stockholder and constitutes a valid and binding obligation of the Company and
each Company Stockholder, enforceable against the Company and each Company
Stockholder in accordance with its terms, subject to (i) bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting or relating to creditors'
rights generally and (ii) the availability of injunctive relief and other
equitable remedies.
2.4 NONCONTRAVENTION. Subject to compliance with the applicable
requirements of the Securities Act and any applicable state securities laws, the
terms and conditions of any Permitted Encumbrances (as hereinafter defined) and
the filing of the Certificate of Merger as required by the Delaware General
Corporation Law, neither the execution and delivery of this Agreement by the
Company or any of the Company Stockholders, nor the consummation by the Company
or any of the Company Stockholders of the transactions contemplated hereby, will
(i) conflict with or violate any provision of the charter or By-laws of the
Company, (ii) require on the part of the Company or any of the Company
Stockholders any filing with, or any permit, authorization, consent or approval
of, any court, arbitrational tribunal, administrative agency or commission or
other governmental or regulatory authority or agency (a "GOVERNMENTAL ENTITY"),
(iii) conflict with, result in a breach of, constitute (with or without due
notice or lapse of time or both) a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify or cancel, or
require any notice, consent or waiver under, any material contract, lease,
sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness or other arrangement to
which the Company or any of the Company Stockholders is a party or by which any
is bound or to which any or all of their assets or properties are subject,
except to the extent any such conflict, breach, default, acceleration,
termination, modification or cancellation, or the failure to give or obtain any
such notice, consent or waiver, would not have a Company Material Adverse
Effect, (iv) result in the imposition of any Encumbrance upon the Company Shares
or the Property or any other material assets or properties of the Company or (v)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company, any of the Company Stockholders or any of their
respective assets or properties, which violation could reasonably be expected to
have a Company Material Adverse Effect.
2.5 SUBSIDIARIES. The Company owns no equity interest in any
corporation, partnership, limited liability company or other entity.
2.6 [intentionally omitted]
2.7 [intentionally omitted]
6
<PAGE> 7
2.8 LIABILITIES. As of the date hereof, except as set forth in
Section 2.8 of the Disclosure Schedule, the Company has no liabilities (whether
known or unknown, whether absolute or contingent, whether liquidated or
unliquidated and whether due or to become due) except for liabilities under the
Quill Lease, liabilities for which Quill is responsible under the Quill lease
and liabilities in connection with the Loan. The foregoing is not intended and
shall not be construed to expand the representations and warranties set forth in
Section 2.22.
2.9 TAX MATTERS.
(a) The Company has filed on a timely basis all Tax Returns
(as defined below) that it was required to file and all such Tax Returns were
correct and complete in all material respects. The Company has paid, or will
pay, on a timely basis all Taxes (as defined below) imposed on the Company and
due on or before the Closing Date, whether or not shown to be due on any such
Tax Returns. The Company does not have accruals or reserves for Taxes. Except in
connection with the assessment of the Property under a "Property Identification
Number" that includes certain other real property owned by one or more
affiliates of the Company, the Company has no actual liability for any Tax
obligations of any other taxpayer (including without limitation any affiliated
group of corporations or other entities that included the Company during a prior
period). All Taxes that the Company is or was required by law to withhold or
collect have been duly withheld or collected and, to the extent required, have
been paid to the proper Governmental Entity. For purposes of this Agreement,
"TAXES" means all taxes, charges, fees, levies or other similar assessments or
liabilities, including without limitation income, gross receipts, ad valorem,
premium, value-added, excise, severance, stamp, occupation, windfall profits,
real property, personal property, sales, use, transfer, withholding, employment,
unemployment insurance, social security, business license, business
organization, environmental, payroll and franchise taxes imposed by the United
States of America or any state, local or foreign government, or any agency
thereof, or other political subdivision of the United States or any such
government, and any interest, fines, penalties, assessments or additions to tax
resulting from, attributable to or incurred in connection with any tax or any
contest or dispute thereof. For purposes of this Agreement, "TAX RETURNS" means
all reports, returns, declarations, statements, forms or other information
required to be supplied to a taxing authority in connection with Taxes.
(b) The Company was incorporated on April 1, 1998 and, as of
the date hereof, the Company has not been required to, and has not, filed any
Tax Returns. Except as set forth in Section 2.9(b) of the Disclosure Schedule,
the Company has not waived any statute of limitations with respect to taxes or
agreed to an extension of time with respect to an assessment of or deficiency in
Taxes.
(c) The Company is not a "consenting corporation" within the
meaning of Section 341(f) of the Internal Revenue Code of 1986, as amended (the
"CODE"), and none of the assets of the Company is subject to an election under
Section 341(f) of the Code. The Company has not been a United States real
property
7
<PAGE> 8
holding corporation within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(l)(A)(ii) of the Code.
(d) Other than the Quill Lease, the Company is not a party to
any Tax allocation or sharing agreement or Tax indemnity agreement. The Company
has never filed Tax Returns on a combined, consolidated or unitary basis with
any other business entity in any jurisdiction or has otherwise been liable, by
contract or otherwise, for any Taxes of any other business entity. The Company
has not participated in or cooperated with, nor will it, prior to the Closing
Date, participate in or cooperate with, an international boycott within the
meaning of Section 999 of the Code. Except as set forth in Section 2.9(d) of the
Disclosure Schedule, the Company is not a party to any agreement, contract,
arrangement or plan that has resulted, or would result, separately or in the
aggregate, in the payment of any excess "parachute payments" within the meaning
of Section 280G of the Code.
(e) The Company is not and has never been a member of an
"affiliated group" of corporations (within the meaning of Section 1504 of the
Code).
(f) The Company is a not party to any tax litigation nor, to
the knowledge of the Company and any Company Stockholder, the subject of any tax
audit. The Company Stockholders have no reason to suspect any tax litigation
attributable to periods ended before or including the Closing Date.
Classifications, definitions, valuation and principles used in the accounts of
the Company are in accordance with classifications, definitions, valuations and
principles used in the Tax Returns of the Company. To the knowledge of the
Company and any Company Stockholder, the Company is not and has never been a
party to any transaction or agreement which is in conflict with the tax rules on
transfer pricing in any relevant jurisdiction.
(g) Since April 1, 1998, the Company has been an S corporation
pursuant to an election validly made under Subchapter S of the Code (which
election has not been revoked or terminated) and the Company has not been
subject to federal income taxes for such periods.
(h) The Company is not required, and will not be required, to
include any adjustment in taxable income for any Tax period prior to the Closing
Date (or portion thereof) as a result of the Merger, a termination of the
Company's S corporation status or accounting methods employed prior to such
termination.
(i) The Company has not agreed to make, nor is it required to
make, any adjustments under Section 481(a) of the Code by reason of a change in
accounting method or otherwise.
2.10 ASSETS. Other than the Property (as defined in Section 2.11),
the Company holds no rights in any assets of any kind.
2.11 OWNED PROPERTY. The Company owns fee simple title to the
following real property and holds good and marketable title to the personal
property described
8
<PAGE> 9
below (hereinafter collectively called the "PROPERTY") free and clear of all
liens and encumbrances other than the Permitted Encumbrances (defined in Section
5.1(e)):
(a) All that certain property located in Lincolnshire, Lake
County, Illinois, as more particularly described in EXHIBIT B attached hereto,
together with all easements, rights and privileges appurtenant thereto
(hereinafter called the "LAND");
(b) The building situated on the Land, together with all
improvements appurtenant thereto, located at 100 South Schelter Road,
Lincolnshire, Illinois 60069 (hereinafter called the "BUILDING"; the Building
and such appurtenant improvements being hereinafter collectively called the
"IMPROVEMENTS", and the Land and the Improvements being hereinafter collectively
called the "REAL PROPERTY");
(c) All fixtures, equipment, supplies and other personal
property of every nature and description attached or pertaining to, or otherwise
used in connection with, the Real Property, and located within the Real
Property, other than any such property owned or leased by Quill or any of its
employees or agents (hereinafter called the "PERSONALTY"); and
(d) All intangible property used in connection with the
foregoing, other than intangible property owned or leased by Quill, including,
without limitation, all contract rights, unexpired guarantees and warranties,
and transferrable licenses and permits held by the Company or to which the
Company is a party (hereinafter called the "INTANGIBLE PROPERTY").
2.12 REAL PROPERTY LEASES; USE. Except for the Quill Lease, a true,
correct and complete copy of which has been delivered by the Company to the
Buyer, there are no leases or other occupancy agreements encumbering the
Property and, subject to the Permitted Encumbrances, no person or party other
than Quill has any right to occupancy or possession of any portion of the
Property. The Property is used solely for the business operations of Quill,
subject to the Permitted Encumbrances. No security deposit is required or is
being held under the Quill Lease.
2.13 [intentionally omitted]
2.14 [intentionally omitted]
2.15 CONTRACTS. Except for the Quill Lease and the Permitted
Encumbrances, there are no material construction management, leasing, service,
equipment, supply, maintenance or other agreements of any kind entered into by
the Company.
2.16 [intentionally omitted]
2.17 [intentionally omitted]
2.18 [intentionally omitted]
2.19 LITIGATION. Except as set forth in Schedule 2.19 of the
Disclosure Schedule, there is no action, suit, proceeding or claim before any
Governmental Entity or arbitrator pending, or, to the knowledge of the Company
and the Company Stockholders, threatened against the Company, any of its
officers or directors (in their
9
<PAGE> 10
capacities as such) or the Property that, individually or in the aggregate, is
reasonably likely to have a Company Material Adverse Effect. There is no
judgment, injunction, decree or order against the Company that is reasonably
likely to have a Company Material Adverse Effect.
2.20 [intentionally omitted]
2.21 [intentionally omitted]
2.22 ENVIRONMENTAL MATTERS.
(a) To the knowledge of the Company and the Company
Stockholders, the Company has complied in all material respects with all
applicable Environmental Laws (as defined below). There is no pending or, to the
knowledge of the Company and the Company Stockholders, threatened civil or
criminal litigation, written notice of material violation, formal administrative
proceeding, or investigation, inquiry or information request by any Governmental
Entity, relating to any Environmental Law involving the Company. For purposes of
this Agreement, "ENVIRONMENTAL LAW" means any federal, state or local law,
statute, rule or regulation or the common law relating to the environment or
occupational health and safety, including without limitation any statute,
regulation or order pertaining to (i) treatment, storage, disposal, generation
and transportation of industrial, toxic or hazardous materials or substances or
solid or hazardous waste; (ii) air, water and noise pollution; (iii) groundwater
and soil contamination; (iv) the release or threatened release into the
environment of industrial, toxic or hazardous materials or substances, or solid
or hazardous waste, including without limitation emissions, discharges,
injections, spills, escapes or dumping of pollutants, contaminants or chemicals;
(v) the protection of wildlife, marine life and wetlands, including without
limitation all endangered and threatened species; (vi) storage tanks, vessels,
abandoned or discarded barrels, and other closed receptacles; (vii) health and
safety of employees and other persons; and (viii) manufacture, processing, use,
distribution, treatment, storage, disposal, transportation or handling of
pollutants, contaminants, toxic or hazardous materials or substances or oil or
petroleum products or solid or hazardous waste. As used above, the terms
"release" and "environment" shall have the meaning set forth in the federal
Comprehensive Environmental Response, Compensation and Liability and Response
Act of 1980 ("CERCLA").
(b) To the knowledge of the Company and the Company
Stockholders, there have been no releases of any Materials of Environmental
Concern (as defined below) into the environment at any parcel of real property
or any facility formerly or currently owned, operated or controlled by the
Company, except in compliance with Environmental Laws. With respect to any such
releases of Materials of Environmental Concern, the Company or Quill has given
all required notices to Governmental Entities (copies of which have been made
available to the Buyer). Neither the Company nor any Company Stockholder is
aware of any releases of Materials of Environmental Concern at parcels of real
property or facilities other than the Property that could reasonably be expected
to have an impact on the Property. For purposes of this
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Agreement, "MATERIALS OF ENVIRONMENTAL CONCERN" means any chemicals, pollutants
or contaminants, hazardous substances (as such term is defined under CERCLA),
solid wastes and hazardous wastes (as such terms are defined under the federal
Resource Conservation and Recovery Act), toxic materials, oil or petroleum and
petroleum products, or any other material subject to regulation under any
Environmental Law.
(c) Set forth in Section 2.22(c) of the Disclosure Schedule is
a list of all environmental reports, investigations and audits known to the
Company or any Company Stockholder relating to premises currently or previously
owned or operated by the Company (whether conducted by or on behalf of the
Company or a third party, and whether done at the initiative of the Company or
directed by a Governmental Entity or other third party) which the Company has
possession of or access to. Complete and accurate copies of each such report, or
the results of each such investigation or audit, have been made available to the
Buyer.
(d) Neither the Company nor any Company Stockholder is aware
of any material environmental liability of any solid and hazardous waste
transporter or treatment, storage or disposal facilities that have been utilized
by the Company.
2.23 LEGAL COMPLIANCE. The Company, the Property and the conduct
and operations of the Company's business are currently in compliance with each
law (including rules and regulations thereunder) of any federal, state, local or
foreign government, or any Governmental Entity, which (i) affects or relates to
this Agreement or the transactions contemplated hereby or (ii) is applicable to
the Company, its business or the Property, except for any violation of or
default under a law referred to in clause (ii) above which reasonably may be
expected not to have a Company Material Adverse Effect.
2.24 PERMITS. Section 2.24 of the Disclosure Schedule sets forth a
list of all material permits, licenses, registrations, certificates, orders or
approvals from any Governmental Entity (including without limitation those
issued or required under Environmental Laws and those relating to the occupancy
or use of owned or leased real property) ("PERMITS") issued to or held by the
Company. Such listed Permits are the only material Permits that are required for
the Company to conduct its business as presently conducted or as proposed to be
conducted by the Company, except for those the absence of which would not have a
Company Material Adverse Effect. Each such Permit is in full force and effect
and, to the knowledge of the Company and the Company Stockholders, no suspension
or cancellation of such Permit is threatened and there is no basis for believing
that such Permit will not be renewable upon expiration. Each such Permit will
continue in full force and effect immediately following the Closing.
2.25 [intentionally omitted]
2.26 BROKERS' FEES. The Company has no liability or obligation to
pay any fees or commissions to any broker, finder or agent with respect to the
transactions
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contemplated by this Agreement.
2.27 [intentionally omitted]
2.28 [intentionally omitted]
2.29 [intentionally omitted]
2.30 INVESTMENT REPRESENTATIONS.
(a) Each Company Stockholder is acquiring the Merger Shares
for its own account for investment only, and not with a view to, or for sale in
connection with, any distribution of the Merger Shares in violation of the
Securities Act or any rule or regulation under the Securities Act.
(b) Each Company Stockholder has had adequate opportunity to
obtain from representatives of the Buyer such information about the Buyer as is
necessary to evaluate the merits and risks of its investment in the Buyer.
(c) Each Company Stockholder has sufficient expertise in
business, financial and investment matters to be able to evaluate the risks
involved in the acquisition of the Merger Shares and to make an informed
investment decision with respect to such acquisition.
(d) Each Company Stockholder understands that the Merger
Shares have not been registered under the Securities Act and are "restricted
securities" within the meaning of Rule 144 under the Securities Act; and the
Merger Shares cannot be sold, transferred or otherwise disposed of unless they
are subsequently registered under the Securities Act or an exemption from
registration is then available.
(e) Each Company Stockholder understands that a legend
substantially in the following form will be placed on each certificate
representing the Merger Shares:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
may not be sold, transferred or otherwise disposed of in the
absence of an effective registration statement under such Act
or an opinion of counsel satisfactory to the corporation to
the effect that such registration is not required."
(f) Each Company Stockholder is an "accredited investor"
within the meaning of Regulation D under the Securities Act.
2.31 [intentionally omitted]
2.32 DISCLOSURE. No representation or warranty by the Company or
any Company Stockholder contained in this Agreement, and no statement contained
in the Disclosure Schedule or any other document, certificate or other
instrument delivered to or to be delivered by or on behalf of the Company or any
Company Stockholder pursuant to this Agreement, contains or will contain any
untrue statement of a material fact or omits or will omit to state any material
fact necessary, in light of the
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circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading.
2.33 GOVERNMENTAL ACTIONS. The Company has received no notice of
and, to the knowledge of the Company and the Company Stockholders, there are no
threatened, pending or proposed (i) proceedings or governmental actions to
modify the zoning classification of, or to condemn, or to purchase in lieu
thereof, all or any part of the Property, (ii) reassessment or special
assessments or penalties or interest with respect to the Land or any other
assessments applicable to the Property, other than periodic reassessments in the
ordinary course or as a result of or in connection with any of the transactions
contemplated by this Agreement, including, without limitation, the application
to have the Property assessed as a separate tax parcel, or (iii) proceedings
before any court or administrative agency, the adverse resolution of which would
reasonably be expected to have a Company Materially Adverse Effect.
2.34 IMPROVEMENTS. To the actual knowledge of the Company and the
Company Stockholders, the Improvements, including, without limitation, the roof,
HVAC and all mechanical systems, loading facilities and electrical systems, are
in good working order and repair.
2.35 OPTIONS. There are no outstanding options or rights of first
refusal to purchase the Property or any portion thereof or interest therein.
2.36 INDEPENDENT PARCEL. Except as set forth in the Permitted
Encumbrances, the Real Property is an independent unit which does not rely on
any facilities (other than the facilities of public utility and water companies)
located on any other property (i) to fulfill any zoning, building code, or other
municipal or governmental requirement, (ii) for structural support or the
furnishing of any essential building systems or utilities, including, but not
limited to electric, plumbing, mechanical, heating, ventilating, and air
conditioning systems, or (iii) to fulfill the requirements of any lease. Except
as set forth in the Permitted Encumbrances, no building or other improvement not
included in the Real Property relies on any part of the Real Property to fulfill
any zoning, building code, or other municipal or governmental requirement or for
structural support or the furnishing of any essential building systems or
utilities.
2.37 FIRPTA. Neither the Company nor any of the Company
Stockholders is a "foreign person" as defined in Section 1145(f)(3) of the
Internal Revenue Code.
2.38 SOLE BUSINESS. The Company is engaged solely in the business
of owning and operating the Property and has no other businesses, properties or
assets. The Company has no employees.
2.39 DOCUMENTS. The Company has provided the Buyer with, or
otherwise made available to the Buyer, copies of the following material and
information (hereinafter called the "DOCUMENTS"): the existing survey for the
Property; the certificate of occupancy for the Property; all permits, licenses,
zoning and other approval issues in connection with operation of the Property;
all existing environmental site assessments, engineering reports, inspections
and appraisals for the
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Property; and such other materials in the possession and control of the Company
or Quill as would reasonably be reviewed in connection with the acquisition of
the Property.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER
AND THE TRANSITORY SUBSIDIARY
Each of the Buyer and the Transitory Subsidiary jointly and severally
represents and warrants to the Company and the Company Stockholders that the
statements contained in this Article III are true and correct, except as set
forth in the disclosure schedule provided by Buyer to the Company on the date
hereof (the "BUYER DISCLOSURE SCHEDULE"). The Buyer Disclosure Schedule shall be
arranged in paragraphs corresponding to the numbered and lettered paragraphs
contained in this Article III, and the disclosures in any paragraph of the Buyer
Disclosure Schedule shall qualify other paragraphs in this Article III only to
the extent it is clear from a reading of the disclosure that such disclosure is
applicable to such other paragraphs.
3.1 ORGANIZATION. Each of the Buyer and the Transitory Subsidiary
is a corporation duly organized, validly existing and in good standing under the
laws of the state of its incorporation. Each of the Buyer and the Transitory
Subsidiary is duly qualified to conduct business and is in corporate and tax
good standing under the laws of each jurisdiction in which the nature of its
business or the ownership or leasing of its properties requires such
qualification, except for any such failure to be so qualified and in good
standing that would not, either individually or in the aggregate, have a Buyer
Material Adverse Effect. Each of the Buyer and the Transitory Subsidiary has all
requisite corporate power and authority to carry on the businesses in which it
is engaged and to own and use the properties owned and used by it. Each of the
Buyer and the Transitory Subsidiary has furnished to the Company true and
complete copies of its Certificate of Incorporation and By-laws, each as amended
and as in effect on the date hereof. Neither the Buyer or the Transitory
Subsidiary is in default under or in violation of any provision of its
Certificate of Incorporation or By-laws.
3.2 CAPITALIZATION. The authorized capital stock of the Buyer
consists of (i) 500,000,000 shares of Buyer Common Stock, of which 252,154,564
shares were issued and outstanding and 59,149 shares were held in the treasury
of the Buyer as of March 1, 1998 and (ii) 5,000,000 shares of preferred stock,
$0.01 par value, none of which are outstanding. All of the issued and
outstanding shares of Buyer Common Stock are duly authorized, validly issued,
fully paid, nonassessable and free of all preemptive rights and are associated
with 16/81sts of a right issuable pursuant to the Rights Agreement referred to
in Section 1.5(i). All of the Merger Shares will be, when issued in accordance
with this Agreement, duly authorized, validly issued, fully paid, nonassessable
and free of all preemptive rights. Except as disclosed in Section 3.2 of the
Buyer Disclosure Schedule or the Buyer Reports (as defined below), as of
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March 1, 1998 there were no (i) outstanding or authorized options, warrants,
rights, agreements or commitments to which the Buyer is a party or which are
binding on the Buyer providing for the issuance, disposition or acquisition of
any of its capital stock, (ii) outstanding or authorized stock appreciation,
phantom stock or similar rights with respect to the Buyer, and (iii) agreements,
voting trusts, proxies or understandings with respect to the voting, or
registration under the Securities Act of any shares of the capital stock (or
rights related thereto) of the Buyer.
3.3 AUTHORIZATION OF TRANSACTION. Each of the Buyer and the
Transitory Subsidiary has all requisite power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. Without
limiting the generality of the foregoing: the Board of Directors of the Buyer
and the Transitory Subsidiary, at meetings duly called and held (or by written
consent) duly determined (in the case of the Buyer) that the Merger is fair and
in the best interests of the Buyer and its stockholders and adopted this
Agreement in accordance with the provisions of the Delaware General Corporation
Law. The execution and delivery of this Agreement by the Buyer and the
Transitory Subsidiary and the consummation by the Buyer and the Transitory
Subsidiary of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of the Buyer and
Transitory Subsidiary. This Agreement has been duly and validly executed and
delivered by the Buyer and the Transitory Subsidiary and constitutes a valid and
binding obligation of the Buyer and the Transitory Subsidiary, enforceable
against them in accordance with its terms, subject to (i) bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting or relating to
creditors' rights generally and (ii) the availability of injunctive relief and
other equitable remedies.
3.4 NONCONTRAVENTION. Subject to compliance with the applicable
requirements of the Securities Act and any applicable state securities laws, the
Exchange Act, the Hart-Scott-Rodino Act and applicable foreign antitrust laws
(if any), and the filing of the Certificate of Merger as required by the
Delaware General Corporation Law, neither the execution and delivery of this
Agreement by the Buyer or the Transitory Subsidiary, nor the consummation by the
Buyer or the Transitory Subsidiary of the transactions contemplated hereby, will
(i) conflict with or violate any provision of the charter or By-laws of the
Buyer or the Transitory Subsidiary, (ii) require on the part of the Buyer or the
Transitory Subsidiary any filing with, or any permit, authorization, consent or
approval of, any Governmental Entity, (iii) conflict with, result in breach of,
constitute (with or without due notice or lapse of time or both) a default
under, result in the acceleration of, create in any party any right to
accelerate, terminate, modify or cancel, or require any notice, consent or
waiver under, any material contract, lease, sublease, license, sublicense,
franchise, permit, indenture, agreement or mortgage for borrowed money,
instrument of indebtedness or other arrangement to which the Buyer or Transitory
Subsidiary is a party or by which either is bound or to which any of their
assets or properties are subject, except to the extent any such conflict,
breach, default, acceleration, termination, modification or cancellation, or the
failure to give or obtain any such notice, consent or waiver, would not have a
Buyer Material Adverse Effect (as defined below), or (iv) violate any order,
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<PAGE> 16
writ, injunction, decree, statute, rule or regulation applicable to the Buyer or
the Transitory Subsidiary or any of their assets or properties. The term "BUYER
MATERIAL ADVERSE EFFECT" means any change, event or effect that is materially
adverse to the business, financial condition or results of operations of the
Buyer or the Transitory Subsidiary, excluding any changes in general economic
conditions in the general economy as a whole, or that adversely affects the
ability of the Buyer to consummate the Merger.
3.5 REPORTS AND FINANCIAL STATEMENTS. The Buyer has previously
furnished to the Company and the Company Stockholders complete and accurate
copies, as amended or supplemented, of its (a) Annual Report on Form 10-K for
the fiscal year ended February 1, 1997, as filed with the Securities and
Exchange Commission (the "SEC"), and (b) all other reports filed by the Buyer
under Section 13 of the Exchange Act with the SEC since February 1, 1997 (such
reports are collectively referred to herein as the "BUYER REPORTS"). The Buyer
Reports constitute all of the documents required to be filed by the Buyer under
Section 13 of the Exchange Act with the SEC since February 1, 1997. As of their
respective dates, the Buyer Reports did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The audited financial statements and
unaudited interim financial statements of the Buyer included in the Buyer
Reports (i) comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, (ii) have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby (except as may be
indicated therein or in the notes thereto, and in the case of quarterly
financial statements, as permitted by Form 10-Q under the Exchange Act and
except for normal recurring year-end adjustments (which will not be material)),
(iii) fairly present the consolidated financial condition, results of operations
and cash flows of the Buyer and its subsidiaries as of the respective dates
thereof and for the periods referred to therein, and (iv) are consistent with
the books and records of the Buyer and its subsidiaries.
3.6 LITIGATION. There is no action, suit, proceeding, or claim
before any Government Entity or arbitrator pending, or, to the Buyer's
knowledge, threatened against, the Buyer or any of its officers or directors (in
their capacities as such) that, individually or in the aggregate, is reasonably
likely to have a Buyer Material Adverse Effect. There is no judgment,
injunction, decree or order against the Buyer that is reasonably likely to have
a Buyer Material Adverse Effect.
3.7 [intentionally omitted]
3.8 ABSENCE OF CERTAIN CHANGES. Since January 31, 1998, there has
occurred no event or development which has had, or could reasonably be expected
to have in the future, a Buyer Material Adverse Effect.
3.9 TAXES. Buyer has (i) filed all federal, state, local and
foreign tax returns and reports required to be filed by it prior to the date of
this Agreement (taking into
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account extensions), (ii) paid or accrued all Taxes due and payable, and (iii)
paid or accrued all Taxes for which a notice of assessment or collection has
been received (other than amounts being contested in good faith by appropriate
proceedings), except in the case of clause (i), (ii) or (iii) for any such
filings, payments or accruals which are not reasonably likely, individually or
in the aggregate, to have a Buyer Material Adverse Effect. Neither the Internal
Revenue Service nor any other taxing authority has asserted any claim for taxes,
or to the knowledge of Buyer, is threatening to assert any claim for Taxes,
which claims, individually or in the aggregate, are reasonably likely to have a
Buyer Material Adverse Effect. There are no liens for taxes upon the assets of
Buyer (other than liens for Taxes that are not yet due or that are being
contested in good faith by appropriate proceedings), except for liens which are
not reasonably likely, individually or in the aggregate, to have a Buyer
Material Adverse Effect.
3.10 ENVIRONMENTAL MATTERS. The Buyer has complied in all material
respects with all applicable Environmental Laws. Except for such matters that,
individually or in the aggregate, are not reasonably likely to have a Buyer
Material Adverse Effect, (i) there is no pending or, to the knowledge of the
Buyer, threatened civil or criminal litigation, written notice of material
violation, formal administrative proceeding, or investigation, inquiry or
information request by any Governmental Entity, relating to any Environmental
Law involving the Buyer, and (ii) there have been no releases of any Materials
of Environmental Concern into the environment at any parcel of real property or
any facility formerly or currently owned, operated or controlled by the Buyer,
except in compliance with Environmental Law.
3.11 EMPLOYEE BENEFIT PLANS
(a) Buyer has listed in Section 3.11 of the Buyer Disclosure
Schedule all employee benefit plans (as defined in Section 3(3) of ERISA) for
the benefit of, or relating to, any employee of Buyer or any ERISA Affiliate of
Buyer (together, the "BUYER EMPLOYEE PLANS"). For purposes of this Agreement,
"ERISA AFFILIATE" means any entity which is or at any applicable time was a
member of (i) a controlled group of corporations (as defined in Section 414(b)
of the Code), (ii) a group of trades or businesses under common control (as
defined in Section 414(c) of the Code), or (iii) an affiliated service group (as
defined under Section 414(m) of the Code), any of which includes the Company.
(b) With respect to the Buyer Employee Plans, individually and
in the aggregate, no event has occurred, and to the knowledge of Buyer, there
exists no condition or set of circumstances in connection with which Buyer could
be subject to any liability that is reasonably likely to have a Buyer Material
Adverse Effect under ERISA, the Code or any other applicable law.
(c) With respect to the Buyer Employee Plans, individually and
in the aggregate, there are no funded benefit obligations for which
contributions have not been made or properly accrued and there are no unfunded
benefit obligations which have not been accounted for by reserves, or otherwise
properly footnoted in
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accordance with generally accepted accounting principles, on the financial
statements of Buyer, which obligations are reasonably likely to have a Buyer
Material Adverse Effect.
3.12 COMPLIANCE WITH LAWS. Buyer has complied with, is not in
violation of, and has not received any notices of violation with respect to, any
United States or foreign federal, state or local statute, law or regulation with
respect to the conduct of its business, or the ownership or operation of its
business, except for failures to comply or violations which, individually or in
the aggregate, have not had and are not reasonably likely to have a Buyer
Material Adverse Effect.
3.13 INTERIM OPERATIONS OF THE TRANSITORY SUBSIDIARY. The
Transitory Subsidiary was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement, has engaged in no other business
activities and has conducted its operations only as contemplated by this
Agreement.
3.14 BROKERS' FEES. Neither the Buyer nor the Transitory Subsidiary
has any liability or obligation to pay any fees or commissions to any broker,
finder or agent with respect to the transactions contemplated by this Agreement.
3.15 DISCLOSURE. The representations and warranties by the Buyer
contained in this Agreement, and any other document, certificate or other
instrument delivered by or on behalf of the Buyer pursuant to this Agreement,
including the Buyer Reports, taken together, do not contain any untrue statement
of a material fact or omit to state any material fact necessary, in light of the
circumstances under which they were made, in order to make the statements herein
or therein not misleading.
ARTICLE IV
COVENANTS
4.1 REASONABLE BEST EFFORTS; NOTICE AND CONSENTS.
(a) Each of the Company and the Buyer shall use its best
efforts, to the extent commercially reasonable ("REASONABLE BEST EFFORTS") (i)
to take, or cause to be taken, all appropriate action, and do, or cause to be
done, all things necessary and proper under applicable law to consummate and
make effective the transactions contemplated hereby as promptly as practicable,
(ii) to obtain from any Governmental Entity or any other third party any
consents, licenses, permits, waivers, approvals, authorizations, or orders
required to be obtained or made by the Parties or any of their affiliates, as
defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended
("AFFILIATES"), in connection with the authorization, execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
including, without limitation, the Merger, and (iii) as promptly as practicable,
to make all necessary filings, and thereafter make any other required
submissions, with respect to this Agreement and the Merger required under any
applicable federal or state securities laws and any other applicable law. The
Parties shall cooperate with each
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other in connection with the making of all such filings, including providing
copies of all such documents to the non-filing Parties and its advisors prior to
filing and, if requested, to accept all reasonable additions, deletions or
changes suggested in connection therewith. Each of the Parties shall use its
Reasonable Best Efforts to furnish to the other Parties all information required
for any application or other filing to be made pursuant to the rules and
regulations of any applicable law in connection with the transactions
contemplated by this Agreement.
(b) The Parties agree, and shall cause each of their
respective Affiliates, to cooperate and to use their respective Reasonable Best
Efforts to obtain any governmental clearances or approvals required for Closing
under the Antitrust Laws (as defined in the Merger Agreement), to respond to any
government requests for information under any Antitrust Law, and to contest and
resist any action, including any legislative, administrative or judicial action,
and to have vacated, lifted, reversed or overturned any decree, judgment
injunction or other order (an "ANTITRUST ORDER") that restricts, prevents or
prohibits the consummation of the Merger or any other transactions contemplated
by this Agreement under any Antitrust Law. The Parties hereto will consult and
cooperate with one another, in connection with any analyses, appearances,
presentations, memoranda, briefs, arguments, opinions and proposals made or
submitted by or on behalf of any Party hereto in connection with proceedings
under or relating to any Antitrust Law. The Buyer shall be entitled to direct
any proceedings or negotiations with any Governmental Entity relating to any of
the foregoing, provided that it shall afford the Company a reasonable
opportunity to participate therein. Notwithstanding the foregoing, no Party
shall be required to take any action under Section 4.1(a) or Section 4.1(b) if
the U.S. Department of Justice or U.S. Federal Trade Commission authorizes its
staff to seek a preliminary injunction or restraining order to enjoin
consummation of the Merger unless the Buyer agrees to pay all costs and expenses
(including, without limitation attorneys' fees and expenses) necessary to resist
and defend against any such order or injunction.
(c) Each of the Parties shall give (and shall use their
Reasonable Best Efforts to cause their respective Affiliates to give) any
notices to third parties, and use (and cause their respective Affiliates to use)
their Reasonable Best Efforts to obtain any third party consents related to or
required in connection with the Merger that are (A) necessary to consummate the
transactions contemplated hereby, (B) disclosed or required to be disclosed in
the Disclosure Schedule or (C) required to prevent a Company Material Adverse
Effect or a Buyer Material Adverse Effect from occurring prior to or after the
Effective Time.
(d) No Company Stockholder shall take any action to rescind or
modify the written consent of stockholders of the Company approving the Merger.
4.2 OPERATION OF THE PROPERTY. The Company shall not during the
term of this Agreement enter into any lease or other occupancy agreement or any
contract relating to the Property without the prior written consent of the
Buyer, which the Buyer may withhold in its sole and absolute discretion. Except
as contemplated by Section 4.2 of
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the Disclosure Schedule, the Company shall continue to operate the Property
during the term of this Agreement in the manner in which it currently is being
operated.
4.3 FULL ACCESS. From and after the date of this Agreement, the
Company shall permit the Buyer, its agents and representatives, to enter upon
the Property upon reasonable prior notice to the Company, to perform, at the
Buyer's sole cost and expense, inspections and tests of the Property, including
surveys and building measurement, environmental studies, examinations and tests
of all structural and mechanical systems within the Improvements, PROVIDED that
in exercising the foregoing rights, Buyer shall use reasonable efforts to
minimize disruption to Quill's business and operations at the Property. The
Buyer shall repair any damage to the Property caused by any such tests or
investigations and shall be responsible for any and all liability and costs for
personal or property damage attributable thereto.
4.4 EXCLUSIVITY. Neither the Company nor any of the Company
Stockholders shall, and the Company shall use its Reasonable Best Efforts, to
cause its Affiliates and each of its officers, directors, employees,
representatives and agents not to, directly or indirectly, (a) encourage,
solicit, initiate, engage or participate in discussions or negotiations with any
person or entity (other than the Buyer) concerning any merger, consolidation,
sale of material assets, sale of Company Shares, the Property or any portion of
either, or other business combination involving the Company or any division or
business unit of the Company or (b) provide any non-public information
concerning the business, properties or assets of the Company to any person or
entity (other than the Buyer). The Company shall immediately notify the Buyer
of, and shall disclose to the Buyer all details of, any inquiries, discussions
or negotiations of the nature described in the first sentence of this Section
4.4.
4.5 NASDAQ LISTING. The Buyer shall use its Reasonable Best
Efforts to cause the Merger Shares to be approved for listing on the Nasdaq
National Market prior to or as of the Effective Time and to cause all fees
applicable thereto to be paid prior to Closing.
4.6 REGISTRATION OF MERGER SHARES. The Buyer and the Company
Stockholders hereby agree that the Merger Shares shall be entitled to
registration rights as Registrable Shares (as such term is defined in the Merger
Agreement). In particular, each of the Company Stockholders hereunder shall be
entitled to all rights and privileges granted to, and bound by all duties and
obligations of, the Rightsholders (as such term as defined in the Merger
Agreement), as more particularly set forth in Article VII of the Merger
Agreement which Article VII is hereby incorporated by reference.
4.7 EASEMENTS, COVENANTS, ETC. The Property shall, at or prior to
the Closing, become subject to a Declaration of Covenants, Conditions, Easements
and Restrictions containing such commercially reasonable terms as shall be
agreed upon by the Parties prior to the Closing.
4.8 FUNDING OF SETTLEMENT AMOUNTS. Buyer agrees that, at the
Closing, it shall contribute to or otherwise make available to the Company
and/or the Surviving
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Corporation, funds sufficient to satisfy the payment obligation to the Arnold
Miller Trust Dated May 11, 1983 pursuant to the Settlement Agreement between
such stockholder and the Company dated as of May ____, 1998. The Parties agree
that such payment is, and shall be, required to be funded by the Buyer, the
Company and/or the Surviving Corporation at or following the Closing and shall
not in any manner be deemed the obligation or responsibility of any Company
Stockholder or the Company prior to the Closing.
4.9 REPAYMENT OF LOAN. The Buyer, on behalf of the Company, shall
pay, or cause to be paid, the Loan Amount to the Lender at the Closing.
ARTICLE V
CONDITIONS TO CONSUMMATION OF MERGER
5.1 CONDITIONS TO OBLIGATIONS OF THE BUYER AND THE TRANSITORY
SUBSIDIARY. The obligation of each of the Buyer and the Transitory Subsidiary to
consummate the Merger is subject to the satisfaction or waiver by the Buyer of
the following conditions:
(a) GOVERNMENTAL APPROVALS. The Company shall have obtained
from each Governmental Entity all approvals, issuances, permits, consents and
other authorizations necessary for the consummation of the Merger.
(b) PENDING PROCEEDINGS AND ORDERS. No action, suit or
proceeding shall be pending by or before any Governmental Entity wherein an
unfavorable judgment, order, decree, stipulation or injunction would (i) prevent
consummation of the Merger, (ii) cause the Merger to be rescinded following
consummation or (iii) be reasonably likely to result in a Company Material
Adverse Effect following the Merger, and no such judgment, order, decree,
stipulation or injunction shall be in effect.
(c) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company and the Company Stockholders set forth in this
Agreement that are qualified as to materiality shall be true and correct, and
the representations and warranties of the Company and the Company Stockholders
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 Effective Time as though made on and as of the Effective Time, except to
the extent such representations and warranties address matters only as of a
particular date (in which case such representations and warranties shall remain
true and correct or true and correct in all material respects, as the case may
be, as of such earlier date).
(d) COVENANTS. The Company shall have performed or complied in
all material respects with its agreements and covenants required to be performed
or complied with under this Agreement as of or prior to the Effective Time.
(e) TITLE. The Company shall have good and clear record and
marketable fee simple title to the Real Property and good and marketable title
to the Personalty and Intangible Property, in each case, free and clear of all
liens and
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encumbrances other than (i) taxes for the immediately preceding and then current
tax period which are not due and payable as of the date of Closing; (ii) liens
for municipal betterments assessed prior to the date of Closing to the extent
not due and payable on the date of Closing; (iii) easements for utilities
serving the Property; (iv) applicable laws and regulations; (v) the covenants,
conditions, easements and restrictions provided under Section 4.7; (vi) matters
which do not interfere materially with the use of the Property for the uses
contemplated under the Quill Lease; and (vii) encumbrances securing the
Company's obligations under the Loan. The matters set forth in (i) through (vii)
above are referred to collectively herein as the "PERMITTED ENCUMBRANCES". If
the Buyer elects, in its sole discretion, to proceed to Closing notwithstanding
the failure of the condition set forth in this Section 5.1(e) to be satisfied,
the Conversion Ratio (after being determined as required by Section 1.5(i))
shall be reduced by a fraction thereof, such fraction being the total amount
required to remove all mortgages, attachments, mechanic's liens or other
monetary liens divided by $49,000,000.
(f) CONDITION OF PROPERTY. The Property shall be in the
same physical condition as it is on the date of this Agreement, reasonable wear
and tear and, subject to Section 7.1(e), damage by casualty excepted, and there
shall not have occurred any event that would entitle Quill to terminate the
Quill Lease.
(g) CERTIFICATE. The Company and the Company Stockholders
shall have delivered to the Buyer and the Transitory Subsidiary a certificate
(the "COMPANY CERTIFICATE") to the effect that each of the conditions specified
in clauses (a) through (f) of this Section 5.1 is satisfied in all respects.
(h) THIRD PARTY CONSENTS. The Buyer shall have been
furnished with evidence satisfactory to it of the consent or approval of those
third parties whose consent or approval shall be required in connection with the
Merger, including without limitation, to the extent required under the Loan, the
consent of Lender.
(i) OTHER DOCUMENTS. The Company shall have delivered to
the Buyer or to the title insurer the following:
(i) such affidavits relating to corporate and
title matters, such as parties in possession and mechanic's or materialmen's
liens for work performed on behalf of the Company prior to Closing, as the title
insurer reasonably shall require in order to issue an owner's policy of title
insurance free of any exceptions for such matters, with a so-called
"non-imputation" endorsement; and
(ii) a certification and affidavit of the Company
and each Company Stockholder as required by the Foreign Investors Real Property
Tax Act, as amended.
(j) LEGAL OPINION. The Buyer and the Transitory
Subsidiary shall have received from Neal, Gerber & Eisenberg, counsel to the
Company, an opinion substantially in the form of EXHIBIT A attached to the
Disclosure Schedule, addressed to the Buyer and the Transitory Subsidiary and
dated as of the Closing Date.
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(k) MERGER AGREEMENT. The transactions contemplated by
the Merger Agreement shall have been consummated prior to or concurrently with
the consummation of the Merger hereunder.
(l) INSPECTION. Buyer shall have determined, in its sole and
absolute judgment, that (a) environmental remediation is not necessary or
desirable at the Property, (b) the Merger would not expose Buyer or the
Surviving Corporation to material liability in connection with Environmental
Laws, and (c) the Property can legally be used for the uses contemplated under
the Quill Lease.
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY AND THE COMPANY
STOCKHOLDERS. The obligation of each of the Company and the Company Stockholders
to consummate the Merger is subject to the satisfaction or waiver by the Company
of the following conditions:
(a) GOVERNMENTAL APPROVAL. The Buyer and the Transitory
Subsidiary shall have obtained from each Governmental Entity all approvals,
issuances, permits, consents and other authorizations necessary for the
consummation of the Merger.
(b) PENDING PROCEEDINGS AND ORDERS. No action, suit or
proceeding shall be pending by or before any Governmental Entity wherein an
unfavorable judgment, order, decree, stipulation or injunction would (i) prevent
consummation of the Merger, (ii) cause the Merger to be rescinded following
consummation, or (iii) be reasonably likely to result in a Buyer Material
Adverse Effect after the Effective Time, and no such judgment, order, decree,
stipulation or injunction shall be in effect.
(c) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Buyer and Transitory Subsidiary set forth in this Agreement
that are qualified as to materiality shall be true and correct, and the
representations and warranties of the Buyer and Transitory Subsidiary 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
Effective Time as though made on and as of the Effective Time, except to the
extent such representations and warranties address matters only as of a
particular date (in which case such representations and warranties shall remain
true and correct or true and correct in all material respects, as the case may
be, as of such earlier date).
(d) COVENANTS. Each of the Buyer and the Transitory Subsidiary
shall have performed or complied in all material respects with its agreements
and covenants required to be performed or complied with under this Agreement as
of or prior to the Effective Time.
(e) CERTIFICATE. The Buyer and Transitory Subsidiary shall
have delivered to the Company a certificate (the "BUYER CERTIFICATE") to the
effect that each of the conditions specified in clauses (a) through (d) of this
Section 5.2 is satisfied in all respects.
(f) LEGAL OPINION. The Company Stockholders shall have
received from Hale and Dorr LLP, counsel to the Buyer and the Transitory
Subsidiary, an
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opinion substantially in the form of EXHIBIT A attached to the Buyer Disclosure
Schedule, addressed to the Company Stockholders and dated as of the Closing
Date.
(g) NASDAQ NATIONAL MARKET. The Merger Shares shall have been
authorized for listing on the Nasdaq National Market.
(h) MERGER AGREEMENT. The transactions contemplated by the
Merger Agreement shall have been consummated prior to or concurrently with the
consummation of the Merger hereunder.
ARTICLE VI
INDEMNIFICATION
6.1 INDEMNIFICATION BY THE COMPANY STOCKHOLDERS. The Company
Stockholders (the "INDEMNIFYING PARTIES") shall jointly and severally indemnify
the Surviving Corporation and the Buyer (the "INDEMNIFIED PARTIES"), without
duplication, in respect of, and hold them harmless against, any and all debts,
obligations and other liabilities, monetary damages, fines, fees, penalties,
interest obligations, deficiencies, losses, and reasonable costs and expenses
(including without limitation amounts paid in settlement, interest, court costs,
costs of investigators, fees and expenses of attorneys, accountants, financial
advisors and other experts, and other expenses of litigation) (collectively,
"DAMAGES") incurred or suffered by the Surviving Corporation or the Buyer
resulting from or relating to any breach by the Company or Company Stockholders
of any representation, warranty, covenant or agreement of the Company or Company
Stockholders contained in this Agreement (including representations and
warranties in the Company Certificate).
6.2 INDEMNIFICATION CLAIMS.
(a) An Indemnified Party seeking to assert rights to
indemnification under this Article VI shall give written notification to Jack
Miller, Harvey L. Miller and Arnold Miller (the "STOCKHOLDER REPRESENTATIVES")
of the commencement of any action, suit or proceeding relating to a third party
claim for which indemnification pursuant to this Article VI may be sought. Such
notification shall be given within 20 business days after receipt by the
Indemnified Party of notice of such action, suit or proceeding, and shall
describe (to the extent known by the Indemnified Party) the facts constituting
the basis for such action, suit or proceeding and the amount of the claimed
damages; provided, however, that no delay on the part of the Indemnified Party
in notifying the Stockholder Representatives shall relieve the Indemnifying
Parties of any liability or obligation hereunder except to the extent of any
damage or liability caused by or arising out of such failure. Within 20 days
after delivery of such notification, the Stockholder Representatives may, upon
written notice thereof to the Indemnified Party, assume control of the defense
of such action, suit or proceeding with counsel reasonably satisfactory to the
Indemnified Party, provided the Stockholder Representatives acknowledge in
writing to the Indemnified Party that any damages, fines, costs or other
liabilities that may be assessed against the Indemnified Party in
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connection with such action, suit or proceeding constitute Damages for which the
Indemnified Party shall, subject to the limitations set forth in Section 6.4, be
indemnified pursuant to this Article VI. If the Stockholder Representatives do
not so assume control of such defense, the Indemnified Party shall control such
defense. The Party not controlling such defense (the "NON-CONTROLLING PARTY")
may participate therein at their own expense; provided that if the Stockholder
Representatives assume control of such defense and the Indemnified Party
reasonably concludes that the Indemnifying Parties and the Indemnified Party
have conflicting interests or different defenses available with respect to such
action, suit or proceeding, the reasonable fees and expenses of one counsel to
the Indemnified Party shall be considered "DAMAGES" for purposes of this
Agreement. The Party controlling such defense (the "CONTROLLING PARTY") shall
keep the Non-Controlling Party reasonably advised of the status of such action,
suit or proceeding and the defense thereof and shall consider in good faith
recommendations made by the Non-Controlling Party with respect thereto. The
Non-Controlling Party shall furnish the Controlling Party such information as it
may have with respect to such action, suit or proceeding (including copies of
any summons, complaint or other pleadings which may have been served on such
party and any written claim, demand, invoice, billing or other document
evidencing or asserting the same) and shall otherwise cooperate with and assist
the Controlling Party in the defense of such action, suit or proceeding and
provide the Controlling Party and its counsel access to (and the right to make
copies of) the Surviving Corporation's books and records pertaining to such
matter. The Stockholder Representatives shall not agree to any settlement of, or
the entry of any judgment arising from, any such action, suit or proceeding
without the prior written consent of the Indemnified Party, which shall not be
unreasonably withheld, conditioned or delayed. The Indemnified Party shall not
agree to any settlement of, or the entry of any judgment arising from, any such
action, suit or proceeding without the prior written consent of the Stockholder
Representatives, which shall not be unreasonably withheld, conditioned or
delayed; provided that if the Stockholder Representatives do not assume the
defense of such action, suit or proceeding pursuant to this Section 6.2(a), the
Indemnified Party shall be entitled to agree to a settlement of, or the entry of
any judgment arising from, such action, suit or proceeding, after giving notice
of the same to the Stockholder Representatives, on such terms as the Indemnified
Party in good faith may deem appropriate.
(b) In order to seek indemnification under this Article VI, an
Indemnified Party shall give a written notification (a "CLAIM NOTICE") to the
Stockholder Representatives which contains (i) a description and the amount (the
"CLAIMED AMOUNT") of any Damages incurred as a result of any final, unappealable
judgment, settlement or acknowledgment of the Stockholder Representatives or
reasonably expected to be incurred by the Indemnified Party as a result of such
claim, (ii) a statement that the Indemnified Party is entitled to
indemnification under this Article VI for such Damages and a reasonable
explanation of the basis therefor, and (iii) a demand for payment in the amount
of such Damages.
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(c) Within 20 days after delivery of a Claim Notice, the
Stockholder Representatives shall deliver to the Indemnified Party a written
response (the "RESPONSE") in which the Stockholder Representatives shall: (i)
agree that the Indemnified Party is entitled to receive all of the Claimed
Amount (in which case the Response shall be accompanied by a cash payment equal
to the Claimed Amount), (ii) agree that the Indemnified Party is entitled to
receive part, but not all, of the Claimed Amount (the "AGREED AMOUNT") (in which
case the Response shall be accompanied by a cash payment equal to the Agreed
Amount) or (iii) dispute that the Indemnified Party is entitled to receive any
of the Claimed Amount. If the Stockholder Representatives in the Response
contest the payment of all or part of the Claimed Amount, the Stockholder
Representatives and the Indemnified Party shall follow the procedures set forth
in Section 6.2(d) for the resolution of such dispute (a "DISPUTE").
(d) During the 60-day period following the delivery of a
Response that reflects a Dispute, the Stockholder Representatives and the
Indemnified Party shall use good faith efforts to resolve the Dispute. If the
Dispute is not resolved within such 60- day period, the Stockholder
Representatives and the Indemnified Party shall discuss in good faith the
submission of the Dispute to a mutually acceptable alternative dispute
resolution procedure (which may be non-binding or binding upon the parties, as
they agree in advance), including without limitation one administered by the
American Arbitration Association or the Center for Public Resources (the "ADR
PROCEDURE"). In the event the Stockholder Representatives and the Indemnified
Party agree upon an ADR Procedure, such parties shall, in consultation with the
chosen dispute resolution service (the "ADR SERVICE"), promptly agree upon a
format and timetable for the ADR Procedure, agree upon the rules applicable to
the ADR Procedure, and promptly undertake the ADR Procedure. The provisions of
this Section 6.2(d) shall not obligate the Stockholder Representatives and the
Indemnified Party to pursue an ADR Procedure or prevent either such party from
pursuing the Dispute in a court of competent jurisdiction; provided that, if the
Stockholder Representatives and the Indemnified Party agree to pursue an ADR
Procedure, neither the Stockholder Representatives nor the Indemnified Party may
commence litigation or seek other remedies with respect to the Dispute prior to
the completion of such ADR Procedure. Any ADR Procedure undertaken by the
Stockholder Representatives and the Indemnified Party shall be considered a
compromise negotiation for purposes of federal and state rules of evidence, and
all statements, offers, opinions and disclosures (whether written or oral) made
in the course of the ADR Procedure by or on behalf of the Stockholder
Representatives, the Indemnified Party or the ADR Service shall be treated as
confidential and, where appropriate, as privileged work product. Such
statements, offers, opinions and disclosures shall not be discoverable or
admissible for any purposes in any litigation or other proceeding relating to
the Dispute (provided that this sentence shall not be construed to exclude from
discovery or admission any matter that is otherwise discoverable or admissible).
The fees and expenses of any ADR Service used by the Stockholder Representatives
and the Indemnified Party shall be shared equally by the Indemnifying Parties
and the Indemnified Party.
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(e) Each Company Stockholder irrevocably agrees that the
Stockholder Representatives shall have full power and authority on behalf of
each Company Stockholder to take any and all actions on behalf of, execute any
and all instruments on behalf of, and execute or waive any and all rights of,
the Company Stockholders under this Article VI, including, without limitation,
the power and authority to agree to, negotiate, enter into settlements of and
demand arbitration of any claim made under this Article VI. A written decision,
act, consent or instruction of a majority of the Stockholder Representatives
shall constitute a decision of the Stockholder Representatives and all Company
Stockholders and shall be final, binding and conclusive upon each such Company
Stockholder, and the Buyer may rely upon any written decision, act, consent or
instruction of a majority of the Stockholder Representatives as being the
decision, act, consent or instruction of the Stockholder Representatives and
each and every such Company Stockholder. The Buyer is hereby relieved from any
liability to any Company Stockholder for any acts done by them in accordance
with such decision, act, consent or instruction of the Stockholder
Representatives. The Stockholder Representatives shall have no liability to any
Company Stockholder for any action taken or omitted on behalf of the Company
Stockholders pursuant to this Article VI.
6.3 SURVIVAL. All representations and warranties contained in this
Agreement, the Company Certificate and the Buyer Certificate (including, without
limitation, those set forth in Section 2.8) shall survive the execution and
delivery hereof and the Closing and continue until the first anniversary of the
Closing Date and shall not be affected by any examination made for or on behalf
of any Party or the knowledge of any of the Party's officers, directors,
stockholders, employees or agents; provided that the representations and
warranties set forth in Sections 2.2(b) and 2.35 (and the portion of the Company
Certificate relating thereto) shall survive the Closing without limitation. If
an Indemnified Party delivers to the Stockholder Representatives before
expiration of a representation or warranty, either a Claim Notice based upon a
breach of such representation or warranty, or a notice that, as a result a legal
proceeding instituted by or written claim made by a third party, the Indemnified
Party reasonably expects to incur Damages as a result of a breach of such
representation or warranty (an "EXPECTED CLAIM NOTICE"), then such
representation or warranty shall survive until, but only for purposes of, the
resolution of the matter covered by such notice. If the legal proceeding or
written claim with respect to which an Expected Claim Notice has been given is
definitely withdrawn or resolved in favor of the Indemnified Party, the
Indemnified Party shall promptly so notify the Stockholder Representatives.
6.4 LIMITATIONS.
(a) Notwithstanding anything to the contrary herein, (i) the
Indemnifying Parties shall be liable under this Article VI for only that portion
of the aggregate Damages which exceeds $200,000, and (ii) the maximum liability
of the Company Stockholders hereunder shall not exceed $4,900,000; provided that
the limitation set forth in clause (ii) above shall be deemed to be $49,000,000
for purposes of a claim pursuant to Section 6.1 relating to a breach of the
representations and
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warranties set forth in Sections 2.2(b), 2.8 or 2.35 (or the portion of the
Company Certificate relating thereto). For purposes solely of this Article VI,
all representations and warranties in Article II (other than Section 2.32) shall
be construed as if the terms "material" and references to "Company Material
Adverse Effect" (and variations thereof) were omitted from such representations
and warranties.
(b) Except with respect to claims based on fraud on behalf of
the Company or the Company Stockholders, after the Closing, the rights of the
Indemnified Parties under this Article VI shall be the exclusive remedy of the
Indemnified Parties with respect to claims resulting from or relating to any
representation or warranty contained in this Agreement.
(c) No Company Stockholder, in its capacity as such, shall
have any right of contribution against the Company or the Surviving Corporation
with respect to any breach by the Company of any of its representations or
warranties contained in this Agreement.
(d) The amount of any Damages of any Indemnified Party shall
be determined net of any United States or foreign federal, state or local income
Tax benefit realized by the Indemnified Party as a result of the incurrence of
such Damages (net of any increased tax liability that results from the receipt
of such indemnity payment) and shall be reduced by any amount received by the
Indemnified Party under any insurance policy with respect to the matter giving
rise to such Damages.
ARTICLE VII
TERMINATION
7.1 TERMINATION OF AGREEMENT. The Parties may terminate this
Agreement prior to the Effective Time as provided below:
(a) the Parties may terminate this Agreement by mutual written
consent; or
(b) the Buyer or the Company may terminate this Agreement if
there has been a breach of any representation, warranty, covenant or agreement
on the part of the other Party set forth in this Agreement, which breach (i)
causes the condition set forth in Sections 5.1(c) or (d) (in the case of
termination by the Buyer) or Section 5.2(c) or (d) (in the case of termination
by the Company) not to be satisfied and (ii) shall not have been cured within 20
days following receipt by the breaching party of written notice of such breach
from the other party; or
(c) the Buyer or the Transitory Subsidiary may terminate this
Agreement by giving written notice to the Company if the Closing shall not have
occurred on or before September 30, 1998 by reason of the failure of any
condition precedent under Section 5.1 hereof (unless the failure results
primarily from a breach by the Buyer or the Transitory Subsidiary of any
representation, warranty, covenant or agreement contained in this Agreement); or
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(d) the Company may terminate this Agreement by giving written
notice to the Buyer and the Transitory Subsidiary if the Closing shall not have
occurred on or before September 30, 1998 by reason of the failure of any
condition precedent under Section 5.2 hereof (unless the failure results
primarily from a breach by the Company or the Company Stockholders of any
representation, warranty, covenant or agreement contained in this Agreement); or
(e) the Buyer or the Transitory Subsidiary may terminate this
Agreement by giving written notice to the Company if at any time prior to the
date of Closing, the Property is destroyed or damaged as a result of fire or any
other casualty whatsoever, or taken by condemnation or eminent domain, in each
case, to such extent that Quill is entitled to terminate the Quill Lease; or
(f) this Agreement shall be deemed terminated if and when the
Merger Agreement is terminated.
7.2 EFFECT OF TERMINATION. If this Agreement terminates pursuant
to Section 7.1, all obligations of the Parties hereunder shall terminate without
any liability of any Party to any other Party (except for any liability of any
Party for a willful breach of this Agreement).
ARTICLE VIII
APPORTIONMENTS
8.1 TAXES AND UTILITIES. All utilities, real estate taxes,
assessments and other municipal charges (including betterment assessments)
affecting the Property and not the responsibility of Quill under the Quill
Lease, if any (the "TAXES AND UTILITIES AMOUNT"), shall be pro-rated on a per
diem basis as of the date of Closing, and the Purchase Price shall be adjusted
pursuant to Section 1.5(i) to reflect such pro-ration.
8.2 RENTS AND ADDITIONAL RENTS. Rents payable to the Company under
the Quill Lease shall be pro-rated on a per diem basis as of the date of Closing
(the "RENT PRORATION AMOUNT"), and the Purchase Price shall be adjusted pursuant
to Section 1.5(i) to reflect such pro-ration.
ARTICLE IX
OTHER AGREEMENTS
9.1 PRESS RELEASES AND ANNOUNCEMENTS. No Party shall issue any
press release or other public disclosure relating to the subject matter of this
Agreement without the prior written approval of the other Parties; PROVIDED,
HOWEVER, that the Buyer may make any public disclosure it believes in good faith
is required by law or regulation or stock market rules (in which case the Buyer
shall use its Reasonable Best Efforts to advise the Company of the proposed
disclosure prior to making the disclosure).
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9.2 NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer
any rights or remedies upon any person other than the Parties and their
respective successors and permitted assigns.
9.3 ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, with respect to the subject matter hereof.
9.4 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests or obligations hereunder without the prior written
approval of the other Parties; provided that the Transitory Subsidiary may
assign its rights, interests and obligations hereunder to an Affiliate of the
Buyer.
9.5 COUNTERPARTS; FACSIMILE SIGNATURE. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same instrument. This
Agreement may be executed by facsimile signature.
9.6 HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.7 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly delivered two
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, or one business day after it is sent via a reputable
nationwide overnight courier service, in each case to the intended recipient as
set forth below:
If to the Company or a Milbro, Inc.
Company Stockholder: 475 Half Day Road
Lincolnshire, IL 60069
Attention: Jack Miller
Copy to: Neal, Gerber & Eisenberg
Two North LaSalle Street
Chicago, Illinois 60602
Attn: Charles Evans Gerber, Esq.
If to the Stockholder Jack Miller, Harvey L. Miller and
Representatives: Arnold Miller
475 Half Day Road
Lincolnshire, IL 60069
Attention: Jack Miller
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Copy to: Neal, Gerber & Eisenberg
Two North LaSalle Street
Chicago, Illinois 60602
Attn: Charles Evans Gerber, Esq.
If to the Buyer: Staples, Inc.
One Research Drive
Westborough, MA 01581
Attention: Secretary
Copy to: Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attn: Mark G. Borden, Esq.
If to the Transitory Subsidiary: Staples Illinois, Inc.
One Research Drive
Westborough, MA 01581
Attention: Secretary
Copy to: Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attn: Mark G. Borden, Esq.
Any Party may give any notice, request, demand, claim, or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is received by the party for
whom it is intended. Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Parties notice in the manner herein set forth.
9.8 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application of
laws of any jurisdictions other than those of the State of Delaware.
9.9 AMENDMENTS AND WAIVERS. This Agreement may be amended at any
time prior to the Effective Time by written agreement of all of the Parties
hereto. No waiver by any Party of any default, misrepresentation, or breach of
warranty or covenant
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hereunder, whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
9.10 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
9.11 EXPENSES. Except as set forth in Article VI, each of the
Parties shall bear its own costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby. Notwithstanding the foregoing to the contrary, the Party,
as between Buyer and the Sellers, that is customarily responsible for payment of
transfer taxes, title insurance premiums and survey costs in the jurisdiction in
which the Property is located, shall be responsible for payment of any and all
such taxes, premiums and costs payable in connection with the transactions
contemplated under this Agreement. If any such taxes, premiums or costs payable
by the Sellers in accordance with the immediately preceding sentence have not
been paid prior to the Closing (the aggregate of such amounts, if any, the
"EXPENSE AMOUNT"), the Purchase Price shall be reduced by the Expense Amount
pursuant to Section 1.5(i), and the Buyer and/or the Surviving Corporation shall
be responsible for the payment of such amounts at or following the Closing.
9.12 CONSTRUCTION. The language used in this Agreement shall be
deemed to be the language chosen by the Parties to express their mutual intent,
and no rule of strict construction shall be applied against any Party. Any
reference to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise.
9.13 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
9.14 FURTHER ASSURANCES. Each of the Parties agrees to execute,
acknowledge and deliver, prior to, at or subsequent to Closing, such other
instruments, documents and other materials as the other may reasonably request
and as shall be necessary in order to effect the consummation of the transaction
contemplated hereby.
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9.15 TRUSTEE EXCULPATION. When this Agreement is executed by the
trustee of any trust, such execution is by the trustee, not individually but
solely as trustee in the exercise of and under the power and authority conferred
upon and invested in such trustee, and it is expressly understood and agreed
that nothing herein contained shall be construed as creating any liability on
any such trustee personally to pay any amount required to be paid hereunder, or
to perform any covenant, either express or implied, contained herein, all such
liability, if any, being expressly waived by the Parties by their execution
hereof (provided that this shall not be construed to release the trust of any
such liability).
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
THE BUYER
STAPLES, INC.
By: /s/ John J. Mahoney
-------------------------------
Title:_____________________________
THE TRANSITORY SUBSIDIARY
STAPLES ILLINOIS, INC.
By: /s/ John J. Mahoney
-------------------------------
Title:_____________________________
THE COMPANY
MILBRO, INC.
By: /s/ Jack Miller
-------------------------------
Title: /s/ President
----------------------------
THE COMPANY STOCKHOLDERS
JACK MILLER TRUST DATED
JANUARY 18, 1984
By: /s/ Jack Miller
-------------------------------
Jack Miller, Trustee
HARVEY L. MILLER TRUST DATED
JANUARY 31, 1983
By: /s/ Harvey L. Miller
-------------------------------
Harvey L. Miller, Trustee
SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER
AMONG STAPLES, INC., MILBRO, INC. AND OTHER PARTIES THERETO
<PAGE> 35
The undersigned, being the duly elected Secretary of the Transitory
Subsidiary, hereby certifies that this Agreement has been adopted by a majority
of the votes represented by the outstanding shares of capital stock of the
Transitory Subsidiary entitled to vote on this Agreement.
/s/ Peter Schwarzenbach
------------------------------------
Secretary
The undersigned, being the duly elected Secretary of the Company,
hereby certifies that this Agreement has been adopted by a majority of the votes
represented by the outstanding Company Shares entitled to vote on this
Agreement.
/s/ Harvey L. Miller
------------------------------------
Secretary
SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER
AMONG STAPLES, INC., MILBRO, INC. AND OTHER PARTIES THERETO
